The most ridiculous thing you'll ever read

“To recap: Congress subsidized a product that didn't exist, mandated its purchase though it still didn't exist, is punishing oil companies for not buying the product that doesn't exist, and is now doubling down on the subsidies in the hope that someday it might exist.”

You couldn’t make this stuff up.  Read about it here.

I’m without words.  I can only shake my head in utter disbelief at this article.  It’s like….I don’t even know.  I have nothing to compare this to.   Could our government be more stupid?

Letter to CPS Energy

In today’s San Antonio News Express, I read about plans CPS unveiled to build a 400 Megawatt solar plant in San Antonio – “CPS Sees strong interest in solar.”   According to the article, this plant would be one of the largest of its kind in the world.  While many of the details about the plant are understandably sketchy, the article does highlight some facts that I find particularly disturbing.

It seems that one requirement of the proposal would be to obligate the selected company to create at least 800 jobs with a minimum payroll of $30 million.  This is nonsense.  Labor is a cost that should be minimized, especially when ratepayers are footing the bill.  Any requirement that forces a firm to maximize a cost for no apparent reason goes against sound business principles, and would ultimately hurt ratepayers by forcing them to pay higher costs.  A firm’s business model, one that is subject to the market discipline, should dictate the amount of necessary labor, not a foolhardy mandate.

Another troublesome item is the cost of solar power.  The article reports that CPS currently pays about $0.15 per kilowatt hour for solar.  On the other hand, costs for natural gas produced electricity run about $0.04 per kilowatt hour.   This begs the question: if CPS can access cheaper, more reliable forms of energy and pass those savings onto its customers, why would it do otherwise?  Choosing to purchase more expensive and less reliable solar power in a state that leads in the production of natural gas defies explanation. 

America’s natural gas industry has been resurrected thanks to advancements in drilling technology.  Officials now estimate that America sits atop a 100-year supply of this clean burning, domestically produced energy source.  It’s even predicted that America may one day become a natural gas exporter.  And one obvious benefit is that natural gas prices have fallen drastically over the past 12 months, saving consumers hundreds of millions (perhaps billions!) in reduced energy costs.  And a reduction in energy costs is a boon to individual consumers, manufacturers, and the economy as a whole.

For CPS to seek out ways to purchase the most expensive power and to pass those costs on to its ratepayers when cheaper, abundant and more reliable sources are available is wrong.  CPS should reconsider its plans to invest in solar and instead look for more affordable and reliable options including natural gas.

Economic future depends on access to affordable energy

Professor Mark Perry, who blogs at Carpe Diem, recently has written some great pieces about energy.   America’s economic future, he suggests, is fundamentally tied to our ability to secure affordable energy.  And we have lots of it, but most folks probably don’t know that.  And here’s one reason why.

When I was attending Syracuse, I took a class on energy and the environment.  My reading list included “The End of Oil” by Paul Roberts and “Hot, Flat, and Crowded” by Thomas Friedman.  I remember the discussion about how America faced an energy crisis – one brought about by the dwindling supplies of natural resources.  Fossil fuels, I was told, would soon run out and we’d be left in a lurch.  These books, filled with neat charts, half truths, and quotes from the famous geophysicist M. King Hubbert about peak oil, were meant to convince us that we should abandon fossil fuels for so-called green energy.  Failure to do so meant certain doom, and cost was irrelevant.  Other views were rarely tolerated.  Too bad.

Mark Perry has shown on several occasions that advances in drilling technology have caused a revolution within America’s energy industry.  It’s now estimated that America sits atop a 100-year supply of natural gas.  We could soon become a natural gas exporter.  This was unheard of just ten years ago.  Oil, once thought too difficult to extract, is also becoming recoverable thanks to these same technologies.  North Dakota could soon become the largest producer of oil outside of Alaska.  Not only are consumers directly benefiting by enjoying lower energy prices, but this revolution is doing something Washington has never been able to do: create jobs.  In parts of North Dakota, the unemployment rate is below 2%.  And other parts of the country are catching on – places like Ohio and Pennsylvania are beginning to develop their shale gas and oil.

It’s become clear to me that the only impediment to an energy revolution that promises to lower energy prices, increase domestic supplies, and create good jobs is power-hungry politicians and an overbearing government.