I found this speech by the CEO of Conoco Phillips to be practical, level-headed and spot on. Here is one point that I thought was important:
“Fortunately for all of us, we benefit from a massive, efficient and highly successful energy infrastructure. It is based on fossil fuels. Building it required 150 years, trillions of dollars in investments, and generations of work – by untold millions of people. They drilled wells, and constructed oil and gas pipelines, fleets of tankers, coal mines and electric power plants. Their work transformed society, created affluence, and improved our quality of life. Replacing this energy foundation would take an unimaginable effort. It could not be done quickly, despite the desire to do so. There simply is not enough investment capital, skilled labor and materials available. And much of the technology needed is still being developed. So building sufficient capacity to replace fossil fuels will take – who knows, decades, perhaps even a century.”
and this point too:
“Further, government must resist the “raise taxes” mentality. Our industry already pays a U.S. income tax rate of over 40%, compared to less than 27% for all manufacturing. Last year, ConocoPhillips paid $13 billion in income taxes, $5 billion in other taxes, and several billion in royalties to government. The Administration’s proposed 2010 budget contains tax provisions that will reduce our ability to invest in increasing production. This would cause greater oil and gas imports, higher fuel prices, and reduced competitiveness. It could also cost many of the 6 million direct and indirect jobs supported by our industry.”
Here is the link:
I can’t remember which CEO it was, maybe Questar?, not sure, but the CEO went on a rampage against cap and trade taxes. He relentlessly addressed each aspect of the tax and tried hard to show how it was a big, bad mistake for America. Before I read that I was pretty uneducated and ambivalent towards cap and trade. I have to thank him because he did a good job educating me with his speech. The ironic thing is the outcome… I think that a cap and trade tax is the answer. I like it for several reasons, primarily; It rewards efficiency. It’s a usage tax. It kills two birds with one stone. It aligns incentives. It’s perfect.
Similarly, the CEO of Conoco is missing the big picture. Our society is built around fossil fuels. We rely on them. Yes, they are taxed heavily at wellhead and on the corporate level but the taxes go to build roads and bailout automakers so people can keep consuming fossil fuels.
I think warren buffett said this about the yellow pages, if we were plopped down on our planet as it exists right now, nobody would print the yellow pages. The internet would be all we need. Similarly, if we were plopped down on our planet in the condition it is in, we would not develop an automobile superhighway infrastructure. Oil is not seaping to the surface like it was 100 years ago. Now we have to drill 2 miles deep into the earth to find a tiny pocket of oil or, even worse, we buy oil from regimes that are not friendly towards us.
Getting off of petroleum will be painful. The other option is worse.
… one last comment:
We have all this “spare capacity” in the U.S. Why not use it to end the energy tax we all pay when we buy fossil fuels from Saudi Arabia!
Interesting thoughts, thanks.