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Energy Free-Market Megatrend: George Will Speaks

George Will, the masterful voice of intellectual conservatism (and almost libertarianism), turned to energy in a recent Washington Post column. In Ringing in a Conservative Year (December 30), Will considered the underlying economic reality that will help shape 2012 politics. Obama or not, Will sees technological/economic trends as powerful if not controlling.

Will’s essay draws upon a startling fact: “In 2011, for the first time in 62 years, America was a net exporter of petroleum products.”

He continues with a play off of Karl Marx’s Communist Manifesto:

For the indefinite future, a specter is haunting progressivism, the specter of abundance. Because progressivism exists to justify a few people bossing around most people and because progressives believe that only government’s energy should flow unimpeded, they crave energy scarcities as an excuse for rationing — by them — that produces ever-more-minute government supervision of Americans’ behavior.

Rationing: the government did just that during World War II with tickets for petroleum products, almost did the same during the Jimmy Carter era, and proposed CO2 cap-and-trade auctions for all carbon-based energies (oil, gas, and coal) just two years ago. California is mimicking Europe and starting a CO2 cap-and-trade program. Whether by ticket or by taxation, it meant/means less energy that the unregulated free-market would produce.

Will continues by reporting on the fossil energy boom:

Imagine what a horror 2011 was for progressives as Americans began to comprehend their stunning abundance of fossil fuels — beyond their two centuries’ supply of coal. Progressives responded with attempts to impede development of the vast, proven reserves of natural gas and oil here and in Canada. They bent the willowy Obama to delay approval of the Keystone XL pipeline to carry oil from Canadian tar sands; they raised environmental objections to new techniques for extracting gas and “tight” oil from shale formations.

And that left one wearisome, problematic rationale for energy planning:

An all-purpose rationale for rationing in its many permutations has been the progressives’ preferred apocalypse, the fear of climate change. But environmentalism as the thin end of an enormous wedge of regulation and redistribution is a spent force. How many Americans noticed that the latest United Nations climate change confabulation occurred in December in Durban, South Africa?

A sea change, perhaps?

The futility of this nullity signaled the end — probably for decades, if not forever — of a trivial pursuit that began 14 years ago with the Kyoto Protocol, which the U.S. Senate would not even bring to a vote. The pursuit was for a 194-nation consensus obligating a few nations to transfer enormous wealth to many other nations’ governments, to be politically distributed by them, with the supposed effect of ending global warming, if such proves to be.

But 2011 was more: the failure of so-called ‘green’ technologies from solar panels to electric cars:

Meanwhile, back in the nation that probably would have ponied up the largest portion of this money, sales of the electric-powered Chevrolet Volt were falling short of General Motors’ goals even before reports about fire hazards in crash tests. And a Wall Street Journal headline proclaimed: “Americans Embrace SUVs Again.”

Because of the Energy Department’s myriad scandals and other misadventures as a venture capital firm (Solyndra, Beacon Power Corp., etc.), it is probable that 2011 will be remembered as the high-water mark of industrial policy. This is another way in which events are draining the Obama presidency of some of its power for mischief. If in November Republicans capture the Senate, which must confirm many senior officials of the executive branch and agencies, only weakness of Republican will can prevent, for example, the Environmental Protection Agency and the National Labor Relations Board from being unconstrained instruments of presidential decrees.

Obama might be able to eke out reelection, Will concludes. But the future belongs to the party of free markets (energy and otherwise) and not the party of government.

Let’s hope so.

———————-

NOTE: On major trends abating energy and climate alarmism, also see Kenneth Green, Death Spiral for Climate Alarmism Continues (A Year Later), May 4, 2011.

8 comments

1 JavelinaTex { 01.12.12 at 10:17 am }

Not much impressed by Will, even if he supports the Free Market / Libertarian positions.

First, the net export of petroleum products isn’t entirely due to abundence (although it is in part). Yes, abundent Nat Gas is providing more propane (making us a net exporter of that product). It is also driving exports of residual fuel oil. But much of the rest is due to a poor economy and ethanol (gov’t mandate & subsidy) driving out some gasoline production.

Also, I never like anyone – especially if I agree with their position given bad spin as fact. The Volt fires occurred 1 to 3 week after the crash tests. Of course he maybe just reflects the WP Editorial Board in that regard.

Also, I think he should watch out dissing electric cars in general and the Volt in particular. If they can get battery manufacturing costs down by a factor of four (IMO a very challenging thing – but we now have 7 to 10 airbags in vehicles where they were arguing that 1 was too expensive 20 years ago) then the efficiency and overall benefits will make a sizable niche market for electrics which will mean… Abundance! More Gasoline (and maybe some Diesel) available for people who need to drive long distances!

Viable Electric Vehicles will make for more abundant transportation fuels while allowing any thing that can make electricity to power a significant portion of transportation vehicles.

2 rbradley { 01.12.12 at 10:42 am }

JavelinaTex:

The competitiveness of batteries to bring economical cars seems to be a mirage. Thomas Edison and Henry Ford gave it a heck of a try a century ago. And today, even with government largesse, it remains a mirage.

3 JavelinaTex { 01.12.12 at 11:39 am }

I am well aware of Mr. Edison’s views and would agree that to date they have been a mirage. For a century. But that doesn’t mean they will always be (but still bet against).

And yes, government largess has played a major role to date. But all I can say is we will find out over the next five years to what degree. We are far closer to having viable electric vehicles without government largess than we have ever been. If they cannot get electric cars down to a few thousand dollar premium WITHOUT tax incentives, it will fail. I just have to think that either Nissan really believes they can cut the battery costs or they have totally blown their analysis. No business person can reasonably expect $7,500 in tax expenditures per vehicle for anything but a short period in time.

4 rbradley { 01.12.12 at 12:48 pm }

Yes JT: Let’s let the market decide! I think the future will be like the past: ‘gasoline and diesel rock’

5 Paddy { 01.12.12 at 1:50 pm }

JavelinaTex: Liquid natural gas and propane are two separate and distinct products, both chemically and in terms of energy output. If you don’t know this, it gives me reason to question your credibility, state of bias ability to think critically.

6 Lionell Griffith { 01.12.12 at 6:58 pm }

Yes, gasoline and diesel rock! Especially when compared on the just the bases of energy density.

Some facts:

From: http://alternativefuels.about.com/od/resources/a/gge.htm

One gallon of fuel contains the energy of 33.56 Kwhs of electricity.

From: http://www.transportation.anl.gov/pdfs/TA/149.pdf

One Kg of Lithium Ion battery contains 48 to 61 whs of energy.

Taking the high end value: 550 Kgs Lithium Ion batteries contain the energy of one gallon of fuel.

From: https://secure.wikimedia.org/wikipedia/en/wiki/Electric_vehicle

Electric vehicle ‘tank-to-wheels’ efficiency is about a factor of 3 higher than internal combustion engine vehicles.

This reduces the weight of one gallon of Lithium Ion batteries to 183 Kg

From: https://secure.wikimedia.org/wikipedia/en/wiki/Gasoline

Weight of gasoline: 6.073 lb/US gal

Conclusion: Lithium Ion Batteries weigh 30 times as much as the gasoline they are expected to replace.

It would take approximately 1830 Kgs (4034 lbs) of batteries to go 300 miles using energy at the rate of an ~3000 lb 30 mpg compact automobile. (from: http://www.hwysafety.org/ratings/rating.aspx?id=107 – 1999 Mitsubishi Galant ES 4-door weighs 3069 lbs.)

This even before you get to the high cost and rather short life of the batteries and the many hours it takes to recharge them. This is compared to a ten gallon fill up can be accomplished in five minutes or less including a snack break.

An electric automobile has a long way to go to be able to compete with a petroleum powered automobile. No amount of government so called investment can make up for the difference.

7 Eddie Devere { 01.13.12 at 4:21 pm }

Paddy,
Cool it. I think that you are over reacting.

JavelinaTex is probably talking about the propane from when you drill for natural gas (what is typically called natural gas liquids…not liquified natural gas. The first is the propane and butane you get when drilling for natural gas, and the other is, as you mention, natural gas so cold that it’s a liquid.)

Lionell,
Make sure that you are comparing technologies on the figure of merit that actually matters. For the electricity grid, the correct figure of merit is the unsubsidized rate of return on investment.

For personal driving, the relevant figure of merit is probably the levelized cost per mile of driving. Engine weight is not correct figure of merit. If you want to attack electric vehicles, make sure that you are using the correct figure of merit.
If you want to see the levelized cost of driving per mile for different technologies, check out slide 16 of the following presentation:
http://cedm.epp.cmu.edu/files/slides/Henrion.pdf
The lowest unsubsidized levelized cost/mile is gasoline-hybrids and compressed natural gas vehicles. The highest levelized cost/mile is the battery electric vehicle.
From the graph in the presentation I linked, it looks like battery vehicles are really far off from competition. So, I agree with your last statement:
“No amount of government so called investment can make up for the difference.”
That’s probably true. Upfront battery costs need to drop considerably before electric vehicles will take off.

8 Don B { 12.20.12 at 10:11 am }

Even the NY Times has (sort of) recognized the benefits of shale oil and gas:

“The switch from coal to cheaper natural gas will save U.S. Steel hundreds of millions of dollars a year. These savings will be amplified by the fact that the company’s competitors in Europe and Asia will need to pay much more. In fact, many economists say that fracking will soon fundamentally shift global economic logic to uniquely benefit the United States. Ed Morse, an influential energy analyst at Citigroup, argues that the natural-gas industry will bring around three million new jobs to the United States by the end of this decade. He also expects that fracking will add up to 3 percent to our G.D.P. and trillions in additional tax revenue. Along the way, it will turn around perennial stragglers, like steel and manufacturing. For millions of workers, there could not be any better news. ”

http://www.nytimes.com/2012/12/16/magazine/welcome-to-saudi-albany.html?_r=1&

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