The Cap and Trade program is just another cash grab
May 11, 2015
May 11, 2015
What’s in a name? Sometimes a lot more than we know! And as any regular Energy Report reader will know, I love to create new words. Take tacifier for instance – I didn’t create this one, but there’s a lot of punch packed into this quirky word. A tacifier is an additive used in industrial lubricants that prevents the oil from dripping or flying off what it’s supposed to cling to – like chain saw oils.
So, I now have a new name for the Cap and Trade and Carbon Tax magic bullets being proposed by various provincial governments to save the planet. These will henceforth be known as “taxifiers” because these are political additives needed to lubricate political legacies, and once applied, they will never come off!
With bleary eyes, and quite honestly, ‘comatosal’ boredom I have listened to commentaries on these carbon control programs ad-nauseum, and feel obligated to add my voice, which I doubt will do little to advance my career as Savior of the Planet.
Two weeks ago, Ontario’s Premier, Kathleen Wynne, in an almost ‘oh, by the way’, and ‘let them eat cake’ manner, proclaimed that the province would go with a Cap and Trade rather than straight carbon tax template.
What was not mentioned is that this is a tax, and it will hit the consumer in their lighter-by-the-day wallets because the purchase of tax credits by those carbon emitter limit violators will be passed on down the line to you and me on the street. It looks as if these carbon emission limits will be completely arbitrary and made up of many moving targets – you and me among them.
As Ontario follows Quebec into this bureaucratic quagmire, rack prices will increase by the following amounts in cents per litre: E 10 gasoline, 3.22; conventional gasoline, 3.57; diesel, 4.55; furnace oil, 4.14.
What they aren’t telling you is that HST is added after the fact so the Ontario increase with 13% HST will be 3.64 for E 10, 4.03 for conventional, and 5.14 for diesel.
Transportation costs are a key factor in getting goods from the manufacturing centres to the customer – anything that increases those costs is, of course, borne by the purchaser.
Will this tax reduce CO2 emissions?
I seriously doubt it.
The only way to noticeably reduce carbon emissions is to double the cost of crude. This will put most manufacturing and resource-based companies out of business, then emissions will fall dramatically because no one would be driving to a workplace where there is no place to work.
If the goal here is to promote wind and solar through even more head-in-the-trough subsidies, then look to what happened in Germany where they went to extraordinary lengths to reduce emissions with solar and wind as fossil alternatives.
The end result?
Germany’s electricity costs are twice that of North America, forcing high energy consuming industries to move to countries with less stringent emission limits, with the void being filled by the importation of those same manufactured goods from the likes of China and India where no grandiose carbon control mechanisms are in place today, or in the immediate future.
Instead of controlling carbon emissions there is a danger of exporting these emissions and importing them back disguised in the form of manufactured, consumer paid for goods.
Unless there is a global plan for emission reduction, and this globe includes the three largest emitters – USA, China and India – none of which have any national policy in place, then any Cap and Trade Program put forward by any province or territory in this country should be renamed as Cash and Carry because it’s just a tax grab by ‘tacified’ politicians.
Roger McKnight is the Chief Petroleum Analyst with En-Pro International Inc.
Roger has over 25 years experience in the oil industry, and has held senior marketing management positions responsible for national and international accounts. He is the originator of the card lock concept of marketing on-road diesel that is now the predominant purchase method of diesel in Canada. Roger's knowledge of the oil industry in North America, and pricing structures has resulted in his expertise being sought as a commentator by local, national, and international media. Roger is a regular guest on radio and television programs, and he is quoted regularly in newspapers and magazines across Canada. All posts by Roger McKnight