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Perry’s Energy Speech: Part I (Real Energy, Real Jobs–but what about the governor’s windpower baggage?

Texas Gov. Rick Perry is swimming upstream in his quest for the Republican nomination for President of the United States, primarily from his weak performances during several debates. To improve his odds, last Friday he gave his first policy speech, titled Energizing American Jobs and Security.

Energy is that important. And it is a breath of fresh air that Perry’s analysis and prescription is 180 degrees from President Obama’s government-knows-best approach to energy and energy/environment.

Four Objectives

The Governor’s plan focused on four objectives that promise economic growth and numerous jobs in America. In Perry’s words:

    • “First, we will open several American oil and gas fields for exploration that are currently off limits because of political considerations.”
    • “It is equally important that we take a second step: eliminate activist regulations already on the books and under consideration by the Obama Administration.”
    • “The third part of my plan is to reform the bureaucracy, in particular the EPA, so that it focuses on regional and cross-state issues, providing scientific research, as well as environmental analysis and cost-comparison studies to support state environmental organizations. We will return greater regulatory authority to the states to manage air and water quality rather than imposing one-size-fits-all federal rules.”
    • “The fourth component of my plan is to level the competitive playing field among all energy producers. As the governor of the nation’s leading producer of wind energy, I clearly believe there is an important role for green sources of energy as a part of our generation mix. The fact is, every energy producer receives incentives and subsidies that cost taxpayers and distort the marketplace.”

He finished his address by stating that his plan is focused to “Make what Americans buy, buy what Americans make, and sell it to the world.”

I agree with these proposals. In particular, getting rid of all energy subsidies and tax incentives across the boardwill allow the market to direct the allocation of resources to energy sources that are profitable without government intervention.

Perry: Big Wind

Perry’s case for energy expansionism, however, is weakened by his past energy actions as governor and by the interventionism by other Republicans.

MasterResource has documented the role of Perry in the (artificial) Texas windpower boom:

Governor Rick Perry (R-TX), T. Boone Pickens, and the Enron Legacy of Windpower (March 24, 2010)

Rick Perry’s $7 Billion Problem (Texas wind transmission project 38% over budget–$270+ for every citizen in the state) (August 26, 2011)

In October 2006, Governor Perry announced $10 billion in commitments from wind developers to increase increase installed Texas wind capacity by about 7,000 MW.19  And to get it, he committed the state to a $5 billion–and now $7 billion– transmission project.

“While Perry’s been governor,” saidthe American Wind Energy Association “we’ve had a business climate that allows a generator to build, connect to the grid and sell power. Under those conditions, wind has been able to compete and bring benefits to Texas consumers, and to the environment.”

As Paul Sadler, executive director of the Wind Coalition, told the New York Timestwo months ago: “He [Perry] has been a stalwart in defense of wind energy in this state — no question about it.”

“The GOP’s Solyndra Problem”

Perry is hardly alone among Republicans, supposedly the party of free markets and small government. This was brought to light by Kimberly Strassel of the Wall Street Journal in The GOP’s Solyndra Problem, subtitled “Republicans have their own green baggage.”

Strassel stated:

Where the handouts really got rolling was at the state level. It used to be that Republican governors competed for business by lowering taxes and regulations. Then some genius worked out that it was easier to flat-out bribe companies to relocate by offering cold, hard taxpayer cash.

And with green energy all the rage, a lot of state tax dollars started flowing to Solyndra-like ventures. Mr. Perry did all this on a grand scale, convincing his legislature to create two investment funds, one being the Emerging Technology Fund, which has acted as state venture capitalist to more than a hundred firms, including green companies.

In fairness, he wasn’t alone. Indiana’s Mitch Daniels, Mississippi’s Haley Barbour, Louisiana’s Bobby Jindal—conservatives all—have happily staked their taxpayers’ dollars on green bets.

Conclusion

Governor Perry is a politician, not a principled free-marketeer. He stepped right into the unholy George W. Bush/Ken Lay windpower nexus and chose to expand it (and now has a transmission boondoggle on his hands).

But times have changed, and the tradeoff between pro-job real energy and bubble-job ‘green energy’ has never been starker. Part II will focus on EPA’s war on real energy in the name of the ‘precautionary principle.’

———————-

Vance Ginn earned a BBA in Economics and Accounting and minored in Political Science and Mathematics at Texas Tech University where he is completing his doctorate in economics. He recently joined the economics faculty at Sam Houston State University (Huntsville, Texas) where he teaches micro and macro economics.

11 comments

1 Jon Boone { 10.17.11 at 8:27 am }

The bipartisan dive to the bottom is much worse than portrayed here–and Perry’s “political” support for wind (since he’s evidently clueless about the power industry at a technical level) has cost Texas rate and taxpayers dearly, raping the landscape, threatening the Gulf with environmental ruin, exploiting property owners–and all the while providing dysfunctional benefits.

What Perry and his fellow Republican wind sleazers evidently do understand is that the more wind, the more need for conventional generation. So gas and coal producers can’t lose. Besides, they can all divvy up wind’s tax sheltering income, which has become, even in Texas, non trivial.

And they can say, as Perry did in his grandstanding speech (clearly vetted by the American Wind Energy Association), that every little bit helps in our “energy portfolio.” This rationale has the same force of logic as saying that the nation should subsidize more drunken drivers because drunks contribute to a productive base of commuters.

But Perry’s brand of crony capitalism represents a particularly pecksniffian sanctimony, since he mouths free-marketing slogans while cutting deals to rig the market. He’s no conservative. Rather, he’s a cheap suit for hire by the highest bidder. In a sane society, he would have long ago been prosecuted for bunco. Instead, he’s governor of Texas now pushing for the presidency.

2 nofreewind { 10.17.11 at 10:33 am }

Here’s a crazy concept.
A 1500 kw turbine in the US averages 375 kw year round and costs a couple million dollars. The power it can generate is comparable(a little more) to the oil burner in my basement.
http://www.directindustry.com/prod/cuenod-thermotechnique/fuel-oil-burners-21259-362943.html

3 Charles { 10.17.11 at 11:16 pm }

Someone needs to ask Perry which fossil-fuelled generator(s) were closed down in Texas (or nearby environs) with the introduction of this windpower, and how much coal and gas were subsequently not burned for the purpose of generating electricity.

Once he does this we can determine for ourselves how much truth and integrity lies in his speech.

4 Jon Boone { 10.18.11 at 9:26 am }

Charles:
No need to ask Perry. Simply go th the USEIA data over the last decade and note the fuel uses in kWh each year. Despite all that 10+GW of wind in Texas, not one fossil fired plant was shuttered because of the wind production, and there is no evidence that less fossil electricity was generated as a consequence. There are, moreover, reasonable grounds for thinking more fossil fuel was consumed than there would have been without the wind output. All this is hard to sort out with clear causal explanation because of the way wind performance affects thermal generation; it’s considered “proprietary” and therefore not in the public domain.

Perry’s position on wind is essentially a modified AWEA stance that the organization puts forward when all its other reasons for the technology are exposed as nonsense–such as that it will backdown coal, substantially reduce carbon emissions, and reduce the impact of “global warming.” Perry has stated that he believes “every little bit helps” for contributing to a diversified electricity portfolio, which little bit would help secure the electricity supply. But since wind can provide no modern power, it cannot be an alternative to any conventional generating plant–and it can’t be a functional additive source of energy that can in a controlled fashion back up conventional generation, or even itself. It is a wholly supernumerary phenomenon that makes everyone and everything work harder just to stay in place, costing more in a variety of ways. Wind is a “little bit” of a gift that keeps on taking…

5 - Resourceful Earth { 10.18.11 at 9:54 am }

[...] can read much more commentary on the plan here and here. var addedComment = function(response) { //console.log('fbComments: Caught added [...]

6 Kermit { 10.18.11 at 10:51 am }

I must say that this is actually a winning plan (for election). The reason being twofold. 1st, is the obvious boom to drilling and all its services along with equipment manufactured in the Midwest by union labor. That would include not only drilling equipment, but also pipeline equipment, such as compressors, valves, pipe, etc…

2nd, and what many do not seem to get, is the nature of “energy” raw materials such as refined oil products, natural gas, and natural gas liquids as feedstock for most thing invented in the 20th Century. At present, engineering firms are backlogged with projects for not only basic petrochemicals (and further downstream products) but also grassroots construction. All that is needed is knowledge that drilling will be allowed on a massive scale thus keeping long stable economical prices a reality. There in fact are projects to bring back much of the manufacturing lost in states like Ohio, Pennsylvania and West Virginia (the birthplace of petrochemicals).

7 john { 10.18.11 at 3:48 pm }

There is indeed a lot of wind baggage out there on both sides.

Map: Wind farms awarded stimulus grants before program started

http://investigativereportingworkshop.org/investigations/wind-energy-funds-going-overseas/htmlmulti/map-wind-stimulus-recipients-receiving-awards-work/

This didn’t create jobs and wasted billions, with a good majority of that going overseas.

8 Jon Boone { 10.18.11 at 4:03 pm }

Maybe, Kermit. But there is a lot of bad mixed in with Perry’s good proposals. You and others might benefit from reading this account by Paul Chesser about Duke Energy’s Jim Rogers, who seems to be pursuing Perry’s energy goals explicitly: http://nlpc.org/stories/2011/10/17/duke’s-rogers-wind-subsidies-yield-high-returns-equity

9 Which Presidential Candidates Take the Most Oil and Gas Money? - GREEN ENERGY 2011 – GREEN ENERGY 2011 { 10.20.11 at 8:16 pm }

[...] Rick Perry’s words, “[L]evel a rival personification margin among all appetite producers. As a administrator of [...]

10 Kermit { 10.20.11 at 9:28 pm }

Jon,
I certainly understand and agree with much of what is written and posted here in Master Resource, regarding Rick Perry. However, the term “Energy” when referring to hydrocarbons is misleading to the vast majority of the public, and it seemingly to most pundits. They only seem to think about the fuel aspect.

What I do know is that what is published in his Phase 1 really speaks to much more than “energy.” It speaks to potential employees in a once quite vibrant petrochemicals area which will provide a very large number of jobs with $50,000 to $110,000 annual pay for blue collar work. Now, if he is getting info from folks like Duke, I’ll concur even though I have never had any connection with either.

11 Which Presidential Candidates Take the Most Oil and Gas Money? — Eko Space { 10.21.11 at 1:17 pm }

[...] Rick Perry's words, "[L]evel the competitive playing field among all energy producers. As the governor of the [...]

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