Tuesday, February 10, 2009

Instead of new oil and gas taxes, how about an import tariff?

I received this e-mail message last week from Ken Lowery, regional account manager for Rapid Energy Services in Bossier City, La.:

"I'm sure that this dog has been beaten to death over the years, but why has no one been talking about leveling the playing field for domestic production by simply implementing a tariff on all imported energy supplies rather than stifling our own companies which are operating within 'normally accepted' profitability ranges and continue to provide good jobs for thousands of people?"

The money could be used to develop pipelines and other parts of the domestic oil and gas infrastructure, increase natural gas availability along major thoroughfares for vehicle consumption, and fund tax incentives for domestic production and alternative and renewable fuel research and development, he continued.

It's a politically appealing idea in some respects. Placing a tariff on imported crude oil and liquefied natural gas would directly attack that "oil addiction" politicians love to cite and indirectly encourage more domestic exploration and production. (Of course, this would require federal and several states' policymakers to allow more access, but that's a subject for another posting.)

It also would have to exclude imports from Canada and Mexico or risk violating the North American Free Trade Agreement, but that shouldn't present a political problem. But it also would increase feedstock costs for oil refineries which rely heavily on imports and natural gas consumers whose supplies include liquefied natural gas from overseas.

Still, it would be better than a windfall profits tax or other new levy on oil and gas production. So why isn't it being considered?


Anonymous Anonymous said...

Does anyone at DC government decision-levels retain cautionary knowledge of the Crude Oil Entitlement Program? Present indications appear to be "No", based on Carbon Offset and Stimulus/Bailout pronouncements.

February 12, 2009 at 10:00 AM  

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