Renewable and Alternate Energy


Dear Senator Murkowski.

I’m writing just to let you know how proud I am of you.  Maybe pride isn’t the right word here, but you are doing what I hope I would do in the same circumstances.  You are following your own light.  You are speaking your truth.  You had the courage, as some others lacked, to stay in the fight.  And you won.  Hallelujah.

Your win is an incredible gift to a country that so needs someone who can stand, even if just a little, on the outside of the duopolistic system that’s evolved; someone who isn’t blinded by party loyalty and is thus able to see things as they are.  America isn’t predominantly right wing or left wing, but center right and center left.  And you and I both know that the solutions to most of America’s most serious problems can be found in that place, where rigid ideology can take a back seat to problem-solving.

Let’s take climate change.  You are right, of course, that there is scientific consensus that the burning of fossil fuels is impacting the planet’s climate.  It may not be the calamity some are predicting, but then again it could be.  We just don’t know that yet.  What is clear is the activities of mankind are having an impact and something needs to be done.  I applaud you for not only recognizing this but having been willing to act.  It was a courageous and principled stand.

We both also know that, fantasies aside, the country is going to be using massive quantities of fossil fuels for decades to come.  With a balance of trade deficit as high as it is and with U.S. environmental standards in the world’s top tier, we need to be producing as much of those fossil fuels as possible here at home – oil and natural gas.  We can do it better than most countries and keep American jobs and dollars in America.  In this tough economic environment what better stimulus than putting Americans to work producing American resources.  Every barrel we don’t produce here must come from somewhere else.  We must also put an end to the delusion that hydraulic fracturing – a process critical to producing world class quantities of natural gas in this country – is a a threat to America’s water resources.  This has been a sub-myth of the myth that if we make it harder to produce fossil fuels in America it will move us to the renewable energy future faster.  We both know it won’t.  Yet we know that renewable energy future is important and is deserving of support.

In closing let me again reiterate my pride in you.  Perhaps part of this pride is that I first met you when you were a state legislator and you attended a program I was giving on the subject of “states and oil and natural gas”.  We talked and I’ve watched and been mightily impressed by your career ever since.  You have been a great Senator and I predict that now you can be an even greater Senator should you be willing to carry your hard-won independence into the U.S. Senate and speak truth to duopolistic power.  I recognize that you may need to bargain away some of that independence in order to again become Ranking Member of the Senate Energy and Natural Resources Committee, but you should nonetheless cherish the independent mantle you’ve earned.  You can become what Senator McCain never really was but claimed to be.  The Senate and indeed America needs a true maverick voice.

I hope you can be that voice.  You will have my full support.

Kevin Bliss

Washington, DC

There is a must-read opinion column in the Washington Post this morning by Robert J. Samuelson.  It’s entitled The Bias Against Oil and Gas.  It is spot-on.

Energy is critical to the healthy functioning of the U.S. economy.  It is, therefore, a crucially important issue for President Obama to get right–to address in a rational manner.  The point here is that Obama’s “bias” against oil and natural gas will have consequences.  These consequences include failure of his “energy policy” and quite possibly failure of his economic policy upon which so much, even rhetorically, rides on the over-estimated potential of renewable energy.  Worse yet, it means that Republicans may be handed an issue, when oil prices once again soar (and oil prices will again soar, trust me), that gets them re-elected before they deserve to be.  The loser will be the country.

The point here, and I am certain the prime motivation behind Mr. Samuelson penning the piece he did, is that there is time to correct course.  There is still time to get it right.

There are a couple of reasons in particular why someone as brilliant as Mr. Obama has gotten this issue so terribly wrong.   One, and at the top of my list, is that our president doesn’t really understand energy policy.  This is understandable.  Although Illinois is an oil and natural gas producing state, it is not Texas.  While once a significant producer, Illinois’ production has declined and oil’s economic significance to the state is limited.  Additionally, spending a career in Chicago and so little time as a Senator representing the entire state, President Obama has had little opportunity to be educated.  Thus he, like most Americans, has learned about energy not by first hand experience but by what he’s been informed about energy, and particularly about oil and natural gas, by popular culture.  Popular culture tells us that oil is dirty and is bad for people and the planet and the way to move ahead is to not drill any more dirty oil wells.  It tells us that solar and wind are clean and abundant and we must only try harder and that will be our future.  As nice as this sounds, however, it is myth.

Another reason Obama has this wrong is alluded to in Mr. Samuelson’s column.  It is the power of the environmental groups and the fact, quoting Mr. Samuelson that “[t]o many environmentalists, expanding fossil fuel production is a cardinal sin.”  Given that environmental groups are an important contituency of the Democratic Party, Democrats are loathe to challenge its orthodoxy.  Yet a rational energy and economic policy demands a overt challenge.  Unless challenged it will lead the country down a path that does not lead to energy self-sufficiency.  It will lead to even more oil imports in the years ahead.

Expanding domestic oil production is not inconsistent with our country’s, and the world’s need, to limit the burning of fossil fuels in the years ahead.  That need is properly addressed through legislation that will begin to put a cost on the burning of fossil fuels so as to discourage its use.  In the meantime, the goal of this country needs to be moving as much production as it feasibly can back to this country.  We must never lose sight that every barrel not produced at home will otherwise have to be imported.  And every barrel of oil imported amounts to hundreds of billions of dollars and thousands of jobs going overseas.

Energy and economic policy will only work if built on a rational foundation.  It is time to re-lay the footings and begin to construct an energy policy that has architectural grounding.   

 

I have very few complaints about our President and the job he’s been doing.  To date, Mr. Obama, while perhaps overreaching at times, has managed to hit the political sweet spot more often than not.  He is, by and large, managing to do the right thing.  His high polling numbers reflect this.  Where he has completely missed the boat, however, is energy policy.  What he is proposing for the country will simply not work.  What the Obama administration has proposed is fantasy, dangerous fantasy.  My critique here is not to declare opposition but to advocate in favor of a course correction.  What’s been proposed is good, indeed, admirable, but it is not sufficient to accomplish the administration’s stated goals.

A couple of recent Op-eds are useful in helping to explain why what Obama is proposing will not work as represented.  The first appeared last week in the Washington Post.  Authored by James Schlesinger and Robert L. Hirsch, it is entitled Getting Real on Wind and Solar.  The second was in this morning’s Washington Post.  It is Robert J. Samuelson’s Selling The Green Economy

As I’ve said many times before on this blog, what the country needs to do, in addition to that which has been advocated by Mr. Obama in incentivizing and encouraging the development of new and clean energy technologies, is to recognize the inevitability of fossil fuels in our economy for the next two decades.  This is cold, hard reality.  Given this reality, the focus needs to be producing more oil and particularly cleaner burning natural gas, here on the North American continent.  For U.S. energy policy to finally succeed the country must face down the twin enemies of overseas imports of oil (this because our transportation sector is so heavily dependent on oil – 96%) and carbon emissions.  Increasing domestic production of both oil and natural gas, while not meeting the second goal–decreasing carbon emissions–, is our only viable alternative if we are to succeed with goal number one — decreasing foreign imports.  It will be through our climate change policy that we reduce emissions either through implementation of a cap and trade system or a carbon tax.  This will be what reduces our use of fossil fuels.  In the meantime, moving more energy production onshore in North America not only increases domestic energy security, it gives our economy a gigantic boost in the form of dollars circulating in America instead of being shipped abroad.  We can no longer afford the money drain.

Environmental groups and their followers need to lose the certainty that supporting domestic production, offshore and onshore, is yielding to the enemy.  It isn’t.  It is facing the fact that the country can no longer afford foreign imports, which is and has been for years the default when domestic production is stymied.  Instead, we need to bring the production home and focus on reducing carbon emissions through enactment of workable climate change legislation.  It can work.  We simply need to make it national policy. 

Ambitious.  That about sums up our President’s address to the nation last night.  Obama is promising the country almost everything.  The problem is, everything is pretty hard to deliver upon.  Does this mean that if we don’t end up getting “everything” that he has failed?  Might it not have been better to scale back the promises, if not the intent, and work on just a few things.  My concern here is heightened by the fact that the risks are so great.

A good “news analysis” of President Obama’s speech last night is provided by Peter Baker in the New York Times this morning.  It’s entitled In Time of Crisis, Urging Bold Action and Big Ideas.  I am personally encouraged we have a leader of the apparent caliber and self-confidence of Barack Obama, but I’m concerned that he can pull it off. 

My concerns are heightened by his ambitious energy goals.  Knowing what I know about energy I am concerned that his other goals are equally ungrounded in reality.  Obama talks about a renewable energy future but doesn’t acknowledge the critical role of the fossil present.  He talks about weaning ourselves from foreign oil but doesn’t discuss the pain it will take to get there.  When Obama promises to double our use of renewable energy that means going from 7% to 14%.  Good, but not enough to wean us from foreign oil, especially when just 7% of renewable energy goes to transportation today.  Today the country is 96% reliant on oil for transportation, the majority of that imported.  The remainder comes from natural gas (2%) and renewables (2%).  A real solution to dependence upon foreign oil will require increased domestic production of oil and natural gas.  To achieve this Obama will have to face down the liberals of his party and environmental groups and convince them that the path to both energy independence and a renewable future involves medium-term dependence on American-produced fossil fuels.  This is the reality.  The other is fantasy.  Will Obama get it right?  I have hope but significant doubts.  Our present system will make it very difficult for him to buck the environmental left on this.  If he doesn’t buck it, he cannot achieve energy independence and the country loses.  If he does buck it, he risks lose a key constituency and significant Congressional support.  Watch how this develops.  If we don’t open the offshore to significant new development we’re operating in fantasy land and Obama’s stated energy goals are likewise fantasy and will fall short.  If he does it, maybe he’s indeed got what it takes.

In the meantime we watch, and hope.   

 

I’m not very hopeful on the energy policy front that President Obama is going to be able to accomplish anything significantly new.  What the country needs is an aggressive “do-it-all” approach to energy.  It would be a policy in which every part of the American energy industry is encouraged to expand and grow with the overlay of needing to move the ball forward, significantly, on mitigating climate change.  But, alas, it doesn’t appear that we’ll be moving into this sphere under President Obama.  I hope I’m wrong, but the early indicators are that we’ll merely emphasize renewables, punish domestic oil and natural gas, and let imports continue to rise (assuming the economy ever rebounds) to fill the gap between what this country can produce and what it needs.

Disappointing but entirely expected from a Democrat Secretary of Interior was the recent voiding of drilling leases on public lands.  The story can be found in the Washington Post and the New York Times.  While this could just be smart politics–cancellation pending review is smart and appeases environmentalist friends–and the end result could be re-leasing much, if not all, of the withdrawn land, don’t count on it.  It would be an unlikely result from a political party so dependent upon its environmentalist constituency.  There is no question that some land needs to be held back from drilling.  We don’t need to drill every square inch of the country, but make no mistake, we need significant domestic drilling to extricate ourselves from our dependence upon foreign oil.  Most environmentalists will only be happy when we halt all domestic oil and gas operations.  It’s unrealistic, but who cares about realism.  This is environmental politics. 

What the country needs to do is encourage domestic drilling in every way it can while at the same time sending a strong signal to the economy, through a gas tax or something similar, that use of oil is very costly.  Senator Richard G. Lugar recently called for imposition of a gas tax in a revenue-neutral way “to treat our oil addiction.”  His Op-ed in the February 1 Washington Post is entitled Raise the Gas Tax.  I’ve advocated for such previously on this weblog (here and here).  It would be sound public policy that in addition to discouraging the use of oil for transportation (our biggest use of oil) would encourage conservation of energy and the growth of renewable and alternative energy.  Win, win, win.  Is it likely to happen?  No.  Politicians are loathe to do unpopular things, even if revenue neutral.

There was also a recent story indicating that green energy has taken a big hit as a result of the declining economy.  This is as tragic as discouraging domestic production of oil and natural gas.  We must do it all.  For the story on how the financial crisis is hurting wind and solar energy, and why the stimulus provisions in this regard will be helpful to the industries, see Dark Days for Green Energy from the February 4 New York Times.

It would not be hard to put together an energy policy that makes everyone happy.  The problem is that such a policy would also make some sad, for the country would have to do some things it wouldn’t do in an ideal world (drill offshore, produce more onshore oil and natural gas, burn more coal, build more nuclear plants, develop wind energy off of Cape Cod).  Doing the right thing is never easy, but it’s the path to progress. 

I was confronted with two stories yesterday, seemingly unrelated.  One was about efforts by natural gas exporting countries to create a formal organization that many fear will morph into a natural gas cartel similar to the OPEC oil cartel.  The other was a story sent to me by a friend about the rescue of a humpback whale off of the California coast where at the conclusion of the rescue the whale went to each rescuer and nudged them as if to say thank you.  It is a moving story that reminds us of our responsibility to preserve other forms of life, some perhaps of very high intelligence.  The latter story was from the San Francisco Chronicle dated December 14, 2005 and entitled Daring rescue of whale off Farallones

Receiving both of these stories comes as I’m finally reading a book that I’ve had on my bookshelf for a year now.  I’d seen it on a list last year at this time of the best books of 2007.  It’s entitled The Unnatural History of the Seaand authored by Callum Roberts.

The book tells the story of man’s centuries old abuse of our oceans and its creatures.  What we’re dealing with today is the result of centuries of overfishing and the complete insensitivity of mankind to the environment.  Reading its chapters on the Chesapeake Bay, including the Potomac River, was particularly interesting to me as I live but few minutes walk from the Potomac River in Washington, DC.  The book describes the Chesapeake Bay estuary when it was discovered as overflowing with fish and and other wildlife.  Observing it today one would suppose that nothing lives within its waters, though a few fishermen can be found angling along the banks despite the warnings not to eat more than certain quantities of fish due to the presence of heavy metals.  One certainly doesn’t see whales (including Killer Whales) or porpoises or fish so thick you could pluck them from the water.

That we must take better care of our waters seems very clear.  Living along the Chesapeake Bay estuary as I do and crossing it on the Chesapeake Bay Bridge dozens of times per year, I can think of few things that should be of a higher priority that cleaning up the bay and reestablishing a healthy fishery.  Yet, knowing what I know about offshore drilling, it wouldn’t faze me in the least to drill oil or gas wells into the bay.  I see the two things as completely unrelated.  My biggest concern with drilling would be with the visual impact and I would think that states would need to insist upon either directional drilling from shore (which can be done perfectly safely) or gas-only production from the waters themselves (as there would be no visual impact other than during the relatively short drilling phase).  This is what the Province of Ontario does in the Great Lakes.

Yet we in America, while we continue to drive our 4-wheel drive Suburbans to and from our homes built in suburbia in a manner that completely ignores the impact of runoff from our fertilized lawns on inland and coastal waters, refuse to consider drilling offshore.  It is completely illogical.  It is the kind of disconnect that we expect in an America that gets its information from soundbites rather than from serious inquiry.

This brings me back to the story that a number of countries that produce and export natural gas have created a formal organization that appears to be aimed at created an OPEC-like cartel for natural gas.  With the increase in the transport of liquified natural gas it is becoming more and more a world commodity.  As we in the United States build more import terminals we are at risk of becoming as economically dependent upon natural gas from abroad as we are on oil.

My very strongly held view is that we must first conserve, and secondly produce as much oil and natural gas at home before we import by sea any more oil or natural gas.  That we may soon have another cartel on our hands that aims to manipulate the supply and therefore the price of natural gas should be highly concerning.  It also means more petroleum products on more boats travelling into a ports, not an unrisky thing itself.

My conclusion in all of this is that President Obama has a unique opportunity to create a new energy policy in this country that is for the first time both rational and balanced.  Certainly a Democrat advocating offshore development will have far more credibility with the public than would any Republican becuase of the Democratic Party’s longstanding advocacy for the environment.  There doesn’t exist the suspicion that would exist with Republican leadership, however unjustified, that the decision is just about paying off campaign contributors.  For reasons including national security, the environment, and the economy, the country needs to expand its production of oil and natural gas at one and the same time that it expands development of alternative fuels and reduces the overall use of fossil-based fuels.  The only energy path forward is one that uses all of our energy resources as we transition to a completely new energy future.  For President Obama and the Democrats to squander this opportunity to at last put the country on the road to that rational energy future would be tragic.  There will never be a better time to get it right and it will not mean forsaking the environment.  It will, however, require saying no to irrationality and yes to progress.

When it comes to our environment, and especially our marine environment, we need to pay attention to the real causes of harm to that environment and the real risks of future harm.  Prudent oil and natural gas production incorporating the lasted technology has shown to be extremely safe and non-damaging to the marine environment.  I have toured production platforms in the North Sea and the California coast and know them to have, if anything, a positive impact on their immediate environment.  There will never be a better time than the present to get straight our goals, a clean environment and a sound energy future, and dispense with myths and untruths that muddy the waters of sound policy making. 

Over the decades that the Organization of Petroleum Exporting Countries (OPEC) has been in business, we’ve come to view them as a benign player on the world stage.  They are anything but.  We have forgotten, if we ever knew, that they are group of “outlaw” nations that engage in behavior that would be illegal in most countries, at least in the West.  This is because it is not legal in most Western nations to conspire to keep prices artificially high.  It’s called restraint of trade among other things.  It is the essence of OPEC. 

I’ve been watching and observing OPEC for most of my lifetime.  It was founded in 1965 when I was eleven.  In my college years, studying natural resources economics at university, I watched OPEC play a key role in the oil crisis of the 1970s.  I recall experts predicting that the price of oil would only continue to increase in the years ahead.  I was amused last year as oil prices rose to record levels that experts were predicting once again nothing but higher prices for oil on into the future.  My reaction this time was, ‘well maybe, but it would be a first’.  It would be a first because over the 30 years that I’ve been watching the oil business I’ve observed that while the behavior of OPEC in reducing supply can result in high prices for a time, the market always wins in the end.  Every time prices get too high for too long, new investments are made and new technologies are employed to develop oil fields that, but for the higher prices, would have been uneconomic.  The new oil flooding the market causes a massive decline in oil prices.  This in turn triggers OPEC to take measures to restrict supply so as to again drive up the price of oil.  

That is in essence what OPEC has done yet again this week.  As reported in yesterday’s New York Times in the story Further Cuts In Output By OPEC Are Likely, OPEC is preparing yet again to cut oil supply in an attempt to drive up the price of oil.  This is notwithstanding the “dire state of the global economy” as the New York Times story put it.  You see, this doesn’t matter to OPEC.  What matters is maximizing the return from their production.

When oil prices rise again, as they will do, OPEC will be only one of the reasons.  Another reason is that low oil prices will have meant that oil companies will have cut back on their investment in new production.  Another New York Times story explains this phenomena.  It’s entitled Big Oil Projects Put in Jeopardy by Fall in Prices.  At today’s prices (the Times reports New York oil futures at $43.60 a barrel on Tuesday), oil companies can’t invest in new production and still make money.  With no investment, supply will fall, and sooner or later, in concert with the actions of OPEC to reduce supply, equilibrium will once again be reached and then breached as demand once again outpaces supply and the price climbs.

For now, the world economy gets a break.  It will be awhile before the OPEC actions and the impact of declining investment in new production begin to show in the market in the form of higher prices.  The world economic slump and its impact on the demand for oil could prolong this period.  In the meantime, every month the price remains low is stimulus to the world economy for which we can be grateful.  Imagine how bad things would have been if the world were still paying last year’s prices for oil.         

The longer term problem is that the oil price yo-yo does no one any good.  Stability in oil prices would be a far better for the world’s economies over the long term.  Industries could plan and consumers could make decisions rationally.  Now, it is anyone’s guess especially as traders collude and world events throw uncertainty into the equation.  How could this situation be improved?

I’d argue that at least in America, an ever-increasing floor on the price of oil (in essence a tax on oil), would contribute to price stability.  It would help send a market signal to consumers that conservation of oil is a good thing.  It would send the signal to Detroit that more efficient cars are an economic necessity.  It would signal to all American energy producers–oil and natural gas production companies as well as solar, wind and geothermal companies–that investments made will be able to be recouped.  It would also begin to address our overuse of carbon-based fuels and begin to cut our emission of CO2 in the atmosphere even in advance of passage of complex cap-in-trade legislation.  If implemented so that all government revenues received from the tax were refunded to consumers, it would be largely tax neutral and should not negatively impact economic recovery, indeed it would assure that the recovery that takes place is smarter from an energy conservation perspective.  See my posting entitled A Floor on Oil Prices and its reference to an excellent Washington Post editorial on the subject. 

I’d argue that imposition of the tax (via setting a floor on the price of oil) along with a meaningful opening of U.S. offshore resources to development and a responsible policy of onshore leasing on federal lands in the west would insulate political Washington and particularly the Obama administration from the shock of higher oil and natural gas which can be expected to hit the U.S. economy just about the time of the next general election in two years.  It would be both smart politics and the right thing to do.  

Some of us are natural Democrats and some of us are natural Republicans. Some of us are neither.  I suggest that a natural Democrat or Republican is someone who is almost always in total agreement with the party and with all of its various alliances; it is someone who could sign the party’s platform every four years as a statement of personal belief.  I’ve never been that person.  There will always be a number of things with which I would disagree.  More importantly there are affiliations with which I could never agree.  In my case I am offended by the all-to-close relationship between the Republican Party and the Christian right.  I am likewise alienated by the seemingly borderless relationship between organized labor and the Democratic Party.  Sorry, but I like to think for myself.  If being a member of one of our parties means I have to check my views at the door, perhaps “Independent” is destined to be my permanent affiliation.

Echoing the point with which I began, for some people there’s no conflict at all.  They are perfectly comfortable as Democrats swearing fidelity to organized labor or as Republicans attempting to legislate morality.   Have at it folks, I’m glad you’re happy.  I suspect there are also others who might not necessarily agree with certain positions or affiliations but that nonetheless have decided to accept the bad with the good as a political necessity.  The same holds true for anyone elected to the U.S. House of Representatives or U.S. Senate.  If you don’t affiliate with one party or the other, you are nobody: you don’t get committee assignments, you don’t get earmarks, you don’t get squat.  Thus, were a true independent to have been elected a few weeks ago, he/she would have to choose between Nancy Pelosi or John Boehner for Speaker.  What a horrible choice.

This leads me to my real point today.  We have a nominee for Interior Secretary, Senator Ken Salazar of Colorado, who is a supposed centrist.  So far, so good.  But how centrist can you really be when a major tenet of your party is “environmentalism” and a very major constituency is the the environmental community.  It has been my experience that it is a rare Democrat that can say “no” to environmental groups.  Indeed, it is a rare Northeast Republican who can say “no” to environmental groups.  These groups have got too many supporters in too many Congressional districts who’ve been brainwashed into thinking that what’s right for the environment is what these groups pronounce is what’s right for the environment.  It is all but impossible for a Democrat or Northeast Republican to be able to say “no” to them.  They would be taking a big political risk to do so. 

So now we have Senator Salazar nominated to the position of Interior Secretary.  For more information on Senator Salazara and this appointment, read the Washington Post story today entitled Obama to Name Salazar As Secretary of Interior.  First, don’t get me wrong, this is an outstanding appointment, especially if one considers some of the other candidates that had been discussed.  Congressman Grijalva would have been a disaster.  With Senator Salazar we have someone, as I believe we would have had with John Berry, who will make a sincere effort to balance interests in administering an agency with one of the most difficult mandates of any in government.  He is someone, unlike Grijalva, who will say “no” to environmental groups.  My concern is it won’t be often enough.  It won’t be often enough because as a Democrat Salazar simply won’t have the option of saying “no” as often as he should.  He’ll say “yes, but” or “no, but” a lot.  Everything will be a compromise.

What will get shortchanged in this the country’s energy policy.  It’s my view that there is no other agency of the United States Government that has more influence on this country’s energy policy or, energy prices, than the Interior Department.  This is because it controls so much public land, onshore and offshore, upon which so much of this country’s natural resources reside.  The department’s decisions therefore have a huge impact on the country’s ability to produce its own oil and natural gas.  Environmental groups like to paint the choice that has to be made as between “appeasing oil and natural gas production company interests” vs. “protecting wildlife and the environment”.  That’s not it at all though.  Oil and gas interests are but vehicles for a much larger and more important public interest.  That is the country’s interest in securing a domestic oil and natural gas supply that reduces our dependence on oil produced in other parts of the globe.  For both national security and economic reasons the U.S. can no longer afford, not that it ever could, to import the quantities of oil that we are presently importing.  We just can’t do it any longer.  Thus, the real debate is between “the country’s need for producing oil and natural gas domestically” vs. “protecting wildlife and the environment”.  The line is fuzzier.  It is even fuzzier if you factor in issues such as the environemental risk taken every day as mega-tankers traverse the world’s oceans with cargo that at any moment could result in an environmental disaster of proportions heretofore not experienced, or the lack of environmental safeguards for oil and natural gas drilling in many parts of the world that are standard practice in the United States.  It’s fuzzier too when one considers the economic ramifications of $350-700 billion (depending upon the price of oil) leaving the country every year to pay for this imported oil.  Every decision Interior makes should be made as if there’s an representative from the National Security Council or the Treasury Department in the room as well to make sure those interests are adequately represented.

People will argue that I’m forgetting climate change in this debate.  I’m not.  It is all too real and has to be addressed.  It would be best addressed through a carbon tax that starts to put a premium on the burning of fossil fuels.  (A less transparent and much more complicated alternative to a carbon tax would be institution of a cap-and-trade system to limit carbon emissions into the atmosphere).  Applied to my argument above that we should be producing more oil and natural gas domestically and importing less oil from abroad, a carbon tax would mean that we would begin to discourage the overall use of oil and natural gas and concomitantly increase the overall use of alternative fuels (such as wind and solar).  The place not to engage in the battle between “oil and natural gas” vs. “alternative fuels” is in the field through denying access to public lands for oil and natural gas development.  That battle should be fought with tax policy at a macroeconomic level.  Fighting the battle locally, as environmental groups so like to do, only means, all things being equal, that the country will have to import more oil.  Every barrel of oil not produced in America is a barrel that will have to be imported.   

I want to also close with this observation.  The wildlife and conservation impacts of oil and natural gas development are widely overestimated by most people.  This is because people think of oil and gas development as requiring a far bigger footprint than it does or as a permanent alteration of an often pristine landscape.  It isn’t.  It is but a 20-30 year endeavor on relatively small locations, spread over a large territory and at the end of which remediation is mandated that will return the land to its natural state.  Furthermore, the footprint for oil and gas activity is minute compared to the solar and wind footprint, which are going to be far longer in duration than the 20-30 years for oil and natural gas.   Done correctly there is also no water impact, surface or subsurface, of oil and natural gas production.  Likewise claims about wildlife impacts of oil and natural development are frequently exaggerated.  Technology that limits the footprint of oil and natural gas production by use of directionally drilled wells lessens further all of the negative environmental impacts of oil and natural gas development.

So my bottom line is that Senator Salazar is a great choice.  My best wishes are with him as he takes on one of the toughest jobs in Washington, a job that is tougher for a Democrat centrist who is going to have to say “no” to a critical constituency more often than not if he’s going to do the job demanded of him.

It appears clear that Keynesian economics is back in vogue.  I thought it had died an ignoble death a decade or two ago, but apparently not.  The morning papers that I read, the Washington Post and the New York Times, offer perspectives on the upcoming Keynesian stimulus our government is the process of formulating.  I’m not ready to make firm conclusions myself, other than perhaps to conclude that we need to take great care not to do stupid (counterproductive) things.  

From today’s New York Times comes one of the perspectives from “Nobel Prize winning economist” and New York Times columnist Paul Krugman.  The column is entitled Deficits and The Future.  He argues that we can’t let concern about long-term deficits diminish the economic stimulus the government must undertake now.  It makes sense.  Another perspective, not necessarily contradictory but certainly cautionary, is offered by George Will in a column yesterday entitled Same Old New Deal.  Among other things, he points out some of the stupid (counter-productive) things we should avoid doing in any government stimulus effort. 

My concern is that with liberals, and their predisposition to pay too much heed to organized labor, running Capitol Hill it is hard to imagine that we won’t end up with some stupid along with the smart.  Here’s an excerpt from the Will column that’s informative in this regard:

In “The Forgotten Man: A New History of the Great Depression,” Amity Shlaes of the Council on Foreign Relations and Bloomberg News argues that government policies, beyond the Federal Reserve‘s tight money, deepened and prolonged the Depression. The policies included encouraging strong unions and higher wages than lagging productivity justified, on the theory that workers’ spending would be stimulative. Instead, corporate profits — prerequisites for job-creating investments — were excessively drained into labor expenses that left many workers priced out of the market.

In a 2004 paper, Harold L. Cole of the University of California at Los Angelesand Lee E. Ohanian of UCLA and the Federal Reserve Bank of Minneapolis argued that the Depression would have ended in 1936, rather than in 1943, were it not for policies that magnified the power of labor and encouraged the cartelization of industries. These policies expressed the New Deal premise that the Depression was caused by excessive competition that first reduced prices and wages and then reduced employment and consumer demand. In a forthcoming paper, Ohanian argues that “much of the depth of the Depression” is explained by Hoover’s policy — a precursor of the New Deal mentality — of pressuring businesses to keep nominal wages fixed.

Wills goes on to note that “Obama’s ‘rescue plan for the middle class’ includes a tax credit for businesses ‘for each new employee they hire’ in America over the next two years. The assumption is that businesses will create jobs that would not have been created without the subsidy. If so, the subsidy will suffuse the economy with inefficiencies — labor costs not justified by value added.”

While we’re on the topic of stupid things and the economy, readers will be aware of my concern with the cozy relationship between Democrats and environmental groups.  The country is at great risk right now of creating a situation in this country that will be decidedly non-conducive to domestic oil and natural gas production, production which this country desperately needs.  The problem is that much of the “rap” against domestic oil and natural gas is much less real than imagined or purposely misrepresented by opponents.   The risk we run in letting zealots make policy is that we will diminish this country’s ability to produce domestically, particularly natural gas, and force greater dependence upon product from abroad.  If this happens, all on the back of largely unsubstantiated allegations and an overriding desire to replace use of oil and natural gas with renewables, we will make all but certain a massive natural gas price spike in 18 months.  Current shale production in the U.S. requires the constant drilling of replacement wells.  The drop in natural gas prices has already resulted in a decline in new drilling.  Federal land policy and measures to impose unnecessary new environmental rules on new development (whether enacted by Congress or imposed by the incoming administration) will exacerbate this situation dramatically.  It will mean higher natural gas prices just in time for the next election cycle.  It will also mean crippling a struggling economy with higher fuel prices and more dollars once again heading overseas to pay for energy purchases (rather thanrecirculating in our domestic economy).  Sane heads need to prevail here.  Let’s tighten some environmental rules where the facts support the changes (this will require a much more open and thorough process of vetting any new environmental legislation and rules) and review some of the Bush public land decisions.  But let’s keep the process open and transparent.  Additionally, let’s make sure the charges by environmentalists are balanced by listening to industry and particularly the states that regulate that industry in America.  This is essential to avoid the stupid.  There are difficult times ahead that will be made more difficult if we aren’t careful.             

The more I learn of President-elect Obama’s cabinet and sub-cabinet appointees, the more I gain confidence that Obama could be a great president.  The centrist approach he appears to be taking is a winning approach, both for the country and electorally.  The team being assembled, with few exceptions, seems to be extremely capable and ideologically moderate.  The foreign policy team in particular is looking extremely good.  While I might question whether Hillary Clinton is the best choice to be Secretary of State, her apparent selection is a mainstream appointment, as would General Jones be as National Security Advisor.  The apparent decision to keep Defense Secretary Gates in his position for at least a year is also most welcome news.

These appointments are welcome because they represent an Obama that wasn’t evident during the primary, when to a large extent he campaigned for and ultimately won the pacifist vote, for lack of a better term.  He went for and won the voters who were opposed to the Iraq war and wanted out, full stop.  By contrast Hillary became the “war” candidate, taking a less strident position on the withdrawal of troops.  That Obama is appointing a team more in line with her campaign than his is comforting to me as it is, in my opinion, the more responsible approach.  My biggest concern during the campaign was what I considered to be Obama’s completely irresponsible position on withdrawal from Iraq.  

I remain disappointed in candidates that cannot run more transparent campaigns–running on who you really are and what you really believe in rather than on what you think voters are looking for or what it takes to win.  Obama clearly ran such a campaign–dishonest might not be too strong term.  So-called “progressives” or the “pacifist” wing might have a justifiable gripe with the man.  From my perspective, at least on this issue, I am gratified that he’s apparently about to do the right thing now that the campaign is over.  It is indeed good for the country.

In this vein, E.J. Dionne in the Washington Post yesterday makes an argument that President-elect Obama is beginning to look very similar to President Bush.  Not President George W. Bush but his father, President George H.W. Bush.  Here’s an excerpt from the column entitled Obama’s Bush Doctrine:    

What’s most striking about Obama’s approach to foreign policy is that he is less an idealist than a realist who would advance American interests by diplomacy, by working to improve the country’s image abroad, and by using military force prudently and cautiously.

This sounds a lot like the foreign policy of George H.W. Bush, and it makes perfect sense that Obama has had conversations with the senior Bush’s closest foreign policy adviser, Brent Scowcroft. Obama has drawn counsel from many in Scowcroft’s circle, and Gates himself was deputy national security adviser under Scowcroft.

Dionne also observes that Obama’s worldview was largely “hidden in plain sight” during the campaign.  While Dionne notes that Obama did indeed severely criticize the Iraq War, Obama also made the case during the campaign for “justified” war.  Perhaps Obama was more transparent than I just accused him of being after all.

There are a number of additional appointments to be made to the administration about which I remain very concerned.  They are the appointments of the Secretary of Energy, the Secretary of the Interior and the Environmental Protection Agency Administrator (EPA).  All three will have an enormous impact on our country’s energy policy and its ability to create a policy that rationally addresses the energy and environmental challenges faced by the country.  In my view, the Secretary of Energy’s first duty should be as the country’s spokesman-in-chief on the country’s energy policy, selling hard policy decisions and educating as much as anything else.  The implementers of that policy, however, will be as they always have been the Interior Secretary and EPA chief.  A rogue appointment in any or all of these positions could wreak havoc on the ability of the country to achieve a rational and viable energy policy.

In terms of the speculation about these positions I reference an article in yesterday’s Washington Post entitled EPA, Interior Dept. Chiefs Will Be Busy Erasing Bush’s Mark.  That headline isn’t a good sign about what’s to come.  I know that rap is that Bush has allowed rape of the nation’s public land and allowed polluters free reign.  The truth is considerably different.  Sure, environmental groups are angry, but a rational energy policy will require that every interest group be a little bit angry.  The speculation seems to be that the Obama appointments will leave environmentalists dancing in the streets.  If that indeed happens, woe to the country and it’s energy future.  It will have meant that we aren’t making rational decisions but environmentally popular ones. 

What people fail to realize is that national security needs to be part of every public lands decision.  While it’s easy to suspect that the opening of public lands to oil and natural gas development in the west is simply about Republicans doing favors for their friends in the energy industry, it is much more about reducing the country’s dependence upon imported oil.  This country pays a very dear price for that foreign dependence, including, I would argue, every death that has resulted from the war in Iraq.  There is no justification for a single death that is consequence of our thirst for oil.  Beyond conservation and an all-out effort to develop substitute fuels, the country MUST develop in a much more robust way than it has done in the past (yes, even under Bush) to develop its own domestic oil and natural gas resources.  There is no other rational choice.  Yes, we wouldn’t do it in an ideal world, but we aren’t living in an ideal world.  We have to make tough choices and developing America’s domestic oil and natural gas resources is one of those tough but necessary choices until the day comes that our country’s economy is no longer as reliant as it is on carbon based fuels.  It is fantasy to think that by reducing domestic production we can bring the “renewable future” into existence sooner.  We can’t.  We will only bring about more imports and all of their adverse consequences (economic, environmental, national security).

So, bringing me back to the point of all of this, the appointments at Interior, Energy and EPA are indeed important ones.  The appointees need to be able to see the entire picture, not just the narrow picture that the traditional environmental groups would have us see.  Unfortunately, I am not optimistic that any of the names being publicly mentioned for these positions are leaders if this kind.  Here’s an excerpt from the above-referenced Washington Post story of those being talked about for Interior Secretary:   

The list for Interior is almost as long. Two House Democrats, Raul M. Grijalva (Ariz.) and Mike Thompson (Calif.) are contenders, but Rep. Jay Inslee (D-Wash.), Montana Gov. Brian Schweitzer, former Oregon governor John Kitzhaber, National Trust for Historic Preservation President Richard Moe, as well as three former Interior officials — David Hayes, John Leshy and Clark at Defenders of Wildlife — have all been mentioned.

I’d argue that each of those individuals mentioned above would likely have a focus that is entirely too much Sierra Club Newsletter and not enough Foreign Policy Magazine.  Let’s hope that Obama surprises here, too, and brings us people with new and different perspectives and who are capable of making the tough decisions and listening to all sides of an issue before deciding.  A first step is realizing that while Bush Administration policies in these areas were far from perfect all of the time (deeply flawed is perhaps a better way of putting it) they were often right as well and a complete reversal of course would not be good for the country.  

For now, we must wait and see.