November 16, 2012

“Is Colorado’s ‘new energy economy’ still viable in light of recent setbacks in the industry? No”

CEI’s William Yeatman, writing in the Denver Post:

Over the last few months, the Centennial State’s green energy industry, which the new energy economy was supposed to kick start, has been beset by a series of setbacks. Loveland-based Abound Solar went bankrupt; Vestas Wind Systems laid off almost 200 workers at its Windsor blade plant; and General Electric pulled the plug on a planned solar manufacturing plant in Aurora.

The troubles of renewable energy companies are not unique to Colorado; they extend nationwide. U.S. taxpayers ponied up $60 billion for green energy “investments” as part of the American Recovery and Reinvestment Act of 2009, better known as the stimulus bill. The results are only coming in only now, and they are not good. The list of “stimulosers” — of which Solyndra is only the most famous example — is long and growing. It includes Beacon Power, Evergreen Solar, Amonix, A123 Systems, Nevada Geothermal Power, and many others.

These green industries are in trouble for a simple reason. They are running out of subsidies. The 2009 stimulus has been spent and the wind production tax credit is set to expire in December. Without a steady influx of taxpayer help, renewable energy sources like wind and solar power cannot compete, due to their high capital costs and intermittent supply.

Allow me to introduce a caveat:  once Obama and the environmental activists inside the bureaucracies effectively kill off coal, turn their attention to frakking, and continue to thwart offshore oil exploration and new natural gas pipelines and refineries, then wind and solar will be able to “compete.”  Hell, they may even take over the market.

Of course, that would mean heating and cooling bills would likely read as a second mortgage payment each  month, and there would have to be rolling brown outs to account for the lack of energy, but then that just justifies a shorter work week, and besides, it’s for the earth, and it’s “fair.”

How dependent on government are these industries? The American Wind Energy Association estimates that almost half of the entire wind power workforce — almost 37,000 people — would lose their jobs if Congress were to allow a single tax subsidy to expire. Such sudden and severe contractions are symptomatic of industries whose business plan is predicated on political favoritism. When the political winds change and the subsidies on which these companies depend are cut, the bottom falls out from under them.

On the demand side, green energy entails higher rates for consumers. […]

Somewhat paradoxically, the new energy economy’s biggest expense likely will pertain to fossil fuels. The 2010 Clean Air Clean Jobs Act mandated that Xcel Energy generate from natural gas almost 1,000 megawatts of base load supply that it now gets from coal. At current prices, natural gas is historically cheap, but it is still more than twice as expensive as coal, according to Xcel Energy’s regulatory filings.

And let’s not forget that the price of natural gas reached historical highs only four summers ago. In fact, the high cost and volatility of the natural gas market relative to coal was the primary reason that the Colorado utilities have relied on the latter to meet the preponderance of the state’s energy needs.

A spike in the price of gas after the current supply contracts expire would cost Xcel Energy ratepayers dearly.

The worst aspect of the new energy economy program is its regressive nature. Utility bills represent a larger portion of poor households’ budgets, so the new energy economy’s costs are shouldered disproportionately by those who can least afford them.

— Which is precisely how you “nudge” people into government dependency — the paper work increase means more government jobs, the dependency means more Democrat voters — and so all of this, from the standpoint of leftist totalitarian economics represents a feature, not a bug.

Not only that, but it also has the socially salubrious effect of teasing out and more permanently stratifying the “classes.”  After all, what’s the point of being wealthy if just anybody can eventually get their through hard work and equality of opportunity.  Wealth should augur a new aristocratic class.  And the vulgar nouveau riche will recede into their rightful social strata.  Call it the Silas Lapham economy — the irony being that the beset will cling to those who pretend to champion them, even as their policies insure their precipitous fall down the economic latter.

It’s the master / slave relationship. Perfected by authoritarian leftists, who have learned to scapegoat the “rich,” even as they embody that particular demographic — though not by way of private industry, but rather by way of government power, crony capitalism, insider trading, and influence peddling.

Before the new energy economy program came along, Colorado utilities’ decisions on how to provide power to consumers were guided by considerations on how to do so most efficiently at the least cost. Now, many of those decisions are based on political considerations, such as the need to prop up renewable energy, imposed by politicians. As a result, Colorado ratepayers can expect to pay for unsustainable subsidies, endure lower power supply reliability, and suffer unexpected consequences — all in the name of green ideology.

Well, I’d suggest it’s not being done in the name of green energy at all, but rather it’s being done to make the price of energy “necessarily skyrocket” — why people are so willing to forget that Obama laid that out in no uncertain terms is beyond me, just as it’s beyond me that nobody seems to remember that Obama’s energy secretary wished to see gas prices reach European levels — and to use these price increases to attack the suburbs and exurbs, retract “suburban sprawl,” corral people back into big cities where they can be more easily  managed and readily concentrated.

That way, not just anybody can have a bunch of acres or a ranch.

This whole American experience has taught us that, if we’re going to separate the worthy people from the unworthy vulgar upward climbers, we need to take away the keys to industriousness:  cheap energy, a more realistic regulatory burden, access to capital, and lower tax rates.

So while on the surface all this is being done in the name of green energy, that’s just the ruse.  This is being done in the name of totalitarianism, which begins by dividing the country into classes and ethnic interest groups, and ends with the institutionalization of policies that are meant, over time, to create a huge gap between the powerful and the not so powerful, between the influence rich and the influence poor.

The rest will take care of itself.

Followed, naturally, by Paradise!

Posted by Jeff G. @ 10:04am

Comments (6)

  1. Coal prices: $66 a short ton for Central Appalachia. Pile it in the yard. Just think Twinkies. Stock up now.

  2. The first two comments on the article were rather instructive. The first comment was dismissive without addressing any of the points made, and the second tried to claim the cost of coal rises if one factors in the cost of the health issues caused by burning coal.

    As if there isn’t a health care cost due to lack of affordable energy.

    Gad, these people are stupid.

  3. Not just dismissive, Blake, but aggressively wrong. How on Earth is a letter to the editor to be categorized as a “political act” that a free-market advocate should avoid? I realize that the Left would like us all to just shut up already, but categorizing free speech as some sort of market-fixing is just dumb.

  4. I think I’m going to start a file of stories like this. After the Obamaclypse destroys such quaint notions as respect for copyright, I’ll be able to make scads of money when I bring out my Hayek’s Road to Serfdom illustrated and annotated with examples drawn from recent history.

    Won’t that make Chicago howl! (Assuming of course, that I don’t end up using my reams of notes for other purposes).

  5. Squid, I think it’s reflexive on the part of lefties. All speech is viewed as political by lefties and all speech contrary to orthodox leftist “thought” is to be derided or labeled as hate speech.

  6. Leo Strauss begins his commentary in On Tyranny with a prooemium from Macaulay, taken from Macaulay’s History of England etc., Vol 4, sec. 10, (the full — and interesting — context filling in Strauss’ elisions is here) thus:

    The habit of writing against the government had, of itself, an unfavourable effect on the character. For whoever was in the habit of writing against the government was in the habit of breaking the law; and the habit of breaking even an unreasonable law tends to make men altogether lawless. . . From the day on which the emancipation of our literature was accomplished, the purification of our literature began. . . During a hundred and sixty years the liberty of our press has been constantly becoming more and more entire; and during those hundred and sixty years the restraint imposed on writers by the general feeling of readers has been constantly becoming more and more strict. . . At this day foreigners, who dare not print a word reflecting on the government under which they live, are at a loss to understand how it happens that the freest press in Europe is the most prudish.