Energetic Energy & Unenergetic Energy

I almost feel the need to apologize for talking about policy. It is pretty clear that the President isn't concerned with policy any more. His recent plans were issued in the full knowledge that they would not pass the Democratic Senate, let alone the House. They were produced as campaign artifacts.

As I have been on the radio frequently talking about Keystone XL, I will persist in talking about policy. Here are a couple of charts that illustrate the case for KXL.

Those tell a tale. The U.S. imports about half its oil. A lot of it comes from Mexico, but Mexico is no longer reliable. Its government is marginally functional and is threatened by its war with criminal gangs. Investment in Mexican oil fields has declined precipitously. It is well on its way to being a failed state.

Canada, by contrast, is a very reliable source of everything Canadian, including oil. That is a very good reason for the U.S. to tap the Canadian tar sands.

I continue to think that opposition to Keystone XL is at bottom an opposition to oil. This opposition is cushioned by the fantasy that if we stop relying on oil (or break our "addiction" to oil) we can move to renewable sources of energy. Well, here is another chart.

That tells another rueful tale. The U.S. Government subsidizes almost all forms of energy. The President keeps talking about ending subsidizes for the great fossil fuels, but this seems to be just more talk. I could be talked into it, if he were serious. That would mean ending all such subsidies, and the chart above tells what that would do to the breezy and brilliant forms of energy.

A megawatt hour, I gather, will power about 330 households for, well, an hour. Uncle Sam shells out about a quarter for every megawatt hour of power produced by natural gas and petroleum, and 44 pennies for the same from coal. Nuclear power is relatively expensive at a buck and a half, though most of that is research and insurance. It could be argued that nuclear power would not be viable without government protection, though that is a legal and political burden rather than a purely economic one. What is clear is that these forms of power would continue without subsidies, for these are the sources of energy on which the economy depends.

By contrast, wind and solar power are subsidized at a rate of more than twenty three and twenty four dollars a megawatt hour. That is a hundred times what natural gas and petroleum are costing the fed. No one would be generating power by wind or sun without massive federal subsidies. These "renewable" energy sources are not producing energy or wealth, they are soaking it up. These industries exist because wealth is transferred from viable enterprises to maintain them. They are not adding to the energy supply, they are depleting it. Likewise, green jobs are not jobs created, they are jobs absorbed at a loss. Paying workers for unproductive work eliminates jobs elsewhere at a rate of about two to one.

The jobs created by the Keystone XL project will be real jobs. The oil that flows will pay for them in energy produced.

Comments

[Donald Pay]

Mexican oil production in its most productive fields overtopped "peak oil" in 2005 and has been steadily declining. This has been well known to anyone who has paid attention to energy matters. This is the result of geology, not failed state dynamics. Canada oil production from standard wells is about at peak oil and may be close to declining. Canada is substituting more expensive tar sands production, so that tends to mask.

Your subsidy data fail to include the national security subsidies for nuclear and petroleum, the subsidies due to externalization of wastes and their costs, subsidies provided by loan guarantees to the nuclear and fossil fuel industry, federal liability limitations under the Price Anderson Act, and the compounding of these subsidies over decades, Essentially your chart expresses the usual voodoo economics of the bought-off right. By the way, the year you provide for those subsidies is 2007, when George Bush ran things.

[Dave]

Sorry... http://nelsonhaha.com/

[Ken Blanchard]

Donald, you amazing man! Do you really believe that investments in Mexico are as attractive as investments in Canada? Even if you do, doesn't that make an equally strong argument for turning to Canada, which somehow seems to be increasing their oil production?

As for the subsidies argument, you love to talk about "externalization of wastes and their costs" and such things, and you seem to think that this changes the calculation. Subsidies move wealth from one source to subsidize something else. The wealth has to come from somewhere, doesn't it? It isn't coming from wind farms or solar arrays. It isn't coming from corn. It is coming from fossil fuels and nuclear power.

Maybe George W. possessed demonic powers, but he didn't control physics. I ask again, what would happen if all federal subsidies for energy production ceased? I humbly submit that we would continue to produce energy, but that almost all generation of power by wind farms and solar arrays would come to a grinding halt. I know you don't want to recognize that fact. It is a fact.

[Donald Pay]

Really, KB? You need to bone up on basic knowledge of world energy. Do you realize that Mexico long ago nationalized its petrochemical industry? So, asking me about where I'd like to invest in oil is really not a relevant question. I wouldn't want to invest in oil at all. My own investments include renewable energy funds, and I turned down an opportunity to invest in an oil well in North Dakota, and will be forced pooled. So, there you are. I put my money where the future is, not where crony Republican capitalism demands.

Here's something to chew on. It looks at government subsidies over the first fifteen years of subsidies for each energy source (based on a constant dollar value.

http://cleantechnica.com/2011/09/27/early-fossil-fuel-nuclear-energy-subsidies-crush-early-renewable-energy-subsidies/

[solar power]

Thank you for this post this is just what I needed to read.

[sullivansolarpower.com]

That would mean ending all such subsidies, and the chart above tells what that would do to the breezy and brilliant forms of energy.