If you restrict the supply of something, the price will go up. It’s one of the laws of supply and demand. Thus, cap-and-trade energy rationing schemes drive the price of energy up, by capping the supply. President Obama has conceded that in his unguarded moments. In a January 17, 2008 interview with the San Francisco Chronicle, Obama said that “electricity rates would necessarily skyrocket” under his cap-and-trade plan to fight global warming. He also said that under his plan, “if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them.”
But journalists are not economists, and often have difficulty understanding the most basic principles of economics. (Some cannot even do basic math). What is clear to any economist or any college graduate who has taken Econ 101 seems disputed or unclear to many journalists, who are more familiar with trendy fads in college English Departments, and left-wing critical race theory, than they are with basic economic truths.
So it is that PolitiFact Virginia erroneously rated as “mostly false” the claim that cap-and-trade would naturally lead to “higher” energy bills for Virginia households. It admitted that “analyses of two measures that have been before in Congress in recent years concluded that cap-and-trade carries a cost for most consumers,” but then claimed that such costs could somehow be offset, even while capping energy use, and result in “an average lower cost for consumers.” While their effects on the environment may be disputed, it is clear that they raise energy costs for consumers by reducing the supply of energy. (As a CBS analyst once noted, a Treasury Department analysis pegged the cost of the Obama Administration’s cap-and-trade plan at $1761 per year per American household).
Whatever their theoretical merits, cap-and-trade schemes tend to become vehicles for vast amounts of corporate welfare and special-interest pork by the politicians who craft them, like the Congressional cap-and-trade energy bill backed by the Obama Administration. That Obama-backed bill contained so many special-interest giveaways that it would have fleeced American consumers without helping the environment, as I explained earlier (it contained environmentally-harmful ethanol subsidies and could have driven industry overseas to countries with less environmental protections).
Originally published August 31, 2012 at GlobalWarming.org.