June 20, 2007

ENVISIONING AMERICA'S ENERGY FUTURE

By Senator Mike Crapo

Energy is on our minds-with gasoline prices still high, "pain at the pump" is something we all relate to.   Understandably, "it's complicated," is a frustrating response to questions about high fuel prices.   Easy answers provide easy targets for our frustration, but simplify issues to the detriment of sound policy development.   The long answer-where the truth is found-is not the stuff of soundbites.  

 

Energy production and consumption must be addressed on the supply and demand sides of the equation, with careful consideration of economic, national security and environmental implications.   Addressing demand means taking responsible, incremental steps that encourage energy conservation; addressing supply means encouraging innovation through tax incentives for renewable energy technology and development, not imposing some $28 billion in taxes on the oil and gas industry.   It doesn't take a rocket scientist to know that those costs will show up at the gas pump.   Approaching supply and demand responsibly allows our economy to adjust to what amounts to an historic energy transformation-certainly not a one- or two-year endeavor.   Diversifying our energy portfolio will take years.   If done correctly, solid markets for new energy will be created, and we will finally extract ourselves from the death grip of foreign oil.   Most importantly, consumers won't bear the cost burdens of taxes that discourage oil and gas production in the intervening years.  

 

The Senate's comprehensive energy legislation, in theory, aims to decrease dependence on foreign energy supplies and increase conservation.   In practice, it implements energy conservation incentives, but fails to move us confidently toward business and market-friendly domestic energy development and conservation.  

 

  The Renewable Portfolio Standards (RPS) would introduce a counterproductive federal standard into a growing and effective state-by-state effort to better utilize renewable fuels.   I support the Clean Energy Portfolio Standard, which provides for a broader range of technologies to meet a responsible, conservation-sensitive federal standard.   The federal government shouldn't impose a "one-size-fits-all" answer on states to fulfilling a renewable energy requirement for electricity, which is what the majority proposal does.  

 

  Federal fuel efficiency standards must be carefully evaluated on merits and long-term market consequences.   In the long run, our environment and pocketbooks can benefit from fuel-efficient automobiles.   Still, statistics show that, even at current gas prices, people are purchasing trucks and SUVs at a steady rate.   Vehicle purchase choices include more factors than just fuel economy.   Introducing unnecessary federal controls into the industry in the guise of fuel efficiency standards affects jobs and even passenger safety.  

 

  Energy tax legislation that I voted against sought to assess higher taxes on the different stages of gasoline production, from drilling to importing to refining.   Taxing a commodity is a disincentive and drives prices up.   In a time of energy transformation, energy tax legislation, in the form of tax incentives rather than new taxes, provides a strong compliment to regulatory efforts.   In fact, tax incentives may prove more effective than traditional federal regulatory command and control when it comes to long-term solutions to our energy needs.

 

Thankfully, a number of tax incentives I have strongly supported are part of the legislation.   These include tax credits for wind, solar and geothermal energy, increased efficiency of commercial and residential buildings, improved transmission facilities and tax credits for alternative vehicles and fuels, particularly cellulosic ethanol.    

 

Key to any comprehensive, honest energy policy debate is recognizing that answers aren't easy.   Effective energy legislation will include:   support for true energy diversity-clean coal, nuclear, wind, biomass, geothermal and solar; incentives for increased conservation endeavors by individuals, the federal government and private industry; incentives for new oil refining facilities; and increased petroleum production.  

 

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