The High Cost of "Free" Solar Energy

What will it take for people -- Obama -- to understand that all energy is free at the source? It's converting it into a useful form that's expensive. Solar is way up there when it comes to conversion costs. Is anyone in Washington paying attention?

Is the Obama administration going to bail out Evergreen Solar? Not likely. Is Obama himself going to learn a lesson about real-world energy facts? Not likely. Is Obama going to wake up to the punishing costs of his energy dreams? Not likely.

Is the administration embarrassed about the total failure of the green energy industry? How about the fact that green energy is not "clean" energy? Solar panels contain some toxic materials that will eventually need disposal. Then what?

Nevergreen Solar
Another political investment goes bust

In 2008, Reuters published one of those stories predicting that green power would be cost-competitive with fossil fuels in five years. Headline: "As Energy Costs Soar, U.S. Looks to Solar."

Among the prophets was Richard Feldt, then the CEO of Evergreen Solar, who said that "it's not far away" and called for more subsidies. On Monday, Evergreen filed for Chapter 11 bankruptcy.

In the grave-dancing department, let's note that failure is part of the risk-taking and creative destruction that drive growth, and that Evergreen got its start in 1994 with an innovation that reduced the costs of silicon panels. The bankruptcy is notable mainly because the Massachusetts-based manufacturer received so much taxpayer support.

Governor Deval Patrick took a $58 million stake in Evergreen in 2007 with direct subsidies and tax breaks in return for the company building a plant in the state. The goal was "to help Evergreen Solar grow and thrive right here in Massachusetts, and give us a head start toward building a clean energy economy," Mr. Patrick said at the time.

But in January, Evergreen, shedding cash, shut down the Devens plant and fired 800 workers, claiming it was at a competitive disadvantage because U.S. solar subsidies are lower than China's. In a letter to the Journal, the U.S. solar lobby in Washington said the solution was to follow "Chinese policy makers" and make "strategic investments to attract this rapidly growing industry."

Mr. Patrick's economic development secretary, Greg Bialecki, told the Boston Globe that Evergreen's collapse was "a cautionary lesson," but not about the distortions and waste that come with the political allocation of capital. "We knew that it would be challenging to do that kind of manufacturing in the United States. It also probably suggests that Massachusetts can't do it alone—in other words, we probably also need federal policy," he said.

So the Commonwealth subsidies weren't enough for Evergreen to succeed because the federal subsidies weren't enough, even though with the stimulus the Obama Energy Department has become one of the largest venture capital firms in the world. And the federal subsidies will only be enough if Washington emulates the Chinese model of a state-planned economy.

As Evergreen's bankruptcy shows, the real story is that the government-as-investor model isn't going to lead the U.S. back to prosperity.

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.

Oil -- Not From Our Backyard

Should we be surprised? Obama wants oil producers to increase their production. A sensible person should be forgiven for thinnking Obama was referring to American oil producers that pay Americans for finding, pumping, refining and selling oil.

Instead, our feckless leader was imploring the Islamic oil nations that despise freedom, equality, plurality, capitalism and democracy to increase THEIR output to offset shortfalls caused by the revolts and revolutions in North Africa and the middle east that have begun to impinge on supplies. The actual decline in Libyan production and the fear that has affected the international oil market has driven oil prices to their high levels since 2008.

Rather than giving American oil companies the green light to expand domestic operations and thereby protect American consumers, Obama has offered the Islamic oil nations another opportunity to expand their influence over our economy. Inasmuch as he seems to have no credibility among muslims, his stature can only sink further as he effectively begs the Islamic nations to help the US.

Meanwhile, the chief issue affecting prices is FEAR. Not actual supply constraints. Sadly, Obama's approach ensures that Islamic oil producers will increase their capacity for generating oil-market fear. He is truly a moron.


Obama Says He Wants Oil Producers to Boost Output

Apr 26, 2011

WASHINGTON -- As the high cost of gasoline takes a toll on politics and pocket books, President Barack Obama said Tuesday he is calling on major oil producers such as Saudi Arabia to increase their oil supplies to help stabilize prices, warning starkly that lack of relief would harm the global economy.

"We are in a lot of conversations with the major oil producers like Saudi Arabia to let them know that it's not going to be good for them if our economy is hobbled because of high oil prices," Obama told a Detroit TV station.

President Obama is calling on an increase in oil production to help stabilize prices.

His remarks signaled a broad new appeal in the face of skyrocketing gasoline prices in the United States and they came as he reiterated a call for Congress to repeal oil industry tax breaks.

In interviews Tuesday with WXYZ in Detroit and in WKTR in Hampton Roads, Va., Obama said the message to major oil producers like Saudi Arabia is that an economy that buckles because of high oil prices won't grow and won't be good for them or for the U.S.

Obama acknowledged disruptions in oil production because of the war in Libya. But he said others can make up the difference and "we're pushing them to do so." Libya supplied less than 2 percent of world demand. Saudi Arabia and other OPEC countries already are covering some of that shortage by boosting production.

The president's effort to compel more overseas production echoed calls by President George W. Bush in 2008 urging Saudi Arabia to increase supplies during that year's spike in gasoline prices. The Saudis rebuffed Bush's efforts.

Obama said he has stressed the self-interest of oil producing nations, arguing that "if we're not growing, they're not going to be making money either.

"And so they need to increase supplies," he told WKTR.

Gas pump prices have climbed for 35 consecutive days. The national average rose by a penny to hit $3.87 a gallon on Tuesday, more than a dollar than a year ago. The price already has exceeded $4 a gallon in some regions of the country.

In a letter to congressional leaders Tuesday, Obama urged them to take steps to repeal oil industry tax breaks, reiterating a call he made in his 2012 budget proposal earlier this year. The White House conceded that plan would do nothing in the short term to lower gasoline prices.

The president wrote a day after House Speaker John Boehner, R-Ohio, said he was willing to "take a look at" repealing the multibillion-dollar tax subsidies enjoyed by the major oil companies. Boehner aides on Tuesday sought to clarify Boehner's stance, stressing that he was not advocating repeal of the tax breaks.

"He has said all along that he is opposed to raising taxes," Boehner spokesman Kevin Smith said. "That's his position."

Rising gas prices have become a political weight for the White House, with polls showing that as the cost rises at the pump, the president's approval ratings have slipped. Obama increasingly has sought to display action on oil, even as he acknowledges that there is no immediate way to stem costs.

"High oil and gasoline prices are weighing on the minds and pocketbooks of every American family," Obama wrote. But he also added that "there is no silver bullet to address rising gas prices in the short term."

Obama's proposal, spelled out in his past two budget plans, would eliminate a number of tax breaks for oil companies that would generate an estimated $4 billion a year in additional revenue.

The tax breaks - some in place since the 1920s - have survived multiple attempts to repeal them in the face of heavy oil industry lobbying.

The Republican response to the president's letter was dismissive.

Another Boehner spokesman, Brendan Buck, said Obama's suggestions "would simply raise taxes and increase the price at the pump." And Senate Republican leader Mitch McConnell said: "The president's latest call to raise taxes on U.S. energy is as predictable as it is counterproductive."

Obama's letter was addressed to Boehner, McConnell, House Democratic leader Nancy Pelosi, and Senate Majority Leader Harry Reid.

Blaming the subsidies on "outdated tax laws," Obama said money obtained from repealing the breaks should be spent on clean energy initiatives to reduce dependence on foreign oil.

On Monday, Boehner told ABC News that the government is low on revenues and that oil companies "ought to be paying their fair share."

"We certainly ought to take a look at it," Boehner said about repealing tax subsidies for major oil companies. "We're at a time when the federal government's short on revenues. We need to control spending but we need to have revenues to keep the government moving."

But Boehner made no commitment to repealing the subsidies. "I want to know what impact this is going to have on job creation in America," he told ABC.

Obama, in his letter, said he was "heartened" by Boehner's remarks. "Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done."

White House spokesman Jay Carney dismissed suggestions that Obama's letter was motivated by the potential effect of rising gas prices on the president's political prospects.

"I don't think when somebody sticks the credit card in the pump or pays a cashier the cash for a tank of gas that they're thinking about an election in 2012," he said.

Obama: Spend More on Energy to Save on Energy

Obama is creating his own words and concepts to expand the range of Orwell's NewSpeak. To him, Spending More = Spending Less. Meanwhile, he said the taxpayer subsidies to the oil & gas industry amount to an annual total of $4 billion.

Four Billion? That's all? I'll take the president's word for it and gladly stand for the termination of those subsidies. Then let's get down to drilling and jump-starting the painfully slow recovery we're muddling through.

Of course if Obama truly wanted to speed the recovery and reduce our consumption of imported oil, he would remove the barriers to domestic energy exploration and exploitation. Not only would a larger domestic energy industry reduce oil imports, it would put a lot of people to work in high-paying jobs. Okay, the downside is the generally messiness of the energy industry. But that's what smart legislation is for.

We can do anything and we can do it well, which, in this case, means cleaning up. Sadly and unfortunately, Obama's approach suggests he want to force Americans into paying high prices for energy alternatives that offer much less than the conventional supplies.

Obama pumps plan to develop renewable energy

Obama says developing renewable energy sources is 1 answer to rising gasoline, oil prices

April 23, 2011

WASHINGTON -- President Barack Obama says one answer to high gasoline prices is to spend money developing renewable energy sources.

"That's the key to helping families at the pump and reducing our dependence on foreign oil" in the long term, he said Saturday in his weekly radio and Internet address.

Obama raises the issue of rising fuel prices during almost every public appearance and says that he understands the strain higher fuel costs are putting on some family budgets.

He announced Thursday during an event in Reno, Nev., that the Justice Department will begin looking for cases of fraud or manipulation in the oil markets, even though Attorney General Eric Holder suggested a variety of legal reasons may be behind the surging gas prices.

As he has before, Obama said Saturday there is no "silver bullet" that will slash gas prices immediately. But he said there are things government can do to help make a difference in the long term. They also include boosting U.S. oil production, rooting out any illegal activity by traders and speculators and ending $4 billion in annual taxpayer subsidies to oil and gas companies.

"Instead of subsidizing yesterday's energy sources, we need to invest in tomorrow's," Obama said.