Energy Will Be Obama's Waterloo

By William Tucker 

And it will all be his doing -- blaming Bush won't cut it anymore.

When President Obama suggested last week that we might eventually be replacing oil with algae, Mark Whittington of Yahoo suggested that the President had reached his "lunar base moment." It was an apt analogy. Just as Newt Gingrich's musings about a moon colony finally made the public cock its head a little when listening to him, so the moment may have arrived when the environmentalism fantasies that inhabit the President's brain will finally be exposed to the light of day.


As things stand now, $5 gas may shift the entire focus of the election onto energy and what the Administration's faculty-lounge policies have been doing to America's industrial base. To the public, "clean, green energy" will no longer be a dreamy vision of windmills and solar collectors but the hard reality of spending $100 to fill your tank. There's one more thing as well. This will be the first issue in four years where President Obama won't be able to cast reflexive blame on George Bush.
The President began his term with an Inaugural Address promise that "We will harness the sun and the winds and the soil to fuel our cars and run our factories." He has kept that promise. Using the crowbar of the $1 trillion "stimulus," the Administration has shoehorned much of the country's energy investment into a Rube-Goldberg sector of the economy made up of the half-baked projects of armchair entrepreneurs plus the off-the-charts dreams of those wanting see the entire planet transformed into an environmental utopia.
Prompted by various federal and state government tax incentives plus market-obliterating "renewable mandates," hundreds of square miles of mountain and prairie have been covered with 45-story windmills that look like the archaeological remnants of a previous race of 80-foot giants. These "wind farms" generally produce electricity that is essentially useless. When the wind blows, windmills can force other forms of generation out of the market because they are free of fuel costs. But those other forms of generation have to be kept running just in case the wind dies down. Last year when temperatures rose to 110 degrees in Texas, that state's 7 percent "wind capacity" proved absolutely useless in the heat-induced doldrums.
And wind "farms," it should be noted, always talk in terms of "capacity" rather than output. That's because they only operate about 30 percent of the time. Nobody has yet invented a way to store commercial quantities of electricity and it may be impossible without building facilities of equally gargantuan dimensions -- say an entire city block of rechargeable batteries. Without any means of storage, wind power is essentially a nuisance.
Then there is solar electricity, which, in order to access, California is now planning to cover dozens of square miles of pristine desert (yes, there is already environmental opposition) in order to prove the world can run on sunshine. Solar energy is a bit more concentrated than wind so that it only takes about five square miles of highly polished collectors to produce 100 megawatts -- when the sun shines. In the desert environment, these solar panels will require constant cleaning and polishing to keep them from getting covered with dust and therefore becoming dysfunctional. It's a labor-intensive task that will require lots of water coming from who-knows-where.
And how about the electric car? Caught in the headlock of a government bailout, GM was forced to push its Volt out the door -- where it has sat on dealer lots ever since. Sales are miserable, except for the occasional government agency that drops by to place an order. Government patronage of the electric car industry has also produced the $104,000 Fisker Karma, made in Denmark but shipped to our shores so that Leonardo DiCaprio and a few others could buy first editions. Then there was the Bright, which went bankrupt last month, and the Asperta, which failed before that.
Now all this wouldn't be so bad if the Administration hadn't spent the other half of its time trying to put the fossil fuel industry out of business in order to clear the path for the Green Age. After spending a year failing to pass cap-and-trade, the Administration has doubled down with the Environmental Protection Agency, turning it loose on the nation's coal plants. The Sierra Club just celebrated the closing of the 100th coal boiler, with more to come. Just what this will mean for the reliability of the electric grid will be revealed this summer when electrical demand peaks. Last August, with temperatures at 110 degrees, Texas consumed a record 68,000 megawatts of electricity with only 76,000 MW of generating capacity on hand. Since then, the EPA has demanded the closure of 10,000 MW of Texas coal. The state has dodged the bullet only by going to court. Industrial states from Pennsylvania to Wisconsin are facing the same dilemma. If the region starts suffering power shortages this summer, will George Bush be there to take the blame?
Not that the President hasn't been playing both sides of the fence. With extraordinary chutzpah, Obama has claimed credit for the increase in oil and gas production through fracking technology. As Newt Gingrich pointed out last week (chronicled on this site by Peter Ferrara), the only reason fracking has succeeded is that all the new deposits are east of the Rockies and therefore beneath private land. In the Far West, where the federal government still owns up to 80 percent of the territory, the pace of exploration is slower than ever. The Institute for Energy Research has shown that drilling on land owned by the Bureau of Land Management is at an all-time low, only half what it was during the Clinton Administration.
How about offshore development? For a few brief months, the Administration actually talked about opening up new areas for exploration. Then came the BP oil spill and since then the Gulf of Mexico is becoming a backwater. Of 51 rig platforms stationed in the Gulf, only 21 are under contract and 15 actually drilling, a utilization of only 41 percent. The rate in rest of the world is 83 percent and in Europe and the Mediterranean 96 percent so there's plenty of demand out there. Fourteen rigs have left the Gulf over the last two years and the pace is accelerating. Since the Gulf provides 30 percent of our domestic production, this is bound to have an impact.
This bureaucratic foot-dragging is recognized all over the oil industry. "These have been the most difficult three years from a policy standpoint that I've ever seen in my career," Bruce Vincent, president of Swift Energy, told the annual meeting of the National Association of Petroleum Engineers last week. "They've done nothing but restrict access and delay permitting." And that doesn't even include the Keystone Pipeline, where the Administration kicked away 700,000 barrels a day, 4 percent of our total consumption. And all this isn't supposed to have an effect on gas prices?
In truth, though, all these considerations are long-range. What is having a more immediate impact is probably the easy money policies of the Fed. Oil isn't climbing so much as the dollar is depreciating. As the Wall Street Journal notes, if President Obama is ready to reap the reward of rising housing and stock prices, it's only fair that he accept rising commodity prices as well. This is treacherous territory. Every major downturn since the Arab Oil Boycott of 1973 has been preceded by a run-up in oil prices. It seems to signal an inflationary bubble in the economy that is about to pop.
So what can the Administration do between now and November? To be frank, they haven't a clue. President Obama is a lawyer, not an economist or a scientist. His knowledge of energy is drawn from the chitchat in the faculty lounge.
In any case, wherever supply and demand are concerned, Democrats are rarely willing to concede to reality anyway. Bernie Sanders is already yammering about "speculators" and the apologists in the press are lamenting that "the President isn't to blame for gas prices." There are even off-the-wall stories claiming that drilling and pipelines will only make things worse. "The Canadian plan [for building Keystone] was to use their market power to raise prices in the United States and get more money from consumers," proclaimed Bloomberg breathlessly -- just as every entrepreneur plans to acquire "market power" to "get more money from customers." Only to end up have the market end up claiming power over them. When defending something like the Obama Administration's energy policies, it's always important to make simple things sound complicated.
At bottom, the real problem is what Charles Murray describes in his new book, Coming Apart --the growing gap between college-educated people schooled in the wish fulfillment of "green energy" and the hard-won, hard-nosed wisdom of blue-collar America. To the elite in New York, Washington and San Francisco, energy generation is something we're trying to put behind us. It's déclassé. Only in blue-collar regions like Pennsylvania, Ohio and North Dakota do the realities of energy become visible, tangible, and audible -- and taxable.
The good news for Republicans is that the battle lines are drawn. After a summer of $5 gas plus power shortages in industrial regions, the results of four years of Obama energy policies will be hard to avoid. And there won't be any George Bushes around to take the blame.