by Rep. Geoff Davis (KY)
With the summer travel season upon us, the cost of gasoline has started to increase rapidly. During the month of May, the average price of a gallon of gas in Kentucky rose by nearly fifty cents, from $2.04 to $2.52. Despite this, House Speaker Nancy Pelosi [CA-8] is pushing legislation that could cause the cost of a gallon of gasoline to jump by as much as seventy-four percent.
On May 21st, the Energy and Commerce Committee passed H.R. 2454, a 946-page climate change bill sponsored by Chairman Henry Waxman [CA-30]. The bill is complicated; even Chairman Waxman confessed to not knowing all the details. Simply put, this legislation would raise prices for almost all consumer goods by imposing a “cap and tax” program and a Renewable Electricity Standard (RES). Additionally, the legislation includes federal mandates on everything from light bulbs and table lamps to household appliances and vehicle emissions.
The “cap and tax” program laid out in H.R. 2454 aims to bring U.S. carbon emission levels down to eighty-three percent less than 2005 levels by 2050. That is equivalent to the carbon dioxide levels in 1907, when even the sight of a gasoline-powered automobile was a noteworthy event. In 2005, the Department of Transportation estimated there were more than 230 million vehicles in the U.S.
A “cap and tax” plan sets limits on carbon emissions. Permits to emit carbon dioxide above that cap are either issued or sold. Those permits become a tradable commodity on an exchange. In theory, the system forces those who produce energy to either produce it more cleanly or purchase additional permits. Either way, the “cap and tax” plan will force the cost of producing energy to increase, and those costs will be passed along to families in the form of what is essentially a tax on energy. According to numbers derived from the Stern Review, “cap and tax” will cost the average Kentucky family an extra $1,798 annually.
By 2035, the Heritage Foundation estimates that Chairman Waxman’s legislation will cause a ninety percent increase in electricity rates and a fifty-five percent rise in residential natural gas prices. As a result, experts predict that a substantial number of U.S. jobs would be relocated to countries like China and India that have not adopted a national energy tax. At a time when our national unemployment rate has soared to 8.6 percent and the Kentucky unemployment rate is getting dangerously close to ten percent, we cannot afford to enact legislation that will create additional hardships for American businesses and workers.
Energy prices are a major factor in determining the cost of living and the cost of doing business in a particular location. One of Kentucky’s principle competitive advantages for economic growth is the low cost of our electricity. More than ninety percent of Kentucky’s electricity is produced from coal, allowing Kentucky to have the fourth lowest electricity costs in the U.S.
I recently met with plant managers and business leaders in Carroll County, Kentucky, who reiterated that the low cost of energy in the Commonwealth is a major reason they chose to base their businesses in Carroll County, creating many jobs in that community. This is a familiar positive story heard from businesses across Kentucky, but one that could quickly change with the adoption of a “cap and tax” program.
Americans deserve a better solution that will take into account the impact climate change legislation can have on our economy, our workforce and our families. Congress and the Administration need to develop a national energy strategy that will drive our economy and preserve our environment.