“America has always risen to great challenges, and our dependence on oil is one of the greatest we have ever faced. It’s a threat to our national security, our planet and our economy. … We must act quickly and we must act boldly to transform our entire economy — from our cars and our fuels to our factories and our buildings.”
So begins “New Energy for America,” a fairly detailed policy statement issued by the Barack Obama campaign as its proposed path for breaking the hold of foreign oil on the United States. In view of the importance of the issue, it is well worth examining.
At the core of the Obama policy is a proposal to tax American oil companies and use the proceeds to fund a variety of initiatives, including a $500 rebate to every adult in the nation to help him or her to make ends meet in the face of high oil prices. This generous program would cost about $100 billion. Since the U.S. oil industry produces about 3 billion barrels per year, this translates into a tax of about $33 on every barrel produced in America, while leaving the 5 billion barrels per year of imported foreign oil untaxed.
As a method of damaging America’s prospects for achieving energy independence, such a proposal is hard to top. It is true that the federal government is facing a $500 billion deficit, so while quite regressive in its impacts, a tax on oil is fair game. But if the goal is raising revenue it would be much less harmful to tax all oil equally, or better yet, do the reverse of the Obama plan and tariff foreign oil while cutting taxation on American producers. Such a plan would raise more money than Obama’s, while stimulating domestic oil production instead of suppressing it.
In addition to the large cash handout to the general public, the Obama plan specifies a long list of targeted expenditures. Some of these are quite good, such as a hefty increase in federally funded research and development in energy technology. Others, such as proposals for federal subsidies for winterization programs to reduce home heating oil use, are reasonable. But others, notably a proposal to use the money taken from American oil companies to help consumers pay their home heating bills, and thus support high petroleum prices with taxpayer dollars, are crazy.
The craziness gets worse when the plan veers from its practical goal of addressing oil prices to its ideological one of trying to change the weather. Global warming can be stopped, says the plan, by cutting America’s carbon utilization to 20% of 1990 levels by 2050. This is a very radical proposal, as it requires reducing the nation’s total carbon use to about the level it was in 1932. In 2050, the USA is expected to have a population of over 450 million people, or roughly quadruple that of the early 1930s. Under the Obama plan, therefore, it is required that Americans’ per capita use of fossil energy in the mid 21st century will have to be reduced to one-quarter of Depression levels. How this is to be done is not explained, but it may be observed that a sustained negative economic growth rate of 4 percent per year for the next 42 years would be sufficient to do the trick.