Congress Should Reject New Taxes on Natural Gas | Citizens Against Government Waste

Congress Should Reject New Taxes on Natural Gas

The WasteWatcher

The $1.75 trillion Build Back Better (BBB) act is riddled with taxes and spending that will cripple the U.S. economy and increase the record national debt.  It includes $555 billion for “climate change” provisions, or 31 percent of the total, and only $3 billion, or .17 percent, to help prevent a future pandemic.  One of the Green New Deal provisions included in the bill is a significant fee increase on methane emissions from the oil and natural gas industries.  The fee would be $900 per ton in 2023, $1,200 per ton in 2024, and $1,500 per ton in 2025 and every year thereafter.

Americans are already suffering under the Biden administration’s policies, which have caused inflation to increase dramatically.  According to the Bureau of Labor Statistics, the U.S. has seen an all-items index increase of 5.4 percent over the past 12 months.  The energy index alone has increased by 24.8 percent over the past 12 months, leading to higher gas prices at the pump and at home.  These costs are also impacting other industries, including trucking and airlines.

The methane fee would annually cost between $42 billion and $72 billion, equal to as much as $417 million in payments per facility.  But it would address only 2.6 percent of total annual greenhouse emissions.  It will have a minuscule impact on emissions but will have a devastating impact on the economy.  According to the Environmental Protection Agency (EPA), greenhouse gas emissions have decreased by 13 percent from 2005 to 2019.  If reducing greenhouse emissions is a core component of fighting climate change, taxing a comparatively clean energy source isn’t the solution. 

These tax increases will significantly increase the cost of consumer goods and negatively impact anyone who uses natural gas to heat their home or small business.  The amount that will be passed onto consumers is estimated to be between $52 billion to $87 billion. 

While President Biden promised, “I give you my word as a Biden: If you make under $400,000 a year, I’ll never raise your taxes one cent,” once the Build Back Better Act is enacted and takes effect, higher energy costs will be passed onto every American both directly and indirectly, as it will impact all industries that rely on natural gas through higher fuel prices.  Energy prices are regressive, meaning they have a disproportionate impact on middle and low-income families, who may end up having to choose between buying food (which also costs much more due to inflation) or heating their homes.  And the tax itself is being used to fund the $1.75 trillion “human infrastructure” reconciliation bill, which is full of wasteful spending. 

Even without government intervention, the natural gas industry has a substantial monetary incentive to reduce emissions.  The fewer methane emissions wasted, the more profit there is to be made. U.S. methane emissions have dropped 16.6 percent since 1990, despite a nearly 100 percent increase in both oil and natural gas production over that same period.  Industry investments made during this period include reducing leaks and improving infrastructure, without strict government regulation.

Any legislation coming out of Washington should be about putting the U.S. on sound economic footing by reducing and prioritizing spending.  Methane emission fees should not be included in the reconciliation package or future legislation.  The unintended consequences of this policy will harm working-class Americans by raising prices on goods and services.  Implementing a fee on methane emissions will be a minor win for the big spenders and Green New Deal zealots, but it will have detrimental economic effects on American families and businesses for decades to come. 

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