Wednesday, February 29, 2012

Pickens crony capitalism update: WSJ says subsidies not needed for natural gas

Last week I wrote about T. Boone Pickens donating nearly a half-million dollars to liberal think tank Center for American Progress so they can promote its idea of clean energy, which includes natural gas--a power source the billionaire hopes to make even more money on. Pickens has a pet piece of legislation--the NAT GAS Act, which proposes subsidies for his latest love.

But guess what? The Wall Street Journal (paid subscription required) says that subsidies are not needed for this crony capitalism caper.
The natural gas shale revolution is a blessing for the U.S., but its very abundance and low cost mean that it could be a commercially viable substitute for oil without taxpayer handouts. At current prices, a gallon of transportation fuel from natural gas costs about one-third to one-half less a gallon of gas from oil. That's a big nonsubsidized cost advantage.

Mr. Pickens claims that the subsidies are merely to finance the transition to natural gas vehicles, and that they will be temporary. But there were no subsidies for Henry Ford to build the Model T, and no tax incentives for gas stations in every town in America.

As for "energy independence," taxpayer subsidies have a miserable record of reducing reliance on foreign oil. In the 1970s the feds spent some $2 billion on synthetic fuels, which were a commercial bust. Ethanol was sold as a path to energy "security," but 30 years and more than $40 billion later it still can't compete without governmental support. The two-decade federal nourishment of solar, wind and other non-hydro renewables has cost tens of billions of dollars, yet they still provide just 3.6% of U.S. electricity.

The history of energy subsidies is that they become an industrial and political addiction that is difficult to stop, no matter the results, and may even inhibit innovation and profitability by providing a crutch.
The NAT GAS Act stink bomb applies Chevy Volt-like credits for trucks--from $7,500 and $65,000 per vehicle--for trucks converting from diesel to natural gas-powered engines. Actually, this is worse than the Volt handouts.

Filling stations would get credits too--and there would be a 50 cent a gallon credit for purchasing natural gas.

None of this is needed. Haven't we learned any lessons from the Volt and Solyndra debacles?

Related post:

Crony Capitalism: Pickens gave $450K to Center for American Progress

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