Pat Allen: The View from Right Field

President Obama Calls for More Action Against Energy Market Manipulators

Sigh.  President Obama is calling for all kinds of new action against energy market manipulation.  More power and more money for government agencies to investigate alleged manipulators.  Increased criminal penalties.  Sigh (again).

I hope that President Obama realizes this is all for show and that it really isn’t going to accomplish anything.  Or, I should say, it won’t accomplish anything helpful.  It might make things worse.  Some of the things President Carter did in the late 1970s actually made things worse, so it is entirely possible President Obama could make things worse today.

In any case, I hope President Obama understands this is all for show.  In a bizarre way, I would prefer that he was smart enough to realize that this won’t really help and that he was doing it just for political reasons.  I think I would prefer the cynicism of that versus the economic illiteracy of someone who thinks this kind of thing might actually help.

Gas Prices Are High and President Obama Seems Worried

On Thursday President Obama complained that Republicans would be trying to take political advantage of the recent spike in gasoline prices (something the President would never do if the situation was reversed) and that the Republicans’ only energy plan was to “drill, drill, and keep drilling.”* Of course that’s not true, and the President knows it is not true, so I don’t know why he said it. But in any case, the fact that more drilling won’t solve the whole problem, doesn’t mean more drilling isn’t part of the solution.

But then Democrats also say that more drilling won’t help because it will take five years for the oil from the new drilling to reach the market. I could not tell whether President Obama used this line yesterday, but it is a common statement by anti-drilling Democrats (which is most of them).

In fact, I remember the Democrats using this argument in the summer of 2008 in response to Republican calls for more drilling at that time. President Bush wanted to allow more drilling on federal lands, but the Democrats wouldn’t allow it. We were visiting our daughter in Washington in August of that year. The Republicans in the House wanted to have a debate on energy – and on drilling. But Nancy Pelosi, the Democratic Speaker of the House (but not a democratic Speaker of the House), wouldn’t allow it. She locked the doors of the House chamber and shut off all the lights (except emergency lighting), microphones, C-SPAN cameras, etc. She shut down everything she could. But that didn’t stop the Republicans. They let people enter the House chamber through the Republican cloakroom, the one door Speaker Pelosi couldn’t lock, and they talked to the American people about energy. And while the Republicans were talking about energy inside the House, the Democrats were outside saying how drilling wouldn’t help because it would take five years for the oil to get to market.

Well, that was three and one-half years ago. If we had started drilling then, the oil wouldn’t be here yet, but it would be here in the summer of 2013. And that is not all that long from now.

Obviously, more drilling won’t solve our energy problems by itself. But more drilling will reduce our dependence on foreign energy. And to the extent more oil comes from the United States (and other stable countries), the whole world will be better off.

Also, while starting more drilling today won’t do these things now, the quicker we start, the quicker they will happen. And if we never start, we will continue to be more dependent on foreign sources of oil than we need to be, and we will continue to be more dependent than necessary on places that nobody wants to be dependent on.

-------
* This is actually a paraphrase of what the President said. The full quote is as follows:

"‘You can bet that since it's an election year, they're already dusting off their three-point plans for $2 gas. I'll save you the suspense: Step one is to drill, step two is to drill, and step three is to keep drilling. ... We've heard the same thing for thirty years. Well, the American people aren't stupid.’"

The Germans Say “Nein” to Nuclear Power

Last year, Angela Merkel’s government decided to reverse Germany’s decade-old policy to close all nuclear power plants by 2022.  But after the earthquake/tsunami disaster in Japan, Chancellor Merkel suspended that decision and shut down seven of Germany’s 17 reactors.  After further review (and some really bad state election results in Baden-Württemberg and Bremen), last week she reinstated the plan to phase out all nuclear power in Germany by 2022.  The plan also calls for greatly increasing the use of renewable energy.

In response, The Economist notes that Germany’s “subsidies for renewable energy are wasteful and its nuclear pull-out looks panicky.  In short, the post-nuclear recoil carries risks of its own.”  But ­The Economist also quotes Mark Lewis of Deutsche Bank as saying that if anyone can make it all work, the Germans can.  Before 1989, the same was said about the East Germans and communism.   They couldn’t.

Tim Pawlenty Tells Iowa That Ethanol Subsidies Have to Go

I don’t know who I am going to support for President in 2012, but that’s okay.  The election is 17 months away.

But while I don’t know who I am going to support, I do know that Tim Pawlenty, two-time Republican governor of Minnesota, impressed me when he went to Iowa on Monday to announce his candidacy – and he told the people of Iowa that “[t]he truth about federal energy subsidies, including federal subsidies for ethanol, is that they have to be phased out.”

Coming out against ethanol subsidies in Iowa.  That is impressive.

A Quick Comment on Japan and Nuclear Power

The accident and continuing problems at Japan’s Fukushima Daiichi nuclear plant, which followed Friday’s earthquake and tsunami in Japan, has led to calls for cutting back on nuclear power.  In Germany, the government is being pressured to reverse its decision last year to extend the life its nuclear plants.  According to yesterday’s Chicago Tribune:

“The nuclear crisis in Japan, even if authorities are able to bring damaged reactors under control, has cast doubts on the future of nuclear power as a clean-energy solution in the United States and around the globe.

Before the recent events in Japan, the world had seen a surge of nuclear reactor projects, and the talk in Washington was of a ‘nuclear renaissance’ as a way of slowing down climate change and weaning the U.S. from its dependency on petroleum. …

Now the word is that the emergency at Japan's Fukushima nuclear complex is likely to dampen the hoped-for renaissance. … Experts said it was clear that the situation in Japan would further erode enthusiasm and may even affect applications for continued use of existing plants ….

[T]he concerns expressed by scientists, business interests and politicians, not to mention the streets of Europe — thousands marched in an anti-nuclear protest in Germany on Saturday — left no doubt that the emergency in Japan would spark a reassessment of nuclear power.”

My quick comment:  I think it would be a mistake to put another hold on development of nuclear power because of what is happening in Japan.  In fact, given the scale of the earthquake and tsunami in Japan, if what we have seen so far at the Fukushima Daiichi plant is most of what happens, then the safety measures will have worked pretty well. 

Clearly, mistakes were made, and people have been hurt, but nothing is perfect.  There is no perfectly clean, perfectly safe source of energy. 

Oil drilling has its dangers, and petroleum has its pollution.  Not to mention some of the really nasty people we have to buy our oil from.

Talk to coal miners about black lung and mine explosions.  And consider the cost of the emissions controls to stop coal-fired electric plants from polluting the air.

Natural gas.  Ten or twelve years ago a house about a block and a half from us blew up because of a gas leak.  There is still an empty lot where there used to be a home.

Green energy?  Not for the next 20 or 30 years.  And even that assumes it works, unlike ethanol.

Speaking of ethanol, I recently read that deaths in grain silos have increased dramatically.  And that doesn’t even get to the silliness of putting 40% of our corn into our gas tanks at a time when food prices are increasing all over the world.

No energy is perfect.  But what is happening in Japan is not a reason to put a halt on nuclear power.  We don’t have any better alternative.

Save the Whales!

If the price of oil gets much higher, we're going to need them to light our lamps.

(Just kidding.)

Why Won't President Obama Call BP CEO Tony Hayward?

Last Thursday Tom Bevan at RealClearPolitics.com noted that, in the eight weeks since the Gulf oil spill started, President Obama has not talked to BP CEO Tony Hayward even once. When the President told this to Matt Lauer on the Today show on Tuesday, Mr. Lauer seemed surprised. Mr. Bevin was more than surprised:

"How can someone who says they are seriously engaged in leading the country through an ongoing crisis go more than seven weeks [now eight weeks] without speaking directly with the person whose company is tasked with a critical part of bringing the crisis to an end? Why would someone who claims to be focused night and day on doing whatever is needed to put an end to the catastrophe not want to have a direct line of communication with Hayward? In fact, instead of not speaking at all with Hayward, wouldn’t a President who was serious about taking charge of the situation and being as well informed as possible do the opposite and demand that the BP CEO provide him with constant direct updates of BP’s efforts in the Gulf, perhaps even on a daily basis? [emphasis in original]

While Mr. Bevan went on to say that President Obama’s failure to talk to Mr. Hayward is "an abdication of leadership," he didn’t try to figure out why President Obama hasn’t talked to Mr. Hayward.

Let me give one possibility: I think the President may be scared to call Mr. Hayward. President Obama doesn’t always do well in one-on-one confrontations. Remember that time when the President went to talk to the House Republican Conference last January and he got in a disagreement with Representative Paul Ryan about how much spending was going up. The President tried to blow Representative Ryan off, but Representative Ryan knows his facts, and he held his ground. Instead of continuing the argument (or discussion) with Representative Ryan, the President just said, "We’ll have a longer debate on the budget numbers, all right" and switched subjects.

I wonder if the President is worried that Mr. Hayward would know what he was talking about and that when the President tried to demagogue the subject, Mr. Hayward would hold the President’s feet to the fire – on the facts. The President might be worried he would come out on short end of it.

It is one thing to "kick ass" in a speech on national TV, like the President tried to do to the Supreme Court in his State of the Union address. It is another thing to do it when the other person can kick back. President Obama may not be sure he would win a fight with BP CEO Tony Hayward. Maybe that is why he is avoiding him. But that is what bullies do. If they can’t be sure of winning, usually because the other person can’t fight back, they won’t take the risk of fighting. The chance of losing – and being embarrassed – is too big.

Apparently, the White House has now asked (demanded-?) Mr. Hayward to come to Washington for a meeting, but even this meeting is just with some of the President’s aides, though The Los Angeles Times did report that the President "would stop by". It may be that the President figures he won’t get bested by Mr. Hayward if he just drops in, as opposed being there for the whole meeting.

President Obama Chooses His Polls Over Our Allies

During the George W. Bush administration, liberals and Democrats frequently criticized President Bush for his "unilateral" foreign policy. We need to cooperate with other nations and work with them, President Bush’s critics said. And Barack Obama said he would do that. Except that now that he is president, President Obama is treating key allies as slightly less important than a mid-range stop on a political tour.

Last March President Obama shortened and then cancelled a trip to Indonesia and Australia because he decided he needed to stay in Washington to get his health care legislation passed. But he promised he would reschedule. He did, but now he has cancelled his trip to these countries again. Why? According to the Associated Press:

"Obama had to weigh the risk of again putting off two allies in a strategic part of the world against the problems of crossing the globe while the devastation from the nation's largest oil spill continued - including the expectation of a political backlash at home.

The domestic agenda proved dominant."

But what exactly is President Obama doing to contain the spill? Is he an engineer? Is he personally cleaning up oil off the beaches or helping oil-covered wildlife? Of course not, and one wouldn’t expect him to do either of those things. There are other people who can do that. The president has other things he needs to do.

But President Obama has apparently decided that, instead of visiting allies like Indonesia and Australia, the most important thing for him to do is to stay home and say things like this:

"‘My understanding is that BP had contracted for $50 million worth of TV advertising to manage their image in the course of this disaster,’ the president said in remarks to reporters. ‘In addition, there are reports that BP will be paying $10.5 billion in dividend payments this quarter.’

‘Now, I don't have a problem with BP fulfilling its legal obligations,’ Obama added. ‘What I don't want to hear is that they're spending that kind of money on shareholders and spending that kind of money on TV advertising, [but] they're nickel-and-diming fishermen or small businesses here in the gulf who are having a hard time.’"

Statements like that are clearly important to getting the problem solved. Without the President going to Louisiana to say things like that for the television cameras, BP wouldn’t be doing anything to try to stop the leak. And neither would the federal government be trying to help. It all depends on President Obama being here and talking tough on TV. (sarcasm intended)

After all, Indonesia is only the biggest Muslim nation in the world and on one side of one of the most important and most constricted shipping lanes in the world, the Strait of Malacca. Nothing important to do there.

And Australia? It only has 1,000 troops in Afghanistan and eleven Australians who died helping in Operation Enduring Freedom. No reason to go there.

In other words, President Obama blew off, once again, two key allies because his standing in the public opinion polls was more important. Is this what then-Senator Obama was talking about back in 2007 when he said our problem was cynicism?

On Barack Obama's Political Philosophy

During the campaign last year, I wondered whether Barack Obama was "very liberal or just a moderate Democrat for change," to quote the title of this post. As we near the end of his first year in office, the answer to my question has become pretty clear: It doesn’t matter. When it comes to domestic policy, Barack Obama isn’t all that relevant. Policy has been made by Nancy Pelosi and the liberal committee chairs in the House and by Harry Reid and the sixtieth yes vote in the Senate.

Consider what has happened. On the first stimulus bill, President Obama did not present a proposal. He let Speaker Pelosi and the liberal committee chairs put a bill together – and then complained about the Republicans not cooperating with people who really didn’t want their input – unless it was to say "okay".

On cap and trade (called "Cap’n trade" by James Taranto of "Best of the Web Today"), Obama presented a general proposal, but the House committee chairs changed it totally so that it became more of a Christmas tree (as in "presents on the tree") for businesses and other people with connections than a policy to really cut back carbon emissions. The bill became so bad that some of its supporters were forced to argue, in effect, that it should be passed, so it would look like they were doing something, and it could be fixed later.

Which brings us to the mish mash of a health care bill that passed the Senate on Christmas Eve morning – without even a single Republican vote. (Not even a Republican from Maine would vote for it.) Once again, President Obama did not put forward any specific proposal or legislation. He just stated some broad general goals*, and then let Nancy Pelosi in the House and Harry Reid and the sixtieth Democrat in the Senate come up with the details; i.e., the stuff that really counts when it comes to your health care in the future. His position wasn’t much more than "If you pass it, I will sign it."

So after almost a year in office, I don’t know whether President Obama has real positions or whether he mostly cares about is getting laws passed so he can claim credit in the history books for accomplishing "big things". In any case, it is pretty clear that whether Barack Obama is "very liberal or just a moderate Democrat for change" isn’t relevant – because his positions haven’t really mattered.

-------------
* Barack Obama’s political philosophy, at least in domestic affairs, reminds me of the reason I used to tell people I liked teaching kindergarteners for Sunday School. I said I liked it because the theology involved was not much more than: "God is great. God is good. Yea, God." From what we have seen so far, President Obama’s political philosophy seems to mostly be: "Government is great. Government is good. Yea, government."

Update (12/26/09 3:55 pm): Corrected a typo in the footnote. 

A Way to Save Detroit – and the Planet, Too

As oil falls to little more than half of its per barrel price of just a few months ago and the price of gasoline drops from over $4.00 per gallon to not much more than $2.50 per gallon, you have to feel sorry for – Detroit’s automakers.

Four months ago SUVs, pick-up trucks, and big comfortable cars were an extravagance few could afford, and many were wondering why they ever bought them. U.S. car manufacturers were scrambling to cut production of big gas guzzlers and trying to come up with new gas-efficient vehicles as soon as possible.

But now, with gas down 40% in some places, I am sure some people are starting to wonder if they really need to spend thousands extra for a hybrid or if it wouldn’t make more sense to buy a slightly bigger car that might be more comfortable to drive.

You can’t run a business, at least a car manufacturing business, like this. Carmakers cannot switch from model to model overnight. This has been much less of a problem for "foreign" car makers, like Toyota or Honda, because they tend to build smaller, more fuel-efficient cars anyway. That is what they sell in other markets and that is their market in the United States.

But that is not true for companies like Ford or GM. Their market is the United States, and when people want big cars or big SUVs, they look to American manufacturers. The problem is that, when gas prices go up 60% in less than a year, Ford and GM can’t change their models that quickly. It takes a while. And now that gas prices have dropped as much as they went up, do we expect Ford and GM to change direction again? Well, they can’t.

If people want Americans to drive more fuel-efficient cars and cut down on emissions (calling Nancy Pelosi and all the Democrats on Capitol Hill who want to save the planet), there is an easy solution. We just saw it. And it is not raising the CAFE averages for some time five or ten years down the road.* It can be done, and it can be done now. It’s very simple: Raise gas prices back up to $4.00 a gallon or more. At $4.00 a gallon, people will change their behavior. They will drive less. They will buy cars that get better gas mileage. And they will do it now, not ten years from now.

All Congress has to do is to raise gas taxes enough so that gas is back over $4.00 a gallon. The taxes can then be adjusted from time to time so that, if the price of oil goes up again, the tax could be reduced some. Prices would still be $4.00 a gallon, but we wouldn’t have these huge swings in the price of gas.

Also, the overall impact on regular people could be minimized by making the tax increase revenue-neutral. Congress could give taxpayers a rebate of the extra gas taxes (instead of using them to fund more earmarks to nowhere). People who really needed to drive would have the money to pay the higher price for gas, but most people would be encouraged to drive less or to buy more fuel-efficient cars.

This would help Detroit, too. They would know what to build. They wouldn’t have customer demand swinging from big cars to little cars back to big cars all within a few months. Give Detroit a market that is not so schizophrenic, and I think they will build good cars that Americans want to buy. Doing that would help Ford and GM more than a bunch of loans from Washington.

But, of course, Congress won’t do this. They claim they want to save the planet, but when it comes to making hard decisions that could really accomplish something today, they don’t do it. They take the easy way out. They raise the CAFE standards and claim they have done something. But it won’t help much for ten years or more. And, most importantly, any costs from in the increase in the CAFE standards will be hidden in car prices, instead of out in the open where people can see them. That way nobody can blame Congress. I guess saving the planet isn’t quite as important to Congress saving their own jobs.

------------------
* The CAFE (or Corporate Average Fuel Economy) standards set an overall average fuel economy minimum that each major auto manufacturer has to meet. Until recently the standard was 27.5 miles per gallon for cars and 22.2 miles per gallon for minivans, SUVs and pickup trucks. In December of 2007 Congress passed a law that required an increase in the overall average to 35.0 miles per gallon – by 2020. And even then, the standard would only apply to new cars. Older, less efficient cars and trucks could stay on the road until they wear out, which for some people can be a really long time. A higher price for gas would cause people to start getting rid of their old gas guzzling cars now.

Note: I am not convinced of the science of global warming. I do not think it has been proven that the increase of carbon dioxide in the atmosphere is the problem many say it is. However, even if this is not necessary to save the planet, it would reduce our dependence on foreign oil from countries that we would rather not have to send our money to.