Who Voted For The End To Coal?

The Obama EPA's war on coal is nearly complete. On Tuesday, the EPA issued it's first proposed rule for green house gases that will effectively prevent any new coal plant from being built, at least beyond the 20 or so in the pipeline today. This from the CS Monitor:

The Obama administration on Tuesday proposed the nation’s first-ever restrictions on greenhouse gas emissions from US power plants. If approved, the restrictions are expected to sharply curb construction of new coal-fired power plants nationwide.

The proposed restrictions, unveiled by officials at the Environmental Protection Agency, would apply only to new fossil-fuel-burning power plants – limiting them to no more than 1,000 pounds of carbon dioxide emissions per megawatt generated.

A typical coal-fired plant produces more than 1,700 pounds of carbon dioxide per megawatt. Most natural-gas fired plants – the majority of power plants under construction today – emit less than the new standard, around 800 pounds per megawatt.

The Obama EPA's other recently issued rules, the Cross State Air Pollution Rule, Boiler MACT, and Mercury and Air Toxics Standards, all attack existing coal fired power plants. Coal provides nearly 50% of our electrical generating capacity today.

We may be lucky. Obama, when he started the war on coal, sold the fantasy of replacing coal with solar and wind - yet neither are any closer to being cost effective at scale today than they were in 2009. That said, natural gas, which has exploded in recent years, may provide a replacement. Still, the overhead costs of building new LNG plants to replace working coal plants prior to the end of their natural period of operation will be significant. Then there is the question of how much the price of natural gas will rise as demand increases exponentially to replace coal. So whatever happens, electric costs are going to rise, the only questions are by how much and whether we will experience significant disruptions of electric service as part of this top down forced replacement of coal.

All of that said, the question that we should be asking is this, did any of our elected representatives vote into law a bill driving coal from our energy marketplace? No, quite the opposite, when the President's energy plan was presented two years ago, it couldn't make it out of the Senate. So why is it that something so fundamental to our nation is being decided based on regulations made without the approval of our elected representatives and in contravention of Article I, Section I of our Constitution (all legislative power is vested in Congress). This out of control, extra constitutional regulatory bureaucracy is the single greatest systemic problem our nation faces. As I wrote in a prior post, End The Tyranny - No Regulation Without Representation.

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Part II: Oil & The Hostile Domestic Regulatory Environment

Nothing could be more fundamental to our economy and our way of life than energy. Costs of transportation and energy effect every aspect of our life and the cost of virtually every good and service in the U.S.. We are on the leading edge of a crisis in energy that could severely damage our economy over the next decade. Our problem is three fold, rising world demand, stagnant world supply that is exponentially compounded by the regulatory and legal burdens to exploiting our own rescources, and the anti-capitalist mentality of the Democratic left.
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This is Part II of what is planned to be a series of four posts on our energy alternatives.

Part I - The Economics of Alternative Energy

Part III - Why Exploit Our Domestic Oil Resources

Every day 85 million barrels of oil are produced around the world. Twenty-one million of those are used here in the United States. Of that, over 70% is imported. That has grown from 20% in the 1970’s. This is both an existential issue for both economics and our national security.

What has changed from the 1970’s is a series of laws that have created two layers of limitation to directly and indirectly stopped the exploitation of our oil resources. These laws were passed when the costs of oil were nominal in comparison to today. And they were taken in response to the problems then associated with energy production. The coastal drilling moratoriums grew out of oil spills off California in the 1960’s. Beyond the moratorium’s, Carter’s populist war on oil companies set them up as the greedy demons causing high prices. Three Mile Island coming on the heels of the film The China Syndrome shut down production of new nuclear plants. Add into this toxic mix the turn towards socialism and narcissism since the 1960’s that has fostered an increasingly radical environmentalism and you end up with the situation in which we find ourselves in today.

This was the testimony of John Hofmeister before Congress several weeks ago describing the laws that directly prevent exploitation of our resources:

. . . [I]n the United States, access to our own oil and gas resources has been limited for the last 30 years, prohibiting companies such as Shell from exploring and developing resources for the benefit of the American people.

. . . According to the Department of the Interior, 62 percent of all on-shore federal lands are off limits to oil and gas developments, with restrictions applying to 92 percent of all federal lands. We have an outer continental shelf moratorium on the Atlantic Ocean, an outer continental shelf moratorium on the Pacific Ocean, an outer continental shelf moratorium on the eastern Gulf of Mexico, congressional bans on on-shore oil and gas activities in specific areas of the Rockies and Alaska, and even a congressional ban on doing an analysis of the resource potential for oil and gas in the Atlantic, Pacific and eastern Gulf of Mexico.

Read the entire post. Mr. Hofmeister went on to add that the Democratic controlled Congress had also recently placed exploration of oil shale in Utah and Wyoming off limits. Projected reserves of oil shale range to a high of two trillion barrels of recoverable oil.

As to the moratoriums on drilling along the outer continental shelf, they were both Presidential and Congressional. President Bush recently removed the Presidential moratorium. The Congressional moratorium is slated to expire October 1, 2008. How the Democrats will treat that is an open question given the proximity to the election. That said, if they treat off shore exploration and drilling as they recently treated oil shale, then we can expect an attempt to reinstate the moratorium.

Then there are those laws and regulations that indirectly inhibit the exploitation of our resources prohibitive. You can get a feel for the tremendous legal and regulatory burden from this study by Argonne National Laboratory assessing the environmental regulatory burden on natural gas. It all applies equally to burdens on domestic oil production. Here is a quick run down of the Table of Contents of Chapter 2 of the study:

2.1 Issues Likely to Limit Access

2.1.1 Coastal Zone Management Act Consistency Provisions
2.1.2 Endangered Species Act
2.1.3 Forest Service Restrictions
2.1.4 Outdated BLM Land Use Plans
2.1.5 Lease Stipulations
2.1.6 Monument Designations
2.1.7 OCS Moratoria — Atlantic Ocean
2.1.8 OCS Moratoria — Eastern Gulf of Mexico
2.1.9 OCS Moratoria — West Coast
2.1.10 Permit Restrictions
2.1.11 Bans on Great Lakes Drilling
2.1.12 Roadless Rule
2.1.13 Wilderness Areas
2.1.14 Ocean Policy

2.2 Issues Likely to Produce Delays

2.2.1 CBM-Produced Water Management
2.2.2 Drilling Permits
2.2.3 Essential Fish Habitat
2.2.4 Fracturing Operations
2.2.5 Nationwide Permits
2.2.6 NEPA Integration and Lawsuits
2.2.7 Pipeline Certification
2.2.8 Pipeline Safety
2.2.9 Wetlands Mitigation

2.3 Issues Likely to Increase Costs

2.3.1 Cooling-Water Intake Structures
2.3.2 Electronic Reporting and Record-Keeping Requirements
2.3.3 Lack of Incentives to Go beyond Compliance
2.3.4 Louisiana E&P Waste Disposal Regulations
2.3.5 Maximum Achievable Control Technology
2.3.6 Mercury Discharge Regulations
2.3.7 NOx Prevention of Significant Deterioration Increment Consumption
2.3.8 Noise Regulations
2.3.9 Nonroad Diesel Rule
2.3.10 Ocean Discharge Criteria
2.3.11 Particulate Matter Regulations
2.3.12 Pipeline Gathering Line Definition
2.3.13 Regional Haze Rule
2.3.14 Spill Prevention Control and Countermeasures
2.3.15 Standards for Decommissioning or Closing Wells
2.3.16 Storm Water Construction Permits
2.3.17 TMDL Regulations Targeting Oil and Gas Wells

You can follow the link above and read through the discussion in that 130+ page report of how we have over-regulated ourselves out of the energy market irrespective of the moratoriums. But even if an oil company is able to jump through the above hoops, there are the private lawsuits brought under the EPA and ESA that can add years and millions of dollars to any particular attempt at drilling.

These private law suits are truly insidious as they circumvent our democratic process and allow very limited special interest groups to hold a veto over an issue at the center of our economy. One need only look to the recent fiasco regarding polar bears and the ramifications of the decision to list polar bears under the ESA to get a feel for how this works. Let there be no doubt that the push to get polar bears listed was aimed in large part at stopping oil drilling in the arctic. Bottom line, if we are going to exploit our resources, not only does Congress have to lift the moratoriums and reduce the regulatory load, but we need a change to the EPA and ESA. We need to take governmental decisions out of the hands of special interest groups and unelected judges explicitly chosen by these groups to hear their law suits.

The sum of the regulatory burden and the hostile attitude towards our domestic oil companies was thoroughly discussed in a March article written in Investor’s Business Daily. It was written in the wake of the then recent announcement by Haliburton to move their headquarters to the Dubai:

Democrats gleefully demonize oil companies, outlaw offshore drilling and, in Hillary Clinton's case, vow to expropriate profits. In that kind of climate, why the surprise that Halliburton is moving to Dubai?

Halliburton's pullout from its Houston headquarters Monday for a new home in the Middle East drew umbrage from the very Democrats who've had the oil-services company in their gun sights for years.

Clinton led the charge, hinting at more punishment ahead. 'I think it raises a lot of very big concerns, and we're going to be looking into it in Washington,' she warned.

One of industry's most innovative firms, Halliburton provides the operative brawn to transform the discoveries of oil exploration into fuel ready for pipeline transport all the way to the gas station. It holds 4,700 patents.

The only thing Democrats see in this showplace of U.S. innovation is a criminal conspiracy. But then, leftists have built a whole culture around hating Halliburton. Their Amazon-listed books hawk conspiracy theories about how Halliburton supposedly runs the U.S. or the world or both.

'Tantamount to fleeing the scene of a crime,' huffed the Huffington Post, claiming Halliburton's move was to avoid taxes and slip investigations. The company, of course, denies this — credibly, we might add, considering its remaining base in Houston.

The reality is, Halliburton's pullout is the result of Democrats doing everything possible to give the company reasons to leave. Yet they don't seem to have a clue that that's what's happening.

Clinton says she is 'troubled by the continued outsourcing of jobs and . . . eager to find out how the tax code can be strengthened to encourage American companies to invest here rather than abroad.'

Invest in what? Democrats have effectively taken away every opportunity that might keep Halliburton in the states. They've blue-penciled all but a small portion of the Gulf of Mexico for offshore drilling. They also have made the Alaska National Wildlife Refuge off-limits and now want that ban permanent.

Add to that Clinton's threat to confiscate the profits of companies such as Exxon, profits now being used to develop the very energy that fuels the electricity in her microphone. The result is a climate so hostile that the only way oil concerns can produce oil is by moving.

It's not just Halliburton. Exxon last week announced 32 new projects for 2006-09. Only three are based in the U.S., and just one is in the Gulf of Mexico.
Another project is in Canada, and the rest are overseas, where no Hillary-like hatred of oil companies exists.

Nine projects are in Western Europe, eight in sub-Saharan Africa, six in the Middle East, three in Central Asia and two in Southeast Asia. Given the size and scope of Exxon, this amounts to a proxy road map of where world opportunities lie for developing energy. In short, they're not here.

That's why this move by Halliburton represents a loss for the U.S. Companies aren't people. They can't be unpatriotic, as the Democrats charge, because their substance is to represent the decisions inherent in the use of capital.

Right now, Halliburton's move reflects the fact that opportunities in energy development lie outside the U.S. Unless Democrats change the hostile business climate they've created, Halliburton's move is a warning of more like this to come.

Read the entire editorial. Though this one concerned Hillary’s plan to attack profits, Obama’s plan is no different.

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T. Boone Pickens - Energy Plan & The New Reid/Schumer Icon

CNN and Wolf Blitzer have a great interview with T. Boone Pickens about his energy plan. Pickens wants the country to move heavily towards wind and solar and is critical of John McCain's energy proposals to date. Democrats have interpreted this as full support behind their plan not to allow any drilling. In fact, its rather hilarious to watch Harry Reid and Chuck Shumer during the video below embrace Pickens, not understanding that he is critical of McCain's plan to drill off the east and west coast because it does not include ANWR. When Pickens says "we can't drill our way out of this problem," he means we won't find enough oil to substitute for our current 70% dependence on foreign oil. But "can't drill" does not mean "don't drill."

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Overview Of An Energy Plan From T. Boone Pickens

T. Boone Pickens, now the 80 year old CEO of BP Capital, made billions as an oil man. He is well respected and a solid conservative. When he says that this energy crisis is different and we can't just drill our way out of this one, its time to listen and take notes.
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Mr. Pickens has recently begun a campaign to push a series of initiatives to attack our energy crisis. He has a series of ads on television and has recently written an article in the WSJ going into more detail. While he favors more drilling, he does not see that alone as what will meet our future energy needs:

. . . [O]ur country faces what I believe is the most serious situation since World War II.

The problem, of course, is our growing dependence on foreign oil – it's extreme, it's dangerous, and it threatens the future of our nation.

Let me share a few facts: Each year we import more and more oil. In 1973, the year of the infamous oil embargo, the United States imported about 24% of our oil. In 1990, at the start of the first Gulf War, this had climbed to 42%. Today, we import almost 70% of our oil.

. . . This year, we will spend almost $700 billion on imported oil, which is more than four times the annual cost of our current war in Iraq.

In fact, if we don't do anything about this problem, over the next 10 years we will spend around $10 trillion importing foreign oil. That is $10 trillion leaving the U.S. and going to foreign nations, making it what I certainly believe will be the single largest transfer of wealth in human history.

Why do I believe that our dependence on foreign oil is such a danger to our country? Put simply, our economic engine is now 70% dependent on the energy resources of other countries, their good judgment, and most importantly, their good will toward us. Foreign oil is at the intersection of America's three most important issues: the economy, the environment and our national security. We need an energy plan that maps out how we're going to work our way out of this mess. I think I have such a plan.

Consider this: The world produces about 85 million barrels of oil a day, but global demand now tops 86 million barrels a day. And despite three years of record price increases, world oil production has declined every year since 2005. Meanwhile, the demand for oil will only increase as growing economies in countries like India and China gear up for enhanced oil consumption.

. . . I have a clear goal in mind with my plan. I want to reduce America's foreign oil imports by more than one-third in the next five to 10 years.

How will we do it? We'll start with wind power. Wind is 100% domestic, it is 100% renewable and it is 100% clean. Did you know that the midsection of this country, that stretch of land that starts in West Texas and reaches all the way up to the border with Canada, is called the "Saudi Arabia of the Wind"? It gets that name because we have the greatest wind reserves in the world. In 2008, the Department of Energy issued a study that stated that the U.S. has the capacity to generate 20% of its electricity supply from wind by 2030. I think we can do this or even more, but we must do it quicker.

My plan calls for taking the energy generated by wind and using it to replace a significant percentage of the natural gas that is now being used to fuel our power plants. Today, natural gas accounts for about 22% of our electricity generation in the U.S. We can use new wind capacity to free up the natural gas for use as a transportation fuel. That would displace more than one-third of our foreign oil imports. Natural gas is the only domestic energy of size that can be used to replace oil used for transportation, and it is abundant in the U.S. It is cheap and it is clean. With eight million natural-gas-powered vehicles on the road world-wide, the technology already exists to rapidly build out fleets of trucks, buses and even cars using natural gas as a fuel. Of these eight million vehicles, the U.S. has a paltry 150,000 right now. We can and should do so much more to build our fleet of natural-gas-powered vehicles.

I believe this plan will be the perfect bridge to the future, affording us the time to develop new technologies and a new perspective on our energy use. In addition to the plan I have proposed, I also want to see us explore all avenues and every energy alternative, from more R&D into batteries and fuel cells to development of solar, ethanol and biomass to more conservation. Drilling in the outer continental shelf should be considered as well, as we need to look at all options, recognizing that there is no silver bullet.

I believe my plan can be accomplished within 10 years if this country takes decisive and bold steps immediately. This plan dramatically reduces our dependence on foreign oil and lowers the cost of transportation. It invests in the heartland, creating thousands of new jobs. It substantially reduces America's carbon footprint and uses existing, proven technology. It will be accomplished solely through private investment with no new consumer or corporate taxes or government regulation. It will build a bridge to the future, giving us the time to develop new technologies.

The future begins as soon as Congress and the president act. The government must mandate the formation of wind and solar transmission corridors, and renew the subsidies for economic and alternative energy development in areas where the wind and sun are abundant. I am also calling for a monthly progress report on the reduction in foreign oil imports, as well as a monthly progress report on the state of development of natural gas vehicles in this country.

We have a golden opportunity in this election year to form bipartisan support for this plan. We have the grit and fortitude to shoulder the responsibility of change when our country's future is at stake, as Americans have proven repeatedly throughout this nation's history.

Read the entire article. I do not know enough about the inner workings of energy grids to be able to speak on the viability of Mr. Pickens's plan for generating 20% of our energy needs via wind power. Where significant wind power generation has been tried, there have been problems. (I hear some indicate that feeding this wind energy into power plants would require substantial construction of power lines that have proven unpopular. As an aside to the Supreme Court, this is precisely the type of scenario in which the Fifth Amendment is meant to play a role.) I also did not see any mention of nuclear power, which we know from France can be used to provide clean, cheap and dependable energy. Beyond that . . . more and faster, please.

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