NCPA - National Center for Policy Analysis


November 15, 2007

Trying to bring the price of energy down by raising taxes and increasing government regulations on energy producers is the wrong course our leaders should be taking, say Margo Thorning, senior vice president and chief economist of the American Council for Capital Formation, and Marc Kilmer, a policy analyst for the Buckeye Institute.

The Senate energy bill contains so-called "price gouging" provisions and the House passed a "stand alone" price gouging bill: These proposals would in effect impose 1970s-era price controls, raising gas prices for consumers and limiting the availability of fuel for American families and businesses. 

The legislation also imposes government mandates requiring massive increases in the use of renewable fuels such as corn-based ethanol:

  • In addition to rising costs for livestock feed, the price of corn already is adversely impacting all consumers through higher food prices for meat, dairy products and other daily staples. 
  • And now that speculators have sped up production in view of new mandates and federal subsidies, we have a glut of ethanol stuck in the Midwest.
  • Requiring consumers to use enormous amounts of subsidized ethanol at the present time does not make practical, fiscal or environmental sense. 

Pending mandates on utilities will require they use a certain percentage renewable energy sources in delivering electricity to all consumers and businesses:

  • Again, renewable energies holds great promise and will clearly be part of our nation's future energy portfolio, but forcing the adoption and uses of alternative energy upon consumers comes with great economic risk, namely in the form of higher utility bills.
  • Until these important segments of the industry mature, consumers have relatively affordable and convenient access to energy sources that should not be disrupted. 
  • As such, it is unfair to impose penalties on consumers because promising technologies have yet to be embraced by the market.

Source: Margo Thorning and Marc Kilmer, "Washington and Columbus Heading Wrong Way on Energy," Buckeye Institute, November 13, 2007.

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