Picking Energy Winners and Losers

A common argument against government incentives for renewable energy is that the government shouldn't be in the business of picking winners and losers: solar or wind or geothermal? As one expert explained it to me, "Every incentive for one industry is basically a disincentive for another industry."

But what happens when the same people who argue against incentives for renewable energy and other developing green fields argue for incentives for nuclear power or, as was the case last week, oil and gas?

As Nikki wrote on this blog, Obama's proposed 2011 budget has some radical environmental maneuvers in it, the biggest of which to eighty-six the tax subsidies long given to oil and gas producers.

To answer my own question: The industry was outraged. Calling the revoked incentives "new taxes" — I suppose to gloss over their own ideological inconsistency — flaks alleged that the industry would be forced to stop doing business in the United States.

Here's Jack Gerard, president of the American Petroleum Institute:

New taxes would mean fewer American jobs and less revenue at a time when we desperately need both. A robust U.S. oil and gas industry is essential to the recovery of the nation’s economy... Imposing new taxes would reduce our nation’s energy security by discouraging new investment in domestic oil and natural gas production and refining capacity and pushing those investments – and American jobs – abroad.

It's funny how that works: When it's your industry, you see subsidies and incentives as sound job-creation engines. But when it's another industry, you see it as big government. Given how established this industry is, not to mention how much help it's gotten over the years, if it can't survive without a so-called government handout, well, goodbye and good riddance.

In its fact sheet, another industry group, the Independent Petroleum Association of America had this to say: "Lower natural gas and oil prices and the tight credit market are limiting investment capital; drilling activity is down over 25 percent since a year ago." I wonder how many of its members opposed the stimulus package. More to the point, drilling is down because profits are down.

And, here's a gem: Noting that the oil and gas industry supports "more than 9 million jobs," the API's Gerard makes the off-the-cuff and patently false claim that "many" are "green jobs." Green jobs are jobs in the field of renewable energy. Oil and gas? Not renewable energy.

The fact is, once upon a time subsidizing oil and gas made sense: They power much of the economy. But climate change has changed the playing field. Now it's time to think about renewable energy as fuel for economic growth, just as other major government-funded infrastructure projects, from highways to the Internet, have been.

Photo credit: Wikimedia Commons