You’ve been hearing lately about a proposed Carbon Tax. With Democrats taking over the House in 2019,
you’ll hear a lot more.
It’s being presented as a new solution to slow down global
warming. It’s also been said it’s an
efficient and revenue-neutral way to wean us off fossil fuels.
Some have even claimed it will put more money in consumers’
pockets.
Here’s a bit of perspective on what it’s really all about …
More than 40 years ago I wrote a high-end newsletter focused
on energy policy and legislation for about 10,000 key decision makers at big
industrial energy users here and abroad.
For six years I covered energy-related legislation and energy technologies
from fossil fuels to geothermal to solar to coal gasification to laser fusion
and more.
Back then there was a push for renewable energy forms over
oil – not because of concerns about pollution or global warming (since we were
actually in a cycle of “global cooling” then), but because America was so
dependent on foreign sources for petroleum.
Think OPEC and the oil embargo. Think gasoline rationing.
It was considered a “national security” issue. We needed long-term alternatives to oil or
we’d be forever beholden to Middle East dictators like the Saudis. Alarmists claimed
America was running out of its own oil reserves and soon there would be no more
American oil to extract.
In short, we were screwed.
We needed to something now, right now, or we’d all be huddled in the
dark and the cold in the very near future.
Seriously, that was threat.
The big push then was on solar. It was “free.” It was clean. As long as the sun came out it was there every
day for the taking. With enough
windmills and solar panels, we could produce enough energy to replace oil or
coal-fired utility plants. We could stop
building risky nuclear power plants. And
the electricity we produced could power clean-energy electric cars.
Mind you, this was 40 years ago. But doesn’t it sound
familiar today?
Best of all, you could produce all the power you needed for
your home without relying on monopolistic public utilities or oil
companies. Just put solar panels on your
house or business.
I saved that tidbit for last because it really was the unspoken
goal of the solar theology – you could put the greedy oil companies and public
utilities out of business with solar. You could take away their power over you
by becoming your own energy producer. Hell, you could make them pay you for
extra power you generated instead of always paying them.
For the true solar zealots, it was all about taking down
“the man.” And making a buck.
Of course, the high priests of solar and other alternatives back
then conveniently ignored both fundamental economics and basic physics. They
still do today.
People will always do what’s in their own
economic best interest. If electricity produced from burning oil or natural gas
is cheaper than from windmills or solar-panel farms, it wins in the
marketplace. If it’s cheaper to heat your home or business with oil or natural
gas than with solar panels, oil or natural gas win. If it’s cheaper to buy and easier to operate
an automobile or a truck powered by gasoline or diesel than an all-electric
vehicle, gasoline and diesel win.
Hence the Carbon Tax.
The only way fossil-fuel opponents can make solar or other alternatives
appear economically attractive without subsidies is if they can artificially
raise the price of fossil fuels for consumers and businesses dramatically. The
Carbon Tax would do that.
That’s the plan. It’s always been the plan. It’s not about saving the planet; it’s about
making fossil fuels more expensive. It’s
also about a new money grab on false promises. The beneficiaries of the Carbon
Tax won’t be consumers – because a tax on fossil fuels is a tax consumers will
ultimately pay.
Politicians and bureaucrats will collect the tax and then
dole it out, after taking a cut for themselves, to favored constituencies.
Think Solyndra and other green-energy money-sucking boondoggles. Think also of fat-cat leftist billionaires
like Tom Steyer and others who hold big stakes in alternative energy companies.
And also remember hypocrites like Al Gore who plan to make millions, perhaps
billions, trading Carbon Tax offsets.
Meanwhile, as they all get richer consumers will pay more
for everything. Count on it.
I laughed the other night when one lobbyist on TV said consumers would financially benefit from the Carbon
Tax. How? They’d get money back in rebates from the
government to offset higher fuel prices, he said. In fact, consumers would get
more money back than the difference in the higher prices they’d pay. And that cash transfer would help boost the
economy.
Yeah, right. Sure … that’s believable.
We don’t have an oil or natural gas shortage anymore. Honestly, we never did. Despite drilling more wells in America than
the rest of the world combined, two-thirds of all the oil we found here was
still in the ground and there was ample gas trapped in shale.
We just needed new technologies to get both out at a profit. And
these arrived.
With fracking and other enhanced recovery tools it became economically
sound to go after all that oil and natural gas.
Supplies went way up and prices came down. So much for the predicted
fossil-fuel-shortage apocalypse. At the
same time, natural gas is now so cheap – and burns so clean – it’s powering
utility plants and reducing emissions of sulfur dioxide and other pollutants.
Automobile and truck engines are also more fuel efficient and clean.
Then why do we need a Carbon Tax to reduce use of fossil
fuels?
The answer is deceptively simple: the economic breakeven for solar and other
alternatives has always been like chasing the horizon. It’s always “so close”;
but it’s been the same promise for more than 40 years. That’s because market forces hold down fossil
fuel prices and cleaner burning and higher efficiency technologies like hybrid
engines keep improving. Even when oil and gas prices do go up the cost of making
and shipping solar devices – like wind turbines and photovoltaic panels – goes
up as well because both are very energy intensive and not very efficient power
producers.
Without government subsidies – like tax credits
to encourage solar and other “renewables,” or tax penalties to discourage
fossil fuel use – the needle never moves. And once any subsidies are removed,
solar power or electric cars don’t make economic sense for most people.
Rich people, who don’t need the subsidies anyway, will drive
a Tesla or Chevy Volt to show how virtuous they are, forgetting entirely that
the electricity they’re using came from a nuclear, coal, natural gas or
oil-fired utility. Where do they think that electricity came from? Their Tesla or Volt? Or maybe some magic socket?
Politicians like incenting consumers to use alternatives to
fossil fuels. It feels good, and shows they are "doing something" about helping the environment, but it doesn’t make much economic sense in the
long run. Or environmental sense. It’s make-believe.
If you give people $7500 for buying an all-electric car,
what's accomplished? Yes, they
won’t use gasoline as much, but they’ll pay for electricity. That electricity will likely be produced by
burning fossil fuels. And oh, by the way, transmitting electricity to their
garage robs 70% of its efficiency.
But won’t goosing demand for all-electric cars via subsidies
create economies of scale and lower prices for future electric cars? Nope. GM just announced it’s discontinuing its
Chevy Volt because of disappointing sales, even with the subsidies. Instead it
will retool for a hybrid.
That's because, except for the rich and the virtue signalers, as
long as oil and natural gas are so cheap nobody really wants an all-electric
car that can only go 200 miles before it needs to be charged overnight. No ordinary consumers want the upfront
expense to install solar photovoltaic panels that take 30 years – the average life
of their roof anyway – to start to hit economic breakeven, if then.
All-electric cars and solar will only take off when they make
economic sense on their own without subsidies or artificially raising the
prices of oil and gas.
Remember that when Democrats and the left start pushing the
Carbon Tax.
The Carbon Tax will only make some rich people
richer and the rest of us poorer. It can’t overturn the basic laws of supply
and demand nor spur new technology to make alternatives cheaper and more efficient. It’s just another money grab wrapped in virtuous clothing.