Can the rest of America afford its Alice in Wonderland energy policies for? (Can California?)
Guest essay by Paul Driessen
California loves to be seen as the trendsetter on energy and environmental policies. But can we really afford to adopt their laws and regulations in the rest of America? Heck, can the once Golden State afford them itself? The path to hell is paved with good intentions, counter-productive policies – and hypocrisy.
The official national unemployment rate is stuck at 6.7% – but with much higher rates for blacks and Hispanics and a labor p labor participation rate that remains the lowest in 35 years. Measured by gross national product, our economy is growing at an abysmal 1.5% or even 1.0% annual rate.
Meanwhile, California’s jobless rate is higher than in all but three other states: 8.1% – and with far worse rates as high as 15% for blacks, Hispanics and inland communities. First the good news, then the insanity.
Citigroup’s Energy 2020: North America report estimates that the United States, Canada and Mexico could make North America almost energy independent in six years, simply by tapping their vast recoverable oil and natural gas reserves. Doing so would help lower energy and consumer prices, insulate the three nations from volatile or blackmailing foreign suppliers, and spur job creation based on reliable, affordable energy, says the U.S. Energy Information Administration.
Driving this revolution is horizontal drilling and hydraulic fracturing. According to Citigroup, IHS Global Insights, the EIA and other analysts, “fracking” technology contributed 2.1 million jobs and $285 billion to the US economy in 2013, while adding $62 billion to local, state and federal treasuries! Compare that to mandates and subsidies required for expensive, unreliable, job-killing wind, solar and biofuel energy.
Fracking also slashed America’s oil imports from 60% of its total needs in 2005 to just 28% in 2013. It slashed our import bill by some $100 billion annually.
By 2020 the government share of this boom is expected to rise to $111 billion. By 2035, U.S. oil and natural gas operations could inject over $5 trillion in cumulative capital expenditures into the economy, while contributing $300 billion a year to GDP and generating over $2.5 trillion in cumulative additional government revenues. What incredible benefits! But there’s more.
A Yale University study calculates that the drop in natural gas prices (from $8 per thousand cubic feet of million Btu in 2008, and much more on the spot market, to $4.00 or so now) is saving businesses and families over $125 billion a year in heating, electricity, fertilizer and raw material feed stock costs.
The only thing standing in the way of a US employment boom and economic and industrial renaissance, says Citigroup, is politics: continued or even more oppressive anti-hydrocarbon policies and regulations.
Here’s the insanity. Fully 96% of this nation’s oil and gas production increase took place on state and private lands. Production fell significantly on federal lands under President Obama’s watch, with the Interior Department leasing only 2% of federal offshore lands and 6% of its onshore domain for petroleum, then slow-walking drilling permits, according to the Institute for Energy Research.
The President continues to stall on the Keystone pipeline, while threatening layers of expensive carbon dioxide and other regulations, to prevent what he insists is “dangerous manmade climate change.” His EPA just adopted California’s expensive all-pain-no-gain rules for sulfur in gasoline, and the Administration and environmentalists constantly look to the West Coast for policy guidance.
Governor Jerry Brown says 30 million vehicles in California translate into “a lot of oil” and “the time for no more oil drilling” will be when its residents “can get around without using any gasoline.” However, that rational message has not reached the state’s legislators, environmental activists or urban elites.
California’s ruling classes strongly oppose drilling and fracking – and leading Democrats are campaigning hard to impose at least a long temporary ban, based on ludicrous claims that fracking causes groundwater contamination and even earthquakes and birth defects.
Meanwhile, California’s oil production represents just 38% of its needs – and is falling steadily, even though the state has enormous onshore and offshore natural gas deposits, accessible via conventional and hydraulic fracturing technologies. The state imports 12% of its oil from Alaska and 50% more from foreign nations, much of it from Canada, notes Sacramento area energy consultant Tom Tanton.
The record is far worse when it comes to electricity. The Do-As-I-Say state imports about 29% of its total electricity from out of state: via the Palo Verde nuclear power plant in Phoenix, coal-fired generators in the Four Corners area, and hydroelectric dams in the Southwest and Pacific Northwest, Tanton explains.
Another 50% of its electricity is generated using natural gas that is also imported from sources outside California. Instead, the Greener-Than-Thou State relies heavily on gas imported via pipelines from Canada, the Rockies and the American Southwest, to power its gas-fired turbines. Those turbines and out-of-state sources also back up its numerous unreliable bird-killing wind turbines.
It adds up to a great way to preen and strut about their environmental consciousness. They simply leach off their neighbors for 62% of their gasoline and 79% of their electricity, and let other states do the hard work and emit the CO2.
These foreign fuels power the state’s profitable and liberal Silicon Valley and entertainment industries – as well as the heavily subsidized electric and hybrid vehicles that wealthy elites so love for their pseudo-ecological benefits, $7,500 tax credits, and automatic entry into fast-moving HOV lanes.
Meanwhile, California’s poor white, black, Hispanic and other families get to pay $4.23 per gallon for regular gasoline, the second highest price in America – and 16.2 cents per kWh for residential electricity, double that in most states, and behind only New York, New England, Alaska and Hawaii.
However, the state’s eco-centric ruling classes are not yet satisfied. Having already hammered large industrial facilities with costly carbon dioxide cap-and-trade regulations, thereby driving more jobs out of the state, on January 1, 2015 they will impose cap-and-trade rules on gasoline and diesel fuels. That will instantly add at least 12 cents more per gallon, with the price escalating over the coming years.
Regulators are also ginning up tough new “low-carbon fuel standards,” requiring that California’s transportation fuels reduce their “carbon intensity” or “life-cycle” CO2 emissions by 10% below 2010 levels. This will be accomplished by forcing refiners and retailers to provide more corn-based ethanol, biodiesel and still-nonexistent cellulosic biofuel.
These fuels are much more expensive than even cap-tax-and-trade gasoline – which means the poor families that liberals care so deeply about will be forced to pay still more to drive their cars and trucks.
In fact, Charles River Associates estimates that the LCFS will raise the cost of gasoline and diesel by up to 170% (!) over the next ten years, on top of all the other price hikes.
In the meantime, China, India, Brazil, Indonesia, Germany and a hundred other countries are burning more coal, driving more cars and emitting vastly more carbon dioxide. So the alleged benefits to global atmospheric CO2 levels range from illusory and fabricated to fraudulent.
Of course, commuters who cannot afford these soaring prices can always park their cars and add a few hours to their daily treks, by taking multiple buses to work, school and other activities.
There’s more, naturally. Much more. But I’m out of space and floundering amid all the lunacy.
Can we really afford to inflict California’s insane policies on the rest of America? In fact, how long can the Left Coast afford to let its ruling classes inflict those policies on its own citizens?
Paul Driessen is senior policy analyst for the Committee For A Constructive Tomorrow (www.CFACT.org) and author of Eco-Imperialism: Green power – Black death.
E.M.Smith says:
April 27, 2014 at 8:39 pm
Once again, E.M. Smith gets it completely wrong.
I believe this makes about the third time I’ve had to call BS on Mr. Smith’s erroneous assertion that the California energy crisis was due to Gray Davis, so there is no excuse for Mr. Smith to continue making his false accusations against Mr. Davis.
In-depth investigation shows how Vice President Dick Cheney pressured federal energy regulators to conceal evidence of widespread market manipulation by energy companies during the California electricity crisis in 2001.
Where to begin to rebut this nonsense!
Mr. Driessen is apparently against anyone importing anything from anywhere…so, is it required then that every state drill and refine its own oil? Texas, and Louisiana, export refined oil products to many states that lack those. Is it OK for other states to import their gasoline, but not ok for California to import oil? Are other states wrong to let Texas and Louisiana produce the CO2 from refining?
Regarding the wind, that Mr. Driessen objects to for creating emission-free energy: in California, which is by no means the state with the most installed wind-turbine capacity, approximately 3 to 3.6 GW of energy is produced on a good day. That allows California utilities to NOT BURN the equivalent in natural gas, as those power plants are backed down a bit to keep the grid balanced. That fuel not burned helps to keep natural gas prices low. Funny thing, Driessen did not mention that.
Driessen also did not mention that California, by law, will cease importing coal-based electric power as soon as the existing purchase contracts expire. At this moment, replacement power plants that use natural gas in Combined Cycle Gas Turbine (CCGT) plants are being designed and built. Additional renewable energy sources are also being built, especially solar and wind projects.
In addition, because California has appropriate geography (plains and mountains), we are building yet another pumped storage hydroelectric project to store wind-energy produced at night, then release the power during the next day or so when it is needed the most. Not every state has the proper geography for that, but as California has it, we are using it.
As to importing oil from Alaska, yes, that oil will be refined somewhere, so why not California? Alaska certainly has a surplus of oil and a deficit in gasoline demand. Where would Driessen rather see that oil refined? China? India? For his information, ANS (Alaska North Slope oil in the industry jargon) is also imported into refineries in Washington State. Is Washington also to be castigated for doing this, or is only California wrong for doing so?
Finally, the entire concept of drilling and producing domestic oil is a recipe for disaster. I agree that a reasonable amount should be drilled and produced, but only enough to ensure a viable oil industry. As I wrote on, and give speeches on, US Energy Policy must not waste our most precious domestic resource: oil in the ground. A part of that speech is shown as:
“. . .the absolutely most important point is that we must take the long view and not be short-sighted. It is critical that the US be prepared for that day when we will desperately need our domestic oil. That day when our foreign supplies are cut off yet again, and this time we are in a prolonged world war, similar to World War II. To meet that day, we must have oil in our own lands. Every president since Truman has known this to be true, and therefore have made so much of the USA offshore off-limits to drilling. The West Coast, East Coast, and eastern Gulf of Mexico are off-limits to drilling. Much of the on-shore lands are also off-limits, including the ANWR. We know the oil is there. We don’t need that oil right now. Preserving that oil for the future is critical, and that is why Drill, Baby, Drill is Dumb, Baby, Dumb. (as an aside, this phrase drew spontaneous applause, much to my great surprise. – RES)
Next we must maintain a vital oil industry. It is critical that the US maintain the ability to drill, produce, refine, and transport oil and oil products to meet that dreaded day. We must attract and retain highly qualified and motivated personnel in the entire oil industry.
Next, we must develop 1 million barrels per day of Coal-to Liquids production using our domestic coal reserves. The Canadians have done something similar with their oil sands, even though they lost money for the first few decades. They went up the learning curve, reduced their operating costs and now are somewhat profitable. We must do the same with our coal.”
see the entire speech with presentation slides at
http://sowellslawblog.blogspot.com/2011/04/speech-on-peak-oil-and-us-energy-policy.html
Of course, commuters who cannot afford these soaring prices can always park their cars and add a few hours to their daily treks, by taking multiple buses to work, school and other activities.
=============
that is how politicians solve traffic jams. make it too expensive for everyone else to drive, so they can cruise around in their air-con stretch limo’s.
That’s not the half of it. Complying with California regulations is a huge problem for manufacturers. Everyone’s seen a Prop 65 label: “This product contains substances known to the State of California to cause cancer or reproductive harm.” Note that the state doesn’t provide any other information, it is just a scary statement with no specifics to let people make a decision. The labels don’t even say what the substance is or what part of the product it is in!
That’s just one example. There are countless regulations and regulatory agents enforcing them. Most state have fairly small pesticide control boards – California has dozens of legal staff as well as many, many other bureaucrats. Manufacturers doing business with California have an entirely new level of annoyance to deal with, which acts as a tax on businesses across the nation.
Roger Sowell –
Why do we have the Strategic Petroleum Reserve, if not to supply our military and vital industries in a crisis? Also, why shouldn’t the oil be extracted and stored securely, rather than left in locations that are difficult to access? Do you really think we should stop extracting resources in the US so we can hold off for a rainy day?
Also, coal gasification and liquefaction is awesome, and I fully support it. It’s solid, proven technology, though methanol may also be worth consideration. The only problems are that it generates a lot of coal tar waste (visit any of the numerous manufactured gas plant sites in Illinois that are now superfund sites to get an idea of the problem) and the process requires energy / heat in sizable quantities. Where is this energy coming from? Now, using high-temp steam from a nuclear reactor would allow for efficient power generation as well as fuel production, but I notice you are ignoring nuclear power in your energy plan for some reason.
@ur momisugly omegapaladin,
The SPR has oil for only a few weeks operation, roughly 10 weeks. That is hardly enough to conduct a long-term war.
Regarding nuclear power, (one) modern nuclear power plants are uneconomic to operate compared to natural gas and wind energy, (two) they produce preposterous pricing if they are the sole power source for a grid, (three) they cost far too much to construct, (four) use far more water for cooling, 4 times as much, than better alternatives, (five) nuclear fuel makes them difficult to shut down and requires very costly safeguards, (six) they are built to huge scale of 1,000 to 1,600 MWe or greater to attempt to reduce costs via economy of scale, (seven) an all-nuclear grid will lose customers to self-generation, (eight) smaller and modular nuclear plants have no benefits, (nine) large-scale plants have very long construction schedules even without lawsuits that delay construction, (ten) nuclear plants do not reach 50 or 60 years life because they require costly upgrades after 20 to 30 years that do not always perform as designed, (eleven) France has 85 percent of its electricity produced via nuclear power but it is subsidized, is still almost twice as expensive as prices in the US, and is only viable due to exporting power at night rather than throttling back the plants during low demand, (twelve) nuclear plants cannot provide cheap power on small islands, and (13) they are heavily subsidized in the US and still cannot compete. See link at
http://sowellslawblog.blogspot.com/2014/04/the-truth-about-nuclear-power-part-13.html
The short answer to the title question is “No.”
Sowell,
Do you by chance work for T. Boone Pickens or a similar supplier of natural gas? The particular combination of gas and wind was something he was very notable for.
(1) Natural gas is cheap to build, but any price increase will hurt the facilities. It’s why we saw gas turbines relegated to peaking work on the grid, while hydro, coal, and nuclear carried the base load. Until fracking took off, there were lots of idle gas turbines. Wind is cheap, but it’s got a laughable capacity factor. Wind also has a tiny energy density.
(2) Nuclear is baseload power currently. It’s designed to run continuously. No one, not even the Nuclear Energy Institute, wants to completely eliminate non-nuclear energy sources. Natural gas is actually the perfect balance to nuclear, as it can very easily be activated and deactivated as needed, reducing gas usage and keeping the cost down.
(3) Nuclear is not cheap to build, obviously. Neither were the TVA hydropower dams, but they both provide cheap and reliable power, with very high capacity factors. The cost is front-loaded, as opposed to split over the course of the plant’s life. The new small modular reactors aim to change that.
(4) There are new reactor designs that use a closed-cycle gas turbine, such as the pebble-bed modular reactor, which minimize the need for cooling water. Also, process steam in PWRs can be used for desalination of ocean water.
5) Reprocess the fuel, and you can extract useful radionuclides and reuse the fuel. The reason we have no permanent fuel solution is political, not an engineering issue. Also, nuclear fuel is replaced during regular outage shutdowns, which go on ALL the time. Decommissioning a reactor is not a problem of the fuel, which requires storage or processing, but the actual reactor vessel itself. You do know that reactors have been decommissioned in the US before, correct?
6) Why is large scale a problem?
7) See two. Unless we get some much superior gas turbine reactors, no one wants an all nuclear grid.
8) That’s a fairly bold statement. Where is your evidence?
9) Lawsuits from people such as yourself, perhaps? Do you think refineries and steel mills are built overnight?
10) I suppose gas turbine blades last forever?
11) You don’t seem to get that nuclear plants are base load power – they are designed for always-on operation. It’s a different operating mode from natural gas.
12) See 2 and 7. Why must only one power source be used on the grid?
13) Why are corporations building them, then?