The right way to fix fixing

You know how members of the Washington brass have been blaming federal policy for high gas prices, seemingly forgetting completely about the role of massive changes to global supply like, say, an embargo against Iranian oil by the greater part of a continent? On the flipside, people who couldn’t be farther outside the Washington brass have a tendency to default to blaming the oil companies for their woes. Turns out, they might actually have something there, and President Obama doesn’t like that.

Hoping to stave off any new Republican attacks on his approach to energy, Obama has called for expanded powers to target and punish oil market manipulation, which would cost $52 million. Oil speculators, who bet on fluctuations in oil prices and thus thrive on risk more than traditional investors, are particular targets of his plan; he wants them to pay more for making their transactions. Republicans, most notably Speaker John Boehner (R-OH), have been quick to criticize him for not doing this sooner through the agencies at his hand.

It’s worth noting that Obama and his proxies have not quite blamed speculation or manipulation for high gas prices, but are targeting both actions anyway because they think market manipulation is bad. Which, of course, it is. I’m glad that someone in the White House is finally acknowledging that, although it would have been preferable if he were targeting manipulative and anti-competitive practices in a certain sector that caused an international meltdown just a few years ago. (cough)

But nobody should expect this to have an appreciable effect on gas prices right away. It’s more of a fundamental fix, which is great if you’re the kind of person who looks out for those, and I would speculate that most American drivers are not. The only way for Obama to score a political victory on gas prices is to drop them now, but in a market-friendly way. It’s rare for an alternative to come from Canada, but this time it does.

In the towns of Kingston and Brockville, both in Ontario, in 2007, gas retailers from different companies phoned each other and agreed to charge a common price for which customers have yet to be reimbursed, although that may change if a class-action lawsuit goes well. I suspect that this kind of local collusion may be easier to detect at first. After that, if anyone wanted to keep blaming “the oil companies,” they would have to tie the collusion back to orders from head offices. This, in the U.S., might be a good use for that $52 million.

That in itself wouldn’t solve gas prices unless it came with strings attached. But cities are the first place anyone should be looking for manipulating prices at the pump.

All of the above vs. oil of the above

Oh, great, this fight again. “The gas is too damn high! Whatever shall we do?” “I say we blame President Obama for being anti-oil!” “Well, I say we blame the Republicans for being anti-everything else!” “It’s better than subsidizing industries that haven’t created any jobs!” “Why does oil still need subsidies? Look at how profitable it is!” “You’re wrong!” “No, you’re wrong!” OK, that’s it. Both of you, sit in your corners and shut up. And no cookies for anyone.

That’s really the only explanation I need to offer for today’s story, so we’ll just clear some misconceptions out of the way right now. First, Obama has not been uniformly anti-oil. He has repeatedly called for more domestic drilling, albeit only in areas of the country that have grown accustomed to it. By opposing the Keystone XL pipeline and opening up the Arctic National Wildlife Refuge to drilling, plus holding off on drilling in the Gulf after the Deepwater Horizon spill, he has only been fighting new development on fronts he is capable of winning in terms of national political support. We’re not talking prohibition here. Get a grip.

Second, clean energy has not presented a job yield of 0. The keys are a) looking at small-scale projects in b) geographic areas with very specific energy capabilities. Why do you suppose solar energy is doing so well on the West Coast compared to elsewhere? As a resident of a province with two large rivers, where the vast majority of our energy comes from hydroelectricity, I know it can work with the right amount of planning.

Third, does nobody remember why the global price of a barrel of crude has shot up so suddenly? You’d think so given the fact that neither the White House nor Republicans are talking about it. Give yourself a moment to make a logical deduction: Does U.S. domestic energy policy have a bigger effect on worldwide commodity prices than an entire trading bloc’s embargo on lots and lots of another country’s oil?

So the debate in Congress is over who loses when energy subsidies are rolled back. Here’s something neither side appears willing to consider: Roll back all of them. No more federal subsidies for energy of any kind. Hell, no more state subsidies, either. Let what works for each individual community just work. Ultimately, they know better than either party in Washington. Just because the Commerce Clause often means they can get away with subsidies, doesn’t mean they should. It’s manipulation, plain and simple.

If you want to “let the market decide” on clean energy, you can’t say otherwise about oil. If you want an “all of the above” strategy for energy, you have to level the playing field. Until then, you can all be hypocrites together, for all anyone else cares.

Obama and Harper’s pipeline dreams

Regular readers know that I would like nothing more than for the entire world to wean itself off fossil fuels. I have repeatedly encouraged the research, development, production and usage of green technology and net-zero supply chain management. In some parts of North America, it’s happening. On a national or international scale, it hasn’t happened yet. Until it does, the U.S. may be shooting itself in the foot by holding off on the Keystone XL pipeline.

President Obama announced last week that the administration would study a new route for the pipeline; the original one looked like this, leading from oil sands in Hardisty, Alberta, to refineries in Texas. Estimates for oil yields, new jobs and environmental damage have varied, with proponents and opponents accusing one another of messing with the real numbers (though the ones for jobs tend to amount in the tens of thousands). To this day I don’t know what the real numbers are and will not link to any. In any event, the decision, says Obama, will come in the first three months of 2013.

How convenient. He’s buying himself some time so one of two things can happen: 1. Opponents of the pipeline will have an extra year to come up with a better idea that he can sell when the general election kicks off. 2. It becomes the new president’s problem. The only other reason he’s offered for the delay is the need to avoid passing through “environmentally sensitive” areas like Nebraska’s Sand Hills. Sadly, only a minority of Americans seem to concern themselves with such matters.

OK, fine. Let’s say they really do need time to determine the real numbers. Canadian Prime Minister Stephen Harper isn’t prepared to wait that long; in a discussion with Obama at this weekend’s Asia-Pacific Economic Corporation (APEC) summit, he warned that he’s prepared to reroute the pipeline through Western Canada, so it can supply oil to Far East countries. That’s what’s really at stake: a transaction. But a massive one.

Am I disgusted that the pride of Canada is a fossil fuel that comes from an ecologically suspect source? Absolutely. But that’s what happens to countries that don’t favor innovation. Even a few thousand jobs would be welcome to Americans. And if you’re going to keep needing oil, even for a while, you might as well get it from Canada instead of Saudi Arabia. Ignoring the possibilities in favor of less-proven green ones isn’t something an American president should try.

With those points made, let’s shut up and get the Congressional Budget Office (CBO) or some other completely non-partisan, non-ideological, non-connected authority to give us the real numbers, just so we can decide something for a change.

Blinded by the light (bulbs)

Having yet to get past their status as an almost purely confrontational political faction, the Tea Party has gone to war with supporters of a certain government regulation. Not much of a shock there, until you consider that one of those supporters is a large private company, Philips Electronics. I imagine a few Tea Partiers’ heads exploded trying to make sense of that one. “A pro-regulation company? In our America? Oh, wait, they’re Dutch. Damn those Dutch!”

The federal regulation in question, co-sponsored by two Republicans and signed into law in 2007 – yes, by then-President George W. Bush – would require manufacturers to upgrade light bulbs to generate the same amount of light as usual, but with less electricity needed. They are more expensive to buy, but last longer and lower energy bills. Also, it’s assumed that they won’t pollute you mercury if they break, which has been Sean Hannity’s rallying point against compact fluorescent bulbs.

Note that nothing in the related legislation mandated the use of these bulbs, only the manufacture. Philips has invested a fair bit of money in researching and developing these bulbs since, and fears that rolling back the regulation would “would undermine their investments in developing energy-efficient bulbs.” I just thought I’d throw it out there that Philips’s operating income in 2010 was $2.065 billion, and there’s no evidence that the government is funding this mandate.

Sen. John Warner (R-VA) brings a slightly different perspective: “If I were a financier trying to help the small business community, I would say, ‘Wait a minute—if Congress is going to start stripping out provisions of this landmark legislation, then there’s no regulatory certainty—and I’m not going to lend you the money.’” It evokes more sympathy than one would have for a large foreign-owned corporation, but not enough for me to endorse the regulation.

The Tea Partiers may be wasting their time on something that stirs up the troops but is, ultimately, unimportant. But it sounds to me like both Philips and the financiers of whom Warner speaks, if he knows any real ones, have more faith in mandates than wise consumer decisions. They should not invest in the newer bulbs because the federal government demands so. They should invest in those bulbs because they’re a good idea.

As for the Tea Party, they should save their energy for a much sexier campaign against regulations. Just imagine how successful they’ll be when “Save the Light Bulb” is replaced with “Save the Pick-Up Truck.”

Green Arrow vs. Red Dart

It’s time once again for The Future American’s FAIL OF THE WEEK! Every Saturday, I name a person or group who has spent the past seven days behaving in a particularly idiotic way. Since it’s my belief that idiocy knows no politics, nobody is safe.

This week’s fail was brought to you by Rep. Darrell Issa (R-CA), chair of the House Oversight Committee and a frequent agoniste of President Obama. I’ve called him out before for using his chairmanship to grind an axe. Now I’m calling him out for using that axe to take a stab at Obama’s pick for Commerce Secretary, which would have been fine if not for one little word.

I would vote to confirm this John Bryson, whose experience focuses on public utilities, for two reasons: a) He sees the economic potential of clean energy, which Issa clearly does not. b) The last guy, Gary Locke, was a career politician (former governor of Washington) and lawyer. I don’t even know what he was doing there. Republicans have already promised to block Bryson’s nomination, calling him a “green evangelist” (Issa) and referring to his Natural Resources Defense Council (NRDC) as “radical” (Sen. Jim Inhofe [R-OK]).

Huh? A “radical” environmental organization would see no connection whatsoever between the environment and the economy, which the NRDC does not. It speaks volumes that they are better at this than Issa and Inhofe. This is far from your average band of hippies that do little more than poster buildings and throw pies. The NRDC has proven worthy of our attention in more than one way.

But that’s not all. Issa is accusing the Obamans of deliberately trying to run up oil prices in an effort to push their clean energy agenda. As far as agendas go, it’s better than any that involves forcing people to live on less energy in one fell swoop. And if this was their plan all along, I’d say turmoil in oil-producing countries did a far better job of it. Nonetheless, I would rather that they confined their agenda to improving general market conditions for new energy sources.

So Issa makes a good point on that prong out of the two that make up his opposition to Obama’s energy agenda. About Bryson, though, Issa and Co. are going way too far in using his support of cap-and-trade as a jumping-off point to call him “radical.” Cap-and-trade speaks for itself; nobody wins when you pull these unnecessary qualifiers out of your ass, not to mention allegations that Obama opposes kicking up domestic oil production. It’s so easy to knock that one down that it’s not even fun.

The least destructive oil man in America

Remember when House Republicans claimed there were too many czars in the Obama administration and they were taking authority away from the three existing branches of government? That last part was crap, but that’s not important now. I concluded that if they are confirmed by the Senate (which they currently are not), it’s fine for a president to have a few, to get the best advice for their domestic agenda. Here’s one more, for clean energy.

That shocked GASP you hear is the sound of my environmentalist friends reacting at my choice of oil magnate T. Boone Pickens for White House clean energy czar. But in business and politics, Pickens is truly “beyond petroleum.” Consider the Pickens Plan, which focuses on wind power – and even answers questions of intermittence.

Pickens believes President Obama has been dragging his feet in coming up with a comprehensive clean energy plan. As much as Obama has done, it’s been quite incremental and mostly focuses on funding for research, which is a good end in itself but does little to address America’s own dependence on fossil fuels. But, hey, he’s been busy, especially when it comes to convincing opponents of his domestic agenda that clean energy spending will pay off.

Politically, it’s likely that Pickens would find more success getting Republicans on board with his proposals than Carol Browner, the previous energy czar, a Clinton appointee. They would respond better to his positioning of clean energy as a cure for oil dependence, as would budget-minded voters, compared to Browner’s calls for cap-and-trade. Also, you’d never get “T. Boone Pickens socialist” as a top Google search result.

But don’t think Pickens is trying to please the GOP; as you’ll see in the first link in this column, he’s gone after them, too. That he believes clean energy should be everyone’s effort certainly gives moderates something to appreciate. Furthermore, his use of local examples in justifying clean energy investment suggests that, if he were to take the federal lead, the benefits to specific communities would be greater.

Of course, there is the money issue, but it’s better to take advice on how to make the best use of one’s money from a self-made man. Besides, if Obama were to take Pickens this seriously, he wouldn’t have to bother paying him. If Pickens were to add solar, geothermal and other forms of alternative energy to his plan, it could be a blueprint for the entire economy, and used as such.

The Supermajors vs. the world

Many people have long suspected that major oil companies have played a role in fill-up costs. Now, finally, we may have a chance to find out for sure. The CEOs of five of the world’s biggest oil companies will be brought before a Senate hearing, where they will face questions from lawmakers about their more dubious arguments against cuts to federal oil subsidies. (As if there are good ones.)

Present at this hearing will be John Watson, CEO of Chevron; Marvin Odum, U.S. president of Shell; Lamar McKay, chairman of BP America; James Mulva, CEO of ConocoPhillips; and Rex Tillerson, CEO of ExxonMobil. These are known as five of the six “supermajors” of the worldwide oil market, the sixth being Total S.A., based in France. (Shell is headquartered in the Netherlands.) To my knowledge, Total has no filling stations in the U.S., so they’re home-free, at least for the time being.

The other five supermajors (doesn’t that sound like an obscure cock-rock band from the mid-70′s?) will be grilled by the Senate Finance Committee, headed by Sen. Max Baucus (D-ND). His office released a statement saying the grilling will center on “ending tax breaks for the largest multinational oil and gas companies.” They, along with some of their political cohorts, say the pinch would do little to ease pump prices and could slow exploration.

They’re missing the point. Cuts to oil subsidies are not being tied to prices dropping; investigating the companies for price fixing is. Furthermore, considering the five companies made $36 billion in profit last quarter, and the subsidies translate into an extra $2 billion for them annually as a whole, I can’t imagine they’d be hard up for money as a result – certainly not to an extent that would risk exploration, jobs and/or pump prices. Don’t make me laugh.

Assuming they make the same amount of profit for the next three quarters, a loss of $2 billion a year represents a total loss of 1.4 percent. That’s all. It may not be much to them (until they face the prospect of losing it), but it’s plenty for a federal government that’s spent enough on them already and needs to save every cent it can get away with. They, and we, deserve a full accounting of what those subsidies have paid for.

You can’t convince me it’s just the market at work when oil prices drop four percent the same day gas prices in my city go up nine cents. Consumers can see that something strange is going on. If the feds can prove it, their standing will improve substantially, to say the least of alternative energy.

A fraction of a green economy

To hear President Obama talk, renewable energy production is the single largest remedy to staggering oil prices. Dependence on foreign oil will dissipate. Carbon emissions will plummet. Massive amounts of jobs, and the small businesses that yield them, will be created. Oil prices will no longer matter because fewer and fewer people will need it. All will be well in America. To hear me talk, you’d think I’d be all for it. Well, yes . . . but it’s not enough. Far from it, in fact.

We talked about bioplastic, one more element to the complete shift to a green economy, last week. There are two other facets I have thought of this week: 1. To my knowledge, nobody has found a silvet-bullet solution to manufacturing processes requiring the burning of fossil fuels, including those involved in producing existing green technologies. 2. Even if all those alternative energy sources are available, who’s buying them up? Us, or everybody else?

I refer you to an article published nearly two weeks ago, describing Gov. Jerry Brown’s (D-CA) plan to require public utilities to draw 33 percent of their power from renewable sources. You can already guess what the arguments for it are. The central argument against it is that it would raise power rates, which would be true if there is increased overhead and no net gain in energy supply. I’m guessing that would be a yes.

Of course, renewable energy sources are far from market saturation, thus their related prices will take at least a few years to level off. That is why Obama’s plan for renewable energy won’t be nearly as successful as he hopes, likely to a greater extent than pressure from the oil people. The consumer backlash (and subsequent voter backlash) will far exceed any similar reaction from career lobbyists, and Republicans will eat it up like so many Moon Pies.

Perhaps it would be wiser for green energy to saturate the market through institutional customers. Instead of requiring it of public utilities, government could provide tax credits to businesses whose operations entail the lowest net fossil fuel use, from beginning to end. They would do this by purchasing whatever green technologies are produced already. This would have to start with those producers, in terms of facilities, equipment and transportation.

After that, we can start talking about mandates that would affect property owners more than anyone else. Obama and Brown have the right idea, but both of them need an expert in the field to tell them how to think truly long-term, from production onward.

Eighth time’s the charm?

I always love it when President Obama brings up the need for America to invest in renewable energy sources; this is one topic on which he and I agree wholeheartedly. He’s at it again, calling for the U.S. to cut its oil imports by 33% over a decade. His four-point energy security plan includes domestic oil drilling, natural gas for public transportation, increased fuel efficiency for motor vehicles and biofuel development. All promising solutions that are still running up against political roadblocks.

For starters, Jack Gerard, head of the American Petroleum Institute – which you can always count on for an objective and unbiased perspective (snark) – claims this plan is actually a call for “more regulation, shorter lease terms and higher costs.” My guess is that if Obama had designs on any of those things, they would be in the pipeline, so to speak, after there was a robust supply of clean energy. Did he not call for more domestic drilling? The API should be wetting its collective pants.

Obama also has congressional Republicans on his back, accusing him of holding back domestic production himself by imposing a moratorium on deep-water drilling in the wake of the BP oil spill. The operative words in that last sentence were “in the wake of the BP oil spill.” Considering what a headache that turned out to be, I, for one, welcomed the moratorium, which we can see is now over. So let’s move on.

I can’t thank the AP writer enough for this: The article mentions that advanced biofuels, which come from non-food sources, are in their infancy compared to corn ethanol and that funding for their research and development has gotten a boost. Fantastic. That’s exactly what I wanted to hear. Obama has also ordered all new government vehicles to be hybrid or electric by 2015. I certainly hope price points on said vehicles drop by then. I might get one myself.

The problem, for the opponents of this plan we’ve heard from thus far, is that when they hear “cut oil imports,” they seem to take away “cut oil,” which can be proven false within seconds of skimming the relevant articles. Obama is making a smart move by increasing the supply of sources other than oil before he even talks about imposing any restrictions on that supply. It’s like building more water fountains on a university campus before banning plastic water bottles.

Republicans did get Obama on his promise to make the U.S. a “major customer” of Brazilian oil. Hey, they have biofuels, too – let’s trade! That, too, would have enormous potential for American industry.

McConnell has no energy for this stuff

There are people, myself included, whose response to any high-profile catastrophe is to ponder what can be done on the public policy level to prevent any more of such catastrophes. When it’s something like an earthquake or a tsunami, there really isn’t much policymakers can do – just get the aid pouring in. Now when it’s an earthquake, a tsunami and a possible nuclear meltdown or two, it’s time to start talking.

That the meltdown could take place in Japan has opened up a national dialogue on the merits of nuclear energy, timely due to the fact that it has come up again and again as a cure for America’s addiction to fossil fuels. Sen. Mitch McConnell (R-KY) says now is not an appropriate time to be debating such matters; however, he did add that the disaster should not “deter” the U.S. from exploring nuclear energy as an option. He and I agree there, possibly for the first time.

McConnell’s exact quote is “We ought not to make American domestic policy based on an event that happened in Japan.” That’s where he and I disagree. There are fundamental differences between the U.S. and Japan, but none of them make much of a difference here. Parts of the U.S. are prone to earthquakes and subsequent tidal waves. Any area of the world where this is likely should be thinking long and hard about the viability of nuclear energy in their backyard.

I would hesitate to call myself “pro-nuclear”; there are far safer types of renewable energy that, if they take hold on a national scale, could make nuclear energy a moot point. However, I have tended to be open to the idea, or at least discussing the idea. If nuclear energy in the U.S. were developed under these circumstances, I’d be OK with it:

• Away from coastal areas. Could an earthquake, tidal wave or hurricane befall a plant? Then don’t put it there. Essentially, put it in the most boring parts of the country you can find.
• Small. According to the World Nuclear Association, reactors can be as small as under 300 MWe (megawatt electrical). “Community-based nuclear” sounds promising, and less prone to terror attacks, which is one of Adam’s concerns.
• Clean – really. Nothing happens until there is a surefire way to safely dispose of waste. That’s a deal-breaker.

And now we can go back to not talking about American domestic policy. Permit me to distract you with another disaster. (I’m definitely going to hell for that crack.)