Time magazine has an online section called "Swampland"; one of the latest articles is a paean to president Obama's green energy funding written by Michael Grunwald, Time's Senior National Correspondent. The piece praises the growth of wind and solar energies under Obama and says that the pro-green energy policies need to continue. Tax subsidies for wind and solar cannot expire according to Grunwald and Time. It is standard liberal nonsense that displays an incredible lack of knowledge of economics.
First of all, Grunwald, like many liberals who discuss energy, ignores the true facts. Here is perhaps my favorite sentence in the entire column:
Romney would say the tax-credit issue goes to Obama’s penchant for supporting goodies for specific industries, which isn’t really fair, since as Obama often says but reporters rarely repeat, Romney and his party support outrageous subsidies and tax breaks for the spectacularly wealthy oil industry.
This is nonsense, but the liberals and the press have begun to believe their own lies. There really are no subsidies or tax breaks left for the oil industry. Now let me be clear: the oil industry does get the same tax treatment as other industries, but those are not subsidies or tax breaks. Instead, it is just equal treatment under the law. For anyone who doubts this a quick look at the Obama proposal to end what he calls "subsidies for Big Oil" should prove my point. I wrote about this last March and am going to repeat now what I said then:
The problem with Obama's constant call to raise taxes on big oil is that no one ever looks at just what he is proposing. So let's break the mold and do just that. There are three main tax provisions that Obama concentrates on.
The first tax provision that Obama wants to eliminate is a tax credt passed in 2005 for all manufacturers operating in the USA. That's right, every mine, every auto manufacturer, every company building refrigerators, all the airline manufacturers, indeed all manufacturers get this tax credit. The idea of the credit was to make it more profitable to do manufacturing and to create jobs in the USA. Obama now wants to treat oil companies differently from all other American industry. Oil is not getting a special subsidy; oil is just getting the same treatment as all other industries.
The second tax provision that Obama wants to erase are the accelerated depreciation of drilling costs. The accelerated depreciation is actually less than most other manufacturing companies get -- those other companies get to expense capital expenditures on plant and equipment this year. And Obama is just plain wrong when he talks about big oil getting this break. The Alternative Minimum Tax for vertically integrated oil companies prevents them from taking this accelerated depreciation. That benefit only goes to the small and medium size independent oil exploration companies; not a penny goes to big oil. But why should that bother Obama. He is never concerned about the truth.
The third tax provision being attacked by Obama is the oil depletion allowance. Here too, Obama is just plain wrong. Big oil does not get the oil depletion allowance. It only goes to small independents, the companies for whom the tax difference actually results in additional drilling and production.
So Obama is after three tax provisions which he says let big oil make obscene profits. Two of the three, however, do not affect big oil. None of the three give oil companies a break that other industries do not also receive. So Obama is just lying on all fronts.
Another fact that Grunwald ignores is that wind and solar energy costs much more than energy from natural gas or coal. It is not enough for the government to subsidize the construction of wind and solar energy sources, there also has to be legislation that requires electric utilities to buy the energy that the wind and solar plants produce. Higher purchases of wind and solar energy mean higher electric costs for consumers and businesses. Switching to higher percentages of wind and solar would mean $50 to $100 more each month in average residential electric bills. It would also mean that the American advantage over other countries in energy costs would disappear and then reverse into a disadvantage. That means fewer new companies, fewer new plants and eventually fewer jobs of any kind. Somehow, the libs always ignore this part of the equation. The environmentalists are happy because fewer businesses mean less activity which means less pollution. Unfortunately, that same dynamic means much greater poverty, less hope for the future and a bleak outlook for America.
The push for wind and solar also ignores the huge benefits of natural gas. Let's be clear; natural gas is the fuel for the next few decades. First, because of the fracking revolution, natural gas is significantly less expensive than other sources of energy. Natural gas is also much cleaner than coal, oil and other conventional energy sources. Think what this means. A switch to natural gas for power plants (right now Nat gas has about 30% share) would mean a major reduction in air pollution; natural gas is 40% cleaner than oil and way more than coal. A switch to natural gas for the 180 million vehicles on the road would be the equivalent of removing 72 million vehicles off the roads as far as air pollution and greenhouse gas production is concerned. A switch to natural gas would also reduce American power costs. That means less expensive bills for American consumers. It means a comparative advatage for American manufacturers. It means greater economic growth. It means millions of more jobs created. It means millions will avoid the decent into poverty and despair that Grunwald and the Obamacrats seem to want to happen.
There simply is no rational basis for continuing to spend hundreds of billions to promote a losing economic future. Boiled down to its essence, the Grunwald/Obama view of energy and the economy is the equivalent of a doctor who decides to shoot all of his patients so that they can avoid ever contracting cancer. It may avoid cancer, but it just is not the best thing for those dead patients. At least not in the real world.
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