Global Warming Examiner

DNC Platform on Energy Policy and Global Warming

Democratic presidential candidate, Sen. Barack Obama, D-Ill., speaks
during a town hall-style meeting in Springfield, Mo., Wednesday,
July 30, 2008. (AP Photo/Jae C. Hong)

“No strategy for American security is complete without a plan to end America's dependence on Mideast oil. Today, the American economy depends on oil controlled by some of the world's most repressive regimes. This leaves our economy dangerously vulnerable to nations that do not share our interests. America too often is silent about the practices of some governments because we depend on oil they control.”

“John Kerry, John Edwards and the Democratic Party believe a strong America must no longer rely on the cooperation of regimes that do not share our values. We believe a strong America must move toward energy independence.”

The Democrats have been relying on the development of renewable energy to not only provide new energy required by our growing economy, but also replace the fossil fuels that we are currently using. They have been opposed to offshore drilling, while oil becomes a scarcer commodity in the world. Newly developing countries and oil producers are all using more oil, leaving less for us and driving prices up.

What about the platform for 2008? That will be decided at the convention, but we can get some ideas of what it might contain by looking at the position statements from presidential candidate, Barack Obama.

Obama’s energy policy contains the following key points:

•    Crack Down on Excessive Energy Speculation.

•    Enact a Windfall Profits Tax on the Top Grossing Oil Companies and Ease the Burden on American Families.

•    Require Oil Companies to Use Existing Drilling Leases.

•    Cooperate with Oil Importing Nations to Reduce Demand.

His overall goal is to reduce carbon emissions 80 percent by 2050.

Let’s analyze his proposals by starting with his goal of reducing carbon emissions 80% by 2050. That would imply that he intends to reduce carbon emissions by 2.5% per year. Our growing economy requires about 2% more energy each year so he needs to come up with 4.5% more energy each year from renewable sources. Considering that wind, solar and geothermal energy provide less than 2% of our total energy now, I don’t see how we are suddenly going to start producing that much new renewable infrastructure so quickly.

But let’s look at Obama’s plan in more detail.

Crack Down on Excessive Energy Speculation

This might produce a reduction in oil prices in the short run, but I think that oil prices are rising because of real world demand and the maxing out of the world’s rate of oil production (Peak Oil). I don’t know if we are before or after peak oil, but we are probably in a period where production capacity is flat. This will not bring more oil to the market.

Enact a Windfall Profits Tax on the Top Grossing Oil Companies and Ease the Burden on American Families.

This will simply decrease the amount of oil produced in this country and increase our purchase of oil from foreign countries. This will hurt our balance of trade, put downward pressure on the value of the dollar, and increase the cost of oil and gasoline in this country. Jimmy Carter tried the same thing during his presidency during a period of high oil prices. The windfall tax didn’t work then, and it won’t work now.

Obama’s plan is to use the money from the windfall tax to pay for part of his tax fairness agenda. He plans on redistribute the money to working families:

“Provide a Tax Cut for Working Families: Barack Obama has called on the President to enact a second round of economic stimulus to immediately put tax rebates in the pockets of American families to pay for rising energy prices. As president, Obama will enact a tax fairness agenda that provides 150 million workers a “Making Work Pay” tax credit of $500 per person or $1,000 per working family.”

Require Oil Companies to Use Existing Drilling Leases.

What can I say about this?. Obama thinks he knows better where to drill for oil than the oil exploration companies. I think if an oil company had a good lease with oil potential, they would be developing it now. Many oil companies have excess cash flow that they are returning to investors because they don’t have enough drilling prospects. Their reserves are diminishing and they are effectively putting themselves out of business. I guess Obama believes they are withholding development waiting for oil prices to go higher.

Cooperate with Oil Importing Nations to Reduce Demand.

Since oil is in short supply, he wants to make sure that the US gets its fair share of oil.

“As new large oil importing nations come on the market, the United States is at the mercy of an ever more volatile oil market. Obama believes we should use existing organizations, like NATO, to make energy security a shared global goal. We should take steps to engage the largest new consumers, China and India, including by inviting them to join the International Energy Agency.”

This to me sounds like he intends to use military force (NATO) to make sure we get our oil. (Maybe Dick Cheney slipped this statement into his position paper and he didn’t notice). Most other countries have figured out that the best way to get oil is to simply buy it.

To implement his policies he has the following plan:

Cap and Trade:

His cap and trade scheme actually sounds like a carbon tax to me. He would auction off carbon pollution rights to the highest bidder. Assuming the amount of rights available drops by 2.5% per year, he could reduce carbon production. The problem with this is that it could all be done by demand destruction, which would cause a lot of economic hardship and pain. A severe recession or depression would reduce our carbon emissions, but that is a very tough policy.

Invest $150 Billion over 10 Years in Clean Energy:

This amounts to about $15 billion per year. We probably should be investing about $400 billion per year over 40 years to replace our fossil fuel infrastructure so his investment won’t even come close.

Develop and Deploy Clean Coal Technology:

He is pushing the development of what he calls “low-emissions coal plants”. I am not sure how that differs from “clean coal” being pursued by the Bush administration, but the only coal technology we should be developing is carbon sequestration. We currently don’t have any commercial plants using that technology on a large scale.

Nuclear Power:

Obama is basically against nuclear power. He would only be in favor of nuclear power if the problems of waste storage. proliferation, security, safety, etc., can be solved. This is in contrast to John McCain who wants to build 45 new nuclear plants and figures he can solve these problems.

In summary, Obama has a 40 year plan with a lot of blue sky and little substance. Assuming that it will take 40 years to reduce our carbon emissions by 80%, we are going to need a lot of fossil fuels over the next 40 years. Obama is for raising automobile mileage standards and promoting the development of electric cars, but it will take decades to replace all of the current cars on the road. Only a few small manufacturers even offer electric cars now, with GM planning to produce 50,000 Chevy Volt plug-in hybrids in 2010 (if they can get acceptable batteries).

By not drilling for off-shore oil, his plan will not necessarily speed up the development of renewable energy, but will cause additional stress on our economy through higher oil prices, a higher balance of trade deficit, job loses, and inflation. This is not the best economic environment for renewable energy project developments. The 2004 platform called for reducing our dependence on foreign oil. How can you reduce our dependence on foreign oil if you can’t drill and you can’t yet build renewable energy plants as fast as energy demand increases?

His tax plan is to take money from the productive part of our economy and redistribute the money to people who are most likely to increase consumption. We produce less at home and buy more from China. (Doesn’t Wal-Mart cash you rebate check for free?) In my previous article “US Tax Code Promotes Global Warming” I discussed how consumption based taxes could help global warming.

Obama’s plan reads like all blue sky and sunshine. What is lacking is the connection between what he would like to see and how he expects to pay for it. By Obama’s plan timeline, we are going to need fossil fuels for the next 40 years and longer. In 2050 we will still be emitting 20% of the carbon we emit now, and that will come from fossil fuels. We should be developing our best EROEI (Enerigy Return On Energy Invested) fuels now (off-shore drilling), holding off on developing our low EROEI fuels (like oil shale), and reducing our use of high carbon emitting fuel (coal) in producing electricity. We should use the tax revenue from oil production on government lands to fund development of renewable energy. That’s where some of the money can come from. Private investment can also fund a lot of nuclear and renewable energy investment, especially if the government can clear barriers to development and provide tax incentives in the case of renewable energy.

We have the technology now to replace our coal-fired power plants. Nuclear power technology works and can be implemented now. With nuclear, wind, solar and geothermal power we could replace all of our coal-fired power plants. This could happen in as few as 20 years.

We should have an energy policy that produces the energy we need for a strong economy. With a strong economy we can become a leader in helping the rest of the world reduce their carbon emissions. It does us no good if we simply shut down carbon production in this country, only to have carbon emissions increase in other countries. We have to remember this is a world problem, not just an American problem.

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