American Elephants

Harry Reid Says No Cap-and-Trade. Can He Be Trusted? by The Elephant's Child
July 24, 2010, 8:48 pm
Filed under: Capitalism, Economy, Energy, Taxes | Tags: , ,

Harry Reid announced yesterday an energy bill without a cap-and-trade provision.  This would be a most helpful outcome for America, for cap-and-trade would be devastating to the economy.  However, it is a matter of Democrats not having the votes, rather than an enlightened change of heart.

This is the time to remember what Ronald Reagan said : “Trust, but verify.”  On second thought, turn that around a little — Don’t trust and eternal vigilance.  These are Democrats, after all, who really like the idea of cap-and-trade. We just saw what happened when the Appeals Court looked at Obama’s Gulf moratorium— that was supposed to be dead too. According to  Heritage Foundation research, a cap-and-trade policy could cost the American economy $9.4 trillion in reduced economic activity between 2012 and 2035.

Nothing seems to go away permanently in Washington.  There is a very real present danger of energy legislation that would have the same effect.  Congress is considering raising the cap on liability  for oil companies from $75 million well into the billions.  That might well shut down the oil and gas industries.

The response to that is usually “Let’s Give Renewables a Chance.”  Wind and solar are subsidized  around 100 times the subsidy that oil and gas receive per unit of energy produced.  [According to the Energy Information Administration: $23.40 per MwH for wind; $24.50 for solar; $0.25 for oil and gas; while coal gets $0.44; nukes about $1.60 and hydroelectric $0.60].  Renewables are NOT competing.  They have been protected for years; subsidizing them costs the economy a bundle, and pretending that it will all be wonderful as soon as there is that breakthrough, or the new invention, or we just give them a bigger subsidy, as long as we just keep hoping.

This is the totalitarian impulse.  The White House wants a clean, green economy.  They believe that everything will be better when America is not afflicted with dirty, polluting hydrocarbons.  People should travel by high-speed trains between cities and within cities, ride bicycles or walk.  Cities should not sprawl.  Cars should be electric and non-polluting.  A clean, green economy will provide all sorts of high-paying jobs for the less-fortunate in society.  An ill-informed public does not appreciate the promise of this vision, and is not willing to make small sacrifices to make it a reality.  Therefore  hydrocarbons should be shut down or made so expensive that the clean, green economy is forced to become a reality.

Of course this vision ignores major amounts of simple facts.  Batteries for electric cars cost somewhere over $30,000.  There are no charging stations even in heavily populated areas, and charging takes as much as 7 hours.  Ethanol producers want the requirement for the amount of ethanol in gasoline increased from 10% to 15%.  But only three percent of cars nationwide have flex-fuel engines — the rest of the engines can be destroyed by that much ethanol.  Wind energy requires 24/7 backup from a conventional power source because wind is intermittent at best, and does not blow when it is most needed — in hot sunny weather when air conditioner demand is high.

The free market wants no part of this lovely vision because it is 1. absurd 2. doesn’t work and 3. is not cost-effective.  The EPA has declared out of thin air that carbon dioxide is a pollutant and dangerous to human health, which allows them to regulate it.  This leaves the scientists who know better in the position of having to prove a negative.

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