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A Project of The Annenberg Public Policy Center

Creepy Cap-and-Trade Claims are Illusions

It’s that spooky time of year, and legislation pending in Congress to curb carbon emissions is really giving the American Energy Alliance the willies.

What’s haunting us is the group’s misuse of statistics in a new ad attacking Republican Sen. Lindsey Graham of South Carolina for his support of the cap-and-trade approach that’s central to the major House and Senate bills.

According to the narrator: "This frightening tax will further hurt our economy, costing millions of American jobs, driving up prices at the pump and hiking our electricity bills by over 50 percent." The on-screen graphics read, in turn: "Costing 2.4 million American jobs"; "Gas prices will increase 26%"; then "Electricity bills jump 50%." AEA, a nonprofit organization that says it believes in "freely-functioning energy markets," attributes its figures to a study done for two pro-industry groups, the National Association of Manufacturers and the American Council for Capital Formation.

Actually, as we said in our recent article about the impact of cap-and-trade on employment, official figures from the government’s Energy Information Administration show that under the House cap-and-trade bill, future job growth might be constrained by between 388,000 and 2.3 million jobs – in the year 2030. The agency drew up 11 different scenarios based on varying sets of assumptions, and the 2.3 million figure was attached to the case in which nothing goes right. But EIA also said that this scenario’s unrelentingly gloomy assumptions are "inherently less likely" than the mixed positive and negative developments assumed in all but one of its other scenarios.

As for energy prices, once again it would take many years and dire circumstances for the cost of gasoline to jump by 26 percent, as the ad says it "will" do. According to EIA, in 2020 gas prices could be between 3 percent and 18 percent higher than they would be without the legislation, depending on whether reality matched the rosiest of six sets of conditions the agency sketched out or the most dismal. In 2030, the highest possible increase is estimated at 33 percent, with the lowest being 5 percent.

Electric bills? EIA’s numbers put the possible hike at somewhere between 3 percent and 15 percent in 2020, not even close to the ad’s 50 percent forecast. By 2030, EIA’s numbers range between 10 percent and 77 percent. But the 77 percent figure is an outlier – none of the other five scenarios produce an increase higher than 29 percent.

Unlike the National Association of Manufacturers’ ad we discussed in our piece on cap-and-trade’s impact on jobs, this one uses no qualifiers. Where the NAM ad said the bill could cost "up to 2.4 million" jobs, AEA’s spot is absolute: "Costing 2.4 million American jobs"; "Gas prices will increase 26%"; and "Electricity bills jump 50%." That, along with the group’s silence on how long it would take, and what circumstances would be required, for its predictions to come anywhere close to bearing out, lead us to find the ad highly misleading.

If the AEA wants to see banshees and goblins down every legislative corridor, of course, we can’t stop it. But we can call in some ghostbusters for the rest of us.