Friday, May 20, 2011

Obama Energy Plan -- Pay More, Get Less

What should we do about energy? Simple. The government should permit drilling everywhere there's oil and gas. That will at least keep Americans working in high-paying jobs. At the same time, the government should encourage car companies to build more hybrids. They work.

A lot of gasoline is wasted by cars and trucks idling at red lights, stop signs and at other times when they are not moving or moving slowly. Electric vehicles use NO electricity when stopped. Thus, hybrids, which run on electric power at low speeds can actually increase the efficiency of motor vehicles. After all, a car with a gasoline engine idling at a stop light is getting zero miles per gallon. ZERO miles per gallon. Can't get worse than that. Whether the car is a Hummer or a Saturn, it's getting zero miles per gallon.

Next, the government should encourage automakers to build cars powered by natural gas -- methane. There are already lots of fleet vehicles using this fuel. It works. The fuel is abundant and domestic. The vehicles are in production. What they lack are re-fueling stations. However, cities with natural gas taxis have some traditional gas stations that have added natural gas to their product line. Also, the Post Office operates a lot of natural gas vehicles. Thus there are already sites at which they fill up.

Next the government must grant permits for the construction of new nuclear power plants. We must also build new coal-fired plants and gas-fired plants.

If we had a sane energy policy, it would be far easier to fund research into improving the efficiency of solar panels as well as to develop cleaner coal-fired plants. But the nation cannot survive on less energy. We will always need more. Every year our aggregate energy consumption will rise.


Four More Dollars?
The Obama administration wants energy to be scarcer and costlier


The U.S. Treasury reports that the federal government ran up $870 billion in red ink in the first seven months of this fiscal year. That is $70 billion, or 9%, higher than at the same point in fiscal 2010, which ended up with a record $1.3 trillion deficit.

America's energy policy is as bad as our fiscal policy. The federal government is focused on producing not more energy but less of it, on making costs higher rather than lower, and on expanding regulation.

Start with nuclear power. It's pollution-free and an excellent source of energy. We have 104 nuclear plants in America today, but only one more is expected to become operative in the next few years, the first in two decades.

As for oil production, our government is limiting it, and over the years domestic drilling has been declining. In 1970 the U.S. produced 3.5 billion barrels; by 2010 that figure was down to two billion. The federal government has prohibited oil and natural gas drilling on 83% of federally owned land and increased the importation of foreign oil. In 1970 only 500 million barrels were imported; last year it was 3.3 billion barrels. That means that in 1970 U.S. oil production was 88% of consumption, and today it is only 37%.

Drilling for oil in the Gulf of Mexico has been restricted, especially since the explosion of the Deepwater Horizon rig last year. The Obama administration first put in place a drilling ban, then a virtual moratorium on issuing new Gulf permits. Then with the uproar over high gas prices, President Obama announced last week a desire to open up the process to more exploration and drilling. But the basic belief of our current administration and the environmental left has been to restrict our exploration and extraction of the 163 billion barrels of crude oil that the Congressional Research Service says are off our coasts and on our land.

Take the case of the oil in Alaska: the amount of oil we produce there now has decreased from 2.0 billion barrels a day in the mid-1980s to about 600 million today. There is more oil off the coast of Alaska, but for the last five years the federal government has not given approval for drilling in the Beaufort and Chukchi seas. What Mr. Obama said last week may now permit such drilling—a bright spot if so. Meanwhile, House Republicans have proposed a bill hopefully called the Reverse President Obama's Offshore Moratorium Act.

As for other energy technology, the National Center for Policy Analysis's Sterling Burnett this month published an excellent analysis of America's energy needs and costs (available here). Today solar power is close to our fastest-growing renewable energy source. Its production grew 15.5% in 2009, but it still accounts for less then 0.5% of global electric power output. And it isn't cheap: subsidized solar energy costs between $220 and $300 a megawatt hour, compared with $110 for electricity nationwide.

That breaks down to $63.10 a megawatt hour for natural gas, $113.90 for nuclear power, $136.20 for modern coal-fired plants, and $210.70 for solar photovoltaic power. According to the Heritage Foundation the subsidies we pay are $23 per megawatt hour for solar and wind, compared with $1.59 for nuclear power, 44 cents for conventional coal, and 25 cents for natural gas. We must start becoming competitive, without large subsidies, to reduce the current distortion in our energy markets.

The good news is that it is estimated that there are 50 trillion cubic feet of natural gas recoverable from fracking just in the Marcellus shale region of Ohio, West Virginia, Pennsylvania and New York. There are concerns about the impact on the environment and drinking water, and they need to be addressed, but the natural gas access is important to our energy needs.

We should also end the 45-cent-a-gallon subsidy of ethanol, which yields one-third less energy per gallon than gasoline. The cost of ethanol subsidies total about $6 billion per year. Sens. Tom Coburn of Oklahoma and Dianne Feinstein of California have introduced a recent bill to do away with the subsidies, along with a 2.5% tariff and 54-cent duty on imported ethanol.

To put it all in the perspective of the environmentalists and the current administration, consider the statement of Energy Secretary Steven Chu in The Wall Street Journal: "Somehow we have to figure out how to boost the prices of gasoline to the levels in Europe." The current gasoline price is about $8.50 a gallon in England and $8.80 in France and Germany.

Sound and significant energy resources are vitally important to our economy and our people. Energy should be reasonably priced, plentiful and be managed by its producing industries. Market prices are better than government subsidies and regulation. The government (and the green lobby) should get out of the way so that we can develop the new technologies we will need over the long term.

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2 Comments:

Blogger Blaq Mind said...

Hey, I like the way you think. We all, (well most of us at least) know The answer are there; but the problems are the assholes in power who don't like the current profit margin.

11:14 AM  
Blogger no_slappz said...

blaq mind,

The problem is elected officials are afraid of real-world economics.

Most businesses have low profit margins. The new "green" businesses lose money outright. To keep them going, the government gives direct subsidies -- which means taxpayers are supporting these loser businesses.

6:58 AM  

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