"Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket ..."
"Coal-powered plants, you know, natural gas, you name it, whatever the plants were, whatever the industry was, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers."
Barack Obama to San Francisco Chronicle
Candidate Obama pushed for a so-called "cap-and-trade" system as a way of limiting carbon emissions; he discussed the difficulty of selling such a plan with the San Francisco Chronicle. Obama acknowledged that it would be an expensive proposition. When it all would be said and done, this scheme would just another tax on Americans. It was a means to an end, which would be good for not only Americans but also the planet. When the debate was raging, the estimate on how much this idea of curbing carbon emissions would impact the average household varied. Here are some of the estimates of the annual economic impact upon households:
"The problem is can you get the American people to say this is really important"
Barack Obama to San Francisco Chronicle
The bottom line is that it would have been expensive. Moreover, that scheme would have been in place during a period of economic distress. It would have meant more lost jobs for a nation that was already hemorrhaging jobs; American businesses would have been less competitive. Recently, a White House spokesperson that was searching for pluses in the economy touted US exports. But, this was possible only because of the energy miracle of more fossil fuels and the greater prosperity outside the United States.
The war on fossil fuels has taken a toll.
From Prince to Pauper
An article in last Wednesday's Wall Street Journal, "The Fall of King Coal Hits Hardest in the Mines of Kentucky," shares the fate of William Hensley. The 50-year-old former coal miner, who once earned $82,000 a year, now collects $15,000 annually in unemployment benefits. Mr. Hensley is collateral damage in President Obama's war on coal (which is just part of a greater war on fossil fuels). Job losses in this space have been heartbreaking.
Last week, we asked subscribers to take profits on Advanced Emissions Solutions ADES, mostly because it gained 37% in just a couple of months. But, the company that makes products that help coal companies comply with new Draconian rules of business stands to make a lot of money ... as long as there are coal fired power plants. I suspect there will be; it means that natural gas has to hold above $3.00, maybe even $3.50, to bolster the argument for more coal use in America, and maybe to get more sympathy from the White House.
The natural gas miracle needs more liquefied opportunities, or the growth and use of fracking operations will have to be capped to make sure oversupply doesn't derail its well-deserved windfall.
Interestingly, domestic economic growth has been so slow and feeble that the demand for electricity has been minimal. After back-to-back years of decline during a couple years of the Great Recession (first time since Great Depression that happened), there's been a rebound, but it's not a roaring rebound. So, with the economy growing at a snail's pace and natural gas prices down year-over-year; why are electricity prices at an all-time high?
Because they have to necessarily skyrocket.
With official government numbers saying, there's no inflation, little has been made of skyrocketing electricity costs; but it's only a matter of time. Mr. William Hensley has a lot of company, as the would-be economic recovery has skipped millions of Americans. Real wages are lower, making the higher electric bills more painful for the average family.
With all the scandals, and what feels like a never-ending string of disappointments, individual stories like high electric bills, will get lost in the shuffle. Right now, millions are losing their health insurance, and doctors are being forced to pay more for coverage. This is for a law that promised to help the underserved.
At some point, the American public will look at their household budgets, and wonder, why, after years of paying off credit card loans and other bills, they're still coming up with red ink on the bottom line.
I think this might save what's left of the American coal industry, but it will never be king again ... at least not during the next three years.