I agree with John Cole that delaying a report from the E.P.A. on fuel efficiency so it wont have any impact on the National Pork…err the National Energy Bill is going to be seen as underhanded.
The executive summary of the copy of the report obtained by The Times acknowledges that “fuel economy is directly related to energy security,” because consumer cars and trucks account for about 40 percent of the nation’s oil consumption. But trends highlighted in the report show that carmakers are not making progress in improving fuel economy, and environmentalists say the energy bill will do little to prod them.
“Something’s fishy when the Bush administration delays a report showing no improvement in fuel economy until after passage of their energy bill, which fails to improve fuel economy,” said Daniel Becker, the Sierra Club’s top global warming strategist. “It’s disturbing that despite high gas prices, an oil war and growing concern about global warming pollution, most automakers are failing to improve fuel economy.”
It is this kind of underhandedness that makes it hard to defend the Administration. I do disagree with John’s (apparent) view that the Energy Bill is a good thing. The bill is nothing more than a mish-mash of pork programs for various companies. Apparently nothing was learned from previous oil shocks. When the government gets involved in trying to craft an energy strategy it is almost surely going to result in pork and mis-allocated resources.
For example, the tax breaks for hybrid cars. The tax break basically says that right now the hybrid most likely uses more resources than regular automobiles unless the reduced emissions is greater than the savings in gasoline expenditures and the tax break combined. Is this likely? Perhaps, but I’m skeptical. Further, what does this do in terms of the high cost of gasoline? Nothing. Instead of spending money on gasoline we are spending it on tax breaks.1
Update: Jerry Taylor of the Cato Institute pretty much sums up my view on the Energy Bill. I strongly recommend reading the whole thing, but in case you aren’t here is a quick summary:
- The Energy Bill assumes that politicians know better than energy industry investors what constitutes a good investment.
- Ignores past examples of politicians bungling investment decisions:
- Nuclear power was going to be the wave of the future.
- Synthetic oil–wasting $80 billion.
- Alternative energies such as solar, wind and geothermal–billions spent and only a tiny fraction of energy produced via these methods.
- Subsidies to provide incentives to produce more oil and gas; as if oil at $60/barrel isn’t incentive enough.
- Incentives for conservation; again, as if high gasoline and energy prices aren’t incentive enough.
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1Some might be thinking, “Huh? Spending on tax breaks?!” Think of it this way. Suppose we have a government budget of $100 and we have tax revenues of $100. Now, if we give tax breaks worth $10, so now we have a $10 deficit. Now we either pay for it now via higher taxes, or we pay for it later with higher taxes (and higher taxes than a current tax increase due to interest on the deficit). Basically, a tax break in one area means that eventually there will have to be a tax increase somewhere else. On top of this, these kinds of things introduce distortions into the economy. Unless the benefit in reduced emissions exactly offsets the tax incentive there is a distortionary effect.
