Energy bill disastrous for the consumer

COMMENTARY Energy Economics

Energy bill disastrous for the consumer

Jun 21st, 2007 2 min read

Former Senior Policy Analyst, Energy and Environment Thomas A. Roe Institute for Economic Policy Studies

Ben Lieberman was a specialist in energy and environmental issues.

Like the idea of paying more for less? If a certain piece of legislation now before Congress becomes law, we might have no choice.

Despite having the words "consumer protection" in its title, the latest Senate energy bill would actually boost the cost of gasoline, electricity, food, cars and home appliances. In fact, virtually everything touched by the Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007 will go up in price and down in quality.

Notwithstanding public outcries over $3-per-gallon gas, the bill's main provision on gasoline is to increase the amount of costly ethanol and other renewable fuels Americans are required to use. The 2005 energy bill mandated that agricultural-based renewable fuels, mostly ethanol made from corn, be mixed into the gasoline supply. Ethanol usually costs more than gasoline and dramatically lowers fuel economy, so the mandate has hurt drivers. And the competition for corn has driven up the prices of food items such as sweeteners and corn-fed meat and dairy products.

Despite this costly track record, the Senate now wants to expand the mandate fivefold to 36 billion gallons annually by 2022. The price for fuel and food, already higher under the current mandate, would likely skyrocket. In addition, the heavy government subsidies for renewables, including a 51-cent per gallon tax credit, would rise along with the mandate.

It gets worse. The bill also would require that 15 percent of electricity be generated by politically correct but expensive means like wind and solar. As with ethanol, the only reason these alternatives need federal mandates in the first place is that they are too costly to compete otherwise.

In addition, the bill sets new federal efficiency standards for a number of home appliances such as refrigerators, clothes washers and dishwashers. The goal is to reduce energy use by setting arbitrary limits on how much electricity these appliances are allowed to consume. But past appliance regulations have actually hurt consumers.

For one thing, mandatory improvements in efficiency usually raise the purchase price of appliances, and sometimes the increase is more than enough to negate the energy savings. These regulations can also hamper product performance. Far more troubling than efficiency standards for appliances are those for cars and trucks. In order to meet any tough new Corporate Average Fuel Economy (CAFE) standards, cars and trucks need to be made lighter, which also makes them less safe in collisions. According to a 2002 National Academy of Sciences study, vehicle downsizing has cost 1,300 to 2,600 lives per year. The far tougher miles-per-gallon requirements in this bill would likely add to the death toll from vehicle crashes.

Consider, too, what the bill doesn't do. There are no provisions for even one drop of additional domestic oil. America remains the only nation that has placed a significant amount of its oil potential off- limits, both offshore and onshore. But this bill does nothing to change that. Nor does it streamline other energy constraints, such as the red tape that has limited refinery expansions and contributed to the 2007 jump at the pump.

A "consumer protection" bill that's anti-consumer. An "energy" bill that's anti-energy. Too bad the laws against false advertising don't apply to Congress.

Ben Lieberman is senior policy analyst in the Thomas A. Roe Institute for Economic Policy Studies at the Heritage Foundation.

Distributed nationally on the McClatchy Tribune wire