Energy Disaster Looming

Iain Murray, CEI, posted on National Review Online

There are strong suggestions circulating that the Administration is being firmly lobbied to announce a cap-and-trade scheme for electricity utilities in the State of the Union address as a 'legacy' item and in a futile attempt to bind the hands of an incoming President.  This would be a disaster.

At a time when the Fed and the rest of the Administration is doing its best to avoid recession, what Mike Huckabee might call the "Wall Street Lobby" within the White House is doing its best to counteract all that effort.  Given that the Bureau of Labor Statistics tells us that household energy prices rose by a staggering 17.4 percent in 2007, but electricity prices rose only 3.4 percent.  Cap and trade will push up those electricity prices too.  It is the last thing we need at present. 

Moreover, cap and trade just doesn't work.  The Europeans have had a system in place for a couple of years now and it has worked so badly that the EU President – supposedly a friend of America – is threatening a carbon trade war because, he claims, "There is no point these industries cutting emissions in Europe if they lose business to countries with more lax rules on carbon emissions."  In other words, an American cap and trade scheme will be the perfect economic stimulus package – for China and India.

It appears that the people who are pushing this within the White House are exactly the same people who, together with Enron's Ken Lay and Environmental Defense's Fred Krupp, snuck a cap and trade promise into the Bush campaign's August 2000 energy plan without the knowledge of the campaign's energy advisory committee.  They're all very well connected with the rent-seeking companies and the Wall Street banks that will make a fortune selling the permits to each other.

There are some very highly-compensated law firms out there currently lobbying for this at rates that pro-free-market groups simply (and ironically) can't afford and they are hiring Bush advisers by the troughload. Yesterday's Greenwire (subscription required), for instance, identified 2004 campaign head and former RNC chairman Ken Mehlman, as "a Washington attorney working for corporate clients who back mandatory climate controls."

The American consumer, however, gets the shaft.  If you don't want higher electric bills, it really is time to get angry.