Tuesday, May 18, 2010

If I'm Lyin, I'm Dyin

Unless I’ve been reading the wrong stuff, cap and trade is going to kill us. First of all, let’s call it what it is. It is a TAX!
I’ve said this before and I’ll say it again, if it looks like a tax, sounds like a tax and quacks like a tax, then it must be a tax. Let me give you my version of cap and trade. There is no doubt that we are experiencing climate change/global warming. What I don’t understand about this whole thing is why people who don’t have a clue of what is happening are the ones who determined that cap and trade is a good thing. Here is the dictionary definition of cap and trade.
Emissions trading (also known as cap and trade) is an administrative approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants.
A central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that can be emitted. Companies or other groups are issued[clarification needed] emission permits and are required to hold an equivalent number of allowances (or credits) which represent the right to emit a specific amount. The total amount of allowances and credits cannot exceed the cap, limiting total emissions to that level. Companies that need to increase their emission allowance must buy credits from those who pollute less. The transfer of allowances is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions by more than was needed. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society.
This all makes perfect sense right? Baloney! Let me give you my scenario on how this will work in our society. Hyperion sits in their office and says they have to make some extra money, so they inflate the amount of pollution they are going to emit. In this case, they say they will emit 19 million tons of carbon dioxide, when in fact they will only emit 10 million tons. This figure was approved by the State of South Dakota DENR so it is accurate as far as the state is concerned. After all, Hyperion knows what it is talking about. Now since this is a new operation and it is going to take them 5 years to build it, they have 19 million credits to sell on the open market to the highest bidder. The law says that the total amount of allowances and credits cannot exceed the cap, and since they didn’t produce anything the first five years, they are home free. After all, the law is the law. Now in the 5th year they go into production and only produce what they figured they would which is 10 million tons. They can still sell 9 million credits on the open market. God, don’t you just love it?
Now who is going to pay for these credits? We are. Hyperion refines the crude and pass off the carbon tax to the next person down the line because they, sure as hell, aren’t going to pay for it, which passes it down the line until it gets to you. The price of oil, gas, diesel, fertilizer, electricity and anything else that uses oil products or its derivatives is going to skyrocket and we are going to bear the brunt of it. This is absolutely not going to be good for the economy because it will stifle any incentive to produce anything. The only ones that are going to make out on the deal are the polluters. If there is a way to screw us, the politicians and the oil companies will figure out a way to do it. If this is such a good deal, why isn’t it being done all over the world? I’ll tell you why, other countries have tried it and it doesn’t work. I’ve listed just one example of the results of cap and trade for the state of Kentucky.

• Due to lower industrial output as a result of higher energy prices, the costs of complying with required emissions cuts, and greater competition from overseas manufacturers with lower energy costs, Kentucky would lose as many as 23,000 jobs in 2020 and nearly 50,000 jobs in 2030.

• Disposable household income would be reduced by as much as $2,500 per year in 2020 and up to $6,000 by 2030.

• The price of gasoline in Kentucky would increase between 74 percent and 144 percent in 2030. Electricity prices would increase by between 122 percent and 159 percent. Kentucky residents would pay between 99 percent and 142 percent more for their natural gas by 2030.

All of Kentucky's largest manufacturing sectors would experience output losses.

Kentucky's 1,865 schools and universities and 134 hospitals will likely experience an increase of up to 35 percent in expenditures by 2020 and as much as 123 percent by 2030.
I have the solution for cap and trade, it is called conservation. We are paying $2.70 for gas now and I just got notified today that my electric rate is going up by 11% for next year. If I limit the amount or distances that I drive and conserve my use of electricity, I can save more money than can be saved by cap and trade. We have become such a throwaway society. It is cheaper to throw it away and buy a new one than to fix the one that is broke. Sometimes, being cheap is okay. It is better to volunteer to do something than to be forced to do something. Do people really care where the oil comes from? Honestly?
I’ll climb off my high horse now.


At May 19, 2010 at 4:56 AM , Blogger caheidelberger said...

Conservation -- that's conservatism we can all believe in.

But I'm also all for responsibility. Cap and trade is about responsibility, having people pay for the externalities their energy use causes. Cap and trade worked spectacularly in the 1990 Clean Air Act... and our economy boomed in the 1990s. And climate change/energy security legislation including cap and trade would knock maybe 1% off the GDP by 2040.


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