Gasoline and the invisible hand

In Adam Smith's "The Wealth of Nations," Smith suggests there's an invisible hand, an unseen force that moves capital to foreign trade only if profits in another country will exceed what is available locally.

This holds true today as much as it did more than 200 years ago. One only has to look to China and India to see how this basic economic principle lives and breathes today.

The Cap-and-Trade bill, H.R. 2454, wants to ignore this reality. Under cap and trade, domestic refineries will be responsible for nearly 45 percent of all emissions regulations and the costs of these regulations will be passed onto the consumer. And unlike oil extraction and production, refineries are barely profitable. For the last 12 months, Valero Energy, one of the largest refiners in the U.S. lost 6 cents for every dollar it made.

But there is one catch. Under cap and trade, importers of refined petroleum products will not be subject to the regulations, giving them an enormous competitive advantage. The end result is the new regulations will shut down nearly all domestic refinery capacity as foreign refiners continue to increase production at a lower price, whereby creating additional demand for foreign produced fuel.

To suggest alternative energy will power electric cars isn't realistic. The largest solar facility in the US, Nellis Solar Power Plant in Nevada, generates 14 megawatts and covers 140 acres. The average wind mill generates 2.5 megawatts, whereas one nuclear power plant outside of Byron, Ill., produces nearly 2,300 megawatts. For alternative energy to equal this one nuclear facility, a solar farm would need to span 36 square miles or we would need 1,000 wind turbines. Additionally, the wind or sun would have to be available consistently. This is not a reasonable solution.

With the passage of cap and trade, Adam Smith's invisible hand isn't so translucent anymore.

Cody McCubbin

Chairman

Kane County Young Republicans

Geneva