Jason Barton

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Archive for the ‘Policy’ tag

A Nobelist’s Energy Pitch for Obama: Slow down, Stay Simple

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There are several portions to these comments from the 1976 Nobel Prize winner in Physics, Burton Richter, that are so clear, so brilliant, so obvious once we read them:

1. Focus on vehicles, electricity generation, and efficiency. Taking on too much at once is counter-productive.

2. Tell the free market what is needed, then let the people there figure out how to do it. The market gets jobs done much more efficiently than government, so provide the vision, but not the micro-management on how to arrive there.

3. Don’t stop renewables, but realize that there is still much work to be done until they are cost-effective.

There’s a lot more there, but these are the big three points in my mind.

June 28, 2010, 10:17 am

By ANDREW C. REVKIN

President Obama is preparing to take another stab at seeking consensus in the Senate on energy legislation with components that could rein in emissions of greenhouse gases.

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Last week, I sent a query to a variety of smart people who’ve spent a long time assessing the tangled interface of energy technology, climate science, politics and economics to collect their “pitches” — made as if they had 30 seconds or so to present their prime points to the president at a fantasy White House energy summit. (It sure would be nice to see the White House host a real one, with varied informed voices.) One who has weighed in is Burton Richter.

Richter’s comments:

We do not have to run everything on solar cells and windmills tomorrow to make fast progress in reducing energy demand and greenhouse gas emissions. The  Waxman-Markey energy bill in the House is a huge brick of paper and seeks to do everything at once. The  Kerry-Lieberman bill in the Senate is nearly as complicated.

I would start with those parts of the economy where the way to make progress is clear, the potential gains are large, and the required regulations are relatively simple. To me this says: Start by focusing on cars, electricity generation and efficiency. The industrial sector is complicated and we should stay away from most of it until we know better what we are doing. Also, tell the private sector what you want done, not how they must do it. There is a huge amount of brain power in our society directed toward making money and tilting the playing field so that more money could be made by doing the right things will unleash it.

Read the entire article here.

The Coming Era of Extreme Energy?

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I am not an alarmist who believes we need an immediate, radical shift in our nation’s energy matrix. The compendium of tragedies in the article below presents another perspective containing several sound points, but also some impractical emotional appeals not based in fact nor reason.

Were it published in February, Klare’s article would raise few eyebrows. Now, because of a single terrible disaster, it sparks ample discussion, including an article by Daniel Gross today in Slate Magazine called “The Dangerous New Era of ‘Extreme Energy.'” In the second paragraph of that article, Gross claims that “When the land-based oil was exhausted, American prospectors went to sea. And when the shallow-water oil was exhausted, they went farther out.” Even if one didn’t immediately know that these claims were inaccurate, Gross graciously contradicts himself just a few sentences later to confirm that he’s simply engaging in yellow journalism: “Today, deep-water Gulf wells account for about one-quarter of the oil the United States sucks from the earth.” The other 75% come from the places Gross just said were exhausted.

I like Slate Magazine, but come on, Mr. Gross, we don’t need to lie to make the important points about changing our practices when it comes to our energy resources. Such dishonesty or carelessness only undermines your point.

When we see a car accident, even a massive one involving several vehicles and loss of multiple lives, do we say we should no longer drive? Do we argue that cars and roads need to be completely redesigned? No. We learn from the details, such as the dangers of drinking or texting while driving, the importance of seat belts, etc. The Deepwater Horizon rig may have been a bad idea from the start, or there may have been clear mistakes as the companies involved were trying to close the well, and these problems should be examined and learned from so they do not happen again. But there is little evidence to suggest that the problems that occurred should lead to the elimination of the thousands of rigs in shallower water that have been operating safely for decades.

Klare is correct to argue that government oversight of health and safety regulations in oil and gas drilling has been woefully inadequate. But as I pointed out in an earlier post, given the poor track record of these government bureaucracies, expanding their size or giving them more power may not be the best option. As citizens and consumers, as well as energy executives, politicians, and bureaucrats, paying greater attention to our sources of energy and their impacts is as fundamental to a safe energy matrix as energy is fundamental to our way of life, to all life.

If it’s true that sunlight is the best disinfectant, then the disaster in the Gulf should expose the many problems that led to the explosion, and even to the poorly planned implementation of the Deepwater Horizon rig in the first place. We should learn from these mistakes and move forward.

Yes, we need to pay greater attention to health and safety considerations as energy resources become more difficult to locate and extract. Let us be pragmatic in this pursuit, and not fall victim to alarmist calls for unrealistic or unnecessary measures. One market based solution is simply to make companies liable for most or all damages from accidents such as the one occurring now in the Gulf, rather than capping their liability and forcing taxpayers to cough up the rest.  Consider the current estimates that put clean up costs around $1 billion. BP recorded first quarter profits of just over $6 billion. They can afford to foot the bill, and if they try to pass the costs of their negligence on to the consumer, competition from other companies will inhibit this effort.

Most importantly, as readily available resources become more scarce, we need to examine our energy use more carefully. Increasing energy efficiency saves money while reducing our exposure to risk. Long term planning needs to include increased efficiency as well as development of technologies that can gradually enter our energy matrix in the coming decades as oil and gas become more scarce, more difficult to extract, and more expensive.

The next few decades could have us witnessing more problems like the one in the Gulf; but thoughtful, measured, gradual changes in our energy practices are possible, and necessary.

Michael T. Klare

Michael T. Klare

Author and Professor of Peace and World-Security Studies at Hampshire College

The Relentless Pursuit of Extreme Energy: A New Oil Rush Endangers the Gulf of Mexico and the Planet

Yes, the oil spewing up from the floor of the Gulf of Mexico in staggering quantities could prove one of the great ecological disasters of human history.  Think of it, though, as just the prelude to the Age of Tough Oil, a time of ever increasing reliance on problematic, hard-to-reach energy sources.  Make no mistake: we’re entering the danger zone.  And brace yourself, the fate of the planet could be at stake.

It may never be possible to pin down the precise cause of the massive explosion that destroyed the Deepwater Horizon drilling rig on April 20th, killing 11 of its 126 workers.  Possible culprits include a faulty cement plug in the undersea oil bore and a disabled cutoff device known as a blow-out preventer.  Inadequate governmental oversight of safety procedures undoubtedly also contributed to the disaster, which may have been set off by a combination of defective equipment and human error.  But whether or not the immediate trigger of the explosion is ever fully determined, there can be no mistaking the underlying cause: a government-backed corporate drive to exploit oil and natural gas reserves in extreme environments under increasingly hazardous operating conditions.

Read the entire article here.

The Offshore Paradox

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The article below contradicts the point I made yesterday, where I contended that the oil spill in the Gulf would not likely cause much change to future oil drilling. I did say that regulations would likely increase to ensure greater safety, but that in this tenuous economy Congress would be unlikely to make significant changes that could greatly hinder securing domestic energy resources.

The article below, as well as a comment received on my post yesterday, argue the contrary, pointing out how Three Mile Island largely derailed the growth of the nuclear industry in the U.S.

While I do not feel the panicked rush that many exhibit towards overhauling our current energy matrix, I do believe it is important to continue laying the groundwork towards more renewable sources of energy. We should continue implementing technologies for bioenergy, solar, wind, and geothermal provided they are competitively cost effective and energetically efficient. Most important and cost effective, of course, is energy efficiency.

No one should rejoice in an oil spill or any other disaster as positive. To do so would be grossly inappropriate and exploitative. That said, if the current mess in the Gulf can motivate us towards a cleaner, more responsible energy matrix, it is making something positive out of what is otherwise entirely negative.

June 04, 2010

Ken Silverstein, EnergyBiz Insider
Editor-in-Chief

Just as offshore natural gas drilling got its legs, the rug has been pulled out from underneath it. The mammoth oil spill in the Gulf of Mexico is to blame.

The question of whether to allow more production in light of the BP oil disaster is one that is likely to haunt the oil and gas sectors for a long time. It’s tantamount to how the accident at Three Mile Island has derailed nuclear development for three decades. For now, the Obama administration has pulled back on its earlier commitment to allow more offshore drilling and instead has decided to “study” the issue.

Read the entire article here.

Curbs on Oil Drilling Lurk as a Long-Term Wild Card

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It’s all about perception. Clearly, this oil spill does not contain the volume to disrupt oil supplies. As is pointed out by this article, the question is how this will change regulations and energy use in the long term.

Is this the sort of disaster that will force a dramatic shift in our energy usage? I don’t think so. It will likely force stricter regulation, however, which may cause a slight upward shift in production costs over the next several years. Given the tendency of Congress to want to work with petroleum companies, rather than against them, as well as the tenuous condition of our economy, the regulations will probably not be sufficiently strict to strangle oil companies the way some may fear.

* JUNE 3, 2010

Oil Traders Take Long View on Spill

By BRIAN BASKIN

They may not be lifting oil prices now, but tough restrictions on offshore drilling in the wake of the oil spill in the Gulf of Mexico may lead to higher prices down the line.

July crude futures have fallen more than $10 a barrel over the past month as traders’ concerns about global demand have overshadowed the political fallout from BP PLC’s failed efforts to contain the spill from its underwater well. Last Thursday, the White House announced a six-month moratorium on all offshore drilling and canceled exploration lease sales in the Gulf and off the Virginia coast.

Read the entire article here.

Written by Jason

June 3rd, 2010 at 1:21 pm

More for funding for Efficiency rather than Renewables?

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This is an interesting article from last year that came to me through a LinkedIn discussion.

I agree that the most cost effective way for us to reduce the negative impacts of our energy consumption and work towards energy independence is through efficiency and reducing our overall energy consumption.

There is certainly a role for renewable and alternative technologies, though it does not seem to me that many of these technologies are currently market ready on a large scale.

Let me know what you think.

Before Adding, Try Reducing

The U.S. government offers a lot of subsidies to expand renewable energy. Should it be doing more to subsidize conservation?

By SARI KRIEGER

(See Corrections & Amplifications item below.)

The U.S. government is committing billions of dollars to support renewable energy such as wind- and solar-power plants. Some say it should use more of that financial clout to encourage less energy consumption in the first place.

Advocates of conservation, including businesses that help homeowners and companies save energy, think there should be more subsidies and tax incentives for basics like insulation and window shading, and for newer, more costly products like light-emitting-diode lamps and building-automation systems. LEDs cost more but use less energy than incandescent bulbs. The new automation systems help buildings waste less energy on cooling, heating and lighting.

Read the entire article here.

Written by Jason

May 25th, 2010 at 1:38 pm

U.S. and Brazil Reach Agreement on Cotton Dispute

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There are two important relationships that I see between this decision and biofuels:

1. Brazil’s push for the U.S. to increase trade liberalization by reducing subsidies to cotton growers is similar to their push for the U.S. to lower its tariffs on imported ethanol. Brazil recently eliminated their own tariff on ethanol, and made it clear this was in part an effort to force us to do the same.

2. If people claim that diverting land from food to fuel is causing deforestation and driving up food prices (known as indirect land use changes, or ILUCs), why don’t we hear the same complaints about using agricultural land for fiber? The complaints may be valid, but it’s interesting that they aren’t applied to cotton. Cotton is certainly important, I’m wearing clothes right now, but transportation fuel is also important, so why the double standard?

The intellectual property rights discussed later in the article are another interesting matter, but that’s a whole other story.

By SEWELL CHAN
Published: April 6, 2010
WASHINGTON — The United States and Brazil have reached an agreement aimed at settling a long-standing trade dispute over American subsidies to cotton growers, officials in both countries said Tuesday.

The announcement came one day before Brazil was to begin imposing up to $830 million in sanctions with authorization from the World Trade Organization. The trade body had ruled last August that American subsidies to cotton growers had violated global trade rules.

[…]

Brazil had threatened, for example, to stop charging its farmers technology fees for seeds developed by American biotechnology companies and to break American pharmaceutical patents before their scheduled expiration. Those retaliatory actions would have cost American businesses up to $239 million.

“Traditionally, retaliation in trade has been the preserve of the largest developed countries, which have market power,” said Robert Z. Lawrence, a professor of international trade and finance at the Harvard Kennedy School. “But this mechanism — suspending intellectual property protection — gives smaller, developing countries a way to enforce their rights under trade rules.”

Read the entire article here.

Written by Jason

April 6th, 2010 at 5:09 pm

President Obama’s energy strategy

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Friday, April 2, 2010

President Obama’s plan to expand coastal drilling could upend a decades-old standoff on the topic – and even lead to a wholly new energy outlook. It’s a nervy strategy that’s unsettled nearly everyone with a seat at the bargaining table.

His hopscotch exploration map safeguards stretches of the nation’s coastline including California while allowing oil rigs into other blue-water spots. By itself, it’s a compromise that annoys all sides and pleases no one.

But Obama is looking ahead from this hot-button issue to a bigger one. He wants to trade more drilling rigs for votes from wavering senators on looming energy and climate change legislation. From Florida to Alaska, the drilling maps try to please the nearest senator.

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Both critics and supporters of his drilling plan have underlined the central irony. In order to garner more support for green energy, reduced dependence on fossil fuels and greenhouse gas reductions, the president will allow more drilling. He’s playing a short-term game for a long-term goal.

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The best-guess predictions are that the expanded areas won’t make a major difference in oil supply. This country uses 20 percent of the world’s supply but has only two percent of the resources. Over half the oil this country uses is imported. The U.S. can’t drill enough to get anywhere close to energy self-sufficiency, Obama said.

Read the entire article here.

Written by Jason

April 3rd, 2010 at 10:06 am

Obama to Propose More Oil Drilling in Gulf

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Interesting. After that polarizing healthcare debate, it looks like Obama is trying to mend some bridges with a more pragmatic approach. A more liberal source, however, claims that he’s actually alienating both ends of the spectrum with this effort. We’ll see what happens.

Obama to Propose More Oil Drilling in Gulf

MARCH 30, 2010

By STEPHEN POWER And IAN TALLEY

WASHINGTON—The Obama administration will propose allowing offshore oil and natural-gas exploration and development in a large swath of the eastern Gulf of Mexico, after months of criticism from Republicans who have made expanded offshore drilling a political rallying cry.

oildrilling0331

In addition, the administration plans to announce new steps to determine how much oil and natural gas is buried off the coasts of Middle and Southern Atlantic states, where oil-reserve estimates are decades out of date.

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At the same time, Mr. Obama’s plan wouldn’t allow new oil and gas development off the coasts of Northern Atlantic states or California, whose political leaders have long opposed offshore drilling. The administration will call off a plan drafted by the administration of former President George W. Bush that would have given oil companies access to Alaska’s Bristol Bay, an area teeming with wild sockeye salmon and many commercial fishing interests concerned about the impact of drilling on their livelihoods.

[…]

The idea of expanding offshore drilling is taking on increased importance in the broader debate over climate and energy legislation.

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Mr. Obama is unveiling his plan at a delicate time for oil and gas companies. Shut out of resource-rich parts of the world like the Middle East and Russia, many oil majors increasingly view the deep waters off the southern U.S. as a key source of exploration success and production growth. Exploration in the Gulf of Mexico is expensive, compared with other basins, but high production rates and proximity to U.S. markets have made drilling there cost-effective.

Read the entire article here.

Written by Jason

April 1st, 2010 at 10:02 am

America’s economy: Hope at last

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Clearly there are many factors to both the Great Recession and our recovery from it–whether that recovery is happening now, or, as some of my smartest buddies believe, will not happen until after a second dip occurs.

Either way, it’s no surprise to this observer that energy is a central issue at the heart of any economic activity.

In addition to the typical energy issues typically discussed on this site, I hope you can forgive the inclusion of macroeconomics included below. It’s important. And interesting. And energy is also certainly related.

The world’s biggest economy has begun a much-needed transition. Barack Obama could do more to help

Mar 31st 2010 | From The Economist print edition

GREAT storms and floods have a way of altering landscapes. Once the waters recede, some of the changes are obvious: uprooted trees, damaged property, wrecked roads. Later come further changes, as people seek to avoid a repeat, erecting new flood walls or rebuilding elsewhere.

As in the physical world, so in the economic one. The financial deluge that broke over America has passed and the recession it caused, the worst since the 1930s, is ebbing. This year the American economy is expected to grow by around 3%, after shrinking by 2.4% in 2009. Rainbow-spotters hope that employment is at last beginning to grow again. And the economy emerging from recession is not the same as the one that went in. There is obvious damage: high unemployment, millions of foreclosed homes and a huge hole in the public finances. Less obviously, a “rebalancing” is under way: from consumption, housing and debt to exports, investment and saving. As our special report this week argues, this is enormously promising for America and the world; but it is far from assured. A lot depends on politicians—and not just the ones in Washington.

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Dearer, scarcer credit is not the only reason. Energy, though not as frighteningly expensive as in 2008, is also no longer cheap. Americans are choosing cars over light trucks, utilities are being told to use more renewable fuel, and domestic deposits of oil and gas locked deep beneath the sea or in dense rock are suddenly profitable to extract. If these trends continue (admittedly, a big if), America could import barely half as much oil in 2025 as seemed likely just five years ago.

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Put crudely, if Americans save more and spend less while other big countries do the opposite, the world economy will prosper. If Americans become thriftier while foreigners fail to spend more, it will stagnate.

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Plenty of microeconomic reforms could also help with rebalancing. America taxes income and investment too much and consumption too little. So far Mr Obama’s policies have mostly worsened the tilt. Health-care reform applies for the first time a payroll tax (for Medicare) to investment income. His administration has rejected a tax linked to the carbon content of fuel. It has also increased the subsidies, guarantees and preferences for mortgages that helped inflate the housing bubble. The federal government now stands behind 60% of residential mortgages and seems open to the idea of creating a permanently expanded backstop.

Read the entire article here.

Written by Jason

April 1st, 2010 at 8:02 am

Critics Claim Offshore Drilling Plan a Half-Step Toward Energy Independence

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Updated March 31, 2010

President Obama’s decision to open up the nation’s shores to new oil drilling drew complaints from both sides of the aisle Wednesday, as environmentalists and congressional Republicans alike claimed the move would do little for America’s energy independence.

Read the entire article here.

The president, in announcing the plan to allow drilling off the Eastern seaboard and potentially the western coast of Florida, said he anticipated the pushback. Yet, on the heels of a health care reform victory that cleared the way for work on other domestic challenges, the president defended his proposal, saying that “homegrown fuels” are needed to move away from foreign oil and help “transition” to more clean-energy sources.

Written by Jason

March 31st, 2010 at 6:23 pm