President Bush Signs Expensive Energy Bill

Published February 1, 2008

The massive energy bill signed by President George W. Bush on December 19 will have serious negative effects on the economy, according to policy experts.

The new law will restrict vehicle choice, mandate and subsidize expensive alternative fuels, and impose a variety of other energy restrictions on American consumers, they note.

Delivered in Prius

In what many observers perceived as a calculated slap at the U.S. automotive industry, congressional leaders made a show of delivering the energy bill to the White House in a Toyota Prius hybrid vehicle.

“It is symbolically fitting that Congress chose to deliver the energy punishment bill to the White House in a Toyota Prius,” said James M. Taylor, managing editor of Environment & Climate News. “The energy-intensive Prius manufacturing process has been documented to produce more greenhouse gas emissions over the life of the car than do its much-maligned American competitors.

“This energy bill, just like the Prius in which it was delivered, is all flash and little substance,” Taylor said. “Efficient, economical energy sources will be severely punished. Expensive, wasteful energy sources will be mandated, and their corporate parents will be heavily subsidized by the American taxpayer,” Taylor added.

More Crash Deaths Likely

The new legislation hikes vehicle mileage standards 40 percent by the year 2020, requiring a fleet-wide average for each manufacturer’s cars and light trucks of 35 miles per gallon. Other significant provisions require American consumers to purchase more ethanol, more electricity from expensive alternative sources, and fewer inexpensive incandescent light bulbs.

“Of all the questionable provisions in the current energy bill, making [Corporate Average Fuel Economy rules] more stringent is by far the worst,” said Sam Kazman, general counsel for the Competitive Enterprise Institute (CEI). “While the subsidies and mandates will waste the taxpayers’ money, this one will cost lives.”

CAFE standards have been imposed on the auto industry since the 1970s with the intent of conserving gas by boosting the number of miles per gallon vehicles must achieve. Traditionally, manufacturers have met the regulations by producing smaller and lighter vehicles.

But smaller means less crashworthy, CEI reports. By compelling manufacturers to reach even higher mileage standards, the new energy bill puts lives at risk.

“In 2001, a National Academy of Sciences panel concluded that CAFE contributes to between 1,300 and 2,600 traffic deaths per year, by restricting the production of larger and heavier cars,” noted CEI’s summary of the bill. “A subsequent study by the National Highway Transportation Safety Administration went even further, finding that the effect of downsizing on safety was substantially larger than previously thought.”

Markets Already Solving Problem

Max Schulz, a senior fellow with the Manhattan Institute who specializes in energy policy, believes auto manufacturers agreed to the tightened CAFE standards because of free-market advances that are naturally leading to higher miles-per-gallon vehicles anyway.

“Detroit automakers have been correct in the past to oppose these CAFE standards, but [their] willingness to go along with this measure leads me to think they’re going to be able to meet the new targets,” Schulz said. “But that’s not because of what Congress is doing. It’s because of new technology … sort of the free market at work.”

Price Hikes Coming

However, Schulz said, this new technology piggybacked on congressional legislation will prove expensive to consumers. In addition, he noted, there are more burdensome provisions in the energy bill that should be of concern to middle-income America.

“There’s a substantial biofuel mandate that Congress passed in 2005 that [mandated] a mix of seven billion gallons of ethanol into our gas supply. That had the effect of raising prices at the pump and raising prices at the grocery store,” Schulz said. “With this bill, Congress decided to multiply that five times … so a total of 35 billion gallons of biofuels have to be mixed into the gas supply” by the year 2022.

“That can only lead to even higher prices,” Schulz observed.

The energy bill’s requirement to convert more farmland from food production to fuel production followed closely on the heels of a Bureau of Labor Statistics report showing food and beverage prices increased 4.7 percent in the past year.

The energy bill will pressure fuel prices further, analysts note. A Heritage Foundation analysis “reveals that the bill could increase the price of regular unleaded gasoline from $3.06 per gallon, the early December national average, to $5.02 in 2016,” reads the December 10 WebMemo, “Paying More at the Pump: Energy Bill Would Increase Gas Prices.”

Light Bulbs Banned

The energy bill also requires a phase-out of incandescent light bulbs, a policy effort that has been pushed by environmental activist groups for years.

“This was a very small provision in the bill, and it’s just another example of using the power of the government to force something on the people they don’t want,” Schulz said.

Cheryl Chumley ([email protected]) writes from Virginia.