Energy Bill: Do you consider this good policy?
Posted by: McQ on Saturday, December 08, 2007
qando.net
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Mandating the Impossible (Not to Mention the Stupid)
... 1. They want 15% of power generation from renewables by 2020. I am not sure if this includes hydro. If it does, then a bunch of Pacific Northwest utilities already have this in the bag. But even if "renewable" includes hydro, hydro power will do nothing to meet this goal by 2020. I am not sure, given environmental concerns, if any major new hydro project will ever be permitted in the US again, and certainly not in a 10 year time frame. In fact, speaking of permitting, there is absolutely no way utilities could finance, permit, and construct 15% of the US electricity capacity by 2020 even if they started today. No. Way. By the way, as a sense of scale, after 35 years of subsidies and mandates, renewables (other than hydro) make up ... about .27% of US generation.
2. The Congress is demanding 36 billion gallons of ethanol. Presumably, this is all from domestic sources because Congress has refused to drop the enormous tariffs on ethanol imports. But the entire corn harvest in 2004 of 11.8 billion bushels would make only 30 billion gallons of ethanol. So Congress wants us to put ALL of our food supply into our cars? Maybe we can tear down the Amazon rain forest to grow more.
3. By the way, I am all for cutting all subsidies to any industry for any reason, but when they say "industry subsidies and tax breaks" for the oil industry, what they mostly mean is this:
These were leases for drilling rights in the Gulf of Mexico signed between oil companies and the Clinton Administration's Interior Department in 1998-99. At that time the world oil price had fallen to as low as $10 a barrel and the contracts were signed without a requirement of royalty payments if the price of oil rose above $35 a barrel.
Interior's Inspector General investigated and found that this standard royalty clause was omitted not because of any conspiracy by big oil, but rather because of bureaucratic bungling in the Clinton Administration. The same report found that a year after these contracts were signed Chevron and other oil companies alerted Interior to the absence of royalty fees, and that Interior replied that the contracts should go forward nonetheless.
The companies have since invested billions of dollars in the Gulf on the basis of those lease agreements, and only when the price of oil surged to $70 a barrel did anyone start expressing outrage that Big Oil was "cheating" taxpayers out of royalties. Some oil companies have voluntarily offered to renegotiate these contracts. The Democrats are now demanding that all these firms do so -- even though the government signed binding contracts.
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