I’ve tried to stay on top of the federal government’s response to natural disasters here at Acton. I’ve written a number of commentaries, blog posts, and a story in Religion & Liberty covering the issue. “Spiritual Labor and the Big Spill” specifically addressed the 2010 Gulf of Mexico oil spill. For extensive background on this short clip of Bobby Jindal at CPAC 2012, see my post “Bobby Jindal on Centralized Disaster Response.”
The Keynesians will have little to cheer about in this story. Yesterday I saw this report from CNN Money that said U.S. consumer credit card debt fell by 11 percent in 2011. Mississippians led the Union by reducing their card balance by 23 percent. While total household debt fell by only 1 percent last year, it is still a towering accomplishment when compared to the U.S. federal debt increase.
This is exactly the point Jordan Ballor and I made in our 2008 commentary “The Fiscal Responsibility of Mall Rats and Bureaucrats.” In that piece, we pointed out that the federal government is a significantly poorer steward of our resources when put up against the supposedly “materialistic” and “selfish” consumer.
The inability of the federal government to curtail spending should be considered a form of insanity when one simply looks at the numbers. Instead, as I pointed out before, government spending is now so sacred for some in the religious community, it is a shrine that must be encircled.
Rather, it comprises an unrepresentative segment of the electorate that believes in radical redistribution of wealth, civil disobedience and, in some instances, violence. Half (52%) have participated in a political movement before, virtually all (98%) say they would support civil disobedience to achieve their goals, and nearly one-third (31%) would support violence to advance their agenda. The vast majority of demonstrators are actually employed, and the proportion of protesters unemployed (15%) is within single digits of the national unemployment rate (9.1%).
In an interview with reporter Brian Fraga of National Catholic Register, Acton’s Ray Nothstine pointed to what may be the fatal flaw for the protests: the lack of a coherent message.
“I’m hesitant to say it will bring about any change,” Nothstine said. “You have too many splinter groups. I can understand people are frustrated with the political status quo, and they’re mad about crony capitalism and government bailouts.
“But some of the demands that have been coming out of this movement, like a $20 minimum wage and across the board debt forgiveness, are very Utopian, and they’re really sort of economic disasters, as I would put it. They would create inflationary policies, create more deficit spending, and create more problems that helped to create the mess that we’re in.”
Read more of Nothstine’s comments in “Occupy Wall Street Gains Momentum” in the National Catholic Register. Nothstine also wrote a commentary on the Occupy Wall Street movement titled “Class Warriors for Big Government.”
Yesterday I was interviewed by WoodTV8 on a story about a controversial billboard near downtown Grand Rapids that reads, “You don’t need God – to hope, to care, to love, to live.” The billboard is sponsored by the Center for Inquiry. My reaction is that the billboard can be a positive because it serves as a conversation starter about a relationship with the Lord and what the meaning of true love and true hope is all about.
When I was an undergraduate student at Ole Miss, I had a religion professor who seemed to be a strong proponent of Buddhism. I believe she was a fair professor and was not trying to indoctrinate anybody into converting, but the class and the studying of other religions called me to study and think deeply about my own faith. The class prompted me to read the Gospels and Scripture closely, which was ultimately a first step into a calling to seminary. Likewise, the billboard may give Christian families and believers a chance to ask the deep questions of what they believe and why they believe. Furthermore, a bland nominal Christianity is no preparation for the difficulties and trials of this world and it is essential to move beyond that.
I’d also like to expand beyond the edited comments from the news report and offer a fuller response about hope and faith. One thing that is apparent today about many skeptics and atheists is that they are very evangelistic. Unlike the past, they are very aggressive about gaining converts and are often reactionary to any faith or religion expressed in culture. In many cases this brand of atheism mirrors a sort of reactionary Christian fundamentalism when it comes to responding to culture.
In a 2007 Weekly Standard piece, Harvard professor Harvey Mansfield summed up the the new aggressive atheist tactic this way,
Atheism isn’t what it was in the eighteenth century. Now, the focus of the attack is not the Church, which is no longer dominant, but religion itself. The disdain one used to hear for “organized religion” extends now to the individual believer’s faith. Despite the change, politics is still the thrust of the attack. It’s just that the delusion of religion is now allowed to be the responsibility of the believer, not of some group that is deluding him. A more direct approach is required.
For the Christian, when it comes to hope, care, living, and love, the believer knows that ultimately all those attributes are grounded in Christ. In contrast, the hope of the unbeliever is a hope in the things of themselves and of this world. The believer on the other hand knows that the hope of this world is ultimately a vain, withering, and disappointing hope. But the hope provided by the life, death, and resurrection of Christ is an anticipation that does not only not disappoint (Romans 1:5) but is triumphant. The resurrection of Christ is so essential to our future hope that Augustine declared, “In Christ’s death, death died. The fulness of of life swallowed up death; death was absorbed in the body of Christ.” John Calvin added about Christ, “Such is the nature of his rule, that he shares with us all that he has received from the Father. Now he arms and equips us with his power, and adorns us with his beauty and magnificence, and enriches us with his wealth.”
As we travel life’s highway, the believer can be assured that God is still on his throne and that those that are hid in Christ are heirs to his glory. If vain and confusing props on the side of the road can help remind us to think and converse in a deeper manner about all that we are promised and will receive by his marvelous grace, then ultimately it is beneficial. When one studies the Gospel story and is rooted in what the Apostle Paul calls “the fulness of Christ,” there is an assurance and confidence the world cannot steal from you.
“The Church and Disaster Relief: Shelter from the Stormy Blast” is a piece I wrote for this issue focusing on the faith community’s response to the tornadoes in the South, Joplin, Mo, and Hurricane Katrina. Pastor Randy Gariss of Joplin and Jeff Bell of Tuscaloosa, Ala. were extremely generous with their time and helped to shape this article. Below is an excerpt from the article on Pastor Gariss’s thoughts on the response:
‘The churches are far better about getting out of their buildings now,’ said Randy Gariss, pastor of College Heights Church in Joplin. ‘Before it was more of a bunker mentality with some churches because of the cultural wars, but so many more churches are building relationships with the whole community.’
David Paul Deavel offers an excellent review of Daniel J. Mahoney’s, The Conservative Foundations of the Liberal Order in the issue. The title of his review is “Saving Liberalism from Itself” and in the review he declares:
Under modernity, Mahoney argues, liberty is too often reduced to ‘a vague and empty affirmation of equality and individual and collective autonomy’ that ‘is inevitably destructive of those ‘contents of life’—religion, patriotism, philosophical reflection, family ties or bonds, prudent statesmanship—that enrich human existence and give meaning and purpose to human freedom.’
“Debt, Finance, and Catholics” is a piece authored by Sam Gregg. Rev. Robert Sirico offers “The Church’s Social Teaching is One Consistent Body of Thought.”
The “In The Liberal Tradition” figure is Richard John Neuhaus. I met Neuhaus on Capital Hill when I was working at the Institute on Religion & Democracy. He was very close to a philosophy professor of mine at seminary and Neuhaus was very familiar with Asbury Theological Seminary, where I was a student at the time. I specifically remembered he knew a lot about John Wesley and the 18th Century evangelical revival in England.
Nuehaus had a real pastoral heart to go along with his sharp mind and he seemed to have an encouraging word for everybody. “Wealth and Whimsy: On Economic Creativity” is an excellent essay from 1990 by Richard John Neuhaus that is certainly worth the read. There is more content in this issue so please check it out and if you ever wish to share any ideas or provide feedback on Religion & Liberty feel free to offer that in the comment section below.
Update: Thanks to Adam Forrest for linking the Grudem interview on the Zondervan blog.
The Wall Street Journal published today a timely, and much needed, reflection by Leon Kass on Calvin Coolidge’s address delivered at the 150th anniversary of the Declaration of Independence in 1926. Kass asks: What is the source of America’s founding ideas, and their “singular combination” in the Declaration?
Many have credited European thinkers, both British and French. Coolidge, citing 17th- and 18th-century sermons and writings of colonial clergy, provides ample evidence that the principles of the Declaration, and especially equality, are of American cultural and religious provenance: “They preached equality because they believed in the fatherhood of God and the brotherhood of man. They justified freedom by the text that we are all created in the divine image, all partakers of the divine spirit.” From this teaching flowed the emerging American rejection of monarchy and our bold embrace of democratic self-government.
Coolidge draws conclusions from his search into the sources. First, the Declaration is a great spiritual document. “Equality, liberty, popular sovereignty, the rights of man . . . are ideals. They have their source and their roots in the religious convictions. . . . Unless the faith of the American people in these religious convictions is to endure, the principles of our Declaration will perish.”
In his speech, Coolidge noted that the idea that a people have a right to choose their own rulers was “not new” in political history. Here’s part of the passage that Kass referenced:
… if these truths to which the Declaration refers have not before been adopted in their combined entirely by national authority, it is a fact that they had been long pondered and often expressed in political speculation. It is generally assumed that French thought had some effect upon our public mind during Revolutionary days. This may have been true. But the principles of our Declaration had been under discussion in the Colonies for nearly two generations before the advent of the French political philosophy that characterized the middle of the eighteenth century. In fact, they come from an earlier date. A very positive echo of what the Dutch had done in 1581, and what the English were preparing to do, appears in the assertion of the Rev. Thomas Hooker, of Connecticut, as early as 1638, when he said in a sermon before the General Court that —
The foundation of authority is laid in the free consent of the people.
The choice of public magistrates belongs to the people by God’s own allowance.
This doctrine found wide acceptance among the nonconformist clergy who later made up the Congregational Church. The great apostle of this movement was the Rev. John Wise, of Massachusetts. He was one of the leaders of the revolt against the royal governor Andross in 1687, for which he suffered imprisonment. He was a liberal in ecclesiastical controversies. He appears to have been familiar with the writings of the political scientist, Samuel Pufendorf, who was born in Saxony in 1632. Wise published a treatise entitled “The Church’s Quarrel Espoused” in 1710, which was amplified in another publication in 1717. In it he dealt with the principles of civil government. His works were reprinted in 1772 and have been declared to have been nothing less than a textbook of liberty for our Revolutionary fathers.
While the written word was the foundation, it is apparent that the spoken word was the vehicle for convincing the people. This came with great force and wide range from the successors of Hooker and Wise. It was carried on with a missionary spirit which did not fail to reach the Scotch-Irish of North Carolina, showing its influence by significantly making that Colony the first to give instructions to its delegates looking to independence. This preaching reached the neighborhood of Thomas Jefferson, who acknowledged that his “best ideas of democracy” had been secured at church meetings.
Read “What Silent Cal Said About the Fourth of July” by Leon Kass in the Wall Street Journal.
Read Coolidge’s Address at the Celebration of the 150th Anniversary of the Declaration of Independence, Philadelphia, Pa. (July 5, 1926).
Ethanol subsidies, once considered a sacred cow, are facing the possibility of being axed from the budget. The Senate cast a deciding vote, 73-27 in repealing the 45 cent per gallon subsidy to refiners for blending gasoline with ethanol, and the 54 cent per gallon tariff on imported ethanol.
Cutting the ethanol subsidy and repealing the tariff still face an uphill battle as it must pass the house and get the signature of President Obama, who has vowed not to fully repeal the subsidy. Supporters of ethanol are fighting harder to preserve the subsidy and tariff, and are now issuing claims that the ethanol subsidy keeps gas prices lower than what they would be if the subsidy wasn’t in place.
Iowa State University released a study arguing that ethanol has helped suppress gasoline prices. It is of no surprise that supporters of the ethanol subsidy and tariff have embraced the study by Iowa State University with open arms and are using it to add weight to their position.
Unfortunately for supporters of the ethanol subsidy, the Institute for Energy Research, released its own study debunking the arguments from Iowa State. While the Institute for Energy Research admits that removing the ethanol subsidy will result in a short-term spike in gasoline prices, they argue that in the long run consumers are better off without the ethanol subsidy–ideally the country would’ve been better off if the subsidy had never existed.
Those who claim that removing the ethanol subsidy and tariff will increase gasoline prices also fail to acknowledge principles of basic market economics. By removing the tariff, the United States is able to import cheaper ethanol from countries like Brazil, which produce the cheaper sugar-based ethanol, thus making ethanol more affordable for consumers. As a result, the market adds a product to compete with gasoline, and through competition, may drive the price of gasoline lower.
The concept of competition driving down prices is explained by Joel Velasco, former chief representative in North America for the Brazilian Sugarcane Industry Association. Velasco argues that competition between corn and sugarcane ethanol will benefit consumers. The principle of competition found in his argument can be applied to competition between gasoline and ethanol as well.
While it may seem like ethanol from Brazil is a perfect solution, there are unintended consequences that must be weighed. Ecology professor at the University of São Paulo in Brazil, Luiz Martinelli, warns of the many problems with Brazilian ethanol in an article published in the Cornell Daily Sun. Martinelli explains that ethanol production pollutes the environment and results cause serious problems:
Ethanol production fosters deforestation in Brazil. Sugarcane needs a well-defined drought season to concentrate sugars in the cane stalk, making the wetter Amazon region less than ideal for growth. Consequently, growers convert increasing areas of land in the transitional area between the cerrado grasslands and the Amazon forests to sugarcane. As a result, the increase may indirectly lead to deforestation as other crops, like soybean, are pushed into the Amazon.
“We don’t have much room for deforestation. If sugarcane causes 1,000 of squared kilometers of deforestation, we’ve set off any savings [of avoided carbon emissions] that we have saved,” emphasized Martinelli.
Such unintended consequences were also articulated by Ray Nothstine on the PowerBlog in 2007 as religious leaders began to express alarm about increasing ethanol production:
Religious leaders are speaking out. In March, Roman Catholic bishops in Brazil warned that a rapid increase in ethanol production based on sugar cane could lead to widespread deforestation, massive relocation of workers and their communities, and harsh working conditions for cane cutters. Analysts predict that Brazil, the world’s largest exporter of ethanol, may increase ethanol production as much as 40 percent in the next four years. “We are going to turn the country into a huge cane (plantation),” said Cardinal Geraldo Majella Agnelo. In Colombia, Christian aid organizations say armed groups are driving peasants off their lands to make way for plantations of palm oil, another biofuel. Acreage dedicated to production of the palm oil tree has more than doubled in the last four years.
Nothstine later explains in “‘Big Corn’ and Unintended Consequences” how corn ethanol will increase food prices, is more costly to produce and transport, and has pollution problems.
If ethanol made from sugarcane gains traction in the United States and other countries, the same questions that have been raised by corn ethanol must also be asked when it comes to sugar-based ethanol. Will we have a problem with unintended consequences? Will sugar ethanol contribute to rising food prices in a manner similar to that of corn ethanol? What effects will sugar ethanol have on the environment, and what are the impacts of deforestation?
Gas prices are beginning to come down, but for many people prices are not falling fast enough.
The pain caused by high gas prices is spread widely, but it is felt intensely on the working poor and the unemployed who are trying to find a job.
A recent story in the Chicago Tribune highlights Alicia Madison, a resident of the Chicago suburbs who is unemployed. Madison is looking for a job, but because of high gas prices she, at times, cannot even afford to go to an interview:
Before a recent job interview, Alicia Madison climbed into her 2001 Ford Explorer and realized her gas tank was empty, just like her bank account.
Unable to afford gas for the 25-mile round trip from her Glen Ellyn home to the Naperville business, Madison was forced to reschedule. She now relies on gas vouchers issued by a nonprofit agency to drive to interviews.
Madison, a certified nursing assistant unemployed three months, is desperate to return to work, but not desperate enough to take a job too far from home with gas prices at record highs.
“I have to be conscious of where I’m looking and how far it’s going to be,” said Madison, 23, a single mother on food stamps. “I don’t want to work just to pay for gas.”
Her dilemma underscores the problem that steep gas prices have created for the unemployed: They need income to fill their tank but can’t afford to take jobs with long commutes.
Some job seekers say they are more selective now, curtailing face-to-face networking and ignoring some opportunities based on the high transportation costs.
As the article also points out, job seekers have to decide if the pay for a potential job is enough for them to make the daily commute. Is it worth working eight or nine hours a day when a good chunk of the earnings goes toward paying for the gas needed to get to work?
The hardships for low income workers are further explained by Greg McBride, Senior Financial Analyst at Bankrate.com. According to McBride, 72 percent of Americans who make less than $50,000 are cutting their discretionary spending. While cutting discretionary spending is what is needed to be a good financial steward when money is tight, McBride explains that higher gas prices hurt economic growth because they cause a decrease in consumer spending.
As Ray Nothstine argues in “High Gas Prices Devastating to Poor”, we should do everything we can to lighten the burden on the poor and lower gas prices. This will aid everyone, but especially those who are the most adversely affected by the high gas prices. One way to lower gas prices is to look no further than the free market, which is articulated again by Nothstine:
While we are bound to labor, 17th century Bible commentator and Presbyterian minister Matthew Henry reminds us, “Let not us, by inordinate care and labor, make our punishment heavier than God has made it; but rather study to lighten our burden.”
Similarly, John Paul II declared, “Besides the earth, man’s principal resource is man himself. His intelligence enables him to discover the earth’s productive potential and the many different ways in which human needs can be satisfied.”
This is good advice. The free market helps to sort out those effective alternatives, encouraging us to drill for oil responsibly at home, and protecting us from costly utopian schemes that drive up energy prices. The market is also our best hope for developing renewable energy technologies that are economically feasible.
Everywhere we look we are facing rising prices. We find them at the gas pumps and now we see them at our supermarkets. Food prices are climbing, and just like gas prices, they are having broadly felt adverse effects on Americans.
The Wall Street Journal sat down with C. Larry Pope, the CEO of Smithfield Foods Inc., the world’s largest pork processor and hog producer by volume, to discuss the rising food prices and how they are affecting his business. Pope attributes the increase in food prices to corn prices and the ethanol industry:
It’s also a business under enormous strain. Some “60 to 70% of the cost of raising a hog is tied up in the grains,” Mr. Pope explains. “The major ingredient is corn, and the secondary ingredient is soybean meal.” Over the last several years, “the cost of corn has gone from a base of $2.40 a bushel to today at $7.40 a bushel, nearly triple what it was just a few years ago.” Which means every product that uses corn has risen, too—including everything from “cereal to soft drinks” and more.
It is also important to note that, while Pope does not go into great detail, he points to the depreciating dollar as playing a role in inflated food prices.
Pope says the majority of his customers will be hurt by rising food prices:
“Maybe to someone in the upper incomes it doesn’t matter what the price of a pound of bacon is, or what the price of a ham, or the price of a pound of pork chops is,” he says. “But for many of the customers we sell to, it really does matter.” Workers can share cars when the price of oil rises, he quips, but “you can’t share your food.”
As food prices rise, what are most people expected to do? Many are on a limited budget and where will they cut back? Increasing food prices may also result in people turning to cheaper less nutritious food. Lora Iannotti, public health expert and professor at Washington University in St. Louis, explains how rising food prices lead to nutritional problems for everyone—especially the most vulnerable:
“During a food price crisis, households moved away from ‘luxury’ food items such as meat, fish and dairy products to poorer quality food,” she says.
Data from nationally representative household budget surveys show that during a food crisis, calorie intake is reduced by an average eight percent from pre-crisis levels, equally affecting rural and urban areas.
“We are particularly concerned for families with young children,” Iannotti says. “When you have a reduction in calories and critical nutrients for kids under 2, there are long term consequences such as stunted growth, cognitive deficits, lower educational attainment, and reduced future productivity.”
Like many other critics of the ethanol subsidy, Pope calls for an end to these subsidies. That would be a significant aid to reigning in the high food prices:
…Mr. Pope says, get rid of the ethanol subsidies and the tariff. “I am in competition with the government and the oil industry,” he says. “It’s not fair.” Smithfield’s economists estimate corn prices would fall by a dollar a bushel if ethanol blending wasn’t subsidized. “Even the announcement that it is going away would see the price of corn go down, which would translate very quickly into reduced meat prices in the meat case,” he says. Imagine what would happen if the mandate and tariff were eliminated, too.
Gary Wolfram, economics and public policy professor at Hillsdale College, offers a similar message. Wolfram points to the sharp increase in food prices, the inefficiency of corn ethanol, and calls for the end of ethanol subsidies:
World food prices are on the rise. In the United States, retail food prices rose .6 percent in February and are up 2.3 percent from February of 2010, the highest 12-month increase since May 2009. Part of the reason for the revolutionary fervor in the Middle East is rising food prices. Yet our government provides a $6 billion per year subsidy to turn the U.S. corn crop into gasoline. Ever gallon of ethanol refined into gasoline receives a 45-cent per gallon subsidy.
But this inefficient use of corn does more than just cost taxpayers’ money. It is part of the problem of increasing food prices. Ethanol makes up about 8 percent of U.S. fuel for vehicles, but uses up about 40 percent of the nation’s corn crop. The Economist estimates that if all the American corn crop that goes into ethanol were used as food, global corn food supplies would increase by 14 percent.
And as an article in Investors.com argues, ethanol has failed to achieve many of the goals that its proponents claim it would achieve.
Acton’s criticism of the ethanol subsidy is not new. In 2008, Ray Nothstine was interviewed and articulated the moral problems with the ethanol subsidy, the unintended consequences, and inefficiencies of ethanol that are now coming to light. Readers can listen to the interview here.
Rising food and gasoline prices are causing people to bear economic hardships, and, with limited household budgets, these trends cannot continue. Many leaders and economists are correct in calling for a reevaluation of our ethanol policy.
The blame game in Washington is heating up on skyrocketing gas prices. Republicans are criticized as being in the back pocket of the oil industry and partaking in crony capitalism. The Democrat Congressional Campaign Committee is even cashing in by hosting a fundraiser that is based on what has been the House Republicans “decade long relationship of protecting Big Oil taxpayer giveaways, speculations and price gouging…” However blame is also placed on Democrats, with accusations of placing barriers to prohibit domestic drilling. The debate has also centered around how we can be better environmental stewards. We may find ourselves asking questions such as whether green energy promotes environmental stewardship, and if oil drilling results in a dramatic harm to the environment?
An article published by the Washington Examiner contains disturbing numbers that will not be received very positively. Oil production in the Gulf was lower than predicated by the Energy Information Administration (EIA); however, imports were up:
While oil production in the Gulf is down more than 10% from April 2010 estimates, net crude oil imports are up 5%. At $83 dollars a barrel (the approximate average price of oil in the fourth quarter of 2010) that means Obama’s oil drilling permatorium increased American dependence on foreign oil by about $1.8 billion dollars in the fourth quarter of last year alone. The numbers only get worse as Obama’s permitorium further cuts into production. A Wood Mackenzie study predicts that for all of 2011 the permitorium will result in the loss this year of about 375,000 barrels of oil a day.
More imported oil also means higher prices at the pumps. The EIA explains: “Retail gasoline prices tend to be higher the farther it is sold from the source of supply.” It costs more money to transport oil to your gas station from the Persian Gulf than from the Gulf of Mexico.
On April 26th, President Obama wrote a letter to Congress calling for “immediate action to eliminate unwarranted tax breaks for the oil and gas industry, and to use those dollars to invest in clean energy to reduce our dependence on foreign oil.” The tax breaks President Obama is asking to be removed are worth $4 billion per year. This isn’t the president’s first call to action. His 2012 budget proposal also calls for the removal of the “subsidies.” But some have pointed out that the oil industry does not receive direct subsidy payments in the way that some farmers do. The president’s proposal specifically states:
Eliminates Inefficient Fossil Fuel Subsidies. Consistent with the Administration’s Government-wide effort to identify areas for savings, the Budget eliminates inefficient fossil fuel subsidies that impede investment in clean energy sources and undermine efforts to address the threat of climate change. Approximately $4 billion per year in tax subsidies to oil, gas, and other fossil fuel producers are proposed for repeal.
Here at the Acton Institute we have spoken in opposition to true subsidies, such as subsidized farming (articles can be found here, here, and here) and health care policy (a related article can be found here). In the past we have articulate the problems with subsidization. The language in President Obama’s budget proposal appears to be vague and does not specify where the oil industry will no longer be, in his words, subsidized. Is it in drilling? Does it affect gas prices? Ray Nothstine notes in his commentary, “High Gas Prices are Devastating to Poor” our moral obligation to the vulnerable and how the high gas prices are affecting them. With gas prices continuing to climb precautions should be taken to prevent even higher prices.
Brian Johnson, the American Petroleum Institute’s senior tax policy advisor, provides insight on the proposal in the president’s 2012 budget. Johnson explains that the president is proposing to remove the intangible drilling cost provision, which is the oil industry’s ability to deduct drilling “costs associated with labor, architecture, design and engineering; basically the building of an oil rig, a platform or any structure that allows the industry to get into the ground and find oil or natural gas.” Johnson claims this process helps in planning for the next stage of development and construction. Furthermore, Johnson claims the oil industry is already paying its fair share in taxes with an income tax rate at 48 percent. Whereas other S&P Industrials average a 24 percent effective tax rate. Stephen Comstock, also from API, responded to President Obama’s State of the Union Address in January, articulating problems with the president’s call to end subsidies for the oil industry.
While the call to end the oil subsidies is being criticized by some, others are supporting such an action. Bill Becker, a Senior Associate with Third Generation Environmentalism and an energy and climate specialist at Natural Capitalism Solutions, argues the subsidies place the United States at a competitive disadvantage to China and India in the competition to champion alternative energy:
If we are looking for ways to chip away at the budget deficit, to keep America competitive and to use market-based mechanisms to build a competitive clean energy economy, then subsidy reform should be near the top of the list.
Think of it this way: Imagine an Olympic marathon in which the U.S. team has to run on a steep and continuous uphill slope, while the teams from China and India run on a level track. That’s what “winning the future” will be like for the United States if we keep our perverse energy policies. Direct and indirect taxpayer support for fossil energy, which far exceeds government support for emerging green energy technologies, almost certainly makes winning the future a futile race.
Becker also cites a report by the Government Accountability Office that claims “taxpayers are losing tens of billions of dollars in royalty payments in part because the Department of Interior doesn’t have sufficient capacity to monitor oil and gas production on public lands.”
In his letter address to Congress, the president calls to reinvest the $4 billion per year that the oil companies receive in subsidies into clean energy. The problem with current alternative energies is they are inefficient, not cost effective, and cause many unintended consequences (related articles on the inefficiency and unintended consequences of various alternative energies can be found here, here, here, and here).
Yes, we will need to develop good alternatives to oil over the long haul, but spending money on energy sources that are not effective is not a wise investment or a sign of being good financial stewards. If the tax provision and subsidies for the oil companies are to be cut, and taking into account the budget crisis the United States is currently facing, it may better serve the country to not reinvest the money and cut it out of the budget completely.