Co-author Nikki Niloufar Hafizi

From the state of Washington to the streets of Paris, proposed taxes on carbon have been making headlines. Why a carbon tax, and what are the arguments for and against it?

Pricing carbon

A progressive carbon tax is a climate-change mitigation policy preferred by many economists. Their reasoning goes like this: Carbon and other greenhouse gas emissions contribute to collective problems such as air pollution and climate change, but the entities emitting the GHGs don’t pay for the damage to the “atmospheric commons”. The price of GHG-emitting activities is lower than its theoretical market price should be, and humans consume more than they otherwise would of these GHG-intensive products and services (think gasoline). A tax on carbon content would correct this market failure and incentivize market participants (consumers and producers … such as yourself?) to emit less carbon by changing their behavior and using different technologies. Continue Reading Carbon Taxes: Wrong Price, Wrong Time?

“It is better to stop a bad law than pass a good one.” Calvin Coolidge.

Is anybody in Washington listening to Silent Cal? 

What can the energy industry (oil and gas in particular) expect from the Administration in its second term?  Let’s gaze into the crystal ball:

Carbon Tax

The National Center for Policy Analysis predicts a carbon tax. In what is really a position statement on the perils of such a tax, Sterling Burnett acknowledges that there are some benefits that are a preferable to cap and trade. A carbon tax is transparent and that it would be clear to everyone that it is money paid directly to the government, whereas a cap and trade scheme would not.

He concludes that a carbon tax is a bad idea because “there is never a good time for a bad tax.” (There is a position we can believe in) In the sense that a tax on something as important as energy which he called the “foundation of modern society” would affect everyone in virtually every activity they undertake. Further, he considers carbon taxes to be highly regressive and hence a disportionate burden on the poor.

The good news, if it can be believed, is that President Obama says he would never propose such a tax.

NGL Exports

The Wall Street Journal reports that as the Department of Energy reviews the pros and cons of exporting US natural gas, large chemical companies who burn lots of natural gas oppose exporting energy. This would, of course, keep natural gas cheap.  Oil and gas producers argue that exports are positive for the economy, good for the balance of trade, and have other benefits.

Chemical companies are building new plants in the US to capitalize on our cheap energy which in itself is a job creator. They say no one knows what demand may eventually be and exports may hinder economic growth in that way.

Daniel Yergin for one, believes that there are shale fields yet to be tapped and those concludes that exports would be a good thing. The Wall Street Journal says let the market decide.

Keystone Pipeline

The Natural Resources Defense Council thinks the Keystone XL pipeline is a bad idea, arguing that the pipeline would kill more jobs than it creates by reducing investment in “the clean energy economy” and that the pipeline would transport dirty, low high sulfur tar sands oil, which itself uses large amounts of energy and water to produce and clean up. In short, they believe we need to do everything we can to avoid importing tar sands oil to the United States (The link to the NRDC offers more reports and analysis from theri point of view if you are interested, just so you know).

Business Insider believes that the pipeline will be approved, with a few tweaks in the route to avoid environmentally sensitive areas.

The Role of Fossil Fuels in the Obama Energy Policy

From Platts: Jack Gerard, president of the American Petroleum Institute professes to be encouraged that about President Obama’s commitment to oil and gas development in campaign statements leading up to the election.  Huh?

According to Inside Climate News, the congressional lineup has changed with the defeat of several congressmen characterized by this group as opposed to clean energy. This is an indicator of continued pressure to be placed on the president to favor alternative energy sources. (Notice how the Heritage Foundation is “Right Wing” while the environmental groups are not “left wing”).

Taxes

According to Reuters the IPAA and others expect a rough four years, from potential elimination of the intangible drilling cost deduction to increased regulation of carbon dioxide emissions, which will affect coal and oil and gas producers. And they don’t mention potential regulations on fracking, which is on the agenda.

Looking to 2016

I conclude with an exclusive look at the early front-runner for the 2016 Republican nomination .

Regardless of your point of view, here is some wise musical advice.

 “It is better to stop a bad law than pass a good one.” Calvin Coolidge.

Is Washington listening to Silent Cal?

This post is about what the energy industry- oil and gas in particular – might expect from the Administration in its second term. Disclaimer: I don’t sponsor any of these predictions. The authors know more about these subjects than I do.

Let’s gaze into the crystal ball:

Carbon Tax

The National Center for Policy Analysis explains the perils of a carbon tax, predicting one will be proposed. Sterling Barnett acknowledges that there are benefits to a carbon tax that are a preferable to a cap and trade scheme: A carbon tax is transparent and it would be clear to everyone that it is money paid directly to the government, whereas a cap and trade scheme would be a disguised tax.

He concludes that a carbon tax is a bad idea because “there is never a good time for a bad tax.” A tax on something as important as energy, which he considers the “foundation of modern society”, would affect everyone in virtually every activity they undertake. Further, he considers a carbon tax to be highly regressive and hence a disproportionate burden on the poor.

NGL Exports

As the Department of Energy reviews the pros and cons of exporting US natural gas, The Wall Street Journal reports that large chemical companies who burn lots of natural gas oppose exporting energy in order to keep gas cheap, but oil and gas producers argue that exports are positive for the economy, the balance of trade, and other benefits.

Chemical companies are building new plants in the US to capitalize on our cheap energy, which in itself is a job creator. No one knows what the demand may eventually be and exports may enter economic growth in that way.

Daniel Yergin, for one, believes that there are shale fields yet to be tapped and concludes that exports would be a good thing. In the end, the WSJ says let the market decide.

Keystone Pipeline

The Natural Resources Defense Council thinks approval of the Keystone XL pipeline is a bad idea, arguing that the pipeline would kill more jobs than it creates by reducing investment in “the clean energy economy” and that the pipeline would transport dirty, high sulfur tar sands oil, which itself uses less amounts of energy and water to produce and clean up. They believe we need to do everything we can to avoid importing tar sands oil to the United States (The link above offers more reports and analysis from their point of view).

Business Insider reports that the pipeline will be approved, with a few tweaks in the route to avoid environmentally sensitive areas.

The Role of Fossil Fuels in the Obama Energy Policy

Platts reports that Jack Gerard, president of the American Petroleum Institute professes to be encouraged that about President Obama’s commitment to oil and gas development in campaign statements leading up to the election.  Huh?

According to Inside Climate News, the congressional lineup has changed with the defeat of several congressmen characterized by this group as opposed to “clean energy”. This is an indicator of continued pressure to be placed on the president to favor alternative energy sources. (Notice how the Heritage Foundation is “Right Wing” but the environmental groups are not “Left Wing”).

Taxes

From Reuters:  The IPAA and others expect a rough four years, from potential elimination of the intangible drilling cost deduction to increased regulation of CO2 emissions, which will affect coal and oil and gas producers. And this piece doesn’t mention potential regulations on fracking, which is on the agenda.

Looking to 2016

Here is an exclusive look at the early front-runner for the 2016 Republican nomination.

Regardless of your point of view, here is some wise musical advice.