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Let's End Energy Policy Whipsaw

A Commentary By Froma Harrop

Thursday, April 09, 2009

Seems a lifetime ago that the price of crude approached $150 a barrel, but it was only last summer. Remember how people went nuts? Santa Barbara County voted for oil drilling off California's spectacular coast. Santa Barbara of all places, epicenter of the 1969 oil spill that ravaged beaches from Pismo to Oxnard -- and launched the modern environmental movement.

Much changed in these eight months. The oil price plunged to below $50 a barrel. The "drill, baby, drill" chant faded into a memento of the 2008 campaign. And Santa Barbara voters replaced the county board of supervisors' Republican majority with a Democratic majority. The new board has just asked President Obama to reinstate the ban on offshore drilling, lifted in the Bush administration. Good going.

But isn't this a curious way to run environmental and energy policy? It is, and the about-face in Santa Barbara only reflects the national tendency to lurch between cheap-oil complacency and expensive-oil panic.

Time and again, the national will to address America's dependence on crude withers as energy costs ebb. Three decades ago, a quick tripling of oil prices ignited a crusade to end "our addiction to oil." Americans weatherstripped their homes, and Detroit started making fuel-efficient cars. Those efforts and a recession sent oil prices into collapse. And soon after, SUV sales took off on the wings of cheap gas.

In the first Gulf War, Americans sent half a million troops to liberate Kuwaiti oil fields from Saddam's grip. Again we rued our addiction to oil and vowed to change. The war was won, the price fell back, and everyone forgot about the whole thing.

Climate change now dominates the energy agenda in Washington. How should we curb the planet-warming gases that fossil fuels emit? The president and House Democrats have a cap-and-trade plan: It would limit greenhouse gas emissions and create a market in which companies could trade their pollution allowances.

But in his determination to not solve a problem, Republican House leader John Boehner simply tars cap-and-trade as an "energy tax." Now Boehner is not being inaccurate. Cap-and-trade and its variations do amount to a tax. If Boehner wished to be constructive, however, he'd join a call by other House members to pass the proceeds of any carbon-trading regime back to consumers in the form of a monthly dividend.

Others want special protection for American manufacturers that compete with rivals in low-carbon-tax countries. That's only fair and essential to gaining the support of Midwest lawmakers, Democrats included.

The objective here is to control greenhouse gases, not raise tax revenues, but the deficit-swamped federal government can sure use the dough. Obama's budget relies on revenues that would be raised by cap-and-trade -- an estimated $645 billion over the next 10 years. Europe has long used high gas taxes to pay for a bundle of social benefits, as well as cut oil consumption. These are regressive levies to be sure, as are American gas taxes. But they do change consumer behavior, and the money pays for progressive programs.

Some economists say, "Let's drop this complex cap-and-trade fan dance and impose a straightforward, grownup carbon tax." That gets my vote. Again, vulnerable industries could be helped on the road to reduced emissions.

Call it a tax. Call it cap-and-trade. Call it ice cream. The best time to put forth policies that may raise energy bills is when oil prices are low. Santa Barbara County used that opportunity to resume its outspoken defense of local beaches.

Congress should do likewise. Energy is an economic, national security and environmental challenge all wrapped into one fat issue. Let's not blow it this time.

COPYRIGHT 2009 THE PROVIDENCE JOURNAL CO.

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Views expressed in this column are those of the author, not those of Rasmussen Reports.

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See Other Commentaries by Froma Harrop.

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