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Tom Tanton Interview (Part II)

“Generally, I’d like to be remembered for helping to form a better connection and awareness between innovation and free markets and the tremendous improvements modern energy brings to people. That’s the essence of my progressive nature, so maybe I haven’t strayed to far from my early liberal bent, just on the best ways to achieve good results. Be clear on results versus intentions.”

MasterResource from time to time conducts interviews with leading free-market scholars (see Ken Green here). This completes the Tanton interview, Part I of which was yesterday.

Q. Let’s turn from traditional pollutants to climate change. What work have you done here?

TT: My focus has been more on policies that strive to address emissions, rather than climate modeling. I’ll leave that to those more qualified, as long as they adhere to scientific process. In any event, some policies act counterproductively.

As an example, many of the policies and regulations adopted by the California Air Resources Board (CARB) under the “Global Warming Solutions Act” (AB32) actually cause increases, not decreases, in global emissions of carbon dioxide, primarily through leakage. And, the “good” news is CARB is a target rich adopter of policies to analyze. The bad news is there continues to be talk in other states and nationally to ‘replicate’ AB32 or components elsewhere, even before the real performance results come in.

Q. Going into college, what were your philosophical or political views?

TT: Many current colleagues and friends, who may not have known me at the time, are surprised to find out I was pretty very liberal in my youth and thought “there ought to be a law” covering just about everything. And, that was at a time when I’d already been supporting myself for a few years.

I’m just one real world example of Winston Churchill’s famous quote: “If you are not a liberal at twenty, you have no heart and if you are not conservative at thirty, you have no brain.” The nice thing about what I do today is it includes heart and brain, as I’ve realized advanced and plentiful energy are key to improving human kind’s lot, and that so called ‘progressives’ are generally the most regressive.

Q. Tell us about your early public policy career?

TT: I had some fun as a chemist for the California Department of Transportation, doing quality control of highway materials—paint, concrete, steel and epoxies used to glue down the dots on freeways. I also got to develop some new paint formulations, using specially produced pigments based on interference patterns rather than just color. Interference patterns, also called Newtonian rings, are what make butterfly wings look iridescent and changeable and that strange pattern you see looking through glass and window screen.

My work on environmental monitoring and impacts of proposed transportation corridors led me to the California Energy Commission, who was just starting up and who needed people with environmental knowledge. It was a great move, largely because I could transition from routine quality assurance work, repeating tests over and over, to doing first of kind work.

One of the nicest parts of my work at CEC was that I never had to do the same thing twice. It also gave me the chance to meet some really fantastic people both inside and outside the Commission and begin to understand that market failures are seldom best addressed by government, whose own failures are legion. Of course, early work on ethanol for transportation led to a clearer understanding of unintended versus unanticipated consequences.

Q. Can you expand on that a bit?

TT: The problems with ethanol as a transportation fuel are legion and growing, some foreseen and others not, but they certainly militate against a mandate. If the intent if to mitigate fuel uncertainty (the driving force at the time of petroleum disruptions by OPEC) why shift to a fuel feedstock subject to the vagaries of the weather and rainfall?

Towards the end of my time at CEC, California embarked on ‘deregulation’ of the electricity market, following some success with natural gas deregulation at the national level. There was NO deregulation in electricity, but rather restructuring. We went from two market regulators to five. There was also never an “energy crisis” but a capacity crisis. Long story short, it seemed some of the implementation of restructuring provides numerous case studies for Hayek’s fatal conceit.

As just one example, the choice to use second price (aka reverse Dutch) auction only ‘works’ if there’s a supply surplus, driving generators to bid their marginal cost. That mandatory bidding protocol was adopted under the forecast of supply surplus. The powers that be myopically ignored the real possibility, for “outside” factors, like natural gas delivery disruptions, to create capacity shortages, and the simple solution of reverting to paid-as-bid during such disruptions.

They were warned such could happen. We could and should have saved California billions of dollars.

Q. You also spent time working with the Coalition of Energy Users there in California.

TT: Yes, for about two years. We had some philosophic and operational differences, and the relationship wound down last year. And with EELI, I am in the right place as far as philosophical outlook. Of course, with my own consulting firm, I can pick those projects that I am most comfortable with.

Q. I assume you have a personal life. What are some of your hobbies?

TT: My main hobby is ‘husband’ including to my wife of 41 years, but also the ranch we live on which necessitates some animal husbandry. Things are about to change, as my son and daughter-in-law are expecting a child later this year, so I get to transition to “grandpa.”

For fun, and I mean this strictly as I have not mastered it by any means, I enjoy golf.

Q. What’s next for Tom Tanton in the policy world?

TT: My current interest focuses on environmental and economic leakage as it pertains to climate change policies, and on the tremendous potential of hydrofracturing and it’s analog stimulation techniques like acidization. Both are examples of “doing the thing right” which is as important as doing “the right thing.”

In the case of climate, whether one believes actions are necessary, policies, like cap-and-trade, that actually increase global emissions seem counterproductive. We’re already very carbon efficient nationally and in California, so why push productive activity to places that are less so? We can show the world how, not just push our innovation into the shadows. We should celebrate our innovation, not demean it.

With respect to hydrofracturing and acidization, it’s important to distinguish between safe, responsible procedures and irresponsible behavior that simply feeds the fear mongers. Of course, hydrofracturing is used in other fields too, like geothermal and water wells, so it always sort of amazes me those are not subject to the same silly fear mongering.

Hydrofracturing and acidization are not static technologies, and actually require a third technology, horizontal drilling, to be effective. In California, the oil bearing strata is more convoluted and twisted, so technology needs to be further advanced to take advantage of the tremendous resource below our feet.

Q. Hasn’t the resource potential for California’s Monterey Shale been dramatically downgraded?

TT: Yes, but they do not include the potential for further improvements in technology, especially for drilling in difficult rock. While there are no guarantees, history favors the innovator. It also raises some fundamental policy questions.

Why try and impose moratoria on drilling as technology advances, rather than encouraging technology advancements? We don’t need to slow them down, we need to speed them up. It amazes me to think about giving special tax credits to Hollywood for making movies, where there never been a ‘new’ movie made in years…just same plot with different characters and special effects, yet impose heavier taxes on petroleum production where the technology continues to evolve.

Q. This might be a question before its time, but what do you want to be remembered for? What is your message for the next generation that is starting to come up in the energy/environmental policy arena?

TT: Generally, I’d like to be remembered for helping to form a better connection and awareness between innovation and free markets and the tremendous improvements modern energy brings to people. That’s the essence of my progressive nature, so maybe I haven’t strayed to far from my early liberal bent, just on the best ways to achieve good results. Be clear on results versus intentions.

For the next generation of policy people, my message would be to think ‘horizontally’ across multiple disciplines and less on vertical minutia. Be prepared for constant ad hominen, but remember that once your adversary resorts to that you’ve won the factual debate…though perception is separate. There’s also no good reason to not experiment on a small scale with new policy rather than foisted an unproven concept on the entire population. Most of all, be willing to accept failure, learn from it and move forward.

1 comment

1 Bill Chaffee { 06.11.14 at 11:11 pm }

What is your take on the threat of peak oil? Do we need a program to manufacture liquid fuels, perhaps using nuclear energy in the manufacturing process?

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