Thursday, October 30, 2008

Palin's Big Energy Policy Speech

Didn't hear about it? I'm not surprised. Sarah Palin delivered her second big policy speech of the campaign on Wednesday, this one about energy. Or, rather, a load of waffle and platitudes that all boils down to: somehow, somewhere, we're going to burn our way to the future. Yeehaw!

Let me set the stage: Palin, the former commissioner of oil and gas for the Alaskan government, now the governor, is by extension supposed to be some sort of expert on energy policy. As I have mentioned earlier, knowledge of and reliance on oil and gas isn't nearly enough to inform someone on how to craft energy policy for the next generation. It might have been fine in, say, 1960, before the first oil embargoes and energy crises, and it was sure great around 1973, when the Alaska oil pipeline got the go-ahead. But, hey, it's 2008, and the decisions on energy policy for the next administration need to look forward to what we want to see come 2050, not 1950.

Palin gave her speech at the Xunlight factory in Toledo, which I feel added a certain dose of cognitive dissonance to the whole affair.

The text of the speech I'll be working off of comes from the McCain-Palin website. It starts off well enough:

All who work in pursuit of new and clean energy sources understand that America's energy problems do not go away when oil and gasoline prices fall, as they have in recent weeks. Oil today is running about 64 dollars a barrel -- less than half of what it was just a couple of months ago. And though this sudden drop in prices sure makes a difference for families across America, the dangers of our dependence on foreign oil are just as they were before.

The price of oil is declining largely because of the market's expectation of a broad recession that would lower demand. This is hardly a good sign of things to come, and should only add to our sense of urgency in gaining energy independence. When our economy recovers, and growth once again creates new demand, we could run into the same brick wall of rising oil and gasoline prices -- and now is the time to make sure that doesn't happen. In Washington, we can view this period of lower oil prices as just one more chance to make excuses -- and on the problem of energy security, we've heard enough excuses. Or we can view it as an opportunity to finally confront the problem.

In reality, volatile oil prices are just the most immediate consequence when foreign powers control our energy supplies. They are an economic symptom of a strategic problem. And prices will stabilize only when we have reached the great goal of energy security for America.

Not bad. One could almost hear the same from Thomas Friedman of the NY Times. Then comes the call to action and criticism of the past:
Achieving this objective will require a clean break not just from the energy policies of the current administration, but from thirty years' worth of failed policies in Washington. As in other challenges that confront our nation, we must shape events, and not simply manage crises. We must steer far clear of the errors and false assumptions that have marked the energy policies of nearly twenty Congresses and seven presidents. Some tasks will be the work of decades, and some the work of years. And they all will begin in the term of the next president.

I can give her some credit for calling out the current administration. All the cool kids are doing it these days. Really one could go on for hours about how backward the Bush administration has been on energy. If one counts back seven presidents, though, you get to Nixon, which means that you also include Jimmy "Cardigan" Carter, which hardly seems fair.

Nevermind. She continues into her well-worn in-the-trenches narrative of Alaska, and how qualified she is on energy policy (see my introductory paragraphs), how she took on the oil companies regarding a natural gas pipeline, and:
When the last section is laid and its valves are opened, that pipeline will lead America one step farther away from reliance on foreign energy. That pipeline will be a lifeline -- freeing us from debt, dependence, and the influence of foreign powers that do not have our interests at heart.

While it is true that she strongarmed an agreement to get the pipeline built, it's not like the thing is set in stone. No definitive plans are in place, the deal could still fall through, no approvals have been given, no land purchased, no pipe has been laid, and it'll probably be another decade at least before the thing is actually built. More information here.

The notion that the pipeline will be a lifeline "freeing us from debt, dependence, and the influence of foreign powers" is demonstrably false. Bear with me while I introduce some numbers - they may be tedious, but if the policy-makers ever bothered to check them, we might get somewhere.

The United States consumes about 23 trillion cubic feet of natural gas per year. (Because demand has seasonal fluctuations, I'll use an annual number.) We produce about 20 trillion domestically, and import 4.6 trillion; the rest is lost, stored, or exported.

So, right here, we find one fallacy. The US imports only about 20% of the natural gas we use. Of that 4.6 Tcf/yr we import, 3.8 Tcf comes in pipelines from Canada and Mexico, hardly the boogey-man countries that don't have our interests at heart. The rest comes as liquified natural gas - gas that has been compressed and cooled enough to become liquid and put onto special tanker ships. Of the 0.7 Tcf of LNG we import from abroad, 0.45 Tcf comes from Trinidad (of all places, who knew?). If you look at the list of who we get our natural gas from, we do find some sorta-unfriendly places, like Algiers, Egypt, Nigeria, and Qatar. But these still only add up to about 6% of our annual imports, so only about 1% of annual consumption.

The capacity of this new pipeline, whenever it comes online, will be 4.5 Bcf per day, or about 1.6 Tcf per year. So, it will increase domestic production by about 8%. It could, theoretically, offset 1/3 of the natural gas that we import (again, from Canada and Mexico). That ain't nothing, but it isn't all that the governor would like us to think it is. In fact, it is likely that, by the time the pipeline is finished, growth in demand will have already consumed the pipeline's contribution, meaning that not much will have changed.

So, we are neither in the thrall of foreign powers when it comes to natural gas, nor will this pipeline free us from the natural gas we import, mostly from allies.

Let's continue with the speech:
To confront the threat that Iran might seek to cut off nearly a fifth of world's oil supplies ... or that terrorists might strike at a vital refining facility in Saudi Arabia ... or that Venezuela might shut off its oil deliveries ... we Americans need to produce more of our own oil and gas.

In the worst cases, some of the world's most oil-rich nations are also the most oppressive societies. And whether we like it or not, the money we pay for their oil only makes them more powerful and more oppressive. Oil wealth allows undemocratic governments to crush dissent and to subjugate women. Other regimes use it to finance terrorists around the world and criminal syndicates in our own hemisphere.

By relying upon oil from the Middle East, we not only provide wealth to the sponsors of terror -- we provide high-value targets to the terrorists themselves. Across the world are pipelines, refineries, transit routes, and terminals for the oil we rely on. And Al Qaeda terrorists know where they are.

Here comes another chestnut, partly false, that everyone loves to pull out: we are dependent on the Middle East for our oil. I won't pretend that, if OPEC wanted to flex its muscles, or Al Qaeda blew something up, we wouldn't take a hit at a pump. But it is easy to dispute that we get the majority of our oil from the Middle East. The US consumes about 20.7 million barrels of oil per day. We import about 13.5 million barrels per day, or about 65%.

That's a whole lot, but where is it coming from? Look closer at that table, you'll see we get about 2.1 million from the Persian Gulf, and 1.3 million from Venezuala. But then there's also 2.5 million from Canada, and 1.5 million from Mexico (bless 'em!). We haven't imported any from Iran since the early-1990s. In fact, we import about as much from OPEC as we do from producers outside OPEC. However, being a global commodity, the actions of OPEC impact the price of oil worldwide, so we have good reason to be wary of what Iran or Venezuala does with their oil.

So what should we do? McCain-Palin to the rescue:
In a McCain administration, we will authorize and support new exploration and production of America's own oil and gas reserves -- because we cannot outsource the solution to America's energy problem. Every year, we are sending hundreds of billions of dollars out of the country for oil imports, much of it from OPEC, while America's own oil and gas reserves in America go unused. And take it from a gal who knows the North Slope of Alaska: we've got lots of both.

As a matter of fairness, we must assure affordable fuel for America by producing more of the trillions of dollars' worth of our oil and natural gas. On land and offshore, we will drill here and drill now!

I'll remind you here that she's giving this speech in a solar panel factory.

No. No. No. No. No. Drilling isn't the answer either. The simple fact remains that there isn't enough oil domestically to even come close to replacing that 13.5 million barrels we import each day. Even if we decided to drill in ANWR, the first oil wouldn't come online for 10 years. The Alaska pipeline has a peak capacity of about 2 million barrels per day. The North Slope fields used to fill that capacity; now they're down to less than half that. Let's say ANWR oil could pick up the slack, it's still only be about 5% of the oil we use each day, and only 1% of worldwide use. What of the continental shelf? Again, it's 5-10 years out, and still wouldn't be enough to offset our imports. (One interesting tidbit - to get at the continental shelf oil you need to drill very deep, which means you have to explore very deep. It turns out that the deep-drill rigs needed for that kind of work are already booked for years to come.)

Besides, being a global commodity, the oil we produce here wouldn't necessarily stay here, not unless McCain-Palin are ready to inaugurate high tariffs or other encumbrances to free trade. In order to have a real impact on prices at the pump, we'd have to start producing oil at a prodigious rate, something to make a dent in the global demand of about 85 million barrels per day. Even if we could, which we can't, should we? Oh, I forgot, this speech is being given by someone who didn't believe global warming was real.

She continues with a pledge that a McCain administration would put the country on track to build 100 new nuclear plants by 2030. I am ambivalent about nuclear - I don't like it, but find it to be a better and more practical part of a long term solution than, say, coal. Still, it's something that will take years and years to even get started. Bush pushed nuclear pretty hard, too, and new plants have yet to even begin construction. She doesn't address the hurdles to reprocessing or long-term storage that would make it possible, nor the related problems of skyrocketing uranium prices and nuclear proliferation. I'm told that, at least, she managed to pronounce it correctly. Whatever.

Then she launches into a blurb on clean coal, but mostly uses it as a flank to attack Obama and, especially, Biden. When she has exhausted that line of attack, she gets back to her point:
As for our coal resources, America has more coal than the oil riches of Saudi Arabia. Burning coal cleanly is a challenge of practical problem-solving and human ingenuity -- and we have no shortage of those in America either. So, in a McCain administration, we will commit two billion dollars each year, until 2024, to clean-coal research, development, and deployment. We will refine the techniques and equipment. We will deliver not only electricity but jobs to some of the areas hardest hit by our economic troubles.

The thing about it, though, is that clean coal doesn't exist - not in the rainbows, bunnies, and CO2-free way they mean it. We're probably as close to practical clean coal as we are to nuclear fusion. People understand the fundamentals of what needs to happen, more or less. But the devil's in the details, and no one's sure if it can be made to work on a large, cost-effective scale. No full-scale demonstration plant exists, and most attempts to build one have been stymied when people realize how expensive it will be. I have some hope for clean coal; but more than that, I hope we don't base our future strategy on it.

After speaking for twenty-some minutes, she starts winding it down to her conclusion and, finally, mentions alternatives and conservation:
To meet America's great energy challenge, John and I will adopt an "all of the above" approach. In our administration, that will mean harnessing alternative sources of energy, like wind and solar. We will end subsidies and tariffs that drive prices up, and provide tax credits indexed to low automobile carbon emissions. We will encourage Americans to be part of the solution by taking steps in their everyday lives that conserve more and use less. And we will control greenhouse gas emissions by giving American businesses new incentives and new rewards to seek, instead of just giving them new taxes to pay and new orders to follow.

Boooyah! There it is, folks! You came to a solar panel factory, and now is your moment. Don't bask in it too long, though, because this paragraph is the sole token gesture to folks like you. McCain has a sort of mixed relationship with renewables like solar and wind. He thinks they're great, but can't ever provide even a sliver of the U.S. power needs. I would say that lacks forward thinking. I don't want to go on and on about how McCain voted on what and when, because that can get very muddy very quickly. Suffice to say that McCain hasn't been very kind to wind in particular, and renewables in general.

What about increased mileage standards? What about smart grids and electric cars? What about distributed generation and micro-grids? What of stricter building codes? What about mandating LEED certification for every new federal building, and phasing in older buildings over time? What about national requirements for generating renewable energy? What about feed-in tariffs? What about increased federal funding for energy R&D (other than coal). What about expanding Energy Star requirements into more product categories? What about greening the military - the federal government's biggest user of energy? What about expanded long-haul freight and passenger rail? What about cellulosic ethanol and algae biodisel? What about geothermal, tidal, and other nascent technologies? What about loan programs and assistance in weather-proofing and winterizing older homes?

What about, heaven forbid, asking Americans to sacrifice - the thing that Bush and every member of government should have done on September 12th, 2001? No? Nothing? Let's continue...
Again and again, our opponents say that drilling will not solve all of America's energy problems -- as if we all didn't know that already. But the fact that drilling won't solve every problem is no excuse to do nothing at all.

No, we can't "drill our way out of the problem" entirely. But this is America, the most resourceful country on earth, and we can drill, and refine, and mine, enrich, reprocess, invent, build, conserve, grow, and use every available means to regain our independence.

My problem with kind of thinking is that, when you look at the numbers, it's not just that drilling won't solve every problem, it won't solve any of our energy problems. Yet at the same time, it incurs tremendous costs that will have to be repaid for generations. As soon as you make a resource more available, there is an inevitable tendency to use more of it. When resources remain scarce and expensive, people will use less or find substitutes. Gas hits $4/gal, and people rethink their SUVs. If the Republicans are such big fans of the free market, why have they managed to forget the first principles about supply and demand? And if the oil within our borders is so valuable now, won't it be more valuable in a generation or two? Shouldn't we keep it in the ground until our needs are even greater? If we restrain ourselves from thinking that drilling (and mining) is an option, we'll have all the more incentive to do something else - the substantive, long-lasting changes we are going to make now to ensure a better future. It'll be easier and cheaper to do it now than to wait until we have a real crisis.

We are addicted, not only to oil, but to cheap fossil fuels in general. The only place we can get by drilling is to dig ourselves in deeper. In an earlier post about gasoline prices, referring to a local Republican candidate that believes drilling will solve our problems, I said: The candidate's position is short sighted at best, and delusional at worst. But, hey, what can you expect from an addict.... To an addict, there can never be enough. Addicts, when it comes to their next fix, aren't rational about it, where it comes from, how they'll get it, or what it'll cost. One doesn't treat an addiction by looking for the next fix; that only makes the withdrawal that much the worse when the stash runs out. The only way to treat the addiction is to reduce the dependence on the substance.... Instead of dickering over where we can get another million barrels a day, we should be seeking out where we can find a replacement for that million barrels.

If Palin was really so in favor of "all of the above" when it comes to energy, why hasn't she advocated doing more of the above in Alaska? Certainly, with all their oil wealth, now would be a good time to start diversifying their energy portfolio. It is ironic that, although they have access to more oil than they need, Alaskans pay a whole lot more than most for a gallon of gasoline. Where we live, we've recently dropped down to about $2.20. In Anchorage, it's still $3.30. Communities further inland face even higher prices. On the North Slope, where all that crude oil is found, the cost is astronomical. Alaska's problem is twofold: they lack refining capacity to turn that crude oil into gasoline and diesel (crude gets shipped down to the west coast or Asia, then shipped back as refined product), and Alaska's large size and sparse population make for very high transportation costs. Alaska should have long ago been looking for alternatives.

Certainly, Alaska should diversify their tax portfolio; some 85% of the state's budget comes from oil and gas taxes. The Alaskan government is so tied to oil that their tax division website has the daily commodity prices on it. Alaska has no sales tax, no income tax, and is aglut in enough oil wealth to be able to give it's citizens an annual dividend check from the Alaska Permanent Fund. The dividend is about $1000-1500 in most years, but over $3000 in 2008 due to the skyrocketing price of oil and a windfall profits tax enacted under Palin. (See politifact and the Alaska Legislative Digest for more on the Alaskan budget and oil taxes.) But just how permanent will that permanent fund be? Unfortunately, like seemingly all oil-rich places, their myopia cannot envision a future when that wealth is exhausted, and so have done little to plan for it.

Some more platitudes and rainbows, the requisite "God Bless America," and there we have it: the Barracuda's take on what energy policy should be for the next administration and, by extension, the next generation or two. For those of you who were keeping count, she devoted a lot of her time to natural gas, followed by drilling for more oil, followed by coal, followed by nuclear, sprinkled with a lot of talk about how the other guys are all wrong. There was a single paragraph into which she wrapped up everything else - alternatives and conservation. So, in essence, her big policy speech roughly matches the energy consumption of the US today: lots coal, followed by oil and natural gas, then nuclear, and a small amount of everything else, mixed with a whole lot of finger-pointing, and lip service paid to conservation. If that is Palin's idea of America's energy future, I'd say it looks a whole lot more like the past and present.

Pig + Lipstick = Pig

So why have I spent so much time excoriating this candidate and a policy speech that, basically, no one noticed? For one thing, I want to make it very clear: this woman doesn't have a clue. Perhaps it is a moot point, if McCain and Palin aren't elected. Then again, there are some who are already looking to her in 2012. Another reason I have gone on at great length is because, unlike many social and economic policies, there are is no shortage of hard facts and figures to substantiate arguments. It is also a subject that, by virtue of my education, I feel qualified to speak on. I don't need to appeal to common values or hypothesize about the future - it's all in the numbers!

Finally, I feel that this is an issue that is important enough that it requires real action from real leadership, and this just ain't it.

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