Cap and Trade’s Effect on Diesel Prices

COMMENTARY Climate

Cap and Trade’s Effect on Diesel Prices

Jul 24, 2009 1 min read
COMMENTARY BY

Former Senior Research Fellow, Labor Markets and Trade

David Kreutzer researched and wrote about labor markets and trade.

Do you drive a truck or a farm tractor? If not, do you use any products grown on a farm or shipped by truck? Well, here’s some news: The Waxman-Markey energy tax bill will make all those products more expensive.

By artificially restricting use of fossil fuels (which provide 85 percent of America’s energy), the Waxman-Markey bill will drive up energy costs of all sorts. One example is the price of diesel fuel. By 2012, the first year of the Waxman-Markey caps, diesel fuel prices are expected to have risen to $3.75. Waxman-Markey would tack on another 20 cents.

And that’s only the start. Because the legislation mandates ever-tightening restrictions on fossil fuel, the tax on diesel continues to rise. Even after adjusting for inflation, this tax will hit $1.38 by 2035.

Though diesel cost most directly affects truckers and farmers, the higher price will filter through the economy and impact all consumers. The chart shows the Waxman-Markey energy tax per gallon of diesel fuel adjusted for inflation to 2009 dollars.

diesel-prices

This piece originally appeared in The Daily Signal

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