Harry Reid pushes tax incentives for natural gas

By Karoun Demirjian

Tuesday, March 13, 2012 | 7:12 p.m.

Sen. Harry Reid often takes a hard line against subsidies for oil and gas companies. But on Tuesday, he was angling to get the U.S. government to create a tax incentive for a different kind of gas fuel — natural gas.

Reid has long championed a proposal to offer billions of dollars in tax credits to boost U.S. production of vehicles that can run on natural gas. The plan — presented as an amendment to the Senate’s transportation bill today — is one Reid has said will “jump start” the natural gas-burning vehicle industry here, which is lagging other nations, and that has received the endorsement of both President Barack Obama and self-appointed energy peacemaker and natural gas company owner T. Boone Pickens.

More importantly to Reid, however, it represents a potential place to dissociate from foreign oil.

“We cannot afford to continue spending hundreds of billions of dollars a year to buy oil from foreign countries,” Reid said back in November, when the legislation was first released. “This bill will create over 1 million jobs by accelerating the development of clean alternative vehicles and fuels here at home.”

Natural gas is not something Nevadans hear Reid talk about as often as he talks about solar and wind energy, but the fuel source has earned a central — and oftentimes, bipartisan — place in the national energy conversation because it is such a viable domestic resource.

Scientists estimate the U.S. has about a 200- to 300-year supply of natural gas in the ground. The price of natural gas has also been plummeting as traditional gas prices have been on the rise.

That’s why the legislation’s backers — 51 of them in the Senate today, not enough to get a measure through — say this is the moment for the government to step in: If the government steps in to incentivize conversion to natural gas vehicles, it will turn the country decisively toward using the increasingly cheaper, domestic resource.

But 51 wasn’t enough to clear a procedural filibuster-proof hurdle Tuesday, when an almost equal number — 47 Senators — voted against the proposal.

Among them was Nevada Republican Sen. Dean Heller — not because he doesn’t believe in natural gas, his spokesman explained, but because he doesn’t believe in the tax incentives.

“Creating the natural gas cash-for-clunkers program will do little to reduce prices at the pump or create jobs in Nevada,” Heller spokesman Stewart Bybee said. “There are plenty of industries that are struggling right now; the natural gas industry is not one of them. Moreover, levying a new gas tax to support another government program is the wrong direction if we want to turn our economy around.”

In the legislation, the cost to the government of the tax credits for converting to natural gas vehicles are paid for with a tax on the end-product liquefied or compressed natural gas sold as fuel for those same vehicles — that being the basis of Heller’s argument that at the end of the day, consumers of the converted vehicles are going to be socked with another tax.

It’s a new frontier for the eternal back-and-forth about gas prices, foreign oil, and alternative forms of energy, all of which are emerging as major topics on the Nevada campaign trail.

As the Senate was preparing to vote on the natural gas amendment and an amendment to resuscitate the Section 1603 tax credit program — in which renewable energy tax credits can be monetized into cash grants, a better, investment-driving option for young companies — Rep. Shelley Berkley, who is challenging Heller for his Senate seat, was in Reno, stumping about Heller and oil and gas.

Berkley and Heller are debating whose votes have been more responsible for climbing gas prices. Heller says its Berkley’s insistence on things like the cap-and-trade energy bill (which never passed) and her refusal to vote for the Keystone XL pipeline (that also never passed). Berkley says it’s Heller’s refusal to vote for keeping more domestic oil products at home (the initiatives she referred to today also never passed).

On Tuesday, no one was expecting Reid’s latest efforts to get energy legislation through the Senate to pass either.

The Section 1603 amendment, which also included a tax credit for wind energy, failed on a tie vote of 49 to 49 — again, with Reid and Heller taking opposite positions not so much on the renewable energy, but on the government’s responsibility in playing a role to promote its development.

“While Sen. Heller continues to support the production tax credit to encourage renewable energy development, spending more money on failed stimulus programs that have already lost jobs in Nevada makes little sense,” Bybee said, referring to the Amonix plant that hemorrhaged 200 workers this year. The company was a recipient of federal tax credits for renewable energy.

Berkley’s campaign charged after the vote Tuesday that Heller’s position on renewable energy was “blatant hypocrisy” and that he had “voted to kill clean energy growth.”

Heller, who an NRDC director recently called a “staunch supporter of clean energy development,” did vote in favor of a Republican amendment to extend a host of other tax credits and other tax programs Tuesday, as well as oil and gas exploration permits and approval of the Keystone pipeline. That amendment failed by a vote of 41 to 57.

The Senate is expected to vote this week on the complete transportation bill.