Gas Tax Controversy Is a Warning to Democrats

While the call by Hillary Clinton and John McCain to suspend the gasoline tax is unquestionably a crass pander to working class swing voters more concerned about rising energy prices than global warming, it is also a warning to Democrats that dealing with global warming by raising energy prices is not a sustainable political strategy.

Next month the Senate will take up legislation -- "cap and trade" -- that would regulate greenhouse gas emissions and increase the price of electricity from fossil fuels. Coal companies -- whose advertisements during the Democratic presidential debates were a shot across the Party's bow-- are already gearing up to run a multi-million dollar ad campaign aimed at stoking voter fears of higher energy prices.

Remember the insurance industry's "Harry and Louise" ad, where a husband and wife fretted about the cost of the Clinton health care plan? Well Harry and Louise will soon be back in American living rooms, courtesy of the fossil fuel lobby. Only this time they'll be worrying about how much global warming legislation will raise their energy bills.

Democratic leaders in the Senate are plowing ahead, ignoring the fact that they have sailed these treacherous waters before. In 1993, President Clinton and Vice President Gore proposed a new tax on energy. While they succeeded in persuading Democrats in the House to vote for it, Democratic Senators balked, and the measure failed. Many House Democrats who voted for the measure lost reelection in 1994, and several pointed to the energy tax as one of the main reasons.

This time is different, environmental leaders insist. The public is more concerned about global warming today than ever before, and the regulations they are proposing aren't technically a tax, even if they will end up raising electricity prices. Such over-confidence has been the death of green efforts in the past. On the 20th anniversary of Earth Day in 1990, environmental leaders were so sure that the public was on their side that they loaded up a ballot initiative, known as "Big Green," with dozens of new regulations on everything from chemicals to carbon. A few months later the economy slid into recession and that November voters rejected Big Green by a whopping two-to-one margin.

Anticipating opposition of the "Harry and Louise" variety, Senate leaders are expected to dilute the global warming cap with loopholes and safety valves that prevent the price of carbon dioxide pollution -- and thus the price of electricity -- from rising very high. And while this may be good politics, the result will be legislation that has little impact on greenhouse gas emissions.

Democratic and environmental leaders insist that the global warming cap and trade pollution law will be as effective as the 1990 Clean Air Act on acid rain, which capped sulfur dioxide emissions and allowed companies to buy and sell reductions in emissions to each other. But whereas the past "cap and trade" law required coal companies to install inexpensive scrubbers to smokestacks, or purchase low-sulfur coal from Wyoming and New Mexico, overcoming global warming requires a whole new energy infrastructure -- such as new transmission lines to bring wind power from the Dakotas and solar power from the Southwest to big cities -- as well as new, expensive technologies, from solar and wind, to coal plants that capture and store their emissions.

This is already playing out in Europe. The European Union has set a fairly high price for polluting carbon dioxide -- about $38 per ton of carbon dioxide -- but it is still cheaper for European energy companies to build new coal plants and purchase off-sets, which is why Europe is today on a coal-building boom, despite the cost it has imposed on polluters. While estimates vary, few expect U.S. climate legislation to result in a carbon dioxide price above $30 per ton for the foreseeable future.

There is a better way. Truly dealing with global warming not just in the U.S. but also in China, which passed the U.S. in emissions last year, requires making clean energy as cheap as possible, as quickly as possible. The good news is that doing so is far more popular politically than increasing the cost of electricity at a time when public anxiety over the economy is rising. Voters overwhelmingly support this objective, and Gallup found last year that 65 percent of voters support spending at least $30 billion a year to do it. A poll conducted by Oakland polling firm EMC Research for the environmental Nathan Cummings Foundation last fall found that voters favored large government investments over cap and trade 84 to 62 percent before arguments were made against it, and 54 to 46 percent after arguments were read.

Just before the 1990 election, a Sierra Club spokesperson told a newspaper, ""If Big Green loses, it will look like the movement cannot translate the rhetoric of Earth Day into the reality of Election Day." The 38th Earth Day has come and gone. If the environmental movement is to finally translate its rhetoric into reality, it will need to shift its focus from making dirty energy expensive to making clean energy cheap.

Michael Shellenberger and Ted Nordhaus, authors of Break Through: From the Death of Environmentalism to the Politics of Possibility.

Comments

[randyjet]

If Obama is so much for the ordinary folks, why has he NOT proposed anything to cut out speculation? He thinks that high gas prices are just fine. If he cannot understand that ordinary people are really hurting because of the speculation driven price rise, then I have NO hope for him doing anything at all for us down the road. It is quite clear from his reaction or non reaction, that only the well off are his concern. Plus, a good number of his backers would take a BATH if he did anything that cuts into speculation.
That is why the press and economists hate any person such as Clinton who even hint at doing something to alleviate the pain. It will cost THEM money. There is NO gas shortage, yet we are paying record levels for it. Most Americans can figure it out that there is something rotten in that. A man who cannot understand that will LOSE and has no business being President.

[UnbiasView]

"China, which passed the U.S. in emissions last year, requires making clean energy as cheap as possible, as quickly as possible."

And you believe them?

[KillTheMessenger]

I usually tend to believe a person who is choking to death that they are trying to loosen their tie.

[UnbiasView]

The USA did not sign kyoto treaty and as a result we have lowered emissions while countries that signed have raised emissions.

[shrugged]

We must expose the real conspiracy among oil/energy executives, engineers and scientists. They have agreed to follow the "second law". If we simply have Congress repeal the second law of thermodynamics ALL global energy problems could be solved. This is the only barrier standing between us and energy independence, cheap energy and a clean environment. Call and write your congress person today. Demand the repeal of the second law of thermodynamics.

[KillTheMessenger]

I disagree. We need to remove the first law first! Perpetual motion machines for everyone!

[shrugged]

It stopped warming a decade ago. The last 2 years temperatures have been drastically dropping. April was below the 114 year average temp. The oceans have cooled. Yet CO2 is up. Maybe no direct link? But, this doesn't mean we shouldn't go ahead with any good reason to tax the people and move jobs to China.

[Bill3rdterm]

When are tree huggers going to get it? It doesn't matter what we do, if the rest of world doesn't fall in line. And if do go with restrictions and more costly forms of energy, it's only going to crush us econemicly

[egal]

Actually, we're already being crushed--economically and politically and otherwise--by using current energy sources. And the nice thing about those Green sources is that they will only be more costly when they start being built up, and soon and for the foreseeable future after being implemented, they give us energy we don't have to start wars or make questionable political alliances and decisions to maintain.

With even remotely decent development and improvement support, many Green energy sources can very quickly become more cost-effective than oil was even before its price skyrocketed (some are close already despite next to no funding).

If we would focus half as much money into the R&D for alternate energy sources as we do into oil (because the oil companies own our government's leaders right now), we would already have clean, renewable, UNITED STATES PRODUCED AND CONTROLLED alternate energy sources of a scope to fulfill a great deal of our energy needs. And the more practice we gain at extracting clean energy from renewable sources, the less expensive it grows to use.

Not to mention the millions of AMERICAN jobs that focus on such industries would create here in America if our president would stop strangling Green funding efforts.

[CocteausTwin]

Thank you for the article. It certainly did not slip my attention that their was "sponsorship" of many debates by this greedy portion of the American economy. It made me ill to watch children trying to pitch the solutions proposed by the industry.

[Tator]

It use to be a joke "Democrats would tax the air you breath if they could figure out a way to do it." Well they did with the Hoax/Religion of Man Made Global Warming.

[BlackbirdHighway]

And Republicans would poison the air we breathe, and yes they have figured out exactly how to do it!

But then they'll sell you fresh air in a bottle, if you're rich enough to afford it. They call that the free market at work!

[UnbiasView]

I don't think anyone is for pollution but there is a lot of questions that need to be answered on this whole global warming thing before putting into place laws that will hurt business and add to rising costs in every segment of our lives.

[KillTheMessenger]

Good grief people... how long did you bury your heads in the sand? Probably long enough to believe that the tooth fairy will bring that ubiquitous cheap energy if we just believe hard enough in it. Here is a thought: take a bunch of lessons in classical physics, thermodynamics, chemistry and geology and after you pass the exams on these topics come back and write a thousand word essay why we will not have cheap energy. Because then you will know why all this political analyzing is hollow in light of reality aka the laws of nature.

Sure the US can try to keep energy prices artificially low. It just won't succeed in doing so without bankrupting itself.

[randyjet]

The FACT is that oil is artificially HIGH since world demand grew only 2% and the supply grew at 2.5% last quarter, and projected to go to 4% in the third quarter. Now how in the world does that translate into higher prices when there is more oil than demanded? As Clinton pointed out, the head of Exxon said that if the speculation was taken away,oil would drop to a free market rate of around $50/bbl. THAT is a true demand curve.
The prediction of peak oil is only true for the easily recoverable oil. The oil shale deposits in the Rockies have enough oil to meet ALL of the US demand at current rates for ONE HUNDRED years. The break even cost is $35/bbl for that process. There is also a huge reserve of oil in Venezuela which has more oil than the ENTIRE Mideast. It is recoverable with current technology and would cost about $50/bbl to produce. Releasing oil from the SPR is not artificial in any way since it is ARTIFICIAL to take oil OFF the market when the SPR is at 97% capacity.

[randyjet]

Obama has taken the approach that high gas prices are the way to go. He has no problem shifting all the costs on to the backs of ordinary Americans and letting the well off skate. He and Bush agree that taking oil off the market and putting it into the SPR is good policy. This simply enriches the speculators for no good reason, and is class based prejudice. The wealthy like Obama and his backers will have no problem paying the increased cost of gas and will drive to their hearts content while the rest of us have to stay close to home and broke.
I will not vote for Obama since he has no concern for ordinary working people and cares less about our concerns. His health care plan is a lie when he says one thing and his web site says another. He is more than happy to leave out the millions of Americans who have no health care and tax us to pay for health care for the poor. It is even worse when the plan is an insurance company's dream. He is simply what he and his wife are, corporate lawyers who look after their own.

[KillTheMessenger]

Can you take the ratio between 70,000 barrels a day (volume of oil going into SPR) and 25 million barrels/day (oil being used for transportation, heating, etc.)? Please try. And then come back and explain to me again how such a tiny fraction can be responsible for all the ills you claim.

[randyjet]

I did NOT say that putting oil into the SPR is responsible for the speculation driven price rise in oil prices. It simply SUSTAINS it and promotes it. Dumping oil from the SPR onto the market will drive the speculation down and probably crash it. That will really hurt the speculatrors and their economists and is what the SPR was originally designed for. Bush I did that during the first Gulf War and it stabilized the prices when there was an ACTUAL shortage since the oil from Kuwait and Iraq was gone.
I would refer you to Star_Telegram.com/ed_wallace and his article Thank You Bubble Boys which gives the facts about the price rise. If you cannot read too well, I remind you that when Goldman Sachs said oil would go to $200/bbl, the price spiked $2/bbl with NO disruption in supplies at all. Even a DUMMY can figure THAT one out.

[kgb999]

I don't think this will be an issue. The "Earth Day" thing was a huge marketing roll-out and the democrats invested much political capital and hoopla on it. This isn't something that got a big launch, or even really any air until now - and it's hitting the floor in a couple of weeks.

I'm not really weighing in on policy, but every schmuck from here to November seems intent on fearmongering that the "democrats better watch out and do X or they are going to lose the election".

In this case, I don't see how. It's just another of a bunch of bills that are way complicated and nobody really understands. Some people think it will make things better .... some say worse, but there is one candidate in bed with big energy and oil and one who is far less so. I think this is going to be dualing wonks with the people falling in line with who they trust anyhow.

BTW: There are OTHER pieces of legislation (some have even passed) that aim to do exactly what you are talking about: making clean energy cheaper. The idea is to provide both a carrot and a stick. This is the stick. I'm pretty sure Obama will do just fine articulating this.