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NAT GAS Act May Be Misguided Legislation

It is important for all of us to keep informed about proposed legislation related to energy issues. Even if you aren’t an oil and gas attorney or involved directly in the energy industry in some way, all of us are affected by energy independence (or lack thereof) and prices. Local, state, and federal legislation often has profound effects on how much energy costs us and whether or not America’s own energy potential is maximized.

775062_oil.jpg Consider the New Alternative Transportation to Give Americans Solutions Act, otherwise known as the NAT GAS Act. Originally, this bill seemed like a good idea. It was introduced in the House by Oklahoma Republican John Sullivan and shepherded through the Senate by Democrats Harry Reid of Nevada and Robert Menendez of New Jersey and Republicans Richard Burr of North Carolina and Saxby Chambliss of Georgia.

The NAT GAS Act would allow consumers or investors who either purchased natural gas vehicles or who built natural gas stations to claim between $5 billion and $9 billion in federal tax credits over the next five years. It had bipartisan support. Many Republicans were happy to sign on initially because of their tendency to support legislation helping the natural gas industry and to give this important sector of our economy a reprieve from some of the currently oppressive taxes. A bevy of prominent business leaders signed on as well, such as T. Boone Pickens .

This support is understandable because America needs more natural gas-an efficient, abundant, and clean energy source. However, it apparently remains a challenge to enact common sense legislation involving natural gas use. Certain segments of the liberal left have been waging a war against natural gas for years. Also, some state legislatures are shortsightedly fighting energy tax savings by actually raising taxes to preserve their own government spending. This ultimately hamstrings industry growth and job creation. Expectedly, President Obama continues his knee-jerk reaction in opposition to any type of sensible fossil fuel policy. The politically-motivated outcry over hydraulic fracturing, and efforts to curtail a demonstrable safe 60 year old practice, (click here for related blog) interferes with rational discussion on the subject.

Despite the real need for sensible energy legislation freeing the natural gas industry for growth, the NAT GAS Act may actually be more of a mirage of responsible legislation than anything else. Recently, 19 Republican co-sponsors have dropped out after considering the real consequences of this legislation. More analysis has shown that the Act does not truly facilitate natural gas production or assuage supply-side concerns, which probably explains why so many Democrats signed on. What the Act really does is skew the market by favoring some consumers over others, which may result in artificially inflating the cost of natural gas. It is may also be unnecessary, as UPS and other companies have fleets of vehicles powered by natural gas without the NAT GAS Act.

At the end of the day, the energy creation environment is complicated enough without further unnecessary laws and regulations being injected into the process. Certain legislation in the area may be helpful, but it is important that it remain revenue neutral, so as not to be used merely to increase federal coffers. The most logical solution is usually to allow the free market to work efficiently and without artificial alterations instead of promoting more unnecessary legislation which distorts natural energy demand.

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