An Excellent Review Of Flawed Obama Energy Policy

The following comes from an excellent blog titled Skeptic's Corner. It summarizes the absurdity and impracticality of even thinking we can substitute so-called "renewables" for our existing oil, gas, and coal resources in the reasonably near future. We have been investing Billions of dollars in alternative forms of energy for decades. We have not much to show for this; at best just a few percent of our total demand.

We need to look at our energy situation very carefully and with as little political bias as possible. This is very serious so I've taken the liberty to reproduce this essay in total.
Peter

Obama and the Alternative Energy Fiasco
The president is wrong to block oil and gas production.


It's only a matter of time before President Barack Obama's vast popularity runs aground on his energy policies. In the name of saving the planet from global warming, he has delayed new oil drilling, an action that will have major political repercussions once the world economy recovers. Instead of using some the stimulus billions to produce more gas and oil, Obama's wild-eyed supporters dream of "renewable" energy derived from corn, wind, sunshine, and even grass.

With the appointment of extremists like climate czar Carol Browner and science adviser John Holdren, Obama has placed his administration's environmental policy in the hands of radicals. Interior Secretary Ken Salazar proposes replacing oil and coal with windmills. Yet Barron's recently reported that America would need to build 500,000 giant offshore windmills and transmission lines to produce Salazar's specified 1,900 gigawatts of electricity. In contrast, oil and gas drilling could provide hundreds of thousands of solid, well-paying blue-collar jobs. Washington Post economics columnist Robert Samuelson explains this in "The Bias Against Oil & Gas," describing how alternative energy job creation is miniscule compared to what an expansion of oil production would create. Meanwhile, Rep. Henry Waxman (D-Calif.) and Rep. Edward Markey (D-Mass.) have proposed legislation giving legal standing to allow Americans to sue any company that produces "greenhouse" gasses.

All of these things are happening at a time when natural gas is abundant and cheap.Hide
The new technology of horizontal fraccing has made it economically feasible to drill into vast shale deposits in many states, even famously difficult ones like Michigan and New York. Many cars could run on natural gas, much like many buses do already. On a recent trip to Peru, I learned that most taxicabs have been converted to natural gas for a cost of about $1,000 each. New technologies continually revive old oil and gas fields and make new ones economically viable. So it's little more than socialist Malthusianism to argue that the world is running out of cheap energy. Science will always find and harness new sources. Even the liberal New Republic recently admitted that, "Utopian environmentalism has, to some extent, always promised to heal the alienation wrought by modernity... it is a form of escapism and disengagement from reality." The extremists scoff at science and would apparently prefer scarcity so that bureaucratic rationing will enforce a change in American lifestyles.

Instead of producing more of the cheap, abundant energy that fueled America's dynamic growth, the extremists who support and surround Obama dream of drastically cutting American consumption. Many of them would like to see the government force General Motors to make flimsy little cars that run on electricity (or alternative energy) at the cost of billions. Meanwhile, the Sierra Club magazine recently boasted of helping to block construction of 96 coal-fired power plants and helping to impose a de facto moratorium on all new plants.

Currently, half of the drilling rigs in America are shutdown because of low oil and gas prices. Most smaller oil companies have suffered severe damage or even gone bankrupt by their inability to renew loans or gain credit. Likewise, the majors have few safe options in foreign countries but would invest heavily in offshore American exploration, if it were permitted.

So what about the so-called green alternatives? Forbes recently detailed the problems with windmills. First, they depend upon a two-cent-per-kilowatt taxpayer subsidy to remain competitive. They also require backup gas generators (in case the wind isn't blowing when needed) and new transmission lines running from windy places to population centers. And while new technologies to store wind-generated electricity are in the works, they have so far proven uneconomical. Nor does this even begin to consider the years of legal delays that would likely result from litigious neighbors opposed to new transmission towers. Solar power is even more expensive and would also require additional billions for backup generators and new transmission lines. Compare those unseen costs to the clear benefits of coal and gas plants where transmission lines are already built.

New oil and gas technologies could also help the U.S. from importing so much oil. But the Obama administration is stalling and trying to stop the offshore drilling approved by the previous Congress. The White House has also shut down previously permitted onshore drilling and burdened drillers with costly new restrictions. Meanwhile, $80 billion in stimulus spending has been earmarked for "renewable" energy. The plan is to give a 30 percent tax credit for the associated costs.

Americans will soon again feel the sting of gasoline costing $3.00 or $4.00 per gallon and then come to recognize how we've wasted years of opportunity to produce more energy domestically. For instance, the U.S. Geological Survey estimates that there are 85 billion barrels of offshore oil. (And that is an old number. It is almost certain to increase once new exploration and testing are permitted.) New supplies in continental America, not to mention the billions of barrels now accessible in Alaska, could transform our trade deficit by cutting hundreds of billions of dollars in imports. This would help rescue the value of the dollar, alleviate the cost of maintaining armies and navies in the Middle East, and help save free trade from the latest round of restrictions.

It's also essential to remember that so-called renewable energy cannot replace oil and natural gas in any significant way. For example, corn-based ethanol production "costs" nearly as much to produce as it saves in oil and can only exist with the help of costly and unending subsidies. Government, in other words, gets what it pays for. If it offers subsidies to alleviate global warming or make gasoline from grass, it will find promoters who will gladly accept that money and deliver scant results.

With the Republicans no longer handicapped by leaders like George W. Bush and John McCain, both of who caved before environmental extremists, Obama's energy policies might be a strong issue for conservatives and libertarians to rally around, and perhaps change their political fortunes. Remember that McCain famously opposed drilling in ANWR, while Bush promised the country that a gasoline substitute could be produced from switch grass.

One day the alternative energy fiasco will be studied as a vast example of waste and fraud that contributed to the collapse of the dollar and to lower living standards for most Americans. Let's hope that day comes sooner rather than later.

It Is Important To Know The Truth About Renewable Energy

People who have dealt with the realities of worldwide energy use for their entire working lives, (like geologists) understand the absurdity of thinking that the so-called renewable sources of energy can or are going to replace oil, gas, and coal in the near future. The following article published in "The Wall Street Journal" explains the reasons for this absurdity very clearly.

The Obama Administration and the Democrats in Congress do not seem to understand this. The science, math, and economics are very clear and simple. It makes one wonder what their real objectives are. They are out to control energy, meaning the oil, coal, and gas industry with their proposed taxes and cap and trade scheme. However, think about it. If we shut down the oil, gas, and coal industry, where is the government going to get the money to finance all their other grand projects? To shut down fossil fuels in the name of stopping global warming is a particularly vile and cruel lie. This is becoming more clear on a daily basis.
Peter



MARCH 4, 2009, 11:18 P.M. ET
Let's Get Real About Renewable Energy
We can double the output of solar and wind, and double it again. We'll still depend on hydrocarbons.

By ROBERT BRYCE (source)
During his address to Congress last week, President Barack Obama declared, "We will double this nation's supply of renewable energy in the next three years."
While that statement -- along with his pledge to impose a "cap on carbon pollution" -- drew applause, let's slow down for a moment and get realistic about this country's energy future. Consider two factors that are too-often overlooked: George W. Bush's record on renewables, and the problem of scale.

By promising to double our supply of renewables, Mr. Obama is only trying to keep pace with his predecessor. Yes, that's right: From 2005 to 2007, the former Texas oil man oversaw a near-doubling of the electrical output from solar and wind power. And between 2007 and 2008, output from those sources grew by another 30%.

Mr. Bush's record aside, the key problem facing Mr. Obama, and anyone else advocating a rapid transition away from the hydrocarbons that have dominated the world's energy mix since the dawn of the Industrial Age, is the same issue that dogs every alternative energy idea: scale.
Let's start by deciphering exactly what Mr. Obama includes in his definition of "renewable" energy. If he's including hydropower, which now provides about 2.4% of America's total primary energy needs, then the president clearly has no concept of what he is promising. Hydro now provides more than 16 times as much energy as wind and solar power combined. Yet more dams are being dismantled than built. Since 1999, more than 200 dams in the U.S. have been removed.

If Mr. Obama is only counting wind power and solar power as renewables, then his promise is clearly doable. But the unfortunate truth is that even if he matches Mr. Bush's effort by doubling wind and solar output by 2012, the contribution of those two sources to America's overall energy needs will still be almost inconsequential.

Here's why. The latest data from the U.S. Energy Information Administration show that total solar and wind output for 2008 will likely be about 45,493,000 megawatt-hours. That sounds significant until you consider this number: 4,118,198,000 megawatt-hours. That's the total amount of electricity generated during the rolling 12-month period that ended last November. Solar and wind, in other words, produce about 1.1% of America's total electricity consumption.

Of course, you might respond that renewables need to start somewhere. True enough -- and to be clear, I'm not opposed to renewables. ( And neither am I, Peter) I have solar panels on the roof of my house here in Texas that generate 3,200 watts. And those panels (which were heavily subsidized by Austin Energy, the city-owned utility) provide about one-third of the electricity my family of five consumes. Better still, solar panel producers like First Solar Inc. are lowering the cost of solar cells. On the day of Mr. Obama's speech, the company announced that it is now producing solar cells for $0.98 per watt, thereby breaking the important $1-per-watt price barrier.

And yet, while price reductions are important, the wind is intermittent, and so are sunny days. That means they cannot provide the baseload power, i.e., the amount of electricity required to meet minimum demand, that Americans want.

That issue aside, the scale problem persists. For the sake of convenience, let's convert the energy produced by U.S. wind and solar installations into oil equivalents.

The conversion of electricity into oil terms is straightforward: one barrel of oil contains the energy equivalent of 1.64 megawatt-hours of electricity. Thus, 45,493,000 megawatt-hours divided by 1.64 megawatt-hours per barrel of oil equals 27.7 million barrels of oil equivalent from solar and wind for all of 2008.

Now divide that 27.7 million barrels by 365 days and you find that solar and wind sources are providing the equivalent of 76,000 barrels of oil per day. America's total primary energy use is about 47.4 million barrels of oil equivalent per day.

Of that 47.4 million barrels of oil equivalent, oil itself has the biggest share -- we consume about 19 million barrels per day. Natural gas is the second-biggest contributor, supplying the equivalent of 11.9 million barrels of oil, while coal provides the equivalent of 11.5 million barrels of oil per day. The balance comes from nuclear power (about 3.8 million barrels per day), and hydropower (about 1.1 million barrels), with smaller contributions coming from wind, solar, geothermal, wood waste, and other sources.

Here's another way to consider the 76,000 barrels of oil equivalent per day that come from solar and wind: It's approximately equal to the raw energy output of one average-sized coal mine.
During his address to Congress, Mr. Obama did not mention coal -- the fuel that provides nearly a quarter of total primary energy and about half of America's electricity -- except to say that the U.S. should develop "clean coal."

He didn't mention nuclear power, only "nuclear proliferation," even though nuclear power is likely the best long-term solution to policy makers' desire to cut U.S. carbon emissions.

He didn't mention natural gas, even though it provides about 25% of America's total primary energy needs. Furthermore, the U.S. has huge quantities of gas, and it's the only fuel source that can provide the stand-by generation capacity needed for wind and solar installations. Finally, he didn't mention oil, the backbone fuel of the world transportation sector, except to say that the U.S. imports too much of it.

Perhaps the president's omissions are understandable. America has an intense love-hate relationship with hydrocarbons in general, and with coal and oil in particular. And with increasing political pressure to cut carbon-dioxide emissions, that love-hate relationship has only gotten more complicated. (Carbon dioxide emissions being related to the global warming scare. Peter)

But the problem of scale means that these hydrocarbons just won't go away. Sure, Mr. Obama can double the output from solar and wind. And then double it again. And again. And again. But getting from 76,000 barrels of oil equivalent per day to something close to the 47.4 million barrels of oil equivalent per day needed to keep the U.S. economy running is going to take a long, long time. It would be refreshing if the president or perhaps a few of the Democrats on Capitol Hill would admit that fact.

Mr. Bryce is the managing editor of Energy Tribune. His latest book is "Gusher of Lies: The Dangerous Delusions of 'Energy Independence'"(Public Affairs, 2008).

Some Basics About Energy

The following article summarizes some basic information about the energy the United States uses, where it comes from, and how it is used. These simple realities are often overlooked, misunderstood, or misinterpreted among people participating in the ongoing debate over energy prices, renewable and alternative energy and global warming. Perhaps most significant, is how little energy comes from so-called alternative energy sources, particularly solar, wind, and geothermal. We can not just suddenly do away with oil, gas, and coal . These numbers are well worth understanding and remembering.
Peter

source

The Basics on Energy
May 23, 2008
Energy & Entrepreneurs #57

The Basics on Energy
by Raymond J. Keating

When energy costs are skyrocketing, it's often hard to stay clear on the basics regarding the economics and workings of energy markets.
The U.S. Energy Information Administration launched a series early this month titled "Energy in Brief - what everyone should know about energy." The EIA explains: "Energy in Briefs explain important energy topics in plain language. Each Brief answers a question relevant to the public and recommends resources for further reading."
For the most part, these are handy guides that walk through some energy fundamentals. They can be read at the "Energy in Brief" website.

A few points from the current reports on the site are worth noting here.
On electricity:

• In 2007, 48.7 percent of electricity generation came from coal, followed by 21.5 percent from natural gas, nuclear at 19.4 percent, hydroelectric at 6.0 percent, other renewables at 2.5 percent, and petroleum at 1.6 percent.

• Regarding electricity prices: "In 2007, Hawaii residential consumers paid the highest rate (24.13 cents per kilowatt hour) because the primary fuel used to generate their electricity is oil, which is expensive. Idaho residential consumers paid the lowest rate (6.35 cents per kilowatt hour) because of the availability of economical hydroelectric power."

On foreign oil:
• In terms of meeting U.S. oil demand, 60 percent are net imports and 40 percent is domestic oil.

• "Some may be surprised to learn that almost 50% of U.S. crude oil and petroleum products imports came from the Western Hemisphere (North, South, and Central America and the Caribbean including U.S. territories) during 2006. We imported only 16% of our crude oil and petroleum products from the Persian Gulf countries of Bahrain, Iraq, Kuwait, Qatar, Saudi Arabia, and United Arab Emirates. During 2006, our five biggest suppliers of crude oil and petroleum products were: Canada (17.2%), Mexico (12.4%), Saudi Arabia (10.7%), Venezuela (10.4%), Nigeria (8.1%)."

On liquefied natural gas:
• "The United States imports about 16% of the natural gas we consume. Most of these imports are delivered by pipeline (from Canada). But a growing volume of natural gas is coming to the United States in liquid form from overseas. With the demand for natural gas expected to increase, it's likely that U.S. imports of LNG also will need to increase."

• "Liquefied natural gas (LNG) is natural gas that has been cooled to about minus 260 degrees Fahrenheit for shipment and/or storage as a liquid. The volume of the liquid is about 600 times smaller than the gaseous form. In this compact form, natural gas can be shipped in special tankers to receiving terminals in the United States and other importing countries. At these terminals, the LNG is returned to a gaseous form and transported by pipeline to distribution companies, industrial consumers, and power plants. Liquefying natural gas provides a means of moving it long distances where pipeline transport is not feasible, allowing access to natural gas from regions with vast production potential that are too distant from end-use markets to be connected by pipeline."

On renewable energy:
• In 2006, renewable energy accounted for 7 percent of U.S. energy demand and 9.5 percent of electricity generation.

• Based on data from the EIA brief, of the total U.S. energy supply in 2006, wind accounted for 0.28 percent and solar 0.07 percent.
"The largest share of the renewable-generated electricity comes from hydroelectric energy (75%), followed by biomass (14%), wind (7%), geothermal (4%), and solar (0.1%)."
This is all information worth keeping in mind as the energy policy debate continues.
_______
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Payback Time: Democrats Plan To Tax Oil and Gas, While Subsidizing Alterntive Energy

This a rather long article and hints at the changes coming in US Energy Policy. The one thing people can be sure of is our energy will cost us more. Does anyone think that new taxes on oil and gas companies will not be passed on to the consumer in the form of higher prices?

Is it smart for the government to tax the public (which is the ultimate effect of subsidies) to pay for unprofitable alternative energy sources? Will these taxes really significantly reduce our "dependence on foreign oil"? Will this shift in government spending really control "global warming"?

The bills essentially transfer billions of dollars from oil and gas companies to producers of "renewable fuels". This is like "robbing Peter to Pay Paul". Is it any wonder why the large oil and gas companies are investing in solar, wind, ethanol, and coal-to diesel technology. They'll be taxed in one area and rewarded in another, maintaining their profits, while the consumer continues paying more.

Or is all of this political gamesmanship, and as some Democrats are saying, "it's payback time", (no doubt with big grins on their faces)? Does any of this make sense to you? Is there a better way?
Peter

from: http://www.nytimes.com/2007/06/18/washington/18oil.html?pagewanted=1&th&emc=th

Democrats Press Plan to Channel Billions in Oil Subsidies to Renewable Fuels
By EDMUND L. ANDREWS
Published: June 18, 2007
WASHINGTON, June 16 — Senate Democrats are seeking a major reversal of energy tax policies that would take billions of dollars in tax breaks and other benefits from the oil industry to underwrite renewable fuels.

The tax increases would reverse incentives passed as recently as three years ago to increase domestic exploration and production of oil and gas. The change reflects a shift from the Republican focus on expanding oil production to the Democratic concern about reducing global warming.

On Tuesday, the Senate Finance Committee will take up a bill that would raise about $14 billion from oil companies over 10 years and would give about the same amount of money on new incentives for solar power, wind power, cellulosic ethanol and numerous other renewable energy sources. The bill is one of the signature issues this year for Democrats, along with immigration and the war in Iraq, and one in which they hope to clearly distinguish themselves from the Republicans.

But Senate Democrats are expected to go beyond the $14 billion in tax changes in the draft bill. Democratic officials said the committee is all but certain to adopt a proposal by Senator Jeff Bingaman of New Mexico that would raise $10 billion from companies that drill for oil and gas in federal waters but do not currently pay royalties to the government.

“We are cutting back subsidies for the oil and gas industry and using that money to finance the development of new and cleaner sources of energy,” said Mr. Bingaman, who plans to attach the entire tax package to the energy bill on the Senate floor next week.
It is unclear how much President Bush or Republicans in Congress will fight the proposed tax shift. The ranking Republican on the Senate Finance Committee, Senator Charles Grassley of Iowa, has already endorsed the $14 billion package.

But the plan could easily founder because of opposition to any one of many hotly disputed provisions in the broader energy bill. Just last week, a threatened filibuster by Republicans forced Democrats to postpone a floor vote on requiring electric utilities to produce 15 percent of their power from renewable fuels. The White House, meanwhile, has threatened to veto the bill if lawmakers do not drop a provision intended to prosecute what Democrats call “unconscionably excessive” gasoline prices.

Senator Charles E. Schumer of New York has proposed that oil companies be prohibited from using an accounting method called “last in, first out” for inventories that saves them as much as $5 billion in taxes a year.
Because Senate Democrats want to offset the cost of any new tax breaks with tax increases elsewhere, many lawmakers are pushing for even more tax raises from oil companies.
Oil executives are protesting loudly, saying that the proposed changes would take money away from exploring and drilling in the United States and increase the nation’s dependence on imported foreign oil.

“They talk about our companies as if they’re owned by space aliens,” said John Felmy, chief economist at the American Petroleum Institute, a trade association. “They talk about energy security, but these provisions could have the opposite effect in terms of reducing our production here and increasing our imports.”
The oil industry has ample reason to worry. With consumers seething about gasoline prices increasing to more than $3 a gallon and oil profits reaching record highs, oil companies would be short of friends in Congress regardless of the party in power.

Beyond the immediate jockeying, however, lies a bigger question: Is Congress putting taxpayers at risk by funneling billions of dollars in subsidies into alternative fuels that are still a long way from being profitable?
Indeed, industry experts said the Senate bill greatly understated the true cost of incentives for renewable fuels. Most of the incentives are set to expire at the end of 2009 or 2010, but Democrats in both the House and Senate have called for an increase in the production of such fuels by 2022. As a practical matter, the vast majority of “temporary” tax breaks are routinely extended once they are passed for the first time.

In addition to higher taxes for oil companies, House and Senate Democrats are hitting at the oil industry in other ways. The Senate bill would give the federal government more power to prosecute companies that engage in “price gouging” on gasoline prices, which is broadly defined in the bill as charging “unconscionably excessive” prices that reflect “unfair leverage.” A similar measure is moving through the House.

Separately, the House Natural Resources Committee passed a bill last week that would, among other things, crack down on companies that cheat on royalties they pay for oil and gas pumped on publicly owned land.
In effect, the various bills would transfer billions of dollars from oil companies to producers of renewable fuels.

The Senate bill would offer $5.6 billion in tax credits over the next three years for companies that produce electricity from renewable fuels like wind and geothermal power. It would offer tax-free bonds for new power plants with renewable or clean energy. It would offer tax credits totaling about a dollar a gallon to producers of cellulosic ethanol, and even bigger tax credits for “biodiesel” fuel. It would extend and expand tax breaks for plug-in electric cars and other vehicles that use alternative energy sources, and it would provide tax breaks for gas stations that offer renewable fuels.

(Page 2 of 2)
In a nod to the politically powerful coal industry, the bill would also provide $1.5 billion in tax-free “clean coal bonds” for advanced coal-fired electricity plants and $332 million in tax credits for plants that make diesel fuel from coal.
Times Topics: Energy and Power
Democrats in the House are moving with similar legislation. The House passed a bill earlier this year that would raise about $14 billion over 10 years from oil companies, and the House Ways and Means Committee is expected to mark up a new tax bill that would offer rich incentives for alternative fuels and increased efficiency.

The Democratic bill contrasts sharply with the energy bill that the Republican-led Congress passed in 2005. The Senate bill offers less than $1 billion in incentives for coal, no tax breaks for nuclear power and tax hikes for oil. But two years ago, Congress approved $11 billion in additional tax breaks, of which $7 billion went to oil, coal and nuclear power.

“It is a dramatic change in policy, targeted at the big oil companies,” said Senator Ron Wyden, Democrat of Oregon. “It will show the country the kind of things we can do by taking away subsidies for fossil fuels and putting the money into new sources of energy.”
Privately, some Democrats say it is payback time: the oil industry’s political contributions have overwhelmingly gone to Republican lawmakers and President Bush, and many Democrats say they have little sympathy for the industry now.

It is unclear whether Republicans or Mr. Bush plan to protect the industry.
In stinging criticism earlier this month, the White House Office of Management and Budget said the proposed price-gouging measure amounted to price regulation that would jeopardize investment in oil production and ultimately hurt consumers.
In 2005, Mr. Bush threatened to veto a one-year measure that blocked oil companies from using the “last in, first out” accounting method for inventories. The Bush administration, echoing charges by the oil industry, said the measure amounted to a one-year windfall profits tax that would frighten investors by raising the prospect of further tax raises whenever oil prices jumped sharply.
Mr. Schumer’s proposal is similar to the 2005 proposal, except that his measure would be permanent.

The oil industry still has persuasive clout in Washington. Exxon, Shell and trade groups like the American Petroleum Institute have hired former Democratic lawmakers and Democratic lobbyists to help press their case.
They have carefully positioned themselves, picking their fights on selected issues that attract fairly little popular interest but affect potentially large amounts of money.
The effort is mostly defensive — fending off tax increases — but also has offensive elements. Royal Dutch Shell and other big companies hope to be big players in coal-based liquid fuels. And the industry in general is still pushing for Congress to open up more areas on the outer continental shelf for deepwater drilling.

But industry executives hold out little hope for emerging unscathed.