I never thought I'd say it, but I agree with Exxon on an environmental issue. The CEO, Rex Tillerson, called for a carbon tax yesterday. As the Wall Street Journal reported:
Rex Tillerson said that a tax was a "more direct, a more transparent and a more effective approach" to curtailing greenhouse gases than other plans popular in Congress and with the incoming Obama administration...Mr. Tillerson has become an unlikely member of a club that includes former Vice President Al Gore, consumer advocate Ralph Nader and President-elect Barack Obama's designated head of the National Economic Council, Larry Summers.
Does "wow" cover it? While skeptics may believe that Tillerson is just throwing the idea out there because he knows it won't happen politically, I'm not so sure. I think he means it. And not just because it's by far the most efficient method to reduce emissions, which pretty much every economist of any political stripe agrees with (for example, Bush's former chairman of the Council of Economic Advisors, Greg Mankiw, is a big proponent...see here and here).
But I think Tillerson knows that a carbon tax would likely be cheaper for Exxon than a cap-and-trade, or at least not as specifically targeted. The wrangling over a cap-and-trade system -- who will pay for permits, who's included in the "cap", and so on -- will be ugly. But you can bet that energy and utility companies will face the most traumatic changes and restrictions. A tax, on the other hand, would wind its way through the economy to the places that the supply and demand curves dictate (those with "inelastic" demand are more likely to pay the price). Basically, even if it's taxed at the pipeline or refinery, the actual cost could be passed on to consumers. But isn't that the point? A tax or a cap should reduce consumption, which won't happen without a higher price signal. Only when gas hit $4 a gallon, did people demand more energy-efficient cars.
At any rate, while many say a tax is nearly impossible to pass, especially in a recession, maybe now's the best time. All bets seem to be off in D.C. these days. Conservative economists are okay with $1.2 trillion deficits and some Republican congressmen have indicated support for energy taxes (and lower income taxes -- a policy called "tax shifting" that other countries have used for years).
It's ideological anarchy out there right now. Maybe while the slate is clean and the economy is at rock bottom, we can explore those hard-to-pass, but ultimately superior, policies. I can dream, can't I?
Andrew Winston helps companies use environmental thinking to grow and prosper. He is co-author of the best-seller Green to Gold, writes a monthly e-letter Eco-Advantage Strategies, and regularly blogs on green business.
A tax, is a tax, is a tax!
In cancer science, they often say smoke, is smoke, is smoke when it comes to it's toxicity to the human body.
I do not understand how anyone can look at the complexity, disfunctionaility, and politically driven nature of our existing tax structure and think that creating an entirely new taxing mechanism is a good idea for solving any problem.
Especially when a recent Harvard Business School economic analysis concluded that the drain in human and societal resources that goes into supporting the U.S. tax code is estimated to exceed defense spending in terms of its drag on the U.S. economy.
I had the same feeling.
A little eerie, to say the least.
I was writing an article for my co-op newsletter on the carbon tax issue.
Moving to cap-and-trade will be the grandest boondoggle that the enviros can ever make.
Makes electricity and energy deregulation look like a game of "go-fish".
Once a "pollution-credit" has been created, it will trade forever in the murky international waters of the other financial exotica out there.
The result will be that the people that actually PAY for our carbon-balancing and sustainability goals will have to pay much more than is necessary, and those same people will never be able to get control of those costs.
But the fact of the matter is that the energy production business is an energy-intensive business, and, as such, the unnecessary operating costs from the C&T will prey on Exxon just like the rest of us, therefore putting pressure on even the biggest of energy industry players.
My problem with the whole Exxon thing is that they never appeared to be that smart.
And, I have never seen them come out on the right side of environmental policy before.
Who's next.
Maybe the electric co-ops?
If one accepts the weak science about the CO2 molecule and the outright alchemy of "feedbacks" and AGW, of course a carbon tax is more "efficient" than cap and trade.
But the money from a tax goes to the government, cap and trade stays mostly private, with Wall Street taking its cut, and creating carbon derivatives to hide debts and such.
The money pushing global warming is Wall Street money wanting cap and trade. They are already invested in it in Europe.
People criticize Al Gore for his "I helped invent the internet" comment. However, as a board member of the Joyce Foundation, Obama can cleanly claim "I helped invent the carbon exchanges".
An import tariff would: 1) Keep the price of oil high and promote conservation and efficiency, 2) Reduce our trade deficit, 3) Reduce our budget deficit, 4) Decrease the amount of money that ultimately finds it's way to terrorist organizations, 5) Promote domestic oil production without giving away billions to oil companies, 6) Reduce pollution, 7) Reduce generation of greenhouse gasses, 8) Promote alternative energy.
It would do so much good that there is not chance in _ell that our idiots in congress would every support it.
Al Gore is a great marketer though, steps 1-3 to be rich:
1. Convince people they can change the climate one way or another
2. Open a business that sells carbon credits
3. Use government to make is law that you business gets business
With all the government waste, why would you want to give them more to deal with and what does government know about running an oil company?
Congress can't run a cafeteria without bankrupting it, they have already done that :)
You seem to forget that government runs a judicial system, military, police and education. Does Exxon run any of those.
Maybe some day Communist China will rise to the supreme military power and send their 210 million man army to your shores. Do you think Exxon are going to send their employee's to the coast to defend the country!
This is at best a marketing gimmick and At Worst an attempt to drive other companies and technologies out of business to prevent the development of competitive sources of energy.
EXXON and the Oil Companies should be prevented from controlling any alternative energy assets for the above reason!
The problem with money as a cap-and-trade system is that the cap can only move it one direction: up. Money seeks interest, bears interest, and it created of interest. Money doesn't work unless its supply can expand exponentially over time, and that can only happen if the supply of energy it chases expands exponentially as well.
If the market expects or the government legislates that the supply of energy will level off and eventually decline, then money will go from being the thing that everybody wants to borrow to the thing that everybody wants to repay. The banks won't lend, consumers won't spend, and capital won't invest.
Sound familiar? In an economic environment where future expectations for energy consumption are anything other than solidly bullish, the financial system enters an auto-cannibalization mode. It's not enough for there to be things that we need, people willing to work, and energy to support production. In a system of private, for-profit capital allocation, if there's no growth, then there's no money.
There's nothing inherently wrong with a competitive market for goods and services. But in a world of energy scarcity, a competitive market for capital is doomed. Stocks and bonds are doomed. Loans of interest-bearing principal are doomed. If we don't eliminate the profit motive from the financial system, then it will implement an energy cap-and-trade system all on its own with no political mandate. It will be rapid, chaotic, and dangerously destabilizing -- and it's happening already.
I'm an environmentalist. I work as an energy modeler/analyst for an architectural firm that only accepts leading-edge sustainable development projects and has designed more LEED Platinum certified green buildings than anyone else. I buy 84% renewable electricity for my home. I'm a progressive. I believe we need more collective decision-making in the economy.
But you have to understand the old economy before you can bolt a new policy package on it an call it a new economy. And once you do, you'll realize that none of these proposals can possibly work unless we radically dismantle a global network of financial institutions and phase out families of financial products to which we have grown quite accustomed. A whole financial paradigm is obsoleted by the very belated acceptance of the natural limits of our finite planet.
Doesn't it strike you as a bit naive to believe that a tax is the solution to such a complex problem?
No, it doesn't. Republicans are always haranguing about how complex government policies "pick industry winners and losers." Let's call their bluff.
A carbon tax doesn't prejudge the final solution to an economic problem. It simply creates an incentive for consumers to use less petroleum (and, personally, I would also like to see natural gas taxes). HOW consumers decide to keep their money is left to them.
Tesla was put out of business by the Rockefeller/JP Morgan tandem in his attempt to provide a mechanism for free distributable electrical energy.
We are still held hostage, 1 century later, to the Rockefeller 95% monopoly on oil refining that feeds crude into the refinery and the gas is sold at the same price at every gas pump guaranteeing perfect profit flow and zero competition.
Yet, since Tesla developed his remarkable patents, the hydrogen economy now awaits its release which would provide each of us with our own source of free electrical energy. This alone would eliminate the massively corrupt oil economy and reset the world to responsible environmentally living.
If Barack Obama wants to move America to energy independence and more importantly to alternative green energy sources, then his first step must be to break up the five sisters. The only way to get there is over the dead body of big oil and that starts with using Taft Hartley to break those companies up. Take a lesson from Teddy Roosevelt and FDR, break up the big girls first.
What is the name of the alternative energy subsidiary that ExxonMobil has created?
That's ALMOST a fair question... Why single out major Western petroleum companies? I know, you did so because ScreenName05 said we needed to break them up, and you were answering that remark.
But the interests of all petroleum companies, domestic or foreign, are the same when it comes to alternative energy. They don't own much of it, they don't control the expertise, therefore they want to keep it out.
I made a prediction here on HuffPo last summer -- that oil prices would decline rapidly in the fall, as the election approached. They did. I said that this state of affairs would be arranged by the Global PetroMafia, as a long-term strategic move. The goals would be:
1) to give consumers a LITTLE relief, enough to see $100/barrel oil as a "bargain";
2) to kill off alternative energy's momentum once again;
3) to give Republicans the chance to claim political credit for "jawboning the Saudis," thereby improving the chances that our next President, like the current one, would be pro-Oil.
Since I exceeded 250 words, I'll follow up to this post with a Part 2, once this post is approved.