Posted by Matt Dempsey (11:30am ET)

Democrats’ Inconvenient Gas Price Problem


EPA Analysis Projects Climate Bill Will Raise Gas Prices 53 Cents Per Gallon

The news media finally appears to get it when it comes to global warming cap-and-trade legislation. The environmental trade publication Greenwire ran an article written by Ben Geman on April 23, with the title asking the excellent question, “Should lawmakers pushing global warming legislation want high gas prices?” (LINK – Subscription required) The article correctly noted, “Most experts agree that placing a price on carbon dioxide -- either through a tax or a cap-and-trade program -- will create new costs for consumers.” [Also see: Is the Media’s Environmental Reporting Improving? ]

The article continued: “A U.S. EPA analysis of the Lieberman-Warner bill last month projects significant increases in consumer power and gasoline costs, with the latter increasing about 53 cents per gallon in 2030 and $1.40 per gallon in 2050, though EPA did not study in detail a recent law that increases auto mileage standards and expands the national biofuels mandate.”

As record gas, energy, and food prices continue to soar and American families continue to face growing anxiety over an economic downturn, the costly and symbolic Lieberman-Warner global warming cap-and-trade bill is set to debut on the U.S. Senate floor in June. With the U.S. acting unilaterally, the bill will not have a detectable impact on the global temperatures, but it will (as correctly noted in the Greenwire article) have a very detectable impact on gas and energy prices for already suffering Americans.

As more and more elected leaders join the chorus to call for some type of relief at the pump, Greenwire asks a rather inconvenient question. “If curbing greenhouse gases -- and fast -- is needed to stave off the worst effects of global warming, are high fuel costs such a bad thing?”

Senate Environment and Public Works Chairwoman Barbara Boxer (D-Calif.) weighed in, "As far as I'm concerned there is no silver lining to high gas prices." Democratic Senator Frank Lautenberg (N.J.) claimed the question was not fair. “That is kind of perverse thinking in my point of view," Lautenberg said "High gas prices are punitive for the entire population, but particularly on the more modest income earner. That is not a way to drive a positive point of view,” Lautenberg added.

But “punitive” costs on lower income families and those with fixed incomes is exactly what the Lieberman-Warner and cap-and-trade approach is all about. A November 2007 report from the Congressional Budget Office (CBO) warned cap-and-trade energy "price increases would disproportionately affect people at the lower end of the income scale." (LINK)

In March, Roy Innis, chairman of one of America’s oldest civil rights groups, the Congress of Racial Equality, warned that mandated carbon controls like those advocated by Lieberman-Warner bill would disproportionally impact minorities.

“We are slowly destroying the energy system we have, and we are promoting an expensive, environmentally harmful, illusory energy system that exists only in theory and environmental rhetoric,” Innis said on March 19. “Worst of all, we are harming our poorest families; we are rolling back the civil rights we struggled so long and hard to achieve; and we are sending many minorities to the back of the energy and economic bus. This must not, and cannot continue,” Innis, the author of the new book Energy Keepers Energy Killers: The New Civil Rights Battle, said. (LINK)

“These policies cause widespread layoffs, leaving unemployed workers and families struggling to survive, as the cost of everything they eat, drive, wear and do spirals out of control,” Innis said on April 22, 2008. (LINK)

An April 23 article in Roll Call, noted how many Senators “remain opposed to major cap-and-trade legislation that they describe as a massive tax increase that will send jobs overseas and hit families with higher costs.”

Senator George Voinovich (R-Ohio) was blunt about the impact of proposed cap-and-trade legislation on states with an already shrinking manufacturing base. “It’ll kill us. Are you kidding me?” Voinovich said. “But let’s not do something that makes us kill our economy and does not have any real impact,” Voinovich added.

“I don’t think the science is there yet,” said Senator Tom Coburn (R-Okla.). “Cap-and-trade is a tax increase.” The article reported that “Coburn complained that the Lieberman-Warner cap-and-trade bill has so many carve-outs, ‘they bought off everyone.’”

“All we need is two or three more years of not doing something stupid and the science will regain the debate instead of the political activists, and we’ll have policies based on science and not emotion,” Coburn added.

Read More:

National Review Online

Pelosi Premium Pain
Democrats want more expensive energy.

By David Freddoso

Link to Article 

House Republicans sent out an email to celebrate the second anniversary of Speaker Nancy Pelosi’s (D., Calif.) promise that she had a “common-sense plan” to reduce gasoline prices — details of which she has yet to release. Their release included the gory details on how today's fossil-fuel prices compare to those of two years ago: a barrel of crude oil up to $117 from $64; heating oil at $3.31 per gallon, up from $2.71; gasoline up to $3.56 a gallon from $2.96 (remember when we used to complain about gas flirting with the $3 mark?); and diesel fuel up to $4.14 from $2.87 per gallon.

Republicans have taken to calling this phenomenon the “Pelosi Premium.”

Now that may be unfair: Party control of the Congress (or the White House, for that matter) has very little to do with short-term oil and gasoline prices. The big factors today, for instance, are a weak dollar and surging demand for petroleum in emerging markets like India and China.

Still, it hasn’t helped that Democrats have routinely blocked oil exploration on public lands. President Clinton’s 1995 veto of a bill allowing drilling in the Arctic National Wildlife Refuge in 1995 is probably now costing us about a million barrels of oil per day. In 2006, Pelosi’s Senate Democrats blocked an effort to drill the Outer Continental Shelf for what the Department of the Interior estimates to be 8.5 billion barrels of known oil reserves and 86 billion barrels undiscovered.

All that said, the real problem — and the reason Pelosi really does deserve blame — is that Democrats’ political goal of reducing carbon emissions continues to trump their populist rhetoric on gasoline prices. The two stances are impossible to reconcile. Try as they might to blame oil companies for the pain Americans feel at the pump, Democrats want higher prices for gasoline — and for all forms of energy that emit carbon. Economic barriers against CO2 emissions are a requirement for environmental progress in the Democrats’ view, and this is the entire purpose of the carbon cap-and-trade system they will put before the House this summer — to create economic disincentives for emitting CO2.

Last summer, Senate Environment and Public Works Chairwoman Barbara Boxer (D., Calif.) said as much in a conference call with reporters and environmental groups. Her exact words were:

[E]veryone has told us, including business leaders, that to drive the investment in these technologies that are going to solve our global-warming challenge, we need to have clear limits on carbon pollution.

Democrats know that business leaders will be unwilling to invest in other technologies as long as hydrocarbon fuels remain the best economic option to power their industries. Even with oil prices at their current levels, investors view other approaches as money-losers. Therefore, we must raise the price of fossil fuels in order to make clean alternatives competitive.

According to the Department of Energy, transportation accounts for about one-third of U.S. carbon emissions. Therefore, higher gasoline and diesel prices are a vital part of any serious emissions-reduction program. It hardly matters whether the higher prices come through an excise tax (which benefits the Treasury), a carbon cap-and-trade system that hits oil producers (which benefits companies as General Electric), a dramatic increase in world demand for petroleum (which benefits oil companies), a weak dollar (which benefits exporters) or even conspiratorial price-gouging. Each of these five phenomena has the same effect: each raises an economic barrier against the emission of carbon dioxide. And each does so at your expense, because the costs are inevitably passed along.

High gas prices are bad for the economy, but the point here is not to make moral judgments about the trade-off between high gasoline prices and reduced carbon emissions. The point is that Democrats have taken a dishonest public stance with false promises of lower gasoline prices that they never intended to honor. Democrats are shedding crocodile tears for the end consumer of petroleum. If they say they hate to see you eaten alive by Big Oil, it is only because they would prefer to devour you themselves.

Without any government intervention, high oil and gasoline prices are already prompting Americans to conserve energy and providing greater incentive at the margin for investment in alternative sources of energy. A new government report from the Department of Energy this month shows that gasoline use is actually down 0.2 percent so far this year — the first such decrease since 1991, and good news if you worry about carbon emissions. Normally, gasoline consumption rises each year with the number of cars on the road, but high gas prices are clearly having a positive environmental effect. This summer, when prices rise still higher, so will the barriers to fossil-fuel pollution and incentives to conserve oil and to invest in new technologies.

If “greedy oil companies” are indeed to blame for the current high prices, Democrats should thank them for saving the planet instead of cynically (and absurdly) scolding them for “price-gouging” in an attempt to deceive voters. It makes little difference to your bottom line, to the economy, or to the environment whether you are shaken down by carbon taxes and regulations or by an oil producer. The end result is the same — less atmospheric carbon dioxide.

Curbing carbon requires economic pain. You can judge for yourself whether that will lead to environmental progress. In the meantime, we ought to drop the pretense that Democrats have or ever had plans to give Americans cheaper gasoline.