Rahall proposal and Waxman-Markey bill aim to increase energy costs

West Virginia Democrat Rep. Nick J. Rahall II, chairman of the House Natural Resources Committee, has proposed a plan to sharply increase the cost of drilling leases that the federal government sells to oil and gas companies who want to search federal lands for oil and gas supplies. His plan would increase royalty rates by 50 percent and would cut the lease periods to five years from the current 10 years or more.

Mr. Rahall’s plan comes as crude oil prices rose from a recent low of $43 to nearly $70 a barrel as the summer vacation season approaches, and foreign sources raise prices in anticipation of increased demand for crude oil.

His recommendation would be part of a massive overhaul of the Interior Department’s $22 billion oil and gas drilling program, and appears to fit in with the thinking of Interior Secretary Ken Salazar, who is currently reviewing the Department’s leasing program. And, according to Sharon Buccino, director of land and wildlife programs at the Natural Resources Defense Council, the Rahall proposal fits into the efforts of the Obama administration and congressional Democrats to drive energy production toward “green” sources and away from conventional sources. "This is a key part of moving that agenda forward," she said.

In combination with the Waxman-Markey cap-and-trade bill that is working its way through the House, the Rahall proposal will cause substantial harm to domestic oil and natural gas production at a time when production of domestic sources should be increased to reduce dependence on foreign countries who really don’t like us much, and also to save Americans from the higher energy costs these measures will cause.

An analysis by the Heritage Foundation notes that “the impact of Waxman-Markey on the next generation of families is $1,500 per year in higher energy costs, over $100,000 of additional federal debt, … a weaker economy, and more unemployment.”

Oil producers object, as well. American Petroleum Institute (API) spokesperson Jane Van Ryan said, “We’re particularly concerned about the way the emissions allowances are being handled. Waxman-Markey provides only two percent of emissions allowances to refiners, but it holds them responsible for 44 percent of carbon emissions. Under the bill, U.S. refiners would have to pay for the carbon emissions from their own facilities as well as all of the cars, trucks, buses, airplanes, etc. that operate in the United States. Utilities get nearly 44 percent of all allowances, select ‘energy-intensive’ industries get 15 percent, and local natural gas distributors receive nine percent,” she said. “This isn’t an equitable way to parcel out the emissions allowances.”

Ms. Van Ryan went on to say that under Waxman-Markey overseas refiners will have a competitive advantage “making the U.S. less energy secure and more reliant on imports.”

API President Jack Gerard said in a statement that an “independent study projects … up to 2.7 million net jobs lost annually, even with new green jobs created. According to one of these reports, an average family will pay … 74 percent more for gasoline. Today, that would mean gasoline prices above $4.00 a gallon, an increase nearly equivalent to a ten-fold rise in the federal gasoline tax.”

The Heritage analysis asks if all of this economic pain is “justified by gains against global warming? Waxman-Markey raises energy prices by 55-90 percent. These higher energy prices push unemployment up by 1,105,000 jobs on average, with peaks over 2,479,000. In aggregate, GDP drops by over $9.6 trillion. The next generation will inherit a federal debt pumped up by $29,150 per person. All of these costs accrue in the first 25 years of a 90-year program that, as calculated by climatologists, will lower temperatures by only hundredths of a degree in 2050 and no more than two-tenths of a degree at the end of the century.”

It doesn’t take much imagination to see these measures as efforts to force our economy out of dependable, abundant and relatively inexpensive energy sources like coal, oil and natural gas, not through a process of natural development and gradual implementation of “green,” renewable energy sources to replace fossil fuels, but prematurely and unnaturally through ill-conceived environmental legislation.

And, apparently neither the Obama administration, the Congress nor the environmentalists give two hoots how much it will cost average Americans, or how much damage is done to the nation’s economy in the process.

They follow this course despite the desire of most Americans to increase domestic energy exploration, not reduce it. A poll conducted by Harris Interactive found that 61 percent of Americans who voted in the 2008 presidential election support access to offshore oil and natural gas resources, while only 26 percent opposed it.

Furthermore, one wonders why Mr. Rahall, who represents a state whose economy relies heavily on the coal industry which, like oil and natural gas, is under attack from the environmental lobby and the “climate change” scaremongers, appears to be more interested in responding to the over-wrought cries of the environmentalists than in trying to protect his state from the negative economic effects of the environmental bills that will hurt the coal industry and his state’s economy.

Cross-posted from Observations