We like to say that we have the safest, most abundant, most affordable food and fiber supply in the world.  But this isn’t just a boastful expression, it is a reality.  Our farmers and ranchers are responsible for feeding folks living in our country and throughout the world.

But, cap and tax legislation threatens that safe, abundant and affordable food and fiber supply.  The agriculture industry, as we know it, will not survive under the heavy burdens of a cap and tax policy.

This week the Agriculture Subcommittee on Conservation, Credit, Energy, and Research held two important hearings to learn more about the economic impact of climate change legislation.  Despite the fact that the U.S. House of Representatives narrowly passed the Waxman-Markey climate change bill last June – a bill that I voted against—this is only the second time Members of the Agriculture Committee have had the opportunity to explore specifically the economic impact of climate change legislation on the agriculture sector.

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An article in the Oil and Gas Journal reveals the thinking processes of some of our leaders on Capitol Hill. And it’s not a pretty sight.

Speaking at a forum on energy and climate policy co-sponsored by Newsweek magazine and the American Petroleum Institute, Rep. Edward Markey (D-MA), Chair of the Subcommittee on Energy and Environment, and co-author of the Waxman-Markey Cap and Trade Bill said:

“The measure is analogous to what we did in telecommunications,” Markey said, noting that Congress passed bills in 1992, 1993, and 1996 that launched, respectively, the modern cable, wireless, and broadband systems while creating 2 million new jobs. … Emerging energy technologies could lead to a $2 trillion domestic industry if the US decided to actively support them, Markey said.

Well, no, not really, Ed.

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We often fall into the trap of acting on emotions, not facts. It certainly makes us feel good to feel like we’re doing something positive. But being a grownup requires discipline, common sense and thinking instead of feeling. Nowhere is this more apparent than in our approach to energy and environmental policy.

One example: the “eat local” movement seems to be getting some traction among concerned urban types. The premise: It must be a horrendous waste, in this post oil-peak world, to transport your strawberries by jet from New Zealand and your haricots-verts and arugula from California, when you can get them at the quaint little Farmer’s Market or a funky co-op in town. Furthermore, industrial farming is not only bad, but doomed by the shortage of energy [link]:

The age of the 3000-mile-caesar salad will soon be over. Food production based on massive petroleum inputs, on intensive irrigation, on gigantic factory farms in just a few parts of the nation, and dependent on cheap trucking will not continue. We will have to produce at least some of our food closer to home.

Not so fast, according to the blog “Peak Oil Debunked”.

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Facts I bet you did not know:

The United States has largest energy reserves on Earth, according to a report from the Congressional Research Service.

As shown in the charts below, the U.S. has 1,321 billion barrels of oil (or barrels of oil equivalent for other sources of energy) when combining its recoverable natural gas, oil and coal reserves.

While Russia is a close second with 1,248 billion barrels, other energy producing nations are far behind. No. 3 is Saudi Arabia (543 billion barrels), followed by China (494 billion barrels), Iran (426 billion barrels) and Canada (221 billion barrels.)

This is really impressive stuff. Now here’s the thing — according to the article, “The report also noted that the United States has 28% of all the world’s coal reserves, with Russia again coming in second with 19%.” But Barack Obama is opposed to further use of coal. He is also opposed to greater use of our oil and natural gas reserves.

So we have all this stuff and our government does not want us to use it. Elections matter.

Natural gas currently satisfies nearly a quarter of the country’s total energy needs. Gas is clean-burning and has less environmental impact than either oil or coal. We have a secure and abundant supply in North America, the technology to drill and produce it efficiently, and a robust distribution network to deliver it to market. Natural gas drilling could generate new, good-paying jobs by the thousands, and not two years from now, but now. At current prices, gas delivers the same energy as a barrel of oil at a third of the cost. What’s not to like?

Policy makers have conflated natural gas with oil and coal as “fossil fuels”, fuels of a bygone era. When candidates intone, “We must end our dependence on fossil fuels,” most of us nod and uncritically accept the notion. We project oil’s perceived shortcomings onto natural gas (”Peak Oil”, dependence on the Middle East, balance of trade deficits, and the environmental threat of spills), when none of those issues is relevant to natural gas. With the arguable exception of nuclear fission, the steady blue flame of natural gas represents the closest thing we have to an ideal fuel.

Until now, the Obama Administration’s “Green Jobs” rhetoric and the stated commitment to wind and solar had the future for natural gas looking mighty bleak, despite the obvious advantages. Just last April, Energy Secretary Steven Chu said that using natural gas as a transportation fuel “will put a strain on natural gas for industrial uses, for heating, and other things“.

Lately, however, there are signs that the Obama Administration might be changing its tune.

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Bluntly?  Because they say stupid things like this.

When it comes to greenhouse-gas emissions, Energy Secretary Steven Chu sees Americans as unruly teenagers and the Administration as the parent that will have to teach them a few lessons.

Speaking on the sidelines of a smart grid conference in Washington, Dr. Chu said he didn’t think average folks had the know-how or will to to change their behavior enough to reduce greenhouse-gas emissions.

“The American public…just like your teenage kids, aren’t acting in a way that they should act,” Dr. Chu said. “The American public has to really understand in their core how important this issue is.” (In that case, the Energy Department has a few renegade teens of its own.)

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The cap and trade national energy tax is being sold to the American people as a free-market answer to environmental problems. Dressed in green as it is, people are led to believe that it was a scheme hatched by the environmentally conscious. The truth is that cap and trade is a product of the very same minds that gave us subprime loans and market bubbles, credit default swaps and the financial meltdown. Cap and trade is actually a child of Wall Street. But, nowadays, that doesn’t help in the marketing, does it?

Cap and trade is based on government setting a cap on the total amount of carbon that can be emitted nationally. Companies will then be allowed to buy or sell permits to emit carbon dioxide. So, at a time when Congress is already grappling with the appropriate solution for restructuring our nation’s financial regulatory system, Congress also wants to simultaneously introduce a new, and potentially the largest, commodity market into the mix? As Tyson Slocum, director of energy for Public Citizen, has stated, “You have to ask yourself if it is wise policy to create a new derivatives market on the heels of the collapse of derivatives markets.”

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On Thursday, I wrote about the announcement of a new giant oil field discovered by BP in the Gulf of Mexico. It’s in 4,100 feet of water, and the well is over 35,000 feet deep. If it turns out to be as big as BP hopes it is, it might be BP’s biggest Gulf find and deliver half the output of Prudhoe Bay. Big field.

On Friday comes
word that Bobby Jindal and the State of Louisiana have their eye on the prize.

This will be interesting.

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You don’t have to be an economist to understand the economic situation.  Unemployment has hit double digits in many states and is growing (in Ohio: 340,000 jobs lost since Ted Strickland and Lee Fisher took office) and everyone is paying the price.    The stimulus has accomplished nothing (Again, in Ohio, in the neighborhood of 100,000 jobs lost since its passage) and yet the Democrats in Congress are intent on making a bad situation worse by passing legislation that would cripple American businesses and devastate families.

The focus lately has been on health care, and for good reason, but energy is an issue that should not be lost in the debate about the economy.  Because Cap and Trade (H.R. 2454, the Waxman- Markey bill) is a dagger aimed at the heart of our economy.

More below.

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Back in May, Treasury Secretary Tim Geithner penned a letter that lays out in glorious detail the misconceptions and wrong-headed thinking that pervade the Obama Administration’s approach to energy and the environment, taxation and to the economy in general.

The letter was a response to one written by Rep. Charles Boustany (R-LA7) (a member of the Ways and Means Committee), expressing his concern for the Obama Administration’s plan to rescind certain oil and gas tax deductions which they characterize as “loopholes”. The economy of Louisiana’s Seventh District, in the southwest part of the state, is heavily dependent on the oil and gas, oil service and petrochemical industries. To paraphrase Boustany’s basic question: How many jobs will my district lose, Mr. Secretary, when you “close the tax loopholes” on oil and gas drilling and production?

Secretary Geithner’s reply belies the Obama Administration’s hostility to oil and gas and their willful ignorance in the realm of energy policy.

Garden variety stupidity might be observed in a statement or point of view that is merely ignorant, misinformed or ill-considered; stupidity of this type occasionally affects us all. It is one-dimensional and generally benign in the long run.

But the transcendently stupid statement is a true gem, like a highly flawed diamond; it is multifaceted and multidimensional; it may even tease with glimmers of brilliance. The more you study it, though, the more glaring the flaws.

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So there’s this Canadian fellow named Steve McIntyre, who works with an organization called Climate Audit. Climate Audit’s interest is not in debunking Global Warming. Rather, they audit the data in an effort to make sure the conclusions derived are unassailable. To that end, Steve contacted the Climactic Research Unit (CRU) of the University of East Anglia, the repository of the data that underlie the “overwhelming scientific consensus” in the Climate Science community. He requested the original raw data behind their temperature trend conclusions, to wit:

CRU

You’d expect scientists who are so sure of their conslusions to welcome this type of scrutiny. Instead, Steve got the Heisman Treatment - the big stiffarm - because he’s “not an academic”.

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Noted energy expert, environmental Luddite and hypocrite Robert Kennedy, Jr., aims to stymie natural gas drilling in New York State by hyping unrealistic and irrational fears of environmental contamination. At issue is the method used to stimulate production in gas wells known as hydraulic fracturing, or “fracking”. Truth be told, Kennedy and the greenies would find something objectionable in anything an energy company would propose.

The Kennedy family fortune has its roots in the ethanol-importing business, although the ethanol in question was potable and not fuel-grade. Robert Kennedy, Jr. is a Harvard-educated environmental lawyer (law degrees from UVA and Pace) and general counsel of an environmental watchdog organization called Riverkeeper. His association with Riverkeeper began in 1983 as a result of 1,500 hours of community service that was suggested to him by a Federal judge.

Ironically, Kennedy derives income from the Arctic Royalty Limited Partnership, a trust created from two family-owned oil companies in order to minimize tax liability. Robert has also opposed the Cape Wind Project, a commercial proposal to build a large wind farm in Nantucket Sound, near the family compound in Hyannisport.

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The Problem: Wind farms located in the Great Plains will be a long distance from where the electricity they generate will be used. Wind energy is not a steady source of generation like coal or natural gas. A wind- and solar-based system will of necessity be located farther from population centers, requiring more power substations and more transmission lines. The tab for the upgrade to the nation’s electric transmission grid will be $130 billion, which in the old days sounded like a lot of money.

Obstacle: The states that must be crossed with the New and Improved Transmission Grid don’t stand to benefit much. Where once stood amber waves of grain and purple mountain majesties, they’ll get giant raptor cusinarts and miles of ugly electric transmission lines.

The “Solution”: Federalize the siting of the New and Improved Transmission Grid. Take it out of the hands of state and local authorities.

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Petrobras, the Brazilian oil giant, has discovered world-class oil fields, estimated to contain in aggregate some 80 billion barrels of oil, in the deepwater offshore Brazil. Developing the reserve will be expensive, as the deposits are located beneath 2,000m (6,600 ft) of water and 5,000m (16,400 ft) of sediment, including a thick layer of salt. The company plans to spend $29 billion through 2013 to develop the portion of the “pre-salt” basin it already controls.

Financing? No problem. The Obama Administration, through the U.S. Export-Import Bank, has agreed to provide up to $10 billion in loans to Petrobras to help pay for the development, according to Brazilian Planning Minister Paulo Bernardo da Silva. The China Development Bank has agreed to supply a similar credit line, repayable in barrels of oil in lieu of cash.

When a lender structures a loan to be repaid in barrels, it represents a speculation on the price of oil as well as a bet on being repaid.

The Brazilian government is the controlling shareholder of Petrobras, but shares trade on several exchanges, including New York (symbol PZE). The company operates in 27 foreign countries, including the U.S. in the Gulf of Mexico.

Which begs the question: Why is the American President willing to risk $10 billion on the success of a Brazilian oil venture, while giving every signal that he wishes the American independent producer would just shrivel up and die?

Is it because we vote Republican?

H/T Kari Scott, CRC Public Relations

A soon-to-be released study of the health effects of living near wind turbines challenges the popular image of the graceful, benign windmill gently coaxing free megawatts from the passing zephyrs.

Dr. Nina Pierpont, a New York pediatrician, has studied subjects who live near windmills in the U.S., the U.K., Italy, Ireland and Canada for the last five years. She concludes that some, but not all, of the near-windmill dwellers show signs of a newly-identified health risk which she calls Wind Turbine Syndrome, or WTS.

Are wind farms a health risk? US scientist identifies ‘wind turbine syndrome’

[WTS] is the disruption or abnormal stimulation of the inner ear’s vestibular system by turbine infrasound and low-frequency noise, the most distinctive feature of which is a group of symptoms which she calls visceral vibratory vestibular disturbance, or VVVD*. They cause problems ranging from internal pulsation, quivering, nervousness, fear, a compulsion to flee, chest tightness and tachycardia – increased heart rate.** Turbine noise can also trigger nightmares and other disorders in children as well as harm cognitive development in the young, she claims.

*[A girl I dated once told me she had VVVD. She stuttered, too.]

**[I experienced symptoms of WTS during Obama's last televised press conference. Memo to self: Search for nearby wind turbine.]

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Right now, today, we have an available source of energy that accomplishes the stated policy goals of the Obama Administration, by:

• Reducing our reliance on imported oil.
• Creating good-paying, green jobs for Americans.
• Reducing greenhouse gases and atmospheric pollutants.
• Providing affordable energy from a totally domestic, proven source in virtually inexhaustable amounts.

Of course, nothing’s perfect. This energy source comes with some distinct DISADVANTAGES, being contrary to the Administration’s goals:

• It’s not government-centric.
• It won’t allow the Administration to throw a sop to ACORN, SEIU or powerful Democrats in Washington.
• American corporations (and American investors) sometimes actually make a profit on it.
• Winners and losers are determined in the marketplace, not by government diktat.

So, I can see already why this fuel might not be popular with the current Administration, but some folks might even interpret those disadvantages as ADVANTAGES.

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This hasn’t gotten much mention here - but when I was in Romania earlier in the week it was big, big news:

The troubled Nabucco pipeline project — designed to diversify Europe’s energy supply and loosen Russia’s grip on the continent’s natural gas market — took a major step forward on July 13 with the signing of a transit agreement between Turkey and five European Union countries involved in the undertaking.

The 2,050-mile-long (3,300 kilometer) Nabucco pipeline is designed to bring gas from the Caspian Basin and the Middle East to European markets via Turkey, Bulgaria, Romania, Hungary and Austria. The $10-billion pipeline is scheduled to start operating in 2014. Nabucco’s primary objective is to lessen Europe’s overdependence on Russia for gas. Moscow currently supplies approximately 40 percent of Europe’s gas.

But there’s even more good going on, which we’ll discuss below the fold.

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Want to see a full list of the earmarks in the Energy and Water Bill that the House is about to begin debating? Well, I hope you have some stamina because there are 1,866 of them to read.

You’ll notice that many of them are being requested by “the President.” That would be the Barack Obama 2012 re-election campaign project you are seeing there.

For some reason, my list is causing trouble with the code here, so the full list was posted by Jamie Dupree.

And, contrary to our current ruling party’s (Democrats) operating fiscal paradigm, there are no money trees out there.  If you want a thing, you have to find a way to pay for it.  The trouble is, of course, that if you don’t particularly want a thing you may have to pay for it anyway, particularly when the people who do want it (Democrats) happen to have one of their own as Governor of Missouri.

These three paragraphs come to the heart of the matter, I think.  Bear in mind that Governor Nixon’s (D) overall goal is that there be less power usage, which sounds marvelous until you contemplate the implications of a population that’s increasing faster than power production.  If you don’t want to increase power supply, and you can’t control the population, the only way to manage the situation is to set up conditions where individual expectations of fair-share power are lowered to a level that equals the supply.  We have an adjective to describe that condition.

It’s ‘poor.’

Usually, regulators allow utilities to recoup the cost of building power plants or buying more power to meet customer demand. Recently, the Missouri Public Service Commission began allowing some utilities to pass along to customers the cost of programs that reduce demand for electricity.

For example, the commission last week approved a program in which St. Louis-based AmerenUE can offer credits to businesses that voluntarily shut down or scale back their electricity use during peak demand. AmerenUE will be able to recoup the cost for the program that starts Thursday by increasing the rates it charges business customers.

[snip]

The U.S. Environmental Protection Agency estimates that energy-saving programs offered by utilities will add about 3 percent to the average electricity rates. But it says customers who participate in the programs could save 10 percent to 20 percent on their energy bills, and even those who don’t participate might save if utilities don’t have to buy more energy or build new power plants.

(Bolding mine)

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Promoted from the diaries by Neil Stevens

One of the lamest arguments in favor of the passage of Cap and Tax was that it was good “energy policy”.  Rep. John Larson (D-CT 1), among others, went off at length in this direction.  You might suspect from the title that I may take exception with this assessment.

Before we go further, a couple of definitions:

Policy: A governmental plan (contrast with “program”), generally formulated within the executive branch which has the purpose of solving a particular problem facing the nation.

Elasticity: The percent change of the quantity of a good/service supplied or demanded for a unit percent change of price.  This definition can be confirmed in any undergrad microeconomics text.

So we see “energy policy” thrown out there as an argument.  What problem facing the nation does are we trying to solve?  In this case, it is the inelastic demand for fossil fuels (primarily oil) combined with the inelastic supply of the same fossil fuels.  The supply is inelastic in that the nation imports a sizable percent of its oil and thus does not have direct control over supply quantity.

Given the definition of the problem, it seems that there is a two part solution:

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