JUNEAU: The Carbon Tax Is A Bad Idea Whose Time Has Not Come

President Obama was mostly silent about the “climate change” issue during his re-election campaign last year. That was undoubtedly due to the low standing the topic has with voters. In his State of the Union speech, however, he hit the issue hard. To start his first term, Obama and the Democrats in Congress, who controlled both chambers at the time, pushed that agenda in spite of a crashing economy. It went nowhere, largely due to the country’s economic downward spiral at the time. The issue is percolating once again in Washington, primarily focusing on two areas: restraining coal usage and imposing a carbon tax on all fuels using carbon as a base.

Higher energy costs acutely and instantaneously affect businesses and consumers. When energy costs go up here at home, it particularly impacts manufacturers. One of the factors behind the offshoring of American manufacturing in the last 30 years was lower energy costs in other nations. Interestingly, the rapid development of domestic shale oil and natural gas production here in the U.S. greatly reduced offshoring and actually led to the return of some manufacturing operations. The Obama administration and its allies in Congress are now poised to take actions that would reverse those positive trends.

The National Association of Manufacturers (NAM) recently did an analysis with NERA Economic Consulting to gauge the impact a carbon tax would have on economies of states that are both large energy producers and consumers. Louisiana is one of those 10 states. NAM’s study shows just how raw of a deal a carbon tax would be for the Bayou State.

The study shows that the cost of natural gas in Louisiana would increase by 40 percent in the first year of the carbon tax, driving up costs for businesses and households alike. Those cost increases will spiral through the economy impacting the price of many goods and services. Gasoline prices could go up 20 cents per gallon, exacerbating already high transportation costs. Household utilities could see a 12 percent jump in prices, hitting family budgets hard.

Higher costs equate to fewer jobs. The NAM study estimates that a carbon tax would immediately cost Louisiana 34,000 jobs or more and between 50,000 and 60,000 in 10 years. Higher consumer prices and fewer jobs will act as an even larger anchor weighing down Louisiana’s prospects for economic recovery.

The economic sectors hit hardest by the tax are energy-intensive manufacturing (losing between 4.5 and 4.8 percent of economic output); non-energy-intensive manufacturing (dropping between 0.7 and 1.9 percent); and refining (losing between 2.5 and 4.4 percent). Industries with the best paying jobs could be hit hardest, and consumers could see disposable income evaporate due to higher energy costs and the inflation it generates. That is anything but a recipe for economic growth.

If the federal government enacts a carbon tax, either through legislation or regulatory fiat, it will have almost zero impact on the climate of Louisiana, the United States or the world. Global temperatures have not risen in over 15 years while the amount of carbon dioxide in the atmosphere increased steadily during that period. The amount of carbon dioxide emitted in the U.S. actually decreased significantly in recent years while the totals for countries such as China, India, and Brazil climbed exponentially.

A carbon tax might make some members of Congress and occupants of the West Wing of the White House gleeful, but it will make jobs more scarce and the cost of living escalate for families who are having a tough time making ends meet in the real world.



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