Cap and Trade will Hurt Texas

Several days ago I issued a statement on President Obama's cap-and-trade proposal. As has already been pointed out on a Texas GOP Vote.com blog post, those that will suffer the most under this bill are my fellow Texans.

President Obama sought to sell his cap-and-trade proposal to Texans by calling it a win-win-win-win-win proposition. As the number one energy producing state in the nation, Texans know firsthand that this is patently false, and his harmful cap-and-trade tax proposal would impose the largest tax increase in American history and result in major losses for Texans across the state. Texans will lose jobs, our economy will lose revenue, and families will pay for higher energy bills. The best way to achieve economic, environmental, and energy security is by encouraging more nuclear energy generation and domestic energy production. Yet, the President's cap-and-trade proposal would do the opposite by shackling domestic energy production with more red tape and restrictions. I call on all Texans to join me in opposing cap-and-trade and similar misguided policies that conceal the true cost to taxpayers and only further our dangerous dependence on foreign energy.

To further highlight the economic impact of the cost of such a policy, look at this map. You'll see that the Mid-Western and the Southern states will pay the most while Pacific and North Eastern states benefit.


Click to enlarge..

Comments

Mr. Cornyn's analysis of cap and trade considers only the direct effects of C&T on electricity consumers & producers.  It does not consider the other important, but less direct, economic impacts of C&T on Texas.

For example, there are many small innovative, entrepreneurial companies in Texas that will benefit from C&T.  My own company, with a innovative technology for recycling CO2 into biomass feedstock for biofuels will benefit from C&T, as will many other clean tech companies in the state.

The C&T bill is designed to spur innovation.  If Texas wants to increase its standing as a hotbed of innovation, research, and venture capital, then we need to consider small businesses when discussing important federal legislation like C&T, which will create more green jobs and innovation in the small sector than the large companies will lose.

Mr. Cornyn's position is clearly driven by the interests of the large, old companies who don't like competition, innovation, or change.   A more balanced analysis is called for in this important debate! 

Jonathan L. Gal
Green Republican

This bill only seeks to make petroleum products more expensive, so that the much less efficient "green" industries can have a chance. These alternative energy sources are only marginally profitable after you add in governement subsidies, they can't compete on their own. Additionally look at how much the "green" jobs pay. Because they aren't as profitable on their own, wages are low. A refinery worker working a modest amount of overtime will make $80,000 - $90,000 per year. A power generation employee might make slightly less than that.  A "green" job will pay $30,000 - $40,000 per year for ethanol plant operators, wind farm workers and solar panel installers. How is this better for the country? This bill will slow the economy and lower the standard of living in any state that currently has energy as a cornerstone of it's economy. It will also increase the current energy bill for everyone.

This is a bad piece of legislation and is not grounded in economic reality.

Jonathan -

Cap & Trade has nothing to do with "competition, innovation, and change."  It has everything to do with taxes and control.  Taking money from "large, old companies" as you call them.  I call them "profitable" job-generating companies that have been able to compete and succeed without government subsidies!

I am all for our federal government encouraging the growth of innovative technology like yours through tax incentives and favorable regulations.  However, I don't think your company deserves a government handout.  Why can't you compete on your own?

This is just corporate welfare by a different name.

Jonathan,
Taxing other industries to support a non-competitive one is counter productive.  No economy has ever taxed its way to prosperity, just the opposite.  If the government wants to provide grants or lower investment loan rates to encourage research, I have no problem with that.  However, to be successful new technology must be able to compete on a level playing field against the existing energy/technology base.  This is particularly true for energy since it directly impact the US's ability to compete with other industrial nations.  Our main industrial competitors, China and India, have flatly stated that they will not implement such a program.  The Indonesian groups have ignored the question, but it doesn't take a genius to understand that they are focused on economic/industrial performance and will not look favorably on anything that negatively impacts their performance.  That leaves Old Europe as the only significant economic/industrial unit that has implemented Cap & Trade and any objective observer/ analysis will tell you that it has been an abject failure.  It has created a significant drag on their economies, and they haven't come close to meeting any of the mandated emissions goals.  It isn't hard to understand why, the costs of the requirements to meet the goals would drive their economies into recession.  The 'star pupil' that President Obama pointed out as an example of this system, Spain, has an 18% unemployment.

 The American people and particularly energy producing states will shoulder a heavy burden from the passage of this poorly conceived and misguided tax bill (C&T). We must therefore deal with some particularly difficult facts in hopes of crafting a better policy. FACT: The climate is changing- for reasons still not entirely clear. FACT: The economy is changing dramatically- on this one the reasons are much more obvious. FACT: The days of cheap and seemingly inexhaustible fossil fuel energy are inevitably coming to a rapid end. The list could go on and on but the question becomes “how do we as individuals, businesses and a nation deal with these issues. John Wayne (2009-07-09) makes a reasonable case for maintaining the status quo of the highly paid workers in the refinery and fossil fuel energy generating industries. Over the short term this seems commendable but the FACT is the days are numbered for these and related jobs much the same as for the engineer who refused to give up his slide rule. Those industries disparagingly referred to as “green” are in their infancy but as they mature they will provide opportunities for high pay (without government subsidies), new technologies, and rejuvenation of the innovative spirit that has made America great. To Norman Adams (2009-07-10), your praise of the established “profitable, job generating” old companies is understandable and justified but those companies can easily miss the opportunity to change just as GM and Chrysler did with such disastrous consequences. Great and enduring companies will do well to seek directorship that tempers the short term quarterly profit report with a long view of 25- 50 years and longer. We should all embrace and encourage new enterprise, innovation and change even if it hurts in the short term.

   We need a fundamental change in the current direction of government, business and society. All the political posturing, rhetoric, deception and self-serving lies the American people are currently being fed bode poorly for our future. The troublesome and dangerous aspects of the current energy equation are that the energy markets, domestic and international, are extremely volatile and can hamstring our economy overnight. We simply are deluding ourselves to advocate a “more of the same” energy economy. Granted more energy is critical but the acquisition and use must be thoughtfully balanced in the near term and sustainable for the long term. Concern for the planet and obviously its environment must not be considered inconsistent with a resilient and productive economy. Hard work, enterprise and reward instead of entitlement, stagnation and insurmountable debt will return our nation to its hard won position of “Home to the Greatest Society on Earth”.

 

Let us get on with it.

God Bless America

Jonathan,

     You say that the green industry will soak up the job losses from the "large, old companies who don't like competition," but what about all of the small business owners that will have to shut down due to direct carbon taxing on their production methods? What about the small business owners whose operating costs will increase across the board due to indirect costs from their suppliers? Larger companies will be able to adjust to this, smaller ones will not. This increase will trickle down the line and make it harder for everyone, well, everyone who's not in your position with a "green" job or company.

     Are you proposing that we rob Peter to pay Paul (take from everyone else to help you)? That's not really a republican or conservative approach to something, but rather a socialist or liberal plan. And for the competition thing; where do you get the idea that these companies don't like competition? They compete everyday, just look at all of the different gas stations, electricity providers, and so on and so forth. Your argument is as baseless as it is unrealistic. Make your production method more cost effective and create a product that people will by. Power your business through capitalism.

C&T is grounded in greed and centralization of power and control...

I would love to see wind, solar, and hydro power do most of our electric power production here, but sadly it'll never happen. We can't bank on Mother Nature to be on the job every day. The biggest benefit we could see is through energy conservation. In Texas, that means insulating our homes from the hot sun, and sealing up all the doors, windows, and wall openings tightly to lower demand for our single largest power consumption: Air Conditioning. Electric consumption can usually be cut by 20% or more in most houses during the 6 warmer months. I've seen a 1500 square foot house electric bill fall by 40% simply by adding 6 inches of blown insulation to the original 4 inches in the attic. Pretty dramatic. For the record, I am not in the insulation business, I am an electrician. 

A point to make: AC Electrical power is not one that can be stored and drawn off as required. There is always an oversupply -reserve capacity- running: the generators have to be running all the time, with enough reserve generation capacity online all the time to handle additional loads as they are connected, or there will be a brownout everytime a bunch of lights are switched on in the neighborhood, multiple Air Conditioners decide to start up at any one time, or electric cars are plugged in to be recharged. And we all know these use fossil fuels to produce power. How does this become more efficient than our cars in turning carbon fiuel to useful power?

Then there's the energy used to produce all these new cars, motors, batteries. The heat and conversion losses from taking 120 volt AC and converting it to DC and operating the electronics in the battery charger control system in order to charge the car. And we all know how long the batteries last... how can we believe we are gaining anything?

Same holds true for Solar Cell systems, storage batteries (solar cells produce direct current, not alternating current) and the A.C inverters to produce 120/240 volt AC for the house to run on. Let's add the heat load and conversion losses incurred by the inverters... more global warming, more heat load for the air conditioning system...

Lastly, I have noticed a trend in my research of Wind power: "Nameplate rating" power generation capacity- the maximum power the windmill can produce WHEN THE WIND BLOWS FAST ENOUGH. Rarely do these wind generators produce maximum power, especially in Texas. I wonder what percentage of maximum output they actually produce when installed, and what financial incentives they recieve are based on.

Politicians are, understandably, woefully ignorant to such vital aspects of the REAL cost and impact of these "green alternatives" -and I don't expect them to know these things. I do expect our poloticians to smell a rat when the profiteers in these technologies are the ones telling them what is right and wrong... and have a conscience when the money comes into play (by way of lobbyists and PAC's) to influence their thought process...

Mr.Cornyn,

If you look at your fund raising results you will see that I have made several contributions to you. What you have received will be the last from me. I write to you, and as I have come to expect, my letters hit file 13. I now understand that you sir are absolutely no different from any of the other self-serving Washington crowd. You will not publish or respond to anything that is not in line with the agenda paid for by your lobby. I plan to take up the cause, along with a rapidly growing number of Americans, to sweep you and your cronies our of office. This Country deserves much more it is time to replace the Congress and Presidency with true patriots.

Bob Rabroker

"I plan to take up the cause, along with a rapidly growing number of Americans, to sweep you and your cronies our of office."

That's a couple months too late, isn't it? He was just re-elected, after having voted for the unpopular TARP.

So Mr Rabroker.  I am pleased to hear that you enjoy paying more for the items that you must use.  I personally am sick of it.  The free market should establish the prices for what is charged for a commodity (not government bureaucrats).  Whoever produces the energy most economically should get the publics business.  That is what our government should uphold (not another rediculous tax on the people of our country).  As one form of energy depletes, another will come to the fore front naturally.

 

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