Higher energy prices are a hidden undeclared tax. If you doubt that, just remember the feeling you had pumping $4 per gallon gasoline in your tank. The equation is simple: The more we pay for energy, the less we have left to spend on food and other household expenses.
President Obama’s “cap-and-trade” proposal is a $650 billion hidden tax on all Americans. Under cap-and-trade, the government will decide how many tons of greenhouse gases, including carbon dioxide (CO2) – the same thing we exhale when we breathe – can be emitted. It will then give or sell emission credits to facilities that emit this greenhouse gas. Excess credits would be traded on an exchange of some sort, sold to companies unable to meet their CO2 limits.
The administration expects the cap-and-trade program to bring in more than $650 billion during 10 years. While the program ostensibly targets “polluters,” industries and energy producers will have no choice but to pass that $650 billion in costs on to everyone who uses gasoline, electricity and natural gas. In other words, you and me.
As the Wall Street Journal noted in a recent editorial,
“Hit hardest would be the ‘95 percent of working families’ Obama keeps mentioning, usually omitting that his no-new-taxes pledge comes with the caveat ‘unless you use energy.’ Putting a price on carbon is regressive by definition because poor and middle-income households spend more of their paychecks on things like gas to drive to work, groceries or home heating.”
According to a study by the global consulting firm CRA International, the president’s cap-and-trade program will increase natural gas prices 39 percent by 2020 and 56 percent by 2025. Electricity prices are estimated to increase 27 percent by 2020 and 44 percent by 2025. CRA projects that cap-and-trade will ultimately increase gasoline prices by 74 cents per gallon.
Then there are the job losses. Coal, the primary target of cap-and-trade, currently provides half the nation’s energy. Under cap-and-trade, coal plants will either be forced to shut down or their energy will be prohibitively expensive, crippling many coal-dependent industries, utilities and communities. Even counting the new jobs in alternative energy development projected by the White House, CRA estimates cap-and-trade will cost more than 3 million jobs.
In Washington, our dependence on clean, affordable hydropower will put us in special jeopardy under cap-and-trade. Hydropower supplies 70 percent of our electricity in Washington, but in times of low snow pack, utilities must purchase conventional energy in the spot market. Under cap-and-trade, the tight supply of approved energy will be very expensive and the fluctuating market for emission credits will make prices even more volatile.
Analysts agree that one of the fastest ways to meet the cap-and-trade limits is to shut down coal plants. Here in Washington, some state lawmakers want to do just that, targeting the TransAlta coal-fired power plant near Centralia. But TransAlta provides enough electricity to heat and light 1,123,200 homes. What are those families supposed to do if we shut down TransAlta – sit in the dark, or find a way to pay thousands more each year for electricity?
The most practical way to produce clean energy that produces no carbon dioxide is nuclear power. In fact, France gets almost 80 percent of its electricity from nuclear power. But here in the U.S., the same environmental groups that crusade against global warming oppose nuclear power. So, what is the answer?
Cap-and-trade has been in effect in Europe since 2005. It has crippled countless businesses while doing virtually nothing to reduce CO2 levels. Before the U.S. jumps into something that jeopardizes our entire economy, lawmakers should slow down and ask some hard questions.
The most important question is, “Isn’t there a better way?”
Don Brunell is the president of the Association of Washington Business.