The Energy Deficit and the Pickens Plan

This graphic is from the EIA in their energy brief on energy subsidies:

From this graph, we consume more energy (blue line) than we produce domestically (red line). The difference between the two is how much we have to import to balance the books, so to speak. This deficit amounts to about 30% of all energy consumed on a yearly basis.

The question now goes to those who want the US to become “energy independent”. How do you get those two lines to converge. You have to either bring down consumption, increase production or end up with a combination of the two. But if you don’t, then you’re still going to be importing energy. That’s the bottom line.

This is the elephant in the room for the Pickens Plan. Right now, the plan is to shift consumption sources around, from oil to natural gas in road transportation and from natural gas to wind in electricity. But shifting the production resources doesn’t address the fundamental imbalance between demand and supply. The difference will still need to be made up, and the Pickens Plan doesn’t do that at all. He’s just playing Three Card Monte with energy.

But one argument would be: yeah, but we’re reducing our imports of oil, so that’s something. But something will have to replace it if you don’t increase energy production by 30%. That is not the goal of the Pickens Plan, so there will still be energy imports even if the Pickens Plan is implemented.

But we have to make sure those dirty Arabs and other terrorist nations don’t get any American oil money, even if we end up buying their natural gas, uranium and other energy sources, which then means that the Pickens Plan will accomplish nothing. Well, except put money in Pickens’ pocket.

How Much Does the Government Spend on Energy Subsidies?

Thanks to the Energy Information Agency, I get little email every once and a while alerting me to when they have produced something called “Energy in Brief.” So this week, I got one in the email called:

“How much does the Government spend on energy-specific subsidies and support?”

Jackpot.

And the answer to this question: $16.6 billion just in the past year. To put that in pork perspective, that’s 45 to 60 Bridges to Nowhere, depending on which figure you use (total price of bridge to nowhere or just the famous 2005 earmark). That’s right, we can connect 45 to 60 small towns with their airports for just how much the government gives out for energy.

And what does the government do with this money? Not much, by the EIA’s own accounting:

Have Subsidies Affected Prices or Production?

Between 1999 and 2007, the average real price of total energy per British thermal unit (Btu)3 consumed increased more than 80%. Meanwhile, total energy consumption or demand, including imports, grew by about 5%. Most subsidies and support to energy producers should stimulate supply; so too should higher prices and rising energy demand. Yet in 2007, the United States supplied roughly 72 quadrillion Btu from domestic resources, about the same amount as in 1999. This leaves the impression that energy subsidies had little effect on net domestic production other than to help prevent further declines. But the enactment of various production-oriented tax incentives in the Energy Policy Act of 2005 and subsequent legislation may have contributed to the slight increase in primary energy production over the last two years.

So as a result of billions of dollars in subsidies and tax incentives, the US might have had a slight increase in energy production. At least with the 45 to 60 Bridges to Nowhere, we would have ACTUAL BRIDGES, not possible things that people would be hard pressed to identify.

You’d think that because of T. Boone Pickens’ ad campaigns that we don’t do anything to support wind energy right now. And, like most things T. Boone Pickens says, this is pretty wrong. Again from the EIA:

Did You Know?
The estimated value of production tax credits to wind producers in FY 2007 was $666 million. The benefit was distributed over an estimated 27.7 million megawatthours, making wind power the largest beneficiary of production tax credits among all renewable technologies.

And this doesn’t even include other incentives given to wind producers that AREN’T tax credits, like direct subsidies. And this doesn’t even take into consideration that wind power DOESN’T produce much energy. So the per unit cost is an astronomical $.02/per kilowatt-hour. Considering that your energy bill is anywhere from $.08 to $.20 / kWh per unit, wind gets a subsidy that’s equal to 10 to 25% of your per unit costs. That sounds like it’s doing a whale of a job.

But believe it or not, wind ISN’T even the worse offender when it comes to government largess. That would be “clean coal”, which gets $2 billion to produce a tiny fraction of the energy in the US. But once again, clean coal and coal-to-liquids have huge backers in the Senate in the form of Robert Byrd and Mitch McConnell. And that’s money that’s not doing a lick of good.

So before we start heaping MORE money on renewables, a la the Pickens Plan, we should look to see what works and what doesn’t. Right now, wind and solar aren’t.

National Party Platforms on Transportation and Energy – Constitution Party

Continuing the series on party platforms on transportation and energy, we come to the Constitution Party.

They do not have a section on transportation issues, much like the Libertarians. They do have an energy section:

Energy

James Madison said: “The powers delegated by the proposed Constitution to the federal government are few and defined.” (Federalist Papers #45) The powers not delegated to the United States by the Constitution , nor prohibited by it to the States, are reserved to the States respectively, or to the people (Amendment X).

We call attention to the continuing need of these United States for a sufficient supply of energy for national security and for the immediate adoption of a policy of free market solutions to achieve energy independence for these United States. We call for abolishing the Department of Energy.

Private property rights should be respected, and the federal government should not interfere with the development of potential energy sources, including natural gas, hydroelectric power, solar energy, wind generators, and nuclear energy.

Pretty simple when you get down to it. Abolish the Department of Energy (much like the old Republicans, and no government interference. Pretty much a libertarian/free-market approach to energy.

I wish they would have something on transportation issues, but including everything risks having an unwieldy platform. It’s still an important federalist issue that would need to be addressed by any major candidate.