In an unprecedented and bold move, the state of Vermont recently passed legislation that will retroactively force fossil fuel companies to pay for climate change damages. The law goes into effect this week and money is supposed to be collected for a Climate Superfund that purportedly goes toward climate change clean up and adaptation projects.
What this really is though, is yet another revenue stream for the state to collect from a politically unpopular industry. Legislators want to punish fossil fuels, blaming them for the ills of the world, and perhaps even their own shortcomings. What if some of the state’s policies and practices for the past several decades have facilitated damage incurred from mother nature? It seems way too easy to use the petroleum industry as a scapegoat.
New York followed suit only a few days later. California, Maryland, and Massachusetts are contemplating their own similar legislation. Others are sure to follow, since this historical maneuver will spread to other groups and organizations who seek retribution from the one energy source that is broadly condemned by politicians and elites alike.
The irony is lost on these activists. It is because of fossil fuels that the residents of Vermont have been able to build homes, businesses, vehicles, infrastructure, etc in order to live and thrive as well as protect and preserve. It is only through fossil fuels that civilizations have exponentially advanced and prospered. The contrasts between first- and third-world nations couldn’t be more stark, and one of the major differences is the level of and access to fossil fuels. Fossil fuels save lives.
It would be an interesting experiment for fossil fuel companies to completely pull out of the Green Mountain State and see how long they last. Hint: It won’t be long.
It is not as if fossil fuel companies spilled oil and contaminated an area. They sold a product, which was then used by the general public. Whatever damage was supposedly done, was done collectively and on purpose. People who put gasoline in their cars and heat their homes know they are spewing greenhouse gases into the atmosphere. But they do so to live their lives, and must make those decisions based on personal needs or wants.
The biggest loser in this debacle is the consumer.
It is basic economics that companies pass extra expenses, taxes, and liabilities on to their customers. It’s business, not personal. Companies cannot simply absorb all the costs that come their way. In essence, residents of Vermont will be paying the tax, which means the state is only piling on more taxes for its citizens. They already have one of the highest tax burdens in the nation.
Vermonters can expect to see the prices of goods and services, particularly energy, increase. This comes at a time when Americans are already suffering from record-high inflation and paying increased costs on countless goods and services. According to a recent report, Vermont households are spending roughly $933 more per month to purchase the same bill of goods as in January 2021. Cumulatively, the average household has spent $21,531 more due to inflation.
Other industries will take note. Who wants to be penalized for simply conducting business? Count on some organizations to flee the state. And count on others simply not entering. Once again, consumers suffer the consequences.
This bill sets a dangerous precedent for governments to punish industries they don’t like and to inadvertently raise taxes on their citizens through these draconian measures.
These laws are expected to face legal challenges. The American Petroleum Institute shared in a letter to the Vermont House that it “retroactively imposes costs and liability on prior activities that were legal, violates equal protection and due process rights by holding companies responsible for the actions of society at large, and is preempted by federal law.”
Let’s hope the courts see this for what it is: a sham.
Kristen Walker is a policy analyst for the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on Twitter @ConsumerPal.