COMMENTARY
Energizing Rural America:
How the energy bill helps us all
Editor’s note: Guest commentary is by
William A. Steel, president of the
National Grange. The opinions expressed
are his own, and do not necessarily reflect
those of USDA or its employees.
When Congress passes a bill, a lot
can be lost in the numbers. Dollar
signs and pages sometime overwhelm
the actual text of a bill, causing the
people who are directly affected to lose
sight of why legislation was actually
passed in the first place. The mammoth
Energy Policy Act of 2005,
recently passed by Congress, fits comfortably
into this description. Within
the 1,700-page document, issues ranging
from daylight savings time to tax
breaks are thrown together and eventually
lost in the magnitude of the text.
The greatest criticism of this legislation
is that it does little to immediately
address the short-term problem
of rapidly escalating prices for gasoline,
diesel fuel, home heating oil,
propane and natural gas. However,
what should not be lost are the positive,
long-term effects it will have on
farmers and those living in rural communities.
Many of the provisions — directly
or indirectly — benefit rural areas, a
part of the country that is sometimes
overlooked when it is time to set constructive
federal policies. One of the
most significant benefits is the new
Renewable Fuels Standard established
in the new energy bill. By federal mandate,
renewable fuels use will increase
to 7.5 billion gallons by the year 2012.
This mandate will increase the demand
for corn (ethanol) and soybeans
(biodiesel), driving up the price of
these commodities and creating a better
market for
farmers.
Both large
and small producers
will benefit
from this
mandate, with a
biodiesel tax
credit of up to 10 cents per gallon,
with up to 15 million gallons of production
given to small producers to
help balance competition. Many of
America’s families, especially those on
fixed incomes, struggle to pay their
natural gas and electricity bills. High
natural gas prices also translate into
huge costs for the typical farmer.
The domestic exploration and production
of natural gas is another provision
designed to help farmers. For the
first time in decades, the federal government
will be authorized to do a
comprehensive survey of natural gas
deposits that lie off our nation’s coasts.
Current government estimates predict
that there is a 15-year supply of
natural gas beneath our coastal waters,
but no one knows for sure. In addition,
special tax provisions will help pay for
development of new supplies of natural
gas derived from abundant deposits of
coal, as well as for new facilities to
store liquefied natural gas.
Input prices for fertilizer and other
[crop inputs] are directly linked to the
price of natural gas. This expansion of
domestic supplies of natural gas will
drive down costs for things like fertilizer,
saving farmers money while better
using an already proven natural
resource.
Rural communities will benefit from
the $800 million earmarked in the
recently passed energy bill for an innovative
new bond authority created to
help in the financing of renewable
electricity projects by rural electric
cooperatives, municipal governments,
and tribal investments.
This provision allows consumer-owned
electric companies to issue
bonds with zero percent interest. The
“interest” paid on the bond comes,
instead, in the form of federal tax credits
to the investor. This new, creative
source of financing will increase
investment in consumer-owned electric
companies and will directly benefit the
rural areas where these companies are
predominantly found.
Although some publications have
erroneously reported that the energy
bill provides few rewards for farmers,
the National Grange strongly supports
the passage of the Energy Policy Act of
2005 and its solid investment in the
future of rural America. It helps to
solidify renewable fuels as a staple of
America’s energy use, while also reducing
costs of natural gas and making
investments in consumer-owned electric
companies more appealing. All of
these provisions directly benefit farmers
and rural communities, and they
will continue to steer rural America
toward a positive and prosperous
future.
William A. “Bill” Steel,
President
National Grange
