The Public Wants It Both Ways

August 19th, 2010

From a recent Pew Research Center/National Journal Congressional Connection Poll (http://pewresearch.org/pubs/1686/effect-campaign-on-congressional-vote-earmark-obama-palin-tea-party):

The latest Pew Research Center/National Journal Congressional Connection Poll, sponsored by SHRM conducted July 29-Aug. 1 among 1,003 adults, finds that energy independence, environmental protection, low prices and job creation are all seen as very important goals for U.S. energy policy. Roughly two-thirds (69%) say reducing America’s dependence on foreign sources of energy should be a very important goal for Congress and the president in any decisions on energy policy. The same number say keeping energy prices low is very important. Nearly as many (64%) say creating jobs within the energy sector should be a very important goal of energy policies, and 61% believe protecting the environment from the effects of energy development and use is a very important goal.

You should read the entire article, which includes important tables. The part I want to focus on is that keeping energy prices low is probably not compatible with energy independence or protecting the environment.  But perhaps this is the public’s wish list, not its expectations.

HEK

http://econpolicy.com

State Department Delays Decision on Canadian Tar Sands Pipeline

August 2nd, 2010

This article is FYI: http://www.nytimes.com/2010/07/28/business/energy-environment/28keystone.html?ref=energy-environment. I am willing to discuss it, but I currently have no position on what the State Department should or should not do.

HEK

http://econpolicy.com

Disaster Averted in Marcellus Shale

June 6th, 2010

On the evening of May 3, there was a gas well blowout in Penfield, PA: http://www.washingtonpost.com/wp-dyn/content/article/2010/06/04/AR2010060402716.html?hpid=sec-nation. “Details about the accident were still sketchy, but the agency was told that unexpectedly high gas pressure in the new well prevented the crew from containing it, said Dan Spadoni, a spokesman for the Department of Environmental Protection.”  It took 16 hours to get the well under control. According to the article, polluted water (most likely containing fracking chemicals)  spewed 75 feet into the air.

We have been told by the industry that no federal regulation is needed, the water supply is safe, only a poorly drilled pipe could put hazardous chemicals into the water supply and the chances of this happening are between slim and none. They say that if the EPA regulates these fracking chemicals, it will be the end of civilization as we know it, and nobody will be able to make a decent living drilling for shale gas.  You know the lobbyist and interest group gloom and doom drill.

The country can use its shale gas.  Landowners can use the royalties, drilling companies can use the profits, drilling crews can use the work.  But do we want more Deepwater Horizon disasters on a smaller scale?  What if the escaping methane had exploded?  What if the blowout preventer had failed? Was there a Plan B?  Is the current petroleum engineering model based upon “Safety 3rd?”  We need to know.

There is some risk to humans and the environment from any form of energy production.  There is no sense pretending we can make the world completely safe.  Fracking of oil wells was once done with nitroglycerin torpedoes. People died.  The abandoned Pithole City, PA serves as a monument to environmental and human degradation in the rush to extract valuable substances from the earth. These things are mostly out of sight and out of mind. And we have improved our methods of resource extraction over time.

However, the companies that produce our energy are dropping the ball these days.  In this case, the PA Department of Environmental Protection was not even called for 5 hours. Do you think there might be some angry regulators down in Harrisburg? My limited knowledge of PA DEP leads me to have more respect for this agency than the US Department of Interior’s Minerals Management Service. But I do not know if the agency has been affected by state budget cuts or if they have the resources to keep up with the Marcellus drilling frenzy.

As it has been said, we are all downstream.  The public needs to get involved.

HEK

http://econpolicy.com

From the “Where on Earth Did This Come From?” Department

May 20th, 2010

Earlier this week I attended a Brookings conference,  “Energy and Climate Change 2010: Back to the Future.”  I’ve seen better, seen worse.

One of the speakers said that the electric industry needs federal pre-emption. It’s hard to disagree with this, insofar as we are speaking of efficient interstate transmission, even though it’s not likely to happen anytime soon.  FERC has some authority in this area, but the political power of state regulatory bodies and politicians limit this authority.  Even the big power companies will not support this idea… perhaps because they fear retaliation from their state regulators.  Or perhaps because they like the Balkanization.

The speaker then said the natural gas pipeline industry also needs federal pre-emption?  Huh?  Where did this come from?  There is a very efficient interstate pipeline network delivering gas to local distribution companies.  FERC policy since the mid-1990′s has been benign neglect as far as pipeline rates are concerned, but it does not prevent pipelines from being built and I have not heard of any cases of state regulators preventing interstate gas pipelines from being built. I do not think many people would want FERC determining LDC’s rates to the final consumer, or helping to determine the efficient path for intrastate pipelines  and distribution companies, nor do I see any advantage whatsoever in it. In fact, most states have no gas systems that only transport gas to LDC’s.  Generally LDC’s take gas from interstate pipelines for distribution to end users.

The moderator had an agenda and left only enough time for two questions to be asked from the audience.  I did not get a chance to ask where this speaker came up with the notion that there is not an efficient interstate gas pipeline grid.

HEK

http://econpolicy.com

Why We Hate the Oil Companies: Straight Talk from an Energy Insider

May 16th, 2010

Click here to  visitPowell's Books!

is the title of a new book by former president of Shell Oil Company president John Hofmeister.  The book will be released on May 25, but a summary article is available from strategy + business (http://www.strategy-business.com/article/10207?gko=d0e17).  Mr. Hofmeister blames the oil industry for lack of concern about customers who buy its products at the pump, lack of transparency, adhering to a bunker mentality and aligning itself with one political party instead of walking down the middle. His insights come a little late for BP executives, but will give them something to read over the coming months as they take political heat.
HEK
http://econpolicy.com

Weighing In on the BP Disaster

May 15th, 2010

What a switch!  From “drill, baby, drill!” as a substitute for sound energy policy when gasoline is $4/gallon to let’s substitute windmills for oil wells when there is a potential environmental disaster on the Gulf Coast. I guess many interest groups got their coffers filled and some got their 15 minutes of fame.

The American Petroleum Institute “warns” us that increasing the federal oil spill trust fund’s liability limit from $75 million to $10 billion would force many independent producers out of the Gulf  (http://www.ogj.com/index/article-display/1360009641/articles/oil-gas-journal/general-interest-2/2010/05/api_-_10_billion_liability/QP129867/cmpid=EnlDailyMay142010.html).  But do we really want Ma & Pa Kettle out there in that environment? And so what if it does increase the cost of drilling?  There are many people who depend on fisheries and tourism for a living.  Should they be told to go pound sand because drilling is more important?

The environmentalists rush in to tell us we should halt offshore drilling.  But there is no halt to energy demand, although it has slackened since 2008 and the world is awash in crude.  Energy independence is not in the cards no matter what we do. But somebody somewhere is taking an environmental risk to drill our oil.  Is it better to ruin another country’s coast for our oil supplies?

Oil is a transportation fuel.  Currently available, but limited, substitutes are ethanol and vegetable oil.  We are not far enough down the path towards cars that run on electricity to call wind and sun a substitute for oil. I do not believe we will ever be able to produce energy without some environmental degradation.  Milton Friedman told us that there are no free lunches. But that does not seem to impede our search for them or the propaganda machines from all sides of the issue from pretending that they exist if we would just follow the correct policy… correct for them, that is.

HEK

http://econpolicy.com

FERC Staff 2009 State of the Markets Report

April 19th, 2010

Issued April 15, 2010.  A rather enlightening summary in a 22 page PDF document, equivalent to a Powerpoint show, with lots of numbers: http://ferc.gov/market-oversight/st-mkt-ovr/som-rpt-2009.pdf .  Electricity demand was down in 2009, gas supplies were up, the gas market is more integrated nationally.

HEK

http://econpolicy.com

Increases in Retail Electric Prices Significantly Greater in States with Deregulated Electric Markets

April 19th, 2010

Between 1997 and 2009, increases in retail electric prices were significantly greater in states with deregulated electric markets than in regulated states (http://www.elp.com/index/display/article display.articles.Electric_Light_Power_Newsletter.enewsletter.Retail_electric_rates_in_deregulated_and_regulated_states__2009_update/QP129867/cmpid=ELPENLApril62010.html).  The Electric Light & Power Newsletter’s source is an EIA survey, which I have not read.  Maybe I will read it and offer comments. This is certainly not good news for advocates of retail competition.

HEK

http://econpolicy.com

Think Tank Seminars

April 6th, 2010

I attend several think tank presentations per week and I cross ideological borders from libertarian to progressive.  Before the recession, most of the functions included breakfast or lunch. Depending on the think tank, there was served what I heard someone refer to as the “official think tank box lunch,” a cold buffet, or sometimes a hot buffet.  Even an occasional real meal at a hotel for a half-day or full-day seminar.  There was a wide range of breakfasts also. You might be seated at tables or in rows of chairs.

Since the financial meltdown, the fare has gotten poorer at most think tanks, you are more likely to be seated in rows, and there are many more presentations between meal times.  Most presentations are now live on webinar, so they can probably show their donors that total attendance is up when this is taken into consideration. I find that when I watch webinars rather than attend live sessions, my attention drifts to other things, but I do not know if that is a factor in think tank cost-benefit analysis.

Another thing that seems to have happened is that these think tank sessions are more politically and ideologically diverse than they were before the recession. I do not have a statistically valid sample, but this is my impression, perhaps to be served with a grain of salt. It may be the case that one cannot shove the party line down guests’ throats without food and drink, so a higher quality of presentation is required.

Thus, I find the presentations to be more intellectually stimulating than they were before. I miss the food and networking opportunities that are more readily available when you are seated at tables. They still do not leave enough time for Q&A, nor do most moderators know how to control speeches by the attendees during this time.

Of course, some think tanks have more resources than others, and this changes over time. Yesterday’s high flier might be tomorrow’s dog.

If you are an individual looking for a job in Washington or are simply interested in increased networking opportunities in the think tank community, I can probably point you in the right direction. This is community service, not a billable opportunity for me.

I do offer services in this area that involve more time and effort than it takes to help a fellow networker. Call or email if you are interested in anything in this area. I can attend any event on almost any issue, write a summary, and discuss it with you in person or by phone.

HEK

http://econpolicy.com

Fracking Chemical Disclosure

March 24th, 2010

From Reuters: http://in.reuters.com/article/environmentNews/idINTRE6292MM20100310.

I cannot understand why so many in the gas industry fight the disclosure of the fracking chemicals they use and also fight federal (EPA) oversight.  There are companies that voluntarily list their chemicals, but the industry trade associations seem to be on the wrong side of this fight.

You can argue until you are blue in the face that the chemicals are safe and cannot affect the water supply 5000 feet into the ground. You can argue proprietary formulas.  You can argue that environmental extremists are helping to shape the debate.  But the people who live in the communities where the shale gas is drilled want assurances that their water supply will not be contaminated.  Fighting with them over their concerns instead of working with them will simply delay development.

HEK

http://econpolicy.com