For awhile I wasn’t sure I would ever make it to the 80th edition of this longtime monoblogue series but I have finally arrived with more tidbits that require only a few dozen words to deal with.
Since this category has the item I’ve been sitting on the longest, I’m going to talk energy first. Some of my readers in the northern part of the state may yet have a little bit of remaining snow from the recent blizzard, snow that may be supplemented by a new blast today. But the fine folks at Energy Tomorrow worry about a regulatory blizzard, and with good reason: Barack Obama has already killed the coal industry, states are suing for relief from the EPA, and a proposed $10 a barrel oil tax may further hinder the domestic oil industry already straining under a price war with OPEC. So much for that $550 annual raise we received, as Rick Manning notes in the latter story I link – for the rest of us, that’s like a 25-cent per hour raise without the increased taxation that normally comes with a pay increase. Yet that quarter would be lost to taxation under the Obama scheme.
It’s interesting as well that the Iowa caucus results favored Ted Cruz over Donald Trump despite their competing stances on ethanol, as Marita Noon wrote, but Cruz’s Iowa win also emboldened others to speak more freely about rescinding the ban.
Speaking of Cruz and Iowa, over the last week we’ve heard more about third-place Iowa finisher Marco Rubio in New Hampshire, as Erick Erickson predicted we would. It’s obvious to me that the media is trying to pick a Republican candidate for us, so they have been pushing either Donald Trump (who is far from conservative on many issues) or Marco Rubio (who has been squishy on immigration and perhaps can be rolled more easily on the subject again.) Or, as Dan Bongino writes, it could be the left’s divide-and-conquer strategy at work once again.
It seems to me that today’s New Hampshire primary should bring the race down to about five participants on the GOP side. The herd will almost certainly be culled of Ben Carson, Carly Fiorina, and Jim Gilmore based on results, polling, and financial situation, and that would cut it down to six. The loser between Jeb Bush, Chris Christie, and John Kasich should whittle the field to five in time for South Carolina and we will begin to see if Donald Trump’s ceiling is really about 25 percent.
Trump’s popularity has been defined by a hardline approach to border security, but once again I turn to Rick Manning who asks what Trump would do about Obamacare, He also shrewdly invokes Bobby Jindal’s name, since the policy wonk had a conservative approach:
Jindal understood that the Obamacare system has put down some roots, and tearing it out was not going to be an easy task that could be glibly done with the wave of a wand or a pronouncement from a podium. He understood that whatever health care system replaced Obamacare would set the tone for whether or not the federal government continued its expansion in scope and power. He understood that what we do about Obamacare is likely to be one of the most important domestic policy decisions that any president will make. So, he laid out his vision for what health care should look like in America. (Link added.)
Yet on another domestic issue New Hampshire’s neighbor Maine is making some serious steps in cleaning up their food stamp rolls. It’s a little scary to think that the Millennials and Generation X decided keeping the “free” stuff wasn’t worth actually getting a job (or taking alternate steps to improve themselves or their community.) Perhaps it is fortunate that these are childless adults.
Turning to our own state, Maryland Right to Life was kind enough to inform me that a rebadged “death with dignity” assisted suicide bill was introduced to the Maryland House of Delegates and Senate (HB404 and SB418, respectively.) The 2015 rendition never received a committee vote, but it also had a late hearing – this year the setup is a little bit more advantageous to committee passage and the number of sponsors (all Democrats) has increased. They thought they had enough votes to get it out of committee last year, and chances are they are correct.
I have postulated on previous occasions that this General Assembly session is the opportunity to plant the seeds of distrust Democrats desperately need to get back that which they consider theirs in 2018 – the Maryland governor’s chair. It will likely be a close, party-line vote but I suspect this bill will pass in order to make Governor Hogan either veto it (which, of course, will allow the press to make him look less than compassionate to cancer sufferers such as he was) or sign it into law – a course for which he will accrue absolutely zero credit from Democrats for reaching across the aisle but will alienate the pro-life community that is a vital part of the GOP.
Try as they might, the Democrats could not bait Hogan into addressing social issues during his 2014 campaign but that doesn’t mean they will stop trying.
On a much more somber note insofar as good government is concerned, the advocacy group Election Integrity Maryland announced they were winding up their affairs at the end of this month. As EIM president Cathy Kelleher stated:
The difficulty of maintaining a small non profit was a full time job and the responsibility fell on the same few individuals for far too long.
We can proudly say that in our 4+ years of operations, we made a difference in the way citizens view the record maintenance of the State Board of Elections and had an impact in the legislative process.
The problem EIM had was twofold: first, a lack of citizens interested enough to address the issues our state has with keeping voter rolls not just up to date, but insuring they are limited to citizens who are eligible to vote; and secondly just an overwhelming task considering there are over 3 million voters registered in Maryland. And for some of the counties that are more populous, the powers that be didn’t much mind having inaccurate voter rolls that may have had a few ineligible voters among them just in case they needed a few extra on election night.
And it’s that prospect of fraud which is among the reasons not to adopt National Popular Vote, as Natalie Johnson notes at the Daily Signal. It’s a good counter to an argument presented in the comments to one of Cathy Keim’s recent posts. After the angst of Bush vs. Gore in 2000, could you imagine the need for a national recount with states hanging in the balance?
I think the system can be improved, but there’s a time and place for that proposal and it’s not here yet. There’s also a time and a place to wrap up odds and ends, and we have arrived.
With the winds of Jonas howling around us last night, I decided it was a good night to clean out the old e-mail box. One result of that is the Liberty Features widget I placed in my sidebar. They have a lot of good content I use for these “odds and ends” posts as well as other content – that and once upon a time I was a writer for them. You just never know when doors may open back up.
On Tuesday last I alerted readers to the Maryland Senate bill that would allow Wicomico County to determine whether or not they want an elected school board. It’s doubtful they picked up on the coincidence that their hearing will occur in the midst of National School Choice Week. But we deserve a choice, so there’s just something appropriate about this – it may even occur during the #schoolchoice Tweetup occurring Wednesday afternoon.
Teachers may be gaining a choice in how they wish to be represented thanks to an upcoming Supreme Court case. Here’s hoping the side of right prevails and teachers are freed from paying excessive union dues to support political causes they don’t agree with.
And since a lot of my cohorts in the region are using their heat, it’s a good time to talk a little about all the energy news that’s been piling up. For example, energy writer Marita Noon recently detailed the Obama administration’s War on Coal. She quotes one Pennsylvania United Mine Workers officer who says, “Obama’s actions have alienated those who work in the industry from Democrats in general.” I think someday there may be thousands of workers in the green energy field, but for now the people who work in the coal mines are looking desperately for jobs.
On the other hand, if the government showers you with favored status, you have a golden ticket. Noon also wrote about the subsidies and rent-seeking that green energy company Solar City is in danger of losing in several states.
Our fracking boom has gone bust, though, since oil has approached $25 a barrel. Some of those furloughed employees could be rehired to pump oil for export, but this game of chicken between OPEC and American producers shows no sign of ending soon.
Those would-be workers could also be good candidates for rebuilding American manufacturing – if any jobs were to be had, that is. Over at the Alliance for American Manufacturing, Scott Paul notes:
I know I don’t have to tell you how important manufacturing is. More than 12 million Americans are directly employed in manufacturing, and many more are employed indirectly.
These good-paying manufacturing jobs are key to a healthy middle class. It’s no coincidence that the middle class is shrinking at the same time manufacturing is struggling.
Manufacturing certainly faced a tough 2015. There were only 30,000 new jobs created nationwide. We still only have gained back 40 percent of the jobs lost during the Great Recession.
They ponder what the 2016 Presidential candidates will do and invite you to ask for yourself (through their form letter, of course.) The valid question is:
What will you do differently? How do you plan to help spur manufacturing job growth and grow the middle class?
Perhaps Larry Hogan’s plan is one answer, although federal intervention may be needed to bring jobs back from overseas. Maryland, though, could create the conditions for growing new companies.
Finally, I wanted to give a shout out to a long-distance supporter of mine over the last several years, one who has decided to make the leap and run for public office. Jackie Gregory threw her hat into the ring for Cecil County Council back in November, running as a Republican in the county’s District 5. That district covers the central part of the county, from the town of North East south along the Elk Neck peninsula.
If you are in the area, she’s having a breakfast next weekend in North East so I would encourage you to drop by and give her some support. Cecil County has been an interesting subject to me for several years, with Gregory’s Cecil County Patriots group being an advocate for change.
So my 79th edition of odds and ends comes to a close as my heater kicks on again. I don’t know about you, but I’m ready for summer. By the way, I also finally finished my updates to the Shorebird of the Week Hall of Fame so the page is back up. I’m not sure it’s odd, but it is the end.
A couple weeks ago I pointed out that about two dozen bills passed by the Maryland General Assembly this year were still pending after Larry Hogan had his final bill signing session May 12. Here was the list of bills I urged him to veto:
- House Bill 51 (Circuit Court fees)
- House Bill 54 (Circuit Court fees)
- House Bill 345 (flexible leave)
- House Bill 449/Senate Bill 409 (fracking regulations)
- House Bill 838/Senate Bill 416 (mandated IVF coverage)
- House Bill 862/Senate Bill 743 (birth certificates)
- House Bill 980/Senate Bill 340 (ex-felons voting)
- Senate Bill 190 (travel tax)
If he wishes to let the decriminalization of marijuana become law without his signature, that’s quite all right.
So I’m very disappointed to report that the deadline came and went while Hogan was away in Asia, and only two of those bills were properly vetoed: HB980/SB340 and SB190.
Yet while he turned aside the travel tax, Governor Hogan increased a number of court fees and kept an additional O’Malley fee increase scheduled to sunset this year for another five years.
The governor who claims to be business-friendly and who wanted to create jobs went against the wishes of his party on flexible leave and thwarted the introduction of fracking to Maryland for another two years. This after announcing during the campaign:
States throughout the country have been developing their natural gas resources safely and efficiently for decades. I am concerned that there has been a knee-jerk reaction against any new energy production.
Now we have our own knee-jerk reaction.
He also added yet another unnecessary mandate to health insurance with in-vitro fertilization coverage for same-sex couples, and if Bruce, uh, “Caitlyn” Jenner were born in Maryland s/he could legally have his/her birth certificate changed to reflect the “fact” he bills himself as a female.
Perhaps you believe Hogan was making the political calculation about whether a veto could be sustained. With the Senate in Democratic hands by a hefty 33-14 count, it’s not likely a veto could be sustained there. However, a 50-seat group of Republicans in the House only need seven Democrats to keep a veto in play, and given enough political pressure there are still a handful of centrist Democrats who could go along with the governor.
These were the House votes on the eight measures I advocated a veto for. I’m also adding the votes on the handful of bills he vetoed for policy reasons.
- House Bill 51 passed the House 97-40. It would have difficult to uphold this one.
- House Bill 54 passed the House 82-58, after originally failing on third reading. This veto could have been sustained.
- House Bill 345 passed the House 86-52. This one was right on the cusp of a maintaining the veto; definitely doable.
- House Bill 449 passed the House 93-45, and its crossfiled SB409 passed 103-36. But if Governor Hogan had vetoed this and put the whip to his department heads to come up with regulations by next January they may have upheld this veto.
- The margins on HB838/SB416 were 94-44 and 93-45, respectively. That’s iffy but the onus should have been placed on the General Assembly to vote on it again.
- Similarly, HB862/SB743 only won the House by margins of 85-50 and 91-49. Still unlikely to hold, but should have made them vote again.
- HB980/SB340 only had 82 votes apiece in the House, which makes these good candidates to be upheld.
- SB190 only passed 84-56, which means it’s also a good possibility to be sustained.
- SB517, which decriminalized marijuana possession but was vetoed, is right on the cusp of overturn as it passed 83-53.
- Similarly, SB528, which dealt with seizure and forfeiture (also vetoed), passed the House 89-51 so it’s also a possible overturn.
I suppose I should be happy with the half a loaf I have received from Governor Hogan considering the absolute disaster we’ve had to endure under eight years of Martin O’Malley. But the leftists are crowing about the fracking ban, and see it as just an initial step to a permanent halt.
The only way to curb an ambitious, leftist agenda is to put up a conservative one of your own and stomp out any attempt to sneak things through. Instead, what we are receiving is a leftward drift in lieu of pedal-to-the-metal liberalism. However, to borrow the words of a former governor, we really need to turn this car around and not using the veto pen as much as it should be won’t get us going in the correct direction.
Okay, now that I have your attention, allow me to add some context. If I did show prep for Rush Limbaugh, this story would be placed in the “lighthearted stack of stuff.” (This explains why I kept it around for a couple weeks.)
Back on April 20 – which somehow seems appropriate – the Washington Times ran the story I allude to in the title. It detailed an April 6 lecture by “a key figure behind New York’s statewide ban on fracking.” Biologist Sandra Steingraber said the following:
“Fracking as an industry serves men. Ninety-five percent of the people employed in the gas fields are men. When we talk about jobs, we’re talking about jobs for men, and we need to say that,” Ms. Steingraber says in a video posted on YouTube by the industry-backed group Energy in Depth.
“The jobs for women are ‘hotel maid’ and ‘prostitute,’” she says. “So when fracking comes into a community, what we see is that women take a big hit, especially single women who have children who depend on rental housing.”
Needless to say, if a conservative said that women were only qualified to be prostitutes and hotel maids, we would have that splashed all over the front pages for months on end. Instead, it took two weeks to leak out to the Washington Times and, aside from that, it’s barely been mentioned. A cursory news search for Ms. Steingraber only found a few articles on smaller outlets about upcoming speeches and minor reaction to this story.
The Times also quotes another anti-fracking activist who compares the procedure to rape:
Ms. Steingraber’s speech, titled “Fracking is a Feminist Issue: Women Confronting Fossil Fuels and Petrochemicals in an Age of Climate Emergency,” comes after Texas anti-drilling activist Sharon Wilson was criticized for comparing fracking to rape in a March 30 post on Twitter and her blog.
“Fracking victims I have worked with describe it as a rape. It is a violation of justice and it is despoiling the land,” Ms. Wilson said in her blog, TXSharon’s BlueDaze. “Victims usually suffer PTSD.”
I tell you, Valerie Richardson’s story could be comedy gold – but these people take this stuff seriously, and that’s a shame.
While the oil and gas industry isn’t female-dominated by any means, it’s often a function of physical strength and skill level – the women who are coming into the field aren’t typically found at the wellhead but in what the industry calls “downstream” jobs. None of them involve prostitution or scullery work, but they’re usually not going to get their hands overly dirty at the jobsite because they are the technicians and engineers as opposed to the guys doing the drilling and extraction. And that’s just fine – they’re making an honest living. So Steingraber may be right in the specific that nearly all wellhead jobs are held by males, but as an industry she’s well off base.
Yet the problem with this line of thinking is that it pervades the brains of liberals who occupy places of power, such as the EPA or, closer to home, the Maryland General Assembly. The Radical Green leftists in the MGA still haven’t received the “war on women” meme, but they don’t have to be as sly about it, either.
As you are likely aware I am currently working on the 2015 monoblogue Accountability Project, and some of my venom is saved for the idiocy which passes for oil and gas industry expertise. Pro-abortion legislators are continually trying to strangle Maryland’s fracking industry before it even makes it to the crib, as you’ll see when I wrap up the mAP in the next few weeks.
One good example is a proposal on the waste products of fracking, which is originally proposed would have made it illegal for a person to “accept, receive, collect, store, treat, transfer, or dispose of, in the state, waste from hydraulic fracturing.” Well, that pretty much covered it: a backhanded ban on the practice. I have at least one other example in the mAP, so be watching.
For America to prosper, we need to create our own energy. And when we have the bountiful resources that we do and can extract them at a reasonable, market-based price, why not do so? You can see the depths opponents have to reach to make their point, which means their argument is a futile one. Drill, baby, drill!
It’s been awhile since I looked at the energy industry, what with legislation, riots, and other general mayhem. Fortunately for me, I have several sources in that industry to return me to speed and one is writer Marita Noon, whose piece on NetRightDaily today detailed the efforts of forward-thinking states to repeal their renewable energy mandates - some by whopping margins in their legislature. In those states, the market-bending allocations to renewable energy are coming to an end, leveling the playing field and perhaps saving their taxpayers millions of dollars.
Unfortunately, Maryland isn’t one of those states rolling back its mandates; in fact, the only piece of legislation dealing with the renewable portfolio was a liberal Democrat-backed scheme to expand it some more. House Bill 377 and Senate Bill 373 both were aimed at significantly increasing the percentage of renewables up to 40% by 2025 – current law peaks renewables’ share at 20% by 2022. (Both these figures are a pipe dream.) The Senate version lost in the Finance Committee by an 8-3 vote, and the House version was withdrawn before it was voted upon.
It was good that a bad bill was thwarted, but it was unfortunate that no bill was introduced to repeal these mandates. Maryland would be in far better shape energy-wise, eventually with lower utility rates, if true reform was achieved: repeal of the renewable energy portfolio, the withdrawal of the state from the Regional Greenhouse Gas Initiative, repealing the subsidy for offshore wind, and encouraging energy production from hydraulic fracturing and offshore drilling.
Over the course of the O’Malley administration, energy companies took the brunt of new regulations and changes in the market; in particular, their cost of doing business was affected by the renewable energy portfolio and the RGGI. If you assume the goal of the utility is to provide energy as cheaply as possible to make a profit – while keeping prices low enough to maintain and grow a customer base – having the dead expenses of the “alternative compliance payment” made necessary by falling short of renewable goals and the CO2 allowances auctioned off by RGGI as a sweet redistribution scheme aren’t helping the cause. Meanwhile, more exploration and investment in energy infrastructure could bring Maryland closer to being at least even as opposed to a net energy importer.
I wouldn’t expect any repeal of these bills to pass on the scale that they’ve moved through some state legislatures, but 71-70 and 24-23 are perfectly fine margins to me. It would also likely require getting around the committee process and bringing the package directly to the floor. (The portfolio repeal, RGGI withdrawal, and repeal of the offshore wind subsidy could be one bill: call it the Maryland Energy Reform Act of 2016.)
The trick is getting the right people to advocate for the changes by showing how much can be saved by consumers. That portion seems like a job for a group like the Maryland Public Policy Institute, while the lobbying on the part of the energy providers should include a pledge of reducing rates. Shaving 2 cents a kilowatt hour off the bill may not sound like much, but it translates to about $216 a year based on average residential usage of about 900 kWh a month. I don’t know about you, but an extra $18 a month would be nice for me. Just think of the economic benefits we received last year when gasoline skidded to $2 a gallon – benefits being lost now as prices have edged back up over $2.50 a gallon.
To help in prosperity, Maryland needs cheap energy. As it stands now, we don’t have it but I think we can get it if the political will is there.
Simply put, March was not a good month for job creation around the country. Numbers were down markedly from previous months while, as the Americans for Limited Government advocacy group pointed out, the labor participation rate tied a 37-year low.
The news was even worse in the manufacturing sector, where it contracted by 1,000 jobs. While Scott Paul of the Alliance for American Manufacturing blamed the strong dollar, calling it “a big loser for factory jobs in the United States,” it’s only a piece of the puzzle.
Paul would favor a more interventionist solution, adding:
There’s plenty that could be done to turn this around. The Treasury should crack down on currency manipulators, the Federal Reserve shouldn’t act prematurely, USTR should be assertive about enforcing our trade laws, and Congress must address currency and trade enforcement in the context of new trade legislation.
Based on Barack Obama’s promise to create a million manufacturing jobs in his second term, he needs to add 628,000 in the next 21 months – a Herculean task for any president, and almost impossible for this one. Let’s consider a few facts:
First of all, the continued low price of both oil and natural gas has tempered the energy boom to some extent. According to Energy Information Administration data, the number of oil and natural gas rigs in operation last week was 1,048. In terms of oil operations, the number is down 45% from last year and for gas it’s down almost 27%. While gasoline in the low $2 range is good for the overall economy, oil prices need to be between $60 and $80 a barrel for operators to break even, and the benchmark price has held lately in the high $40s.
As I noted, low energy prices are good for some aspects of job creation, but the energy boom is on a bit of a hiatus and that affects manufacturing with regard to that infrastructure. Throw in the unfair competition we’re receiving when it comes to OCTG pipe and it doesn’t appear this will be the cure to what ails us as far as job creation goes.
More important, though, is the financial aspect. Our corporate tax structure is among the most punitive in the developed world, which leads to capital flowing offshore despite the “economic patriotism” appeals of our government to demand it come back. Once you have the opportunity to take advantage of other countries’ willingness to charge 20% or even 15% tax, why should you willingly pay a 35% rate? Their slice of the pie may be less, but they get a lot more pies this way.
And then we have the aspect of regulations, particularly when it comes to the financial restrictions that Dodd-Frank places on the lending industry and the environmental mandates an overzealous EPA is putting on industry – look at coal as an example. If we went back to the conditions of 2006 the environment would likely not suffer serious harm and companies would have a much easier time with their accounting. I haven’t even touched on Obamacare, either.
Not all of this is Obama’s fault, but the majority of these problems can be laid at his feet. Alas, we have 21 months left in his term so many of these things will not change despite the presence of a Republican Congress which will be blamed for any setbacks.
So the question becomes one of just how many employers in general, not just in manufacturing, will be able to weather this storm. Even the recent news that both Walmart and McDonalds will be increasing their wages brought out the cynics and doubters. But it’s worth pointing out that both Walmart and McDonalds have stated they wouldn’t oppose a minimum wage hike. Such a move makes sense for them because their bottom lines can more easily manage a modest wage hike for their employees and they know their local competitors can’t. Both also have the flexibility to adopt more automation where they used to have a row of low-wage employees. As an example, most of the local Walmarts adopted a number of self-serve checkout lanes over the last year or so. If you hire a dozen fewer cashiers it’s easier to give the others another dollar an hour.
Change is a constant in the labor market, and we know this. But there are some circumstances under which businesses thrive and others where they struggle, and history has gone long enough to suggest the broad outlines we should follow. It’s unfortunate that some want to blaze a new trail when we know where the correct path is.
You probably recall that last month I detailed a study claiming that wind-created energy saved consumers $1 billion in last year’s “polar vortex.” Ironically enough, it was released on the anniversary of the 2014 polar vortex in the midst of more unusually cold weather at a time when the favored energy source of natural gas was serving the twin masters of electricity generation and home heating.
Yet a bone of contention for the wind industry has been the overdue renewal of a production credit of 2.3 cents per kilowatt hour, allowed over the first ten years of a qualifying project’s life. A five-year extension of this credit, sponsored by Senator Heidi Heitkamp of North Dakota, was included in an amendment to the Keystone XL authorization bill in the Senate, but the amendment lost 47-51. One opponent of the credit, Americans for Limited Government, called it:
(J)ust another example of the crony capitalism that runs rampant in Washington, D.C. distorting our nation’s energy markets while encouraging the non-economically sustainable wind farming of America.
Of course, the American Wind Energy Association, while touting the increased capacity put into place last year, lamented the lack of this tax incentive:
2014 saw the completion of 4,850 megawatts (MW) in generating capacity, with cumulative installed capacity increasing eight percent to a total of 65,875 MW. That current wind capacity will avoid over 130 million metric tons of CO2 emissions annually, equal to taking 28 million cars off the road, when the current wind capacity produces generation for a full year.
However, the amount installed in 2014 still falls far short of the record 13,000 MW that the U.S. wind energy industry was able to complete during 2012.
Industry leaders blamed uncertainty over federal policy. The renewable energy Production Tax Credit was only extended for two weeks at the end of last year, and has now expired again.
“Wind is gaining strength, but as recent history shows, we can do a whole lot more,” said AWEA CEO Tom Kiernan. “We’re looking forward to working with Members of Congress from both sides of the aisle so that a reasonable, responsible tax policy is in place that allows the wind industry to continue lowering costs and investing billions of dollars in U.S. communities.”
So is it a “reasonable, responsible tax policy,” or a boondoggle?
As noted above, the tax credit is equal to 2.3 cents per kilowatt hour. According to the Energy Information Administration, the average American home uses just over 900 kilowatt-hours of electricity per month. Rounding down to 900 for ease of math, it means that each month a wind-powered home creates a tax credit of $20.70 – over a year that adds up to $248.40.
In the same AWEA release, they claim that “U.S. wind farms now provide enough power for the equivalent of 18 million typical American homes.” If this is so, then the annual cost of this tax credit would be nearly $4.5 billion. Granted, this assumes that all wind capacity in the country would qualify for the credit, but stick with me.
Yesterday our not-so-illustrious former governor Martin O’Malley blustered in the New York Times that:
(R)enewable-energy businesses still aren’t even competing on a level playing field with fossil-fuel companies, which enjoy more than $4 billion in guaranteed federal subsidies each year.
Yet if you work out the wind power tax credit, that section of renewables could get a tax break exceeding $4 billion per year, not to mention the carve-outs states like Maryland provide for renewables at the expense of less expensive and more reliable fossil fuels. The benefit of having a share of a market worth tens of billions of dollars handed to renewable energy (or, as is more common, the treatment of this rent-seeking as a penalty paid by energy companies) is rarely factored into the equation, but stands as an advantage for the renewables side that traditional sources do not enjoy.
To really get a sense of where wind power can compete, not only should we permanently eliminate the Wind Production Tax Credit, but also do away with the market share requirements for renewables. Only then can we get a sense of where the market really is for that type of energy.
There’s a reason we have cars that run on gasoline, electrical plants which run on coal and natural gas, and fervent exploration for new sources of oil, just as there’s a reason wind turbine construction came to a near-halt in 2013. The market seeks its own level.
I wrote a little bit about the 2012 contenders yesterday in a piece about 2016, but I’ve been seeing the evidence that Newt Gingrich’s thought and 2012 campaign plank that we could once again see gasoline at $2.50 a gallon (or less, as the recent photo above from my Missouri-based writer friend Melinda Musil demonstrates) has come true despite naysayers from just a short year or so ago. Yet despite experts who called the idea “absurd” and noted “the price of oil is set on a global market” and decreed “in the immediate term there is almost nothing you can do,” well, here we are. Musil reported yesterday her prices are now under $2 a gallon.
The reason prices are so much lower is pretty much what Gingrich proposed to do in the 2012 campaign: increased production. With fracking and other enhancements in technology allowing domestic output to increase, the benefits have been enormous. Considering that average prices going into the July 4 holiday hovered over $3.60 a gallon, the relief expressed by drivers may begin spilling over into the economy at-large. Now the average is about $2.54 a gallon, with this area’s prices relatively close to that point.
Over time, the benefits will be accruing to consumers – if an Eastern Shore driver goes 20,000 miles a year in a truck that gets 20 miles per gallon, spending $1 less a gallon for a year is equivalent to a $1,000 annual raise that’s tax free. On the other hand, this decline in prices is thwarting the state of Maryland’s scheme to take more out of our pockets by increasing the sales tax on gas, because as I noted a few days back their 8 cents per gallon projected revenue is sinking closer to a nickel. Luckily, the state government over the next four years will desperately try not to confiscate any more revenue from working folks like us thanks to the recent election, and this tailwind could help Governor-elect Hogan address the state’s structural deficit through a modest increase in economic activity.
It’s doubtful that our prices will stay quite this low, for oil at $60 a barrel means our extraction with its price point that’s a little bit higher isn’t sustainable in the long term. But there is the chance that more practice with these unconventional techniques could drive down production costs to a point where our producers could prosper at that price or even below – if we could match the Saudis’ lower extraction cost we could wipe out the OPEC cartel once and for all.
So enjoy these low prices while they last. Hopefully, this modest economic bump will kickstart other sectors and bring us prosperity despite the best efforts of some in Washington – you know, the ones who try to take credit for this energy boom despite having little to do with it.
Last week, Mark Green at the Energy Tomorrow blog posted a critique of the proposed fracking regulations Maryland may adopt in the waning days of the O’Malley administration. In his piece, Green stressed that Maryland needed to adopt “sensible” restrictions but feared Maryland would go too far. It was echoed in the Washington Post story by John Wagner that Green cites.
But the money quote to me comes out of the Post:
“In the short term, as a practical matter, the industry will probably choose to frack in other states than Maryland where the standards are lower,” O’Malley said. But in the longer term, he said, “it could well be that responsible operations may well choose to come here.”
Or maybe not, which seems to have been the goal of O’Malley and Radical Green all along. It’s funny that they don’t seem to have the objections to wind turbines dotting the landscape despite their own health issues. Certainly no one studied them to death.
Being a representative of the energy industry, Green naturally argues that “sensible” regulations are similar to those already in place in states which already permit the practice. As he notes:
Hydraulic fracturing guidelines developed by industry – many of them incorporated into other states’ regulatory regimes – offer a sound approach proved by actual operations.
I can already hear the howling from Radical Green about the fox guarding the hen house, and so forth. But is it truly in the interest of industry to foul its own nest?
On the other hand, the success of fracking and other domestic exploration may create an interesting situation. Even back in October, when oil had declined to $90 a barrel from a June peak of nearly $115 a barrel, analysts were speculating on the effects the drop would have on the budgets of OPEC member nations. Now that oil in closing in on $60 a barrel, the economic effects on certain nations will be even more profound, and contrarian economic observers are already warning that the oil boom is rapidly turning into a bust with a ripple effect on our economy.
Even the revenue scheme by which Maryland would collect a sales tax on gasoline depended on gas prices staying somewhere over $3 a gallon. Assuming the price of gasoline stays at about $2.70 per gallon through the first of the year, the predicted 8-cent per-gallon rate will only be 5.4 cents. (The sales tax on gasoline is slated to increase to 2% on January 1.)
In any case, there is a price point at which non-traditional oil extraction such as fracking or extraction from tar sands – the impetus for the long-stalled Keystone XL pipeline – becomes economically non-viable. I had always heard that number was $75 per barrel, which was a number we had consistently hovered above for the last half-decade. Now that we are under that number, the question of exploration in Maryland may be moot for the short-term, although the price of natural gas is only slightly below where it was this time last year so that play is still feasible.
Whether the decline in oil prices is real or a manipulation of the market by a Saudi-led OPEC which is playing chicken with prices to try and restore its bargaining position by outlasting domestic producers, it may be yet another missed opportunity for Maryland as it could have cashed in during a difficult recession and recovery if not for an administration which believed the scare tactics and not what they saw with their own eyes as neighboring Pennsylvania thrived.
In 2007, Congress passed (and President Bush regrettably signed) a bill which was, at the time, a sweeping reform of energy policy. As part of the Energy Independence and Security Act of 2007, the EPA was supposed to regulate the Renewable Fuel Standard on an annual basis, with the eventual goal of supplying 36 billion gallons of renewable fuel by 2022 – the 2014 standard was set at 18.15 billion gallons (page 31 here.) By the way, this is the same bill that did away with incandescent light bulbs.
Unfortunately, for the second straight year the EPA is late with its update and last month they decided to take a pass altogether on 2014. Mark Green at the Energy Tomorrow blog writes on this from the petroleum industry perspective, while the ethanol industry took the decision as news that the EPA was staving off a possible reduction in the RFS.
We all know hindsight is 20/20 but it should be noted that, at the time the EISA was written, the conventional wisdom was in the “peak oil” camp, reckoning that American production was in a terminal decline. Yet we’ve seen a renaissance in the domestic energy industry over the last half-decade despite government’s best attempts at keeping the genie in the bottle. So the question really should be asked: is the Renewable Fuel Standard worth keeping in this new energy era, or should the market be allowed to function more freely?
It goes to show just how well the government predicts activity sometimes. They assumed that the technology behind creating biofuels from agricultural waste would supplant the need for corn-based ethanol in time to maintain the amount required and also figured on gasoline usage continuing to increase. Wrong on both counts; instead, we are perhaps in a better position to invest in natural gas technology for commercial trucks as some fleet owners already have – although long-haul truckers remain skeptical based on better diesel engine fuel economy, which ironically came from government fiat - than to continue down an ethanol-based path.
But the larger benefit from removing ethanol-based standards would accrue to consumers, as corn prices would decline to a more realistic value. Obviously the initial plummet in the corn futures market would lead to farmers planting more acreage for other crops such as soybeans or wheat as well as maintaining virgin prairie or placing marginal farmland, such as thousands of acres previously reserved for conservation easements, back out of service.
Poultry growers in this region would love to see a drop in the price of corn as well, as it would improve their bottom line and slowly work its way into the overall food market by decreasing the price consumers pay for chicken.
I believe it’s time for Congress to address this issue by repealing the RFS. Unfortunately, it would take a lot to prevail on many of the majority Republicans in the Senate because they come from the major corn-growing states in the Midwest and agricultural subsidies of any sort are portrayed as vital to maintain the health of rural America. Yet the corn market would only be destabilized for a short time; once the roughly 30% share of the crop used to create ethanol (over 4.6 billion bushels) is absorbed by the simple method of planting a different crop or leaving marginal land fallow, the prices will rise again.
Until the common sense of not processing a vital edible product into fuel for transport prevails, though, we will likely be stuck with this ridiculous standard. Corn is far better on the cob than in the tank, and it’s high time the EPA is stripped of this market-bending authority.
I’ve referred to this writer recently, but energy maven Marita Noon had a piece at NetRightDaily today talking about the difficulties customers in the Northeast may have this winter with electricity. It got me to thinking about the local situation, as we had a rough winter last year and indications are we’ll have more of the same this year.
While the Eastern Shore of Maryland is situated in a slightly better place for solar electricity than the Northeast, the reality is that very little of our electricity comes from renewable sources. Instead, the two closest power plants in the Delmarva Power region where we live are in Vienna, Maryland and Millsboro, Delaware. Both of those plants were once owned by Delmarva Power, but were sold in 2001 to NRG. According to NRG, the Vienna plant is a 167 MW oil-burning plant while Indian River in Millsboro uses coal to create 410 MW (and has a 16 MW oil-burning unit as well.) Another plant under construction in Dover, owned by Calpine, will add 309 MW of natural gas-fired capacity once it comes online beginning next year. Calpine also owns a number of small, locally-based “just in case” plants in the region as well – two of these oil-burning facilities are in Crisfield, Maryland and Tasley, Virginia.
The other regional power supplier, Choptank Electric Cooperative, produces about 2/5 of its supply from plants in Cecil County, Maryland and Virginia with the remaining electricity being purchased from various regional suppliers.
Infrastructure is also a concern. Several years ago there were plans to create the Mid-Atlantic Power Pathway, a transmission line which would extend from Virginia to Delaware, connecting the Calvert Cliffs nuclear plant and others in that region with the aforementioned Vienna and Indian River plants. But those plans were scrapped a few years ago due to slowing demand, which is unfortunate because our transmission otherwise comes exclusively from the north through Delaware.
In order to create good jobs, we need reliable sources of energy. Unfortunately, regulations aren’t on the side of plants like Vienna or Indian River so it may be time to think about encouraging investment in another natural gas-based power plant on Delmarva, with the requisite infrastructure to ensure supply. According to Calpine, the Dover site can expand to double its capacity but that would only partially replace the Indian River plant if it is forced offline. Realistically, though, the new power plant would probably be best sited in Delaware as it’s closer to the main body of pipeline infrastructure for natural gas.
But the new power plant is good news for the region, particularly in light of the issues Noon points out in her piece on the Northeast. With thousands of consumers using electricity to heat their homes in one way or another – either directly through baseboard heating or with a furnace and blower or pump – reliability is key. And when solar panels are buried in snow or wind turbines are frozen in place, they’re not much use.
In the midst of what’s good news about energy production in America – despite the headwinds created by an administration that believes global warming is a large problem while spending millions to prop up failing green energy companies – the question can be asked whether Maryland has achieved its share. I want to quote writer Mark Green from the Energy Tomorrow blog, who writes that based on Energy Information Administration data that:
This is a snapshot of America’s energy revolution – the fundamental shift from energy scarcity to abundance that would have been unthinkable less than a decade ago. The shift is the result of surging oil and natural gas production using advanced hydraulic fracturing and horizontal drilling, harnessing oil and gas reserves in shale and other tight-rock formations. Safe, responsible energy development has made the United States the world’s No. 1 natural gas producer, and the U.S. could become the world’s top producer of crude oil related liquids before the year is out.
Larry Hogan has acknowledged that western Maryland has an “enormous” amount of natural gas and that he favors an “all of the above” energy policy. On the other hand, Anthony Brown is studying the issue to death. At the other end of the state and scale, Brown backs his boss’s offshore wind boondoggle while Hogan mentions that “proponents (of wind power) rarely mention the actual costs which include billions in state and federal subsidies.” In a separate statement, he also decries the potential for offshore wind’s “crony capitalism” under a Brown administration.
You know, there’s no question that the key issue in this gubernatorial race is the economy. Maryland is a state lagging behind its peers, and more and more people speak about pulling up stakes and relocating somewhere else: Delaware, Florida, Virginia, the Carolinas, Tennessee – name a state south of the Mason-Dixon Line and it’s likely someone you knew in Maryland moved there.
But one piece of the puzzle is energy, and those who toil in the oil and gas industry understand what the potential is. In his piece, Green closes by quoting American Petroleum Institute president and CEO Jack Gerard:
We need leaders who reject the outdated political ideology of the professional environmental fringe and the political dilettantes who advance the irresponsible and unrealistic “off fossil fuel” agenda. Because if we get our energy policy right today, we can be the generation that erases what for decades has been our country’s most potent and intractable economic vulnerability: dependence on energy resources from less stable regions and countries hostile to our goals, ideals and way of life.
Writer Rob Port at the Say Anything Blog also asks the pertinent question, and the answer on a state level can be found in Maryland.
I look at it this way. There was a governor and a majority in the General Assembly who were willing to risk over a billion dollars in ratepayer money on something which studies suggested might work but hadn’t been tried in Maryland before, offshore wind. Conversely, given the success of the Marcellus Shale formation in several surrounding states (most notably Pennsylvania), why not encourage the exploration of several other regions in the state which share many of the same characteristics? The worst that can happen is that we find these areas aren’t worthwhile for natural gas with current technology, but the rapidly evolving science of energy extraction means studies done even as recently as a few years ago may be rendered worthless.
Given the correct conditions for marketable extraction of coal and natural gas and an aggressive expansion of power plant capacity which uses those resources, it should be a goal to make Maryland self-sufficient in electricity by 2030. I don’t think offshore wind will get us there, but extracting those resources we have gives us a shot, and provides good-paying jobs for Maryland families who need them.