TCS Daily


The People Have Spoken - For Higher Energy Costs?

By Ben Lieberman - December 14, 2006 12:00 AM

Will the incoming Congressional majority misread their mandate from the American people? Well, on energy policy they are off to an incredibly fast start.

Needless to say, the public has responded very angrily to rising energy prices in recent years -- natural gas and electricity, but mostly gasoline. In fact, when the price at the pump hit $3.00 a gallon last summer, it was America's number one gripe. The drop in price since August made it somewhat less of an Election Day issue, but energy costs still had an impact and definitely clouded the electorate's perception of an otherwise strong economy.

Of course, the jump at the pump hurt Republicans, who controlled everything in Washington while it was occurring. But the next time gasoline rises to $3.00, it won't be so easy for congressional Democrats to point fingers since it will be happening on their watch as well. Likewise any future increase in natural gas or electric bills.

So no incoming majority would take steps to deliberately raise energy costs, right? But some Democrats are already promising as much.

First, party leaders are calling for more alternative energy mandates. This includes expanded ethanol requirements for the transportation sector, as well as renewable portfolio standards that require a certain percentage of electricity be generated by wind or solar power.

Such federal mandates are invariably bad news for consumers. Keep in mind, the only reason these alternative energy sources need to be mandated in the first place is that they are too expensive to compete otherwise. In effect, these proposed laws force the American people to switch to costlier energy options.

In fairness to Democrats, Republicans have also supported some of these provisions. For example, the Republican-led Congress and President Bush enacted the 2005 energy bill, which included the requirement that 4 billion gallons of ethanol be added to the gasoline supply in 2006, rising to 7.5 billion gallons by 2012. The measure enjoyed strong bipartisan support amongst Midwestern cornbelt legislators who represent ethanol's home base. But Democrats now seem intent on one-upmanship, perhaps in order to strengthen their position in that region before the 2008 elections. Some, like Sen. Tom Harkin (D-IA), incoming chairman of the Senate Agriculture Committee, have already advocated a massive expansion of the current ethanol requirements.

In even starker contrast with Republicans, the soon-to-be Democratic leadership has pledged to fight global warming by reducing carbon dioxide emissions. The House of Representatives opposed such measures in recent years, largely on economic grounds but also questioning the seriousness of the threat. However, incoming Speaker of the House Nancy Pelosi (D-CA) has already announced that "America must provide strong leadership to reduce emissions that are responsible for global warming." And Barbara Boxer (D-CA), who takes over as chair of the Senate Environment and Public Works Committee from global warming skeptic Jim Inhofe (R-OK), has asserted that "there ought to be a global-warming bill that looks at all the contributors to carbon dioxide emissions."

Carbon dioxide is the unavoidable byproduct of fossil fuel combustion, so capping emissions of it would require, for the first time ever, government limits on the amount of coal, oil, and natural gas that the American people are allowed to use. The bottom line -- restrictions on energy use which will drive up prices and likely do more economic harm than environmental good.

Thus, instead of looking for ways to make energy more plentiful and affordable, the new Congress would be moving in the exact opposite direction by imposing a costly new energy rationing scheme. The results may please green activists, but few others.

Proponents claim these alternative energy and global warming proposals are justified on national security and environmental protection grounds. However, the amount of oil imports ethanol can supplant is surprisingly low, the most massive expansion of wind and solar possible would provide less power than just a few new nuclear plants, and even a harsh cap on carbon dioxide emissions will have a negligible impact on the earth's temperature.

While the benefits of these measures are debatable, the fact that they will raise energy prices is not. The best proponents can do is speculate that energy cost increases can be kept under control, but even that is doubtful. Ethanol currently costs nearly 60 cents per gallon more than gasoline, hardly a boon for consumers. Thus, increasing the current mandate will only add to the pain at the pump. Similarly, wind and solar remain more expensive than the conventional energy sources that currently provide most of the nation's electricity, thus renewable portfolio standards can't help but increase electric bills.

Reducing carbon dioxide emissions would be the most expensive change of all. According to the Energy Information Administration, a previous attempt to enact such a cap on greenhouse gas emissions would have added 19 percent to gasoline prices by 2025, and 35 percent to electricity costs. And this bipartisan Senate bill, which failed to garner enough votes, was an extremely weak one that proponents conceded was merely a first step towards much more ambitious controls. In addition, the early experience with the European Union's attempts to rein in carbon emissions has shown it to be so prohibitively expensive that most member nations are violating their obligations.

Overall, the Democratic leadership isn't returning to power with an agenda to reduce energy costs, but with an agenda to increase them. If they think that's the change the public wants, they may end up even less popular on energy than the Republicans.


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68 Comments

Solutions?
Ahh, the Democrats. How they never change. Amazing how they deal with issues. Always the same. How about someone talking nuclear energy for a change?

Election's over, gas prices headed back above $3....
Funny, wasn't it. Gas prices started going down about 6 months before the election, hit a longtime low just around election day, and headed back up immediately after. Just the ol' free market in action, sure...

Total cost of energy
Consumers do not seek higher energy costs for their own sakes, but they are willing to pay for the benefits of lower polution and less dependence on foreign oil (Iraq). The total cost to the consumer of a gallon of gasoline is much higher than the pump price.

Energy Policy and Congress
Consumer and National Security interests would be best served if Congress supported the diversification of energy supplies. This goal is best accomplished through innovation and markets. We simply do NOT currently know what the optimal energy sources should/will be in 2030. Neither scientists nor congressmen are omniscient and able to pick future energy “winners”. What Congress can and should do is to legislate and fund research efforts that support a wide range of future energy sources. In addition, many current laws and regulations inhibit energy expansion and innovation. These policies were created by Congress. They have not served us well and should be reformed forthwith.

If consumers can be relied upon to decide who will sit in Congress, they surely can decide how to power their homes and cars. Citizens should decide the future of America. The preferred and most effective role of Congress is advice and support.

Dems want the exploit the issue in a way that keeps the greens from voting for them rather than the
First I do no believe that the amounts of increased atmospheric CO2 possible in the next 200 years due to burn fossil fuel is a problem at all.

But…

The only sensible way to reduce co2 emissions is to tax them and then to pay that money out to those who extract net co2 from the air (there are methods for doing this. Making agricultural charcoal and deep ocean iron fertilization are a two schemes that have been shown to work). The democrats show that even they do not believe that atmospheric CO2 is a problem by ignoring this. They want the issue to keep the greens from voting for them rather than the green party without and obvious tax that would drive off the union voters.

Dems want the exploit the issue in such a way that keep the greens from voting for them rather than the green party without an obvious tax that would drive off the union voters.

So we have these ineffective nonsensical mandates for “green energy” that makes the uninformed potential green voter think that voting Dem in a better move than voting green. It is like Bushes Fuel Cell vehicle support which gives people the false hope that they will have a vehicle that will perform just as well as current vehicles for the same price as current vehicles but will not use oil and will make no pollution soon.



The cost to the consumer
of having no gasoline is far higher still.

The Greens don't like nuclear power
because it threatens their vision of small local communities. The Greens see transformative change as necessary for society, and nuclear power offers an energy source that makes such a transformative change unnecessary. Greens want to talk about doing without, not about other ways of having it all.

Government funding of research
One of the things the greens don't like is that capitalist investors can do a better job of assessing the practicality of new technology.

The plain truth is that when somebody wants to get Uncle Sam to subsidize R & D on their pet project, (be it alternative power, embryonic stem cells, etc.) it's because the smart money realizes the project is a dog.

I agree
Excellent point. Well put. So once again, they are in charge and self determination is superseded by the common good.

Right Wing
It is all a right wing conspiricy isn't it. The MSM is unbiased and the Republicans can manipulate the world oil prices. Your conclusions are outstanding. I bet 9-11 was a inside job to right?

research
If the technology has a realistic chance, the private sector will fund the research without any help or guidance from govt.

The best thing govt can do is maintain a low tax, low regulation environment so that companies have the money and freedom to decide for themselves, what the best research opportunities are.

Hey, I'm sure it's all just a huge coincidence
I mean, what else could it be? Gas prices go down for six months, hit a low just on election day, and then move back up. Absolute coincidence, has to be, never claimed anyhting else.

Not quite
Self determination is superceded by minority self-interest. Self determination is the common good.

Think about it. Everything the Greens stand for is a war against the poor. What food to they attack? Fast food and modern low cost production methods in the interest of high cost, low volume organics. What energy do they attack? It's low cost. What transportation do they attack? Cheap gasoline and low air fares. Can't let the plebs enjoy the benefits of the rich and privileged Green priesthood.

The Greens are not about the common good. Everything they stand for is about the common impoverishment. Their greatest nightmare (and James Lovelock has written this) is that the world will discover an energy source that allows huge quantities of energy available at trivial cost to anyone anywhere.

They're anti-human. All followers of Malthus, they want fewer people in the world, not more. They have in the past openly called for a thinning of the human population from some great plague, yet I don't ever hear of them volunteering to step over the side.

In short, the Greens are a disease.

Coincidence...,
or a production decrease by the OPEC countries, reducing supply without a corresponding decrease in demand. Basic economics!

Opinion polls...
would lead you to believe this is the case. However, market research professionals would tell you that consumers vote differently with their money than with their mouths, typically by a factor of ~2 on this type of issue.

If you really want to know how much consumers are willing to pay for "clean, green and domestic", put two gasoline stations on opposite corners - one clean and green - and play with the relative prices.

As to the real cost of a gallon of gasoline, there are multiple ways of calculating environmental externalities; and, there are nearly as many externality cost estimates as there are estimators. (California had 3 different values for environmental externalities costs for SOX and NOX about 10 years ago.) We've been around that issue before and generated far more heat than light in the process. I'd bet the results of another round would be similar.

National Security and Government Policy
There are significant, negative national-security ramifications from our past and current energy policies. Congress and President therefore have a measure of responsibility under the Constitution. The US Government-University complex for basic scientific research is the best in the world. One of its primary missions is to serve National Security interests. Since energy is a top security priority currently, it is appropriate for Congress to prioritize research dollars towards achieving the energy diversification that will enhance national security. DOE is currently directing a respectable degree of energy research. But given the stakes, more can and should be done.

Many consumers today seek the unavailable opportunity to purchase products from NON-hostile countries, or to purchase products they consider to be more environmentally responsible. If energy sources can be diversified, consumer choice will be expanded. Government policy is partially responsible for locking our economy into oil dependency. Non-statist government policies should now be part of the solution.

Basic Research
"...It is like Bushes Fuel Cell vehicle support which gives people the false hope that they will have a vehicle that will perform just as well as current vehicles for the same price as current vehicles but will not use oil and will make no pollution soon."

Substantial public investment in cancer and HIV research has not yet led to cures or vaccinations. Yet some patients have been helped, and we are closer to effective treatments. Curing cancer or developing effective fuel cells both are a long term effort with substantial potential benefit. While basic research efforts may create false hopes...this is preferable to doing thing and having no hope.

Look at the graph! of course it's basic economics
I mean, what possible coincidence could there be??

http://theelectoralvote.com/gasoline/?p=3

Perhaps, ...
the coincidental start of the winter heating season, which increases demand for heating oil. But, hey, a conspiracy is a whole lot more interesting.

Of course it's just the ordinary beginng of the winter heating season.
So we'd expect to see the exact same pattern last year, wouldn't we, low point around November 6? Why not look it up & see how that worked out?

here's the graph:
http://en.wikipedia.org/wiki/Image:Gas_Prices_Short_Term.png

Oh my goodness. Turns out that last fall, gas prices hit their peak in late October, and then declined through the winter. What a relief that nothing looks suspicious.

The secret to multi-variate analysis is...
analyzing multiple variables. Ceteris is very rarely paribas, even when there is an attempt to make it so.

US election not relevant
The October 2005 runup in gasoline was the result of forced outages of Gulf coast refinery capacity. The current runup is the result of cuts in OPEC oil production.

"So we'd expect to see the exact same pattern last year, wouldn't we, low point around November 6? Why not look it up & see how that worked out?"

Utter rubbish. The price of gasoline follows the world crude oil price with little connection to seasonal weather patterns. When you posted that graph, you neglected to post the crude oil price graph from the same article for the same period. Gasoline price was simply following the crude oil price.

Or do you imagine that the U.S. somehow controls the world price of crude oil?

But wait - you were sure that it was the heating oil changeover
You were so certain that was the answer. So, why did it change from 2005 (peak in October) to 2006 (lowpoint Nov. 6)?

>Ceteris is very rarely paribas, even when there is an attempt to make it so.

I'm not the one saying that there's a general pattern for low prices for gas in November.

Hey, any excuse will do.
And I'm sure the price began climing November 7 because of OPEC, or Nigeria.

Not my fault
if you can't read a graph. It's your fault however if you only show half the evidence.

I said no such thing, nor did I imply it.
I pointed out that there were factors other than the election which could (and probably would) have influenced the price of gasoline, including a change in supply and a change in demand.

I expressed no certainty with regard to a single cause; rather, I suggested the existence of multiple causes. I also made no statement or suggestion regarding the relative impact of the factors.

In this case, all other things were clearly and demonstrably not held equal.

Sure, there's always all kinds of factors
But you're sure that the election wasn't a factor because....

I am not "sure" the election wasn't a factor.
I am sure it wasn't THE factor, as you implied. That's all.

You're the one made the allegation
not me. I simply suggested a far more likely cause. You failed to provide anything other than a post hoc assertion. In passing, you data dredged by only presenting part of the data in a report. Tends to add a bit of suspicion of doubt to whatever case you were trying to build.

anything congress prioritizes, inevitably falls further behind
If you truely want to lessen the dependance of the US on foreign oil, the first thing you want to do is get congress as far away from the issue as possible.

I'm fine with that.
thanks for your openness

I made no "allegation"
I did say it was an interesting coincidence. But now that you say it's all right, we can all rest easy.

Then maybe you can supply the parallel graph for this year
And show how the same mechanisms were working.

Correction, the Greens didn't like Nuclear power
http://www.washingtonpost.com/wp-dyn/content/article/2006/04/14/AR2006041401209.html

"Nuclear energy is the only large-scale, cost-effective energy source that can reduce these emissions while continuing to satisfy a growing demand for power. And these days it can do so safely."

That doesn't mean we shouldn't use solar and wind where we can, however Greens have lately been shifting toward Nuclear power as the least poluting method of satisfying the energy needs.

The Post article
is by Patrick Moore, a founder of Greenpeace. He's now at odds with the organization he left because of their desertion of science in the 1980s. Bishop Hugh Montefiore, founder of Friends of the Earth, also supported nuclear power just before he died last year(?), and is now denounced by his own organization. Stewart Brand of the Whole Earth Catalogue expressed support for nuclear power last year and was denounced by the usual gang of criminals. James Lovelock has pronounced support for nuclear power and similarly been condemned by Greenpeace et.al.

See the pattern? When intelligent Greens decide to look at issues instead of their ideology they are denounced as heretics by their priesthood.

So yes, some Greens have been turning in more rational directions. Others however are verging on religious eco-terrorism: EarthFirst, ALF, ELF to name just a few.

Greed is the disease, Greens are the Penacilin
What the Greens stand for is long term, healthy, sustainable development as opposed to short term, unhealthy, unsustainable development.

Ten Key Green Values

Grassroots Democracy

Every human being deserves a say in the decisions that affect their lives; no one should be subject to the will of another. Therefore we will work to increase public participation at every level of government and to ensure that our public representatives are fully accountable to the people who elect them. We will also work to create new types of political organizations that expand the process of participatory democracy by directly including citizens in the decision-making process.

Ecological Wisdom

Human societies must operate with the understanding that we are part of nature, not separate from nature. We must maintain an ecological balance and live within the ecological and resource limits of our communities and our planet. We support a sustainable society that utilizes resources in such a way that future generations will benefit and not suffer from the practices of our generation. To this end we must have agricultural practices that replenish the soil; move to an energy efficient economy; and live in ways that respect the integrity of natural systems.

Social Justice and Equal Opportunity

All persons should have the rights and opportunity to benefit equally from the resources afforded us by society and the environment. We must consciously confront in ourselves, our organizations, and society at large, barriers such as racism and class oppression, sexism and heterosexism, ageism and disability, which act to deny fair treatment and equal justice under the law.

Nonviolence

It is essential that we develop effective alternatives to our current patterns of violence at all levels, from the family and the streets, to nations and the world. We will work to demilitarize our society and eliminate weapons of mass destruction, without being naive about the intentions of other governments. We recognize the need for self-defense and the defense of others who are in helpless situations. We promote nonviolent methods to oppose practices and policies with which we disagree, and will guide our actions toward lasting personal, community and global peace.

Decentralization

Centralization of wealth and power contributes to social and economic injustice, environmental destruction, and militarization. Therefore, we support a restructuring of social, political and economic institutions away from a system that is controlled by and mostly benefits the powerful few, to a democratic, less bureaucratic system. Decision-making should, as much as possible, remain at the individual and local level, while assuring that civil rights are protected for all citizens.

Community Based Economics

We recognize it is essential to create a vibrant and sustainable economic system, one that can create jobs and provide a decent standard of living, for all people, while maintaining a healthy ecological balance. A successful economic system will offer meaningful work with dignity, while paying a "living wage" which reflects the real value of a person's work. Local communities must look to economic development that assures protection of the environment and workers' rights, broad citizen participation in planning, and enhancement of our "quality of life". We support independently owned and operated companies which are socially responsible, as well as co-operatives and public enterprises that spread out resources and control to more people through democratic participation.

Feminism

We have inherited a social system based on male domination of politics and economics. We call for the replacement of the cultural ethics of domination and control, with more cooperative ways of interacting which respect differences of opinion and gender. Human values such as equity between the -sexes, interpersonal responsibility, and honesty must be developed with moral conscience. We should remember that the process that determines our decisions and actions is just as important as achieving the outcome we want.

Respect for Diversity

We believe it is important to value cultural, ethnic, racial, sexual, religious and spiritual diversity, and to promote the development of respectful relationships across these lines. We believe the many diverse elements of society should be reflected in our organizations and decision-making bodies, and we support the leadership of people who have been traditionally closed out of leadership roles. We acknowledge and encourage respect for other life forms and the preservation of biodiversity.

Personal and Global responsibility

We encourage individuals to act to improve their personal well being and, at the same time, to enhance ecological balance and social harmony. We seek to join with people and organizations around the world to foster peace, economic justice, and the health of the planet.

Future Focus and Sustainability

Our actions and policies should be motivated by long-term goals. We seek to protect valuable natural resources, safely disposing of or "unmaking" all waste we create, while developing a sustainable economics that does not depend on continual expansion for survival. We must counter-balance the drive for short-term profits by assuring that economic development, new technologies, and fiscal policies are responsible to future generations who will inherit the results of our actions. Our overall goal is not merely to survive, but to share lives that are truly worth living. We believe the quality of our individual lives is enriched by the quality of all of our lives. We encourage everyone to see the dignity and intrinsic worth in all of life, and to take the time to understand and appreciate themselves, their community and the magnificent beauty of this world.

http://www.greenparty.org/values.php


I'm not interested in the slightest
in high-sounding, well-intentioned manifestoes. I'm only interested in their actual specific policies and actual specific actions. If they actually believed any of this stuff, then then their policies would be quite different from the ones they pursue. It's nothing more than a road to political and social power by cashing in on public guilt, and it's the same scam that every religious cult has used from the beginning of recorded history.

Of course you did
Go back and read your own posts. You alleged a connection between low gasoline prices and the runup to the November election, and offered a gasoline price graph in support.

that's a record for eric
It usually takes him a day or two to contradict himself. Today he managed to do it in just a couple of hours.

I agree
"So yes, some Greens have been turning in more rational directions. Others however are verging on religious eco-terrorism: EarthFirst, ALF, ELF to name just a few."

There are some major splits in the Green party right now, I am hopeful that in the end those proposing realistic, rational and workable solutions will win out.

I've never been directly involved in Green politics, nor am I aware of any Green priesthood. I am familier with the the 10 key values and believe that this is the direction that we as a nation should be moving toward.

http://www.gp.org/tenkey.shtml

As for eco-terrorism, Earthfirst, ALF, and ELF. Thier just petty criminals who prefer to commit thier crimes in the name of a noble cause. At the same time, equating some idiot who believes setting fire to SUVs at a car dealership is good for the environment with terrorists willing to murder innocents is just stupid.

I agree with your sentiments
regarding the key values. Some of them are worthy and a few are a bit dubious, but at least worthy of debate. But I'm convinced that they wear it like a hair shirt over a suit of armor. Revolutionary France Jacobins preached liberty, equality and fraternity, but that didn't stop them during the Terror from executing tens of thousands, and not mostly aristocrats either.

With respect to the eco-terrorists, it's a bit more complicated. ELF gets some of its funding from EarthFirst which in turn is channeling money from the Sierra Club. Why? Very simply, it makes Sierra Club look very moderate by comparison. It's a deliberate attempt to move one end of a spectrum closer to the political centre. It's an old, old political tactic. I may accuse the Greens of many things, but political stupidity is not one of them.

As Malcolm X said, whom I think everyone would agree was a very intelligent man irrespective of some of his political views, "Why do you think everyone wants to talk to Martin Luther King? Because otherwise they'd have to talk to me."

Thanks; it does show what you said.
and I appreciate you posting it: that was helpful and convincing.

I said it was an interesting coincidence
And offered the graph as documentation of the timing, not as proof of causality.

The Green manifesto is....
nothing less than a path to tyranny. A world wherein all are forced to live by the "values" of the few, the self-righteous elitist collective. Call it what you will, but "green values" is a vision of threat, force and violence as the means to achiveing unrealistic, vaguely defined utopian ends.



what a bunch of garbage
I'm really stunned at the stupidity of this article. Rather than discuss possibilities and ideas, this is just another right-wing article meant to bash the left and produce misleading statements about the motives and reasons for doing things the right-wing are ideologically opposed to. Oil owns the right-wing, along with Pharma, Banks and other giant corporations, and Evangelicals are in bed with them all too. And we thought gay marriage was illegal! Sinners!
Does that constitute a right-wing conspiracy? Who cares? Its the truth, doesn't matter what you want to call it. This article is nothing more than puke to feed the baby birdies and amuse them with a stab at Democrats. What a joke.


"Of course, the jump at the pump hurt Republicans, who controlled everything in Washington while it was occurring."

It hurt the Republicans only very slightly. Americans know the politicians don't control the price of oil. But Americans were angry with Republicans about it because of the Administration's intimately close ties to big oil. How many people are happy that Cheney has defied court orders to reveal who he had on his energy task force? Let alone what they discussed, he won't even share who he had advising him! Anyone concerned as to why he kept it secret in the first place? Big Oil bitches. We pay so the rich can get richer. Fair or not, thats the association with Republicans. Reality bites.


How shameful of those Democrats to want to break America from its tether to the Middle East. Does anyone in here understand we are slaves to the Middle East??? As long we depend on them for our fuel, for our economy, for our very way of life, we will be FORCED to appease them. Why is Wolfowitz the only right-winger to have come to this realization? He has rightly said this is a national security issue and we must not continue to allow Arabs to dictate our foreign policy. Wolfowitz! He sucks, but even he can overcome the brainwashing and use his noggin for thinking, for once. We should be so past this discussion its ridiculous.

If economic harm is what it will take to snap our umbilical cord to the Middle East, bring on the pain.


I'm no fan of mandates and rationing. Rationing might be one of the worst ideas there is. Funny the only place its mentioned is in this article, right-wing propaganda. But sometimes mandates are necessary. Some things only the government has the power and resources to implement. The free market is not going to free us of our servitude to the Middle East. We all need energy, in our vehicles, our homes, schools, work, everywhere. Only the government can push our society in the correct direction, with consideration for national security, economic and cultural implications. Articles like this do nothing but agitate at a critical time we need to work together for solutions. Stoneheads who only see black and white and can't think for themselves should just get out of the way.

Greens emit carbon dioxide
Greens emit carbon dioxide all day long along with their hot air!

Utopian State
I could write volumes refuting this. A decentralized economy with mandated livable wages alone is impossibility. In fact the concept of a livable wage is as stupid as the idea of the minimum wage in the US. Feminism? Male dominated societies? Social harmony. Right, and free pot for everyone? the effort.

Heh
Funny

Cars need oil for lubrication...
While it'd be nice to have a car that wouldn't need oil or make pollution, the fact is that a car would wear out very quickly without oil to keep the moving parts lubricated. Buying a new car as often as they'd be wearing out due to no oil would be much more expensive than the oil changes...

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