Promoting freedom, innovation, and growth

Connect with IPI

Receive news, research, and updates

January 18, 2017

Perry Shouldn't Forget to Do These Four Things at the Energy Department

  Washington Examiner

Former Gov. Rick Perry, R-Texas, will face a number of challenges when he takes over the Department of Energy, both from the bureaucracy within and environmentalists and the media outside.

The agency was created in 1977 by President Carter, partly in response to Middle Eastern oil-exporting countries' decision to use oil as a political weapon.

DOE, whose proposed 2017 budget is $32.5 billion, is responsible for a number of energy-related tasks. Surprisingly, regulating the fossil fuel industries isn't one of them. Those responsibilities primarily belong to the Environmental Protection Agency and the Department of the Interior.

One important function has been to deal with nuclear issues, including nuclear power, missile complexes and nuclear waste and cleanup.

The agency is also tasked with developing a national energy plan. That focus has changed with different presidential administrations. Under the Obama administration, the agency has been a cash cow for green energy projects, often with questionable results.

For example, in 2014 DOE ponied up a $150 million loan guarantee for Cape Wind, a wind turbine project to be located in Nantucket Sound. However, local pushback over the potential doubling of consumers' electricity bills, even after millions of taxpayer dollars, has stalled the project.

The solar energy company Solyndra, whose failure became a national scandal, received its $535 million loan from DOE in 2009, though it originally applied for the loan in 2006 under the Bush administration.

In short, Perry needs to reign in, downsize and refocus DOE. Here are some steps he should take.

Eliminate all mandates and subsidies for energy sources. According to a 2015 study by the Taxpayer Protection Alliance, the Obama administration spent an average of $39 billion a year over five years subsidizing solar and other renewable energy projects, and a chunk of that money came from DOE.

But the federal government should not be in the business of deciding private sector winners and losers. That's what consumers and markets do. Perry should phase out DOE clean energy subsidies and hand that money back to taxpayers.

Scale back and rationalize energy research. DOE is charged with conducting energy research and development. In an effort to fulfill Obama's dream of a clean energy economy, DOE's 2017 budget request hoped to "double clean energy R&D funding in five years." That's probably not going to happen now.

There may be a role for DOE to engage in certain types of specialized energy R&D, both for fossil fuels and clean energy, but that possibility has often been used to promote political agendas. Perry needs to depoliticize DOE's R&D and refocus its efforts on developing a realistic energy plan, one that recognizes the country will be dependent on fossil fuels for decades to come.

Expedite approval of liquefied natural gas terminals. Liquefied natural gas could become a major export, but for several years the federal government has been a roadblock rather than a catalyst.

The Federal Energy Regulatory Commission is an independent agency within DOE. Among other duties, it is charged with approving applications to build liquefied natural gas terminals that cool natural gas to -260 degrees so it can be shipped on tankers.

Under the Obama administration, the permitting process has been slow. Perry should do what he can to expedite the application approval process. Not only would the additional income from gas exports help the economy, it would provide an alternative for our allies who are dependent on countries like Russia for their natural gas.

End the Strategic Petroleum Reserve. The Strategic Petroleum Reserve was created under the DOE to stockpile crude oil in case of disruptions in U.S. oil imports. But innovative drilling techniques have increased U.S. oil production so rapidly that we will soon be a net oil exporter. That greatly expanded production has negated the need for the Strategic Petroleum Reserve. It should be phased out.

DOE has a number of important core responsibilities, but it has also engaged in numerous costly and counterproductive activities. Perry needs to eliminate those activities and return the agency to its original mission. It will be a smaller and less costly DOE but a much more effective one.

This piece also appeared in the Logan Daily News (Feb. 3, 2017) and the Odessa American (Feb. 7, 2017). 


  • TaxBytes-New

Copyright Institute for Policy Innovation 2018. All Rights Reserved Privacy Policy Contact IPI.

e-resources e-resources