Various media outlets are reporting that at a press conference this afternoon the State Department will reject going forward with the Keystone XL pipeline as it is currently defined but will allow TransCanada, the company behind the pipeline, to offer a new proposal. Few things so clearly exemplify the mindset of the Obama Administration and its deep hatred of inexpensive energy. It trumps even its love of labor unions (in part because its greater love is for public sector unions rather than industrial and private sector unions). When a liberal campaign contribution “bundler” for President Obama says that she would have a hard time raising more money for Obama if the pipeline went forward, you know you’re living in a nation being influenced, if not dominated, by people who don’t love the environment as much as they hate humanity. Every once in a while, the Obama Administration is put (or puts itself) in a position that even it can’t spin into a tale with broad appeal. This is one of those situations. And while I’d much rather have cheaper, more reliable energy supplies than yet another issue to hold against Democrats in November, we do have to be slightly grateful every time Obama shows what he really believes, especially in a way that pits him against many large unions, as the rejection of Keystone XL does.
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Keystone Not XL, Not Even XS
Property rights advocates had reason to be optimistic this week, as the Supreme Court heard arguments in Sackett v. U.S. Environmental Protection Agency.
1. Despite a natural gas drilling moratorium in New York, that state’s Chemung and Broome Counties are feeling the economic lift from drilling next door in Pennsylvania. But to the New York Times, the ex-pat workers, largely from Texas, Oklahoma and Louisiana, have awfully low-brow tastes , don’t you know. (NYT link below the fold.) 2a & 2b. The Daily Beast seems to have turned over reporting on energy issues to complete idiots. They should stick with things they do best, like candid upskirt photos of the Kardashian sisters. (Two DB links below the fold.) 3. Betty Sutliff is a member of the Upper Wayne County Property Owners Alliance . Her northeastern Pennsylvania county is prospective for Marcellus gas development, but a board called the Delaware River Basin Commission (representing New York, Delaware, New Jersey, Pennsylvania and the U.S. government) has blocked development. In addition an influx of well-heeled interlopers who own second homes in NE PA are vocal in their anti-gas rhetoric, although they have almost no skin in the game. There exists a minority of those who vehemently oppose natural gas development. They would oppose it if it were 200% safe. For this group it really isn’t a question of safety. Instead, it is a new ideology aimed against anything fossil. Simplistically, these folks look at any fossil fuel development as an addiction that should be conquered “cold turkey.” Most of these individuals own very little land and think (mistakenly, as UGI [retail natural gas price cut] demonstrates) they have nothing to gain economically from natural gas exploration and production. They also are typically residents who do not reside here full-time or have moved to the area after living elsewhere. They don’t want their peace and serenity, not to mention their viewscape, tampered with at all for any reason. However well-funded, well organized, and vocal they may be, they do not speak for the majority of residents here who have called this area home for generations. This is noticeable by the landslide victories of pro gas candidates in local elections which show the majority of people in favor of moving forward with exploration and production of natural gas. Well said, Ms. Sutliff. The loudest voices in the debate are the ones with the least knowledge and the least stake in the game. And they would be the first one to cry “Conspiracy!” if the cost to heat their home doubled, or if there were no gas available at all. These elitists portray natural gas as bad for the environment (a very tenuous position), but in reality they know that cheap gas is the #1 enemy of their Mother Gaia-approved alternatives. 1. NY Times: With Gas Drilling Next Door, County in New York Gets an Economic Lift HORSEHEADS, N.Y. — At the Glamour and Glow boutique in the local mall here, crystal necklaces and fake fur vests have been hot-ticket items the last year. When the drilling workers head home between long stretches of work in this gas-rich region, explained Christy Spreng, the shop’s owner, they need gifts for their wives and girlfriends. “They know what they want,” she said. “They’ll say: ‘Looks good. Wrap it up.’ ” 2a. The Daily Beast: Gas Drilling Likely Caused Ohio Quake A seismologist investigating a series of minor earthquakes in Ohio says they were almost certainly caused by a well used to dispose of wastewater from oil and gas drilling. Nice headline; too bad it is a blatant lie. Gas drilling doesn’t cause quakes; disposal of waste products in a well situated near a fault zone may have caused some slippage in the fault, so the well is being shut down to check it out. I blogged it here ; even the Washington Post got it right in the article the DB links. 2b. The Daily Beast: Youngstown Rocks: Is Fracking Causing Earthquakes in Ohio? by Jon Avlon My wife and I were in town visiting my 96-year-old grandmother and felt the mid-afternoon rattle shake the roof for five to 10 seconds. What makes the minor rumble newsworthy is that until 2011, Youngstown had never had a recorded earthquake. What changed? Fracking. … In response to a Christmas Eve earthquake—the 10th in nine months—the Ohio Department of Natural Resources ordered D&L Energy Inc. to stop its operations at a brine-injection well in the heart of downtown Youngstown. The epicenter of the New Year’s Day quake was within half mile of the 9,000-foot-deep well. All of the earthquakes emanated from within five miles of local drilling, and in some cases as close as a few thousand feet. The Ohio Department of Natural Resources is careful to state that there is no proven link between the drilling and the quakes, but the cause and effect seems clear to citizens. This is one of the stupidest things I’ve ever read. Mr. Avlon clearly doesn’t know the difference between a “drilling”, “fracking” and an “injection well”, and I suspect he could not care less. I set a very low bar of expectation for technical comprehension by journalists, and Mr. Avlon has tunneled under it. Cross-posted at stevemaley.com .
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Gas Pains
As the clock struck 12 am January 1, one of the most anti free market government interventions expired without renewal and without fanfare. In honor of the Iowa Caucuses, we can now declare that the ethanol subsidies and tariffs are finally dead. However, before we celebrate this rare piece of good news, we must remember that in order to deracinate the ethanol beast from our midst, we must destroy its third leg; the 10% blenders mandate. Over the past decade, ethanol has been the poster child for the worst aspects of big-government crony capitalism. The ethanol industry has used the fist of government to mandate that fuel blenders use their product, to subsidize their production with refundable tax credits, and to impose tariffs on more efficient sugar-based ethanol from Brazil. This onerous mega-intervention on the part of government has had a devastating effect on the price of food and gas and it has forced consumers to purchase inefficient and often damaging fuel. Yet worst of all, it has enriched an industry that would have otherwise faltered in the natural order of the free-market. Ethanol production has increased 719% during the past decade, as almost half of all corn grown in the country is diverted for this unnatural and odious use of a product that was traditionally grown for livestock feed. Government-backed venture socialism is indeed a powerful force. Ethanol blenders have benefited from the 45-cent per gallon Volumetric Ethanol Excise Tax Credit (VEETC), which may be refundable for those companies that lack any excise tax liability. The ethanol industry has pocketed over $45 billion in subsidies since 1980, with a $6 billion annual price tag in recent years. Additionally, all foreign ethanol imports incurred a 54-cent-per-gallon import tariff, which coupled with a mandatory 2.5% ad valorem tax, adds up to an increased cost of about $0.60 per gallon. These two policies are unlikely to be renewed; however, the most egregious part of the three-legged ethanol beast –the mandate – is still intact. Industry leaders are employing a rope-a-dope strategy vis-à-vis the subsidies, while launching a counterattack to double down on the mandates. They must be stopped. Under current law, the federal government mandates that 10% of fuel contain ethanol. This is on top of the generic mandate that requires the consumption of 36 billion gallons of renewable fuels by 2022. All these government interventions and coercions have had such a tendentious effect on ethanol production, that there is now a massive surplus of domestic ethanol. By far, the tyrannical mandate requiring everyone to use this ineffectual product is more effective than the subsidy or tariff. Now, the ethanol industry is planning an aggressive lobbying effort to expand the mandate in order to sell off their government-sponsored surpluses. Tom Buis, CEO for the industry group Growth Energy, revealed that the new agenda “is opening up the market place with E15 (15% ethanol blend), and flex pumps and flex fuel vehicles.” Such an increase in ethanol concentration will have a dangerous effect on automobile engines, yet these leeches only care about their bottom line. While expansion of the mandate is an uphill battle for ethanol peddlers, they will use the inevitable price increase at the gas pump as casuistry for their agenda. Repeal of the subsidy for ethanol blenders will increase the cost of gas, even though ethanol is an ineffectual and inefficient fuel mixture that has engendered higher gas prices. Sound confusing? It’s actually quite simple. In the real world of the free-market – one in which we would use 100% petroleum – gas prices would necessarily decrease. However, as long as the mandate for 10% ethanol concentration is left intact, we will be forced to purchase this more expensive fuel, albeit at a higher price, due to the expiration of the subsidy. Industry lobbyists will use this counterintuitive argument to promote an increase to the destructive E15 mandate. House Republicans must preempt this act of aggression by repealing the sections of the Energy Policy Act of 2005 (EPAct, P.L. 109-58) and the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140) that mandate ethanol fuel blends. In fact, they should probably repeal those laws entirely. Not only is this good policy; it is good politics (outside of Iowa). This is a quintessential opportunity for Republicans to stand on principle on an issue that resonates with populist factions on both sides of the aisle. There is no better example of how government regulations and corporate welfare are used to enrich a select few – to the detriment of all American consumers – than the ethanol boondoggle. There is no worse form of tyranny than using the boot of government to force consumers to purchase a particular product. Republicans should not squander this teachable moment and unique opportunity to completely kill ethanol while it is unpopular.
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Quash the Ethanol Beast in Honor of Iowa Caucuses
WASHINGTON — Do you recall in reading President Harry S. Truman’s very good memoir, Years of Trial and Hope: 1946-1952 , his scholarly dissection of the Federal Reserve System and discussion of low inflation’s influence on relatively unstable growth? Actually, I do not either, and I read the book from cover to cover. Or how about Dwight D. Eisenhower, the man who led our forces in vanquishing Hitler’s war machine, became the first Supreme Commander of NATO and eventually president, serving until 1960? Do you remember his erudite discussions of domestic policy during his 1952 campaign? His plan to pare down the national debt with a temporary “surcharge” on the top 1.5% of income earners? And then there was, of course, his education policy that would include highly nutritious lunches to low-income students so the students would not be a burden on our healthcare system in future years? Well, I do not recall these discussions either. Actually I do not recall Eisenhower’s talking in such wonky ways about anything, and I know Truman’s memoir was devoid of the stuff. It read too well. Of course, today both Truman and Eisenhower would have to be really up to the highest wonk standards if they hoped to run against Barack Obama or Newt Gingrich. For that matter, our greatest president since the sainted Franklin Delano Roosevelt, I speak of Ronald Reagan, was not a wonk at all. Nor were John F. Kennedy or Richard M. Nixon, and certainly not Lyndon B. Johnson. Jimmy Carter made a stab at being a wonk, but as with everything else he failed. The real wonks came with the maturing of the 1960s generation, most notably Bill Clinton and Newt Gingrich, but there were also those curiosities California’s Jerry Brown and the ghost of 1972 Democratic convention, Gary Hart. They are a little long in the tooth to be legitimate wonks of the 1960s generation, but they tried — as for a certitude Brown was weird enough. The true policy wonk is a juggler of facts and trends and “ideas,” who came out of the 1960s to wow all those whom he assaulted with his knowledge of government, of society, and the movies, rock & roll, and the cost of a gallon of milk. They have ideas for income distribution, the value of the dollar, for crime in the inner city, healthcare, the environment — whatever is in the headline at the moment. They dream up policies for things whose policies are unclear. The problem of global warming? Cap and trade! Healthcare? Well, tax income at a certain percentage and apply the revenue to agreed-upon disbursements for earmarked segments of the population but with mandates that… oh, forget about it. The healthcare monstrosity should have earned every wonk a price on his head. With the 1960s generation came government policies for every aspect of the human condition and there has not been a good president elected since 1988. Barack Obama is the reductio ad absurdum of every policy wonk ever heard of. Now steps forward Bill Clinton with a new book, Back to Work: Why We Need Smart Government for a Strong Economy . The presumption he attaches to the word “smart” is typical of him and his fellow wonks. Would Harry Truman or Dwight Eisenhower have the temerity to claim any of their policies as being smart? They would not brag of their policies’ stupidities but they would leave it to someone else to appraise their policies’ merits — and in the 1940s and 1950s “smart” was a word associated more frequently with couture or tailoring than with policy. Both Harry and Ike were far better presidents than Bill, the guy who got himself impeached and trapped by a Republican majority in both houses, leaving him muttering that “The era of big government is over.” Now with this insufferable book of wonkish chatter he has come forward and boasted of all that he achieved during his big-government-is-over days and proclaimed a future that will be dominated by the biggest government of all. It brings to mind another problem with wonks. Their wonkery is not rooted in principle or ethics. It is only rooted in their egos, which are fickle.
