A carbon tax would establish a set fee on sources across the economy for every ton of carbon dioxide emitted—a fee that would then be passed along to consumers. If adopted in a vacuum, Tesoro believes that a carbon tax would constitute another questionable government intervention into the economy.
In imposing an ever-increasing rate of tax to incentivize reduced use of fossil fuel energy sources so as to reduce overall GHG emissions, the costs for electricity, gasoline and general goods would also increase significantly. In fact, studies have shown that a carbon tax would impose a larger burden on lower-income households—many of whom spend a higher amount of their earnings on energy costs and goods produced by energy intensive industries (e.g. gas, food, public transportation, etc.).
Adding a carbon tax on top of the complex of federal and state regulations on greenhouse gas emissions would cause harm to businesses around the Nation as it would place them at a competitive disadvantage with companies in developing nations or other states who are not subject to the same costs. However, a revenue neutral carbon tax imposed in a transparent manner as an alternative to, and in lieu of, less flexible command and control regulation at the Federal and state levels may have merit and warrants discussion. Finally, it is unclear what, if any, climate benefit would be achieved by a carbon tax since only U.S. emissions would be targeted.
Although the Obama administration has consistently stated over the last several months that it has no intention of proposing a carbon tax, many in Congress are not so certain. Earlier this year, the House and the Senate have had record floor votes in which bipartisan majorities have indicated their reluctance to embrace a carbon tax.