New West Energy Grok
Alternative Energy Tax Package Fails
By Richard Martin, 6-22-07
Faced with a chance to stand up and do something farsighted and courageous about the future of our energy supply and our climate, the U.S. Senate yesterday demonstrated again why the “world’s greatest legislative body” currently has the lowest public esteem in its history: it ducked.
Rather than reversing eight decades of political favors and government handouts to the oil and gas energy—by enacting a $29 billion redistribution of public wealth toward renewable and non-climate-altering power sources such as wind, solar, and hydrogen—the Senate by a margin of 3 votes failed to protect the big tax package at the heart of an energy bill now withering into inconsequence. Two proposals to direct billions in subsidies to coal-based liquid fuels also failed.
The Senators did agree to raise auto fuel-economy standards, approving a somewhat scaled back amendment that requires carmakers fleets to attain an averge of 35 miles per gallon by 2020. The auto industry fought that provision hard and succeeded in removing a requirement for continued improvements after 2020, though the compromise deal on the so-called CAFE standards was seen as a defeat for Detroit. (Montana Democratic Senators Max Baucus and Jon Tester, who were undecided on the CAFE issue until the end and were thus targets of heavy lobbying by Big Auto, both supported the new requirements).
At this moment it might seem that the Iraq-war resolution was the defining vote of this generation’s congressmen and –women. Twenty years from now, it may seem to historians that yesterday’s vote on energy policy had more far-reaching consequences.
In other energy news:
-- Facing a hot summer of high electricity demand, Xcel Energy, Colorado’s largest utility, has had a poor start to June. Residents in some Western Slope towns have already complained of sporadic power outages, glitches that were exacerbated by this week’s ruptured pipe at the 98-year-old Shoshone hydroelectric generating station in Glenwood Canyon. Xcel is also in trouble with the IRS: the utility agreed this week to pay $64.4 million in back taxes, lowering its profit forecast for the year.
-- Trains on the proposed “Gold Line” between Arvada and Wheat Ridge may run on diesel fuel – but not if community leaders along the corridor have their way. RTD eliminated diesel on the FasTracks project eight months ago but the transit agency’s board now says it’s re-evaluating the question of electric-vs.-diesel trains, raising questions of “public trust” according to local government officials speaking at a project meeting on Wednesday..
-- These are flush times for the National Renewable Energy Laboratory in Golden, which just last year was facing budget cuts and layoffs. Since President Bush visited the lab and spoke of the need for high-quality scientific research into alternative power sources, the lab is now set to receive $130 million in additional funding. Most of the new money will go to new facilities and equipment.
Another metod of funding alternative energy that is different from the tax incentives that were defeated in the Senate would be to add an additional tax to the price of gasoline. This tax could be dedicated for the purpose of funding alternative energy. The increase inthe supply of alternative energy would mean less demand for oil, which would lower the price of oil and gasoiline due to decreased demand.
There are two methods that I see as feasible for the methodology of this tax on gasoline. One would be to add a given amount to the price of gasoline--$.10, $.15. or $.25. The second method would tie the amount of tax to the average price of gasoline, with the actual tax computed from how much the price at the pump varies from the average price of gasoline. A given percent of the difference would be the amount of tax. The example below is for a percent of 50%.
Price at Pump > Average Price of Gasoline
Alternative Energy Revenue Tax = .50 (Price at Pump - Average Price of Gasoline)
Average Price of Gasoline > Price at Pump
Alernative Energy Revenue Tax = .50 ( Average Price of Gasoline - Price at Pump)
The second method listed above would fund alternative energy and reduce the average price of gasoline and oil in a gradual manner over a period of time, in accord with the laws of supply and demand.
Both of these methods will work, in my opinion, but he second method is the one that I feel will be most effective for the needed transition to alternative energy production to meet future energy needs.