The Politics of Offshore Drilling

Fresh off of his national "to drill or not to drill" tour, Interior Secretary Ken Salazar has announced that the Administration will proceed with plans to auction off oil drilling leases in the Gulf of Mexico.

From an energy perspective, that's good or that's bad depening on who you talk to. But form a political perspective, it's fascinating.

Consider this.

The original plan to drill the Gulf (and Alaska) was owned politiclally-- lock, stock and barrel-- by former President George W. Bush and it enjoyed broad support by conservatives.

New President Barack Obama-- arguably the most liberal president since FDR and the political antithesis of Bush-- is swept into office promising to undo everything Bush put into action. (Except the stimulus... but I digress.)

A federal appeals court in Washington essentially does the dirty work on the Bush offshore oil leases for the new president, invalidating them for insufficient environmental impact analysis on the Alaska portion of the plan.

Rather than check off "terminate the Bush offshor oil plan" from his Presidential to-do list, Obama sends out Interior Secretary on a national listening tour to guage public sentiment for drilling.

Now comes the announcement that Obama is going ahead with the plan-- in the Gulf, at least, which was the part of the plan the court ostenisbly did not object to. The Interior Department has no plans to appeal the court ruling, which is a de facto acceptance of the plan's illegitimacy, but it is asking for "guidance" from the court. All of this notwithstanding, the lease auctions are going ahead as planned.

You would think conservatives would be thrilled, right? Well, the Republicans, for their part, criticized Obama for not going far enough, with one lawmaker stating that to only drill in the Gulf puts "all of our eggs in one basket."

All of this has been put into play by a President who has made curbing the the use of fossile fuels and promoting renewable energy production and development the centerpiece (along with health care reform) of his legilsative agenda.

Around and around we go...

Offshore oil leases to be auctioned despite legal uncertainty [Los Angeles Times]

A "Government Solution" To Climate Change Still on the Table in California

If you want to be a player in Sacramento, inserting yourself prominently in the energy agenda is a prudent place to start. Nobody has ever accused Sen. Alex Padilla of not being "prudent" (or insert your own synonym here).

So nobody should be surprised by the longish piece in Capitol Weekly today about Padilla's efforts to take up where Don Perata left off on pushing for a massive new state agency/research institute to study potential solutions to climate change.

Perata's bill to establish the $50 million a year insitute was killed for a variety reasons-- not the least of which was Perata himself and the implications it had for his stature in the capitol-- but he's gone now and Padilla has stepped up with a what the Weekly calls a "placeholder bill," hoping to revive negotiations over the propsoed institute next year when the economy improves.

The Weekly reports:

"Padilla’s bill takes a slightly different tact, but it is sure to go through a number of revisions if and when it is resurrected next year. As of now, the bill is still mostly a placeholder. It does not specify a governance structure for the Institute, the size or scope of the research to be undertaken by the Institute, or the funding source for the Institute’s operating costs or research,” according to a Senate analysis of the bill.

Padilla says the idea of the institute would be to leverage federal stimulus dollars, and coordinate efforts to meet new state greenhouse gas requirements set forth in AB 32, the greenhouse gas reduction bill authored by now Sen. Fran Pavley, D-Agoura Hills."

-and-

"In addition to the ratepayers’ fee, the California Climate Change Institute would have been financed with about $12 million worth - about half - of the natural gas fees that currently go to an Energy Commission research program known as PIER. The institute’s total budget would have been about $500 million dollars over the next decade. The intention was to woo federal matching money, too - a likely prospect because of the federal government’s infusion of cash into carbon emission research. Since the goal of the institute, which was written into the legislation, was to get matching money for 100 percent of its income, the CCC1 would have had authority over $1 billion. "

All of this begs the question of whether we really need a $50 million a year state entity to combat the problem of global warming. After all, nothing says "innovation" "groundbreaking" like a California state agency.

Legislature still working toward greenhouse gas institute [Capitol Weekly]

On The Road Again... Just Can't Wait To Get On The Road Again....

Traveling today so not much time to sift through the news...

But for your entertainment, check out Sen. John Kerry's response to Sarah Palin's cap and trade rant... he published it yesterday in the friendly confines of the Huffington Post.

This is like some cyber-consolaton-game between a "could have been President" and a "wow that was weird, Vice Presidential nominee"... I suspect more than a few people would prefer they just exchange email addresses and have this debate off line!!!!

What Gov. Palin Forgot [Huffington Post]

More on Climate Change and Cap & Trade

The opinion section of today's Washington Post is a treasure trove of energy observation.

First, columnist Anne Applebaum takes on the notion that world leaders can do anything at all about climate change. Applebaum argues that the only thing that is going to fix the problem is money-- not treaties, speeches or conferences.

Now, when she says "money," she doesn't mean it in the way President Obama would typically interpret it, i.e., "Let's print more tax dollars and subsidize companies in the green energy sector...and while we're at it, maybe create an extra government agency or two to perform (poorly) redundant regulatory tasks."

Applebaum argues that the only way to fix the climate change problem is for some entrepreneur to get obsceneley wealthy running a company that actually performs in the renewable energy sector (Memo to T. Boone Pickens...).

She states:

"The truth is that carbon emissions will not be reduced by international bureaucrats, however well-meaning, sitting in a room and signing a piece of paper. They will not be reduced by public relations campaigns or by Oscar-winning documentaries. Above all, they will not be reduced by a complex treaty that neither the United Nations nor anyone else can possibly supervise, particularly not a treaty that effectively punishes those countries that abide by it and ignores everyone else. They can, however, be reduced by the efforts of entrepreneurs such as Pickens. If he and others can find economically viable ways to produce clean energy, then the problem will solve itself without the aid of a single international conference. To put it another way: The first solar power billionaire will have many, many imitators. "

Chew on that.

But the real star of the opinion pages is the "gift that keeps on giving"... Governor Sarah Palin of Alaska, who comes out firing against cap & trade:

"American prosperity has always been driven by the steady supply of abundant, affordable energy. Particularly in Alaska, we understand the inherent link between energy and prosperity, energy and opportunity, and energy and security. Consequently, many of us in this huge, energy-rich state recognize that the president's cap-and-trade energy tax would adversely affect every aspect of the U.S. economy.

There is no denying that as the world becomes more industrialized, we need to reform our energy policy and become less dependent on foreign energy sources. But the answer doesn't lie in making energy scarcer and more expensive! Those who understand the issue know we can meet our energy needs and environmental challenges without destroying America's economy.

Job losses are so certain under this new cap-and-tax plan that it includes a provision accommodating newly unemployed workers from the resulting dried-up energy sector, to the tune of $4.2 billion over eight years. So much for creating jobs.

In addition to immediately increasing unemployment in the energy sector, even more American jobs will be threatened by the rising cost of doing business under the cap-and-tax plan. For example, the cost of farming will certainly increase, driving down farm incomes while driving up grocery prices. The costs of manufacturing, warehousing and transportation will also increase.

The ironic beauty in this plan? Soon, even the most ardent liberal will understand supply-side economics."

You betcha!

But alas, the chattering classes- as they are wont to do-- have already pounced on her, saying she has no idea what she's talking about.


The Summit of Green Futility [Washington Post]



The 'Cap And Tax' Dead End [Washington Post]

Do-It-Yourself Geothermal

Until now, the little town of Anderson Springs in Lake County was known as a place to hike and for its seismic activity. Soon it could be known as town that revolutionized the way we harness geothermal energy.

A start up company called AltaRock is testing a way to essentially create geothermal energy.

Traditionally, geothermal power has come from tapping existing pockets of steam beneath the earth's crust; steam that is then used to power turbines and create electricity.

Like any form of alternative enregy, be it solar, wind, etc., the challenge with geothermal has been that, in order to harness it, you have to go where the steam pockets are. That may no longer be the case.

AltaRock is testing a new method whereby they drill down to superheated rock (in the case of Anderson Springs, a drill boring of 2 miles) and then inject water into shaft, creating steam off the superheted rock below.

If it works, the upside is limitless.

However, as we have seen with other forms of renewable energy, the project is not without its detractors.

Solar arrays have been opposed by conservationists who fear damage to desert ecosystems; wind turbines have been opposed by animal rights advocates who fear bird strikes (and by Kennedys who like their ocean views).

Now the residents of Anderson Springs are speaking out against the AltaRock project, fearing that it will exacerbate an already dicey seismic situation, and cause earth quakes.

It's an interesting experiment to watch play out.

Small town fears quakes from geothermal energy project [Sacramento Bee]

Are Conservationists Winning the Solar Battle?

Reuters moved a story yesterday that posited the theory that the future of solar power in California lies in "distributed generation."

Translated: big solar farms out in the desert cause too many political problems, don't create enough jobs, are expensive, etc., etc., so the future of solar lies in individual, small rooftop arrays.

From Reuters:

"Trend-setting California may be the test case for the United States. It has the most aggressive renewable ambitions of any state in terms of raw energy production. A target of 20 percent renewables may be raised to a 2020 goal of 33 percent.

"We really may be in a paradigm shift," said Judith Ikle, program manager for procurement of renewables and climate mitigation at the state's Public Utilities Commission, which has just finished an analysis of how to build a state-wide system that gets a third of its power from renewable sources.

California expects most of its new renewable power to come from big solar thermal desert plants, which use mirrors to focus the sun's heat and drive a generator.

But the PUC also considered a "distributed generation" model of putting solar panels on rooftops all over the state, commenting that political roadblocks for transmission and big plants could make it more attractive and that it could be a cost-competitive solution if solar panels, now one of the most expensive renewables, continue a price dive."

A PUC analyst quoted in the piece comments that distributed generation is great in theory, but price and grid integration issues remain.

Politics may make future of solar energy "small" [Reuters]

Jobs vs. The Environment - Just Another Day in California

Playing the "jobs" card has been a standard tactic for real estate developers for years. Recently, President Obama has used it to sell his energy agenda. Now, against a backdrop of 11.5% unemployment in California, Chevron is screaming "JOBS!!!"

After getting hit with a negative ruling on its EIR for the Richmond refinery upgrade, Chevron was ordered to halt construction on the project. The judge says the EIR was inadequate; Chevron disagrees and is appealing.

At issue are two massive furnaces designed to create hydrogen needed to refine "sour crude." But environmentalists say the furnaces are trojan horses that are capable of processing the ultra-dirty "heavy" crude and that is Chevron's true agenda.

Caught in the middle of the he-said, she-said are more than 1,000 workers construction workers and electricians who have been laid off.

In the San Francisco Chronicle, one environmental activist who is driving the fight against the expansion made the comment that Chevron is flush with cash and shouldn't lay off the workers. (He doesn't address what 1,000 construction workers and electrricians would actually do with the project shut down.)

Look for more grandstanding and demagoguery on this issue as the appeals play out.

Chevron to appeal ruling on Richmond refinery [San Francisco Chronicle]