Free Markets, Free People

Energy

To my friends in the oil industry

Almost everyone has heard of the infamous “Blackhawk down” incident in Somalia in which Army Rangers were ambushed while on a mission and 18 brave special operators died.  COL David Hackworth, one of the most decorated and outspoken field commanders during Viet Nam, blamed the fiasco on two of the generals there.  His words are harsh, but they tell the tale:

[The generals] made every basic error in the book, beginning with not understanding the enemy. They had bad intelligence, were overly dependent on firepower and technology and were arrogant. Nor did they bother to put a go-to-hell-plan in place in case the [stuff] hit the fan.

That “go-to-hell” plan Hackworth is talking about is something every operations officer in the military has learned about from history and experience.  Essentially a “go-to-hell” plan envisions the very worst case scenario one can imagine in an operation and that scenario is then planned for, staffed,  equipped and exercised (at least at a sand-table level) in case it has to be executed.  The point, of course, is that plans usually don’t survive first contact and commanders are faced with situations in which they have to modify orders and, in dire cases, enact the “go-to-hell” plan.  With such a plan in place, commanders have the chance of minimizing the losses they may be facing – in territory, casualties and effect -because they have planned for this eventuality.  Without it, however, they’re likely to be left in the situation that Hackworth describes in Somalia – nothing ready to go and trying to improvise everything at a critical moment.  That rarely, if ever works out well.

Anyone watching the situation in the gulf with the oil spill has to believe that they’re witnessing the very worst case scenario that can be imagined in that type of an environment – a cutting edge, deep water platform has an explosion, burns and sinks.  Tragically 11 lives are lost.  The riser to the surface is bent and the blow-out prevention device fails allowing 5,000 barrels of crude oil to escape from the well head daily 5,000 feet below the sea.  A true nightmare.

But seeing the reaction to the situation, I had to ask, where was the “go to hell” plan?

As anyone who reads this blog regularly knows I am a proponent of continued exploration and exploitation of petroleum reserves because the alternative fuels and technologies simply aren’t available yet or can’t be produced cost effectively.  They’re certainly the future, but not for some time to come.  Oil remains, and will remain, a critical component of any future energy plan.

I’ve been able, through trips paid for by the American Petroleum Institute, to educate myself on the petroleum industry and see first hand what they do and how they do it.  I’ve seen their intensive focus – bordering on the obsessive – on safety and the precautions they take to produce oil safely and in an environmentally friendly way.  I’m certainly not an expert, but I do know that this is an industry that deserves our support because they provide a critical product – the lifeblood of our nation – and they care about how they produce it.

Unfortunately, this spill and the inability to cap the well is reflecting on the industry in a way which will be detrimental in the long run to both the industry and our energy future.  Certainly they’ve reacted as well as they can given their resources and their effort has been mammoth in size and scope. But the bottom line is the problem for which they didn’t plan persists.  And each day the problem persists, the public’s confidence in the industry’s ability to produce oil off-shore in an environmentally responsible way wanes.  That’s reality.

That reality drove me to participate in an American Petroleum Institute conference call last week as an invited blogger. I posed the following question to the panel:

My question has more to do with the future, I guess.  My background is military plans and operations, and when we wrote plans and operations, we always had a “go to hell” plan, you know, in which the worst-case scenario was imagined and planned for.

I get the impression that what’s going on out there is definitely the worst-case scenario for the petroleum industry.  And my question is, why wasn’t there a “go to hell” plan, or if there was, did it envision this?  And in the future, will the industry address this type of a scenario and have teams and equipment available to address it more quickly?

Richard Ranger, who is an expert on Upstream/Industry Operations for API fielded the question and replied:

And I think really, the array of vessels, the number of personnel, the amount of equipment being deployed indicates that it is execution of what I think you could call the “go to hell” level of an oil spill contingency plan.  The plans that are developed – BP, other companies in the industry that have them are, you know, routinely re-examined and adjusted based on lessons learned, most usually from drills and exercises.

And the drills and exercise – because, you know, our record, certainly, up until this horrible incident has been a record where there have been very few spills of scale against which to test a plan.  So the drills and exercises themselves are carried out at different scales.  They’re carried out not simply by the companies, but in collaboration with government officials, be it – usually involving, for the OCS, the Coast Guard and Minerals Management Service.  There’s a tremendous transfer of knowledge throughout industry and between industry and government.

Now, so the question, in terms of scale here, was there access to equipment for an immediate response?  Yes, there was.  Was there access to additional, out-of-region equipment to cascade into the Gulf of Mexico to augment the initial response?  Yes, there was.  Has there been a scaling up of the government or public side of the response across Coast Guard districts and involving additional personnel from both federal and state agencies?  Yes, there has been.

This event has been moving at a very fast pace, but I think it would be mistaken to suggest that there hasn’t been, really, a very complete commitment, certainly, of the resources that BP has available, the resources that the key government agencies have available, and most importantly, the resources, the expertise and the personnel that the response organizations, like MSRC, have available.  So I would argue it’s been demonstrating scalability of the response plan.

While it is clear that the industry has responded as best it can it is also clear, at least to me, that the industry has no answer to the scenario which has unfolded before it with the Deepwater Horizon disaster.  In essence they relied on technology to be the failsafe and it failed them.  And when it failed, there was no real backup plan – a “go to hell” plan – to do what the failed technology hadn’t done.

As to the plan Richard talks about – it is a plan mostly geared toward oil spill containment, as he notes.  But the real problem isn’t just containment.  In fact the need for containment is a result of the real problem.  An unchecked deepwater blowout, albeit one caused by a catastrophic accident.  No planning, apparently, had been made to address a deepwater blowout in which all the technological failsafe devises didn’t do their job.  That was the point I was trying to make.  So I asked a follow-up question:

I guess what I’m getting at, Richard, is the fact that there’s been – it’s been almost a month fabricating this dome that’s going to be placed over the wellhead. And while I appreciate the fact that people have responded and are out there doing the best they can, and that we don’t know whether this dome is going to work or not, that kind of gets to my point. If this dome had been available at the time of the accident, and if it, in some way, had been tested or we knew more about it, wouldn’t that type of a response have been much more, I guess, impressive than what we’re seeing now?

Richard answered and, as you’ll see, eventually acknowledged that perhaps that particular scenario hadn’t been on the industry radar screen as perhaps it should have been:

Well, I guess, Bruce, in response to that, with your military background, I forget how the words go, but you’re probably familiar with the adage that you have a plan and once the gunfire starts, you throw the plan away.  And I think what there has not been before is this type of catastrophic event effecting a failure of the drilling rig.

The sinking of the rig, the consequent bending of the riser and the creation of a situation where you’ve got this, you know, significant leak of oil from below the sea floor and you have to put something over that leak – so this is kind of a serial number one effort that, I think with all of the anticipation and all of the forward planning, this particular scenario, perhaps, hadn’t been envisioned before.

So your question’s a good one.  There are things that are going to be learned about the performance and effectiveness of this particular piece of equipment, but I think it’s a significant achievement that, in the span of a very few days, this idea was conceived, this piece of equipment’s been fabricated and being brought to the location.  So yes, I would agree you’re partly right, but I think the response that BP and others have put together shows the adaptability of people and expertise when confronted with the kind of situation we have here.

Those are the words of an honest man realizing that perhaps, despite the heroic effort that BP and others have made, there was no real “go to hell” plan in place that envisioned this obvious (now) worst case scenario or how to defeat it.  Instead they are pretty much reduced to winging it at the moment.

And, of course, the failure of the first attempt to place the containment dome only strengthens the point.

My desire here isn’t the beat up on the petroleum industry.  As I’ve said I’m a huge supporter of what they do and how they do it.  I’ve also pointed out that another institution – the military – of which I’m a very big supporter has learned this lesson the hard way.  Instead this is intended to point out what I see as a deficiency the industry needs to address and address quickly because the policy implications of not doing so are profound.

We all know what will happen next.  There are obvious political ramifications to this. It will start with Congressional hearings and a battle over the safety of off-shore drilling.  The sides are well known.  Unfortunately, situations like this hand ammunition to those opposed to the oil industry and drilling that they’ll gladly use.  In fact, gleefully use.  This sort of on-going, constantly-in-the-news disaster is a political God send to them.

To begin to win back those who are now wavering about off-shore drilling, the petroleum industry has to be able to show Congress and the public that it understands the gravity of the problem,  accepts the worst case scenario as possible and is developing a plan to deal with it.  It will have the equipment necessary along with trained crews available in the future to cap something like this is days – not weeks or months.  The industry must also have a plan to  successfully manage the situation that develops after containment and until a more permanent solution can be implemented (such as a relief well).

For example, if the containment dome is found to be a workable solution and eventually successfully caps the well, such domes would be prefabricated and available in all areas where off-shore drilling is being done or planned, ready for immediate deployment if necessary.  That sort of plan would point to a proactive industry learning and applying lessons from this situation to prevent it from happening again to the extent this situation has developed.  The industry has already proven that it can deploy containment assets quickly to address a spill.  That’s both noteworthy and praiseworthy.  But everyone also understands that those assets are finite and the probability of continued containment success lessens each day that the spill builds and the surface area grows.

In order to regain the initiative in the policy realm, it is critical at this juncture that the industry begin an immediate analysis of this disaster and the formulation of a critical “go to hell” plan.  It may not answer all the mail when the inevitable political hearings begin, but it will demonstrate an engaged industry that has recognized the reality of the problem and is working proactively (and without Congress mandating solutions or increasing regulation) to provide a workable and timely solution should such a situation ever again occur.  And that may also help allay the fears of some and stiffen the spines of others that are ready to abandon the effort to drill off-shore.

Time is critical and off-shore drilling is vital to our national interest and national security. I’m sure the brilliant minds within the industry can come up with a contingency plan that will make the case for its continuance.

~McQ

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Clean, green and expensive as hell

Well, well, well – “green energy” costs strike again.  You remember the controversial off-shore wind turbine project that was proposed for an area off the coast of Cape Cod in Massachusetts?  Well it finally got approved.  And surprise – it’s revised costs has the project in “Big Dig” territory:

The controversial Cape Wind project will cost taxpayers and ratepayers more than $2 billion to build – three times its original estimate.

That colossal cost is the driving force behind the sky-high electric rates it plans to charge Massachusetts customers in coming years.

Cape Wind, which wants to build 130 wind turbines off the coast of Cape Cod, and National Grid announced yesterday that they’ve reached an agreement to start charging customers 20.7 cents per kilowatt hour in 2013 – more than double the current rate of electricity from conventional power plants and land-based wind farms.

Under the 15-year National Grid contract, the price of Cape Wind’s electricity would increase 3.5 percent each year, pushing the kilowatt price to about 34.7 cents by the time the contract ends.

The current price of National Grid’s non-wind electricity is now about 9 cents per kilowatt. That means the cost of fossil-fuel generated electricity would have to increase nearly four-fold just to keep pace with Cape Wind’s prices over the next 15 years.

This little doozy is now on the planning boards – another, in a long line of costly projects backed by government that will cost consumers more than it’s worth and not deliver that much in terms of increased energy – certainly not that much if  you look at the price.

“I’m glad it’s your electric bills and not mine,” said Robert McCullough, president of McCullough Research, an Oregon energy consulting firm, referring to Cape Wind’s prices.

He said Massachusetts would have been better off going with less costly land-based wind farms.

“Why are you spending billions (on offshore wind) when you can pay half that with traditional wind?” he asked.

You tell me?  And, by the way, how did the costs of building the system suddenly triple?  This was only discovered after approval had been granted?  Oh – wait a minute:

Three sources familiar with the Cape Wind-National Grid negotiations confirmed yesterday that Cape Wind’s final price tag will be above $2 billion.

Because of available federal tax credits, Cape Wind could reap about $600 million in taxpayer subsidies if the final cost is $2 billion, in addition to its higher power rates.

So the incentives are provided by government?  Does this make Cape Wind a “greedy utility?”

Oh, and I love this:

Cape Wind president Jim Gordon yesterday again refused to say how much construction will cost, citing competitive talks he’s now in with construction companies.

Cape Wind and National Grid, which is planning to buy half the energy the wind farm will produce, said their rate deal will add about $1.59 a month, or about 5 cents a day, to the current ratepayer’s bill in 2013.

“The question is whether folks are prepared to pay five cents a day for a better energy future,” said Gordon.

The answer should be “no, they’re not.  Either build the project at the original price, bring it on shore if that isn’t possible or forget it.”

The pricing has to be approved by Massachusetts Department of Public Utilities, but I don’t think there’s much of a question as to how that will go:

Ian Bowles, Gov.Deval Patrick’s secretary of energy and environmental affairs, said the National Grid prices are competitive if renewable energy credits are deducted.

Those who aren’t politicians interested in building a green energy legacy this say otherwise:

But energy experts said the proposed National Grid rates, especially with the annual inflation adjustments, add up to a very high price.

“This would seem to me to be a most unwelcome additional energy tax” on customers, said Peter Beutel, an energy analyst at Cameron Hanover in Connecticut.

And that’s precisely what this ends up being – a energy tax to build something that could be build cheaper on shore and which, in reality, won’t add that much energy to the national grid. A rather dubious recommendation for its continuance. I don’t know about you but if I were a citizen of Massachusetts, I’d be raising hell about this and demanding the project be shelved until it can be shown to deliver the promised “clean, green, renewable and cheaper energy” Greenies are always telling everyone these sorts of projects will deliver.

~McQ

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Top down bureaucratic rule may mean big bottom up problems

Despite the many problems cited with turning cereal grains into ethanol (price spikes, shortages, etc.) and a new study saying ethanol damages engines, the EPA is going ahead with plans to raise the amount of ethanol mandated in fuel mixes:

The Environmental Protection Agency is expected to issue a rule in the next few weeks that would permit oil companies to increase the percentage of ethanol in automotive fuel to 15 percent, up from the current level of 10 percent, so they can meet E.P.A. quotas for renewable fuels.

Like a true bureaucracy, the quota is much more important than the fact that increasing ethanol percentages could cause more pollution and damage car engines according to a new study:

But now the industry says it has conducted tests that confirm the higher-ethanol blend will cause problems in many cars.

Half of the engines tested so far have had some problems, said C. Coleman Jones, the biofuel implementation manager at General Motors, who spoke on behalf of the Alliance of Automobile Manufacturers.

More ethanol will confuse exhaust control systems and make engines run too hot, destroying catalytic converters, automakers say. It can also damage engine cylinders, they say.

For some car owners, “you will be walking, eventually,” Mr. Jones said. The industry is urging the E.P.A. to delay any changes to the fuel mix until after 2011, when more complete testing will be done.

The EPA’s answer?

An E.P.A. spokeswoman declined to discuss the E.P.A.’s specific plans beyond its November letter, in which the agency said it planned to make a decision by midyear. The agency said at that time that it was leaning toward allowing the change.

Bureaucratic inertia has set the ball in motion and facts simply don’t matter.   And I loved this:

While the change is intended to apply only to cars of the 2001 model year and newer, it’s unclear how it would be enforced at the pump.

Heh … yeah, are we going to have 2000 and below model gas pumps now?

The heavily subsidized ethanol industry says it’s just the oil companies trying to keep their share of the market:

The ethanol industry argues that the proposed rule is essential for reducing reliance on imported oil. Ethanol makers say that most cars will run just fine on 15 percent ethanol and oil companies are standing in the way only because they want to hold on to market share.

Bob Dinneen, president of the Renewable Fuels Association, said enough test data was available to approve the new blend. “You just see all this hand-wringing,” he said.

But it isn’t the oil industry objecting – it’s the auto industry saying such an increase will ruin engines.  In fact, it’s Government Motors.  And they have no particular skin in the game here – what is is.

I don’t know about you, but I’ve sunk a good bit on money in a new car recently.  If this goes through and I end up walking because of it, who do I go see to recover damages?

~McQ

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Oil spill – a perfect storm (update)

I’ve been watching this oil spill story develop over the weeks since the April 20th explosion and sinking of the BP oil platform in the Gulf of Mexico.

As an outspoken proponent of drilling for oil – both on-shore and off shore – I’ve watched happen what I had been convinced couldn’t happen.  A deep water platform, with cutting edge technology, blew up and sank.  A deep water well with the latest in blow-out prevention devices failed to function properly and stem the flow of oil from the well.  An  industry that had no contingency plan or equipment available to quickly cap such a leak.  And the result has been an environmental problem that the industry all but claimed couldn’t happen.

All that’s extremely disappointing and causes me great concern.  However, it doesn’t change the fact that oil is still critically important to our energy needs now and in the future, must be a part of any comprehensive energy strategy and must still be sought and recovered.  Period.  End of statement.

That said, the oil industry must seriously address what I’m sure most thought was unimaginable a few short weeks ago.  Obviously blow-out prevention technology isn’t fail safe.  Perhaps redundant systems are needed, or some easier method of manually addressing the failure of “automatic” systems, especially in deep water wells.  This particular well is at around 5000 ft. meaning divers couldn’t be deployed.  Robotic submersibles were unable to close the valves on the blow-out prevention device.  While that’s bad, what perhaps bothered me more was the fact that there was no industry backup plan in case such a situation presented itself.  They’re now fabricating a cap to put on the well and no one knows if that will work.

So this particular catastrophe’s continuance is on BP and the oil industry in general.  It seems they may have believed their own press a little too much and were caught flat footed when the worst case scenario unfolded.  Since BP is on the hook for paying for the clean up of this mess, not to mention losing a billion plus oil rig, I’m sure the lesson will be learned.

That brings me to the reaction by government to the growing disaster. It appears some lessons are never learned.  Slow to realize the size, scope and impact of the disaster don’t even begin to describe its reaction.  Certainly the Coast Guard has been on the problem almost from the beginning.  But, acknowledging the Katrina comparisons being made, that was the case then as well.  That doesn’t excuse the administration’s apparent lackadaisical response.  It doesn’t explain why a 1994 plan for such a disaster wasn’t implemented quickly as it was designed to be (it involves fire booms to burn off the oil – and the oil, light, sweet crude is very amenable to burning).  Had that been done, some experts believe the spill could have been contained soon after the accident.

It doesn’t explain why the EPA has taken almost 2 weeks to get involved or why the EPA’s Ocean Survey Vessel “Bold” has yet to be deployed in support of the effort when it was in Miami, FL the 19th through the 23rd of April (OSV Bold has been deployed in the past to monitor and assist in other oil spills).

The White House is now in full spin mode and the modus operandi is the usual – blame others.   Stipulated – BP is to blame for the leak.  BP should pay for the damage it caused – all of it.  BP is the cause of the problem and they acknowledge it.  Got it.

Now – what has government, which we’re told is always the answer, done to protect our shores and waters from the disaster?  Well, it is appearing that so far the effort hasn’t been particularly well run, successful or timely.

Just as interesting is how little the press is howling about it.

Bottom line, this disaster points to inadequacies on both sides of the problem.  The oil industry needs to get its act together on this problem.  And government has been no better now than it has in the past.  I hold out some hope that the industry will learn from this disaster and do what is necessary to prevent it again.  Given its history, I hold little hope that government will improve its performance.  That said, it should be clear that it is up to industry to clean up its act since government seems inadequate to the job of cleaning up any mess industry makes (government will hold hearings, of course, and spout off about needing more regulation).  What shouldn’t end up being an option though is the abandonment of off-shore drilling.

UPDATE: Nice – the usual blame targets again emerge.  Huge surprise.

~McQ

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Department Of Interior SWAT Teams Dispatched To The Gulf?

A massive oil spill in the Gulf of Mexico has prompted a large coordinated response from the owner of the rig, BP, and the U.S. government. President Obama addressed the issue in a short speech yesterday where he said:

Earlier today, DHS Secretary Napolitano announced that this incident is of national significance and the Department of Interior has announced that they will be sending SWAT teams to the Gulf to inspect all platforms and rigs. And I have ordered the Secretaries of Interior and Homeland Security as well as Administrator Lisa Jackson of the Environmental Protection Agency to visit the site on Friday to ensure that BP and the entire U.S. government is doing everything possible, not just to respond to this incident, but also to determine its cause.

I was immediately puzzled when I first heard this yesterday. Why on Earth would the DOI have SWAT (“S”pecial “W”eapons “A”nd “T”actics) Teams? What exactly would they need them for, and why would they be dispatched to “inspect” oil rigs in the middle of the Gulf? I was not alone in my puzzlement:

In an odd turn, Obama announced he’d be sending SWAT teams out to all oil rigs and platforms in the Gulf to inspect them, as pointed out by RealClearPolitics. We’re not sure what a Special Weapons And Tactics team is going to do on an oil rig but we’re pretty sure it’ll make good fodder for Tom Clancy’s next book.

I have to believe that Obama was being colorful in his language instead of literal. I checked the DOI website and could find no announcement about “SWAT teams” or any mention of such teams whatsoever. So, it must be the case that the man whose speeches cause tingles to run down the legs of newscasters, oceans to recede, and Nobel Prizes to fall from the sky simply misspoke.

One interesting thing to note is that DHS Secretary Janet Napolitano’s declaration of the oil spill as an incident of “national significance” brings the whole mess within her Department’s purview. That of course allows all sorts of resources not otherwise available (i.e. money) to be employed in the cleanup, but it also raises the question as to what exactly the limits of the DHS are. Apparently they are quite willing to spend gobs of money and effort (and possible deploy SWAT teams!) to tackle an invasion of viscous minerals upon our southern shores, but are completely uninterested in doing anything about an invasion of vicious criminals upon our southern border, other than to challenge the right of individual States to defend themselves. Perhaps Arizona should spill a bunch of oil along the border and see what happens.

Lindsey Graham finally gets the message … and delivers one

And that message: is if your political opponents are in a hole of their own making, don’t throw them a rope.

That’s precisely what Sen. Lindsey Graham (R-SC) was in the middle of doing prior to this past week.  He was the lone Republican Senator working on the “climate” bill with Senators John Kerry (D-VN) and Joe Lieberman (I-CT).  Additionally, he was also the only Republican Senator working on immigration.

This past weekend, Graham pulled out of the cap-and-trade “climate” bill, leaving it in doubt – although word now has it that it was Harry Reid (D-Desperate) who decided it must wait for immigration. That would actually make sense since it is Harry Reid who is in re-election trouble in a state with a large Hispanic population who’ve complained Democrats haven’t done anything with immigration.

Graham seems to have finally awakened to the fact that he has an opportunity to slow both cap-and-trade and immigration down and hobble the administration’s agenda in this Congress. Today he made it clear that immigration was off the table, as far as he was concerned, for this year – if not next:

Sen. Lindsey Graham, the sole Republican working on a bill to legalize illegal immigrants, in effect put the bill on the shelf on Tuesday, saying that a debate now would destroy any prospects for passage and that the issue needs to wait until 2012.

The remarks likely signal the end of any serious chance for broad immigration legislation to pass this year, since Mr. Graham, South Carolina Republican, was the best hope for a partnership with President Obama and Democrats who want to write a bill.

Unlike the cap-and-trade bill, there has been no immigration bill yet written. So, given the process, even given priority, legislation would take months and months before passage. Graham was the forlorn hope of Reid and the Democrats on immigration. He effectively slammed that door in Reid’s face yesterday. And he’s playing some smart politics in how he’s framing his decision. He’s tapping into that latent anger within much of the country about the refusal of the federal government to secure the borders.

“It is impossible for me and any other serious Democrat to get this body to move forward until we prove to the American people we can secure our borders,” Mr. Graham told Homeland Security Secretary Janet Napolitano, who was testifying at a Senate Judiciary Committee hearing.

“I believe we can do it by 2012 if we’re smart,” he said.

Ms. Napolitano, a former governor of Arizona, disagreed with Mr. Graham’s evaluation of border security. She said she knows the southwest border as well as anyone and, by every measure Congress has laid out, the border is more secure: Fewer illegal immigrants are being apprehended, and more fencing and infrastructure have been deployed.

But under close questioning by Mr. Graham, Ms. Napolitano could not say whether she would declare the border secure if she were still the governor of Arizona. She called it an “unfair question.”

“It is a fair question, and I’ll give you my answer: I don’t think it is,” Mr. Graham said. “I think since the last effort to solve immigration the border situation has deteriorated.”

Popular position that plays well to the Tea Partiers and again points to ineffective government. Essentially, in one week, Graham has made the completion of the Democratic/Obama agenda much, much more difficult – if not impossible – during this session of Congress.

Things to think about on a beautiful Sunday

So, after jamming the health care reform legislation through Congress, Democrats begin to turn a wary eye toward November and the mid-term elections.

A good portion of them have deluded themselves into thinking Bill Clinton was right – that after they passed the legislation all the furor would subside and Americans would accept the new legislation – even embrace it.   The term “Judas goat” comes to mind.  And I think for those who bought into that nonsense, they realize they’ve certainly been led into the electoral slaughter pen. The Obama post law-signing sales tour has been anything but successful in changing the public’s perception of the law.  And it certainly hasn’t cooled the anger about its passage.

Some Democrats are giving up to “spend more time with their families” as has Bart Stupak.  They see the writing on the wall and don’t like what they’re reading.  Others are gearing up for a fight that many experts are sure they’ll lose.   Of course there are those on the left who’re sure the tide will turn.  James Carvelle recently said the GOP “peaked too soon”.  I don’t think so.

However, what are the Democrats going to do to reverse this trend that sees them losing big in November.  Well, the word was they were going to do energy next.   And that energy would contain a utility tax being called “cap-and trade lite”.  Frankly I don’t see them trying to introduce any new tax before November unless they’re just a lot less intelligent than they should be.

But they have to do something to take the public’s mind of HCR and do something positive for their chances in November.  I was thinking about that when this headline caught my attention – “Hispanic loyalty to Democrats wanes” with the sub – “Inaction on immigration reform has key voting bloc less enthused about election.” Ah ha! Why is this potentially the issue that will be most important to Dems prior to November – because of the nature of the election.

“The number of Latinos who say they are enthusiastic about midterm elections is the lowest we’ve ever seen,” said Barreto, whose firm polls extensively among Hispanics. In 2006, 77 percent of Hispanics were excited about voting. In a recent poll, however, just 49 percent were excited.

As Barreto noted, midterm elections usually feature lower turnout, which means victory hinges on energizing the party’s core supporters rather than persuading swing voters.

So Barreto is asserting that Hispanics are inclined to vote Democratic and unlike the 2006 mid-terms, have much less interest in voting in this mid-term because, well, see the headline.

Conclusion – look for a flurry of activity addressing “comprehensive immigration reform” in an attempt to energize the hispanic vote prior to November and, I’d guess, try to lure some independents back as well. Whether they get anything done or not is probably not as important right now, in the short time span involved, than appearing to make the effort. Whether that will be enough to save them remains to be seen.

But if it doesn’t – then what? What would a lame duck Democratic majority Congress attempt from November to January. My guess, and that’s all it is, with nothing to lose, they’d go for broke and try to ram as much of their agenda through as possible. And that means they’ll be working on a comprehensive energy bill, to include cap-and-tax, and possibly a VAT tax, and be prepared to introduce them the day following the mid-terms. Success might not be easy, but if Nancy Pelosi knows she’s losing her speakership and Harry Reid finds himself out of a job – anything is possible.

~McQ

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Pimping solar power

There’s no question that alternative and renewable fuels and energy sources are the way to go – if they’re feasible.  Solar, wind, geo-thermal and others all promise clean and renewable energy for our future.  But one of the more irritating things concerning some of those energy sources are the claims that they’re technologically ready for prime time.  Geo-thermal being the exception (but a very minor source), wind and solar aren’t at all where they need to be to provide for the energy needs of the world.  That doesn’t stop the usual suspects from implying they are.

One of the recent stories that helped blunt those sorts of assertions was that of Spain’s attempt to go green.  The result was a loss of jobs and heavy subsidies for the solar power industry.  Well apparently it is time to resurrect Spain and the solar industry and the New York Times obliges:

Although Spain’s long-term goal had been to produce 400 megawatts of electricity from solar panels by 2010, it reached that milestone by the end of 2007.

In 2008 the nation connected 2.5 gigawatts of solar power into its grid, more than quintupling its previous capacity and making it second to Germany, the world leader. But many of the hastily opened plants offered no hope of being cost-competitive with conventional power, being poorly designed or located where sunshine was inadequate, for example.

That’s wonderful, but in 2009, Spain’s power demand declined by 4.3% to 251,305 GWh.  So while solar is a least contributing, it’s not contributing much. And there are still serious and obvious problems with solar power. The example used comes from Florida:

Across 500 acres north of West Palm Beach, the FPL Group utility is assembling a life-size Erector Set of 190,000 shimmering mirrors and thousands of steel pylons that stretch as far as the eye can see. When it is completed by the end of the year, this vast project will be the world’s second-largest solar plant.

But that is not its real novelty. The solar array is being grafted onto the back of the nation’s largest fossil-fuel power plant, fired by natural gas. It is an experiment in whether conventional power generation can be married with renewable power in a way that lowers costs and spares the environment.

The fact that they’re experimenting with solar is a good thing. It needs a lot of that. However the fact that this covers 500 acres of land is notable. 500 acres. It is the world’s 2nd largest solar array. And its contribution? At its peak, it will produce 75 megawatts of power. That’s about enough to power 11,000 homes.

Sitting right next too it is a natural gas fired power plant. In fact, that’s the plant on which these panels are grafted. It covers far fewer acres than does the solar array and it produces 3,800 MW of power – enough to power 557,333 homes.

The difference couldn’t be more obvious. Solar is much too inefficient in terms of power provided/land use to be practical as a stand alone source. To produce the same power the gas fired plant does would require an array that covers over 25,000 acres.

And there are other drawbacks as well.

This project is among a handful of innovative hybrid designs meant to use the sun’s power as an adjunct to coal or gas in producing electricity. While other solar projects already use small gas-fired turbines to provide backup power for cloudy days or at night, this is the first time that a conventional plant is being retrofitted with the latest solar technology on such an industrial scale.

The project’s advantages are obvious: electricity generated from the sun will allow FPL to cut natural gas use and reduce carbon dioxide emissions. It will provide extra power when it is most needed: when the summer sun is shining, Floridians are cranking up their air-conditioning and electricity demand is at its highest.

The plant also serves as a real-life test on how to reduce the cost of solar power, which remains much more expensive than most other forms of electrical generation. FPL Group, the parent company of Florida Power and Light, expects to cut costs by about 20 percent compared with a stand-alone solar facility, since it does not have to build a new steam turbine or new high-power transmission lines.

“We’d love to tell you that solar power is as economic as fossil fuels, but the reality is that it is not,” Lewis Hay III, FPL’s chairman and chief executive, said on a recent tour of the plant. “We have got to figure out ways to get costs down. As we saw with wind power, a lot has to do with scale.”

In other words, solar has a place as an add on, an adjunct, a gap filler for peak times (if it is sunny), but as a stand alone, the technology is not ready for prime time. As noted most stand-alone solar arrays have small gas-fired turbines to provide backup for cloudy days an night. And those backups are used – a lot.

It also requires heavy government subsidy since the cost of producing solar power is so high (inefficiency due to technology and its limitations on cloudy days and obviously, at night).

The whole point of this is to get real about the alternatives and understand that while everyone would love to see them come into their own as dependable sources of energy that can replace dirtier sources, the technology doesn’t yet exist. Until it does, I’m not at all ready to trade the eye-pollution of acres and acres of solar panels for a few megawatts of power – not when we’re the largest producer of natural gas (the cleanest burning fossil fuel we have) in the world.

When solar is ready (and that means dependable and steady power on the minimum of land) I’m ready to see it deployed. But until then, if it’s going to be pimped, it would be nice if those pimping it would include the good, the bad and the ugly when they talk about it. Of course if they did that, it wouldn’t be pimping, would it?

~McQ

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$7 gas in our near future?

While Senators Graham, Kerry and Lieberman scramble around telling you how bright the energy future will be if they are able to pass their carbon tax bill, here’s a sober reminder of what it will actually bring to working Americans:

To meet the Obama administration’s targets for cutting greenhouse gas emissions, some researchers say, Americans may have to experience a sobering reality: gas at $7 a gallon.

To reduce carbon dioxide emissions in the transportation sector 14 percent from 2005 levels by 2020, the cost of driving must simply increase, according to a forthcoming report by researchers at Harvard’s Belfer Center for Science and International Affairs.

Not might increase. Must. Those targets are 10 years in the future. So “must” has to begin to take effect pretty soon if they’re to be met, wouldn’t you say?

As for that promise that 95% of Americans won’t see their taxes increased by a dime? Well, Obama’s agnostic about that now.

Take a good look at the figure and try to visualize the impact on your family’s budget. Also remember the transportation sector uses 70% of carbon based fuels. So not only is gas going to cost you about $4.50 more a gallon in taxes, every single necessity and consumer good you purchase will cost you more as well. Factor that in as well. Now try to imagine the impact on a struggling economy.

There are different ways to skin the taxation cat – and income taxes are only one of them. Of course it really doesn’t matter to you how they do it, the result remains the same: less money for you to use on your priorities and needs.

~McQ

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Zombie Cap-and-Trade coming to a utility bill near you soon

Senator’s Lindsey Graham, John Kerry and Joe Lieberman have bought the premise that “carbon = bad”.  But being politicians, looking at the economy and understanding the discontent of the voters with both health care reform and cap-and-trade, they’ve decided on a more incremental approach to implementing the latter.

First, they announce that “cap-and-trade as we know it is dead“. Of course cap-and-trade is, at base, a tax on carbon which is now considered a “pollutant” by the anointed. Apparently they believe you’ll believe that since it isn’t a comprehensive, across the board imposition of carbon taxation via the method of cap-and-trade, you’ll buy into the basic lie that this is wholly different.

Then they proffer their plan, which, of course, they claim is nothing like cap-and-trade. Really. It’s not:

Rather than include all major industrial sources of greenhouse gases in one broad economywide cap-and-trade system, the Senate trio will propose different types of limits for different sectors of the economy, beginning with electric utilities and then turning later to manufacturers such as chemical plants and pulp and paper mills.

Said another way, they prefer to tax carbon incrementally and not all at once. And that is the only real difference between Graham/Kerry/Lieberman and cap-and-trade.

The result? Read this finely wrought paragraph carefully to glean the effect:

“The bottom line with utilities is they’ll assume a compliance obligation from day one of the program,” the Senate staffer said, adding that no decisions have been made on how to allocate valuable emission allowances to the power companies except to incorporate an industry recommendation to shuttle revenue toward consumers to help pay for higher energy bills.

You have to love the “nuance” – the intent is to agree with the industry (allow them to raise their rates commensurate with the increase in cost to them) and “shuttle revenue toward consumers to help pay for higher energy bills”. In other words, subsidize consumers to pay for industry’s upgrades to cut carbon dioxide output.

The bottom line is your utility bills are going up from day one of the passage of this bill and the taxpayer – you – will be on the hook to subsidize yourself to pay for the increased cost.

Another in a long line of schemes we simply can’t afford and a convoluted and costly method of implementation.

And eventually, of course, the cost of other products (chemical companies? paper mills?) to include transportation and certainly at some point, gasoline and home heating oil will all be taxed as well.

Transportation fuels can expect a carbon tax that rises based on the compliance costs faced by the other major emitters. Several major oil companies, including Shell Oil Co., ConocoPhillips and BP America, floated the original idea on Capitol Hill, and the Senate trio has evolved their plan by funneling revenue toward transportation projects, reducing fuel consumption and lowering domestic reliance on foreign oil. The Highway Trust Fund is also a potential recipient of the carbon tax revenue, Senate aides said.

A carbon tax, by any other name, is still a carbon tax, isn’t it? And the timing of such legislation is just perfect. If passed anytime soon, the increased costs to industry should hit just about the time they’re beginning to climb out of recession.

As they make their case for the legislation, the three senators plan to tout their effort to incorporate energy and climate proposals into one overall package. And they will highlight the shift on carbon pricing away from cap and trade.

“It will be different from anything that’s been put on the table in the House or Senate to date,” Kerry said last week. “It’ll be comprehensive. And I hope it’ll change the debate.”

But it’s not “different” in the most important aspect – it taxes carbon. The premise is that carbon dioxide is a pollutant. For those who don’t accept the premise as accurate or scientifically valid, this is no different than cap-and-trade. It aims at the same result (taxing carbon) only approaching it in a slightly different and incremental manner.

~McQ

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