Yesterday on NPR’s radio program To the Point, I said it was dishonorable for ExxonMobil to support a carbon tax. I compared ExxonMobil’s reported embrace of carbon taxes to Enron’s lobbying for the Kyoto Protocol.

Enron was a a major natural gas distributor and saw in Kyoto a means to suppress demand for coal, natural gas’s chief competitor in the electricity fuel market. ExxonMobil is a major natural gas producer. So I took this to be another case of political capitalism – corporate lobbying to replace a competitive market with a rigged market to enrich a particular firm or industry at the expense of competitors and consumers.

The NPR program host said something like “even oil companies like ExxonMobil now support a carbon tax,” alluding to a Nov. 16 Bloomberg Businessweek article titled ”Carbon Fee From Obama Seen Viable With Backing From Exxon.” I too had read the article, and ExxonMobil’s reported behavior struck me as imprudent as well as unkosher. A carbon tax could come back to bite natural gas producers big time if the EPA decides, along the lines of Cornell University research, that fugitive methane emissions from hydraulic fracturing make natural gas as carbon-intensive as coal.

The Bloomberg article quoted an email from ExxonMobil spokesperson Kimberly Brasington:

Combined with further advances in energy efficiency and new technologies spurred by market innovation, a well-designed carbon tax could play a significant role in addressing the challenge of rising emissions. A carbon tax should be made revenue neutral via tax offsets in other areas.

As explained previously on this site, a revenue-neutral carbon tax is a political pipedream, as is a carbon tax that preempts EPA and State-level greenhouse gas regulations. ExxonMobil is too savvy not to know this. So I interpreted Brasington’s caveats (“combined,” “well-designed,” “revenue-neutral”) to be the typical K Street evasiveness of those wishing to signal rather than declare their support for a controversial policy.

But articles published today in FuelFix and The Hill contend that ExxonMobil “does not support” a carbon tax and is “not encouraging policymakers” to impose such a tax. Both articles quote ExxonMobil VP for public affairs and government relations Ken Cohen:

If policymakers are going to adopt a measure, a regime to affect or put in place a cost on the use of carbon across the economy, then as we look at the range of options, our economists and most economists would support a revenue-neutral, economy-wide carbon tax as the most transparent and efficient way of putting in place a cost on the use of carbon.

Not supporting and not encouraging is not the same as opposing. Indeed, not opposing while saying But if you’re gonna do it, do it like this! can be a low-profile way to support and encourage! Also, why say anything favorable about carbon taxes when cap-and-trade is dead and there’s no longer even a weak prudential case for supporting carbon taxes as the lesser evil?

According to FuelFix, Cohen rejected a carbon tax “imposed solely to raise revenue.”

“If the policy objective is to raise revenue, it’s not on the table,” he [Cohen] said, insisting that a better way to send dollars to federal coffers would be to open up more public lands and waters for drilling.

But of course the leading objective for many proponents is precisely to raise revenue.* Carbon taxes have suddenly emerged as a hot topic for one reason only — their potential to sustain Washington’s spending addiction for a few more years. The folks at ExxonMobil have to know this.

So the question returns: Why on Earth at this time is ExxonMobil making happy noise about carbon taxes?

* Ditto for cap and trade. As my colleague FOIA master Christopher Horner discovered, the Obama Treasury Department estimated cap-and-trade would bring in revenues up to $400 billion annually from carbon permit sales — a share of GDP roughly equal in size to the corporate income tax.

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Update (Dec. 27, 2012)

Over at MasterResource.Org, my colleague Rob Bradley reproduces Enron Lobbyist John Palmisano’s Dec. 12, 1997 memo on the Kyoto climate treaty conference crowing that, “This agreement will be good for Enron Stock!!”

Palmisano lobbied for Kyoto’s three main policy mechanisms – joint implementation, clean development, and emissions trading. He enthused:

The endorsement of joint implementation within Annex-1 is exactly what I have been lobbying for and it seems like we won.  The clean development will be a mechanism for funding renewable projects. Again, we won. (We need to push for natural gas firing to be included among the technologies that get preferential treatment from the fund.)  The endorsement of emissions trading was another victory for us.

Palmisano and Enron won plaudits at the Kyoto conference:

I gave three speeches and received an award on behalf of Enron. The speeches dealt with emissions trading, energy efficiency/renewable, and the role of business in promoting clean energy outcomes. The award came from the Climate Institute and was for Ken Lay and Enron for our work promoting clean-energy solutions to climate change.

Enron had become the green Left’s corporate darling. Palmisano reported:

Through our involvement with the climate change initiatives, Enron now has excellent credentials with many “green” interests including Greenpeace, WWF, NRDC, GermanWatch, the US Climate Action Network, the European Climate Action Network, Ozone Action, WRI, and Worldwatch. This position should be increasingly cultivated and capitalized on (monetized).

(Parenthetically, I heard many times people refer to Enron in glowing terms. Such praise went like this: “Other companies should be like Enron, seeking out 21st century business opportunities” or “Progressive companies like Enron are….” Or “Proof of the viability of market-based energy and environmental programs is Enron’s success in power and SO2 trading.”)

In a separate column, Bradley explains that, “Enron, in fact, had no less than six profit centers tied to pricing carbon dioxide (CO2), and seven if CO2 were capped and traded.”

The Wall Street Journal has a long piece today about the prospect of using the state to move part of the U.S. transportation fleet from oil to natural gas. It gives prominent voice to the massive public affairs campaign of T. Boone Pickens to add billions to his natural gas fortune as a swansong to a prosperous career.

This campaign takes the form of a bill embraced by ostensible fiscal hawks, causing an uproar from those conservatives who took umbrage at Members abandoning their pledges of fiscal sobriety at the drop of a billionaire’s phone call. This enabled the media to describe the Republicans’ ‘circular firing squad.’ Well played, gentlemen.

The vehicle was not Pickens’ first choice. His first choice was a windmill mandate, transparently pushed by a handful of gas interests, including Chesapeake Energy’s Aubrey McClendon, to put a green hat on their efforts to use the state to displace coal’s market. In this effort, they found natural allies in environmentalist special interests.

I happened to be in the room in 1997 with the American Gas Association, BP, and Enron as they worked with green pressure groups, as radical as the Union of Concerned Scientists as well as more mainstream, anti-coal activists like NRDC, to get a global warming treaty and a domestic cap-and-trade scheme. I couldn’t believe my ears and said so, which in a matter of weeks led to us parting ways.

When Pickens was pitching his Plan A in an off-the-record meting a few years ago, I congratulated him on discovering my old boss Ken Lay’s business plan: he had some gas interests, bought a bunch of windmills on the cheap because they aren’t economic investments, then set about to use his lobbying muscle to make them not economically viable, but rather, as President Obama is given to saying, “the profitable kind of energy.”

The windmill mandate flopped. So Pickens unloaded his windmills and reached up another sleeve. Now, the argument goes: (1) we have lots of natural gas, thanks to the hydraulic fracturing revolution in production; (2) oil is expensive; (3) therefore, we should move transportation onto natural gas, although this cannot happen without robbing taxpayer Peter to pay gassy Paul, according to anyone cited in the WSJ article.

Of course, we also have vast quantities of oil, likely all of it recoverable at a per-barrel price around half of where it stands today. So that’s not really much of an argument for such wrenching, expensive, uneconomic intervention, now is it?

But this is the sort of advocacy that bad ideas are forced to employ. As my CEI colleague Myron Ebell wrote:

Why are billions of dollars of taxpayer-funded subsidies needed?  According to T. Boone Pickens’s web site, it’s because natural gas vehicles are cheaper to operate than gasoline or diesel vehicles:  “Even with higher initial costs (which will disappear as manufacturing ramps up) the life-cycle costs of NGVs [natural gas vehicles] are significantly lower.  Fuel costs are at least 15 percent less using natural gas rather than gasoline or diesel.”

So people need to be paid in order to make them want to buy vehicles that will save them money.  Yes, that makes sense: I always prefer the more expensive product unless there is a government rebate for the cheaper one.

Given all of this, we have three takeaways from today’s Journal piece.

First, here is the chart of countries this idea seeks to have us be more like.

Message: be more like Third-World countries. But for Italy, which has long directed nearby North African gas into its economy, no other OECD country is big into this old idea. I know that history of saying “look at Spain” didn’t work out to well about the windmills, but countries without oil, like, say, über-green Germany, aren’t on the list. Why?

Second, the article acknowledges these countries have been doing this for a long time. Yet the Wall Street Journal’s pull-quote gives us the $5-$9 Billion Quote of the Day: “T. Boone Pickens on subsidies for natural-gas truckers: The government should provide five years of subsidies, ‘and then get the hell out of it.  It flies by then, or it’s a bad idea.’”

Yeah. Once you build a subsidy, and the constituencies dependent upon it, even if it doesn’t work Washington is pretty good about letting it expire. It hasn’t worked anywhere with decades of support. A clever man, Mr. Pickens.

Finally, the story admits that this very scheme was one of the ‘stimulus’ schemes. Mr. Pickens is calling for the ‘stimulus’ to continue, for his investments in the uneconomic, for 5 more years.

Stimulus. Subsidy. Can’t say it too many times. That’s what this is. Republicans, wise up.

The coalition of major corporations hoping to get rich off cap-and-trade legislation started to crack up yesterday when BP America, Conoco Phillips, and Caterpillar dropped out of the U. S. Climate Action Partnership (or US CAP ).  Their defections end the exceedingly small remaining chance that cap-and-trade could be enacted this year.

BP America and Conoco Phillips did not pull out because they realized that the Climategate scientific fraud scandal has revealed that global warming alarmism is based on junk science.  Nor did they pull out because they finally recognized that energy-rationing policies will wreck the U. S. economy.   They pulled out when it became clear that they were not going to get rich off the backs of American consumers if the cap-and-trade bill enacted is anything like the specific bills being considered in Congress.

The Waxman-Markey bill that the House passed last June by a 219 to 212 vote and the Kerry-Boxer bill introduced in the Senate would, as intended by US CAP, raise energy prices for consumers through the roof.  Unfortunately for BP America and Conoco Phillips, the primary beneficiaries of this multi-trillion dollar wealth transfer from consumers to big business would be electric utilities and General Electric.

In other words, the two oil companies lost the political pushing and shoving match to James Rogers of Duke Energy and Jeffrey Immelt of GE.  That’s no surprise: Immelt has been driving GE into the ground ever since he took over, but he’s a savvy political operator; and Rogers learned how to get to the government trough first from the master, Ken Lay of Enron.  It is worth recalling that Enron Corporation was the leading promoter of the Kyoto Protocol and cap-and-trade before it went spectacularly bankrupt.

Caterpillar’s case is different.  As the major manufacturer of heavy equipment used in coal mining, Caterpillar must have been asleep when they joined US CAP.  The National Center for Public Policy Research’s Free Enterprise Project has been gently shaking Caterpillar’s top executives for several years, and perhaps they finally woke up.

So cap-and-trade is dead.   But other piecemeal energy-rationing policies are still very much alive.  The Environmental Protection Agency is going ahead with regulating greenhouse gas emissions using the Clean Air Act.  Senator Lindsey Graham (R-SC) is working with Senators John Kerry (D-Mass.) and Joseph Lieberman (D-Conn.) on a “compromise” package that can gain bi-partisan support.  Senator Jeff Bingaman (D-NM) has passed a renewable electricity requirement and new building energy efficiency standards out of his committee.

And big corporations are still circling the trough.   By my count, US CAP still has twenty-three corporate members plus eight environmental pressure groups that front for big business.  And of course, BP America, Conoco Phillips, Caterpillar, and many other companies that don’t belong to US CAP still hope to make money off the “right” sort of policies to raise energy prices.

The good news is that public opinion has turned decisively against global warming alarmism and energy-rationing.  People have figured out that they, not big business special interests, will end up paying the bills when energy prices, in President Obama’s elegant formulation, “necessarily skyrocket.”  In the November elections, the American people have a lot more votes than James Rogers of Duke Energy or Jim Mulva of Conoco Phillips.