While I fully support alternative fuels and energy independence, I think that this particular bill might be a huge mistake. At this point, time will only tell.
If you think about it, how are car companies going to be able to manufacture cars with higher fuel economy standards without increasing the manufacturing price? It might "save" money on fuels twenty years from now, but the problem has always been "at what cost" are we saving? Hopefully, Democrats have not leapt in head first into the water on this one like they did with MTBE and clean air in 1992.
I'm not holding my breath on this one.
API expresses serious concern over legislation
December 6, 2007
Dear Senator:
As you prepare to consider the House passed HR6, we urge you to reject this legislation, which could result in serious harm to our economy.
Over the years, the keystone of America’s oil and natural gas industry has been its reliability. Americans have come to rely on our industry to be there for them with the energy that allows them to get where they need to go, to keep their homes comfortable, to transport their goods, and to fuel the nation’s economic engine. Were the Senate to follow in the House’s footsteps, the ability of American consumers to get the energy they need, when they need it, could be profoundly impacted.
At a time of tight supply and demand, the legislation under consideration would do absolutely nothing to bring to the marketplace one more gallon of gasoline or diesel or one more cubic foot of natural gas. In fact, the opposite may be true. The large tax increases the bill would impose on the industry would discourage companies from investing in increased U.S. oil and natural gas production and expanded refinery capacity – and it would make us less competitive worldwide at a time when the competition for the world’s energy resources is intensifying. Further, it would tax away the incentives that have allowed our companies to keep pace with the rising demand in spite of the numerous restrictions – legislative and regulatory – that keep many of the areas rich with energy sources “off limits” to exploration and production.
As the National Taxpayers Union has noted, similar taxes in the past have “simply reduced” domestic oil production. Reducing domestic production flies in the face of government projections that America’s energy demand will increase 30 percent over the next 22 years and that we will need all sources of energy, including oil and natural gas, to meet the country’s needs.
The biofuels mandate in the bill will require huge volumes of a variety of advanced biofuels, betting on yettobeachieved technological breakthroughs to meet the specific, yearbyyear usage requirements. Our industry recognizes the importance of having a balanced energy mix and the role that alternative fuels should play in that balance. We helped craft the renewable fuels standards (RFS) in earlier legislation, and our refineries are, in fact, the largest consumers of ethanol. The current mandate recognizes the importance of letting the market determine what fuels – and how much of them – best serve consumer needs. This legislation would take away that function from market forces and give it to government, letting it determine the winners and losers among fuel types. Additionally, the renewable fuels title sets up a new crazyquilt of boutique biofuels that could strain, indeed could break, the nation's fuel supply system.
For these and other reasons, I strongly urge you to vote “No” on this legislation. It is not too late to start over and produce commonsense legislation.
Red Cavaney
President and Chief Executive Officer of the API
UPDATE: Energy Bill Responds To President's "Twenty In Ten" Vision
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