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The Economic Outcomes of a Carbon Tax

Late this afternoon a group of House Republicans lead by Congressman Scalise (R-LA) held a press conference to announce a resolution opposing a carbon tax. Late last month the NAM released the results of a study by nonpartisan NERA Economic Consulting which found a carbon tax would have a negative effect on jobs, energy costs and manufacturing output.

Today, the NAM sent a letter to Congressman Scalise outlining the findings of the study. Below is an excerpt from the letter:

“NERA concluded that the increased costs of coal, natural gas and petroleum products due to a carbon tax would ripple through the economy, resulting in higher production costs, less spending on non-energy goods, fewer jobs and slower economic growth. Nationally, a carbon tax designed to reduce CO2 levels by 80 percent could place tens of millions of jobs at risk and raise gasoline prices by over $10 a gallon, natural gas prices by almost $60 per MMBtu, and residential electricity prices by over 40 percent. NERA also found that a carbon tax would have a negative impact on manufacturing output. In energy-intensive sectors manufacturing output could drop by as much as 15.0 percent and in non-energy-intensive sectors by as much as 7.7 percent. The overall impact on jobs would be substantial, with a loss of worker income equivalent to between 1.3 million and 1.5 million jobs in 2013 and between 3.8 million and 21 million by 2053.”

Yesterday, a bicameral group of Democrats released a discussion draft of a carbon tax plan. The NAM’s Ross Eisenberg posted here on Shopfloor.org yesterday regarding their efforts.

The bottom line is a carbon tax resembling the one in our study would drive up energy prices and make it more expensive to manufacture in the United States.

 

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U.S. Trade Deficit Plunges in December

The Bureau of Economic Analysis and the Census Bureau said that the U.S. trade deficit fell from $48.6 billion in November to $38.5 billion in December. This was the lowest deficit since January 2010, and it resulted from an uptick in goods exports and corresponding decrease in goods imports. Goods exports rose from $129.3 billion to $132.6 billion, and goods imports dropped from $194.9 billion to $188.8 billion. In December we also saw the surplus in trade services increase by $669 million to $17.7 billion.

Petroleum was part of the story, but not all of it. The petroleum trade balance declined from $23.4 billion to $18.7 billion. Petroleum exports were up by $926 million to $11.6 billion, and imports declined by $3.7 billion to $30.3 billion. Illustrating just how much this figure has changed, the petroleum trade balance was $29.9 billion in January 2012, suggesting a drop of over $11 billion throughout the year. The price of West Texas intermediate crude also dropped during that time frame from $100.24 per barrel in January to $88.25 a barrel in December. (It has since risen, averaging $94.69 in January 2013.)

Outside of oil, there were some positives in the goods markets. Most notably, the largest change occurred within industrial supplies and materials, with exports up $3.8 billion and imports down $4.2 billion. Outside of industrial supplies, the largest net winner was foods, feeds, and beverages (up $96 million). There were fewer net exports among non-automotive capital goods (down $431 million), automotive vehicles and parts (down $292 million), and consumer goods (down $240 million).

On the goods imports side of the ledger, there were declines across-the-board in all major categories except consumer goods, which eked out a gain of $43 million. Sectors with reduced imports – beyond industrial supplies – included automotive vehicles and parts (down $944 million), non-automotive capital goods (down $264 million), and foods, feeds, and beverages (down $75 million). (continue reading…)

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