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MAKING CENTS OUT OF THE NEWS
Blog #04
(January 26th, 2012)
Energy Shortage or Environmentalist Scare?
By Tom McAllister, CFP®
Green? Where energy is concerned, I’ve been green for thirty years. I’ve invested my own money and that of my clients in hydro-electric, solar, ethanol, and wind power projects. I support alternative energy whenever it makes sense. But facts are facts: Despite heavy-handed stimulus from the U.S. government, alternative energy is not as yet economically competitive with coal, oil, and gas. As of now, in fact, alternative energy makes up less than 5% of our total consumption.
For all these reasons, I feel I’m on strong ground when I declare that we do not have a shortage of energy. We have a shortage of government leadership. We have an over-abundance of political pandering run wild.
What triggered this rant was our President’s recent refusal to approve the Keystone XL Pipeline for Canadian oil. His excuse: the project needs more study. Facts:
 All appropriate federal and state studies have been completed and approved over the past three years.
The Keystone company has agreed to move the location of the pipeline in order to skirt the wetlands in Nebraska which it could impact.
The pipeline project will create 10-20,000 jobs, with many more to come after completion.
A large majority of Congress, both Republicans and Democrats, favor it.
Big Labor, significant supporters of the President, favors it.
Despite all this, the President, in a fairly obvious move to placate far left environmentalist supporters while he seeks reelection, has denied his administration’s approval. Of course, he has a right to do exactly that. He is the President after all, and he sees the world from the left side of our political spectrum. But, for me, this decision, “broke the camel’s back” so far as our government’s involvement in energy.
Congress has kept us from drilling for existing oil and gas off our Atlantic shores, most of our Pacific shores, and even off a large portion of the Gulf of Mexico. Drilling in the Arctic National Wildlife Refuge has been proscribed, even though it would impact less than 2% of the Refuge, which is larger than West Virginia, on land that consists of wasteland tundra, where no humans and few animals reside.
Our government, at the behest of these same environmental activists a generation ago, shut down all nuclear electric plant construction and development. This despite the fact that no Americans have ever died, or been injured, in a nuclear accident. Here in Indiana, our largest electric utility, now part of Duke Energy, was forced to abandon a partially completed nuclear plant at a cost of over THREE BILLION dollars (in 2012 dollars). Guess who paid for that abandoned project? Hint: it was not Duke Energy! Of course now, thirty years later, the government is promoting these same type nuclear projects.
We don’t have an energy shortage! We have self-imposed limitations on the use of the more than adequate energy that is readily available for our use!
As I write this, President Obama is preparing his State of the Union message. The media tells us he will speak positively on increased dependence on domestic natural gas. Good! I support, and indeed have invested in natural gas projects. Natural gas is the cleanest burning and least polluting type of hydrocarbon fuel. Exploration for natural gas has been so successful we are now faced with a glut of it and prices have dropped accordingly, about 80% in recent years. It is dramatically cheaper than $100 oil, which is negatively impacting, if not choking, our economic recovery.
Our large trucks, busses, heavy equipment, even certain cars can easily be modified to burn natural gas instead of gasoline. This would take a lot of pressure off domestic oil prices. It appears too, that we, along with our Canadian neighbors, have an almost unlimited supply of natural gas. Electric generating plants using natural gas as fuel are far less expensive and much quicker to build and bring on line than any other such plants.
But environmental activists are interfering here, too. They are complaining that developing these natural gas fields must use a technique called “fracking” (fracturing), which involves putting liquid chemicals into a gas and/or oil bearing geological seam under extreme pressure, opening the seam up to produce commercially saleable oil and gas. This process has been used for over fifty years in oil and gas drilling, but now these extremists, with no evidence whatsoever, express fear it will pollute underground water sources and thus should not be utilized. Balderdash, I say!
I could go on and on, but it is a lack of political will on the part of our leaders which has caused our energy prices to skyrocket in recent years. We have sufficient energy available now. Let us hope we elect new and more responsible leadership from both parties in the coming election.
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