Friday, October 26, 2007

U.S. Energy Policy or Lack Thereof


Yesterday, I happen to watch CSPAN as Rep. John Peterson from Pennsylvania was giving a presentation concerning the coming energy crisis.

This was the last item of business for the House of Representatives and Mr. Peterson was speaking for the record since virtually all of the other representatives had left for the traditional 3-day weekend.

From what I could see, Mr. Peterson may have had a few slides that were previously shown, but these pictures taken of my TV screen give a pretty good idea of what he was saying. You can click on any image to see a much larger and clearer picture.

He was listing the shortcomings of the present energy bill before Congress:
  • Prevents access to 9 trillion cubic feet of natural gas in the U.S.
  • Prevents access to 18% of onshore natural gas in the U.S.
  • Prevents access to 2 trillion barrels of shale oil in the U.S. [Mr. Peterson noted that the Canadians were extracting 1-2 million barrels daily from tar sands using technology that would be similar for extracting oil from shale]
  • Prevents access to 10 billion barrels of oil from the National Petroleum Reserve in Alaska
  • Attempts to breach existing, legal offshore energy contracts
  • Increases taxes by $15 billion on energy companies [which get passed along in the price of energy products purchased by business and consumers in the U.S.]
  • Ignores proven coal-to-gas technology which has been proven since WWII
  • Raising expectations that 15% of U.S. energy needs can be produced from renewable resources

The chart below shows what our energy sources are. Wind and solar energy are a minuscule fraction of our total requirements.

The largest danger is the petroleum products of which more than 60% are presently imported. Mr. Peterson noted that oil is now $90+ per barrel under the best of conditions. Should storms or significant political upheaval affect our supplying nations, that price could easily reach $125 per barrel.

In addition to our tenuous oil supplies, we are facing critical shortages of natural gas.

Failure to access enormous supplies of domestic natural gas has resulted in the U.S. paying some of the highest natural gas prices in the world. This not only affects the cost of NG used for heating, but the many products derived from NG.

Among the many items produced from natural gas, fertilizer is one. Mr. Peterson noted that because of the dramatically rising NG prices, the cost of fertilizer has doubled and that cost now appears in our food supply.

Mr. Peterson is co-sponsoring legislation [some good graphics] to expand our nations natural gas supply. The following chart shows estimates of the revenue that will come from expanding natural gas leases.

What Mr. Peterson has done is outline the impact of the anti-energy political elements in the U.S. and the economic danger in which those elements have placed the U.S. He is proposing action that, if taken today, may lessen that danger in 10 years... not today since that opportunity passed 10 years ago.

While wind farms may sound wonderful, the reality is that with the U.S. population growing by millions each year [joining the millions who sneak into the country], we cannot afford to place our future in the hands of "if-come" technology... not when proven techonology and proven resources are awaiting our use.

Can"t Find It?

Use the SEARCH BLOG feature at the upper left. For example, try "Global Warming".

You can also use the "LABELS" below or at the end of each post to find related posts.

Blog Archive

Cost of Gasoline - Enter Your Zipcode or Click on Map

CO2 Cap and Trade

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."
It was beautiful and simple, as truly great swindles are.
- O. Henry
... The Government is on course for an embarrassing showdown with the European Union, business groups and environmental charities after refusing to guarantee that billions of pounds of revenue it stands to earn from carbon-permit trading will be spent on combating climate change.
The Independent (UK)

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

My photo
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)