Monday, July 6, 2009

Prepare for higher electricity prices due to cap and trade

"Under my plan of a cap and trade system, electricity rates would necessarily skyrocket ... because I'm capping greenhouse gasses, coal power plants, natural gas ... you name it ... whatever the plants were, whatever the industry was, they would have to retro-fit their operations. That will cost money. ...They will pass that money on to the consumers." -- Barack Obama, January 17, 2008, San Francisco Chronicle

It seems that the Obama administration has claimed that this will be a neutral because of tax credits or deductions that they'll be adding, $500 or something. This may work for the average but it is going to hurt some people much more than average. For instance, in the North West where there is a lot of hydro power, cap and trade may be a benefit to them because the cost of electricity won't go up because they're not producing C02, and they'll still get the "$500 benefit". However, in places getting their power from coal, their costs will go up more than average, hurting them disproportionately. So rather than evenly distributing the costs of cap and trade we're going to punish a subset of the American population, not for anything that they've done, but rather because of what the power company servicing where they live is using.

In addition, perhaps my power bill will go up $500, but what about second order effects? My groceries, dining out, etc are going to go up because those businesses are going to have their expenses go up as well.

And then there is the question about the true cost and does government ever get the cost right.

Just seems like a disaster.

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