Energy Archives

A friend and I have coauthored a paper on regulation of gasoline markets that might interest people here. The paper is available on SSRN here.

We review the history of economic and environmental regulation and argue that the combined impact of 100 years of regulatory interventions has been to fragment the market for gasoline in the United States, leaving it vulnerable to supply disruptions and making it likely that prices will increase in the future.

Iain Murray directs our attention to this interview with Lester Brown in The Independent, where Brown dumps all over ethanol.

Sample:

Just a single fill of ethanol for a four-wheel drive SUV, says Brown, uses enough grain to feed one person for an entire year. This year the amount of US corn going to make the fuel will equal what it sells abroad; traditionally its exports have helped feed 100 - mostly poor - countries.

From next year, the amount used to run American cars will exceed exports, and soon it is likely to reduce what is available to help feed poor people overseas. The number of ethanol plants built or planned in the corn-belt state of Iowa will use virtually all the state's crop.

This will not only cut food supplies, but drive up the price of grain, making hungry people compete with the owners of gas-guzzlers. Already spending 70 per cent of their meagre incomes on food, they simply cannot afford to do so.

I was recently related a story of a prominent historian—a liberal Democrat—who visited with President Bush at some length at the White House, where in the course of conversation Bush said that he had changed his mind about some things (though not the Middle East), including the environment. Our interlocutor didn't pursue this topic, being more interested in larger matters. Then, too, there have been rumors the last several days that the Administration might do something to "take global warming off the table" in the 2008 presidential election. Why they would want to do such a thing is beyond me, but there it is.

Comes today this report from Mike Allen in Time:

Previewing the final quarter of Bush's presidency, officials disclosed to TIME that the Administration is formulating a huge energy initiative designed to "change the whole nature of the discussion" and challenge the G.O.P., Democrats, the oil and electricity industries, and environmentalists. An adviser said Bush's views about global warming have evolved. "Only Nixon could go to China, and only Bush and Cheney--two oilmen--can bring all these parties kicking and screaming to the table," the adviser said.

The National Center for Public Policy Research issued a press release a few minutes ago on offshore drilling:

Policy Groups to Congress: Lift Federal Ban on Offshore Energy Production

Washington, D.C. - The National Center for Public Policy Research has delivered a coalition letter to all 435 members of the U.S. House of Representatives, urging them to remove the moratoria on offshore oil and gas production.

"States that wish to permit oil and natural gas leasing in their adjacent offshore waters should be afforded the right to do so," said Peyton Knight, director of environmental and regulatory affairs for The National Center. "It is far past time for the federal ban on such leasing to be lifted."

National policy organizations that signed the letter include: Coalitions for America, the American Conservative Union, FreedomWorks, Americans for Tax Reform, the Competitive Enterprise Institute, the Council for Citizens Against Government Waste and the National Defense Council Foundation.

State policy organizations, including the Mississippi Center for Public Policy, the Virginia Institute for Public Policy, the Maine Heritage Policy Center and Kansas Taxpayers Network signed the letter as well.

The letter notes that Cuba recently announced its intention to permit China to explore oil and gas production just 50 miles off the coast of Key West, Florida. America's self-imposed ban on offshore drilling means that Cuba can develop resources in its portion of the Florida Straits, yet the U.S. can't do the same on its side.

"Increased energy costs have become a burden for millions of Americans," said David Ridenour, vice president of the Center. "Developing these vital resources in the Outer-Continental Shelf would help lower energy prices for the over 60 million American homes that depend on natural gas for heating."

A copy of the letter can be found online at http://www.nationalcenter.org/OCSLetter0606.pdf.

Project 21 Senior Fellow Deneen Moore has a letter in today's Wall Street Journal:

Regulate Gasoline, Create a Nightmare

In regard to the June 5 editorial-page commentary 'Tradeable Gasoline Rights' by Martin Feldstein: Mr. Feldstein believes that the government should be the arbitrator of individual liberty by allowing government authorities to design an economic scheme to regulate drivers' behavior and thereby control the amount of gasoline used in the nation each year.

Let's not be deceived -- tradeable gasoline rights is socialism cleverly disguised as a free-market mechanism. Why not suggest 'tradeable calorie rights' to address the obesity issue. The surgeon general can declare an ideal weight for American citizens and obese individuals can buy calorie rights from thin people.

Deneen Moore
Senior Fellow, Project 21
New York

Dr. Feldstein is a reputable fellow, to say the least, but his idea in this case sounds awful. Reminds me of World War II gasoline rationing. (Yes, I know we won that war.) I suspect an unintended consequence of Dr. Feldstein's idea, should it ever be implemented, would be to teach a generation of young people to hate the federal government ("sorry, junior, we can't go, Mommy used up her TGRs"). However, surrendering freedom to teach people to love freedom would be throwing the baby out with the bath water.

P.S. Speaking of gas prices, my husband David has an op-ed out about this topic this week. Here's a link to it as it appeared in the Biloxi Sun Herald.

Project 21 Senior Fellow Deneen Moore has a letter in today's Wall Street Journal:

Regulate Gasoline, Create a Nightmare

In regard to the June 5 editorial-page commentary 'Tradeable Gasoline Rights' by Martin Feldstein: Mr. Feldstein believes that the government should be the arbitrator of individual liberty by allowing government authorities to design an economic scheme to regulate drivers' behavior and thereby control the amount of gasoline used in the nation each year.

Let's not be deceived -- tradeable gasoline rights is socialism cleverly disguised as a free-market mechanism. Why not suggest 'tradeable calorie rights' to address the obesity issue. The surgeon general can declare an ideal weight for American citizens and obese individuals can buy calorie rights from thin people.

Deneen Moore
Senior Fellow, Project 21
New York

Dr. Feldstein is a reputable fellow, to say the least, but his idea in this case sounds awful. Reminds me of World War II gasoline rationing. (Yes, I know we won that war.) I suspect an unintended consequence of Dr. Feldstein's idea, should it ever be implemented, would be to teach a generation of young people to hate the federal government ("sorry, junior, we can't go, Mommy used up her TGRs"). However, surrendering freedom to teach people to love freedom would be throwing the baby out with the bath water.

P.S. Speaking of gas prices, my husband David has an op-ed out about this topic this week. Here's a link to it as it appeared in the Biloxi Sun Herald.

Rob Bradley has this in the Houston Chronicle today. Rob dismantles the major themes of Mr. Gore's latest scare tactics and his never ending fatal conceit. The history of malthusian politics is summarized along with the failure of government responses.

Famed engineer Paul MacCready of AeroVironment described some of his projects, which have all been driven by his career ambition to "do more with much less." Among other things, MacCready helped develop low-power, solar-powered, and human-powered vehicles (including planes, such as the Gossamer Condor, Gossamer Albatross, and Solar Challenger).

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Caltech vice provost Dr. David Goodstein speaks on Out of Gas: The End of the Age of Oil. Goodstein sets out several "myths" of oil that he wants to show are false:

- $3 is too much for gasoline (it's cheaper than bottled water)
- Oil companies produce oil (they just extract what it took millions of years to create)
- We must conserve energy (it's actually a law of physics - fuel is what we conserve
- "When we run out of oil the marketplace will take care of it" (that’s just what economists say)
- There’s enough fossil fuel in the ground to last centuries
- Nuclear energy is dangerous (it's not, but it can't solve all of our problems)
- The greenhouse effect and global warming are bad (they make life on earth possible, but anthropogenic warming is still dangerous).

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Last week I had this column on NRO critiquing current Congressional efforts to address high gasoline prices. The discussion continued on the Volokh Conspiracy here.

[Posted on behalf of Indur Goklany]
The price of gasoline is on everybody's mind these days, but affordability is just as important. To help put recent gasoline price hikes into perspective, some analysts and media outlets even provide us with information on the real price of gasoline, that is, price adjusted for inflation of the dollar. But even that provides, at best, an incomplete picture. A broader perspective is obtained by looking at trends in price relative to the personal income of the average American, as shown in the following figure. This figure plots the trend in the price of a gallon of regular gasoline in the U.S. from 1949 through the first quarter of 2006. This trend is displayed using three different measures: (a) nominal (or current) dollars, (b) real (i.e., inflation-adjusted) dollars, and (c) a ratio of the gasoline price to the per capita income. The last measure is an inverse proxy of the affordability of gasoline: inverse, because the lower this number, the more affordable the gasoline, and a proxy because it is an imperfect measure of affordability (more on this below). Each curve is normalized so that the price using any of the three measures is fixed at 65 cents per gallon (or $0.65 per gallon), which was the nominal price in 1978.

This figure shows that:
1. The nominal price of regular gasoline is higher now than at any time since 1949.
2. The "real" price during the first quarter of 2006 was at approximately the same level as it was in the early 1980s. Today (May 10, 2006), it is higher.
3. Relative to 1978, the price of regular gasoline has increased by 260 percent in nominal terms and 47 percent in real terms. However the price-to-income ratio has declined by 17 percent, i.e., it is more affordable today.

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CNN's quick poll has 83% of almost 20,000 respondents saying the bigger incentive to leave the car in the garage is "high gas prices, save money" over "It's Earth Day, save the planet."

Alas, I cannot seem to get the link to the poll to work.

My friend Kevin pointed this one out to me.

Apparently RFK Jr's opposition to the development of a wind farm off of the coast of Cape Cod is not sitting well with many other environmentalists. GristMill has the details here.

The proposed wind farm off the coast of Nantucket may have a big problem: Proposed legislation barring the cosntruction of wind turbines near shipping lanes. According to the NYT, Alaska Congressman Don young is seeking to add such a provision to the Coast Guard's appropriations. Wind farms have enough trouble competing in the open market; they have no chance if they have to fend off government regulation as well.

That's the plan, announced by the Bush Administration Tuesday.

A new site devoted to casting a skeptical eye at wind energy.

Tim Haab reports on another inane gasoline policy proposal, this one from my adopted state of Ohio.

Many environmentalists have embraced the "peak oil" hypothesis that world oil production has already peaked and will inexorably decline. Many Greens seem to believe that convincing the world that we are running out of oil will spur the adoption of government-mandated conservation and subsidies for alternatuive energy sources. Yet, as Dave Roberts notes, there is no reason to assume that the public reaction to a "peak oil" consensus will be so "green."

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The Senate blamed oil executives for oil supply shortages Wednesday, while the House, finding its budget-saving measure held hostage by a tiny group of anti-drilling Republican moderates, decided to drop an effort to permit drilling for oil.

From the Washington Post:

House GOP leaders agreed last night to strip plans to permit oil drilling in Alaska's Arctic National Wildlife Refuge and in the offshore continental shelf from a $54 billion budget-cutting measure, probably securing the votes to pass the bill today.

The move is a blow to President Bush, who has made expanded oil exploration a priority since he took office. Lawmakers said the White House applied pressure yesterday to Republicans to save the drilling provisions, especially in Alaska, even wooing conservative Democrats who have steadfastly opposed the GOP budget package...

No word on what energy source was used to get the moderate Congressmen home, but it probably was oil.

Peyton Knight of the National Center for Public Policy Research has more on the ANWR provision the House dropped.

Addendum: PostWatch has a photo. Two photos, actually.

Yesterday the Senate Environment & Public Works Committee reportedly rejected S.1772, legislation introduced by Senator Inhofe to, among other things, remove regulatory barriers to increased domestic refinery capacity and gradually reduce the number of boutique fuel formulas refiners are required to produce. Each of these provisions should have helped relieve upward pressure on gasoline prices -- pressure that exisitng government policies helped produce. As a result, this bill (unlike the energy legislation Congress adopted earlier this year) might have actually helped lower retail gas prices.

Unlike the more expansive, and more controversial, bill adopted by the House of Representatives a few weeks back, this bill neither trampled on state and local prerogatives nor adopted ill-considered "price gouging" provisions. It did, however, include a few subsidy provisions (what energy bill doesn't?) designed to enhance the likelihood of passage. Equally significant -- and contrary to the claims of some groups -- the bill did nothing to lessen substantive environmental protections. for more on the bill, see here.

I testified on some of the better parts of the bill on October 18. A copy of my written statement is here.

Post-Katrina, there has been underpricing by some major refiners and retailers in an attempt to avoid political or actual prosecution. This has resulted in out-of-gas situations at some gasoline stations, even as people try to flee Rita. This problem is likely to become much worse post-Rita. Gas prices will likely need to go a good deal higher to the extent that refining capacity is interrupted, yet there is a good chance that prices will not go high enough, given the policitcal circumstances. Closed service stations will tell the tale, and even with such underpricing there will still be charges of "price gouging" and "unconscionable pricing."

The clarion call to oil companies and politicians from economists, consumer advocates, and environmental groups (the last who believe that oil prices are below "social costs") should be "price to clear the market," not "hold the line on prices."

Consumers do not really save money when gas is not conveniently available and time is wasted in gas lines. There is mental strain just knowing that gas may not be available to support routine activities or for that emergency moment as is the case today.

We have a strong intellectual case for full pricing. Here are some points that come to my mind. This is likely to be a big issue for some time, and expect congressional hearings and calls for price controls, allocation controls, and windfall profits tax, which will make the disaster even worse.

Market-clearing pricing:

1) discourages tank topping, thus creating more effective supply; it discourages hoarding.

2) empowers consumers with optionality--the ability, the choice, of buying gasoline;

3) reduces gasoline lines, which waste fuel, wastes critical time during evacuation, and create unnecessary emissions (it is ozone season during hurricane season);

4) encourages conservation, where consumers see the real scarcity price and act accordingly (carpooling, etc.)

5) provides the correct market signal to refiners and other industry parties to eke out more supply in the short term and, longer term, increase total capacity.

"Buffer of Civility"
If oil pricing becomes more politicized and physical shortages/gas lines result, we are back to the summer of 1979. There will be civil disobedience in the gas lines, and it will bring out the worst in all of us. I would like to share a quotation from a Wall Street Journal opinion-age editorial of June 26, 1979, published in the wake of a fuel riot in Levittown, Pennsylvania. (Scattered gunfire, arson, vandalism, etc. were happening elsewhere in the shortage environment.)

Simply entitled "Buffer of Civility," the op-ed read in part:

"Classical economists used to list among the virtues of the price mechanism that it avoided social strife. It did not set group against group, they taught. In our lifetime … we have generally allowed prices to allocate goods among different end uses. It worked so smoothly we did not understand what the classical economists meant; today, we see. In addition to its economic virtues, the price mechanism is a vital buffer of civility."

It will be not only economically efficient but also civil to allow prices to work their magic in bad times, as in good.

One of the perverse reactions to the recent upsurge in crude oil and gasoline prices has been calls by some members in Congress, various State legislatures and the press to impose windfall profit taxes (WPT) on oil companies. These calls of course raise the question—just how profitable are oil companies compared to other sectors? The figure shows that oil (and natural gas) companies’ profit margins are actually lower than most other sectors of the economy. (Data from Business Week, August 22/29, 2005)

Imposition of WPT is bad public policy. It would keep oil in the ground when it is most needed in cars, trucks, planes, furnaces, and power plants. That, in turn, will increase prices, which will lead to further consumer unrest and political momentum for the worst quick-fix of all—price interference, albeit moral suasion or formal ceilings. The “slippery slope” of government intervention—one intervention leading to another and yet another—can be avoided by letting market forces work in emergencies as in normal times.

What would the government do with the revenues derived from the WPT—rebate it to gasoline or fuel oil buyers? Since oil demand is relatively inelastic, fuel rebates would result in higher energy demand and prices. Would the new oil tax be spent in ways to reduce overall tax burdens, or, as history teaches, would it just be spent on new pork? Government has not shown the ability to wisely spend any ‘windfall’ in tax revenues.

Energy companies were not responsible for the geopolitical events that led to 2005’s upsurge in prices, and certainly were not responsible for Katrina. Scapegoating is not good policy for oil or any other industry. Imposing WPT would start random tacking and jibing when a steady tiller is what we need.

I have an article in today's TechCentralStation about a proposed "electricity strike" in Italy. 4 major consumers associations are asking Italians to stop using electricity tomorrow at 11,30 am, for 5 minutes, as a way to protest against high oil prices that translate into high prices of electricity, gas, etc. Protesters call for political measures aimed at counterbalance the effect of rising oil prices, including a shift in our "energy mix" (the sources through which energy is generated) and possibly price controls. What they doesn't seem to realize is that free market provide a built-in mechanism to react to high prices: demand will eventually fall and prices will have to decrease. If government gets into the process it may simply make the problem harder to solve, as a cap on prices might lead to further scarcity - i.e., waiting lines at gas stations or blackouts. Consumers should understand that that is not their best interests.

Rob Bradley has analyzed crude oil and gasoline prices and makes some lucid observations amidst the hype and alarmism. Prices are in 2004 dollars--i.e. adjusted for inflation (except the most recent 2005 prices)

• Katrina severely interrupted the Gulf Coast oil industry as described by the Department of Energy’s Energy Information Administration.

• Post-Katrina crude-oil prices around $65 per barrel compare to the all-time spot high in March 1981 of $72 per barrel. This compares to the 1913-2004 average of $21 per barrel.(see fig.1)

• The average crude price can be divided into pre-1973 and post-1972, the more recent period covering the ARAMCO nationalization (1973/74) and a variety of geopolitical events driving up oil prices. The “free market” price (1918-72) is about $17 per barrel; the “nationalism” era (1973-2004) about $30 per barrel. Government ownership and control of oil outside of North America is keeping the world oil price above finding costs for new supplies, making subsoil and infrastructure privatization an attractive public policy reform.

• Domestic retail gasoline prices in 2004 were below the 1918-2004 average of $2.08 per gallon. Post-Katrina, prices are above their long-term average. Labor Day spot gasoline at $3.07/gallon is just below March 1981’s peak, reported EIA. See fig.2) Moreover, today’s gasoline is a superior, specialty product with much lower emissions than in decades past.

• The good news is that even with the recent surge in crude prices, gasoline for consumers has increased much less than crude oil. Comparing $65 crude oil and $3.07 gasoline, crude is 223% above its historic average and gasoline only 44% higher. (see fig.3) This reflects improved efficiencies in “midstream” and “downstream” sectors: crude-oil transportation, oil refining, oil-product transportation, and marketing.

• Gasoline shortages were the exception and not the rule over Labor Day weekend even with hurricane’s disruption of vital industry infrastructure. 1970s-style gasoline shortages from price and allocation controls were averted. Three dollar gasoline rationed available supply to demand and encouraged motorist conservation, a textbook example of market forces at work.

From my prespective, with so much pork it might as well be considered a farm bill, especially given all the sops to ethanol. Lynne Keisling addresses this question from an economic perspective (and with a bit more seriousness) here.

In what appears to be intentional amnesia, the California Legislature and Governor Schwarzenegger appear committed to mandating yet another round of subsidies for and required use of solar energy. The legislation, SB 1, appears unstoppable, and in one supportive yet typical editorial is described here. What seems to always be forgotten or miscast are a) renewables already receive HIGHER levels of subsidies compared to traditional energy sources, when measured on an output basis b) solar energy has benefited from over thirty years of similar programs yet can never quite grow up—every mandate and subsidy program has said it would wean solar from the need for government support -- in California alone support has totaled several billions of dollars from taxpayers and ratepayers and c) paying for almost half of the cost of systems using taxpayer dollars has not and cannot drive the price down in a mandatory-use program. Of course the fact that the equipment for such systems is imported from foreign countries is always forgotten as well.

Cato's Jerry Taylor and Peter Van Doren explain why here.

UPDATE: Dave Roberts critiques the Taylor-Van Doren critique -- and offers his thoughts on libertarian environmental views generally -- here. Scroll down for Jerry Taylor's forceful response.

Ethanol, touted as an alternative fuel of the future, may eat up far more energy during its creation than it winds up giving back, according to research by a UC Berkeley scientist that raises questions about the nation's move toward its widespread use. Story is here. Predictably, ethanol proponents have come out against the research and the researcher. This controversy has been brewing for years, but typically has been relegated to debates amongst the cognoscenti and seldom has seen the light of public discourse. There are actually a few lessons here. One is that there is wide variety among the physical facilities that produce ethanol, just as there are among all other energy facility types--some good and some not so good. Public policy should recognize that there are good performers within a type (in this case ethanol production) that should be treated separate from bad performers. Similarly, the baseline fossil fuel technologies that alternatives are invariably compared against are technologically advancing too—much cleaner and much more efficient than just a few years ago.

After years of speculation and minimal success, "tar sands" (aka "oil sands") are emerging as a viable source of petroleum, today's Washington Post reports.

Until a few years ago, such projects -- called "oil sands" or "tar sands" -- sputtered at the fringes of the oil industry. But since technological breakthroughs brought down costs and oil prices have soared, companies have been investing heavily here. Oil-sands production is now profitable when a barrel of oil sells in the low $20s, analysts said -- far below the recent $50 range.

Meanwhile the NYT reports on efforts to unleash global natural gas markets and obstacles to that effort.

The NYT's John Tierney is happy some environmentalists are reconsidering the costs and benefits of nuclear power, but not so thrilled that Congress wants to lavish another layer of subsidies on the industry. Alas we've seen this all before.

Environmentalists originally supported nuclear power because of its obvious benefits: no dirty air from smokestacks, no need to strip the ground for coal or dig for oil. Economic benefits, however, were not so obvious to investors, who were leery of the plants' costs and new problems, like accidents and waste disposal.

But Washington decided that nuclear power was so good for the environment and national security - how would America cope with the crisis when fossil fuels ran out? - that it should be subsidized. The federal government exempted the industry from full liability for accidents and took responsibility for waste disposal.

If Washington hadn't acted, nuclear power plants wouldn't have been built so fast, maybe not at all. But if the industry had been forced to deal with the costs and the risks on its own, it might have developed cheaper, simpler, more reliable plants.

I don't know whether nuclear is the answer or not. It, but I agree with Tierney's primary points. First, nuclear power should be on the table as a potential energy source. Second, government does a poor job of picking winners and losers in the marketplace and energy subisidies are a waste of money, whether they go to nuclear or anything else.

The NYT reports on the growing number of environmentalists reconsidering the merits of nuclear power in the face of climate change. "It's not that something new and important and good had happened with nuclear, it's that something new and important and bad has happened with climate change," says Whole Earth catalog founder Stewart Brand (whose previous remarks on the subject I blogged here). Among others slowly reconsidering nuclear's merits, according to the story, are Fred Krupp of Environmental Defense, Jonathan Lash of the World Resources Institute, and Gus Speth of the Yale School of Forestry and Environmental Studies. Others hold out hope that modern civilization's energy needs can be met by wind, solar, geothermal and biomass energy.

Well, actually The Knowledge Problem on power and related issues. Some worthwhile posts on the energy bill, the Economist's survey of oil, and related stuff. See here and here.

Jerry Taylor and Peter Van Doren explain how both Republicans and Democrats are advocating nonsensical energy policies. NR's Rich Lowry agrees.

But it gets even worse, as Gristmill reports some members of Congress are starting to embrace "peak oil" theories. (Wasn't it just a few years ago that Scientific American was excoriating Bjorn Lomborg for suggesting anyone believed in looming oil shortages? Just checking.)

Instapundit has thoughts for those interested in environmentally friendly lawnmowers.

Whole Earth Catalog founder Stewart Brand is making a startling prediction about the future of environmentalism.

Over the next ten years, I predict, the mainstream of the environmental movement will reverse its opinion and activism in four major areas: population growth, urbani­zation, genetically engineered organisms, and nuclear power.

Imagine that, a pro-nuke, pro-biotech environmental movement. If it happens, it will be a dramatic change for the better.

Glenn Reynolds adds some thoughts on nuclear power and "going green" here and here. Gristmillers also ponder nuclear power's potential here.

Grist's Dave Roberts has more thoughts on Brand and heresy here and here.

An amendment to extend Daylight Savings in order to save energy made its way past the House Energy and Commerce Committee today. As one who enjoys bright summer nights, I have no qualms with the bill, but I'm not sure it is a good thing if it means cranky cows.

UPDATE: Over at A Stitch in Haste, KipEsquire is already pondering the unseen costs that might cut into the 1/120th of 1% of energy consumption that the Daylight Savings change would accomplish.

The International Energy Agency projects 65 percent growth in world energy demand by 2020. Two questions pop up: How will we meet this energy demand and what are the environmental consequences of our choices?

When we consider these issues we confront three vexing realities. First, fossil fuels (i.e., oil and coal) are our cheapest, most available sources of energy. The U.S. is the Saudi Arabia of coal, with 25 percent of the world’s reserves, double those of the next largest source, China.

Second, billions of the earth's poorest are just climbing out of desperate poverty. Affordable energy is essential to their successful escape...and they know it.

Third, burning fossil fuels causes air pollution and contributes to climate change.

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John Holdren and others assailed Bjorn Lomborg's The Skeptical Environmentalist for, among other things, daring to suggest that there was continuing concern about energy scarcity. The real issue, Holdren wrote in Scientific American was not supplies of carbon-based fuels, such as oil, but rather the environment's ability to withstand their continued use. To contend otherwise, Holdren claimed, was to attack a straw man. (The full Scientific American critique and Lomborg's response is here.) Funny how this "straw man" refuses to die.

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Environmental sage Bill McKibben is upset that more environmentalists don't really support wind power. Sure, national environmental groups talk about the importance of wind as an alternative energy source, but green groups nonetheless oppose many of the wind farm proposals that are actually put on the table, such as the plan to put wind turbines off the coast of Cape Cod.

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It’s an accident of geology that most of the world’s proven reserves of low-cost oil are in unfriendly or politically unstable countries. This reality prompts calls to “reduce our dependence on foreign oil.”

A recent article in Slate magazine describes an alliance of Iraq war hawks seeking to reduce American dollars flowing to oil-rich Islamic theocracies, e.g., Saudi Arabia. James Woolsey, the former director of the CIA, and Frank Gaffney, the president of the Center for Security Policy, believe reducing our demand for imported oil is “a national security imperative.” Their preferred method is through conservation (e.g., Woolsey drives a 58-miles-per-gallon Toyota Prius).

In his piece “The Geo-Green Alternative,” New York Times columnist Thomas Friedman posits that lower oil revenues will spur reform of corrupt Arab regimes. “You give me $18-a-barrel oil and I will give you political and economic reform from Algeria to Iran.... Shrink the oil revenue and they will ... open up their economies and their schools and liberate their women.... It is that simple.”

Well, is it?

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Green Mountain Energy likes to bill itself as a "green" source of energy. Some environmentalists aren't so convinced, and have launched a boycott. Of course, some might argue that "green" energy isn't so green in the first place.

Montana Governor-elect Brian Schweitzer plans on passing an ethanol bill in Montana ---what sort of bill remains unclear. Given that the few areas in Montana that can claim to have air quality problems cannot blame those problems on the automobile, any mandates for ethanol in the state would clearly be nothing more than subsidies to the agricultural interests in the state --- at the expense of the Montana taxpayers. Moreover, it remains unclear whether ethanol really is cleaner burning overall and whether it actually provides net energy gains.

Wind energy development is the favorite source of new electricity generation in the US and worldwide, at least by the environmental elite. The drivers for new wind generation include claimed environmental benefits (which are often offset by negatives), coupled with significant financial incentives paid for by taxpayers and ratepayers--the production tax credit, which far exceeds any subsidy to other technologies. The public is beginning to recognize that the favoritism given this technology is not without downsides. In an article I recently had published in PERC reports available here I provide a modest catalog of some of the negative impacts traditionally unrecognized in the rush to build more and more turbines. It goes beyond the issue of killing endangered species, although that appears to be the main issue the public is using more frequently as reported in West Virginia and, as would be expected, in California.

Other issues that are driving a more rational, and likely slower, approach to wind development include the need for more transmission (more than for traditional and more reliable generation sources) and wind’s greater impact on an already stressed transmission network. The latter is recognized tangentially by FERC Chairman Pat Wood.

Let's hope that the valid concerns of private citizens (and property owners) don't get drowned out by accusations of 'industry support.'

The New York Times reports on potentially significant breakthrough in hydrogen production. The new technique shows promise because it can be used to produce hydrogen with far less energy (and therefore at less cost) than other methods. The catch? The technique, which relies upon running electricity through hot water, seems most suited for use in combination with nuclear power production. The "hydrogen economy" is still a ways off, but this breakthrough may make it one step closer.

Northwestern's President just announced Northwestern University's new sustainability guidelines. At least, I trust they are guidelines. It might get a bit "heated" if they try and enforce temperature mandates on tenured faculty.

California Governor Arnold Schwarzenegger often mentions his goal of improving California business climate. It was a major factor behind his historical entry into the Governor’s office during the recall of Governor Davis. It seems as if some in the regulatory bureaucracy would do well to listen more attentively to what the Governor and the public are saying about the business climate in California, especially with respect to electrical energy. During recent adoption of the state’s “Integrated Energy Policy Report” (IEPR), California Energy Commissioners are penalizing one utility (Southern California Edison; SCE) for accomplishing more (and faster) than the state wants regarding development of renewable energy. Current state law includes a ‘renewable portfolio standard’ that requires private utilities (SCE, PG&E and SDG&E) to produce 20% of their electrical energy by 2017, with an annual increase of at least 1%. The legislative mandate has been ‘accelerated’ by the CEC, CPUC and Governor’s office to move up to 2010 through various policy pronouncements and goals. Interestingly, SCE has pretty much already met even the accelerated goal (although some smart-alecky ratepayers have begun spelling it “gaol”) in large measure through their own aggressive, and long standing, pursuit of renewable technologies. However that’s apparently not enough for some of the regulators, as evidenced in the IEPR. The report recommends passage of legislation requiring all retail suppliers of electricity to meet a 20 percent eligible renewables goal by 2010. But it sets the bar even higher for SCE. “The state should enact legislation that allows the California Public Utilities Commission to require SCE to purchase at least 1 percent of additional renewable energy per year between 2006 and 2020,” the report states, even if the overall 20% is exceeded. SCE already procures nearly one fifth of the nation’s renewables. Commissioner John Geesman, presiding member of the IEPR committee, said he did not think an additional 1 percent per year was unreasonable. “It is wrong to look at this as a question of equity or a burden to your company,” Geesman said. “Lowering the bar for Edison would be akin to lowering the basketball hoop to eight feet for the tallest players.” Perhaps, but putting the hoop at 13 feet only for Yao Ming doesn’t make for fair competition either.

A recent expansion of interest in coal as fuel for electricity generation has re-kindled an old debate about California exporting pollution to neighboring states while importing their generation, as described here. Of course the debate has NOT been informed by the tremendous advancements in coal technology, with near-zero pollutant emissions from newest designs. Opponents of coal uniformily push for exclusive reliance on (the singularly most expensive) 'renewables'-- never natural gas or less expensive hydroelectric--or as Marie Antoinette said "let them eat cake." In this case however, THAT historically significant comment has been updated to "make them eat cake"