This entry was posted on 1/27/2008 11:46 PM and is filed under Economy,Leadership.
Let's talk turkey.
The big concern about a phased-in, federal tax shift from income to non-renewable energy....... that it will slow economic growth and cause inflation.
My answers (in order of importance):
1)We don't have a choice. Our actions and past energy policies are leading to slowed economic growth and inflation anyway; our actions and energy policies are not sustainable. We're deluding ourselves if we think we can choose to NOT take significant action to solve global warming (Entry #1 and Entry #2) and our dependence on foreign energy (including global peak oil - Entry #1 and Entry #2). The scope and threat of these problems is accelerating. Do you think $90 - $100 per barrel oil has anything to do with our current (poor) economic condition? How about the economic costs we're already seeing as a result of global warming?
From global warming Entry #1 above, ALREADY a minimum of 150,000 PEOPLE PER YEAR ARE DYING PREMATURELY AS A RESULT OF GLOBAL WARMING - CAUSES: INCREASED DISEASE, DROUGHT AND FLOOD. We have a choice? By what moral compass?
Do we really think our energy policy should be the President of the United States asking (begging?) OPEC to increase oil production so Americans can have lower oil prices? (occurred earlier this month) What control are we ceding to others? Is this acceptable?
How are we going to use existing, readily available fossil fuel resources to set ourselves, and future generations, up for a sustainable energy future and economic growth?
One of two engines on our economic "airplane" is gone. We can act now and land safely, or lose the remaining engine and crash.
2) This tax shift will create long-term jobs. Where are the jobs of the future? Are developing countries going to invest in huge centralized power plants and electric grids OR decentralized, renewable systems? Why do we have OIL companies in the U.S. instead of ENERGY companies? What is the best action we can take to leverage these trends (including peak oil)?
Paying for the external costs of our energy use AT THE TIME WE USE THE ENERGY by enacting a phased-in, federal tax shift from income to non-renewable energy WILL MAKE ENTIRE TIERS OF RENEWABLE ENERGY PROJECTS ECONOMICALLY VIABLE. We'll create a slew of jobs in the renewable energy industries - from research to development to demonstration to manufacturing to EXPORT. The worldwide need for decentralized, renewable power systems is so large, it's practically un-estimatable. (new word for Webster's)
We'll also switch from being a greenhouse gas reduction obstructionist to a leader. This will improve our seriously damaged world reputation (an important asset for world trade).
3) This tax shift will start small and be phased-in so businesses and individuals can plan. Phasing-in the tax shift will minimize any negative economic impact and inflationary pressure. Although the Intergovernmental Panel on Climate Change (IPCC) believes that "to avoid the worst effects of global warming we may need to raise the cost of gasoline by up to one dollar a gallon over the next several decades", I (without a Nobel Peace Prize) believe it may take more. I suggest the equivalent of a 10-15 cent per gallon of gasoline tax shift per year for 10 years on ALL non-renewable energy (based on energy content - BTU's). The problem with a carbon tax is that nuclear energy would not see increased taxes - THAT would be a problem. To put a 10-15 cent per gallon tax in perspective, the federal gasoline tax is now 18.4 cents per gallon and the average state tax is 21.5 cents per gallon.
A gallon of gasoline has 124,000 BTU's so a, say, 12 cent per gallon tax shift would amount to .1 cents per thousand btu's. This 1/10 of 1 cent tax would be added each year for 10 years to every type of non-renewable fuel at the time it is used. The additional federal revenue would be estimated and income taxes would be reduced by the appropriate amount so this tax SHIFT would be as close to revenue neutral as possible for families, individuals, and the government.
Example: For every 1,000 btu's of coal or natural gas that an electric plant burns to produce electricity, they'll pay an additional 1/10 of 1 cent tax. This additional cost will of course be passed on to the users of electricity and they'll receive this amount back in lower income taxes.
What about the economic "brakes" of our current energy policies? What are the economic costs of CAFE standards? Forcing automakers to make vehicles that Americans don't want because gasoline is so inexpensive. Why not follow the "Tragedy of the Commons" model? A tax shift would change the "rules" of the game via legislation - we'd be agreeing that all will begin to pay the external costs of non-renewable fuel use AT THE TIME IT IS USED. Then Americans would WANT to buy more fuel efficient vehicles. Increased energy prices will provide the incentive for significant energy conservation to actually occur.
Will food prices increase because energy prices increase? Not as much as you might think because more locally grown food will be consumed - food transportation costs could decrease because food is transported less.
*********************
In conclusion, when Americans understand the realities of our economic situation as it relates to our energy policies, and the global implications, all will want to do the right thing even if it entails sacrifice. We've been there, and back, before. Most notably during World War II.
The challenge: global warming and our dependence on foreign energy (including peak oil) seem to be much larger problems.
The University of Wisconsin is joining a national "teach-in" on climate change this month. They have a web page and are having a "vote" on their proposed solutions.
but I was rejected because you must vote for FIVE. 