Should We Subsidize Nat Gas Engines? - Real Time Insight

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In early 2010, when I first read of the T. Boone Pickens' plan to subsidize the conversion of 18-wheelers to run on natural gas I thought it was a great idea. Clean-burning, abundant, cheap nat gas would be a triple-crown winner for the environment, the economy, and new industries, to say nothing of national energy security with less dependence on the Middle East.

I thought Boone was one of the more honest types in the energy patch for having the guts to take this stand for our country when it could just as easily hurt some of his petroleum investments. But obviously, lots of other big oil guys would be hurt worse. In fact, one of his buddies and fellow fossil-fuel billionaire, Charles Koch, publicly slammed Boone for his plan.

But the Wall Street Journal ran an editorial piece a couple of weeks ago that challenged the man's plan as simply more corporate welfare.


"Proponents put the cost at about $5 billion over five years, but many energy experts believe it would be multiples higher. Eight million trucks are on the road today, and if each got a $15,000 average tax credit, the price tag grows to over $100 billion.

The history of energy subsidies is that they become an industrial and political addiction that is difficult to stop, no matter the results, and may even inhibit innovation and profitability by providing a crutch."

My take is that we've subsidized just about every other industry that needed it or not. And this one seems like it's worth a try in some way, on some level. I'm not for wasting money and creating dependent industries that don't really serve broader objectives. The details need to get hammered out and compromises will have to be made.

The Journal suggests letting free markets work their magic to eventually find the best solution. I couldn't agree more because while Congress fiddles and fights about it, American companies (and Norwegian ones) will probably be busy selling the technology and infrastructure to China and other markets. Why do you think Cummins, the biggest maker of nat gas engines, already does business in 190 countries?

So, should we subsidize nat gas engines, or not? And why or why not?

Cooker


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: CLNE , CMI , FSYS , GLNG , WPRT

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