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Thursday, April 22, 2010

Senate Climate Bill Trio Scrapping Oil and Gasoline Fee?

Originally posted at the Breakthrough Institute

[Update at end of post - 4/22/10 at 5:20 PST]

According to several reports, the trio of senators leading the effort to craft a climate and energy bill for release next Monday are back-peddling from earlier plans to implement a new fee on petroleum-based fuels such as gasoline amidst concerns that any new "gas tax" would trigger voter backlash.

Earlier reports of ongoing, private negotiations on a Senate climate and energy bill led by Senators John Kerry (D-MA), Lindsey Graham (R-SC), and Joseph Lieberman (I-CT) indicated that the trio were planning to drop the 'economy-wide' cap and trade plan included in the House-passed Waxman-Markey bill in favor of a 'three sector' approach to regulating emissions from power plants, industry, and petroleum-based fuels.

A cap would be implemented on the power sector to begin with, with industry phased in at a later date, while the oil sector would be exempted from the plan. Instead, petroleum-based fuels, including gasoline and diesel fuel, would be subject to a "linked fee" that would be tied somehow to the price of carbon pollution credits under the power sector cap and trade program -- in effect, a variable tax on gasoline and other petroleum products.

Now however, the Wall Street Journal reports that Sen. Kerry vehemently declares, "There is no gas tax, there was no gas tax and there will never be a gas tax."

Another Journal article similarly reports:

The senators had been discussing the idea of using an indirect tax on gasoline to substitute for emissions caps on the oil industry, according to people familiar with the discussions. The White House last week said President Obama wouldn't support an increase in the current federal gas tax of 18.4 cents a gallon, and Messrs. Graham and Kerry have disavowed the idea of a gas-tax increase.
As we await the release of the Kerry-Graham-Lieberman senate climate bill next Monday, there's thus little clarity about how, if at all, oil refiners and transportation fuels will fall under the bill's carbon regulations. The transportation sector is responsible for roughly one-third of total U.S. greenhouse gas emissions, the second largest sectoral share after power plant emissions.

UPDATE: Kate Sheppard at Mother Jones is fresh off a conference call with Senator Kerry which revealed a few more details of the yet-to-be-released Senate climate bill. According to Sheppard, Kerry says the bill should now have the backing of at least three of the five big oil majors as well as the Edison Electric Institute, a trade group representing the country's investor-owned utilities. And here's the current scoop on the oil and transportation sector, according to Sheppard:
There will be no fee--or "gas tax"--on transportation fuels. Instead, oil companies would also be required to obtain pollution permits but will not trade them on the market like other polluters. How this would work is not yet clear.
Looks like Kerry et al. are still trying to figure out how to increase the cost of gasoline through carbon fees without calling it a "gas tax." We'll see how that goes...

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1 comment:

Anonymous said...

I think what people don't realize is that an energy tax is not something completely unheard of. For years, Europe and Japan have taxed the price of fossil fuels to promote efficiency and renewables (with good results). This also plays a balance of power with oil producing countries such as OPEC. Although an oil tax may help in generating income, policy makers need to be extremely careful not to so much strain on gas prices that other parts of their economy shrink because of this.
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