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OBE: Energy policy in Washington

OBE: overcome by events. That’s the story of the nation’s energy policy agenda in the wake of the credit collapse of the past several weeks. In short, there likely will be no new major energy investments in the coming months or years, whether Congress enacts energy legislation or not, or if executive branch agencies implement the authorities in the 2005 Energy Policy Act. The money isn’t there.

Big money for infrastructure projects won’t materialize until the nation – the federal government, including the executive branch and Congress – figures out how to get new liquidity into credit markets. The traditional financial approach of the past 30-plus years no longer exists. Independent investment bankers are gone.

What will replace them as the middle-folk in putting major deals together? That’s not at all clear. Figuring out how to structure large finance deals to get infrastructure projects – power plants, pipelines, electric transmission, coal plants, and LNG terminals – underway will be months, possibly years, away.

Given the recent reductions in crude oil, and resulting gasoline, prices, it’s not likely that Congress will focus on energy in the few days ahead before the solons head home to campaign for reelection. Instead, the final days of the current Congress likely will be dominated by the credit collapse and what to do about it.

There will be wrangling about the shape of the bailout. I suspect it won’t be partisan, but will reflect tensions between the legislative and executive branch over authority and oversight. Institutional, not partisan.

Congressional Democrats and Republicans are expressing qualms over giving the White House a blank check – that’s what Treasury Secretary Henry Paulson’s proposal amounts to – for restructuring financial markets. He’s already being skewered in the press as “King Henry.”

There’s also an inherent incentive in Congress to delay the decision until a new administration is in place. After all, Hank Paulson is unlikely to be Treasury Secretary after January 20, regardless of whether McCain or Obama is the new president. The Senate will have to confirm a replacement, and is likely to want to extract promises about performance before approving a new secretary, particularly one with unprecedented financial powers.

In the meantime, markets are demonstrating panicky uncertainty. Wall Street stock market indices are up today, down tomorrow, up the next day. Investors are likely to seek protection in bond markets, which will drive bond yields down. It’s not a pretty picture by any means.

So the final result of the disastrous Bush administration appears to be two expensive and inconclusive wars, a foreign policy in disarray, a bankrupt federal government, and an economy in freefall. It’s hard to imagine a worse eight years of governance, and difficult to see how the next president, whoever he is, can dig his way out of the hole the Bush has dug for the nation.

Best wishes, Barack and John.

“Green” gasoline?

Cellulosic ethanol? How about cellulosic gasoline and diesel fuel instead?

A research team from the University of Wisconsin at Madison has come up with what may be an economic way to produce what a UW press release calls “green gasoline” from the sugars in corn stalks and stover and other plant residues that the Department and Energy and other are targeting for production of alcohol fuels. The paper, published last week in the online edition of Science magazine, explains how it is possible, using catalysts common to the oil refining industry, to turn the sugars in plant wastes directly into gasoline and diesel, not alcohol.

The research team led by James Dumesic of Wisconsin’s department of chemical and biological engineering identified a “catalytic approach for the conversion of carbohydrates to specific classes of hydrocarbons for use as liquid transportation fuels, based on the integration of several flow reactors operated in a cascade mode, where the effluent from the one reactor is simply fed to the next reactor. This approach can be tuned for production of branched hydrocarbons and aromatic compounds in gasoline, or longer chain, less highly-branched hydrocarbons in diesel and jet fuels.”

The university press release notes that the process begins by adding a solid catalyst (identified in the Science article as Pt-Re – or Platinum-Rhenium—a common catalyst in the petroleum refining industry) to a water solution containing the sugar-rich cellulosic bio-wastes. This, said the press release, leads to “the formation of an organic oil-like solution floating on top of the water. The oil layer, which is easily transportable, contains molecules of acids, alcohols, ketones and cyclics.” Dumesic calls these “functional intermediates” to conventional transportation fuels.

They can then be easily upgraded to different forms of fuels. “This is the same fuel we’re currently using, just from a different source,” says Dumesic. “It’s not something that burns like it – it is it.”

The Dumesic process appears to be simpler and less expensive than the approach that many researchers have taken toward converting plants wastes into ethanol, which can be blended into conventional fossil fuels for powering cars and trucks. It is fairly easy to convert high-sugar plant substances, such as corn kernels and sugar cane, into alcohol, but much more difficult and expensive to turn plant wastes into fuel. President Bush famously cited plans to turn switchgrass (Panicum virgatum) into alcohol in his 2006 State of the Union address, with few results to date.

The Science Express article concludes with the usual caveats. More research is needed to demonstrate just how this scales up to commercial production. The initial research had funds from the U.S. Department of Energy and the National Science Foundation.

Where’s Sam Bodman

Where’s Sam?

Energy Secretary Sam “The Sham” Bodman has been absent from the discussions in Washington in recent months about energy prices and energy policies. What does this say about Bodman?

It says that neither Sam nor the Department of Energy have any influence in Bush administration energy policies. That’s not a bad thing. Energy prices are a function of markets. DOE has no influence in those markets. Nor should it.

On the other hand, the absence of DOE from the discussion of energy prices of late suggests that maybe DOE should have its wings clipped, even amputated. Yes, this is my annual whine about why we don’t need a U.S. Department of Energy. Stay with me.

I covered the creation DOE for Congressional Quarterly in 1977. I thought it was a bad idea from the start, although I was then a conventional liberal. I had spent some years in government and found that the urge to consolidate powers in a single agency in a crisis and throw money at problems is foolish. My experience was Nixon’s “War on Cancer,” when I worked at the National Institutes of Health in the early 1970s.

Now, I’m a rather unconventional liberal, skeptical of concentrated government power in most areas of society and the economy. That includes energy.

When Jimmy Carter and Jim Schlesinger created DOE, it was Schlesinger’s great power grab. consolidateHHe sucked in R&D programs and funding from the National Science Foundation, the Interior Department’s Bureau of Mines (where my father had worked for more than 30 years), the R&D remnants of the Atomic Energy Commission (where Schlesinger had been chairman), and other agencies across the federal landscape.

Schlesinger’s grand energy vision never worked. Amalgamating and integrating the many diverse research and development programs from around the federal government proved exceedingly difficult. Layered upon that were new regulatory responsibilities (now, thankfully, historical relicts such as the implementation of oil price controls and the fundamentally-stupid windfall profits tax on oil companies). DOE became, and still is, an incoherent collection of uncoordinated functions.

This, of course, is the exact model for the Department of Homeland Security, created after the 9/11 attack. DHS is a great discredit to both congressional and executive branch authorities in both parties, who failed to learn from the past, creating another administrative dinosaur to deal with a nimble and creative threat.

Back to DOE. In Sam Bodman’s reign (that’s a strong word, maybe “cameo appearance” would be better?), crude oil prices jumped from $70/barrel to $147/barrel and back to under $100/barrel. Did DOE have anything to do with this, either in the run-up or the run-down?

The clear answer is “No.” Nor did the giant energy bureaucracy have any advice to give to the nation or the White House on how to manage the latest energy “crisis.” Sam Bodman was, it appears, AWOL. There’s no evidence in the public record that DOE or Bodman had any impact on the White House reaction to crude oil and gasoline price increases and declines.

It’s really not Sam’s fault. The whole notion – initially promoted by Carter and Schlesinger and carried forward by all following administrations – of a central “energy ministry” is a fraud. There is nothing that a cabinet-level energy department can bring to national policy discussions that could not have been advanced by the separate agencies that the Congress and the Carter administration ripped apart to create DOE.

I would argue that, when it comes to energy understanding and energy policy, the DOE proves that the sum can be less than its parts. I’ve been pushing that case for some 30 years, and I’m not giving up yet.

As for Sam, I’ve had a lot of fun bashing him over the past couple of years (I slammed his predecessor, empty suit Spence Abraham, a lot harder). But Sam wasn’t calling the shots at the Energy Department. That was his deputy, Clay Sell, a White House apparatchik. Bodman ultimately must have felt he’d signed onto a slippery deal when he agreed to become secretary of energy, but without much real influence over energy policy.

So long, Sam, we won’t really miss you. But we look forward to a replacement – by either new administration – as a new target for ridicule.

Thomas (Malthus) Friedman

New York Times columnist Tom Friedman is a Malthusian. That’s clear from his latest book – Hot, Flat and Crowded. As such, he’s a wrong-headed fool, in the camp of Paul Ehrlich (a lepidopterist by training), Lester Brown, and the Club of Rome pessimists.

Their view is that the world is running out of resources, soon to be over-populated (whatever that means), and going to a man-made hell. They’ve been pushing that view since the 1960s, with no evidence of results but lots of persistence claims.

Friedman is also a member of the church of global warming catastrophists, as are Ehrlich and Brown. Friedman buys into the green religion that man-made carbon dioxide emissions are going to destroy life as we know it today.

Friedman’s religious views are the foundation of his latest book, which has some valuable points, but is essentially flawed and not a guide to righteous policy for the U.S. or the other nations of the world. Even expected sympathetic reviewers, such as Gregg Easterbrook in the online Slate magazine, have recognized the fundamental flaws in Friedman’s analysis.

Easterbrook is one of the few balanced environmental writers in conventional journalism, although he, too, occasionally falls prey to conventional, unproven, wisdom. Easterbrook wrote,e wroteHe “Global warming is a problem, one that must be managed via greenhouse-gas restrictions and a weaning away from fossil fuels. But in a world of poverty, disease, dictatorships, terrorism, nuclear proliferation, a lack of girls’ education, and more than 1 billion people without clean drinking water or electricity – climate change barely makes the Problem Top 10.”

Right on, brother. But I’d go farther. If the globe is warming, and the evidence for the 21st Century is lacking, there is no evidence that a warming world is a worsening world. It may be a better world. The concept that there is a climate equilibration that is desirable is simply nonsense.

So to Tom Friedman’s book. The guy writes and presents his arguments beautifully, which is why he has won three Pulitzer Prizes. But in his latest book, his arguments don’t hold any kind of water. He clearly has chosen sources that support his pre-existing beliefs. He doesn’t challenge the conventional wisdom, which I believe is the job of journalists, even columnists.

Friedman acknowledges that his understanding of climate dynamics comes from the Pew Charitable Trust, a leading purveyor of the doctrine of man-made global warming (ironically, a foundation funded by 19^th century oil money). Friedman provides no evidence that he consulted any skeptics of the Pew-provided conventional wisdom. No references to Richard Lindzen at MIT, Roger Pielke (Sr. or Jr.) at the University of Colorado, or Roy Spencer at the University of Alabama at Huntsville, to name a few. These are not right-wing, ideological nut jobs, but respectable scientists. Tom Friedman appears to never to have heard of them.

Indeed, there are no references of any kind in the Friedman book, either as footnotes or end notes, making it impossible to track his intellectual journey. This is unacceptable scholarship.

Friedman also accepts the conventional green wisdom that a warming world is bad. Maybe. Maybe not. Ask Siberians if a warming climate is bad. In addition, Friedman never looks skeptically at claims that global warming is the worst catastrophe since the claim of global cooling in the mid-1970s.

Easterbrook in Slate comments: “Why does the cocktail-party circuit embrace claims about a pending climate doomsday? Partly owing to our nation’s shaky grasp of science – many Americans lack basic understanding of chemicals, biology, and natural systems. Another reason is the belief that only exaggerated cries of crisis engage the public’s attention; but this makes greenhouse concern seem like just another wolf cry.” Well said.

Friedman advocates a multi-billion-dollar U.S. crash research and development program to boost advanced and green energy technologies, whatever those are. He doesn’t specify what this means. In several radio interviews I’ve heard, he rejects the notion of a government-centric “Manhattan Project” approach to energy technology. That’s right on the mark. Bigger is better hasn’t worked since the 1950s.

What’s the alternative? Friedman advances the notion – which I find laughably vacuous – of “each ark” for each society. He’s unable to spell out just what this means, retreating to the generality that each society needs a “Noah” to energize the building of an environmental ark, with each ark “tailored to each setting, in every case the governments, companies, NGOs, and villagers involved in each ark have to understand that keeping the local ecosystem intact is in their interest.” What the heck does this mean? Kumb Bah Yah ?

In radio interviews, Friedman has advocated the computer revolution paradigm of hundreds of thousands of innovators working in hundreds of thousands of garages to produce new energy technologies. Steve Jobs and Steve Wosniak. Bill Gates. And plenty of garage rock bands, good, bad and indifferent. Kurt Cobain?

This is, put simply, vacuous chattering. It is devoid of meaning. If this is Tom Friedman’s answer to the problem of how the world can cooperate on global environmental problems, then he’s already consigned himself to the dust bin of intellectual history. Should U.S. government policy encourage garage-band technologies? How can the government do that? Didn’t the computer entrepreneurs do their stuff without any government assistance?

Friedman’s analysis of the economic and environmental challenge to the world is flawed at the root. His policy prescription is ludicrous. Do not buy this book.

Thomas L. Friedman, Hot, Flat, and Crowded, Farrar, Straus and Giroux, New York, 2008

Buffett buys Constellation

The Wall Street financial crisis hit Baltimore’s main street on Thursday, as Constellation Energy Group agreed to be bought by Warren Buffet’s MidAmerican Energy Holdings for $4.7 billion ($26.50 per share.)

Among the victims in the sale could be Constellation’s attempt to build a new, third nuclear generating unit at its Calvert Cliffs site in Calvert County, Md., south of Baltimore and Washington. It’s difficult to see MidAmerican agreeing to go forward with a multi-billion merchant generator in today’s credit market.

Constellation, which owns the regulated Baltimore Gas and Electric Co. utility, has a large energy trading operation which has pumped up the company’s balance sheet in the past. But recently, the traders reported faltering numbers, the debt was downgraded, and the stock lost 60% of its value over the past week, according to the Wall Street Journal.

Then, earlier this week, S&P indicated that it was contemplating a further downgrade of Constellation’s current BBB rating. A downgrade would have triggered a need for greater collateral to back its borrowings. Constellation didn’t have adequate funds to post additional capital and started looking for a buyer with deep pockets.

Constellation’s first choice, according to several accounts, was Electricite de France, which already owns some 9 percent of the Baltimore company. But Constellation needed an immediate bailout to prevent a run on the company and resulting failure. If EdF were to buy Constellation, it would face the problem of foreign ownership of a U.S. nuclear power plant, currently not allowed.

In a written statement, Mayo A. Shattuck III, Constelleation’s CEO said, “The financial services sector and energy commodity markets have witnessed unprecedented volatility. Backed by the significant industry expertise and financial stability of MidAmerican and (Buffet’s) Berkshire Hathaway, Constellation Energy will build on its reputation as a first-choice energy solution provider for our many customers.”

MidAmerican has said Constellation will remain a standalone business. The issue of who will run the company was not decided at the time of the announcement.

According to Baltimore Sun columnist on a Baltimore radio show, the deal negotiators literally worked all night Wednesday, and announced the deal at 9:45 a.m., just 15 minutes before the opening of the New York Stock Exchange.

The acquisition of Constellation will require approval by shareholders, the Maryland Public Service Commission, and the Federal Energy Regulatory Commission. The two companies said they expect to close the deal in nine months. When it comes to utility mergers, that’s very rapid.

Coal contines to flex its muscles

More evidence that the demise of coal – Al Gore to the contrary notwithstanding – is greatly exaggerated. On Sept. 11, Tulsa-based Alliance Resource Partners announced it will open a new underground coal mine on the West Virginia-Pennsylvania border, digging high-sulfur Pennsylvania No. 8 coal for the utility market.

At the same time, the U.S. railroad industry said it expects coal shipments – the most important commodity for the rails – to remain strong for the foreseeable future. CSX Chief Financial Officer Oscar Munoz told a transportation conference last Thursday that demand for shipments of Appalachian coal are increasing and will be strong for the remainder of the year. Coal represents nearly a third of CSX’s annual shipments, the most important single commodity for the Jacksonville, Fla., railroad.

Alliance, a master limited partnership based in Tulsa, Okla., and created out of the former MAPCO mining empire in the 1990s, said it will open the new Tunnel Ridge mine on the West Virginia-Pennsylvania border as a long-wall operation producing some three million tons a year over 10 years, employing up to 300 workers by the end of 2010. Company CEO Joseph W. Craft III said in a press release that his company “has secured coal sales for 30 million tons over 10 years to support the opening of the Tunnel Ridge mine and is experiencing strong interest from other customers for the remaining production from this operation.” The company said production will initially run from 1.5-3.0 million tons annually, increasing to 5.5-6.0 million tons in 2015.

So much for Gore’s call to eliminate fossil fuel consumption in a decade.

Alliance Resources, according to the company, is the fourth largest coal producer in the eastern U.S., with eight underground mines in Illinois, Indiana, Kentucky, Maryland, and West Virginia. I have visited its large, long-wall underground mine in western Maryland, the Mettiki mine, and gone to the coal face. I was impressed by the professionalism and safety culture of the mine.

In addition to the Tunnel Ridge complex, Alliance Resources is also constructing the River View mine in Kentucky. The company also owns a coal loading terminal in Indiana.

As for the trains, coal is the most important commodity shipped by rail in the U.S., followed by grain. Traditionally, rail and barge transport is a significant component of the delivered price of coal. Coal prices outside the Powder River Basin, according to the EIA, have spiked dramatically, following crude oil prices, while rail haul prices have lagged.

That may be changing, as coal becomew attractive and prices are rising for other rail-shipped commodities. A Reuters account concludes, “ Railroads have benefited in recent quarters from global demand for metals, fertilizers and ethanol, offsetting softer shipments of auto, some consumer products, freight related to housing.”

Nonetheless, coal remains a growth market for the double-trackers, says CSX CEO Munroe. He told the transportation conference, noting that the coal market is locked in by long-term contracts, “We have in hand the demand that we see. It’s tangible, not hoping and wishing.”

Politically, coal is a potent issue in states that produce the dusky diamonds. The Associated Press reports that Montana Democratic Gov. Brian Schweitzer, a rising star in his party, is a stout advocate of Montana’s considerable, stripmineable, low-sulfur coal deposits. Schweitzer, who grabbed a prominent speaking spot at the Democratic national convention in Denver, is touting all forms of energy development. “Whether we’re talking about wind energy, oil, gas, coal, transmission systems – it’s all the same,” he told the wire service. “You’ve got to go out and you’ve got to work at it.”

Some Democratic analysts believe that presidential nominee Barack Obama would have been well-advised to pick Schweitzer as his vice presidential nominee, instead of Delaware Sen. Joe Biden. “Schweitzer would have given Obama a new look, and would have sewed up Montana,” one Democratic insider told me. “It would have also gone a long way to solidify support in other energy-producing, particularly coal-producing, states. If Obama can win those states, he becomes president.” Coal remains a necessary energy source, and a political power.

The madness of hybrids

If you love irony, as I, then you will find this delicious. Hybrid electric
vehicle enthusiasts are less than enthusiastic about the plan by natural gas
empresario T. Boone Pickens to boost wind electric generation. Pickens has
proposed a major expansion of wind power to back out gas generation in
electricity markets.

That, in turn, will free up gas for transportation fuels, as
modern internal combustion engines burn methane easily. My friend and colleague
Bob Peltier, POWER magazine
editor-in-chief, has correctly observed that Boone Pickens, the man who made Gulf
Oil and its weather tower disappear from the Pittsburgh skyline, “has stolen
this election year’s energy policy center stage with a plan that is eloquent in
its simplicity.” Wind backs out gas, gas fuels cars. It works.

But the self-proclaimed hybrid electric vehicle lobby –
which appears to be a faux grass roots group – doesn’t much like the Pickens
plan. Their objections don’t pass the straight-face test, but here they are.
This comes from a press release by the “Hybrid Owners of America,” a
group based in the Virginia suburbs of Washington, D.C.

The organization says that the Pickens plan “doesn’t make
sense when plug-in hybrids are so close to entering the market.” The group
complains that natural gas is still a fossil fuel (and CO2 generator), and
therefore verboten in advanced energy markets. Rather, wind energy should be
used to pump up the batteries on plug-in hybrids.

There’s the rub. Battery technologies continue to suck,
despite decades of government-supported research and development. Wind is
intermittent and batteries are unreliable. Does this make sense to you?

Who are these folks? Their web site says, “Supported
by the nonprofit and nonpartisan Civil Society Institute (CSI), the Hybrid
Owners of America will strive to be a true voice for owners of gas-electric
hybrid cars and other highly fuel-efficient vehicles. HOA will track and defend
existing hybrid purchase incentives (e.g., tax breaks and HOV lane access), as
well as advocating for new incentive arrangements. The HOA Web site will track
the fast-increasing myriad of federal, state, local, and private sector
incentives for hybrid car owners.”

Is HOA a grass-roots movement? Looks like Astroturf to me
and I’d be surprised if many owners of hybrid vehicles have ever heard of the
group. The Civil Society
Institute, based in Newton, Mass., is a left-of-center organization affiliated
with the Hastings Group, a Boston consultancy that has advised the AARP, the Service
Employees International Union, the Consumer Federation of America, and other
green, consumer, and government reform-minded left-oriented groups.

There’s nothing wrong with this advocacy. But it’s important
to understand that it comes from groups that are largely opposed to any further
use of fossil fuels, from coal to natural gas, as its web site make clear.
These are Al Gore acolytes, not simply drivers of hybrid cars (although the two
cohorts are likely to be very similar).

HOA touts a Washington
Post op-ed from veteran environmental catastrophist Lester Brown, claiming
that wind power can displace natural gas as the source of electricity for
plug-ins, which are just a few eye-blinks away from the market. That’s Oscar
Meyer “b-o-l-o-g-n-a.”

Anyone who has followed energy and environmental issues for
more than a decade knows Lester Brown, a Malthusian, who has never been right
on any environmental subject. Nor has his peer, Stanford’s Paul Ehrlich. These
guys have been crying green “wolf” for decades, and have never been close to
accurate.

In his Aug.
31 Post op-ed, Brown claimed, “Plug-in cars are here, nearly
ready to market. We just need to put wind in the driver’s seat.” Nonsense. Plug-ins,
which are several years from the market at best, will cost substantially more
than today’s fossil-electric hybrids. Intermittent wind resources aren’t
reliable enough to power the plug-ins. Nor are the batteries that will provide
electric power to the cars.

Also,
gasoline prices are likely to go down. That’s why some so-called energy policy gurus
such as New York Times columnist Tom
Friedman advocate gasoline price controls through carbon taxes to keep oil (and
coal) prices high. Gasoline where I live has gone down more than 50 cents a
gallon in the past three weeks.

Friedman’s
approach – which he claims energy company executives such as Jeff Immelt at
GE support – is a return to the 1970s. Remember price controls? Remember
gasoline lines? Welcome to Tom Friedman’s flat world.

Jeff
Immelt wants the federal government to guarantee GE profits. I don’t, and I
sold my GE stock when Jack Welch retired.

Let
markets work. Let T. Boone Pickens risk his billions. If he’s right, he
profits. If he’s wrong, he gets a haircut. In either case, consumers benefit.
Energy markets are beyond governmental control and must remain so.

My friends: the lies of McCain and Obama

My friends, John McCain’s pronouncements in his acceptance speech for the Republican nomination as president were entirely bogus when it comes to energy.

Unfortunately, so were Barack Obama’s when he accepted the Democratic nomination.

Both candidates tout plans for “energy independence,” while neither actually defines the term. What exactly is “energy independence?” Is it zero imports of crude oil? Is it less reliance on imports than today’s levels? Neither candidate can tell us what he means or how to measure the results of his proposed policies.

In his stolid acceptance speech, McCain praised his running mate, Alaska Gov. Sarah Palin, for tackling “tough problems like energy independence and corruption.” Huh? Palin, according to the record, has favored domestic oil production. What Alaskan politician would not adopt that policy? How does that reduce imports in a fungible world market? How was that reform?

McCain’s approach to energy policy is predictable and conventional. “We will drill new wells offshore, and we’ll drill them now. We will build more nuclear power plants. We will develop clean coal technology. We will increase the use of wind, tide, solar and natural gas. We will encourage the development of use of flex fuel, hybrid, and electric automobiles.”

Yawn. Nothing new here. Nothing that promises any immediate or long-term reduction in gasoline prices, which is what I suspect most Americans want from a government energy policy, and which is impossible for any president to accomplish. Drilling for oil and gas offshore and in Alaska could produce new supplies of fossil fuels, but not anytime soon, according to the experts, and not in great quantities. It’s worthy, but hardly earth-shaking.

New domestic supplies would only add fuels at the margin of the markets. Pump price reduction? Maybe a few cents. Worth doing but not a big deal for most Americans.

New nuclear plants won’t impact our imports of crude oil unless plug-in hybrid cars can come to the market far faster and far cheaper than most experts believe possible. Plug-ins so far are too expensive to win a significant share of the North American market. They would not back out significant amounts of oil in the near or medium term, in the most optimistic scenarios.

McCain slammed Obama unfairly, charging that the Democratic nominee thinks we can achieve energy independence without more drilling and without more nuclear power. Not so. Obama said he favors more exploration for domestic oil and gas, and supports an increase in nuclear power. Obama said he bases those policies in the context of a “balanced” energy policy, whatever the heck that means. He’s trying to finesse the public support for offshore drilling and more nukes with the green opposition.e’s trying toH Obama’s support for drilling and nukes may be grudging, but it is on the record.

Obama’s approach to energy policy is every bit as feckless as McCain’s. Neither is willing to acknowledge the reality on the ground, that fossil energy is the foreseeable future, and it comes from folks we don’t much like or trust, such as ugoHugo Chavez, Vladimir Putin, and the Saudi monarchy. We’ve got to learn to live with the reality.

In his acceptance speech, Obama said, “I will tap our natural gas reserves, invest in clean coal technology, and find ways to safely harness nuclear power.” Good luck, and he didn’t quantify the investment (although that wouldn’t make a difference, since there is no prospect that any of these investments would pay off).

Obama added that he will put “150 billion dollars over the next decade in affordable, renewable sources of energy, wind power and solar power and the next generation of biofuels….” This is empty, and typically Democratic, rhetoric. The president can’t make investment decisions. That’s up to Congress and the market. The political lay of the land suggests that these sorts of investments, which would likely yield negative or tiny positive returns, won’t occur anytime soon and probably would not have much impact. A presidential candidate can’t truly promise an investment in any priority for a year ahead, let along a decade, when there is a limited prospect that he or she will be able to control the government or the market.

Even if the Democrats win the White House and gain ouxse Hwider margins in the House and Senate this year, Obama won’t have an easy path to implementing what he describes as his energy policy. It took a Republican White House and Congress almost a decade to enact the party’s empty-headed approach to energy policy, the 2005 Energy Policy Act. That law has yet to demonstrate a beneficial impact on U.S. and world energy markets.

The truth is that energy, as is the case for most major economic issues, is far beyond the control of national governments. The White House and Congress can’t manage even domestic supply and demand for oil and gas, let alone that of emerging super economies in India and China. Nor can the U.S. control investment decisions in Russia, China, India, Australia, or Canada.

Then there is the bogus issue of climate change, where both McCain and Obama are off track. Thinking that the world can reduce greenhouse gas emissions, in a futile attempt to control the climate of the planet, while reducing energy prices at the same time, is preposterous. People who believe this are smoking intellectual wacky weed.

But those pipe dreams appeal to many Americans, who would rather face fantasy than fact. Both McCain and Obama make this lame “we can have it all” pitch, hoping that no one will notice the inherent contradiction that belies the economic engine of supply-and-demand. I suspect they know they are lying, but they are, after all, politicians.

When it comes to energy policy, neither McCain nor Obama make any kind of energy sense. At the final analysis, neither administration would make much difference when it comes to energy policy. Both candidates’ proposals are incoherent and irrational. Just like those that preceded them.

Weather and climate: what’s the connection?

More evidence that the globe is not catastrophically warming comes from the current issue of Science magazine. A research team led by W.T. Pfeffer of the University of Colorado at Boulder in the current issue of the magazine concludes that current global circulation models vastly overstate the possibilities of sea level rise as a result of projected warming.

The notion of rising sea levels, of course, is one of the scare scenarios in Vice President Al Gore’s screed that the sky is falling when it comes to climate change. The Pfeffer team concludes that the Gore-ish predictions of sea level rises of two meters (six feet) or more by 2100 “are physically untenable.” Those levels of sea increases, say the Pfeffer team, occur “only if all variables are quickly accelerated to extremely high limits.” Not likely, they conclude.

At the same time, weather conditions around the globe continue confound the warming acolytes. Let’s make it clear here. Weather is not climate. Yet the warming crowd insistently offer weather phenomenon as anecdotal evidence for climate trends, so I think it’s fair to offer anecdotal weather evidence to the contrary.

Take Australia, where there is considerable skepticism that the nation’s coal economy is warming the world. Sydney, according to the Morning Herald, is experiencing the coldest August in more than 60 years, including freezing temperatures. For the nation, the nation had the driest May on record, Perth had the wettest, and Tasmania, the Aussie Alps, had the hottest temperatures. All this according to an environmentalist, whose data are extremely suspect.

No surprise here: greens have blamed all of the extreme Aussie weather on global warming, which, they claim, produces not only warming but weather extremes, with absolutely no evidence. It is impossible to verify claims that warming or cooling or high winds or drought are the result of man-made carbon emissions. So, folks, we simply don’t know. There is plenty of reason to ascribe the evidence to normal variation.

For my part, my wife and I spent most of June in the extreme Aussie outback – south from Darwin in Kakadu National Park, across the lower Kimberly, and back by ship from Broome to Darwin along the northwest coast. We experienced expectedly dry weather (the region experiences only two seasons: wet and dry), but two days of cold-and-unusual rain in the Kimberly that prevented us from a flyover of the geologically-unique Bungle Bungles. Weather happens. That says nothing about climate.

Then there is the UK, where, the Telegraph newspaper reports a premature autumn for Great Britain. The newspaper observes, somewhat breathlessly, “On the rolling moors of Scotland and Yorkshire, dramatic blooms of heather have come out far earlier than normal while wild berries, which are normally the harbingers of autumn, have appeared on bushes nearly two weeks ahead of schedule.”

Here at home in western Maryland, fall is approaching far faster than usual. Ragweed plants – my fall allergy bane – are flowering at least a month earlier than usual. The black walnut trees, hickories, and my Japanese Kutsora tree, are shedding leaves and dropping nuts far ahead of the normal October schedule. The local squirrels are hoarding food far in advance of the normal October 15 first freeze.

Global warming? I doubt it. Global cooling? I doubt it. Natural variations in weather from year to year? That’s it. Anecdotal weather phenomena do not provide any kind of hard evidence for climate changes. Let the activists bloviate. Anecdotes don’t signify. Evidence rules.

Coal continues to clobber wind

Just when you thought coal was down for the count, here’s a report from London’s Financial Times. “British coal production looks set to grow for the first time since 2001, thanks to higher prices and power generators’ new-found appreciation of domestic coal supplies.” Coal production in the UK mostly has been falling since the 1950s.

Despite international attempts to demonize coal, nothing trumps economics. Coal continues to be the worldwide low-cost electricity producer. Those dusky diamonds deep down in the ground continue as the world’s most important source of electric energy. The greens be damned, coal is still king.

The FT reports, “The renaissance of UK coal is the result of a steep rise in world coal prices, caused by soaring oil and gas prices and a growing demand for electricity in the developing world. It is once again profitable to mine many of the UK’s deposits, and power companies are increasingly choosing local coal because of shortages in the international market.”

Coal is relatively more expensive in the UK than in many other countries, particularly the US. Nonetheless, it is the least-cost fuel for Britain, and the most dependable source of fuel for electric generation. The UK, like the US, can deliver its own fuel to generating plants, without fear of disruption or unanticipated price spikes. Dorothy Thompson, the head of Drax, the largest coal-fired power plant in Britain, burning Yorkshire coal, told the FT, “The logistics are cheaper and easier to manage” burning local coal.

In the US, the Energy Information Administration reported, coal production and consumption has steadily increased, despite the hype about renewable energy. EIA reported that coal consumption in 2007 in the electric generating sector increased by 2%.

Most of the story about electric generation in the US has been focused on wind power. But wind, while growing rapidly, remains a tiny fragment of total electric generation, according to EIA, far less than hydro and biomass (wood waste) in terms of so-called renewable generation.

Wind’s growth is also dramatically limited by the US power grid, as Matt Wald reported in the New York Times. Wald, who has covered energy issues as long as I have (that means we are both geezers), noted that the US transmission grid is a major limiting factor for wind power. “The dirty secret of clean energy,” he wrote, “is that while generating is getting easier, moving it to market is not.”

That’s right. The US infrastructure for renewable energy – specifically wind and solar – is limited. The infrastructure is built around the ability to move coal and nuclear power – and big hydro – to load centers. That’s not going to change anytime soon, so it looks to me that nasty old coal, with all of its environmental baggage, will continue to be the winner in the US generating market. As Deep Throat (the late FBI official Mark Felt) told Woodward and Bernstein in the Watergate scandal, “Follow the money.” That’s good advice when looking at future trends in power generation.

Coal is money. Wind is chump change.

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