Job Creation and EPA Enforcement Philosophy – Coincidence With Roots
Crucified Firms Don?t Create Very Many Jobs
“…the soldiers out of rage and hatred, nailed those they caught, one after one way, and another after another, to the crosses, by way of jest.”
– Flavius Josephus (HT:Wikipedia)
In the video above, Al Armendariz discusses how his agency should enforce regulations on Oil and Gas extraction firms. The term crucifixion enters into the discussion. I’m sure it was just a rhetorical flourish in the proud tradition of Huey “The Kingfish” Biden, however, our choice of wording does offer a nice, handy window into our souls.
The EPA’s crucifixion agenda was on leafy, green display when they ruled that power generation facilities could not emit more than 1,000 pounds of CO2 per megawatt of electricity produced. The people getting nailed to the cross predictably come from locations that rely on coal-fired power for their electricity. The Washington Post’s Juliet Eilperin describes why this poses a difficulty for coal-fired generation facilities.
“The average U.S. natural gas plant, which emits 800 to 850 pounds of CO2 per megawatt, meets that standard; coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.”
This would be fine and dandy to anyone who doesn’t dig or ship or burn coal except for two wee problems. The US currently derives 45% of its electricity from coal-fired plants. These plants would have to install carbon sequestering technology which does not exist at a level yet where it can be commercially mass-produced.
In and of itself, we wouldn’t be dead just from enhanced regulatory costs levied against coal-fired electrical production. The problem occurs when the EPA uses other regulatory actions to also squeeze the viable alternatives to coal-fired plants. Natural Gas extraction firms have rapidly increased supply availability via the use of frakking methods to force previously unavailable natural gas out of the ground. Senator Jim Inhofe describes EPA actions towards natural gas producers following Armendariz’s infamous crucifixion edict.
“Not long after Administrator Armendariz made these comments in 2010, EPA targeted US natural gas producers in Pennsylvania, Texas and Wyoming.
“In all three of these cases, EPA initially made headline-grabbing statements either insinuating or proclaiming outright that the use of hydraulic fracturing by American energy producers was the cause of water contamination, but in each case their comments were premature at best – and despite their most valiant efforts, they have been unable to find any sound scientific evidence to make this link.”
And meanwhile at The Bureau of Labor Statistics, we learn that the Glorious Obama Recovery seems to have hit a rough patch. Employers added only 120,000 new jobs to their payrolls last March after several months of averaging twice as many. Meanwhile, the four-week moving average of new unemployment claims hit 381,750. This is as poorly as this indicator has fared since early January.
This stalling economic activity occurs in synonymy with rising energy prices. It occurs at the same time our Interior Secretary, Ken Salazar, claims that the US Government has no control over the price of gasoline. He says this while the EPA does everything in its power to increase two possible substitute goods for crude oil in power generation. His disingenuous response bears no relation to what the explicit goal of President Obama’s energy policies have been since 2008. Here is how President Obama described the economic outcome of his environmental policy goals.
Under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I’m capping greenhouse gases, coal power plants, you know, natural gas, you name it — whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money.
So does the EPA have a deleterious effect on the current economy? A reflexive thought would be that firms undergoing regulatory crucifixion tend not to have excess funds to hire new staff. They also tend to stay away from anything that would require them to take regulatory risk. Regulatory crucifixion leads firms to stop asking where they should explore and start asking what they need to shut down if they don’t want nail holes in their hands. Logically, this should lead to a necessary level of damage to American economic vitality.
Logic also suggests that higher electricity prices, as President Obama indicated he believed would occur, should create negative externalities in consumer spending and on hiring in mechanization-intense industries. This quite possibly shows up in the perniciously stubborn U3 rate of unemployment that only seems to decline when hoards of perpetually idled workers get officially classified as “discouraged.” Or maybe this is all just a result of American velleity.
I tend to think the crucifixion philosophy at the EPA, the high prices of energy and the slowing rates of economic vitality are all components of a system. The EPA regulatory posture has a steady-state effect that increases the prices of energy inputs to production. The things firms produce have a higher manufacturing overhead, so that they are harder to make. The firms hire fewer workers and charge consumers more for their goods and services. This is how The Government-Centered Society kills economic vitality.