Category: Energy and Climate

The American Council for Capital Formation’s (ACCF) ActOnLNG campaign has launched a new video highlighting how important liquefied natural gas (LNG) exports are to revitalizing Main Street, powering key industries, and strengthening U.S. manufacturing.  The short video, narrated by former Congressman Harold Ford, Jr. (D-Tenn), also urges the Obama administration to speed up LNG export approvals.  The video complements efforts in Congress to boost LNG exports to America’s allies through legislation, including the Domestic Prosperity and Global Freedom Act (H.R. 6). “This video captures the sense of urgency that use needed to ensure that the United States continues to lead the world in the development of energy resources–particularly natural gas,” explained Dr. Margo Thorning, ACCF Chief Economist and Senior Vice President.  ”Exporting LNG would be a real game changer for the nation’s economy and would help America sustain its natural gas boom.  We hope this video will spark further conversation around natural gas exports–especially the need to cut through the bureaucratic red tape holding back development.”

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It’s becoming a quarterly tradition as reliable as the seasons: the oil sector releases its earnings, and the Center for American Progress contorts itself into a misleading critique of the industry, its tax treatment, and its outsized role in the American economy. Unfortunately, repetition has not made CAP’s argument any more factual, any more persuasive, or any more founded in the common sense tenets that make for sound energy and tax policy. The crux of CAP’s argument is, as ever, that the oil and gas industry’s earnings are too high. And because of these high earnings, the oil and gas industry should be taxed more heavily. They assert that the oil sector fails to carry its share of the burden, that it is a drain on the economy, and that policymakers should act in a manner that artificially shifts the American energy portfolio away from traditional fossil energy and toward preferred, “green” energy projects. Not a single aspect of this line of reasoning holds water. Earnings, Expenses, and Returns Let’s start with the earnings. Earnings in 2013 for the “Big Five” oil companies clocked in at $93 billion – an objectively large number, but around thirty percent lower than last…

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Background: A recent article by Daniel Weiss of the Center for American Progress tries to make the case that because the net income of large, integrated U.S. oil companies has risen in recent years, these companies should lose the federal income tax provisions they currently use.  A quick look at Weiss’s article reveals several serious analytical and methodological flaws which make his conclusions about how tax reform should impact the oil and gas industry inappropriate and, in fact, harmful to U.S. job and economic growth.

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This week, National Journal posed the question about determining the right price for energy, whether it’s powering your car or house or weighing diverse issues like the renewable-fuel standard and forthcoming regulations controlling greenhouse-gas emissions from electric power plants. My thoughts: cost/Benefit analysis should be the test by which policymakers craft sound energy policies.  Regulating GHGs through the Clean Air Act fails that standard. As I noted in my testimony before the Senate EPW Subcommittee on Clean Energy and Nuclear Safety, “In sharp contrast to EPA’s $2 trillion estimate of the ‘economic value’ of the CAAA, EPA’s own simulations with its macroeconomic model show that the CAAA has significant negative impacts on U.S. GDP growth over the 2010- 2020 period GDP declines by $79 billion in 2010 and by $110 billion in 2020 relative to the baseline forecast. In other words, the already implemented CAAA regulations have real, quantifiable costs to the economy.”  Also failing the cost/benefit test is the use of tax credits and subsidies to promote the use of renewable and alternative energy in the U.S. This misguided policy adds costs to business, households and the government without delivering commensurate economic or environmental benefits. Data from DOE’s EIA…

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Despite what some policymakers may assert, the U.S. is not facing a shortage of energy.  Domestic oil production has increased by 25 percent over the 2005-2012 period and oil imports are down sharply. Natural gas production has increased even faster, rising by 33 percent over the same period. Wind and solar power have also made strong gains as well thanks to renewable portfolio standards in 30 states as well as subsidies like the production tax credit (PTC) and investment tax credits for renewable energy. As policymakers confront the sluggish U.S. economic recovery and slow job growth, they need to consider the impact of tax, budget and regulatory decisions that promote the use of costly renewable energy compared to the expansion of conventional fossil fuels or nuclear power for electricity generation and for transportation. Another factor to consider as policymakers debate subsidies for new energy technology deployment is that, as is widely understood, the impact of U.S. reductions in GHGs will have almost no impact on the growth in global GHG concentrations since most emission growth is in developing countries like China, India, Indonesia and in Latin America (see Figures 1 and 2). Furthermore, according to recent EIA data, new electric…

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