The Cost of Cap & Trade: Good Paying Jobs
Visit to Oklahoma plant drives this point home for Lucas
The cost of a national cap and trade system is good paying manufacturing jobs in rural America. This is according to a recent study from Charles River Associates International (CRA) and The Fertilizer Institute.
The study highlights the estimated economic contributions of the U.S. fertilizer manufacturing industry in 2006. It also explains how a national cap and trade system, as envisioned in the Waxman-Markey bill (H.R. 2454), will jeopardize the domestic fertilizer industry, which is critical for food production, food security, and a healthy U.S. economy.
Ranking Member Frank Lucas recently visited one fertilizer plant in his Oklahoma district to emphasize the real risk of losing American jobs if the Waxman-Markey bill becomes law. Koch Nitrogen Company, LLC in Enid Oklahoma employs roughly 100 people plus numerous contractors. These jobs have an average compensation of $76,000, which is almost 80 percent greater than the U.S. average compensation across all industries. A national cap and trade system could force this plant to close because it would drive up the price of natural gas, which is critical for fertilizer production.
Highlights of the economic contributions of the U.S. fertilizer manufacturing industry:
- The U.S. fertilizer industry directly employs more than 24,800 people to produce $15.1 billion in output.
- The total economic contribution of the industry was $57.8 billion. The total number of jobs provided was 244,500.
- These jobs had an average compensation of $76,000, which was almost 80 percent greater than the U.S. average compensation across all industries.
- The purchase of materials and services to support fertilizer manufacturing led to an additional 73,000 jobs along the supply chain.
Impact of cap and trade system on U.S. fertilizer manufacturing industry:
- Farmers must have fertilizers in order to continue to produce a stable food supply. Commercial fertilizer nutrients are currently responsible for 40 to 60 percent of the world's food supply.
- During the last decade, 26 U.S. ammonia plants have closed primarily due to high natural gas prices.
- High natural gas prices have already raised the fertilizer costs for farmers, which has been a major factor in the rapidly rising production costs in agriculture.
- Currently, the U.S. imports approximately 85 percent of potash and 55 percent of the nation's nitrogen needs. Of these imports, 83 percent comes from countries without a cap and trade regime in place to regulate carbon.
- Under H.R. 2454, the price of natural gas is expected to increase dramatically. Every $3 increase in the price of natural gas adds more than $1 billion to the cost of nitrogen production.
- Such increases in the cost of production will put this American industry at a competitive disadvantage with other countries, which do not have a cap-and-trade system in place.
- U.S. producers will face the choice of losing market share to imports or moving production overseas.