In The Pipeline 7/5/11

Writing letters to the government can be therapeutic, especially when you’re asking the powers that be to allow more drilling in Alaska. Go on, give it a try Reuters (7/5/11) reports: The U.S. Environmental Protection Agency on Friday said it would begin collecting public comments on draft permits for Royal Dutch Shell’s (RDSa.L: Quote) planned oil exploration off Alaska’s coast…Shell has been working to revive its long-delayed Arctic oil program, submitting plans to begin drilling in the Chukchi and Beaufort Seas next year…The EPA had approved permits for Shell to drill at least one Beaufort Sea well this year, but those permits were revoked by an agency appeals boards…The public comment period on the revised permits, which set limits on air pollution from the drilling operations, will run from July 6 through Aug. 5. The EPA will issue the final permits after considering the public’s input…To address concerns raised by the appeals boards, the agency revised the permits, reducing the emissions of most key air pollutants by more than 50 percent from the levels in the earlier permits.

Just like the firework displays last night, governments have been burning money on renewable programs and the taxpayers watche their ‘investments’ go up in smoke Time (7/5/11) reports: Big solar producers should be feeling very, er, sunny. New solar power doubled last year globally, with the world adding 16 gigawatts worth of new photovoltaic energy. In the first quarter of 2011, installations of solar power increased 66% over the previous year in the U.S. Just last week the Obama Administration offered a $1.4 billion loan guarantee to help fund what will be the world’s largest rooftop solar project, which put at least 733 megawatts worth of photovoltaic panels on commercial buildings across nearly 30 states while creating 10,000 jobs. Even bad news for the industry is good: a front-page story in Monday’s Washington Post raised questions about why more than half of President Obama’s out-of-town private-business visits had been to renewable-energy companies. Considering that the renewable-energy industry had to fight for any attention from Obama’s hydrocarbon-loving predecessor, being criticized for getting too close to the White House seems like a significant step up…But there are clouds on the horizon for solar power — especially for big producers who want to build utility-scale projects, not just slap panels on rooftops. The miniboom in solar in the U.S. is being driven chiefly by U.S. Treasury grants — most funded by the 2009 stimulus — which have helped fill the gap created by the evaporation of private capital after the recession. The only problem is that stimulus funding is just about tapped out, the tax credits are set to expire in December and the mood on Capitol Hill is utterly hostile to more spending. If that government money simply vanishes and private capital fails to appear, the U.S. renewable-energy industry could be set back by years. And no one is at greater risk than those who want to build large-scale solar.

Good news — the Obama Administration created jobs. Bad news — each one cost the taxpayer $278,000 Weekly Standard (7/3/11) reports: When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt… The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job…In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead…Furthermore, the council reports that, as of two quarters ago, the “stimulus” had added or saved just under 2.7 million jobs — or 288,000 more than it has now.  In other words, over the past six months, the economy would have added or saved more jobs without the “stimulus” than it has with it. In comparison to how things would otherwise have been, the “stimulus” has been working in reverse over the past six months, causing the economy to shed jobs.

How good is your memory? Better yet, how much of that cheap gas can you fit in your tank before prices go back up? Wall Street Journal (7/5/11) reports: When the time comes to cast their ballot in November 2012, one may predict U.S. motorists hitting Route 66 this summer will be grateful to President Barack Obama. But will they?..By giving the nod to half of a global release of oil from emergency stockpiles decided by oil-consuming nations worldwide, Mr. Obama spoon-fed instant pain relief into the mouth of every driver north of the Rio Grande. The move knocked $5 a barrel off crude prices as drivers were preparing to take the road for the 4th of July weekend…But once the full effect of the magic pill sets in, watch out for the upset stomach…Interfering in markets might end up pushing prices up in the long run and doesn’t resolve issue number one: America’s addiction to oil runs deep into both Wall Street and Main Street…Though statistics do show an uptick in crude-oil demand in the second half of the year, the release is adding confusion at a seriously messed-up moment for the global refining industry…The drop in crude prices is depressing margins at refineries with some markets already swamped with products. Indeed, despite claims the release is to make up for lost Libyan barrels, the U.S. only depended on Mr. Gadhafi’s country for 0.5% of its crude imports…On paper, glut is good for consumers—it makes prices cheaper. But with the International Energy Agency, which oversaw the move, warning it may repeat it, refiners and oil producers will have little visibility on future supply. And, next time, they may let prices slip without further ado. For instance, if much of the U.S. crude is snatched by traders, it could go straight to build up commercial inventories…That may trigger more worries for Gulf members of the Organization of Petroleum Exporting Countries. Many of them were already taken aback by the release—they had pledged to boost output unilaterally after the group failed to act collectively on June 8.

What the author misses is that the short con sets up the long con. Isn’t that right, Mr. President? Politico (7/5/11) reports: President Barack Obama has pressed repeatedly for a long-term energy policy, devoting five weekly radio addresses to the subject in the past three months and blasting other politicians during a March press conference for pursuing short-term political fixes for high gas prices…“Every few years, gas prices go up; politicians pull out the same old political playbook and then nothing changes,” Obama said. “And when prices go back down, we slip back into a trance. And then when prices go up, suddenly we’re shocked. I think the American people are tired of that. I think they’re tired of talk.”.. But this weekend as an anticipated 39 million Americans drive 50 miles or more for the holiday, the Obama administration is preparing to release 30 million barrels of crude from the Strategic Petroleum Reserve. Meanwhile, AAA reports the price of gasoline per gallon has declined from $3.63 just before the announcement to $3.55 on Friday. Gasoline prices peaked this year at nearly $4 a gallon on May 5…Some critics say the president’s action betrayed his lofty rhetoric about energy…“This is the shortest of short-term fixes,” said Spencer Abraham, who served as President George W. Bush’s energy secretary from 2001-05. “It very much falls in the category of politically expedient actions.”

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