Cap & Trade - An Economic Nightmare?

The Waxman - Markey bill or better know as the Cap & Trade bill, is currently working its way thru the House of Representatives and Senate. This bill is designed to limit Americas carbon emissions and will end up being one of the largest Taxes ever levied. The bill will actually levy financial penalties against companies that produce carbon dioxide and other gases. Carbon dioxide is a byproduct of burning wood, coal, gasoline, etc.


Who do you think is going to bear the brunt of these taxes? You guessed it you and I along with every energy intensive business in this country. Coal miners, especially those on the east coast will probably be put out of business. Coal power plants that produce more carbon dioxide than they're allowed will have to buy the right to produce more. That additional cost will be passed on to consumers, you and I.

US steel makers are large carbon emitters and will probably get crushed by this legislation also. Foreign steel makers won’t be affected by this and steel imports will rise dramatically, which is just more bad news for our already fragile economy.

Then there’s the refiners they’re responsible for over 40% of carbon emissions and as such will be the biggest buyers of carbon credits. Many of the smaller and older refiners will go out of business and we’ll be importing more foreign gasoline. More bad news for the economy and the price of a gallon of gas.

This whole nightmare amounts to a molehill compared to how little it’s going to affect “global warming”.

Let's all understand one thing right now, this 1,200-page bill isn't about saving the environment over the next few decades, its all about dollars – yours and mine – right now.

According to analysis by the Heritage Foundation (a conservative think-tank), the combined cost of the bill would be $3,000 per family in 2012 and $20,000 per household by 2035.
How can you or your family be expected to handle the burden of an additional $20,000/year. What’s that going to do for your standard of living?

The question you should be asking yourself is, can I profit from this fiasco? The answer is, I think you can.

Who stands to profit most? Probably the Green Energy companies. You can look for some green energy ETF’s, that way you’ll be more diversified than buying one or two of these small cap stocks.
Nuclear power producers will probably be another winner, they don’t produce carbon dioxide. Their cost to produce electricity won't go up, but they will benefit from increased electric prices. They'll just keep getting paid to do what they've always done, but now they’ll have the added income from being able to sell their carbon credits.

Make no mistake selling credits will be big business. That brings to mind the brokers that sell these carbon credits, they’ll also get a good boost to their bottom line.

So if you think our politicians are living in a Fairy Tale world, then send them a wake up call and tell them your fed up with their nonsense. You can do it here. Until they get the message it’s just going to be more of the same with you and I carrying the load.

Good Investing,

TC