Consumer-First Energy Act of 2008 Lacks Support
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.
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