Gramm: End Wind Subsidies, Let Natural Gas Flourish

Wednesday, 26 Dec 2012 10:21 AM

By Dan Weil

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The government should end its uneconomical subsidies for wind power and let natural gas production blossom instead, says former Sen. Phil Gramm, now a visiting scholar at the American Enterprise Institute.

“Federal subsidies for new wind-power generation will end on Dec. 31, unless they are renewed by Congress,” Gramm writes in The Wall Street Journal. “For the sake of our economy and the smooth operation of the energy market, Congress should let the subsidies lapse. They waste taxpayer money, subvert the allocation of capital, and generate a social cost many times the price tag of the subsidies themselves.”

Natural gas is the answer instead, he says. “If unimpeded, the expanded use of cheap natural gas to generate electricity will raise living standards and attract millions of new industrial jobs back to our shores. A vote to stop wind subsidies from being extended is, therefore, a vote for cheaper, more reliable power, higher living standards, reindustrialization, and fiscal sanity.”

Government wind subsidies cost $52.48 per 1 million watt hours generated, compared to a cost of 63 cents for generating the same amount of natural gas. “But the cost to taxpayers is only part of the problem,” Gramm says.

“Subsidized, wind-generated electricity is displacing other, much cheaper sources of power. The subsidies are so high that wind-power producers can pay utilities to take the electricity they produce and still make a profit.”

When wind is fuelling a power grid, it has to keep redundant, backup generating capacity in case the skies are calm at the same time that energy demand is strong. “Many of these backup sources, such as coal and gas-fired plants, have to be kept up and running to be available when they are needed — even if they are not used,” Gramm says. “This partially offsets the environmental benefits of wind power.”

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