Entries Tagged as 'energy policy'

It’s True, Both Parties Subsidize Energy

October 25th, 2011 at 6:13 pm 13 Comments

A guy closing in on retirement can speak uncomfortable truths that he might not have felt as free to share before.

John Rowe, the soon-to-retire CEO of the giant utility Exelon, rolled out a few grenades about energy politics in a recent interview published in the October 22nd Wall Street Journal.

Rowe argues that market-friendly Republicans are as eager to pick technology winners as government-knows-best Democrats are.

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Has Perry Read His Own Jobs Plan?

David Frum October 19th, 2011 at 8:59 am 30 Comments

To my mind, Rick Perry’s most telling moment in the Las Vegas debate came before the famous hand-on-shoulder exchange with Mitt Romney. It came when he talked about his jobs/energy plan:

[T]he plan that I laid out last week, where we talk about the energy industry and this treasure trove that we have under this country, and we need to recognize that the administration that we have today is blocking mining that could be going on in the state of Nevada. I talked to Brian Sandoval before I came in here today. You have an administration that is killing jobs because they want to move us to a green energy. You have a secretary of energy who has basically said he wants to see gas prices up close to the European model. The president himself said electricity rates are necessarily going to skyrocket.

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Perry’s Wind Energy Mandate

September 8th, 2011 at 2:25 pm 8 Comments

What would a President Perry mean for the U.S. energy-wise?

First, Perry’s election would mean environmentalists might as well scrub “climate change” and “global warming” out of their vocabularies for four years. There would be no climate initiatives offered or accepted as such by a president who dismisses rising temperatures as the concoction of unnamed conspirators, even as his state bakes and burns.

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Choosing Our Energy Priorities

David Frum June 27th, 2011 at 9:28 am 20 Comments

Human Events offers a “Top 10″ list of reasons to think that President Obama favors expensive energy.

Here’s number eight:
8.  Stifles U.S. oil drilling, while subsidizing Brazil’s: The BP oil spill prompted the President to impose a drilling moratorium in the Gulf making deepwater drilling permits impossible to obtain.  So when oil companies moved their rigs to areas off the coast of Brazil where they were welcomed, Obama offered billions in US taxpayer money to aid the venture, creating new jobs in South America.  By refusing to allow U.S. energy sources to be developed, the President is ensuring increased reliance on expensive and volatile foreign oil.

I know this point about US oil vs. Brazilian oil has become a major right-of-center talking point.

But here’s the strange thing: if what you want is cheap oil, you want oil neither from Brazil nor from the Gulf of Mexico. The cheapest oil in the world comes from the Middle East: Saudi Arabia, Kuwait, and so on.

And as between Gulf of Mexico oil and Brazilian oil, Brazilian oil is the cheaper (but not cheap) alternative.

Human Events lambastes the Obama administration for delaying approval of a second pipeline to Canada’s oil sands. (That’s proof number nine.) But Canadian oil sands oil costs even more to produce than Brazil’s offshore oil.

The Human Events list nicely illustrates why US energy policy is such a mess. There are three different things we can want from energy policy, but we can achieve (at most) two at the same time.

We can have energy that is cheap: electricity from coal, oil from the Middle East. But cheap oil is not secure, and cheap electricity is not clean.

We can have energy that is secure: oil from North America and other politically reliable producers. But secure oil costs more than Middle Eastern oil.

Or we can energy that is clean: electricity from nuclear power or renewable sources; alternative sources of motor fuel. But those sources are not cheap. Electricity from solar sources costs between five and 10 times as much as coal-fired electricity.

So we have to make choices.

Choice-making begins with realistic understanding of the trade-offs. Green energy advocates want to conceal how very expensive their preferred policy will be. They talk about creating “green jobs” to distract attention from the impact of expensive energy on everybody else’s jobs.

But advocates of drilling in US coastal waters can be equally misleading, when they suggest we can lower prices by drilling more at home. The marginal cost of US oil greatly exceeds the marginal cost of Middle Eastern oil. We can enhance security by diversifying sources of supply, agreed. But there is only one world price, and that price is set in global markets in which the US will never again be the marginal supplier. Which means that the familiar formula “drill here, drill now” is not a formula to “pay less.”

It’s a good discipline for all of us to be explicit about rank-ordering our energy preferences. I’d say: security first, cleanliness second, cheapness third.

Which is why I favor intensifying US-Canada energy cooperation and shifting from coal-fired to nuclear-generated electricity. Carbon taxes would be a good mechanism to facilitate this shift.

Maybe you have a different rank ordering? Perhaps (as is implicitly the case for Human Events), cheapness first, security second, cleanliness third?

OK then. You’ll want to maximize imports of Middle Eastern oil, ignore nuclear power, and forget about the Gulf of Mexico.

Whatever your rank ordering, unless you think clearly about what you wish to achieve, you are very unlikely to achieve it.

GOP Punts on a Real Energy Plan

May 8th, 2011 at 3:43 pm 22 Comments

Last Tuesday, online Johns Hopkins University hosted Congressman Alan Nunnelee (R-Miss) to speak to the College Republicans and College Democrats, discount as well as a handful of students from surrounding institutions.

Nunnelee entered the auditorium after the students had filed in and taken their seats.  Grinning, patient he made his way through the room, extending his hand to various students.  As he moved fluidly through the crowd, he stopped to chat with some, asking: What’s your name? Where are you from? What do you study? After a brief introduction, Nunnelee approached the podium and his soothing southern drawl began to echo through the room.

Though Nunnelee was invited to Hopkins to discuss US energy policy, he took the opportunity to share his views on a variety of issues.  He started by telling his reasons for running for Congress. He said that becoming a grandfather compelled him to run. “The reasons for saying no were outweighed by the obligation to pass on a better life to my children and grandchildren,” he said, “the country was slipping away from us.”

Like many of the other 96 freshman members of the House, Nunnelee succeeded in defeating the incumbent and won himself a seat as Representative for Mississippi’s first congressional district. After a few more anecdotes about his personal history and ascension to US Congress, the policy portion of his speech began.

According to the Congressman, he and his fellow Republicans in the House are the face and voice of the Republican Party and it is their mission to first and foremost correct the “failure of the previous Congress to cut spending and balance the budget.” Nunnelee correctly asserted that excessive government spending puts a “severe strain on economic growth and saddles [future generations] with massive debt,” unfortunately he failed to both pinpoint which expenditures he believed to be “excessive” or provide an operative plan for how reduce the debt.  Instead, the congressman suggested that he wanted “congressional Democrats to come to the table and show real signs of commitment to limiting spending,” at which point he would consider raising the debt ceiling.

When it came to US energy policy, the lack of a realistic agenda was even more alarming.  Nunnelee urged complete energy independence by 2020.  Okay, awesome, but how?  “By beginning aggressive drilling throughout the US.” I raised the point that even if the government gave the green light for large-scale drilling in the Dakotas, Alaska, the Gulf, and other coastal regions, that still wouldn’t provide enough oil to cover all of America’s energy needs.  Nunnelee countered, asserting that with Canada’s “abundant” fossil fuel reserves “it would probably be enough.”  Even if this were an accepted and feasible assumption (it’s not) Canada isn’t in the United States, so how exactly would relying on Canadian fossil fuels make us “completely energy independent within the next decade”?

Nunnelee recommended that the U.S. “actively expand development of nuclear power” to advance energy independence and security.  Yet when I asked him about his plan to deal with nuclear waste (i.e. re-open Yucca Mountain), he responded, “I dunno, we’ve gotta figure out a way to deal with it. I don’t have an answer for you right now.” Promoting development of nuclear power with absolutely no plan for storage of radioactive waste does not constitute a policy agenda… it is an ideal.

And therein lies the problem with the Republican majority in the House, if not the entire Republican Party today: lots of valid criticisms, even more laudable goals, but only hazy plans for action.

Obama Energy Plan Won’t End Our Oil Addiction

March 31st, 2011 at 11:55 pm 55 Comments

Cutting oil imports by one-third, as President Obama proposed, is a fine goal. The biggest energy security problem we face, however, is not dependence on imported oil. It’s dependence on oil, period.

Oil dependence is a strategic liability because oil is traded in a globally integrated market, where events over which the U.S. has little or no control – rising demand in Asia, civil commotion in dysfunctional petro-states – can roil the market and drive up prices.

Sure, we could import more oil from those nice Canadians and hand over our public lands and territorial seas to oil producers. For anyone who believes Doc Hastings’ rhetoric that doing so would translate automatically into lower gasoline prices and less vulnerability to OPEC machinations, we’d be happy to mail you a prospectus about buying Brooklyn Bridge time shares.

The problem is that the U.S. is not an island unto itself. Oil produced here would enter a global pool for purposes of price setting. Further, we consume 25 percent of global production – which is three times what we produce – and hold only a 2 percent share of global reserves. U.S. dependence on the world market wouldn’t go away even if Congress acceded to every item on the American Petroleum Institute’s wish list.

In the years ahead, as a 2010 research brief from Resources for the Future pointed out, the oil market will be influenced by trends with worrisome implications for energy security – rising energy demand in Asia, more production from OPEC, more control over oil by national oil companies serving political as well as economic agendas, and longer, more vulnerable supply lines bringing in oil from costly, difficult production areas in the remote Arctic and in deepwater.

In March 17 testimony before the House Natural Resources Committee, Energy Information Administration chief Richard Newell tried to insert a few facts through the ideological filters that most members of that committee have stuffed into their ears.

“Long term, we do not project additional volumes of oil that could flow from greater access to oil resources on federal lands to have a large impact on prices given the globally integrated nature of the world oil market and the more significant long-term compared to short-term responsiveness of oil demand and supply to price movements.”

There is another thing to consider, Newell told the committee. Given the outsize importance of OPEC oil in the supply-demand equation, “another key issue is how OPEC production would respond to any increase in non-OPEC supply, potentially offsetting any direct price effect.”

In other words, if the U.S. insists on speeding up depletion of its 2 percent share of global oil reserves in a vain attempt to drive down prices, the House of Saud could dial back the valves to ensure that prices stay within the Goldilocks range that serves the kingdom’s interests – not too low, so the regime has enough money to smother domestic discontent with fiscal largesse, and not too high, so that the U.S. and other addicts in the shooting gallery don’t get uppity ideas about aggressively expanding use of oil alternatives.

Getting out of the oil dependence pickle will not happen overnight, on Obama’s watch, or on that of his successor. We would start moving in the right direction, however, if Congress were less interested in partisan games and more interested in seeking out energy policy agreements that both sides could live with.

Yes, more domestic oil production without giving the store away to oil producers would help a bit, but we’ll need tighter fuel efficiency standards and adequate funding for R&D into fuel and motive technologies that could compete with oil.

Someday, Congress might be willing to have a rational discussion about a revenue-neutral carbon tax. If and when that day comes, we’ll be closer to solving the energy security riddle.

Some Truths More Inconvenient than Others?

David Frum September 29th, 2009 at 11:17 am 67 Comments

Here is Paul Krugman this past weekend:

In a rational world, then, the looming climate disaster would be our dominant political and policy concern. But it manifestly isn’t. Why not?

Part of the answer is that it’s hard to keep peoples’ attention focused. Weather fluctuates — New Yorkers may recall the heat wave that pushed the thermometer above 90 in April — and even at a global level, this is enough to cause substantial year-to-year wobbles in average temperature. As a result, any year with record heat is normally followed by a number of cooler years: According to Britain’s Met Office, 1998 was the hottest year so far, although NASA — which arguably has better data — says it was 2005. And it’s all too easy to reach the false conclusion that the danger is past.

But the larger reason we’re ignoring climate change is that Al Gore was right: This truth is just too inconvenient. Responding to climate change with the vigor that the threat deserves would not, contrary to legend, be devastating for the economy as a whole. But it would shuffle the economic deck, hurting some powerful vested interests even as it created new economic opportunities. And the industries of the past have armies of lobbyists in place right now; the industries of the future don’t.

Nor is it just a matter of vested interests. It’s also a matter of vested ideas. For three decades the dominant political ideology in America has extolled private enterprise and denigrated government, but climate change is a problem that can only be addressed through government action. And rather than concede the limits of their philosophy, many on the right have chosen to deny that the problem exists.

Let’s test whose ideas are vested here. It ought to be unignorably obvious that the only near-term way to generate sufficient electricity while reducing the use of coal is nuclear power.

And yet… Krugman does ignore that particular inconvenient truth in this column and in so many others. In a 2006 exchange with readers, the Times columnist did have this to say:

William R. Mosby, Salt Lake City: Does nuclear energy have a part to play in mitigating global warming in the long term? Assuming it produces sufficient net energy and that fuel recycling/waste partitioning is used, nuclear energy could be one part of a non-CO2-emitting energy mix that would be sustainable for as long as a few thousand years, using the depleted uranium already in storage in the U.S. A great deal of research has already been done on the type of reactor and fuel recycling facility required to do this — the Integral Fast Reactor — but was canceled for political reasons in 1994.

However, those who see an urgent need to do something about global warming generally don’t talk about nuclear energy as a prominent part of the solution. Do they think that nuclear energy would be a bigger problem than global warming?

Paul Krugman: I was at a reception for Al Gore after a screening of his movie, and he was asked that very question. I thought his answer was very good. He said that yes, nuclear should be part of the mix, but it can’t be the main answer. And there are problems with nuclear we need to resolve: not just disposal of radioactive waste, but vulnerability to terrorist attack. In fact, as nuclear power becomes more common around the world, the possible misuse for weapons, terrorist or otherwise, will be a big problem. So unless there are some breakthroughs, nuclear power is only a piece, and maybe not a big one, of the solution.

But why can’t nuclear be the main answer? After all – there isn’t any other answer! Conservation can be incentivized through higher prices, yes. Solar and wind can contribute in some specialized niches. But remember, half of America’s electricity is generated by burning coal.  Only nuclear power is sufficiently cheap and scalable to replace so massive a power source. If your version of environmentalism cannot accept that truth, please kindly refrain from lecturing others about the blinding effects of ideology!