Platts Energy Week Review: Rep. Olson Shines, Ambassador Pascual Demonstrates Futility of Climate Diplomacy, U.S. Lucky to Lose the Great Global Green Race, and More

This week’s Platts Energy Week with Bill Loveless started with an interview with the co-chairman of the newly formed congressional refinery caucus, Rep. Pete Olson (R-TX). I’d never before heard Olson speak; he’s a peculiar monotone cadence that sounds sorta like Boomhauer from King of the Hill.

I’d like to draw attention in particular to Rep. Olson’s extremely impressive discourse on risk. About a third of the way through the interview, Host Bill Loveless referenced a couple recent refinery accidents, and questioned Rep. Olson about whether the industry should be subject to greater regulatory scrutiny.

Rep. Olson first executed some clever political jujit-su. He assured Loveless that the industry is safe, and then waxed lyrical about growing up near refineries along the Gulf Coast, even going so far as to recall how much enjoyed and appreciated as a child the refineries strewing Christmas lights during the holiday season.

The host pressed and then Rep. Olson got serious and delivered a great answer. He said, in effect, that refining entails the manipulation of volatile gases under high pressures at high temperatures and, as such, it cannot be risk-free. However—and this is his key insight—this state of risk is equally true for much of the advanced engineering on which modern society relies—from driving cars to building houses.  Humans make mistakes; ergo risk. The question then becomes: Is [further] federal regulation based on reasonable risk-management? Or is it championed by special interests for which fossil fuels are “dirty” and therefore evil, per se? Rep. Olson’s interview is posted below.

After Rep. Olson, Bill Loveless interviewed U.S. Department of State “energy envoy” Carlos Pascual. The segment was interesting insofar as it demonstrated how climate change policy is incompatible  with the art of diplomacy.

Ambassador Pascual is no doubt a brilliant mind. I suspect he learns languages as easily as I get sunburned. And whenever he discussed non-climate diplomacy, he demonstrated great agility of mind. But when he veered into environmental policy, he sounded loopy.

The interview started with Ambassador Pascual intelligently discussing the nexus between energy and diplomacy. He spoke of the need to understand the market implications of Iranian sanctions, in order to assuage the fears of allies. And he explained that sectarian politics are inextricable from improving energy infrastructure in Iraq. Smart stuff, IMHO.

But then the conversation pivoted to climate change, and things got preposterous. Ambassador Pascual started talking about how we need to plan China’s domestic energy markets, as if this was remotely possible. The absurdity of his response aptly demonstrates the futility of climate diplomacy, which is a subject I discuss here. The entire interview is reposted below.

The segment thereafter, Headlines around the World, continued on the subject of Sino-American relations by noting that last Monday, a World Trade Organization panel ruled that the U.S. Department of Commerce impermissibly levied import tariffs on Chinese solar panels.

As I explain here, here, and here, the whole solar panel tariff imbroglio is a bonfire of the inanities. Thirty U.S. States have enacted Soviet-style production quotas that forces consumers to use green energy. As a result, the Commerce Department’s solar tariffs are hurting consumers subject to government mandates. Hurting your own consumers is pretty dumb.

The Chinese government, for its part, is stupid to subsidize solar panels. Its strategy is to dominate western markets, where consumers are forced to use solar energy (see immediately above). This is insipid, because markets based on political favors are inherently precarious. There’s nothing more ephemeral than public opinion, and when the political winds change, government-dependent businesses go bust.

Until the problem of energy storage is solved, green energy will remain more expensive and less reliable than conventional energy. As long as this is the case, the industry will depend on political favoritism. This is why the Great Global Green Race is one the U.S. would be wise to forfeit. The segment is posted below.

The final segment of the show, Market Trends, featured an interesting interview with Platts reporter Bobby McMahon, on the D.C. Circuit’s recent decision to overturn a FERC order fundamental to demand side management markets. Here, I’ve written about the impact of the court’s decision on EPA’s Clean Power Plan. McMahon addresses the ruling’s impact on the demand side management industry.