Just how badly did the EPA underestimate the cost of their new regulations?

When Barack Obama’s EPA announced their new carbon restrictions for power plants, they were quick to try to undercut arguments from coal state politicians who predicted staggering costs which would be passed on to consumers. While their own, initial estimates were not accepted by anyone of repute, they had outlets like NPR going out and saying that compliance with the crushing regulations would actually wind up producing a net cost benefit of as much as $67B. And if that were the case, they would have a strong argument indeed. But are those figures rooted in any sort of reality?

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A recent, exhaustive study of the long terms costs associated with these carbon emissions regulations argues quite the opposite. In fact, they found that, rather than saving money, these new EPA regulations will add $284 billion in costs over the next five years. So how does that matter to the wallet of the typical consumer?

Electricity prices are set to skyrocket across the board – whether looking at residential gas, electricity or heating oil. In 2020, annual residential power and gas costs would be $102 billion higher and would continue to escalate in subsequent years. Average annual household gas and power bills would increase by $680 or 35% from 2012 to 2020. Annual average electricity bills would increase approximately $340 or 27% from 2012 to 2020. Annual average home gas heating bills would increase approximately $340 or 50% from 2012 to 2020.

Economic impacts will not be divided evenly among states. The five states that would bear the greatest increases in annual residential power bills are Texas, Mississippi, Pennsylvania, Maryland and Rhode Island. Families in these states would experience average electricity increases of more than $660 ($566) annually beginning in 2020 compared with 2012. The states that would incur the largest total cost increases on a percentage basis are Texas, Mississippi, Louisiana and North Dakota, averaging more than 115% increase in annual electricity and natural gas bills from 2012 to 2020.

Among businesses, the industrial sector will be the hardest hit. On a percentage basis, the U.S. industrial sector would be affected most severely, as its total cost of electricity and natural gas would approach $200 billion in 2020, a 92% increase from 2012.

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Whether you’re talking about the homeowner, the small business employer or large industrial interests, the story being pitched by the EPA at the start of this mess was completely inaccurate. You can say that they lied or that they were just incompetent in their analysis, but the result is the same. These regulations are going to deliver a crippling economic blow in exchange for modest (at best) reductions in emissions, even as competitors in other nations continue to flood the zone while facing no such restrictions. The overall “benefit” to the global environment will be too small to measure, but the hike in your heating bill will be a very easy calculation.

The problem here, yet again, is that it’s unclear what – if anything – the new congress could do about this. The White House has essentially unchecked power to pass de facto laws through the regulatory process, and while they hold endless hearings where questions are raised and reports are generated, in the end they can still do essentially anything they like. The sad reality may be that nothing is going to change this without putting a new person in the Oval Office.

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Beege Welborn 5:00 PM | December 24, 2024
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