Late on Friday, The House of Unrepresentatives passed a 1200+ page bill without reading it. Colloquially called "Cap and Trade," it was presented as a way to save the environment from "manmade global warming." Essentially, if a business releases too much "greenhouse gases," it must purchase the right to do so from other, less "polluting" companies. Coal companies seem to be one of the big targets of this bill - a coal company will have to purchase "carbon credits" from another company. Who pays for this additional cost, in the end? The consumer. It's a fact that 50% of electricity in the USA comes form coal.
Maybe it's just me, but raising the costs of necessities for Americans during a very deep recession isn't the best way to revive the economy, especially when it's in the name of the polar bears and baby seals. Especially with the American consumer, the so-called "backbone" of the economy, spending less and saving more.
In the 3rd Presidential Debate, Obama promised the following: "I think that in ten years, we can reduce our dependence so that we no longer have to import oil from the Middle East or Venezuela. I think that's about a realistic timeframe." Yet Obama and the Democrats blocked offshore drilling. If we aren't developing our own offshore oil resources, where are we going to get the oil from?
OK, so coal is getting more expensive and we're not developing our own oil supplies. What about wind power? Not in Ted Kennedy's backyard. Where are we going to get our electricity from? True, there are other sources, such as solar, nuclear, etc. But these aren't going to appear overnight.
In the short term, things are going to cost more. Within eleven years, Cap and Trade is currently estimated to cost a family $1870 more,just for electricity. That assume all other things equal. And as we all know, these estimates are usually half of what they really turn out to be.
Now, here's the kicker - who's going to make money dealing in these carbon credits? You guessed it - our friends at Goldman Sachs, the company who made money betting against the debt products that it was selling to its customersand received billions of "bailout" money, thanks to its former CEO who was Secretary of the Treasury, Hank Paulson.
