Tag: Gas

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Five Things Congress and the President Are Doing to Bring Back Sky-High Gas Prices

This is a great article chock-full of information from Ben Lieberman at The Heritage Foundation.

Gasoline prices are up since the start of the year, but the summer of 2009 has thus far been a bargain at the pump compared to a year ago when prices exceeded $4 a gallon. However, the respite from sky-high prices is likely temporary.

A return to $4 a gallon gas–or higher–will be made even more certain if Congress and the President succeed in enacting a host of proposals to crack down on domestic energy supplies. Instead, the federal government should support several pending pro-domestic energy measures that would help meet the nation’s growing demand in the years ahead.

Proposals That Would Raise Gasoline Prices

1. Pump price-boosting global warming legislation. The American Clean Energy and Security Act of 2009 (H.R. 2454, commonly known as Waxman-Markey after its two main sponsors) seeks to limit how much gasoline and other fossil fuels Americans can use. The aim is to cut America’s emissions of carbon dioxide from energy use, which proponents of the bill claim is warming the planet to dangerous levels. As with electricity rates, gasoline prices would have to rise high enough so the public would be forced to use less and meet the bill’s ever-tightening energy rationing targets. It is literally a deliberate effort by the U.S. government to make gasoline less affordable.

According to a Heritage Foundation analysis,[1] the bill would boost the price at the pump by 20 cents per gallon when the provisions first take effect in 2012. The targets get tougher each year, and by 2035 the increase would be an inflation-adjusted $1.38 per gallon–and that is on top of any other price increases that might occur.

2. Regulation of hydraulic fracturing. Bills have been introduced authorizing the Environmental Protection Agency (EPA) to regulate hydraulic fracturing under the Safe Drinking Water Act.[2] This could greatly reduce future onshore drilling for oil (and even more so for natural gas), thus lowering domestic supplies and adversely impacting gasoline prices.[3]

Hydraulic fracturing is a process by which pressurized water and other substances are injected into wells to facilitate the flow of oil and natural gas. It has been widely used for decades and is necessary for the majority of new wells in the U.S. It is currently regulated at the state level, and its environmental and public safety track record is nearly spotless.[4]

Nonetheless, proposed legislation seeks new federal regulation by the EPA based on concerns about contamination of drinking water supplies, even though such water contamination has never occurred and is highly unlikely.

3. Increased red tape and costs on domestic drilling. A draft bill from the House Natural Resources Committee seeks to discourage domestic oil production by adding a host of new regulatory requirements on top of those already in place.[5] The result would be more paperwork, delays, and litigation, but lower domestic supplies of oil.

The bill also creates new regional councils (above and beyond the many existing opportunities for state and local participation) with control over offshore oil and gas leasing. Though couched in terms of allowing public input, these councils would be susceptible to dominance by anti-energy activists not in step with the pro-domestic energy sentiment of the American people.

The proposal would restore unnecessary and redundant environmental reviews that had been eliminated by the Energy Policy Act of 2005. This policy change has proven very helpful for new domestic energy production since 2005, and its reversal would be a serious blow to future oil and natural gas drilling.

The bill also raises many fees on oil production in areas with existing leases. These increases would be particularly burdensome for the smaller energy companies that account for most of the domestic oil and gas activity. In some cases, these provisions would be enough to make oil leases too costly to pursue. As it is, the costs of drilling in the U.S. are very high relative to the rest of the oil-producing world, and this proposal would only add to the disparity. While discouraging existing oil activities, the bill does nothing to open up currently off-limits areas to new production.

4. Raising energy taxes. Although President Obama has spoken frequently about the need to reduce imports of oil, his first budget proposed a host of punitive taxes aimed at domestic oil and natural gas production. For example, the budget eliminates several deductions against income for energy producers, most notably the manufacturer’s deduction under the American Jobs Creation Act of 2004. Under the budget proposal, this deduction, which applies to all domestic industries, would specifically exclude domestic exploration and production of oil and natural gas.

Overall, the budget uses the domestic oil and natural gas industry as a source of $31 billion over 10 years in additional revenues. It should be noted that this industry already faces effective tax rates that are higher than the manufacturing sector as a whole.[6]

These energy tax hikes, which of course do not apply to foreign sources of oil, also put domestic production at a comparative disadvantage. For example, the 1980 windfall profits tax on oil companies (an excise tax that kicks in when the price of oil exceeds a certain amount) was found by the Congressional Research Service to have “reduced domestic oil production from between 3 and 6 percent, and increased oil imports from between 8 and 16 percent.”[7] The newly proposed tax changes would have the same effect.

5. Administrative delays on drilling. Last year, in the wake of public outrage over $4 gas, President Bush and Congress repealed the restrictions on leasing in 85 percent of America’s territorial waters. However, Secretary of the Interior Ken Salazar has already reversed the pro-energy momentum from last year, announcing he will slow down the process of opening any new areas to leasing and even cancel some existing leases. He has also blocked the leasing program for oil shale, a promising source of oil trapped in massive deposits of rock under parts of Colorado, Utah, and Wyoming. If progress can be made on technologies to efficiently extract the oil from the rock, oil shale could single-handedly supply America’s oil needs for many decades and possibly a century or more.[8]

What to Do Instead

Instead of clamping down on domestic energy supplies, American energy policy should embrace these ideas:

  • Expand offshore and onshore oil production into previously restricted areas, including Alaska’s Arctic National Wildlife Refuge, where an estimated 10 billion barrels of oil–16 years of current imports from Saudi Arabia–lie beneath a few thousand acres that can be accessed with minimal environmental impact;
  • Reduce the regulatory and legal delays that can slow and sometimes stop production;
  • Allow further progress on oil shale; and
  • Prevent costly new anti-energy regulations from being imposed in the name of addressing global warming.

These principles are contained in bills such as the American Energy Innovation Act (H.R. 2828), the No Cost Stimulus Act (S. 570 and H.R. 1431), and the American Energy Act (H.R. 2846).

Smart Energy Policy Should Be Obvious

It should be obvious, but in Washington it is often not: Discouraging domestic oil supplies with access restrictions, regulations, fees, and taxes will add to the future price at the pump, while streamlining these impediments to increased production will do the opposite. Congress and the President should be enacting measures that allow oil and gasoline to be as plentiful and affordable as possible to meet the nation’s energy needs. Instead, they are doing the opposite.

Ben Lieberman is Senior Policy Analyst in Energy and the Environment in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

[1]David Kreutzer et al., “The Economic Consequences of Waxman-Markey: An Analysis of the American Clean Energy and Security Act of 2009,” Heritage Foundation Center for Data Analysis Report No. CDA09-04, August 5, 2009, at http://www.heritage.org/Research/EnergyandEnvironment/cda0904.cfm.

[2]The Fracturing Responsibility and Awareness of Chemicals Act of 2009, H.R. 2766, 111th Congress, 1st Sess.; the Fracturing Responsibility and Awareness of Chemicals Act of 2009, S. 1215, 111th Congress, 1st Sess.

[3]Global Insight, Measuring the Economic and Energy Impacts of Proposals to Regulate Hydraulic Fracturing, 2009, at http://www.oilandgasbmps.org
/docs/GEN130-IHS_GI_Hydraulic_Fracturing_Task1.pdf (August 13, 2009).

[4]Scott Kell, “Statement on Behalf of the Ground Water Protection Council,” testimony before the Subcommittee on Energy and Mineral Resources, Committee on Natural Resources, U.S. House of Representatives, June 4, 2009, at http://www.gwpc.org/e-library/documents/general/Kell%20House
%20Testimony%206-4-2009.pdf (August 12, 2009); U.S. Department of Energy, State Oil and Natural Gas Regulations Designed to Protect Water Resources, May 2009, at http://ipams.org/wordpress/wp-content/uploads/WaterProtection.pdf (August 12, 2009).

[5]The Consolidated Land, Energy, and Aquatic Resources Act of 2009, 111th Congress, 1st Sess.

[6]Department of Energy, Energy Information Administration, “Performance Profiles of Major Energy Producers 2007,” table 1, at http://www.eia.doe.gov
/emeu/perfpro/tab01.html (August 12, 2009).

[7] Salvatore Lazarri, “The Windfall Profit Tax On Crude Oil: Overview of the Issues,” Congressional Research Service, Sept. 12, 1990, Summary.

[8]Congressional Research Service, “Oil Shale: History, Incentives, and Policy,” April 13, 2006, pp. 1-2, at http://www.fas.org/sgp/crs/misc/RL333
59.pdf (August 12, 2009).

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Amusing

Fuel Tax Could Be Replaced With a By-the-mile Road Tax

Lets’ see… with this tax people who live in rural areas (Red States) will be taxed excessively as many have to drive numerous miles to go to work and to buy groceries or any kind of supplies.

Legislation like this along with all the changes we have see over the last several months are readying this once great country for a Second American Revolution. We have fought to make this country free and we will have to do so again. Just a word of advice to all that cherish freedom and still love this country; keep your guns ready and tell Obama he can keep his “Change”.

The year is 2020 and the gasoline tax is history. In its place you get a monthly tax bill based on each mile you drove — tracked by a Global Positioning System device in your car and uploaded to a billing center.

What once was science fiction is being field-tested by the University of Iowa to iron out the wrinkles should a by-the-mile road tax ever be enacted.

Besides the technological advances making such a tax possible, the idea is getting a hard push from a growing number of transportation experts and officials. That is because the traditional by-the-gallon fuel tax, struggling to keep up with road building and maintenance demands, could fall even farther behind as vehicles’ gas mileage rises and more alternative-fuel vehicles come on line.

The idea of shifting to a by-the-mile tax has been discussed for years, but it now appears to be getting more serious attention. A federal commission, after a two-year study, concluded earlier this year that the road tax was the “best path forward” to keep revenues flowing to highway and transportation projects, and could be an important new tool to help manage traffic and relieve congestion.

The decision by the 15-member National Surface Transportation Infrastructure Financing Commission was unanimous, which surprised Robert Atkinson, the group’s chairman. But he said it became clear as the commission’s work progressed that a road tax on miles traveled was the best option.

“If you’re committed to the system being improved then it was a no-brainer,” he said.

The commission pegged 2020 as the year for the federal fuel tax, currently 18.5 cents a gallon, to be phased out and replaced by a road tax. One estimate of a road tax that would cover the current federal and state fuel taxes is 1 to 2 cents per mile for cars and light trucks.

The commission said work needed to start soon to prepare for a road tax. But more work has already been done than most people probably realize.

Oregon did a field test in 2007, concluding it was possible to collect a road tax. The University of Iowa’s Public Policy Center — with support from the Federal Highway Administration and 15 states, including Kansas and Missouri — began work a decade ago on how a road tax could be deployed.

Now the University of Iowa, with the help of a $16 million federal grant, is beginning the field test that will eventually include 2,700 vehicles in six states. The vehicles equipped with computers and GPS devices will keep track of the miles traveled and send the data through wireless technology to a billing center that will compute “simulated” tax bills.

“There is a lot of work nationally going on that is beneath the surface,” said Pete Rahn, director of the Missouri Department of Transportation.

Missouri, like the federal government and other states, has been watching revenues from the gas tax decline. Last year that revenue was down more than 3 percent, and so far this year it has declined a similar amount. The state’s highway budget was about to “hit the rocks,” he said, but federal stimulus funds gave it some breathing room.

Even when the economy recovers, the gas tax will remain under pressure.

“The Chevrolet Volt won’t pay a penny of fuel tax,” Rahn said of the electric car that will make its debut next year.

Rahn, past president of the American Association of State Highway and Transportation Officials, said some states have considered implementing a road tax without waiting for the federal government to act, but a national system would probably work best.

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Amusing

House passes “Cash for Clunkers” Bill to Boost Car Sales

First it’s the carrot, then it’s the stick. STOP SPENDING OUR MONEY. JUST DRILL FOR OIL… problem solved!

The House on Tuesday approved a “cash for clunkers” bill that aims to boost new auto sales by allowing consumers to turn in their gas-guzzling cars and trucks for vouchers worth up to $4,500 toward more fuel-efficient vehicles.

President Barack Obama has encouraged Congress to approve consumer incentives for new car purchases as part of the government’s work to restructure General Motors and Chrysler. The House approved the bill 298-119.

Supporters pushed for the measure to stimulate car sales and increase the fleet of fuel-efficient vehicles on the nation’s highways. The auto industry has sought the incentives after months of poor auto sales. In May, overall sales were 34 percent lower than a year ago.

“Stimulating sales is the only way to get the auto industry back on its feet,” said Rep. Donald Manzullo, R-Ill.

General Motors Corp. and Chrysler LLC have received billions of dollars in government aid and the entire auto industry has watched car sales plummet during the past year. In May, overall sales were 34 percent lower than a year ago.

“Our industry has been stuck in neutral and really has not started to move,” said Larry Kull, president of Marlton, N.J.-based Burns Kull Automotive Group, which includes General Motors, Honda and Toyota dealerships.

The vehicle scrappage bill has been under negotiations for months as lawmakers try to find a solution that boosts car sales while providing some environmental benefits. Proponents have pointed to similar programs in Europe that have enhanced auto sales.
Opponents said the bill failed to include incentives for used vehicles and represented an artificial incentive for the industry.

“It’s defying the laws of economics and saying we can manufacture enough of a demand to keep the auto industry afloat,” said Rep. Jeff Flake, R-Ariz.

Separately, House and Senate appropriators were discussing providing $1 billion to a supplemental war funding bill for the “cash for clunkers” program, which aims to generate about 1 million new auto sales. Since the yearlong vehicle program is expected to cost $4 billion, lawmakers would attempt to find the additional money later this year.

Under the House bill, car owners could get a voucher worth $3,500 if they traded in a vehicle getting 18 miles per gallon or less for one getting at least 22 miles per gallon. The value of the voucher would grow to $4,500 if the mileage of the new car is 10 mpg higher than the old vehicle. The miles per gallon figures are listed on the window sticker.

Owners of sport utility vehicles, pickup trucks or minivans that get 18 mpg or less could receive a voucher for $3,500 if their new truck or SUV is at least 2 mpg higher than their old vehicle. The voucher would increase to $4,500 if the mileage of the new truck or SUV is at least 5 mpg higher than the older vehicle. Consumers could also receive vouchers for leased vehicles.

Rep. Betty Sutton, D-Ohio, the bill’s chief sponsor, said the bill showed that “the multiple goals of helping consumers purchase more fuel efficient vehicles, improving our environment and boosting auto sales can be achieved.” Sen. Debbie Stabenow, D-Mich., has backed a similar version in the Senate, which has the support of automakers and their unions.

The bill would direct dealers to ensure that the older vehicles are crushed or shredded to get the clunkers off the road. It was intended to help replace older vehicles — built in model year 1984 or later — and would not make financial sense for consumers owning an older car with a trade-in value greater than $3,500 or $4,500.
The U.S. industry is expected to generate about 9.5 million vehicles sales in 2009, compared to more than 13 million in 2008 and more than 16 million in 2007.
Auto analysts questioned whether it would be enough of an incentive for many consumers burdened by debt or financially stressed by the troubled economy.

“That is the major sticking point for Americans: How do you finance your vehicle? How do you pay for it?” said Rebecca Lindland, an auto industry analyst for the consulting firm IHS Global Insight.

A group of senators led by California Democrat Dianne Feinstein were pushing an alternative version that would require consumers to trade up for more fuel-efficient cars and trucks to qualify. They complained that even a 2009 Hummer H3T, which gets 14 mpg in city driving and 18 mpg on the highway, could qualify for the incentives under the House bill.

Under Feinstein’s plan, a passenger car owner’s trade-in would need to get 17 mpg or less to qualify and only new passenger cars getting at least 24 mpg would be eligible. Owners could receive a $2,500 voucher for a new car that gets at least 7 mpg more than their old car. The voucher would increase to $3,500 for new cars with a 10 mpg improvement and $4,500 for new cars with a 13 mpg increase in fuel efficiency.

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Amusing

Nukes Are OK For Iran, But Not For Us?

As usual, Liberal inconsistency reveals that their true motivation is the destruction America.

Nuclear Power: If Iran has “legitimate energy concerns” that make its nuclear plants OK, doesn’t the energy-starved U.S.? Why doesn’t Iran, with the second-largest proven oil reserves, just build some refineries?

Normally, a nation with significant oil resources that decides to develop nuclear power would and should be praised for its prudence. Nuclear power is an emission-free domestic form of energy that is good for the environment and the economy.

Except when it’s a country that builds missiles instead of refineries and pledges to wipe a neighbor off the face of the earth.

Iran says it’s developing nuclear power to generate electricity while it waits for the 12th Imam and the apocalypse to arrive. To hasten the process, however, it is using its nuclear knowledge to amass fissile material necessary to build a bomb. It’s developing missiles to deliver that bomb, presumably somewhere in the heart of downtown Tel Aviv.

Our new administration is trying to talk them out of it, and the Iranians are quite willing to drag out the conversation as long as it takes to develop their nuclear weapon and the means to deliver it.

“Although I don’t want to put artificial timetables on that process,” President Obama has said, “we do want to make sure that, by the end of this year, we’ve actually seen a serious process move forward. And I think that we can measure whether or not the Iranians are serious.”

Unfortunately, Iran by the end of the year should have enough weapons-grade material to make a bomb, if it doesn’t have enough already. One thing we can measure is the increasing number of centrifuges they have spinning. They are not designed to keep the lights on in Tehran.

It would seem to us that encouraging Iranian use of nuclear energy in any context is the last thing we should be doing. In a BBC interview broadcast on Tuesday, President Obama said:

“Without going into specifics, what I do believe is that Iran has legitimate energy concerns, legitimate aspirations. On the other hand, the international community has a very real interest in preventing a nuclear arms race in the region.”

This echoes remarks made in Prague last month, when the president said his administration would “support Iran’s right to peaceful nuclear energy with rigorous inspections” if Iran gives up its pursuit of nuclear weapons.

But it hasn’t, and the race is already on. Iran state television interpreted these remarks as recognizing “the rights of the Iranian nation,” by which it means its right to develop nuclear power unencumbered.

That Iran is not serious about peaceful nuclear energy is shown by its refusal to build the refinery capacity needed to eliminate its dependence on imported gasoline. That money instead has gone to buying more centrifuges and expanding nuclear facilities. If Iran’s energy aspirations were legitimate, it would be building refineries and not bombs.

The irony here is that at the same time we are encouraging Iran to exploit the peaceful uses of nuclear power, we are discouraging its use here at home. We have legitimate energy aspirations as well, and one of them is reducing our dependence on imported oil from countries that do not have our interests at heart.

We let billions flow overseas and domestic oil resources from the Chukchi Sea to ANWR to Western oil shale to the Gulf of Mexico go unexploited. We have one thing in common with Iran: We’re not pushing refinery construction here either.

We prattle on about nuclear power being costly and nuclear waste being a danger without a safe place to store it even as we shut down Yucca Mountain, a perfectly safe place to store it. We place all sorts of regulatory and environmental impediments in its way.

Why is nuclear power a viable energy source for Iran but not for America?

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Amusing

Pumpcast News


This one has been around for quite some time, but that doesn’t make it any less funny. Basically, they’ve set up a fake newscast to air at a pump at this gas station – add in a hidden camera and let the hilarity ensue.

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