Wednesday, March 3, 2010

Another Consequence Of The 2008 Election

Massive hikes in fuel prices:

To meet the Obama administration's targets for cutting greenhouse gas emissions, some researchers say, Americans may have to experience a sobering reality: gas at $7 a gallon.

To reduce carbon dioxide emissions in the transportation sector 14 percent from 2005 levels by 2020, the cost of driving must simply increase, according to a forthcoming report by researchers at Harvard's Belfer Center for Science and International Affairs.

The 14 percent target was set in the Environmental Protection Agency's budget for fiscal 2010.

Remember, the EPA has the authority to do this without Congressional approval.  The only question is whether or not they think they can get away with it without getting lynched.  And, for Obama, to see if he can get away with it without being painted as responsible for it.

The basic idea here is not a new one: raise taxes on carbon products.  This is, of course, laughable.  Carbon is a naturally occurring substance, and it is a completely ridiculous object of taxation.  Regardless, raising taxes on gas is going to cause all kinds of havoc.  We saw in 2008 just how high it goes before people start getting angry: $4 per gallon.  Just imagine how $7/gal. is going to feel on your pocketbook!

But this isn't just a theoretical exercise:

If you think it's out of the question, it's not. Members of Congress are working with oil companies now to levy a carbon fee on the transportation sector: "Key senators are weighing a request from Big Oil to levy a carbon fee on the industry rather than wrap it into a sweeping cap-and-trade system that covers most of the U.S. economy. If accepted, the approach — supported by ConocoPhillips, BP America and Exxon Mobil Corp. — could rearrange the politics of the Senate climate debate and potentially open up votes that may not be there otherwise."

Such an approach would do nothing but cause more economic pain for American households. Higher gas prices lower employment, income, and spending, and Americans will have to dip into their savings to pay for higher gas prices. Heritage economist Karen Campbell details these effects in her paper, "How Rising Gas Prices Hurt American Households."

Furthermore, a carbon fee would do very little to reduce CO2 emissions. As Senior Policy Analyst Ben Lieberman points out, gasoline prices have already reached these levels in Western Europe where nations have made commitments to cut CO2, yet we are outperforming them in terms of emissions reductions.

One problem with America right now is that too few people consider the long-range ramifications of these issues.  For example:

Higher fuel prices adversely affect just about every aspect of the economy. Food prices, for instance, will increase as it costs more to harvest, manufacture and transport food. And as the price of airline tickets rise, people will travel less. It may be easier to support these policies when public transportation is readily available – although the cost of public transportation will rise as well. However, many parts of the country do not have access to public transportation and have to drive a significant distance just to get to a grocery store.

Indeed, the rural, poorer areas will be hit hardest by a spike in gasoline prices as residents in these areas spend a larger percentage of their income on fuel.

If this kind of plan moves forward, it will be lower income and rural Americans that get slammed hardest.  Is that you?

Moe Lane over at RedState offers this commentary which makes me chuckle:

Ace of Spades Headlines has already used the 'tar, feathers, and pitchforks' joke, so let me go to my backup response: if the 111th Congress raises the average price of gas to seven bucks a gallon, the major result will be that the 2010 Election Night map will give the impression that the entire country was dipped in raspberry jam.

Fortunately, I think this kind of taxation is something that can be rolled back easily and quickly.  It'll be painful while it lasts, but when the raspberry jam flows, the taxation goes.  Just don't forget who took the serious bite out of your budget first.

There's my two cents.

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