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ENLARGE
Richard Vecchio
The House Energy and Commerce Committee is debating a very controversial bill.
“Cap and trade” is being sold as a solution to “climate change” and one that will stimulate the production of green energy. In reality, the cap and trade proposal is simply a tax on carbon dioxide emissions. The government will auction off the right to emit carbon dioxide. By some estimates this will increase government revenues (read taxes) by hundreds of billions of dollars per year.
Think about which industries emit significant amounts of carbon dioxide. These would include manufacturing (steel, auto, rubber, petroleum refineries, etc.), utilities powered by coal and natural gas, and others. These entities would be forced to pass through their increased costs to the consumer. By some estimates the cost per household could be as much as $1,000 to $3,500 per year. The increased costs will be in the form of higher utility rates, higher transportation costs (directly by increased gasoline prices and indirectly by increased costs to deliver goods), higher commodity prices (steel, aluminum) which yield higher prices for consumer goods. One of the plans floated would require a 15 percent decrease in carbon dioxide emissions. Once in place it would be rather simple to require even more stringent standards, which would increase the tax on consumers and businesses alike.
The final form of cap and trade is still under discussion but beware of this hidden tax. Call and/or write your representatives now and tell them – no more taxes.
Large amounts of advertising dollars are already being spent on this hidden tax. Some advertisements are quite clever calling the tax a “carbon pollution loophole” and linking the tax to production of green energy. Wake up America. Green energy will become economic when the price of other energy sources such as coal and oil and gas rise. I understand the need to reduce our dependence on foreign sources of energy. It may be economic to fund promising research but to inject huge amounts of tax dollars will be a titanic waste. I am not too young to remember the “Synthetic Fuels Program” enacted under the Carter Administration. The purpose was to drive America to energy independence. The goal was to produce 1.5 million barrels per day of synthetics within a few years after the law was enacted. Billions of dollars were wasted and no commercial synthetic fuel production was sustained.
My greatest concern regarding any cap and trade program is that it will make domestic businesses and industries less competitive in a global marketplace and will ultimately result in more outsourcing, domestic job losses and fewer productive (and taxpaying) businesses in the U.S. As we export industries to countries like Mexico and China, pollution will actually increase because these and others have few, if any, environmental regulations.
Having worked in the energy industry for more than 35 years, I believe that becoming “energy independent” is a pipe dream but that decreasing our dependence on foreign sources of energy is a necessity for economic and national security reasons. We will need to develop all sources of energy just to reduce our dependence on foreign oil (which stands at about 60 percent versus about 30 percent during the 1970s). This means searching for oil and natural gas areas currently off limits like the outer continental shelf and the Arctic National Wildlife Refuge. It means developing and using our most abundant form of domestic energy – coal. It means developing nuclear power plants. It means developing green alternatives that are economically viable. There is no magic bullet. All avenues must be pursued.
As a side note, some have rejoiced in the precipitous decline in oil prices. I am afraid this will be short-lived. Oil prices have always been sensitive to economic conditions because during boom times, the demand for oil increases whereas supply in the short term is relatively inelastic.
What is happening now is that demand is being destroyed due to the global recession, but more importantly we are laying the groundwork for another and possibly more severe price spike when the global economy picks up.
This is because oil producers are slashing exploration budgets due to pressures on profits and because many oil projects are not economic at today's oil prices. This will result in less potential supply available for market in the coming years.
When the economy improves we will face the “double whammy” of higher demand and less production capacity. As prices for traditional forms of energy rise, green energy will become economically viable and will be funded by private sector dollars.
Richard Vecchio and his wife, Susan, moved to Roseburg when they retired about five years ago. Richard has an engineering degree from Georgia Tech and a master's in business administration from Xavier University. He worked in the defense and energy industries in economics, planning and acquisitions. He can be reached at richv9876@hotmail.com.
“Cap and trade” is being sold as a solution to “climate change” and one that will stimulate the production of green energy. In reality, the cap and trade proposal is simply a tax on carbon dioxide emissions. The government will auction off the right to emit carbon dioxide. By some estimates this will increase government revenues (read taxes) by hundreds of billions of dollars per year.
Think about which industries emit significant amounts of carbon dioxide. These would include manufacturing (steel, auto, rubber, petroleum refineries, etc.), utilities powered by coal and natural gas, and others. These entities would be forced to pass through their increased costs to the consumer. By some estimates the cost per household could be as much as $1,000 to $3,500 per year. The increased costs will be in the form of higher utility rates, higher transportation costs (directly by increased gasoline prices and indirectly by increased costs to deliver goods), higher commodity prices (steel, aluminum) which yield higher prices for consumer goods. One of the plans floated would require a 15 percent decrease in carbon dioxide emissions. Once in place it would be rather simple to require even more stringent standards, which would increase the tax on consumers and businesses alike.
The final form of cap and trade is still under discussion but beware of this hidden tax. Call and/or write your representatives now and tell them – no more taxes.
Large amounts of advertising dollars are already being spent on this hidden tax. Some advertisements are quite clever calling the tax a “carbon pollution loophole” and linking the tax to production of green energy. Wake up America. Green energy will become economic when the price of other energy sources such as coal and oil and gas rise. I understand the need to reduce our dependence on foreign sources of energy. It may be economic to fund promising research but to inject huge amounts of tax dollars will be a titanic waste. I am not too young to remember the “Synthetic Fuels Program” enacted under the Carter Administration. The purpose was to drive America to energy independence. The goal was to produce 1.5 million barrels per day of synthetics within a few years after the law was enacted. Billions of dollars were wasted and no commercial synthetic fuel production was sustained.
My greatest concern regarding any cap and trade program is that it will make domestic businesses and industries less competitive in a global marketplace and will ultimately result in more outsourcing, domestic job losses and fewer productive (and taxpaying) businesses in the U.S. As we export industries to countries like Mexico and China, pollution will actually increase because these and others have few, if any, environmental regulations.
Having worked in the energy industry for more than 35 years, I believe that becoming “energy independent” is a pipe dream but that decreasing our dependence on foreign sources of energy is a necessity for economic and national security reasons. We will need to develop all sources of energy just to reduce our dependence on foreign oil (which stands at about 60 percent versus about 30 percent during the 1970s). This means searching for oil and natural gas areas currently off limits like the outer continental shelf and the Arctic National Wildlife Refuge. It means developing and using our most abundant form of domestic energy – coal. It means developing nuclear power plants. It means developing green alternatives that are economically viable. There is no magic bullet. All avenues must be pursued.
As a side note, some have rejoiced in the precipitous decline in oil prices. I am afraid this will be short-lived. Oil prices have always been sensitive to economic conditions because during boom times, the demand for oil increases whereas supply in the short term is relatively inelastic.
What is happening now is that demand is being destroyed due to the global recession, but more importantly we are laying the groundwork for another and possibly more severe price spike when the global economy picks up.
This is because oil producers are slashing exploration budgets due to pressures on profits and because many oil projects are not economic at today's oil prices. This will result in less potential supply available for market in the coming years.
When the economy improves we will face the “double whammy” of higher demand and less production capacity. As prices for traditional forms of energy rise, green energy will become economically viable and will be funded by private sector dollars.
Richard Vecchio and his wife, Susan, moved to Roseburg when they retired about five years ago. Richard has an engineering degree from Georgia Tech and a master's in business administration from Xavier University. He worked in the defense and energy industries in economics, planning and acquisitions. He can be reached at richv9876@hotmail.com.
