NCPA - National Center for Policy Analysis

Costs and Consequences: America's Misguided Energy Policies

February 9, 2012

By targeting fossil fuels in favor of renewable energy, the Obama administration's energy policies suppress job creation and result in higher energy costs for American families.  The damaging effects of these policies can be seen in a number of areas, says Mario Loyola, a senior analyst at the Armstrong Center for Energy and the Environment.

First, the administration's use of taxing tools against fossil fuels and subsidization of renewable energy seeks to create an artificially stimulated demand for an inefficient resource.

  • According to the 2011 Almanac of Environmental Trends, wind power is three times as expensive as electricity derived from coal, while solar power is four times as expensive.
  • In his 2012 budget, Obama proposed eliminating 12 tax-related provisions that favor oil companies, generating $46 billion over 10 years, all of which would go to his proposed $148 billion in subsidies for green and renewable energy.
  • The energy industry replied that, in response to losing $4 billion annually, they will cut back on expanding capacity by about a third, eliminating or deferring hundreds of jobs.

The Obama administration recognizes that the only way renewable energy can be allowed to compete with less expensive fossil fuels is by making oil and natural gas more expensive to develop.  The president used the Gulf Coast oil spill as a pretense for reaching that end.

  • The moratorium on deep water drilling made little technical sense, as it halted operations during some of the safest phases of oil production.
  • It was clearly legal overreach, as evidenced by the fact that it was thrown out by numerous courts on several levels of the judiciary.
  • The subsequent regulatory atmosphere caused 33 drilling rigs present in the Gulf before the spill to leave for other countries, as of June 10, 2011.

Continuing this broad campaign, the Obama administration now relies on onerous regulations from the Environmental Protection Agency and the U.S. Fish and Wildlife Service to price oil and natural gas out of the market.  Their rules increase costs -- costs that will inevitably be passed onto American consumers.

Source: Mario Loyola, "Costs and Consequences: America's Misguided Energy Policies," Texas Public Policy Foundation, January 2012.

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