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Monday, March 14, 2011

Ruminations From the Void

As the events in Japan continue to evolve, please take a moment to contact the American Red Cross or World Vision Int'l to see how you can help.

It's still unclear the total extent of the loss of life, but it appears that the events have stabilized and relief efforts are mobilized.  The nuclear reactors were shut down immediately which has probably prevented any type of Chernobyl level event.  The danger has not passed, but at this point the potential for a worst case scenario is over.  In the short term, the new activity from a volcano in southern Japan may cause more trouble for the populace if it prevents rescue and relief operations in the near term.

We will continue to keep them in our prayers.

>>     I hope that as we move forward, our energy policy is not hijacked by these events in calls to end our push for more nuclear energy.  It's difficult to imagine a set of circumstances more devastating that what was experienced in Japan - structural damage, loss of electric and loss of operation of the back-up generators due to flooding.  These would be difficult if not impossible to replicate at most of our current nuclear facilities.

We can look back at the disasters in the oil and coal production industries and see they did not deter us, but were used to safely improve the process.  The effects of last year's gulf oil spill never reached the level that many expected.  Our earth is much hardier than many understand, and nearly impossible for us to do any lasting damage.

After a final assessment is done, if less damage has been done by the reactors than, say a oil refinery explosion, then we would be doing a great disservice to our future generations if we allow this to divert our efforts away from nuclear energy.  Nuclear is far cleaner than coal and vastly more profitable and efficient than wind or solar.

>>     Here is a chart of the amount of subsidies provided in the US energy market from 2007.  (wind & solar saw a large increase in 2009 under Obama's stimulus package.)
I show this chart for two reasons.
  1. While in dollars we spend a lot on nuclear and oil subsidies, the return makes their cost per Megawatt produced very small.
  2. Continuing to fund wind and solar at these levels is folly.
On the first point, nothing needs to be said - the chart makes clear that oil and nuclear power are good buys for the government.

On the second point, one thing is clear - it's a poor return for the taxpayer dollars spent.  What might not be so clear, is that this has absolutely no chance of changing under the current conditions.

US subsidies in the wind and solar energy sector are not going into research.  They are going into production.  Commercial companies would not exist without the government subsidy, because there is no sign of profit in the market other than the subsidies.  This inhibits innovation.  At HOTAIR, Ed Morrissey writes,
However, as economist Robert Michaels points out, most of the subsidies involved in green energy come on the commercial end, not in research.  Government is trying to pick winners and losers with current technology.  As the chart shows, government is picking the least efficient technology (by orders of magnitude) as winners.  They’re deliberately hiding the price on the product in order to convince people that this energy is competitive, while taxpayers pick up the rest of the bill.
In doing so, they are preventing — or at least disincentivizing — the normal innovative processes that could unlock a real revolution in green technology.  Wind and solar technology in their current form today cannot compete in the marketplace without heavy government intervention, and thanks to that intervention, wind and solar purveyors don’t have to innovate to make a profit.  As long as that situation continues, we’ll still be waiting decades to “turn the corner” on mass production of renewable energy.
In other words, for commercial industries, innovation happens in a competitive environment as companies seek to beat the other company to the new technology.  This type of competitive environment doesn't exist in wind and solar energy due to government attempts to make it appear profitable.  It won't exist until more technological breakthroughs are made in research.  But we're not funding research, we're funding production.

To put it simply, we are not changing the timeline for having a viable wind and solar market, we're simply funding a few companies to make it appear we have one today.  We don't.  Even worse, we're wasting money at a time when we need to reevaluate how every dollar in Washington is being spent.

>>     Speaking of our President's Energy Policy.....
I mentioned in last week's Casual Friday Edition, that Interior Secretary Ken Salazar had either misspoke or lied when he stated that production in the gulf was at an all-time high.  While there are more rigs in the gulf, less than half those rigs are in operation today.  Jazz Shaw at HOTAIR makes a valid point,
...a better analogy would be to have a poultry farmer claiming that egg production was at an all time high based on the number of chickens he has, regardless of the fact that more than half the hens have stopped laying. But in fairness to America’s poultry farmers, your average chicken doesn’t have to wait for a permit from the federal government before dropping more eggs in the nest.
The American Petroleum Institute, (I know, hardly an unbiased place, but....) reports,
The Obama administration continues to delay or defer action on developing our domestic resources of oil and natural gas at every turn.
“The trend is alarming. The administration has postponed lease sales in offshore areas. It has canceled lease sales in onshore federal lands. It has extended permitting timelines for current leases and added unnecessary regulatory burdens. It has chosen inaction on essential energy projects that would create jobs, drive economic growth, and boost federal revenues.
“The administration is well on its way toward creating higher gasoline prices for Americans.
“To get more oil and gas, we need more access. Placing more government lands and waters off-limits and forcing companies to focus on areas that may show little promise even if already under lease will not solve our energy challenges.
As Americans find rising gas prices to be painful, it is difficult to think they will find much relief in an administration that won't speak truthfully about the issue.  If Secretary Salazar misspoke earlier, what was it when President Obama said the same exact thing on Friday in his press conference on oil prices.

>>     Speaking of the President's press conference falsehoods....
Other than repeating Salazar's claim of all-time highs in production in the gulf, the President made several other easily demonstrated falsehoods.  Dana Perrino said this over the weekend on FOX News Sunday,
“It is interesting to me how the administration allows President Obama to say things that are so quickly proven false… The facts are standing in the way of their rhetoric.”
President Obama on Friday told the American Public,
So any notion that my administration has shut down oil production might make for a good political sound bite, but it doesn’t match up with reality. We are encouraging offshore exploration and production. (emphasis mine)
Read the report from the API (above) again to see if the President's words ring true.  Steve Everly at American Solutions provides his top 3 myths from the press conference.
  • "We can't escape the fact that we control only 2% of the world's oil." This is a common refrain among anti-drilling Democrats and environmentalists, and it's repeated enough that many people accept it as true. In reality, it's 100% false. The number comes from a highly conservative estimate from the Energy Information Administration totaling America's proven reserves where we are already drilling. It does not include the 10 billion barrels available in the Arctic National Wildlife Refuge. It does not include most of the 86 billion barrels available offshore in the Outer Continental Shelf, most of which President Obama has placed under an executive drilling ban. And it does not include the 800 billion barrels of oil we have locked in shale in Wyoming, Utah, and Colorado. Those shale resources alone are actually three times larger than the proven reserves of Saudi Arabia, so the claim that the U.S. only has 2% of the world's oil is clearly false.
  • "Industry holds leases on tens of millions of acres both offshore and on land where they aren't producing a thing." President Obama adds to this whopper by saying he wants to "encourage companies to produce [on] the leases they hold." While this sounds like a common sense fix, it's actually just blind rhetoric reserved only for people with a shocking ignorance of drilling. You can read more about this here and here, but it basically boils down to this: A lease is for exploration and production, not just production, and because oil is not equally distributed across the globe, one parcel of leased acreage may not hold any oil. Moreover, due to the circuitous and needlessly complicated permitting process, it can take years for companies who own a lease to complete their exploration activities. To get to the production phase, it could take as long as ten years. Ironically, President Obama wants to tax companies for not producing on their leases, even if the federal government's refusal to grant permits is the reason why those companies are not drilling.
  • "Last year...our oil production reached its highest level in 7 years." This is pure spin. President Obama is deliberately trying to take credit for actions unrelated to his policies. The increased level of production is due to the actions of previous administrations and production in the Dakotas where most drilling is occurring on private land. By contrast, the Energy Information Administration projects that there will be a decline in production of 220,000 barrels of domestic oil per day in 2011, and in 2012 America will produce 150 million fewer barrels in the Gulf of Mexico, all because of President Obama's policies to discourage or ban domestic drilling. In addition, President Obama's drilling moratorium (and subsequent refusal to issue drilling permits) has forced at least 7 rigs to leave the Gulf and sign contracts in other countries, taking much needed jobs and revenue with them.
>>     I prefer to take the President at his word, unless the facts contradict him.  So when Obama talk about his inclination or desires, I refuse to speculate publicly on whether he truly feels that way.  Many have done so with his past statements on gay marriage and religion, and are now doing so with regard to oil and gas prices.  I've never heard him state a preference for high gas prices similar to what he has expressed for high electric prices, so I won't attempt to put words into his mouth.

On the other hand, his Energy Secretary has spoken out regarding gas prices in the past.  The man charged with implementing the President's energy policies was quoted in a Wall Street Journal article from December 12, 2008,
In a sign of one major internal difference, Mr. Chu has called for gradually ramping up gasoline taxes over 15 years to coax consumers into buying more-efficient cars and living in neighborhoods closer to work.

"Somehow we have to figure out how to boost the price of gasoline to the levels in Europe," Mr. Chu, who directs the Lawrence Berkeley National Laboratory in California, said in an interview with The Wall Street Journal in September.
>>     Former Presidents George W. Bush and Bill Clinton recently participated in a panel at the IHS CERAweek conference.  Politico reports,
But according to multiple people in the room, Clinton, surprisingly, agreed with Bush on many oil and gas issues, including criticism of delays in permitting offshore since last year’s Gulf of Mexico spill.

“Bush said all the things you’d expect him to say” on oil and gas issues, said Jim Noe, senior vice president at Hercules Offshore and executive director of the pro-drilling Shallow Water Energy Security Coalition. But Clinton added, “You’d be surprised to know that I agree with all that,” according to Noe and others in the room.

Clinton said there are “ridiculous delays in permitting when our economy doesn’t need it,” according to Noe and others.
“That was the most surprising thing they said,” Noe said.

The two former presidents both generally agreed on the need to get offshore drilling workers back on the job.

Clinton and Bush also agreed on the need for more domestic shale gas production, with Clinton noting that it has been done safely for years in his home state of Arkansas.
As I have always tried to state, these aren't Republican vs Democrat issues.  This is about moving America forward to the best that we can.  Oil, natural gas and coal extraction create good paying union jobs, lower costs for domestic companies that keep production and jobs within our borders and help maintain low prices for American consumers.
This is a win-win for both parties.  The only groups holding this issue up are the environmentalists and Global Climate Change lobbyists.  Even as we have seen the fraud perpetuated by these groups and a decreasing fear of their claims, this administration seems to be packed with true believers.
It's time for Congress to take this debate to the people and seek legislative action to force the administration's hand.  We can't sit on our hands and not do anything while so many workers are sitting at home wanting to work.

>>     Sorry if anyone was disappointed that there was no Sunday Sentimental Side posted yesterday.  I purchased a new guitar on Saturday and God created multiple needs that required my musical assistance on Sunday.  As I am blessed by God, I cannot refuse to pay that blessing forward.  It was well after 7pm before I made it back home last night.  With an hour absent from my sleep the night before, I didn't feel like sitting at the computer and writing a story.  If you were disappointed, I apologize.

Blogging should be back on schedule this week.

Have a great week.

God Bless

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