Today at The Federalist I explore “Why Big Oil Wants A Carbon Tax.” Perhaps such advocacy isn’t just made out of a sense of global citizenship and environmental stewardship.
On the surface such advocacy may seem counter-intuitive. Why on earth, other than out of selfless benevolence, would a firm (or group of firms) advocate for higher taxes on their products? But on reflection, it makes some sense, and the reasoning is similar to why an online retailer like Amazon might be in favor of the collection of sales tax at the state level.
As Adam Smith famously put it, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”
Companies are often happy to raise prices if it hurts their competition or provides them with a competitive advantage. And in the case of carbon taxes, it’s important to recognize that not all fossil fuels are equally carbon-intensive, just as not all renewable sources are equally sustainable and resilient.
This is one of the economic realities that I wish Pope Francis had recognized more clearly in Laudato Si’, although I may have more to say about this later. For now, David Brooks expresses a similar desire in his column, “Fracking and the Franciscans.”