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Costs Outweigh Benefits of EPA Ruling

Costs Outweigh Benefits of EPA Ruling

By Jon Metropoulos

Missoula Senator Dick Barrett would like us to believe there will be economic benefits to President Obama’s new directive to reduce power plant emissions via new EPA regulations (Billings Gazette, 6/17/14).  Citing the EPA, he writes: “economic benefits from reducing emissions substantially outweigh the costs.”

Apparently, Sen. Barrett believes we’ve been holding ourselves back from enjoying greater economic prosperity, making ourselves richer, and fixing that stubborn unemployment problem—all because we haven’t imposed a top-down, authoritarian carbon-regulation scheme?

The source he cites—Obama’s EPA—explains the problem.  Of course they’re claiming positive results from their own rule and downplaying the negative consequences?

Barrett’s argument, and Obama’s, are too clever and sound too good to be true.  They are...

It’s a near universal truth that when there is an economic benefit to be had, we find a way, working for our own self-interest, to make it a reality.  It’s not in our nature to leave money (i.e. economic benefit) on the table.

So why haven’t we transitioned from fossil fuels to alternative energy? —It’s very expensive to do so.  It’s expensive at an individual level—under Obama’s EPA rule, households will see a reduction of thousands of dollars in their purchasing power, due in large part to higher energy prices they will have to pay—and it’s expensive at the macro-economy level—we will have fewer jobs and negative impacts to GDP.

Sure he knows what’s good for us, Barrett brushes these costs aside.  But they are very real and very significant, especially in Montana, especially for families across Montana who rely on the jobs that natural resource development provide.  Under the President’s directive, it will not only be more difficult to find a job, it will be more expensive to heat homes and businesses, drive cars, and keep the lights on.

 Those are the costs.  And the benefits, as pointed out eloquently in a recent column by the Montana Chamber of Commerce’s Glenn Oppel, are a less than 2% reduction in global carbon emissions.  There’s an obvious imbalance in the costs and benefits.

Due to it’s complicated design, the EPA’s rule makes it difficult to pin down the exact magnitude of those costs.  A recent study by the U.S. Chamber of Commerce—conducted before the rule was released and based on EPA’s preliminary emissions targets—gives some ballpark figures, and they’re not pretty: as much as 40 percent of our coal fleet will be shuttered, the average household will see a reduction in disposable income by as much as $3400 annually, and the economy will lose a quarter of a million jobs each year through 2030. 

 We can debate the magnitude of those effects, but what’s not in dispute is that they have us heading in a negative—not positive—direction.

Make no mistake: President Obama’s EPA regulation is not designed to make our country more prosperous. This was not concocted by a group of bureaucrats trying to figure out how to jumpstart our economy.  With all respect due to Senator Dick Barrett, that claim is just not plausible and does not make sense.

Jon Metropoulos is the Executive Director of the Montana Association of Oil, Gas, and Coal Counties, a non-profit corporation providing leadership on energy issues and promoting responsible energy development for the future of Montana.