Monday, September 22, 2008

Comprehensive American Energy Security and Taxpayer Protection Act

It was overshadowed by the recent problems on Wall Street, but your congress critters passed the Comprehensive American Energy Security and Taxpayer Protection Act last week. It’s now on its way to the Senate. The Dims want you to believe that it provides a basis for an energy policy. Lets take a look.....

It purports to open more offshore areas to drilling. The gotcha is that these areas must be 100 miles or more offshore. There is still no drilling allowed within 50 miles of the shore and permission from the coastal State is required to drill between 50 and 100 miles offshore. And the Eastern Gulf of Mexico, which has the best potential, is still entirely off limits (thank you, Florida). The areas opened up will be in deep water and will be expensive to develop. They won’t be attractive to oil companies. And the states have no incentive to allow drilling off their coast because they will not get a share of any oil revenues.

It eliminates a royalty relief provision that was enacted several years ago to provide incentive to develop deep water and drilling for deep gas. It means the government is reneging on an agreement they made with industry several years ago. If there is one thing oil companies do not like, it’s a country that changes their agreements on a whim. It puts the USA on the same level as a third world dictatorship. Eliminating royalty relief will stifle high-risk, high cost developments in the Gulf of Mexico.

It mandates that 15% of electricity must be generated by renewable means by 2020. This sounds like a good idea, but who is going to pay if the electricity you get from wind farms costs more. Ummmmm, you!

It requires selling oil from the Strategic Petroleum Reserve to reduce the price of gasoline. Those of us who sat in gas lines in the 70’s remember that the SPR was built to provide a reserve of oil that could be used in times of national emergency (say, a war, for example) when certain foreign producers may not want to sell oil to us. It was not to be used to manipulate the price at the pump. The word “Strategic” should be a clue.

Oil companies have a choice where they explore for oil. They can easily shift their money to overseas opportunities where they will be welcomed. If you like the idea of more jobs going overseas, increasing our dependence on foreign oil and higher cost electricity, then urge your Senator to vote for this bill. If you want energy independence from foreign imports, tell them to vote against this bill.

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