Tax or Cap and Trade? No!! Tax AND Cap and Trade!

Recently it has become fashionable in the environmental community to argue the merits of taxing energy versus cap and trade schemes. This is at best a waste of, well, energy and at worst counterproductive to environmentalists' ends. Both taxing and cap and trade have their merits and in no way are they mutually exclusively. After years of trial, Europe is trying to get through the many complexities of cap and trade. But before the concept of cap and trade was developed they had high energy taxes. And as a result of that tax structure Europeans per capita use half the energy that Americans do.

It has been said of energy taxes that they would end up being just as complex as cap and trade. That depends on where they are applied. The tax that more Americans pay more often and with less hassle than any other is an energy tax. We pay that tax every time we buy gas at the pump. Cap and trade to regulate auto emissions would be a nightmare whereas taxing gasoline is demonstrably the simplest of solutions. On the other hand cap and trade might be the best solution to curtail industrial carbon emissions.

In the end everyone in the environmental community thinks that energy taxes work; they just think they are not politically feasible. If people in the environmental community don’t think energy taxes are feasible, they are right. They are right precisely because they don’t think they are feasible. If the people who every day are telling us we are on the verge of an environmental apocalypse won’t support this fast effective tool to fight global warming then no one will. If environmentalist question the feasibility of energy taxes then the debate should center around how to make them feasible not how to abandon them.

Who then is the winner tax or cap and trade debate? Why it’s Exxon Mobil.

Automakers for Energy Taxes! READ ALL ABOUT IT!

Recently, congressman John Dingell (D-Michigan) introduced legislation for a gasoline tax. Cynics feel that this was done at the prompting of the auto industry to introduce a bill that is sure to go down to defeat and sink its future prospects. If that is the case how should those who support gas taxes respond? I would suggest with gratitude to both Congressman Dingell and the auto industry.

Obviously, a gas tax is a sure way to save the domestic auto industry. The greatest enemy of any industry is uncertainty. Car makers are designing cars for the future. Will that future have gasoline at $2/galoon or $12/gallon? What that price is will determine what kind of cars Detroit should make. It would be a lot easier for Detroit to be designing cars at a stable energy price. A gasoline tax would do just that! With stable energy prices Detroit would know just what kind of car to design.

At the beginning of the decade Ford promised higher mileage cars but the market wouldn’t support this strategy so they stuck with their traditional models and then got really stuck when gas prices went up. The next car Ford designs may be its last. So they need to know what to shoot for.

Auto makers have history of supporting gas taxes. When China established its very strict CAFÉ standards the energy companies asked that they pass a gas tax instead.

In the end whether automakers want a gas tax or not the environmentalist response should be to congratulate them on their corporate wisdom, point out how beneficial it is for them, and encourage them to more openly support gas taxes for everyone’s mutual benefit. Giving them a reason to back gas taxes and forcing them to repudiate them at their peril might be a way to the auto industry to back something that is good for them even if they don’t realize it