Albert V. Gore, Jr. (former Vice President, Senator, and Representative) laid out his plan to save the planet from global warming in a speech at the Daughters of the American Revolution’s Constitution Hall in Washington on Thursday. As a member of the We (Can Solve It) Campaign, I got one of the first tickets and was able to attend along with four thousand other lucky folks. Americans for Prosperity and CEI’s Bureaucrash added to the gaiety by holding a little demonstration in front of the building. Mr. Gore and his entourage arrived in two Lincoln Town Cars and a Chevy Suburban.
Gore argued that, because global warming is happening faster and the impacts are even worse than even he predicted a few years ago, drastic actions were required immediately. He proposed that the United States replace all of its coal and natural gas produced electricity with solar, wind, and geothermal sources within ten years and also move towards replacing our gas-powered automobiles with plug-in electric hybrids.
Coal-fired power plants produce about half the nation’s electricity. Natural gas-fired plants contribute roughly twenty percent. He didn’t mention nuclear (another 20%) or hydropower (7%), so I’m not sure whether he proposes to keep or replace those sources. Electric utility companies are having a hard time building enough new power plants to keep up with increasing demand. Most of the new power being installed is coal or gas. At a minimum, it takes several years to design, arrange financing, permit, and build any new power facility. Gore is proposing that we close thousands of plants worth trillions of dollars and replace them with thousands of new plants costing trillions of dollars in a decade. That sounds a little unrealistic to me.
Gore argued that the costs would be substantial, but would not be as high as the defenders of Big Hydrocarbon claimed. First, the costs of solar and wind power have come down dramatically in the past few years. Second, building new solar and wind facilities on a massive scale would lower prices even more dramatically. Third, prices for oil, gas, and coal have gone up rapidly in the past few years. And fourth, hydrocarbon prices could only continue to go up. So within a decade the cost of solar and wind power would be no higher than the cost of continuing to burn coal and gas.
Even if true, Gore seems not to understand the concept of sunk costs or the capital required to build all those wind mills and solar panels. It would require a lot more to accomplish than the sacrifices Americans were forced to make during World War Two, when much of our market economy became a command-and-control economy.
The Dark Side of the Force has now spoken: Turn out the Lights! And Back to the Caves! Were only there enough caves for six billion people.
Working as a land clerk for a small Denver oil exploration company in 1981, I did a lot of work that never resulted in a drop of oil. We worked to get a high percentage of the leases covering a certain field, but sometimes another company, such as Anadarko, held too much of the area or we had to wait on cantankerous rancher holdouts. It was a long, many times unsuccessful, process.
Oil exploration has come a long way since the ‘80s but many things still hold true. It’s still a risky business—the $50 yearly check I received in the ‘80s from a small percent interest I held in an oil well turned into a $50 liability in the ‘90s. (I foolishly got rid of it.)
The number of permits required has increased. Twenty-five to thirty permits are needed for off-shore leasing, and the permitting required for onshore leasing has become dizzying as well.
But the energy companies are filling our government’s coffers. In 2006, the top 27 U.S. energy producing companies paid 21% of the total corporate income taxes ($81.5 billion) collected by the federal government. These 27 companies were responsible for 44% of the total U.S. crude oil and natural gas production, and 81% of domestic refining capacity.(API) In fiscal year 2006, $10.48 billion was also collected in the form of bonus bids, rents and royalties from oil and gas companies operating on Federal lands. (Interior Budget in Brief 2009)
It’s also important to know that ANWR’s size is comparable to South Carolina’s and the size of the area that would be drilled is comparable to Dulles airport’s. Jonah Goldberg asks, “Has South Carolina been ruined because it has an airport?” The Congressional Research Service estimates that ANWR production would deliver $191.1 billion in corporate income tax and royalty payments to the federal treasury at today’s prices. (CRS Report)
Today, certain congressmen think they are landmen and have decided that oil companies don’t know how to make money and should be making money off their currently-held leases, rather than Congress releasing new areas. They have no desire to open up American soil for American oil with American jobs. This is clearly seen in the fact that the place where such a bill would be considered—the House Natural Resources Subcommittee on Energy & Mineral Resources —has no hearings scheduled for July on this important issue.
Environmental groups have railed for years against President Bush and the Republican Congress, calling on them to resist drilling the nation’s public lands.
Oil prices could hit $300 a barrel if the United States does not take drastic action to reduce its heavy dependence on foreign oil, but neither of the top presidential candidates is addressing the crisis, Texas oilman T. Boone Pickens said Monday.
With energy prices on a steady climb, consumers have been looking for ways to cut back. They are driving less, turning down the pool heaters and using fans instead of air-conditioners.
Bush administration officials agreed that greenhouse gases could endanger the public and should be regulated under clean-air laws, but later reversed course amid opposition from Vice President Dick Cheney's office and the oil industry, a congressional report said.
The national debate over opening more offshore areas to oil and gas exploration has begged the question: Just what are the companies doing with the tens of millions of acres they're already leasing from the federal government?
President George W. Bush this week rescinded the executive order that his father President George Bush signed in 1990 prohibiting oil and gas exploration in 85% percent of the Outer Continental Shelf surrounding the lower 48 States. He then challenged Congress to remove the congressional moratorium on oil and gas exploration in those OCS waters that has been in place since 1982. He should have done this a long time ago, but now it’s up to Congress to drop the moratorium and then up to the next administration to put some offshore leases up for bid. Don’t hold your breath (see next four items).
House Appropriations Committee Chairman David Obey (D-Wisc.) said this week that he didn’t see any point in trying to pass appropriations bills for the various departments of government until the Republicans on the committee led by Rep. John Peterson (R-Penna.) dropped their demands to hold a vote on lifting the congressional moratorium on OCS oil and gas exploration. The fact is that the House Democratic leadership opposes increasing domestic oil production and favors importing more and more of the oil that we consume. They also support higher gasoline prices in order to reduce greenhouse gas emissions, but of course that is not something they can say out loud.
The House again failed to pass the Drill Responsibly in Leased Lands (or DRILL) Act, H. R. 6515, by a vote of 244 to 173. The Democratic leadership brought the bill up under suspension of the rules, which requires a two-thirds vote. They did that so Republicans could not offer an amendment to open OCS areas to oil and gas exploration. The DRILL Act would prevent oil companies from bidding on new federal leases unless they were producing oil on the leases that they already hold. With oil at $140 a barrel, the oil companies have every incentive to produce as much oil on the leases they have already paid for as they can. But there are obstacles: it takes years to get through the permitting process before you can start drilling and then environmental pressure groups file lawsuits, which can take years to resolve. And even after exploratory wells are drilled, there is another frequent obstacle to producing oil: no oil is discovered. See Oil Leasing 101 below.
Senate Majority Leader Harry Reid (D-Nev.) is going to try to bring a bill to the Senate floor next Tuesday that would go after oil speculators who, it is claimed, are driving up the price of oil. Republican leaders are demanding that votes be allowed on amendments to open OCS areas to oil and gas exploration, so my guess is that it’s unlikely that Reid will move forward. I don’t know what role speculators have played in driving up the price of oil, but there is a simple way to end any speculative bubble: open up federal OCS areas and ANWR to oil and gas exploration. The prospect of increased oil production would bankrupt speculators who have bet the farm on ever higher oil prices.
As the price of oil and natural gas soars, many customers are looking to coal as an alternative fuel. That means a boon for suppliers — and a potential bane for the environment.
Paul Chesser, Climate Strategies Watch
Economist friend Dr. David Tuerck, executive director of the Beacon Hill Institute based at Suffolk University in Boston, had this to say yesterday in response to Al Gore's speech on going 100-percent to renewable sources for energy generation:
"Al Gore wants to be Rachel Carson but has revealed himself to be Carrie Nation. He talks about protecting the environment, when all the while he really just wants to banish fossil fuels from the marketplace.
"There is no better example of his prohibitionist mentality than his recent demand that the United States produce 100 percent of its electricity from renewable and carbon-free sources in 10 years. Only about 30 percent of our electricity currently comes from these sources. The question is what will happen to the fossil fuels that are used to make the remaining 70 percent, once those fuels are no longer used to produce electricity. The answer is that they will find their way to the market place to be used, as they are now, to produce energy, whether in the United States or abroad.
"A “strategic initiative” that is aimed at substituting alternative fuels for fossil fuels in the production of one kind of energy is doomed to failure unless it somehow eliminates the value of using the same fossil fuels to produce other kinds of energy. If Mr. Gore really wants to spur the United States and other countries to use alternative fuels to produce electricity or any kind of energy, he should just sponsor legislation to prohibit the use of fossil fuels. Otherwise, he is just blowing smoke."
Beacon Hill has weighed in on the absurd economic claims promoted by various state climate commissions.
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