Policy

Published on May 8th, 2008 | by Timothy B. Hurst

6

Consumer-First Energy Act of 2008 Lacks Support

dreamstime_capitol_night_506_195.jpgSix Democratic Senators joined together on Wednesday to announce a comprehensive energy bill that would tax windfall profits and “force” investment in renewable energy.

Among other things, the Consumer-First Energy Act of 2008 would roll back tax breaks for oil companies and invest the money in renewable energy development and energy efficiency technology. It also would create a windfall profit tax on oil companies failing to invest in increased capacity and renewable energy resources.

According to one of the bill’s co-sponsors, Sen. Bernie Sanders (Ind.-VT):

“The bottom line is that at a time when this country faces a major crisis in terms of the price of oil, when many working families in our state and all over this country are hurting, I think we have brought forth a comprehensive piece of legislation, which begins to attack that problem with the result of lowering the price of oil.”

Reaction Less than Stellar

Thus far, reaction across the blogosphere is just as what might be expected. Dave Roberts at Grist makes no bones about his skepticism and calls the move a “counter-pander.” He writes:

“Look: you can’t promise Americans you’re going to lower the price of gas. It’s a lie, and they’re going to notice when prices don’t go down. It might help you tactically in the short-term, but in the long-term it’s going to come back and bite you on the ass. Gas prices are going to keep going up, and good leadership begins with honesty.”

It’s not just bloggers who oppose the Consumer-First Energy Act, the New York Mercantile Exchange (NYMEX) released a statement yesterday decrying the windfall profits title of the bill as “misguided.” According to the statement:

“Regrettably, this proposed margin provision, which would push trading from regulated and transparent markets to unregulated and nontransparent markets, would constitute a significant step backward in transparency and market integrity.”

The problem I see with this legislation is that it does nothing to address the structural problems that are causing a rise in oil prices. Simply put, the only way for us to even try and stabilize oil prices is to use less. Using less would require major investments in public transportation, the kind of investments the feds are very skeptical of providing.

Some of the components of the Consumer-First Energy Act are as follows (adapted from bill summary – available here)

  • A windfall profit tax for oil companies – A 25 percent windfall profits tax on companies that fail to invest in increased capacity and renewable energy sources. This provision would not apply to the profits those companies reinvested in clean, affordable, domestically produced renewable fuels, expanding refinery capacity and utilization, or renewable electricity production.
  • Stop speculation in the oil markets - First, the bill prevents traders of U.S. crude oil from routing transactions through off-shore markets to evade speculative limits and sets forth reporting requirements. The bill also requires the Commodities Futures Trading Commission to set a substantial increase in the margin requirement for all oil futures trades, contracts or transactions.
  • Roll back tax breaks for oil companies and invest the money in renewable energy - Bill would roll back $17 billion in tax breaks for oil and gas companies and instead invest those taxpayer dollars to improve consumer price protection, renewable energy development and energy efficiency echnology through a designated Energy Independence and Security Trust Fund.
  • Stop government purchases of oil for the Strategic Petroleum until the price of oil drops to $75 a barrel or less - The Consumer-First Energy Act calls for suspending through December 2008 oil purchases for the SPR. Filling could resume when the 90 day average price of crude oil recedes to $75 or less.
  • Protect consumers from price gouging - Give the President the authority to declare an energy emergency should there be a shortage, disruption or significant pricing anomalies in the oil market.

See Also:

Associated Press

Photo: © Tommyschultz | Dreamstime.com




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About the Author

is the founder of ecopolitology and the executive editor at LiveOAK Media, a media network about the politics of energy and the environment, green business, cleantech, and green living. When not reading, writing, thinking or talking about environmental politics with anyone who will listen, Tim spends his time skiing in Colorado's high country, hiking with his dog, and getting dirty in his vegetable garden.



6 Responses to Consumer-First Energy Act of 2008 Lacks Support

  1. EC says:

    Most people I know support this bill 100% "Blogosphere?" WHO are writing these comments? Traders? Oil speculators? People who have a vested interest in keeping oil at high speculation at the expense of the American public. Stop messing around and PASS THE BILL!!

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  3. Phillip Huggan says:

    By the NYMEX logic subprime mortgages should have been offered to cats and dogs and NYMEX should be trading unregulated weapons-grade plutonium contracts.

    Kind of disappointing to see B.Obama not vote in favour of the bill. Though he has stated his support for the windfall profits oil tax proposal, and the absentee votes wouldn't have totalled enough to pass the Bill.

    Consumer culture (like suburban sprawl) and insufficient 1990's oil refinery construction are the main reasons oil is priced high. The Dutch pay $10/gallon gasoline yet still have a higher standard-of-living than Americans. I wish addressing the human extinction and national security threats posed by global warming wasn't conflated with angst over have to buy a dorky looking car. I wonder how many extra months of longevity Amsterdam's bicycle culture adds over LA's fossil car culture?

  4. J. Wallace says:

    Taking out the windfall profit tax for oil companies would alleviate the controversy. Why put a burden on oil companies, this would only cause less production and increase prices on oil produced by American companies, giving foreign companies a boost.

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