Jack Gerard
Jane Van Ryan
Perhaps you've seen API's ad in The Washington Post today. It states our position on the Waxman-Markey bill quite clearly. The sub-head reads, "If you like $4 gasoline, you'll love the House Climate Bill."
No one likes the prospect of paying $4 for a gallon of gasoline, but API economists who analyzed the bill say $4 gasoline easily could become a reality. They based on their calculations on two recent studies--the Heritage Foundation analysis of the Waxman-Markey bill, and two Congressional Budget Office (CBO) reports.
First, the economists' methodology using the Heritage study was quite simple. The Heritage Foundation found that the bill could raise gasoline prices by 74 percent. Based on the fact that today's AAA average gasoline price is $2.676, that means the bill could result in an increase of $1.98. Add the two numbers together, and the potential price per gallon of gasoline is in excess of $4.
Using the June 5th CBO analysis of the bill's potential emission allowance costs, API economists concluded that by 2019, the greenhouse gas emission allowance costs for a gallon of gasoline could be the equivalent of up to 77 cents, up to 88 cents for a gallon of diesel fuel, and up to 83 cents a gallon for jet fuel-- if CBO is correct about allowance costs when "international offsets" are not readily available. Furthermore, they discovered that the June 19 CBO study contains two overly optimistic assumptions and fails to consider the bill's potential adverse impact on the Gross Domestic Product (GDP). As a result, API economists discovered that the CBO analysis grossly underestimates the bill's potential cost on each American household.
As written, the CBO says the cost of the Waxman-Markey bill in 2020 would be "about $175 per household." When corrected, the CBO's own numbers show the impact per household could be as high as $3,342 a year. That's more than $278 a month--money that families need for food, a car payment, child care, and housing.
As Jack mentioned in an earlier blog post today, the CBO's initial "calculations give new meaning to the term 'rosy scenario.'And API isn't the only organization that's questioning the wisdom of passing this bill because of how it tackles greenhouse gas emissions.
Several libertarian and conservative bloggers are voicing their concerns about the bill, too:
"Cap and trade in any form is a tax increase, in my opinion. It doesn't even work to reduce emissions as promised and it threatens the economy." (Vulcan's Hammer, June, 24, 2009)
"Trust me, this isn't about emissions. If it were, they wouldn't treat natural gas the way they do in the legislation...After all, they're the government and they're there to help." (QandO, June 24, 2009)
"Frankly, we have not heard enough about the climate change legislation to be comfortable with the prospect of an impending vote and the commensurate belief that we are doing the right thing by passing this legislation. There deserves to be a full and fair debate on the issue...I am sure that this is a great way to run a political machine. But as always, it is worth noting that it is a really bad way to make policy." (The New Ledger, June 24, 2009)
"Cap and Trade will move profits and money around, but protect the environment, it will not." (opntalk, June 24, 2009)
Tell us what you think about the Waxman-Markey bill by commenting below.
I read your full page ads in the Washington Post every day and I would like you to know that there are some Americans out here who believe that this ad campaign is just another "scare-em with a lot of obfuscation" tactic.
The truth is, we NEED a much higher federal tax on gasoline. For one thing, Americans are never going to figure out about being fuel-efficient if we don't hit them in their pocketbooks. Witness what happened a while back when the price of gas was hovering between $3 and $4 per gallon. People started driving less; people were looking for more fuel efficient cars to drive; car-pooling increased. Demand for gasoline went down.
We were all demanding alternative fuel programs; we were demanding more fuel efficient cars to purchase. But the drop in fuel demand caused a drop in price, and once gas dropped below $2.00 per gallon, guess what? Everyone forgot about the gas crisis. People started driving more again; demand for fuel efficient cars fell off; SUVs didn't look so bank-breaking as before.
I fully support up to another $1 per gallon in federal tax, even though I am in an income bracket that makes it difficult to get from paycheck to paycheck. three years ago, at the height of the $4 per gallon gas, I switched from a gas-guzzling SUV to a smaller, much more fuel efficient (45 mpg) car. Even though it is now very cheap for me to drive, I still try to get the most out of every trip I take, and I would willingly pay more to drive if I knew the government was using my money to plan for the future; a future I may not live to see, but at least it might be a better place for my children.
That $1 extra in tax would keep the price of gas high enough that people would think twice about jumping in their cars to drive 6 blocks for a loaf of bread; consumers would demand more fuel efficient cars and Detroit could start making those cars with the assurance that they would be in demand. The money could go to fund research for alternative fuels and transportation, such as light-rail, inter-city public transportation, etc.
Your continuous full page ads attempting to scare me into thinking that the world would end if I had to pay $4 for gas make me wonder who you are really fighting for? Energy as we know it today is limited. We need to do something about changing how we produce and use enegry. Stop scaring us with the same old canards and start figuring out how to get the American people to finally understand that petroleum is not only a limited resource, but using it is not particularly good for our environment.
Suzi, thank you for your thoughtful and well written comment. You’re correct—energy efficiency is very important. But here’s the question: Is it better for the government to force Americans to be more energy efficient by imposing higher costs or allow American ingenuity find and commercialize the fuels of the future?
The Waxman-Markey bill could have a huge negative impact on every family. Independent studies show it will raise fuel prices substantially, including gasoline, destroy U.S. jobs, reduce U.S. energy production and drive energy production overseas, which will have the perverse impact of increasing emissions there.
API’s ads are using data from these independent studies. They aren’t meant to scare anyone, but they do provide information that all Americans should consider.
Here’s one more point to think about: The last time this country shifted from one power source to another, it took 90 years (1859-1950). The free market recognized the flexibility and energy content of oil and slowly made it the predominant fuel over coal. The transition was not accomplished by fiat. A similar transition could occur in the future, but forcing a change through legislation is likely to raise consumer costs substantially, according to the studies, and do little for the environment.
I hope you’ll continue to read our blog posts and submit comments. I look forward to hearing from you again.
Suzi, a dollar increase in a gallon of gasoline doesn't just effect gasoline consumers by using up more of their discretionary spending on fuel for transportation, it also extends to all parts of the economy--it will make EVERYTHING more expensive: food, clothing, books, electronics, etc. Higher transportation costs will also make it more demanding on businesses to compete: High gasoline prices was one of the catalysts of our current recession. Would you like slow economic growth in the future due to high fuel costs? It won't help us get more efficient sooner and it won't fund all those light rail projects that you pine readily either.
As nearly half our domestic and imported oil is consumed primarily in the form
of gasoline to fuel personal vehicles, this is where we need to focus a great deal
of our attention and investment dollars.
gasoline
Gasoline is a refined blend of several hundred of these compounds,
formulated to perform in extremes of hot and cold and at widely varied altitudes,
not burn too fast or too slowly, burn as cleanly as possible,
and remain stable during transportation and storage.
gasoline
"Suzi, a dollar increase in a gallon of gasoline doesn't just effect gasoline consumers by using up more of their discretionary spending on fuel for transportation, it also extends to all parts of the economy--it will make EVERYTHING more expensive: food, clothing, books, electronics, etc. Higher transportation costs will also make it more demanding on businesses to compete: High gasoline prices was one of the catalysts of our current recession. Would you like slow economic growth in the future due to high fuel costs? It won't help us get more efficient sooner and it won't fund all those light rail projects that you pine readily either." - Absolutely agree to this post! $4 gas is ridiculously high!
-Bob
washing machines