The Journal weighs in on the Gang of However Many It Is Now compromise bill:
. . . . The problem is that the proposal still doesn’t open drilling enough, and it raises taxes and subsidies in the bargain. Today 85% of the Outer Continental Shelf is off limits for drilling. The Gang of 10 would only reduce that to 75%, according to the pro-exploration Institute for Energy Research. It also allows drilling only outside of 50 miles and only if the states allow it. That arbitrary 50-mile buffer zone is more than three times farther than necessary to be out of sight from shore. It also walls off many of the most promising and least costly drilling sites, such as the Gulf of Mexico’s Destin Dome, which is some 25 miles offshore of Florida.
The gang proposal also does nothing to open up more of Alaska, and nothing to remove the ban on exploring oil shale in states like Colorado and Utah. And some Democrats in Congress are insisting that they will go along only if it also includes a permanent ban on drilling elsewhere on the Outer Continental Shelf. When even officials in Santa Barbara, California, have endorsed offshore drilling, this compromise amounts to a premature surrender.
The gang would also impose about $86 billion in new taxes, in large part on oil and gas companies through higher royalty fees and the loss of benefits available to other manufacturers. These new taxes are to be levied on the same companies that paid more than $100 billion in taxes last year, and they are of course the firms that would have to invest the billions of dollars needed to exploit the new offshore resources.
Naturally, the Members propose to take that $86 billion . . . and spend it. They propose to ladle it out in subsidies for “clean coal,” electric cars, nuclear energy research, biofuels, cellulosic ethanol and solar and wind power. Most of these “alternative” fuels are already heavily subsidized, yet they only supply 7% of America’s energy. Wind and solar already receive almost 100 times more in subsidies than oil and natural gas per unit of energy produced, and they still can’t compete on commercial terms.
The main thrust of these “investments” is to turn 85% of the U.S. auto fleet into nonoil engines in 20 years. This isn’t even remotely plausible, though the Members would nonetheless provide Detroit $7.5 billion to “retool” to make electric or alternative-fuel cars; $7.5 billion for research on battery-operated cars; and another $5 billion for a $7,500 tax credit for Americans who purchase these “green” cars. If Congress gets much more generous, it might as well promise a hybrid in every garage.
The Gang of 10 proposal is better than current law, but its main purpose is to provide political cover in an election year. Democrats are rushing to embrace it so they can claim to have done something to expand U.S. energy supply, even as voters lose track of the details. The gang is now up to 20 or so in the Senate, and even House Speaker Nancy Pelosi is drafting legislation based on it, which should tell you something about its substance. The Senate Republicans who co-wrote it must not mind being in the minority, because they’ve made that prospect more likely in November.