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Thread: An American Energy Initiative for the 21st Century - Part II

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    Default An American Energy Initiative for the 21st Century - Part II

    As noted yesterday in Part I, this initiative and the various proposals are designed to address America’s long term energy needs.

    While Part I was derided and criticized by Liberals, I fully anticipate Part II will likewise be lambasted by Conservatives. The bottom line, however, is for the good of us all, regardless of our political persuasions, our views on the environment and oil corporations; we must quit talking past each other and begin talking to each other. The energy crisis affects us all; Democrats, Republicans and Independents alike. I’ll not be so Pollyannaish as to lament why can’t we all just get along, but in the end that is precisely what is going to be needed if we are to overcome this challenge to our nation, our economic security and our way of life.

    And with no further adieu, Part II.

    -Increased federal gas taxes: Incremental gas tax increases should be enacted to A) gradually diminish demand and encourage the addition of more fuel efficient and flex fuel vehicles to the national fleet, B) provide funding for our dire infrastructure needs and C) underwrite tax incentives in other areas of the energy initiative.

    -Accelerated increases in Corporate Average Fuel Economy (CAFÉ) standards: The deadline for increasing CAFÉ standards should be accelerated to three to five years from the passage of the comprehensive energy initiative. While automakers would still be free to produce vehicles that do not meet the new CAFÉ standards, they would pay a surcharge on each non-industrial unit that does not meet the new standards. With those surcharges naturally passed on to the customer, the end result will steer consumers to purchase more fuel efficient models.

    -Consumer tax credits for hybrid vehicles: Tax credits that allow consumers to recoup the annual cost of the maintenance of hybrid vehicles as well as a third of the vehicle’s purchase price over a five year period would be used to accelerate the move to a more diversified and efficient national auto fleet.

    -Hybrid infrastructure expansion: If hybrid vehicles are to become a significant part of the nation’s auto fleet, they must have an infrastructure network that supports their use. Gas station owners would be allowed to write off the expense of adding equipment that supports hybrids over a three year period.

    -Increased regulation and oversight of energy futures markets: With speculation and excess global liquidity a major force in the spring run up of oil prices, it is clear that enhanced regulation and oversight is in order. As part of that, futures margins should be increased from 5 percent of a contract’s bid price to 50 percent which is the standard for stock options. By forcing players in the market to seriously insure their positions and risk considerable amounts of capital it will encourage them to act more responsibly and resist taking purely speculative action.

    In addition to this, enhanced regulation and oversight will provide an active and aggressive defense against market manipulation and collusion.

    -Creation of the American Energy Innovation Awards program: Picking and choosing who the winners and losers are in the marketplace and who is most worthy of research funding often becomes mired in partisan and geographic politics. In order to minimize this negative force, the American Energy Innovation Awards program would create multi-million dollar tax-free prizes that would be awarded to firms, institutions and individuals that design, develop and perfect commercially exploitable products that enhance America’s energy use and efficiency. Based on the X-Prize model of the commercial space industry, the AEIA would provide concrete, uncomplicated standards and incentives for private development of cutting edge energy-related technologies, services and goods.

    For example, a tax-free prize of 50 million dollars could be offered for the first mass producible battery-powered mid-size vehicle that can travel 500 miles on a single overnight charge. Similar awards could be granted for sustained commercial tidal generated electrical systems and hybrid heavy industrial vehicles like tractor trailers and construction equipment.

    In addition to the cash awards element, the AEIA would also establish a scholarship fund that would encourage the study of petroleum engineering, geology and energy-related sciences at both the undergraduate and graduate levels. With the ranks of these critical professionals diminishing due to retirement, the energy industry and our national security depend on an ample and well-trained pool of available talent to replace them.

    -Increased funding for the Advanced Research Project Agency – Energy (ARPA-E): While the AEIA program will provide substantial incentives for independent research and development, ARPA-E is focused on the more traditional model of government funded research grants and coordination. Having produced significant developments in the past, this model should be retained with a substantial funding increase directed towards expanding the breadth and depth of its projects.

    ARPA-E is the logical venue through which government works on projects such as algae biomass and other currently experimental and theoretical processes and proposals. Furthermore, it should play the primary role of serving as the intermediary between fledgling private sector ventures and governmental agencies. With the government serving as the primary client and consumer initially, such ventures would be provided the financial lift and stability necessary for expanding to greater commercial viability and long term societal adoption.

    -Passage of a tariff on imported oil: In order to pay for expanded funding for ARPA-E and the AEIA, a 2 percent tariff on imported oil would be imposed. At $100 a barrel, the tariff would generate in excess of $8.7 billion a year. Should Congress and the President elect to expand the areas funded by the tariff, one of 3 percent would generate revenues in excess of $13.1 billion a year at $100 a barrel.

    By imposing an oil tariff, Americans would in essence require oil producers to fund research geared towards energy efficiency and decreasing oil imports.

    -Establishment of the Western Hemispheric Energy Cooperation Council: In order to encourage greater dialogue and cooperation between both producers and consumers of energy in the Western Hemisphere, the United States would propose the establishment of the Western Hemispheric Energy Cooperation Council. The WHECC would allow for greater coordination of hemispheric energy policies and would encourage members to work closely with their neighbors to maintain stability for the region’s energy supply.

    One of the primary goals of the WHECC would be to orient Brazil and its burgeoning oil industry towards regional considerations and away from potentially joining OPEC. Accordingly, members of the WHECC would be granted an exemption from the tariff on imported oil.

    This is by no means the Holy Grail, Ten Commandments or a silver bullet. To portray it as such would be an exercise in delusional arrogance. However, it is offered as a starting point; a platform to jump off into debate and discussion.

    It is a hybrid proposal in that it incorporates market-oriented initiatives as well as expanded governmental involvement and oversight in various energy-related sectors. It increases taxes as well as loosens regulations. It provides for expansive incentives and punitive penalties. Accordingly, it is rooted not in political philosophy, but rather practicality, flexibility and comprehensiveness.

    And with that, I will place it on the backstop and you may fire your slings and arrows at it as you please.

    And you may ask yourself, faithful readers, where is my large automobile? Stay tuned for further updates as the crisis mounts and the stubbornly ideological sit on their hands.

    Except, of course, when they’re pointing fingers at yours truly. Now there’s the love!
    http://bareknuckledpundit.com/

    Scientia Potentia Est

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    Quote Originally Posted by The Bare Knuckled Pundit View Post

    -Increased federal gas taxes:

    Sounds good...

    -Accelerated increases in Corporate Average Fuel Economy (CAFÉ) standards:

    Sounds good...

    -Consumer tax credits for hybrid vehicles:

    Concept good over all, but I would personally restrict it to the cost of the vehicle being written off over three years and would not include maintenance.

    -Hybrid infrastructure expansion:

    As long as this is paid for by the gas tax increase you mentioned, then no problem with this one.

    -Increased regulation and oversight of energy futures markets:

    This one... big disagreement. Speculation is not the friggin problem. That is pure bullshit spin from the media and politicians. It has always been there. No one was bitching when oil was priced at a discount to fair value in 1999. THAT too was due to speculation. It is a way for people and companies to hedge their portfolios against future expected increases/decreases in the underlying commodities. You want to see speculation's effect reverse from a premium to a discount, then work towards increasing energy supply. Over regulating our markets will only lead to a competitive disadvantage for those that don't/can't shift their futures trading overseas.

    -Creation of the American Energy Innovation Awards program:

    Sounds good....

    -Increased funding for the Advanced Research Project Agency – Energy (ARPA-E):

    Sounds good.... until....

    -Passage of a tariff on imported oil:

    This is a really dumb and dangerous idea. You put tariffs on imported oil, other countries retaliate with tariffs on our products. Just include this with the increase in the gas tax.

    -Establishment of the Western Hemispheric Energy Cooperation Council:

    Not a bad idea.

    !
    Mostly good ideas. Only a couple I had a problem with.
    Quote from Cypress:
    "Scientists don't use "averages". Maybe armchair supertools on message boards ascribe some meaning to "averages" between two random data points. And maybe clueless amatuers "draw a straight line" through two random end data points to define a "trend". Experts don't.

    They use mean annual and five year means in trend analysis. Don't tell me I have to explain the difference to you. "

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    -Increased federal gas taxes:
    Gas taxes for anything other than transportation infrastructure are not a good idea. Such taxes affect far more than prices at the pump. The transportation of goods across the nation use gas. Farming uses gas. I suggest you look up the ratio of fuel used for transportation of goods compared to use for personal transportation. As has been noted at other time when gas and oil prices jump, high prices at the pump only results in a minimal decrease in demand. This is because much of the demand is from necessity, not preference. About the only demand that would be decreased would be from voluntary transportation, such as vacation trips, etc.

    Such a tax would also hit lower income people harder; first because they are already having trouble affording high priced fuel; and second because the reason they are driving older, less efficient vehicles is because they cannot afford newer, more efficient ones. Urban folk can resort to public transport, but then most lower income urban folk are already using public transport - which would go up because of higher fuel costs. Rural poor are fucked because there is no public transport, and they are not only forced to depend on their own older, inefficient vehicle, but also are driving farther to get where they need to go.


    -Accelerated increases in Corporate Average Fuel Economy (CAFÉ) standards:
    Couple this with incentives for early compliance and you'd have a really good idea.

    -Consumer tax credits for hybrid vehicles:
    Not a bad idea, as long as you find somewhere other than fuel tax to fund it.

    -Hybrid infrastructure expansion:
    I am always for subsidizing infrastructure over other types of subsidies. Once the infrastructure is up and runnng, the need for subsidies automatically ends. Subsidies of consumables (ie: ethanol production and use) never ends.

    -Increased regulation and oversight of energy futures markets:
    Not sure how such regulations would be written or enforced. U.S. businesses are not the only ones who engage in futures speculation, nor is the futures market limited to the U.S. You can regulate U.S. businesses, but in a rising market like we see today, that would only result in U.S. companies unable to compete, and result in shortages as well as over inflated prices.

    -Creation of the American Energy Innovation Awards program:
    Again, as long as it can be funded without additional fuel taxes.

    -Increased funding for the Advanced Research Project Agency – Energy (ARPA-E):
    Research always pays off in the long run. I am always in favor of funding research.


    -Passage of a tariff on imported oil:
    I cannot get behind this one either, for the same reasons as the first tax. Taxes always get passed on to the consumer, and the consumer is already been hit hard. Adding to the price of fuel through taxation is kicking people when they're down. And, of course, there is the factor of how those whose products we are placing tariffs would react.


    -Establishment of the Western Hemispheric Energy Cooperation Council:
    Not a bad idea in principle, but it would probably get bogged down in political posturing and not do much good where the leather hits the pavement.

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    Superfreak and Good Luck,

    Thank you both for your comments and suggestions. They're greatly appreciated and very reasonable.

    As I noted previously, Part I was more market-oriented while Part II focused more on oversight and regulation. While I'm personally no fan of increased taxes and tariffs, as with any good proposal or legislation you've got to have some items you're willing to sacrifice in negotiations in order to move forward.

    That being said, I do, however, feel there is a significant infrastructure problem that needs addressed. With estimates in the $1 trillion range, you're going to need a significant funding mechanism. The most obvious choice, in my opinion, is the gasoline tax. While I understand it will impact the poor and working class the hardest, it will likewise create thousands of construction jobs as well as spin off support jobs. Accordingly, many of those jobs are going to go to some of these very people we remain concerned for. Nonetheless, I am open to your learned and seasoned suggestions.

    Thanks again....
    http://bareknuckledpundit.com/

    Scientia Potentia Est

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    Quote Originally Posted by The Bare Knuckled Pundit View Post
    Superfreak and Good Luck,

    Thank you both for your comments and suggestions. They're greatly appreciated and very reasonable.

    As I noted previously, Part I was more market-oriented while Part II focused more on oversight and regulation. While I'm personally no fan of increased taxes and tariffs, as with any good proposal or legislation you've got to have some items you're willing to sacrifice in negotiations in order to move forward.

    That being said, I do, however, feel there is a significant infrastructure problem that needs addressed. With estimates in the $1 trillion range, you're going to need a significant funding mechanism. The most obvious choice, in my opinion, is the gasoline tax. While I understand it will impact the poor and working class the hardest, it will likewise create thousands of construction jobs as well as spin off support jobs. Accordingly, many of those jobs are going to go to some of these very people we remain concerned for. Nonetheless, I am open to your learned and seasoned suggestions.

    Thanks again....
    The jobs created by using gas taxes for improving infrastructure will not form a hair on the pimple on the ass of the inflationary problems a high gas tax will cause.

    It is not just a matter of what the lower income strata pays for gas, but what they pay for milk, eggs, bread, clothing, etc, all of which will be affected by gas prices. I am not saying we cannot justify some type of taxation, fee structure, or combination of methods to fund subsidy programs to improve infrastructure. But a gas tax simply is not a method that will result in a positive benefit versus the costs such a tax will extract from our economy. Ditto tariffs.

    The ideas need to be paid for, that I am not arguing. But just because we are talking about subsidizing energy infrastructure does not mean the funds must come from energy use. I suggest some more creative thinking on the topic of funding. There are other options to explore. Hell, hold national bake sales. But taxing gas when so much of the economy depends on gas is NOT the way to go.

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    Of course not, only 30% of the people in this country work for the govt in some way now.

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