Re: Statement on Gang of 10 Proposal
The daunting energy challenges facing the U.S. economy are placing serious pressures on energy users, including corporations of all sizes and individual households. As a broad-based CEO-led organization representing both energy producers and consumers, Business Roundtable is deeply concerned that continued high energy prices threaten economic growth, capital investment and U.S. competitiveness in the global economy.
Bipartisan cooperation represents the best, and indeed only, hope for sustained progress on energy policy. For this reason, we welcome the recent package of legislative proposals offered by the Gang of 10 (now the Gang of 20). While the package is a constructive step forward and represents a serious effort to build consensus, we believe it needs important modifications to effectively address our energy challenges and could not support it as is. As the Senate considers a number of energy proposals this week, we urge it to work on a bipartisan basis toward a more balanced approach that addresses the concerns expressed in this letter.
Business Roundtable’s recent report, More Diverse, More Domestic, More Efficient, emphasizes the need for wise and balanced long-term energy strategies that achieve an alignment between supply and demand and increased U.S. energy security. These strategies should not focus only on boosting supply or reducing demand but should take advantage of all tools that will improve our energy situation.
We are pleased that the Gang of 10 proposal reflects this comprehensive approach and attempts to strike a balance between increasing domestic energy sources and promoting conservation and efficiency. This balance is not only essential to building bipartisan support but will, over the long-term, provide the greatest protection against price shocks and energy shortages that threaten U.S. energy security.
As the Gang of 10 recognizes, the U.S. needs to give high priority to advanced vehicle and other technologies to gain efficiencies and diversify transportation fuel supply sources. More Diverse, More Domestic, More Efficient calls for maximum feasible development and deployment of energy efficient vehicle and other technologies and recognizes that this goal will require a sizable ongoing commitment of funds and expertise to R&D programs. In addition, our report recognizes that incentives to increase R&D and early consumer purchase of advanced vehicles and other products are critical to accelerate introduction of these technologies into the marketplace.
Although we favor government programs to promote fuel-efficient technologies, Business Roundtable believes it is imprudent to set numerical goals for conversion of the vehicle fleet to non-petroleum fuels. The pace of this transition should be determined by advances in technology, economic factors and consumer preferences.
We also applaud the Gang of 10’s focus on enhancing conservation and efficiency. Business Roundtable members strongly support an aggressive national initiative to promote increased energy efficiency. We understand the need for incentives to increase the role of renewables in our power generation mix through extension of renewables production tax credits and investment tax credits and to boost the production of a greater variety of transportation fuels. Similarly, we support expanding the electricity transmission and distribution system to allow greater access to renewable sources of energy that often are located far from existing load centers. In addition, we think refurbishment of the existing grid will also improve reliability. We support expanded weatherization, building efficiency and other programs to substantially raise the efficiency of new and existing commercial buildings.
Increasing domestic energy resources is a central theme of More Diverse, More Domestic, More Efficient and a top priority of the Gang of 10 package. It is imperative that we take full advantage of domestic resources to reduce our reliance on energy imports and provide a supply cushion that will ease pressure on prices in the global market. As recognized by the Gang of 10, investment in enhanced oil recovery, coal-to-liquid plants and nuclear power will contribute to this goal.
We strongly support expanding opportunities for drilling on the Outer Continental Shelf (OCS). This is a goal that the Roundtable has advocated over several sessions of Congress. We are pleased that the Gang of 10 would increase OCS access but believe it must go much further to meet America’s energy needs. Our members support a broader lifting of the OCS moratorium to allow oil and gas leasing in all areas off the Atlantic and Pacific coasts and in the Gulf of Mexico. Similarly, we urge Congress to improve access to public lands in the Rockies and in Alaska.
We understand that the programs proposed by the Gang of 10 are not cost-free and that public resources must be invested to realize the potential of advanced energy technologies. However, we strongly disagree that these investments should be financed by increasing tax burdens on the oil and gas industry or any other single sector of the economy. U.S. companies now labor under one of the highest corporate tax rates in the developed world. Increasing the effective tax rate on oil and gas production and petroleum refining will inevitably reduce incentives for increased domestic energy production at a time when boosting domestic supplies is an urgent priority. It also will penalize an innovative, risk-taking industry because of its success in the current market environment creating a dangerous precedent for taxing other successful business sectors to meet government revenue needs. While we support increased public investment in advanced energy technologies, it is incumbent on Congress to find broader funding sources for these investments.
In conclusion, the Gang of 10 proposal is a welcome bipartisan effort but should be modified to achieve the right balance between reducing demand and increasing domestic energy supplies. We urge the Senate to continue to work toward a bipartisan package that addresses the concerns in this letter and effectively meets our energy challenges.
Sincerely,
Michael G. Morris
Chairman, President and CEO
American Electric Power Company, Inc.
Chairman, Sustainable Growth Initiative
Business Roundtable
cc: Nancy Pelosi, Speaker of the House
John Boehner, House Republican Leader