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Can Capitol Hill Finally Pass a Renewable Energy Test?

August 15, 2011

The federal gasoline tax is set to expire on September 30, 2011. In normal times, renewing the federal excise tax on gasoline would be another routine vote on Capitol Hill. With the debt ceiling controversy all but resolved and hostage-taking once again proven to be an effective strategy for achieving conservative policy goals, the times are anything but normal.

The gas tax, in addition to financing federal investments in transportation infrastructure, serves as an important tool to achieve various environmental goals. On the other hand, the U.S. tax structure grants the oil industry a depth and breadth of subsidies that keeps the cost of petroleum low and affordable. In terms of renewable energy, the price of petroleum serves as a financial benchmark to justify the cost of clean energy. Add to the subsidized cost of petroleum the myriad of hidden costs, such as the life cycle, financial, environmental, health care, and Defense Department to protect the overseas oil supply lines to name a few, it is not surprising that renewable energy has such a difficult time making sound financial sense.

Time-and-time again it has been shown as the price of petroleum skyrockets at the pump the public and private sectors of the U.S. economy scrambles for alternate fuels. Subsequently, when the price declines, sometimes almost as fast as the increase itself, compliancy takes over and the urgency for alternative fuels comes to a dramatic halt.

The dilemma then becomes the political uncertainty between extending the federal gas tax and America’s long-term need not only maintain but to increase the tax to level the playing field. Unfortunately, due to budgetary constraints, renewable energy incentives are most likely a thing of the past. The renewable energy community finds itself at the crossroads of a viable pathway or another dead end.

In closing, the test in Congress will be their willingness to support higher petroleum prices. Hopefully, if the tax is extended, it will have as much to do with promoting renewable energy and improving our infrastructure rather than raising revenues to cover a voluminous budget deficit. Washington has an opportunity to put America’s long-term interests ahead of partisanship and the upcoming 2012 election. Time will tell if Capitol Hill is made of true metal or hot air!

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