February 2012

Post image for Kill The Owls…To Save the Owls?

Conservatives often complain that government shouldn’t be “picking winners and losers” in the market, by for instance, lavishing some politically favored and connected constituencies (solar companies, unions, et al) with subsidies that give them an advantage over competing interests.

True enough.  Government shouldn’t be picking winners and losers.  But that never stops the Feds from trying…and now, they have gotten into the business of pickling the winners and losers in the game of life itself.

The U.S. Fish and Wildlife Service (FWS) has proposed new measures to save the endangered Northern Spotted Owl, that bane of loggers and rodents from the Pacific Northwest.  Science Insider fills us in on the FWS’s new pro-owl/anti-owl campaign:

The proposals include designating more critical habitat, encouraging logging to prevent forest fires, and an experiment to shoot a competing owl species.

Wait, come again? What was that last part?  “An experiment to shoot competing owls.”  OK, I did read that right.

Wow.  Science Insider gives the gory details:

The northern spotted owl (Strix occidentalis caurina) ran into trouble in the 1980s as its old-growth forest was severely logged in Oregon and Washington. Even though destruction of its habitat slowed dramatically after the owl was placed on the endangered species list in 1990, its numbers have continued to decrease by an average of 3% a year. A major problem is competition from barred owls, which have invaded its territories.

How dare those Barred Owls out-compete rival species by being more productive and intrepid!  That’s the kind of success Obama loves to punish.  (The Administration’s attitude toward the Second Amendment appears to go something like this:  Guns are bad, unless you are 1) a Mexican drug lord or 2) an Elmer Fudd wannabe out for Barred Owl blood.  In either case, you have the Feds’ full support.)

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Post image for Ethanol Industry Hurting from Loss of Tax Credit

The expiration of the Volumetric Ethanol Excise Tax Credit (VEETC) at the end of 2011 has led to a number of ethanol plants shutting down, and others operating in the red:

After predicting they would survive the end of a major federal subsidy without problems, it looks like officials at the nation’s ethanol producers may have been too optimistic.

Since the subsidy ended Dec. 31, ethanol profit margins have declined sharply, even slipping into negative territory. Experts see no quick turnaround in sight.

Now that the subsidy has disappeared, the ethanol downturn is being felt nationwide, including in Minnesota. The state’s $2 billion-plus industry ranks fourth in the nation in capacity and production.

At the Al-Corn Clean Fuel ethanol plant in southeast Minnesota, CEO Randall Doyal sees how the loss of the subsidy has hurt this business. He said his profit margin — the difference between the cost of making the corn-based fuel and what he can sell it for — has disappeared.

“Since the first of the year it’s been even-to-slightly negative,” Doyal said.

It’s not exactly satisfying to see economic activity being shuttered during a time of high unemployment, as undoubtedly hard-working individuals at these plants are temporarily out of work. But those who support aligning our energy economy more closely with market principles are in a minority, so we don’t necessarily get to choose when and where some of these decisions (that can be painful in the short run) are made. [click to continue…]

Post image for Let’s Level the Playing Field

Want wind to get subsidies just like oil does?  Then, cut the PTC by 99.9%.  Wind’s subsidy is 40% of the wholesale cost.  This would work out to $50 per barrel in the oil industry.  Instead oil gets 5 cents.

Of course the best deal would be to cut them both to zero.

For the details, see my blog today at The Foundry.

On another point: AWEA and its apologists have fallen back on the “we need certainty” argument.  Well here is some certainty: The subsidy will be zero for all time.

David W. Kreutzer, Ph.D. is a Research Fellow in Energy Economics and Climate Change at the Heritage Foundation.

Post image for Reps. Waxman and Markey Make Nonsensical Cap-and-Trade Pitch in WaPo

In Friday’s Washington Post, Reps. Henry Waxman (D-Beverly Hills) and Ed Markey (D-Massachusetts) pitched cap-and-trade as a means to balance the budget. According to the Congressmen,

“The debate over how to reduce our nation’s debt has been presented as a dilemma between cutting spending on programs Americans cherish or raising taxes on American job creators. But there is a better way: We could slash our debt by making power plants and oil refineries pay for the carbon emissions that endanger our health and environment.”

This statement is absurd. By design, a cap-and-trade policy makes conventional energy more expensive. It is, therefore, functionally equivalent to a tax on a commodity—energy—that is fundamental to every act of economic production. It’s an economy wide tax. In effect, Reps. Waxman and Markey are claiming that a broad consumption tax (cap-and-trade) avoids “the difficult dilemma” of raising taxes, which doesn’t make any sense. Fortunately, these two Congressmen are in the minority party in the House, so their policy idea is a non-starter.

Post image for Fossil Fuels’ Triple “A” rating

“I’m trying to write a paper on why fossil fuels are good. I was wondering if you could help me out with some information? I couldn’t find much information on the Internet because most people seem to think that fossil fuels are evil.”

The aforementioned is from an e-mail a young man named Cooper sent me the day before his paper was due. His father had heard me on the radio and suggested that Cooper contact me. I spent 45 minutes talking with him. Everything I said was a fresh new idea to Cooper. Obviously he was not being taught the complete picture. If Cooper had questions, others probably do, too. Here are the three things I told him that, like Cooper, you may not know, may have forgotten, or just haven’t thought about in a while.

With rising gas prices bringing energy into the debate, and President Obama setting his energy priorities out in his budget, it is important to be aware of some energy realities. Otherwise you may think fossil fuels are “evil,” when, in fact, they provide us with the freedom to come and go, to be and do.

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Last Thursday in Florida, President Barack Obama grossly misrepresented his record on energy policy in a speech delivered at the University of Miami.

The President first bemoaned the effect of rising fuel costs on average Americans, saying that, “high gas prices are like a tax straight out of your paycheck.” His apparent empathy is belied by his support for a cap-and-trade energy rationing scheme, which makes gas more expensive by design.

Then the President disingenuously took credit for rising oil and gas production in America. While it’s true that there has been a recent increase in production, it occurred despite this Administration’s anti-energy policies. As explained by the Institute for Energy Research, “The reality is that oil production on federal lands is falling, while production on private and state lands is rising.” To put it another way, production is increasing where the President doesn’t have the authority to stop it.

After misattributing to himself credit for increasing oil production, President Obama touted his record on pipelines, telling the audience that, “Over the last three years my administration has approved dozens of new pipelines, including from Canada.” He failed to mention his unpopular refusal to approve the Keystone XL, a 1,700 mile, shovel-ready pipeline from Alberta to Texas that would create thousands of construction jobs, stimulate tens of billions of dollars in business spending, and generate billions of dollars in tax revenues.

Finally, the President pitched an “all of the above” energy strategy. The primary problem with this approach, as my colleague Chris Horner has noted, is that it draws no lines to exclude the uneconomic. By embracing “all” energy sources, taxpayers are on the hook for green energy boondoggles that can’t exist without subsidies.

Post image for Algae: Forever the Fuel of the Future

I’m still thinking about this algae thing, having been on the road when the hilarity ensued. As I understand it, we’re talking about algae because those stupid Republicans keep saying we should produce more oil domestically if we want to lower the price, since we have so darned much of it. And the President responded, that’s stupid because it won’t be here tomorrow.

We instead should “invest in” algae (see, “invest in” Solyndra, “invest in” Beacon Power, “invest in Ener1″…need I continue?). Because algae will be here…um…well, don’t be a cynic.

Because the true engine of… fuels for your engine… will always be energy sources like algae (man, I just wish I was in the room when the consultants worried, “how do we avoid him telling people the real answer is properly inflating their tires,” and the response to this brainchild was “YESSSSSS!,” high fives all around!).

Of course, any insider fool knows that this is a big waste of money because the prez has “invested” a lot of our money in Fisker and the Volt. They don’t need no stinkin’ pond scum to get you where you’re going.

Anyway, flash forward using time travel, which, really, like anti-gravity boots and the rest, has never been more promising (technically, you have to admit he’s right), and enter the world when we pull up to the station and say fill ‘er up with algae! (Free packet of Sea Monkeys with each tank!). It’s just around the corner, as competitive wind and solar electricity have been just around the corner since the ’80s…the 1880s.

The price is 425 dollars and 9 10ths of a cent per gallon. Question for our economist in chief: if we produce more algae, does that bring the price down? Just a window into your thinking.

I sense somehow we’ll be told that we’re really captive to a world algae cartel and that the U.S. is powerless therefore to impact the price. And so stop asking that we produce more. We all know, by now, you can’t produce your way to lower prices.

So that’s stupid. We should instead be investing in…

Post image for Why Doesn’t Greenpeace Demand a Congressional Probe of James Hansen’s Outside Income?

The Heartland Institute plans to pay Indur Goklany, an expert on climate economics and policy, a monthly stipend to write a chapter on those topics for the Institute’s forthcoming mega-report, Climate Change Reconsidered 2012. Earlier this week, Greenpeace and Rep. Raúl Grijalva (D-Ariz.) called for a congressional investigation of Goklany. In addition to being an independent scholar, Goklany is a Department of Interior employee. Federal employees may not receive outside income for teaching, writing, or speaking related to their “official duties.”

But as I pointed out yesterday on this site, climate economics and policy are (to the best of my knowledge) not part of Goklany’s “official duties.” It would be shocking if they were. Goklany is a leading debunker of climate alarm and opposes coercive decarbonization schemes. Why on earth would the Obama Interior Department assign someone like that to work on climate policy?

Greenpeace and Grijalva have got the wrong target in their sites. The inquisition they propose might actually have some merit if directed at one of their heroes: Dr. James Hansen of NASA. Hansen has received upwards of $1.6 million in outside income. And it’s not unreasonable to assume that most or all of that income was for teaching, writing, and speaking on matters “related to” his “official duties.” [click to continue…]

Post image for Worst Green Break-up of 2012: The Windustrial Tax Extension

The pay roll tax cut package managed to escape the grasp of renewable energy stage-5-clingers as President Obama signed it into law on Wednesday.  Unsurprisingly, wind farm hopefuls still remain committed to making this relationship work.  Proponents of the government-funded windustry are now frantically searching for an extension of the wind production tax credit (PTC) which is set to expire at the end of the year. After twenty years of government dependency, wind energy still cannot compete without the taxpayer crutch; it’s time to throw in the towel.

Government has been playing matchmaker with its insistence that wind energy is a complete catch: it’s clean, comes from an elite family (the Renewables) and will be good for you (i.e. the environment) “in the long-term.”   But from the get-go, there are several reasons why taxpayers wouldn’t want to take this industry to the prom.   Modern wind turbines are very large, expensive, visually unappealing permanent structures that inhibit land use and create a loud drone when in operation.  When the wind is actually blowing, the spinning wind turbines end up accumulating a massive death count of thousands of birds and bats.

Beauty isn’t everything, you say? Well, even if wind farms were a total fox, wind energy is inseparable from its inherent baggage.  For instance, if you’re looking for that long-term special some-energy to see you through the good times and bad, wind energy is risky.  It only can only sustain itself when there is—wait for it—wind!  Consequentially, it must have the constant back-up connection with the grid, depending on generators or batteries (that use fossil fuels) to keep you satisfied.  Wind turbines (produced with the aid of fossil fuels) can be quite the intermittent diva too: when the wind current isn’t strong enough, it is unpractical to operate them; if the wind is blowing too fast, it completely shuts down to avoid damage.  Wind farms can only thrive in specific geographic settings, usually in remote areas that require the expensive construction of transmission lines.  In the end, with its absolute dependence on alternatives, wind farms are not taxpayer-healthy to pursue at all.

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Post image for Let’s Make a Bet, Mr. President

The president sneers at drilling for domestic oil. After all, it wouldn’t be to market for a few years. It won’t do anything to alleviate the pain you feel now.

Which is what the same crowd said when vetoing opening ANWR in 1995. And in opposing opening ANWR in 2000. And in 2002. And, per him in a speech in Miami the other day, in 2007. And again today.

So, here’s a challenge, Mr. President.

Let’s have a race.

Allow for more drilling. And, since you’re going to do so anyway, you go spend a bunch of our grandkids’ money on putting some algae in our tank.

Might work as well as Solyndra. Or Synfuels. Who knows?

First one there wins.

You’re a confident guy. That sarcastic speech in Miami, dripping with condescension at your fellow countrymen who would like to tap domestic resources indicates, wow, he must really know something. We’re impressed. We want to believe you.

Whaddyasay. Deal?