Obama’s Trust Fund to Refuel Auto Sector Leaves Both Sides Wincing
Ken Silverstein | Mar 18, 2013
President Obama’s plan to expedite the development of alternative fuels is causing both sides of the aisle to wince. He would take $200 million a year for the next 10 years from federal oil and gas royalties and use that money to fund research for next-generation vehicles.
In presenting his policy at the Argonne National Laboratory last week, the president said that the objective here is to reduce the country’s dependence on oil imports by one-half before the end of the current decade. He would do that by opening up more areas to oil and gas drilling, which would not just increase domestic production but also be used to fund the $2 billion total he is pledging.
Among the arguments against the plan are that drilling proponents would leverage their position to access places that progressives say should be off-limits: the Arctic National Wildlife Refuge and more areas along the Atlantic and Pacific coastlines, for instance. Meantime, some lawmakers would use the president’s request to get a better deal for their states in terms of revenue sharing.
“The only way to really break this cycle of spiking gas prices, the only way to break that cycle for good, is to shift our cars entirely, our cars and trucks, off oil,” Obama said during his speech at Argonne.
The president emphasized that he supports an all-of-the-above energy strategy. To that end, he introduced the Energy Security Trust -- the mechanism by which the the $2 billion will be held and distributed to alternative fuel technologies.
He said that the ideas are not pie-in-the-sky thinking. Indeed, he went on to point out that during his tenure the country has made progress on many fronts, producing more oil than in the last 15 years while importing less oil than it has in 20 years. It’s also doubled its green energy generation and it's exploring for shale gas that is transforming the American economic landscape. Nuclear energy, furthermore, has been federally licensed and is getting built here by two utilities.
President Obama gave the nation a preview of his intentions during his State of the Union address. There, he referenced “painful spikes” in gas prices, noting that the development of new automotive technologies are required to end the oil addiction.
Concerns Raised
The Energy Trust is one that some conservatives could support, namely Senator Lisa Murkowski, R-Alaska. She has submitted legislation doing the same, although linking the revenue diversion to added production in the Arctic.
“Our nation is too often hamstrung by burdensome regulations, delayed permits, and overzealous litigation,” she writes in her vision what American energy policy should resemble. “This can render projects uneconomic by attrition and prevent timely, efficient, and urgently-needed investments in energy supply and conservation."
One Forbes author, meantime, says that diverting money from oil and gas royalties is a “terrible idea” that could be a “backdoor” move to institute a carbon tax. Christopher Helman writes that the federal government is within its right to bankroll research. But the creation of a special fund is overkill. Congress could simply pass such a bill and a corresponding budget to finance these projects. Does the average guy have multiple checking accounts to pay bills, he asks?
His connection, though, to a carbon tax is a non-sequitur. The money would fund new technologies that would replace vehicles that use conventional engines. No where does the president propose setting car quotas. And no where does Obama say that the money would later be diverted to develop power plants that release fewer carbon emissions than those being used today.
Certainly, the concerns over using the monies for something other than their original intent are noted. But the legislation to which they would be attached could stipulate exactly how the money would be applied. And House Republicans, generally, think targeting those royalties to alternative technologies would result in wasteful spending.
Similarly, the left is fearful that this proposal would open up too many pristine places to more oil and gas development. They ask: Why not close the tax breaks given to oil companies? And, why not just allow gas prices to rise to a level where people drive less? Answers: Oil companies have too much political clout while raising gas prices is the equivalent of a tax hike for many.
Both Republicans and Democrats are getting pressure to find the middle ground. The overlap here is to allow more drilling and then use the increased revenues to fund new technologies -- something that is now causing each side to gasp.
EnergyBiz Insider has been awarded the Gold for Original Web Commentary presented by the American Society of Business Press Editors. The column is also the Winner of the 2011 Online Column category awarded by Media Industry News, MIN. Ken Silverstein has been honored as one of MIN’s Most Intriguing People in Media.
Twitter: @Ken_Silverstein
energybizinsider@energycentral.com
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