Nat Gas Act is no boondoggle
Backing natural gas is essential for national security
The other day, the estimable Wall Street Journal editorial board took issue with the equally estimable T. Boone Pickens, the legendary oilman, over the Nat Gas Act. The Journal argued with its customary lucidity that Mr. Pickens’ idea of subsidizing natural gas, even for a short period, was ill-advised. To my mind, the Journal left one argument out, to wit: national security.
The Journal argued that natural gas could be supplied according to free-market practices, presenting clean and cheap energy even to those behemoth 18-wheel semis that carry their loads across America. It argued that talk of energy independence had led to numerous boondoggles for years. Ethanol had been tried for 30 years, cost $40 billion and still is costing us. It argued that wind and solar had cost huge amounts and contributed mostly to boondoggles or “Boone-doggles,” as it headlined its piece. It argued that no subsidies had been necessary for Henry Ford to build the first Model T, nor were subsidies necessary to put gas stations across America for servicing the Model Ts.
Yes, well, let’s stop right there. America existed in the first part of the 20th century in an entirely different world than exists today. There were no terrorists capable of killing us. Oil came mostly from Texas or Oklahoma, much friendlier and more stable places than the Middle East, Venezuela or Russia.
We now import some 50 percent of our oil. We are at the mercy of conditions that are usually out of our control. If we were to have natural gas fueling our 18-wheelers, we would be back in control. Actually, we could resume shipping energy abroad. In recent years, we have found natural gas in abundance right here in America. Through technological developments such as hydraulic fracturing we have unlocked more energy than exists in all of Saudi Arabia. Let Iran or a gang of terrorists close down the Strait of Hormuz. We are still secure.
The Nat Gas Act now pending before Congress will extend and increase tax credits for natural gas and for fueling. The key clause calls for the orderly replacement of diesel-powered 18-wheeler semis and other heavy-duty vehicles with natural gas over a five- to seven-year period. It also gives tax incentives to truck-stop owners to supply natural gas. That will amount to a savings of 2.5 million barrels of oil a day. Our reliance on oil from the Organization of Petroleum Exporting Countries (OPEC) will be cut by 50 percent. Mr. Pickens calls this “a game changer.” With our reliance on OPEC down by 50 percent, the oil producers will have to negotiate with us for the price they charge us for oil, not the other way around. What is more, we will have a breathing spell during which to find alternative sources of energy. That breathing spell could last a century or more. There is that much natural gas right here in America. Finally, the energy sector of our economy can and will produce thousands of high-quality jobs.
The way to justify the Nat Gas Act is via national security. American presidents since Jimmy Carter have called for America to be energy independent. They wanted us to drill for energy, to develop wind and solar, to expand our nuclear potential. Well, all that is fine, but the major justification should be national security. We spend in the neighborhood of $700 billion a year on national security. We can spend a few billion more.
America is vulnerable to terrorists, Middle Eastern instability and unfriendly powers around the world. We have a kind of miracle that has been developed over the past few years, natural gas. By passing the Nat Gas Act now we can end these threats against us. We can become an energy exporter. The bill now has 180 co-sponsors in the House. Seventytwo are Republicans. This is one act of bipartisanship that can make a huge difference in our nation’s security. The time to act is now.
It proposes to spend $3.8 trillion in fiscal 2013 alone, running a deficit of $1.3 trillion. This is set to be the fourth straight year of deficits of more than $1 trillion, the first time this has happened in the history of our nation. In the past few years, spending has exceeded 24 percent of the overall economy, the highest federal spending as a percentage of gross domestic product since 1946.
The unsustainable level of federal spending is nearly universally acknowledged as a real problem, not just for government priorities today, but more importantly, for future generations. For the job creator, watching Washington spend taxpayer dollars it doesn’t have raises concerns that taxes will have to be raised on society’s most productive in an attempt to slow the growth of our nation’s debt.
That is what this budget does. Instead of prioritizing spending, it proposes raising taxes by $1.9 trillion on working families, small businesses and job creators to enable — you guessed it — more spending. In my nearly three decades in business, I’ve never heard of a single job that was created by taking more money from the hiring class.
Just as important as what this budget does is what it doesn’t do: propose any solutions for entitlement programs that are well on their way to insolvency or do anything to mitigate the onslaught of regulations that are crushing our small businesses, startups and innovators.
Instead of unshackling the free-enterprise system that made America’s economy the most prosperous in history, it’s clear that this administration is intent on doubling down on a failed status quo of bigger government, higher taxes and no fiscal discipline. Job creators across this nation — many of whom I work with as a venture capitalist — are looking to Washington for less regulation; a simpler, flatter tax code and the kind of policy certainty that will provide incentives for investment and hiring. Unfortunately, with this budget, we still haven’t found what we’re looking for.