Agreement to End Crude Export Ban Illustrates Difference Between Real and Fake Energy

The good news out of the recent omnibus bill agreement in Washington is that finally, after 40 years, the unwise ban on exporting crude oil from the United States has ended. The bad news is…well, pretty much everything else in the bill. That includes a five-year extension of the investment tax credit for solar and an extension of the production tax credit for wind retroactively to last year and ending in 2019. There is a silver lining, however and that is that the wind tax credits will be phased down by 20 percent each year over that time span.

The solar tax credit on the other hand, currently a 30 percent credit for utility, commercial and rooftop solar installations — would get phased down through 2022. The credit would stay at 30 percent through 2019, and then fall to 26 percent in 2020. It would drop to 22 percent in 2021 and 10 percent in 2022.

So, “energy” is a big winner in all of this, but there is a major difference. According to the Washington Post reporter covering this story:

Despite rapid reductions in the cost of wind and solar, both still rely heavily on government subsidies. Bloomberg New Energy Finance has estimated that without the extension of the investment tax credit, solar installations would fall 70 percent in 2017 whereas an extension would boost solar projects by 50 percent through 2022.

In other words, the free market side was simply looking to overturn an obstacle to free trade in their product while the wind/solar lobby was looking for special favors from the taxpayer. It will be interesting to see if wind and solar can make themselves viable in the marketplace before these special favors end (there are other subsidies and mandates at the state level).

As a sign of just how clear-cut the case for crude exports was, none other than Larry Summers (Bill Clinton’s former Treasury Secretary) said, “The merits [of lifting restrictions] are as clear as the merits with respect to any significant public policy issue that I have ever encountered.” And yet, Mr. “All of the above” Obama remained bitterly opposed to the very end.