Low Gas Prices Not an Argument for a Carbon Tax

By H. Sterling Burnett

Published January 13, 2015

Climate Change Weekly #154

Almost before consumers began to reap the benefits of lower gasoline prices after a decade of pain at the pump, climate humbugs and their political lackeys started hinting now would be a good time for carbon or gasoline taxes.

My response: There is never a good time for bad public policy!

Astute political observer Marlo Lewis of the Competitive Enterprise Institute explains the benefits of lower fuel prices and why carbon taxes are both unnecessary and harmful to people and the economy.

Fuel prices are down largely because of the fracking revolution. Prices are currently below $50.00 per barrel for the first time in six years, with gasoline selling for less than $2.20 a gallon, one-third below its price in January 2014. As to the benefits, Lewis reports:

AAA: Americans saved $14 billion on gasoline in 2014 compared to 2013, with many drivers saving $15–$30 every time they fill up, compared to a year ago.

Bloomberg: “Plunging fuel prices will free up as much as $60 billion over the next year that the consumer can spend on a fall jacket, a movie ticket or just more groceries.” That was in October, when gas prices were still north of $3.00/gal.

WSJ: Falling gas prices will give consumers the equivalent of a $75 billion tax cut. The tax cut is progressive because low-income households pay a larger share of earnings on energy. “Households earning less than $50,000 annually spent around 21% of their after-tax income on energy in 2012, up from 12% in 2001, according to analysts at Bank of America Merrill Lynch.”

NPR: If current gas prices continue, the typical household will have an extra $1,500 to save or spend in 2015. Already, “The average American is seeing a much bigger boost from falling gas prices than from pay raises. Cheap energy could finally put the U.S. economic recovery over the top.”

Good news? Not for climate alarmists. Low gasoline prices are the goose that laid the golden egg for the economy, so naturally climate alarmists and their fellow travelers want to kill it.

In The Washington Post, Harvard economist Lawrence Summers argued, “Oil’s swoon creates the opening for a carbon tax.” What!!!???

Lewis points out companies mining, drilling, processing, refining, delivering, and using carbon-based energy already pay lots of taxes: “ExxonMobil, for example, paid $31 billion in corporate income taxes in 2012 and more than $1 trillion in total taxes during 1999–2011, paying $3 in taxes for every $1 in profits.” Those companies also pay tens of billions of dollars in backdoor taxes via their compliance with various regulations specific to energy exploration, production, and distribution.

The majority of these taxes and regulatory costs are passed on to consumers. Federal and state gasoline taxes alone account for 49.28¢ per gallon on average, equivalent to nearly $50 per ton of carbon dioxide (CO2) emissions. Taxes are a drag on the economy in two ways. First, by raising the cost of production, they reduce the capital available for productive activities – in general, as the cost of an activity rises, businesses (and people) do less of it. Second, these taxes leave less disposable income in consumers’ pockets – and when they spend less, the economy declines.

Even worse, low-income people and those on fixed incomes suffer most from energy price hikes, like those that would result from carbon taxes. They spend a greater share of their incomes on fuel, foods, and medicines – essentials made possible and accessible by energy – than do the relatively well-off. It’s almost funny – not in a “ha, ha” way – how regularly progressives propose policies that hurt the poor the most. With the way energy poverty is robbing the future of the poorest people in the world, we should be encouraging more oil and gas use, not less.

There is no good case for a carbon tax and Lewis sums up why:

American energy is not undertaxed or under-regulated.

Carbon taxes are regressive and would be piled on top of existing taxes and regulations rather than replace them.

Even a very aggressive carbon tax imposing trillion-dollar costs on the economy would have no discernible climate impact.

Consumers are finally getting a break from high gasoline prices. Having endured years of energy-price windfall losses, they should now be allowed to enjoy windfall gains.

I couldn’t have said it better myself.

SOURCE: Global Warming.org

IN THIS ISSUE …

Warm Alaska: Weather pattern, not climate change … Governor Brown gaga for global warming … New NASA observatory shows ocean CO2 output … North, South Poles not melting … Warming up the climate rhetoric

WARM ALASKA: WEATHER PATTERN, NOT CLIMATE CHANGE

While much of America suffered record cold in 2014, Alaska suffered through a relative heat wave. In 2014, Anchorage had no days below zero for the first time in recorded history and had its warmest year since 1926. Seven cities in Alaska set record warm temperatures for the year. Global warming? Not according to James E. Overland, oceanographer with the National Oceanic and Atmospheric Administration. Overland’s research shows Alaska’s heatwave is not runaway global warming, but rather the next segment in a long-term weather pattern NOAA has observed “that began with six years of warming in the Bering Sea and southern Alaska, followed by six cold years.” Overland told the Los Angeles Times, “This year, then, was the breakdown of the string of cold years.” He continued, “What all the scientists are wondering now [is]: Is this just one warm year? Could we flip back to a cold sequence again, or is this the start of a warm sequence? … We don’t know, and it makes a big difference.”

SOURCE: Los Angeles Times

GOVERNOR BROWN GAGA FOR GLOBAL WARMING

California Gov. Jerry Brown (D) used his January 5 inauguration speech to call for greater efforts to battle climate change. He wants California to meet half its energy needs with renewable energy by 2030. According to Brown, “We must demonstrate that reducing carbon is compatible with an abundant economy and human well-being.” Investor’s Business Daily responded, “good luck with that.” It notes California’s experience with renewable energy has hardly been economically or environmentally friendly as it hosted Solyndra, among the biggest financial green energy bubbles that burst, and wind and solar farms that alternately dice and cook birds. IBD also could have noted energy prices have grown fastest in states forcing their ratepayers to use the highest percentages of wind and solar power through renewable energy mandates.

SOURCE: Investor’s Business Daily

NEW NASA OBSERVATORY SHOWS OCEAN CO2 OUTPUT

NASA’s new orbiting carbon observatory has made a surprising discovery, finding at least three tectonically active ocean hotspots spewing carbon dioxide, methane, and occasionally heat not just into the ocean but into the atmosphere. At least some of the ocean warming in recent years is likely due to regional tectonic greenhouse gas seepage, not anthropogenic global warming.

SOURCE: Watts Up With That

NORTH, SOUTH POLES NOT MELTING

Although climate models predict the North and South Poles should be melting, they aren’t. New evidence indicates the poles are “much more stable” and thicker than climate scientists previously thought. Ted Maksym, an oceanographer at Woods Hole Oceanographic Institution, sent an underwater robot deep into the Antarctic sea to measure the ice, documenting the ice is much thicker than has been predicted over the past 20 years. In addition, recent satellite data show Arctic sea ice has recovered from recent lows. Data from the European Space Agency CryoSat-2 satellite indicates, at 10,200 cubic kilometers, Arctic sea ice volumes in 2014 were above the average set over the past five years, and sharply above the lows of 4,275 cubic kilometers in 2011 and 6,000 cubic kilometers recorded in 2012.

SOURCE: The Express

WARMING UP THE CLIMATE RHETORIC

Even before 2014 ended, climate prognosticators were predicting 2014 would be the hottest year on record, and early in the new year, the Japan Meteorological Agency announced 2014 surpassed 1998 to set a new record by five one-hundredths of one degree C. Britain’s Met Office announced 2014 was the warmest year in the 355 years of the Central England Temperature record. Writing at National Review, Rupert Darwall notes the climate alarmism bandwagon was being driven by Harvard climate alarmist Naomi Oreskes, who claimed the minuscule single-year bump in annual temperature showed the world has been “underreacting to the reality of dangerous climate change ‘now unfolding before our eyes.'” Then Oreskess wrongly but boldly claimed climate change is happening “faster than scientists predicted.” This is demonstrably false. Francis Zwiers, an IPCC member and former lead coordinating author, wrote recent observed global warming was significantly less than the trend simulated by climate models. From 1998 to 2012, observed rise of 0.05 degrees C per decade — or close to zero – “was more than four times smaller than the averaged simulated trend of 20 climate models used by the IPCC,” writes Darwall. In addition, 2014 was arguably not the hottest year on record, since global satellite system records it as barely being the third warmest year since satellite measurements began in 1979. “Third warmest year in 36 years,” is hardly the headline climate alarmists are shouting from the rooftops.

SOURCES: National Review; Dr. Roy Spencer.com