Oil companies call Waxman-Markey clean energy bill 'unfair'
A big headline in The Wall Street Journal today says that "Oil Refiners Predict Higher Gas Prices" as a result of the bill. While I don't doubt many of the costs associated with the bill will end up being paid for by the consumer and taxpayers, the goal is to benefit them. A few warning bells immediately go off in my head when I read such articles:
1. Oil and gas companies have increased their lobbying budget by 50 percent in the first three months of the year, spending up to $45 million to pressure lawmakers to reject president Obama's efforts to enact clean energy and climate legislation. No doubt, many such "scary" articles are the result of this lobbying, which would make any of these issues, even if justified, possibly far more hyped than their true weight in the grand scheme of the bill.
2. Like any government program, some of the plan is no doubt going to be funded by taxpayers, directly or indirectly. Refiners say the added cost of buying allowances would likely be passed on to consumers in the form of a 28-to- 54-cent-a-gallon rise in the price of gasoline by 2030, although even the WSJ article points out that the real hurt for the oil producers would come in the form of a lower demand for gasoline. So while consumers may pay more per gallon, they will also be consuming less (by driving more fuel efficient cars etc.), making the net cost more manageable. In fact, this is supposedly the way the program was intended to work, "assuming the bulk of revenues from the program are returned to household," as the EPA suggests (pdf).
3. The biggest complaint that may have more merit is that the oil and gas sector is being unfairly burdened compared to other sectors. Oil and gas, which accounts for 44 percent of U.S. carbon emissions "would receive just 2 percent of the emissions allowances available under the bill," while "the electricity sector, which accounts for about 40 percent of U.S. CO2 emissions, would receive 35 percent of the allowances, with other industries such as cement, glass and paper manufacturers getting 15 percent of the free permits." There are many who believe these inequities could clear the way to financial manipulations, distort the real value of the allowances and lead to lower revenue for the government. A straight carbon tax would be better, they say. But there also other considerations that come into play, such as the risk of bricks-and-mortar industries going overseas if the costs are too high, while oil and gas clearly doesn't have that option.
The bill isn't finalized yet, at least not in its detailed form. No doubt it isn't perfect and may have to be amended as we learn what works and what doesn't. But, overall, especially seeing the reaction from some sectors, it seems to be attacking exactly what needs to be if protecting the environment -- our environment -- is its final goal. Such protection is for our benefit and that of future generations and if we have to pay a little more now to avoid future disaster, then so be it. Besides, if there's one thing we learned from the sub-prime crisis, it's how artificially low payments upfront come to bite you later when you're least prepared.
Here's a link to the bill on the Committee on Energy and Commerce: Chairmen Waxman, Markey Release Discussion Draft of New Clean Energy Legislation.