Wasted Energy

Washington Post
10 June 2003; Page A20

ALAN GREENSPAN, the Federal Reserve chairman, is to testify today before the House Energy Committee on an issue not usually thought to be his area of special interest: the natural gas supply. On the other side of the Capitol, senators are scheduled to vote on an amendment designed to strike a clutch of nuclear energy subsidies from the Senate version of an energy bill. What do these two events have in common?

Quite a lot, as it happens. Both touch on the issue of energy supply and U.S. dependence on oil, and both concern subsidies. Most of Mr. Greenspan's testimony will probably concern the threat to the economy posed by the high price and scarcity of natural gas, supplies of which are at their lowest level since records began. He is right to worry -- but while he's at it, he should also say a few words in opposition to a Senate plan that would enable construction of a natural gas pipeline to the lower 48 states from Alaska -- where there is ample gas -- but would set a floor for the price of gas at the same time. Energy bills in both the House and Senate would mandate a route for the pipeline through Alaska, despite evidence that routes through Canada may well be cheaper. This is unnecessary: The need for more natural gas should not be used as an excuse to force taxpayers to pay for an uncompetitive delivery system or to guarantee profits to natural gas producers well into the future.

By the same logic, taxpayers should not be asked to provide subsidies for new nuclear power plants either. As it stands, Senate legislation would provide loan guarantees for up to half of the construction costs of new nuclear plants. According to the Congressional Budget Office, up to half of these loans might never be paid back, adding billions to the ultimate cost of the new plants to taxpayers. The senators behind the bill dispute these numbers and claim that nuclear energy is relatively cheap. But if that is so, then it ought to be up to the power industry to work out how to finance new plants, not Congress. If the Senate wants to encourage nuclear power plant construction, it should find means to do so that don't risk such a high price to the taxpayer.

Those who favor subsidies for the pipeline and for nuclear power like to point out that the oil, coal and wind industries are subsidized too, in both open and hidden ways. True, but it's a weak argument. Instead of finding new ways to spend taxpayer money, Congress should cut energy subsidies across the board. Only then will businesses and consumers be able to judge the true price of energy and make the right decisions about how much, or how little, to use.

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