Energy Bill rewards the fattest cats

 

As you may have noticed, gasoline costs more than of yore. Some basic economics: Gasoline is a manufactured good. Its price depends in part on the price of its basic commodity, in this case crude oil. It costs more than of yore, as does natural gas.

More basic economics: The price of crude oil and natural gas is high because the demand for it has risen sharply, while the supply (remember these italicized terms; they will be on the exam) has barely been inching up, perhaps because so much of the stuff that's easy to pump has been pumped.

In a market economy, when demand goes up faster than supply, the price rises. Despite public grumbling, this is good; it's the way the system is supposed to work because high prices create an incentive for more production, thereby increasing the supply, thereby bringing down the price, until a new equilibrium is reached.

The above-described market economy is also known as free enterprise, or, more baldly, capitalism. Though political liberals approve of it, or they would not be liberals, but socialists — quite a different category — conservatives really dig it.

These conservatives — as they call themselves — are in charge these days. So they could and did create an energy policy. Lucky them. The system was working according to their ideology. High prices were creating incentives for oil and gas firms to increase supply. The government didn't have to do much of anything, which is just what conservatives love, though it did speed up oil and gas exploration on public lands.

Nonetheless, it cut the taxes of the oil and gas companies by several billion dollars. Then it cut the taxes of coal and nuclear power companies that were also doing well, because the price of one fuel influences the price of others.

The stated reason for these tax reductions was to provide an incentive for the companies to produce more. But… I hear you sputtering, according to the rules of capitalist economies, didn't those high prices already provide ample incentive to produce more? So why — you may still be sputtering here — also cut their taxes and exacerbate the federal budget deficit, which conservatives are supposed to hate?

You pass the course. You have figured out the truth about the Energy Bill about to become law. (It is short of final Senate passage as of this writing, but its tax provisions were essentially set in the Budget Bill, which has passed). The ideology behind it is not conservatism.

A conservative energy policy would be market-oriented. Yes, this might include using tax breaks to create incentives not already provided by the market — for wind and solar power, for instance, or for getting folks to use less energy.

Such tax incentives are in the bill. About $400 million worth over the 10-year period of the legislation. But that pales beside the $7.6 billion in incentives for producers that did not need them.

So, if not conservatism, what ought one call the ideology underlying this strange bill? The standard liberal answer is that it is no ideology at all, more a legal corruption in which Republican politicians reward their friends and contributors.

There is some evidence to support this contention. One of the last decisions the House of Representatives made on the bill was to keep a provision protecting the makers of a gasoline additive called MTBE from lawsuits, even though MTBE has polluted drinking water in 29 states. And, wouldn't you know, the companies that make the stuff have given more than a million bucks to Republican candidates.

But there is no evidence that Republicans are more beholden to their big contributors than Democrats. What seems more likely is that the new breed of conservatives believes in the right of certain people — their rich and powerful friends — to be immune from the restrictions mere mortals face. Rather than have these folks break the law, the politicians change the laws so that what was once criminal or actionable becomes legal and proper.

None dare call it kleptocracy. But unlike the Russian version, American kleptocracy stems not from venality but from ideology, a sort of neo-Nietzschean and anti-egalitarianism holding that the successful are superior; therefore, they deserve special privileges.

Besides, like everyone else, the new conservatives, having defeated their opponents, enjoy kicking them when they're down. The fervor for drilling in the Arctic National Wildlife Refuge, even though the oil industry isn't convinced there's much goop down there, stems at least in part from the joy of humiliating the other guys.

Jon Margolis is a contributor to Writers on the Range, a service of High Country News (hcn.org). A veteran political reporter, he writes about Washington, D.C., from Barton, Vermont.

Note: the opinions expressed in this column are those of the writer and do not necessarily reflect those of High Country News, its board or staff. If you'd like to share an opinion piece of your own, please write Betsy Marston at betsym@hcn.org.