miner helmet shovel

“Creating Jobs” Will Hurt the Economy by T. Norman Van Cott

How many jobs would the Keystone Pipeline project create? Political reporter Tom Murse points out that the answer is a matter of dispute. “Supporters argue that the Keystone XL pipeline would create tens of thousands, if not hundreds of thousands, of new jobs.” But critics “claim those numbers are wildly inflated,” Murse writes.

Both sides assume a higher number would make the project better for the economy. Both sides have it backwards.

Home Economics

The value of work is easy to grasp at the most domestic level: your own home.

Being a homeowner isn’t easy. Among other things, you always seem to have more chores to do than time to do them. The chores are not ends in themselves. Rather, they are means to an end — in this case, making a home and yard more livable or aesthetically pleasing.

Opting to do a chore yourself — “insourcing” in current parlance — isn’t costless. You lose the opportunity to enjoy the fruits of your other labors. For example, you could tackle different chores, spend more time with your family, or work extra hours in the marketplace, increasing your income. Hiring someone else to do the chore — that is, “outsourcing” — isn’t costless, either. It means you can’t buy other things. Costs represent sacrificed alternatives.

The rule when it comes to home ownership isn’t rocket science. Tackle those chores whose ends you value more than their cost. If your water softener breaks, and you value having softened water more than what it would cost either you or the plumber to repair it, then hire the plumber if his cost is less than what it costs you to fix it yourself. (Don’t forget to count the work time you’ll be giving up to act as your own plumber.)

By outsourcing the repair work, you will have “lost a job,” but your standard of living will be higher. By how much? The difference between your cost and the plumber’s cost.

Added household chores — that is, “gaining jobs” — are anything but a blessing. Chores represent hurdles between you and that more livable, aesthetically pleasing home and yard. Each job represents something you’re going to have to give up before your house is the way you want it. “Gaining jobs” to achieve a given objective is synonymous with worsening your situation, not improving it.

The Rule Writ Large — The Case of the Keystone Pipeline

What is rocket science for many is the ability to recognize that the rule for individual households extends to the national household, as we can see in the case of the Keystone Pipeline controversy. The project, which has been a political football for several years, would transfer oil from Canada to the Texas Gulf Coast. The project’s desirability is associated with the number of jobs required for the pipeline’s construction and maintenance. The more jobs created, the more desirable the pipeline, it would seem.

All involved in the discussion fail to apply lessons for individual households to the national household. Pipeline jobs are part of the cost of getting oil from Canada to the Texas Gulf Coast. They are not part of the benefits. The fewer jobs created, the better. Indeed, in the best of all worlds, there would bezero jobs required to transfer oil from Canada to the Texas Gulf Coast. That way, we could get the oil transferred without having to give up anything!

Pipeline proponents who note a large number of required jobs are unwittingly arguing against the project, just as opponents who cite a small number of jobs are unwittingly arguing in its favor.

Beyond the Pipeline

This failure to apply the simple rules for individual households is not restricted to the Keystone Pipeline issue. It pervades economic, business, and political discussions. Government programs come packaged with estimates of the number of new jobs the programs will supposedly create. The more jobs, the merrier. That’s the political refrain. Likewise, state and local economic development bureaucrats tout the number of jobs associated with business relocations or expansions.

One has to wonder whether those who peddle this more-jobs nonsense apply it to their own households. I bet not. Fewer chores, not more, make their homes more enjoyable. National households are no different. Or as Adam Smith put it in his classic, The Wealth of Nations, that which “is prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.”

T. Norman Van CottT. Norman Van Cott

T. Norman Van Cott, professor of economics, received his Ph.D. from the University of Washington in 1969. Before joining Ball State in 1977, he taught at University of New Mexico (1968-1972) and West Georgia College (1972-1977). He was the department chairperson from 1985 to 1999. His fields of interest include microeconomic theory, public finance, and international economics. Van Cott’s current research is the economics of constitutions.

lng canada

Canadian Liberals War against Liquefied Natural Gas is killing jobs and prosperity

President Obama and Democrats have declared a war against coal. This has led to the U.S. coal energy industry to face regulatory burdens that kill jobs and prosperity. It also leads to higher cost for electricity. The Liberal government of Canada has learned from the American president and has declared its own war against Liquefied Natural Gas (LNG or CH4).

Sheila Gunn Reid reports, Liquefied Natural Gas (LNG) is safe, low carbon and clean burning.

It has the support of local BC mayors, Premier Christy Clark and First Nations. LNG has the potential to pull the entire country out of a recession. So what’s the hold up?The Federal Liberals are the hold up.

Sheila explains how and why in her video.

Lear more.

alex epstein senate hearing oil drop

VIDEO: The Lessons of my Senate Hearing on the ‘Moral Case for Fossil Fuels’

I was overwhelmed by the number of positive comments I got from those of you on this list as well as all manner of people on social media: from comedian Larry the Cable Guy, “This is so good and full of common sense truth it needs to be tweeted again.” to Everybody Loves Raymond’s Patricia Heaton, “I just listened to your senate testimony. You rock.” to meteorologist Joe Bastardi, “Every human being on the planet should look at this. Take 5 minutes and spread this to everyone. Nails it, including the moral imperative of the matter.”

I got a lot of questions about how I manage to be calm, passionate, and fast at the same time. The fundamental answer is: I understand how to frame the issues properly—in a pro-human, big picture way. Once I frame the discussion, I am in control of the situation—even when I am in a huge position of disadvantage, such as being the person in the room with the most controversial view and the most hostility and gamesmanship from Senators who have the right to silence me. When I have framed the discussion, there’s no need to worry about rudeness from a Senator Boxer or anyone else; she can say whatever she wants but I know I have put forward a framework that makes sense and she will just come across as ignoring me and ranting.

The headline from Energy and Environment news, a leading Washington and industry publication, showed me that I accomplished my goal of setting the agenda: “Moral Case for Fossil Fuels’ sparks angry Senate debate.”

The two resources I’ve created that can most empower you to frame discussions in a pro-human, big-picture way are The Moral Case for Fossil Fuels and How to Talk to Anyone About Energy.

Here are some links from my Senate testimony last week:

bloomberg_bill_mckibben_1600px

Setting Things Straight: Bill McKibben is Very Wrong About Fracking

KEY TAKEAWAY: 

A big part of public policy debates involves countering misleading claims. In this regular feature, I highlight important facts about the key issues being debated around Washington, D.C.

Claim: Fracking causes water and air pollution.

What you need to know: After leading the charge against the Keystone XL pipeline, anti-affordable-energy zealot Bill McKibben’s next target is fracking.

“Natural gas” has “to be left in the ground,” he declared in The Nation. “We need to stop the fracking industry in its tracks, here and abroad.”

First, McKibben blames fracking for water contamination, despite it taking place thousands of feet below the ground, far away from water supplies:

The Marcellus Shale, though, underlies densely populated eastern states. It wasn’t long before stories about the pollution of farm fields and contamination of drinking water from fracking chemicals began to make their way into the national media.

The key word is “stories.” Researchers from EPA, Yale, and elsewhere have found that fracking is done safely and doesn’t contaminate water.

Most-recently, researchers at the University of Cincinnati tested water from wells before, during, and after fracking took place nearby. Their conclusion: There is “no evidence for natural gas contamination from shale oil and gas mining.”

But what really scares McKibben is supposed methane leakages. He cites a Harvard study claiming to show that “U.S. methane emissions had spiked 30 percent since 2002.” “We closed coal plants and opened methane leaks, and the result is that things have gotten worse,” he writes.

But like claims of water contamination, facts don’t live up to McKibben’s methane horror.

According to EPA data, “Methane emissions from hydraulically fractured natural gas wells are down nearly 79 percent since 2005,” writes Mark Green at Energy Tomorrow.

Methane released from fracked natural gas well completion has fallen since 2005. Source: Energy Tomorrow.

This makes sense since methane is natural gas, and energy companies are in the business of selling that to customers. There is an obvious incentive to minimize leaks and capture as much product to maximize sales.

But if that’s not enough, a top environmental thinker thinks the McKibben is “misleading” the public. Ted Nordhaus, co-founder of The Breakthrough Institute, read the same Harvard study that got McKibben quaking in his hiking boots and came to a very different conclusion:

[Researchers] concluded that while the United States has seen a 20% increase in oil and gas production since 2002, “the spatial pattern of the methane increase… does not clearly point to these sources.”

To use Nordhaus’ words, the scientists that McKibben puts on a pedestal don’t “clearly point to a source of the increase in atmospheric methane concentrations.”

Fracking opponents like McKibben understand that they can’t win the public debate when it’s about the benefits the technology has given us: access to abundant, affordable energy; millions of new jobs created; and increased energy security. That’s why a recent University of Texas at Austin poll found that more people support fracking than oppose it.

Instead, they have to scare people and mold facts like Play-Dough to push their unrealistic, irrational,“keep it in the ground” fantasies of meeting America’s energy needs without fossil fuels.

The biggest energy challenge is low prices–which is a great boon for consumers. That’s a 180-degree turn from only a decade before. Fracking and the shale boom that resulted from it is an impressive illustration of the power of American enterprise and innovation. Opponents cannot be allowed to undercut that success story by misleading the public.

RELATED ARTICLES:

Businesses in These States are Getting Hit Hardest by Federal Regulations

Here Are 6 Ways Energy Companies Are Using Innovation to Endure Low Oil Prices

EDITORS NOTE: The featured image is of 350.org founder, Bill McKibben. Photo credit: Scott Eisen/Bloomberg.

carbon tax

A ‘Carbon Tax’ Is a Utopian Fix that Can’t Survive Contact with Political Reality by Diana Furchtgott-Roth

Paul Krugman, writing in the New York Times, suggests that Americans should pick a president who favors a carbon tax. But not even Democratic candidates Hillary Clinton and Bernie Sanders have proposed a carbon tax as part of their tax plans. All candidates have put forward detailed tax plans, and a carbon tax is not included in any of these plans.

What is a carbon tax? Why do so many academics and columnists love it? And why will Congress be unable to enact such a tax effectively?

No matter that only 16 percent of global greenhouse gas emissions are caused by America, and that by many measures global temperatures have not increased over the past decade. No matter than unless China and India reduce their carbon emissions, U.S. unilateral efforts will have no practical effect on global temperature. China has stated that it will reduce emissions in 2030, but has not made any definite commitment.

The carbon tax is a favorite of many academic economists for restructuring the tax system. Proponents include a bipartisan group of professors such as Tuft University’s Gilbert Metcalf, now Deputy Assistant Secretary for Environment and Energy at the Department of the Treasury; Harvard University’s Martin Feldstein, Edward Glaeser, and Gregory Mankiw; and Columbia University’s Joseph Stiglitz.

However, as tax practitioners know, a carbon tax is complex to set up. It requires adjustments to make sure that the tax is not unduly regressive and does not encourage consumption of imports relative to domestic production.

But, as we saw from the passage of many tax and budget bills over the years, Congress does not think deeply before it passes major tax bills.

Rather, political expediency always triumphs over academic elegance. Congress is incapable of thoughtful tax solutions, no matter how many are offered by well-intentioned professors. Despite years of notice that the Bush tax rates were due to expire, Congress passed permanent tax laws at the last moment, without reading the bill.

Many academics see a carbon tax as an alternative to an individual income tax, a corporate income tax, or a European-style cap-and-trade system. But a quickly-passed carbon tax in the hands of Congress would be just another add-on levy, with exemptions for friends and punishments for enemies.

A carbon tax raises the price of energy and so discourages consumption without regulation. Carbon tax rates could be calibrated to be revenue neutral or to yield a net rise in federal tax receipts, with the increment possibly dedicated to reducing deficits.

What are the problems with a carbon tax?

Everyone would want to spend the revenue. Some people would want to use it to reduce the deficit. Others would want to use carbon tax revenues to lower other taxes, such as income taxes. And since high income tax rates reduce incentives to work, this could conceivably add to economic efficiency.

Carbon taxes are regressive. Since low-income people use more energy as a percent of their income than high-income people, a switch to a carbon tax would have to be accompanied by transfers to low-income groups.

Some academics suggest that offsets be returned to taxpayers through lower income taxes, perhaps with the proceeds going chiefly to low-income households (individuals and families), which are disproportionately hurt by what is in essence an energy consumption tax.

This could theoretically be done by adjustments to the income tax. However, low-income earners are not required to file returns, and they would have to do so in order to be identified and compensated. That means extra work for them, and for the Internal Revenue Service — which will already be overworked calculating and collecting penalties from Obamacare violators.

Energy-intensive sectors lose under a carbon tax. The prices of energy-intensive goods in America would increase relative to imports from countries without carbon taxes. So Americans will prefer to buy imports, and American firms will lose business. Proponents of the tax suggest putting tariffs on imports in proportion to their carbon content so that American companies will not be at a disadvantage. But the precise quantities are complex to calculate, and tariffs might be illegal under World Trade Organization regulations.

The shale oil and gas that are attracting energy-intensive manufacturing back to America would be taxed, to the detriment of these new industries — and their employees. Some industries, such as coal, would be big losers. Politicians from coal-producing regions are influential in Congress, and they would demand a share of revenues.

So for a carbon tax to make our tax system more efficient, its revenues would have to be used to offset other taxes in the economy. Its negative effects on low-income Americans and on energy-intensive regions would have to be ameliorated. Some border adjustments would have to be made so that domestic goods were not disfavored.

But our disfunctional Congress is incapable of crafting a carbon tax with these attributes. Any tax on carbon would be an additional tax, without the offsets that make it so attractive to university professors. It would hurt the poor and raise domestic prices relative to prices of imports.

None of the front-running presidential candidates have proposed a carbon tax as part of their tax plans, because they know it is unpopular and will not pass Congress. To lower global emissions, the large emitters of carbon such as China and India need to move to nuclear power or natural gas. That would indeed make a difference.

This post first appeared at Economics21.org.

Diana Furchtgott-RothDiana Furchtgott-Roth

Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, is director of Economics 21 and senior fellow at the Manhattan Institute.

RELATED ARTICLES:

Calls for Fracking Bans Ignore Sound Science

Taxpayers Are Footing Bill for Solar Project That Doesn’t Work

environmntal news

Latest Energy and Environmental News

Energy and Environmental Newsletter is now online.

Some of the more interesting energy articles in this issue are:

Some of the more informative Global Warming articles in this issue are:

PS: As always, please pass this on to open-minded citizens. If there are others who you think would benefit from being on our energy & environmental email list, please let me know. If at any time you’d like to be taken off the list, please let me know that too.

PPS: I am not an attorney, so no material appearing in any of the Newsletters should be construed as giving legal advice. My recommendation has always been: consult a competent attorney when you are involved with legal issues.

bloomberg_jackstmalo_oil_platform_1600px

Obama Sides with ‘Keep It In the Ground’ Fanatics

KEY TAKEAWAYS:

President Barack Obama continues choosing cementing his legacy among anti-energy zealots rather than ensuring America’s energy security.

Instead of the all-of-the-above energy strategy he touted for most of his time in office, the president is going with the “Keep it in the ground” approach preached by radicals like Bill McKibbon.

The Interior Department flip-flopped on leasing portions of the Atlantic coast to oil and natural gas development, Bloomberg reports:

The proposed offshore leasing program being released Tuesday eliminates the administration’s initial plan to auction off drilling rights in as many as 104 million acres of the mid- and south-Atlantic in 2021, according to an Interior Department statement.

In 2015 Interior’s Bureau of Ocean Energy Management (BOEM) proposed leasing parts of the Atlantic coast to energy development. That’s now off the table.

Bloomberg map: Obama reverses offshore drilling plan

The administration “once again put short term political interests ahead of our nation’s best interest,” Karen Harbert, president and CEO of the U.S. Chamber’s Institute for 21st Century Energy, said in a statement:

America’s job creators have become accustomed to the relentless drumbeat of anti-energy policies from the Obama administration. Today’s announcement that the waters off of our Atlantic coast will be excluded from the next offshore drilling plan is nevertheless remarkable for its catering to fringe constituencies at the expense of energy security and the American economy. The Outer Continental Shelf is the backbone of U.S. oil and gas production and the announced deviation from the proposed plan will cost us jobs and harm security for decades to come.

This isn’t the first time that the administration pulled a Lucy and yanked away the football just before Charlie Brown was about to kick it. The Interior Department pulled out from planned Atlantic coast oil and natural gas leases in 2010.

The New York Times reports, “The decision represents a reversal of President Obama’s previous offshore drilling plans, and comes as he is trying to build an ambitious environmental legacy.”

Interior’s action fits a recent pattern of President Obama abandoning abundant, affordable energy:

Interior estimates that 3 billion barrels of oil and more than 25 trillion cubic feet of natural gas lie below the mid and southern Atlantic costs.

Because it takes years to lease, explore, plan, and develop offshore projects, cancelling lease sales pushes back any energy development for a generation.

A 2013 study found that opening the Atlantic outer continental shelf to oil and natural gas exploration will create 280,000 jobs. That’s all put on hold.

Leaders in Atlantic coast states support safely developing energy. In 2015 before the House Natural Resources Committee, Governor Pat McCrory (R-N.C.) testified:

Harnessing America’s offshore energy reserves in an expeditious, environmentally safe and responsible manner will lead to greater independence and economic prosperity for North Carolina and the entire nation.

Polls show that those living in Atlantic coast states support energy development because of the jobs and economic growth that would be created. Among registered voters, Harris Poll found 65% support for offshore development in Virginia, 64% in North Carolina, and 67% in South Carolina.

Now, the president’s defenders may note that the Interior Department kept Alaska offshore Arctic drilling under consideration. However, they won’t point out how through excessive regulation, Interior has made it nearly impossible to explore and develop energy there. In addition, Interior could yank those planned leases just like it did off the Atlantic coast.

One thing is for sure, President Obama has decided that improving access to American energy isn’t in the cards for the rest of this presidency. The decision made today will have ramifications for 10-15 years to come, not just until Jan 20, 2017.

MORE ARTICLES ON: ENERGY

EDITORS NOTE:The featured image is of tug boats move a oil platform to the Gulf of Mexico. Photo credit: Eddie Seal/Bloomberg.

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Let’s See the University of Cincinnati’s Hydraulic Fracturing Research

KEY TAKEAWAY: 

Recently, I wrote about hydraulic fracturing opponents being put in the uncomfortable position of funding a University of Cincinnati research project that found fracturing didn’t contaminate groundwater in Ohio’s Utica Shale.

New information has surfaced on how its research was funded. Based on this, the university is obligated to do more to publicize the study’s findings.

For those getting up to speed on the story, Energy In Depth posted a short clip [full video] from the University of Cincinnati’s Dr. Amy Townsend-Small’s presentation to local Ohio hydraulic fracturing opponents along with some key findings about hydraulic fracturing’s safety:

  • “All the samples fell within the clean water range and they did not find any changes over time either in any of our homes during the time series of fracking.”
  • “We never saw a significant increase in methane concentration after fracking well was drilled.”
  • Samples that were collected that were high in methane “clearly did not have a natural gas source.”
  • “Some of our highest observed methane concentrations were not near a fracking well at all.”
  • “There was no significant change in methane concentration over time, even as more and more natural gas wells were drilled in the area.”

Unfortunately Townsend-Small said her team’s research won’t be publicized further because the study’s funders stopped supporting them because of they didn’t like the findings.

“I’m really sad to say this but some of our funders, the groups that had given us funding in the past, were a little disappointed in our results,” Townsend-Small told the audience. “They feel that fracking is scary and so they were hoping our data could point to a reason to ban it.”

No press releases, no research papers, and no data released for the public or other researchers to dig deeper.

That’s not just disappointing; it looks to be in violation of the grant the University of Cincinnati used to fund its research.

The premise of the research project was to see what effects hydraulic fracturing has on drinking water by testing wells before, during, and after fracturing took place.

Here’s how the Ohio Environmental Council (no fans of hydraulic fracturing) described the project that earned one of its Environmental Achievement Awards in 2014:

This innovative research study is examining the potential effects of hydraulic fracturing, or fracking, on groundwater in Ohio’s Utica shale. Led by UC geologist Amy Townsend Small, this first-of-a-kind project is testing for the presence of methane (the primary component of natural gas) and its origins in groundwater and drinking water wells before, during, and after the onset of fracking.

Water samples were tested using a stable isotope ratio mass spectrometer to determine the source of methane found in the water. As Inside Climate News explained in a 2014 story:

Each sample is tested for methane, the main component of natural gas. Townsend-Small’s lab uses isotopic analysis to “fingerprint” the methane to determine if it’s “biogenic methane” (produced by microbes, and unrelated to natural gas drilling) or “fossil fuel methane” (methane found in oil, gas and coal deposits).

The University of Cincinnati purchased the mass spectrometer to do the testing in 2012 with a$400,000 grant from the National Science Foundation—i.e. taxpayers’ dollars. Townsend-Small’s team was one group of UoC researchers using the device.

The NSF grant’s mandate states unequivocally that findings gleaned from using the instrument be made publically available:

Results from research projects using this instrumentation will be disseminated through student and faculty presentations at national and international scientific meetings, publications in peer-reviewed journals, and online data repositories.

The University of Cincinnati should hold up its end and add to the public’s knowledge of hydraulic fracturing’s safety. With so much misinformation being pushed by hydraulic fracturing opponents, a short presentation in front of a few people in southeast of Canton, Ohio doesn’t cut it.

EDITORS NOTE: The featured image is of a drilling rig sits on a natural gas pad in Pennsylvania. Photo credit: Andrew Harrer/Bloomberg.

America's Energy Opportunity

Super PAC Helping Elect Republicans Supporting a Conservative Clean Energy Agenda

CHARLOTTE, N.C. /PRNewswire-USNewswire/ — Conservative philanthropist Jay Faison today announced the formation of ClearPath Action, a new independent expenditure-only political action committee being established to help elect Republicans to public office and advance a conservative clean energy policy agenda for GOP lawmakers.  Faison is also the CEO and founder of ClearPath, a private non-profit foundation dedicated to accelerating conservative clean energy policy solutions.

“No one is currently providing enough support to candidates who embrace conservative clean energy principles and feel compelled to talk about clean energy as part of their campaign,” said Faison in announcing the effort.  “We’re forming this committee to make an impact, provide support, and help Republicans this election cycle and in future election cycles.”

“We know that Democrats are using clean energy as a wedge issue and we’re committed to fighting back and going on offense for the GOP,” added Faison.  “We don’t have to agree on climate change to agree that Republicans can support a conservative clean energy platform that provides energy security, creates jobs and boosts our economy, and reduces pollution.”

clearpat actionABOUT CLEARPATH ACTION

ClearPath Action is building a sophisticated campaign infrastructure with plans to help support multiple Republican candidates throughout the country in 2016.

For more information on ClearPath Action, visit www.ClearPathAction.org.

i love fossil fuels tshirt

Why I Wear the I Love Fossil Fuels T-Shirt

For years I have gotten the question: Where can I get one of those shirts? And for years I have had inadequate solutions that involved a) you paying $25-30 a shirt or b) CIP spending a lot of time becoming a mediocre t-shirt fulfillment company.

Now, thanks to the geniuses at Teespring, I am thrilled that you can get between 1 and a million I Love Fossil Fuels t-shirts for $10 each.

This year is the pivotal year for the future of energy in the world. No exaggeration. The results of the US elections and the energy policies adopted by the next President and Congress can either a) commit us to the catastrophic, energy deprivation policies the current administration agreed to in Paris last year or b) liberate the energy industry and capitalize on America’s amazing energy opportunities to create energy abundance around the world.

Wearing the I Love Fossil Fuels t-shirt is the perfect way to show where you stand in the energy battle of 2016.

Alex

P.S. Please, please, please also sign and spread the America’s Energy Opportunity ultimatum to our politicians.

The Latest From CIP

“Must Watch” Video Interviews

Alex’s interviews on TheSurge.com’s “Jolted” series (some of his best yet!)

obama-evil

Obama Seeks To Harm America, Again

History proves that President Obama’s plan to slap a ten-dollar tax on every barrel of oil imported into America or developed here to use the money for transformation is both is both fool-hearty and wasteful.  Once again, one of the big chiefs of overbearing nanny goat government is threatening to use unconstitutional bullying to dictate the activities of “We the People.”  This time seeking to increase the tax burden upon business activity and consumption.  The president stated, “I will take advantage of low gas prices to accelerate a transition to a clean energy economy.”  “We’re going to impose a tax on a barrel of oil imported, exported, so that some of the revenue can be used for the investments in basic research and technology that’s going to be needed for the energy sources of the future.”

Oil industry officials, who are always accused by progressive government types like Obama and their cohorts in the dragon media of being greedy, stated that Obama’s proposed $10.00 per barrel tax on crude oil would harm consumers.  “The Obama administration believes that we the American people are not paying enough for gasoline.”  That is why he wants to dictate a higher price for us to pay more for gasoline.  The proposed tax could increase the cost of gasoline by at least 25 cents per gallon.  That development could harm consumers who have ale=ready been hurt by the president’s efforts to “fundamentally change America.”

In addition, more American jobs could be wiped out.  Also our republic’s emergence as a global energy leader could be brought to a halt, according to the American Petroleum Institute.  Actually, that is a goal of the Alinsky inspired Obama administration.

Now that I think about it, no one is more to blame than the bloated federal government for any problems our republic is facing in regards to energy production or transportation.  If you research the mid nineteenth until the early twentieth century, the private sector was providing a vastly superior system of transportation over what has emerged as government transit systems throughout America.  For example, Both Cleveland and Detroit had rail transportation throughout both cities and surrounding areas.

All major thoroughfares and many minor streets had streetcar or rail transport that ran often and almost always on time, baring any natural disaster.  The service was provided by mostly private companies who competed for customers.  The various transportation systems did not overlap and even the quality and cleanliness of the streetcars, or trolleys were well maintained.

In Detroit, among the private companies providing transportation service were the Fort Street and Elmwood Avenue Railway Company, Detroit Railway Company and several others.  Streetcar or rail service for public transport began during the 1860s in both Cleveland and Detroit as horse drawn trolleys.  By 1895 all were converted to electric power.

The nature of government is to progressively either take over or dismantle and then dominate private entities.  That was the case in both Cleveland and Detroit.  In Detroit, during the early 20th century, the transit companies raised their adult ridership price by one nickel to a “whopping” ten cents.  Soon after, the populist city government bullies who desired to take over the transit business publically railed against the nickel increase and duped Detroit voters into approving the city government takeover of transportation services.  City misleaders had convinced city dwellers that they could provide better transportation services at a lower price by using tax dollars to subsidize the trolley services.  That false scenario was played out in other cities as well including New York City.

In fact, the original private based companies that oversaw the building of the earlier subway tunnels in the Big Apple constructed them at a much quicker pace than the tax payer funded union trolls who built subway tunnels in the following decades.

What does the story about past government takeovers of private transportation services have to do with Obama’s call for increasing crude oil taxes today?  It is simple, if government had not gotten involved and taken over viable private run transportation companies, I believe that cities like Detroit would have maintained great transportation systems it their customers desired to continue utilizing transportation systems.

The problem is big government getting involved, thus killing innovation and in most cases quality of service.  How much further ahead regarding energy independence would America be, if only the United States had not been prevented from increasing oil and gas exploration and production by the Obama administration?  Before the curse and onslaught of the Obamacare being thrust upon our republic “We the People” were blessed with the best medical care on earth, but now it is in steady decline.

If Obama wants improved transportation options for America, the government tax regulations and tax burdens must be lessened and certain taxes such as on production should be eliminated as soon as possible, which should be now.  As a result there would come about increased economic activity would fuel incentives for needed changes that the American people desire, not wasteful unwanted government mandates that only bring about destructive and unnecessary declines in the quality of life and related hardships.

RELATED ARTICLE: Supreme Court Halts Obama’s Aggressive Climate Agenda

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President Obama Wants You to Pay More for Oil

Apparently oil prices are too low, so President Barack Obama thinks it’s a good idea to slap on a $10 per barrel oil tax. Politico reports:

Obama aides told POLITICO that when he releases his final budget request next week, the president will propose more than $300 billion worth of investments over the next decade in mass transit, high-speed rail, self-driving cars, and other transportation approaches designed to reduce carbon emissions and congestion. To pay for it all, Obama will call for a $10 “fee” on every barrel of oil, a surcharge that would be paid by oil companies but would presumably be passed along to consumers.

Based on current prices, this would be a roughly 30% tax on a barrel of oil.

It’s disturbing that the president’s reaction to an industry slashing jobs and cutting investments in a tough business environment is to place a massive tax on the product they produce.

It’s also troubling to see that President Obama thinks of the tax as a quid pro quo for ending the oil export ban. (Something he opposed.)

“You’re allowed to export, but we’re also saying is that we’re going to impose a tax on a barrel of oil,”President Obama said at a press conference.

Thankfully this tax is already “dead on arrival” in Congress, said House Speaker Paul Ryan (R-Wis.).

President Obama knows this, but doesn’t care. As Politico notes, “It’s mostly an effort to jump-start a conversation.” And it falls squarely with his mission to end fossil fuel use in the United States.

“It’s really about taxing the energy they don’t like to make President Obama’s favored energy sources,” said Institute for Energy Research President Thomas Pyle.

The president acknowledged this. When questioned by reporters, President Obama said if imposed, the tax “will have further weaned our economy off dirty fuels.”

But his sweeping plan runs straight up against reality. Americans will be using oil and other fossil fuels for decades to come. Until economically viable alternatives are developed that offer the same benefits (convenience, reliability, energy density), fossil fuels will be needed to keep America’s economy moving.

There’s no question we need more revenue to fix America’s broken roads and bridges, but the oil tax covers over the real intention behind the proposal: The radical transformation of America’s energy economy.

MORE ARTICLES ON: ENERGY

EDITORS NOTE: The featured image of President Obama is by photographer: Andrew Harrer/Bloomberg.

ethanol mandate

The Ethanol Mandate Is Literally Impossible by Alan Reynolds

In recent years, politicians set impossibly high mandates for the amounts of ethanol motorists must buy in 2022, while also setting impossibly high standards for the fuel economy of cars sold in 2025. To accomplish these conflicting goals, motorists are now given tax credits to drive heavily-subsidized electric cars, even as they will supposedly be required to buy more and more ethanol-laced fuel each year.

Why have such blatantly contradictory laws received so little criticism, if not outrage? Probably because ethanol mandates and electric car subsidies are lucrative sources of federal grants, loans, subsidies and tax credits for “alternative fuels” and electric cars. Those on the receiving end lobby hard to keep the gravy train rolling while those paying the bills lack the same motivation to become informed, or to organize and lobby.

With farmers, ethanol producers and oil companies all sharing the bounty, using subsidies and mandates to pour ever-increasing amounts of ethanol into motorists’ gas tanks has been a win-win deal for politicians and the interest groups that support them and a lose-lose deal for consumers and taxpayers.

The political advantage of advocating contradictory future mandates is that the goals usually prove ridiculous only after their promoters are out of office. This is a bipartisan affliction.

In his 2007 State of the Union Address, for example, President Bush called for mandating 35 billion gallons of biofuels by 2017, an incredible target equal to one-fourth of all gasoline consumed in the United States in 2006. Not to be outdone, “President Obama said during the presidential campaign that he favored a 60 billion gallon-a-year target.”

The Energy Independence and Security Act of 2007 (EISA) did not go quite as far as Bush or Obama, at least in the short run. It required 15 billion gallons of corn-based ethanol by 2015 (about 2 billion more than were actually sold), but 36 billion gallons of all biofuels by 2022 (which would be more than double last year’s sales). The 2007 energy law also raised corporate average fuel economy (CAFE) standards for new cars to 35 miles per gallon by 2030, which President Obama in 2012 ostensibly raised to 54.5 mpg by 2025 (a comically precise guess, since requirements are based on the size of vehicles we buy).

The 36 billion biofuel mandate for 2022 is the mandate Iowa Governor Terry Branstad (and Donald Trump) now vigorously defend against the rather gutsy opposition of Sen. Ted Cruz. But it is impossible to defend the impossible: Ethanol consumption can’t possibly double as fuel consumption falls.

From 2004 to 2013, cars and light trucks consumed 11% less fuel. The Energy Information Agency likewise predicts that fuel consumption of light vehicles will fall by another 10.1% from 2015 to 2022.  So long as ethanol is no more than 10% of a gallon (much higher than Canada or Europe), ethanol use must fall as we use less gasoline rather than rise, as the mandates require. If we ever buy many electric cars or switch from corn to cellulosic sources of ethanol, as other impossible mandates pretend, then corn-based ethanol must fall even faster.

If raising ethanol’s mandated share above 10% is any politician’s secret plan, nobody dares admit it. Most pre-2007 cars can’t handle more than 10 percent ethanol without damage, and drivers of older cars often lack the income or wealth to buy a new one. Since ethanol is a third less efficient than gasoline, adding more ethanol would also make it even more impossible for car companies to comply with Obama’s wildly-ambitious fuel economy standards (which must also reduce ethanol use, if they work).

The 2007 law also mandated an astonishing 16 billion gallons of nonexistent “cellulosic” ethanol by 2022 from corn husks or whatever. We were already supposed to be using a billion gallons of this marvelous snake oil by 2013. Despite lavish taxpayer subsidies, however, production of cellulosic biofuel was only about 7.8 million barrels a month by April, 2015 (about 94 million a year). The Environmental Protection Agency (EPA) mandate in June 10, 2015 was 230 million billion in 2016, which is more fantasy.

It doesn’t help that the Spanish firm Abenoga – which received $229 million from U.S. taxpayers to produce just 1.7 million gallons of ethanol – is trying to sell its plant in Kansas to avoid the bankruptcy fate of cellulosic producer KiOR. It also doesn’t help that a $500,000 federally-funded study paid finds biofuels made with corn residue release 7% more greenhouse gases than gasoline.

The contradictory, fantastic and often scandalous history of ethanol mandates illustrates the increasing absurdity of mandates from Congress and the EPA.

The 2007 biofuel mandate was not just bad policy. It was and remains an impossible, bizarre policy.

This post first appeared at Cato.org.

Alan ReynoldsAlan Reynolds

Alan Reynolds is one of the original supply-side economists. He is Senior Fellow at the Cato Institute and was formerly Director of Economic Research at the Hudson Institute.

Greece, Cyprus and Israel

Greece, Cyprus and Israel to build Eastern Mediterranean Gas Pipeline

Auspicious meetings were held in Nicosia, Cyprus with members of the emerging Trilateral Eastern Mediterranean Gas Pipeline alliance: Israeli Prime Minister Benjamin Netanyahu, Cyprus President Nicos Anastasiades and Greek Prime Minister Alexis Tsipras.

Watch this Jerusalem Post news video of the historic triple alliance meeting in Nicosia:

leaders on mediteranian pipeline

Israeli Prime Minister Benjamin Netanyahu, left, Cyprus President Nicos Anastasiades and Greek Prime Minister Alexis Tsipras at Nicosia trilateral meeting, January 27, 2016.

The Jerusalem Post reported the triple alliance leaders announcing plans to set up the long delayed Eastern Mediterranean gas pipeline:

NICOSIA – Israel, Cyprus and Greece decided at their first ever tripartite meeting to set up a steering committee to look into laying a gas pipeline from Israel to Cyprus, and then to Greece for further export to Europe.

The decision was announced by Prime Minister Benjamin Netanyahu, standing next to Cyprus President Nikos Anastasiades and Greek Prime Minister Alexis Tsipras.

Each leader delivered a statement noting the historic nature of the meeting, and highlighting the possibilities this emerging alliance has for the region. They did not answer any questions from the press.

While both Anastasiades and Tsipras stressed, without mentioning Turkey by name, that this cooperation was not “against anyone else,” Netanyahu did not make a reference at all to Turkey, either directly or indirectly.

National Infrastructure, Water and Energy Minister Yuval Steinitz, who was part of the Israeli delegation, told reporters on the plane en route to Nicosia that Israel wanted to have the ability to export the gas both through Greece and Turkey. Laying the pipeline to Turkey is considerably cheaper than through Cyprus and Greece.

Anastasiades, as host of the summit, spoke first, and said this cooperation was based on an appreciation that “it is imperative to work collectively through coordination.” He said that the three leaders signed a joint declaration, which he termed a “historic document” that deals with cooperation in the energy, tourism, research, water-management, anti-terrorism and immigration spheres. He said that a trilateral steering committee will monitor the agreement.

Netanyahu, who said that as the son of a historian he was averse to using the term “historic,” said that the term did however fit the meeting. “I believe this meeting has historic implications,” he said. “The Last time Greeks, Cypriots and Jews sat around a table and talked about a common framework was 2,000 years ago.”

In addition to the gas pipeline, Netanyahu also spoke of a plan to lay an underwater cable to connect the electric grids of all three countries. “You can export gas through electricity,” he said.

Tsipras said that cooperation with Israel and Cyprus was a “strategic choice” for Athens.

EasternMedPipeline(1)In a January 2015, New English Review article, “Could Israel Lose the Energy Prize in the Eastern Mediterranean,” we noted this about the prospects for the Triple Alliance Eastern Mediterranean Pipeline.

“On December 9, 2014, Israel, Cyprus and Greece pitched the Eastern Mediterranean pipeline a day before a conference organized jointly byNatural Gas Europe, the Greek Energy Forum, ESCP Europe, RCEM and the European Economic and Social Committee (EESC). The conference was titled “2030 EU Energy Security, the Role of the Eastern Mediterranean Region” and took place at EESC headquarters in Brussels. Natural Gas Europe in an article on the EESC conference noted the comments of Greek Energy Minister, Ioannis Maniatis:

Europe will need an extra 100 bcm of natural gas in the next 15 years, and in light of Europe’s increasing dependence on imports to fulfill its energy needs, the EU must find a sustainable model to ensure it is a competitive economy.

The EU needs to reduce external dependence, increase efficiency, diversify its sources and routes of supply, and improve interconnectors, he added. Fully connected energy grids, greater transparency, good governance and a thorough understanding of global events should also be the focus of the EU according to Maniatis. He explained that Greece’s importance is growing. The East Med pipeline pitched by Israel, Cyprus and Greece would run from Israel and Cyprus via Greece to Italy and then to the rest of Europe is technically feasible and attached to attractive prospects said Maniatis. He told the audience that the results of a feasibility study on the East Med pipeline will be released next year and that the pipeline would serve as a new source and provider of natural gas comparable to the Southern Corridor. The attractiveness of the East Med Pipeline, said Maniatis, is that unlike the Southern Corridor, it would pass exclusively through four member states and hence deserves strong EU backing for its materialization.

The Eastern Mediterranean Pipeline had received the endorsement of the EC as a priority project for underwriting in November 2013. According to The Guardian that could provide the Eastern Mediterranean pipeline project “access to a €5.85bn fund, and preferential treatment from multilateral banks.”

Natural Gas Europe reported at the time the options under consideration:

The basic plan will see the pipeline stretch from the Leviathan field offshore Israel on to Cyprus ending in eastern part of the Island of Crete in Greece. Three alternate routes were discussed:

  • To the Peloponnesus Peninsula joint via spur with the Trans-Adriatic Pipeline (TAP)
  • From Crete to northern Greece where it would join the Interconnector Greece-Bulgaria (IGB)
  • From Crete to the Revythousa LNG terminal close to Athens. The terminal would be significantly upgraded to accommodate large amounts of gas exports thereafter.

The technically difficult 1,880 kilometer long submarine pipeline project, reaching depths of more than 2,000 meters, would connect Leviathan and Aphrodite gas fields ultimately to Italy. Cost for the project was estimated at over $20 Billion and would likely not be concluded at the earliest until 2020, assuming that production of the Leviathan field in the Israeli EEZ begins in 2017. With the demise of both the Turkish Leviathan-Ceyhan pipeline and the Australian Woodside Pty. Ashdod LNG –Eilat pipeline for delivery of gas to the Asian markets, the Eastern Mediterranean pipeline project may have serious consideration. There is the alternative of the onshore LNG facility at Vassilikos on Cyprus’ south shore to be built by the Consortium at an estimated cost of $10 billion. A Memorandum of Understanding for planning the Vassilikos LNG complex was signed by Cyprus and the Consortium in June 2013. In the interim, offshore floating LNG processing platforms that might be leased to ship processed gas via pressured LNG vessels to receiving terminals in Greece and Italy. However, Noble Energy was not initially supportive of the Eastern Mediterranean pipeline option, instead concentrating on sales from Leviathan to regional users like Jordan and Egypt and building the proposed Cypriot LNG processing facility.”

Israel has overcome the ruling of its former Anti Trust Authority general director, approving an offshore gas development plan with US Partner Noble Energy, inc. and Israeli partner Delek Group involving the Leviathan, Tamar and adjacent Aphrodite gas fields in the Cyprus Exclusive Economic Zone. With yesterday’s announcement in Nicosia by the Triple Alliance of Israel, Cyprus and Greece, a way can now be seen to go forward with the Eastern Mediterranean Gas Pipeline and the LNG facility in Cyprus.  At the time we wrote the January 2015 NER article, Russian President Putin and Turkish President Erdogan had announced a $12 billion Turkey Stream pipeline deal to supply Europe with natural gas. Given the break off in relations between Russia and Turkey over the latter’s downing of a Russian Su-24 bomber, Putin has suspended the project.  That sent Erdogan scrambling to re-open diplomatic relations with Jerusalem seeking supplies of Israeli gas.  The dour circumstances propounded in our January 2015 article appear to be lifted by the geo-resource and political wars in the Syrian and ISIS conflicts.  That is enhanced by the settlement of Israel’s plan for development and distribution of its offshore gas and oil fields.

RELATED ARTICLE: 10 Reasons Israel Is Not An ‘Apartheid’ State

EDITORS NOTE: This column originally appeared in the New English Review.

offshore-opportunity-1320x763

How We Can Get the Candidates Talking About America’s Energy Opportunity

America has a once-in-a-generation opportunity to combine American innovation, American resources, and American freedom to create American energy abundance and become the world’s energy superpower, overtaking Russia and the Middle East.

In 20 seconds, you can tell our politicians, including the candidates that are completely ignoring this issue in the debates–this time to discuss Trump’s feud with Megyn Kelly–that you will only vote for candidates who will seize America’s Energy Opportunity.

Please do so at AmericasEnergyOpportunity.com.

For Energy Industry Employees

America’s Energy Opportunity affects all of us, but you most directly, along with the millions of people who work directly and indirectly with your industry.

Therefore, please tell your colleagues about this campaign. Here is a letter you can send.

Dear ______,

I would like to ask you to take three minutes to stand up for this industry in the upcoming elections.

As you know, last year was a difficult year for our industry, with many bankruptcies and massive job losses.

Unfortunately, Washington is considering many proposals to make it even harder for our industry to produce, move, and sell our product–proposals to tax hydrocarbons, stop hydraulic fracturing projects, and limit exports to our customers. That will mean more job losses, bankruptcies, and damage to our economy. And so far our industry has had no voice in the 2016 debates.

But a movement called America’s Energy Opportunity is fighting back.

At AmericasEnergyOpportunity.com there is a petition to our politicians to leave our industry free to create amazing prosperity for this country. If millions of people sign this petition we will prove to the candidates that we cannot be ignored this election.

Please take 3 minutes to read the petition and sign it–for the sake of your jobs, your families, and this country’s future.

Sincerely,

________

8 Speeches in 2 Days

Last week, I gave 10 speeches–including 8 speeches in 2 days. The 8 were all at one company. Those of you who signed up for this list, welcome.

Lately in my speeches I have been emphasizing, even more than I used to, that clear thinking and communication about energy issues requires the right starting framework. If in our thinking and communication we start with a framework based on human well-being and big-picture thinking, we come to the right conclusions and can explain them convincingly. If we don’t, our thinking is a mess and/or our communication is a mess.

For more on framing conversations the right way, see How to Talk to Anyone About Energy.

Thanks to everyone who came to my presentations last week, and the organizations in Mississippi who sponsored them. I met a lot of bright, motivated people whom I expect to become great energy champions.

New Blog Post by David Biederman: Fossil Fuels Make the Planet More Productive

From the latest blog entry:

“The fact is that when it comes to satisfying humanity’s basic needs, almost nothing is given, as almost everything must be created and produced. The arrangements of elements that make up the planet are not organized by natural processes to optimally support human life. Instead, work is required to transform the planet from an environment of scarcity to one rich with food, clothing, and shelter. The ability to do this work is made possible primarily by the fossil fuel industries?coal, oil and natural gas.”

Keep reading.

This Week’s Power Hour: Amanda Maxham on the Virtues of GMOs

On this week’s episode of Power Hour I talk with Dr. Amanda Maxham, Research Associate at the Ayn Rand Institute, about the incredible advances in genetic modification–and why our society is responding to them with fear and coercion rather than enthusiasm and freedom.

Listen to this episode.

Power Hour: Michael Lynch on Recent Oil Prices

On this episode of Power Hour, I talk to Mike Lynch, President of Strategic Energy & Economic Research, about the recent decline in oil prices.

Tune in.

As always, if you’d like to suggest a new guest for Power Hour, or have me appear on your show, you can send me an email at support@industrialprogress.net, or just reply to this one.