Tuesday, September 16, 2008

Energy Subsidy Shell Games

Now that Congress is back in session, and working on yet another energy package, Big Wind, Big Sun, and Big Bio are lining up at the trough for more federal handouts, to be paid with higher taxes on Big Oil, according to this Associated Press report. This really means that the "renewable" subsidies come courtesy of gasoline users like you and me, since oil and gas companies don't eat these costs, but pass them on to consumers in the form of higher prices.

Some folks argue that because Big Oil benefits from subsidies of one form or another (depending on how one defines the term), it's only fair that these "cleaner" alternatives get government handouts as well. But instead of compounding our energy policy errors, I would argue that we should eliminate all energy subsidies, across the board, to "old" and "new" energy companies alike, and let the best energy options prevail, responding to market forces and consumer choice.

There's no more virtue in giving corporate welfare to Big Wind or Big Sun than in giving it to Big Oil. In either case, the "Bigs" make out like bandits while the consumers and taxpayers get screwed.


Winston said...

Since these "me, too" subsidies wind up as (tiny) pale, faint echoes of what the big boys get, those industries should agree with you. Far as I can tell, there are no believers in the free market, either in the energy industry or among their federal/congressional sponsors. A few questions: is this just a pipedream, or do you think there's any chance of substantially changing the game; has anyone done any serious work along these lines; and how would you lay out short-term and mid-term goals for such an approach?

Sean Paige said...

It's just a pipe dream, Winston, until we get some politicians who can say "no" and the American taxpayers recognize that they are the ultimate victims and rise up in revolt. The short-term approach would have been for Congress to have this week declined to extend the subsidies for alternative energy, or at least include a phase-out provision, putting this new class of corporate welfare recipients on notice that they either need to make it work in the market, or give it up.

Thanks for reading the blog, and for your input.

Winston said...

But why limit it? Seems All-American for them to line up at the trough, rat-sized, getting a few drops next to the hogs. I was responding to your "no subsidies" call, so that's not really a serious approach, I guess.