Oil prices seemed to shake off worries surrounding the increasing tensions in the Gaza strip and instead decided to focus on the weak jobless claims and the looming fiscal cliff. Not even a supportive Energy Information Administration report at least based upon expectations was enough for the market to rebound. Erratic trading and mood swings seem enhanced by people worrying about our economic future. A meeting today between Obama and key legislators could be the catalyst for a market move today.
After the Obama administration denied that they were going to try to institute a carbon tax, contradicting Senate Majority Leader Harry Reid, is it possible that a back room deal between the energy industry and the administration could open the door for a new tax coming to a gas station near you? Is it possible that the Obama administration is making the energy industry a deal that they just can’t refuse? In other words, if the industry backs off its opposition to a carbon tax is it possible the administration is promising they'll get off their backs? If the energy industry continues to oppose it, could the administration be making another promise to make their lives a living nightmare? Does the energy industry believe that they can make up for the tax by being able to produce more oil and gas and will Republicans join in if the administration puts more federal land in play? Well that is my take on a Bloomberg article and my understanding of politics done the Chicago way.
Bloomberg reports that there is the possibility of a carbon tax from Obama now seen as viable with Exxon backing. They report that, “Exxon Mobil Corp. is part of a growing coalition backing a carbon tax as an alternative to costly regulation, giving newfound prominence to an idea once anathema in Washington. Conservative economists and fossil-fuel lobbyists united in 2009 to fend off climate-change legislation that would have established a cap-and-trade mechanism. They are now locked in a back room debate over a tax on carbon-dioxide emissions that could raise an estimated $100 billion in its first year. A carbon tax would force electricity producers, refiners and manufacturers to pay a fee for the greenhouse gases they emit. It is gaining interest as lawmakers and Obama pledge to simplify the corporate tax code and raise revenue to narrow the deficit." The devastation from superstorm Sandy following the wildfires and drought of this summer have also increased concern about global warming.”
Bloomberg went on to say the, “Washington-based American Enterprise Institute, which says it advocates libertarian and conservative values, held a full-day discussion Nov. 13 to examine how best to implement a carbon tax, which its economists say could enable a cut in corporate taxes and head off regulation by the Environmental Protection Agency. The same day, an opponent of the idea, the Competitive Enterprise Institute, filed a lawsuit against the Treasury Department, seeking private e-mails it said would show the administration is secretly pushing for a carbon tax. “They want new sources of revenues, and this is an enormous one,” Chris Horner, a senior fellow at the Washington- based CEI, said in an interview. “This thing is gaining steam. If successful, it would be disastrous.”