About that proposed Carbon Tax ...

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.