March 2012

This Week in the Congress

by Myron Ebell on March 18, 2012

in Blog

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Senate Rejects Subsidies to Big Wind, Pickens Payout Plan

The Senate passed its version of the highway bill, S. 1813, this week on a 74 to 22 vote.  Following votes on amendments last week, several more energy-related amendments were defeated on Tuesday, March 13, before the final vote.  The vote tallies on these amendments, which were not germane to the underlying legislation and so required 60 (out of 100) votes to pass, were nonetheless quite interesting.

Senator Debbie Stabenow’s (D-Mich.) amendment to extend a number of tax subsidies for renewable energy, including the wind production tax credit, was defeated 49 to 49.  Forty-nine Democrats voted yes.  Forty-five Republicans and four Democrats—Joe Manchin (D-WV), Claire McCaskill (D-Mo.), Mark Warner (D-Va.), and James Webb (D-Va.)— voted no.  Two Republicans missed all three votes.  This is an encouraging result, but is by no means the end of the massive effort by the wind industry to get their subsidy extended beyond December 31st, as I detail in the item below.

Senator Jim DeMint’s (R-SC)amendment to end all tax subsidies for conventional and renewable energy and for energy efficiency then failed on a 26 to 72 vote.  The twenty-six Republicans voting to go cold turkey on their subsidy addiction were Ayotte (NH), Blunt (Mo.), Burr (NC), Chambliss (Ga.), Coats (Ind.), Coburn (Okla.), Corker (Tenn.), Crapo (Id.), DeMint (SC), Graham (SC), Inhofe (Okla.), Johanns (Neb.), Johnson (Wisc.), Kyl (Az.), Lee (Ut.), McCain (Az.), McConnell (Ky.), Paul (Ky.), Portman (Ohio), Risch (Id.), Rubio (Fla.), Sessions (Ala.), Shelby (Ala.), Toomey (Penna.), Vitter (La.), and Wicker (Miss.).

Getting twenty-six votes to end all energy subsidies is quite a stunning result, but it’s not quite as impressive as it looks.  Senators Richard Burr (R-NC), Saxby Chambliss (R-Ga.), and Tom Coburn (R-Okla.) turned around and voted to create several new tax subsidies for heavy-duty trucks fueled by natural gas.

The vote on the amendment offered by Senators Robert Menendez (D-NJ) and Burr was 51 to 47 (with 60 votes required for passage).  Besides the three inconsistent Republicans, three other Republicans voted for the Pickens Payoff Plan, which is also known as the NAT GAS Act.  They were Senators Collins (R-Me.), Isakson (R-Ga.), and Snowe (R-Me.).  Thirty-nine Republicans and eight Democrats—Harkin (D-Ia.), Leahy (D-Vt.), Levin (D-Mich.), Nelson (D-Neb.), Pryor (D-Ark.), Sanders (Socialist-Vt.), Stabenow (D-Mich.), and Webb (D-Va.)—voted against the amendment.

I have been calling the NAT GAS Act, whose chief promoter is billionaire T. Boone Pickens, the Pickens Payoff Plan or the Pickens Your Pocket Plan since last spring.  One of my CEI colleagues calls it the Billionaires’ Bailout.  Any doubts that these pejorative characterizations are justified have been laid to rest this week by an article by Ryan Grim and Michael McAuliff in the Huffington Post.

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Post image for President Continues Frantic Response to High Gasoline Prices

After speeches the last three weeks (reported here, here, and here) on why he isn’t to blame for high gasoline prices, I thought President Barack Obama would be moving on to other issues.  But in a sign of how desperate the White House is becoming about the threat gas prices pose to the President’s re-election, the President on Thursday, 15th March, gave yet another speech on the topic.

At Prince George’s Community College in Largo, Maryland, a few miles east of Washington, D. C., Mr. Obama took credit (completely undeservedly) for increasing domestic oil production, but then argued that increasing oil production won’t solve the problem of high gasoline prices.  According to the President, the only lasting solution is to continue pouring taxpayer dollars into subsidizing alternatives to oil.  Once we replace gasoline and diesel with other fuels, then we will have solved the problem of recurring spikes in gasoline prices.

The problem with the President’s argument is that the alternatives are likely to cost more, not less, than the oil they are replacing.  That is certainly the case with ethanol.  And hybrid electric vehicles still take many years of gas savings to pay for their much higher prices.

President Obama lashed out at those who disagree with him: “If some of these folks were around when Columbus set sail, they must have been founding members of the Flat Earth Society.  They would not have believed that the world was round.”

His critics are simply stuck in the past and don’t see the new clean, green energy economy his policies are creating: “The point is, there will always be cynics and naysayers who just want to keep on doing things the same way that we’ve always done them….  But that’s not who we are as Americans.  See, America has always succeeded because we refuse to stand still.  We put faith in the future.  We are inventors.  We are builders.  We are makers of things.  We are Thomas Edison.  We are the Wright Brothers.  We are Bill Gates.  We are Steve Jobs.  That’s who we are.”  That sounds good, but in real life the President’s heroes are not inventors, builders, and makers of things; they are crony capitalists and subsidy suckers like Jeff Immelt, Warren Buffett, Vinod Khosla, George Soros, T. Boone Pickens, George Kaiser, James Rogers, and Lloyd Blankfein.

President Obama also reiterated his claim that producing more oil isn’t going to solve the problem because the United States consumes over 20% of the world’s oil, but has only 2% of the world’s oil reserves.  Even the Washington Post has had enough.  On 15th March, Glenn Kessler dissected this technically true, but utterly misleading claim in a long Fact Checker piece.

It doesn’t, according to this excellent blog by Heritage’s David Kreutzer, from which the graph below is excerpted.

 

Misleading Headline

by Myron Ebell on March 16, 2012

in Blog

Post image for Misleading Headline

Above is a screenshot from Wednesday’s Bloomberg News. The headline suggests that green energy is a white knight poised to save the U.K. from rolling blackouts. However, the body of the article states nothing of the sort. Below is the story’s actual thesis:

[Government science advisor Sir David] King said power outages [in the United Kingdom] could occur as early as 2017 as old nuclear, oil and coal-fired power stations are closed because not enough is being done to replace them. The school’s study shows Britain can’t meet its goal of cutting carbon emissions 80 percent by 2050 without ramping up nuclear power and electrifying both transport and heating.

The comments contrast with findings by Bloomberg New Energy Finance, which last month concluded that growth in renewable energy will prevent the U.K. from suffering an electricity crisis. Britain will build more than 30 gigawatts of capacity by the end of 2016, two-thirds of it in solar, wind and biomass and the rest largely fired by natural gas, according to the researcher.

Despite the hundreds of millions of dollars lost in the Solyndra scandal, Energy Secretary Steven Chu gave himself “an A-” when he “testified before Congress after a series of bankruptcies from companies floated by green-tech stimulus loans” and was asked what “grade he would give himself as a steward of public funds.”  But it turns out that Chu’s Energy Department was much more reckless in its lending decisions than the private lenders that the Obama Administration has blamed for the financial crisis (even as the Administration has expanded the role of the government-sponsored mortgage giants and federal affordable-housing mandates that helped spawn the housing crisis), manifested in “an 85 percent failure rate on its process check.”  As Ed Morrissey notes, a recent report from the Government Accountability Office (GAO)

looked at the handling of $30 billion outstanding in loan guarantees and future commitments and discovered that the DOE rarely follows its own written procedures for vetting and auditing applications.  In fact, in many cases, the Loan Guarantee Program (LGP) couldn’t even find the data managers needed to administer the loans properly . .

In the case of Solyndra, the Obama administration ended up overriding the expressed concerns of DOE auditors to grant the solar-tech firm $535 million in taxpayer guarantees, all of which disappeared in the company’s collapse.  In almost every case study investigated by the GAO, important steps got skipped in the reviews that determined whether loan applications would be granted.  In other cases, the documentation was so poor that the GAO couldn’t figure out what the LGP did . . . the process had at least an 85 percent failure rate on its process check.  . .

With $30 billion in taxpayer money at risk, the DOE under Steven Chu didn’t bother to conduct the reviews it claimed it would on applications for loan guarantees, didn’t keep records of what reviews they did accomplish, and signed off on loans with incomplete documentation and inadequate oversight of the risk.  The result — perhaps $6.5 billion immediately at risk, according to CBS, and possibly most of the $30 billion. . . Political connections existed with Solyndra specifically, but the DOE may have felt political pressure to sign off on loans quickly in order to get Obama’s stimulus started. . . the DOE under Chu has been anything but a careful steward of taxpayer money.

As Morrissey notes, Obama has also fostered financial irresponsibility by expanding federal bailouts “to include the real-estate speculators that helped inflate the housing bubble.”  (The speculator bailouts are being done partly with taxpayer money, and partly at the expense of innocent mortgage investors who have never been accused of any wrongdoing). The Administration has also forced some banks to make risky loans to borrowers of certain races, potentially contributing to future bank failures and bailouts.

As The Washington Post noted earlier, energy programs have been “infused with politics at every level” during the Obama administration. It hastily approved subsidies for Solyndra, whose executives are now pleading the 5th Amendment, despite obvious danger signs and warnings about the company’s likely collapse. (Later, federal officials successfully pressured Solyndra to delay its announcement about upcoming layoffs until just after the 2010 election, to avoid embarrassing the Obama administration.)  CBS News reported that there were 11 more Solyndras in the Obama Administration’s green-energy programs.

The Obama Administration has used green-jobs money from the stimulus package to outsource American jobs to countries like China: “Despite all the talk of green jobs, the overwhelming majority of stimulus money spent on wind power has gone to foreign companies, according to a new report by the Investigative Reporting Workshop at the American University’s School of Communication in Washington, D.C.” As the Investigative Reporting Workshop noted, “79 percent” of all green-jobs funding “went to companies based overseas . . . In fact, the largest grant made under the program so far, a $178 million payment on Dec. 29, went to Babcock & Brown, a bankrupt Australian company.” This just one of many ways in which the Obama administration has used taxpayer money to outsource American jobs to foreign countries.

Post image for Big Green Wants To Repeal the Industrial Revolution

First of a three-part series of excerpts from Energy Freedom by Marita Noon

Originally published in the Washington Examiner

Environmentalists would have everyone believe that oil, gas, and coal—all fossil fuels—are at the base of much of the world’s ills. Nuclear is no better. They even oppose hydropower, wind energy, and commercial solar. Yet, they claim the high ground and position themselves as the moral authority. What would the world look like if they were setting truly setting energy policy rather than merely influencing it?

An in-depth study of environmental groups’ energy-related goals as posted on their websites’ shows that there is not an energy project they like. In short, they want to “kill,” “block,” and “deny.” The only thing they want to expand is moratoriums.

If environmentalists are in charge, expect these changes to American life:

Transportation

Most Americans have the freedom to come and go in their individual cars as they choose. A survey found that 91% of Americans consider their cars to be a necessity, not a luxury. Yet environmental extremists are actively working to stop or prevent drilling for oil and gas. They also aim to shut down coal-fueled power plants and oppose nuclear energy. With a reduced capacity for electricity and transportation, our lifestyle, as we know it, ceases to exist.

Modern Conveniences

The same survey found that most Americans consider things like microwaves, air conditioning and heating, computers, and cell phones to be a necessity. However, in a limited-fuel, environmentally controlled society, these items would have to go. They all require electricity—as do electric cars. Additionally, each of these “necessities” is made from plastic and plastic is typically made from hydrocarbons.

Health

Like modern conveniences, our health is heavily dependent on both energy and plastics. If you have been in a doctor’s office or hospital lately, you know that even taking your temperature requires electricity and plastics. Today’s extreme regulations could have an adverse impact on our health.

Housing

Without abundant electricity to purify water and pump it into your home and remove and process waste matter, you couldn’t live there. You’d need to move to a location near a fresh water source. Additionally, many environmental groups want to block the cutting of trees—making the construction of new homes near a potential fresh water source virtually impossible.

We all want clean air, fresh water, and a safe food supply, but stopping, opposing, denying, and blocking are not the ways to get it.

Huge strides have been made since the dawn of the industrial revolution. Despite increases in the typical activities that produce pollution, America is much cleaner now than it was twenty years ago. Since 1970, our population has increased and our energy consumption has gone up. We drive more miles each year. At the same time, our American ingenuity has been at work generating an increase in our Gross National Product. Environmentalists want you to believe that pollution has also increased. However, the truth is that, despite this growth, our aggregate emissions are approximately half of what they were.

Michael Economides, author of Energy and Climate Wars says, “The US is certainly one of the cleanest, more environmentally responsible nations in the world. Virtually no European country can boast cleaner waters, more pristine rural landscapes or air quality.”

We need exploration and innovation in America. We need to tap into energy sources currently—or in the process of being made—off limits in America by the Endangered Species Act or by plans to lock up resources under the guise of a national monument. When you think about it, energy makes America great—and we do it in a manner cleaner and safer than anywhere else on the planet.

Post image for Coalition Letter to the Senate: Reject Subsidies to Big Wind, T. Boone Pickens!

March 13, 2012

Dear Senator:

The Senate is scheduled to finish voting on amendments to the highway bill, S. 1813, on Tuesday. We are writing to urge you to:

  • Vote Yes on amendment #1589 (DeMint) to end all special-interest tax preferences for renewable energy, conventional energy, and alternative fuel vehicles;
  • Vote No on amendment #1812 (Stabenow) to extend tax credits for wind, solar power, a variety of biofuels, coal, oil and gas, energy efficient buildings and appliances, and plug-in electric vehicles; and,
  • Vote No on amendment #1782 (Burr/Menendez) to create massive new tax preferences for natural gas vehicles, fueling stations, and motor fuel.

The American people are fed up with corporate welfare. They view the Solyndra debacle as an object lesson in the folly of government trying to pick energy-market winners. Above all, they want Congress to put the nation’s fiscal house in order.

How you vote on the aforementioned amendments will determine whether or not you are serious about curbing political influence in energy markets, ending crony capitalism, and halting the nation’s slide towards bankruptcy.

The wind energy production tax credit (PTC) is a wealth transfer from States that do not establish renewable electricity mandates to States that do. The PTC props up these Soviet-style production quotas by masking their full cost from ratepayers. Congress should pull the plug on this deception: Vote No on amendment #1812, and let the PTC expire.

Amendment #1782, which proposes tax credits up to $64,000 for purchases of natural gas-fueled 18-wheelers, could add billions of dollars to the national debt. With natural gas industry profits soaring and prices at historic lows, there is no justification for Congress to rig the market in favor of natural gas producers, purchasers of natural gas vehicles, or investors in natural gas infrastructure.

The best energy policy is one under which consumers decide winners and losers and politicians can’t stick taxpayers with the bill when an energy company fails. The DeMint amendment (#1589) would eliminate tax favoritism in the energy sector. Equally important, it would not raise the overall tax burden, because it would use the savings from rescinded tax credits to lower general tax rates.

Sincerely,

Freedom Action
Americans for Tax Reform
Council for Citizens Against Government Waste
Club for Growth
Taxpayers for Common Sense Action
60 Plus Association
Americans for Prosperity
American Energy Alliance
Competitive Enterprise Institute
National Center for Public Policy Research
Energy Integrity Project (Idaho)
Citizen Power Alliance (New York)

Post image for Strange Bedfellows Coalition (CEI and Greenpeace!) Urges Senate To Oppose NAT GAS Act (a.k.a., the Pickens Payout Plan)

Oppose Amendment 1782 to the Transportation Bill

March 13, 2012

Dear Senator:

Our groups have diverse missions and different ideas about the role of government. But we join together to urge you to oppose Senate Amendment 1782 to the Transportation bill currently being debated on the floor. This amendment would attach S. 1863, the New Alternative Transportation to Give Americans Solutions or NAT GAS Act to the bill.  By providing billions in tax subsidies, the NAT GAS Act interferes in the marketplace to favor natural gas over other transportation and energy technologies that may be more cost-effective or sustainable.

The NAT GAS Act provides significant subsidies for natural gas at all levels of production– from manufacturing and infrastructure to consumer tax credits– carrying an estimated $5 billion price tag.  It includes a tax credit for up to 80 percent of the marginal cost of buying a natural gas vehicle–up to $64,000 for the heaviest trucks, an infrastructure tax credit for 50 percent of the cost of a fueling station—up to $100,000, and a manufacturing tax credit for the production of natural gas vehicles. While a consumer fee would be used as an offset over the long-term, the fee does not even begin phase in until 2014, sticking taxpayers with the immediate fiscal impacts.

Again we urge you to prevent the siphoning of billions of dollars to the natural gas industry.  Oppose S.A. 1782 to the Transportation Bill.

Sincerely,

Taxpayers for Common Sense
Freedom Action
Competitive Enterprise Institute
Americans for Prosperity
Greenpeace
Friends of the Earth
The Heartland Institute
Earthworks
Food and Water Watch
Western Organization of Research Councils

Carl Sagan

Common sense teaches that the world would be a better place if people were more informed about it. Scientists with the fervor of corner preachers exhort anyone who will listen to take an interest in scientific matters. Astrophysicist Carl Sagan writes, for example, that:

the consequences of scientific illiteracy are far more dangerous in our time than in any that has come before. It’s perilous and foolhardy for the average citizen to remain ignorant about global warming, say, or ozone depletion, air pollution, toxic and radioactive wastes, acid rain, topsoil erosion, tropical deforestation, exponential growth….How can we affect national policy… if we don’t understand the underlying issues?

Certainly everyone wants to overcome ignorance in the world, but notice that Sagan does not just complain about ignorance. Rather, he says that it is “dangerous,” “perilous,” and “foolhardy” to be ignorant of environmental issues. Passages like these rarely create “average citizens” who become experts on environmental policy, particularly when these issues barely warrant a mention in the rest of the book. Instead they create average citizens who become experts on caring about environmental policy. They tell the reader that it’s “perilous and foolhardy”  to ignore these issues. After all, they’re scientific.

The Experts on Caring then go out and flood politicians and bureaucrats with questions about the environment. What will you do about this or that new catastrophe? Those who ignore such calls are labeled as “anti-science.” Anyone who disagrees just doesn’t understand science.

This weekend, one such Caring Expert told me that “all our wealth has a downside. Think about global warming. We are responsible for that. Hurricanes and floods kill people.” Statements like these encapsulate the major problem with Experts on Caring: Even if they’re right about a problem, their sense of proportion has been totally distorted by the Carl Sagans of the world who tell them it’s “dangerous” not to care.

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Post image for Suck It Dry: A Modest Proposal

Environmentalists are always wringing their hands over the evils of fossil fuels, and no wonder – all these dirty and dangerous substances have done is power multiple revolutions in transportation, manufacturing, commerce and art that have lifted untold billions out of the wretched poverty that characterized most of human life for most of human history.  That is the kind of success loathed by liberals in general and enviros in particular.

Oil, especially, has earned the ire our erstwhile eco-friends, for oil above all has served as the black, gushy heart of Man’s industrial capacity.  And so this naturally-occurring substance, which bubbles up from the belly of the Earth to power our civilization, is demonized and reviled.  Never mind that without this substance, and the brave and brilliant people who find and harvest it, we would have at best a 19th century existence.  We are constantly told that oil is running out!  And that even if it isn’t running out, we shouldn’t be using it, because, you know, someday we will run out.  (Huh?)  Plus, it’s disgusting.  Plus, it’s heating the Earth.  Or something.

The problem for the enviros who evangelize on the evils of oil is simple:  Fossil fuels remain plentiful, cheap, and effective.  We are literally awash in the stuff.  And thanks to new methods of exploitation like hydro-fracking, we appear no way near running out.  So long as fossil fuels remain plentiful and efficient, they will crush so-called green technologies in any marketplace that is even remotely free.  In fact, the only possible circumstance that would actually wean us off oil is if the wells do one day finally run dry.

So I encourage my enviro friends to take a different tack – they should be encouraging oil production!  As much as possible!  The faster we suck the Earth dry, the faster we will transfer to “alternative” fuels (of course, by then, they won’t be alternative, but never mind) or revert to an agrarian existence, either of which would placate the environmentalists’ implacable heart.

What I’m saying is this – if green activists really cared about the Earth, they would ditch their Volts and solar panels and get on board with Big Oil.

I can see the banners now:  “Suck It Dry For Mother Earth!”