Federal meddling hurts energy output

The 110th Congress is introducing new energy proposals that include a package of tax increases on businesses and subsidies for certain renewable energy sources. The benefits of these proposals are questionable, and experts are cautioning law-makers against passing legislation that would raise costs for small businesses and consumers while stifling innovation, notes Tom Tanton, vice president of the Institute for Energy Research, Takoma Park, Md., adding that some policies being advocated on Capitol Hill are detrimental to the overall goal of reducing the burden of energy costs and securing a robust American supply.

Members of the House of Representatives are championing legislation that increases taxes on energy companies and mandates which energy alternatives the U.S. should promote. Tanton points out that California voters already have rejected mandates that would create an artificial market for less efficient alternative energy sources. Such policies are counterproductive to reaching lower gas prices and maintaining energy interdependence. Raising taxes on energy companies encourages outsourcing of America's energy supply and increases U.S. dependence on foreign oil.

"Raising taxes on one industry to create another is counterproductive and discourages investment," asserts Jack Rafuse, former energy advisor to the Nixon White House. "Markets will ultimately dictate viable energy sources in the future, but increasing subsidies for alternatives such as ethanol and wind power only raise the cost of energy and stall innovation for alternative sources."

The Senate likewise is considering legislation that will follow a recently-adopted California model to regulate carbon dioxide emissions. Regulating C[O.sub.2] as a pollutant or through cap and trade schemes, however, merely would raise production costs for small businesses and filter down to the average customer.

"Regulating carbon dioxide would raise production costs, thereby increasing outsourcing, and send the U.S. deeper into a trade deficit," contends Tanton. "Increased production costs would inflate prices across the board, while wages for labor would stay the same. More companies would invest overseas and the American worker would pay the price."

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