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Today, Senators Kay Bailey Hutchison (R-Texas) and Kit Bond (R-Mo.) released a report analyzing the likely effects of the Waxman-Markey energy bill passed by the House of Representatives in June. The report provides an analysis of aspects of the bill that have previously gone overlooked: Increased fuel prices and their effect on consumers. Up until now, analysis of Waxman-Markey has focused on electricity prices and ignored the harm caused by higher fuel costs. According to the report, Waxman-Markey will increase fuel costs by more than $3.6 trillion over the life of the bill.
This massive increase in fuel costs should come as no surprise; the entire goal of the legislation is to increase the cost of fossil fuels to discourage people from using them. However, this legislation will mean much more than higher fuel costs. Although the price increases would be seen primarily in the price of gasoline, significant price increases would also be seen for jet fuel and diesel. More expensive jet fuel means higher travel costs, and increased diesel prices means even more than that. Diesel is a critical resource in all agriculture, and is the primary fuel used in the transport of goods manufactured around the country. Higher diesel prices mean higher prices of everything, from food to electronics to clothing.
"Cap and trade legislation will be costly and threatens millions of jobs. So far, the impact on fuel prices has not been discussed, but the consequences of higher fuel prices will be widespread,” said FreedomWorks Foundation’s chief economist Dr. Wayne Brough. “Increasing the price of gas in a struggling economy is the last thing we want to do."
The Senate is moving closer to taking up its own climate change legislation introduced by Senators Kerry (D-Mass.) and Barbara Boxer (D-Calif.) that proposes even stricter limits than those in Waxman-Markey, making the impact even greater. In the current economic climate, the Senate should be very mindful of the full range of consequences of its legislation and avoid policies that impose substantial economic costs for very little environmental gain.