In the Pipeline: 3/25/11

Energy crisis by design — the war against affordable and reliable energy will not go without casualties Washington Post (3/24/11) reports: Last month, Seahawk Drilling declared Chapter 11 bankruptcy and announced the sale of its assets to shallow-water driller Hercules Offshore. This devastating decision was the culmination of a long period in which we found our customers unable to secure permits for work in the Gulf of Mexico despite the fact that both our industry and our company have excellent safety records. In the 11 months after the Deepwater Horizon accident, it became clear that Seahawk’s greatest rival was no longer our industry competitors but the U.S. government…The government’s drastic slowdown in the issuance of permits for shallow-water drilling operations — in which companies work in familiar geological formations, typically in less than 500 feet of water, mostly seeking to produce natural gas — has all but crippled the industry. The survivors (for now) like Hercules are staying afloat largely thanks to revenue from operations outside U.S. waters. Put another way, a once-proud industry born in the gulf during the Truman administration can no longer survive on operations in its own back yard.

How would the Obama Administration respond to this question, “Do you think high gas prices are a good thing?” NRO covers the faux conversation National Review Online (3/24/11) reports: as is well over $4 a gallon in most places in California — and soaring elsewhere as well. But are such high energy prices good or bad?…That should be a stupid question. Yet it is not, when the Obama administration has stopped new domestic offshore oil exploration in many American waters, curbed oil leases in the West, and keeps oil-rich areas of Alaska exempt from drilling. Last week, President Obama went to Brazil and declared of that country’s new offshore finds: “With the new oil finds off Brazil, President [Dilma] Rousseff has said that Brazil wants to be a major supplier of new stable sources of energy, and I’ve told her that the United States wants to be a major customer, which would be a win-win for both our countries.”… That conclusion is not wild conspiracy theory, but simply the logical manifestation of many of the Obama administration’s earlier campaign promises. Secretary of Energy Steven Chu — now responsible for the formulation of American energy policy — summed up his visions to the Wall Street Journal in 2008: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” I think Chu is finally figuring out the “somehow.”

Jevons Paradox: As technology improves, more goods and services are consumed. For example, VMT will increase with more efficient engines or even EV’s, but Congress wants to know how you tax it The Hill (3/24/11) reports: “In the past, the efficiency costs of implementing a system of VMT charges — particularly the costs of users’ time for slowing and queuing at tollbooths — would clearly have outweighed the potential benefits from more efficient use of highway capacity,” CBO wrote. “Now, electronic metering and billing are making per-mile charges a practical option.”The Congressional Budget Office (CBO) this week released a report that said taxing people based on how many miles they drive is a possible option for raising new revenues and that these taxes could be used to offset the costs of highway maintenance at a time when federal funds are short…The report discussed the proposal in great detail, including the development of technology that would allow total vehicle miles traveled (VMT) to be tracked, reported and taxed, as well as the pros and cons of mandating the installation of this technology in all vehicles.

Winning the Future: China out innovates the world on nuclear technology while Congress holds hearings and threatens American energy New York Times (3/25/11) reports: While engineers at Japan’s stricken nuclear power plant struggle to keep its uranium fuel rods from melting down, engineers in China are building a radically different type of reactor that some experts say offers a safer nuclear alternative…The technology will be used in two reactors here on a peninsula jutting into the Yellow Sea, where the Chinese government is expected to let construction proceed even as the world debates the wisdom of nuclear power…Rather than using conventional fuel rod assemblies of the sort leaking radiation in Japan, each packed with nearly 400 pounds of uranium, the Chinese reactors will use hundreds of thousands of billiard-ball-size fuel elements, each cloaked in its own protective layer of graphite.

Lisa Jackson puts on a persuasive writing clinic — letter to farmers against dust regulation, but sets up back door for asthma campaign Fresno Bee (3/24/11) reports: On my visit to California this week, many people have offered thoughts and prayers for Japan and the earthquake and tsunami victims now facing threats from radiation. Many have also voiced concerns about radiation reaching the United States…The U.S. Environmental Protection Agency and our federal partners are closely monitoring radiation levels and ensuring that all steps are taken to safeguard health, and we will continue to work closely with state and local officials and regularly update the public…One example is the resource conservation work here in the Valley, which is considered among the best in the country. Developed in collaboration between growers, the U.S. Department of Agriculture, the local air district and the EPA, these cost-effective practices can be tailored to individual farms.

Take that, Hofmeister.  IER’s Pyle predicts $6 gas if Obama affordable energy war continues unabated News Max (3/25/11) reports: Although Pyle noted that both Democratic and Republican administrations have shied away from exploiting the country’s vast energy resources in the past, Obama’s policies in particular “have led to basically a shutting down of the oil and gas industry in this country…”Which, as the third-largest producer of oil in the world, is certainly going to send a signal to the marketplace that we are going to see a shortening of supply at a time when we actually need to be producing as much oil as possible not only to satisfy the growing demand in other countries but also in order for us to recover economically.”..The country is “on a path for not only $4.50 gasoline, potentially $5, even $6 gasoline if these policies continue,” said Pyle, former policy analyst in the U.S. House…However, just as Obama’s policies have sent a signal to the marketplace, a reversal will do the same with an immediate effect, he said