Tuesday, July 7, 2009

Cap and Trade is a Job Killer and Creates Even More Entitlements

In all the Michael Jackson hoopla, I somehow missed this Washington Times article Friday regarding the Cap and Trade legislation. An excerpt:

Adversely affected employees in oil, coal and other fossil-fuel sector jobs would qualify for a weekly check worth 70 percent of their current salary for up to three years. In addition, they would get $1,500 for job-search assistance and $1,500 for moving expenses from the bill's "climate change worker adjustment assistance" program, which is expected to cost $4.2 billion from 2011 to 2019.

Remember Nancy Pelosi standing in front of the House right before the vote? She was shrieking "Jobs, jobs, jobs, jobs!" As it turns out, and as we suspected, this bill will NOT create jobs. It will kill jobs. It will send jobs overseas. It will stop jobs from being created. If this bill was going to create so many jobs, why is there this provision to compensate people who will lose their jobs? There's more:

While the analyses assume displaced workers will eventually find jobs, the liberal-leaning Brookings Institution predicts a net job loss of 0.5 percent over the first 10 years that carbon reduction legislation, called "cap-and-trade," is in effect. The conservative Heritage Foundation found that by 2030 net job losses would top 1.1 million, while the Coalition for Affordable American Energy, an industry group, estimates that more than 3 million jobs would be lost by 2030 as a result of the cap-and-trade system.

The Wall Street Journal has an article today that explains how the Cap and Trade bill will work to kill jobs and will certainly NOT create "energy independence." It also makes clear how jobs will NOT be created under this legislation. Paired with the understanding that the 2010 budget calls for elimination of important tax breaks for energy companies, we have a recipe for disaster. The tax breaks that will be cancelled will discourage domestic exploration and drilling.

An example: In the past couple of years we discovered here in NW Louisiana that we are sitting on a shale formation similar to the Barnett Shale in Texas. There is also a shale formation in Pennsylvania. The WSJ article points out the value of this resource:

An April Department of Energy report estimated that the newly available shale resources total 649 trillion cubic feet of gas. That's the energy equivalent of 118.3 billion barrels of oil, or slightly more than the proven oil reserves of Iraq. Eliminating the tax breaks for drilling will make natural gas more expensive. Tudor, Pickering, Holt & Co., a Houston-based investment-banking firm, estimates that eliminating the intangible drilling cost provision could increase U.S. natural gas prices by 50 cents per thousand cubic feet. Why? Because without the tax break, fewer wells will be drilled and less gas will be produced. The U.S. consumes about 23 trillion cubic feet of gas per year. Simple arithmetic shows that eliminating the drilling subsidies that cost taxpayers less than $2 billion per year could result in an increased cost to consumers of $11.5 billion per year in the form of higher natural gas prices.

So energy prices will go up. But inherent in this is the fact that people that would be working those wells and in the processing of that natural gas, won't be working. Those jobs won't be created because the energy companies won't be able to afford to drill as many wells. Eighteen months or so ago people around here were signing leases and getting royalties and signing bonuses for their mineral rights for this Haynesville Shale development. No more. It dried up. Stopped.

The WSJ points out that this is hardly a recipe for energy independence. We still need oil and gas in this country. Ethanol and wind won't cut it. The cap and trade legislation and the 2010 budget both work against those industries, and in fact, work to create even more entitlements from the government. The government is going to support you because they tanked your job. And don't forget, we're also going to give cash via direct deposit to low-income people to offset these higher energy costs - another entitlement. Even more people will now be dependent on the government to take care of them.

Cap and trade is not going to create jobs. It's going to kill jobs. It's going to increase our dependence on foreign oil.

Michelle Malkin has the info you need to get to work to stop the passage of Cap 'n Tax. The Heritage Foundation has a great video about the cap and trade legislation; take a look.

Related Posts:
Inhofe: Waxman-Markey Dead in the Water?
What's in the Waxman-Markey Bill?
Fun Facts on Cap and Trade
The Cap and Trade Anti-Stimulus


Anonymous said...

All taxes increase cost to the consumer All tax reductions decrease cost to the consumer If your point of your article is just that, and it is a valid point, then it holds that it is true of products, whether is be oil, gas, coal, tires, cars, washing machines, real estate, income taxes and etc. The only difference here is that only oil and gas exploration gets to expense this rather than depreciated over the life of the asset. I know, I am in the oil and gas exploration business. I don't like it either, but does that make it wrong policy?

The truth is we could remove all taxes on oil and gas and still not acheive engergy independence. We consume 25% of the worlds production, and product on 3% of the production and only 45% of our consumptions.

Your article like so many makes the case against taxes. That's a very popular position. So what do you think we should tax? Nothing?

Serge said...

If Louisiana does have a shale formation similar to Barnett, those who own mineral rights might already be thinking about what to do with their rights.