A global Carbon Tax would transfer wealth from Oil Producers to Oil Consumers

An interesting observation with regards to a Carbon Tax is that it would mean that oil consuming states would be levying a tax on the world’s oil deposits – effectively transferring some of this natural resource wealth from the world’s oil producing states.

How come?

Well, a Carbon Tax being levied by consuming countries would of course increase the total price of energy containing goods. But it would also push down the demand for fossil fuels, and consequently the price of fossil fuels. This difference can thus ultimately be pocketed by the taxpayers of the oil consuming country. In effect a globally agreed Carbon Tax would constitute a buyer’s cartel – the opposite of OPEC.

Good or bad? It would reduce the income of states such as Saudi Arabia, Russia or Norway at the expense of USA or the EU. If you like it or not probably depends on where you live.

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