The former state comptroller distributed an op-ed piece on Thursday with his proposals on how to increase domestic energy production. His approach is to reduce or eliminate taxes for domestic production and to impose taxes on foreign oil. I wouldn’t count on his being Secretary of Energy in the Obama administration.
One of the great problems with American energy policy is the government. Government usually makes poor decisions on whom to favor in energy production here in America, just as governments in non-democracies make poor decisions and cause supply and demand disruptions. The secret to America’s economic success has never been government decisions on energy production or for that matter, any other kind of production. The real secret to American economic prosperity has always been free markets. The best that governments should do is lessen restrictions on energy and allow markets to “produce to demand” with reasonable regulations. In that light, if you want more of something, tax it less. If you want less, tax it more. We need more energy and government should not decide what kind of energy. The markets of the American people should decide.
An energy policy that would produce more domestic energy should include the complete repeal of all corporate income taxes for all new domestic energy production from this day forward. That would include: new solar plants, new windmills, new geothermal plants, new nuclear plants, new oil and gas wells, or fields that move to secondary and tertiary recovery, and any other type of saleable energy. This will not affect the existing energy tax base, as it only exempts new domestic energy production.
Secondly, cut the capital gains tax from 15% to 7.5% for investments in new domestic energy. History has shown that capital gains cuts produce more revenue for government, not less. These two actions would unleash the economic power of America towards solving our energy crisis by allowing Americans to do what they do best… produce. This country has never conserved its way to greatness, but many times we have produced our way to greatness.
Whether America likes it or not, oil and gas is going to be here to bridge us into alternative energy. Not opening up areas like the Outer Continental Shelf to drilling is not smart. Unless you want to continue going hat-in-hand to OPEC, we must maximize our own energy.
What do we want less of? Foreign Oil! Give the President the option to impose oil import fees on crude and refined products to use at his discretion. If enacted, it would give an advantage to domestic production, and the next time a President goes to Saudi Arabia with a request, he’ll have more in his hand than his hat. Much has been made of speculation in oil futures. Of course there is speculation and that speculation ought to be reigned in, but the real cause of the speculation is loose monetary policy by the Federal Reserve that has resulted in a huge amount of liquidity sloshing around the world that’s looking for an investment. So if we want to assign blame for that, Alan Greenspan would be a good place to start. However, if you want to solve the problem instead of assigning blame, the tax incentives I mentioned are the best place to start, because then all of that money sloshing around the world would invest in American energy production of all kinds. With these tax policies the free markets of America will amaze the world with our energy production, including all forms of alternative energy, and the laws of supply and demand will bring us adequate energy at a fair price.