Category — State Energy Issues
Since 2009, the State of New Hampshire has reviewed three large-scale wind energy facilities, totaling 177 megawatts. In each case, the project proponents engaged University of New Hampshire Professor and economist Ross Gittell and his research assistant, Matt Magnusson, to conduct economic impact studies to show the long-term (20-year) benefits the projects would deliver to the local area.
Figure 1 summarizes the findings of each report (please click for better resolution).
The UNH researchers relied on NREL’s Jobs and Economic Development Impacts (JEDI) or similar linear spreadsheet models to assess job creation and economic impacts for the three projects: Granite Reliable Wind Park, Groton Wind and Antrim Wind. The methodologies and assumptions for the three studies appear nearly identical.
In all cases, their reports showed minor direct job opportunities (15 full-time equivalent positions for operations at the three sites) but substantially inflated indirect and induced job benefits relative to the local area. [Read more →]
December 12, 2012 2 Comments
For most economists, the workings of “price gouging” laws are simple and predictable. Binding price caps in emergencies create shortages on the most urgently needed goods and services during emergencies.
The recommended policy reform is simple, too: stop harming citizens when they can least afford it!
It would seem to be an open-and-shut case, a slam dunk for economics to inform the electorate and thus policymakers to avoid such folly. Remember the gasoline lines and natural gas shortages of the 1970s? Perhaps no simple event has convinced mainstream economists that price controls have bad consequences despite intention.
Defenders of economic liberty have an even easier argument: merchants ought to be free to ask what ever price they like for the goods and services they offer. Price gouging laws unjustly limit that freedom and government ought not to do that.
Yet, some 34 states and the District of Columbia have laws that impose price caps on urgently needed goods and services during emergencies. The easy arguments of free-market economists are not winning policy debates.
One response is to make it easier for the non-specialist to understand why price gouging laws cause more harm than good, as with Matt Zwolinski’s short video on price gouging for LearnLiberty.org. My own price gouging essay in Regulation magazine might serve a similar purpose for the non-specialist policymaker audience.
A complementary line of work digs deeper into the economics of price gouging in an effort to trace out the consequences of the laws. Defenders of price gouging prohibitions are comforted by their good intentions and a vague sense that somehow emergencies would be worse if prices were freer to adjust. Careful empirical and theoretical work on the consequences of price gouging laws can help undermine this false comfort.
In that spirit, here are ten researchable price gouging topics for economists. [Read more →]
December 11, 2012 2 Comments
While Invenergy waits for the federal Production Tax Credit (PTC) to be extended by this ‘Lame Duck’ Congress, as expressed in the 12/4/12 Batavia Daily News article: “Orangeville windfarm waits on the tax credit,” there are thousands of local tax- and rate-paying citizens who are eagerly awaiting the expiration, permanent expiration, of this $0.022/kWh subsidy. The PTC is nothing more than a tax-shelter-generator for wealthy, multinational, rent-seeking corporations like Invenergy.
How does a business plan dependent on massive taxpayer-funded handouts for profitability make it past the drawing board in the first place?!? Any of us would have filed such a plan to its rightful place—in the garbage can.
The American Wind Energy Association (AWEA)– with the help of political cronies in high places–have attempted, and failed to push the PTC through various bills, not once, not twice, but FIVE (5) times in a little over a year. Congressmen were inundated with letters, e-mails and phone calls each of those (5) previous attempts from a lot of us telling them to say NO to the PTC–which they did. Yet, here it comes again.
No Means NO!
We hope that our elected “public servants” understand that NO means NO! “We the People” do NOT want more wasteful spending on an inefficient, unreliable, antiquated energy source that ruins peoples’ lives, kills hundreds of thousands of birds a year, does nothing to significantly reduce CO2 emissions, and has exorbitant costs to boot. [Read more →]
December 10, 2012 5 Comments
Proposition 3, sponsored by by Michigan Energy-Michigan Jobs (MEMJ), would have forced utilities to produce 25 percent of Michigan’s electricity by 2025 from renewable sources, primarily industrial wind. Despite national backing and a lot of money spent, Michigan voters rejected the “25×25″ measure by a 64–36% margin.
Clearly, the voters saw through what would have been effectivity a tax increase on electricity which would threaten to endanger reliability as well.
This initiative was hardly local. It was driven by national pressure groups like the Sierra Club with their backing by natural gas company Chesapeake Energy, and the League of Conservation Voters, also heavily funded by deep-pocketed elites.
MEMJ itself was funded largely by the Green Tech Action Fund of San Francisco and the Natural Resources Defense Fund of New York, both darlings of green industrialists, particularly Tom Steyer, a California hedge fund billionaire.
These carpetbagger activists placed a bull’s-eye on Michigan ratepayers with Proposal 3. The Sierra Club was blunt: “If successful, the [Michigan] 25×25 initiative will send an important signal to the nation that public desire to move toward green energy remains strong.”
Answering the Sierra Club, Michigan ratepayers shouted that there is no such “public desire.” In fact, there is widespread opposition to mandating forest-denuding biomass and massively expensive solar. But the hottest conflict centers on industrial wind. [Read more →]
December 6, 2012 4 Comments
“It is well known that Texas is undergoing a major challenge in maintaining resource adequacy due to improper price signals; less well known is that a significant portion of the problem can be laid directly on the doorstep of subsidies for wind generation.”
The federal Production Tax Credit (PTC), which currently provides a $0.022/kWh subsidy to qualifying renewables, is set to expire at year-end. Just the prospect of expiration has dramatically slowed new construction of industrial wind capacity, despite a raft of other subsidies to politically correct energy. 
The Texas Public Policy Foundation has released a new paper looking at the effect of the production tax credit both on taxpayers and consumers. Bill Peacock and I found that PTC continuance puts the Texas electricity market at increased risk of price spikes and blackout by discouraging the construction of new reliable, on-peak generating capacity.
Texans are not only paying for the PTC’s direct annual cost of $622 million; they could pay billions of dollars more from forgone capacity given negative pricing where wind producers generate unneeded electricity just to pocket tax credits.
It is well known that Texas is undergoing a major challenge in maintaining resource adequacy due to improper price signals; less well known is that a significant portion of the problem can be laid directly on the doorstep of subsidies for wind generation.
When wind is bid into the market at a negative price, superior forms of generation must match that price or risk getting knocked off the grid. This decreases the profitability of non-wind generation and makes companies less likely to invest in new capacity. This has already degraded Texas’s resource adequacy, and it could get worse before it gets better. This increases the risk of blackouts if unusual events reduce capacity and/or increase demand. [Read more →]
November 27, 2012 3 Comments
“I don’t think it’s the right thing to do to foist onto consumers … 20 to 30 percent higher energy rates in an opt-out program. If people want to spend more money … to buy green energy … that is terrific…. But to coerce them into doing it in an opt-out program … is the wrong approach.”
- Mark Farrell, San Francisco Supervisor, 2012 (quoted below)
Thousands of San Francisco residents may be sucked into a green energy plan that will raise their electricity rates 77 percent without their knowledge or consent. Beginning next spring, half of the city’s 375,000 residential ratepayers will automatically be enrolled in CleanPowerSF – unless they take action to opt out of the program. Eventually the entire city will be enrolled in the program unless they choose to opt out.
Here is the sales pitch of CleanPowerSF:
Currently, you don’t have a choice in how PG&E selects your power. Your PG&E electricity is generated from a portfolio that includes carbon-emitting and nuclear energy sources like natural gas and nuclear power. CleanPowerSF will generate your electricity from a 100% renewable electricity portfolio. CleanPowerSF’s energy mixture will utilize resources like solar, wind, biogas and geothermal power, effectively the cleanest energy available in the United States.
City officials are hoping at least 90,000 households will choose to remain in the program — despite paying an average $18 more each month. That could be a safe bet, because many liberal, wealthy San Franciscans will embrace the opportunity to boast that their power is coming from a clean, green, renewable energy source.
Many residents, perhaps tens of thousands, who could not care less where their energy comes from may be stuck with a 23 percent total rate hike (the 77 percent commodity-charge increase averaged down by unchanged items such as transmission). They would be unaware of the change and not know about their option to get out of it–thanks to CleanPowerSF’s “Do nothing, and you will receive cleaner energy; it’s that simple” siren song. [Read more →]
November 26, 2012 4 Comments
In recent months, the state of New York has been a focal point in the broader public debate over hydraulic fracturing. Activists in the state have teamed with musicians (in the loosest possible definition of the term) and Los Angeles movie stars to try to block shale development from occurring.
Hollywood’s finest, including Robert Redford and airline aficionado Alec Baldwin, as well as celebrities like meat-suit-wearing Lady Gaga have expended great effort in trying to undermine scientific conclusions about the safety of hydraulic fracturing.
Meanwhile, unemployment remains unacceptably high in the areas of upstate New York where prospective natural gas development would be located. So, it was with perhaps little surprise that when the voters in the Southern Tier had their say at the ballot box last week, they sent a clear message that they’ve had enough of “artists” telling them how to live their lives.
As the Associated Press reported, candidates opposing hydraulic fracturing “were beaten up and down the ballot after intense campaigns, some of which were framed as referendums on shale gas development.”
Translation: bring all the tambourines and celebrity star power you want, but facts will win the day, and the people have spoken.
Not to be rebuffed by democracy, “Artists Against Fracking” founders Yoko Ono and Sean Ono Lennon – best known for breaking up the Beatles and, well, being the son of the lady who broke up the Beatles, respectively – have paid for a huge billboard that says “Imagine There’s No Fracking.” [Read more →]
November 15, 2012 7 Comments
A new report from the environmental group Earthworks suggests that shale gas development, including hydraulic fracturing, “risks public health” in the state of Pennsylvania. In addition to the numerous problems with the report itself, a larger issue is passing anecdotal evidence off as hard science.
Uni Blake, a toxicologist who studies health issues relating to shale development, has fleshed out the main problem with Earthworks’ latest report (which could also be applied to a Cornell veterinarians’ “study” from earlier this year): findings of a subjective nature that rely on individuals’ recollections of symptoms. According to Blake, such “should not be allowed to take the place of quantitative measures and physical findings.”
Blake also identifies another significant problem with studies that rely on anecdotal evidence: confirmation bias. Organizations like Earthworks and researchers at Cornell (funded by anti-shale groups, including the Park Foundation) have a vested interest in painting oil and natural gas development in the worst possible light. Thus, they will “seek out information that confirms what they already believe, want to believe or want to avoid,” according to Blake – which in this case means talking to individuals who may be predisposed to provide negative feedback about development. [Read more →]
October 26, 2012 10 Comments
“There is a vast difference between doing the right thing and doing the thing right. In this case, CARB is implementing AB32 in ways that ignore current realities and that likely make matters worse…. It is time for a major reset of the underlying law and its regulatory implementation.” – T. Tanton
The California Air Resources Board (CARB) is all-in, damn-the-torpedoes relating to AB 32, the state’s 2006 anti-global warming law, even while acknowledging that it will drive up the cost of energy. CARB chair Mary Nichols confirmed the start of a statewide cap-and-trade auction system November 14 under which industrial firms will buy and sell emission rights for pollutants–despite receiving unrebutted testimony from manufacturers and business owners about the very onerous, and even devastating, impact of moving forward with the auction.
When the California’s Global Warming Solutions Act was enacted in 2006, things were quite different. Electricity prices were being pushed down by the early expansion of natural gas plenty. Other states and nations were considering similar climate change programs, and, in fact, the Western Climate Initiative set up by Western Governors looked to increase trade in emission allowances. Unemployment in the State was at about 7 percent, and the foreclosure debacle hadn’t yet hit (which would drive many cities to the brink of bankruptcy).
The prospect of “leakage” was known, but not the extent. Too much faith was held in the Hobson’s choice of cap-and-trade as opposed to the more draconian option of command-and-control regulation. And finally, national cap-and-trade seemed to be coming.
My how things have changed—except for the commitment to economy destroying state policies. The most notable change is that, nationwide, greenhouse gas emissions have already dropped to 1992 levels, without interventionist policies. California’s carbon intensity has improved 21 percent since the turn of the century. Compare this to AB32′s goal of reaching 1990 statewide emissions by 2020. [Read more →]
October 4, 2012 7 Comments
‘Let’s Go’ … Game On for Shell in the Arctic (a milestone in the still maturing hydrocarbon energy era)
“I can’t downplay this. It’s obviously very exciting for us…. This is opening up a new chapter in Alaska’s oil and gas history that is literally starting today.”
Profit-seeking, consumer-directed business is proper, necessary, and heroic. Free-market-based energy enterprises (oil, gas, and coal) are quite unlike government-dependent (crony) businesses (ethanol, windpower, and on-grid solar). Ken Lay’s Enron is (was) a leading example of the latter; Koch Industries’ Charles Koch, writing in the Wall Street Journal yesterday, epitomizes the former.
Shell has scaled back its (scarcely profitable) renewable energy investments and is back to its oil and gas roots. Its advertising is no longer about pie-in-the-sky energies and more about here, now energy. LET’S GO! The company found out the hard way that self-styled environmentalists are really anti-industrial and obstructionist when it comes to producing the energy needed by world consumers.
The expense and delay of Shell’s ambitious plans to drill offshore Alaska have been huge. But that chapter is largely over. It is GAME ON for Arctic drilling. LET’S GO!
September 11, 2012 4 Comments