Over-Under
As I wrote before, Waxman-Markey puts most of the onus for CO2 reduction on refiners and transportation fuels, so that is the area we will see the most price increase if the bill passes.
So I ask you, after putting this huge effective tax on refiners, which will also in some cases force refiners to shut down capacity and produce less fuel, how long will it be before a politician starts to demagogue oil companies for rising gasoline prices and/or fuel shortages?
This is at the end of the day why Congress wanted cap-and-trade rather than a carbon tax. By putting the tax on unsympathetic targets like oil companies, Congress and Obama can pretend that inevitable consumer price increases are the oil companies greedy fault, and not related to the actions in Washington.
Michael:
This is just the other half of the car companies take over. They need gas over $5 a gallon to get people to buy the "new" GM cars. Washington is now just a bunch of bullies forcing the American people to doing something against their will solely to stroke the ego of "The Elected."
June 26, 2009, 1:38 pmsilvermine:
Don't forget that once the oil companies raise prices and manage to not deliver, they'll have to nationalize them, too, huh?
June 26, 2009, 2:29 pmLoneSnark:
But wait, economically speaking, the coal fired power plant owners face an opportunity cost in that they could sell their carbon credits, and electricity consumers will need to compensate them for that cost. As such, even if you give every electricity producer in the country 100% of their needed carbon credits, they will still raise prices. As such, your explanation falls flat: rates will go up regardless, it is just that every cent will flow to the plant owners.
So maybe that is the explanation: when rates go up, they can credibly blame the greedy power companies just by pointing at their profit margins.
June 26, 2009, 9:05 pm