Now They Tell Us

In the 1970's, during the Arab oil embargo, oil company presidents were dragged to Washington to defend themselves from charges that they were holding tankers offshore to drive up prices and all kinds of crazy BS.  Since that time, in every oil price spike, oil companies were vilified by the Left for destroying the American economy by driving up oil prices (artificially, I suppose).

Now, however, is seems that this was all wrong.  The fossil fuel price increases and artificial supply shortages needed to cut our CO2 emissions by 50% are enormous.  The Europeans have $9 gas and they are not near these targets, in fact in many countries their fossil fuel use has gone up.  We have been in a substantial economic slowdown, but even at these lower output and consumption levels we are far short of a 50% target.

But now the EPA says it has a computer model (stop me if you have heard that one before in the global warming debate) that says that proposed efforts to cut CO2 emissions by 50% in the next 20 years will have a negligible impact on the US economy over the next 20 years.

But there's another reason it was disappointing that Obama didn't mention carbon pricing: his own EPA had handed him a perfect excuse just one day before. In a detailed analysis of John Kerry's American Power Act, the EPA provided estimates of how it would affect carbon emissions and how much it would cost the average American. The results were remarkably reassuring.

On the emissions front, the APA would have a dramatic effect: US emissions would be cut nearly in half by 2030 compared to doing nothing. That's an enormous impact.

But how much would it cost? The answer is: almost nothing. According to EPA's models, if we do nothing, consumption of goods and services in the United States will increase 74.1% by 2030. If APA is passed, consumption will increase 73.4%.That's it. We can cut carbon emissions nearly in half, and the net cost will be a decrease in consumption of 0.7% in 2030. EPA figures this comes to an average annual cost of $146 per household. That's 40 cents a day per family.

And everyone on the Left is credulously lining up to say that this sounds about right to them.    Well, now you tell us.   And if this is true, why have you been hammering on the oil companies for 40 years if oil price increases are virtually irrelevant to the economy.

Look, the is is utter BS.  I have a wild optimism about the power of free minds to innovate and handle about anything if they are allowed, but even so there is no way that an energy price increase (or artificial shortage, take you pick of mechanisms) large enough to cut output by 50% in 20 years will have a negligible impact on the economy.  No way.

Update: I am skimming the EPA power point presentation.  I am looking at one chart that shows a shows coal with CO2 capture around 5% of US energy production about 12% of electricity production by 2030.  Absolutely no freaking way.  They are on drugs.  CO2 capture is never going to happen except when exorbitantly subsidized by the government.

And they show natural gas going way down.  Why?  Replacing coal-produced electricity with natural gas produced electricity is probably the most effective single CO2 reduction step that exists after certain conservation approaches.  But despite huge availability in the US, they show gas consumption going down by half.  If so, those are some pretty screwed up incentives in the bill.

Update #2: I found the price chart.  Apparently they project they will get all this fossil fuel reduction with an increase of electricity prices from 11 cents per Kwh in 2030 without the law to 14 cents with the law.  Gasoline prices with the law will be increased by about 25 cents a gallon in 2030 by the law.  So we are going to get a government imposed 50% reduction in CO2 output in 20 years with a price increase that is within the natural variation over a couple of months in the gasoline market?  Yeah, right.  We all will be riding unicorns to work instead.

  • anon

    OK, immediately enact a Pigouvian tax of 25 cents/gallon and 3 cents/kw-h . . . with an offsetting decrease in income tax.

    Do it now, do it today, then STFU about global warming.

    (and this means you can get rid of all subsidies for "green" energy, right?)

  • Sounds like the Drug Enforcement Agency would be best off concentrating its efforts on the Environmental Protection Agency. If both agencies take each other out in a blaze of gunfire, then we all win.

  • mesaeconoguy

    I have a computer model which says the spare rocks next to my pool are worth $10,000,000,000.

    Or, you can just sue the EPA, which everyone is either 1) already doing, or 2) about to do.

    These people (the EPA) simply don’t know jack shit.

  • Pat Moffitt

    EPA has no risk- only upside with its push for carbon regulations. Lets add language to any bill that says for every dollar EPA is wrong it comes out of EPA's budget.

  • Curtis

    anon is right. By re-arranging (not raising) taxes, we can reduce CO2 emission for free. Raise the gas tax 10 cent gallons each year for the next 20 year. Reduce the social security tax by the same amount each year. Obviously, this will hurt high energy using people and corporations and will help high labor companies and people.

    Tax what you want to discourage (e.g. CO2 production) and reduce tax on what you want to encourage (e.g. employment). It really is a no brainer but has no hope of be enacted.