You and I know it was never about facts, it was about hyping the green dream. Just look at the numbers. First from the opposition:
Of course they don’t dare mention the amount of money their side has put into it, because, well, that would look imbalanced. Now have a look at the other side of the issue from the legislator who spearheaded the effort:
Logue: Big money beat Proposition 23
AB32 was passed and signed by the governor in 2006. It provides that between 2012 and 2020 greenhouse gas emissions will be reduced to 1990 levels.
Proposition 23 would have postponed implementing major parts of AB32 until the state’s unemployment rate stood at 5.5 percent for a year. Now the jobless rate is around 12 percent.
In June, when Proposition 23 qualified for the ballot, the Enterprise-Record interviewed Logue and Robin Huffman of the Chico-based Butte Environmental Council. At that time, Logue was thrilled, and Huffman expressed concern.
Full story here at the Chico Enterprise Record
Here’s the REAL “dirty secret”, from the LA Times:
But it was pure spin. As they say in the movie, “Follow the money.”
Two Texas-based oil refiners, along with California business trade associations and anti-tax activists thought they could halt the nation’s most ambitious effort to curb greenhouse gas emissions. But they were able to raise only $10.6 million. Most of California’s biggest companies, including Chevron, Pacific Gas & Electric and Sempra Energy, stayed neutral or actively opposed the initiative.
Backers were steamrolled by a $31.2 million campaign funded by such wealthy philanthropists as San Francisco hedge fund manager Tom Steyer, such big environmental groups as the National Wildlife Federation and the ClimateWorks Foundation, and such Silicon Valley green-tech moguls as John Doerr and Vinod Khosla.
10.6 million from “big oil”
31.2 million from “big green”
Yep, that’s some dirty secret alright. But you won’t see this reported on one side news outlets or green blogs.
There’s lot of hype about green jobs, but read this from a man who actually created some of them:
I know firsthand about green jobs. SunPower Corp., a company I chair and the second-largest U.S. producer of solar cells, has produced about 800 green jobs in California. But that’s just a fraction of the 4,700 jobs lost when Toyota pulled the plug on its local Nummi automotive plant due to the high cost of doing business in California.
That “pull the plug” meme will be repeated again and again in the coming months.
And then there’s this absolute rubbish:
Here’s why, when you look at California’s energy supply…
Energy Generation in California: Source: Figure E-1
California Energy Commission – http://www.energy.ca.gov/2009_energypolicy/
…and you see all that hydro, nuclear, natural gas, and renewables, you have to ask yourself: “where’s the dirty energy problem?”
With coal making up only 18.2%, “dirty energy” and up to 40% of the electricity coming from out of state (remember Enron’s manipulation of California?) “dirty energy” was really a non-issue.
But when we are talking green jobs, green energy, green money, green envy or just about anything else “green”, such facts don’t matter.
Congratulations to California, you got the government and legislation you deserve.
Maybe Keith Olberman of MSNBC will name me the “worst person in the world” for writing this fact check. Oh, wait.
Paul Birch;
but the effect is a second order one: doubling the cost of energy will not double the cost of goods or halve standards of living, because the energy is only one relatively minor factor of production; a loss ~5% would be more typical.>>
Really? Just 5%? Well at least you admit that it will have an effect. Before I dispute your number let’s talk about market share and how a 5% increase in costs might affect it. You’re in a store looking at two television sets. They are identical, but one costs $1000 and the other $1050. Which one will you buy? A 5% increase in final price results in a MASSIVE change in market share. Watch what happens when a price war breaks out between gas stations. One station drops their price by 1 cent per litre. What happens if the gas station across the street doesn’t match it? Answer; they get to stand around and watch the long line ups across the street because for an extra 100 meter drive, people will save that once cent per litre. So for starters, even 5% is a gigantic impact. Let’s see if it is reasonable.
Semi-trailer @ur momisugly 6 miles/gal @ur momisugly 60 miles/hr =10gal/hr
@ur momisugly$4/gal = $40/hr.
driver = $30/hr.
total = $70/hr
@ur momisugly$8/gal=$80/hr
driver = $30/hr
total = $110/hr
Doesn’t look like 5% to me. Did I cherry pick the example? Sure. Try it with an ocean cargo ship and the number will be even more out of kilter. How about a steel mill? They’d kill for the kind of energy vs labour rate the trucking company gets. Farming? The top three input costs in farming are fuel, fuel and fertilizer. But its partly about capital costs as well, right? Good point. So the truck cost more to make, as did the ocean liner, the steel mill and all the farm machinery. You can of course come up with examples where the impact of doubling fuel costs would be far less. But while I doubt your over all 5% number, that kind of a cost differential, just 5%, would render most companies uncompetitive on the world stage with massive loss of market share as a consequence.
And let’s put just 5% in perspective by converting it to VALUE. Remember the television you were going to buy? The manufacturer of the one for $1050 doesn’t want to lose your business, so they decide to match price. Its “only” a 5% price decrease, right? WRONG! The manufacturer is only making a 20% profit margin on the TV in the first place. So at $1050 the VALUE of the sale is $210. At $1000, the VALUE of the sale is $160. Smidge more than 5%. If the lower cost manufacturer reduces their price to say $839, they are still making $39 on every TV. Now what does the high cost manufacturer do? At $839 they are LOSING one dollar per TV. The more they sell the more money they lose.
But hey, it was “only” a 5% increase in their cost of goods sold that drove them into bankruptcy.
For a jones … and anyone else interested in the potential effects of (the passed) Proposition 26 on AB32 (connected with the defeated Prop 23) you can see the exact language of Prop 26 here:
http://voterguide.sos.ca.gov/propositions/26/
just click on “Text of the Proposed Law” in left part of the page
Here is another interesting review of Prop 26:
http://www.lao.ca.gov/ballot/2010/26_11_2010.aspx
Finally, this gives some information on the Prop 26 For and Against Donors – can’t vouch for the accuracy on this one, but if accurate than very interesting. Inverse ratio to Prop 23.
http://www.ballotpedia.org/wiki/index.php/California_Proposition_26,_Supermajority_Vote_to_Pass_New_Taxes_and_Fees_(2010)
Drill baby, drill!
“Fossil fuels” (not aptly named—it is self-regenerating as the earth continually produces hydrocarbons—q.v. Titan, the moon of Saturn) are in abundance. Let’s begin using the term “hydrocarbon fuels”. Clean coal as anthracite, the cleanest variety of carbon, deposited in shallow form just below the surface, is in super-abundance in the US. Areas with vast deposits have been prohibited from access to these cheap sources by illogical laws.
Natural gas is unlimited, and power from it should be exploited now. Innovative technology should be used to exploit these sources rather than detour our innovation into fatally flawed wind and solar technologies.
Oil drilling should be increased in Alaska and offshore, and leases should be given to companies in currently protected areas. Our laws are sufficient to control any exploitation of wilderness areas, and technology should be continually addressing improvements in cleanly accessing these resources. Oil wells have remarkably small environmental footprints now, and that will even improve by bringing lateral drilling to bear.
Nuff said that nuclear fission technology should be exploited, starting today. Uranium comes out of ground water—it is not manufactured, it is already there, and uranium is flowing inexorably into the oceans whether we tap it or not. Fusion technology may be possible once magnetic bottle containment is optimized using supercomputers.
Exploiting and utilizing what we have here in North America alone will turn the overseas spigot off very quickly. Start with native oil and natural gas, and we have an endless supply, just counting “fossil fuels”, that can obviate foreign sources in short order.
Fascinating comments, all. One of the best on this blog.
The idea of renewable energy being cheaper – someday – has a bit of truth, and a bit of alarmism to it, as I see it. Consider that one of the oldest forms of renewable energy is hydroelectric power, where rain is collected and stored behind a large dam (typically 200 feet high or higher), then the water is passed through a turbine-generator to produce power. Even older are the water-wheels that provided power for all sorts of processes.
The point is that electricity produced from a hydroelectric plant is very, very cheap, once the dam and generating station are paid off. Coal, oil, natural gas, even nuclear power cannot compete with hydroelectric costs. The greenies have a dream in which their solar, or wind, or waves, or whatever, do the same as hydroelectric has.
It’s not going to happen, of course, because they miss the fundamental fact: hydroelectric power has built-in storage for all the energy. The lake behind the dam is the storage, and provides the necessary ingredient to allow power production even when there has been no rain for weeks. Solar cannot do that. Wind-power cannot do that. Wave power cannot do that. Tidal power cannot do that. Storage systems for electricity from renewables do exist, but they are very, very expensive.
The alarmism aspect requires fossil fuels’ prices to escalate dramatically. This is not likely, of course, as there are hundreds of years of reserves of coal, oil, and natural gas. More oil and natural gas are discovered each year. Thus, greenies are counting on fossil fuel price to escalate, at which point their renewable power plants will be cheaper than power from fossil fuels. This may happen someday, but not anytime soon. Certainly there is no reason to build renewables today.
Here’s a good piece showing who were the top contributors, by name, that helped defeat prop. 23:
http://www.climatechangedispatch.com/the-money-trail/7974-follow-the-money-whos-paying-to-defeat-californias-prop-23
As Anthony noted, it never had a chance of passing as it was outspent nearly 3 to 1 by Silicon Valley’s green technology sector and enviro-hypocrites.
Roger:
Hydro is indeed a great source, but the environmental impact is severe. For existing hydro, the environment has had a chance to recuperate over decades. Hydro footprint is measured in square miles, not acres, impacting downstream and upstream ecology, for both humans and animals. It would have been great had we implemented this strategy a century ago, before humans were so ubiquitous.
Mike Haseler says:
November 6, 2010 at 3:58 am
There is at least one very successful company in ‘Silicon Glen’ (aka Glasgow):
http://www.ftdichip.com/
You are more than likely to be using one of their products.
bubbagyro you missed Roger’s point which was that wind and solar are not practical because of the lack of a cost effective storage medium. Period.
As for your objection to building hydro dams because of the environmental impact due to humans being “ubiquitus”, I find this laughable. “Environmentalists” daily propose draconian limits on CO2 production while quietly ignoring the fact that a low energy economy can’t sustain the global population, sentencing billions to death by starvation. Even the “mild” cutbacks some less strident activists are demanding would have major impacts on billions of people.
But ask a few people to move so that a hydro dam can be built and suddenly its impossible?
Ha!
Thankfully, prop 26 passed which should make it harder for AB32 to screw California.
I’ve been reading quite a bit of ARB’s documents and basically, they are gunning for a cap-and-trade program to go national and then international.
They (ARB) are looking to get CA into a REDD and then a REDD+ scheme where we could end up paying other countries to maintain their forests as well as use those forests to store our carbon (we of course will pay those countries for this carbon sequestering).
@bubbagyro, re hydroelectric.
Hydroelectric dams were almost never built for the primary purpose of generating power. The primary purpose was to eliminate destructive flooding that caused many deaths and property destruction. Hydroelectric generation was simply included because the energy source was there, waiting to be tapped. Thus, the ecological damage argument fails – such dams preserved the landscape, not ruined it.
And, in fact, most large hydroelectric dams were built many decades or a century ago. There are relatively few rivers left in the world where a large hydroelectric dam can be built. There are some, but not many. Recently, of course, China completed a huge hydroelectric project known as the Three Gorges Dam, and it was also built to prevent the destructive flooding. Hydroelectric is an added benefit.
re the hydroelectric comments and renewable energy.
As far as I can see – about the best solution would be a combination of the two – whereby renewable power is used to pump water into hydroelectric ‘batteries’ (as per Dinorwic in Wales whereby this reservoir is spun up in seconds to meet sudden demand increases). Of course, this would require massive and numerous dams (as well as renewable sources) but in conjunction with nuclear as a baseline generation system and intercountry distribution ‘grids’, this could be a serious way forward. Indeed, smaller countries/states, with little to offer in the way of resources could become renewable energy producers and ‘sell’ to neighbouring states/countries.
THIS is where governments should be investing in the research and practical solutions. The logical afterthought is that once such a system is in place – fossil fuels become essentially obsolete – but in a programmed way – i.e. after a few decades, and CO2 concentrations will cease rising – (Not that I believe CO2 is a problem at all!) but the best bit is that FF reserves are ‘saved’ for future use as and when required (e.g. the next ice age! LOL)
“No, money actually represents human labour, including human labour invested in the form of capital. Energy is merely one of the tools or resources employed by that labour and capital, ”
No, I think the original poster had it right. Human labor is a TYPE of energy, but labor itself is not the determining factor of price and value.
It’s not hard to imagine a scenario where a future will require virtually no human labor, but intense energy expenditure to craft a product. The price of that item will not be $0. Human energy vs machine energy… they’re interchangable. Value is a measure of how hard it is to get from a starting point to the sales point, which includes base costs and energy costs (including human labor and/or design.)
davidmhoffer says:
November 6, 2010 at 9:21 am
Paul Birch says:… doubling the cost of energy will not double the cost of goods or halve standards of living, because the energy is only one relatively minor factor of production; a loss ~5% would be more typical.
“Really? Just 5%? Well at least you admit that it will have an effect.”
5% would be typical. Sometimes it might be higher. Sometimes it might be lower. I do not “admit” it will have an effect; I claim it.
“Before I dispute your number let’s talk about market share and how a 5% increase in costs might affect it. … A 5% increase in final price results in a MASSIVE change in market share. Watch what happens when a price war breaks out between gas stations. One station drops their price by 1 cent per litre. What happens if the gas station across the street doesn’t match it? Answer; they get to stand around and watch the long line ups across the street because for an extra 100 meter drive, people will save that once cent per litre.”
First, this isn’t necessarily true. A few hundred yards from where I normally buy my petrol is a garage selling it for about 6p/litre more (a 5% difference). This is typical of the range of prices, for essentially the same product, across the Island. It has been like this for as long as I can remember; the competition among these suppliers is surprisingly weak. I have often wondered why people whom I know frequent these more expensive establishments; the fact is, they do; observation trumps theory.
Second, the effect of a local increase in the price of one factor of production is not to increase the price of the local product by that amount; it is to drive down the cost of the other factors to the point at which the price is approximately as competitive as before. Specifically, an increase in the cost of energy in California will tend to reduce Californian wages and rents by an amount sufficient to bring the final cost back down to near the original figure.
The economic loss will not (in this example) show up as higher prices for Californian goods, but as less disposable income for Californian consumers.
“Doesn’t look like 5% to me. Did I cherry pick the example? Sure. Try it with an ocean cargo ship and the number will be even more out of kilter. How about a steel mill? … ”
You are still cherry-picking those industries – extractive and transport – in which the cost of energy is most significant, and even then omitting the cost contribution of numerous other factors, especially the cost of capital or borrowing, and taxes.
The ~5% figure is for the whole of the economy. It is confirmed by actual experience; energy costs have doubled (and more than doubled) for political reasons on more than one occasion (such as the OPEC oil crises of the 70’s and in the periods after the Gulf Wars). This has indeed been blamed for recessions, in which economic output has fallen; but by how much? Around 5% at the depths of the crunch. Businesses adapt to higher energy costs.
@Kum Dollison
No. They’re morons in a broke state buoyed by under the table federal bailouts that have kept the state afloat the last two years, delaying the inevitable reckoning. That money is about to dry up and several million people are going to have to vote with their feet.
davidmhoffer says:
November 6, 2010 at 11:44 am
You missed my main point about enviro-impact. Forget the humans and infrastructure upstream, although that is the big political problem. You sentence all the critters downstream for hundreds of miles to extinction. Plants, fish, insects, etc. Upstream for dozens of square miles only catfish and bass survive.
It just isn’t reasonable to do hydro. Ain’t gonna happen. Not even in Ontario, where my wife is from and wilderness areas are available has it happened for 50 years, and they call it hydro!
No, solar and wind are not efficient, storage is a minor problem. To start with, as the flippant saying goes, “a windmill cannot produce enough power to make a windmill”. The maintenance costs for solar and especially wind are enormous.
Compare that with $25/barrel oil, which is what some say that drilling here and now would lead to.
I agree with your other point.
I was born in Calif, my mother was born in Calif, my grandmother was born in Calif, my maternal great grandparents were immigrants to Calif in the 1870s. I am 63. Recently, in this past decade, I managed to ochestrate the sale of all ancestral family property, including my own home of the prior 18 years in silicon valley, and then my family and I moved to Nevada. I would encourage others to do likewise.
We still own some property in California but our presence and interest has been significantly reduced. I am sorry to see the direction that Calif continues to pursue and I wish them all the best but hope they don’t tax us just the same. Perhaps it could be sold to China or Mexico or both.
@bubbagyro, I suspect you meant to write “sentence all the critters UPSTREAM to extinction.” And even if that is the case, I disagree. Extinction is the wrong word, as it applies to the last surviving members of a species. Perhaps death is what you meant to write.
Most animals are quite nimble and will relocate away from the rising waters created by a dam as the lake is formed. Plants will not, of course, but then plants die all the time from various causes, with little impact to the environment.
Hydroelectric dams are a very good thing, and should be built wherever they can be. Previous generations knew this and found no reason not to build them – thus they were built. It is only the modern greenies who are against hydroelectric dams.
As to storage being a “minor problem” for solar and wind, no, that is the crucial problem. If and when the storage problem is solved with a cost-effective solution, renewables will take on a much greater role in power production.
mike sphar says on November 6, 2010 at 2:23 pm
I was born in Calif, my mother was born in Calif, my grandmother was born in Calif, my maternal great grandparents were immigrants to Calif in the 1870s. I am 63. Recently, in this past decade, I managed to ochestrate the sale of all ancestral family property, including my own home of the prior 18 years in silicon valley, and then my family and I moved to Nevada. I would encourage others to do likewise.
Sounds like a good idea if I could find someone who wants embedded Linux Kernel and or storage experience there …
Funded by “Texas Oil Barons”! Ha ha, did they invoke the terrible name of GEORGE BUSH too?
BBk says:
November 6, 2010 at 1:36 pm
“No, I think the original poster had it right. Human labor is a TYPE of energy, but labor itself is not the determining factor of price and value.”
You are confusing value with cost. The determining factor of value is how much human beings want the good – that is, the magnitude of the expected satisfactions it provides. The determining factor of cost is how much human beings have to be paid to produce the good – that is, the magnitude of their aversion to the labour and waiting (that is, deferred satisfactions) its production entails. As an economic resource or capital, energy is itself created by human labour and waiting; it is that which determines its cost. The same is true for every other factor of production.
Of course the real fly in the ointment is the Obama Administration and Lisa Jackson from the EPA. If left unchecked by the new House or sensible judges, they will ruin the entire US economy along the same lines as the California extremist will do to their state. California actions may not matter.
Lisa Jackson and the Administration are essentially of the same ilk as the California wackos.
During the Dems control of the NJ Governor’s agenda, Lisa Jackson contributed significantly to the economic demise of NJ. Numerous green initives led to wholesale departure of Industry from NJ. She knows the impact but does not care!! Our New Governor has his plate full to restore the financial integrity of NJ economy.
I commute daily through Altamont Pass, still billed as the largest concentration of wind turbines in the world. Beyond the fact that many of the turbines are broken, lacking maintenance, or are otherwise non-fuctional, my view from my train seat has often led me to ponder, what will we do when all energy is mandated to be “green”. (What color is an electron, anyway?)
Storage of renewable energy is not a small problem, or a medium problem, or even a large problem. It is THE problem with renewables. We are talking about alternating current. There are no batteries to store alternating current. Not now and not in the foreseeable future. The pumping of water uphill into reservoirs, cracking water in hydrogen and oxygen, converting AC to DC and storing the power in batteries will work on a small scale, but not a large scale. Without viable storage, renewables are untenable for a modern, mechanized society. Period.
Here is why. From my seat on the train I have seen the outlines of those windmills standing immobile in the dark, under a 1,500′ thick layer of what we call tule fog. The wind speed is zero (0) miles per hour. And yes, I can recall periods of time when that fog didn’t lift for weeks. Any attempt to discuss power needs without the reality of understanding the pitfalls of putting all of our eggs into the renewable basket is folly indeed.
At some point adults will have to begin to discuss rationally the difference between air pollution and carbon dioxide. To stand against polluting our water and yet not take the stance that humans are not part of nature and have a natural territory that extends to every corner of the globe. To stop accepting the canard that we are running out of oil and begin to use some of the recoverable oil that Dr Kovarik, (among others), (http://www.runet.edu/~wkovarik/oil/2worldoil.mideast.html) lists at 397.9 billion barrels for the North American continent without accepting the terrible pollution that is rampant in Europe and Asia. To start talking rationally about developing nuclear power as the true green energy source and stop taking our science from movies like the now ancient China Syndrome. To use nuclear with real safeguards so that another careless technician doesn’t fry the control wiring in a nuclear reactor as happened at Three Mile Island. False dichotomies are the tools of politicians and activists that will impoverish us all if we don’t stop allowing others to define terms and determine the rules by which we will go to battle over critical ideas.
Remember this! All real wealth is mined from, pumped from, or grown in the earth. All else is an outgrowth of those activities. And when the only alternatives for mining or pumping are presented as pollute or don’t produce we will get nothing but a lower and lower standard of living with higher and higher taxes as the government continues to spend our hard earned wealth on pipe dreams and the green factory de jour.
Enough said. My family has been here in California for five generations, but my hope for sanity returning to our once great state diminishes with every election where the desires of those who live in 2% of the state control what the rest of us have to put up with.
bubbagyro;
You sentence all the critters downstream for hundreds of miles to extinction. Plants, fish, insects, etc. Upstream for dozens of square miles only catfish and bass survive.>>
Sorry, but nonsense. As an avid fisherman in my youth I can tell you that the creation of a lake from a hydro dam on a major river increases diversity and turns the entire area into a fisherman’s paradise…upstream, downstream, and on the lake itself. Do you have to pay some attention to detail in implementation? Of course you do. You raise the water level slowly over time, not all at once. Some species of fish like salmon or walleye you may have to build fish ladders for so that you don’t break their spawning cycle.
At project end you’ve started with ( random numbers for illustrative purposes) a 200 mile river that runs at one point through a 4 mile long valley. At project end you’ve got 98 miles of river, 4 miles of lake, and another 98 miles of river. Once the resevoir is full, what’s the flow rate upstream? Exactly the same as it was before. What’s the flow rate downstream? Exactly the same as it was before. The river habitat is nearly identical from one end to the other, it only changes in that 4 mile stretch. Further, in drought years the river would tend to “dry up”. By lowering the level of the lake, this can be prevented, saving the lives of millions of walleye, a noble cause if you’ve ever had a shore lunch of freshly caught walleye. (For the canucks, same as pickeral). Flooding can also be controlled, and this too preserves the fishies required for a shore lunch. When a river floods, the fish get trapped by the receding waters in small pools which dry up, and they die.
The reason there haven’t been new dams of late has more to do with politics than anything else, but the second issue is distribution. Manitoba has some major hydro plans, but they already have a surplus of hydro power which they sell. To sell more would require additional infrastructure to carry the power either to neighbouring provinces or to the US. On the politics side, environmental studies, native reserves demanding inordinate amounts of compensation, and similar issues are slowing it down. But that’s just politics, nothing to do with practicality.
Paul Birch;
Omigosh, where do I even begin? You are confusing theory and practice. I guess the only option is to go through your points.
PB;
First, this isn’t necessarily true. A few hundred yards from where I normally buy my petrol is a garage selling it for about 6p/litre more (a 5% difference). This is typical of the range of prices, for essentially the same product, across the Island. It has been like this for as long as I can remember; the competition among these suppliers is surprisingly weak. I have often wondered why people whom I know frequent these more expensive establishments; the fact is, they do; observation trumps theory.>>
Emperical evidence suggests otherwise, your observation is anecdotal. In multiple studies (sorry no links, been a couple of decades since I was involved in this industry) if there are three gas stations at a single intersection, and one of them is 1 cent less than the other two, that gas station will get between 60 and 75 percent of the business. Put in a no left turn sign that makes it inconvenient to access that station and almost 100% of what the other two stations lost comes right back. Your example is “several hundred yards”. I’ve forgotten the stats on distance but the result of the study was that some retailers like Husky in Canada embarked on a strategy of locating their stations in isolation and charge higher prices versus the traditional strategy of locating in the highest traffic intersections which is how we got to three,sometimes four gas stations at one intersection.
BP;
Second, the effect of a local increase in the price of one factor of production is not to increase the price of the local product by that amount; it is to drive down the cost of the other factors to the point at which the price is approximately as competitive as before. Specifically, an increase in the cost of energy in California will tend to reduce Californian wages and rents by an amount sufficient to bring the final cost back down to near the original figure. The economic loss will not (in this example) show up as higher prices for Californian goods, but as less disposable income for Californian consumers.>>
I was quite clear that the consequence would be less money in the pockets of the producers of value as they cut profits to remain competitive. But that doesn’t mean the cost comes down to the original figure. It means that goods produced outside of California are by default more competitive pricewise than goods produced inside of California. Now you have Californians with less money to spend, and they are more likely to spend it on imported goods that are lower cost than localy produced goods, and exports also fall because your goods are burdened with an artificialy high cost that makes them uncompetitive. You’ve heard of “win win”? This is “lose lose lose”.
BP;
You are still cherry-picking those industries – extractive and transport – in which the cost of energy is most significant, and even then omitting the cost contribution of numerous other factors, especially the cost of capital or borrowing, and taxes.>>
Manufacturing; energy intensive. Transportation; energy intensive. Construction; energy intensive. Farming; energy intensive. Commercial fishing; energy intensive. What, pray tell, is NOT energy intensive? Retail? MASSIVELY energy intensive, they depend on manufacturing and transportation or they are out of business. Entertainment? LOL. They only exist if the energy intensive industries are thriving and producing disposable income. Information technology? Well I suppose those computers save a lot of labour and time, but have you seen the power draw on a large data centre? Telecomm? HIGHLY energy intensive. You don’t get dial tone by magic, thars electrons in them thar wires. Service industry? Debatable I suppose, but the service industry is like entertainment. No extra cash, no dinner out. Insurance? OK, maybe I’ll give you that one, and banking too. But make a list of the largest employers by industry and you’ll find that the bulk of the jobs are in energy intensive activity.
PB;
The ~5% figure is for the whole of the economy. It is confirmed by actual experience; energy costs have doubled (and more than doubled) for political reasons on more than one occasion (such as the OPEC oil crises of the 70′s and in the periods after the Gulf Wars). This has indeed been blamed for recessions, in which economic output has fallen; but by how much? Around 5% at the depths of the crunch. Businesses adapt to higher energy costs.>>
Sorry, but NOT! You can’t claim that energy costs doubling on a TEMPORARY basis caused a recession AND that business adapts. The energy costs came back down in both cases and the economy recovered in both cases. Nothing to do with adaptation. If you worked in an energy intensive industry you would know that senior management stays awake at night trying to come up with ways to reduce fuel and electric bills NO MATTER IF THE PRICE IS HIGH OR LOW! Business is ALWAYS evolving to reduce costs.
And now the clincher. Theory meets practice. In your two examples above, world wide energy costs rose and the world wide economy tanked. Key words being “world wide”. Everyone got hit with the sudden rise in costs at the same time. So no jurisdiction had a competitive advantage over any other. But what we’re talking about now is increased costs based not on world wide markets, but on artificial constructs through legislation. The only way this can result in a “world wide” economic slump of 5% is if it is implemented world wide. Will China go along? Russia? India? Texas? New Hampshire? Zimbabwe? Iran? Taiwan? Singapore? Pakistan? It will require an awful lot of ammunition and an awful lot of lives to get anywhere near world wide adoption.
So it isn’t -5%. It is those that “don’t” +50% and those that “do” -50%. You want to live your life at -50%, go ahead. Just don’t drag me with you. And for the sake of humanity, don’t drag China and Russia either. They still got nukes which provide a rather interesting method of saying “go to h***”.
http://cdn.law.ucla.edu/SiteCollectionDocuments/Environmental%20Law/Paying%20for%20Pollution.pdf
“..California’s Global Warming Solutions Act, or AB 32, is another high-profile program
under which the State may impose future regulatory fees. To the extent that future
AB 32 fees go beyond amounts necessary to compensate the state for benefits conferred on industry alone, those fees could potentially be reclassified as taxes under the Proposition 26 regime. But because the State legislature enacted AB 32 in 2006,
well before Proposition 26’s effective date, and authorized the imposition of regulatory
fees, we believe the Proposition’s impact on those fees is unclear. At a minimum, we
expect that industry would mount a challenge to future AB 32 fees if Proposition
26 were to pass…”