The Straw that Broke the Camel’s Back?

Elections normally don’t turn on one act or event. There is generally an accumulation of factors that influence voter preferences. As in many situations in life, a tipping point can be reached that results in an unexpected and significant change. The EPA rule could prove to be a tipping point.

Even before the climate rule was issued, Democrats faced the prospect of losing the Senate or at best seeing its majority seriously eroded.

The proposed EPA regulation cannot stand on its merits because it imposes costs on a still struggling economy and will have virtually zero impact on climate or human health. But elections don’t often get decided on merits. Images and illusions, unfortunately, can trump facts and this administration excels in creating images and illusions.

If the economy continues to improve along with consumer confidence, the President will benefit and perhaps so will Democrats. But, there will also be negatives, for example double digit health premium increases or another VA-like debacle that cut in the other direction. It is unclear whether the state of the economy and strong support from the environmental community will be enough to counter questions about the competence of the Obama administration, public fatigue with the President, and what seems to be an unending series of debacles and distortions of facts.

It may be that the President figured that the most vulnerable Democrats, under the best of circumstance, would down play their association with the President and focus on trying to demonize their republican opponents. It may also be the case that the President has looked at the election and energy map and concluded that states that will get hit hardest by the EPA rule— Montana, West Virginia, Kentucky, Louisiana, Alaska, for example—are ones where he is too much of a liability to be of much help to the incumbents in November. But clearly, he has made the challenges facing Mary Landrieu, Kay Hagan, and Mark Begich, to name just three, much more difficult. Voters will surely understand that if Democrats continue to control the Senate the principle of checks and balances will be moot.

The biggest problems with this regulation is that it will do nothing to drive down global emissions, do nothing to change the climate, and will expand EPA’s role in setting energy policy and economic policy. The notion that this administration embraces an “all of the above” energy strategy is a total fiction, as has been clear with its excessive delays in approving Keystone XL.

An iron law of economic growth is that the economy cannot grow without adequate supplies of reasonably priced energy. Forcing coal out of the economic equation by fiat will have economic consequences associated with stranded assets and making electricity intensive businesses less competitive. That has happened in the EU and the President is importing policies that have been a major failure there.

Coal currently represents about 37% of the energy used to generate electricity, the demand for which is growing as a result of shifts in the composition of the economic output. Making energy more expensive simply has the result of slowing growth in the services and high tech industries. The electric power industry has been moving from coal to gas in response to market forces. Replacing those forces with government dictates is the wrong way to go. It will also be another incentive for crony capitalists to invest in influencing the regulation so that they profit while hindering their competitors

The jobs associated with an aggressive, market driven energy policy are good paying blue collar jobs that have been in short supply in this recovery. In spite of a falling unemployment rate and impressive job creation numbers, about 50% of the new jobs are low paying ones not the type of jobs that are being created in North Dakota or other states that are pursuing energy production. This Administration is hostile to fossil energy and voters will almost certainly be reminded of that and its negative consequences.

This article appeared on the National Journal’s Energy Insiders weblog at http://disqus.com/wokeefe/

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