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Energy Week

September 22-26, 2014 . . . only on NRO

The Carbon-Benefit Deniers



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Since 1950, humanity has utilized a great deal of carbon. Simultaneously, three major changes have occurred worldwide:

  1. The standard of living, as measured by average global GDP per capita, has increased by 400 percent.
  2. The rate of plant growth on Earth has increased by 15 percent.
  3. The average global temperature has increased by 0.2 percent.

It is a measure of the mental and moral dementia of the current anti-carbon crusade that it has spent billions of dollars promoting alarm over the last point on the above list, while ignoring or denying the profound benefits of the first two. “The science is clear,” they solemnly intone. “The widespread use of fossil fuels is causing global warming.”

Well, the science is anything but clear, as the Earth’s “temperature” is not an actual physical quantity and therefore cannot be measured. Rather, it is a simplified notion based on a statistical average of constantly changing measurements drawn from a tiny subset of an infinite number of locations, depths, and altitudes that could potentially be selected for sampling. Nevertheless, the theory that carbon-dioxide enrichment of the atmosphere should cause some planetary warming is sound. Furthermore, atmospheric  CO2 concentrations have increased by 80 parts per million over the past 60 years, with the total amount added to the atmosphere equal to about half that produced by human fossil-fuel use over that period. Thus, assigning the observed CO2 enrichment to human activity is entirely plausible, and describing it as the cause of a claimed planetary warming of 0.6 K (0.2 percent of the ambient average of about 290 K) over the period in question is defensible. This warming might also be the cause of the six-inch increase in sea level that has been detected by careful measurements over the past 60 years.

But that said, the effects in question are insignificant, and, to the extent they matter at all, beneficial. Rising global temperatures would lengthen the growing season and increase net rainfall, both of which are very good things. The barely perceptible inch-per-decade rise in sea level is so small as to be lost in the noise of the daily tides and waves, surface erosion, soil deposition, dune building, coral-reef growth, crustal uplifts, and other much faster up or down movements of local geology.

What is not imperceptible, however, are the radical positive effects of carbon enrichment on plant life. We have photographs taken from orbit since 1958, and they show a 15 percent increase in the rate of wild plant growth worldwide due to CO2 enrichment. Not only that, but plants are starting to grow in deserts where arid conditions made plant growth impossible before. (Agricultural plants have benefited as well, but their growth has accelerated even more due to fertilizers, pesticides, and irrigation made possible by carbon fuels.) There is no doubt that CO2 enrichment is responsible for this growth acceleration, because not only is the theory behind very well understood, but the experiment has been done repeatedly in the lab, and always produces the same result.

The science is clear: Anthropogenic CO2 emissions are making the Earth a more fertile planet.

Even more striking, and readily apparent, are the effects that increasing carbon use is having on human society. The graph below shows this effect, comparing average global GDP per capita (in 2010 inflation-adjusted dollars) to global annual carbon use. It can be seen that, for the past two centuries, these two quantities have risen in direct proportion.

In 1950, humans used 1,700 million metric tons of carbon per year, and the average global GDP per capita was $1,700. Today we use 9,000 million metric tons per year, and the average global GDP per capita is $9,000. That’s a fivefold increase in average global income within living human memory, and anyone who has traveled much around the world over the past half-century has witnessed this miracle unfold.

I’m one of those people. I can remember the 1950s. In the 1950s, people were a lot poorer than they are now. They were poorer in America, they were much poorer in Europe, and they were infinitely poorer in Asia and Latin America. The weather, however, was about the same as it is today.

When confronted with the above evidence for the profound benefits of carbon use, those who wish to halt this wonderful trend by making carbon unaffordable have no alternative but to resort to denial. “Correlation is not causation,” they claim. But this is dissembling. The relationship between carbon use and the production of material goods is quite clear: Virtually everything we use is either made of, produced through, or transported to us via the utilization of carbon. Therefore the data presented in the graph are not a mere demonstration of a correlation, but the quantification of the effects of a clearly understood causal relationship. To deny this, as the carbon-benefit deniers do, is a denial not only of facts and of science, but the very principle of causality that underlies the rational worldview itself.

Put simply, carbon-benefit denial is a form of insanity. We need to do all we can to find a cure.

— Robert Zubrin is president of Pioneer Energy, a senior fellow with the Center for Security Policy, and the author of Energy Victory. The paperback edition of his latest book, Merchants of Despair: Radical Environmentalists, Criminal Pseudo-Scientists, and the Fatal Cult of Antihumanism, was recently published by Encounter Books.

Green Energy and Red Tape



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Nuclear reactors are designed to withstand severe weather, earthquakes, even airplane crashes. But how much more handling from the federal government they can endure remains to be seen.

Almost since the inception of the American commercial nuclear industry, presidents and politicians have taken a special interest in it. We would all be better off if they wouldn’t. While early intervention may have been justifiable because of national security, that time has long since passed. Now the government just prevents a well-developed, safe, and international industry from becoming competitive.

The current administration has emphasized nuclear energy’s importance, from Energy Secretary Ernest Moniz to advisers to the president (such as the formerly anti-nuclear Carol Browner). The president’s Climate Action Plan will take coal plants off the grid, and the missing megawatts will have to be replaced with another affordable and reliable source of baseload power.

Putting aside the many and fundamental problems with such a goal, nuclear energy provides affordable, reliable, and emission-free power. Accordingly, the Climate Action Plan promises to “expand [efforts] to promote nuclear energy generation” at home and abroad. As Browner has written, “If you agree . . . that global warming is real and must be addressed immediately, then you cannot simply oppose clean, low-carbon energy sources.”

For all the talk, though, the president’s nuclear-power policies are accomplishing the exact opposite of this goal, going well beyond the usual political shenanigans and maneuverings that have always characterized the federal government’s micromanagement of this industry. Many government-induced problems plague the commercial nuclear-power industry, from oppressive export regulations to post-Fukushima standards that might make sense in a Washington office but not on the floor of a power plant. But the biggest problem holding back American nuclear power, in which the Obama administration has been particularly obstructive, is the management of nuclear waste.

The trouble started in 1982 when Congress gave the Department of Energy (DoE) the responsibility to collect and dispose of all the nation’s commercial nuclear waste. Congress subsequently chose to build a national repository by 1998 at Yucca Mountain, in Nevada, pending approval of a license by the Nuclear Regulatory Commission (NRC). Though the scheme was imperfect and fell greatly behind schedule, it at least was a plan.

After many delays, and with the NRC’s evaluation of the site finally well under way, in 2010 President Obama ignored Congress and ordered the Department of Energy to end its Yucca Mountain program. The NRC followed suit. With nearly 70,000 metric tons of used nuclear fuel sitting in temporary storage at nuclear plants and government facilities across the country, waiting to be collected by the DoE, President Obama left America’s commercial nuclear reactors, the Department of Defense, and federal regulators with no waste policy at all, and wasting the more than $15 billion in taxpayer money and electricity users fees already spent for the unfinished Yucca Mountain repository project. That’s not to mention the billions more in federal liability as commercial nuclear companies sue the government for its broken promise to start collecting waste a dozen years earlier. Moreover, until recently, the NRC took a sabbatical from renewing or issuing new operating licenses to nuclear power plants because it could not be confident that waste would be collected by the government.

After a major effort to study the nuclear-waste issue by the president’s Blue Ribbon Commission, and after a series of court cases that stole attention, public resources, and time, at least the federal government is once again slowly moving in the right direction to address Yucca Mountain. But simply finishing the safety review without completing the process that would allow for a permitting decision hardly inspires confidence. Meanwhile, Congress has not yet abandoned plans for the Yucca Mountain repository, which is still required by law and affirmed by the courts.

Some critics, while admitting that government-induced risks and costs have played a role, say that abundant and inexpensive natural gas is the primary reason the expected nuclear renaissance has yet to occur. But this view is forgetful and ignores the potential benefits that would result from better policy.

Natural gas has been cheap before. Indeed, it was very cheap at about the same time the nuclear industry was last declared dead. Then, the world was responding to the nuclear accident at Three Mile Island, which helped send nuclear-plant construction costs sharply upwards. At the same time, the wellhead price for natural gas was $1.18 per thousand cubic feet.

Nevertheless, nuclear power improved its safety procedures and now has the most efficiently operating power plants available. Today reactors routinely exceed a capacity factor of 90 percent, meaning the average plant spends only 10 percent of the year not producing electricity. The numbers show the industry’s progress: In 1979, America had 72 plants online; today there are 100. Meanwhile, the wellhead price for natural gas peaked at $7.97 per thousand cubic feet in 2008 before tumbling down to $2.66 in 2012.

Markets and technology change, but until the federal government gets out of the picture, nuclear power in America will not reach its potential. We need a better policy.

The first and most important step to realizing the true costs and benefits of nuclear power is to resolve the nuclear-waste issue. Until that is done, we are only playing games if we expect to see the nuclear industry to grow and innovate.

Getting the government out of the business of waste management would allow it to focus its attention on what it should be doing — establishing licensing requirements and performing oversight. A system that puts waste producers in control of managing waste would create strong incentives to pursue economical solutions that meet customers’ needs and government safety standards. It would also unlock the door for innovation in nuclear-waste management, not unlike what we see today as local garbage companies find valuable ways to repurpose and store the waste from homes and businesses.

If President Obama really believes that nuclear power is critical to the future of the country, then he needs to leave his current policies behind and work with Congress to do the following:

Support NRC’s completion of the Yucca Mountain permit application. The United States needs a geologic repository regardless of how it ultimately manages and disposes of used nuclear fuel. Plus, critical knowledge will be discovered from finishing the Yucca Mountain application review.

Institute market-based nuclear-waste management reform. The U.S. needs a market-based nuclear-energy policy. This begins with a nuclear-waste policy that gives utilities and other waste producers the primary responsibility for waste management and a system for financing nuclear-waste disposal that allows waste producers to pay directly for nuclear-waste-related services.

Develop a rational, flexible, and predictable regulatory regime. The nation needs a regulator that can issue permits for new plants on a predictable basis at a reasonable cost and is capable of regulating multiple types of reactors and other industrial facilities, such as used-fuel-treatment plants.

Modernize commercial nuclear export regulations. U.S. nuclear-power companies have a substantial opportunity to compete in the global marketplace. Unfortunately, current export regulations make such activities extremely difficult for American firms.

While the desire to help reestablish the United States as a leader in commercial nuclear power is commendable, it is critical that congressional and executive action not do more harm than good. Drawn-out permitting timetables, ill-conceived regulations, and other government-imposed market distortions create so much risk and price inflation that some believe the industry needs subsidies to compete internationally and to offset the negative impacts of these policies.

Instead, the U.S. government can best ensure the sustainability of a strong U.S. nuclear industry by simply providing a stable regulatory environment, authorizing industry to handle its own spent nuclear fuel, and opening foreign mar­kets. As we have seen in recent years, given the freedom to innovate and compete, the private sector will take action.

— Katie Tubb is a researcher in the Roe Institute for Economic Policy Studies at The Heritage Foundation. Jack Spencer is the director of the Roe Institute.

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Earth-Friendly Energy Is Anything But



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Environmentalists worship solar energy and wind power as Earth-friendly answers to their ecological prayers. Tortoises, bats, butterflies, and bald eagles beg to differ.

Perhaps because solar panels and industrial wind farms lack emissions, they seem “clean.” Despite their pristine appearance, however, these “green” electricity sources hammer Mother Nature — often fatally.

Southern California’s Ivanpah Solar Electric Generating System.

Consider the Ivanpah Solar Electric Generating System in southern California’s Mojave Desert. As Carolyn Lochhead wrote on September 7 in the San Francisco Chronicle, Ivanpah occupies 3,500 previously untouched federal acres. It features 300,000 mirrors that focus sunlight on three 40-story towers of power. Inside, 900-degree temperatures yield steam, propel turbines, and generate electricity for 140,000 homes.

Ivanpah’s environmental toll is stunning:

• BrightSource Energy, the project’s owner, could have rehabilitated a brownfield, an abandoned commercial site, or a decommissioned military base. Instead, BrightSource developed 5.5 square miles of virgin desert.

• Lochhead reports that “scientists now say desert soils contain vast stores of carbon that are unleashed by construction of solar facilities.”

• Tortoises native to that area became refugees once BrightSource relocated them en masse.

• Kit-fox dens were flattened during construction.

• Monarch butterflies and birds should avoid Ivanpah at all costs. Those who traverse its highly concentrated sunbeams often ignite. Center for Biological Diversity ecologist K. Shawn Smallwood told the California Energy Commission last July that Ivanpah will roast an estimated 28,380 birds annually.

This MacGillivray’s Warbler suffered fatal burns at the Ivanpah solar plant in October 2013. Photo: Associated Press/U.S. Fish & Wildlife Service.

Ivanpah cost $2.2 billion, including a $1.6 billion federal loan. For its next trick, BrightSource envisions a bigger installation near Joshua Tree National Park — within a migratory path for protected peregrine falcons, golden eagles, and some 100 other bird species.

Meanwhile, environmentalists call wind power as benign as a summer breeze. In fact, wind farms have become avian killing fields. The U.S. Fish & Wildlife Service reports that “wind turbines may kill a half a million birds a year.” Wind blows away another 600,000 bats annually, primarily through lung hemorrhaging. While these “flying vampires” look scary, most are insectivores and vegetarians. Bats actually serve mankind by pollinating crops and devouring mosquitoes. Fewer bats mean more mosquitoes. Swell.

USF&WS explains also that “eagles appear to be particularly susceptible. Large numbers of golden eagles have been killed by wind turbines in the western states,” as have smaller numbers of bald eagles. Team Obama — which could not care less about America’s beautiful, majestic national symbol — almost never prosecutes wind companies for violating the Bald and Golden Eagle Protection Act. Even worse, Obama is granting wind-farm operators 30-year federal eagle-killing permits, to continue their mayhem — all in the name of “clean” energy. On this matter, Obama’s unvarnished callousness is staggering.

Long before windmills are installed — which itself consumes open fields — they abuse the Earth.

To evaluate any energy technology, “we must remember that it’s a process, starting with mining the materials necessary for the machines,” Alex Epstein notes in his forthcoming Penguin book, The Moral Case for Fossil Fuels. Epstein observes that manufacturing wind turbines requires “hazardous substances like hydrofluoric acid in order to get usable rare earth elements.”

The Daily Mail’s Simon Parry toured Baotou, China, a source of neodymium, the main ingredient in wind turbines’ electromagnets. He discovered “a five-mile wide ‘tailing’ lake. It has killed farmland for miles around, made thousands of people ill, and put one of China’s key waterways in jeopardy.”

This toxic lake in Baotou, China, is filled with pollution from nearby neodymium factories, which are crucial to wind-turbine production.

Parry added:

This vast, hissing cauldron of chemicals is the dumping ground for seven million tons a year of mined rare earth after it has been doused in acid and chemicals and processed through red-hot furnaces to extract its components.

The lake instantly assaults your senses. Stand on the black crust for just seconds and your eyes water and a powerful, acrid stench fills your lungs.

For hours after our visit, my stomach lurched and my head throbbed. We were there for only one hour, but those who live in Mr. Yan’s village of Dalahai, and other villages around, breathe in the same poison every day.

Environmentalists should stop hallucinating about “sustainable” power sources that unleash puppies and rainbows at no cost to air, water, habitat, and wildlife. “Clean energy” hurts nature. Those who believe otherwise live in Fantasyland.

— Deroy Murdock is a Manhattan-based Fox News contributor and a media fellow with the Hoover Institution on War, Revolution, and Peace at Stanford University.

A Green Scam



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In this corner, we have a human-rights lawyer representing the interests of indigenous people in the Amazon residing in a remote corner of Ecuador polluted by the by-products of oil exploration; in the opposite corner we have Chevron, a multinational petroleum behemoth with billions of dollars in cash on hand but refusing to part with a dollar in the cause of justice for the beleaguered Ecuadorian tribesmen. It is a testament to the vapidness, incuriosity, and corruption of the intellectual classes, from the editors of Vanity Fair to celebrity activists such as Mr. and Mrs. Sting, that this black-hats/white-hats version of events was sufficient reason for the luminaries of the Left to hitch themselves to what turns out to be almost certainly the largest attempt at extortion in recorded human history.

For those who have not been following the case, and for those who might be familiar with it from reporting in these pages and elsewhere, Bloomberg Businessweek writer Paul M. Barrett offers a thorough account of the episode in Law of the Jungle: The $19 Billion Legal Battle Over Oil in the Rain Forest and the Lawyer Who’d Stop at Nothing to Win (Crown, 304 pp., $26,00). But before digging into Mr. Barrett’s book, readers should treat themselves to the Miami Herald’s account of how Steven Donziger, the “lawyer who’d stop at nothing” of Barrett’s subtitle, corrupted Vanity Fair’s reporting on the case. The author of the Vanity Fair piece, William Langewiesche, was so thoroughly seduced by Mr. Donziger’s human-rights shtick that he literally had the plaintiffs’ attorney script the questions he was submitting to Chevron — and even went so far as to submit copy to Donziger for his approval. E-mails between the two released as part of the legal discovery process find the attorney apologizing to the allegedly independent journalist for being “a little aggressive in the editing.”

But using Vanity Fair as his sock puppet was hardly the greatest of Donziger’s achievements, as Barrett’s book dutifully reports. Scott Pelley and 60 Minutes swallowed his version of events without even chewing, as did any number of major media outfits. Crude, a film purporting to be an independent documentary about the episode, was edited to Donziger’s specs; it was, needless to say, praised to the heavens by the New York Times and others. The Huffington Post published the work of Donziger’s publicist without ever noting that she not only was being paid by the plaintiffs’ attorney but had attempted to maneuver herself into a percentage of what turned out to be a multibillion-dollar judgment.

And if the media were corrupted to an extent that would shock even a cynic, the legal institutions in Ecuador were corrupted far beyond even what one might expect from a poor, backward South American country. In one particularly entertaining passage, Barrett documents that Donziger et al. managed to corrupt a so-called independent court-appointed expert tasked with assessing the extent of environmental damage in Ecuador and the likely cost of mitigating that damage. The report submitted to the court was not the work of the independent expert but that of Donziger’s hired scientific consultant. But the Donziger team did not stop there: Fearful that the report would be too obviously their own work, they prepared a series of objections to it — and scripted the “independent” expert’s response to their objections, too. When in the early stages of litigation it became clear that they would not achieve victory in American courts, they wrote the Ecuadorian mass-litigation statute under which they would later sue Chevron in that country, tailoring the very law to the particular needs of their lawsuit.

There have got to be easier ways to make a few billion dollars.

Barrett dutifully reports these facts, but the aggregate impact of them fails to make the proper impression on him. In his telling, the story is one of hardball corporate lawyers vs. hardball human-rights lawyers, a rough kind of moral equivalency in a battle in which Donziger and his allies were finally tempted into acts that a U.S. judge would in the end rule to be racketeering. But the facts very strongly suggest that the well-being of the people of Amazonian Ecuador never seriously entered into Donziger’s calculations. As Barrett reports — a fact previously unknown to me — Donziger actively worked to undermine plans by the Ecuadorian government and its state oil company to clean up polluted drilling sites: The more damage there was to point to, the more suffering the Ecuadorian people endured, the stronger his case. Barrett is a reliable reporter, but he resists what seems to be the inevitable conclusion: There was never anything to this case other than attempted extortion from the beginning. Donziger and his allies did not get corrupted; they entered into the litigation that way.

The strange thing is this: Chevron has never drilled for oil in Ecuador.

For some years, Texaco was a minority partner in a joint venture with Petroecuador, the state oil company. When Texaco had concluded its business with Petroecuador, it entered into an agreement with the Ecuadorian government to remediate a number of drilling sites in the rain forest, proportionate to its ownership stake in the venture, about one-third. (Some 90 percent of the joint venture’s profits over the decades went to the Ecuadorian government and allied institutions.) Texaco did its work, the Ecuadorian government pronounced itself satisfied and signed off on the remediation, and it released Texaco from further liability in any related matters. This was critical, in that the remaining sites were the responsibility of Petroecuador and the Ecuadorian government, and pollution originating there would be easily mistaken for pollution coming from the Texaco sites — especially by those with a financial interest in making that mistake.

And that leads to the most damning piece of evidence presented in Barrett’s book. It almost certainly is true that the environmental standards to which the Ecuadorian government held Texaco were much laxer than would have been the case in an operation in the United States. And by all accounts Petroecuador failed to perform the remediation that it was obliged to undertake — but Donziger preemptively promised the Ecuadorian authorities that he would never seek damages from the national government or its oil company, and would refuse to collect or accept damages against them if they were awarded by a court. With that, the Ecuadorian government had license to back Donziger’s scheme to try to pry billions of dollars out of a foreign multinational while the so-called human-rights crusaders had granted the government and Petroecuador immunity.

Chevron’s role in this story is simply to have acquired Texaco during the oil industry’s period of energetic consolidation some years back. It grossly underestimated the likely impact of the Donziger litigation, perhaps owing in some part to the fecklessness of Texaco’s general counsel, Deval Patrick, who is today the governor of Massachusetts. Governor Patrick, who is black, was brought in as Texaco’s top lawyer in the wake of an ugly racial-discrimination scandal. As Barrett puts it, Patrick had no desire to play the corporate heavy against suffering Amazonian Indians.

There are some truly shocking moments in the book: Over a jovial dinner, Donziger’s allies affirm that no judge will rule against them, because any judge who did probably would be killed. The philosophical attorney says that the judge in the case probably thinks that, and that is good enough. Indeed, the threat of violence against judicial personnel and others opposing Donziger is a theme in the book. I myself had to cancel two separate trips to inspect the former Texaco sites in Ecuador when Chevron pulled its personnel out, fearful for their physical safety.

There are many characters and episodes to follow in Law of the Jungle, and Barrett is, if not a riveting storyteller, reasonably deft in helping the reader to keep it all straight and in moving the story along. And he is particularly valuable in his closing thoughts on the nature of state-run oil companies. “The company did not sneak into the Oriente,” he writes, and notes that China’s SINOPEC faces little to no prospect of being held to very high environmental standards by Beijing.

Texaco’s real sin, and Chevron’s, is willingly associating itself with such enterprises; oil executives are not such dewy-eyed naïfs as to fail to appreciate what Petroecuador is, and what the government of Ecuador was (it was, at the time of Texaco’s initial involvement, a military junta). As I told a Chevron executive some time ago: “You went to bed with the devil — you’re bound to experience a burning sensation afterward.” But “being in bed with the devil” is, unhappily, another way of saying “being in the global oil business.” In the world of crony capitalism, the U.S. Export-Import Bank is the Smurfs compared with state-run oil companies. I am open to imposing a punitive tax on anybody doing business with the government of Ecuador, or Nigeria, or China. But $19 billion seems a bit high.

– Kevin D. Williamson is roving correspondent at National Review. This article originally appeared in the October 6, 2014, issue of National Review.

Climate Rhetoric vs. Reality



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It has been a curious experience to watch the news about the “largest climate march in history” from Japan. There weren’t any marches here in Tokyo. Indeed, 350.org, the group that was a lead organizer of the march in New York City, doesn’t even appear to have a presence in Japan.

The energy-related headlines in the Asian newspapers over the past week or so haven’t been about climate change or the march in New York City. They have largely been about nuclear and coal. And therein lies the mismatch between the rhetoric of the marchers and organizers, and the hard realities of the global energy market.

Sure, some 300,000 people showed up in Manhattan to express their desire for action on carbon dioxide emissions. But if the marchers and the organizers behind the march are serious about addressing climate change, then they should be holding a march against coal use. Instead, according to a key observation on the march made by Ed Crooks, a reporter for the Financial Times, the marchers were overwhelmingly demonstrating against, wait for it . . . natural gas.

In a Twitter message, Crooks wrote, “Anti-fracking signs here outnumber anti-coal signs by more than 10:1.” In another Twitter message, Crooks noted that anti-fracking signs were “by far the most popular” and that there were “possibly even more” signs about hydraulic fracturing than there were about climate.

If climate activists were serious about reducing carbon dioxide emissions (as well as traditional air pollutants such as sulfur dioxide and nitrogen oxide), they should be embracing natural gas instead of attacking it. Indeed, the U.S. is leading the world in reducing its carbon dioxide emissions thanks to increased use of natural gas, which is displacing coal in the electricity-generation sector.

Climate-change activists such as Bill McKibben love to point to Germany as an example the rest of the world should be following. Over the past decade or so, German consumers have subsidized renewable-energy programs at a cost of about $134 billion. And while it’s true that Germany is now producing more solar energy than any other country, it’s also true that the U.S. has achieved far greater emissions reductions, in absolute terms, than has Germany.

Since 2003, according to the latest BP Statistical Review of World Energy, the U.S. has cut its carbon dioxide emissions by over 400 million tons. Germany’s reductions over that same period have totaled about 67 million tons. Thus, over the past decade or so, the U.S. has cut its emissions by more than six times what Germany has achieved, and it has done so without federal mandates for renewable energy, and it has done so at far lower cost for consumers.

Of course, while holding up Germany as an example to be copied, climate activists are ignoring another inconvenient truth: German utilities are building more coal-fired power plants. On September 22, the day after the big march in New York, Julie Mengewein of Bloomberg reported that last year, coal-fired electricity provided 45 percent of all the power used in Germany, the highest level since 2007.

Indeed, while the marchers in New York eagerly demonize natural gas, they are ignoring the extraordinary growth in global coal use. Coal is the fastest-growing form of energy, and it has been since 1973. Coal combustion now accounts for about 44 percent of global carbon dioxide emissions, and coal-fired generators provide about 40 percent of all global electricity.

Before I came to Japan, I spent two weeks in Australia. While there, I had several conversations about the Asian energy market with Chris Grieg, who heads the University of Queensland Energy Initiative in Brisbane. Grieg has spent 25 years in the energy sector and holds a doctorate in chemical engineering. “There’s one thing that Asian countries like more than coal,” he said, “and that’s cheap coal.”

Indeed, countries such as Indonesia, Pakistan, India, and China are building lots of new coal-fired power plants. In Japan, the home of the much-ballyhooed Kyoto Protocol, coal use has jumped more than 9 percent since 2011, when the Fukushima Daiichi nuclear plant was disabled by an earthquake and tsunami. And more coal-fired plants will be built here in Japan. In April, an official in the Japanese government, Akira Yasui of the Ministry of the Economy, Trade and Industry, told Bloomberg that it is “crucial to have diverse energy sources” for Japan, which imports nearly all its energy. “Our basic stance,” he said, “is to use coal while caring for the environment as much as possible. Coal is economical and stable in supply.”

So why are the marchers in New York protesting against natural gas and not coal? The answer is simple: It fits the narrative that’s continually promoted by McKibben, Naomi Klein, and other high-profile environmentalists. In their view, the main reason that carbon dioxide emissions are rising and that there hasn’t been any concerted global effort to constrain those emissions is that a secret cabal of evil businessmen is preventing such action.

In an interview published in Newsday after the march, McKibben touted the event as “the largest political gathering about anything in quite some time.” When asked what frustrated him most about the lack of political action on carbon dioxide emissions, he replied that it’s “sad to see this kind of destruction solely to maintain the profit margins of the oil majors and the coal barons for a few more years.”

To believe such a narrative is to believe in a cabal so powerful that it controls events in Dhaka, the capital of Bangladesh, a country where the average citizen consumes about 240 kilowatt-hours of electricity per year. For comparison, the average American consumes over 12,000 kilowatt-hours per year, 50 times as much. That electricity use translates directly into wealth. Per-capita GDP in the U.S. is about $52,800, roughly 25 times the level in Bangladesh, where that figure is $2,100.

On Monday, just a few hours after Al Gore, Leonardo DiCaprio, and other climate activists finished trudging through the streets of Manhattan, officials in Dhaka signed a memorandum of understanding with Malaysian officials to build a new 1,300-megawatt electricity-generation plant in Bangladesh. It will burn coal. The fuel probably will be shipped to Bangladesh from mines in Indonesia, South Africa, Australia, or Mozambique.

The punch line here is obvious: Spouting rhetoric about climate change is easy. Bashing natural gas and hydraulic fracturing while living in one of the world’s wealthiest countries is even easier. The hard reality of bringing electric lights, refrigeration, and modern industry to Bangladesh? Well, that’s just a little more complicated.

— Robert Bryce is a senior fellow at the Manhattan Institute. His fifth book, Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong, was published in May by PublicAffairs.

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A Plutonium-Rich Asia



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Given the current military and territorial disputes between China, Japan, and South Korea, the last thing anyone should want is to have these states make more nuclear explosives that could blow the whole region apart. Yet, that is precisely what the U.S. Department of Energy (DoE) is encouraging in a misguided effort to develop new types of “fast” reactors offshore.

DoE is actively collaborating with these countries on fast-reactor research and commercial fast-reactor demonstrator programs to get around its own lack of funding to conduct such programs in the U.S. Unlike power reactors now operating and being built, these new fast reactors require large amounts of plutonium fuel to start with. This entails prior production and stockpiling of quantities of plutonium enough — in the cases of Japan and China — to make tens of thousands of bombs.

The good news is that there is still time to sideline these programs before they do any lasting damage. To accomplish this, though, the Hill, the White House — and China, Japan, and South Korea — must recognize now just how frightening, and unnecessary, a plutonium-based energy future would be.

In Japan’s case, this ought to be easy. After Fukushima, it is unlikely that more than half of its 48 reactors will return to service. Japan’s atomic energy commission stated this number would be too few to justify the costly process of separating plutonium from the spent fuel (by means of “reprocessing”). This is bad news for any future fast-reactor program, especially considering these reactors would themselves be very expensive.

Japan’s fast-reactor demonstrator, called Monju, has experienced so many technical difficulties (including debilitating accidents and the discovery that it sits on seismic faults) that it is unlikely ever to operate. Japan still hopes to have another fast-reactor demonstrator plant by 2028 (with pledged U.S. DoE and French assistance) but has put off deciding on construction until next year.

Still, Tokyo already has amassed 9 metric tons of weapons-useable plutonium –roughly enough for as many nuclear weapons as the U.S. has. Right now, Japan has no reactors to burn this plutonium as fuel. It also has constructed a large, commercial-sized reprocessing plant at Rokkasho, one designed to separate 8 metric tons of plutonium annually. So far, Tokyo has wisely delayed starting up this plant.

The security implications of operating Rokkasho are obvious. In June 2012, during the previous supposedly “anti-nuclear” Kan administration, Japan’s Atomic Energy Basic Act was amended to stipulate that a key aim of the law would be “national security.”

This raised the hackles of Japan’s neighbors, especially when combined with Japan’s 9-ton plutonium stockpile and its plans to start up Rokkasho. After passage of Japan’s amended nuclear-energy act, Korea’s leading newspaper complained that Seoul was now sandwiched between two nuclear-weapons-arming states — North Korea and Japan. South Korea’s president further warned that continued North Korean nuclear testing could prompt “a nuclear domino effect in the region” – a not-so-veiled threat that her country and Japan would themselves go nuclear. 

China also was unhappy. While it applauded Washington’s March announcement that the U.S. would take back a small amount of weapons-usable plutonium from Japan, Beijing complained that much more needed to be done. Chinese officials were emphatic that Japan’s 9-ton plutonium stockpile and planned operation of Rokkasho “went against the grain of international nonproliferation.”

None of this is making it any easier for the U.S. to persuade Seoul to drop its demand that Washington treat it on a par with Japan and allow it to reprocess and enrich U.S.-origin nuclear fuel (of which South Korea has plenty). This is the sticking point in current negotiations to renew a U.S.-Korea civilian nuclear-cooperation agreement. It has forced these talks to be extended an additional two years to 2015. So far, South Korea is not backing down.

Although the economic case for Seoul to gear up to make plutonium-based fuels for a fast reactor of its own is hardly pressing (Seoul is thinking about bringing such a reactor online around 2030 and initially fueling it with low-enriched uranium), it is easy to understand why it is chafing at Washington’s opposition to South Korea making its own plutonium-based fuels. The U.S. DoE, rather inconsistently, just reaffirmed its 2010 agreement to help South Korea develop and build a U.S.-designed Generation IV fast reactor before 2030, and this cooperation includes work on the fuel cycle this reactor would require.

Seoul also has quietly grumbled that the U.S. is treating it very differently from Japan. The U.S. civilian nuclear-cooperative agreement with Japan allows Tokyo to reprocess to extract plutonium from U.S.-origin spent fuel. Additionally, the State Department could have, but didn’t, call for the U.S.-Japan nuclear-cooperative agreement to be renegotiated before 2018 to force a debate in Japan about its plutonium plans. None of this seems fair to Seoul, particularly as it must deal with a North Korea that is reprocessing to extract plutonium and enriching uranium to make nuclear weapons.

Meanwhile, the United States is collaborating with China on fast reactors, which also has bizarre security ramifications. As if dealing with the safety challenges of tripling China’s nuclear-power-reactor capacity in the next six years wasn’t daunting enough, the U.S. DoE is also cooperating with China to develop fast reactors and the plutonium fuels to support them. It’s unclear what specific technology has been shared, but Beijing has gotten DoE’s message: Never mind how bad the economics might be, fast reactors are hot.

Accordingly, China has ambitious plans. It is negotiating with France for AREVA to build by 2025 a copy of Japan’s Rokkasho plant. China plans to operate this plant for at least 15 years. It will be designed to produce 8 metric tons of nuclear-weapons-usable plutonium a year — again, enough to make roughly 2,000 nuclear warheads each year. By 2040, when China hopes to load some of this plutonium into its first commercial fast reactor, it will have amassed roughly 30,000 weapons’ worth of plutonium (compare this with the 200 to 400 warheads most experts believe China now has and the nearly 2,000 warheads the U.S. currently has deployed).

Complicating matters, China plans to extract plutonium by reprocessing spent fuel coming from, among others, 12 U.S.-designed reactors that Westinghouse hopes to build in China. These U.S. reactors could contribute up to 600 bombs’ worth of plutonium each year they operate.

Why would the United States want to encourage such a plutonium-rich future in East Asia? Senior officials outside the pro-fast-reactor clique at DoE should make inquiries. Congress should also ask this question, as it oversees the renegotiation of the U.S.-China civilian nuclear-cooperation agreement. It must be finalized and be brought before Congress before the end of next year.

Meanwhile, our diplomats would do well to speak more openly about the regional security risks of opening Rokkasho, of Japan keeping its 9-ton plutonium stockpile as a security hedge against China, and of continued Chinese coyness about its own holdings of nuclear-weapons-usable material. Finally, and above all, it would help if our own DOE backed off its urgent promotion of fast reactors and joined in persuading Tokyo, Beijing, and Seoul to do likewise.

— Henry Sokolski is executive director of the Nonproliferation Policy Education Center and author of Underestimated: Our Not So Peaceful Nuclear Future (forthcoming).

Lift the Ban



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It’s a simple policy change that would create jobs, boost energy production, lower gas prices, help our reliable trading partners and ease geopolitical tensions around the world. Larry Summers, formerly President Obama’s top economic aide, recently said, “The merits are as clear as the merits with respect to any significant public-policy issue that I have ever encountered.” That policy change is lifting the ban on crude-oil exports.

Crude-oil production in the U.S. has skyrocketed in the past six years, largely due to technological advances in hydraulic fracturing (fracking) and horizontal drilling. With the aid of these advanced techniques, domestic crude-oil production has increased by 99.5 percent since 2008, the year when production reached its lowest point since 1943. Over 90 percent of all oil-production growth in the U.S. can be credited to fracking.

The soaring production now has America in a position to export crude. But antiquated laws stemming largely from the Arab oil embargo in the 1970s stand in the way. By and large, companies must refine the crude in the U.S. before shipping it overseas.

Crude oil, and energy broadly, should be traded freely like any other good or service. Free trade is a major engine of economic growth, prosperity, and human well-being. When markets are open to more producers and consumers, competition provides people with more choices and better products at lower prices.

Free trade allows Americans to buy products that companies in other countries make more efficiently — and vice versa. Additionally, being able to rely on other countries’ ability to specialize in making certain products creates new opportunities to apply American labor and capital to more productive uses. Companies in foreign countries that specialize in making a product at a lower cost create opportunities for Americans to import the product and thus pay less for it. Further, when markets are open to exports, opportunities grow, increasing the potential for more wealth, investment, and jobs.

Opening markets to both imports and exports fosters innovation. Facing more competition forces companies to change if they are to retain or expand their market share. The result is innovative ideas, higher-quality products at competitive prices, and an improving standard of living. Free trade has helped lift hundreds of millions of people out of poverty around the world. Whether by reducing hunger, improving the environment, or generally growing the global economy, free trade raises the tide for all boats, increasing prosperity and the quality of life for all.

So what’s the holdup? Perhaps the biggest concern among skeptics and opponents of lifting the crude-export ban is how increased oil exports might affect the price at the pump here at home. Yet several studies project that lifting the ban would actually decrease gas prices here, as well as abroad, by creating a more efficient distribution system for processing oil.

Crude can range from very light to very heavy (depending on its density) and from sweet to sour (depending on its sulfur content). Light, sweet crudes sell at a premium compared with heavy, sour crudes because refiners can process them more cheaply. Opening exports would allow U.S. companies to compete in the international markets, where similar crudes have higher prices. The overall increase in global supply would reduce the price of internationally benchmarked crudes and decrease the price at the pump.

To fully unleash America’s oil production and improve global market oil efficiencies, we must match refining capabilities with raw resources. For decades, industry investment has been driven by an import mindset. Despite the recent growth in light-crude production, U.S. refiners have invested — over the past 20 years — $100 billion in plants built to handle heavier crude imports. Gulf Coast refineries, for example, are set up largely to handle medium and heavy crudes from Venezuela, Mexico, Canada, and the Middle East..

U.S. refiners set up to process light crude have replaced similar grades of oil imported from West Africa with domestic light crude, and a number of companies have made investments to handle more light crude. Over the past four years, light-oil imports have decreased by two-thirds.

However, these market shifts have constraints and are unlikely to keep up with American crude production. If the refining market is saturated, domestic oil companies will have to stall or shut-in production, which would require companies to implement a production cap lower than available output. In some areas of the country, this is already occurring. The discouragement of production brought on by an artificially restricted market will decrease global supplies of oil and keep prices higher than they otherwise would be.

On the other hand, allowing crude-oil exports to flow freely to foreign markets already able to process the oil would increase supply and increase overall market efficiency. An ICF International study prepared for the American Petroleum Institute estimates that opening markets to crude exports would save American consumers $5.8 billion over 20 years, increase U.S. GDP by more than $38 billion, and add more than 300,000 jobs by 2020. A recent study by global-information firm IHS study projects even higher benefits, finding that removing the ban would lower gasoline prices by 8 cents per gallon, saving motorists $265 billion over 15 years. IHS projects that the economic activity resulting from increased crude exports would create an average of 394,000 jobs annually from 2016 to 2030, peaking at nearly 1 million jobs in 2018.

Freely trading energy has national-security benefits as well. Removing restrictions on crude-oil exports would reduce any one nation’s ability to manipulate energy supplies for political and economic influence. The recent crisis in Crimea between Ukraine and Russia demonstrates how liberalizing global energy markets could be an effective geopolitical tool. Much of Russia’s power in the region derives from its control of energy supplies, particularly natural gas, and distribution systems. Opening markets would provide a diversity of suppliers and greater energy supplies for the global market. This would likely reduce prices and certainly offer more choice to countries such as Ukraine and Poland in the near future. Ultimately, providing that choice would diminish Russian power. Establishing free-market reforms now and increasing energy supplies would help prevent future incidents and price shocks, not just in Ukraine, but around the world.

To its credit, the Obama administration has taken some steps to slightly open the door to increase allowable exports. Recently, the Commerce Department granted two Texas companies permission to export an ultra-light crude called condensate. However, Commerce has put other companies’ requests on hold.

President Obama could declare that crude-oil exports are in the national interest of the United States. Given the expansive economic gains from exports and the geopolitical gains from increasing supplies to the world market, lifting restrictions on crude-oil exports is undeniably in the national interest. However, given that the president is supposed to make a national-interest determination for Keystone XL — which it undeniably is — and has stalled that decision for years, it is unlikely that he would make that call for crude exports.

If the president does not act, Congress can. It could take up legislation to remove the ban. After all, lawmakers can heed the advice of presidential advisers just as well as the president himself can.

— Nicolas Loris is the Herbert and Joyce Morgan Fellow at the Heritage Foundation,where he analyzes energy and environmental issues.

America’s New Oil Weapon



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On July 30, in Galveston, Texas, history was made, although few Americans noticed.

The oil tanker BW Zambesi docked at a terminal there and took on a load of 400,000 barrels of a kind of ultra-light crude oil known as condensate, then proceeded to the South Korean oil refiner Caltex.

The event marked the first time in nearly 40 years that the United States had sold its own crude oil. A ban on crude sales has been in place since 1975 (the Obama administration made a rare exception in this case, for this ultra-light oil). It’s a lasting legacy of what has become an outdated energy policy, and of the outdated foreign policy that went with it.

Clausewitz famously defined war as politics by other means. Today the other means of politics also include energy, and particularly oil. Thanks to our current booming domestic energy production, the United States at last has an oil weapon in the arsenal of “soft power” that it can use to advance both its own interests and the good of the world.

This is ironic, because over the past 40 years oil has been associated with harmful purposes. Leading oil-exporting countries such as Russia, Iran, Saudi Arabia, Moammar Qaddafi’s Libya, Saddam Hussein’s Iraq, and Hugo Chávez’s Venezuela have used their version of the oil weapon to prop up authoritarian and despotic regimes around the world, including their own. Some have used their dominance of the global oil market to finance terrorist groups such as al-Qaeda, Hamas and Hezbollah, and (in Qatar’s case) the Islamic State — while Russia’s burgeoning oil and gas revenues have underwritten Vladimir Putin’s military adventurism in Ukraine and Eastern Europe.

The Middle East powers of OPEC have also been adept at using oil to blackmail the West into doing their bidding on matters of foreign policy. Arab producers, for example, have consistently used the threat of an oil-price hike like the one that crippled the world economy in 1973 to coerce Europe into tolerating Arab hostility to Israel, just as Putin now uses his control of Europe’s flow of natural gas to tame opposition to his aggression in Ukraine.

For the sake of protecting world oil supplies, the United States has intervened in the bitter internecine conflicts among Middle East oil producers. Ronald Reagan had to use the U.S. Navy to escort oil tankers through the Persian Gulf during the Iran–Iraq War, in the course of which the USS Vincennes shot down an Iranian airliner by mistake, killing all 290 passengers and crew. Likewise, George H. W. Bush and NATO had to intervene massively to save oil-rich Kuwait from the clutches of Saddam Hussein in the 1991 Gulf War, while Bill Clinton had to acquiesce in the increasingly corrupt U.N. oil-for-food program that kept Iraqi oil flowing and Hussein’s vicious regime funded.

The Islamic State’s use of captured Iraqi oil wells to pay for its murderous atrocities is just the latest and most blatant example of the oil-into-terrorism dynamic that’s ruled the Middle East for decades — and all, ironically, under the protective umbrella of American arms. Just keeping the region’s shipping lanes, including the Strait of Hormuz, open to tanker traffic costs the Pentagon on average $50 billion a year — a service that earns us the undying enmity of populations in that region even as their governments take our protection for granted.

But now, thanks to the shale-oil revolution, the U.S. has an opportunity to strike back. Congress and the president could use our new energy abundance to advance our own strategic interests for a change, while also supporting and fostering democratic allies, combating state sponsors of terrorism, and deterring aggression, whether it’s in Eastern Europe or East Asia — all without putting a single boot on the ground or launching another Hellfire missile.

At the heart of this transformation is, of course, the boom in oil and natural-gas production in the United States, thanks to hydraulic fracturing, horizontal drilling, and other technologies that have unlocked unconventional hydrocarbon resources in a sudden but lasting profusion. In 2000, fracking accounted for only 1 percent of total oil and natural-gas production in the U.S. Today it’s almost 30 percent of all oil production and almost 40 percent of all natural gas, and those percentages are going steadily upward as the U.S. tops one OPEC producer after another.

Indeed, this July the United States replaced Saudi Arabia as the world’s No. 1 oil producer, and virtually every industry study indicates that the trend will continue through the next two decades and beyond. American oil production could surge by as much as 50 percent between this year and 2040 — with no fall-off in sight. As a Brookings Institution study has just concluded, the United States is “on track to become the dominant player in global energy markets” — as big a player as, perhaps even bigger than, Saudi Arabia is today.

Leverage over the global energy market on this scale deserves a coherent and carefully thought-out policy, geared not just toward “energy independence” (an elusive, even misleading, term, as we shall see) but also toward an “energy security” strategy that advances the cause of freedom and the position of our allies while punishing our foes and diminishing their power.

There are four major steps that the United States could take — although the current Congress and president have been unwilling to take them — to seize our new strategic opportunity and to increase the reach and impact of our emerging oil weapon.

The first is completing the Keystone XL pipeline, which has been suspended for almost four years. Quite apart from benefits in terms of jobs and investment, finishing our portion of this oil pipeline meant to connect Canada to the U.S. Gulf Coast would go a long way toward healing relations with the other surging oil producer in the Western Hemisphere, Canada, which President Obama’s dithering and delays have unnecessarily alienated.

In fact, Keystone is just one of 25 infrastructure projects crossing from Canada into the United States that are currently sitting in limbo, projects including other oil and natural-gas pipelines. Both nations would benefit from completion of these projects. On one hand, Canada is a natural customer of American natural gas (we became the world’s biggest producer in 2010). On the other, Canada’s oil reserves stand close to 175 billion barrels. Only Saudi Arabia and Venezuela have more.

Completing Keystone, in other words, would vitalize a growing energy infrastructure that connects our two countries and that eventually could extend into Mexico — setting the stage for a North American energy bloc. The three countries’ combined daily oil output of 17.5 million barrels already almost equals that of Saudi Arabia and Russia combined, or that of OPEC’s four biggest producers (the Saudis, Iran, Iraq, and Kuwait).

A North American energy bloc wouldn’t put OPEC out of business. But it could serve as a powerful counterweight to OPEC’s dominance of the global market, giving market-oriented democracies of the Western Hemisphere greater leverage over supply and price and reducing the sway of the Middle East’s princes and despots.

Yet none of this can happen without the second step of finally lifting the 1975 ban on oil exports. Once again, there are sound economic arguments for lifting the ban, including creating new jobs and increasing government revenue, as well as using American sales of crude to stabilize world prices. But even more important from an energy-security standpoint, the United States would then be free to use its oil exports to support our allies in times of economic or geopolitical crisis, for example if Iran closed the Strait of Hormuz or China cut off shipments of oil to Japan and South Korea via the Strait of Malacca.

We could use exports not only to stabilize prices but also to exert a steady downward pressure on them. A new Brookings Institution–sponsored study by NERA Economic Consulting predicts that lifting the export ban could lower world crude prices by as much as $6 a barrel just in the first year. That would mean significantly less revenue for despots and terrorists, even as our exports made the market more efficient and responsive to normal supply and demand instead of to the whims of countries such as Iran, Venezuela, and Saudi Arabia.

Indeed, U.S. exports could prevent OPEC from ever again using the threat of an oil cutoff to blackmail our allies. At the same time, American tankers carrying oil to developing countries in Africa and Asia could make “energy diplomacy” as integral a part of America’s foreign policy as “Chinook diplomacy” is today — but in a less symbolic and far more potent form.

Critics of lifting the ban have argued that allowing U.S. crude exports would force domestic gasoline prices up at the pump because there would be less oil to refine. This claim, however, misunderstands the nature of the current North American oil market. Domestic refineries in the Midwest and on the Gulf Coast are geared for refining a heavier crude than the light crude from today’s shale production. The latter — known as “tight oil,” since it is fracked from tight shale formations — is ideally suited, however, for refineries in Europe. And if the Keystone pipeline is completed, American refineries will have plenty of heavier oil flowing in from Canada.

Far from raising gas prices, U.S. exports would — by raising the amount of crude available to be refined worldwide — actually push prices down at home by as much as twelve cents a gallon, according to an estimate by the Houston-based firm Cambridge Associates. This would save consumers some $420 billion a year.

America’s oil weapon will work according to a simple economic formula: supply and demand. By keeping world supply up, the United States can put downward pressure on prices. This not only would promote economic growth around the globe and especially in emerging economies, but also would squeeze the revenues of OPEC and Russia, the key sponsors of terrorism and aggression worldwide, as their share of the global market shrank.

They already fear the impact of American crude. Russia in particular has watched the shale-oil explosion in this country with deep misgiving and has tried to halt a similar trend in Europe. Iran saw its former stranglehold over Europe’s oil supply collapse as the United States’ tumbling demand for imported oil allowed Europe to buy what it needed from other sources, and at relatively low prices. That in turn enabled Europe to enforce sanctions on Iran that for the first time took a real bite out of the Iranian economy and forced Tehran to the bargaining table in Geneva.

This year, the Saudis will have to cut their production by 3 percent to keep prices and revenues up as U.S. demand for OPEC imports declines. If U.S. exports were able to push oil prices significantly below the current level of $90–100 a barrel, as the NERA study implies they can, it would trigger a near-panic in capitals such as Riyadh, Tehran, and Moscow — and a surge of economic growth virtually everywhere else, including the United States.

Indeed, it’s easy to imagine the additional panic in OPEC’s headquarters in Vienna if Congress were to take the third step in unleashing America’s oil-as-strategic-tool potential by authorizing drilling in the Arctic National Wildlife Refuge, or ANWR.

The almost unlimited possibilities for tapping into the reserves in Alaska’s North Slope have been overshadowed by the shale revolution. But opening the ANWR reserve could supply America’s oil weapon with a gusher of mammoth proportions. There are more than 10 billion barrels of oil locked up in ANWR, roughly 40 percent the amount of the Saudi reserves. Drilling in ANWR could, in a decade or so, produce twice as much oil as is currently flowing from the Bakken shale formation in North Dakota. In addition to creating jobs and raising government revenue, tapping into these federal lands would put still more downward pressure on world oil prices — and give America still more leverage against OPEC producers.

Beyond that, crude oil flowing from Alaska would be perfectly located for export to Asia. One of the reasons the oil-export ban was extended in the 1990s was to prevent newly opened production in Alaska from being diverted to Japan — a dramatically shortsighted move but one typical of the zero-sum assumptions that governed American energy policy then and that still prevail today.

America would enjoy a clear strategic advantage in helping democratic allies such as Japan and South Korea (the latter of which has to import 97 percent of its energy) get all the oil and natural gas they need and in using similar exports to other Asian countries to reinforce our containment of China’s aggressive moves in East Asia.

The fourth and final step that Congress and a new administration should take is to rethink the future of our Strategic Petroleum Reserve. Located on the Gulf Coast in a series of salt caves, the SPR is, like the crude-export ban, a relic of Ford- and Carter-era energy policies and fears that if OPEC cut off its oil exports our economy would grind to a halt.

Today, some 700 million barrels of oil sit in the reserve. At current prices, that’s almost $77 billion worth of crude waiting for a crisis that isn’t in the offing anymore. Instead of thinking of the SPR as an energy piggy bank that we can tap only in a national emergency, a better plan would be to treat it as a true strategic reserve. Deploying it could involve both selling it into the global market to stabilize prices and using it to keep allies such as Japan and South Korea supplied with the energy they need in the event of a major crisis in the Persian Gulf.

Congress is taking limited action on some of these fronts, but more is needed. And action on Capitol Hill is not enough.

A bill sponsored by U.S. representatives Gene Green (D., Texas) and Fred Upton (R., Mich.) would require the State Department and other executive-branch agencies to authorize energy-infrastructure projects such as the Keystone pipeline within 120 days. The bill recently passed the House of Representatives, but it is now all but stuck in the Democrat-controlled Senate — and it would certainly face a presidential veto if it arrived on President Obama’s desk.

Likewise, the North American Energy Security Act, co-sponsored by Alaska senator Lisa Murkowski (a keen proponent, not coincidentally, of relaxing the rules on drilling in ANWR), Arizona senator John McCain, North Dakota senator John Hoeven, and others, would shorten the time required to obtain drilling permits for federal lands and would lift the current ban on exporting natural gas. There’s still an urgent need to lift the oil-export ban, and doing so must be the centerpiece of any American energy-security policy. Yet many in Congress are terrified of passing a bill that might be followed by a price rise at the pump, even if the two events were entirely unrelated.

Further, there’s the problem of America’s continued dependence on oil from the Middle East. The shale revolution has already cut imports from the Middle East by half. But even as production continues to rise and new fields are developed, both the International Energy Administration and BP predict that we won’t see true “energy independence” from OPEC until 2035 at the earliest — and only if domestic consumption declines by 3 percent or more.

So the true long-term solution for energy security has to be cutting demand, by gradually shifting away from oil and gasoline and toward natural gas and its derivatives, including methanol and ethanol. This would free up huge capacities of world oil supply and allow the United States to export a greater share of its crude oil than it otherwise could.

If America does not take these steps, its shale-oil revolution will never provide true energy independence. Nor will it make OPEC’s power, and America’s security responsibilities in the Persian Gulf and Middle East, disappear, since OPEC will still be a principal supplier to Europe and Asia. In concert with the strategy outlined here, however, the shale revolution can offer a new era of energy security to both us and our allies, and provide a new tool with which American leadership can promote economic growth and geopolitical stability.

— Arthur Herman, a senior fellow at the Hudson Institute, is the author of Freedom’s Forge: How American Business Produced Victory in World War II and of a forthcoming biography of Douglas MacArthur. He can be reached via Twitter: @ArthurLHerman. This article originally appeared in the October 6, 2014, issue of National Review.

Clean Energy’s Dirty Secrets



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Renewable energy has become a potent rallying cry uniting Hollywood and the Beltway. “We can move our economy town by town, state by state to renewable energy and a sustainable future,” Leonardo DiCaprio says in his eight-minute climate movie Carbon, released in August. In his fiscal-showdown speech during his first term, in April 2011, President Obama put Paul Ryan’s proposals for a 70 percent cut in clean energy at the top of his list of reprehensible and unnecessary reductions. “These aren’t the kind of cuts you make when you’re trying to get rid of some waste or find extra savings in the budget,” he said. “These are the kinds of cuts that tell us we can’t afford the America that I believe in and I think you believe in.”

In May of this year, President Obama declared the shift to clean energy a “fight” that was about shaping the sector “that is probably going to have more to do with how well our economy succeeds than just about any other.” At least on that, the president was right. If we get energy wrong, America will throw away the world-leading energy advantages bestowed on it by geology, technology, and capitalism.

Presenting the administration’s Clean Power Plan, EPA administrator Gina McCarthy admitted it was not about pollution control. “It’s about investments in renewables and clean energy,” she told the Senate Committee on Environment and Public Works in July. “This is an investment strategy.” The president’s favorite corporate-tax inverter has a different take on the nature of the investment opportunity. “We get a tax credit if we build a lot of wind farms,” Warren Buffett told Berkshire Hathaway’s investors. “That’s the only reason to build them. They don’t make sense without the tax credit.” While wind investors hoover up the $23 production tax credit per megawatt hour (MWh) of electricity produced, the real costs of intermittent renewables such as wind and solar are many times greater. And they’re not even good at what they’re meant to do — reduce carbon dioxide emissions.

Deriving a large proportion of energy from renewables is proving extremely costly for Germany. Last year, Peter Altmaier, then the energy and environment Minister and now one of Chancellor Angela Merkel’s closest advisers, said that Germany’s effort to decarbonize electricity generation could cost one trillion euros by the end of the 2030s. Not that you would necessarily see that from Germany’s carbon dioxide emissions. Despite lower economic growth in Germany than in the U.S., German emissions have been rising seven times faster — up 9.3 percent between 2009 and 2013 compared with 1.3 percent for the United States.

Indeed, renewable energy provides a textbook case of what the French 19th-century economist Frédéric Bastiat meant when he described the difference between a bad economist and a good one: The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen. The visible effect of renewables is their use of “free” wind, sun, and running water. All that’s needed to transition from a world of dark, satanic power stations to a clean, low-carbon world are temporary subsidies until renewable power becomes competitive. Hailing the closure of nuclear-power plants in the Midwest due to a glut of wind power, Howard Learner of Chicago’s Environmental Law and Policy Center last year declared: “It’s a matter of economic competitiveness.” This is the story told by Bastiat’s bad economists.

The closure of a nuclear-power station shows that something is amiss. Nuclear-power stations emit no carbon dioxide. Their running costs are low and much of the costs are unavoidable whether the stations are kept open or closed — construction and commissioning at the front-end, de-commissioning at the back. Since 2008, the output of America’s nuclear-power stations has fallen by 0.480 billion MWh, a decline of 6 percent. In a properly functioning market, this shouldn’t be happening.

Advocates of renewables are getting excited about falling costs of solar photovoltaic (PV) panels. According to the Department of Energy (DoE), PV costs have fallen by two thirds since 2010 and the cost of solar-generated electricity has fallen from $21.4 per MWh in 2010 to $11.2 per MWh in 2013, leading the DoE to claim that solar will be “fully cost-competitive” by the end of the decade.” A growing number of Bastiat’s “good” economists have been looking behind the visible costs of renewables. They reveal a very different picture. A 2010 paper by MIT professor Paul Joskow, a leading economist in the field, shows why the DoE’s cost-competitiveness claim is thoroughly misleading. Using levelized costs (life-cycle costs per MWh) to assess the economics of intermittent energy gives the wrong answer because they ignore the changes in the value of electricity throughout the day and the costs of coping with unpredictable renewable energy.

To the life-cycle cost of renewables must be added short-term balancing and longer-term-capacity adequacy to match supply to demand. Because renewables output depends on the weather, an electricity system with a high proportion of renewables needs much more generating capacity. Without renewables, Britain would need 22GW of new capacity to replace aging coal and nuclear-power stations. With renewables, Britain will need 50GW, i.e., 28 GW extra to deal with the intermittency problem. And the more renewables in the system, the worse the problem is. A 2012 analysis by the OECD illustrates the problems caused by the increase in cost due to the increasing scale of wind and solar power. For onshore wind with 10 percent penetration (meaning that wind supplies 10 percent of the energy in that market), the Organisation for Economic Cooperation and Development (OECD) estimates extra balancing and adequacy costs of $7.61 per MWh rising to $11.14 per MWh at 30 percent penetration.

Levelized costs also ignore extra spending on grid infrastructure. Texas is the leading wind state, accounting for nearly 22 percent of the nation’s wind-generated electricity.  Transmitting electricity from wind farms in the rural north and west of the state to cities such as Dallas and Houston caused grid congestion. The state decided to have consumers back the inaptly named Competitive Renewable Energy Zones (CREZ) grid program to give wind investors a windfall subsidy in the form of access to nearly 3,600 miles of transmission lines. Subsidies via grid infrastructure spending can be more costly than overt plant-level subsidies. Bill Peacock and Josiah Neeley of the Texas Public Policy Foundation reckon that CREZ costs attributable to wind amount to $6.8 billion. This compares to plant-level subsidies of $4.14 billion in the ten years between 2005 and 2015.

Perhaps the dirtiest secret of renewables is how ineffective they are at displacing carbon dioxide emissions. Brookings senior fellow Charles Frank has calculated that replacing coal with modern combined-cycle gas turbines cuts 2.6 times more emissions than using wind does, and cuts four times as many emissions as solar.  If anything, these figures are likely to be too generous to renewables. Frank uses conservative assumptions about the energy consumed for balancing and cycling (starting up or shutting down gas-fired plants). Based on recent research, Edinburgh University’s Professor Gordon Hughes found that balancing costs are nearly ten times higher than Frank’s assumptions and that cycling reduces the amount of CO2 up to 50 percent more than wind turbines do (relative to the classic grid-average method of calculation used by most official bodies such as the International Energy Agency).

The most insidious and destructive effect of renewables, however, is on the wholesale electricity markets. Intermittent renewables, particularly wind, can flood the market at random times of day with zero marginal-cost electricity. The production tax credit means that renewable investors make money from negative prices down to minus $23 per MWh. Episodes of negative prices are evidence of an electricity market that isn’t working. They imply that what is being produced is garbage — someone has to be paid to take the electricity away.

Negative prices crush incentives to invest in the conventional capacity needed to keep the power on when the wind doesn’t blow and the sun doesn’t shine. The OECD report warns that gas, coal, and nuclear-power stations would experience lower electricity prices, reduced load factors, and higher costs because of intermittent renewables. To avoid the risk of “green outs” caused by inadequate investment in conventional and nuclear capacity, governments and regulators have to intervene and construct capacity markets to redress the distortion created by renewables. These don’t come cheap. In the case of Texas, the Brattle Group estimates that a capacity market would cost Texans an extra $3.2 billion a year.

Unseen system costs highlight a critical flaw in the EPA’s Clean Power Plan. With the exception of Texas, electricity systems cross state boundaries. Yet the EPA’s approach, in the words of Gina McCarthy, is to provide states with a flexible path toward compliance. One state’s mandates affect all the other states served by the same system, so the impacts of renewables are on systems, rather than states. Thus the EPA approach risks sparking energy wars between states, illustrating the cluelessness of the EPA and the dangers of allowing an environment agency to craft energy policy. Already North Dakota has refused to co-fund the costs of Minnesota’s renewable energy mandate, which is costing North Dakotans an extra $5.7 million a year. Yet for the EPA to recognize the systems costs of renewables would be to destroy any objective justification for them.

The bad economist, Bastiat wrote, pursues a small present good that will be followed by a great evil to come, while the good economist pursues a great good to come, at the risk of a small present evil. Across the Atlantic, the calamity of renewable energy is becoming more visible each day. It will not be only good economists who see that imitating Europe would be a colossal blunder.

— Rupert Darwall is the author of The Age of Global Warming: A History.

Access Is Power



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The foxes are running the henhouse at the U.S. Environmental Protection Agency (EPA). In academic parlance, this is a textbook example of “regulatory capture” — in this case by environmental special interests. Thanks to their considerable partisan campaign support, green advocacy groups such as the Natural Resources Defense Council (NRDC) and Sierra Club have gained access to the highest levels of the Obama administration’s regulatory apparatus. And they’re using this access to wage war on fossil fuels.

It wasn’t always this way. Forty years ago, environmental groups such as the Sierra Club and NRDC rightly could claim to be scrappy underdogs. Today, however, they are sophisticated, connected, and extremely well-funded advocacy organizations. In 2012, NRDC had over $103 million in revenues; in 2012, the Sierra Club had assets greater than $82 million.

Increasingly, they are throwing their considerable resources into politics. The Sierra Club recruited 12,000 members to join Environmentalists for Obama, to participate in get-out-the-vote shifts on Election Day in 2012 and make over 30,000 phone calls on behalf of the Obama campaign. During the last election cycle, the NRDC Action Fund asked its donors to give directly to candidates or green advocacy groups, reports The Washington Post.

Then there’s the revolving door between green nonprofits and EPA political appointments. Consider former EPA Region 6 administrator Al Armendariz, who resigned in controversy after a video surfaced of him comparing his enforcement style to a Roman crucifixion. Soon after leaving the agency, he joined the Sierra Club’s Beyond Coal campaign.

Alas, Armendariz’s experience is all too common. A recent Senate Republican staff report, “The Chain of Environmental Command,” lists the many EPA political appointees who came from the ranks of environmental special interests and explains:

The Obama administration has installed an audacious green-revolving door at EPA, which has become a valuable asset for the environmental movement and its wealthy donors.

Thanks to their political spending, green organizations can count on their voices being heard. “They have millions, which gives them access,” said Sen. John Barrasso (R., Wyo.) during a recent committee hearing. “The EPA has turned a deaf ear on those that don’t.”

Access comes in many forms. My colleague Chris Horner has used the Freedom of Information Act to produce for the public thousands of pages of correspondence between EPA officials and green groups. There’s evidence that high-ranking EPA officials are relying on private e-mail accounts to conduct public business with special interests, probably to avoid compliance with federal transparency laws. In early 2013, for example, EPA Region 8 administrator James Martin abruptly resigned after conceding in federal court that he had used his private e-mail account to conduct government business with his former colleagues at Environmental Defense, a prominent green litigation group where Martin previously had worked.

The agency has also delegated policy-making prerogatives to special interests. In July, the New York Times reported that three NRDC lobbyists penned the “blueprint” for the EPA’s marquee climate policy, the Clean Power Plan — which would fundamentally overhaul the nation’s electricity markets in accordance with the Obama administration’s climate agenda.

The Times story prompted an investigation headed by a group of prominent Republicans from both chambers of Congress. To this end, they wrote to EPA administrator Gina McCarthy, requesting more information on the nature of NRDC’s involvement in the climate rule.

In September, NRDC responded to the Republicans’ letter. NRDC’s David Goldston blogged of the “dangerous” precedent set by a letter questioning “those trying to influence public policy using the normal tools of government.” On Twitter, @NRDC posted that “Republicans act as if fighting for public health were un-American.”

If NRDC were merely using the “normal tools of government” to “fight for public health,” there’d be no problem! But that’s not what NRDC and other green groups are doing. Rather, they’re buying access in order to write policies that have more to do with using federal power to punish the use of “dirty” fossil fuels than with promoting public health.

An ideal example is the Clean Power Plan — a major policy initiative effectively written by NRDC, an unelected special interest that campaigned for the president. That’s a far cry from the “normal tools of government.”

Now, let’s consider the extent to which EPA/NRDC’s Clean Power Plan advances the “fight for public health.” In September 2013 testimony before a House committee, EPA administrator Gina McCarthy conceded the agency’s climate-change regulatory regime would not affect the climate, because the preponderance of current and future greenhouse-gas emissions originate in Asia.

So the Clean Power Plan’s supposed benefits are non-existent. Its costs, on the other hand, are very real. The EPA/NRDC climate plan will make it more expensive to do business in America by effectively forcing industries to use far less coal, the most affordable source of electric power.

Yet the Clean Power Plan is only one of many regulations that make sense only if your goal is to demonize fossil fuels. Such rules satisfy environmentalists, for whom coal is an existential evil. For the rest of us, these regulations make everything more expensive in order to obtain non-existent benefits. In short, they are all pain for no gain.

— William Yeatman is a senior fellow at the Competitive Enterprise Institute, a free-market think tank in Washington, D.C.

Dodd-Frank Will Cripple American Energy



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The two recent federal court decisions on Obamacare subsidies — one for, one against — prompted fevered reactions and discussion. By contrast, two recent rulings against the Dodd-Frank Wall Street Reform and Consumer Protection Act — which is about the same length as Obamacare (around 2,600 pages) and which was rammed through the same Democrat-controlled Congress — attracted much less notice. Why? It may have something to do with the particular provisions involved.

Dodd-Frank’s Section 1502, for example, does not contain much of the terminology one would expect in a “Wall Street reform” bill. There is no mention of banking, lending, or financial fraud. Instead, one finds references to things such as “minerals necessary to the functionality or production of a product manufactured.” Minerals, manufacturing, “functionality” — in a banking bill? At least in Obamacare, no one has found any hidden provisions on foreign policy, international trade, or energy policy.

#ad#In the more than four years since Dodd-Frank became law, Fannie Mae and Freddie Mac — significant players if not the largest culprits in the mortgage crisis — are bigger than ever. The law did not lay a hand on them. And Dodd-Frank didn’t curb the power of too-big-to-fail banks. In fact, the law’s designation of “systemically important financial institutions” enshrines too-big-to-fail by telling creditors which financial firms the government will spare from a normal bankruptcy. But some parts of Dodd-Frank simply have no relationship to financial stability.

As Mercatus Center scholars Hester Peirce and James Broughel explain in their recent book on Dodd-Frank, the law’s “miscellaneous provisions” in Title XV offer “a clear example of how a statute invoked as the answer to the financial crisis is, in reality, an odd conglomeration of responses to issues, many of which had nothing to do with the financial crisis.” Section 1502, championed by celebrities such as Ashley Judd and Ben Affleck, requires all types of publicly traded firms to disclose their use of five “conflict minerals” — including gold, tin, and tungsten — sourced from war-torn regions of the Congo. Similarly irrelevant to finance is Section 1504, added at the behest of rock-star-turned-activist Bono. With the stated aim of combating the use of “dirty money” by U.S. energy companies, it requires firms developing oil, gas, or minerals to disclose payments they make to foreign governments to further their development activities.

Fighting corruption and violence in the Congo is a laudable goal, but pursuing foreign-policy objectives through a financial bill is the wrong approach. The government entity charged with enforcing these provisions, for instance, is neither the State Department nor the Defense Department, but rather the Securities and Exchange Commission (SEC) — an agency no one would describe as well schooled in the nuances of foreign policy.

Further, the required disclosures will be made in the same annual reports where companies disclose financial information to investors. This mission creep imposed on the SEC could impair its efforts to protect U.S. investors from financial fraud. As Peirce and Broughel warn, “Title XV not only fails to address any issues that arose during the crisis, but it also distracts the SEC from undertaking reforms designed to prevent future crises.”

Now, about those court rulings. Both sections 1502 and 1504 have been challenged. On April 14, a D.C. Circuit Court of Appeals panel ruled 2–1 that the “conflict minerals” provision, as applied by the SEC, could not withstand First Amendment scrutiny, even though the government has a fairly broad authority to regulate “commercial speech.” Noting that this mandated disclosure is not even “reasonably related” to the SEC’s mission of “preventing consumer deception,” the court’s opinion concludes:

By compelling an issuer [publicly-traded company] to confess blood on its hands, the statute interferes with that exercise of the freedom of speech under the First Amendment.

A federal district judge, also in D.C., did not reach First Amendment issues in ruling on Section 1504 but vacated the SEC’s application of the rule as “arbitrary and capricious.”  Until there is final resolution by the Supreme Court, these provisions may continue to cost non-financial businesses and their customers plenty.

Even under the SEC’s constrained cost-benefit analyses, these rules are shown to weigh heavily on consumers. The SEC has estimated that each provision will make companies pay more than $1 billion in initial costs, followed by annual costs in the hundreds of millions. Moreover, U.S. energy companies exploring for resources abroad may be required to publicly disclose trade secrets, such as how much they paid for an individual project. Should this happen, state-owned oil companies in some of the world’s most corrupt nations will have access to this valuable info, and they won’t have to disclose anything in return. As American Petroleum Institute President Jack Gerard has pointed out, “the 16 biggest oil companies in the world do not fall under SEC jurisdiction,” because they don’t list on U.S. exchanges. And if the costs of these provisions force U.S. companies to pull out of developing countries, the results will not be pretty for those countries’ citizens.

Dodd-Frank’s “conflict minerals” provision already has led to a similar trend in mining. Because it is nearly impossible to source many minerals used in manufacturing to their countries of origin, many manufacturers have told their suppliers to avoid all regions of the Congo and all nearby nations. The celebrity activists pushing these measures would do well to read freelance journalist David Aronson’s New York Times op-ed describing how Dodd-Frank’s backdoor tariffs are harming Africa:

Mining towns are virtually cut off from the outside world because the planes that once provisioned them no longer land. . . . Villagers who relied on their mining income to buy food when harvests failed are beginning to go hungry.

So add to the long list of “accomplishments” by former Senator Chris Dodd (D., Conn.) and former Rep. Barney Frank (D., Mass.) the boosting of energy prices for American consumers and the further impoverishment of developing nations.

— John Berlau is senior fellow for finance and access to capital at the Competitive Enterprise Institute.

Pipeline Safety



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Friday’s jobs numbers from the Labor Department show that President Obama needs to approve the Keystone XL pipeline. Even with 175,000 jobs created in May, there are 2.4 million fewer jobs in America than at the start of the recession in December 2007.

Approval of the Keystone XL pipeline, to bring oil from Canada to our refineries near the Gulf of Mexico, would create jobs, both for constructing the pipeline and for refining the oil. But President Obama has delayed the pipeline’s approval, citing safety concerns.

Pipelines have been used to transport natural gas and oil, including from Canada to the United States, for three-quarters of a century. Almost 500,000 miles of interstate pipelines crisscross America, carrying crude oil, petroleum products, and natural gas, and over 2 million miles of natural-gas distribution pipeline send natural gas to businesses and consumers.

This extensive infrastructure network is heavily regulated by the U.S. Department of Transportation, which monitors the very issues central to the Keystone controversy: safety and reliability.

My review of accident statistics provided by the Department of Transportation shows that, in addition to enjoying a substantial cost advantage, transporting these substances by pipeline results in fewer spillage incidents and personal injuries than transporting them by road or rail. Americans are more likely to get struck by lightning than to be killed in a pipeline accident. The full paper can be found here.

The question of how to transport oil and natural gas safely and reliably is broader than Keystone XL. Petroleum production in North America is now at nearly 18 million barrels a day, and could climb to 27 million barrels a day by 2020, attracting manufacturing from abroad and creating yet more jobs. Natural-gas production in Canada and the United States could rise by a third over the same period, climbing to 22 billion cubic feet per day.

U.S. oil and natural-gas production is outpacing the transportation capacity of our inadequate national pipeline infrastructure. The Keystone XL pipeline is only one of many pipelines that will need to be constructed in the years ahead. Much of America’s refining capacity is located in the Gulf states, but large and expanding reserves of petroleum are being discovered in the north-central part of America and in Canada. Bringing oil to refineries, and then to end users, requires pipelines.

If this oil and natural gas can easily travel to where it is needed, all America will be able to benefit from lower energy prices and thus from increased economic activity and employment. New environmental regulations are closing coal-fired power plants, increasing the demand for natural gas. Large fleets of buses and trucks are switching to natural gas, and General Motors and Chrysler are making dual-fuel pickup trucks.

Approximately 70 percent of crude oil and petroleum products are shipped by pipeline on a ton-mile basis. Tanker and barge traffic accounts for 23 percent of oil shipments. Trucking accounts for 4 percent of shipments, and rail for the remaining 3 percent. Essentially all natural gas, except liquefied gas, is shipped by pipeline to end users.

If personal injuries and environmental damage caused by accidents in the transportation of oil and natural gas were proportionate to the volume of shipments, one would expect the vast majority of incidents to occur on pipelines. But the opposite is true — the majority of incidents occur on road and rail, as shown by Transportation Department data, even though more road and rail incidents go unreported.

Road transport had the highest rate of incidents, with 19.95 per billion ton-miles. This was followed by rail, with 2.08 per billion ton-miles. Natural-gas pipelines came next, with 0.89 per billion ton-miles. Oil pipelines were the safest, with 0.58 incidents per billion ton-miles.

Natural-gas pipelines had the lowest average fatality rate for operator personnel and the general public between 2005 and 2009, with a rate of one person killed per year. This was followed by oil pipelines and rail, each with an average of 2.4 people killed per year. Road had the highest fatality rate, with an average of 10.2 people killed per year. This is not because many members of the public are killed in accidents involving oil trucks. Only 1.4 members of the public, on average, were killed annually, but an average of 8.8 operators died per year.

Not only are fatalities and other injuries relatively low, but the majority of those that do occur have been associated with pipelines that are part of intrastate natural-gas-distribution systems. The U.S. network of pipelines for natural-gas distribution spans over 2 million miles, and the federal government does not regulate state pipelines (local distribution and production-gathering lines), except for gathering lines that are located on federal lands. Local distribution networks, which account for the vast majority of pipeline miles and where the vast majority of accidents occur, are regulated by states and municipalities. The federal government would regulate the Keystone XL pipeline.

The evidence is clear: Transporting oil and natural gas by pipeline is safe. Furthermore, pipeline transportation is safer than transportation by road, rail, or barge, as measured by incidents, injuries, and fatalities — even though more road and rail incidents go unreported.

As America continues to ramp up production of oil and natural gas, our pipeline infrastructure becomes more and more important. We need better pipelines to get oil from North Dakota to the refineries in the Gulf, and natural gas from the Marcellus Shale in Pennsylvania (and New York, should the Empire State allow production to move forward) and the Utica Shale in Ohio to the rest of the country.

In order for these resources to get where they are needed, America needs more pipelines — the safest way to move fuel.

— Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Manhattan Institute. She is the author of Regulating to Disaster: How Green Jobs Policies Are Damaging America’s Economy (Encounter Books, 2012).

The Energy Subsidy Experiment



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National Review and the American Energy Alliance presented The Energy Subsidy Experiment: A Debate on Energy, June 7, 2013, in Washington D.C. Moderated by Charles C. W. Cooke of National Review, the panel included Bob Dinneen of the Renewable Fuels Association, Steve Moore of the Wall Street Journal, Tom Pyle of the American Energy Alliance, and Michael Zehr of HBW Resources. Watch the six-part replay here:

 

Debating Phil Cafaro



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Phil Cafaro is a leading radical anti-humanist. A professor of philosophy at Colorado State University and president of the International Society for Environmental Ethics, he has published numerous articles and a book calling for shackling humanity with all sorts of chains, ranging from mandatory recycling, to limits on meat consumption, airplane travel, and the size of houses, to stiff carbon taxes, immigration restriction, and population control. He also urges the abandonment of Judaeo-Christian ethics and human rights. According to Cafaro, the world population needs to be reduced to 2 billion and the U.S. population to 100 million. “The last thing the world needs is more Americans,” he says.

On May 13, I got a chance to debate him. The debate was occasioned by a guest commentary that Cafaro penned in the February 11 Denver Post, in which he advanced the argument that immigration needs to be sharply cut, because otherwise people from Third World nations might come to the United States and become prosperous, and thereby add to global warming. “And make no mistake,” warned the philosopher. “Immigrants are not coming to the United States to remain poor. Those hundreds of millions of new citizens will want to live as well and consume energy at the same rates as other Americans. . . . What climate change mitigation measures . . . could possibly equal the increased greenhouse gas emissions we would lock in by adding 145 million more new citizens to our population?”

I rebutted this on NRO on February 21: “This is truly remarkable. Conservative immigration skeptics have voiced the concern that immigrants might not assimilate and achieve success, and even common xenophobes have never objected to would-be immigrants attaining prosperity elsewhere. But according to Cafaro’s liberal argument, the wretched of the Earth must be kept poor wherever they reside, because otherwise they would ruin the weather for the rest of us. Following this logic, the United States should adopt the role of the world’s oppressor, enforcing the continuation of poverty around the globe. But why stop there? We have millions of poor people right here in America who hope to rise into the middle class. Surely we must stop them from doing so.”

I sent the piece to Cafaro and challenged him to public debate. He accepted, and John Andrews, the director of Colorado Christian University’s Centennial Institute, agreed to host the event, setting it for April 15. It was snowed out (by one of the several blizzards this spring, which was the second coldest since 1860), but Cafaro agreed to reschedule, and on May 13 the encounter finally occurred.

It was a remarkable event. If you want to see it, the video is now available. You can watch it online, or download it from Dropbox.  But for those who would rather read a condensed, partially paraphrased, and frankly partisan first-person account, here is what happened.

Andrews, who served as the moderator, introduced the contestants and stated the debate proposition, which was that to help stop global warming, the United States should seek to sharply reduce carbon emissions, cut immigration, and reduce population growth. Cafaro, arguing for the affirmative, was given 17 minutes to present his case, and then there was equal time for me, representing the negative. Following this, we were each given 7 minutes for rebuttal, after which the meeting was opened up to 40 minutes of questions posed by members of the audience.

In his opening presentation, Cafaro soft-pedaled his actual beliefs, pointing (disingenuously, as later became evident) to concern for the 22 million Americans unemployed or underemployed as a reason to stop immigration, an action that, he further said, would allow the American population to be stabilized in the 360 million range by the end of the century. If this is not done, he said, then the U.S. population will rise to 600 million by 2100 and strongly drive anthropogenic global warming. This, which he claimed had already entailed an increase of the Earth’s temperature by 1.5 degrees Celsius per decade for the past century (a total of 15 degrees C!), would raise it another 3 to 6 degrees C over the next 50 years, with devastating results. Thus, said Cafaro, immigration restriction combined with other measures to limit the U.S. population is “the right policy for stewardship, and the right policy for future generations.”

I then took the floor, focusing most of my presentation on the chart below.


Figure 1: Average global GDP per capita vs. global carbon use, 1800–2010 (2010 dollars)

“This graph,” I said, “shows the history of humanity’s great escape from poverty over the past 200 years. From the world depicted in the novels of Victor Hugo and Charles Dickens, with an average per capita income of $180 per year and people starving to death in the streets of London and Paris, the capitals of the world’s leading nations, to the world of today, with an average global GDP per capita of nearly $9,000. As you can see, it has been driven directly by carbon use. . . . What we are looking at here is not only a grand story of a world of billions of people escaping from poverty, but millions of individual stories of people escaping from places where they were doomed to poverty to places where they had the opportunity to rise. It’s a story of millions of people coming to America.

“So here,” I said, pointing to the lower-left-hand part of the graph, which begins in 1800, “they have names like Smith and Andrews, and they are coming from impoverished circumstances in England and Scotland. And here [pointing to 1850] they have names like O’Brien and O’Donnell, and they are coming from Ireland. And here [pointing to 1875] come Hanson and Johansen. And here [pointing to 1910] come Kowalski, and Kaplan, and Petrakis, and Cafaro. And here [pointing to the mid 20th century] they have names like Rice, and King, and Robinson, and they are coming from the land of Jim Crow to the land of opportunity. And here [pointing to 2000] they have names like Chang, and Gupta, and Gonzalez, and they come, seeking and finding opportunity. 

“Now this is so obviously good, who could oppose it? Cafaro does. He says, repeatedly, in his writings that ‘the last thing the world needs is more Americans.’ Well, I say that the first thing the world needs is more Americans. And here is why: Because we need to ask ourselves who did this [pointing to the line on the graph rising from $180 per year in 1800 to nearly $9,000 per year in 2010]? Who is responsible for this miracle? Well, for the first part [pointing to the region of the graph from 1800 to 1875], the answer is, the British. There are others who play a supporting role, including Americans and continental Europeans, but in the main, this is a British show, and it’s a great achievement, raising the world from $180 per year to $500 per year. But after that [pointing to the graph from 1875 to 2010], it’s the U.S.A. It’s America, inventing oil drilling, and light bulbs, and recorded sound, and centrally generated electric power, and telephones, and airplanes, and motion pictures, and mass-produced automobiles, and radio, and television, and nuclear power, and modern agriculture, and computers, and transistors, and micro-electronics, and all the rest. We are 4 percent of the world’s population, but for the past century we’ve been responsible for half the world’s inventions. That’s why the world needs more Americans.

“But has this been accomplished at the expense of a climatic catastrophe? Well, I’m 61, and my memories go back to Sputnik [pointing to the late 1950s], when the average global GDP per capita was $2,200. During the span of my living memory, we’ve quadrupled the global per capita income. What has happened to the weather? Well, for those of you who weren’t around then, let me tell you. When I was a boy, the weather was pretty much the same as the weather is now.”

That line got me a big knowing laugh from the audience. I then went on to display my second graph, provided below, which shows how, contrary to Cafaro’s Malthusian ideology, since 1500, as the world’s population has increased, GDP per capita has risen even faster.


Figure 2: Growth of living standards with population, 1500–2000 (2010 dollars)

I then pointed out, as a matter of particular interest, the part of the graph since 1968, when Cafaro’s mentor, Paul Ehrlich, published his bestselling book The Population Bomb, in which he predicted a collapse of living standards worldwide, including in America, should the global population double as anticipated by the year 2000. (Incidentally, Ehrlich and his wife, Anne, wrote the introduction to Cafaro’s book, Life on the Brink, published in 2012.) “As you can see,” I said, “the population did double, albeit by 2010, but instead of collapsing, as predicted by Ehrlich, the global GDP per capita tripled. Well, anyone has the right to be wrong about the future. But Ehrlich was also wrong about the past.” Here I pointed to the thin purple line with which I extrapolated the predictions given by Ehrlich’s theory backward in time from 1968. “Ehrlich was born in 1931, when the population of the world was 40 percent lower than it was in 1968. So if Ehrlich’s theory that human well-being is inversely proportional to human numbers was correct, then the world should have been much richer in the 1930s than it was in 1968, and Ehrlich would have been around to see it. But of course the world of the 1930s was much poorer than the world of the late 1960s, let alone the world of today. It is this willingness to ignore readily available data, and continually make predictions on the basis of a theory that has been shown to be completely counterfactual, that defines Ehrlich and his fellow Malthusians as cranks.”

At this point Andrews informed me that I had only one minute left. So I went straight to my conclusions. “The bottom line is this. Ideas have consequences. If the idea is accepted that humans are not creators but destroyers, then every nation becomes the enemy of every other nation, and every race the enemy of every other race. In 1941 Adolf Hitler said, ‘The laws of existence require uninterrupted killing, so that the better may live.’ Genocide is supposedly necessary because the Earth only has so much carrying capacity. That is the worldview that Cafaro and his co-thinkers are promoting. And if it is accepted, then there will be world war. Because if the Chinese come to believe it, the existence of the United States is unacceptable. We are using up too many of the world’s resources, and so forth. And should America’s strategic thinkers accept it, then for them the rise of China becomes unacceptable, because when the children of Chinese peasants graduate from college, they’ll buy cars, and start using the oil that we need, etc. But if the truth is understood — that humans are creators, not destroyers — then every nation is potentially the friend of every nation. The truth is that China’s ability to rise from poverty has depended entirely upon inventions made in America and elsewhere in the West, so the existence of America has been very good for China. And should the children of Chinese peasants become scientists and engineers, they will start making inventions that will contribute to human progress, and thereby benefit us. So that’s the choice: a world of war of all against all, or a world where all men can be brothers. The more people there are, the more free people there are, and the more of the freest people there are, the better off we all are.”

My time was up, but Andrews felt that I hadn’t directly addressed global warming very much. He asked Cafaro if I could have two more minutes to directly address that topic, and Cafaro generously agreed. So I did, briefly making the following points: Empirically the current rate of global warming is unclear, as we have just had the second-coldest spring since 1860. But if it were occurring, that would be something to celebrate, as global warming lengthens the growing season and increases net rainfall. Furthermore, increasing CO2 concentrations in the atmosphere, which we have indeed done, accelerates plant growth, and we have both photos taken from orbit and reproducible lab experiments to prove it. So the bottom line is that we are making the world a more fertile planet. “The Chinese have a saying, ‘Where there is a will to condemn, evidence is never lacking.’ The anti-humanists want to put humanity in chains, so they seek to represent any human action as criminal. But we should be proud to have made the Earth more fertile.”

Cafaro then gave his rebuttal, making the point that in his view global warming must be bad, because we are accustomed to the current climate. He said that it was not correct to say that he is anti-people. He just does not consider the advancement of humanity as consisting of acquiring ever more wealth. Continuing in this vein, he proceeded to quote the Bible, reminding us to lay not up for ourselves treasures on Earth, but put them in Heaven, as where your treasure is, there will your heart be also. “We must choose between the pursuit of Mammon and another path that is better for our society,” he said. “I am frankly anti-growth,” he continued. “Our politics are built around the pursuit of growth. That might be okay for a poor country, but not for the U.S.A. I’d like to see more spiritual growth and less material growth.”

Then it was again my turn. I thanked Cafaro for admitting plainly that he was anti-growth, as this underscores the lack of sincerity of his alleged concern for the unemployed. Cafaro, I said, wants to stop immigration in order to stop economic growth, which is the only hope for the unemployed. I then addressed the broader issue of what Cafaro is actually up to, in combining xenophobia with collectivism. “Hayek examines this same phenomenon in The Road to Serfdom,” I pointed out, “where he says that Nazism is actually the ultimate form of socialism. How can that be, Hayek asks rhetorically, since the Nazis are racists while the socialists are internationalists? He then answers that, yes, the social democrats may prefer internationalism, but what Hitler understands is that if you really want to mobilize the passion required to impose the full collectivist agenda, you have to invoke the tribal instinct. Thus the combination of xenophobia with collectivism, the most lethal political combination there is. No one should be fooled by this. If you combine nationalism with socialism you don’t get conservatism, or liberalism. You get National Socialism.”

In response to Cafaro’s citing of the Bible, I offered two quotes of my own — Leviticus 19:33–34 and a longer passage from Mathew, 25:34–46 — which make it very clear where the Judaeo-Christian tradition stands relative to both xenophobia and Cafaro’s supposedly spiritual endorsement of state policies designed to enforce poverty. In contrast, I drew the attention of the audience to the philosophical writings of Cafaro and his fellow ideologues, who deride in their journals any form of human-centered ethics as representing “anthropocentrism,” a supposedly more primitive and narrow outlook than theirs, which places nature first and human needs last.

The floor was then opened to questions. The first questioner asked Cafaro how he thought Social Security could be financially sustained under conditions of negative population growth. Cafaro saw no problem, so long as the decrease was gradual.  I disagreed, pointing to the impending bankruptcy of Europe following from its ongoing population implosion. “It’s been said that the problem with socialism is that you run out of other people’s money to spend,” I commented. “Another is when you run out of other people’s children to support you.”

Andrews asked Cafaro if he did indeed want the U.S. population to decline. Cafaro said yes, but avoided saying how much. I then quoted one of Cafaro’s own articles in his Life on the Brink anthology, in which he favorably cited Negative Population Growth ideologue David Pimentel’s estimate that the proper U.S. population size was between 40 and 100 million. My daughter Rachel, who was in the audience, then asked Cafaro how he expected to deal with recurrent natural climatic problems like glaciation. Cafaro replied that that was for the long term — the problem now was to stop warming. I commented that the broader problem being raised was how can we cope with massive natural threats, including glaciation and asteroidal impacts. Clearly, the only way is by increasing our technological and industrial powers over nature, not holding them back. Andrews asked Cafaro to comment on his opposition to “anthropocentrism.” Cafaro responded that he was indeed opposed to ethics that placed value only on what was of use to humans and that, accordingly, he was also concerned with animal rights.

A questioner asked me what I thought was sustainable “on a planet with limited resources and land size.” I answered that the concept of sustainability within stasis was itself wrong, and that no fixed set of resources will ever last. The need therefore is for continued invention. “The idea that a society can pull in its horns and live within its means is false. Static societies have always failed. The society that has succeeded is one based on progress.” Andrews then asked me how many people, in that case, can we have on Earth. I replied that we are on the verge of achieving true access to space, and whether that occurs in 10 years, 20, 50, or 100, in an historical blink of an eye, the relevant arena of human activity will expand far beyond the confines of the Earth, just as our current global reach extends far beyond the limits of our species’ original natural habitat in the Kenyan Rift Valley.

Andrews asked Cafaro if he believed in the precautionary principle. Cafaro replied that while he would not ban all innovations, we have had an awful lot of progress in the past 100 years, and so a certain amount of precaution makes sense before we progress further. So let’s slow down a bit, he said. I intervened to point out that the average world income today is nearly $9,000, and while that is a great accomplishment relevant to past ages, we still have a long way to go. Poverty remains the No. 1 problem in the world today, I said. Poverty kills millions, through starvation, disease, exposure, brutality, ignorance. To say we’ve made it, so now progress can stop and the rest of the world remain in poverty, is not a moral position.

A Colorado Christian University professor commented that his best students were immigrants, and if we seek to exclude such bright, hard-working people, we will weaken the national fiber. Cafaro answered that nothing he said should be taken to imply that he was against immigrants, to which I responded by pointing out that he did want to exclude them. He said yes, but we have all the bright, hard-working people we need already here within our borders. I then spoke, agreeing with the CCU professor that excluding such people would reduce the future of this country, and therefore the world, “because it is America that holds up the sky.”

A questioner then confronted Cafaro with data showing that for the past 16 years there has been no global warming. Cafaro said he hadn’t seen those data. Another questioner asked Cafaro how he accounted for the 1,700 scientists who have signed a statement saying that the warmist campaign is a hoax. Cafaro answered that it was impossible to imagine how the thousands of scientists who are involved in the development of the U.N. Intergovernmental Panel on Climate Change reports could be induced to cooperate in a massive scientific fraud. I replied, “Not if you understand how science is funded.”  I then went on to discuss how in the 1920s, pseudoscientific reports based on IQ tests given in English were used to argue for immigration restriction based on the non-existent threat that Polish, Italian, and Jewish immigrants were posing to the nation’s hereditary intelligence.

A questioner then asked Cafaro what he meant when he said he supported “noncoercive” population-control measures. Cafaro responded by saying he supported the use of contraceptives. Andrews asked Cafaro where he stood on the Chinese one-child policy. I pointed out that it is endorsed in Cafaro’s book. Cafaro replied that the book is an anthology, merely edited by him, and that one of his contributing authors (David Foreman, co-founder of Earth First!) had actually made that endorsement. Andrews then pressed Cafaro to say where he stood, and Cafaro admitted that he endorsed the one-child policy too, saying that if China hadn’t had it, there would have been 200 million more Chinese, which would have been a disaster. I then spoke, quoting Cafaro as recommending that limits on childbearing be enforced by fines, which is certainly a form of coercion. I also quoted one of his own articles in his anthology, in which he says that the United States should use denial of foreign aid as a means of forcing Third World countries to impose top-down population-reduction programs, and I proceeded to discuss exactly how many such brutal, racist programs have been implemented under USAID auspices to date. Cafaro replied that that was unfortunate, and so to prevent our ever getting to that point, the United States should start implementing domestic population-control programs now.

The time limit for the event having been reached, Andrews drew the meeting to a close, and the audience departed, perhaps somewhat enlightened.

— Robert Zubrin is president of Pioneer Energy, www.pioneerenergy.com, and the author of Energy Victory. His latest book, Merchants of Despair: Radical Environmentalists, Criminal Pseudo-Scientists, and the Fatal Cult of Antihumanism, was published last year by Encounter Books.

Dodd-Frank’s Early Returns



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‘Admit it . . . you haven’t read it all either.”

Thus said a New York Times op-ed (by Bono, of all people) about the Dodd-Frank Wall Street Reform and Consumer Protection Act, just a couple of months after that law’s passage in 2010. The line reflected a common sentiment toward the 2,600-page law, and things haven’t improved since. Both supporters and opponents of Dodd-Frank will concede that, as with Obamacare, members of Congress passed the law before they — or the public — knew or understood what was in it.

But give Obamacare this much: So far, in digging through its thousands of pages, no one has found any hidden provisions that significantly affect foreign policy, international trade, or energy policy. The same can’t be said for the so-called financial-reform bill.

“Hidden somewhere in the Dodd-Frank financial reform bill,” noted the op-ed, “there is a hugely significant ‘transparency’ amendment. . . . Now energy companies traded on American exchanges will have to reveal every payment they make to government officials.”

Hold on. A provision targeting energy companies — in a banking bill?

In the almost three years since Dodd-Frank was rammed through Congress, Fannie Mae and Freddie Mac — significant players if not the largest culprits in the mortgage crisis — are bigger than ever. The law did not lay a hand on them.

And many on both left and right say Dodd-Frank didn’t make a start on curbing the power of too-big-to-fail banks. In fact, the law’s designation of “systemically important financial institutions” through its Financial Stability Oversight Council enshrines too-big-to-fail by telling creditors which financial firms the government will spare from a normal bankruptcy.

But rest assured that Dodd-Frank is working — at great cost — to force energy companies to tell shareholders each and every payment they make to foreign governments, and all public companies to say whether they have ever used tin or tungsten from the Democratic Republic of the Congo. As explained by Mercatus Center scholars Hester Peirce and James Broughel in their book Dodd-Frank: What It Does and Why It’s Flawed, the law’s “miscellaneous provisions” in Title XV offer “a clear example of how a statute invoked as the answer to the financial crisis is, in reality, an odd conglomeration of responses to issues, many of which had nothing to do with the financial crisis.”

The specific provision championed by Bono ended up as Dodd-Frank’s Section 1504. With the stated aim of combating the use of “dirty money” by U.S. energy companies, it requires firms developing oil, gas, or minerals to disclose payments they make to foreign governments to further their development activities. Section 1502, championed by some of Bono’s fellow celebrities, including Ashley Judd and Ben Affleck, requires all types of firms to disclose their products’ use of five “conflict minerals” — including gold, tin, and tungsten — that can be sourced to war-torn regions of the Congo.

Fighting corruption and violence in the Congo is a laudable goal, but it is a bad idea to pursue foreign-policy objectives through a financial bill. There are a number of reasons for this, the most important being that the government entity charged with enforcing these provisions is neither the State Department nor the Defense Department, but rather the Securities and Exchange Commission — which no one would call an agency well-schooled in the nuances of foreign policy.

Under Dodd-Frank’s Title XV provisions, the SEC requires companies listed on U.S. stock exchanges to disclose these things in the same annual reports in which they disclose financial information to investors. This new mission creep imposed on the SEC could impair its efforts to protect U.S. investors from financial fraud, as Peirce and Broughel warn: “Title XV not only fails to address any issues that arose during the crisis, but it also distracts the SEC from undertaking reforms designed to prevent future crises.”

For Bono and other activists, it’s all worth it to be making a stand against — in the immortal words of musical satirist Tom Lehrer — “poverty, war, and injustice, unlike the rest of you squares.” Bono, who has in the past made thoughtful arguments on the role of trade and development in combating poverty, becomes almost a caricature of the rock-star crusader when he talks about this Dodd-Frank provision, spouting the tired and untrue platitude that “corruption [is] more deadly than the deadliest of diseases.” He concludes that this kind of forced disclosure “is the kind of daylight that makes the cockroaches scurry. . . . And the cost to us is zero, nada.”

In fact, even under the SEC’s constrained cost-benefit analyses, the costs of these rules are far from nada. The SEC has estimated that each provision would costs companies more than $1 billion in initial costs, with annual costs after that in the hundreds of millions. Moreover, U.S. energy companies exploring for resources abroad are now required to disclose to the general public information that fits into the category of trade secrets, by revealing how much they paid for each individual project. This means that the state-owned oil companies in some of the most corrupt regimes — which aren’t subject to Dodd-Frank because they don’t list on U.S. exchanges — now have access to this valuable info, giving them a competitive edge over their U.S. private-sector rivals. As American Petroleum Institute president Jack Gerard points out in a Wall Street Journal op-ed, “the 16 biggest oil companies in the world do not fall under SEC jurisdiction.”

And if the costs of these provisions force U.S. companies to pull out of developing countries, the results will not be pretty for the ordinary citizens of those countries — as has already been shown to a large extent with the “conflict minerals” provision.

Because it is nearly impossible to source many minerals used in manufacturing to their countries of origin — gold has been called “the world’s most recycled material” — many manufacturers have told their suppliers to avoid all regions of the Congo and all nearby nations. Bono and his fellow celebrity activists would do well to read another Times op-ed, in which freelance journalist David Aronson describes how Dodd-Frank’s backdoor tariffs are re-impoverishing Africa. Among the effects Aronson describes: “Mining towns are virtually cut off from the outside world because the planes that once provisioned them no longer land. . . . Villagers who relied on their mining income to buy food when harvests failed are beginning to go hungry.”

Dodd-Frank has already entrenched too-big-to-fail and worsened Third World poverty. That’s some achievement for a law that’s not yet three years old.

— John Berlau is senior fellow for finance and access to capital at the Competitive Enterprise Institute.

Global Warming and Energy Insanity



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Rush Limbaugh hasn’t made a lot of green friends over the years with his “environmental wacko” tirades, but, given what’s going on these days, perhaps his rhetoric has been too mild.

Exhibit No. 1 is the sleek and sexy Tesla Model S. If you want the one with the lowest chance of stranding you on I-95, it will set you back over $100,000. You’ll be refunded $7,500 from the federal government, several thousand more (in most states) from state taxpayers, plus various other credits that governments bestow upon ostentatious and cheap virtue, like putting a special plug in your garage. Somehow, Tesla is still losing money.

You might have read otherwise. The company’s stock price doubled — to about $110 a share — after it reported a profit last month. Along the way, its genius founder, Elon Musk, hit upon the clever notion of paying off hundreds of million dollars in federal loans by issuing a jillion more shares of TSLA stock.

Supply and demand usually dictates that when the number of shares in a company is dramatically increased, the price goes down, but this is not the case with TSLA. By announcing a phony profit, TSLA made its stock kite to the point that issuing even more of it generated enough dough to retire its massive federal debt.

By “phony” I mean this: Conservatively speaking, Tesla lost about $11,000 for every car that rolled out the door last quarter. But they covered that by selling $68 million in “credits” to their competitors.

These competitors had chosen not to enter the obviously limited market for cars with an average real-world range of around 200 miles. We know the market is limited thanks to the paltry sales (averaging around 2,000 per year) of the Honda Civic GX, a natural-gas-powered version with about that range. But the State of California punishes car companies that won’t go along with this craziness, making them buy “credits” to not produce what no sane company would, from the only one that does: Tesla.

Honda (“The Power of Dreams”) thinks it’s a perilous business model to depend upon evanescent global-warming shakedowns and subsidies. They are reading the recent scientific literature in which climate scientists are clumsily trying to thread the needle between backing off their forecasts of the end of the world and maintaining a shred of credibility.

Exhibit No. 2 is the increasing clear-cutting of the jungle-like dense vegetation of the southeastern U.S. to fight global warming. Say what?

Remember all that caterwauling that cutting down the world’s forests is a bad idea because it results in increasing carbon dioxide emissions as the felled trees are burned? As Mikhail Gorbachev says, “that’s old thinking.” The EU has now decided that forests are “renewable,” and that their wood is a renewable fuel, disregarding their previous concerns about carbon emissions. But they won’t cut their own forests, because they have laws against clear-cutting, or mowing down the entire woods.

So we cut down ours. The 100-year-old trees of Northampton County, N.C., that are being bulldozed, pelletized, and shipped to Europe to be combusted in (previously) coal-fired power plants indeed are renewed — after 101 years. In the meantime, global concentrations of carbon dioxide increase, but the Euros meet their 2020 target.

The green pashas of the EU have finally come to the realization that their previous favorite “renewable” technologies — solar energy and windmills — aren’t going to get them even close to their silly commitment to reduce their emissions of dreaded carbon dioxide by 20 percent below 1990 levels a mere 6.5 years from today.

Maybe that’s because solar is guaranteed not to work whenever there’s insufficient solar radiation — about 50 percent of the time, or “night” — and Europe’s high latitude means there is little insolation except during the summer. And maybe it’s because the “load factor” for wind is even worse, running around 15 percent. There is no way anyone would invest in such insanity if it weren’t paid for with other people’s money.

The Euros could reduce emissions the way the good old U.S.A. is doing, by hydraulically fracturing deep shale for natural gas. That increases supply to the point that it displaces coal for electrical generation, which results in cheaper power and half the carbon dioxide emissions. They could, but the same nutsos who think that reducing their emissions will have a detectable effect on global temperature also think shale gas is yucky.

Why won’t they go our way? Because the green world is stark, raving mad.

Destroying the forest for the good of the environment is insane, right? So is shaking down auto companies that produce profits by selling cars rather than indulgences, and so is giving folks who buy $100,000 cars an average of $10,000 of taxpayer largesse.

Rush was right: Wackos.

Patrick J. Michaels is a senior fellow at the Cato Institute.

No More Energy Protectionism



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At current consumption rates, the United States has more than a century’s worth of natural gas beneath its soil, and new drilling methods are making it much easier to extract. The shale-gas boom has created jobs, generated economic growth, and produced consistently low prices in a historically volatile market.

In fact, the current price of natural gas may be too low to sustain the current rate of development. Some producers are flaring gas and passing up opportunities to drill new wells until they can get a better price. As a result, many in the industry are looking to expand to foreign markets where prices are much higher.

Exporting natural gas is no easy task. An exporter must first liquefy it at extremely low temperatures, then send the liquefied natural gas (LNG) overseas from a purpose-built export terminal and deliver it to a specialized import terminal for storage or distribution via pipeline. It’s a huge investment of time and money — yet sometimes the hardest step of all is getting the government’s permission.

Of course applicants have to undergo the normal environmental review and permitting process conducted by the Federal Energy Regulatory Commission, as would anyone building such huge facilities. But Section 3 of the Natural Gas Act of 1938 also gives the Department of Energy’s Office of Fossil Energy a say in the decision — and not on health or safety grounds, but based on whether DOE thinks it’s good for the economy.

DOE automatically authorizes a permit for exports if the importing nation has a free-trade agreement (FTA) with the U.S. Unfortunately, many of the countries that want our natural gas and will pay high prices do not have such an agreement. If there’s no FTA, the Energy Department must publish a notice of the application in the Federal Register. Then there’s an extended comment period, and eventually DOE will issue a ruling that decrees whether the desired facility is in the public interest.

The initial motivation behind this process was to keep natural gas, in times of scarcity, from being sold abroad when it was needed at home. Whatever the wisdom of that policy, today there is no possibility of a shortage developing, and with all the jobs and money flowing from natural-gas wells, it might seem obvious that selling more gas at higher prices will benefit the economy. Yet the DOE still thinks long and hard before approving permits (a second one was just granted, leaving 19 under consideration), under pressure from hard-core environmentalists who oppose all fossil fuels and manufacturers who benefit from cheap gas.

The Obama administration has been saying most of the right things about these permits. Now it’s time to walk the walk by allowing the market, instead of politics, to determine how much natural gas the U.S. will export. If the administration continues to drag its feet on approving the other 19 licenses, Congress should step in.

The benefits of exporting LNG are clear — not least to the Department of Energy itself, which recently released its second study on the macroeconomic effects of LNG exports. The analysis, produced by National Economic Research Associates, projects annual increases in export revenue as high as $30 billion. By 2020, the report concluded, LNG exports could increase gross domestic product by up to $47 billion: “Across the scenarios, U.S. economic welfare consistently increases as the volume of natural gas exports increase. This includes scenarios in which there are unlimited exports.”

Sure sounds like shipping out more LNG would be in the public’s interest, especially for a president who wants to double American export growth. But the longer the administration waits to approve licenses, the greater the likelihood of squandering this growth opportunity. Australia alone has eight export terminals under construction. If a slow permitting process needlessly delays America’s terminals, the economics could change, as the arrival of exports from other countries lowers prices in areas where U.S. companies wish to export.

President Obama has spoken favorably about natural gas and the possibility of America’s being an energy exporter. So, too, has newly confirmed energy secretary Ernest Moniz. In fact, Moniz chaired a 2011 MIT study that recommended: “The U.S. should sustain North American energy market integration and support development of a global ‘liquid’ natural gas market with diversity of supply. A corollary is that the U.S. should not erect barriers to natural gas imports or exports.”

Ironically, the federal agency that Moniz heads up now poses the greatest unnecessary barrier to more natural-gas exports. Some advocate a go-slow policy, worried that an unrestricted natural-gas boom will lead to a bust. But it’s unlikely that all the companies that have applied to build export facilities will actually build them, because changes in prices would make it no longer profitable. In any case, those decisions should be made by the private sector, not the federal government.

If the administration isn’t going to walk the walk by approving natural-gas-export licenses to non-FTA countries, Congress should work to lift those restrictions. In a free economy, goods and services go to their highest valued use. Natural gas is no different, and it should be treated the same as any other good the U.S. trades around the world.

— Nicolas D. Loris is the Herbert and Joyce Morgan Fellow in the Heritage Foundation’s Roe Institute for Economic Policy Studies.

Feds Fail on Nuclear Waste



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The federal government assumed responsibility for nuclear-waste management more than 30 years ago. The Nuclear Waste Policy Act of 1982 created an ostensibly simple system: Nuclear utilities would pay the U.S. Treasury a fee, collected from their customers, to cover the costs, and the government would see to it that the waste was taken care of. The act and its amendments over the years specified every detail of the disposal process. They stipulated how the waste would be disposed of, where, and who would be responsible.

Surprise! Despite the politicians’ and bureaucrats’ best efforts to centrally plan a long-term solution, the system doesn’t work. Although the government successfully collects money from the consumers of nuclear-generated electricity — nearly $30 billion since 1982 — it has collected zero nuclear waste. And as the waste — nearly 70,000 tons and counting — continues to build up at nuclear plants around the country, the government continues to dither. It literally has no plan to collect and dispose of the waste.

To address this, earlier this spring four senators released a draft of another “solution”: the Nuclear Waste Administration Act of 2013. Unfortunately, the NWAA does nothing to fix the failed system. Instead, it accepts the notion that the feds, not waste producers themselves, should be responsible for nuclear-waste management, and it continues the policy of having waste producers pay a flat fee for these services.

In an attempt to fix this, the bill creates a new bureaucracy to handle the problem in place of the Department of Energy — but this new bureaucracy cannot solve the problem if it works under the same assumptions that have stalled the DOE for three decades. Rather than modify and perpetuate a broken system, Congress should chart a totally new waste-management strategy. Here are some steps it should consider:

1. Start by finishing a permit for a permanent waste repository.

Deep geologic storage provides a safe, long-term solution and is critical to any sustainable nuclear-waste-management plan. There is almost no political or technical disagreement over that fact. It’s time to finish the permit review for Yucca Mountain. The Obama administration has tried to terminate the project, but finishing the review isn’t optional; it’s required by law.

2. Make producers responsible.

France, Finland, Japan, and Sweden all have functioning nuclear-waste programs. The common thread among them: Waste producers are responsible for waste management. A new American system should transfer waste management into hands more capable than the government’s.

3. Allow for market-based pricing.

Prices determine the attractiveness of a product or service for suppliers and customers alike and permit rational economic decision making. They also give potential competitors the information needed to guide them in introducing new alternatives. Waste-management reform should allow waste producers to pay directly for actual services rendered and nothing more — as opposed to the present system, in which they pay a flat fee for an undefined, unrendered service. And the amount paid should be whatever emerges as the market value of the service provided.

4. Allow competition.

Though full privatization of waste-management services should be the long-term objective, a transition that begins by simply allowing competition would be extremely valuable. The government could still offer waste-management services, but any reform should allow waste producers to seek services from regulated nongovernment entities. Utilities could then determine what approach would best meet their unique waste-management needs.

These basic reforms could yield a variety of outcomes — all of them better than what the current system delivers. Perhaps it will turn out that the private sector just can’t provide some or all of the needed waste-management services better than the government can. In that case, the government would remain as the nation’s sole waste manager. More likely, though, America will find that the private sector can provide the entire spectrum of services better than the government.

Regardless, policies that introduce market forces and corporate responsibility are key to a long-term solution. But to achieve this, we need a bill with some attitude.

— Jack Spencer is the Heritage Foundation’s senior research fellow in nuclear-energy policy.

The Climate’s Alright



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“Progressive” politicians, pundits, and organizations continue to wage political warfare on affordable energy, and their team still controls the Senate and the EPA. Their worldview, however, is crumbling.

Think back to the mid-2000s, when Congress last enacted major energy bills. The period of 2005 through 2007 was a high-water mark of U.S. oil-import dependence. The expert consensus at the time held that America was fated to become ever more dependent on increasingly costly energy imports unless policymakers could tax and regulate America “beyond petroleum.”

During those same years, the Kyoto Protocol’s entry into force, Hurricane Katrina’s devastation of New Orleans, Al Gore’s An Inconvenient Truth, the UK government’s Stern Review (famous for warning that climate change could decrease global GDP by 5 to 20 percent annually “now and forever”), and the UN IPCC’s Fourth Assessment Report set the terms of debate on global warming.

Alarm was the ideological fashion du jour. Fear of peak oil merged with fear of climatic disruption to make fuel-economy mandates, biofuel mandates, wind and solar mandates, “green jobs” programs, and even cap-and-trade seem like ideas whose time had come. A lot has happened since then.

In recent years, advances in unconventional oil and gas production have transformed North America into a major hydrocarbon-producing region. Imports as a share of U.S. petroleum consumption declined from 60 percent in 2005 to 40 percent in 2012.

By 2011, more than half those imports came from the Western hemisphere, with Canada’s share more than twice that of Saudi Arabia. Petroleum products became America’s leading export for the first time in 2011, and again topped the list in 2012.

As Mark Mills detailed earlier this week, the shale boom has already created hundreds of thousands of jobs and attracted $150 billion in foreign direct investment. If policymakers allow U.S. producers to compete in the global marketplace, the oil-and-gas industry could create millions of new jobs, generate hundreds of billions in cumulative tax revenues, and eliminate much of the U.S. trade deficit.

The potential geopolitical benefits are also considerable. U.S. hydrocarbon exports could undermine Russia’s leverage over Europe, weaken OPEC, strengthen alliances with friendly nations, and improve America’s bargaining position vis-à-vis our top creditor — China.

The narrative of inexorable depletion, dependence, and decline is obsolete. The narrative of climate doom is not faring much better.

A constant refrain of alarmist rhetoric is that climate change is “even worse” than scientists previously believed. That is hard to square with a 15-year period of no net warming — an outcome that “consensus” scientists did not predict and still struggle to explain. Whatever the causes, the observed warming rate over the past 15 years is lower than the UN IPCC’s best estimate, as NASA scientist Roy Spencer has clearly demonstrated.

A plausible explanation, based on several 2011-2012 studies summarized by Cato Institute climatologist Chip Knappenberger, is that the IPCC overestimated climate sensitivity (the amount of warming from a doubling of pre-industrial greenhouse-gas concentrations).

Otto et al. (2013), a study published last month in Nature, also indicates that the climate system is less sensitive than the IPCC’s best estimate. Lower climate sensitivity means less warming, hence less damaging climate change impacts. That’s good news.

There is much more. In 2006-2007, commentators like Al Gore, Joseph Romm, and Fred Pearce popularized scary climate-change impact scenarios, such as ice-sheet disintegration and catastrophic sea-level rise, dramatic increases in extreme weather, and climate-destabilizing releases of methane from melting permafrost. Recent studies undercut the credibility of such predictions. Here’s a short list:

King et al. (2012): The rate of Antarctic ice loss is not accelerating and translates to less than one inch of sea-level rise per century.

Faezeh et al. (2013): Greenland’s four main outlet glaciers are projected to contribute 0.7 to 1.1 inches to sea-level rise by 2200 under a mid-range warming scenario (2.8°C by 2100) and 1.1 to 1.9 inches under a high-end warming scenario (4.5°C by 2100).

Weinkle et al. (2012): There is no trend in the strength or frequency of land-falling hurricanes in the world’s five main hurricane basins during the past 50 to 70 years.

Bouwer (2011): There is no trend in hurricane-related damages since 1900 once economic-loss data are adjusted for changes in population, wealth, and the consumer-price index.

NOAA: There is no trend since 1950 in the frequency of strong (F3 to F5) U.S. tornadoes.

National Climate Data Center: There is no trend since 1900 in U.S. soil moisture as measured by the Palmer Drought Severity Index.

Hirsch and Ryberg (2011): There is no trend in U.S. flood magnitudes over the past 85 years.

Schultz (2011): Even under the most extreme climatic scenario tested, permafrost thaw in the Siberian shelf will not exceed 10 meters in depth by 2100 or 50 meters by the turn of the next millennium, whereas the bulk of methane stores are trapped roughly 200 meters below the sea floor.

Kessler et al. (2011): Microbes digested the methane released during the 2010 BP Deepwater Horizon oil spill, indicating that any warming-induced “large-scale releases of methane from hydrate in the deep ocean are likely to be met by a similarly rapid methanotrophic response.”

Goklany (2009): Global deaths and death rates related to extreme weather have declined by 93 percent and 98 percent, respectively, since the 1920s.

Granted, climate-alarm persists. The main reason is that climate risk is easily confused with climate-change risk. Due to their sheer magnitude and terror, natural catastrophes have an almost supernatural aspect. People are innately prone to imagine that natural disasters have non-natural causes. Thus, each time disaster strikes, pundits — especially those with scientific credentials — can plausibly blame fossil fuels and declare “it’s worse than we thought.”

But the best available science does not support such claims. Far from being worse than predicted, the climate outlook is better than we have long been told. For this reason, too, policymakers should remove self-inflicted constraints on the development and export of North American energy.

Marlo Lewis is a senior fellow at the Competitive Enterprise Institute’s Center for Energy and Environment.

Keystone Deserves a Vote



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Every American, whether Democrat or Republican, agrees that job creation and affordable energy will be crucial to our economic turnaround. Fortunately, there is a project that will create jobs, provide direct investment in our economy, and move us closer to our longstanding goal of becoming energy independent: the Keystone XL pipeline.

Keystone will deliver 830,000 barrels of oil per day from Canada, North Dakota, and Montana to Gulf Coast refineries. It will directly create 20,000 jobs and indirectly create tens of thousands more, at a time when more than 11 million Americans are out of work. Added reliable supply from Canada and North Dakota also will reduce the impact of oil-price spikes dictated by the OPEC cartel. And we know, based on a study by the State Department, that the project will have minimal impact on the environment.

The benefits associated with this project are widely understood: 66 percent of Americans support Keystone, according to a March Pew Research poll. And yet President Obama has refused to grant the necessary permits. So it’s up to Congress to force the issue — but the effort to do so has fallen victim to Senate majority leader Harry Reid.

Standing alongside the vast majority of Americans who support this project, House Republicans unanimously joined 19 House Democrats to support legislation that would approve the pipeline. This strong support extends to the U.S. Senate, too. On March 22, before the House had passed its authorization, 62 senators voted to express support for the Keystone XL pipeline. This filibuster-proof vote in favor of putting Americans back to work included 17 Democrats.

Despite support from a majority of Americans, a majority of the House of Representatives, and a majority of the Senate, Keystone XL is stuck – stalled by special-interest politics.

Conventional wisdom would suggest that since the majority of his colleagues support the project, Leader Reid will bring the House bill to the Senate floor for an up-or-down vote. But conventional wisdom doesn’t account for the political pressure he is receiving from the White House, which has stalled on approving this project since President Obama took office in 2009. Reid knows the project would pass the Senate, forcing the president to make a decision that pits his radical-environmentalist base against job creation.

Making his priorities clear, Leader Reid has even said, “I am not going to help [the pipeline] in any way I can. The president feels that way. I do, too.” Such an important project should not rest on a senator’s political whims.

This posturing should stop. Americans believe in securing a reliable supply of the critical resource that takes our children to school and delivers products to customers. They believe we should capitalize on the opportunity to reduce the influence OPEC nations have on the price of oil. And most important, they believe in American job creation.

It’s time to act, Mr. Leader. Bring the Keystone XL pipeline to the floor for a vote.

— Kevin McCarthy is the representative of California’s 23rd district, serves as the majority whip in the House of Representatives, and is the chairman of the House Energy Action Team.

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