Jason Marks, the State Public Regulation Commissioner from the Albuquerque district, recently authored an article criticizing the vote by Congress, and specifically New Mexico Senator Pete Domenici, which would allow the current renewable energy tax credits to expire in 2008 as was determined when they were passed years ago. Unfortunately, Mr. Marks did not take into consideration all the issues at hand.
To begin with, we must recognize that alternative and renewable fuels are not in a race with traditional fossil-fuels as a means to provide energy for our current needs and those of the upcoming generations. They are both integral components of our long-range energy future.
It must also be noted that the renewable energy tax credits were tied directly to the passage of over $13 billion in new energy taxes to be levied upon our domestic energy producers. These new taxes would have dramatic negative economic consequences here in New Mexico and across our nation as they would be passed directly down to us all in the form of higher prices for gasoline, home heating oil and in the costs of general goods and services.
This would have come at a time when the costs of energy are at or near all-time highs, and when our economy is under a great strain and facing what many fear will be a recession. These higher costs-of-living would be especially difficult for individuals and families who are struggling simply to make ends meet and could be the last straw for businesses that are already under siege by higher costs, slowing demand and competition from global trade.
New energy taxes were proposed chiefly as a means to punish domestic energy companies for lingering high world energy prices over which they have no control. Yet, in their zeal to pacify angry voters, backers of this proposal overlooked the important ways in which higher energy taxes would harm our nation and our economy by further increasing American dependence on foreign oil.
Obviously, massive new taxes and disincentives for production will only make domestically produced energy more expensive than imported supplies. The net result of this is an overall decrease in domestic output and greater dependence on production by others; the polar opposite of our national goals.
Perhaps most dangerous for our nation in these times of great political unrest is the fact that higher energy taxes for domestic producers put our U.S. energy companies at a severe competitive disadvantage with state and foreign-owned companies worldwide. These entities control much of the world’s known energy reserves and are increasingly reluctant to allow us to participate. America faces growing risks of source-nationalism, limited access and infrastructure constraints at every turn. Taxes that limit energy companies’ ability to participate worldwide or reduce their incentive to develop greater domestic output are against our national interests.
The development of increasing pools of traditional energy and new sources of alternative and renewable power are not mutually exclusive goals, as Mr. Marks seems to believe. There is no reason to pit one against the other, nor is there any ambiguity in Senator Domenici’s past support of alternative and renewable energy coupled with his recent vote against new energy taxes. These are equally valid steps toward a continued search for answers to our national energy dilemma.
Paul Gessing is President of the Rio Grande Foundation; a non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.