Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
Candidate Barack Obama promised to give special attention to
rebuilding Louisiana while campaigning for the White House. So why is
President Obama pushing an energy tax that disproportionately harms the
energy tax is known as a "cap-and-trade" scheme. It works by putting a
price on greenhouse gas emissions thought to cause global warming, to
encourage Americans to emit fewer of them. However, emissions are an
inevitable by-product of the energy use, so Obama's plan would
constitute an energy tax. As a new Congressional Budget Office report
notes, "by attaching a cost to CO2 emissions, a cap-and-trade program
would thus lead to price increases for energy." Starting in 2012, Obama
plans on raising $645 billion in revenue over eight years with a
cap-and-trade program, although a top administration official told
Senate staffers last month that the figure could be as high as $2
tax increases are created equal, however, and an energy tax in
particular carries social and regional inequities. Louisiana's unique
economic makeup renders it especially vulnerable to Obama's
the Democratic Party has embraced progressive to that redistribute
wealth from the rich to the poor, yet Obama's energy tax is regressive
-- the burden is heaviest on the poorest, because they spend more on
energy, proportional to income.
percent of Louisianans live below the poverty line -- the second
highest proportion of any state in the country. Moreover, per capita
residential electricity consumption is relatively high, due to demand
for air conditioning during the sweltering summer and the widespread
use of electricity for home heating. As such, Obama's energy tax hits
Louisianans the hardest, proportional to income.
are regional inequities, too. Cap-and-trade puts a price on greenhouse
gas emissions, so naturally, states with higher emissions face a higher
it is home to many energy-intensive industries, the Bayou State emits
more than all but 10 other states. In fact, Louisiana has the greatest
concentration of crude oil refineries, natural gas processing plants
and petrochemical production facilities in the Western Hemisphere.
Louisiana has the sixth highest levels of per-capita emissions in the
country, according to the World Resources Institute.
energy tax would hammer Louisianan industries, which would pass along
higher production costs to consumers. Demand would plummet, markets
would contract, and those businesses would have to shed jobs.
April, Peter R. Orszag, who now serves as the President's top budget
expert, told Congress that, "the higher prices that would result from a
cap on CO2 emissions would reduce demand for energy and
energy-intensive goods and services and thus create losses "» for
workers in the sectors of the economy that supply such products." Those
"sectors of the economy" are found in Louisiana.
Obama needs to come clean with the American people. Rather than claim
that his cap-and-trade climate policy would create millions of "green
jobs," he should level with the public about the cost of his proposed
William Yeatman is an energy policy analyst at the Competitive Enterprise Institute.