By Tom Pyle
Today, President Obama will be speaking at theUniversityofIowa, targeting young voters as a key part of an election strategy that worked so well for him in 2008. In a trip paid for by taxpayers, he will then replicate that speech and travel later this week to other universities inNorth CarolinaandColorado. According to Politico, on Monday, the President’s campaign held a conference call drawing sharp contrasts between the President and Mitt Romney on students, saying, “Romney’s policies don’t just hurt students and working families, they hurt our ability to grow the economy.”
While the President’s campaign is focused on students, working families, and the economy, he’d be negligent if he did not address another issue which has taken a significant bite out of the average family’s budget this year – skyrocketing energy prices.
Gasoline prices in some areas of the country have already shot passed $4 a gallon and are heading towards $5. According to AAA, Iowaprices are expected to join the $4 club by Memorial Day but there are some steps we could be taking now to avoid price spikes like these in the future.
There is one solution the President could address. Thanks to hydraulic fracturing, natural gas production is at an all time high creating a shale gas boom in theUnited States. With the untappedForest City Basin,Iowa seems poised to be the next state to reap the rewards.
Perhaps the reason President Obama is not addressing energy issues is that lately his Administration seems to be doing more to stifle energy jobs than promote them – last week, the Environmental Protection Agency released new air emission standards that could significantly slow down investment in shale drilling in Iowa before it ever has a chance to get going.
When he does address gas prices, he seems eager to shift blame rather than offer solutions, often shaming oil companies for making profits – usually a good thing – and calling for an end to subsidies for “Big Oil.” First off, that’s another surefire way to increase prices at the pump for consumers as higher costs on the industry will be passed down to motorists at the pump. And second, he’s not referring to actual subsidies; these are the same tax breaks that are given to all manufacturing industries to promote development.
One of those tax breaks, called “Intangible Drilling Costs,” actually helps out smaller, independent drilling companies more than it helps out huge companies like ExxonMobil. It allows the deduction of other expenses related to the exploration and discovery of new wells because all too often that exploration yields no product. Without this, smaller companies couldn’t afford to keep exploring.
One major industry in Iowathat is subsidized is the wind energy industry. According to the Des Moines Register,Iowais the nation’s No. 2 state in wind energy production. Wind energy has largely benefitted from a credit against taxes of 2.2 cents per kilowatt hour of wind power produced for the first ten years of a plant’s operation. That is more than 20 percent of the average retail price of electricity. But that tax credit isn’t always guaranteed and wind has yet to find its feet. With the subsidy at risk, so are jobs in the companies that relied on them.
It begs the question, why is the President trying to raise taxes on oil and gas, when that industry has consistently been a provider of home grown jobs? If the President is truly concerned with students, American families, and the economy he’ll put Americans before his campaign and stop misleading the public with election year rhetoric.
Tom Pyle, President with Institute for Energy Research (IER)
