Monday, November 26, 2007

MAINE VOICES - New energy bill is anti-consumer

If it gets passed, look for higher prices, less supplies and a major economic downturn.

Donald A. Grant (Donald A. Grant of Orono is chair and professor emeritus of the Mechanical Engineering Department of the University of Maine. )

November 26, 2007

At a time when energy costs are spiraling upward,
presidential candidates are persistently avoiding difficult energy

Such complacency is misguided, because Congress is debating
proposed legislation that would have harsh consequences for

Energy efficiency and conservation are a necessary part of any
strategy to deal with our challenges, but they cannot work
without accompanying measures to increase domestic oil and
gas production.

Without a change in the basic strategy, the result will be higher
energy costs. And that will mean Americans will have to spend a
larger percentage of their income to maintain their current level
of consumption, let alone produce any growth.

The next president will have to confront not just the challenge of
reducing foreign-oil dependence but also increasing domestic
energy production.

Facing these challenges will be even more difficult if Congress
approves proposed legislation that would restrict the supply of
energy available to the U.S. economy while increasing its cost.
The consequences for the Northeast in particular would be

A new study by CRA International, one of the nation's leading
economic consulting firms, confirms that the proposed
legislation will have multiple negative effects on the economy --
less employment, investment and economic output.

According to CRA's projections, 4.9 million jobs would be lost by
2030, including 384,000 in the Northeast, while the average
American household's annual purchasing power would decline
by $1,720.

This legislation repeats failed energy policies of the past with
government interference in the marketplace. It mandates the use
of ethanol, five times more than is currently produced.

It requires electric utilities to obtain 15 percent of their power
from renewable energy sources like solar and wind, though that
would be extremely costly in some parts of the country.

Moreover, it imposes civil and criminal penalties for alleged
"price gouging," even though repeated investigations by the
Federal Trade Commission have uniformly found that market
forces drive prices.

It calls for a national plan to curb oil use by 10 million barrels
per day by 2031, despite government forecasts showing the
need for significantly more energy. It further restricts domestic
oil exploration and production. And it adds more than $15
billion in taxes on the oil industry, much of which will be passed
along to consumers.

Absent from the proposed legislation is anything that would
encourage domestic oil and natural gas production. The House
and Senate energy bills would not produce a single additional
drop of oil.

That's astonishing, given that the United States has an
extraordinary amount of oil and gas reserves, both offshore and
on federal lands that are closed to energy development.

Plainly, higher taxes on oil companies won't do anything to
encourage increased investment in finding and producing more
oil. Nor will a provision that would require the companies to pay
higher royalties on leases in deepwater areas.

If domestic oil production is discouraged, as happened in 1980
when Congress passed a windfall oil-profits tax, the result will
be even greater payments to oil-producing countries that don't
always have Americans' best interests in mind.

Mark this legislation as the first step backward toward the oil
and natural gas price controls of the 1970s. That era made
shortages worse and hurt American consumers with long gas
lines and rationing.

So if polls now show voters are in a foul mood, wait until this
bill's anti-consumer energy provisions begin to take effect.

-- Special to the Press Herald

Copyright © 2007 Blethen Maine Newspapers

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