Features

Post image for Ethanol Mandate: Proud Milestone in the Glorious History of Central Planning

Today on National Journal’s Energy Experts Blog, I post a comment celebrating the Renewable Fuel Standard (RFS) as a triumph of centralized economic planning. You think I’m joking? Far from it. The RFS is working at least as well as other central planning schemes!

Well, okay, the RFS would be funny if it weren’t so destructive. A new report by NERA Economic Consulting warns that the RFS is heading for a “death spiral” — a vicious circle in which rising fuel costs, declining sales, and dwindling biofuel credits make compliance increasingly “infeasible.”

In one scenario analyzed by NERA, the death spiral produces a 30% increase in gasoline prices and a 300% increase in the cost of diesel fuel in 2015. Potential adverse macroeconomic impacts include a “$770 billion decline in GDP and a corresponding reduction in consumption per household of $2,700.” Ludwig von Mises coined a term for such debacles: “Planned Chaos.” [click to continue…]

Post image for Eco-Anxiety Takes a Toll on Global Warming Alarmists

Most global warming alarmists focus on changes  supposedly occurring to the world we live in, but GW is also having an effect on another world—the world inside our heads. For instance, a recent study by the World Wildlife Foundation (WWF) showed that 80 percent of Sweden’s young people (ages 15-25) worry about how climate change will affect their future. Moreover, half of the respondents think about climate change once a week or more often, and no less than 25 percent experience stomach pains or unhappiness when they do so.

This is actually not a new phenomenon. In the 1990s, something known as “eco-anxiety” came into existence. It involved feelings of helplessness, despair or of not being able to do enough about climate change. Margaret Anderson, who holds a master’s degree in eco-psychology, calls it “that underlying feeling of fear and anger about the state of the Earth”. One person explained her melancholic feelings this way:

“The sight of an idling car, heat-trapping carbon dioxide spewing from the tailpipe, would send me into an hours-long panic, complete with shaking, the sweats, and staring off into space while others conversed around me.”

Another anxious reporter explained it as follows:

“Whatever steps I take to counter global warming, however well-intentioned my brief bursts of zeal, they invariably end up feeling like too little, too late. The mismatch between the extremely dangerous state of the earth and my own feeble endeavuors seems mockingly large.”

While eco-anxiety might be an unknown concept for most, that hasn’t stopped it from becoming quite a lucrative business for some. One website has compiled a database of people who identify themselves as providing therapeutic or educational services related to ecopsychology. In the U.S. alone, there are over one hundred people listed–charging up to $250 per hour–ranging from ecotherapists and ecologists to shamans.

Climate change/eco-anxiety has an eerie resemblance to another condition that popped up back in 2009: “Avatar blues”. The movie Avatar, which basically showed dirty mankind exploiting beautiful Na’vi people on the beautiful planet Pandora, caused people to experience depression–and in some instances—contemplating suicide. As one viewer said to CNN back in 2010:

“When I woke up this morning after watching Avatar for the first time yesterday, the world seemed … gray. It was like my whole life, everything I’ve done and worked for, lost its meaning … It just seems so … meaningless. I still don’t really see any reason to keep … doing things at all. I live in a dying world.”

The common denominator between eco-anxiety and Avatar blues seems to be the notion that earth is a unclean place, soon-to-be inhospitable to polar bears and on the brink of overall destruction. On its face this is similar to the “nuclear anxiety” that was widespread in the later half of the 20th century; the difference, however, is that fear of nuclear war was rather well-founded, while the alleged mega-catastrophes of GW have yet to appear.

Fortunately, there are ways of overcoming eco-anxiety, such as realizing that earth isn’t such a dull place. Our friends the ecotherapists have constructed more ingenious methods, such as advice on becoming more in tune with nature by always carrying around a small rock or twig. According to Carolyn Baker, a psychotherapist who offers eco-anxiety coaching, it helps to realize that “it’s OK to give yourselves a break for a few weeks or months,” and “focus on positive things, go see a comedy, [or] read a trashy novel”. Thanks, Carolyn. [click to continue…]

Post image for Bipartisan Senate Majority Votes To Oppose a Carbon Tax

Senate Majority Leader Harry Reid (D-Nev.) seldom lets Senators vote on amendments to bills, but last week he agreed to a “vote-a-rama” on the budget bill.  Hundreds of amendments on all sorts of issues were offered and many of them are being voted on.  Senator Roy Blunt (R-Mo.) offered an amendment (#261) to put the Senate on record against any tax or fees on carbon dioxide emissions.  The Senate voted on this anti-carbon tax amendment on Friday, 22nd March.  Fifty-three Senators voted in favor, with 46 opposed. Sixty votes were required for passage under Senate rules.

All the no votes were from Democratic members.  The 45 Republican Senators were joined by eight Democrats in voting for Blunt’s amendment.  The Democrats were: Max Baucus of Montana, Joe Donnelly of Indiana, Heidi Heitkamp of North Dakota, Mary Landrieu of Louisiana, Joe Manchin of West Virginia, Claire McCaskill of Missouri, Mark Pryor of Arkansas, and Jay Rockefeller of West Virginia.

Post image for False Alarms: Dow Chemical’s Campaign against Natural Gas Exports

Last week on this blog, I explained how Dow Chemical’s chief rationale for restricting exports of liquefied natural gas (LNG) — the claim that gas used as a feed stock in domestic manufacturing adds more value to the economy than gas exported overseas — would also justify:

  • Curbing Dow’s exports of chemicals, plastics, and electronic components to help domestic manufacturers of paints, cosmetics, pharmaceuticals, cell phones, laptops, and other finished goods become more competitive in the global marketplace.
  • Empowering bureaucratic agencies to commandeer private property whenever they think the resource would add more value in the hands of some other firm or industry.

Dow CEO Andrew Liveris would no doubt cry bloody murder if Congress proposed to give Dow a dose of its own medicine and restrict the company’s exports in the “public interest.” Presumably, Mr. Liveris would also disavow any sympathy for confiscatory centralized economic planning, although that is in effect what he is advocating.

Other rationales Dow and its allies invoke to oppose “unfettered” gas exports include:

  1. “Unlimited” gas exports could dramatically reduce the domestic supply of the natural gas liquids (NGLs) on which manufacturers depend as key feed stocks.
  2. Long-term contracts to export liquefied natural gas (LNG) will “lock in” deliveries to foreign buyers, subjecting U.S. manufacturers to high risks of price shocks and supply disruptions.
  3. Approving all LNG export applications that have been submitted to the Department of Energy (DOE) could result in “half” of all U.S. gas produced being burned for the Btus in overseas power plants, pushing U.S. gas prices to Asian levels.

These are all false alarms. Let’s take them one at a time. [click to continue…]

Post image for Obama Administration Casts a Shadow on Sunshine Week

The newspaper industry has named this week Sunshine Week to focus attention on the importance of open government and public access to information.  The Obama Administration has gotten into the spirit of Sunshine Week with daily posts on the White House blog and the Department of Justice blog, which talk about the importance of transparency and trumpet the Administration’s achievements.  President Obama after all promised in the 2008 presidential campaign that his administration would be the most transparent in history.

It hasn’t quite worked out that way.  For example, CEI’s Chris Horner has filed multiple ongoing lawsuits to try to force the Administration to comply with Freedom of Information Act requests.  The Republican minority staff of the Senate Environment and Public Works Committee have been having fun with daily posts that chronicle example after example of Obama Administration stonewalling and failures to comply with federal open government laws.

But it’s no longer just a partisan complaint.  Glenn Greenwald published a column in London’s Guardian this week headlined, “Obama’s secrecy fixation causing Sunshine Week implosion.”  The sub-headline reads, “Even the most loyal establishment Democrats are now harshly denouncing the president for his war on transparency.”

Post image for A Modest Proposal on Exports: Give Dow Chemical a Dose of its own Medicine

Dow Chemical CEO Andrew Liveris has been making waves of late with congressional testimony and a Wall Street Journal oped advocating restrictions on U.S. exports of liquefied natural gas (LNG).

To oppose “unfettered,” “unlimited,” or “unchecked” LNG exports — in other words, to fetter, limit, and check the freedom of gas producers to sell their own products — Dow formed a business group called America’s Energy Advantage (AEA). Other members include Alcoa, Eastman, Huntsman, and Nucor.

AEA’s rationale for restricting gas exports (to quote Liveris’s oral testimony) is that when gas is not exported but instead is used to manufacture products, it creates “eight times the value” across the entire economy. That claim derives from a Charles River Associates (CRA) study sponsored by — drum roll, please — Dow. According to CRA, using gas as a manufacturing input trounces gas exports in terms of job creation, GDP growth, and trade-deficit reduction. Therefore, AEA argues, Congress and/or the Department of Energy (DOE) should constrain LNG exports in the “public interest.” AEA also warns that higher gas prices from increased overseas demand could destroy tens of thousands of manufacturing jobs and kill the U.S. manufacturing renaissance. AEA claims it is not opposed to all LNG exports, it just wants a “balanced” approach.

Economist Craig Pirrong (a.k.a. the “Streetwise Professor“) deftly pops this rhetorical balloon:

I am adding a new entry to my list of phrases that put me on guard that someone is trying to con me: “balanced approach.”. . . . In Obamaland, “balanced approaches” mean large tax increases now, and hazy promises of spending cuts in some distant future. In Liveris’s oped, “balanced” means imposing restrictions on exports of natural gas to lower the cost of his most important input. Funny, ain’t it, that things seem to tip the way of those advocating “balanced approaches”? In other words, if it helps me, it’s fair and balanced!

The whole thing is galling. Even if Liveris were correct and gas turned into chemicals generates “eight times” the economic value of gas sold abroad, such third-party assessments should have no bearing on how companies dispose of their own property. As American Enterprise Institute scholar Mark Perry points out, AEA companies did not invest a dime to develop fracking and horizontal drilling technology, construct the wells, or hire the rig workers, yet they presume to decide what happens to the gas after it’s extracted from miles under the Earth. Not unlike the Supreme Court’s Kelo decision, AEA’s implicit premise is that central planners have the right, nay the duty, to commandeer private property whenever the resource would add more value in someone else’s hands.

But do Liveris and AEA really believe the rationale they’re pushing, or only when it cuts in their favor? Here’s an easy way to tell. Dow, Alcoa, Eastman, Huntsman, and Nucor primarily manufacture intermediate goods, not final goods. As natural gas is an input to them, so their products are inputs to still other companies. AEA-produced chemicals, plastics, electronic components, aluminum, and steel reach the consumer only after other manufacturers “add value” by turning those “feed stocks” into paints, cosmetics, fertilizers, pharmaceuticals, computers, cell phones, automobiles, and so on.

So by AEA’s logic, the government should restrict exports of chemicals, aluminum, and steel to hold down domestic prices and make U.S. manufacturers of final goods more competitive. The “public interest” demands it! I’ll bet my salary against Liveris’s that he will never, ever agree that sauce for the goose should also be sauce for the gander. [click to continue…]

Post image for Maryland’s Off-Shore Wind Farm Would Be More Dangerous Than You Think

With the Maryland’s Senate passing the Maryland Offshore Wind Energy Act of 2013, it looks as if the U.S. is likely to build its first off-shore wind farm east of the Ocean City. The initiative has been widely endorsed by environmentalist groups, such as the Coalition for Wind Works for Maryland. As the coalition states on its website:

“Bringing offshore wind power to Maryland will effectively stabilize electricity rates, create jobs, reduce pollution, and provide us with a local source of clean, renewable energy.”

According to current plans, any offshore windfarm built pursuant to the legislation would be approximately 10 nautical miles (11.5 miles) from the Atlantic coast and produce 200 megawatts – supposedly providing about 1 percent of the state’s electric needs.

As we’ve frequently pointed out, wind power plants are inefficient, costly and in need of heavy subsidization. But the cost may not only be measured in dollars–reports show that the turbines are in fact quite dangerous as well. For instance, two windmill accidents have been reported in Sweden in the few weeks alone.  In February, a blade fell down while a turbine was being repaired, crushing a parked car. This past Sunday, a windmill spun out of control after a safety mechanism failed, forcing the nearby residents to evacuate for 24 hours until two blades finally came off in the strong winds.

And not every accident leaves people unscathed. Last December, a German crane operator was killed when a blade fell on his cab during the installation of a windmill. A survey performed by RenewableUK, a wind power trade association, estimated that 1,500 accidents had occurred between 2006 and 2011 in the UK alone, including 300 injuries and 4 deaths. Focusing on wind farms, the Health and Safety Executive’s figures showed three fatal accidents between 2007 and 2010 and a total of 53 major or dangerous incidents during the same time frame.

[click to continue…]

Post image for A Later Peak Cherry Blossom Date – Is DC’s Global Warming Indicator Broken?

There’s an ongoing quest to find signs of global warming in every aspect of everyday life. Over the last few years a rather unique kind of local indicator for GW has emerged, namely the predicted peak cherry blossom bloom of Washington DC’s Tidal Basin.

The peak cherry blossom bloom period has been used frequently as a GW indicator for the last three years. In line with GW claims, the predictions for peak blooms were moved ahead in both 2010 and 2011; in 2010, the revised predicted peak dates were April 1 to April 4; in 2011, they were even earlier– March 29 to April 3.  In 2012, the predictions of a peak between March 20 and March 23 were regarded as a first-class sign of GW, with DC’s cherry blossoms being called a “Global Warming Canary” by the Huffington Post. It seemed that the hugely popular cherry blossom festival was in danger of becoming a winter, rather than a spring, event.  As stated in a 2012 Washington Post article “Could cherry blossoms one day be blooming in winter?” there is a future possibility of “a blooming period in February instead of March, and a peak bloom in early March, instead of early April”.

So what are the predictions for this year’s cherry blossom? The National Park Service has announced that the peak bloom for Washington’s Global Warming Canary will be March 26 to March 30 — about one week later than last year. Although the actual bloom dates will be determined by the weather in the coming weeks, this year’s prediction of a later peak period does not fit into the alarming predictions of earlier years, or the notion that the shift towards earlier dates will continue.

Given the decades-long nature of climate trends, later peak blooms in a single year don’t prove anything either way about GW.  But that was just as true of the 2010 to 2012 cherry blossom seasons, and yet those dates triggered quite a bit of GW alarmist commentary.  This year’s prediction hasn’t.  Press coverage of GW “evidence” apparently omits incidents that run counter to alarmism.  Perhaps that’s not a surprise, but it’s not a healthy sign for public understanding.

And no matter when the blossoms appear this year, let’s all enjoy them—even the GW alarmists among us.

Post image for Exxon Mobil’s Carbon Tax Follies

It was a busy week for promoting and opposing a carbon tax.  Two studies on the economic effects of a carbon tax that draw opposite conclusions were released by the National Association of Manufacturers and the Brookings Institution.  Kevin Hassett, Ph.D., director of economic policy studies at the “pro-business” American Enterprise Institute, continued his advocacy of a carbon tax at a Resources for the Future forum.  And most interestingly, former EPA Administrator William K. Reilly, said at a conference that, “The strongest advocate on our task force for a carbon tax was ExxonMobil.  I had previously thought that was a public relations thing — I didn’t think they were quite interested in it.”

The National Association of Manufacturers released a study by NERA Consulting on the Economic Outcomes of a Carbon Tax. The NAM study concludes that a tax starting at $20 per ton of carbon dioxide emitted and increasing by 4 percent per year would have a range of negative effects that would ripple through the economy.  In particular: “The negative impact of a carbon tax on total manufacturing output would be significant, with output from energy-intensive manufacturing sectors dropping as much as 15 percent and output from non-energy-intensive manufacturing sectors dropping as much as 7.7 percent.”

The NAM study also argues that: “A carbon tax would have a net negative effect on consumption, investment and jobs, resulting in lower federal revenues from taxes on capital and labor. Factoring in lost revenue from reduced economic activity, the net revenue from a carbon tax available for deficit/debt reduction and lower tax rates is relatively small.”

[click to continue…]

Post image for EPA Cuts 2012 Cellulosic Blending Target to Zero

“U.S. EPA has altered its cellulosic biofuel requirements for 2012 — from 8.65 million gallons to zero,” today’s Climatewire reports. In January, the D.C. Circuit Court of Appeals vacated EPA’s 2012 cellulosic biofuels standard. “As a result,” Climatewire explains, “obligated parties — oil companies required to show EPA that they blend biofuels in their fuel supply — won’t need to provide information on their compliance. The agency will submit refunds to companies that have submitted payments for 2012 cellulosic waiver credits.”

Who says there’s no justice in this world! For several years the EPA has fined refiners for not purchasing and blending ethanol made from switchgrass, wood chips, and other fibrous, non-edible plants. Refiners protested that there was no commercial cellulosic fuel to buy. The EPA argued that didn’t matter because the Renewable Fuel Standard (RFS) is meant to be “technology forcing.” The agency thus based each year’s cellulosic target on aspirational (rather than realistic) projections of how much cellulosic fuel would be produced. It then cheerfully collected fines for all the gallons of phantom fuel refiners did not blend.

The Court held that punishing refiners for what the ethanol industry failed to do is not “technology forcing”:

EPA applies the pressure to one industry (the refiners) [citation omitted], yet it is another (the producers of cellulosic biofuel) that enjoys the requisite expertise, plant, capital and ultimate opportunity for profit. Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry. “Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.” Given this asymmetry in incentives, EPA’s projection is not “technology-forcing” in the same sense as other innovation-minded regulations that we have upheld.

Zeroing out the RFS cellulosic blending targets established by the Energy Independence and Security Act (EISA) is long overdue. [click to continue…]