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Congressman
Paul Ryan
As you may know, the House recently considered H.R. 2454, the American Clean Energy and Security Act. The bill seeks to cap global greenhouse emissions by putting in place a complicated “cap-and-trade” program that would require all energy producers to purchase expensive government permits in exchange for the right to produce energy from certain natural resources or to produce certain goods like steel, aluminum, or cement. The legislation will have a devastating impact on our economy and disproportionally hit cold-weather states like Wisconsin. I voted against this measure.
The proposed cap-and-trade scheme, would in effect place a new tax on energy consumption, from transportation, to food, to electricity. It will cost taxpayers on average $3,000 per year and raise taxes by more than $840 billion. And the impact on Wisconsin will be especially severe. Estimates from the Congressional Budget Office and the Energy Information Administration, predict Wisconsin families alone will shoulder an extra $230 million in energy costs as a consequence of this bill. At a time when families are struggling to cope with harsh economic conditions, driving up the cost of their heat and power bills is wildly irresponsible.
Further, the consequences this unilateral energy tax will have on our fragile job market are just as alarming. Under H.R. 2454, the 1st District of Wisconsin is predicted to loose roughly 3,000 jobs. We have already suffered the closure of major car factories in Janesville and Kenosha. The unemployment rate in Racine recently broke 10%. It is unacceptable for Congress to consider legislation that would drive even more Americans out of jobs and force businesses to close their doors. Wisconsin manufacturers, already facing stiff competition from overseas, would be put at an even further competitive disadvantage with countries such as China that have no intention of inflicting a similar tax on their businesses.
Additionally, it is unclear to what extent this legislation would reduce carbon emissions enough to have a significant impact on global temperatures. In fact, studies from across the spectrum indicate that the various cap and trade schemes being proposed in Congress would produce a change in global temperatures of less than 0.5o F. And, this change would not take full effect until 2095. Further, this small reduction in temperature also assumes that other countries will not increase carbon emissions. What’s worse, because the bill imposes this energy tax unilaterally, the legislation will actually hinder the environmental goals it has set out to achieve. By making manufacturing more expensive here in America, this bill would send manufacturing jobs overseas to our competitors, like India and China. For every ton of emissions we reduce, India and China will produce several tons more.
I believe that environmental stewardship and economic growth are not mutually exclusive goals. That is why I have outlined a national energy proposal built on principles of conservation, American-made energy, regulatory reform, and alternative energy development. The economic well-being of the United States and the livelihood and safety of our citizens is largely dependent on maintaining a strong energy supply. We depend on electricity to light our homes and businesses, natural gas to heat them, and gasoline to operate the cars and trucks that carry us to work and transport our goods.
Unfortunately, the U.S. House of Representatives has continued to take the wrong approach in achieving our shared objectives of meaningful reform to our nation’s energy policies.
That is why, on June 26, 2009, I joined 211 of my colleagues and voted against H.R. 2454. Despite warnings about the harmful effects of this approach, the U.S. House of Representatives muscled through the 1,200-page cap-and-trade bill – by seven votes – mere hours after the final version was released. This vote has caused tremendous backlash against not only the Majority’s strong-arm tactics, but more importantly the disastrous consequences of the underlying bill. The message seems to have resonated with the Senate, where cap-and-trade has all but collapsed under its own weight.
The lost momentum on cap-and-trade has pushed the Obama Administration to take matters into its own hands.
On December 7, 2009, the Environmental Protection Agency (EPA) declared that carbon dioxide “threatens the health and welfare of the American people,” paving the way for additional regulatory restrictions on American manufacturers. In addition to the economic consequences of this unprecedented decision, the Administration’s thwarting of the legislative process raises serious concerns. Congress’ decision not to impose this restraint on our economy does not justify the executive branch to take charge.
Lisa Jackson, the head of the EPA,
argued that this decision will “cement 2009’s place in history.” Jackson is right. Washington’s recent power grabs into our economy and into our lives are indeed historic. Unfortunately, this is not the type of history that future generations will appreciate.
A Long Term Solution for Energy Independence
I believe a national energy proposal must take a three-pronged approach focused on increasing American-made energy, reforming outdated fuel regulations, and investing in alternative energy sources.
More Production
To address this problem, I have continued to support efforts that would open up the resources available to America in the Outer Continental Shelf. On December 15, 2006, Congress passed a comprehensive package that included a measure to allow oil and natural gas exploration in two specific areas of the Gulf of Mexico. I voted in favor of this measure and was glad to see this provision pass into law on December 20, 2006.
Next, I support Arctic National Wildlife Refuge (ANWR) oil exploration because it will significantly increase the domestic supply of oil in the United States. Our society continues to demand more gasoline, but we have not increased our domestic supply of crude oil and are forced to import more and more to meet our needs. Currently, we import approximately two-thirds of the crude oil that we use and are expected to import 80% by 2020. This dynamic poses a threat to our national security and our economy. It leaves the price of gasoline in the U.S. subject to the actions of the Organization of Petroleum Exporting Countries (OPEC) and the political conditions in countries like Iraq, Saudi Arabia, and Venezuela. It also forces individuals to pay more for the gasoline that they rely on to go about their daily lives and makes our businesses less competitive by making it more expensive for them to produce and transport their goods to consumers.
Importantly, only 2,000 of the 19.6 million acres in ANWR would be affected. This represents only 0.01% of the total ANWR acreage. To further illustrate, ANWR is approximately the size of South Carolina, whereas the total footprint for oil production at ANWR is equal to the size of Milwaukee’s Mitchell International Airport. As a strong supporter of wildlife and land conservation, I would not support exploration in ANWR if I thought it would carelessly or permanently damage excessive areas of the arctic tundra. Thanks to new technology that minimizes the environmental impact of this drilling; we can take steps to ensure that the ANWR region remains environmentally sound while providing relief to consumers.
More Refineries
I also support reforms to our regulatory regime to allow for new refineries to be built in the U.S. We have not built any new refineries since 1976. At that time, our country was only using a handful of blends of gasoline. Now, we are attempting to refine four dozen blends of gasoline in a system designed to only produce a few. This has imposed substantial constraints on our ability to refine the gasoline that we use on a daily basis and has forced us to import more and more of the gasoline that we use. Furthermore, adding new refineries to the market will lead to greater competition and help place downward pressure on prices.
During the 110th Congress, I cosponsored H.R. 6165, the Refinery Permit Process Schedule Act. This legislation would take multiple steps to cut down on the bureaucratic requirements that have prevented the establishment of new refineries. Additionally, this bill would have instructed the President to designate at least three closed military installations as potentially suitable for the construction of a refinery. This innovative attempt to employ untapped resources to provide real energy relief to consumers is an example of sound energy policy that is necessary to lower gasoline prices. Unfortunately, this legislation was never brought before the House for a vote and Congress failed to address this important issue. failed to pass the House. I am hopeful that Congress will make another attempt to address this issue during the 111th Congress, because our limited refinery capacity is a large factor in the high cost of gasoline.
Boutique Fuels
In addition to problems with supply, we pay more for gasoline because of an outdated reformulated gasoline policy that requires different areas of the country to use different blends of fuel to meet environmental requirements. This fragmented system results in the under-production of certain blends and allows refineries to charge more for the unique boutique fuels that they produce due to a lack of competition in the marketplace. The use of boutique fuels also causes price spikes any time that there is a supply disruption, such as a refinery fire or pipeline break, because there are few refineries that can make the special blend to cover the loss in capacity. Furthermore, areas like Southeastern Wisconsin that are required to use different fuels during the winter and summer months experience price spikes when the transition between fuel types is made.
I have been working hard to help address the boutique fuels problem since 2001. During 2005, I was able to make significant progress on this issue when legislation that I authored that capped the total number of fuels that are used in the U.S. and allowed for fuel waivers to be provided in the case of supply emergencies such as Hurricane Katrina was signed into law by the President.
During the 110th Congress I again acted on addressing this problem by introducing H.R. 2493. This bill addressed the proliferation of specialized “boutique” fuels to prevent further fragmentation of America’s gasoline supply. This bill aimed to reduce our fuel blends to a small, manageable number of blends so that gasoline supplies are much more stable. Unfortunately, my legislation experienced opposition from the oil industry and oil state legislators. I will continue fighting this opposition so we can bring common sense to our fuel distribution system, which will help lower prices and prevent future price spikes.
Alternative Energy
From a long-term perspective, I also support the development of alternative fuel vehicles. American automakers have already made strides in this area with the production of cars and trucks that run on ethanol, electricity, hydrogen and natural gas. We must encourage this type of behavior to continue so that Americans can continue to enjoy the freedom of owning automobiles without contributing to our increasing demand for crude oil. Equally important, this course of action will also have many positive benefits for our environment. That is why I have supported proposals that would require the Environmental Protection Agency (EPA) to implement research programs that would make biofuels more compatible with petroleum-based fuels. While the House passed legislation like this during the 110th Congress, the Senate failed to take action. I look forward to working with my colleagues in the 111th Congress to make this issue a central part of energy reform discussions.
Conservation
We must also affect the demand side of increasing gasoline prices. I believe that energy conservation and responsible fuel efficiency improvements can go hand in hand with our efforts to expand our economy. I believe that initiatives such as requiring efficiency improvements on vehicles using a class-by-class basis, rather a company-by-company basis, are proposals that can help reduce the demand for gasoline while not undermining U.S. auto manufacturers. It is my hope that Congress will pass legislation that will reduce energy consumption in an efficient manner, protecting both industry and ensuring lower energy prices for consumers.
Additional Information.
For more information on energy issues and priorities, please refer to the following
web site:
Energy
Information Administration: www.eia.doe.gov
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