Archive for the ‘Energy and Environment’ Category
EPA Witchdoctors Get No Peace
A coalition of unions representing U.S. EPA scientists and other specialists sent a letter to EPA chief Stephen Johnson on Wednesday asserting that agency managers and pesticide industry officials are exerting political pressure to allow the continued use of organophosphates and carbamates, which are used in many industrial pesticides. The letter complains that EPA scientists are being pushed to skip steps in their regulatory testing of the chemicals, arguing that ”the integrity of the science upon which agency decisions are based has been compromised.”
This is rich. The methodology being employed by the EPA to ascertain human health risks for these and other chemical substances has long been discredited by academics, who, at best, suggest that it holds promise but has a long way to go, or, at worst, suggest that it is akin to astrology or palm reading. If the environmental Left were serious about allowing scientific concensus to dictate federal policy (a proposition they ardently embrace when the topic turns to global warming), the tests at issue would have been junked long ago.
But by all means, let’s not disturb the witchdoctors!
Fear Not, Tom Friedman
Yesterday’s New York Times op-ed page had a couple of rather interesting pieces on global warming that merit some thought. The first, by Thomas Friedman, discussed how American capitalists – motivated as much by the hunt for profit as they are by the quest so save the world – are undertaking a “distributed Manhattan project” to develop economically attractive alternatives to fossil fuels. No centralized government program is necessary, thank you very much. The second, by environmental writer Gregg Easterbrook, described why he has switched sides in warming debate, moving from skeptic to cautious activist. Both are far more sensible than the usual screeds on those subjects published by the Gray Lady.
The Friedman piece was spot-on. Thousands of rather brilliant minds and billions of private dollars are being devoted to ambitious alternative energy R&D. While government sprinkles money here and there, the real work is being done by venture capitalists and entrepreneurial visionaries. If anything emerges from that creative soup, it will be primarily due to the fact that capitalism is the most powerful engine of technological change and innovation ever created by man. Waiting for the Congress or the Department of Energy to come up with something would be a triumph of hope over experience.
Friedman worries, however, that it won’t be enough. “If we want to see these alternatives move from little start-ups to large-scale commercial ventures, ‘we need to get the price mechanism right.’ When you’re talking about oil, you can’t just say ‘Let the market work’ because there is no free market in oil: the producers have a cartel, and governments – like ours – subsidize oil so we don’t pay the full cost.” Friedman proposes a price floor for gasoline ($3.50-$4.00 per gallon) and green purchasing practices for the federal government.
Fear not, Tom Friedman. The alternative energy revolution (if one is to come) will indeed be televised. First of all, to say “there is no free market in oil” is to say “I don’t know a damn thing about oil markets.” One would be hard-pressed to find a freer market on this planet than the one that trades in oil. There are a multiplicity of buyers and sellers who are free to sign long term contracts or to buy and sell in futures markets and spot markets with little regulatory interference. Secondary markets are likewise robust. Prices in wholesale markets are established by supply and demand and the only reason they don’t translate directly to the consumer is because governments are fond of taxing the hell out of the product at the retail level. Read the rest of this post »
Nuclear Welfare
At a Senate Energy & Natural Resources Committee hearing yesterday, outgoing Nuclear Regulatory Commission chairman Nils Diaz reported that 16 utility companies were busily planning to build 25 new nuclear power plants thanks to last year’s energy bill. Champagne corks were popped, backs were slapped, congratulations were offered, and all was right in the political world.
Just what did last year’s energy bill do to usher in this nuclear nirvana? Well, our fair Senate–said by many to be in the grip of doctrinaire, free market Republican jihadis–passed a 20-year extension of the Price-Anderson Act (which protects the industry from liability if damages from an accident exceed a certain amount); adopted a 1.8 cent production tax credit for up to 6,000 megawatts of new nuclear generating capacity; provided risk insurance against the financial costs of litigation and other delays in building new nuclear power plants; and provided federal loans and guarantees for up to 80 percent of project construction costs.
Look, I’ve got nothing against nuclear power per se. But if nuclear energy had economic merit, it wouldn’t need this avalanche of government help and hand-holding. Neither party looks good in all of this. Republicans have no business meddling in markets this way. And Democrats should quit folding to business interests like a cheap suit.
Democrats Out of Power
The Washington Post reports today that the Ds are planning an onslaught of staged media events over the Memorial Day weekend to highlight their discontent over high gasoline prices. The Democrats are kicking off their campaign today in Ohio, where Senate Minority Leader Harry Reid is scheduled to appear in front of the cameras with Rep. Sherrod Brown, the Democratic Senate candidate there, in front of a giant wind turbine outside a Cleveland science center.
Presumably, the Democrats think that the windmill symbolizes their commitment to break America’s so-called addiction to oil. In reality, the windmill symbolizes the Democrats’ incoherence on energy policy. Unless they plan to strap those turbines onto the hoods of our cars, wind power cannot substitute for oil because windpower is used to generate electricity and only a trivial amount of oil is used for that purpose.
“Wherever you live, your gas prices are out of control, and you want to hold someone accountable for it,” Reid said. While Reid predictably blames “Big Oil,” he apparently missed the FTC report out today finding nothing underhanded about gasoline prices in the aftermath of Hurricane Katrina.
I’m sure you’ll hear all about on tonight’s O’Reilly Factor.
Global Warming Resolution Bites the Dust
Not that you’d know it from reading the newspapers this morning, but the much-ballyhooed House resolution that would have supposedly put the United States on a firm march to Kyoto-ville died with little more than a whimper yesterday. Apparently, VE (Victory for Earth) Day will have to wait another year.
Reporters love to write about how proposals to do something about global warming are gaining momentum. But they are less wild about stories that suggest trends might be running in the opposite direction. Believe me, had that resolution passed, it would have been on the front pages of most newspapers today. If passage would have been such big news, why not defeat?
I’ve got a theory about this. Having spoken at several conferences of the Society of Environmental Journalists, I can tell you without hesitation that enviro beat reporters are more often than not little more than PR vessels for organized environmental interest groups. Whether the bias is intentional or unintentional is irrelevent—critical thinking and healthy skepticism simply go out the window when your average enviro reporter talks to a credentialled Green lobbyist or activist.
The Left vs. Conservation
I was on NPR’s “News & Notes with Ed Gordon” today to discuss gasoline prices with Julianne Malveaux. It was a rather bizarre experience. Apparently, the Left is of many, many minds when it comes to energy conservation—and all of those minds seem to coexist in the same head.
On the one hand, Dr. Malveaux was quite adamant that we need to “incentivize people” (her phrase) to use mass transit. But, on the other hand, she was equally adamant that gasoline prices were too high and had to be brought down by hook or crook.
Question 1: Wouldn’t increasing the marginal cost of driving provide the most powerful incentive for people to use mass transit?
Question 2: Wouldn’t decreases in marginal driving costs reduce the incentive people would have to use mass transit?
I tried to press her on those points but couldn’t get a straight or even understandable answer out of her.
When I tried to point out that how much people spend on gasoline is largely under their control and that high gasoline costs will do more to encourage conservation than anything government could do, I was treated to a rather loud rant about why most people had no option but to keep buying gas and that only ivory tower, doctrinaire Cato types would ever believe to the contrary.
Now, this is really something. Up until recently, environmentalists and conservationists have gone on at quite some length about how people can and should conserve energy. When I took a page from that book and suggested that people could sell their SUVs, pickups, and luxury sedans for more fuel efficient cars, I was told that this would be too expensive for working Americans to even consider (huh?). When I suggested that people could move closer to work or to mass transit hubs if they wanted to cut their commute costs, I was accused of crazy talk. When I suggested that car-pooling is always possible for those who don’t want to pick up stakes, I was informed that this is yet more crazy talk. When I suggested that people may want to rethink how often and how far they drive around town on errands or the nature of their summertime vacations, I was accused of peddling nonsense. When I argued that high gasoline prices are actually something that conservationists and environmentalists should embrace, I was dismissed as a nutcase.
Apparently, all that talk about conservation from the Left was smoke. It’s actually an impossible task, quite beyond the capabilities of mere mortals.
Republican Lunacy on Energy
My colleague Peter Van Doren and I wrote an op-ed that was published this morning at National Review Online that rips the GOP for their ideas regarding energy policy. Just when you think the Republicans can’t get any worse, they manage to surprise.
For those tired of all the populist hysteria surrounding gasoline prices, we’ve also got a piece in the Investor’s Business Daily today (subscription only) that presents data on what we term “the hardship price” of fuel. We looked at gasoline prices from 1949 to the present and adjusted for inflation and changes in per capita disposable income. In essence, we ask: How long would a person have to work to pay for a gallon of gasoline today compared to any other year over the past 57? Turns out that gasoline at the moment is less expensive by that metric than it has been during most years over that time. A very nice graphic is provided with the piece.
We’ll have the IBD piece on the Cato website soon.
Oil Unbound
There is a lot of worry in the public domain these days about whether we might be running out of oil. That shouldn’t surprise – every time the oil industry goes through a boom cycle (and there have been six such price booms since the creation of the industry in the late 19th century), industry analysts and resource prognosticators have warned that, this time, the lights are truly going out.
The worry, however, is overly broad. There is virtually no limit to the amount of hydrocarbons available to the economy. It has been estimated, for instance, that the amount of oil that we could theoretically extract from shale rock in the western United States is about three times as great as the proved reserves of oil in Saudi oil. Other unconventional sources of oil such as tar sands (now being exploited with gusto in Alberta) promise even more.
But unconventional oil is expensive. The reason it’s not exploited very aggressively at the moment is that conventional oil is still less expensive to deliver to market. If conventional oil continues to increase in price – or if the technology related to unconventional oil extraction improves – that might change.
Worries about the depletion of conventional oil - and light crude oil in particular – are better grounded. But how much better?
To worry about the future availability of light crude is to worry about the future availability of Persian Gulf crude oil in general and Saudi crude oil in particular. If Saudi fields are running dry, then worries about conventional crude are probably well placed. If not, then they probably aren’t.
The most credible analyst who’s made the argument that Saudi reserves are overstated and that Saudi Aramco is near a production plateau is Matthew Simmons, author of Twilight in the Desert. The most impressive criticism of Simmons’ arguments come from energy economist Michael Lynch, who maintains that Saudi production is not even close to reaching its peak.
Time will tell soon enough who’s right (I’d bet on Lynch), but in the meantime, a new report out today about Arab investments underway in the oil sector suggests that someone forgot to tell OPEC that the wells are running dry. Of course, one might argue that all that money is necessary just to maintain current production levels. Maybe – but the increasing production figures coming out of OPEC aren’t figments of the imagination.
No Courage Behind Global Warming Convictions
The House is expected to vote as early as Wednesday on a resolution that decries the dangerous threat posed by rising industrial greenhouse gas emissions. The resolution calls for an emissions cap on greenhouse gases as long as (i) the cap doesn’t harm the U.S. economy, and (ii) U.S. trading partners agree to live under a similar cap.
While the Greens are quite exited that the GOP seems prepared to go along with this, these things are called “resolutions” for a reason – they echo promises made on New Year’s Eve. In short, it’s nothing but a statement that the Congress thinks that this would be a good idea, but that they are unprepared (at the moment) to do anything about it.
Does this represent progress for the enviros? Not really. Show me an emissions cap that won’t have a negative effect on the economy and I’ll show you an alterantive reality where up is down, black is white, and rivers are made of liquid chocolate. Now, depending upon the nature of the cap and the regulations attached thereto, the negative economic impact might be very modest or rather signficant. But ruling out caps that have any negative economic impact is to essentially rule out a cap.
Frank O’Donnell, head of the Left’s Clean Air Watch, was not too far off the mark when he was quoted in the subscription trade journal Energy & Environment Daily this morning as noting that “The way [the resolution] is worded, you’d have to be a kook to be opposed to it.” Indeed, who would object to what is in effect an insurance policy with no premium?
If the Greens really think that global warming is serious, they are demonstrating both political and intellectual cowardice by backing pablum like this. All this resolution would accomplish is to allow politicians to claim environmental virtue from empty political gestures.
So why would the enviros provide an easy out for politicians who want to appear Green but not do anything real to advance the Green agenda? Because it’s the best the enviros can do right now. That speaks volumes. This is a resolution that advertises Green political weakness, not Green political strength.
The resolution, then, is pretty meaningless. That having been said, you don’t have to be a “kook” to be skeptical about all the “doom, doom I say” hand-wringing that litters the resolution. That is, unless you think a Vice President of the U.N.’s oft cited International Panel on Climate Change is a kook. And if you do, what does that say about the merit of that much-worshiped body of scientific experts?
Caution: Supply and Demand at Work
According to a report released yesterday by the International Energy Agency, high oil prices are forcing analysts to make sweeping cuts in their forecasts regarding energy demand and substantially revise upward their forecasts regarding energy supply. Apparently, producers and consumers aren’t the mindless economic zombies that politicians would have us believe.
Who knew this crazy invisible hand thing might be legit?
Energy Policy Hooch
It what might be the quote of the week, Bob Dinneen, president of the Renewable Fuels Association, warned the House Energy & Commerce Committee yesterday in an open hearing that removing the U.S. tarriff on Brazilian ethanol would send “a very negative signal to our marketplace.”
So there you have it. According to the loony-fuels lobby, positive signals to the market = trade barriers and negative signals to the market = uninhibited global trade. Say this stuff enough times and you too might be able to work for the renewable energy business.
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