The Unbearable Lightness of Obama's Energy Policy

There are three great concerns to be addressed by a national energy policy: one, to provide energy for the American economy; two, to promote energy independence, in so far as that is a reasonable goal; and three, to protect the environment. 

The big rub is between one and three.  Is there a way to reduce the increase in greenhouse emissions in the future (let alone reduce the actual amount of green house gases emitted) without drastically retarding economic growth?  The Obama Administration holds out green technologies like wind and solar power as solutions, and of course these are supposed to reduce our dependence on foreign oil.  But what happens if these pretty ideas fail, and the lights go off and the cars stop running?  I submit that Americans won't give a rats ass about global warming if they are reduced to cooking actual rat's asses on wood harvested from their cedar decks.  So maybe the first thing we need to do is make sure the lights stay on. 

Robert Samuelson, the most clear headed economist writing for the popular press, points out that the U.S. has a lot of untapped fossil fuel. 

Contrary to popular wisdom, the United States still has huge oil and natural gas resources. The outer continental shelf (OCS), including parts that have been off-limits to drilling since the early 1980s, may contain much natural gas and 86 billion barrels of oil, about four times today's "proven" U.S. reserves. The U.S. Geological Survey recently estimated that the Bakken Formation in North Dakota and Montana may hold 3.65 billion barrels, more than 20 times a 1995 estimate. And there's upward of 2 trillion barrels of oil shale, concentrated in Colorado. If only 800 billion barrels were recoverable, that's triple Saudi Arabia's proven reserves.

None of these sources, of course, will quickly provide oil or natural gas. Projects can take 10 to 15 years. The OCS estimates are just that. Oil and gas must still be located -- a costly and chancy process. Extracting oil from shale (in effect, a rock) requires heating the shale and poses major environmental problems. Its economic viability remains uncertain. But any added oil could ultimately diminish dependence on imports, now almost 60 percent of U.S. consumption, while exploration and development would immediately boost high-wage jobs (geologists, petroleum engineers, roustabouts).

So item number two can be satisfied, if only we exploit our own energy reserves.  Samuelson goes on to point out that the Obama Administration has a congenital bias against oil and coal.  Obama's decision not to begin exploiting these resources will not affect his own Presidency.  They will handicap the American economy ten or twenty years down the road.  We are already twenty years behind when it comes to tapping proven reserves.  That is the Democratic Party at work. 

So what about 'renewable energy'? 

In 2007, wind and solar generated less than 1 percent of U.S. electricity. Even a tenfold expansion will leave their contribution small. By contrast, oil and natural gas now provide two-thirds of Americans' energy. They will dominate consumption for decades. Any added oil produced here will mostly reduce imports; extra natural gas will mostly displace coal in electricity generation. Neither threatens any anti-global warming program that Congress might adopt.

Encouraging more U.S. production also aids economic recovery, because the promise of "green jobs" is wildly exaggerated. Consider. In 2008, the oil and gas industries employed 1.8 million people. Jobs in the solar and wind industries are reckoned (by their trade associations) to be 35,000 and 85,000, respectively. Now do the arithmetic: A 5 percent rise in oil jobs (90,000) approaches a doubling for wind and solar (120,000). Modest movements, up or down, in oil will swamp "green" jobs.

If Republicans want an issue, this is one.  "Alternative energy" is a joke.  The only viable sources of energy sufficiently cheap to power a modern economy are fossil fuels and nuclear power.  So far Democrats have not suffered from their relentless campaign to keep us from exploiting our own wealth.  Sooner or later that will change. 

Comments

[Ben]

Solar and Wind technology have very little to do with lowering our dependence on foreign oil. These technologies are only for ELECTRICITY. Oil, while it supplies a minute amount of electricity to our grid: ~1%, is not in competition with renewable energies such as solar and wind. Natural gas is a viable resource but has equal economic implications to any renewable resource that we develop. Ultimately, all development has costs and pollution implications. Renewable energy just has higher initial costs and lower pollution damage, though in the end, the cost is equal since the resource is renewable and requires minimal O&M. I would advise readers to do research on their own. Review the DOE website for generation and cost data: www.eia.doe.gov

[Jason]

One only has to look to North Dakota to see the benefits of tapping into our own wealth. The Bakken formation in westeren North Dakota has created numerous jobs, and the oil revenues play a big part in the billion dollar surplus that North Dakota enjoys. In turn, the North Dakota legislature recently passed $400 million of property and income tax cuts.

[B]

I'm pretty sure that the tax cuts made in North Dakota were to induce development in North Dakota versus the Montana oil fields. Also, this oil is difficult to profitably refine with foreign oil set at $55.

In the end, the economy determines the best technology. It is the role of the government to ensure that it is safe and sustainable.

[Jason]

B:

I am unsure of what tax cut bill you are refering to. I was referencing ND SB 2199. SB 2199 gives North Dakotan's $295 million in property tax relief and $100 million in income tax relief. I will admit that the income tax cut is not needed, but the property tax reduction will be a welcome sight to thousands of citizens. The bill requires school districts to drop their property tax levels by up to 75 mills. The state will then replace the lost revenue with oil tax revenue. Most can expect to see their property tax bill drop 15-18%. The point being, the oil fields in the Bakken formation have been a great economic boom to the state, one which all citizens will benefit.

[B]

I agree that we should be developing our own resources, this can create revenue at home. The problem being that this oil field is difficult to mine and refine when oil is cheap. There is no profit and therefore no tax relief in this area if we can import oil cheaper than we can produce it.

Alternative energy is not a joke. It is a viable and local resource. Please research the subject and compare apples to apples, (Oil vs. Electricity = not the same thing!).

[KB]

B:

Thanks for the comments. You are right that fuel and electricity are two different things, but the President lumps them together when talking about economic and environmental policies. And they certainly overlap, since electricity however produced can power electric vehicles.

I agree that alternative energy is not funny. In virtually all its forms it is more costly economically and more damaging to the environment.

[B]

KB:

I apologize for clogging up your blog, but I refuse to admit that alternative energy is more damaging to the environment than conventional forms of energy.

I agree with you that everyone lumps together electricity and coal, and I find that very frustrating. I also agree with you that alternative energy is more costly, but it is my opinion that this is an externality that the government should support.

I think I've made my point, and I think we can safely say: agree to disagree.

[KB]

B:

No need to apologize for commenting. Your participation is always welcome. You say you "refuse to admit that alternative energy is more damaging to the environment than conventional forms of energy".

Refusing to admit something in the face of overwhelming evidence looks a lot like prejudice. You aren't alone. We are spending billions on "alternative energy." What are we getting? People who don't want to drill in a very small space in Alaska are prepared to tear up miles of virgin desert to erect solar energy stations, stations that require large amounts of water! Wind power farms clearly require the burning of more fossil fuels to maintain them. Biofuels have led to tearing up virgin prairie to plant corn, which is harvested by big gas-hungry machines. Oh, and it is starving people in the third world.

All this for pretty ideas that a lot of us refuse to look at.

[B]

Alright, if you want to welcome my comments, then I'll respond.

I'm sorry but my refusal to admit that alternative energy is not more damaging to the environment is because there is overwhelming evidence in favor of my opinion and I didn't think that had to be stated, but if you want to get into it...

Any and all development leads to an increase in pollution, there is no denying that any form of energy development will cause pollution. Now, comparing fossil fuels to renewable energy resources is rediculous. A renewable resource is just that, renewable and sustainable, it can run with minimal maintainence (minimal does not mean zero, but for the amount of energy produced it produces far less pollution. Please read the department of energy's data: http://www.eia.doe.gov/oiaf/1605/coefficients.html this shows the comparison of production of CO2 for each form of energy and shows how wrong you are.

I agree that energy development does cause pollution but you are simply wrong when it comes to comparing fossil fuels to renewable resources.

PS. For the record, corn ethanol is and always will be wasteful. This form of energy was created and is being pushed by the agricultural lobbying firms in DC that have a stranglehold over a vast majority of our congress and senate. There are better ways to produce gasoline supplements that don't use a food source and waste good farmland.

[KB]

B:

Corn ethanol was supposed to make us more energy self-sufficient. It seems obvious doesn't it? We grow corn right here! In fact, it adds almost nothing, tears up virgin prairie, and starves people in other countries. On this we agree.

What about wind and solar power? You point me to evidence that wind power has low C02 emissions. But that just means wind towers. It doesn't tell us what the carbon footprint of the wind industry is. On that note, the evidence so far is that it leads to higher C02 emissions. In Denmark, emissions went up by 50%!

Wind power is absurdly expensive. The massive subsidies have to be paid for, and the wealth behind those subsidies must be generated with other forms of energy. Solar power is probably worse, but no major country has found a way to waste a lot of money on that.

When I see a nation generating a significant portion of its power from "renewables" while cutting back on traditional power generation and C02 emissions, then I will grant that there is evidence in favor of such forms of energy. I am not holding my breath.

[B]

KB:

I'm glad we agree on something.

I'm very curious about these numbers you're breaking out. Could you please site your sources. I'd like to see where this is coming from and when it was, and if it is a localized trend. The information that I have found shows a localized increase in CO2 in Denmark (though not as high as 50%) from 2006-2007 and a decrease from 2007-2008. This is likely due to the increase in exports in Denmark (50% of their emissions is from the shipping industry), or it is in the accounting of the carbon credits which are a complicated issue. Just let me know where you found this information because I'm very curious.

As for a country that is generating a "significant" portion of power from renewables while cutting back on traditional power and co2 emissions, look no further than Germany. Just review the EIA website, international page.

That's all I got for now, look forward to hearing back from you.