Ben Lieberman

The BP Deepwater Horizon Spill Commission report is out and its recommendations would spell bad news both for energy industry jobs and the future price at the pump.   The administration-selected panel, dominated by anti-drilling activists but devoid of anyone with actual experience producing energy, proposes to pile new layers of red tape onto a process that already leaves much domestic energy off-limits and creates years of delays for rest.    It even includes measures that would virtually shut down new oil drilling in Alaska, though the spill occurred thousands of miles away and under very different conditions in the Gulf of Mexico.

But buried in the report is an important truth – the spill occurred because of a series of blunders by BP and its contractors and was far from inevitable.   This contrasts sharply with the recommendations suggesting systemic problems to be fixed by an industry-wide crackdown.

There is ample reason to believe – along with the powerful circumstantial argument that the deadly April 20th explosion and subsequent oil spill is unique amidst the thousands of offshore wells drilled in Gulf – that this incident was due to gross mismanagement and is not a justification for closing the door further on domestic drilling.

The American public is more worried about a repeat of $4.00 gas than a repeat of Deepwater Horizon – and rightly so as the former is vastly more likely than the latter.  Reasonable changes to improve safety are warranted, but should occur in the context of a policy that ensures expanded offshore drilling.   To do this, Congress should not adopt the report’s recommendations or allow Obama regulators to impose them.

            Undefeated Auburn beat Oregon to win the BCS championship last night, yet Sports Illustrated magazine failed to include Auburn in its Preseason top 25.  Believe it or not, this was far from SI’s silliest error in recent years.  The magazine was even further off the mark with its March 12, 2007 cover story on global warming.

Yes, SI devoted an entire story to global warming, and in particular its impact on sports.  The tone was set by the cover itself, which depicted then-Florida Marlins pitcher Dontrelle Willis in Dolphins Stadium.  Presumably he’s on the mound, but it’s hard to tell since he is above his knees in water – the text explains that “the seas will rise and coastal areas, including parts of South Florida, will eventually be underwater.”   In fairness, SI’s prediction of sea level rise stretches to 2100, so it cannot yet be disproven.  But the cover certainly suggests more immediate impacts, and elsewhere the story stresses that “global warming is not coming; it is here.”  Much of the rest of the piece is an anecdotal litany of spectator and participant sports purportedly being ruined by global warming – ski seasons getting shorter, summer heat waves causing cancelled high school football practices, and even the bats used by the hitters Willis faces jeopardized by warming-induced insect infestations of ash forests.      

             Nearly four years later, few of the article’s scary scenarios are standing the test of time.   Since 2007, we have seen bad ski seasons have followed by good ones, unusually hot summers followed by mild ones – in other words, fluctuations in weather that are completely normal and nothing for the sports fans – or the rest of us – to be particularly worried about. 

            The good news is that the public is wisely tuning out global warming alarmism, though Willis may have been convinced by rising sea levels to move inland – he is on the Cincinnati Reds roster for 2011.  Either it was global warming or the $12 million a year he is getting from the Reds.


It wasn’t a very merry Christmas for America’s motorists, as pump prices averaged $3.00 per gallon nationwide  for the first time since 2008.   And President Obama’s holiday gift to car and truck owners – new proposals to clamp down on domestic drilling and ratchet up refining costs – will only make matters worse in the years ahead.

The days before a big holiday weekend have become a busy time for Obama’s regulators, who take advantage of the chance to slip through unpopular measures with minimal attention.   Coming on the heels of a pre-Thanksgiving announcement that oil exploration and drilling in Alaska will be curtailed in order to create vast expanses of polar bear habitat, the Obama Department of Interior (DOI) made a pre-Christmas policy change that would further reduce domestic oil supplies by placing more energy rich lands out of reach.   

It is supposed to require an act of Congress to designate federal lands as wilderness areas – and for good reason as this designation places any such lands off limits to oil and gas leasing or any other economically beneficial use.   But thanks to the December 23rd announcement, DOI bureaucrats will essentially be able to make that determination on their own, reversing a Bush-era policy that had constrained this kind of unilateral agency action.  

At issue are millions of acres throughout the West.  Some of this land sits atop promising oil and natural gas deposits – indeed, wherever there’s energy below ground, environmental activists and bureaucrats hype whatever is above ground as some kind of treasure in need of being fenced off.  Utah is particularly hard hit, with up to 6 million acres now in jeopardy of getting locked up.   Rep. Rob Bishop (R-Utah) told the Salt Lake Tribune that “this decision will seriously hinder domestic energy development and further contribute to the uncertainty and economic distress that continues to prevent the creation of new jobs in a region that has unduly suffered from this administration’s radical policies.”     

On the same day as DOI’s anti-drilling announcement, the Environmental Protection Agency proposed another piece of its global warming agenda, this one targeting America’s refiners.   Though the details of the provisions placing limits on carbon dioxide emissions from refineries have yet to be determined, refiners fear it would increase the cost of turning oil into gasoline and thus raise retail prices.

It should be noted that these new measures do not explain the current spike to $3.00 per gallon, which appears to be the result of growing demand from a recovering global economy.    But these and other anti-energy policies are very likely to put upward pressure on pump prices once they take effect in the years ahead.   Arctic Power, an organization funded by Alaska to promote its energy industry, was sharply critical of the polar bear decision as well as other measures that have all but shut down oil exploration and drilling activities in the state.    Adrian Herrera, head of Arctic Power’s Washington office, calls such policies “taking away the farmer’s seeds,” because today’s exploration and drilling leads to tomorrow’s production.  Without new fields to replace the declining output from existing ones, future production will dwindle and prices will rise.

In sum, the administration gave us a Thursday-before-Christmas present of lower future supplies and thus higher prices for oil plus increased costs of refining that oil into gasoline, and did so at a time when pump prices have reached their highest level since Obama took office. Little wonder the feds made the announcement when so few were paying attention.


For all the administration’s talk about job creation being priority one, the President has targeted a number of occupations for elimination because environmentalists don’t like them. As my New York Post article sets out, oil industry workers, factory workers, miners, and fisherman are all being subjected to environmental regulations that are putting these people out of work. (I could have added loggers, ranchers, and others as well). The worst is yet to come, especially with EPA’s global warming agenda to take effect in January of 2011, not to mention the President’s recent announcement that he is shutting down nearly all offshore oil and gas leasing. When the wishes of environmental activists clash with the need to save and create jobs, the Obama administration has sided with the environmentalists nearly every time.

It is worth noting that the two biggest environmental scares of recent memory-global warming and the BP oil spill-both failed to sway voters on November 2.  Quite the contrary, it was the ill-advised attempts to address them that sparked voter anger.  The Waxman-Markey bill worried the electorate more than global warming itself (and quite rightly so), and contributed to the loss of more than two dozen of its supporters in the House of Representatives.

Similarly, the BP oil spill had virtually no adverse impact on pro-drilling politicians. If anything, it was Obama’s overreaction to the spill in the form of the drilling moratorium that proved highly unpopular in Louisiana and other impacted States. The moratorium didn’t cost any Congressional seats there only because both Democrats and Republicans strongly denounced it.

Call it the election-day dog that didn’t bark – or maybe the oiled bird that didn’t fly – the BP oil spill had virtually no impact at the polls on November 2nd.   The fact that the biggest ecological scare of the summer was nearly forgotten by fall says a lot about where the American people stand on energy and environmental issues.

Less than five months after President Obama gave a primetime address hyping the Deepwater Horizon spill as “the worst environmental disaster America has ever faced,” there is scant evidence that even a single Congressional race was affected by it.  This was not for lack of trying.  In the first few months after the April 20th spill, many Congressional Democrats joined environmental activists and some in the media in blaming pro-drilling Republicans for their complicity in the so-called Gulf disaster. 

For a while, it was fashionable to ridicule those who had chanted “drill baby drill” during the 2008 race.   Opponents of domestic drilling thought they had a defining issue heading into the midterms.

But rather than having to eat their words and go home in defeat, the “drill baby drill” crowd is back – and they’ll be returning to Washington with quite a few new allies. 

Ironically, it was not the spill itself but Obama’s overreaction to it in the form of a job-killing moratorium on offshore drilling that really angered voters in Louisiana and other impacted states.  The only reason the Obamatorium didn’t hurt Democratic candidates there was that they were just as vocal as Republicans in their opposition to it.

 So what does all of this say about voters?  For one thing, it shows that they are getting wise to environmentalist alarmism and exaggeration.   Just as the drumbeat of doom and gloom predictions about global warming didn’t generate public support for cap and trade, neither did the equally-overblown claims of spill–induced ecological devastation create a backlash against offshore drilling.     And, given the still-struggling economy and stubbornly-high unemployment, the electorate is not going to accept costly solutions to overstated threats.   The drilling ban, like cap and trade, would have raised energy costs and destroyed jobs.  As such, it is a nonstarter with the American people and their newly-elected representatives.  

 But has the Obama administration gotten the message?  Not yet.  While admitting that cap and trade legislation is dead, the President coyly describes it as “just one way of skinning the cat,” and added that “I am going to be looking for other means to address this problem,” including EPA regulations that seek to achieve the same ends.   Similarly, the President announced with great fanfare – shortly before the elections – that he is lifting the drilling moratorium.   But this policy change has thus far made no difference as the administration continues to bottle up all new drilling with regulatory red tape and indefinite delays.   

In other words, the same energy and environmental policies that the public rejected when the administration and Congress tried to push them through the front door will be making a return via the back door.   The incoming Congress has been elected to stop this from happening.

Draw up a map of the U.S. and shade in the regions that rely on energy jobs – places like Appalachia, the Rockies, western Gulf states, Alaska – and that’s where we saw some of the strongest anti-Obama sentiment succeeding on election day.
With few exceptions, the only Democratic congressional candidates who won in these areas were those able to distance themselves from President Obama’s energy policies – or to be more accurate, his anti-energy policies. In its first two years, the Obama administration has tried to slam the door shut on domestic production of coal, oil, and natural gas.
But now, many of the administration’s Congressional allies in this effort have gotten a pink slip from their constituents. Obama will soon have to contend with a Congress that sees increased supplies of affordable domestic energy – and the increased jobs that go with it – as things worth fighting for rather than against.
Most notably, costly global warming legislation proved to be political poison. Many Senate incumbents can only be grateful that the administration-endorsed cap-and-trade bill never came to a vote in the upper chamber, as the House-passed version was a major factor in defeating more than two dozen of its supporters. This includes longtime Democratic incumbent Rick Boucher whose rural Virginia district has a number of coal mines.
Voters throughout Appalachia correctly saw cap-and-trade as an energy tax designed to raise the cost of coal and other fossil fuels in order to drive them out of the marketplace. They didn’t like the implications for their electric bills, and they certainly didn’t like the implications for coal mining jobs. In addition to cap-and-trade, attempts by the Environmental Protection Agency to deny new coal mine permits added to the voter outrage throughout coal country. And on top of concerns about coal mining jobs, voters in states like Ohio, Pennsylvania, and Michigan that need affordable coal to maintain manufacturing jobs sent home incumbents who voted for cap-and-trade.
Cap-and-trade was every bit as unpopular in other energy producing regions, including the West where Rep. Harry Teague of New Mexico suffered the same fate as Boucher. The administration’s efforts to reduce oil and natural gas production on federal lands were also a factor. Obama’s Secretary of the Interior Ken Salazar quickly earned a reputation as Secretary No on oil and gas drilling throughout the Rocky Mountain region, blocking many already-approved leases and issuing a record-low number of new ones. The region has the highest unemployment in the nation, and killing high-paying oil and gas industry jobs there was not well received on election day. Another November 2nd victim was Obama supporter John Salazar, incumbent Congressman from an energy-rich but job poor Colorado district – and Ken Salazar’s brother.
It is also worth noting that the BP oil spill in the Gulf of Mexico, hyped by President Obama in a nationwide address as “the worst environmental disaster America has ever faced,” had little impact on the elections. If anything, it was the administration’s attempt to parlay the spill into a deepwater drilling moratorium that sparked anger amongst voters in the Gulf region. Obama’s overreach has already killed jobs in Louisiana and neighboring states. The only reason the moratorium did not play a bigger role in the elections there was that it was denounced by candidates of both parties.
The same is true in Alaska. Nowhere is the energy industry more important to a state economy than in Alaska. And there, the Obama administration has reached a dubious milestone – for the first time in decades, virtually all energy exploration activities in the state have come to a halt. As with Louisiana, the only reason energy wasn’t a bigger issue was that every major candidate had strongly disagreed with the administration and vowed to fight it on issues like opening portions of the Arctic National Wildlife Refuge and National Petroleum Reserve and allowing exploration in the Beaufort and Chukchi seas.
In sum, just about every place in America where there is energy below the ground there were angry voters above it on November 2. The mandate is clear and now it is up to the incoming Congress to bring to Washington something that has been missing for the past two years – a policy that favors American energy production and jobs.

Post image for Will EPA Regulators Leave America In The Dark?

There’s no doubt that federal regulations lead to economic harm, but could the wave of Obama regulations affecting electric power plants lead to electricity shortages as well? A new study from the North American Electric Reliability Corporation (NERC) finds reason for concern.

Resource Adequacy Impacts of Potential U.S. Environmental Regulations looks at four pending Environmental Protection Agency rules – the Cooling Tower Rule, the MACT Rule, the Clean Air Transport Rule, and the Coal Combustion Residuals Rule – that would impact coal-fired electric generating units. These power plants currently provide half of America’s electricity. It should be noted that there are several other proposed or recently finalized rules that also affect these units – including the EPA’s massive global warming regulatory agenda – that are not considered in this study. Nonetheless, NERC concludes that these four rules raise issues about electric reliability in the years ahead.

The study concedes considerable uncertainties regarding how strict the final version of these proposed rules will be as well as their ultimate compliance costs. For example, multiple rules with fairly urgent and overlapping timetables place great constraints on the existing supply of skilled labor and equipment needed to comply, while a more sequential rollout would be less onerous. In any event, NERC fears enough premature retirements of older coal-fired plants, along with significant downtime for units undergoing retrofits, to raise the possibility of reliability shortfalls.

This much is certain – the billions in compliance costs from EPA’s rules will boost electric bills. But whether there will be enough electricity to meet the nation’s growing demand while avoiding brownouts or blackouts is just one more piece of regulatory uncertainty to be piled onto the economy in the years ahead.

Green activists and allied rent seekers like to portray themselves as the underdogs against big business in their environmental causes.  The battle over Proposition 23 – the California ballot measure to suspend the state’s global warming law until unemployment is under control – is certainly no exception.    But they have David and Goliath backwards here; those spending to defeat the measure and keep California cap and tax in place have outgunned supporters of reform by at least 3 to 1.

Compared to the $9 million or so in favor of Prop 23, including most from oil companies, the $28 million to kill this measure has gotten relatively little attention.   Only a minor percentage of this amount has come in the form of small contributions from regular Californians – little wonder since it is defending a global warming policy that would drive up fossil fuel costs and kill jobs just as a similar policy has done in Spain. In fact, most of the money has come in the form of six and seven figure contributions from big environmental groups, Hollywood bigshots, and, most disturbingly, opportunists like venture capitalists John Doerr and Vinod Khosla, who hope to secure a guaranteed market selling alternative energy and vehicles far too expensive to compete otherwise.

Adding ethanol to the gasoline supply raises the cost of driving, boosts food prices, gobbles up subsidies, and has failed to live up to its environmental promise. But there’s good news – the Environmental Protection Agency may let us use more of it.
EPA recently announced that E15 – gasoline with up to 15 percent ethanol blended in – has been approved for use in cars and trucks built since 2007. Until this decision, no more than 10 percent ethanol was allowed. The federal government is still conducting testing to determine whether older vehicles can use E15 without problems, and until that decision is made gas stations will be reluctant to carry it. Beyond cars and trucks, a coalition of producers and owners of watercraft, motorcycles and off-road vehicles, and gasoline-using equipment continue to express concerns that E15 will compromise performance and possibly damage engines.
Given the increasing ethanol mandate – 13 billion gallons of corn based ethanol and other renewable fuels must be added to the fuel supply in 2010, increasing to 36 billion by 2022 – raising the limit to E15 was necessary in order to incorporate the mandated amounts into the fuel supply. But the risk to millions of vehicle and equipment owners only adds to the problems created by the mandate. Ethanol has not lowered and in fact has increased the cost of driving. And the diversion of nearly a third of the nation’s corn supply from food to fuel use has raised the costs not only of corn itself but related items like corn-fed meat and dairy.
In addition to the mandate, ethanol benefits from billions in tax breaks as well as protectionist tariffs that limit competition against sugar ethanol from Brazil.
While the costs of ethanol have been higher than anticipated, the claimed air quality benefits and reductions in greenhouse gas emissions are failing to materialize. Indeed, several major environmental groups have joined in the fight against E15.
At least on the tax and tariff front, there may be a chance to stem the tide. The tax credit of 45 cents per gallon of ethanol (currently costing about $6 billion a year) as well as the tariffs are set to expire by the end of the year. Allowing them to end would be the first step to rein in the ethanol mistake.