Posts from — April 2011
When it comes to climate, are all fossil fuels equal?
“No,” the answer has been until very recently. In terms of how much carbon dioxide (the major force behind the human alteration of the atmospheric greenhouse effect) is produced when burning various fossil fuels to produce a unit amount of energy, there is a definite ranking. From the most CO2 produced to the least, the list goes coal worst, oil next worst, and natural gas least worst.
While it would be stretch to call natural gas the sweetheart of climate-change-fearing environmentalists, many have considered it to be the lesser of the reliable-energy-source evils. Of course, they rally behind the wind and the sun, but even renewable energy idealists understand that there needs to be a bridge between where we are now and where they would like us to be—and that bridge is envisioned to be constructed primarily from natural gas (a foundation furthered by the nuclear problems in Japan).
But a new study out of Cornell University makes the natural gas bridge out to be another Gallopin’ Gertie rather than a secure pathway to the future—at least when it comes to being a climate-change mitigator/savior.
The Climate Impact of Natural Gas
According to the carbon dioxide emissions factors given by the Energy Information Administration (which assume 100% combustion), coal burning emits on average about 95 kilograms (209 lbs) of carbon dioxide per million BTUs produced. Burning oil to produce a million BTUs of energy produces about 20kg less, or about 75 kg (165 lbs) of CO2. And burning natural gas to do the same thing saves you another 20kg, producing only about 55 kg (121 lbs) of carbon dioxide.
So, on the face of things, numbers like these are what make natural gas the darling of climate change mitigators. They see that a switch from coal to natural gas could cut global-warming CO2 emissions by more than 40%. This number falls quite a bit short of the long term goals of reducing greenhouse gas emissions by more than 80%, but nevertheless it is a big step in the right direction. Thus, natural gas is viewed as a “bridge” to a largely carbon-free energy production—that is, it is a construct which buys time for other technologies to mature and/or be developed. [Read more →]
April 29, 2011 9 Comments
A smart grid/distributed generation combination could have a large role to play in the future of electricity systems in terms of both supply and use. But it is incorrectly being touted as the solution to our perceived electricity problems in the short term, that is for the next 10 to 20 years. Meaningful fulfillment of a “smart” grid and/or extensive Distributed Generation could be a half-century away, even more. Therefore, early, extensive, and expensive initiatives that claim to be on the “right track” are very likely to be on the wrong track later.
Is the right track (1) upgrading the grid capacity and implementing new transmission lines to facilitate the integration of utility-scale wind and solar or (2) the implementation of smart meters to match (read restrict) demand to the erratic and unreliable supply of these?
Absolutely not. Such ill-advised initiatives will require an unacceptably large investment in grid elements that will likely all too quickly become irrelevant as the needed electricity infrastructure changes are engineered and introduced in the future.
But first things first: what is meant by Distributed Generation (DG) and the smart grid? [Read more →]
April 28, 2011 9 Comments
Joe Romm: “It is clear that solar and wind are competitive in many situations right now” (Where have we heard this before?)
“It is clear that solar and wind are competitive in many situations right now — see Wind now on even playing field with gas and Solar costs may already rival coal. And continued aggressive deployment along with continued R&D will keep driving the price down (see Energy Sec. Chu sees “wind and solar being cost-competitive without subsidy with new fossil fuel” by 2020.”
- Joe Romm, “Fred Hiatt Back to running Climate and Energy Disinformation from the Likes of Bjorn Lomborg,” April 21, 2011.
Are wind and solar really “competitive in many situations right now”? For decades, we have heard that this is the case. But the reality is that dilute energy flows do not compete on either a price or a reliability basis with the stock of energy that is oil, gas, and coal.
Why would anyone buy a product that is more expensive and of poorer quality than a ready rival? Would you pay extra for a car with a trick motor–an engine that went on and off at any time? Of course not! And this is why wind and solar as grid electricity must be taxpayer-gifted to the hilt and in some states (Texas being foremost) have a mandated market share.
If Joe Romm thinks that politically correct renewable energies “are competitive in many situations right now,” then let him 1) define those situations and 2) recommend that preferential subsidies/mandates be removed. Let’s see what consumers want in terms of price and reliability. (And sure, we can end all government energy subsidies while we are at it.)
Romm circa 2011 continues a multi-decade siren song of wind and solar becoming affordable, prime time, industrial energies. Yet the litany of exaggerations and disproven claims should give pause to current claims–and increase understanding about the density problem with wind and solar. The diluteness of wind and solar as on-grid electricity is not the result of a lack of inventive effort (a breakdown of human ingenuity), insufficient taxpayers subsidies, or a conspiracy by rival energies. It is basic physics.
In 1983, s study by Booz, Allen & Hamilton for the Solar Energy Industries Association, American Wind Energy Association, and Renewable Energy Institute concluded:
The private sector can be expected to develop improved solar and wind technologies which will begin to become competitive and self-supporting on a national level by the end of the decade if assisted by tax credits and augmented by federally sponsored R&D.” (1) [Read more →]
April 27, 2011 7 Comments
The 100th birthday of President Ronald earlier this year brought forth a flood of nostalgia. Americans rightfully love their great man. But enviro-revisionism from some slammed Reagan for his reversal of President Jimmy Carter’s energy program. As Joe Romm puts it, Reagan “almost single-handedly ruined America’s leadership in clean energy.”
Such criticism reflects a extremely selective memory and a fundamental misunderstanding of the nation’s energy challenges.
Carter Was Pro-Coal, Nuclear Too
In recent years, true, some of Carter’s energy policies have been rehabilitated in the name of “energy independence” and addressing the alleged human influence on global climate. The implication—not always stated explicitly—is that Carter’s energy plan was primarily about renewable energies. The solar thermal panels he had installed on the White House roof, indeed, epitomized the differences between him and Reagan—who had the panels removed.
But selective memory comes into play, especially in overlooking the Carter-era push to increase coal and nuclear in power generation. This policy arose from his misguided view that the natural gas resource was “simply running out,” which is clearly refuted by the fact that more than three decades later the industry finds itself in a gas glut.
Coal was the energy future for the next decades in Carter’s energy thinking. The Powerplant and Industrial Fuel Use Act of 1978 , for example, restricted gas burning in the named facilities, targeting coal and fuel oil for the “low priority” market to save natural gas for “high priority” homes and commercial establishments. Gas distribution companies, organized as the American Gas Association, supported the law. (1) Exemptions were granted in the law’s early years, however, and it was effectively repealed in 1987. (2)
Running Out of Gas?
Still, the fired 39th president of the United States might be praised for relaxing price controls on natural gas, except that it was done from the obvious economic distortion of artificial shortages–and because he thought higher prices would husband a “depleting” resource. [Read more →]
April 26, 2011 5 Comments
“The Arab oil embargo was not the cause of the energy crisis in this country: it was merely the straw that showed the camel’s back was broken.” (1)
“There is no ‘natural’ geological crisis; there is an enormous political one.” (2)
- Ayn Rand, “The Energy Crisis,” November 5, 1973.
The highly regulated society depicted by Atlas Shrugged includes many things energy. Her 1957 novel and now movie (Part I out; Part II and Part III to come) has had relevance for U.S. energy policy ever since.
Atlas Shrugged describes oil shortages (342–44, 475), gasoline shortages (pp. 272–73), and electricity blackouts (pp. 669, 671). When the 1970s energy crisis hit, Rand commented:
Many readers have been asking whether I intended to write about the energy crisis. I would be tempted to answer: “I already have” – but they anticipate me by adding that things are “just as in Atlas Shrugged.” Well so they are. (3)
Rand was right on: President Nixon’s wage and price control order, extended into phases of price ceilings, caused petroleum shortages before the the Arab OPEC embargo. (4) Rand had earlier lambasted Nixon for his action, this being a president who was elected “on the implicit promise to save the country from a statist trend” who instead “helped and accelerated the march to statism.” (5)
Having seen the march of domestic regulation during World War II and during the Korean Conflict, Rand turned fact into fiction with consequent intervention, much of it stemming from federal price controls (effective ceiling prices).
Atlas Shrugged has energy rationing (pp. 349–50), conservation edicts (pp. 339, 343) and the Industrial Efficiency Award (pp. 44–45). The Bureau of Economic Planning and Natural Resources, in fact, was created in part to combat “a shortage of oil in the city” (p. 273).
There is fair profit legislation (p. 507), anti-profit law (pp. 997, 1074), and public utility regulation (p. 195). There is common carrier regulation (p. 677).
Regulations are gamed by the regulated (p. 217), and trade associations work to limit competition (pp. 46–47, 274). And there is the dynamics of government intervention as one regulation spawns another (pp. 130, 273, 413).
Fiction from Fact
Rand did not invent her scenarios out of whole cloth. She saw government price and allocation controls in action. She also became familiar with free market economics to understand the cause-and-effect of government intervention in the economy. [Read more →]
April 25, 2011 3 Comments
[Ed Note: This letter was originally published two years ago today at MasterResource with the permission of the Julian Simon family.]
“So how about it, Al [Gore]? Will you accept the offer? And how about your boss Bill Clinton, who supports your environmental initiatives? Can you bring him in for a piece of the action?”
- Julian L. Simon, May 1, 1995
“EARTH DAY: SPIRITUALLY UPLIFTING, INTELLECTUALLY DEBASED”
- by Julian L. Simon
April 22  marks the 25th anniversary of Earth Day. Now as then its message is spiritually uplifting. But all reasonable persons who look at the statistical evidence now available must agree that Earth Day’s scientific premises are entirely wrong.
During the first great Earth Week in 1970 there was panic. The public’s outlook for the planet was unrelievedly gloomy. The doomsaying environmentalists–of whom the dominant figure was Paul Ehrlich–raised the alarm: The oceans and the Great Lakes were dying; impending great famines would be seen on television starting in 1975; the death rate would quickly increase due to pollution; and rising prices of increasingly-scarce raw materials would lead to a reversal in the past centuries’ progress in the standard of living.
The media trumpeted the bad news in headlines and front-page stories. Professor Ehrlich was on the Johnny Carson show for an unprecedented full hour–twice. Classes were given by television to tens of thousands of university students.
It is hard for those who did not experience it to imagine the national excitement then. Even those who never read a newspaper joined in efforts to clean up streams, and the most unrepentant slobs refrained from littering for a few weeks. Population growth was the great bugaboo.
Every ill was the result of too many people in the U. S. and abroad. The remedy doomsayers urged was government-coerced birth control, abroad and even at home.
On the evening before Earth Day I spoke on a panel at the jam-packed auditorium at the University of Illinois. The organizers had invited me for “balance,” to show that all points of view would be heard. I spoke then exactly the same ideas that I write today; some of the very words are the same. [Read more →]
April 22, 2011 7 Comments
Atlas Shrugged: The Philosophy and Its Energy Implications (Part IV: The Moral Obligation of Capitalists)
“In [Atlas Shrugged], I glorify the real kind of productive, free-enterprise businessman in a way he has never been glorified before…. But I make mincemeat out of the kind of businessman who calls himself a ‘middle-of-the-roader’ and talks about a ‘mixed economy’—the kind that runs to government for assistance, subsidies, legislation and regulation.”
- Ayn Rand (1949) (1)
As the public face of capitalism, business leaders are well positioned to explain the logic of free markets from a moral and economic viewpoint—and to demonstrate by example the non-coercive nature of trade by eschewing the political exploitation of consumers, taxpayers, and rivals.
The words and deeds of corporate executives are quite different, however. Rand was very disappointed in what she saw–and she would be more disappointed today, particularly in the energy industry. Think of Enron’s Ken Lay and BP’s John Browne a few decades ago–and and Duke Energy’s Jim Rogers and T. Boone Pickens today.
Rand did identify “businessmen as the greatest victims of the present philosophical trend (particularly of the altruist morality).”(2) Muckrakers from different generations, indeed, have criticized and demeaned the great wealth-creators, even those who benefited the masses without resorting to political means, such as John D. Rockefeller and Cornelius Vanderbilt.(3)
Rand noticed the propensity of business leaders to not stand up for self-interest, individual rights, and capitalism proper. She complained:
As a group, businessmen have been withdrawing for decades from the ideological battlefield, disarmed by the deadly combination of altruism and Pragmatism. Their public policy has consisted in appeasing, compromising and apologizing: appeasing their crudest, loudest antagonists; compromising with any attack, any lie, any insult; apologizing for their own existence. Abandoning the field of ideas to their enemies, they have been relying on lobbying, i.e., on private manipulations, on pull, on seeking momentary favors from government officials. Today, the last group one can expect to fight for capitalism is the capitalists. (4)
Adam Smith fretted about capitalists-versus-capitalism, and the Adam Smith of our era, Milton Friedman, observed: “The two greatest enemies of free enterprise in the United States … have been, on the one hand, my fellow intellectuals and, on the other hand, the business corporations of this country.”(5)
Appeasement of capitalism’s opponents was philosophical surrender to Rand: [Read more →]
April 21, 2011 5 Comments
[Editor note: MasterResource's Atlas Shrugged week began with an overview (Part I–Monday) and has continued with a look at the book (Part II–yesterday) and the philosophy behind the book (Part III–today). The moral obligation of capitalists according to Rand (Part IV-Thursday) will be followed by Atlas shrugging in the energy market (Part V-Monday).]
“Facts are facts, independent of man’s feelings, wishes, hopes, or fears.”
- Ayn Rand, “Introducing Objectivism” in Rand, The Voice of Reason: Essays in Objectivist Thought (New York: New American Library, 1988), p. 3.
“Clean energy” and “green jobs” are catch phrases at odds with the affordable, reliable energy required for a modern, expanding industrial society. So-called clean, green energy is politically correct but not very clean or green on close inspection. Yet electricity from industrial wind parks and solar farms–rejected by consumers because of high price and unreliability–are sold to the voters (qua taxpayers) by a political class and special interests (including rent-seeking corporations) as in the common good.
The sell is a shared narrative, a form-over-substance play, of huge proportions. Obama, in fact, seems to be basing part of his reelection prospects in 2012 on “clean” energy. The windpower president, anyone?
The intellectual misdirection of ‘green’ and ‘clean’ energy goes far beyond build-it-and-they-will-come. Entrepreneurs have been trying to commercialize wind turbines and solar farms for many decades. Special interests and politicians have been promising competitiveness for decades too. Why the perenial failure? Basic energy physics is involved with energy density placing oil, gas, and coal on a different plane than the dilute, intermittent energies flows.
One can even ask whether the anti-industrial lobby likes wind and solar precisely because these energies are expensive and unreliable as sources of on-grid (central station) electricity.
The chimera of wind and solar as industrial energy is postmodernism in action. Objectivism can identify and refute the emotional, whimsical nature of anti-energy energy on a philosophical level, complementing the economic verdict of the marketplace.
Ayn Rand’s novels conveyed a world of human relationships “as they might be and ought to be.”  Her stories turn complex personal and economic relationships into triumph and tragedy based on philosophical precepts. And the nature of a just political system is never far from view.
Rand’s passion for political justice stemmed from the totalitarianism she escaped  and the personal and economic freedom she relished. The naturalized citizen was a true American patriot.  Yet she would always be an outsider to America’s improvisational spirit and always be hypercritical of perceived imperfections. [Read more →]
April 20, 2011 No Comments
[Editor note: With the Atlas Shrugged movie enjoying a strong opening, MasterResource this week is examining the book (Part II–today), the philosophy behind the book (Part III–Wednesday), the moral obligation of capitalists according to Rand (Part IV–Thursday), and Atlas shrugging in the energy market (Part V–Monday).]
Ayn Rand’s first major novel, The Fountainhead, is the story of a lone architect struggling against the altruistic, collectivist norms of his profession. Atlas Shrugged describes the process by which men and women of accomplishment and honor withdraw their talent to defeat a parasitic, collectivist society.
Rand described her major plot device, an anti-Industrial Revolution:
Reverse the process of expansion that goes on in a society of producers: Henry Ford’s automobile opened the way for industries: oil, roads, glass, rubber, plastics, etc. Now, in a society of parasites, the opposite takes place: a shrinking of industries and productive activities. (1)
Originally titled The Strike, the novel revolves around John Galt, a theorist and inventor in the field of energy who leads the exodus, refuses under torture to save the bankrupt society, and then returns with the strikers to rebuild America on a rational, individualistic basis. “Who is John Galt?” has become a literary phrase that, like “Atlas Shrugged,” is still in use today.
Atlas Shrugged contains a variety of business and business-government situations that impart Rand’s views of positive and negative attributes of firms and their leaders. Although the work is fictional, a number of its insights anticipated the real-life blind spots of major business and political figures from Ken Lay to Barack Obama.
Energy in the Novel
Rand’s book about the anti-industrial revolution finds government and society working against the master resource of energy.
There is John Galt’s abandoned motor, his secret energy, that represents a foregone quantum leap for energy creation and usage.(2)
There is Ellis Wyatt’s oil, which Atlas Shrugged refers to “the black blood … because blood is supposed to feed, to give life….” (p. 9). Rand continues: “[The discovery of oil] had shocked empty slopes of ground into sudden existence, it had brought new towns, new power plants, new factories to a region nobody had ever notices on any map.” [Read more →]
April 19, 2011 7 Comments
Atlas Shrugged (Part I) had a strong debut weekend despite the effort of its philosophical critics, including some leading movie reviewers, to pan the effort and to discourage attendance (see the Appendix below where Walter Donway challenges Roger Ebert).
This movie and the classic 1957 book are important for today’s energy debate in a variety of ways, beginning with Enron and continuing with Obama energy policy. And how Rand undressed Richard Nixon with the energy crisis of her day(Part V–see schedule below)!
“Ah, Ha!”: Interpreting Enron/Ken Lay
For me personally, Ayn Rand’s philosophy was the key that unlocked the mystery of Ken Lay and the magical new energy company, Enron. I had once studied Objectivism but lost interest in Ayn Rand, finding it too dogmatic for my taste. (In retrospect, I ‘threw the baby out with the bath water’.) But some twenty years later, after I was laid off from Enron (where I had worked for 16 years) and was writing a why-behind-the-why book about the company’s rise and fall, I encountered a simple but profound essay, “Enron As a Postmodern Company.”
Roger Donway’s article gave me the insight to unravel what I called the Ken Lay Paradox, interpreting the once-revered Lay as a second-hander, a philosophical fraud. (See chapter 3 of my book, Capitalism at Work: Business, Government, and Energy, for a full explanation.)
And yet yesterday’s New York Times had an uninformed, cheeky piece by Maureen Dowd, Atlas Without Angelina. She makes fun of the fact that the movie was low budget, missing the stars. (I thought the Left rooted for the little guy, but Big Hollywood, I guess, is too politically correct.) But where Ms. Dowd goes off the rails is resorting to the capitalism-is-greed theme. She writes:
You’d think our fiscal meltdown would have shown the flaw in Rand’s philosophy. She thought we could derive morals from the markets. But we derived immorality from the markets.
But political capitalism (including that practiced by central planner Alan Greenspan) is not real capitalism. Has Dowd studied the philosophy behind the book and movie? Rand was rather clear on perverted capitalism–the James Taggart, Wesley Mouch, Ken Lay, James Rogers kind–versus the the Dagny Taggart, Hank Rearden, John Allison, Charles Koch real kind.
Rand herself was clear on this point. “In my new book, I glorify the real kind of productive, free-enterprise businessman in a way he has never been glorified before,” she wrote. “I present him as the most heroic type of human being…. But I make mincemeat out of the kind of businessman who calls himself a ‘middle-of-the-roader’ and talks about a ‘mixed economy’—the kind that runs to government for assistance, subsidies, legislation and regulation.” (1)
Enron and the more recent financial meltdown were all about the political side of the mixed economy enabling bad business behavior. I invite Ms. Dowd to consider what Adam Smith and Samuel Smiles, not only Ayn Rand, had to say about best business practices in a free economy. (2)
Objectivism and the Energy Debate
For today’s energy debate, there are a number of insights from Ayn Rand’s Objectivist philosophy, including:
- Energy in Atlas Shrugged. From John Galt’s motor to Ellis Wyatt’s oil to Ken Danagger’s coal, energy is at the center of business life in her most famous novel. To Rand, energy comes from the mind, not the ground. Energy is a torch of man’s greatness, hence such metaphors as the “electric breath of the city” (p. 673). But Atlas is also about the forces against energy: the altruism that sacrifices its creators, the taxes that drain its producers, and the edicts that hobble its profitable use. (Obama energy policy, anyone?) [Read more →]
April 18, 2011 33 Comments