KAI RYSSDAL: Europe moved another step ahead of the United States in fighting climate change today. Regulators proposed new rules to cut carbon dioxide from cars 20 percent over the next five years.
The U.S. doesn’t even have CO2 limits for cars. Which is part of the reason Americans produce almost a quarter of the world’s greenhouse gases. Commentator Robert Reich offers this suggestion about how to cut back.
ROBERT REICH: You can forget a carbon tax any time soon. Democrats don’t have the intestinal fortitude, or the votes, to enact it. That leaves the only plausible alternative right now, subsidizing the development of nonfossil-based fuels. Yet there’s no money in the public kitty for this. Bush’s new budget allows only a pittance for new research in solar, biomass, wind, and other alternatives. Even if the Democrats wanted to spend more, they’d have to take it from somewhere else in a budget that’s already tight.
So the question is where to get the money for alternative energy? The answer is, at least partly, from the revenues we consumers have been handing oil companies. For the last few years, as oil prices shot upward, America’s largest oil companies reaped a bonanza. Essentially, it’s been a gigantic transfer of money from Americans who use oil to oil companies and their shareholders.
Exxon Mobil reports an annual profit of $39.5 billion for 2006, its second-consecutive record and the largest profit reported by any American company in history. Other oil companies are also swimming in cash. And it doesn’t look like the bonanza will end anytime soon. Oil prices are rebounding now that cold weather has returned to most of the nation.
The Democrats should propose a temporary windfall profits tax on oil companies — temporary, that is, until the oil companies’ current oil earnings boom falls back to a normal range. The proceeds would go into a fund to finance R&D in nonfossil-based fuels.
Market fundamentalists who holler that oil companies should be allowed to reinvest their profits in new oil exploration aren’t paying attention to the environmental costs. But the windfall tax should be designed so that, to the extent oil companies do wish to invest in nonfossil-based fuels, such profits are exempt.
It’s a no-brainer. Oil companies are in the money. We gave it to them because there are no competitive nonfossil alternatives. It makes sense to use those extra profits to create those alternatives.
RYSSDAL: Robert Reich is a professor of public policy at the University of California Berkeley. He used to be the secretary of Labor for President Clinton.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
