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.
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.
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.
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.
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?
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.
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.
I’m not sure how else to characterize this in a strategic and national security sense:
Canada, faced with growing political pressure over the extraction of oil from its highly polluting tar sands, has begun courting China and other Asian countries to exploit the resource.
The pressure is coming from the United States. The “pollution” is carbon. But the bottom line is the tar sands are going to continue to be exploited in Canada. The question is, to whom will the oil extracted go?
With the US backing away, the answer, apparently, is China.
In the most significant deal to date, the Canadian government recently approved a C$1.9bn (£1.5bn) investment giving the Chinese state-owned oil company PetroChina a majority share in two projects. Prime minister Stephen Harper said: “Expect more Chinese investment in the resource and energy sectors … there will definitely be more.” China’s growing investment in the tar sands is seen in Canada as a useful counter to waning demand for tar sands oil from the US, its biggest customer. The moves, which have largely gone unnoticed outside north America, could add further tension to efforts to try to reach a global action plan on climate change.
The projects, which will begin coming on line over the next decade, are seen as crucial to a long term strategy of finding new sources of energy as China’s economy continues to expand.
How about that … a country with a “long term strategy” in which it seeks sources of new energy for future growth. Not so in the US where Ken Salazar’s Interior Department seems to be using every means available to it to slow down the possibility of finding and bringing new carbon based resources on line for future consumption:
The Interior Department has informed Congress that it will take over two years to complete an environmental study needed to allow major seismic surveys of Atlantic coast oil-and-gas resources – a timeline that industry groups allege is too slow.
In an early February letter to House and Senate appropriators, Interior provides a timeline for completing a “programmatic environmental impact statement” on the effects of seismic testing and other assessment techniques.
It anticipates a “record of decision” – which is the final agency sign-off – in mid-April of 2012.
If I’m not mistaken, that will put us 4 years into the decision to allow drilling in the OCS. And, of course, seismic surveys and their effects are well known and have been for decades. The seismic surveys would update decades old surveys.
The point, of course, is these new Interior requirements completely derail the timeline established by the Interior Department in 2007:
Interior’s 2007-2012 offshore leasing plan calls for a lease sale off Virginia’s coast in 2011, although the sale could be delayed.
No company is going to bid on leases until those seismic surveys are complete.
The long range consequences for the US of these sorts of short sited policies should be obvious. And I don’t expect them to get any better any times soon despite the promises President Obama made in his State of the Union address.
Because where I come from, this doesn’t suffice:
President Barack Obama is spending $2.1 million to help Suntech Power Holdings Co. build a solar- panel plant in Arizona. It will hire 70 Americans to assemble components made by Suntech’s 11,000 Chinese workers.
So it’s not really a “solar-panel plant”, it’s a “solar-panel assembly plant”. Are those “green jobs?” How so? They don’t make the parts. It’s not their technology. To me it’s not much different than assembling an air conditioner. Or a car. It’s not a manufacturing job, it’s an assembly job, and it is no more “green” than assembling an auto-winding watch (I mean, there’s no battery in the watch, so that makes it a “green job” right?).
And at $30,000 a job (subsidy), it’s clear how government efficiently and carefully spends your money and should be trusted with more.
Just to make sure I’ve got this – we’re spending 30K per job subsidizing a Chinese manufacturer’s assembly plant in the US? Have I got that straight? All so a) a claim can be made that jobs were “created” and b) that the created jobs were “green jobs”.
Laughing and derision optional but highly recommended at this point. Keep in mind though that the government’s answer to making “real” green jobs available in America is cap-and-trade (yeah, I know that’s counter-intuitive, but only if you live outside the beltway). Don’t believe me? Read the rest of the article.
This is what it takes to create “Green Jobs“?
President Obama’s announcement earlier today of an additional $2.3 billion in federal tax credits for creating approximately 17,000 subsidized temporary jobs in the green energy industry is drawing a less than enthusiastic response from Thomas J. Pyle, president of the Institute for Energy Research:
“Show me one other industry that requests and receives a nearly 30 percent taxpayer subsidy. That’s what the wind and solar industries require – at a minimum – to exist. All the president did today is throw more money at an unproven technology that is not economically viable in the marketplace. Unfortunately, the only winners in this latest taxpayer giveaway will be Wall Street money managers and corporate interests in the wind and solar industry.
Of course, dividing the subsidy by the number of jobs shows us that each job costs the taxpayers $135,295 each. The usual inefficient and wasteful spending for which the government is famous.
But there’s another bit of truth in Pyle’s statement that the right likes to mostly ignore – corporate interests, not just in the wind and solar industry, are deeply intertwined with political interests in this country and those corporate interests use their ability to influence in ways that give them an advantage (even to the point of helping to write legislation). However, that’s a post for another day.
Today, we’re looking at a perfect example of a governmental distortion of a market. Without the subsidy, the wind and solar industries most likely wouldn’t survive. But since it is a politically favored industry, it gets a hand out to keep it afloat. Meanwhile, it finds only a limited market share because the alternatives – coal, natural gas, oil, etc. – are much cheaper, more reliable and more readily available. Says Pyle:
“If the president really wants to create an environment that will foster economic growth and job creation, he need not look any further than the domestic oil, gas and coal industries. These three industries and energy sources built this nation. For the administration to continue to ignore this fact and to keep the vast resources that taxpayers own under lock and key at the Department of Interior is irresponsible and a disservice to the American people.
“The Outer Continental Shelf (OCS), if opened for business, would create over 1 million high-wage jobs. It would reduce our dangerous dependence on hostile nations for their energy resources and spur economic growth across all 50 states. Development of these energy resources will create sustainable employment, not taxpayer dependent make-work jobs.”
Instead, as I pointed out in a post last week, this administration is doing the opposite. New rules from Secretary of the Interior Ken Salazar make such exploration and exploitation of these known reserves much more difficult to do. It is step 2 in the government’s distortion of the energy market.
And it’s distortion of markets does have an effect – mostly unintended and, frankly, negative. Take the biofuel mandates Congress passed into law a year or so back.
It sounded like a good idea: Provide a little government money to convert wood shavings and plant waste into renewable energy.
But as laudable as that goal sounds, it could end up causing more economic damage than good — driving up the price of raw timber, undermining an industry that has long used sawdust and wood shavings to make affordable cabinetry, and highlighting the many challenges involved in decreasing the nation’s dependence on oil by using organic materials to create biofuels.
In a matter of months, the Biomass Crop Assistance Program — a small provision tucked into the 2008 farm bill — has mushroomed into a half-a-billion dollar subsidy that is funneling taxpayer dollars to sawmills and lumber wholesalers, encouraging them to sell their waste to be converted into high-tech biofuels. In doing so, it is shutting off the supply of cheap timber byproducts to the nation’s composite wood manufacturers, who make panels for home entertainment centers and kitchen cabinets.
The subsidy has distorted the market that has historically seen timber byproducts go to composite wood manufacturers and, since the subsidy pays more, seen those byproducts go to the production of biofuels. Result? Higher timber prices, an important market segment in trouble and an industry which couldn’t survive in the market without the subsidy continues to function.
In fact, the tail is wagging the dog as the government uses its power and purse to attempt to meet the arbitrary mandates that Congress passed into law:
The federal government is actively working to support the growth of as many of these biomass crops as possible, in part to meet requirements under the 2007 energy bill: The country must produce 5.5 billion gallons of advanced biofuels annually in five years, and 21 billion gallons by 2022. Right now, almost no U.S. land is devoted to raising biomass crops; according to congressional estimates, by 2022 the country will need between 22.2 and 55.5 million acres for this purpose
Did you get that? In 13 years it is estimated that between 22 and 55 million acres will be devoted to growing crap “crops” – like switch grass – instead of food – just to feed this contention that biofuels are better for us than fossil fuels. Those, I suppose, will be “green jobs” as well.
Speaking of green jobs – the government doesn’t even have a definition of what that means:
Even the Bureau of Labor Statistics, which has been cogitating on the problem since last spring, hasn’t made up its mind on how to count green jobs.
“There’s alternative ways for doing that and we haven’t yet finalized our methodology,” says John Galvin, associate commissioner for employment statistics at the BLS.
So you, and they, can call just about whatever you want a “green job” – and I have little doubt that the spinmeisters in government will do exactly that for the foreseeable future (especially when inventing statistics for “created and saved” jobs).
In reality I have no problem with “green jobs” or alternate and renewable fuels. I only have one demand – that they carry their own weight in the marketplace. Subsidizing each doesn’t meet that demand. Instead it unleashes the law of unintended consequences in all its negative fury and distorts exiting markets in ways that cost jobs and productivity that this economy badly needs. As Thomas Pyle points out, we have existing resources and existing technology that could create more available energy while creating thousands of good paying jobs not requiring a single dollar in subsidies that we’re ignoring to push an industry (or industries) which aren’t economically viable and, with existing technology, won’t be for years if not decades.
It is a short-sighted, politically driven policy which will hurt us in the long run. While this administration talks about a “comprehensive” energy policy, it is clear it has settled on one which is focused on an nonviable but politically correct industry to the detriment of the viable but carbon based existing industry. That is not a comprehensive policy regardless of how many times the politicians claim it is or put it in the title of their bills. A comprehensive strategy would recognize the reality with which we’re faced, exploit the traditional carbon based fuels while putting together a rational timetable for switching over to alternative (nuclear) and renewable fuels as the technology proved viable and cost effective.
Instead we get subsidized distortion of the markets, eschewing of readily available carbon based fuels and a push for jobs no one has yet to be able to define.
It’s madness. And, unfortunately, it is a madness which is going to cost us dearly in the not too distant future.