Smart Retorts: Hmmmmm.....Study Says Energy Legislation Would Hurt Economy

One TRILLION dollars!!!

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WASHINGTON, Nov. 13, 2007 – Energy legislation pending in Congress likely would have significant adverse effects on the economy and consumers – including nearly 5 million lost jobs and $1 trillion in lost economic output, according to a report released today by API.

The study, prepared by CRA International and commissioned by API, found that the combined effect of seven legislative proposals would restrict the supply of energy available to the U.S. economy and would likely increase the cost of energy supplies to consumers and businesses.

“This legislation would put consumers in a squeeze,” said W. David Montgomery, a vice president and co-head of CRA’s energy and environmental practice. John Felmy, API’s chief economist, said: “This study points out the folly of energy legislation based on taxing the oil industry and raising the cost of energy to consumers.”

Higher energy costs likely would reduce total consumption, employment, investment and economic output, the study found. In addition, the study also found that by 2030: Economic output likely would decline 4 percent, or more than $1 trillion; non-farm job losses caused by higher energy costs likely would result in nearly 5 million lost jobs, and households likely would suffer about a $1,700 reduction in real income.

API is the industry’s national trade association that represents all aspects of America’s oil and natural gas industry. CRA is a worldwide leader in providing economic, financial and management consulting services.

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Highlights:

As the figure shows, it is estimated that the provisions would drive down the demand for petroleum products by roughly one-third in 2030. The renewable fuels standard is estimated to increase corn-based ethanol use by almost 40 percent, and cellulosic ethanol is estimated to reach almost 13 percent of the total market. This projected change would result from the provision’s proposed requirements that at least 60% of biofuels be advanced biofuels by 2022.

Overall, U.S. transportation fuel consumption would decline due to higher costs faced by end-users. Costs of petroleum products to end-users are estimated to rise significantly over the baseline levels to effect the above illustrated shifts in transportation fuel volumes. Other energy markets would also be affected although less than that for transportation fuels.