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Is Cap and Trade Deadly to Elected Officials?
Posted Thursday, May 14, 2009 ; 06:00 AM | View Comments | Post Comment
Updated Saturday, May 16, 2009; 12:19 PM

Columnist Rob Cornelius says the self-preservationists on Capitol Hill are ready to save our way of life in West Virginia whether they like it or not.

Story by Rob Cornelius

The self-preservationists on Capitol Hill are ready to save our way of life in West Virginia, whether they like it or not.

Expedience is one of the top characteristics of a multi-term legislator, or appropriator as Rep. Alan Mollohan, D-W.Va., likes to call it. No matter which, centrist Democrats in Congress are getting scared of being too close to the Waxman-Markey bill making the rounds.

As we've warned in this space since before the last even-numbered election year, doing the wrong thing for the voters' wallets on the environment is going to turn some legislators back into pumpkins soon.

The beat goes on out in the real world, where real people with real jobs continue to do real things with fossil fuels. We see coal companies merging -- Alpha Natural Resources with Foundation Coal. We see China announcing plans for a Strategic Coal Reserve that will start at a capacity of 120 million tons. Even if folks don't burn another ton of the stuff here, other nations will.

Take your pick of surveys and information, but most all the ones hitting the streets these days simply see cap and trade as an effective tax or cost increase for the typical American home of four figures per year. Thankfully, most of us don't enjoy paying more and getting less of anything.

The one I'm reading from economic consulting firm CRA International starts with projecting immediate job losses due to the White House's environmental policy plans of 800,000 alone in the year 2015, with that number totaling well over 3 million jobs by 2025.

This comes from a variety of factors, from the plans for carbon capture, the disuse of American coal and the requirements to increase usage of renewables to the 20 percent mark to make electricity.

The CRA study posts added costs per household to jump by more than $1,000 in 2015 if the White House gets its way and more than doubling again by 2030. This is in addition to any rebates or refunds the current president has promised will be returned to the taxpayers through the sale or auction of carbon credits.

The current version of the Waxman-Markey legislation going through Congress now has more free credits initially going to power companies and industry, but this seems to be not much more than splitting hairs in a wig of new costs for everyone from industry to local governments to the consumer.

The worst thing about any of this is probably the planned obsolescence and waste that will occur. We talked last week about the "cash-for-clunkers" provision of law that accompanies this legislation right now in Congress, thanks to a Michigan representative.

Trouble is, there isn't any such sweetheart rebate for industries that will have to shutter existing equipment that works or pay huge new taxes for the privilege of using power. Again, like paying more for less, you are telling big sectors of the economy that they will need to retool or start over or incur huge new costs to keep doing or making the same goods.

All that paying more for the same widget means the price of the widget is going up. If prices go up, people buy fewer widgets. This is all pretty much common sense. Trouble is, right now nobody is buying many widgets.

Despite the last eight weeks of stock market entertainment, we've gotten to the upside. Despite all the news shows trying to tell us that a second-derivative change in unemployment rate means something ... here's the truth. People aren't buying anything of substance.

I measure that assumption with a lot of tools, but my favorite is usage of rail cars. They carry everything -- agriculture, coal, cars, delicious frozen waffles ... whatever.

The best example is in this research last week from Credit Suisse. No one is restocking much of anything. These numbers are actually worse than over the winter.

"The railroad carload data are telling a very different story about the economy than one might surmise by looking at the S&P 500. Our concern is that the carload data are ahead of the curve; the light at the end of the tunnel that seems to be boosting stock prices may just be an oncoming freight train. ... All commodity types posted steep declines during Week 17. Specifically, we saw sharp drops in metallic ores and minerals (-52.6 percent), motor vehicles and equipment (-37.6 percent), nonmetallic minerals (-26.4 percent), chemicals (-21.6 percent), coal (-18 percent) and intermodal (-17 percent) (compared to 2008).

Rob Cornelius writes about energy and the stock market for The State Journal. His e-mail address is robcwv@gmail.com.

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User Comments [ post comment ]
User Comment
Larry Notes
6/2/09 at 9:35 PM
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Ask a navy man (from a sub). Earth is at 385 ppm, sometimes on a sub it would reach 8000 ppm. You do the math, but above all ask somebody that has been on a navy sub that is underway. They will tell you the truth about C02, they lived it.

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