Free Markets, Free People


The Obama Administration’s war on carbon-based energy

A little reminder:


We are currently in the middle of a war against carbon based energy being waged by the current administration to do precisely what Obama promised as a candidate.  Raise energy prices. The method is irrelevant to him.  No “cap and trade”?   Fine.  He’ll find other ways.   And that’s exactly what is happening as we speak. 

For instance, via the EPA.  Background – apparently the EPA released its new proposed “Cross-state Rule” on July 7th – a couple of weeks ago – after previously sending it around for comment.  The rule is scheduled to go into effect on January 1st of 2012.  It is 1,323 pages long.   It seems they threw a new requirement into the mix that was not in the original proposed rule and that none of the energy generating owners knew was coming. It would require many to shut down.  The Electric Reliability Coalition of Texas picks it up from there:

ERCOT’s May11 report to the Public Utility Commission on the impact of the proposed environmental regulations did not address the impact of SO2 restrictions on coal plants in ERCOT because these restrictions on Texas were not included as part of the EPA’s earlier rule proposal.  We have not had time to fully analyze the entire 1,323-page Cross-State Rule released July 7 or to communicate with the generation owners regarding what their intentions will be.  However, initial implications are that the SO2 requirements for Texas added at the last stage of the rule development will have a significant impact on coal generation, which provided 40 percent of the electricity consumed in ERCOT in 2010.

Our concern is that the timing of the new requirements – effective Jan. 1, 2012 – is unreasonable because it does not allow enough time to implement operational responses to ensure reliability.  We fear that many of the coal plants in ERCOT will be forced to limit or shut down operations in order to maintain compliance with the new rule, possibly leading to inadequate operating reserve margins with insufficient time to reliably retrofit existing generation or build new, replacement generation.

So the EPA pushes out a new reg with drastic limits on SO2 that were not in the original draft of the regulation.   If left unchanged it will, per ERCOT, cause many coal-fired plants to shut down or limit their generation.  And with 40% of electricity generated by coal in Texas, that will be a significant loss of generating power.  Texas will then have to buy what it can’t generate itself and consumer prices will do precisely what candidate Obama hoped – and planned- for them to do.  Now think of this and its effect across the country.

Right in the middle of a recession (he’s not the only one trying his best to shut down coal). 


Of course that isn’t the only facet of the war on carbon based energy being waged by this administration.  Oil and gas also have seen what has now become to be called a “permatorium” on offshore drilling enforced by the administration.    Using the Deepwater Horizon blowout as its excuse, the administration has slowed permitting to a crawl and is dragging its feet as slowly as possible to, one suspects, fulfill Obama’s desire.

Study after study have shown that opening the process back up to at least the speed in which it was previous to the accident could create hundreds of thousands of jobs and billions in revenue.  A real step toward jumpstarting the economy.  Just yesterday another study made that very point:

Faster permitting of offshore oil and gas projects could create nearly 230,000 new jobs in 2012 and boost the economy by $44 billion, including a surge in tax revenue, according to an industry-funded study released Thursday.

The report by IHS CERA said job growth would extend beyond the Gulf Coast states, boosting employment indirectly as far away as California, New York, Florida, Illinois and Georgia.

The study, funded by the Gulf Economic Survival Team, a group of largely Louisiana-based energy and business interests, looks at data on the pace of permitting by the Bureau of Ocean Energy Management Regulation and Enforcement through April 30.

That’s six months after the end of a federal moratorium on offshore drilling, which the government imposed after last year’s Deepwater Horizon accident killed 11 workers and triggered a 5 million-barrel oil spill.

Permit approvals take 95 percent longer now than before the spill, the study says.

You can read the study for yourself here [pdf].  But that last number is telling.   There’s no reason for it.  The industry has stepped up and raised the bar significantly on safety.  The numbers quoted in the study projecting jobs and revenue are for 2012.  What administration concerned with jobs wouldn’t leap at such low hanging fruit?  This one.  Compared to historical trends, pending exploration plans are up by nearly 90%, approvals are down by 85% ,and the approval process has slowed from an average of 36 to 131 days.

And there’s no reason for it.

Meanwhile, what we have is tough to get to market.   Take West Texas Intermediate (WTI) oil

As for WTI, inadequate pipeline infrastructure makes it difficult to get the stuff out of North America — and that depresses its price, especially when demand is also weak. Its problems could also get worse before they get better. Output from North America is growing faster than expected. Canadian producers, for example, recently said output will grow from 2.7 million barrels a day to 3.4 million by 2014 and North Dakota production is surging. Meanwhile efforts to build new pipelines are mired in political controversy.

And they’ll remain mired in political controversy as long as this administration is in power.  Slowly, but surely, a nation with huge energy resources is being strangled by a government and President who want to intentionally raise energy prices.  Inadequate pipeline infrastructure means less product makes it to market.  Less product in the market place means higher prices for what does make it there.   Who pays?   Consumers.

However, proposals and applications to build pipelines, submitted in 2008, still await action:

In September 2008 TransCanada applied to build a new pipeline — the Keystone XL — to bring diluted bitumen from the oil-rich tar sands of Alberta to thirsty American refineries on the Gulf Coast. It is hardly a radical proposal. Canadian crude has been flowing to the U.S. for decades. Another Canadian company — Enbridge — operates the Clipper pipeline across the Canadian border to Chicago. In July 2010 TransCanada began operating its Keystone pipeline from Alberta to Cushing, Oklahoma, which is a major storage and pricing depot…TransCanada estimates that building the pipeline will mean more than $20 billion — $13 billion from TransCanada itself — in investment and 13,000 new American jobs in construction and related manufacturing. The company also expects more than 118,000 "spin-off" jobs during the two years of construction. TransCanada says it has signed building contracts with four major U.S. unions. It projects that construction will generate $600 million in new state and local tax revenue and that over its life the pipeline will generate another $5.2 billion in property taxes. The Energy Policy Research Foundation in Washington estimates that by linking to the XL, oil producers in North Dakota’s Bakken region will enjoy efficiency gains of between $36.5 million and $146 million annually. Lower transport costs will mean savings for Gulf Coast refiners of $473 million annually if the pipeline meets conservative expectations of shipping 400,000 barrels per day.

Jobs and revenue (in addition to those previously cited in the study), there for the taking, and this administration sits and waits.

And of course, the newest controversy to hit the energy community as to be used as an excuse not to act has to do with hydraulic fracturing, or “fracking”.   This is a 64 year old technology that has been used in the US on over a million wells.  Suddenly, after news of massive new findings of natural gas in shale formations, it is a problem.  And, of course, once it can be officially designated as a problem area, it must be investigated and regulated by the federal government.   Complaints of ground water contamination have derailed the exploitation of these energy assets while the politicians argue, dither and delay.  With those delays, again, go thousands upon thousands of potential jobs for Americans.

Name a reason for the sorry shape our economy is in and the government’s apparent refusal to aggressively move to help the energy industry create hundreds of thousands of jobs?  Review that video again.  It’s not long, but it plainly gives you the reason.

Is that what your government is there to do?


Twitter: @McQandO

Blunt talk from Bernie Marcus about Obama and economy

This has been a week for CEOs speaking out against the Obama administration.   This time it’s someone I actually admire.  Bernie Marcus, co-founder and CEO of Home Depot, has given an interview to Investors Business Daily and it is a pretty frank denunciation of the policies this administration has followed since coming into power.  It’s one of the things I admire about Marcus – he pulls no punches:

IBD: What’s the single biggest impediment to job growth today?

Marcus: The U.S. government. Having built a small business into a big one, I can tell you that today the impediments that the government imposes are impossible to deal with. Home Depot would never have succeeded if we’d tried to start it today. Every day you see rules and regulations from a group of Washington bureaucrats who know nothing about running a business. And I mean every day. It’s become stifling.

If you’re a small businessman, the only way to deal with it is to work harder, put in more hours, and let people go. When you consider that something like 70% of the American people work for small businesses, you are talking about a big economic impact.

Remember that Home Depot was launched during the then worst recession in 40 years and Marcus took it public 3 years later.   He’s built a business from the ground up and created thousands of jobs.   He actually understands what it takes.  He also clearly understands what will kill it. 

Here is one of the key points one has to understand about this administration and Marcus is on it:

IBD: President Obama has promised to streamline and eliminate regulations. What’s your take?

Marcus: His speeches are wonderful. His output is absolutely, incredibly bad. As he speaks about cutting out regulations, they are now producing thousands of pages of new ones. With just ObamaCare by itself, you have a 2,000 page bill that’s probably going end up being 150,000 pages of regulations.

We’ve been warning you from the beginning  to pay no attention to the man’s words and instead scrutinize his deeds.  Often they are the opposite of what he has said he’d do.  For example:

In January, however, he issued an executive order requiring federal agencies to review their regulations, looking for rules that are inefficient or outdated. His aim, he explained on The Wall Street Journal‘s op-ed page, was to "root out regulations that conflict, that are not worth the cost, or that are just plain dumb."

But there’s a catch: All those new regulations Obama put in place will not be subject to review. Just days after the president issued his order, an anonymous administration official conceded to the Journal that "new regulations will not be priorities for the look back." Meanwhile, more than a dozen federal bureaucracies—including the Securities and Exchange Commission, the Federal Communications Commission, and the National Labor Relations Board—are exempt from the review because they are independent agencies.

That’s another in a long list of many examples of him saying one thing and doing something else.  His speeches are politically driven and designed to give him political cover while his actions are ideologically driven and part of an agenda.

Marcus is then asked about the debt talks:

IBD: Washington has been consumed with debt talks. Is this the right focus now?

Marcus: They are all tied together. If we don’t lower spending and if we don’t deal with paying down the debt, we are going to have to raise taxes. Even brain-dead economists understand that when you raise taxes, you cost jobs.

With all the talk about tax increases it means we have a lot of zombie politicians who haven’t a clue, unfortunately.  I mean how difficult is this?   When you raise taxes in a recession, many businesses are going to have to make a decision aren’t they?  Use the money to pay the tax or hire.   Any guess which will win out?  You can’t go to jail for not hiring.

Finally, and this one is devastating in its forthrightness, Marcus is asked what he’d tell Obama if he could sit down with him and talk about job creation.   His answer is a classic:

IBD: If you could sit down with Obama and talk to him about job creation, what would you say?

Marcus: I’m not sure Obama would understand anything that I’d say, because he’s never really worked a day outside the political or legal area. He doesn’t know how to make a payroll, he doesn’t understand the problems businesses face. I would try to explain that the plight of the businessman is very reactive to Washington. As Washington piles on regulations and mandates, the impact is tremendous. I don’t think he’s a bad guy. I just think he has no knowledge of this.

One can only wish Contessa Brewer was around to ask about economic degrees.  Marcus is right about Obama’s lack of knowledge.  He’s surrounded by a lack of knowledge in this area if his policies are any indication.  As has been pointed out repeatedly, a president who was really concerned about jobs would be green lighting oil and gas exploration as fast as he could make it happen.  And he’s certainly made speeches about doing just that, but as usual, his actions betray his words.

Marcus has got a bead on this administration and this president.  As long as they are in power and continue with the course of their regulatory policies,  the economic malaise that has settled over this country will continue.  


Twitter: @McQandO

Temporary worker hiring outlook dismal

One of the things economists watch to try to gauge the job market is how the temporary worker market is doing.   Many times a rise in temp workers signals businesses are gearing up for more permanent hiring as the economy gains steam.  The opposite is many times also true.   And, unfortunately, it appears that this particular indicator isn’t giving us the warm fuzzy feeling  we hoped it would:

Last month’s fall in the number of temporary workers could herald continued weakness in the job market.

The total number of temporary employees placed by staffing agencies dipped by 12,000 last month and is down 19,000 the past three months, the Bureau of Labor Statistics reported Friday.

Now perhaps 3 months can’t be considered a “trend”, but it is pretty darn close.  And it parallels the news we’ve been getting about unemployment and the economy in general.

Temporary workers, however, could be the most telling signal. The number of contingent workers started growing in fall 2009, about six months before the broader job market began to emerge from the recession. From September 2009 to March, employers added nearly 500,000 temporary workers.

Roy Krause, CEO of SFN Group, a top staffing agency, says temporary placements for white-collar jobs in accounting, computers and legal remain strong. But those for lower-skilled light industrial, clerical and certain call-center jobs — which accounted for most of last year’s growth — have slowed. "They tend to be more sensitive to economic conditions," he says.

An example:

Chemical maker Arkema of Philadelphia employed about 150 temporary workers earlier this year. But it trimmed that total by about 50 in April and May as the weak economy prompted it to cut its 2011 forecast, Vice President Chris Giangrasso says. Arkema, he says, will likely not add this year to its permanent staff of about 2,500 in North America.

Key point – “weak economy”.  He had enough growth last year to warrant hiring temp workers but not full time staff.   Now he doesn’t even have enough business to warrant 2/3rds of the temps he hired and had to let them go.

That weakness in the economy continues to linger because, as we’ve noted any number of times, of the unsettled business climate.  And that’s something government could do to help the situation – back off regulation, taxes and interference (*cough* NLRB/Boeing*cough*) and stay out of the way.   It seems, though, that doing so is just not in this administration’s genes.

And so the negative indicators continue to pile up while the President of the United States and a complicit media attempt to make bad guys out of the GOP as they hold the line against economy crippling tax increases.

Go figure.


Twitter: @McQandO

[ad] Empty ad slot (#1)!

Did Obama save us from a second “Great Depression”?

That’s the spin from the White House and its supporters, or has been for quite some time.   The story goes, “if we hadn’t passed the stimulus bill, we’d have seen even worse economic performance than we have and we’d have worse unemployment to boot”.

Investor’s Business Daily (IBD) took a look at the claim and found it … wanting.

For instance:

White House economists forecast in January 2009 that, even without a stimulus, unemployment would top out at just 8.8% — well below the 10.8% peak during the 1981-82 recession, and nowhere near Depression-era unemployment levels.

The same month, the Congressional Budget Office predicted that, absent any stimulus, the recession would end in "the second half of 2009." The recession officially ended in June 2009, suggesting that the stimulus did not have anything to do with it.

Now we can argue the unemployment numbers and whether or not the real number of unemployed is approaching the Depression-era level (it’s not), but what can’t be argued are the forecasts from that time.  Obviously, the supporters of the stimulus knew of these forecasts and believed that with the stimulus we could come in well under those numbers.

As it turns out, unemployment shot past 8.8% and the recession ended exactly as forecasts said it would without any stimulus.  That makes it a bit difficult to argue the stimulus had a positive effect.  In fact, it can be argued that it may have had a negative effect.   But, there are also those who claim it would have been “a lot worse” without it, not to mention those who claim it was too small to begin with.

But that’s unsupportable in the face of the economic forecasts.

The argument is often made that the recession turned out to be far worse than anyone knew at the time. But various indicators show that the economy had pretty much hit bottom at the end of 2008 — a month before President Obama took office.

Monthly GDP, for example, stopped free-falling in December 2008, long before the stimulus kicked in, according to the National Bureau of Economic Research. (See nearby chart.) Monthly job losses bottomed out in early 2009 while the Index of Leading Economic Indicators started to rise in April.

So looking back we see all the indicators of an economy trying to begin a recovery.  Yet here we are still struggling and we spent a trillion dollars of borrowed money in the meantime on goodness knows what.

One other thing to keep in mind – the establishment of the most hostile climate toward business I’ve ever seen from government in my lifetime began about this time as well.

No, per IBD, it appears if there’s any credit at all for saving the country from depression, it should go to the other guy:

Also often overlooked is that a tremendous amount of stimulus already was in the economy when Obama took office, including President Bush’s $150 billion stimulus, two unemployment benefit extensions and $250 billion spent on "automatic stabilizers."

More importantly, the Bush administration pushed through the controversial $700 billion TARP program (which Obama sustained), while the Fed pursued an aggressive anti-recession campaign by, among other things, effectively lowering its target interest rate to zero.

Now agree with it or not (not – I’m still not convinced it was necessary), and buy into the “saved us from depression” or not (not – we’d have gotten over the pain much more quickly and wouldn’t be at the beginning of a “lost decade”), it appears that economic history is being revised here.   The Obama stimulus was a latecomer to the party.   Most of the action had already taken place.  What Obama and his administration did was create a hostile business climate.  The business community reacted by sitting on its hands and its money waiting for a clear signal (one they’ve yet to receive) that they’re not going to be taxed and regulated to death.

But Obama save us from a depression?  

Just for the record, It doesn’t appear to be the case.


Twitter: @McQandO

[ad] Empty ad slot (#1)!

Food police want to regulate foods "for the children"

At RightOnLine, Ann Macelhinny (author of “Not Evil Just Wrong) said that while many believe that the right wants to control what happens “in the bedroom”, it is the left which wants to control everything that goes on in every other room in the house to include the kitchen and garage (what car you should drive and what fuel it should use).

An example of her point comes to us today via this proposed “voluntary” regulation by the Federal Trade Commission, Centers for Disease Control and Prevention, Food and Drug Administration and the U.S. Department of Agriculture.

“The Interagency working group recommends that the food industry, through voluntary self-regulatory efforts, make significant improvements in the nutritional quality of foods marketed to children and adolescents ages 2 to 17 years,” the proposal says.

“By the year 2016, all food products within the categories most heavily marketed directly to children should meet two basic nutrition principles.  Such foods should be formulated to … make a meaningful contribution to a healthful diet and minimize the content of nutrients that could have a negative impact on health and weight.”

The foods most heavily marketed directly to children and adolescents fall into 10 categories: “breakfast cereals, snack foods, candy, dairy products, baked goods, carbonated beverages, fruit juice and non-carbonated beverages, prepared foods and meals, frozen and chilled desserts, and restaurant foods.”

Again, this proposed regulation calls for voluntary compliance, but apparently there’s also a proposed penalty for those foods which aren’t reformulated:

If the food is not reformulated, no more ads or promotions on TV, radio, in print, on websites, as well as other digital advertising such as e-mail and text messaging, packaging, and point-of-purchase displays and other in-store marketing tools; product placement in movies, videos, video games, contests, sweepstakes, character licensing and toy branding; sponsorship of events including sport teams and individual athletes; and, philanthropic activity tied to branding opportunities.

That includes softball teams that are sponsored by food companies and school reading programs sponsored by restaurants.

That’s why the FCC is involved (in case you were wondering).  Additionally, as most of us know:

“When regulators strongly suggest a course of action, it’s treated as a rule, not a suggestion,” said Scott Faber, vice president of federal affairs for the Grocery Manufacturers Association.  “Industry tends to heed these suggestions from our regulators, and this administration has made it clear they are willing to regulate if we don’t implement their proposal.”

That’s just reality.  Of course, the underlying premise is that parents are inept and children rule the household and make all the buying decisions as well as eating what they want when they want too.  Thus government must step in.

Oh – and of course, any reformulation will cost money which will, of course, be passed on to the consumer, if the consumer buys the product at all (vs. going to a substitute or alternative).

Between the EPA, the Department of Interior, and now this bunch, the war on US businesses continues apace.

Choice – the lost concept of freedom.


Twitter: @McQandO

[ad] Empty ad slot (#1)!

In the midst of terrible economic times, let’s raise energy prices dramatically and lay people off …

“Never let the reality of the situation stand in the way of a political agenda”, ought to be the slogan of the Obama reelection campaign.

In the midst of the worst economic downturn the executive branch of the Federal Government (the Obama administration), under the guise of the EPA is ratcheting up standards that will shut down many coal fired plants and their jobs as well as cost billions for utilities to keep other coal plants open.  Result:

Consumers could see their electricity bills jump an estimated 40 to 60 percent in the next few years.

The reason: Pending environmental regulations will make coal-fired generating plants, which produce about half the nation’s electricity, more expensive to operate. Many are expected to be shuttered.

Of course the timing of the increase is predictable:

The increases are expected to begin to appear in 2014, and policymakers already are scrambling to find cheap and reliable alternative power sources. If they are unsuccessful, consumers can expect further increases as ore expensive forms of generation take on a greater share of the electricity load.

Yup, safely reelected (he hopes), Mr. Obama will smile benignly as he watches more of you hard earned money go for what should be cheap and plentiful energy based on incredibly abundant coal.  Instead we’ll be chasing “reliable alternate power sources”.   One would like to believe we’d go to natural gas, but then those abundant finds are also being slow walked through the red tape of the government approval process.

More than 8,000 megawatts of coal-fired generation capacity has been retired in the U.S. since 2005, according to data from industrial software company Ventyx. Generators have announced they plan to retire another 21,000 megawatts in the near future, and some industry consultant studies estimate 60,000 megawatts of power, enough for 60 million homes, will be taken offline by 2017.

This in the midst of projected energy shortages as demand increases while we shut down power generation assets.

Certainly we may want to, at some time in the future, shut down all coal fired plants.  We may collectively wish to see other energy sources used as well.  But that would require a coherent transition plan, viable alternatives, phasing and a little common sense (or essentially being in touch with the reality that one finds around them).

This is  a agenda driven, safely-after-the-election, regulatory fiat that will cost workers their jobs and consumers a higher portion of their earned income in poor economic times.

Another, among a myriad of reasons why the man in the White House needs to be in his own house come 2014.


Twitter: @McQandO

[ad] Empty ad slot (#1)!

Top 10 cities with the most pink slips and the 5 worst states to do business in

What do they have in common?  Well, you tell me (but my guess is onerous taxation, over-regulation and an anti-business climate).  Here are the cities that have lost the most jobs recently according to the Daily Mail?

  1. Los Angeles, California, 17,393 workers
  2. New York, New York, 14,312
  3. Chicago, Illinois, 7,835
  4. San Francisco, California, 5,117
  5. Riverside, California, 4,852
  6. San Diego, California, 4,382
  7. Philadelphia, Pennsylvania, 2,747
  8. Seattle, Washington, 2,601
  9. Sacramento, California, 2,467
  10. Pittsburgh, Pennsylvania, 2,205

OK, you say, LA has a lot more jobs to lose than say, Montgomery AL.   True and understood.  But, there’s more.  Take a look at the states in which you find the job losses.  Now peruse the list of the “best/worst states to do business in”.

Bottom 5?

46 Michigan

47 New Jersey

48 Illinois

49 New York

50 California

All deep blue states.  If you’re wondering, PA comes in at 39th just ahead of OH, WV, HI, CT and MA and behind MS.  Yeah, that’s right, MS.  Everyone’s 50th state in most every other comparison.  WA was 34th.

Contrast that with the top 5 states  – TX, NC, FL, TN and GA.  All red, all right to work states, all southern states.  Draw your own conclusions.  By the way, the ratings of the “best/worst states” came from a group of people who ought to know and be able to make such a determination as it relates to business.  The rankings are the product of surveying 550 CEOs.

And, as they indicate, it isn’t rocket science needed to attract and keep businesses in a state:

Business leaders graded the states on a variety of categories grouped under taxation and regulation, workforce quality and living environment. “Do not overtax business,” offered one CEO. “Make sure your tax scheme does not drive business to another state. Have a regulatory environment and regulators that encourage good business—not one that punishes businesses for minor infractions. Good employment laws help too. Let companies decide what benefits and terms will attract and keep the quality of employee they need. Rules that make it hard, if not impossible, to separate from a non-productive employee make companies fearful to hire or locate in a state.”

That, in my estimation, is the primary difference between Texas and California, and why Texas is booming and California is drowning.

Food for thought.


Twitter: @McQandO

[ad] Empty ad slot (#1)!

Dems double down on government spending in face of stimulus fail

It seems “insanity” has indeed gripped the party of the left.  That is, doing the same thing over and over again and expecting different results:

House Democrats this week have amplified their calls for new spending on infrastructure and other federal projects in the face of May’s discouraging job-creation figures.

Even as Republicans are insisting on "trillions" of dollars in spending cuts, Democrats maintain that a targeted injection of additional federal dollars in the near-term would go a long way toward reversing the hiring slump. Friday’s disappointing job report, they say, only bolsters their case.

I’ll again remind readers that it was the Obama administration and Democrats who said that if we’d give them the almost one trillion dollars in borrowed stimulus money, they’d keep unemployment under 8%.  And, of course, the plan was to spend all that money on “infrastructure and other federal projects”.

Worked real well didn’t it?

Now, with much of every dollar spent still coming from borrowed money, they want to repeat the failure while saddling the economy with even more debt?

It all comes down to what they believe the role of government to be:

"The American people, while concerned about the deficit, place much more emphasis on job creation, and they see a role for the government," Rep. Raul Grijalva (D-Ariz.) told The Hill. "A fast injection of job stimulus on the public side would help tremendously. … It [the job report] helps our argument about investment."  

No.  It wouldn’t “help tremendously”.  If that were the case, the stimulus would have helped “tremendously” and we’d be looking at less than 8% unemployment as promised instead of 9.1%.  But as is obvious to everyone but Democrats, it didn’t help at all.    In fact, considering that 9.1% unemployment rate, it can be argued that things got worse.

That’s because where the government actually could help, it won’t, can’t or isn’t willing to help.   Deregulation, for instance.  Make it easier for businesses to do business and hopefully expand and hire.   They can quit making war on the private sector as well.  The NLRB’s shameless politically motivated attempt to shut down Boeing in South Carolina at the behest of unions.   The seemingly permanent moratorium in the Gulf of Mexico and the slow-walking of the permit process that has crippled domestic oil and gas production and cost thousands of jobs and millions, if not billions, in economic impact.  Cut taxes and leave more in the pockets of both consumers and business.  Cut spending – deeply – and quit borrowing money.

Unfortunately, all that is boring economics and at conflict with the “government is the answer” mindset that is prevalent in Democratic circles:

Rep. Earl Blumenauer (D-Ore.) said that only in Washington is targeted new spending being demonized.

"Once you get outside the Beltway, almost everyone agrees that we should be rebuilding our crumbling infrastructure and investing in clean American energy that reduces our dependence on oil," Blumenauer said.

I have no idea where this guy gets this nonsense, but I live out here and I don’t hear anyone claiming that the solution to our problem lies in “rebuilding our crumbling infrastructure” and “investing in clean American energy”.  Not once have I heard the typical Americans I know ever mention those two options as how government should be responding.

So either Rep. Blumenauer has selective hearing, or he’s making it up on the fly.  Most people I’ve talked too are convinced that government is the problem, not the solution.  That government can contribute to a recovery by getting the heck out of the way, quit throwing road-blocks in front of business, reduce taxes and cut spending and getting its own house in order.

But double down and increase spending on make work and pie-in-the-sky energy projects? 

No, not what I’m hearing.  At all.


Twitter: @McQandO

[ad] Empty ad slot (#1)!

The cost of the regulatory state

One issue that deserves much more attention is the cost of the powers government exercises to regulate.  The Competitive Enterprise Institute has just issued a study that does exactly that – study the cost of the regulatory state and the impact it has on our economic viability.

You shouldn’t be surprised to learn that regulation is up and so is its cost (per the report, the cost of regulatory compliance in this country is about $1.75 trillion):

Among the report’s findings:

  • The Federal Register stands at an all-time record-high 81,405 pages.
  • In 2010, federal agencies issued 3,573 final rules.
  • While agencies issued 3,573 final rules, Congress passed and the president signed into law a comparatively “few” 217 bills. Considerable lawmaking power is delegated to unelected bureaucrats at agencies, an abuse addressed recently in proposals such as the REINS Act.
  • Alarmingly, proposed rules in the Federal Register have surged from 2,044 in 2009 to 2,439 in 2010, a jump of 19.3 percent.
  • Of the 4,225 rules now in the regulatory pipeline, 224 are “economically significant” meaning they wield at least $100 million in economic impact—this is an increase of 22 percent over 2009’s 184 rules.
  • Given 2010’s government spending (outlays) of $3.456 trillion, the regulatory “hidden tax” of $1.75 trillion stands at an unprecedented 50.7 percent of the level of federal spending itself.
  • Regulatory costs exceed all 2008 corporate pretax profits of $1.463 trillion.
  • Regulatory costs dwarf corporate income taxes of $157 billion.
  • Regulatory costs tower over the estimated 2010 individual income taxes of $936 billion by 87 percent—nearly double the level.
  • Regulatory costs of $1.75 trillion absorb 11.9 percent of the U.S. gross domestic product (GDP), estimated at $14.649 trillion in 2010.
  • Combining regulatory costs with federal FY 2010 outlays of $3.456 trillion reveals a federal government whose share of the entire economy now reaches 35.5 percent. 

The report urges reforms to make the regulatory costs more transparent and accountable to the people, including annual “report cards” on regulatory costs and benefits, and congressional votes on significant agency rules before they become binding.

Take a moment to absorb those numbers.  And ponder, for a moment that final percentage.  35.5% of what our economy produces now is related to government spending or compliance to a government regulatory regime.

Here’s a thought – if the government wants to spur economic growth, create jobs and, most likely, increase revenue for government, perhaps a serious – and I mean very serious- look ought to be taken (along with action, please) at the mountain of costly regulations now imposed by said government and a majority of them rolled back.  Over 81,000 pages of regulations, and I’m sure some bureaucrat out there believes everyone of them is necessary.

Sane people know better. Much of it is out of control or heading that way.  For instance:

Runaway regulation under the Clean Air Act.

In regulating greenhouse gas emissions, the Environmental Protection Agency (EPA) is trying to pick and choose which provisions of the Clean Air Act it wants to implement. But that is not how the Clean Air Act was set up. Under the Act, regulation under one section trips regulation under multiple other sections. Even if EPA tries to avoid this outcome,environmental pressure groups have already filed several lawsuits to compel the agency to begin regulating greenhouse gas emissions under other sections. Unless Congress intervenes, every building larger than a single-family dwelling likely will become subject to carbon controls in the near future.

Of course the next logical step after pulling in all structures other than “single-family” homes is to do what?  That’s right, pull in single family homes.


EPA’s administrative cap-and-trade power grab.

The EPA plans to propose greenhouse gas emissions control technology standards for power plants in July2011 under the Clean Air Act. One of the primary options the EPA is reportedly considering is a cap-and-trade program. The fact that even the Democratic-controlled 111th Congress refused to enact a cap-and-trade program appears not to matter to Climate Czar Carol Browner or EPA Administrator Lisa Jackson. The EPA’s authority under the Clean Air Act requires clarification and the agency’s unilateral actions require investigation.

Can’t get it done by Congress (whose job it is, by the way).  Then do it by regulatory fiat.


De facto moratorium on American oil and gas production.

Political decisions by Interior Secretary Ken Salazar and his appointees have led to a steep decline in domestic oil and gas production on federal lands and offshore areas. Production is already down and will almost certainly decline further. The extent of these cancellations is not fully apparent because they have been done piecemeal. An investigation is needed to put all the pieces together and thus show the damaged one and being done to America’s domestic oil and gas industry.Congress refused to enact a cap-and-trade program appears not to matter to Climate Czar Carol Browner or EPA Administrator Lisa Jackson. The EPA’s authority under the Clean Air Act requires clarification and the agency’s unilateral actions require investigation.

These are the types of regulatory abuse and over reach that are harming our economy, costing us jobs and making us less competitive.

Not only do we need to get government spending back under control, we badly need to get the regulatory state back under control as both spending and over regulation are eating up increasingly large parts of our GDP.


[ad] Empty ad slot (#1)!

Our energy future should involve a lot of shale gas–if our government will allow it

This map should give you a good feeling as you survey it:




All the red you see in the US is a good thing.  This graphically shows the results of a survey conducted by the US Energy Information Administration in which it assessed world shale gas resources.  The legend is a little hard to read so, for those with eyes like mine:

  • Red colored areas represent the location of assessed shale gas basins for which estimates of the ‘risked’ gas-in-place and technically recoverable resources were provided.
  • Yellow colored area represents the location of shale gas basins that were reviewed, but for which estimates were not provided, mainly due to the lack of data necessary to conduct the assessment.
  • White colored countries are those for which at least one shale gas basin was considered for this report.
  • Gray colored countries are those for which no shale gas basins were considered for this report.

And here’s a chart that give you some of the numbers.  Pay particular attention to the numbers in the left hand column:



The chart doesn’t show all of the 32 countries, but I wanted you to see the amount of shale gas that is technically recoverable and the amount we import (10%).  With the development of these gas fields  we can up our domestic production and consumption (an alternative to oil in many cases) as well as become a net exporter.

Says the report:

The development of shale gas plays has become a “game changer” for the U.S. natural gas market. The proliferation of activity into new shale plays has increased shale gas production in the United States from 0.39 trillion cubic feet in 2000 to 4.87 trillion cubic feet in 2010, or 23 percent of U.S. dry gas production. Shale gas reserves have increased to about 60.6 trillion cubic feet by year-end 2009, when they comprised about 21 percent of overall U.S. natural gas reserves, now at the highest level since 1971.

In fact, this assessment provides good news for much of the world:

To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of January 1, 2010 are about 6,609 trillion cubic feet, and world technically recoverable gas resources are roughly 16,000 trillion cubic feet, largely excluding shale gas. Thus, adding the identified shale gas resources to other gas resources increases total world technically recoverable gas resources by over 40 percent to 22,600 trillion cubic feet.

Of course the catch is “technically recoverable” – i.e. is it worth bringing to market even if we have the technology to do so?  That depends on a number of things, to include the cost governments place on those attempting to bring it to market, and the hurdles governments may place in their way if they attempt to do so – such as the hydrofracking controversy.

It is estimated that 80% of the new oil and natural gas wells in the US will require hydraulic fracturing (hydrofracking).  What hydraulic fracturing does is create tiny fissures in the rock so the oil and gas can flow through the wellbore to the surface.  Hydrofracking has been used in over 1 million – yes, that’s right – 1 million wells in the last 60 years (here’s an animation of the process if you’re interested).  The fracturing takes place hundreds, if not thousands of feet below the aquifer.

But, as with all things, the process which as been in use for over 60 years and with a million wells is now “controversial” with unsubstantiated claims that hydrofracking in these shale sites will cause contamination of the ground water.

Yet no evidence of that is apparent in the history of the process or an investigation conducted by the EPA in 2004:

U.S. government studies have found no evidence of drinking water contamination from hydraulic fracturing. In 2004, the Environmental Protection Agency (EPA) conducted a study to assess the contamination potential of underground drinking water sources (UDWS) from the injection of hydraulic fracturing fluid into coalbed methane (CBM) wells. EPA found "the injection of hydraulic fracturing fluids into CBM wells poses little or no threat to USDWs and does not justify additional study at this time." EPA also reviewed incidents of drinking water well contamination believed to be associated with hydraulic fracturing operations. It found "no confirmed cases linked to fracturing fluid injection of CBM wells or subsequent underground movement of fracturing fluid."

In 1998, the Ground Water Protection Council (GWPC) and a team of state agency representatives conducted a survey of state oil and natural gas agencies to establish an accurate assessment of the number of active CBM wells associated with hydraulic fracturing. Based on the survey of 25 oil and natural gas producing states, the GWPC concluded, "there was no evidence to support claims that public health is at risk as a result of the hydraulic fracturing of coalbeds used for the production of methane gas."

So, the map points to a bonanza of natural gas that is technically recoverable, would cover our own domestic needs easily (and may see some oil dependent means of transportation and energy production look toward to switching to cleaner burning natural gas) and even have us exporting the product versus importing it.

If … key word … if the hydrofracking Chicken Little’s aren’t allowed to have their way and delay or stop such exploitation.

Look, no one wants ground water contamination – no one.   But a system that has been in use for over 60 years an a million wells with no evidence it has contributed to ground water contamination has enough time and data points to help assure us of process reliability in this case.  Here’s something we can do now to help alleviate our energy deficit and cut dependence on imports.

Will we take advantage of this opportunity?

That remains to be seen.


[ad] Empty ad slot (#1)!