Today, the Ways and Means Committee held a hearing on energy tax policy and prospective tax reform. During the hearing—which lasted nearly 4.5 hours—the most interesting debate surrounded the NAT GAS Act, legislation that would provide tax credits to consumers who purchase natural gas cars and construct natural gas infrastructure.

Proponents of HR 1380, the NAT GAS Act, constructed and leaned on three straw men. The bolded sentence represents the NAT GAS Act advocates’ arguments—my rebuttal follows.  

1. Increasing demand for natural gas via the NAT GAS Act will increase American natural gas production. Unfortunately, this theory only works in a vacuum. A vacuum that is absent government’s prohibitive exploration policies and uncertain regulatory environment. The hostile-to-hydraulic fracturing Environmental Protection Agency is looking to impose regulations which will surely hamstring the burgeoning industry. States like New York have banned hydraulic fracturing completely. In reality, the NAT GAS Act would likely induce demand that outpaces supply. This would raise prices for other, less politically connected, consumers of natural gas—like American manufacturers.
2. The NAT GAS Act will make America more secure. America imports a majority of its oil from our North American neighbors, Canada and Mexico. The amount of oil we import from unfriendly governments, that perhaps may be sponsoring terrorist activity, is not insignificant but minimal. The NAT GAS is estimated to displace 100,000 oil-based cars over the next five years. This will reduce the amount of foreign oil we important but is not substantial enough to starve OPEC or Venezuela of revenue. After all, Venezuela and the countries that constitute OPEC export arguably the most valuable resources in the world—they don’t have trouble finding buyers.
3. Without the NAT GAS Act, consumers won’t buy natural gas cars. While a tax credit would certainly increase purchases of natural gas cars, it is important to ask what the impetus is behind such a policy, and is it fair. Americans for Tax Reform operates under the assumption that the government should abstain from meddling in the market unless there is an obvious market failure. With their vast natural gas vehicle fleets, UPS and Fed Ex disprove the supposition that natural gas cars are simply too expensive. Further, why should natural gas consumers who drive cars receive preferential treatment over a family that uses the fuel to heat their home?
    

Don’t like the NAT GAS Act? Tell your Representative or Senator.

Posted by Chris Prandoni on Thursday, September 22, 2011 2:47 PM EDT

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