Posted: Mar 14, 2008  15:44

Extending tax credits on energy costs to homeowners is one good step the Congress is taking to help real people deal with higher home heating bills. But, as lawmakers debate the components of an overall energy package it appears many are taking the same old approach to coping with the fluctuations in energy prices brought on by a volatile global market.

Many are still considering increasing the taxes paid by energy providers.

Historically this has been a bad move. Going back to the oil embargo of the 1970s, lawmakers sought to raise taxes on energy as a way of controlling costs. The result left America with a diminished supply of domestic oil and a greater thirst from imported supplies.

Today, as the global demand for energy is increasing lawmakers want to justify higher taxes on domestic energy companies as a way to address not just prices but also the pressure to support alternative energy sources.

What makes sense for consumers and for the nation is a policy that encourages the development of all new sources of energy. Any policy which seeks to favor one form of energy over another will fail to meet our needs and ensure reliable, affordable energy for everyone.

Once again this year lawmakers have struck down a proposal to harvest energy resources in Alaska despite assurances that it could be done in an environmentally friendly manner. This kind of knee-jerk reaction by lawmakers shows an unwillingness to look at the big picture and craft a policy that enables America to reduce its reliance on foreign sources of energy while, at the same time, investing in new resources.

Providing tax credits for homeowners who take steps to improve efficiency should be the beginning of an overall policy that encourages efficiency on a national scale. But, for such a policy to be truly effective, tax credits should also be extended to all energy producing entities.

Many see that as an opportunity, that instead of paying higher taxes it would allow energy producing entities to reinvest those earnings into projects that will make production, refining and delivery more efficient.

The health and strength of our economy depends on robust energy supplies and stable energy supplies. The reality of an energy tax increase is that it will force prices up as energy providers pass on additional costs to consumers and businesses.

The best way to think about a tax on energy is that it is really a tax on citizens. Higher costs for gas, home heating oil, consumer goods and travel will negate any advantages brought on by a stimulus package.

With American business facing more competition from other nations, it is unwise and misguided to force them to absorb higher costs. Doing so will only weaken their position in the world market and ultimately lead to job cuts and a more severe economic downturn.

Alternatively, an effort to support investment by energy companies will lead to greater supply and greater economic strength. If we can create a more diversified supply of energy, while rewarding efficiency, we will be stronger and more secure in the long run. Traditional energy sources - along with promising alternative fuels - are necessary to keep this country on the right track and protect consumers and business.