Saint Reagan vs the Wildcats and Oil Barons

Now would have ever guessed that Ronald Reagan would say this in an address to the nation:

"Under our new tax proposal the oil and gas industry will be asked to pick up a larger share of the national tax burden. The old oil depletion allowance will be dropped from the tax code except for wells producing less than 10 barrels a day. By eliminating this special preference, we'll go a long way toward ensuring that those that earn their wealth in the oil industry will be subject to the same taxes as the rest of us. This is only fair. To continue our drive for energy independence, the current treatment of the costs of exploring and drilling for new oil will be maintained."

- Ronald Reagan, May 28th 1985

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The oil depletion allowance is a tax gimmick instituted in 1926 that allows well owners to deduct a fraction of their revenues rather than their actual costs. Of course, they can chose to do the latter if it works out better, so effectively this becomes a tax cut relative to standard accounting...in many cases a very large one. There is no reason to grant a sweetheart deal to the world's most profitable industry. Reagan was right, and this tax break should be eliminated.

Republicans *** Heart *** Taxes...

Republicans do love taxes...when they are slapped on the wind and solar industry. Legislators in Oklahoma, citing "fairness" and a "free-rider" problem, have decided to slap grid-connected solar or wind powered homes with a monthly fee to cover theoretical costs these users place on the grid. While the precise fee hasn't be determined yet, Arizona has a $5/month fee based on a similar logic, or about half a penny per kilowatt hour for a typical household.

Now, one might be able to argue that these fees are justified, but it is not completely clear that the free-rider problem actually exists, especially in the case of solar, which reduces peak demand and therefore the amount of infrastructure needed to handle it. However, even if it is the case where renewably-powered homes place usual burdens on the grid and thus would be free-riding if they didn't pay for it, their competition has free-rider issues that are an order of magnitude larger or more, 14 to 35 cents per kilowatt hour according to a recent study.

It is all but impossible to justify this discrepancy. If free-rider problems are something that deserves government intervention, then the government should be focusing on the big ones tied to entrenched incumbents, not tiny ones by their competitors. The fact that Oklahoma Republicans decided to attack the wind and solar industries while letting fossil fuel industry get away with relative murder can only be explained by petty partisanship, regulatory capture, or both. None of these explanations reflects well on their abilities as our representatives. It is as if they are prosecuting shoplifters at the behest of the mafia.