5 Points from Democratic Platform on Energy

By at 28 July, 2016, 3:18 pm

Democrat platform

by Raymond J. Keating-

An “all of the above” energy policy, unfortunately, seems hard to find in the Democratic Party’s platform. The focus is on taxing and regulating our most valuable energy resources, namely, oil, natural gas and coal, while providing taxpayer subsidies for wind and solar power.

Consider 5 key points from the Democratic party platform.

Higher taxes on oil and gas energy. The platform pledges to “eliminate tax breaks for big oil and gas companies.” This mantra has been around since the start of the Obama administration. Two problems exist here. First, these so-called “tax breaks” are simply legitimate deductions and measures tied to doing business, and have been in the tax code for decades. For example, one measure calls for repealing the expensing of intangible drilling costs. However, this provision has been in the tax code since 1913, and simply is a tax increase that would raise the costs of and reduce innovation and growth in the industry. Also, there’s repealing the standard, long-established (since the 1930s) “last in, last out,” or LIFO, accounting method would hit energy firms and any other business confronted by rising costs for the goods they buy or produce. The second problem is that these tax increases would not just affect “big” oil and gas companies, since energy consumers would be impacted by higher costs, and given that most businesses in the energy sector are small. For example, 90.7% of employer firms among oil and gas extraction businesses, 78.1% of drilling oil and gas wells businesses, 81.5% of firms among support activities for oil and gas operations businesses, 60.5% of oil and gas pipeline and related structures construction businesses, and 54.7% of firms among oil and gas field machinery and equipment manufacturing businesses have less than 20 workers.

Energy mandates. It is stated in the Democratic platform: “We are committed to getting 50 percent of our electricity from clean energy sources within a decade, with half a billion solar panels installed within four years and enough renewable energy to power every home in the country.” Of course, such a government mandate is completely detached from market, technological and cost realities, and would dramatically increase energy costs, especially given the fact that given the unreliability of wind and solar power, they must be backed up by energy produced from sources like natural gas and coal.

Taxpayer handouts. Another point in the platform calls for higher taxes on carbon-based energy and is repeated along with a declared commitment to inefficient forms of energy: “Democrats believe the tax code must reflect our commitment to a clean energy future by eliminating special tax breaks and subsidies for fossil fuel companies as well as defending and extending tax incentives for energy efficiency and clean energy.” Here is one of the clearest statements about what lies behind energy policy in this party document, that is, a radical green agenda seeking to undermine energy production that makes economic sense, and subsidizing sources of energy that make no economic sense.

Imposition of a carbon tax. It is stated in the Democratic Party platform: “Democrats believe that carbon dioxide, methane, and other greenhouse gases should be priced to reflect their negative externalities, and to accelerate the transition to a clean energy economy and help meet our climate goals.” That quite simply is a call for carbon tax, which would jack up energy costs for consumers and businesses of all types and sizes, dramatically reducing U.S. global competitiveness, and chasing away economic activity, including jobs, to other nations.

More energy regulation. The Democratic party platform also states: “Democrats are committed to defending, implementing, and extending smart pollution and efficiency standards, including the Clean Power Plan, fuel economy standards for automobiles and heavy-duty vehicles, building codes and appliance standards.” This sweeping declaration is a commitment to abide by the wide array of energy-related regulations imposed by the Obama administration. The results have been and will continue to be increased costs, with the coal industry, for example, being devastated by such policies. For example, consider that U.S. coal production fell by 23.5 percent from 2008 to 2015. For good measure, coal also is largely about small business, as 58.5 percent of coal mining businesses and 64.6 percent of firms in the support activities for coal mining sector have less than 20 workers.

The platform makes clear the desire to threaten hydraulic fracturing –  where technological advancements have been central to transforming the U.S. into the global energy leader – with federal regulatory burdens and costs: “Democrats are committed to closing the Halliburton loophole that stripped the Environmental Protection Agency (EPA) of its ability to regulate hydraulic fracturing…”

Finally, the party platform explicitly supports Mr. Obama’s decision to not approve the Keystone pipeline: “We support President Obama’s decision to reject the Keystone XL pipeline.”

“All of the above” is not the reality in the platform document; rather, the effort seems more focused on policies that “keep it in the ground.”


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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