Obama's Energy Bill: A Recipe for Economic Destruction

"Those whom the gods wish to destroy they first make mad" is an ancient saying that Obama seems intent on confirming with his energy bill. It has been estimated that if implemented, this bill will added $9 trillion to energy costs by 2050. And the bad news does not stop there. Critics point out that the these costs will be felt throughout the US economy, particularly in the production of goods and services. However, Americans will not have to wait until 2050 for a severe energy crisis to strike.

The brilliant Waxman and Markey are demanding that electric utilities use grossly inefficient solar and wind power sources to generate 20 per cent of their power. This is the kind of insanity that raised California energy prices to nearly twice the national average and in doing so contributed mightily to the state's current economic crisis. Let's take a look at some figures. Average growth in GDP since 1970 has been about 3 per cent p. a. This means that GDP doubles roughly every 24 years. (I'm applying the banker's "doubling time" trick of dividing 72 by the annual rate of increase).

At a cost of $9 trillion Obama's energy bill averages $0.237 trillion per year which would amount to $5.684 trillion in 2036. As GDP will have doubled to $28 trillion this means that Americans will be facing a totally unnecessary increase in energy prices of $5.684 trillion, which would be 20 per cent of GDP. Let that figure sink in. Even according to this bottom line figure Obama's energy taxes — and this needs to be stressed, these additional costs are in fact taxes — will soak up 20 per cent of GDP. Add this monstrosity to his massive deficits that see no end in sight, his colossal increase in borrowing that could triple the national debt by 2016, the nationalisation of health care and other proposed increases in government spending and you are looking at a prostrate economy.

Without a doubt this is very bad indeed. Unfortunately the situation is going to be far worse. By focusing on 'dollar costs' critics are missing the true costs of this impending disaster. His energy policy is a direct attack on America's capital structure (sometimes called the production structure), the effect of which will be to shrink it. When this happens living standards will fall.

Economic growth is another name for capital accumulation. Any country that consumes capital or allows the rate of capital accumulation to fall behind the growth in population will experience falling living standards. Capital is paid for out of savings and savings are forgone consumption, a process by which present goods are transformed into future goods. (It is important to distinguish between savings and cash balances).

Obama supporters tell me that this cannot be so because "solar and wind power plants are capital". So spending $1 billion dollars on these is just the same economically as the same amount of money a coal-fired power station. No it ain't. I have explained numerous time that these so-called alternative energy sources are grossly inefficient and suffer from massive diseconomies of scale, which means they are afflicted with rising average costs of production.

The more they expand the higher will be their average costs. No amount of wishful thinking can make it otherwise. Hence, even if they were 100 per cent efficient in a technical sense they would still be hopelessly inefficient economically. Therefore the insurmountable problem of diseconomies of scale will always make them extremely inferior to centralised power plants and this is why they have to be subsidised.

Therefore spending on these plants results in capital consumption because it involves the absorption of capital that would otherwise have been used to raise living standards. Put another way: spending on these plants can only take place by sacrificing spending on projects that raise living standards. For example. Reliable power plants that actually have long run falling average costs, meaning that the more they produce the cheaper each unit of electricity will be. This is called increasing returns to scale. To invest in the opposite is utter economic idiocy.

As the costs of electricity rises more and more energy intensive lines of production will have to close down. To fully grasp the ramifications of this process we must develop some understanding of how incredibly complex the capital structure is, even with respect to a single product. As Hayek explained:

What is no less important is that, in the course of the lengthening of the process, the stream of operations leading up to a given product will as a rule be split up into many branches and sub-branches. And it may be that, long before the first move is made to produce the actual material from which the product is to be made, work is being taken in hand to provide some auxiliary material or tool which will be needed later to convert the raw material into the final product. At each stage of the process from the raw material to the finished product the main stream will be joined by tributaries which in some cases may already have run through a much longer course than the main stream itself. But all these activities, many of which may be carried on at the same time at different places, have to be regarded as part of the same process, and have to be taken into account when we talk about its length. The series of operations which are required in order to provide the fuel or lubricant, and the tools or machines which are needed for turning the raw material into the finished product, are just as much part of the process of production of the good as the operations performed on the raw material. (The Pure Theory of Capital, The University of Chicago Press, 1975, pp. 174-175)

By raising energy prices a large number of streams and tributaries will be eliminated while others will be redirected into less productive lines. The more energy prices rise the greater will be the damage. Instead of accumulating capital America would be accumulating malinvestments thanks to Obama's capital destroying legacy. Let us, for example, assume that the US is reduced to a pathetic one per cent annual growth in GDP. By 2050 GDP would have increased to $21 trillion dollars, $9 trillion of which is consumed by energy taxes. This would come to 43 per cent of GDP.

To top it off, Americans will be facing an avalanche of tax increases in 2010 to 2011, courtesy of a Democratic ruled Congress. Obama has made it clear that the aim of increased taxation is income equality (except for his super rich pals whose vast wealth will remained untaxed) which will increase the level of consumption*. This means less investment, which in turn will hit living standards. As Keynes observed:

If fiscal policy is used as a deliberate instrument for the more equal distribution of incomes, its effect in increasing the propensity to consume is, of course, all the greater. (The General Theory of Employment Interest and Money, Macmillan-St. Martin’s Press, 1973, p. 95).

No matter which way GOP-hating Obama cultists try to spin it, Obama's energy policy alone is a recipe for economic disaster. Then again, I did not write this in an effort to change the minds of Obama's delusional supporters but to educate others about the grave dangers his policies pose for American living standards. If you doubt me, just take a gander at what the Democrats have done to California. Unlike the federal government California cannot print dollars to try and save itself, thank God.

Bernard Shaw surely had the arrogant and conceited likes of Obama in mind when he said:

He knows nothing and thinks he knows everything. That points clearly to a political career.

Footnote:

Obama cultists truly are pathetic. Their idea of a refutation is to mindlessly parrot talking points the Democrats issue. I'll do this by the numbers.

1. Bush is not responsible for the deficit. It was Obama who quadrupled it to $1.8 trillion dollars. Bush is not responsible for Obama's gigantic spending binge. This was Obama's plan all along.

2. The Democrats have controlled Congress since 2007. From that time onward they could have stopped any increase in spending. Instead they accelerated it with Obama voting for every single spending increase that hit the floor. This is why under this lot spending jumped by $429 billion in two years.

3. Deregulation did not cause the financial crisis. Two things: First the crisis also swept through Europe, despite the fact that its financial sector is heavily regulated. Second, I warned back in 2004 that thanks to Greenspan's monetary policy the US could expect trouble in 2008. Moreover, the crisis would again first make itself when manufacturing started to contract. This is exactly what happened.

4. Bush tax cuts were not — unfortunately — "massive": they were very modest compared with the Kennedy and Reagan cuts. Moreover, I have yet to see an explanation of how in heavens name tax cuts in any form whatsoever could possibly trigger a financial crisis. And if tax cuts are the culprit then how do Obama groupies explain the crisis in Europe? I can only imagine that these poor souls are getting this nonsense from the mendacious Senator Steny Hoyer.

5. In the four years following 2003 the cuts tax receipts rocked by $785 billion.

6. The so-called cuts that favoured the rich resulted in the richest 1 percent, 5 percent and 10 percent of taxpayers paying even more in taxes.

7. This site vividly puts Obama's spending in perspective and in doing so demonstrates just how reckless it is.

8. The real cause of the crisis is the lousy economics that rationalises deficits and justifies more and more governments spending and taxation, greater control of the economy, loose monetary policies, manipulation of interest rates, etc.

Comments

[LoveShorting:]

great article.
I am glad you mentioned BO's "super rich pals" but let me give them a name - - Loyd Blankfein, Robert Rubin, Hank Paulson, and all the other Goldman alums and current employees.
This energy bill is absolutely a disaster but you left out the largest beneficiary - - GS. Read Matt Taibi in this month's Rolling Stone.
The only answer to the energy crisis is nat. gas, not carbon credits, but I guess the nat. gas lobby is relatively lean in the pocket.
I disagree on one point - - deregulation had a LOT to do with the current crisis. I don't even view this point as debatable. Again, who pushed for deregulation? To find the answer, just "see above".
GS is sucking the life out of the american economy, they are getting away with it, and they know they can't be stopped. Their
arrogance amazes me. Maybe, maybe, one day America will wake up. I'd drive to NYC to see the revolution if it ever starts.

Jun 29 08:33 AM

[jamesnach:]

www.nytimes.com/2009/0...

Jun 29 09:31 AM

[toobad41:]

I have yet to read the Obama Energy bill. I need to see the details of the plan if it passes. It probably will pass. Your analyses seems to be reasonable. The situation as I see it is that Obama is doing what he promised..."Change". Now does he care if it works or not. I really don't think he cares one way or other. You can't say he is a "do nothing President".

Jun 29 09:38 AM

[jamesnach:]

Footnotes are probably the most hilarious part of this nonsense

Mi favourite is #3:
"Deregulation did not cause the financial crisis. Two things: First the crisis also swept through Europe, despite the fact that its financial sector is heavily regulated"

Hey, Mr. Jackson, have you ever heard about "financial markets" and "globalisation"?

Even if you are an anti-government hardliner, you shouldn't be allowed to be so or ignorant...

Jun 29 09:39 AM

[Ferdinand E...:]

This is an interesting article, although the leading academic energy economist in the world - ME - thinks that you have a few things wrong.

First, and most important, this energy bill is not a recipe for economic destruction. IT IS JUST CRAZY! But long before destruction sets in the provisions of the bill will be abandoned, and people like Dr Chu will lock the door of his office to his energy team and do what has to be done....I think.

Jun 29 09:40 AM

[NumbersGuy:]

You need to explain those numbers. How does $0.237 Trillion (which sounds like more than $237 Billion) end up as $5.6 Trillion in 2036? Using your doubling number, it should be $0.474 Trillion annually at that point, which is a lot less than 20% of that year's GDP, no? It looks like you're taking a cummulative number and dividing it by an annual number, which doesn't make sense. Please explain.

In any event, there is a cost to the energy bill. I'm not going to deny that. But I'm not going to deny climate change science either. There is a clear risk of potentially catastrophic problems that society as a whole will face if we don't start to grapple with these issues. The Energy Bill is an attempt to start doing that. (If you're going to tell me that it's all a "hoax" then we can stop here. There's way more than enough objective scientific data to make it clear that a real quantifiable risk exists.)

On another note, blaming California's budget crisis on its energy policies doesn't fly. Blame it on a combination of a polarized legislative process and fiscal irresponsibilty. Energy costs, while higher in CA certainly, have little, if anything to do, with the State's fiscal crisis.

CA uses energy more efficiently than any state in the country. Higher costs have resulted in more efficiency and, on the down side, the loss of some energy intensive industries. But their early move into alternative energy has created an industry and a lot of investment in new businesses. Overall, I would argue it's a positive.

Yes, the Energy Bill will result in some "Economic Destruction", but have we forgotten Schumpeter? Creative Destruction is necessary in any vibrant economy. WM pushes the energy sector in a direction that it must eventually pursue, unless you are OK with the increasingly clear risk of a major shift in global climate. We can follow the rest of the world or we can try to take the lead (a little late for that frankly). It will be disruptive and costly to some, but an economic opportunity for others.

The US has always been blessed with an open economy that manages through these painful transitions relatively quickly, thanks to reasonable levels of labor mobility and capital markets that have been fairly adept at redirecting capital to new opportunities. Hopefully those strengths will help us through this next transition...

Jun 29 09:50 AM

[dolfen:]

The only economic destruction that this bill will cause will be the demise of big oil, gas and coal. And hopefully nuclear energy. Someone has to put a stop to the continued use of these environmentally and economically destructive forms of energy production. Granted, the bill still subsidizes them but now at least the door has been opened to allow the alternatives a little bit more of a level playing field. If we can just get this administration to support research and implementation of the truly revolutionary energy production forms of cold fusion, zero point energy and the novel forms of water electrolysis we will be on our way to energy independence and a cleaner more healthy environment. Mr. Chu, are you listening?

Jun 29 10:19 AM

[jerrydd:]

There is so much propaganda, corporate welfare in this article it's not worth going over. The one thing he left out in his calculations is how much fossil fuels will cost if we don't become independent on them.. Add that to the equation and RE starts looking real good.

Read below and ask yourself what is the real fiscal conservative, free market path, his or mine.

To be honest as Klugman said this morning, your way is treasonous from the damage it will do to the national economy, security and the planet. Try to live in the 21st century, not the 19th!!

Here's my take on our energy Future and the cap and trade bill.

How about the cost we pay now for fossil fuels?

This bill is a scam because it doesn’t make oil, coal pay it’s full cost.
It would be much better if it was a cap and tax on each ton of coal and gal of oil.

As for costs we now pay it in our incomes taxes so I’d much rather have those who use the oil, coal pay the real price. Then we can all get tax cuts and help switching to more eff homes, transport.

Or we can destroy our water supply, eat fish which in a recent test a guy ate 2 meals and his mercury levels went way above max levels, land destruction, SOx, NOx, radioactive coal emission, google that, of a 200lb dirty bomb from every large coal plant/day from coal costs.

From oil we spent $700B last yr in imported oil which 50% went directly to Iran, Russia, oil dictators and terrorists. Then there is the military costs of the Persian Gulf, Afghanistan, Iraq oil wars vs $1T/yr savings to balance our budget, create jobs replacing coal, oil where our homes produce the power we need so we no longer pay electric bills, in fact get a check for extra power each month, ect.

And this doesn’t even include CO2/GW costs. So please don’t complain about paying oil, coal’s true cost as 1/5 of the US gov budget already subsidizes them!!

With a $40/ton tax on coal and $1.50/gal on oil we can eliminate RE subsidies and give low cost loans for more eff homes. businesses, cars/trucks which could being us out of this recession and bring a real free market to correct the damage these subsidies have caused!!

If we don’t cut oil 5%/yr and reduce our electric use the price of oil, coal is going up with a bullet anyway. So it is far better that money go to our government for our benefit instead of our enemies.

Or we can go broke and pay others to kill us. Your choice!!

It’s eff along with RE that will get us out of this. If we don’t then nothing we will do will stop more GHG’s, make jobs and improve our economy, security.

With Eff we can cut all coal out completely. How is by cutting power needs by insulation, eff windows, appliances, etc can easily cut building, many business electric needs by 50%.
Next is many homes, buildings can make their own power so need little or no power, even produce excess power. All this is very low tech.

Tidal/river generators can supply much of the power needs without dams. I’ve done this for 30 yrs on a small scale and can be easily scaled up and costs much less than coal power does..

Wind, solar thermal generators and soon PV are cost effective once built in real mass production both home and utility scale.
Now add NG cogen plants at 60% eff for peak power along with biomass, hydro and EV’s that both charge at night and while parked can feed power back into the grid when needed along with Sodium batteries in home, utility sizes will easily handle peak power needs all at less cost than we are paying now for fossil fuel and much less than future fossil fuel costs.

Nukes unless they can be found to cost 1/2 they cost now are too expensive and the money much better spent putting RE, eff in, on homes, businesses.

Now add EV’s which work very well, I drive mine every day at very low cost and along with local and high speed rail with NG semi’s, trucks can solve most of the transport problems at lower prices than we pay now over 20 yrs.
We need to do these for national economic and security and pollution reasons anyway

None of this is a technical problem but a political one. All of this could be done with already available tech, most which is 30+ yrs old or more and with a higher quality of lifestyle or we go broke, stay at war if we continue as we are now..

Jun 29 10:22 AM

[Mad Hedge F...:]

Sure it will cost $9 trillion by2050, but it will cost $10 trillion to but a coffee at Starbucks then. If the 2009 Clean Energy Bill passes, it is going to pave the way for major structural changes to the US economy, which few of the non-engineering types voting for it in Congress understand. The bill encourages electric power utilities to switch to renewables, upgrade the electric power grid, and put in place a cap and trade system which places an enormous burden on the power industry to go green (see www.madhedgefundtrader...). The bill is expected to sail through the House, but faces a major fight in the Senate, where the administration is going to have to get all of their ducks in a row for it to pass. The bill provides the legal structure to spend that $100 billion for alternative energy already passed in the stimulus bill. In his cheerleading press conference for the bill, Obama correctly declared that dependence on hydrocarbons was jeopardizing our national security. He also cleverly described this as a massive creator of high tech jobs that can’t be exported. I’m not highlighting this because I live in California, wear sandals all year, drive a Prius, or have a refrigerator stuffed as if a giant gerbil does my shopping. Since this economic crisis started, the key has been to buy whatever the government is buying, and since they are going into alternatives in a big way, you want to be right ahead of them (see my solar piece at www.madhedgefundtrader...). Time to add more alternative energy names to your list to buy on dips. Look at American Superconductor (AMSC), which is involved in advanced wind turbine designs and electric power grid upgrades. Also take a peek at Covanta (CVA), an established business that profitably burns trash to create electricity.

Jun 29 10:26 AM

[jmmx:]

The question is simple - If the global warming people are correct -- I do not care to argue yes or no here but any sane person has to admit to the possibility that they are -- then the potential cost of NOT converting is simply enormous. The single event of Hurricane Katrina has cost this economy scores of billions of dollars, if not more. The fires in California alone some 100s of millions of dollars. What are the costs of the dwindling water supplies around the world as glaciers retreat world-wide at a rate that is astounding researchers? And if this water becomes scarce, then what about the rising cost of food?

Oh it is true that no one can be 100% sure that the current climate change is due to AGW or not, but if a preponderance of evidence points to at least a LIKELIHOOD that it is, then shouldn't we prepare for it?

Some people will hide their head in the sand and gamble with our children's lives. Apparently Mr Jackson has no concern for out children's future.

Jun 29 10:47 AM

[Paul Wowk:]

"The brilliant Waxman and Markey are demanding that electric utilities use grossly inefficient solar and wind power sources to generate 20 per cent of their power."

I work in the power generation industry. This is a bad statement. Even looking at the context, it is wrong.

Firstly, in some cases, wind can be the most efficient power source. That is, mechanical energy in vs electrical energy out.

Secondly, the bottom line is cost, not efficiency. Wind energy is almost competitive with coal and is cheaper than nuclear energy and natural gas energy. It is no surprise that companies that traditionally operate fossil fuel power plants are putting up wind turbines (PNM, Florida Power and Light, etc.). Not just because it is green, because it is profitable.

Jun 29 10:49 AM

[User 412487:]

Air and water polution are for real. Carbon fuels are not renewable,they polute and raise CO2 levels and promote global warming.The cost of carbon fuels will sky rocket by the most basic law-supply and demand.Carbon fuels are not renewable and the world does not have and endless supply. The cost for air,sun,and geothermal energy is high now but after its established, the resources are free and clean.The longer we do nothing like Bush and Regan,the more it will cost.Had we started a 5% per yr. alternative energy program in 1980 we would have been carbon free nine yrs. ago.How much money have we sent overseas to people who dislike us for carbon fuels the last 9 yrs.Carbon fuels will become scarce.Should we wait till then? Aternatives will last forever and will not poison us or cause climate change. We can pay now or pay later.We will pay! That is for certain.When will it be cheaper?

Jun 29 11:10 AM

[Stu in SDGO:]

Astounding that some of you are ostensibly "free-traders" and yet swoon to the cockamamie swindle that is "cap-and-trade." The market is good enough to manage human economic affairs for everything except energy, is that it? And for that we simply MUST engage in the most onerous central planning in the history of America? As irrationally determined as any delusional Obama fan can concoct. I strongly suggest anyone who believes in the hoax of "anthropogenic global warming" to visit this website: scienceandpublicpolicy.../ and read some of Lord Monckton's analyses. And after that, go back to high school and run a terrarium experiment to learn how the CO2-O2 life cycle works.

Stu in SDGO

Jun 29 11:29 AM

[R Fiske:]

Hmph.

Another Rightwing Idealist, trying desperately to prop up a hollow and crumbling idea.

'Efficiency'? I suppose that's a euphemism for 'cost' or something. Burning fuels is not 'efficient', the heat and energy are largely wasted. It's just that we found something that we could light on fire, and so we called ourselves Prometheus and felt all Greek about it.

Alternative energy equipment is expensive, no doubt, but it actually recoups ALL of its costs and keeps on giving, while Mr. Prometheus can only get rich by burning up our Mountains and laying waste to the streams that once ran beneath them.

Madness is adamantly doing the same old thing and expecting (in this case) that nothing ever need change that picture.

Adapt or perish.. or just bum a ride from one of us, who's willing to forget your historic obstinance and help you out.

Jun 29 11:48 AM

[Stu in SDGO:]

Oh, I get it now. Madness would be trying centralized planning (a Left-wing idealist's dream) and socialism over and over again and expecting different results? Tell me again where this "hollow and crumbling idea" has been successful?? A fool and his money are soon parted, as you're about to find out as a result of cap-and-trade.


On Jun 29 11:48 AM R Fiske wrote:

> Hmph.
>
> Another Rightwing Idealist, trying desperately to prop up a hollow
> and crumbling idea.
>
> 'Efficiency'? I suppose that's a euphemism for 'cost' or something.
> Burning fuels is not 'efficient', the heat and energy are largely
> wasted. It's just that we found something that we could light on
> fire, and so we called ourselves Prometheus and felt all Greek about
> it.
>
> Alternative energy equipment is expensive, no doubt, but it actually
> recoups ALL of its costs and keeps on giving, while Mr. Prometheus
> can only get rich by burning up our Mountains and laying waste to
> the streams that once ran beneath them.
>
> Madness is adamantly doing the same old thing and expecting (in this
> case) that nothing ever need change that picture.
>
> Adapt or perish.. or just bum a ride from one of us, who's willing
> to forget your historic obstinance and help you out.

Jun 29 12:05 PM

[User 331120:]

i am wondering what was said when we introduced unleaded gas into the system?

Jun 29 12:08 PM

[nakedjaybird:]

My, my,.......free energy (fuel) cost forever with solar and wind. So energy at point-of-use doubles over the next decade. So what? Electricity has increased from $0.01 per kwh to north of $0.08 as a national average over the past few decades (that's 8x or 3 doublings), and we are still here (vis not to examine what capex dams and nuclear plants involved). And then there is gasoline: less than $0.25 per gallon and now exceeds $2.50 per gallon (that's 10x or more than 3 doublings), since I was in grade school. Neither killed us, nor created the gloom and doom that the next doubling fears render. Free energy forever is worthy of some capex - unfortunately the rapist is the mfgr and installer of the cap. And they know how to do their job too well! The sick part of the energy world is the capitalist - it has no conscience.

Jun 29 12:12 PM

[TCK:]

All good points !

Especially considering there is no alternative energy source to replace carbon/petroleum at any any price point !

Jun 29 12:19 PM

[quick:]

jerrydd - I agree with you completely! It will cost us a little money up front, but save us a TON of money in the long run!

Jun 29 01:09 PM

[R Fiske:]

Sdgo;
Wasn't IRAQ a result of 'centralized planning'? It's not a question of WHETHER you have a system of Government that takes on decisions that affect the whole nation, but whether those plans make sense or not. Both sides want to be in control and enact their plans, be they 'Torture Macht Frei' or 'Bailouts Macht Frei' .. to highlight some of the low-points of both parties.

Personally, I'm agnostic on Cap/Trade for now. But when the author says Renewables are Inefficient, I just have to laugh. Solar Panels are expensive, and they only capture up to about 15-18% of the Sun's energy at this point.. but the rest of that Sunlight was going to hit the Earth anyway.. it's not like the inefficiency of a Gasoline Engine that only uses a quarter of the incredible amount of power in that fuel to move the car, throwing out the rest, PLUS the fumes.

I'm happy to hear the economist battle out the Schemes, Carbon Tax, Gas Tax, Cap/Trade.. whatever. But there are tools like PV and Wind that are proving themselves both energywise AND economically (Look at how many are being bought and installed, even in this economy) .. and if Nigeria, VZ and Saudi don't pull off their spectacular promises, we'll be dying for every watt we can get hold of.

This isn't about 'Socialism' ... you guys are so snookered over these easy Red Meat terms. (Gay Marriage!, Illegal Immigrant!) It's about investing in tools that work for long years with minimal running costs. and the Fuel is delivered free almost every day. Just in Time!

Bob

Jun 29 02:46 PM

[elliot_mllr:]

Excellent article.
Where is the infrastructure to transport and distribute wind powr, etc?
Fortunately Steny Hoyer is not yet a Senator. He is still only a congressman.

Jun 29 03:20 PM

[nLightn:]

Just listen to all the shrill attacks and fear mongering (the sky will certainly fall unless you do exactly what the Obama-Pelosi-Reed administration demands); the total absence of reasoned deliberation based on facts.
1. There is no settled science of human-induced global warming. As Kimberly Strassel points out in a June 26, 2009 Wall Street Journal article, scientists are increasingly skeptical about the idea: the earth's temperatures have not risen since 2001, despite growing concentrations of CO2, and peer-reviewed research has debunked doomsday projections about rising oceans and the polar ice caps. Also see Australian geologist Dr. Ian Plimer's book "Heaven and Earth," dissecting the "evidence" underlying the manmade global warming dogma.
2. Based on this unsettled, unconvincing science, Obama and the Democrats by their cap and trade legislation will hugely increase energy costs for all Americans and for American industry, making American business less competitive globally and less able to grow and create new jobs.
3. These huge new energy taxes on Americans and American business will have virtually no impact on carbon emissions worldwide, since America does not control global air.
Thank you for your excellent article, Gerard Jackson.

Jun 29 03:29 PM

[MudEngineer:]

I do know that it takes an incredible amount of hydrocarbon energy to manufacture, transport and install wind turbines, solar panels, electric cars and whatever other alternatives that you can come up with. If you tax the oil industry too much, you will get less oil and therefore that oil will no longer be available to create all this new alternative energy infrastructure. As the cost of oil rises, so does the cost of creating "any" new alternative energy equipment. We need more oil now "and" more wind turbines, solar panels, electric cars and natural gas vehicles. Have Obama allow the Bush directive to open up the rest of the Gulf of Mexico to oil exploration go ahead and you might have a chance to save the planet.

This is also being done at a time when oil production is already in decline due to the now rapidly depleting existing oil wells (depletion rate is now 9% per year). Drilling is already down about 30% in the U.S. now, so let's make it even worse by creating a new tax.

Jun 29 05:12 PM

[quick:]

Just as an example, here's another side effect of using fossil fuels as our primary energy source so that we can have "cheap" electricity:

news.yahoo.com/s/mccla...

When comparing the cost of coal vs. renewable energy, these kinds of clean up costs are NEVER taken into consideration and should be!

Jun 29 10:28 PM

[zagman:]

Great in your face article by Mr. Jackson that bring out the Obama police in full force. It's absolutely mind boggling how entrepreneurs operating in a free enterprise system refused to invest in alternative energy with any success. Could it be that it does not make economic sense? Instead we are having this farce of a policy forced on us by radical politicians and they are using our money (not theirs) to pay for it. When all is said and done the American public will wake up and vote these idiots out of policy making positions. It will then take us several decades to clean up the total destruction of our country if we are still are a free country at that time.

Jun 29 11:39 PM

[Windsun33:]

At least get your numbers right. Several of what you quoted are way off. Just for example, if this is true, it means that Every country that has oil but Canada and Mexico are dictators or terrorists. And BTW, we get no oil to speak of from Iran.


On Jun 29 10:22 AM jerrydd wrote:

> From oil we spent $700B last yr in imported oil which 50% went directly
> to Iran, Russia, oil dictators and terrorists.

Jun 30 01:42 AM

[Windsun33:]

Obama's main justification for it now seems to be that it will "send a message" to China. Yeah, that has worked so well in the past...


On Jun 29 11:39 PM zagman wrote:


> ...Instead we are having this farce of a policy forced on us
> by radical politicians and they are using our money (not theirs)
> to pay for it. When all is said and done the American public will
> wake up and vote these idiots out of policy making positions. It
> will then take us several decades to clean up the total destruction
> of our country if we are still are a free country at that time.

Jun 30 01:44 AM

[martinpw:]

The fundamental premise of this articles appears to be a rather embarrassing error by the author. The author says:

"At a cost of $9 trillion Obama's energy bill averages $0.237 trillion per year which would amount to $5.684 trillion in 2036. As GDP will have doubled to $28 trillion this means that Americans will be facing a totally unnecessary increase in energy prices of $5.684 trillion, which would be 20 per cent of GDP."

The $5.684 is the total spending from now to 2036, not the amount spent in 2036 alone. The GDP figure is for 2036 alone. So it is nowhere near 20% of GDP, probably closer to 2% of GDP. Kind of renders the rest of the article irrelevant.

Jun 30 02:35 AM

[Davewmart:]

Aside from grave errors others have pointed out, to ignore costs imposed on society by coal does not make them disappear.
Even in economic terms the burdens of ill-health etc are substantial.
Wind can play it's part, as can solar.
The problems occur when advocates leave the realm of practicality and try to push their preferred solution too far, with fantastic schemes to send power from solar in the South-west to the rest of the country, and so power even the North-east in the winter.
This is because many of the supporters of renewables are ideologically opposed to nuclear power, which is needed for baseload power in any realistic low-carbon scheme.
Nuclear is expensive, or rather new construction is, but then again anything would be if it were run in the same way as the nuclear construction industry, with one-off builds of a complex system to control an inherently dangerous technology.
Fortunately alternatives exist to go to much smaller, factory built units which cannot go bang and could even be substituted into existing coal facilities.
One such technology is liquid fluoride thorium reactors, which was prototyped and performed well in the 60's.
The program was killed because they are lousy at producing weapons grade materials, and because they don't need to have their fuel extensively prepared, a major source of income for nuclear providers.
They can also use up all the 'waste' from existing reactors and the weapons program, burning up the actinides which are the real nasties and producing very little waste themselves which is radioactive for a couple of hundred, not tens of thousands, of years.
The entire US power grid, if powered by this technology, would use around 500tonnes of thorium a year, with a correspondingly tiny amount of waste.
The US has vast reserves of thorium.
Here is more information on the technology:
www.energyfromthorium.com/
It should be noted that this is not some far off technology needing fundamental breakthroughs like fusion, but needs simply some more basic engineering, chiefly in the fields of high temperature materials, to test out which works best.

You see, the author of this article is also assuming that global warming is false, which appears to be against most of the evidence.

Fortunately solutions are available which not only do not emit carbon, but can produce power at less than current cost, and which will not run out.

Jun 30 05:53 AM

[Saildog:]

Oh Dear

Gerard Jackson has crawled out from under his stone. The real issue here is that Jackson thinks Global Warming "is garbage". He also thinks Peak Oil "is garbage".

Both are real risks that need proper management. Obama's bill is a long way from perfect, but it is a start at attempting to deal with an energy crisis that is all too real, whatever Jackson and his band of Austrian school economists think.

His arrogance is breathtaking. The academies of science of all the G8 nations and of India and China have endorsed Global Warming theory and called for rapid action. Just who does he think he is?

Jun 30 09:46 AM

[nakedjaybird:]

TCK - yes, they call FOSSIL Energy FOSSIL for a REAL reason!!

Jun 30 10:46 AM

[Davewmart:]

I was previously mildly sceptical of global warming, but in my view this is conclusive:
www.sciencedaily.com/r...
Correlation does not prove causation, of course, but a one-for-one correlation between CO2 levels and temperature over hundreds of thousands of years mean that you would have to make some pretty spectacular assumptions to get to a conclusion that temperatures are unlikely to rise this time is step with CO2 concentrations.
Least hypothesis is that temperatures will rise to the same level as they were before with similar levels of CO2.
Hanging on to the proposition that they won't is now simply perverse.

Jun 30 11:20 AM

[jmark:]

This type of "perversion" is in the eye of the beholder. For alternate views on paleoclimate data and interpretations (including ice cores) in the context of AGW, see Section 3.1 of the following report:

www.heartland.org/publ...


On Jun 30 11:20 AM Davewmart wrote:

> I was previously mildly sceptical of global warming, but in my view
> this is conclusive:
> www.sciencedaily.com/r...
> Correlation does not prove causation, of course, but a one-for-one
> correlation between CO2 levels and temperature over hundreds of thousands
> of years mean that you would have to make some pretty spectacular
> assumptions to get to a conclusion that temperatures are unlikely
> to rise this time is step with CO2 concentrations.
> Least hypothesis is that temperatures will rise to the same level
> as they were before with similar levels of CO2.
> Hanging on to the proposition that they won't is now simply perverse.

Jul 01 03:40 PM

[bartpr:]

you are completely ignorant or knowingly ignoring the destructive effects of C02 in the atmosphere form coal fired power. the simple test of heat absorbtion of C02 is the use of the gas in shielded electrode welding. C02 is used to absorb the heat generated by the weleding electrode. it does the same thing in the atmosphere. it hold the heat.

also, have you ever part of the production of power by coal. check out the ash scrubbers and the amount of lake water used to wash the ash out of the stacks. it is tremendous. this is waste big time.

europe is already seeing the effect of coal power and acting accordingly. we are controlled by the industry here.

wait until there is a shortage of water to scrub out the ash. the public will turn on the coal industry big time.

Jul 02 09:47 AM