Of Climate Change Alarmism, CO2 Taxes (i.e. “Cap and Trade”), and Solutions to High Energy Prices

8 06 2008

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Black Canyon of the Gunnison, Colorado, USA

“Climate Change Collapse” by the Wall Street Journal, June 5, 2008

The Wall Street Journal (http://online.wsj.com/public/us) provided this commentary on the failure of “Climate Change / Cap and Trade” legislation in the U.S. Senate on June 5, 2008. Read the full article here. Following are some key quotes from the article titled “Climate-Change Collapse“. Please note that any underlining or bold text in the following article exerpts are added by myself as blogger-in-chief to highlight certain key points in the quoted sections of the article.

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“Backers of the Warner-Lieberman cap-and-trade bill always knew they would face a veto from President Bush, but they wanted to flex their political muscle and build momentum for 2009. That strategy backfired. ….. Those groups spent millions advertising and lobbying to push the cap-and-trade bill through the Senate. But it would appear the political consensus on global warming was as exaggerated as the alleged scientific consensus. ….. Even John McCain, a cap-and-trade original co-sponsor, now says that this scheme won’t fly until China and India sign on – which could be never.”

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“Senators also criticized Warner-Lieberman’s failure to clearly specify what would happen with the vast revenues the climate bill would generate – some $1 trillion over the first decade, which environmental groups wanted as a slush fund to finance “green technologies. …… The Natural Resources Defense Council desperately tried to persuade Congress in the 11th hour that the expensive price tag is a bargain because “the cost of inaction” would reach $1.8 trillion by 2100 due to increased hurricanes and rising oceans – an argument without a shred of scientific or fiscal credibility.”

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Conservative political columnist George Will wrote two articles for the Washington Post (http://www.washingtonpost.com/) that are clearly spell out the related issues of “cap and trade” and “energy development”.

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“Carbon’s Power Brokers” by George Will, Washington Post, June 1, 2008

Will’s June 1, 2008 Washington Post article titled “Carbon’s Power Brokers” (read whole article here) identifies the Lieberman-Warner bill’s central feature that was make deliberately ‘less than obvious to the general public’. In so many words, “cap and trade” legislation is essentially a less transparent form of taxation upon business’ energy production and use, and would have accomplished greatly expanded control of the U.S. economy by the newly formed environmental/energy use-control bureaucracy within the U.S. government. Following are some key quotations from the article:

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“Speaking of endless troubles, “cap-and-trade” comes cloaked in reassuring rhetoric about the government merely creating a market, but government actually would create a scarcity so that government could sell what it had made scarce. ……. Businesses with unused emission allowances could sell their surpluses to businesses that exceed their allowances. The more expensive and constraining the allowances, the more money government would gain.”

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“If carbon emissions are the planetary menace that the political class suddenly says they are, why not a straightforward tax on fossil fuels based on each fuel’s carbon content? This would have none of the enormous administrative costs of the baroque cap-and-trade regime. And a carbon tax would avoid the uncertainties inseparable from cap-and-trade’s government allocation of emission permits sector by sector, industry by industry. So a carbon tax would be a clear and candid incentive to adopt energy-saving and carbon-minimizing technologies. That is the problem.”

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A carbon tax would be too clear and candid for political comfort. It would clearly be what cap-and-trade deviously is, a tax, but one with a known cost. Therefore, taxpayers would demand a commensurate reduction of other taxes. Cap-and-trade — government auctioning permits for businesses to continue to do business — is a huge tax hidden in a bureaucratic labyrinth of opaque permit transactions.”

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Will’s June 5, 2008 Washington Post article titled “The Gas Prices We Deserve” (read whole article here) discusses the ramifications of political choices made by elected representative of the U.S. government in regards to energy resource development. Will discusses U.S. policy decisions to date relating to the development (or lack there of) of existing domestic U.S. energy supply sources and the ramifications upon current and future U.S. energy supplies and prices. Following are some key quotes from the article….

“Seventy-two of today’s senators (…39 Democrats and 33 Republicans)….. have voted to keep ANWR’s estimated 10.4 billion barrels of oil off the market. ….. Also disqualified from complaining are all voters who sent to Washington senators and representatives who have voted to keep ANWR’s oil in the ground and who voted to put 85 percent of America’s offshore territory off-limits to drilling. The U.S. Minerals Management Service says that restricted area contains perhaps 86 billion barrels of oil and 420 trillion cubic feet of natural gas — 10 times as much oil and 20 times as much natural gas as Americans use in a year.”

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“Drilling is underway 60 miles off Florida. The drilling is being done by China, in cooperation with Cuba, which is drilling closer to South Florida than U.S. companies are.”

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“ANWR is larger than the combined areas of five states (Massachusetts, Connecticut, Rhode Island, New Jersey, Delaware), and drilling along its coastal plain would be confined to a space one-sixth the size of Washington’s Dulles airport.”

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“Offshore? Hurricanes Katrina and Rita destroyed or damaged hundreds of drilling rigs without causing a large spill. There has not been a significant spill from an offshore U.S. well since 1969. Of the more than 7 billion barrels of oil pumped offshore in the past 25 years, 0.001 percent — that is one-thousandth of 1 percent — has been spilled. Louisiana has more than 3,200 rigs offshore — and a thriving commercial fishing industry.”

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“In September 2006, two U.S. companies announced that their Jack No. 2 well, in the Gulf 270 miles southwest of New Orleans, had tapped a field with perhaps 15 billion barrels of oil, which would increase America’s proven reserves by 50 percent. Just probing four miles below the Gulf’s floor costs $100 million. Congress’s response to such expenditures is to propose increasing the oil companies’ tax burdens.”

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Sterrenberg Castle, Europe (here)

  • Friends, my opinion is that while climate change is real, it is as or more likely due to natural cycles of the Earth’s Sun and other climatic / environmental factors than to Man-Made / Anthropogenic Global Warming.

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  • Also, if “Cap and Trade” legislation were adopted into law, it would have resulted in the most far reaching and intrusive governmental regulatory control of the U.S. economy that has ever occurred. The inefficiencies of governmental control schemes are well known to any free market-oriented economist. Even with the aspect of “market-based trading of carbon credits”, the more essential and critical issue is that low cost, established energy resources would have been deliberately put aside for the sake of adopting high cost, as yet untested energy resources and technologies. Furthermore, with existing fossil fuel sources, the technology is either now available or relatively affordable to use that will allow plentiful supplies of U.S. oil, coal and natural gas to be used in a manner that is environmentally reasonable if not benign.

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  • As an economist, I fail to see why we as a nation insist on disallowing ourselves of making use of domestic sources of energy that would a) lessen our need for military action and involvement in such places as the middle east, b) would lessen our foreign trade deficit, and c) would provide jobs and a higher standard of living for U.S. citizens.

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  • At the core is these issues are the American people ourselves. As long as U.S. citizens fail to objectively perceive the fundamental economic issues involved, they/we/I will be continually missing the mark in regards to charting the best course for the economic future of our children and succeeding generations.

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Ronald Reagan, 40th U.S. President (1911-2004), Pro-growth Conservative Leader

  • I just cant or wont accept the idea that the U.S. should step away from doing things that will secure a healthy, growing U.S. economy both now and in the future. Conservatives need to lead on these issues for the sake of people that cant shape the future for themselves.

Cheers,

Churchlayman

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The San Juan Mountains, Southwestern Colorado, USA (here)

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