On the menu today: After canceling the Keystone Pipeline and eliminating 1,000 jobs, the Biden administration says climate change means job creation; Biden continues to characterize tax-code provisions designed to increase domestic energy production as “handouts”; Biden wants federal agencies to purchase more electric vehicles, whether or not those agencies say those vehicles work well for them; the CDC says they’re still trying to figure out why there are “many vaccines that are sort of unaccounted for”; and a quick observation on the stock price of GameStop.
Fact-Checking ‘Climate Day’ in the Biden Administration
Yesterday, President Biden announced, “Today is ‘Climate Day’ at the White House and — which means that today is ‘Jobs Day’ at the White House. We’re talking about American innovation, American products, American labor.”
Biden’s chief climate adviser, former Obama-era EPA administrator Gina McCarthy, added, “when we say, ‘climate change,’ eventually, people are going to think ‘jobs,’ just like President Biden when he hears the words ‘climate change.’”
The problem is that Biden’s first major move on climate, canceling the Keystone Pipeline, already eliminated 1,000 jobs, according to TC Energy. And defenders of the Biden administration are being ludicrously disingenuous when they insist that “most of the [Keystone Pipeline] jobs would be temporary.” Yes, all construction jobs are temporary. (It only seems like the contractor working on your kitchen is taking forever.) When the construction crew has built what they’ve been assigned to build, that job is over, and they have to find a new one.
The Biden administration answer to those 1,000 laid-off workers is to tell them to find other jobs. A week ago, the incoming transportation secretary, Pete Buttigieg, declared in his confirmation hearing, “We are very eager to see those workers continue to be employed in good-paying union jobs, even if they might be different ones.”
And yesterday, “Special Climate Envoy” John Kerry suggested that coal miners could and would easily transition into the solar-power industry: “You know, you look at the consequences of black lung for a miner, for instance, and measure that against the fastest-growing job in the United States before COVID was solar power technician. The same people can do those jobs, but the choice of doing the solar power one now is a better choice.”
Elsewhere in the day, Biden continued to characterize existing U.S. energy policy as “handouts” to oil companies. “Unlike previous administrations, I don’t think the federal government should give handouts to big oil to the tune of $40 billion in fossil fuel subsidies. And I’m going to be going to the Congress asking them to eliminate those subsidies.”
When Biden says “handouts,” you may be picturing the U.S. government handing a check to oil companies. What Biden is actually referring to are provisions in the tax code that were all designed to increase domestic energy production, reduce dependency on foreign sources, and reduce the cost to consumers.
- One provision would allow companies to deduct a majority of the costs incurred from drilling new wells domestically; keep in mind the same deduction applies to geothermal energy, which is considered clean.
- Another provision, “percentage depletion,” works akin to the calculation of depreciation in assets for all companies and that applies to all mining, not just oil and gas drilling.
- Another provision includes tax credits for “clean coal” projects that prioritize capturing greenhouse gases.
When Biden says he’s going to “stop giving them federal subsidies,” what he means is that he wants to change the tax code so that domestic production of oil and natural gas becomes more expensive.
Electric Cars for Everyone! Except High-Level Government Officials, of Course
Yesterday, Biden also said, “the federal government owns and maintains an enormous fleet of vehicles, as you all know. With today’s executive order, combined with the Buy American executive order I signed on Monday, we’re going to harness the purchasing power of the federal government to buy clean, zero-emission vehicles that are made and sourced by union workers right here in America. With everything I just mentioned, this will mean one million new jobs in the American automobile industry. One million.”
Every time the U.S. government makes a decision to purchase one new kind of vehicle, it is choosing not to purchase the old kind of vehicle. Purchasing a few thousand more electric vehicles means not purchasing a few thousand traditional vehicles. Purchasing electric cars will indeed create new jobs as U.S. manufacturers increase production to meet the government’s demand for them, but it will also eliminate jobs as manufacturers decrease production for the old cars.
The U.S. government’s vehicle fleet varies from 640,000 to 645,000, with roughly 225,000 sedans, minivans, and SUVs, 412,000 trucks, and about 8,000 ambulances and buses. About 200,000 of those trucks are used by the U.S. Postal Service. The overall size of the fleet increases or decreases by 20,000 in a big year and by 1,000 in a stable year.
During the Obama years, government purchasing offices were gradually reducing the percentage of government vehicles that were “conventional,” and in 2015, Obama signed an executive order directing federal agencies to reduce per-mile greenhouse gas emissions and increase acquisitions of electric vehicles; Trump repealed that order in 2018.
According to the General Accounting Office, some federal agencies would like to buy electric vehicles, but the ones on the market don’t make financial sense or fit their needs:
First, while hybrid and electric vehicles can offer reductions in petroleum use and greenhouse gas emissions, the costs of these vehicles and their charging infrastructure make it challenging for agencies to acquire them on a large scale. According to GSA data, agencies purchased 373 electric vehicles (sedans and minivans) in fiscal year 2017 — along with about 4,500 hybrid electric sedans — out of a total of over 16,000 sedans and minivans acquired. In total, agencies spent about $10.5 million more to purchase hybrid or electric vehicles than they would have to purchase comparably sized conventionally fueled vehicles. However, agencies did not consistently track the life-cycle costs of these vehicles. Second, agencies also stated that a lack of fuel and infrastructure availability limits agencies’ use of alternative fuel. Third, agency officials stated that a continuing need for larger vehicles limits the number of low greenhouse-gas-emitting vehicles agencies can acquire.
Biden is unlikely to be stepping into an electric vehicle anytime soon. Back in 2010, President Obama inquired about the government purchasing a hybrid-powered limousine, but the U.S. Secret Service deemed the idea unfeasible:
Obama told Litzler the Secret Service rejected his request for hybrid limousines because “the cars that I’m in are like tanks . . . They’re a little reinforced. They weigh twice or three times what an ordinary car weighs. So, they just couldn’t get the performance, in terms of acceleration, using a hybrid engine.”
The Secret Service purchases a lot of vehicles besides the presidential limo. The presidential motorcade usually includes about 20 to 30 vehicles, and requires a massive amount of preparation:
The presidential motorcade is built from a fleet of both custom and sometimes rented vehicles. A finite amount of presidential limousines exist, with between 16 and 20 being an estimate. Careful planning and a logistical symphony has to take place in order to pre-position the most capable (and usually newest) vehicles based on the threat level and operating environment at each destination.
It is not uncommon of for the President to visit three separate cities during a single day, especially during campaign season. That means three separate motorcade detachments need to be forward deployed to those cities. This is done via USAF heavy-transports such as C-17s, or on some occasions, a single C-5 Galaxy.
Wait, Where Are the Vaccines?
I caught this exchange on yesterday’s The Lead with Jake Tapper, and I’m wondering why the new director of the U.S. Centers for Disease Control and Prevention is still trying to figure out how much vaccine is available:
JAKE TAPPER: Sanjay, there seems to be some confusion about the location of some of these vaccines. Dr. Walensky from the CDC says they’re focused on — quote – ‘understanding where in the pipeline the vaccine actually is.’ How is it possible that so many vaccines are unaccounted for?
DR. SANJAY GUPTA: Well, this is a real problem. I mean, Jake, this is a — vaccines are the most precious commodity really anywhere on the planet right now. And there’s many vaccines that are sort of unaccounted for. What we’re learning as we’re sort of digging into this is that the vaccines went to states. And that was sort of tracked by the software platform known as Tiberius. So it kind of knew the vaccine numbers that were going to states.
But then, after that, it became a little bit muddled, because states were handling this differently. Some states were automatically holding back second doses within the state. So, they had been distributed to states, but obviously not being administered.
So, that’s caused some of this confusion. You also — as I’m learning, the data that we see from the CDC is oftentimes lagging. It takes time to collect all this data from the states. So, by the time we actually see an aggregate data set, it may be several days or even a week behind. And that’s a problem as well.
So, even if we look at the numbers on the screen in terms of overall doses administered, that may not reflect this point in time exactly. So, we have to take that into account.
At the beginning of the week, I noted that Pfizer and Moderna had to know how many doses were shipped and what pace they can continue. Later that day, a reporter asked Jen Psaki, “[General] Gus Perna still works here, right? . . . And he’s in charge of the logistics. So could he say how much vaccine there is, since they’re in charge of where it’s going?” Now it appears the issue is that the vaccine gets distributed to the states, and then . . . everyone seems to lose track of it, apparently.
ADDENDUM: If you’re confused about why so many people in the investing world are freaking out about “Redditors” and a bonkers jump in the stock price of GameStop, join the club. I’ll just point out a few things. If GameStop was less than $10 per share for most of the past two years, and nothing has changed the fundamental outlook for the company, then sooner or later it’s going to go back to less than $10. As of this writing, a single share of GameStop costs $347, meaning someone’s made a fortune virtually overnight. Someone who’s purchasing it at its current price is going to lose a fortune, really fast, unless the fundamentals of the company change.
As anyone who’s ever tried to sell a house has learned, the value of what you have is limited by what someone is willing to pay for it. It doesn’t matter what Zillow or Redfin or your realtor says, and it isn’t really shaped by how much other homes in your neighborhood have sold for in the past year. If it’s worth $300,000 on paper, but no one is willing to pay that amount, your house cannot sell for that price, it can only sell for a lesser price.
As of this writing, there are people who are willing to pay more than $300 for a share of GameStop, because everyone is swept up in this “let’s stick it to the short-selling hedge-funds” exuberance. But someday — maybe today! — that exuberance will stop. This is a classic speculative bubble, and you can pick your metaphor — musical chairs, hot potato, catch a falling knife. At some point, reality gets the last laugh. As they say, don’t gamble with any money you can’t afford to lose.