Dallas, the site of this Sunday’s Super Bowl, is experiencing unusual winter weather with record snowfall this year. That brings to mind a question: whatever happened to global warming?
Earlier this week, former Vice President Al Gore insisted all this erratic winter weather was a result of anthropogenic global warming, a point columnist Charles Krauthammer refuted on the Friday broadcast of “Inside Washington.”
“Look, if Godzilla were on the Mall this afternoon, Al Gore would say it’s global warming because the spores in the south Atlantic Ocean were – you know, look everything is, it’s a religion,” Krauthammer said. “In a religion everything is explicable. In science, you can actually deny or falsify a proposition with evidence. You find me a single piece of evidence that Al Gore would ever admit that would contradict global warming and I’ll be surprised.”
Evan Thomas, a former editor for Newsweek magazine, said Gore wasn’t relevant and that it is plausible global warming is contributing to the winter weather.
“Al Gore is a red herring here,” Thomas said. “There are some scientists that are looking at this interesting question about the jet stream, which had gone at sort of this tight cone over the North Pole. That wall that kept it up there has broken down with global warming as the sea has been heating up there. So, there is a body of scientific – it’s theory still that the jet stream is wobbling around and causing this crazy weather and it is related to global warming.”
Europe's Industry May Be Left Behind By Shale Revolution
The impact of shale has the potential, if we are smart enough to grab it, to ripple through the entire European economy. Energy is a key economic marker, and if Europe turns it back on shale it also concedes a significant economic advantage to the rest of the world.
A story I've been following the last few months is where shale is starting to go beyond energy and out to other industries. A classic example of this is the US chemical industry.
Chemicals play nearly as important a role in the macro economy as energy. Petro-chemicals and natural gas are the feedstock for plastic and fertiliser. Eighty per cent of the cost of nitrogen based fertiliser is natural gas. Similarly, natural gas liquids like ethane are a major cost component of ethylene for plastic, which impacts everything made from, or wrapped in, plastic.
The US shale revolution provides low cost natural gas and ethane and impact other markets like hydrochloric acid. So low cost US shale means much more than cheap energy:
The head of Dow Chemical Co. said Thursday that the U.S. can become a low-cost leader for the global industry as shale gas production increases and cheap natural gas from the Middle East is diverted to produce power.
Demand for commodity and specialty chemicals is returning to pre-recession levels and U.S. exports to Asia have soared, with prices rising amid tight supplies for the building blocks of everything from diapers and packaging to autos and consumer electronics.
I've already highlighted how companies like BASF are building plants in places where there was no production like West Virginia to take advantage of Marcellus produced ethane at give away prices. The conventional wisdom in chemicals was based on the other conventional wisdom: US energy would be expensive and declining. As a result the world chemical industry started to move from the Gulf of Mexico to the Persian Gulf, costing jobs and pushing up prices. But that was then and this is now:
Cheap U.S. natural gas prices already give its chemical companies an advantage over many overseas rivals, though this is eroded by the cost of shipping to fast-growing Asian markets. Mr. Liveris said the development of domestic shale-based deposits could narrow the cost gap with the Middle East.
He said Dow would accelerate efforts to move away from low-value commodity business, though the outperformance of its basic chemicals and plastics operations drove results that surpassed analysts' expectations as the company absorbed higher raw material costs and secured a 10% rise in prices.
Which means Dow Chemical is doing just fine thanks: "The company reported a profit of $511 million for the quarter ending in December compared with $172 million a year earlier".
This underlines even more how slowing down Europe shale production by looking the gift horse of shale in the mouth will end up shooting the chemical industry and many others in the foot.
The Interior Department's Culture of Contempt
Oops, they did it again. President Obama's grabby-handed environmental bureaucrats have earned yet another spanking from the federal judiciary over their "determined disregard" of the rule of law. Isn't it time to give these misbehaving government hooligans a permanent timeout?
Federal judge Martin Feldman in Louisiana excoriated the Obama Interior Department Wednesday for defying his May 2010 order to lift its groundless ban on offshore oil and gas drilling in the Gulf. Nine months later, not a single permit has been issued. Several deepwater platforms have moved out of the area to take their businesses -- and an estimated 5,000 jobs -- overseas. Billions of dollars in potential oil revenue and Gulf lease sales-related rent have also dried up.
Interior Secretary Ken Salazar -- a.k.a. The Loathsome Cowboy -- thumbed his nose at the judge's preliminary injunction last June and dragged his feet into July, when his bureaucracy lost its bid for a stay from the U.S. Court of Appeals. Salazar then concocted a second "revised" moratorium to replace the one Feldman had nullified as "arbitrary and capricious, and therefore, unlawful." The second deepwater drilling ban (which oil spill czar Michael Bromwich admitted was "roughly congruent with the original moratorium") was "lifted" in October, but still no permits were issued.
This is because Team Obama's eco-radicals never intend to approve them.
Every step of the way, the White House team has displayed unbridled defiance -- by continually broadcasting its intent and determination to impose the blanket moratorium in spite of the judicial order, and by ramming through a second sweeping ban that did nothing to address the court's concerns after the injunction was issued.
The Interior Department's contempt for the law is outweighed only by its contempt for sound science.
Remember: Salazar is the data doctor who falsely claimed that the administration's blanket moratorium report was endorsed and peer-reviewed by seven scientific experts -- when, in fact, eight of the scientists studying the issue for the government explicitly said they "do not agree with the six-month blanket moratorium" on floating drilling.
Remember: The Interior Department inspector general publicized e-mails in November showing that Salazar's office and former environmental czar Carol Browner's office collaborated on the false rewrite of the White House offshore drilling ban report. While the inspector general found no conclusive evidence of wrongdoing and the White House denied any attempt to mislead the public, Feldman pointed out that "at the hearing on the first moratorium, in response to a question by the Court, the government's answer then was wholly at odds with the story of the misleading text change by a White House official, a story the government does not now dispute."
As GOP Congressman Joe Wilson of South Carolina would have put it more bluntly: "You lie."
In addition to the lost jobs and lost revenue already sacrificed at the altar of "safety," the Interior Department will now siphon tax dollars to pay for the "substantial" legal fees of the plaintiffs as a result of the contempt ruling. Another affected business, Century Exploration New Orleans, Inc., filed a drilling ban-related complaint against the department last week claiming breach of contract -- which could add yet more millions or billions to publicly subsidized legal costs.
Jim Adams, president and CEO of the Offshore Marine Service Association (OMSA), noted the massive gap between Obama's words and actions this week: "[T]housands of workers are out of jobs, Americans are paying more for gasoline and heating oil, and our nation is becoming even more dependent on unstable nations for our energy needs. President Obama talks a lot about jobs and energy independence. Now it's time for him to back up his words with action and call off his de facto moratorium. Americans want an end to this manmade disaster."
But instead of reining Salazar in, the White House is happy to let him wage the administration's continuing war on the West with impunity. Despite pleas from both Democratic and Republican officials at all levels of government to retreat from an administrative usurpation of wild lands that he slipped through during the Christmas season lame duck session, Salazar is moving full speed ahead. Adding audacious insult to economic injury, Salazar this week unveiled new "scientific integrity rules" to "end political manipulation of science" and "encourage an environment of rigorous open discussion."
The Obama culture of corruption meets the culture of contempt. It's a toxic slick that will ultimately be left to voters to clean up.
The blind man's carbon tax
In a recent article in the Wall Street Journal, Alan Blinder listed numerous alleged benefits of a phased-in carbon tax. Out of his entire column, he devoted a single sentence to the possible downside of his plan when he wrote, "No one likes to pay higher taxes." A more balanced assessment shows that a carbon tax presents very real dangers, even if we rely on the same economic analysis that so enthralled Blinder.
Spurring Innovation through Higher Taxes?
Here's Blinder explaining the economic benefits of a carbon tax that starts out low, but will eventually become quite steep:
Once America's entrepreneurs and corporate executives see lucrative opportunities from carbon-saving devices and technologies, they will start investing right away — and in ways that make the most economic sense. I don't know whether all this innovation will lead to 80% of our electricity being generated by clean energy sources in 2035, which is the president's goal. But I can hardly wait to witness the outpouring of ideas it would unleash. The next Steve Jobs, Bill Gates and Mark Zuckerberg are waiting in the wings to make themselves rich by helping the environment.
We should also be clear that Blinder's argument for job creation does not rely on the "negative externalities" of carbon emissions. Earlier in the piece, he made a list of the "few nice side effects" that would result from a carbon tax: "reducing our trade deficit, making our economy more efficient, ameliorating global warming …" Because he puts global warming at third in the list, we see that there is nothing peculiar to greenhouse gases behind his main argument for job creation.
No, Blinder is making the simple observation that if the government imposes artificial costs on the current way businesses operate, then the market will respond to the new handicap and end up generating new products and techniques along the way.
This analysis is true, as far it goes. But the same could be said for any new government policy that made it illegal for businesses to continue operating in the ways that they currently find the most efficient. For example, if the government promised to impose stiff taxes on nails and screws over the next few decades, that would certainly cause entrepreneurs to see "lucrative opportunities" in developing do-it-yourself furniture that used only wooden pegs and glue. But obviously consumers would be worse off because of the less convenient and/or more expensive products.
This is basic economics: you don't make the country richer by taxing it, or by taking options away from industry. If investors pour money into carbon-reducing technologies under the threat of a future carbon tax, there is correspondingly less investment available for other technologies.
Dealing with Negative Externalities
Of course, advocates of a carbon tax claim that there is a special reason to penalize carbon emissions, as opposed to nails and screws. They argue that because emissions of carbon dioxide (and other greenhouse gases) may eventually lead to significant damages from climate change, entrepreneurs currently are not taking all of the costs of their actions into account.
Even if we concede this framing of the issue, it still does not follow that economists should favor a new carbon tax. Ironically, we can use the same researcher — William Nordhaus — upon whom Blinder based his own case.
It is true that Nordhaus himself favors a carbon tax. In the 2007 calibration of his "DICE" model of the global economy and climate system, Nordhaus estimated that the theoretically optimal carbon-tax regime would reduce (the present value of) climate damages by about $5 trillion, at the cost of about $2 trillion in lost economic output. This is why Nordhaus favors such a policy — its theoretical benefits exceed the costs by up to $3 trillion.
However, this figure assumes all governments around the world implement the tax. If some governments cheat, then the alleged benefits shrink, as some of the emissions simply migrate from the high-tax to the low-tax areas.
Nordhaus's calculation also assumes that governments implement the economically optimal carbon tax. If the tax is set too high, however, Nordhaus's results demonstrate that the cure can be much worse than the disease. For example, when Nordhaus simulated the impact of limiting atmospheric concentrations of CO2 to 1.5 times their preindustrial level, he found that it would make the world more than $14 trillion poorer than if governments did absolutely nothing to regulate emissions. This is because the simulated $13 trillion in benefits from avoided climate damage were swamped by $27 trillion in reduced economic output.
A Carbon Tax Involves Economics, Not Just Natural Science
The proponents of a carbon tax (or "cap and trade") continuously point out that there is a "consensus" on the natural science linking human activity to rising global temperatures. But the economic arguments, needed to show that the benefits of a carbon tax outweigh its costs, are far less conclusive.
For example, in the spring of 2009, Richard Tol published a survey of comprehensive studies of the global "welfare impacts" of climate change. His list of these impacts included, not just appraisals of direct economic harms, but also attempts to value (in dollar terms) intangibles such as human health and mortality. Of the 13 studies Tol surveyed, the best-guess estimate of global GDP impacts ranged from a loss of 4.8 percent to a gain of 2.5 percent. Most of these impacts were calibrated for temperature increases of 2.5 to 3.0 degrees Celsius, which are not expected to occur until the second half of the 21st century. (Currently the globe is about 0.8 degrees Celsius warmer than the preindustrial benchmark.)
Tol found that, of the 11 studies that had been published since the year 1995, the most grim estimate was a global GDP loss of 1.9 percent. To put that number in context, in a 2009 report the Congressional Budget Office estimated that an 83 percent cut in emissions — the long-run cap proposed under the Kerry-Boxer bill — would reduce US GDP in 2050 from 1.1 to 3.4 percent.
To repeat, the damages in Tol's survey were calibrated for a particular range of temperature increases, and in reality it's always possible that global warming could be worse by, say, 2085.
But using reasonable projections of what is likely to occur, the economic case for a carbon tax is not nearly the slam dunk that Blinder implied in his article. To reiterate my argument, I am conceding the basic framework of "negative externalities" and peer-reviewed models of the harms from climate change. And still, once we factor in the obvious possibility that governments will not uniformly implement the "optimal" tax, the case for intervention falls apart.
Alan Blinder is right that this country could use a burst of entrepreneurship and investment. But there are much more productive policies to stimulate investment than threatening future tax hikes.
British recycling fanaticism achieves nothing
They were supposed to bring about a green revolution, forcing families to recycle more and send less to landfill. But fortnightly rubbish collections and strict ‘bin police’ have barely had an effect, according to official figures.
Despite the pressure of fewer bin rounds and tough rules imposed by councils, the recycling revolution has ground to a halt. The amount of rubbish sent for recycling has increased by a tiny margin and the town hall campaign to compel people to throw out less waste is also in trouble, with only a minuscule reduction in the amount left for binmen to collect.
Over the past two years, dozens of councils have switched to fortnightly collections, complicated kitchen slopbucket systems or straightforward rubbish rationing. At least 13 have cut back on refuse collections in the time since last year’s general election, and more are set to follow.
One Tory-led council, Wokingham in Berkshire, plans to restrict rubbish collections to 80 small sacks a year for everyone but large families. The stated aim is to push up recycling figures and reduce refuse. This, councils say, will cut the amounts sent to landfill, so avoiding Treasury landfill tax and EU fines due to come in next year, as well as reducing the ‘greenhouse gases’ linked to climate change.
But figures released by the Department for Environment, Food and Rural Affairs yesterday suggest that householders have fallen out of love with recycling. In the year to June 2010, the total amount of waste destined for landfill sites fell just 0.3 per cent to 26.5million tonnes – seven times less than the average annual drop of 2.2 per cent over the previous five years.
And figures for the second quarter of 2010 show that the amount sent for recycling rose by just 0.4 per cent over three months, reaching 40.1 per cent of all household refuse. The quarterly increase is tiny compared with the 330 per cent rise in household recycling over the previous nine years.
The weak results suggest that coercive methods are no longer yielding results for town halls trying to cut the amount of waste they collect and send to landfill. It leaves reductions in spending as the only remaining reason for the introduction of fortnightly collections and rubbish rationing.
The fall-off follows a warning from Communities Secretary Eric Pickles that council methods are fostering resentment among voters. He said: ‘There is genuine anger that in the last decade their council tax bills have doubled but their bin collections have halved. ‘In their experience, the iron fist of the municipal state has come down on everyday people for the most minor of bin breaches.’
Doretta Cocks, of the Campaign for Weekly Waste Collections, said yesterday: ‘These are poor figures. Over the past two years we have had large numbers of councils moving to food waste collections with incredibly complicated recycling rules. ‘This is now entirely out of hand. They are not contributing any service for their money and they are losing people’s goodwill. ‘There is now a stalemate – people want to recycle but they are fed up with the stupid rules, the bin police and the fines.’
The Local Government Association, which represents town halls, insisted the initiatives are a success. Environment chief Gary Porter said: ‘The figures are another sign that councils and residents are working well to increase recycling rates and, more importantly, reduce landfill. ‘It is very encouraging to see recycling rates continue to rise.’
But Environment Minister Lord Henley warned councils not to force the issue. He said: ‘The best way to encourage people to recycle is not to punish families with bin taxes and bin fines as the previous administration did, but to encourage and reward them for going green.
‘This is good news that we have got this far, and as part of the waste review we’re looking at how to make it even easier for us all to do the right thing.’
"Green Jobs" Cronyism and Cannibalism
To rephrase President Obama's State of the Union theme: "This is our generation's apparatchik moment."
Yes, he said "Sputnik" instead, but his actual agenda is about the apparatchik -- government by party leaders, bureaucrats and the well-connected.
His agenda is symbolized by his push for "green jobs" as the path to a better future. Simply put, the green jobs agenda spends billions of taxpayer dollars to destroy existing jobs and replace them with jobs in politically-favored businesses, raising the costs of energy along the way.
The politically-connected win. Existing job-holders and companies lose. Home electric bills go up. Power also costs more for companies, making it more expensive to go into business or to stay in business.
It's cronyism that is building a political power structure based on false claims about clean green jobs. It's cannibalism because creating the green jobs requires killing off existing jobs.
As Bloomberg News reported, "Subsidizing renewable energy in the U.S. may destroy two jobs for every one created if Spain's experience with windmills and solar farms is any guide."
One Heritage Foundation study showed that proposed mandates for using "renewable energy" to generate electricity would cost 1-million jobs. Had last year's cap-and-trade bill been passed, we might have lost almost 2-million jobs. That compares to claims by the renewal energy industry that 274,000 jobs would be created by their products. We would lose 3 to 7 jobs or more for every one that we gain.
This is Obamamath. Obama wants us to pay for the privilege of destroying jobs. His State of the Union called for "incentives that will finally make clean energy the profitable kind of energy in America."
Guess what? If it requires incentives, it isn't profitable!
"When the President and Congress talk about green jobs, they are talking about ones created via federal tax breaks, subsidies, or outright mandates," noted The Heritage Foundation's Ben Liebermann.
The green jobs agenda is all about making a large group dependent on the politicians who provide them money and who in exchange receive campaign donations and other political support. It is the ultimate in Tammany Hall-style political bossism -- the political earmark that dwarfs all others. The green jobs agenda is a political spoils and cronyism system operating in the open, justifying itself through political correctness and overblown claims that it is dictated by global warming.
POLITICO reported that the alternative energy sector only spent $2.4-million on lobbying in 1998, but that grew to $30-million a year by 2009. The story noted, "The speed of expansion is eye-popping," and added, "Wind, solar, ethanol up and other alternative energy groups are also stepping up their political contributions to candidates -- almost all of them Democrats. Yes, the fossil fuel lobby spends about five times more than the alternative energy lobby, but fossil fuel produces over 20 times as much power -- about 70% of our national electricity compared to about 3%.
How about claims that existing federal policies already advantage fossil fuels? A report from the federal Department of Energy shows that each megawatt of power produced by wind or solar power receives subsidies almost 100 times higher than for oil and natural gas, and about 50 times higher than for coal.
Even The New York Times reported that wind-generated power costs 50% more than power generated from fossil fuel, and power from solar energy costs 2-3 times more than wind power.
Perhaps someday those who profit from subsidizing alternative energy will admit what they've done, just as Al Gore now admits his push for billions in ethanol subsidies was a mistake based on political gain--not even counting his monetary gain since leaving office. As The Wall Street Journal said, "ethanol has become a purely political machine: It serves no purpose other than re-electing incumbents and transferring wealth to farm states and ethanol producers."
But don't some business interests support the green agenda? Sadly, yes. They tend to be those who profit from these subsidies. Writing in Forbes, Jerry Bowyer noted, "What is the difference between crony capitalism and socialism? Not much."
We did not win the space race by putting extra costs and burdens on ourselves to benefit a team of politicians and businesses that scratch each others' backs. Obama's call to action isn't based on Sputnik; it's based on apparatchik. We don't need that cronyism. Or to cannibalize existing jobs so cronies can build more power for themselves.
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