Texas Insider Report: Washington D.C. Not satisfied with its efforts to regulate carbon the U.S. EPA (Environmental Protection Agency) is beginning a 2-month comment period on proposed new rules that tighten emissions restrictions on power plants burning coal & oil. If adopted the new rules will raise power production costs force closure of the oldest plants and make new ones more expensive.
The proposed rules would affect power plants emissions of heavy metals including mercury arsenic chromium and nickel as well as acid gases such as hydrogen chloride and hydrogen fluoride.
Power plants would have to be inspected every year to ensure optimal combustion.
These rules are projected by EPA to cost $11 billion per year in 2016 to American households who will eventually pay the higher costs of producing electricity.
The costs of the new regulations would put an implicitly higher price on electricity generation particularly from coal. In contrast EPAs carbon regulations would put an explicit price on carbon according to James Lucier of Washingtons Capital Alpha Partners an investment research firm.
But Americans should not worry about negative economic effects of these rules according to EPA because astoundingly for a rule of this magnitude compliance is characterized as economically feasible.
Specifically the EPA fact sheet states that a range of widely-available technical and economically-feasible practices technologies and compliance strategies are available to power plants to meet the emissions limits including wet and dry scrubbers dry sorbent injection systems
activated carbon injection systems and baghouses.
EPA tries to sweeten the rule by saying this rule will provide employment for thousands by supporting 31000 short-term construction jobs and 9000 long-term utility jobs.
However 40000 new jobs is less than 20 percent of the 222000 private-sector jobs created just last month. Far more jobs would be lost due to the higher price of energy that results from the rule.
The benefits calculated at $60 billion to $140 billion in 2016 supposedly take the form of improvements in Americans health lowering cancer premature deaths heart attacks and asthma.
But these gains are hard to measure especially since other factors such as obesity and lack of exercise are involved. Asthma has been rising over the past two decades even as the air has been getting cleaner.
As well as trying to eliminate the use of coal one of Americas major resources President Obama wants to increase taxes on oil and gas. These would discourage domestic production just when global uncertainly requires us to expand it and shrink the profitability of American companies vis a vis foreign ones.
The proposed new energy taxes in Obamas 2012 budget would make domestic oil relatively less profitable and tend to raise Americas already high fraction of imports of crude and product. Such taxes would result in the substitution of foreign oil for domestic and curtail well-paying jobs in domestic exploration for and production of oil.
Obamas budget assumes it will raise $3.6 billion in 2012 and $46 billion over the next decade from these tax increases on oil and gas more than on any other industry.
Plus a disproportionate share of tax increases on overseas income and higher Superfund levies would also hit oil hard raising another $21 billion for a total of about $67 billion over a decade.
The nuclear power industry will be set back for decades due to Japans nuclear disaster and the decision by Senate Majority Leader Harry Reid D-Nev. to block the disposal of spent nuclear fuel at Nevadas Yucca Mountain.
So higher electricity prices no nuclear expansion coal becoming more difficult to use economically oil and gas taxes up -- all at a time when unemployment is
close to 9 percent.
Lets hope the wind blows and the sun shines otherwise our economy will grind to a halt.
Examiner Columnist Diana Furchtgott-Roth former chief economist at the U.S. Department of Labor is a senior fellow at the Hudson Institute.
