When President Obama
suggested last week that we might eventually be replacing oil
with algae, Mark Whittington of Yahoo suggested that the President
had reached his “lunar base moment.” It was an apt analogy. Just as
Newt Gingrich’s musings about a moon colony finally made the public
cock its head a little when listening to him, so the moment may
have arrived when the environmentalism fantasies that inhabit the
President’s brain will finally be exposed to the light of day.
As things stand now, $5 gas may shift the entire focus of
the election onto energy and what the Administration’s
faculty-lounge policies have been doing to America’s industrial
base. To the public, “clean, green energy” will no longer be a
dreamy vision of windmills and solar collectors but the hard
reality of spending $100 to fill your tank. There’s one more thing
as well. This will be the first issue in four years where President
Obama won’t be able to cast reflexive blame on George
Bush.
The President began his term with an Inaugural Address
promise that “We will harness the sun and the winds and the soil to
fuel our cars and run our factories.” He has kept that promise.
Using the crowbar of the $1 trillion “stimulus,” the Administration
has shoehorned much of the country’s energy investment into a
Rube-Goldberg sector of the economy made up of the half-baked
projects of armchair entrepreneurs plus the off-the-charts dreams
of those wanting see the entire planet transformed into an
environmental utopia.
Prompted by various federal and state government tax
incentives plus market-obliterating “renewable mandates,” hundreds
of square miles of mountain and prairie have been covered with
45-story windmills that look like the archaeological remnants of a
previous race of 80-foot giants. These “wind farms” generally
produce electricity that is essentially useless. When the wind
blows, windmills can force other forms of generation out of the
market because they are free of fuel costs. But those other forms
of generation have to be kept running just in case the wind dies
down. Last year when temperatures rose to 110 degrees in Texas,
that state’s 7 percent “wind capacity” proved absolutely useless in
the heat-induced doldrums.
And wind “farms,” it should be noted, always talk in terms
of “capacity” rather than output. That’s because they only operate
about 30 percent of the time. Nobody has yet invented a way to
store commercial quantities of electricity and it may be impossible
without building facilities of equally gargantuan dimensions — say
an entire city block of rechargeable batteries. Without any means
of storage, wind power is essentially a nuisance.
Then there is solar electricity, which, in order to
access, California is now planning to cover dozens of square miles
of pristine desert (yes, there is already environmental opposition)
in order to prove the world can run on sunshine. Solar energy is a
bit more concentrated than wind so that it only takes about five
square miles of highly polished collectors to produce 100 megawatts
— when the sun shines. In the desert environment, these solar
panels will require constant cleaning and polishing to keep them
from getting covered with dust and therefore becoming
dysfunctional. It’s a labor-intensive task that will require lots
of water coming from who-knows-where.
And how about the electric car? Caught in the headlock of
a government bailout, GM was forced to push its Volt out the door
— where it has sat on dealer lots ever since. Sales are miserable,
except for the occasional government agency that drops by to place
an order. Government patronage of the electric car industry has
also produced the $104,000 Fisker Karma, made in Denmark but
shipped to our shores so that Leonardo DiCaprio and a few others
could buy first editions. Then there was the Bright, which went
bankrupt last month, and the Asperta, which failed before
that.
Now all this wouldn’t be so bad if the Administration
hadn’t spent the other half of its time trying to put the fossil
fuel industry out of business in order to clear the path for the
Green Age. After spending a year failing to pass cap-and-trade, the
Administration has doubled down with the Environmental Protection
Agency, turning it loose on the nation’s coal plants. The Sierra
Club just celebrated the closing of the 100th coal boiler, with
more to come. Just what this will mean for the reliability of the
electric grid will be revealed this summer when electrical demand
peaks. Last August, with temperatures at 110 degrees, Texas
consumed a record 68,000 megawatts of electricity with only 76,000
MW of generating capacity on hand. Since then, the EPA has demanded
the closure of 10,000 MW of Texas coal. The state has dodged the
bullet only by going to court. Industrial states from Pennsylvania
to Wisconsin are facing the same dilemma. If the region starts
suffering power shortages this summer, will George Bush be there to
take the blame?
Not that the President hasn’t been playing both sides of
the fence. With extraordinary chutzpah, Obama has claimed credit
for the increase in oil and gas production through fracking
technology. As Newt Gingrich pointed out last week (chronicled
on this site by Peter Ferrara), the only reason fracking has
succeeded is that all the new deposits are east of the Rockies and
therefore beneath private land. In the Far West, where the federal
government still owns up to 80 percent of the territory, the pace
of exploration is slower than ever. The Institute for Energy
Research has shown that drilling on land owned by the Bureau of
Land Management is at an all-time low, only half what it was during
the Clinton Administration.
How about offshore development? For a few brief months,
the Administration actually talked about opening up new areas for
exploration. Then came the BP oil spill and since then the Gulf of
Mexico is becoming a backwater. Of 51 rig platforms stationed in
the Gulf, only 21 are under contract and 15 actually drilling, a
utilization of only 41 percent. The
rate in rest of the world is 83 percent and in Europe and the
Mediterranean 96 percent so there’s plenty of demand out there.
Fourteen rigs have left the Gulf over the last two years and the
pace is accelerating. Since the Gulf provides 30 percent of our
domestic production, this is bound to have an impact.
This bureaucratic foot-dragging is recognized all over the
oil industry. “These have been the most difficult three years from
a policy standpoint that I’ve ever seen in my career,”
Bruce Vincent, president of Swift Energy, told the
annual meeting of the National Association of Petroleum Engineers
last week. “They’ve done nothing but restrict access and delay
permitting.” And that doesn’t even include the Keystone Pipeline,
where the Administration kicked away 700,000 barrels a day, 4
percent of our total consumption. And all this isn’t supposed to
have an effect on gas prices?
In truth, though, all these considerations are long-range.
What is having a more immediate impact is probably the easy money
policies of the Fed. Oil isn’t climbing so much as the dollar is
depreciating. As the Wall Street Journal notes, if
President Obama is ready to reap the reward of rising housing and
stock prices, it’s only fair that he accept rising commodity prices
as well. This is treacherous territory. Every major downturn since
the Arab Oil Boycott of 1973 has been preceded by a run-up in oil
prices. It seems to signal an inflationary bubble in the economy
that is about to pop.
So what can the Administration do between now and
November? To be frank, they haven’t a clue. President Obama is a
lawyer, not an economist or a scientist. His knowledge of energy is
drawn from the chitchat in the faculty lounge.
In any case, wherever supply and demand are concerned,
Democrats are rarely willing to concede to reality anyway. Bernie
Sanders is already yammering about “speculators” and the apologists
in the press are lamenting that “the President isn’t to blame for
gas prices.” There are even off-the-wall stories claiming that
drilling and pipelines will only make things worse. “The Canadian
plan [for building Keystone] was to use their market power to raise
prices in the United States and get more money from consumers,”
proclaimed Bloomberg breathlessly — just as every
entrepreneur plans to acquire “market power” to “get more money
from customers.” Only to end up have the market end up claiming
power over them. When defending something like the Obama
Administration’s energy policies, it’s always important to make
simple things sound complicated.
At bottom, the real problem is what Charles Murray
describes in his new book, Coming Apart —the growing gap
between college-educated people schooled in the wish fulfillment of
“green energy” and the hard-won, hard-nosed wisdom of blue-collar
America. To the elite in New York, Washington and San Francisco,
energy generation is something we’re trying to put behind us. It’s
déclassé. Only in blue-collar regions like Pennsylvania, Ohio and
North Dakota do the realities of energy become visible, tangible,
and audible — and taxable.
The good news for Republicans is that the battle lines are
drawn. After a summer of $5 gas plus power shortages in industrial
regions, the results of four years of Obama energy policies will be
hard to avoid. And there won’t be any George Bushes around to take
the blame.
