Each Red Dot is A Coal Plant That Will Be Shut Down By MACT

We have two different candidates who could win the US Presidential Election in six days. One claims that he favors “All of The Above” as an energy policy, but as you’ll see below, that comes with a caveat. The other candidate favors US Domestic Energy Independence as a method of economic revival. To determine which man is serious, look closely at how they react to the idea of reliance upon coal-fired energy.

Let’s say you saw the number one goal of the current US President is domestic energy independence or an all of the above energy policy. Would that include a major environmental regulation that threatened to take nearly 30KMW of electrical power generation offline in the immediate future? Would it involve specifically preventing mining and development of a major source of available domestic energy? If so, your candidate is already in office. The Hill describes the Obama Administration’s stance on coal energy below.

Meanwhile, media reports point out that coal was conspicuously missing from the description of the President’s energy policy earlier this year, and was not added until after several congressional inquiries.”…Indeed, recent regulatory changes implemented by the Obama Administration have placed a disproportionate burden on the coal industry. Mining permits have been suspended, and coal mines subjected to new permitting restrictions which effectively ban modern surface mining. Perhaps the most visible display of the administration playing favorites is a set of regulations handed down or proposed by the Environmental Protection Agency (EPA). Faced with new air emission standards, several utilities found themselves forced to convert their coal-fired power plants to natural gas in order to avoid shutting them down.

Yet some will say the MACT Regulation proposed by the EPA does no such thing. The graph below showing the costs of the proposed regulation to electrical plant operators belies this facile argument.

MACT Makes Coal-Fired Plants Too Expensive To Be Worth It To The Producer

Another argument put forth in favor of the Obama Administration’s coal phase-out centers on the successes of Hydraulic Fracture technology as an alternative way to produce domestic energy. This stance is also belied by an examination of the underlying finances involved in firms that engage heavily in frakking. The problem with putting low technological readiness level solutions into the field is that they cost exorbitantly before they mature and produce a reliable return. Chesapeake Energy and other such companies face the problem described below.

Chesapeake Energy’s well-publicized funding gap isn’t an outlier but an emblem of wider issues in the shale oil and gas boom that imply an industry-wide downturn is possible in coming quarters. In particular, it could spell earnings trouble for oil service stocks rigged to the still-high rig count across the U.S. Oil and gas exploration companies are spending on drilling programs far in excess of cash coming into the their coffers, with average spending 43% higher than cash flow, according to Guggenheim Securities data.

Those who seek to reduce the US reliance upon coal will even overhype the ability of the US to produce oil. The AP recently claimed the United States would overtake Saudi Arabia as the world’s biggest oil producer. The fact Saudi Arabia out-produces the US by 150% per day doesn’t deter a good sci-fi narrative in the slightest. This ridiculous claim is supported via statistical prestidigitation.

Within the last decade the industry began to count something called natural gas plant liquids (NGPL) as part of oil supply. Here’s how I’ve explained NGPL previously:NGPL are hydrocarbons other than methane that are separated from raw natural gas at a processing plant. They include ethane, propane, butane and pentane. ….Also included in the definition of oil supply are biofuels, namely ethanol and biodiesel.

So the US is not going to displace coal as the easiest and most convenient source of domestic energy in the near term. Policies that severely limit the ability of coal-fired power generation deprive the economy of motive power that is impossible to replace in the near term. The end result of these policies will be continued economic stagnation and destruction of wealth. The US economy will not be revived by shutting down 30KMW of electrical power in the near term. If getting the unemployed more opportunity and hope is the number one job of our President, we obviously need a new one. Mitt Romney 2012. That is all.

*-Not the unemployment rate, mind you, they’ve already got the BLS working on that one.