Memo To Bush: ‘Magic Wand’ Not Needed To Deal With Gas Prices
Memo To Bush: ‘Magic Wand’ Not Needed To Deal With Gas Prices
President Bush said Tuesday that he has no “magic wand” to affect gas prices. In reality, gas price is “all about government policy.” As the United States has some of the lowest gas taxes in the world, the price at the pump is dominated by the cost of oil:
Energy Information Administration
The rise in the price of oil in recent years involves four components:
— The effects of supply and demand. Exxon Mobil senior vice president Stephen Simon testified the supply-demand equilibrium is at “somewhere around $50-55 a barrel” — about half the current price.
– The weaker dollar. Since 2001, “the dollar has lost 45% of its value” against the euro. In 2003 one gallon of gas in the U.S. cost $1.50 and 1.50 Euro. Today’s $3.60 gallon of gas costs only 2.25 Euro.
– Geopolitical risk. Since 2003, the United States has been committed to a three-trillion-dollar war in Iraq, the heart of the turbulent oil-producing world. Furthermore, the burning of oil is continuing to increase global warming, “one of the greatest national security challenges ever faced.”
– Speculation. “Investors have looked to commodities
not only as a hedge against inflation but as a hedge against the tumbling greenback.
In recent years, the United States has gotten locked into a vicious circle in which the latter factors worsen each other. Suspending the federal gas tax would exacerbate the problem — in the words of Thomas Friedman, “we will have increased our debt to China, increased our transfer of wealth to Saudi Arabia and increased our contribution to global warming for our kids to inherit.”
Immediate action to deal with rising gas prices should deal with the root problems, not worsen them. Center for American Progress analysts Sam Davis and Daniel J. Weiss describe how a demand-independent “reliefbate” plan could be paid for by closing several oil tax loopholes. The Washington Post’s Dan Froomkin further recognizes that there are “two hugely significant factors” that President Bush could affect immediately: “the war in Iraq and the value of the dollar.”
But the federal fuel tax is but one brushstroke in a much broader picture. As the Center for American Progress’s energy opportunity agenda states:
The realities of global warming and our growing dependence on oil, much of it imported, will make energy more pivotal than ever to our economic, environmental, and national security fortunes in the 21st century. The challenge we face is nothing short of the conversion of an economy sustained by high-carbon energy — putting both our national security and the health of our planet at serious risk — to one based on low-carbon, sustainable sources of energy. The scale of this undertaking is immense and its potential enormous.
What The Gas Tax Holiday Has To Do With Global Warming
What The Gas Tax Holiday Has To Do With Global Warming
Gas prices have risen dramatically, and Sen. Hillary Clinton (D-NY) and Sen. John McCain (R-AZ) have proposed suspending the 18.4-cent-per-gallon federal gas tax over the summer, a proposal criticized as “stupid,” “pandering,” and “destructive nuttiness.”
But the problems with the proposal run deeper than the economic reality that the plan would add up to a “huge windfall for refiners” that also increases “our transfer of wealth to Saudi Arabia.” It is also the type of thinking that could lead to an utter breakdown of our national imperative to deal with global warming. Fuel taxes are the fundamental governmental mechanism for limiting the consumption of gasoline and making users pay for the costs of pollution — just as cigarette taxes capture the “negative externalities” of the societal health costs associated with smoking.
As Sir Nicholas Stern described in his report on the economic costs of global warming, “Climate change is a result of the greatest market failure that the world has seen.” Because polluters have never paid a price for the emission of greenhouse gases into the atmosphere, no steps were taken to avoid fossil fuel consumption. Read the rest of this entry »
McCain’s Gas-Tax Holiday From Reality Continues
Two weeks ago, Sen. John McCain (R-AZ) proposed a summer-long “gas tax holiday.” Since then, he’s been faced with the challenge that such a moratorium may sound good but would be terrible policy.
When it was pointed out that the federal gas tax funds critical transportation infrastructure and jobs, a spokesman said McCain would pay the $11 billion tab from the “general revenue.”
When it was pointed out that cutting the federal gas tax would minimally affect the price at the pump, McCain then said his proposal was just “a little psychological boost.”
When it was pointed out today by MSNBC anchor Mika Brzezinski that the tax cut is an expensive and environmentally unsound policy that would do nothing to help American drivers, McCain finally erupted:
Mika, you know what? All it is is it’s not the end of Western civilization as we know it according to some, quote, economists and some around America. It’s just to give Americans a little relief.
He then exposed how out of touch he is with the realities of America by saying:
I think it’s obvious that the lowest-income Americans drive the furthest and probably they spend more on gasoline because of the age of their automobiles.
In fact, lowest-income Americans drive the least, and most of the benefits of the gas-tax holiday would go to high-income Americans.
No amount of bluster can disguise that this proposal — just as it was when Sen. Bob Dole proposed a similar gas tax holiday as the Republican presidential nominee in 1996 — is a violation of the responsible economic principles Sen. McCain has formerly espoused.
UPDATE [5:30 PM]: Michael Bloomberg, the mayor of New York City, tells the Observer a gas tax holiday “would help Chavez, Qaddafi and other people like that.” He also said:
It’s the dumbest thing I’ve heard in an awful long time from an economic point of view. I don’t understand why you think there’s any merit to it whatsoever. We’re trying to discourage people from driving and we’re trying to end our energy dependence. We don’t do that — oh, and incidentally, we’re trying to have more money to build infrastructure. All three of those things go fly in the face of giving everybody $30 a year. The $30 bucks is not going to change anybody’s lifestyle. The billions of dollars that we would otherwise have in tax revenues can make a big difference as to what kind of a world we leave our children.
Dreier Says Nukes ‘Cleanest, Safest, Most Cost Effective Energy Source Known To Man’
Dreier Says Nukes ‘Cleanest, Safest, Most Cost Effective Energy Source Known To Man’
Interviewed on Dennis Miller’s radio show today, Rep. David Dreier (R-CA) discussed the House GOP “commonsense” attack on Speaker Nancy Pelosi (D-CA) over skyrocketing gas prices. He then went off into the following non sequitur on nuclear power:
And frankly, whatever you want to say, you know, eighty percent of the French energy comes from nuclear power and it’s the cleanest, safest, most cost effective energy source known to man. And they have a very unique way of disposing of it. We should look at coal to liquification. We should be looking at all kinds of alternative sources and what is it that they have done? They refuse to allow us to even have votes on that.
Listen:
Dreier is mimicking talking points from the nuclear lobby. In a recent column in the Washington Times, Spencer Abraham of the Clean and Safe Energy Coalition claimed nuclear power is the “most environmentally friendly source of all clean-air electricity options.” Dreier is spinning an utter fantasy:
– “…cleanest, safest, most cost effective energy source known to man…” Nuclear power requires dangerous mining, produces permanently deadly toxic waste, and may abet the proliferation of weapons of mass destruction. Nuclear power is only “cost effective” to the degree these costs are ignored.
– “…they have a very unique way of disposing of it…” The truth is that France, like the United States, still has no solution for safely managing nuclear waste. [Forbes, 3/22/06]
– “…We should look at coal to liquification…” Liquid coal is a climate killer. The energy required to convert coal to liquid fuel doubles the amount of carbon dioxide released compared to petroleum-based gasoline, producing a “ton of carbon dioxide for each barrel of liquid fuel.” [NRDC, 2/07]
–“…We should be looking at all kinds of alternative sources…” Energy sources that are cleaner and safer than nuclear power include: energy efficiency, co-generation, wind power, solar power (photovoltaic and thermal), geothermal power, and tidal power — to name a few.
–“…They refuse to allow us to even have votes on that.” Rep. Dreier has voted against the Energy Independence and Security Act of 2007 and Renewable Energy and Energy Conservation Tax Act of 2008, both of which would have taken tax subsidies away from oil companies to invest in renewable energy. He was one of only 31 people to fail to vote on the Advanced Fuels Infrastructure Research and Development Act.
The truth of the matter is that this Congress has raised fuel economy standards, increased investment in renewable energy, and repeatedly attempted to reduce subsidies for oil companies. And they’ve been opposed at every step of the way by Rep. Dreier.
TRANSCRIPT: Read the rest of this entry »
Will The Real Jim Rogers Please Step Forward?
Our guest blogger is Frank O’Donnell, president of Clean Air Watch.
Jim Rogers, President and CEO of Duke Energy, has become one of the most prominent industry voices calling for the regulation of global warming pollution from power plants and other sectors of the economy. Not only does Rogers advocate a cap-and-trade system, like that adopted in Europe, but he also proposes a surcharge on all electricity use to fund low carbon technology research and development.
However, as one of the largest producers of global warming pollution, Rogers’ policy prescriptions warrant special scrutiny. In making his case for action, Rogers includes a very important caveat: regulate greenhouse gases, but regulate in a way that ensures that the American taxpayer foots the bill for cleaning up the company’s aging and high-emitting power plants. In 2007, Duke’s coal-heavy fleet released 108,500,000 tons of CO2 to the atmosphere, the equivalent of about 18 million cars. This climate two-step is not new for Rogers:
| DUKE DOUBLE-SPEAK | |
|---|---|
| As a member of the U.S. Climate Action Partnership, Duke Energy calls on the federal government to ”quickly enact strong national legislation to require significant reductions of greenhouse gas emissions.” | The U.S. Chamber of Commerce has lambasted the leading Congressional climate change bill with an aggressive ad campaign. Jim Rogers is a member of the Chamber’s Board of Directors. |
| Jim Rogers states that “we must be responsible stewards of the environment and our communities.” | Duke Energy is suing EPA to try killing the Clean Air Interstate Rule, which EPA estimates will generate $85 to $100 billion in health benefits by 2015. If Duke wins, thousands of Americans may die prematurely. |
| Jim Rogers proposes a tax (or ”surcharge“) on all electricity use to fund low carbon technology research and development. | Jim Rogers says it is “misguided” for cap-and-trade legislation to require “companies to pay for current carbon dioxide emissions using auctions.” |
Rogers’s sleight-of-hand lies in his proposal for distributing the emissions permits (allowances) under a greenhouse gas cap-and-trade program. According to Rogers, Congress should stick to the grandfathering approach that was used more than two decades ago when it established the Acid Rain program, by which he means giving allowances away for free to companies based on their proportional share of historic CO2 emissions.
What he neglects to mention is that Duke Energy would receive an allocation valued at more than $2.0 billion annually (equivalent to 10% of the North Carolina state budget), which the company’s unregulated generating assets will use to drive up company profits while at the same time raising consumer electricity costs — precisely the issue that lead to criticism, and ultimately modification, of the European Union’s cap-and-trade system.
Rogers argues that cap-and-trade based regulation is not about punishing people for making decisions 40 years ago. However, nor should it be about rewarding the biggest polluters and preserving the status quo. If companies want free allowances, they should earn them by investing in renewable energy technologies, carbon capture and storage technology, and energy efficiency.
Exxon Spends More On Its CEO Than It Does On Renewables
Exxon Spends More On Its CEO Than It Does On Renewables
Exxon Mobil’s CEO Rex Tillerson made $21.7 million last year — admittedly a small chunk of the company’s $40 billion in profits. The skyrocketing price of oil behind Tellerson’s windfall has a very different impact on most people — everyone from school districts to small businesses are struggling to survive. What makes Tillerson’s good fortune particularly galling is that his company is leading the rush to burn up the planet. At a conference for oil and gas executives in 2007, he claimed that most politicians make bad decisions because they don’t take the long view — unlike companies like Exxon:
Most policymakers operate on two-, four- or six-year timelines, while most energy companies operate on two-, four- or six-decade timelines. This is an important point, because acting impulsively in setting energy policy with the expectation of immediate results will likely have negative consequences that will be felt for decades to come.
The truth is Exxon’s policy is based entirely on short-term gains with disastrous long-term consequences. At the recent Congressional hearing with top oil executives, Exxon’s Stephen Simon said his company agrees with the U.S. Energy Information Agency projection that the world will continue to be powered 80 percent by fossil fuels and that “the impact of renewables” will be “very, very small” for decades to come.
Tillerson is trying to make that business-as-usual outlook a self-fulfilling prophecy. Over the next five years, Simon said, Exxon Mobil plans to invest at least $125 billion in oil and gas projects that will last for decades. Unlike other energy majors who have at least some investment in the wind, solar, and geothermal industry, Exxon’s only significant “investment” in renewable alternatives to fossil fuels is a $10 million-a-year R&D partnership with Stanford University — about half of Tillerson’s salary and 0.02% of Exxon’s investment in fossil fuel extraction.
Exxon’s energy policy will send us careening to climate disaster. The International Energy Agency (IEA) has calculated that “global emissions will increase 50% by 2030 and more than double by 2050” if the Exxon-desired future comes to pass, “leading to a global average temperature increase of 1.7 to 4.4°C, with a best estimate at 2.8°C” in 2050, which would cross the “tipping point into truly catastrophic change.” It is certainly true that energy policy decisions being made now could have, as Rex Tillerson said, “negative consequences that will be felt for decades to come” — but he is the guilty party.
$4 Billion Among Friends
Our guest blogger is James Kvaal, Domestic Policy Advisor at the Center for American Progress Action Fund.
Later today, Sen. John McCain (R-AZ) will visit the Petroleum Club of Denver to pick up a stack of cash for his presidential campaign. He should get a warm welcome from the oil and gas executives who show up.
The centerpiece of Sen. McCain’s plan to stimulate the economy — actually, the whole plan — is large tax cuts for corporations. It would deliver $3.8 billion in tax cuts to the five largest American oil companies, according to an analysis released today by the Center for American Progress Action Fund.
The analysis only looked at one of the McCain corporate tax breaks: the proposal to cut the top corporate tax rate from 35 percent to 25 percent. Read the whole analysis here.
McCain’s Membership In The Petroleum Club
Tonight Sen. John McCain (R-AZ) is flying into Denver to scrounge up cash at a $25,000 apiece “roundtable” followed by a $1000-a-head ($2300 with a “Photo Opportunity”) fundraiser at the Denver Petroleum Club. McCain’s choice of venue is singularly appropriate, as his campaign is being funded and run by Big Oil lobbyists. As global warming, skyrocketing oil prices, and a failing economy create an interlinked energy crisis, McCain has repeatedly failed to put the people’s interests before those of the fossil-energy industry.
Since launching his campaign for president, Sen. McCain has talked tough about Big Oil but has been funded by their petro-dollars. In a 2007 Iowa speech, McCain described his “energy strategy” for America, with “straight talk” about “petro-dictators,” big oil subsidies, and energy lobbyists:
As President, I’ll propose a national energy strategy that will amount to a declaration of independence from the risk bred by our reliance on petro-dictators and our vulnerability to the troubled politics of the lands they rule. That strategy won’t be another grab bag of handouts to this or that industry and a full employment act for lobbyists. Yes, that means no ethanol subsidies. But it also means no rifle-shot tax breaks for big oil.
But is candidate McCain himself reliant on Big Oil? Since first running for the Senate in 1986, John McCain has received at least $549,712 from the oil and gas industry. More than half — $291,685 — has come in the last two years. Moreover, John McCain’s own campaign is a “full employment act for lobbyists” who rely on “petro-dictators.”
– McCain’s Senior Adviser Lobbies For Foreign Oil Interests. Charlie Black (lobbying firm: BKSH), McCain’s senior campaign adviser, is a registered lobbyist for two Russian oil companies — Yukos Oil and Occidental International Corporation — and his lobbying firm was hired in 2005 by the China National Off-Shore Oil Corporation. [Roll Call 7/18/05, Senate Lobbying Disclosure Records]
– McCain’s “Consigliere” a Top Lobbyist for Saudi Arabia. Former Texas representative Tom Loeffler (The Loeffler Group), a top Bush fundraiser now in charge of McCain’s fundraising efforts, received approximately $900,000 a year from the Saudis to lobby Congress and “arrange meetings between Saudi officials and such senior Bush administration officials as Karl Rove.” [DNC 4/23/07]
– McCain’s Campaign Liaison to Congress a Million-Dollar Big-Oil Lobbyist. John Green (Ogilvy Government Relations) — the “full-time liaison between McCain’s presidential campaign and Republicans in the House and the Senate” — has made over $7.6 million dollars since 1999 lobbying for petro-industry giants such as Amerada-Hess, Chevron Texaco, the American Petroleum Institute, Reliant Energy, PJM Interconnection and First Energy. [Politico 3/4/08, Senate Lobbying Disclosure Records]
– Fossil Fuel Lobbyists Everywhere in the McCain Campaign. Susan Nelson, McCain’s National Finance Chair worked at the Loeffler Group for Saudi Arabia. Frank Donatelli, McCain’s RNC liaison to the Republican Party, has lobbied for ExxonMobil, Dominion, and Eastman Chemical. Jerry Kilgore, co-chairman of McCain’s Virginia campaign, has lobbied for Shell Oil and coal company Alpha Natural Resources. [Washington Post 3/12/08, O’Dwyer’s 8/9/06, Media Matters 2/26/08, Senate Lobbying Disclosure Records]
Although Candidate McCain may have made a “declaration of independence” on the campaign trail, Senator McCain’s own actions have kept “rifle-shot tax breaks for big oil” and “reliance on petro-dictators” as the law of the land.
– McCain Voted Against Reducing Dependence on Foreign Oil. In 2005, McCain voted against legislation calling on the President to submit a plan to reduce foreign petroleum imports by 40 percent. [Senate Roll Call Vote #140, 6/16/05; DNC 6/22/07]
– Candidate McCain’s “Zero” For Energy Future, Billions For Big Oil. Since launching his campaign for president in 2007, Sen. McCain has skipped out on every key environmental vote the Senate has considered, earning him a zero on the League of Conservation Voters scorecard this session. In one such instance, his absence killed the rollback of billions of dollars in oil subsidies for renewable energy investment. [LCV 2008]
– McCain’s Absence Allows GOP to Filibuster Oil-For-Renewables. By a roll call vote of 59-40 on December 13, 2007, Senate Democrats failed to muster the 60 votes needed to prevent a filibuster threatened by Republicans of compromise energy legislation with an oil-for-renewable tax package. The tax package rolled back $12.7 billion in tax breaks on the oil and gas industry to invest in renewable energy tax credits. Sen. John McCain, on the campaign trail, was the one senator not voting. [CQ 12/12/07] [Vote #425 12/13/07]
Having failed to act to roll back subsidies for Big Oil as a senator, McCain now has unveiled a tax plan which would provide an even greater “grab bag of handouts” to industry. As Wendy Norris at Colorado Confidential asks, “[W]ould a McCain presidency simply reprise the oil-and-gas-friendly Bush Administration for another four years?”