CHANTS OF "drill, baby, drill" aside, the true path to energy independence, as we've argued before, is in making sure that the price of oil stays high, and predictably so. That is what motivates people to change their behavior and investors to develop alternative energy sources. These goals could be achieved without socking it to ordinary Americans by taxing oil and gas and returning the revenue to taxpayers.
But Congress isn't about to raise the gasoline tax, so the question becomes what is second-best. One answer is in a Senate bill that extends tax credits and incentives that will bring certainty to renewable-energy producers and encourage conservation. After coming to an agreement with Sen. John Cornyn (R-Tex.), who is fighting for money for his state after it was ravaged by Hurricane Ike, the measure is scheduled for a Tuesday vote. We urge its passage.
The impact of the Energy Improvement and Extension Act of 2008 would be immediate. The production tax credit would be extended through 2009 for wind and refined-coal companies. For renewable-energy businesses that generate electricity from biomass, waves, tides and other sources, the credit would run though 2010. This would bring predictability to the wind and solar energy industries, which have lurched from solvency to insolvency each time the tax credits have expired in the past.
The legislation would also encourage conservation, which is needed to cure the nation's addiction to imported oil. It would do so through a kind of picking and choosing among technologies that Congress is not well equipped to do, and that is invariably subject to lobbying and political decision making. But conservation and a greater reliance on renewable energy sources are components of a long-term energy policy that the United States desperately needs, and most of the tax credits in this bill will do more good than harm.