A free-market energy blog

“The draft assessment continue[s] to miss the positive externalities associated with climate change, like the fact that we have doubled our life spans in societies that were largely powered by fossil fuels that have slightly raised mean global temperature.

Doubling the lifespan of, say, two billion people, is equivalent to saving one billion lives. This dwarfs any negative effects of climate change. Me, I’ll take 85 quality years versus 43 with a price of one degree Celsius, which I can counter simply by moving from the city into the burbs.”

- Patrick Michaels (et al), Cato Institute Center for the Study of Science, “The Missing Science from the Draft National Assessment on Climate Change,” April 15, 2013.

“Power corrupts; absolute power corrupts absolutely,” Lord Acton wrote in 1887. The current scandals in Washington, DC remind the entire political spectrum about how dangerous concentrated power is with THE institution that possesses a legal monopoly on the initiation of force.

Power has corrupted Big Government Climate Science too. In our country, Exhibit A is the multi-agency U.S. Global Change Research Program (USGCRP) whose periodic reports on the impact of manmade climate change on America are one-sided alarmism with policy activism and bigger budgets being the goal.  Reports issued in 2000 and 2009 will be joined by a third report this year.

The Cato’s relatively new Center for the Study of Science submitted formal comments on the draft report last month. Some of the more salient criticisms of politicized science are reprinted below.

The USGCRP report is due out later this year. Will the draft report be altered to reflect the other side of the peer-reviewed (and Internet-corrected) science? The answer is just months away. [Read more →]

“The distinction between renewable and non-renewable resources is tenuous and perhaps in the last analysis untenable.”

- M. A. Adelman, The Economics of Petroleum Supply (Cambridge: The MIT Press, 1993), p. 66.

“The tradition in academic energy economics is to stress the ability to overcome depletion threats.”

- Richard Gordon, The Energy Journal, (Vol. 22: No. 2), 2001, p. 128.

The headline from the May 15th Time article reads: “The IEA Says Peak Oil Is Dead. That’s Bad News for Climate Policy.” Author Bryan Walsh begins:

No one … was really looking forward to a peak-oil world…. Think uncomfortable and violent. Oil is in nearly every modern product we use, and it’s still what gets us from point A to point B—especially if you need to get from A to B in a plane. If we were really to see the global oil supply peak and decline sharply, even as demand continued to go up, well, apocalyptic might not be too large a word.

Walsh then degenerates to the “upside” of the old view–”We’d lose oil but save the world”–to explain why climate-change policy is in (further) trouble. Well, good riddance to climate policy–and expect the collapsing case for climate alarmism to be recognized as good news. Justin Gillis’s recent New York Times piece begins this long-awaited revisionism:

What’s new is that several recent [peer reviewed] papers have offered best estimates for climate sensitivity that are below four degrees Fahrenheit, rather than the previous best estimate of just above five degrees, and they have also suggested that the highest estimates are pretty implausible.

Walsh in Time shares the new “mainstream” view: [Read more →]

“The Permian Basin is a story about combining the various talents of independents, majors, and service companies in using advancing technologies to sustain the lifespan of existing fields, to tap into zones that were previously uneconomic or inaccessible, and to increase the Permian’s proven reserves in a remarkable fashion.”

The Permian region, in western Texas and extending into southeastern New Mexico, has been one of North America’s major oil and natural gas producing regions for nearly a century. What makes the Permian stand out, besides its size, is its huge diversity. Rather than a single play, it is a collection of regional conventional and unconventional plays, producing from a variety of geological formations covering a wide area in more than a dozen productive formations.

Permian wells produce in depths ranging from a few hundred feet to tens of thousands of feet. While conventional exploration and production continues, horizontal drilling and multistage hydraulic fracturing (in both vertical and horizontal wells) are opening up a new, more unconventional chapter.

The Permian accounts for about two-thirds of crude oil production in Texas and nearly 15 percent of that of the entire U.S. It also accounts for more than a quarter of U.S. rig activity.

According to a 1995 assessment by the U.S. Geological Survey (USGS), the Permian had more than 100 billion barrels of oil in place. The key, of course, is how much of that can be recovered commercially, a figure that has continued to grow with technological innovation. [Read more →]

“The claim that wind projects in the U.S. are achieving 30% average capacity factors nationally [are] … not meaningful when considering that state RPS mandates are based on local resources. For states like New York and Pennsylvania, where average capacity factors are in the low- to mid- 20% range, many more wind turbines and related infrastructure (transmission) will be needed to meet RPS mandates than originally forecasted, resulting in increased costs and impacts.

Couple this with the fact that wind production in most states is seasonal with summer months producing at half that of winter months and also concentrated during periods of low demand (night time) — much of the energy arrives as excess energy making it less useful.”

This week, the U.S. Department of Energy announced it was revisiting the conclusions of its 2008 report, 20% Wind Energy by 2030.

The study, produced in cooperation with the American Wind Energy Association (AWEA) and other stakeholders, explored a modeled energy scenario in which wind could supply 20% of the nation’s electricity by 2030. DOE made clear in the report that the 20% scenario was neither a prediction nor a goal, but, for wind proponents, the study served as the foundation for ongoing advocacy.

20% wind power by 2030 became a call to action and more. Absent a national renewables standard, AWEA heralded the 20% as a de facto mandate for wind.

The industry insists it’s on track to reach 20% wind (up from 4% today), but such claims are neither realistic nor wise. Despite explosive growth in new wind installations in the last five years alone, [1] challenges to further development have become more evident and will ultimately limit wind’s expansion.

An Unpopular Wind [Read more →]

“[A]s my father liked to tell me, ‘Son, a fool with a plan can beat a genius with no plan any day.’ Right now, when it comes to America and our effort to achieve greater energy security, we’re a foolish nation without a plan.

If it were up to me, America’s energy plan would have ….”

- T. Boone Pickens, “Leadership Absent on Energy Plan,” Omaha World-Herald, May 1, 2013.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine the can design.”

- F. A. Hayek, The Fatal Conceit: The Errors of Socialism (1988), p. 76.

T. Boone Pickens, the author and marketer of three national energy plans (see yesterday’s post), is a “man of system,” to use Adam Smith’s phrase from the mid-18th century.

Pickens’s grandiose scheme to use the powers of government to implement wind-for-natural-gas in  electrical generation and natural-gas-for-oil in transportation (Pickens I) inspired Carl Pope, then head of the Sierra Club, to state back in 2008: “To put it plainly, T. Boone Pickens is out to save America.” [1] Plans II and III dropped wind (when business Boone did) to just push natural gas in the transportation market.

To plan or not plan–that is the wrong question in the realm of human action. Purposeful human action is planning. A central plan enforced by government (which by definition has a legal monopoly on the initiation of force) precludes planning on the individual and group level done by voluntary means.

Thus T. Boone Pickens has fundamentally misconstrued the question of planning which is who will plan: the market through private property, voluntary exchange, and the rule of law or government through its “experts” and legal monopoly on coercion.

Early Warming: Adam Smith [Read more →]

When it comes to energy, T. Boone Pickens esteems government planning. When asked about President Obama’s recent proposal for an Energy Security Trust, Pickens responded:

That starts to talk about a plan. He’s going to fund something to start something…. Make a plan … and do something different.

And low and behold, Pickens is crusading with yet another energy plan, his third in the last six years. As before, his animus is against Big Oil (see Appendix) and his fondness for personal dollars.

Pickens Plan III proposes that the federal government sell oil from the Strategic Petroleum Reserve (SPR) to jump-start the costly transition from oil to natural gas to fuel transportation. We don’t know the details yet, but T. Boone in March began pushing his new plan in the national media and local press.

Pending a legislative proposal with the specifics, two points can be made. First, the federal government should not be in the business of picking fossil-fuel winners. Second, the idea of selling federal oil should be elevated to a national debate to privatize the SPR to both reduce the federal budget and demote Washington from the day-to-day energy market. [Read more →]

The Alliance for Wise Energy Decisions (AWED) is an informal coalition of individuals and organizations interested in improving national, state, and local energy & environmental policies. Our basic position is that technical matters like these should be addressed by using real science.

Instead of a science-based approach, our energy and environmental policies are typically written by those who stand to economically or politically profit from them. As a result, anything genuinely science-based in these policies is usually inadvertent and accidental.

A key element of AWED’s efforts is public education. Towards that end, every 3 weeks we put together a newsletter to balance what is found in the mainstream media about energy and environmental matters. We appreciate MasterResource for their assistance in publishing this information.

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A fascinating technical study at Phys.org concludes that turbines have adverse consequences to grid stability. For example:

“wind turbines do not only transfer wind intermittency to the grid, but they also amplify it… The data also shows that wind power intermittency does not only affect the output of individual turbines, as previous research has shown, but it also extends to entire wind farms, which has not been observed before.”

Watch this great (short) video about entitlement. [Read more →]

“There is no evidence that government scientists and engineers are better at forecasting the future and know how the future will play out better than the scientists and engineers in private companies. Technocrats ignore the fact that private companies also hire scientists and engineers, (not to mention MBA’s and economists) and make investments based on their outlook for the future.”

The technocracy movement that arose in the early part of twentieth century advocated turning over the reins of governmental decision making to scientists, engineers and other “technocrats”. It was argued that the expertise of technocrats would result in better decisions than those made by private companies.

The idea of technocracy was embedded in the concept of central planning and was heralded by Thorstein Veblen and embraced by the Soviet Union. In the early years of the Great Depression the movement enjoyed renewed popularity, the belief being that technical, rational and apolitical expertise could revive the economy.

As an aside, one of the advocates of technocracy was M. King Hubbert who later developed his theory of Peak Oil production. Hubbert also proposed that energy certificates be issued to replace conventional money. These certificates could be divided equally among all members of a North American continental “technate.” Hubbert went on to become a geoscientist at Shell Oil.

A Comeback in Energy

Interest in the technocracy movement waned as the 1930s wore one, but surprisingly it is making a comeback in the area of energy. The Obama administration’s belief that the government can pick winning energy technologies is something that has a lineage reaching back to the technocracy movement. [Read more →]

The Fraser Institute recently published a study examining the impacts of green energy policies inOntario,Canada. The summary of the study, which was written by Fraser Institute Senior Fellow Ross McKitrick, is below.

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The Ontario Green Energy and Green Economy Act (herein the GEA) was passed in May 2009 with the purpose of addressing environmental concerns and promoting economic growth inOntario. Its centerpiece is a schedule of subsidized electricity purchase contracts called Feed-in-Tariffs (FITs) that pro­vide long-term guarantees of above-market rates for power generated by wind turbine farms, solar panel installations, bio-energy plants and small hydroelec­tric generators. Development of these power sources was motivated in part by a stated goal of closing the Lambton and Nanticoke coal-fired power plants.

This report investigates the effect of the GEA on economic competi­tiveness in Ontario. It focuses on three questions:

(1) Will the GEA mater­ially improve environmental quality inOntario?

(2) Is it a cost-effective plan for accomplishing its goals?

(3) Are the economic effects on households and leading economic sectors likely to be positive? The answer to each question is unambiguously negative. The specific findings of the report are as follows. [Read more →]

“No matter whose carbon dioxide emissions estimate is used, the climate impact of the oil transported by the pipeline is too small to measure or carry any physical significance. In deciding the fate of the Keystone XL pipeline, it is important not to let symbolism cloud these facts.” [1]

Climate change results from a variety of factors, both human and natural. The primary concern raised over the pipeline involves the carbon dioxide emissions that will result from the production and use of the oil that the pipeline will carry. It is the potential climate change from these emissions that will be the focus of my testimony.

In its Draft Environmental Impact Statement, the State Department finds, and I think that there is broad agreement on this point, that a barrel of oil produced from the Canadian tar sands carries about a 17 percent carbon dioxide emissions premium compared to the average barrel of oil finding its way into the U.S. market.

Disagreement: EPA vs. State Department

The disagreement between the State Department, the Environmental Protection Agency, and several environmental groups, involves how many new carbon dioxide emissions this 17 percent premium results in when considering the 830,000 barrels of oil that the pipeline will carry each day when operating at full capacity. [Read more →]