If the goal is “energy independence,” what issues should be a priority in America?

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Greetings!
When I sat down to write this week’s column in Austin, TX, where I’ve been on a long personal weekend, I thought it would be short and easy to write. I had all my ideas developed. I’d received a copy of the Democratic Congressional Campaign Committee “2014 Priority Issues Survey” and intended to use its energy question as my framework—which I did. I tore into each survey point and exposed what it really meant and how it did—or, more likely, did not—lead to “energy independence.”

While writing If the goal is “energy independence,” what issues should be a priority in America? (attached and pasted-in-below) was fairly easy, it did take me almost the entire day Friday to write—and it didn’t end up being short. When I sent it to my proofreader first thing Saturday morning, I told her that it was too long and that I was going to have to cut some of the section on CAFE standards. I asked for suggestions on what to cut. She sent the corrected version back with no cuts and added that she thought it all needed to be there. So, it is all there and If the goal is “energy independence,” what issues should be a priority in America? is long. Sorry.

But here’s what I found most interesting. As a part of my preparation, I posted a question on my Facebook page about energy independence (which, just so you know, I don’t really think is the goal, but it was the survey question). As I address in the column, the answers were most interesting and revealed a total misconception of energy independence—even among my Facebook friends who generally read my work. The misconception is my particular pet peeve. I frequently state that wind and solar have nothing to do with getting the U.S. off of foreign oil, yet even on my Facebook page when asked the title question, many offered solutions that pertained to electricity. Argh!

So, while If the goal is “energy independence,” what issues should be a priority in America? offers an interesting glimpse inside the ideology of the DCCC, more importantly it points out what really will, and will not, move the U.S. towards energy freedom—the ability to use energy freely without peoples hostile to America using it as a weapon against us.

Please help me spread the word by posting, passing on, and/or personally enjoying: If the goal is “energy independence,” what issues should be a priority in America?
Thanks!
Marita Noon

Marita Noon

Executive Director, Energy Makes America Great, Inc.
PO Box 52103,
Albuquerque, NM 87181
For immediate release: April 7, 2014
Commentary by Marita Noon
Executive Director, Energy Makes America Great Inc.
Contact: 505.239.8998, marita@responsiblenergy.org

If the goal is “energy independence,” what issues should be a priority in America?
Recently the Democratic Congressional Campaign Committee (DCCC) sent out a “2014 Priority Issues Survey.” In addition to the obligatory Tea Party bashing: “help the Democrats protect the progress we have made from Tea Party radicals, deliver the positive changes America needs and help Democrats win a Majority in the U.S. House of Representatives!” and the fundraising requests to “help protect House Democrats against Republican attacks”—there is a section on energy.

Section VII, asks: “Which of the following will help America achieve energy independence?” It offers five options that do little to move America toward energy independence—which isn’t even a realistic goal given the fungible nature of liquid fuels. Additionally, most of the choices given on the DCCC survey actually increase energy costs for all Americans—serving as a hidden tax—but hurt those on the lower end of the socio-economic scale the most. The proposals hurt the very people the party purports to champion.

The survey asks respondents to “check all that apply.”
Raising gas mileage standards for all new cars and trucks
This choice presumes that making a law requiring something will make it happen. Sorry, not even the Democrats have that kind of power. Even the current Corporate Average Fuel Economy (CAFE) Standard of 54.5 miles per gallon (mpg) by 2025—finalized on August 28, 2012 and called “the largest mandatory fuel economy increase in history”—will be tough to hit.

The CAFE standards mean that a carmaker’s passenger vehicle fleet average must achieve 54.5 mpg. To meet that, and produce the big pick-up trucks and SUVs Americans like to drive, the manufacturers must also produce the little itty-bitty cars with mpg above 60 and the more expensive hybrids (not one of which was on the top ten best-seller list for 2013)—or have a loss leader like the Chevy Volt to help bring down the average.

Suggesting a forced raising of gas mileage standards implies that auto manufacturers are in collusion with oil companies and are intentionally producing gas guzzlers to force Americans into buying lots of gasoline.

With the price of gasoline wavering between $3-4.00 a gallon, most people are very conscious of their fuel expenditures. If it were technologically possible to build a cost-effective truck or SUV that had the size and safety Americans want and that got 50 mpg, that manufacturer would have the car-buying public beating a path to its door. Every car company would love to be the one to corner that market—but it is not easy, it probably won’t be possible, and it surely won’t be cheap.

When the new standards were introduced in November 2011, Edmonds.com did an analysis of the potential impact: 6 Ways New CAFE Standards Could Affect You. The six points include cost and safety and highlights some concerns that are not obvious at first glance.

Achieving the higher mileage will require new technologies that include, according to Edmunds, “turbochargers and new generations of multispeed automatic transmissions to battery-electric powertrains.” The National Highway Traffic Safety Administration and the Environmental Protection Agency have estimated that the average new car will cost $2,000 extra by 2025 because of the proposed new fuel-efficiency standards.

Additionally, new materials will have to be used, such as the proposed new Ford F-150 made with aluminum, which is predicted to add $1500 over steel to the cost of a new truck. Aluminum also complicates both the manufacturing and repair processes. Edmunds reports: “Insurance costs could rise, both because of the increased cost of cars and the anticipated hike in collision repair costs associated with the greater use of the plastics, lightweight alloys and aluminum necessary for lighter, more fuel-efficient vehicles. (Plastics, lightweight alloys and aluminum are all more difficult than steel to repair.)”

Another concern is safety. “The use of weight-saving materials will not only affect repair costs but could make newer vehicles more susceptible to damage in collisions with older, heavier vehicles, especially SUVs and pickups. Their occupants could be at a safety disadvantage.”
One of the subtle consequences of high mileage vehicles is the probable increase in taxes.

Edmunds points out that lower driving cost may increase wear-and-tear on the nation’s highway system as consumers drive more freely. “Declining gas sales mean a further decrease in already inadequate fuel-tax revenue used to pay for road and infrastructure repair and improvement. … As more untaxed alternative fuels such as compressed natural gas and electricity are used for transportation, fuel tax revenue falls even farther. All of this is likely to lead to calls for a road tax based on miles driven and not the type of fuel used.”
Instead of increasing costs by forcing a higher mpg, a free-market encourages manufacturers to produce the cars the customers want. The Wall Street Journal story on the Ford F-150s points out: “In 2004, as the auto market soared, Ford sold a record 939,511 F-series pickups. That amounted to 5.5% of the entire U.S. vehicle market. But four years later, gas prices rose above $4 a gallon, sales of pickups began tumbling.” Then, consumers wanted small cars with better mileage. I often quote an ad for Hyundai I once saw. As I recall, it said: “It’s not that complicated. If gas costs a lot of money, we’ll produce cars that use less of it.”

In response to an article in US News on the 5.45-mpg CAFE standard, a reader commented: “ALL CAFE regulations should be repealed. Let the market and fuel prices decide what vehicles are purchased. The federal government should not be forcing mileage standards down the throats of the automaker or the consumers. This is still America, right?”

 Develop Renewable Energy Sources
There is nothing inherently wrong with the idea renewable energy. However, the cost factor is one of the biggest problems. When I do radio interviews, people often call in and point out Germany’s renewable energy success story: “The share of renewable electricity in Germany rose from 6% to nearly 25% in only ten years.” While that may be true, it doesn’t address the results: “Rising energy costs are becoming a problem for more and more citizens in Germany. Just from 2008 to 2011 the share of energy-poor households in the Federal Republic jumped from 13.8 to 17 percent.”

Germany has been faced with a potential exodus of industry as a result of its high energy costs. For example, in February, BASF, the world’s biggest chemical maker by sales, announced that for the first time, it “will make the most of its capital investments outside Europe.” According to the Financial Times, Kurt Bock, BASF chief executive explained: “In Europe we have the most expensive energy and we are not prepared to exploit the energy resources we have, such as shale gas.”

Throughout America people are beginning to feel the escalating costs of the forced renewable energy utility companies are required to add as a result of Renewable Portfolio Standards that more than half of the states passed nearly a decade ago.

But the cost is not where I take issue with the DCCC’s inclusion of “Developing renewable energy sources” in its survey. The survey question is about achieving “energy independence.”
In preparation for writing this column, I posted this question on my Facebook page: If the goal is “energy independence,” what issues should be a priority in America? The first answer posted was: “Smart grid and fast ramp natural gas turbines.” Another offered: “High efficiency appliances and lights. I am a LED FAN!” Yet, another: “Solar, tidal, water.” Bzzzzzzt, all wrong answers.

All of the above suggestions are about electricity. The U.S. is already electricity independent. We have enough coal and uranium under our soil to provide for our electrical needs for the next several centuries. Add to that America’s newfound abundance of natural gas and we are set indefinitely. By the time we might run out of fuel for electricity, new technologies will have been developed based on something totally different, and, I believe, something that no one is even thinking about today.

Developing more “solar, tidal, water” or wind energy won’t “help America achieve energy independence.” Nor will a smart grid or natural gas turbines. High efficiency appliances or LED light bulbs won’t either.

 Encouraging consumer and industrial conservation
Consumers are already feeling the pinch of higher energy costs—both electricity and liquid fuels. When possible, people are restricting driving by taking a stay-cation rather than a traditional vacation. Many people who can afford the option are switching to more energy-efficient light bulbs.

As the BASF story above makes clear, most industry is energy intensive. In the story about the Ford F-150’s use of aluminum, the WSJ says that the new manufacturing process requires “powerful and electricity-hungry vacuums.” Industry cannot stay in business without profit. Therefore, in interest of preservation, energy conservation is virtually an instinct.
The cost of energy drives conservation.

Including this question in the survey is a red herring that would lead the respondent to think conservation is a big issue.

 Investing in energy efficient technology
When the word “investing” is used in reference to a government document or program, it always means spending taxpayer dollars. In a time of ongoing economic stress, we don’t need to borrow more money to spend it on something of questionable impact on energy independence.

Remember, much of the “efficiency” numbers bandied about refer to electricity, which has nothing to do with energy independence. Energy.gov states: “Every year, much of the energy the U.S. consumes is wasted through transmission, heat loss and inefficient technology…Energy efficiency is one of the easiest and most cost effective ways to … improve the competitiveness of our businesses and reduce energy costs for consumers. The Department of Energy is working with universities, businesses and the National Labs to develop new, energy-efficient technologies while boosting the efficiency of current technologies on the market.” Among the “solutions” presented on the page are “developing a more efficient air conditioner” and “a new smart sensor developed by NREL researchers that could help commercial buildings save on lighting and ventilation costs.” Nothing is offered that will actually impact energy independence.

 Increasing offshore drilling and oil exploration in wilderness areas
Respondents are discouraged from selecting the one item on the list that could actually lead to “energy independence” by the inclusion of the words “offshore” and “wilderness areas”—as if those are the only places drilling could take place.

Yes, we should increase exploration and drilling—and, while there are risks, it can be, and has been, done safely in offshore and wilderness areas. But there are vast resources available on federal lands that are either locked up or are under a de facto ban due to the slow-walking of drilling permits.

Instead of phrasing the choice “Increasing offshore drilling and oil exploration in wilderness areas,” if the goal is energy independence, the option should have read: “Release America’s vast energy resources by expediting permitting on federal lands.”

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While the options on the DCCC survey, even if a respondent checked them all, will do little to “help America achieve energy independence,” the survey didn’t include any choices that could really make a difference in America’s reliance on oil from hostile sources.

Some selections that would indicate a true desire to see America freed from OPEC’s grip should include:
 Approving the Keystone pipeline;
 Revising the Endangered Species Act so that it isn’t used to block American Energy Development;
 Encouraging the use of Compressed Natural Gas as a transportation fuel in passenger vehicles and commercial trucks;
 Expediting permitting for exploration and drilling on federal lands;
 Opening up the Arctic National Wildlife Refuge; and
 Cutting red tape and duplicative regulations to encourage development.

The fact that not one of these options that would truly make a difference was included belies the ideology of the Democrat Party. Its goals do not include energy independence. Instead it wants to continue the crony corruption that has become the hallmark of the Obama Administration as evidenced by Secretary of Energy Ernest Moniz’s April 2 announcement that: “the department would probably throw open the door for new applications for renewable energy project loan guarantees during the second quarter of this year.”

Like the Ukraine, until there is a change at the top, the U.S. will likely remain dependent on the whims of countries who want to use energy as a weapon of control. The goal should be energy freedom.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.

 

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Marita Noon: The “Yes, you can” vs “No, you can’t” energy plan Marita Noon

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The “Yes, you can” vs “No, you can’t” energy plan 

Marita Noon

President Obama’s energy policies have kept investment and jobs out of America; Romney’s energy plan can bring money and jobs back. Analysts are picking apart Romney’s 21-page energy plan that was introduced in Hobbs, New Mexico, on Thursday. Is energy independence by 2020 possible, or is it, as the Financial Times posited, “an act of hubris?” More important than whether or not his energy play is realistic is the international implications of his “independence” assertion and how he plans to get there.

Mitt Romney and Paul Ryan in Ashland today

Mitt Romney and Paul Ryan in Ashland today (Photo credit: tvnewsbadge)

As the news coverage reminds us, “Every US president since Richard Nixon has set an objective of reducing the country’s reliance on foreign oil, and most of them have failed.”

President Obama’s approach has been to “end the age of oil.” To that end, he has poured billions of dollars into green energy projects–many of which were risky investments that have now failed or are headed for failure. His approach has done nothing to reduce our reliance on foreign oil–though we are importing less due to the bad economy and high prices, and the new oil boom presently centered on North Dakota. To companies looking to invest in any kind of extractive endeavor, his policies have screamed “You can’t!”

Romney’s plan is to open up US resources off the east coast and in Alaska; make it easier to obtain permits for oil and gas production, and other energy projects; transfer control of development from the federal government to state authorities; approve the Keystone XL pipeline; and ensure that environmental regulations do not prevent the use of coal. The Romney plan, shouts “You can!”

How will Romney’s plan invite global investment back to America, while Obama’s approach chased it away? The Gulf of Mexico saga offers a simple example.

Drilling rigs cost millions of dollars a day to operate. Following the Deepwater Horizon accident, the Obama administration put a moratorium on activity in the Gulf. Rigs sat idle; people were laid off; and companies lost billions. Ultimately, many of the rigs left our shores for countries that welcomed them–taking the potential jobs and revenues with them, and adding to the economic damage in the region.

Like the rig owners need to have their assets working, all companies need to have growth. If they cannot work in the US, they are virtually forced to do business in other countries. Those countries often have governments that do not respect the rule of law, making doing business there more risky than similar activities in the US. But, at least they can do business there. In America, they can’t. Additionally, the cheaper labor and lower taxes made the risk/reward ratio attractive.

However, recent history tells us that the reward may no longer be worth the risk.

Russia

A few days ago, ConocoPhilips announced that it is retreating from its position in Russia by disposing of its 30 percent stake in the NaryanMarNefteGaz joint venture to its partner Lukoil, the Russian oil group, and is now focusing mainly on developed countries and on North America in particular. Last month, a Russian decision against BP “demonstrates the perils faced by foreign investors in Russia.” The Financial Times reports: “the ruling has sent a chill through Moscow’s foreign investment community” and shows “the uncertainties faced by western companies that go into business with powerful local partners.”

Nigeria

Also last month, Shell shed its prolific onshore Nigerian oil assets for $850 million, less than the estimated $1 billion value. Shell is now refocusing its Nigerian efforts offshore, “where rigs are better insulated from oil theft, militancy, and the legal constraints of operating in an area that is vulnerable both environmentally and economically.” Shell’s appetite for Nigerian exploration has been waning for months. In February, Ian Craig, Shell’s director for sub-Saharan Africa, said: “The greatest challenge, however, is the massive organised oil theft business and the criminality and corruption which it fosters. This drives away talent … increases costs, reduces revenues both for investors and the government and results in major environmental impacts.”

Argentina

In April, the Argentinian government under, President Cristina Kirchner “nationalized” Spain’s flagship oil company, Repsol’s YPF unit and caused Repsol’s stock to plummet. The relationship between Repsol’s YPF and Kirchner’s corrupt government has been troubled for at least four years, and the fate is now in the hands of the World Bank’s International Centre for Settlement of Investment Disputes in New York.

South Africa

In South Africa a different verse of the same song is playing out, as apartheid-era type violence plagues mining operations. According to the Wall Street Journal, “Investors already have been worried this year by a debate about nationalization of South African mines.” WSJ reports: “Mining accounts for about 9% of South Africa’s gross domestic product. But despite the country’s rich resources, South Africa has failed to ride the global commodity boom due to lack of investment in infrastructure.” Addressing the violence at a platinum mine, owned by London-based Lonmin (one of the world’s largest primary producers of platinum group metals), that claimed 44 lives, Mathews Phosa, the treasurer general of the ruling African National Congress, said: “The incident at Lonmin has had a very negative and a very devastating impact internationally. It has created a lot of uncertainties for investors. We need to assure investors that this will never happen again.”

These are just a few examples of the risks multi-national companies are taking–nationalization, theft, corruption–by doing business in countries with unstable governments. The increased risk results in lower rewards. Yes, the extractive industries do have to go where the resource is located, but all things being equal, they’d rather, as ConocoPhillips has acknowledged, do business with “developed countries”–if they can.

Romney’s energy plan is the equivalent of rolling out the red carpet and inviting the global investment community to America, where, despite Representative Maxine Waters’ suggestion, we do not “nationalize” private industry–and we do have the resource.

A soon-to-be-released report from Noble Royalties Inc. and Netherland, Sewell and Associates Inc., based entirely on data from US federal government sources, reviews the potential of oil and gas development on Federal Lands in Alaska, the lower 48 onshore, and the Gulf of Mexico and offers insight into how the Romney energy plans could totally change the dynamics of America’s economy.

The report states that leasing on federal lands is at a 30-year low–50 percent of what it was under the Clinton administration. The report points out that allowing drilling in Alaska, just enough to fill the pipeline back up to historic levels, would generate $318.1 billion in gross revenue–which would result in $39.3 billion in new royalty revenues to the federal government. Combining the Alaskan numbers with oil and gas extraction from the lower 48 onshore and the Gulf of Mexico, bringing leasing on federal lands back to historic levels would generate $785.4 billion in new revenue for the federal coffers. Note: this figure does not include potential development from the east and west coasts or leasing beyond historic levels. The report finds that new activity on Federal lands will create $5.02 trillion in taxable revenue and significantly increase jobs (think North Dakota with the lowest unemployment in the country).

Not only will increased development on federal lands create new wealth and new revenue streams, but not adding to the current low-level of leasing will cause a loss of $40 billion over the next five years, due to declining reserves in Alaska.

The numbers from this new report are conservative. Remember they are based on known historic results (91 percent of undiscovered resources on onshore federal lands are either inaccessible or restricted), and do not include potential development. Additionally, the report only addresses oil and gas development on federal lands. It doesn’t include development on private land–which will also create new revenue streams for the federal government, development on either coast, and it doesn’t address other resources, such as coal, uranium, copper, tungsten, or rare earth elements that are all in demand in a global market and are found in abundance in the US.

If a President Romney uses the benefit of the bully pulpit to tout the new access to American resources, even half as much as President Obama has done to push green energy, companies could come flocking back to do business under the stable, rule-of-law, American government. Good paying jobs would be created, local economies would be stimulated, and new wealth would be developed–all without a penny of government investment.

This, not “independence by 2020″ is the true benefit of the Romney energy plan–though as the WSJ states, “the ‘independence’ trope polls well.” Instead of “You can’t!” the Romney energy plan says: “You can!” It opens up a third option to solve America’s economic stagnation. There are more options than just raising taxes or cutting spending, the Romney energy plan has the potential to bring investment back to the US and introduces “wealth creation” that is like finding a pot of gold buried in the American backyard.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy

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Buffet Gets A Buffet From Obama

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President Barack Obama and Warren Buffett in t...
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According to an article on or in The Washington Times,  almost without “warning”.Warren Buffet stands to dine at the table set for him by Obama and his State Department’s lack of support for thousands of jobs in the USA. The Keystone XL pipeline, once to be built from Canada to Houston, Texas has been left exposed to the millionaires among environmentalists, green people and assorted other opponents to real job creation in this country. 

 Warren Buffett, whom President Obama likes to cite as a fair-minded billionaire while arguing for higher taxes on the wealthy, stands to benefit from the president’s decision to reject the Keystone XL oil pipeline permit.

Mr. Buffett’s Berkshire Hathaway Inc. owns Burlington Northern Santa Fe LLC, which is among the railroads that would transport oil produced in western Canada if the pipeline isn’t built.

Obama’s rejection of the pipeline comes three years after the initial application was made to construct the pipeline and just when it amounts to political expediency and a thumbing of the nose toward energy independence for this country:

 “Whatever people bring to us, we’re ready to haul,” Krista York-Wooley, a spokeswoman for Burlington Northern, a unit of Buffett’s Omaha, Neb.-based Berkshire Hathaway Inc., told Bloomberg News. If Keystone XL “doesn’t happen, we’re here to haul,” she said.

The Obama administration rejected TransCanada’s request for a permit on Jan. 18, saying there was not enough time to review the proposal by Feb. 21, the deadline imposed by congressional Republicans eager to see the pipeline built. The decision came from the State Department, although Mr. Obama said he agreed with it.

If completed, the $7 billion Keystone XL would deliver 700,000 barrels a day of crude from oil sands in Canada to Texas refineries on the coast of the Gulf of Mexico. It would traverse about 1,600 miles.

Republicans, labor unions and even some Democrats have criticized the administration’s rejection of the pipeline permit, saying it would create up to 20,000 jobs. Critics accuse the president of buckling to pressure from environmentalists who oppose the project and are important to Mr. Obama’s re-election effort.

What was that about transparency?  Obama has consistently spouted transparency, has he not?  In addition to Buffet’s buffet and other railroad’s largesse, do you think there might be investors in renewables walking this project to the gallows?  Yep, me too.

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