[Note: This post has been superceded by Under Further Review …]
ExxonMobil’s new corporate position in favor of carbon taxes, reported today by the Wall Street Journal, is not entirely unexpected. It is the result of a policy drift of recent years toward compromise and appeasement with the company’s political critics.
But I doubt that ExxonMobil has bought into alarmism. Back at Enron, where I was director of public policy analysis, we didn’t necessarily buy into climate alarmism but we welcomed the public’s concern because we had seven profit centers (see pp. 3–4) that stood to benefit. ExxonMobil, the anti-Enron, has not set itself up as a rent-seeker, but it apparently wants a seat at the policy table given the perceived choice between a carbon tax and a carbon cap-and-trade scheme.
It is ironic that ExxonMobil’s shift has come at a time when the case for climate alarmism is in growing trouble. Global temperatures are flat, not accelerating, as Chip Knapperberger recently blogged on this site. Climate mini-alarms, as I argue in “Climate-Change Alarmism Runs Into a Reality Check” in today’s Houston Chronicle, have not held up well.
I wish that Rex Tillerson, ExxonMobil’s chairman, would oppose carbon taxes on the grounds that 1) it would hurt motorists and other energy users by raising prices; 2) it is a “solution” for an ill-defined problem; and 3) it could spark an international trade war via border tax-adjustments on countries that do not have such a tax.
But perhaps Mr. Tillerson (or his eventual successor) will change his mind and not support carbon dioxide pricing/regulation per se. Back in 1981, Exxon Chairman C. C. Garvin told a group of environmentalists what they wanted to hear: “Indeed, we believe that in the United States oil use reached its peak several years ago and is on the way down.” That was also when Mobil head Rawleigh Warner predicted that the “brief interlude” of the oil age was coming to a close, and the head of the American Gas Association, George Lawrence, predicted that natural gas would soon be too scarce for industry use (for cites, see pp. 264–65 of Capitalism at Work). They were all wrong by a long shot during this alarmist era.
Government intervention in the name of “sustainability,” not the interaction between man and nature, is the threat to energy sustainability. This may be exactly what Obama’s energy/climate team does not want to hear, but it is good news for mankind nonetheless.
I am convinced that the global warmists are not serious in their concerns about the future of the earth. If they were serious, they would have been candid with the “great unwashed” about what would have to be done to halt the increase in atmospheric CO2 concentrations, no less reverse it.
Global average temperatures began increasing in ~1650, the trough of the Little Ice Age. Atmospheric CO2 concentrations began increasing in ~1750, when annual CO2 emissions were ~1/2000th of their current levels. It seems logical that halting the increase in atmospheric concentrations would require reducing annual emissions to or below the annual emissions rate at which the atmospheric concentration began to increase. That would require a 99.95% reduction from current emissions rates globally. That would entail not only the complete elimination of fossil fuel use, but also reductions in human and domesticated animal respiration, since there are now so many more of both contributing to the CO2 emissions. (Consult PETA regarding the required vegan diet. Consult China regarding one approach to population control and perhaps Peter Singer for another.)
Those of us among the “great unwashed” are still waiting for those who have “consensed” to get serious, assuming that they are actually capable of doing so.
You don’t have to believe in global warming (I’m pretty agnostic myself) to support carbon taxes. I think it’s pretty much undisputed that burning carbon causes other, non-global-warming-related, bad things, like pollution and associated public health issues.
So anyway, plenty of folks, including Bush’s economic adviser Greg Mankiw, support carbon taxes for Pigovian reasons–taxing something that’s bad for people and cutting taxes on good stuff (like work).
However, I’d guess Tillerson’s support is more grounded in his views on oil supply vs. demand elasticity–if oil demand is inelastic, then the tax falls completely on consumers–plus his estimation of the increase in natural gas demand (and prices), as gas would be tremendously advantaged by carbon legislation. Everybody talks about “Big Oil” like that’s all these companies produce–but they have significant gas assets that would appreciate significantly under carbon legislation.
First do no harm. We do this by using the regressive carbon tax to replace the regressive social security tax. Since not everyone pays SS taxes, will need some tweaking for those folks. (Carbon tax equal to a buck on gasoline would cover 100% of current SS taxes, employer and employee. ) And what if it turns out that CO2 is not a problem. We would have reduced energy consumption at no net cost to the citizenry and that ain’t all bad. Also, with a tax you allow the bright-eyed and bushy-tailed young scientists and engineers figure out what to do instead of a bunch of congressmen who should be fined for practicing engineering without a license. I’m sure that is very much on Tillerson’s mind. Had the US congress been involved, there would be no Prius.
[…] week I blogged on the news accounts of ExxonMobil’s coming out in favor of a carbon tax. I was too hasty. I […]
[…] week I blogged about the news accounts of ExxonMobil’s coming out in favor of a carbon tax. I was too hasty. I […]