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A Fading Shade of Green

It is ironic that the greenest president presides over the demise of the green industries while a new oil boom is making us more energy independent in spite of policies intended to stunt the growth and development of fossil fuels.  The jobs boom is not coming from the development of green energy, but it is coming from the ‘dying’ oil sector.  More and more countries are withdrawing from the Kyoto Accords and and more and more scientists have become skeptical of the absolutism of politically influenced science used to promote extravagant solutions to climate problems that may not exist, or at least may be beyond the cause or the control of human action..

Victor Davis Hanson writes in The National Review Online Obama 101, 11/30/11.


“Green” will never be quite the same after Obama. When Solyndra and its affiliated scandals are at last fully brought into the light of day, we will see the logical reification of Climategate I & II, Al Gore’s hucksterism, and Van Jones’s lunacy. How ironic that the more Obama tried to stop drilling in the West, offshore, and in Alaska, as well as stopping the Canadian pipeline, the more the American private sector kept finding oil and gas despite rather than because of the U.S. government. How further ironic that the one area that Obama felt was unnecessary for, or indeed antithetical to, America’s economic recovery — vast new gas and oil finds — will soon turn out to be America’s greatest boon in the last 20 years. While Obama and Energy Secretary Chu still insist on subsidizing money-losing wind and solar concerns, we are in the midst of a revolution that, within 20 years, will reduce or even end the trade deficit, help pay off the national debt, create millions of new jobs, and turn the Western Hemisphere into the new Persian Gulf. The American petroleum revolution can be delayed by Obama, but it cannot be stopped.

HKO comment:

With all of the enormous political power at his disposal, the president is unable to fight true market forces.  The crony capitalists who see enormous campaign donations as the same kind of investment as capital equipment and technology are able to suck large sums from the public trough until the market reality that their product cannot survive in a true market becomes obvious.  It is one thing for an objective investor to place his fortune at risk to develop new technology; it is quite another for a public official to place taxpayer money at risk while making endless efforts to hobble competitive energy options.  Markets move at a much faster rate than government.  This is the reason that such government solutions are always fighting the last war and ignorant of the developments that refute their best and most corrupt efforts.

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Clunker Math

A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline. A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.

So, the average clunker transaction will reduce US gasoline consumption by 320 gallons per year.
They claim 700,000 vehicles – so that’s 224 million gallons / year.
That equates to a bit over 5 million barrels of oil.5 million barrels of oil is about ¼ of one day’s US consumption.
And, 5 million barrels of oil costs about $350 million dollars at $75/bbl.
So, we all contributed to spending $3 billion to save $350 million.
How good a deal was that ???

Tips to Joe McKinney

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Build Strategic Reserves- NOW !

Investment personality Jim Cramer has proposed a great and simple idea- take advantage of the cheap price of oil to build the strategic reserve to huge levels. Build more storage facilities and tankers etc. A huge strategic reserve will keep a lid on future speculators and suppliers who would use oil as a strategic weapon against us.

You can not develop new sources at the current market price. Such an idea could be a part of infrastructure development. It could even be a source of future revenue.

During the oil crisis Pelosi and Obama advocated selling off the strategic reserve. It was a bad idea to expose ourselves to greater risk at that time, even though we would have sold at a peak. But it would be a great idea to now build our reserves.

The markets have dealt our nation an opportunity we should not miss.

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Strategic Protectionism

High oil prices brought the reality that our purchases were funding hostile regimes. We sought to be independent of imported energy for the purposes of national security.

The price of oil has fallen dramatically and now we are faced with a dilemma; do we still pursue energy independence or do we slowly revert to our old gas guzzling past. The new lower prices have already caused T Boone Pickens to abandon his plan to harness the wind and natural gas.

It appears that some government involvement is needed to get alternative energy off the ground; the difficulty is in creating a gentle stimulation without creating expensive and long lasting market distortions.

Some of my suggestions:

1. Require all new cars sold in the United States to be flex fuel compatible. This creates a market for alternative fuels such as alcohol blends and liquid natural gas. Create tax credits for fuel distributors to install alternative fuel pumps.
2. Tax imported oil to encourage domestic production. Restrict the export of locally produced oil. Remove barriers to imported alternative fuels such as alcohol especially from developing countries. Developing countries can use the relatively simple development of alcohol to pull themselves out of poverty and reduce the need for foreign aid.
3. Add a gas guzzler tax to low mileage vehicles. Create a tax credit to convert commercial vehicles to natural gas.
4. Encourage more nuclear power plants.
5. Avoid heavy government involvement in selecting and developing the future alternative industries. This action is fraught with favoritism and bureaucratic bungling. It would be best to carefully and gently to stimulate the market demand and then let the market find the best solutions.

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The Other Side of Doom and Gloom

In June with oil pushing $150 a barrel forecasters predicted higher prices yet to come. Yet with oil now below $50 a barrel and dropping, Merrill Lynch forecasts $25 oil.

The media and the forecasters always seems to ride a trend to an extreme. One would be wise to ignore them. They rarely catch the changes that matter.

How will the new low oil prices effect policy for the new president? How will he push the alternative fuel agenda when the economic incentive has dissipated? How will this change their policy toward the evil oil companies?

The drop in the economy will reduce the carbon footprint of our nation. Is that to be cheered? It will reduce the causes of global warming. Will we celebrate?

We lamented the poor consumer who had to give up food and medicine to buy gas. Will we relax now that he has more money in his pocket? If high fuel prices once choked our economy shouldn’t the dropping prices be a stimulus?

Where is the other side of the doom and gloom stories from the news magazines now that the crisis in fuel prices has reversed?