Free Markets, Free People
And on and on and on:
“We now have an elephant in the room, and its name is peak oil.” –Kjell Aleklett, Professor in Global Energy Systems
Lord I wish I had a nickel for every time I’ve heard that in the last 30 years. And always in the face of something like this:
Nearly a third of the world’s technically recoverable natural gas and 10 percent of its oil can be found in shale formations, according to anew report by the Energy Information Administration. Thanks to fracking and horizontal drilling, there’s a bounty of oil and gas available to countries around the world .
This report, which has a much larger scope than previous reports, bumped up the estimated global amount of technically recoverable shale gas by 9.3 percent. In its regional breakdown North America looks like a big winner. Of the 41 countries surveyed, Mexico had the seventh and Canada the ninth largest reserves of shale oil, while the US was second only to Russia. Meanwhile, the US, Canada, and Mexico were in fourth, fifth and sixth place, respectively in the EIA’s ranking of the largest technically recoverable shale gas reserves.
Of course part of the reason the peak oil crowd continues to issue it’s predictions is it seems tied into, well, another bit of a scam:
Are you optimistic about the future? Do you think that politicians will, at some point, address the problem of peak oil?
I’ve been working in this field for many years now, and it’s sad to see how little has been done. The measures that have been taken have been implemented largely because of climate change. Energy challenges such as peak oil are closely linked with climate-related issues, so victories within the field of climate change tend to be victories for peak oil as well. The good news is that we have started to tread the right path. Ultimately, we have to act. Whichever way you look at it, we won’t be able to use as much energy in the future as we do today.
I’m sorry, but that’s just nonsense. A) there’s no reason, at least at this point, that we can’t use as much energy in the future as we do today, and B) perhaps that energy will come from a different source but not necessarily. Unless, of course, these sorts of people have their way. More importantly though, politicians need to be kept strictly out of this business.
As we note often, this isn’t about energy or climate-related issues – it’s about control.
Make the warnings scary and dire enough and we’ll pitch control over to them. See “war on terrorism” as a case study.
Meanwhile, in the back forty, a certain cow is still mooing the same old song:
Former Vice President Al Gore lamented today that scientists “will not let us link record-breaking” tornadoes in Oklahoma and elsewhere to climate change because of inadequate record keeping on the twisters.
“But when you put more energy into a system, it gets more energetic,” Gore said at an environmental event in Washington hosted by Sen. Sheldon Whitehouse.
Yeah, darn those scientists anyway. Oh, wait, I thought all his stuff was from scientists. No?
As to that familiar tune?
“It is well-past time that we put a price on carbon and not just accept the price that it extracts from us,” he said.
He noted that some officials won’t pay for tornado shelters in public schools. But “if we’re having arguments about how to pay to recover” from storms, he said, that’s one more reason to fix the climate change that is leading to stronger storms.
Even if the “price” can’t be supported by science.
And, it’s actually worse than first imagined. First the background:
Uncle Sam gave GM $49.5 billion last summer in aid to finance its bankruptcy. (If it hadn’t, the company, which couldn’t raise this kind of money from private lenders, would have been forced into liquidation, its assets sold for scrap.) So when Mr. Whitacre publishes a column with the headline, “The GM Bailout: Paid Back in Full,” most ordinary mortals unfamiliar with bailout minutia would assume that he is alluding to the entire $49.5 billion. That, however, is far from the case.
Because a loan of such a huge amount would have been politically controversial, the Obama administration handed GM only $6.7 billion as a pure loan. (It asked for only a 7% interest rate–a very sweet deal considering that GM bonds at that time were trading below junk level.) The vast bulk of the bailout money was transferred to GM through the purchase of 60.8% equity stake in the company–arguably an even worse deal for taxpayers than the loan, given that the equity position requires them to bear the risk of the investment without any guaranteed return. (The Canadian government likewise gave GM $1.4 billion as a pure loan, and another $8.1 billion for an 11.7% equity stake. The U.S. and Canadian government together own 72.5% of the company.)
So GM “paid back” only the $6.7 billion it got in the “pure loan”, not the full $49.5 billion it is on the hook for to taxpayers, or the $1.4 billion it got in a “pure loan” from Canada’s government.
When this story was first reported, it was claimed that TARP money was used to pay the loan. That’s true, but not exactly how you might have imagined it. Remember, GM reported a $3.4 billion fourth quarter, and a loss for the year. Where did it get $6.7 billion to pay off the loan? Here’s where:
As it turns out, the Obama administration put $13.4 billion of the aid money as “working capital” in an escrow account when the company was in bankruptcy. The company is using this escrow money–government money–to pay back the government loan.
Yes, that’s right, they used a taxpayer funded escrow account to pay off the loan. And, as Forbes points out, the GM claim that being able to do so shows progress, it’s hardly worth the hype it received – except that’s not the whole story. In fact, it’s not a show of progress at all. GM did it for a very specific reason:
Sean McAlinden, chief economist at the Ann Arbor-based Center for Automotive Research, points out that the company has applied to the Department of Energy for $10 billion in low (5%) interest loan to retool its plants to meet the government’s tougher new CAFÉ (Corporate Average Fuel Economy) standards. However, giving GM more taxpayer money on top of the existing bailout would have been a political disaster for the Obama administration and a PR debacle for the company. Paying back the small bailout loan makes the new–and bigger–DOE loan much more feasible.
Or, as Forbes sums it up:
In short, GM is using government money to pay back government money to get more government money. And at a 2% lower interest rate at that. This is a nifty scheme to refinance GM’s government debt–not pay it back!