NAT GAS Act Supporters Inadvertently Admit it’s Unnecessary

When someone supports something whole-heartedly, it’s funny to watch them stumble over their own arguments. But that’s just what happened last night on CNBC’s Mad Money with Jim Cramer:

While chewing out the Senate for rejecting the NAT GAS Act amendment yesterday, Mr. Cramer and his guest, Co-founder and CEO of Clean Energy Fuels, Andrew Littlefair, continuously impeded their own arguments by consistently claiming that the natural gas industry is moving along just fine without massive government subsidies (emphasis added):

CRAMER: Lately nat gas vehicle plays like Clean Energy Fuels and Westport have made people fortunes. The nat gas fueling station company is putting on a network of stations all across American and making trucking quarters and giving you a 65% gain since we heard from its fabulous CEO just four months ago.

[…]

LITTLEFAIR: I’m a little disappointed because I thought really for the American  people – not so much for our company because we’re way ahead – but for the American people this was a good chance….I’m not waiting for Washington and neither is Chesapeake and you saw the announcement of GM and GE. American business is moving forward. Unfortunately, we are counting on some leadership from Washington.

That “leadership” Mr. Littlefair is referring to is the act of giving a government subsidies to companies for something they were already planning to do. By all accounts, they absolutely don’t need a handout. That’s the whole problem with the NAT GAS Act –  businesses just want government handouts for something they were already going to do. The industry is advancing without the handout, so why give it to them in the first place? Mr. Littlefair didn’t stop there:

LITTLEFAIR: I think some were not for it because of the budgetary situation of the country, and didn’t realize, Jim, that there was a pay-for associated with this. This wasn’t going to cost the taxpayer a nickel…

That “pay-for” refers to a tax on the natural gas fuel, much like you’re taxed by the government for every gallon of gas you put in your car. So, the government is going to make it more expensive to fill up with natural gas and then give your dollars to the natural gas industry for something they’re already doing. Seriously, they’re going to tax the natural gas fuel that you would then be buying. Big business wins, individuals lose…again. Mr. Littlefair continued:

LITTLEFAIR: I don’t think we have to wait for Washington. You know, we had growth this last year of 38%, we’ll see an even better 2012. You’ve got now major corporations, Coca-Cola and Owens Corning and UPS and FedEx, they’re all moving this way.

[…]

The private sector is moving this way. As we’ve talked about before, waste management is leading by example in the Republic. Ninety percent of the new vehicles that waste is buying is natural gas. Let’s not get hung up and wait for Washington. We’re building it out. It’s happening. GM and Chrysler and Ford are all moving this way, so this is going to happen.

They said it! The natural gas vehicle industry is moving along without Washington, so why shovel billions more dollars (and put taxpayers on the hook) to subsidize an industry that clearly doesn’t need it?

CRAMER: Isn’t the principle objection right now that there just simply aren’t enough nat gas filling stations and Exxon is not going with it? I don’t know if Shell is going. You’re really the only game in town, and you don’t have the capital to put up 1,000 gas stations in the next 48 hours.

LITTLEFAIR: That’s right, we don’t. We do have the capital, about $300 million on hand right now, and we’re going to spend it. We’re building 150 stations as we speak

Again, businesses are already moving the natural gas industry along. Mr. Cramer and Mr. Littlefair believe, however, that things would move quicker with the subsidies. However that has never been the case. Taxpayers subsidized the Chevy Volt, but that never took off; we’ve been subsidizing wind energy for two decades but that only accounts for 2.3% of the energy we use in the country. Subsidizing an industry does not make it grow; it creates a crony capitalist structure aimed at getting more subsidies, not furthering innovation.

CRAMER: One last question. I know if you had a subsidy, people would just be retiring those bad trucks by days – just by the hour. Now can we reduce the price of these trucks enough that it’s just an instant payback?

LITTLEFAIR: Yeah. Let me give you this one, and I can’t give you the name, but so one of the largest trucking fleets in America has just made a deal with our friends at Navistar, and it hasn’t been announced yet, and the incremental cost is in the low $20,000 range, so now, this fleet uses 20,000 gallons, so you’ll get about a six-month, seven-month payback on that, and that’s a no brainer, Jim.

CRAMER: That’s enough to do it.

LITTLEFAIR: That will do it, and we’ve come a long way from $65,000 to $25,000. We’re done at that point.

These two spent the entire segment talking about how businesses are already moving towards natural gas vehicles, already installing fueling stations, and already bringing down the cost of the vehicles. My question is this: why do they need government subsidies for something they’re already doing at lightning speed?

CRAMER: …Very disappointing day, but, you know, your company is going to do fine without it…I think that this is a company that you buy because the country is smarter than its leaders. That’s what’s going to happen. Business people are smarter than the politicians

Exactly! Business people know where to invest capital, that’s why the natural gas vehicle industry is moving along. Once politicians get involved, the issue becomes not about which companies have the best product or the best business model, it becomes about which company is backed by the most politically connected person.

This entire exchange inadvertently highlights the absurdity of the NAT GAS Act.

Related Links:
Obama’s Non-Solution for High Gas Prices
Senate Rejects NAT GAS Act
Untangling the Spin: Senator Burr’s NAT GAS Act Speech

Please Share Your Thoughts

One thought on “NAT GAS Act Supporters Inadvertently Admit it’s Unnecessary

  1. Regarding NAT Gas Act.
    Question #1. Do we believe Nat Gas is abundant and available in the US?
    Question #2. Would moving to Nat Gas more quickly assist in our nation’s security?
    Question #3. Has dependence on oil gotten us more involved in middle east conflicts than we would have had we been more energy independent?

    Why does the political debate not include probably the most important aspect of this? How would our economy be doing if we hadn’t spent a cent in Iraq or Afghanistan?
    If we laid out a plan as a country including the US, on getting off of imported oil, it would be amazing. I don’t give a about what company gets the subsidy… Every one in this country would win.

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