Quote from WarEagle:
I have seen a couple of posts by people that seem to be conservative but they are in favor of a government subsidy of Pickens ' plan. Artificial manipulation of the market is wrong, even if the idea is something you think is the right thing to do.
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As to Pickens' plan, I have no problem at all with alternative sources of energy, but not until they can compete with the best source of energy...fossil fuels. If wind can compete, then private investors will line up for miles to put money in it. I would invest in hamster farms if we could get them to run in a wheel and produce cheaper energy than a barrel of oil. This notion that only the almighty government can solve our need for energy is absurd. Look at what subsidies for corn ethanol have done...record high corn prices and starvation in the third world. All for a fuel that is nowhere near as good as oil.
Just thought I'd point out that when you talk about "subsidy", what you're talking about is the tax credit that government currently gives for wind production, amounting to 2 cents/kwh.
This tax credit is not unique to wind production. All forms of alternative energy production get a tax credit to my knowledge.
There's a reason for this. Government want to encourage alternative forms of energy, particularly those like solar or wind where they are renewable.
I don't intend to get off on a philosophical tangent. But certainly we are aware that government creates certain advantages into the tax code for things that they think may be beneficial to the society at large. I don't agree with all of these of course, nor do you I suspect. Currently for instance we pay unemployed workers federal unemployment insurance for a period. We give tax credit under certain conditions for child care. We give an interest write off on mortgage interest. You can get depreciation allowance on investment property. Depletion allowance on an oil well. I can go on.
So when it comes to a tax credit for alternative energy, this seems to be yet another thing that society, via their government, has decided has enough merit to be encouraged. And stop and thing about it. We hear alot about peak oil. So it is just a question of time when we better have some type of alternative. Evidently, up to now, there has been no widespread desire, to build alternative energy production, even with oil at $140 per barrel. There are alot of reasons why society, via the government, might wish to encourage something like solar, or wind. They're renewable. There are many benefits that fossil fuel does not have. Not to mention environmental benefits or the fact that we currently send $700 Billion overseas for imported oil every year...and growing.
In the case of wind power, there are large upfront expenses. In the case of Pickens, he has spent approximately $2Billion on wind turbines. By the time he is done with his project, he will have spent an estimated $12 Billion. Perhaps you are unaware that right now Congress has failed to renew the tax credit for wind power. But the transmission lines for Pickens wind power is a part of that $12Billion. In order to turn wind into a viable method there is alot of infrastructure that needs to be put into place....transmission lines for example.
I guess it depends on what type of government you wish to have. Currently, our government discourages drilling. We discourage building refineries. We discourage nuclear facilities. And don't get me started on all the ways government makes any of these nearly impossible. And unfortunately, I see no short term plan around to get rid of government interference with business.....which would be a good start if you really want someone to compete with a start up alternative energy plan. I guess you realize just putting up transmission lines down the midwest corridor is going to require alot of governmental help in terms of property rights, etc....just like the highway system did.
I find it interesting that Pickens is really the first plan I've seen come forward. And the first objection that has been thrown up is that people don't want to "subsidize" the plan. Presumably meaning they don't think Pickens should get a tax credit for his investment. I wonder how much thought people gave that objection?
OldTrader
