Bush Approves Transfer: America Adds $8 Billion in Debt

From the AP (via Forbes):

The bill transfers $8 billion from the Treasury’s general fund to shore up the financially teetering highway trust fund, which supports road and bridge projects around the country. In July, the White House threatened a veto, saying taking money from the general fund was “both a gimmick and a dangerous precedent that shifts costs from users to taxpayers at large.”

Supporters of the transfer argued that the Treasury was merely returning $8 billion it took from the then-prospering trust fund in 1998 for deficit reduction.

So basically, to cover “paying off the deficit” back in the 1990’s, lawmakers took money out of the highway trust fund (the checking account where all the gas tax revenues go). Which is funny because I thought the budget surplus was from income tax revenues, but I guess everything gets included in this. So now that the Schumer hits the fan (I swiped that from www.survivalblog.com, which I think is a great euphemism for the actual phrase, if not accurate), the money gets “loaned” back. Of course, this just means that whatever “debt reduction” is done is actually just been eliminated. Awesome accounting guys.

But this also means that the states get their precious highway money, construction companies’ political contributions and lobbying did not go in vain, and whatever useless highway projects that this money is being spent on can continue. At least until next year.

What I also found interesting is that one proposal floated by the Bush administration was to reduce the MASS TRANSIT portion of the trust fund. Motorists, you’ll be happy to know that your gas taxes are going toward those empty regional transit buses you’re stuck behind on the road. Of course, the Democrats wanted nothing to do with that, being that they love mass transit, even if it is cross-subsidized by motorists.

And the same thing has already happened with Social Security. The government has been using the money in the SS trust fund to pay for the usual stuff. So in about 2020, when the trust fund starts to run out, the government will just “get the money back” from the Treasury, since it was already “loaned out”. So don’t worry, Social Security WILL BE SAVED. You’ll just end up paying 50-80% income taxes to do it.

Government: The largest legal Ponzi scheme ever created.

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.

John McCain Uses the Pickens Lie

From John McCain’s acceptance speech last night:

My fellow Americans, when I’m President, we’re going to embark on the most ambitious national project in decades. We are going to stop sending $700 billion a year to countries that don’t like us very much. We will attack the problem on every front. We will produce more energy at home. We will drill new wells offshore, and we’ll drill them now. We will build more nuclear power plants. We will develop clean coal technology. We will increase the use of wind, tide, solar and natural gas. We will encourage the development and use of flex fuel, hybrid and electric automobiles. (Emphasis added)

I’ve documented the fact that $700 billion is a bald-faced, economically illiterate number that was conjured up by T. Boone that has no basis on the realities of the oil market or just plain facts. Add to the fact that McCain just lumped natural gas in with solar and wind (“one of these things is not like the other, one of these things is just not the same”), and T. Boone must have been jumping for joy with the speech last night. I’m sure one of the first things McCain will reach across the aisle to Nancy Pelosi is to force private fleet vehicles to run on natural gas.

So if you oppose the Pickens Plan, or don’t like the fact that it’s based on sketchy numbers, has a significant chance of screwing up our electricity market and backed by someone who has a huge financial stake in it, then you don’t have a choice in the election. Well you do, but you won’t hear about it in the media.

I would call on John McCain’s campaign to fully disclose their relationship with T. Boone and fess up to the fact that he cited a horribly incorrect number during a nationally televised speech. It’s the least that he can do “for the country.” But I doubt that will happen.

McCain Invents New Constitutional Power

Again, from John McCain’s acceptance speech:

We need to change the way government does almost everything: from the way we protect our security to the way we compete in the world economy; from the way we respond to disasters to the way we fuel our transportation network; from the way we train our workers to the way we educate our children. All these functions of government were designed before the rise of the global economy, the information technology revolution and the end of the Cold War. We have to catch up to history, and we have to change the way we do business in Washington.

I must’ve missed that part of the Constitution where it says that the government sets the standards for transportation fuel. Yes, yes, I know I’m in a minority opinion, where the Supreme Court has given the federal government carte blanche to do whatever it wants with the economy. Of course, no one has opposed the ethanol mandates, or the EPA gasoline/diesel requirements yet either, at least not successfully. Of course, as a nation, we have long accepted federal limits on economic freedom. Perhaps when you’re required to trade in your gasoline powered car for a T. Boone special, you might make a peep, or not.

Regardless, this is just another way that McCain is letting everyone know that he’s going to be fulfilling the Pickens Plan when he gets into office. He just doesn’t want to say it so directly. So much for that openness and accountability that he’s running on.

National Party Platforms on Transportation and Energy – Green Party

I have to give credit where credit is due: the Green Party is very, very open about what they want to do. Sure it’ll involve massive government intervention in everyone’s daily life, but they’re putting it out there in very specific terms.

The entire platform (including changes from 2004 to 2008) on energy and transportation policy, which they call “Ecological Sustainability” is available from the GP website. Unlike the Libertarian Party, the Greens are very specific about what they would like to do.

So lets see what they have on energy:

• “Our oil and gas addiction in particular has led to wars and human rights abuses in many countries….U.S. dependence on oil and gas has driven an unparalleled assault on the global environment and on human rights in many nations.” Of course, if we were to not use oil or natural gas anymore, these third world countries would be liberal democracies with no disputes or conflict whatsoever. This, of course, confuses the fact that the countries themselves start these wars. There are plenty of countries that have petroleum resources that don’t abuse their citizens (e.g. Canada), and there are countries that DON’T have oil resources and DO abuse their citizens (e.g. Zimbabwe). Removing the oil would not remove the source of these problems (the backwards societies and the lack of governing structure)
• “We oppose energy utility deregulation…. We recognize that deregulation and its reliance on markets – as opposed to state-based regulations – is incapable of providing affordable, reliable and clean energy…. We support state efforts to regain control over electricity by establishing democratic, public control systems to locally coordinate supply and demand and by eliminating energy trading.” It’s funny how people have no idea how economics (and socialism) work. PUCs are NOT democratic by any stretch of the imagination, and the current market system somehow does enable people to have affordable and reliable energy, and if you’re in a fully deregulated market like Texas, you can have clean energy too. If you’re in California or most other states, you have no choice in where you get your electricity and it’s “cleanliness”. But the Greens see markets as bad, no matter if they actually enable clean energy or not.
• “New construction should be required to achieve substantial portions of its heating energy from the sun.” Man, I’d hate to live in the Pacific Northwest under the Greens.
• “We oppose further oil and gas drilling or exploration – especially that which would occur in other countries, (emphasis mine)” I’d LOVE to see how they’d enforce banning oil exploration in other countries. This further enforces the general criticism of the enviros as wanting to keep the poor countries poor.
• “We call for independent, public-access radiation monitoring at all nuclear facilities.” If you want to do this, do this. Go to your nearest nuclear power plant, set up shop with a Geiger counter, and report your results. I’m not going to stop you and if the government does, then THAT’s your problem. But you don’t need the government to do this for you.

And their section on transportation:

• “We call for major public investment in mass transportation, so that such systems are cheap or free to the public and are safe, accessible, and easily understandable to first-time users. ” hahaha Short of spending TRILLIONS on mass transit, you’re never going to get all three… and since we’re talking about the government running this system, you’re NEVER going to get anything that’s easily understandable. No matter how much you spend.
• “The present-day approach of upgrading streets to accommodate increased traffic generates new traffic because access is now easier, and people will now take jobs further from their homes or purchase homes further from their jobs. Some people shift from public transit to private cars due to the trip time in cars being shorter. As patronage for public transit decreases, public transit loses funding, becomes less viable, and service deteriorates thus encouraging even more people to use their cars. ” This is the best part, the Greens admit that people don’t like taking transit, admit that private transport is faster, and that public transit wouldn’t work without massive subsidies. So, their solution is to make people do something they would prefer not to do in the first place. A winning political strategy.
• “Redirect resources that currently go to enhancing auto capacity into expanding human-scale transit options….Develop affordable mass transit systems that are more economical to use than private vehicles. ” What the hell is a human-scale transit option? And I’d love to see the day when a public mass transit system is more economical to use than a private system. That’s also the day communism will finally work. And pigs will fly.
• “Emphasize the use of light and heavy rail for freight transportation. ” WHY? It’s slower, it has a lot more delays and is constrained in where and how it can go. An airplane or truck can bypass congestion. A train can’t. Just ask anyone who’s taken Amtrak. Speaking of which…
• “Expand our country’s network of rail lines, including high-speed regional passenger service.” Because outside of the Northeast, there is not a single place that is built in a similar way to that region. So you’d be trying to shoehorn a system that works (barely) in one region, where it’s not needed elsewhere. And as most people who take Amtrak can attest to, Amtrak is beset by delays and general incompetence.
• “Ban flights between cities where land-based travel options can get a passenger to their destination within four hours.” Since you have the Acela, all of the Northeast just lost their air service… sorry. Not to mention the whole hub-and-spoke system for the airline industry. So for example, I live in Columbia, SC. Since nobody in their right minds wants to travel to Columbia, there are not many direct flights, so you have to have connections in many cities. Thus, you have alot of flights from Columbia to Atlanta (4 hours away) and Charlotte (1 hour away). Congrats, you no longer can fly that route. So this will either:
  1. Force people to drive up to 4 hours to get to the airport
  2. Force airlines to have you connect from somewhere MORE THAN 4 hours away.

  Either way, you’ve just made the whole air travel system ALOT more complicated and wasteful. But environmentalists are pretty ignorant when it comes to the law of unintended consequences. And to put a cherry on top of their economic backwardness…

• “We encourage the social ownership and use of land at the community, local, and regional level.” The Greens have never studied or heard about the Tragedy of the Commons.

So overall, the Greens have set out an expansive list of things they want to do, which is ballsier than most political parties. Of course, given that most of what they want to do would be economically wasteful at best, it’s not a very smart plan either.

Stephen Spruiell on Energy & Environment on National Review Online

Stephen Spruiell on Energy & Environment on National Review Online

Sigh… is there any more reason to realize that Republicans made a huge mistake in nominating John McCain?  They’re going through all of these problems trying to square the platform with the candidate.  Of course, in a rational electoral system, the candidate would reflect the base and not have to be grafted together like “trying to write a lawsuit against yourself.”

But as a result, Republicans have now gone along with the environmental movement in calling all this “climate change” instead of “global warming.”  Which is a tautology, or some kind of logical infallacy, since CLIMATE IS ALWAYS CHANGING. Somehow, this society has become so narcissitic that the current climate SHOULD be the only climate on Earth for as long as humans remain here.  Try telling that to the people of North Africa, who have been screwed the past 1000 years or so with advancing desert conditions, which cannot be explained away in the past 50 years of industrial development.

So in continuing with my plan to review all of the party platforms, I’m pretty sure I’m not going to like what I see in the Republican platform when it is formally adopted next week.

Gresham Barrett Brings the Stupid

Here in Columbia SC, we’re doomed to have at least one talk radio host who’s a complete moron, Kevan Cohen. He’s the definition of a neo-conservative, and makes my ears bleed if I listen to him for more than 15 minutes at a time. You can’t go five minutes without him making some pro-military or pro-war comment, but on every other topic, he’s about as spineless as they come.

So that’s why I didn’t hear him and Congressman Gresham Barrett talk about energy until the end of their conversation. Hannity wasn’t doing it for me today, so I switched to the other station. I only caught the end of the conversation, but this is where Mr. Barrett brought it. And by it, I mean his completely stupid idea.

Make SOUTH CAROLINA energy independent.

There’s enough problems with making the US energy independent. Like the fact that our electric grid is connected to both Canada and Mexico. But it’s at least possible given the resources of the entire country.

South Carolina, on the other hand, doesn’t have the resources to independent from anyone on energy. We don’t have coal beds, we don’t have natural gas production areas, we don’t have uranium mines. And most importantly, we don’t have the ability to use solar, wind or geothermal energy:

So in order for South Carolina to be energy independent, we’d have to completely rely on the state’s hydroelectric dam system. Needless to say, this isn’t a very smart way to encourage economic development, or keep the lights on in South Carolina.

So what does energy independence for South Carolina look like for Mr. Barrett? Pork. Lots and Lots of Pork.

Pork for nuclear.
Pork for biofuels.
Pork for hydrogen.
Pork for universities.
Pork for everyone.

He will basically be hiding a pork bill under the guise of making South Carolina the “leader in energy.” But he has to return the investment that his sponsors have made in him. His top sponsor, Washington Group International runs the Savannah River Site, which handles, you guessed it, the Department of Energy’s nuclear research. He also has received money from South Carolina’s investor-owned and electric cooperatives who have a heavy stake in all of the nuclear reactors found in the state. So any pork toward nuclear, which he’s pushing heavily, goes towards his financial benefactors. Big surprise there.

Finally, he came up with this bit of genius. He mentioned in passing that by building nuclear reactors, they can serve as desalinization plants as well. Uh, yeah. There’s just a little question of… where are you going to put this nuclear desalinization plant? Myrtle Beach? No, they can’t even handle motorcycles, nevermind a nuclear reactor? Charleston? Perhaps. But do you remember a little thing called Hugo, Mr. Barrett?

The point is that “energy independence” has become a phrase that has lost all meaning. Much like “going green,” this is a phrase that means whatever the person using it wants it to mean.

T. Boone now teams up with Nancy Pelosi on Pickens Plan

T. Boone Pickens has a huge financial stake in his Plan. We know this. But now, word has come out, via Michelle Malkin and Rush Limbaugh, that Nancy Pelosi has a stake in this too.

Specifically, Nancy Pelosi has a couple thousand shares in Clean Energy Fuels Corp, which is T. Boone’s company that sells fleet natural gas refueling services. Right now, the stock has been doing ok, especially when compared to the rest of the market: Google Finance chart of CLNE since inception

Since T. Boone has said that he wants a federal mandate of ALL fleet (public and private sector) vehicles to be powered by natural gas, this would become a HUGE financial windfall for T. Boone. But now there is another player who would benefit immensely from this: the Speaker of the House.

Increasingly, it looks like this is a money grab by Pickens who is using government power to increase his financial ends. And it will come at the expense of taxpayers and electricity users.

Another Rent Seeker Using Scare Tactics to Get Government Money

Ladies’ Home Journal’s Red Light Problem – Reason Magazine.

This is similar to another “crisis” where people are agitated about something that had been happening for quite a few years now, but were (blissfully?) unaware of until now.  And now that they have been agitated, they demand action by the government to solve this problem that was never a problem in the first place.

And who’s behind all this?  Someone who stands to make alot of money off of the government’s decision to force people/localities into doing something they didn’t want to do in the first place.

Red Lights meet wind power, just another way to restrict people when there wasn’t a problem in the first place.  And where the cure is worse than the disease.

(Don’t get me wrong, I have nothing against traffic lights.  But automated red light cameras will become the 21st century speed limits.  A government policy put in place purely to serve as a revenue generator with no relationship to reality).

Wall Street Journal and Rush Limbaugh Pick Up on the Gang of 10

On Monday, I posted on the Gang of 10, a group of Senators seeking to bring bi-partisanship and results on the energy issue to the Senate. I looked at more of the spending aspects of the bill, but neglected both the drilling and political aspects of this issue.

So today, the political aspects were addressed by the Wall Street Journal in an article by Kimberley Strassel. So the cat is now out of the bag and how “bi-partisanship” is going to take a key issue off the table for Republicans.

The Institute for Energy Research did a thorough look at all aspects of the bill, as currently announced. Of course, we haven’t seen an actual bill yet, so it could be significantly different in certain ways and have impacts yet unforeseen.

One thing that I had completely forgotten about was the fact that the off-shore drilling ban is set to expire on September 30th:

Republicans are winning the energy debate and will continue to highlight the issue until Democrats are forced to either renew the existing offshore ban when it expires on September 30, or allow it expire. Democrats need to hope for prices to come down and stay down until the election. Whether they have a legislative way to bring that about (such as releasing fuel from the Strategic Petroleum Reserve) is unclear.

So this is a new wrinkle to the bi-partisan plan. Don’t do anything (let the ban expire) and you get what you want (more drilling) . Do something (pass the compromise) and you do less of something (limit the amount of area available for drilling).

So this came up big-time on Rush Limbaugh’s show today. So much that Georgia US Senator Saxby Chambliss called in. Of course Rush put him on right away. There were quite a few things that the Senator said but there are a few that I want to highlight… and pick apart.

RUSH: … The ban on offshore energy production is set to expire at the end of September if Congress does nothing, giving the American people exactly what they want. Now, here comes your bill, The New Era Bill, and it says that new production will only be permitted in four states, and the state legislatures are in charge of it, not the federal government anymore, and only 50 miles or further offshore in those four states, which eliminates the richest fields and things like ANWR. It has 84 billion dollars in tax credits, subsidies and federal handouts for alternative fuels and renewables. It basically, according to the Wall Street Journal today, will eliminate any effort for new drilling.

CHAMBLISS: Well, it’s actually designed to do just the opposite, Rush. First of all, our bill has nothing to do with whether or not the moratorium remains on after September 30. That’s going to be an up-or-down vote on either continuing resolution or some sort of omnibus bill. That’s where it will be included. I intend to vote to lift the moratorium. I think all five of us will do that. I’m sure all five of us will. This doesn’t have anything to do with that. What it does have to do with is we’ve got a commitment for the first time that I can remember in my now 14 years in the Senate, a significant number, although five may not sound significant, but it really is. We’ve got five Democrats who are willing to say, “Look, you know, we think we need to be reasonable and we need join with you guys, so let’s work on a compromise bill that will allow additional offshore drilling,” something we haven’t done in the last 28 years.

Three things I want to mention:

1. This has everything to do with the moratorium. If you replace law that is set to expire in two months with a new set of laws that keep the law in place, then you’re extending the moratorium. In this case, they’re just keeping the moratorium in place 50 miles off-shore and in. But it’s still in place. If you don’t do anything, the moratorium expires, and you get to drill EVERYWHERE. You win.
2. If Congress passes the moratorium extension in an omnibus bill, then Senators have two options: strip it out in an amendment (straight up or down vote) or have President Bush veto the bill and not override it. Even if the law is passed, Pres. Bush can still veto it, and the Democrats absolutely do not have the votes to override it. Just so long as Republicans keep playing the drilling issue up, which is a political winner for them. Especially if there are 5 Democrats willing to go along with drilling.
3. Since when did a “continuing resolution” have the force of law? If the President doesn’t sign it, it’s not law. Period. If that’s not the case anymore, then 216 years of a Constitutional Republic have just been blown up. And then we have a pretty good legal case on our hands. A continuing resolution that’s not signed by the President (that whole checks and balances thing, remember?) SHOULD NOT and DOES NOT have the power of law. If I’m an oil exploration company, I challenge that law as soon as possible.

Pretty much, the rest of the interview is mostly Sen. Chambliss defending his position that “his constituents want me to do something” and I’m doing something. Whether or not his something will amount for anything is a different matter altogether.

The entire conversation is below the cut.