economic benefits from CO2 cap and trade

For some time, I have seen value in the idea of taxing crude oil to discourage consumption, send much less US cash to foreign nations and stimulate the US economy, when the money not spent on gasoline is spent on purchases here. A few months ago, I extensvely reviewed the draft bill HR 2454, that if enacted would require the users of fossil fuels to hold emission credits for burning all fuels which release CO2. With many allowances given to the producers of electricity and not given to the burners of gasoline, the effect is to tax gasoline at a floating market rate based on the price of buying CO2 emission allowances.

While I do not agree on all details of HR 2454 and who gets the free allowances and the use of revenues from selling the allowances, I do believe the legislation is needed, even if just for reducing the cash flow to foreign countries.

As a side calculation, I estimated the reduced US gasoline consumption from getting cars off the road via the cash for clunkers program and found a 4 year payback of $4500 to the government. The principal is the same; dollars not spent on gasoline flow through the US economy and provide an economic stimulus that adds worker income and increases federal taxes thus the $4500 gets paid back.

The CO2 work is in the attached file for any comments.

Ben Claassen