Global Warming Politics

There’s an interesting discussion about global wraming politics and how it could theoretically help the right (assuming they’ll admit it exists. It started with this post by Jim Manzi at NRO, was picked up a few other places, and has been weighed in on by many others, but I’m going to focus on Andrew and his readers for brevity’s sake.

I should say that, on some level, I agree with cap-and-trade skeptics. Not that I have any specific issue with the idea of cap-and-trade, or it’s soundness in achieving the desired outcome, but it seems unnecessarily complex, bureaucratic, and open to me. A simple, straight forward, carbon tax, especially consumption taxes on gasoline and diesel fuel, strikes me as being much simpler and ultimately more effective. Yes, that will make driving and consumer goods more expensive (although I suppose we could look into way to ease the burdens on things like agricultural production to keep food prices low), but that’s kind of the point. Higher prices will encourage less oil consumption, which would then, obviously, curb emissions. Manzi’s fundamental quetion is simply, “is the goal worth the cost?”

The problem is, this misses the underlying reality that the climate question is a secondary concern to the economic one. Yes, green is chic, but in the long run the environmental impact of oil is dwarfed by the economic impact of it. Take food prices for example. The reason food prices are increasing dramatically is because producing that food is extremely energy intensive. Right now, that means lots of oil is used in production. So when such a basic input as energy sources rise in cost as dramatically as they have in the past decade, the cost of everything that requires energy to produce is going to increase as a direct, linear, result. With oil production peaking in important parts of the world, and with demand rising unabated, high oil prices are here to stay. The talk of speculation and weak currency is tertiary at best; speculators speculate because they expect the price to continue to rise. If anyone thought that a price decline was imminent, speculators would stop buying. And weak dollar or not, oil is up across the board; by approximately 50% on the Euro for example.

So what we have is a situation in which our fundamental energy source, something that’s required in more or less every aspect of the economy, is exploding in cost with no end in reasonable sight, meaning that even more inflationary pressure is going to be put on prices. This is obviously unsustainable in the long run, particularly for a country like the United States that requires about 21 million barrels of oil a day.

Thusly, our focus in the discussion about oil ought to focus on the economics in question, as opposed to the more en vogue environmental questions. Whether or not you think $7.00/gallon gas would be worth the environmental benefits, it should seem logical that the economy would suffer undesired ripples from oil continuing to trade at current levels or higher, something that has nothing to do with domestic tax policies. The key is that any carbon tax policies should not only be designed to punish and disincentivize consumption of oil and other fossil fuels, but to incentivize the production and usage of alternative, renewable, and yes, clean sources of energy. That’s never going to happen so long as gasoline can be sold at record profits to energy companies, not because energy companies are evil, but because that’s the design of American corporate structure. Any company seeing record profits quarter after quarteris going to be loathe to give up a good thing (don’t fix it if it ain’t broke after all) in the interest of the economy as a whole. That’s simply not how our system functions. But it is in the interest of everyone else to get energy costs down, and that means we need a non-oil based economy, and that means we’re going to have to come up with a fiscal policy that incentivizes the production and marketing of alternative fuels as opposed to oil.

A cleaner environment will be a side effect of such a policy.