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.

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13 Replies to “Agreement to End Crude Export Ban Illustrates Difference Between Real and Fake Energy”

  1. “Real and fake energy” kind of a stretch. Have you looked into the subsidies received by Big Oil? Or the never fazed out Farm subsidies, in fact extended through disaster subsidies. Or the $622 billion to revive a series of expired tax breaks. What about the inclusion in H.R. 2029 prohibiting the SEC from requiring publicly traded companies to disclose political contributions. Ending the mandatory country of origin of meat imported from other countries. Unanticipated little details that so affect our daily life.

  2. The EIA’s new report, Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2013, shows wind energy received more than $5.9 billion in federal electricity-related subsidies during FY2013, which is almost 2x as much as coal, natural gas, and nuclear combined.

    Solar received the second-most electricity-related subsidies, at nearly $4.4 billion, while all other energy sources received considerably less. The gap widens further when we consider subsidies per unit of electrical energy produced.

    The data shows that in FY2013, federal electric subsidies propped up wind to the tune of $35.33 / MWH of electricity, compared to just $0.57 for coal, $0.67 for natural gas and oil, $2.07 for hydropower, and $2.10 for nuclear.

    The so called subsidies that oil gets are actually tax breaks available to any business. What bugs me the most about renewables is the mandates that probably is the biggest reason they exist at all. Take away all the subsidies and wind and solar collapse.

    Both Great Britain and Germany are cutting back on renewable subsidies as they are realizing it’s a fiasco for energy providers. Just like the Rail Runner is a big economic fiasco for NM.

    Furthermore: Total federal electricity-related subsidies rose 38% between FY2010 and FY2013, but for renewables, including wind and solar, climbed 54%. Despite generous and rising subsidies, wind energy supplies just 4.5% of U.S. electricity. Meanwhile, natural gas, coal, and nuclear generate more than 86% of the electricity Americans use.

    The bang per buck is not there for renewables.

  3. You can pick and choose your charts as you like.

    Here are some more charts and info on tax breaks and subsidies:

    All and all wouldn’t it be better to ultimately go with renewables even if the R+D have some up front costs? Oil and Gas have had the lions share over decades of subsidies, R+D and tax breaks. I do not see a future in coal, oil and gas other than more pollution and related health issues which do not seem to figure in the overall costs.

    1. I agree with you Paul. Get rid of ALL the subsidies! The difference is that per energy unit produced, so-called “renewables” are far more subsidized than are fossil fuels. America still gets 90+ percent of its energy from traditional sources. Only hydro really makes an impact among renewables.

      That is the point of the IEA data which is legitimate. I don’t have time to look at the others, but some “green” advocates lump any tax benefit received by the energy companies as a subsidy when those are available to any industry. They may be bad policy (or not), but they are not an “energy subsidy.”

      And the Omibus I’m referring to included gobs of subsidies for “renewables.” Nothing for fossil fuels that I’m aware of. Allowing exports is hardly a subsidy.

  4. On how many other issues does M Kershner indulge himself in moral equivalency?
    They do it so it’s OK for us to do it (??)

    Like M Kerry’s comment that the terrorist attacks in Paris somehow had a rational basis; western Europe did not invade the mideast in the 8th century with a program of conquest, murder, and slavery.

    It’s out of line to subsidize a relatively new industry that has no way to store its product, nor to deliver to market when it is needed.

  5. Moral equivalency not applicable lobbying power is. Who sponsored the Bill to end the disclosure of the country that is exporting meat to us?

    Of course the dehumanizing of young people without hope or ability to feed and clothe themselves has a rational basis. Although there are many examples of man’s extreme brutal depravity throughout recorded history the present phenomenon is extraordinary. Why so broadly based? How do you explain it?

    Kershner Ms.

      1. Culture: a shared view by a group that gives meaning to their existence and facilitates the foundation and organization of society. New studies suggest globalization has brought together people from different cultural backgrounds producing two reactions: can provide individuals with a flexible mindset creating diverse and stimulating ideas about inclusivism or can intensify loyalty to their own culture to the exclusion if others.

        The highest youth unemployment in the world exists in the Middle East and North Africa, countries that have not yet entered the modern world due to the uncharted aftermath of Colonialism. No jobs for even the college educated; no faith in democracy working for them; no way to develop skills that equip them to deal with the complexities and necessities of modern life.

        ISIL originated in Irag with the Sunni insurgency against the Shiite government under Nouri al Maliki who President Bush believed could unite the country’s Shiite, Sunni and Kurdish groups. But al Maliki immediately (2006) began to consolidate Shia power, removed the Sunni army commanders and sealed multi-million dollar oil contracts with the international oil giants. He is now one of the richest men in the world.

        The leader of the Sunni insurgency called AQI (Al Qaeda in Iraq), al-Zarqawi, was killed in 2006 and after his death AQI aligned with several other extremist groups and renamed itself ISI (Islamic State of
        Iraq). The repression of Sunnis under al-Maliki ensured fertile territory for the growth of discontent coupled with the withdrawal of foreign troops allowed the formation of AQI/ISI. The civil war in Syria created new recruits with the announced intention of combining forces in Iraq and Syria under ISIL (Islamic State in Iraq and the Levant).

        ISIL took parts of the Old Testament bible followed by Christians, Jews and Muslims, ruthless and bloody as it is, and proclaimed it as most Holy scripture thereby re-enacting archaic versions of law and justice — “an eye for an eye” that existed over 2000 years ago when Jews were slaves in Egypt. They also were well financed as they took cities with banks, oil and taxing authority. Thus what began as an economic problem has morphed into a religious problem.

  6. It’s fascinating to me that on the one hand, we need to drill and drill and drill and drill in order to produce enough oil to achieve independence from OPEC nations, but on the other hand, we have enough surplus oil that we can export it to other countries! What am I missing? Do we have too much oil or not enough? I submit, we can’t have it both ways.

    A careful reading of the announcement of the end of the prohibition on exporting crude oil, reveals who benefits: Big Oil makes more profit profit selling crude oil to foreign countries where it can be refined more cheaply than here at home. Result? More American jobs down the drain to benefit corporate bottom lines. And who will get the blame during the general election for increased unemployment? I’m betting it will be our current president. And who will be called lazy and undeserving of unemployment benefits when they can’t find comparable work? I’m betting it will be those recently fired American refinery workers. And who’s fault will it be when those unemployed workers lose their homes because they can’t make mortgage payments with minimum wage jobs at Walmart and fast food restaurants? Raise your hand if you think any of the corporate elite with compensation packages tied to stock price will step up and take responsibility.

    1. Wow, Ken. I thought exports were a good thing. Simply put, US refineries were designed to process “dirty,” sulfur-rich coal from places like Venezuela. The newly-accessible fracked crude is “light and sweet.” This is a good thing and it can be processed abroad more efficiently and at a higher price. So, it is a classic win-win which is what free trade is all about (voluntary buyers and voluntary sellers).

      In terms of “drill baby drill,” I think property owners should make that decision for themselves. To the extent that Washington owns lands (not national parks), it should be devolved to the states or sold off so that those owners can find the highest and best use. If that is an environmental group or groups that want to re-wild it, that is totally fine too. The federal government stinks at managing lands/resources/anything.

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