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April 21, 2010

More Government Waste on Energy and Climate Spending

Since the Obama Administration has come into being, there has been discussion of some sort of Energy Policy.  While the goal of many Americans is to have energy independence, the Obama Administration believes that this cannot be achieved without their direct involvement.  While I applaud the President’s decision to increase drilling offshore, I believe this needs to be increased nationwide.
The government historically has spent less than $1 billion per year on energy.  Most of the government actions in the past have involved subsidized loans to various energy providers.  When the government lends money, it does not record the loan as an expense in the federal government budget, instead it records the interest payments as a surplus.  However, if a company defaults on the loan and files for bankruptcy, the government does recognize those losses as a budget expense.
Subsidizing Energy
While the President is on the right track by allowing more nuclear power plants in the United States, the methodology of subsidized government loans to build them is not responsible.  While I do not have information on the company that is building these nuclear plants, I have learned that green energy companies that get flushed with government subsidies have had severe leadership deficiencies that have led to bankruptcies and economic disruptions in the localities they operate in.
For example, in Woodford County, Illinois, there are multiple wind turbine projects underway.  The company that started these projects was Navitas Energy.  Navitas was heavily dependent on government subsidies and had a reckless management structure.  The government did not have any accountability structure set up on these funds.  The result was Chapter 11 bankruptcy.  While that may not seem like a big deal, the taxpayer had to take losses on their subsidized loans.
In addition to the losses, the local economy is Woodford County was affected.  Farmers who had set aside hundreds of acres of land to lease for wind farms were left with useless land.  In some cases, construction had started, but was stalled because of the bankruptcy procedures.  If you go to the Navitas Wind Projects site, you can see all of the projects that had been handed over as a result of the bankruptcy.
There are stories like these across the country.  Do we really want billions to be lent to the same types of companies for nuclear power?
The Energy Budget
Now that we’ve dealt with the truth behind energy subsidies, let’s focus on the Obama Energy budget.

Energy conservation is the largest increasing component in the budget for the short term.  This is likely money the government is paying out for appliance and window energy efficiency credits.  Energy supply is clean energy grants (different from subsidies as these are handouts not loans) and the proposed climate bill.  The cost of the supply section of the energy budget is the fastest growing component from 2011-2014.
What I don’t understand is why we should support a climate bill that clearly increases in cost over the next five years?  Do we really need this bill while there is a $1.5 trillion budget or can we wait for our fiscal situation is stable?  Should we continue to provide subsidies to newly formed energy companies without accountability?
Cost to the Average Taxpayer
For the $23 billion in energy spending in 2010, the cost to the average taxpayer is a $60 increase annually and $238 over the next five years.  To date, the Budget BS series has exposed a $120 increase in the average taxpayer’s cost for 2010 and $578 over the next five years.  This is only the second in 12 parts to this series.  How much will it cost in the end?  Stay tuned.

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