Call it the iron law of political economy: Government goes to those who show up.
The good news is that limited-government groups are showing up. And they are not pro-industry (such as the natural gas industry) but pro-consumers, pro-taxpayers, and pro-marketplace. The bad news is that too many business leaders–and think T. Boone Pickens in this instance–are using their resources to politicize industry.
Elements of the gas industry want to use special government favor to increase demand and thus prices of their product. A quick summary of the New Alternative Transportation to Give Americans Solutions Act was given by the Leftie group DeSmogBlog:
As stated in an earlier article, “The bill is 24-pages long and rewards [natural gas vehicles] with tax [subsidies] to help ‘drive’ consumption. The bigger the vehicle, the more tax credits given.” The bill’s main purpose is to build up a massive fueling and vehicle infrastructure for the natural gas industry, which currently does not exist in the United States.
The NAT GAS bill was written by and for natural gas insiders, chief among them energy magnate T. Boone Pickens, Chesapeake Energy CEO Aubrey McClendon, and Clean Energy Fuels CEO Andrew Littlefair — referred to in an earlier post as the “self-enriching trifecta.” The bill currently possesses 183 bipartisan co-sponsors and until finally getting a hearing Friday, had sat in the Congressional coffers since early April.
The Left smells a rat at such corporate welfare, and so does the free-market Right. Regarding the latter, Calvin Beiser makes the case well in his post, Natural Gas a Natural Winner? Let the (Transportation) Market Decide!
Another post has gone over the self-help opportunities of the domestic gas industry in addressing the (low) price for its product. The principled entrepreneurial approach revolves around increasing demand through the market means, not the political means. (For other criticisms of the 18-wheeler mandate and, more generally, “The Strange Case of T. Boone Pickens,” see here.)
The letter below is particularly directed to Senate Majority Leader Harry Reid (D-Nev.) now that the legislation has ripened for consideration.
November 21, 2011
Dear Member of Congress:
In May, this coalition sent a letter opposing the New Alternative Transportation to Give Americans Solutions (NAT GAS) Act (H.R.1380), which creates and expands a host of tax credits to subsidize the use of vehicles that run on natural gas.
Despite an unprecedented number of representatives removing their support for the bill, it seems that a Senate companion (S. 1863) for this subsidy has recently emerged. We write to renew our opposition and urge you not to support new efforts for Washington to pick winners and losers in the energy markets. If we’ve learned anything from the Solyndra debacle it’s that politicians do a terrible job trying to prop up their favored energy industries.
The NAT GAS Act would subsidize every aspect of the natural gas-fueled vehicle industry, from production to purchase and the infrastructure needed to fuel such vehicles. It would also extend the tax credit for natural gas used as a transportation fuel, even though natural gas is currently significantly less expensive than diesel or gasoline. Tax incentives like these allow government to decide which energy sources thrive or fail—and thereby distort the market. America’s experience with a number of similar energy subsidies dating back to the 1970s has shown that businesses benefiting from these incentives become reliant on government handouts in order to stay in business, causing the price of the subsidy to rise over time and leaving taxpayers to support industries for decades.
We respectfully requested that all members of the House and the Senate follow some basic guidelines when considering new energy legislation in the 112th Congress:
Evenly applying lower taxation across the board
By targeting tax subsidies toward one type of transportation fuel—natural gas—the NAT GAS Act does not evenly apply lower taxation across the board. It does the exact opposite. America’s tax code is already overburdened with too many carve-outs for special interests that raise compliance costs, distort economic decision making and give advantages to the politically well connected.
The last thing Congress should be doing is making the tax code more complex.
Americans sent a strong message to Members of Congress in the 2010 mid-term elections: It’s time to stop wasteful government subsidies and end the destructive nature of special interest politics. Co-sponsoring this misguided legislation is a sign that you have not heard the message and are not serious about eliminating expensive, counterproductive energy subsidies.
Thomas J. Pyle: President, American Energy Alliance
Tim Phillips: President, Americans for Prosperity
Dave Ridenour: Americans for the Preservation of Liberty
Tom Schatz: President, Council for Citizens Against Government Waste
Chris Chocola: President, The Club for Growth
Matthew J. Brouillette: President & CEO, Commonwealth Foundation
Myron Ebell: Director, Freedom Action
Michael A. Needham: Chief Executive Officer, Heritage Action for America
Seton Motley: President, Less Government
Amy Ridenour: President, National Center for Public Policy Research
Jim Martin: Chairman, Plus Association
Ryan Alexander: President, Taxpayers for Common Sense
Morton C. Blackwell: Chairman, The Weyrich Lunch