Cold in the dark prospects

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By Thomas J. Pyle

While the nation's leaders focus on expanding government's role in our health care system, they are working simultaneously to chew away at another foundation of America's economic strength and our individual liberties -- affordable, reliable energy.

The assault comes, as most rhetorical attacks do, cloaked in righteousness. The government, through the Waxman-Markey cap-and-trade legislation, aims to save us from global warming by imposing arbitrary limits on domestic carbon emissions. This regime would enable its proponents' Wall Street allies to trade and swap the allowances and offsets -- the new currency under this system -- among themselves. Think Bernard Madoff.

In doing so, the federal government would seize control of our energy use, rationing it to ensure it is both more expensive and less plentiful. The certain loss of manufacturing jobs to China and India that would result from this scheme, while unfortunate to some, is a side benefit to a group of ideologues who never really cared much for manufacturing anyhow -- too dirty, too blue-collar, too old-fashioned, too capitalist, too American.

Of course, those who favor such a regime do not say they plan to ration energy. Rather, they talk about "efficiency." This efficiency would require Americans to reduce their energy use by nearly 85 percent by 2050. On a per capita basis, that means each American would use about as much energy as did each American living in 1790.

Energy prices certainly would surge under cap-and-trade. President Obama said so. His budget director said so. The nonpartisan Congressional Budget Office (CBO) said so. And most recently, the Energy Information Administration (EIA), an independent statistical government agency, said so.

The legislation provides for amelioration of increased energy costs to lower- and fixed-income persons. Estimates of the increased costs have ranged from a few hundred dollars to a few thousand dollars per year per household. Notably, no analysis or credible person has suggested that the legislation would not increase energy costs.

The legislation also would reduce our gross domestic product. Again, each study, including the one by the EIA, indicated that cap-and-trade legislation "increases the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services. The result is that projected real gross domestic product (GDP) generally falls relative to the [status quo]."

Cap-and-trade's supporters don't mention job destruction. In fact, they claim the legislation would be a boon to job creation. Why let the facts get in the way of a good argument? Numerous studies and real-world trials have shown that cap-and-trade and "green jobs" subsidies result in a net job loss. Those jobs that are created are temporary and unsustainable without continued government subsidies and mandates. While the figures of lost jobs vary, they all reach the same conclusion: Cap-and-trade kills jobs.

Some energy-rationing proponents suggest that Waxman-Markey would reduce our dependence on imported oil. Again, no one who has examined the legislation shares that belief. In fact, many experts note that the legislation may increase our reliance on oil from unstable nations because it would complicate and retard refiners' ability to use denser Canadian crude. Is that what we want, a de facto ban on oil from our neighbors to the north?

Americans should take a careful look at Waxman-Markey. The stated goals and the real effects of the legislation are exceedingly divergent. This divergence allows for only one explanation -- those who advocate for the bill merely wish to control energy supply and demand in the United States.

Increasing the price of energy while suppressing supplies would further cripple our already ailing economy. Americans deserve better from Washington.

Thomas J. Pyle is the president of the Institute for Energy Research, a free-market energy think tank with offices in Houston, Texas, and Washington, D.C.