How Much Would You Pay for Cap-and-Trade?

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Jun 26 2009, 10:15 am by Derek Thompson

About $19 a month? Then you're an average American. That's according to this fancy graph (after the jump) drawn up by Nate Silver based on a Washington Post poll. Silver took two pieces of data -- that when the monthly cost of the cap-and-trade bill is $10, 56 percent support it, and when it's $25, 44 percent support it -- drew lines, crossed the streams and came up with this:

The "indifference point" -- that is, the point after which most Americans do not want to pay for climate change reform -- is right around $19. That good news for the Waxman-Markey bill, which should be voted on today. The Congressional Budget Office put the average monthly cost of that cap-and-trade bill at $14.58 as of 2020. As Nate explains, this is of course incredibly subjective considering differences in poll question and the unknown longterm costs of both global warming and the climate change bill. But really, $19 dollars a month is 63 cents a day. Is that so bad?

Comments (7)

mgoodfel June 26, 2009 11:02 AM

The CBO estimate ($175 per family) makes no sense to me. The average car is driven something like 12,000 miles a year. A 25 mpg, this is 480 gallons of gas. If they want people out of their SUVs and into a Prius, they have to be talking at least $1/gallon increase in gas prices. This is a $480 hit per year per car.

With the average family having more than one car, we have to be talking far more than $175 tax. Either that, or the permits are so loose to start with that they have no effect on gas prices. $175 would be a 36 cent increase in price, even assuming only 1 car per family.

Steve Koch (Replying to: mgoodfel) June 26, 2009 2:33 PM

Good point, my good fellow.

The last time that gas prices shot up (last year) behavior changed when gas got to about $4/gallon. Gas is around $2.50/gallon right now so the hit would be around a $720 increase per car per year. I would prefer that oil be taxed but not the other energy sources that are plentiful. There are good geopolitical/economic reasons to tax imported oil.

If they don't make this thing revenue neutral (eg: offset the energy taxes with income tax decreases), then the economy will take a hit (i.e. this is an absolutely terrible time to raise taxes).

jjenkins June 26, 2009 11:55 AM

I presume (on no good authority other than my gut) that the estimate factors in increasing fuel efficiency and a shift to more alternative energy sources (wind, solar, geothermal) whose use the cap-and-trade policy would encourage.

jjenkins June 26, 2009 11:56 AM

By the way, Silver breaks down average cost by state today.

Nola Dawg June 26, 2009 12:41 PM

I think first there needs to be acknowledgment that there is still a lot of (growing) skepticism about the science behind global warming. The earth's temperature has been static (if not decreasing, according to some) since 2001. More and more scientist' are expressing at least concerns and doubts about the science behind the theory, and Congress seems unwilling to allow debate on the subject. Before catapulting ourselves into an unknown expense with an unknown benefit (like Britain), I wish they would allow some public debates about it. Al Gore absolutely refuses to debate the topic, which should be a glaring red flag to anyone with any background in science, as well as memories of Galileo.

Further, the idea that the Waxman-Markey Bill is crucial for foreign (read: China & India) compliance is becoming more and more tenuous:

http://online.wsj.com/article/SB124597505076157449.html

If we can't get Australia to pass such legislation, how can we possibly expect China or India to do so?

Steve Koch (Replying to: Nola Dawg) June 26, 2009 2:52 PM

Periodically we get these crazes where the political/media class goes crazy. Once upon a time there was a eugenics craze in America. Even people like Woodrow Wilson thought we could improve the human race through eugenics. Anybody proposing eugenics today would generate a horrified response.

Two or three decades ago, the was a global cooling craze. There were magazine covers warning that we were about to enter another ice age.

Before we rush to ruin our economy by passing another 1000+ pages of legislation that nobody has even read, let alone understood, there should be a thorough public debate and we should proceed with discipline and caution.

If we do want to change the climate (I'm dubious), then maybe it would be cheaper to deflect sunlight from the earth.

We might also consider that there is a lot of land on the planet that would benefit from being warmed (eg: Canada and the northern part of the USA and the northern part of Eurasia). The planet has warmed and cooled a bunch over the ages. Are we really committing to prevent global climate change? Do we even know how to do it? Are we even sure that it is a good thing to do?

Nola Dawg (Replying to: Steve Koch) June 26, 2009 3:12 PM

To continue your list of crazes, there was also once a political discussion on the large family size of the Catholic Irish and the burden they placed on the family. Jonathan Swift had an interesting answer:
http://art-bin.com/art/omodest.html