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Pickens’ NATGAS act sponsor defeated

A congressional primary election served as a barometer of public sentiment on energy policy and government interventionism into free markets.

In last week’s Oklahoma primary elections, Jim Bridenstine defeated 10-year incumbent John Sullivan in a Republican primary for U.S. House of Representatives, first district.

The difference between the two candidates, as reported by the Tulsa World, boiled down to supporting or opposing H.R. 1380: New Alternative Transportation to Give Americans Solutions Act of 2011, or NAT GAS act. The bill provides a variety of subsidies, implemented through tax credits, to producers and users of natural gas. The legislation’s purpose is to promote the use of natural gas as the fuel the nation uses for transportation by converting over-the-road trucks to run on natural gas. From the story Republicans vying for 1st District seat square off civilly at event:

On only one issue, energy policy, did Sullivan and Bridenstine substantially disagree. Sullivan touted his bill to promote natural gas vehicle fuels, while Bridenstine supports an alternative proposal.

“Let’s get cars, trucks and buses running on natural gas,” Sullivan said. “We have an abundance of it here in the United States. It’s cheap and abundant and … it also addresses a national security issue by lessening our dependence on foreign oil.”

Bridenstine calls Sullivan’s NatGas Act a “big-government” boondoggle because it creates a short-term subsidy to convert vehicles to natural gas.

“We ought not let Washington, D.C., control free markets with tax subsidies,” he said.

It wasn’t just that Sullivan supported the NATGAS bill — he was the lead sponsor. Now Oklahoma Republicans have rejected the sponsor of a large dose of harmful crony capitalism. Thank you, Oklahoma.

Another supporter of this bill — perhaps the leading promoter — is T. Boone Pickens. He promotes this bill as a way to convert trucks to run on natural gas at no cost to the taxpayer. Except for two things: Tax credits are equivalent to spending. But they mix spending with taxation in a way that lets politicians and handout-seekers like Pickens to wrongly claim that tax credits are not cash handouts. Fortunately, not everyone falls for this seductive trap. In an excellent article on the topic that appeared in Cato Institute’s Regulation magazine, Edward D. Kleinbard explains:

Specialists term these synthetic government spending programs “tax expenditures.” Tax expenditures are really spending programs, not tax rollbacks, because the missing tax revenues must be financed by more taxes on somebody else. Like any other form of deficit spending, a targeted tax break without a revenue offset simply means more deficits (and ultimately more taxes); a targeted tax break coupled with a specific revenue “payfor” means that one group of Americans is required to pay (in the form of higher taxes) for a subsidy to be delivered to others through the mechanism of the tax system. … Tax expenditures dissolve the boundaries between government revenues and government spending. They reduce both the coherence of the tax law and our ability to conceptualize the very size and activities of our government. (The Hidden Hand of Government Spending, Fall 2010)

The other thing is that the NATGAS bill would likely be very expensive, much more so than claimed. The Wall Street Journal has reported on its cost: “Proponents put the cost at about $5 billion over five years, but many energy experts believe it would be multiples higher. Eight million trucks are on the road today, and if each got a $15,000 average tax credit, the price tag grows to over $100 billion.”

Pickens appeared this Sunday on Fox News Sunday with Chris Wallace to promote NATGAS in this excerpt.

WALLACE: All right. Let’s focus on the natural gas, though, which you’re saying cheaper. It’s cleaner. And we don’t have to ship trillions of dollars over to OPEC, to our enemies.

Your idea is to convert this nation’s 8 million heavy duty trucks, the 18-wheelers, to natural gas.

What does that mean for pollution? And what does that mean in terms of our dependence on foreign oil?

PICKENS: The independence on foreign oil first. There are 250 million vehicles in America. I just want 8 million. Give me the 8 million.

What can I do for us? If I had 8 million, that would be 3 million barrels of oil a day. We import 4.4 million barrels a day from OPEC. So, we would cut OPEC by 20 — by, we could cut them about –

WALLACE: Sixty percent.

PICKENS: More than 60 percent, close to 70 percent we could cut. With just 8 million, that’s it. I mean, it’s like a freebie. And it truly is.

Pickens promotes the program as a “freebie,” despite the Journal’s reporting that it could cost over $100 billion and the fact that tax credits are real government spending.

Troubling also is Pickens’ focus on himself: “I just want 8 million. Give me the 8 million.”

In March an amendment to a Senate highway bill that would have implemented a version of the NATGAS act was defeated. That, coupled with the message Oklahoma voters sent, ought to put an end to NATGAS and let energy markets and consumers decide energy policy.

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