Carbonomics: Fix the Climate and Charge It to OPEC

Carbonomics.jpgCarbonomics is a book that tackles energy and climate policy together. Right now, “drill baby drill” and “save the planet,” are out to kill each other. But when OPEC first used its “oil weapon” against the US and Europe, the global response was to fight the OPEC cartel, and the Republicans did that by organizing a counter cartel (the IEA)  to fight OPEC. 

The first Republican policy was good for energy independence and good for the environment. And that’s the kind of policy we need today. But it’s been subverted.

Now the IEA is working closely with OPEC and the the US oil industry has an official advisory committee inside the US Department of Energy.

  • Who’s the biggest fan of OPEC?  Exxon !!
  • Who’s the biggest enemy of global climate policy?  OPEC !!

Of course this means Exxon is also against climate policy and so is the coal industry. But oil is the key to the energy/climate problem, because oil is where the money is. To fight this much money, we need a clever political strategy based on sound economics. Environmentalist have done a pretty good job of sounding one alarm, but the Republicans, back in the 1970’s, actually did much better on the policy-economics front, although, in the end, the oil industry took them over.

Carbonomics covers both national and international policies. Here’s a sample.

China-green.pngThere’s Money on the Table.
China Gets It.   Gore Doesn’t.

China cares about global warming, but it knows how to bargain. Gore just cares: “If the United States leads,China will follow.” Wrong!

Why should China follow? Just to be nice? Like in Tibet? Meanwhile, Waxman’s cap-n-trade bill is offering China a $5 billion bribe not to follow. Here’s how that works. Cap-n-trade provides an “offramp.” Industry can buy up to one billion tons of permits from foreign countries. Under the Kyoto system, China’s been selling close to half of these. So China could easily have made $5 billion off of the Waxman cap-trade bill — unless, of course, China cooperated with the Kyoto system and capped itself. So the Waxman-Gore bill was offering China a $5 billion bribe not to cooperate at the Copenhagen summit. And guess what? To the great surprise of environmentalists, China derailed that summit.

Exxon.pngExxon Profits Highest Ever — $45 Billion

  How did they do that? We helped; China helped; and OPEC helped. The US and China keep using more oil. OPEC holds down its supply. What a team. Exxon did nothing special this year. It just makes a killing whenever the world price of oil sky rockets—the same as all big oil companies.
This is why Exxon loves OPEC.
There is no way Exxon will ever back good energy or climate policy, because they both hurt OPEC and what hurts OPEC, hurts Exxon. Exxon and big oil are on OPEC’s side not Americas side.

Pelosi.jpgPelosi Confused xlnk.gif on Cap and Trade

“You cap and you trade [to] pay for investments in energy independence.” No, actually, that’s the reason. Cap and trade was invented by economists, and its purpose was to put a price on pollution—not to raise money for environmental subsidies. Economists hate that! What economists recommend (listen up Nancy) is a revenue-neutral carbon tax — one that raises no money for subsidies. And the best such tax is the untax, which doesn’t raise any money for anything — so it’s not really a tax.


The Untax — No revenue, no subsidies.  It just works. 

Tax oil refineries and coal mines. That will raise energy prices. But refund all the tax revenues on a per-person basis just like Alaska does with its Permanent Fund. This will be stronger environmentally than a cap-and-trade tax that charges as much on average! And, the refunds will cover what we pay in higher energy prices.