DPC REPORTS
FACT SHEET | February 12, 2008
Democrats are Committed to Extending Renewable Energy Tax Credits as Energy Prices Continue to Rise
Rising energy costs are
squeezing the budgets of middle-class Americans and putting a strain on the
economy. For years, as Bush Republicans took their cue from the big oil
companies on energy policy--and the oil companies made hundreds of billions in
windfall profits--American consumers have paid more at the pump. In
recent months, as the economy has shown signs of weakness, sharp increases in
energy prices have taken on a new significance.
Senate
Democrats are committed to an energy policy that invests in renewable energy,
lowers gas prices, makes
This Fact Sheet will outline
how energy costs are impacting the economy and middle-class families and
highlight the importance of extending the energy tax credits which have been
repeatedly blocked by the Bush Administration.
High Energy Costs are Straining the Economy
Increasing wholesale inflation. The Labor Department reported that wholesale inflation was up 6.3 percent for all of 2007, reflecting a huge increase for the year in various types of energy costs ranging from gasoline to home heating oil.[1]
Stifling economic growth. The increase in oil prices over the past five months could easily translate into half a percent reduction of GDP, which could be enough to throw the economy into recession.[2]
Increasing consumer prices. The same increase in oil prices that may be a negative influence on growth is also lifting overall consumer prices and putting upward pressure on inflation as well.[3]
Acting as an artificial tax on the economy. The more-than-$30-a-barrel increase in oil prices over the past five months is similar to a $150 billion tax increase.[4]
Deflating
consumer confidence.
The increase in the price of oil is sending up the price of gasoline, the most
visible price in the
Increasing our trade
deficit. Record oil
prices widened the
Rising Energy Prices are Taking a Toll on the Middle Class
The ever-increasing rise in energy costs are squeezing the pocketbooks of middle-class
families who face the prospect of “spending more than $2,500 to heat their
homes this winter.”[7] The price that middle-class Americans are paying at
the gas pump is also having a profound impact on middle- and lower-income
families. “Our (
Consumers are also getting squeezed by businesses that are passing on increased fuel costs to the customer. A number of major airlines, for example, recently announced that they would double their domestic flight surcharge from $20 to $40. This “marked the third time they have tried to pass on the cost of fuel to passengers.”[9]
Renewable Energy and Energy Efficiency Tax Credits Create Economic Growth and Save Consumers Money
Last year, the renewable
electricity sector pumped more than $20 billion into the
The Production Tax Credit (PTC) for wind energy and the Investment Tax Credit (ITC) for solar energy are currently scheduled to expire at the end of 2008. The extensions of these renewable energy tax credits are important because they will help stimulate the economy and create high-paying jobs. The expiration of renewable tax credits could lead to the loss of 116,000 jobs in the wind and solar industries through the end of next year.
Solar. An estimated 6,000
high-quality jobs were created in the solar sector in 2007 and another 12,000
are expected in 2008. The market uncertainty surrounding a possible
extension of the ITC has already dampened the solar energy market and it is
estimated that additional market contraction will occur if the ITC is not
extended.
Wind.
The potential expiration of the PTC would cause the loss of more than 1,000
jobs in
Geothermal. New geothermal projects will result in the
infusion of $11 billion in capital investment in the western states, and create
5,600 permanent jobs and over 21,000 person-years of construction and
manufacturing employment. Without an extended credit, the resulting tax
hike will undercut one of the fastest growing segments of the
Energy
efficiency. According
to the
Appendix A
[2]
[3]
[4] Ibid.
[5] Wall Street Journal, “Weakened
[6] New York Times, “Oil Is Blamed for Widening Trade Deficit,” (January 12, 2007).
[7] San Francisco Chronicle, “Short-term fixes to high energy prices aren't sustainable,” (December 3, 2007).
[8] New York Times, “Americans Cut Back Sharply on Spending,” (January 14, 2008).
[9] Los Angeles Times, “Fuel fees pump up airfares,” (January 29, 2008).
[10] American Wind Energy Association, “Support the Senate Finance Committee Economic Stimulus Package,” January 30, 2008.
[11] Ibid.