For Release: January 15, 2009
Contact: David Almasi at (202) 507-6398 or [email protected]
Energy Bubble, Anyone?
Henry Waxman Gives Public a Look at the Corporate-Congressional Alliance that Threatens to Raise Energy Prices in Pursuit of Private Profit
Washington, DC - Thursday’s first hearing of the U.S. House Energy and Commerce Committee since Rep. Henry Waxman (D-CA) ousted Rep. John Dingell (D-MI) as chairman is drawing criticism from the National Center for Public Policy Research, which says the hearing illustrates how powerful corporate interests are working with influential special interests and with the liberal majority in Congress to use government to enhance private profits at great cost to economic growth and liberty.
The hearing will, according to the committee’s announcement, “present the perspectives of members of the U.S. Climate Action Partnership (‘USCAP’), a coalition of over 30 businesses and nongovernmental organizations that has called for Congress to pass legislation to address the climate change threat.”
“Today’s hearing on the U.S. Climate Action Partnership exposes the dangers posed by the new political economy,” said Tom Borelli, Ph.D, director of the Free Enterprise Project at the National Center for Public Policy Research. “The alignment of corporations, special interest groups and liberal members of Congress aiming for this legislative goal is frightening. The housing bubble was born from an alliance of similar interest groups and now we are about to repeat the same mistake with energy policy.”
Corporate members of USCAP are trying to profit from a government-mandated “cap and trade” anti-global warming policy by selling so called carbon credits from reductions in greenhouse gases. Under cap-and-trade, emissions of greenhouse gases, such as carbon dioxide, would be limited by the federal government. Companies that are over their emission allotment will be forced to purchase credits from another company that is below its allowance.
Under a cap-and-trade policy, companies would be forced to raise energy prices to reduce their emissions. This would unleash a series of adverse economic consequences and hardships for Americans, as the National Center’s Vice President David Ridenour noted in a recent article in Investor’s Business Daily:
- A study by the National Association of Manufacturers projected that emissions caps, similar to those rejected earlier this year by the U.S. Senate calling for a 63% cut in emissions by 2050, would reduce U.S. gross domestic product by up to $269 billion and cost 850,000 jobs by 2014.
- According to a study conducted by researchers at the Massachusetts Institute of Technology, the restrictions could raise gasoline prices by 29%, electricity prices by 55% and natural gas prices by 15% by 2015.
- A 2007 report by the Congressional Budget Office, examining the costs of cutting carbon emissions just 15%, noted that customers “would face persistently higher prices for products such as electricity and gasoline. Those price increases would be regressive in that poorer households would bear a larger burden relative to their income than wealthier households would.”
“The alignment of corporate and government agendas for the so called “social good” is eerily similar of the warnings in Ayn Rand’s Atlas Shrugged which described the unraveling of capitalism” said Deneen Borelli, a full-time Fellow with the National Center for Public Policy Research-sponsored African-American leadership network Project 21.
“Pursuing legislation that will raise energy prices in the middle of a recession is economic suicide. It exposes the inability of these CEOs to connect the dots between economic growth and their future earnings,” added Tom Borelli. “Let’s not forget USCAP corporate membership reads like a who’s who list of corporate losers; AIG and Lehman Brothers were founding members and General Electric stock is trading at multiyear lows. Ford, Chrysler and GM are also members -- need I say more?” said Tom Borelli.
“Unfortunately for shareholders, the USCAP CEOs, like their banking industry colleagues, have executed poor risk management regarding the impact of cap-and-trade on their businesses. While banking CEOs thought real estate prices could only go up, USCAP CEOs somehow think there is no downside risk to high energy prices and handing over more power to government bureaucrats. They also think the environmental special interest groups are their friends. That’s incredibly naïve,” Tom Borelli said.
“We know for a fact that some USCAP CEOs have not analyzed the impact of cap-and-trade on their business. In response to my question about the company’s participation in USCAP at the Caterpillar shareholder meeting in 2007, CEO James Owens admitted he did not conduct a cost benefit analysis of cap-and-trade on his business. Shareholders should be outraged over such incompetence,” said Deneen Borelli.
“ConocoPhillips CEO James Mulva has also not done his homework,” said Tom Borelli. “ConocoPhillips has made a significant investment in Canadian oil sands, which release about three times the amount of carbon dioxide than traditional oil. Since cap-and-trade will increase the cost of carbon emissions, Mulva is lobbying to increase the cost of his investment. In addition, his USCAP partner Natural Resources Defense Council is taking legal action to block the processing of the oil sands at a ConocoPhillips refinery.”
“Finally, if General Electric CEO Jeff Immelt is so concerned about the state of the planet,” Tom Borelli Continued, “why was he selling electricity infrastructure equipment to Iran? Nuclear Iran poses a much greater threat than carbon emissions.”