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Archive for the ‘Energy’ Category

The so called Green Tea coalition of the Tea Party has it right – energy conservation is a conservative cause.

Free Markets – Government spends billions dollars of taxpayer money on direct subsidies to foreign oil, domestic coal, and nuclear power.  Ending those subsidies is a small government, conservative idea that also helps the environment.  Energy users should pay for what they use.  Conservatives should reject paying the bill (through taxes) for someone else’s energy use.

National Security – Centralized power plants and foreign oil fields are vulnerable to terrorists and foreign powers.  Rooftop solar is not.  Conservatives should embrace home energy production as a hedge against terrorists and big government.

Property Rights – Conservatives should reject dumping without paying.  Coal users belch and burn in the trash dump of the sky without paying a tipping fee.  Anyone who dumps on all of us should pay a fee.

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CNN’s Fareed Zakaria‘s got it right:

It’s difficult not to get spooked by terms like “meltdown,” “radiation clouds,” and “radioactive leakage.” But let’s remember that nuclear reactors have operated peacefully, quietly, and safely for decades in countries from Japan to France to the United States.

Over the last five decades, there has been just one nuclear accident that caused any deaths at all. At Chernobyl, and that was a poorly designed reactor, unlike any of the ones in the United States or Japan. It had almost no safety codes or procedures.

The accident at 3 Mile Island in the United States did not actually kill anyone. There was no significant radiation leakage because in the US – as in Japan – all reactors have steel or concrete containers to prevent such leakage. That’s why there were no illness resulting from radiation after the 3 Mile island accident.

And the new plants that have been built in the last decade are safer – the OECD says 1,600 times safer than the old ones. And the 3rd generation reactors being planned now, which will be built later, are safer even than those.

Now, all energy sources have their risks when being extracted.

Oil and coal have far worse safety records than even decades-old nuclear plants. The BP oil spill, for example, was triggered by an explosion that instantly killed 11 workers and then poured 4 millions barrels of oil into the Gulf of Mexico.

In a thoughtful article in Slate, Will Saletan does the math and finds that if you add up all the deaths caused by oil explosions and the like, the rate of death per unit of energy extracted is 18 times worse for oil than it is for nuclear energy. With hundreds of people dying in mining accidents, coal is also much more likely to kill people working on it or around it than nuclear. And none of this counts the millions of people who get diseases and die a premature death thanks to pollution.

I know there is something about nuclear power that worries us. But it’s important not to make huge public policy decisions based on perception rather than reality.

When a plane crashes and hundreds of people die, we immediately panic and worry about flying. But we tend to forget that almost 50,000 Americans die every year in accidents on highways, making the act of getting into your car by far the most dangerous thing that an American will do every day.

We need all the sources of energy we can find. No one source is going to satisfy the world’s energy needs. Every one has some costs and some benefits. Nuclear energy can be scaled and it is clean.

We need to design the safest possible plants with the maximum number of back-up procedures. So far, that is the lesson we should draw from this tragedy in Japan.

Well said.

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Tax Swap

Thomas Friedman’s tax swap proposal is right on the money and right on the public good.  We should reduce taxes on jobs, personal income and corporate profits, and should impose taxes on carbon.  A clean swap.

Tax policy is social policy – we get less of what we tax, and more of what we subsidize.  For once, both conservatives and liberals are correct about the same issue.  Our current tax scheme is exactly backwards.  We discourage personal and corporate prosperity and we encourage dumping pollution into the commons while using energy that fuels our national deficit and risks our children’s safety and climate.

Easy fix. Slash personal and corporate and personal taxation, and tax the pollution.  Net result: corporations and consumers will be unharmed,  but consumers and corporations that don’t adjust will pay more, whereas smart corporations and consumers will have the opportunity to pick up additional profits or lower prices, and fix national energy policy at the same time.

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Green is Not Enough

Cash and internal restructuring are not enough to save GM.  What will it take?

First, someone (other than management) must have the legal authority to unilaterally write down debt and re-write labor contracts.  A bankruptcy court is the usual scheme, but the atmospherics around that scare everyone.  Congress should empower an oversight board of bankruptcy, turn-around and non-detroit auto experts to do what a bankruptcy judge can do.

Second, higher gas prices are a must.  GM will be under political pressure to build more Green cars than the market requests.  This can only succeed if the cost of gasoline is artificially kept above a certain floor.  Without higher gas prices, consumer demand will rapidly shift away from Green, and GM will be left holding the bag.  We need a gradually rising floor tax on carbon-based motor fuels.  Start at $2/gallon today, and rise towards $4 in 6 years.  That will move Detroit faster than any C.A.F.E. standard.

Recall, too, that Saudia Arabia is not going to sit still, either, while we attempt to break their monopoly.  Look for a flood of cheap oil.  It’s already begun.  In the 1970’s, the Saudis successfully scuttled a drive towards energy independence, and they’ll do so again, unless we make it impossible with a tax that puts non-oil energy at a competitive advantage.

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What Would Saudi Arabia Do?

What would Saudi Arabia do if its largest customer got tired of spending endless blood and treasure to buy and secure foreign oil, in what T. Boone Pickens calls “the largest transfer of wealth in the history of mankind”?  What would Saudi Arabia do if the price for its oil was so high that it would be cheaper for its largest customer to switch – i.e. to invest in developing its own supplies of nuclear, solar, and wind?

What they would do is exactly what they have just done – lower the price to keep that from happening.  Oil producers have a lock on the market simply because the consumers have been too short sighted to stop it.  And the solution for us is so very simple.  A one-time transition to an energy cost of about $60/barrel will enable all the capital and government research spending needed to transform our energy economy.  We need a floor tax, and we need the political courage to stay with the program, even when Saudi Arabia tries to lull us to sleep again with another flood of cheap oil.

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Oil Prices

Too high, too low, and too volatile.

Why too high?  All the yammer about supply and demand missed the fundamental: demand did indeed drive the price, but it was not demand for oil per se, only demand for oil futures from those who never intended to use the oil.  Too much cash, much of it leveraged, chasing oil futures.  Then the credit crunch, de-leveraging all around, and speculators pull their cash out of the futures market.  Thunk.  Oil returns to a price driven by true demand.

Why too low?  If we’re ever going to get off of foreign oil (a must for continued prosperity), we need a floor on oil prices.  Investors in domestic oil, wind, solar, nuclear, etc. cannot justify these projects without a reasonable assurance of a market at the end – and that means an oil price at or about $60.  Newsweek was correct in calling for a penny-a-month increase in gas taxes (same on non-motor users such as power plants), but the tax should automatically adjust down if oil rises above $60.  Floor tax.

Why too volatile?  Imagine trying to run an airline when one of your biggest costs can’t be predicted.  How many planes do you lease?  How many employees do you hire?  Imagine trying to design cars two years out – first everyone wants SUVs, then you can’t give them away, then the price of gasoline falls to half in a few weeks.  Detroit has enough problems of its own creation.  We don’t need to make it any more difficult.  Policy fix?  See above.  Floor tax.  Keep oil at $60 or more.  Use the revenue for domestic energy R&D.

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