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    Energy Independence Is a Winner for the GOP

    BY Cesar Conda
    09/15/2006

    Congressional Republicans are breathing a little easier because of the recent decline in gasoline prices. Earlier this year, Sen. Charles Schumer (D., N.Y.) confidently proclaimed: “High gas prices are going to be the final nail in the GOP’s coffin this election year.” Today, gasoline prices have dropped to almost $2 per gallon in some parts of the country.

    Now that prices are going down, the GOP can stop being on defense when it comes to energy policy, and start going on offense — by talking about the need for a credible, long-term strategic plan for energy independence. In other words, the changing energy market has changed the political market as well, and in a way that helps Republicans if they proceed correctly.

    The vast majority of Americans strongly support reducing our dependence on oil from the Middle East and other hostile locales — and for good reason. For example, conflict in Nigeria and Iraq already has removed nearly 1 million barrels per day of oil supply. Iran, meanwhile, is threatening to use its oil as a weapon against the global economy. According to the Times of London, Ali Larijani, Iran’s chief negotiator on atomic issues, served warning that Iran would retaliate if the world imposed sanctions: “We will react in a way that would be painful for them. They should not think that they can hurt us and we would stand still without a reaction. We do not want to use the oil weapon. Do not force us to do something that will make people shiver in the cold.” Venezuela’s Marxist leader, Hugo Chavez, has threatened to cut off oil supplies to the U.S. at the first sign of “gringo aggression.”

    Unfortunately, the recent congressional debates over energy policy have focused on roughing up oil executives for (so far unproven) price gouging, throwing more taxpayer money at ethanol, and tossing out silly ideas like $100 tax rebates for consumers. In addition to calling for a windfall profits tax on oil companies, the Democrats propose solving high energy prices by using campaign funds to purchase gasoline at service stations and then offer that gas to motorists at discounted prices.

    Clearly, the Democrats have ceded the field of serious energy debate. So it’s up to Republicans to advance a balanced, comprehensive energy strategy — one that increases and diversifies energy supplies, promotes energy efficiency, and builds international alliances to promote energy security.

    Recently, Sen. George Allen (R. Va.) unveiled a “Strategic Plan for Energy Independence,” which GOP candidates around the country should make the centerpiece of their campaigns. The Allen plan calls for the following:

    The strategic use of America’s global economic power and international relationships to reduce the oil-based leverage used by hostile states. The plan calls for establishing a permanent Energy Security Working Group within the administration, developing an inventory of worldwide strategic oil reserves, and building energy alliances with other oil-producing nations. Strong international energy alliances and coordinated efforts to manage strategic reserves are the key to turning the oil weapon against Iran and other hostile regimes.

    The accelerated exploration and development of American energy supplies. Permitting the environmentally sound exploration of oil and natural gas on the North Slope of Alaska and in the eastern part of the Gulf of Mexico would significantly reduce our dependence on Middle East oil. According to the U.S. Department of Energy, the estimated daily production of oil in ANWR alone would be roughly the equivalent of the current daily oil imports from Saudi Arabia. In addition, the Allen plan would increase the number of conventional and unconventional refineries by streamlining the burdensome permitting process, and provide needed incentives for the development of innovative clean-coal technologies.

    The accelerated research, development, and deployment of every economically viable alternative and renewable source of energy. The Allen plan calls for the adoption of a flexible and diverse portfolio of energy options (such as bio-fuels) and innovative ideas such as hybrids, solar power, and nanotech-enabled lithium ion batteries.

    Perhaps one of Allen’s most innovative solutions is to grant 100 percent first-year expensing to businesses to help spur the development of domestic and alternative energy sources. From an energy-specific perspective, expensing is a high-performance tax reform of vital importance. According to economist Gary Robbins of Fiscal Associates, it would reduce capital costs in petroleum exploration by 2.3 percent, lower petroleum-refining sector costs by 4.4 percent, and cut capital costs in the oil and natural-gas transmission industry by 6.7 percent. The reduction in capital costs for electric-utility production and transmission would be in the area of 9.3 percent. First-year expensing also would be important to “green” technology, where it can help tip the balance between infeasible and feasible.

    Even if there were no energy crisis, Congress would still be justified in immediately enacting first-year expensing. In fact, many economists believe expensing is the cheapest, most bang-for-the-buck, most growth-oriented tax reform Congress could make. Replacing old-fashioned tax depreciation with immediate first-year expensing would add more than $200 billion dollars to GDP and deliver upwards of 750,000 new jobs.

    Despite the recent drop in gasoline prices, America’s over-reliance on foreign sources of energy remains a top concern among voters. And it should: U.S. petrodollars are being sent to Middle East countries, many of which are breeding grounds for Islamic fascists who want to kill Americans.

    The American people deserve a serious debate on energy policy this election season. George Allen has provided the GOP with a compelling energy blueprint.

    — Cesar Conda, a former assistant for domestic policy under Vice President Dick Cheney, is a senior fellow of Freedom Works.

    by Cesar Conda on 9/15/06.