Wednesday, March 21, 2012

U.S. Energy Policy


Our President made it clear before he became President that he was going to attack coal as the primary source of electrical energy in the U.S.  He has been successful as coal now accounts for less than 40% from nearly 50% a couple years ago.

Many will say, "that is a good thing" because coal is a dirty source of energy and we want a clean source such as solar or wind... even if the cost per kilowatt hour is many times that of coal.  The American people want to pay higher energy costs for the privilege of having clean energy.

Besides, we have many other sources such as natural gas that can economically substitute for coal for the time being, so we don't have to rely on unreliable sources such as wind and the sun.  Our President has even signed a rather long and mind-numbing National Defense Resources Preparedness Executive Order that has a provision regarding Energy. [h/t Bill]

Sec203.  Maximizing Domestic Energy Supplies.  The authorities of the President under section 101(c)(1) (2) of the Act, 50 U.S.C. App. 2071(c)(1) (2), are delegated to the Secretary of Commerce, with the exception that the authority to make findings that materials (including equipment), services, and facilities are critical and essential, as described in section 101(c)(2)(A) of the Act, 50 U.S.C. App. 2071(c)(2)(A), is delegated to the Secretary of Energy. 

However, the President's own policies have significantly hindered this Executive Order resulting in a net decline of electrical energy in the U.S.

Note that "Other" which includes wind/solar has not increased.
Total electricity generation was down 7% in December 2011 compared to December 2010 (see chart above). Despite this decline, generation from natural gas rose 12% to 86 terawatthours. Coal-fired generation, however, fell by 21% between December 2010 and December 2011, to 132 terawatthours. 
But the President has claimed that he is pro-energy and has pointed to an increase in oil and natural gas production to back up that claim.  That must be the where that Section 203 of the National Defense Resources Preparedness Executive Order fits in:
“Under my administration, America is producing more oil today than at any time in the last eight years,” Obama told the audience at the University of Miami. “That’s why we have a record number of oil rigs operating right now – more working oil and gas rigs than the rest of the world combined.” 
The increase in domestic drilling was almost entirely in areas for which the Obama administration exercised no authority, as oil production on federal land declined by 11 percent in fiscal year 2011, according to a study by the Institute on Energy Research (IER), a free-market energy think tank. But oil production on state lands increased that year by 14 percent and increased by 12 percent on private lands. [source]
And as the Speaker of the House, John Boehner, has pointed out, President Obama has been an energy obstructionist [h/t Anthony Watts]:

Running on Empty: New Chart Shows White House Plan for Higher Gas Prices & Fewer Jobs
Posted by Don Seymour on February 24, 2012

In yesterday’s speech defending his failed energy policies – under which gas prices have nearly doubled and are rising faster than ever – President Obama called for the kind of “all of the above” energy strategy long-championed by Republicans. But far from supporting “all of the above,” the Obama administration has spent more than three years blocking efforts to expand energy production and bring down gas prices, while pushing job-crushing tax hikes and taxpayer-backed loans to companies like Solyndra.
That leads to very interesting speculation: perhaps President Obama has issued this latest National Defense Resources Preparedness Executive Order as justification for expanded government funding of his favorite alternative charities such as Solyndra.

What might be Dr. Chu's vision as Secretary of Energy?

Chu: Solyndra Loan Was My Responsibility by associatedpress
Steven Chu Says Plants Might Be Ultimate Fuel...

After all, we can't rely on coal anymore... or oil... or nuclear power.  Going for the Sun or water... or going down the rabbit hole....  Perhaps a little realism mixed with idealism might be helpful.


Myth Of U.S. Oil Dependence 

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
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- O. Henry
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Tracking Interest Rates

Tracking Interest Rates


SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."

December 11, 2007 Somehow the Fed misses the obvious.
[Image from:]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)