Barrel of Oil Cost to Increase by End of 2009

With uncertainty in the air about the future cost of a barrel of oil, CARE contacted our good friend Michael J. Economides, a nationally energy analyst, to provide us with some foresight. As a regular contributor to national TV and radio programs and PhD petroleum engineer that has performed technical and managerial work in more than 70 countries; Dr. Economides has both the credibility and expertise to predict how much a barrel of oil will cost in months ahead. With both international political calculations and oil-producing nation's economic policies guiding the future price for a barrel of oil, things can get confusing sometimes and it takes an expert to provide clarity. Below is Dr. Economies's case that the cost of a barrel of oil will soon increase from $80 per barrel to $100 per barrel.

$80 oil on the way to $100 by the end of 2009
Oil has been flirting with $80 per barrel and from the start of this year I have been predicting $100 oil before the end of the year. Almost all other analysts were predicting $40 to $60 oil. I am not quite ready to declare that I was exactly right and they were wrong but it looks like increasingly so.

There are obvious and real underlying reasons for the escalating oil prices which we will expound upon below but news headlines have ruled the price of oil since at least 2004. There was no real rational economic reason for almost $150 oil (which for people with short memories may seem to have happened last century – it happened a year ago, July) nor was there any reason for below $40 oil, which happened right after the late last year "crises" such as the economic crisis, the credit crunch crisis etc. In fact had it not been for those events delegating oil announcements to the seventeenth page of newspapers, a report by the International Energy Agency in Paris last November, which showed that world oil production from operating wells has been declining by 9.1 percent per year, the largest ever, would have shot the oil price to over $200. In fact, even now, there is a lingering possibility that a strike by Israel on Iran may close the Straits of Hormuz and will shoot the price overnight to the stratosphere.

The headlines started in 2004 and included the Abu Ghraib photographs, which increased enormously the fear factor in the Middle East, the re-Sovietization of Russia’s oil industry following the assault on Yukos by then President Vladimir Putin and the re-nationalization of Venezuela’s oil industry by the Hugo Chavez government. That perfect storm of headlines created one of the most telling and repeatable events from 2004 to last year’s economic collapse. With escalating energy and energy product prices, every quarter ExxonMobil, the largest multinational oil company, would announce the biggest profits of any company in the history of the world and "Big Oil" would be in the mouth of many politicians in many countries as the devil-incarnate himself. And yet that very same day, mystifying to many people, their stock would plunge because in smaller letters they would announce that their oil production and reserves were declining. Shut out of reserves in some of the most prolific oil provinces of the world, such as Russia and Venezuela, international Big Oil was, and is, in trouble.

Recent hints of economic recovery and the price of the dollar are offered now as the reason for the oil price escalation. They are real reasons but they hide others. There should be no mistake: oil producing countries love $100 oil and they have little incentive to shoot themselves in the foot by increasing production. Neither the price escalation of the previous four years nor the oncoming one have anything to do with "peak oil". This will eventually happen but not for decades. Physically but not necessarily politically, the world can produce 130 million barrels of oil per day, compared to the current 85 million, but with proper investment and management and will.

Many of the oil producing and exporting nations are run by regimes that want the oil revenue not for technological and even business re-investment and long-term resource management but to affect other internal political and geopolitical aims.

Let’s look first at Russia. From 1998 and the admittedly imperfect privatizations that involved Yukos and Sibneft when the country produced 6 million barrels per day to 2005 when production escalated to more than 9.5 million barrels per day (almost 10% increase per year) Russia was the brightest spot in the international oil business. There was talk of increasing production to 12 million barrels per day which some Yukos executives touted as very realistic. Since then Russia has vegetated to about the same production and the tax regime and government control of the oil business can mean only one thing: imminent declining production and no incentive to do any of the spectacular things that Yukos and Sibneft became legendary for.

Venezuela is an even bigger factor, considering its oil dominance in the Western hemisphere. Before Hugo Chavez took office in 1999 Venezuela was producing 3.4 million barrels per day and there were concrete plans to increase that production by now to 6 million. Instead, after the massive firing of practically all petroleum professionals and the re-nationalization and expulsion of international oil companies, Venezuela is producing 2.6 million barrels per day, the lowest volume since the first nationalization in the 1970’s.

And of course Iraq, with a demonstrable ability to escalate its oil production to 6 million barrels per day has been languishing at 2 million. It may have been quieted down a bit but the sectarian violence is barely beneath the surface and the risks are still great. In a recent auction for oil blocks the interest by international oil companies was abjectly disappointing.

Saudi Arabia is the only country with excess production capacity, estimated at 2.5 million barrels per day, and this is a role that the country found itself once more, in the 1980s, when at the prompting of then US President Reagan it overproduced. The ensuing oil price collapse contributed greatly to the demise of the Soviet Union which depended on oil for almost all its foreign revenues. Russia today depends pretty much at the same level on oil and gas and Saudi Arabia has the capability, if it chooses, to bring enormous hardship on that and other oil producing countries. There is no evidence they will do so, considering it will bring huge hardship on them as well.

Finally, the signs of imminent Chinese exploding oil demand are already here. After phenomenal economic growth in the first seven years of this decade, oil demand was growing by annual double digits. A short-lived slowdown lasted for a few months after the dire headlines of last year’s economic crisis. But Chinese economic growth has bounced back to more than 8 percent. So did oil demand which just came in with vengeance. Last January and February, Chinese oil imports stood at 3.1 million barrels per day, compared to an average of 3.87 million barrels per day in 2008. But from March to June oil imports averaged over 4 million barrels per day and in July they jumped to an unprecedented 4.6 million barrels per day, close to a 20% increase over the average of 2008. (Source: China Customs, August 2009.) This level of imports inch towards the two-thirds of total demand that the United States has been experiencing.

All signs point that oil is on its way to $100 very soon and it will not stop there.

Prof. Michael J. Economides, University of Houston and also Editor-in-Chief Energy Tribune Houston, TX.

Will America Run Out of Oil?

Most Americans live hectic lives and don’t have time in their day to pay attention to news reports about “peak oil”. But would more people pay attention to the supply of oil if the price for a gallon of gas at the pump skyrocketed in the near future? You bet!

Is there an oncoming energy crisis to be caused by peak oil production? Will global oil production become stagnant due to international political strife? Will humanity experience a global oil shock by the year 2012? Our CARE blog contributor and former conference call guest Byron King from the Whiskey and Gunpowder (an investment newsletter) thinks so. While we at CARE don’t necessarily agree, or disagree, with Byron King’s viewpoint on "peak oil," he offers a noteworthy perspective on the situation. You’ll want to note that he writes from an investment perspective.

Peak at 85 Million Barrels of Oil a Day
Eighty-five million barrels a day. That’s the most that can be produced. So when recession causes a temporary decrease in world consumption, it can seem like those 85 million barrels are enough. But consumption is bound to resume its upward climb, while those 85 million barrels a day are all we get. The day of reckoning has just been delayed for a little bit.

"Can’t we get more than 85 million barrels?" some folks are bound to wonder. Let’s look into that.

Those Stubborn "Peak" Curves
This week I was in Denver, attending the 2009 conference of the Association for the Study of Peak Oil & Gas (ASPO). Despite all the happy talk in the Big Media about how the oil situation is under control, I assure you that the oil situation is NOT under control.

The market meltdown and world recession of the past year has bought some time, or stolen some time may be a better way of saying it. All the "peak" curves are still out there, but are merely adjusted a bit to the right on the timelines.

As Marine Corps Gunnery Sergeant R. Lee Ermey likes to say on the television show Mail Call, "Wipe that smile off your face." We’re staring at an energy problem that’s coming down the tracks like a runaway freight train. It’s just astonishing that more people don’t appreciate the looming impact of Peak Oil.

Meanwhile, the politicians are fooling around with the health care issue. Hmmm... I have some news for them. If you screw up energy, health care isn’t going to matter very much.

Oil Output Not Increasing
It might be a comforting thought to believe that world oil output can increase. Indeed, many policymakers in the U.S. and Europe apparently dream themselves to sleep at night pondering how the current oil volume of about 85 million barrels per day could move upward to, say, 95 million barrels per day — "if only the world oil industry were more efficient."

Yeah, right. Except the global oil industry is not that model of dreamland efficiency. Sure, there are some bright spots. The big internationals like Exxon Mobil, Chevron, BP, Shell, etc. are good. There are some really good state oil firms like Brazil’s Petrobras and Norway’s StatoilHydro. Saudi Aramco is outstanding. These guys are all doing great work to keep the world’s pipelines and tankers filled.

But much of the rest of the world’s oil industry lacks the knack for capital discipline and crisp project execution. Venezuela’s oil industry is a basket case, what with the Chavez-led nationalizations and mass firings of recent years. Output is falling in Venezuela, and this from a nation with among the largest hydrocarbon reserves anywhere in the world.

Mexico’s national firm, Pemex, is nothing but a piggy bank for the politicians, who suck most of the investment capital away from the oil patch and into their own boondoggles. Thus is Pemex walking off a cliff of underinvestment, depletion and decline. According to Matt Simmons, Pemex may not be exporting any oil at all to the U.S. within 18-24 months.

Iran’s oil industry is in a slow death spiral, despite the occasional report of Chinese assistance with field development. Apparently, there’s a "Twitter Revolution" going on in Iran that includes people at the grass roots impeding the oil industry. Well, it worked to depose the Shah back in 1979. Perhaps the Iranians can rid themselves of their mullahs in a similar way.

Next door in Iraq, chaos reigns. According to Matt Simmons, the Iraqis "are in the dark about how to run their oil industry." The Iraqi oil legislation is so burdensome that almost all players within the international energy industry are spurning Iraq, including the Chinese. Wow. When the Chinese won’t invest in your oil fields, there MUST be something wrong.

And so it goes. The bottom line is that we should expect a global oil shock by 2012, or earlier if global economic activity kicks into high gear. It should go without saying that despite any calamities that may come from such a thing, you would be very happy if you’d taken advantage of lower oil prices to stock up.

Byron King--Prior to joining Whiskey and Gunpowder, Byron received his Juris Doctor from the University of Pittsburgh School of Law, was a cum laude graduate of Harvard University, served on the staff of the Chief of Naval Operations and as a field historian with the Navy. Our resident energy and oil expert, Byron is the editor of Outstanding Investments and Energy and Scarcity Investor.

Rare Earth Elements: Vital to Strengthening America’s Economy/Security

Following the publication of the commentary “Happy Talk on Green Jobs” and in conversations surrounding the topic, CARE’s executive director, Marita Noon, is often asked a question, “What are rare earths?” Rare earth elements such as lanthanum, cerium, and many others of are of great importance to the energy sector of our economy and are vital to preserving America’s national security interests. The green energy revolution that environmentalists advocate is impossible to achieve without a secure supply of rare earth elements. REEs are used in the construction of wind turbines, hybrid vehicles, and emerging energy technologies. REEs are also vital to our national security, such as in the construction of jet fighter engines, missile guidance systems, underwater mine detectors, space-based satellite power plants, and military communication systems. And here’s the scary part--China controls 95% of the world’s REE production and environmental extremists are repeatedly blocking American companies from mining efforts that would allow reaching the REEs that we need to keep America free and prosperous. This is an energy issue and a national security issue. Found in one of our favorite sources, Whiskey and Gunpower (an investment newsletter) we discovered a good overview of Rare Earths and the current situation. Most of our posting from Whiskey and Gunpowder come from their Energy Editor Byron King, but this posting introduces a new writer: Doug Hornig.

Why All the Fuss Over Rare Earths?
Rare earth elements (REEs) have been the mystery metals of the mining world for years. Now, suddenly, everyone’s heard about them.

Before we delve into the reasons behind all the publicity, here’s the basic skinny on REEs: One, they are rare, at least sort of. Two, they are indispensable to modern technology. Three, the number of active, dedicated producers is tiny, with more than 90% of the world’s supply coming from China.

If you took high school chemistry, you probably remember the periodic table of the elements. But if you’re like most of us, even if you pulled a 95 on the chem final, you may not recall many of the details today. And there’s a better than even chance you never bothered to memorize the names of the REEs. It’s time to get reacquainted.

They’re generally clustered in a separate grouping at the bottom of the table, are known collectively as the lanthanoids, and these are their names, in order of atomic number (57-70): lanthanum, cerium, praseodymium, neodymium, promethium, samarium, europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, and ytterbium. Yttrium (39) and lutetium (71) are also sometimes included.

Need to Know, Point 1: Rarity
Fact is, we begin with something of a misnomer. These elements are not, strictly speaking, rare. Earth’s crust is full of them. True, they’re not as common as iron, carbon, or silicon, but are about on a par with nickel, copper, and zinc. Even the scarcest is way more abundant than gold, platinum, or palladium.

What is rare about them is that they’re widely dispersed. Very seldom are they found in economically exploitable deposits. Complicating matters further is that there are so many of them, and they clump together. They have to be separated first from the ore and then from each other.

Thus REE production comes primarily from other mines’ byproducts. The miner strips off the metal he’s really after, then sends the REE clusters to a specialty refiner.

Need to Know, Point 2: Applications
It’s safe to say that life as we know it would be very different without the REEs. The more our technological accomplishments pile atop one another, the more crucial these metals become. Because of their unique properties, there are generally no substitutes for them.

Of all the REEs, the one people may have heard of is neodymium. Alloys containing it have revolutionized permanent magnet technology, allowing miniaturization of all sorts of electronic components in appliances, A/V equipment, computers, communication systems, and military gear. Your hard drive probably has neodymium in it. So does your DVD player.

Liquid crystal displays depend on europium. Fiber-optic cables can’t function without erbium. Virtually all specialty glass products, from mirrors to precision lenses, are polished with cerium oxide. Several REEs are essential constituents of both petroleum fluid cracking catalysts and auto emissions-control catalytic converters. Half a dozen REEs go into the manufacture of the energy-efficient fluorescent bulbs that will soon be mandatory. Lanthanum-nickel-hydride rechargeable batteries are replacing older ones based on lead or cadmium. And no REEs, no electric cars. Nor next-generation wind turbines.

That’s only a partial list. But what makes REEs an increasingly sensitive topic is their role in national defense. Here are a few small items that have become dependent on them: jet fighter engines, missile guidance systems, underwater mine detectors, range finders, space-based satellite power plants, and military communications systems.

Think the Pentagon is very, very interested in maintaining a steady REE supply?

Need to Know, Point 3: Supply
95% of the world’s REE production originates in China. If you’re looking for reasons why we’re so nice to the premier Communist power left standing, this is a biggie.

We weren’t always so dependent. Not long ago, mines such as Mountain Pass in California made us nearly self-sufficient in REEs. But in the early ‘90s, China flooded the market with cheaper product, until it had driven all of its competitors out of business.

Today, Mountain Pass is being revived, but the start-up of an old mine is a lengthy and costly process. There are also some from-scratch REE development projects under way in the U.S., as well as Canada and Australia. But for the moment, China holds the hand with all of the high cards in it.

Forget your hard drive. Forget 11th-grade chemistry experiments. This is a national security issue. The American government cannot afford to lose that supply source, period. Maybe someday, but not now.And that’s what’s behind the recent furor over these obscure elements. Because China threatened just that, a cutoff. The one thing that really gets Washington’s knickers in a twist. In August, the story broke in the mainstream press. Sources in China leaked news of a draft copy of a report from the Ministry of Industry and Information Technology. It allegedly calls for a total export ban on five of the rare earths, with the rest restricted to a combined export quota of 35,000 metric tons a year, far below annual global consumption of 125,000 tons, and rising fast.

This doesn’t look like a move they’d follow through on, if only because of the lost trade revenues. And it’s only a recommendation; final approval rests with China’s State Council. But consider it an opening shot across our bow, if you wish. Or perhaps they’re telling us they need their REEs for the domestic economy, and we’d best go find our own supplies. Either way, the scramble is on to find alternatives.

That could backfire. REE prices and demand were already dropping last fall as the recession deepened, and China maintains a decided competitive advantage beyond control of supply: lax environmental standards (many REEs are highly toxic). Thus the new companies could spend the fortunes required to come on line, only to find themselves victims of yet another market glut engineered by the Chinese. Still, these metals are so important, it wouldn’t surprise us if the U.S. government subsidized domestic production, rather than risk a squeeze.

The Market
The market took due notice of the China story, driving the stocks of Western REE producers, and would-be producers, nearly straight up. Since late August, Avalon Rare Metals has gained 120%, Arafura Resources is up 75%, Rare Element Resources has added 72%, and Lynas Corp. is 50% higher (China, ever the master strategist, exploited the credit crisis to grab 25% of Arafura and more than 50% of Lynas). Lurking in the background is Molycorp, the private company redeveloping Mountain Pass. It’s planning an IPO that may well come out of the gate red hot.

With market action this frantic, the sector is on the frothy side at the moment. The heady market caps being awarded to these companies are obviously not based on fundamentals, and a savvy investor takes care not to get caught on the wrong side of a bubble.

Even though the Chinese export ban may never materialize, the ever-growing need for REEs is dead serious. And while the current bubble may pop any day, the long-term prospects for successful miners are outstanding.

Doug Hornig--A former Edgar Award nominee, finalist for the Virginia Prize in both fiction and poetry, and a past winner of the Virginia Governor’s Screenwriting competition, Doug Hornig lives on 30 mountainous acres in a county that just got its first stop light. He is an admitted political junkie, but hates all political parties. Doug has authored 10 books and has written articles for BusinessWeek and other renowned publications. In addition he produces original analysis for Casey Research.

How many Americans Will Follow Obama’s Leadership On Climate Change?

We here at CARE noticed (perhaps you did too) that President Obama repeatedly states, “Few challenges facing America—and the world—are more urgent than combating climate change,” and that “We will make it clear that America is ready to lead."

Building upon the work of CARE Blog contributor Paul Driessen, we’ve decided to raise some questions: How many Americans will support a 1400-page energy and climate bill that will create a trillion-dollar cap-trade-and-tax industry? How many Americans will follow the leadership of a man who is working hard to ensure that energy and food costs “necessarily skyrocket,” killing jobs, and imposing an all-intrusive Green Nanny State? How many Americans are willing to point an economic gun to the heads of their neighbors and to pull the trigger during this economic downturn?

These questions have serious implications and we encourage our readers to delve further into the issue with our friend Paul Driessen.

Leader of None
"Few challenges facing America--and the world--are more urgent than combating climate change," President Obama has asserted. "We will make it clear that America is ready to lead."

The President and Al Gore are certainly ready to lead. But how many will follow?

Even in America, and certainly on the world stage, the two increasingly look like Don Quixote and his faithful squire, Sancho Panza. As they tilt for windmills, and against a "monstrous giant of infamous repute"--climate disasters conjured up by computer models and Hollywood special effects masters--their erstwhile followers are making politically correct noises, but running for the hills.

The House of Representatives passed a 1400-page energy and climate bill - by a razor-thin margin, and only after Nancy Pelosi and Henry Waxman packed it with enough last-minute deals to protect favored congressional districts, buy votes, and curry favor with assorted special interests. Not one legislator actually read the bill--which would create a trillion-dollar cap-trade-and-tax industry, ensure that energy and food costs "necessarily skyrocket," kill jobs, and impose an all-intrusive Green Nanny State.

Republicans want to control what people do in their bedrooms, insists the old canard. Democrats, it appears, want to dictate what we do everywhere outside of our bedrooms. And Sancho Gore wants to become the world's first global warming billionaire, by selling climate indulgences, aka carbon offsets.

The reaction has been predictable--by anyone except House and White House czars and czarinas.

Citizens are livid over yet another attempt to use a purported crisis to justify further expanding the government and spending billions more tax dollars for alarmist research, activism and propaganda, just ahead of the Copenhagen climate conference. Global warming continues to rank dead-last in Pew Research and other polls that actually list it as an issue. Rasmussen puts the President's approval ratings at 46% and falling. Zogby reports that 57% of Americans oppose cap-and-trade bills.

Manufacturing states, which get 60-98% of their electricity from coal, worry that the only thing they'll export in ten years will be jobs. Democrat senators from those states worry that the energy and climate issue will be "toxic for them during midterm elections," says Politico magazine.

Even companies that had eagerly sought seats at the negotiating table are now gagging. ConocoPhillips, Caterpillar and others finally realize that cap-and-tax will severely penalize them and their customers.

Not even the climate is cooperating. Outside of Dallas, 2009 has brought some of coldest summer days on record across the US. Near freezing temperatures nipped at crops, and gas heaters were sine qua non at an August 29 outdoor wedding in Wisconsin. The Farmers Almanac predicts a brutal 2009-2010 winter.

In Europe, every longitude has a platitude about saving the planet. But EU countries that agreed to slash greenhouse gas emissions below 1990 levels are well above their Kyoto Protocol targets - Austria by 30% and Spain by 37% as of 2008. And despite new commitments to cut emissions 40 years from now, you don't need tarot cards or entrails to predict the more probable EU emissions future.

Germany plans to build 27 coal-fired electrical generating plants by 2020. Italy plans to double its reliance on coal in just five years. Europe as a whole will have 40 new coal-fired power plants by 2015, columnist Alan Caruba reports. The Polish Academy of Sciences has publicly challenged manmade global warming disaster hypotheses. And only 11% of Czech citizens believe rising carbon dioxide emissions caused global temperatures to climb 1975-1998--and also caused them to rise 1915-1940, fall 1940-1975, then stabilize and decline again 1998-2009.
Australia just voted down punitive global warming legislation. New Zealand has put its emissions-bashing program in a deep freeze.

Russian President Dmitry Medvedev's top economic aid bluntly dismissed any talk of following President Obama's quixotic lead. "We won't sacrifice economic growth for the sake of emission reduction," he told reporters at the July 2009 G8 meeting.

Chinese and Indian leaders are equally adamant. China is playing a smart hand in this high-stakes climate poker game, drawing up plans to combat global warming sometime in the future, and gradually improve its energy efficiency and pollution control. However, it is building a new coal-fired power plant every week and putting millions of new cars on its growing network of highways.

So is India, which will double its coal-based electricity generation and produce millions of Tata and other affordable cars by 2020. "India will not accept any binding emission-reduction target, period," Indian Environment Minister Jairam Ramesh has stated. "This is a non-negotiable stand."

India and China have a "complete convergence" of views on these matters, Ramesh added. No wonder: 400 million Indians still do not have electricity; 500 million Chinese still do not.

No electricity means no refrigeration, to keep food and medicines from spoiling. It means no water purification, to reduce baby-killing intestinal diseases. No modern heating and air conditioning, to reduce hypothermia in winter, heat stroke in summer, and lung disease year-round. It means no lights or computers, no modern offices, factories, schools, shops, clinics or hospitals.

Fossil fuels are "gradually eliminating poverty in the Third world," observes UCLA economist Deepak Lal. Any call to curb carbon emissions would "condemn billions to continued poverty. While numerous Western do-gooders shed crocodile tears about the Third World's poor, they are willing to prevent them from taking the only feasible current route out from this abject state" - oil, gas, coal, nuclear and hydroelectric energy development. The situation is intolerable, unsustainable, lethal and immoral.

The only way India and China would agree to cut their emissions is if the United States cut its emissions 40% by 2020, says Ramesh - back to 1959 levels and pre-JFK living standards, when the US population was 179 million (versus 306 million today). No way will that happen. So Asian energy and economic development will continue apace. And rightly so, to foster human rights and environmental justice.

All is not bleak, however, for Canute Obama's impossible dream of controlling global temperatures.

British politicians remain committed to slashing CO2 emissions and replacing hydrocarbons with wind power. Unfortunately, the biggest UK wind projects have been abandoned or put on indefinite hold--and a growing demand/supply imbalance portends still higher energy prices, widespread power cuts, rolling blackouts and energy rationing, the Daily Telegraph reported on August 31. Brits may soon trade their stiff upper lips for contentious town hall meetings and ballot-box revolution.

The Democratic Party of Japan's landslide victory in the August 30 election will likely create a new coalition government tilted strongly to the left. The DJP has pledged to cut carbon dioxide gas emissions 25% below 1990 levels by 2020 - though this will likely strangle economic growth and job creation, especially if one coalition partner's opposition to nuclear power becomes DJP policy.

Then there is Africa, where leaders appear ready to support curbs on energy use--in exchange for up to $300 billion per year in additional foreign aid, "to cushion the impact of global warming." That will be nice for their private bank accounts, but less so for Africa's 750 million people who still don't have electricity. Those people will simply be sacrificed, to prevent natural or fictitious climate disasters.

Of course, the real goal was never to control the climate. It was always to control energy use, lives, jobs, economies, transportation and housing--and usher in a new era of high tax global governance. The American people are increasingly saying they're not ready to grant that power to Obama Gore & Company.


Paul Driessen is author of Eco-Imperialism: Green power ∙ Black death (http://www.eco-imperialism.com/) and senior policy advisor for the Congress of Racial Equality and Center for the Defense of Free Enterprise, whose new book (Freezing in the Dark) reveals how environmental pressure groups raise money and promote policies that restrict energy development and hurt poor families.

Back to the “Good Old Days”

Many activists, bureaucrats, politicians and even some corporate executives present arbitrary CO2 reduction targets and timetables casually and with great fanfare--as though achieving them were simple, desirable and necessary.

In reality, reducing America’s carbon dioxide levels to 80% below 1990 levels would return the United States to emission levels last seen in 1905 … and that’s before accounting for changes in population and energy-based technology. The impact on our nation’s economy, employment, manufacturing, living standards and health would be profoundly negative.

And yet, there has been virtually no mention of this in Capitol Hill hearings or public policy discussions.

Here, regular contributor Paul Driessen seeks to bring these facts to light while presenting a fresh perspectives on cap-and-tax proposals, CO2 reductions, and wind energy “substitutes” for the hydrocarbons that make our modern lives possible.

US Energy And Climate Plans Would Drag Us Back To 1905--Or 1862
Think back to 1905.

The Wright brothers had just made history. Coal and wood heated homes. Few had telephones or electricity. AC units were handheld fans. Ice blocks cooled ice boxes. New York City collected 900,000 tons of vehicle emissions--horse manure--annually, and dumped it into local rivers. Lung and intestinal diseases were rampant. Life expectancy was 47.

Today, President Obama wants to prevent “runaway global warming,” by slashing US carbon dioxide emissions to 80% below 1990 levels by 2050. According to Oak Ridge National Laboratory data, this reduction would return the United States to emission levels last seen in those halcyon days of 1905!

But America’s 1905 population was 84 million, versus 308 million today. We didn’t drive or fly, or generate electricity for offices, factories, schools or hospitals. To account for those differences, we’d have to send CO2 emissions back to 1862 levels.

The Civil War was raging. Nine of ten Americans were farmers (versus 2% today). The industrial revolution was in its infancy. Malaria halted construction on the Washington, DC aqueduct. Typhus and cholera killed thousands more every year. Life expectancy was 40--half of what affordable hydrocarbon, hydroelectric and nuclear power helped make it today.

None of this seems to matter to the Obama Administration or liberal Democrats. The 648-page Waxman-Markey climate bill would compel an 80% CO2 reduction, by imposing punitive cap-and-tax restrictions on virtually every hydrocarbon-using business, motorist and family.
That’s making some legislators nervous, as they ponder the health, economic and employment effects of restricting energy supplies and driving up the cost of everything we eat, drink, make and do--especially in 20 states that get 60-98% of their electricity from coal.

So to prod Congress into action, or achieve the 80% target via regulatory edict, the Obama Environmental Protection Agency has decreed that natural, plant-enhancing, life-sustaining carbon dioxide “endangers human health and welfare.” The authoritarian actions it is contemplating would regulate cars, trains, boats and planes; pave the way for regulating farms and factories, hospitals, schools, malls and apartment buildings, computer servers and lawn mowers; and send energy prices skyrocketing.

It is astonishing how casually activists, bureaucrats, politicians and even some corporate executives advocate arbitrary CO2 reduction targets and timetables--as though they were possible, desirable or necessary.

The targets reflect worst-case scenarios generated by computer models. But the models assume human CO2 now drives climate changes that have been occurring for eons. They ignore many natural forces, and inadequately analyze incomplete data, based on our still limited grasp of complex climate processes.

They cannot accurately replicate last year’s regional climate shifts or predict changes even one year in the future. They ignore Earth’s history of repeated climate changes, and failed to anticipate the slowly declining global temperatures of 1995-2008.

Thousands of climate and other scientists say there is no climate crisis, and CO2 plays little or no substantive role in climate change. A new Rasmussen poll finds that 48% of registered American voters now believe climate change is caused by planetary and other natural forces. Only a third still believe it’s due mostly to humans.

Climate realists also recognize that, even if America eliminated all of its greenhouse gas emissions, increasing Chinese and Indian carbon dioxide emissions would promptly offset our draconian cuts.

This alarms Climate Armageddonites. They fear it’s now or never to wrest control over energy and the economic, manufacturing and transportation activities it fuels. Now or never to profit from cap-and-tax laws, renewable energy mandates, and a forced shift away from hydrocarbons that now provide 85% of US energy.

“Socially responsible” corporate groups like the Carbon Offset Providers Coalition are banking on passage of Waxman-Markey or similar legislation. They want to ensure that any CO2 regime is “rigorous and efficient,” to foster high carbon prices, maximum subsidies and strong profits.
President Obama says cap-and-trade will “raise” $656 billion over the next decade. The National Economic Council and other analysts put the tax bite at $1.3 to $3.0 trillion.
This is not monetary manna. The wealth will be extracted from every hydrocarbon-using business, motorist and family.

The intrusive energy rules and taxes will clobber households, manufacturers, farmers, truckers and airlines. The poorest families will get energy welfare, to offset part of their $500-3,000 increase in annual heating, cooling, transportation and food expenses. Everyone else will have to trim health, vacation, charity, college and retirement budgets to pay for energy.

Every increase in energy prices will result in more businesses laying off workers or closing their doors, more jobs sent overseas, more families forced into welfare, more school districts, hospitals and churches into whirlpools of red ink.

Exactly how will they, your family, your business eliminate 80% of CO2 emissions by 2050? Exactly how will you pay those skyrocketing fuel bills?

The Nature Conservancy predicts that, by 2030, “eco-friendly” wind, solar and biofuel projects will require extra land equivalent to Minnesota, to produce the energy we now get from oil, gas and coal. Interior Secretary Salazar’s proposal to have offshore wind turbines replace gas, coal and nuclear electricity generators would mean 336,000 3.25MW behemoths off our coasts--if they operate 24/7/365. Far more if they don’t.

Where exactly will we site those turbines--and get the billions of tons of concrete, steel, copper and fiberglass it will take to build and install the expensive, unreliable, subsidized monsters?
My grandmother used to say, The only good thing about the “good old days” is that they’re gone.
Few Americans will be enthralled by the prospect of returning to that era. Fewer will relish the hefty price tag--and damage to their freedoms, budgets, jobs and living standards.

The White House, EPA and Congress need a serious reality check.

Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow (http://www.cfact.org/) and author of Eco-Imperialism: Green power – black death.

Environmentalism: A Philosophy of Guilt and Sacrifice

We here at CARE have been baffled by the apparent inability to appease the environmental community. We are not referring to those of us who care about the environment, who have lived through this winter wearing a sweater and a down vest in our house rather than turning up the heat, or who carry a canvas sack to the grocery store to save trees, or who reuse paper and recycle our aluminum cans. These are wise-use choices that we should all be doing. We are referring to the environmental zealots who we like to refer to as “Watermelons.” These are the people who push for wind and solar until it really begins to happen and then they battle the transmission lines. (See “Making Environmentalists Happy Will Take Magic Tricks in the August CARE Newsletter.)

With this in mind, we were elated when this piece (originally published in the Washington Times) came into our in-box. It was forwarded from a new source. We may not advocate everything this site or writer addresses, but he has surely hit the nail on the head with this posting. We believe you’ll want to pass it on and on--as we do!

No "Footprint," No Life
As environmentalism continues to grow in prominence, more and more of us are trying to live a "greener" lifestyle. But the more "eco-friendly" you try to become, likely the more you find yourself confused and frustrated by the green message.

Have you tried giving up your bright and cheery incandescent light bulbs to save energy--only to learn that their gloomy, but efficient, compact fluorescent replacements contain mercury? Perhaps you’ve tried to free up space in landfills by foregoing the ease and convenience of disposable diapers--only to be criticized for the huge quantities of energy and water consumed in laundering those nasty cloth diapers. Even voicing support for renewable energy no longer seems to be green enough, as angry environmentalists protest the development of "pristine lands" for wind farms and solar power plants.

Why is it that no matter what sacrifices you make to try to reduce your "environmental footprint," it never seems to be enough?

Well, consider why it is that you have an "environmental footprint" in the first place.

Everything we do to sustain our lives has an impact on nature. Every value we create to advance our well-being--every ounce of food we grow, every structure we build, every iPhone we manufacture--is produced by extracting raw materials and reshaping them to serve our needs. Every good thing in our lives comes from altering nature for our own benefit.

From the perspective of human life and happiness, a big "environmental footprint" is an enormous positive. This is why people in India and China are striving to increase theirs: to build better roads, more cars and computers, new factories and power plants and hospitals.

But for environmentalism, the size of your "footprint" is the measure of your guilt. Nature, according to green philosophy, is something to be left alone--to be preserved untouched by human activity. Their notion of an "environmental footprint" is intended as a measure of how much you "disturb" nature, with disturbing nature viewed as a sin requiring atonement. Just as the Christian concept of original sin conveys the message that human beings are stained with evil simply for having been born, the green concept of an "environmental footprint" implies that you should feel guilty for your very existence.

It should hardly be any surprise, then, that nothing you do to try to lighten your "footprint" will ever be deemed satisfactory. So long as you are still pursuing life-sustaining activities, whatever you do to reduce your impact on nature in one respect (e.g., cloth diapers) will simply lead to other impacts in other respects (e.g., water use)--like some perverse game of green whack-a-mole--and will be attacked and condemned by greens outraged at whatever "footprint" remains. So long as you still have some "footprint," further penance is required; so long as you are still alive, no degree of sacrifice can erase your guilt.

The only way to leave no "footprint" would be to die--a conclusion that is not lost on many green ideologues. Consider the premise of the nonfiction bestseller titled "The World Without Us," which fantasizes about how the earth would "recover" if all humanity suddenly became extinct. Or consider the chilling, anti-human conclusion of an op-ed discussing cloth versus disposable diapers: "From the earth’s point of view, it’s not all that important which kind of diapers you use. The important decision was having the baby."

The next time you trustingly adopt a "green solution" like fluorescent lights, cloth diapers or wind farms, only to be puzzled when met with still further condemnation and calls for even more sacrifices, remember what counts as a final solution for these ideologues.

The only rational response to such a philosophy is to challenge it at its core. We must acknowledge that it is the essence of human survival to reshape nature for our own benefit, and that far from being a sin, it is our highest virtue. Don’t be fooled by the cries that industrial civilization is "unsustainable." This cry dates to at least the 19th century, but is belied by the facts. Since the Industrial Revolution, population and life expectancy, to say nothing of the enjoyment of life, have steadily grown.

It is time to recognize environmentalism as a philosophy of guilt and sacrifice--and to reject it in favor of a philosophy that proudly upholds the value of human life.


Keith Lockitch, PhD in physics, is a fellow at the Ayn Rand Center for Individual Rights, focusing on science and environmentalism. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead.

Shoveling Global Warming from Your Driveway?

This winter, many of us have faced record cold weather. We have joked with one another about shoveling global warming from our driveways. We have longed for some of that global warming in our area.

At CARE we have joked—half in jest, half seriously—about making bumper stickers that say, “Pray for Global Warming.” (We’ve been into making bumper stickers. E-mail us for a FREE “Energy Makes America Great!” sticker.)

With that in mind, you can imagine the glee we experienced when the following posting was forwarded to us. We contacted the author to ask permission to post it. Not only were we granted permission, he added a response to those who have e-mailed him following its original publication.

Please enjoy “Pray for Global Warming” written by John Tomlinson, weekly columnist for the Flint Journal in Flint, Michigan--Michigan's third largest paper. His additional comments follow the original article. Read on! What’s your response?

Pray for Global Warming

If you're wondering why North America is starting to resemble nuclear winter, then you missed the news.

At December's U.N. Global Warming conference in Poznan, Poland, 650 of the world's top climatologists stood up and said man-made global warming is a media generated myth without basis. Said climatologist Dr. David Gee, Chairman of the International Geological Congress, "For how many years must the planet cool before we begin to understand that the planet is not warming?"

I asked myself, why would such obviously smart guy say such a ridiculous thing? But it turns out he's right.

The earth's temperature peaked in 1998. It's been falling ever since; it dropped dramatically in 2007 and got worse in 2008, when temperatures touched 1980 levels.

Meanwhile, the University of Illinois' Arctic Climate Research Center released conclusive satellite photos showing that Arctic ice is back to 1979 levels. What's more, measurements of Antarctic ice now show that its accumulation is up 5 percent since 1980.

In other words, during what was supposed to be massive global warming, the biggest chunks of ice on earth grew larger. Just as an aside, do you remember when the hole in the ozone layer was going to melt Antarctica? But don't worry, we're safe now, that was the nineties.

Dr. Kunihiko, Chancellor of Japan's Institute of Science and Technology said this: "CO2 emissions make absolutely no difference one way or the other ... every scientist knows this, but it doesn't pay to say so." Now why would a learned man say such a crazy thing?

This is where the loonies get lost. Their mantra is atmospheric CO2 levels are escalating and this is unquestionably causing earth's temperature rise. But ask yourself -- if global temperatures are experiencing the biggest sustained drop in decades, while CO2 levels continue to rise -- how can it be true?

Ironically, in spite of being shown false, we must now pray for it. Because a massive study, just released by the Russian Government, contains overwhelming evidence that earth is on the verge of another Ice Age.

Based on core samples from Russia's Vostok Station in Antarctica, we now know earth's atmosphere and temperature for the last 420,000 years. This evidence suggests that the 12,000 years of warmth we call the Holocene period is over.

Apparently, we're headed into an ice age of about 100,000 years -- give
or take. As for CO2 levels, core samples show conclusively they follow the earth's temperature rise, not lead it.

It turns out CO2 fluctuations follow the change in sea temperature. As water temperatures rise, oceans release additional dissolved CO2 -- like opening a warm brewsky.

To think, early last year, liberals suggested we spend 45 trillion dollars and give up five million jobs to fix global warming. But there is good news: now that we don't have to spend any of that money, we can give it all to the banks.

Now, Here are his additional comments in response to the initial article:

Response From John Tomlinson
Re: Pray For Global Warming,

To: All the wonderful people who thought to write.

I want to finally take a moment to get back with all you kind people who took the time to read and respond to my article. As you can imagine I got slammed with massive emails from all over the country. So rather than attempt to answer each one individually (as I began to), I decided to put together something that says thanks, and to answer the questions people had about further information.

First, let me say how gratified I am to hear from so many thousands of people across the country who have not been sucked in by the hype. Hang in there, it’s getting colder! Second, I really don’t care what people believe about global warming, er . . . "climate change." Everyone gets to believe what they want. I just don’t want the most gullible among us spending trillions and trillions of our ever precious dollars and handing over millions of jobs to the Chinese (et al.) just to chase Vladimir’s Ghost.

Just as importantly, I don’t like people having their careers destroyed because they have the balls to stand up and say, "The hot dog has no mustard." Earth’s climate has changed radically lo’ these millions of years. It’s hubristic to believe man can usurp Mother Nature.

Consider this: If you believe the accepted version of how oil is made within the earth (by jungle-like vegetation being subsumed, then compressed into oil over millions of years), how do you explain the discovery of one of the earth’s largest oil fields under the Arctic ocean? Clearly, things aren’t what they used to be!

Obama and Energy: A Cure Worse than the Disease

Think about the strong men you've seen. Those whose body is the envy of all other men--not that they'd admit it. What do they eat? Real food in a balanced diet that includes veggies, carbs and protein.

America is like that--or it has been. We've been the strong man. The envy of other countries with men, women and children sneaking into America to enjoy what we have here.

As the bumper stickers we have available through CARE advertise: Energy Makes America Great. What separates America--and the rest of the civilized world--from the third world countries is not that we are better or smarter than those in other countries, but we have the energy to allow us to excel. We have electricity and liquid fuels--in abundance. Or at least we did.

However, there are forces at work who want to make America not only “vegetarian,” but “vegan” when it comes to energy. These forces want us to live on greens only. Salad is nice--but not when it is all you eat! We’d no longer be the “strong man.” We’d be susceptible to attack from terrorist factions. On a balanced diet, we are strong, we can fight off those who wish to annihilate us.

This posting is from frequent contributor Paul Driessen. Here he looks at the energy plans of the new administration and how they will impact America. Read on!

Economic Bloodletting--Some proposed energy and environmental policies are akin to eighteenth century medicine
Doctors once prescribed bloodletting to eliminate impurities that they believed caused disease. When George Washington was stricken with malaria and a throat infection in December 1799, his physicians bled a quart of blood from his weakened body, and administered laxatives and emetics.

A few hours later, Washington died – from a cure far worse than the disease.

Today, our nation is in a recession. Millions are unemployed. The financial meltdown has hammered incomes, consumer spending, savings, profits, tax revenues, charity, remittances and foreign aid in America and across the globe.

Congress and the White House have responded with promises to spend $1 trillion or more, to bail out banks, homeowners, taxpayers, auto makers and other beleaguered groups; fix roads and bridges; and weatherize buildings, develop renewable energy and create “green jobs.”

The economic situation is so dire, they say, that we can’t worry about deficits. The “patient” needs a large “blood infusion” stimulus to “get the economy moving.”

But many worry that the proposed infusion is artificial blood: government loans, grants, mandates and debts. Reduced taxes and regulations would stimulate far more private sector initiatives and jobs, argue many economists; but those curatives enjoy limited support among current political leaders.

Worse, there is a real danger that the stimulus actions will be followed by the economic equivalent of medical practices that killed our first president.

Precluding access to oil, gas, coal and uranium would deprive America of fuels that produce 93% of the energy that makes jobs, living standards, food, health and transportation possible. It would force us to continue spending our children’s inheritance on imported energy – and forego trillions of dollars in leasing, royalty and tax revenues that could help pay for stimulus, defense, renewable energy and other programs.

Some want even more extreme bloodletting administered in the name of global warming. President-Elect Obama wants to slash carbon dioxide “impurities” by 80% by 2050, via cap-and-trade programs. He says any company trying to build a coal-fired generating plant will be “bankrupted” by greenhouse gas fees.

If Congress fails to act expeditiously on cap-and-trade, the Obama Administration could unleash the Environmental Protection Agency’s newly proposed rules – and regulate virtually our entire economy under the Clean Air Act. Those rules would immediately impose even more draconian restrictions on carbon dioxide and methane released from almost every office and apartment building, power plant, factory, farm, hospital, school, car maker and dealership, train and airline in the nation.

However, that would severely impact two dozen mostly Southern and Midwestern states which use coal to generate 47-98% of their electricity – and ensure lower utility and manufacturing costs, more jobs and better living standards. Moreover, modern coal-fired power plants emit 95% less pollution than 1970s-era plants, per unit of energy produced.

Restrict hydrocarbon use, and millions will lose their jobs. Mortality rates will rise, if people cannot afford proper heating, air-conditioning, nutrition and medical care. In minority areas, restricted hydrocarbon use would hobble economic opportunities and civil rights.

A cap-and-trade bill like Warner-Lieberman would cost 3 million U.S. manufacturing jobs and $7 trillion in lost GDP, by taxing hydrocarbon energy, the Heritage Center for Data Analysis calculates. The EPA regulatory regime would be even more onerous and costly.

Either action would drain the energy lifeblood from our economy, prolong the recession and kill jobs, for little environmental gain.

Renewable-energy economic superpowers are as rare as body-building vegans. America needs a balanced energy diet, to ensure security and prosperity: raw “green” energy vegetables like wind and solar, proteins and carbohydrates from hydrocarbons and nuclear, and a full allotment of iron-rich energy lifeblood.

Some say we are heading for climate disaster. But thousands of scientists vigorously disagree. A US Senate Minority Report features 650 climate experts (including many current and former UN-IPCC scientists) who say there is no evidence to support climate cataclysm hypotheses.

Computer models are not evidence, they stress – and not one has accurately predicted climate conditions even one year into the future, much less fifty. Actual, measured temperature, hurricane, flood, drought and sea level changes are completely within the realm of observed variability over the centuries.

Satellite measurements show that planetary warming stopped in 1998, even as global CO2 levels continue to rise. Even eliminating US greenhouse gases would reduce 2050 global temperatures by only 0.2 degrees F, assuming CO2 controls our Earth’s constantly changing climate.

China and India are building new coal-fired power plants every week – and their expanding greenhouse gas emissions now dwarf even economy-killing reductions under cap-and-trade or EPA. Europe’s emissions are well above 1990 levels and even further above promised reductions under Kyoto. Yet, the Poznan agreement delays and dilutes EU pledges even more, to avoid jeopardizing jobs in a hydrocarbon-dependent Europe.

Politicians violate their oath of office when they impose policies based on climate disaster scenarios, despite real-world evidence to the contrary – and regardless of the grievous harm that their “cures” would exact on poor, elderly, minority and working-class families.

Americans everywhere should demand solid evidence, robust debate, honest congressional hearings, and responsible energy and environmental decisions. We need to prevent further economic bloodletting, preserve freedom and opportunity, and restore our nation’s prosperity.

Paul Driessen is author of Eco-Imperialism: Green power ∙ Black death (http://www.eco-imperialism.com/) and senior policy advisor for the Congress of Racial Equality and Center for the Defense of Free Enterprise, whose new book (Freezing in the Dark) reveals how environmental pressure groups raise money and promote policies that restrict energy development and hurt poor families.

The Social Responsibility of Coal

Omigosh! Reading this is like reading all of the last year’s worth of op-eds, newsletters and blog posting from CARE. It is like the author Paul Driessen got inside CARE and said everything in one smart, and articulate posting. You must read this!

In fact, CARE and Paul are very close--as you will see if you go back and review the various writings available through CARE. But this piece is just brilliant! It captures the current worldwide energy picture in a clear and concise manner. Read it and pass it on to everyone you know who cares about energy.

Relying More on Coal Generates Benefits that are Too Often Ignored
They get little credit for their efforts, but most resource extraction, manufacturing and power generation companies strive to be “socially responsible”--by emphasizing energy efficiency, resource conservation, pollution control and worker safety in producing the raw materials, consumer products and electricity that improve, safeguard and enrich our lives.

It’s not easy, due to the nature of their business, public intolerance for any ecological impacts--and the fact that “corporate social responsibility” (CSR) is often defined and used by activist groups to promote ideological agendas. Above all, activists want to engineer a “wholesale transformation” of our energy and economic system, away from hydrocarbon fuels and into “eco-friendly” renewable resources; reduce our living standards to “sustainable” levels (their definition again); and give them power over the power that sustains our modern society.

This “hard green” version of CSR largely ignores socio-economic considerations, the many benefits of fossil fuel and nuclear power, the significant land and environmental impacts of wind, solar and ethanol--and the oppressive effects of soaring energy prices on jobs and poor families.
Speaker Nancy Pelosi closed down the House of Representatives on August 1, to avoid an energy vote that Democrats would have lost, and later displayed her acumen on the subject when she opined: “natural gas is a clean, cheap alternative to fossil fuels.” News flash: Natural gas is a fossil fuel.

An Energy Economics 101 course is clearly needed, so that members of both parties can legislate more astutely … understand why mining and burning coal is a socially responsible component of sound energy policy … and help stanch the unnecessary flow of $700 billion a year in foreign oil payments.

Energy is the master resource, the foundation for everything we eat, use and do. Sound policies ensure that energy is abundant, reliable and affordable. Restricting supplies in the face of rising global demand drives up prices and sends shockwaves through families, industries, communities and nations.

Average total energy costs for a typical American household doubled from $2,400 in 1997 to over $5,000 in 2007. Food prices also soared, while wages remained relatively stagnant. More low and middle income families have been forced to choose between heating, eating, driving, medicines and housing--with little left over for vacations, emergencies, retirement, college or charity.

Thankfully, most electricity bills rose more modestly, because half of all US electricity is generated using coal, and the price for that fossil fuel has risen far less than oil, gasoline and natural gas prices. However, in places like Florida--where coal is verboten, natural gas is promoted but drilling for it is banned, and wind and solar are all the rage--electricity prices continue to climb. Florida Power & Light must pay four times as much for photovoltaic power as for coal power, the Heartland Institute reports, and schools face budget crunches for buses and electricity.

America has centuries’ worth of coal. Our reliance on this resource has tripled since 1970--but sulfur dioxide and particulate emissions are down 40% and 90% below 1970 levels, respectively, notes air pollution expert Joel Schwartz. New technologies and regulations will reduce coal power plant emissions even further by 2020, but even current emissions (including mercury) pose no significant risks to human health, he emphasizes.

Radical environmentalists worry and wail about speculative health risks, to justify anti-coal campaigns. But their concerns often disappear when the discussion shifts to millions of Africans who die every year from real, preventable lung and intestinal diseases that result from an absence of electricity for cooking, heating, refrigeration, safe drinking water, hospitals and decent living standards. Wind and solar will save few of those lives--and yet green pressure groups stridently oppose fossil fuel, nuclear and hydroelectric power for Africa.

US electricity consumption will continue climbing, even with conservation, because our population and technology use are increasing steadily. Meanwhile, 59 coal-fired plants were cancelled in 2007 thanks to eco-activists, who are challenging 50 more.

The US now has virtually no excess capacity, and switching to natural gas as a primary power plant fuel (and fuel for backup generators to support wind farms) means electricity prices could increase “as much as tenfold,” says energy analyst Mark Mills, especially if we continue to ban drilling. “After that we may see forced conservation, or even blackouts in rotation among business and residential customers.”

Energy shortages and price hikes could cost millions of jobs in the automotive, airline, tourism, food and beverage, textiles, paper making, plastics, chemicals, metals and manufacturing industries--especially if Congress also enacts cap-and-trade rules. Most will never be replaced by “green collar” jobs that some claim will be created by intermittent, unreliable wind and solar energy.

Switching to plug-in hybrid cars will only exacerbate the problem. They will need a well-stocked power grid to plug into, and current energy policies virtually ensure that it won’t be there.

In addition to balance of trade issues, over-reliance on imports has major national security implications, as Russia’s invasion of Georgia forcefully reminded Europe. Germany imports 40% of its natural gas from Russia, and six Eastern European countries are entirely dependent on Mr. Putin’s energy. Shackled further by their opposition to nuclear power, fear of climate change Armageddon and fixation on the Kyoto Protocols, the EU has barely protested actions by a rogue bear that has already cut off natural gas supplies to Latvia, Lithuania and the Czech Republic, to impose its will.

That should cause Congress to reflect more soberly on US dependence on oil from Venezuela, Nigeria, Iran and Russia. Coal could be converted into synthetic liquid and gas fuels, to replace the oil and gas we refuse to develop, but legal and regulatory hurdles restrict that option, too.

A key justification for these anti-energy policies is cataclysmic global warming. However, 32,000 scientists have signed the Oregon Petition, saying they see “no convincing evidence” that humans are causing climate change, or that it will be catastrophic. Climate models continue to predict chaos but, as one scientist wryly notes, faith in their predictions is as misplaced as reliance on emails from Nigeria, advising recipients that they have won the Lotto.

Global temperatures have not increased since 1998, despite steadily increasing carbon dioxide levels, and solar scientists like Pal Brekke say the sun’s formerly high activity level is leveling off or abating, which could bring falling global temperatures.

China and India are planning or building 700 coal-fired power plants; European countries plan to build 50 more in five years, to reduce dependence on Russian gas; and other nations are also increasing fossil fuel use for transportation and power generation.

Thus, no matter how much the USA reduces its energy use, driving, heating, air-conditioning and living standards--no matter how much it punishes poor families or commits economic suicide--its actions would not reduce global CO2 levels, or affect Earth’s climate.

We need to conserve, and continue improving renewable energy technologies that currently provide just 0.5% of our energy. But at this time renewables are simply too inefficient, expensive and unreliable to permit a shutdown of hydrocarbon-based systems.

Putting “social responsibility” and “environmental justice” in the hands of eco-activists and liberal Democrats is like giving a machine gun to an idiot child. We need definitions that recognize the full spectrum of societal needs, and energy policies that acknowledge life in the real world.

Paul Driessen is author of Eco-Imperialism: Green power ∙ Black death (http://www.eco-imperialism.com/) and senior policy advisor for the Congress of Racial Equality and Center for the Defense of Free Enterprise, whose new book (Freezing in the Dark) reveals how environmental pressure groups raise money and promote policies that restrict energy development and hurt poor families.

The Russia, Georgia and Energy Connection

Why is there suddenly activity in Georgia that looks a lot like war? Most of us know nothing about Georgia and think that it is a state in the US. Why is Russia flexing its muscle? What are we not hearing in the news?

These are but a few of the questions we were asking when we heard the reports of fighting between Russia and Georgia. We turned to someone who knows a great deal about the inner workings of that part of the world, Michael Economides—one of our favorite contributors and author of the new book From Soviet to Putin and Back, subtitled: The Dominance of Energy in Today’s Russia.

We asked Economides for his insights on the situation and this is what he sent us. We believe it will shed new insights on the situation for you.

Scratch Russia-Georgia War and You Find Oil and Gas Pipelines
The war between Russia and Georgia has some nationalist elements, some old grudges but mostly it rubs the wrong way Russia’s newly found power: energy imperialism.

Georgia has refused to play along like other former Soviet states and, if anything, its independent attitude has been a giant irritant for Russia ever since Vladimir Putin used oil and gas to project hegemony over the region and, by extension, into all Europe. At the same time, Georgia, a tiny, 4 million people country has been trying to ward off the giant on its north by seeking membership in NATO or the European Union. In the post-Cold War era, the United States and Russia-dependent Europe are reduced to just pleading for calm.

A look at the map makes the issue at hand quite transparent.

Oil and gas can come from Russia into Europe by tanker through the Black Sea from its massive terminal in Novorossiysk or by pipelines through Belarus, Ukraine and even plans of under water construction in the Baltic. All of these give Russia a huge leverage, almost monopoly, over both the transit and destination countries. More than 25 European countries depend now for more than 75% of their oil and gas from Russia.

But Georgia was eager to act as a spoiler and European countries were even more eager to comply while trying to avoid incurring the wrath of the hand that feeds them.

First, it was the Baku-Tbilisi-Ceyhan (Turkey) oil pipeline that started in 2002 with a much weaker then Russia. The 1776 km line was to connect the Caspian and south Europe in what was to be an “Energy Corridor” for European oil and gas supplies. The pipeline was designed to carry 1 million barrels per day from Azerbaijan’s Caspian oil fields to the export terminal Ceyhan via Tbilisi, with Georgia acting as a very important transit country. This did not sit well with Russia, cutting it out from oil exports to that vital part of Europe. The pipeline, funded by western oil companies and banks at the tune of $3.2 billion, was commissioned in 2006.

What gave and still gives Russia fits is what else can happen that could affect its control. For example, how about building under-water pipelines across the Caspian linking Kazakhstan or Turkmenistan?

What really caused the ire of Russia was the talk of a gas pipeline, similar to the oil pipeline, again linking Azerbaijan and Turkey and points beyond (Baku-Tbilisi-Erzerum) through Georgia. This would give Georgia energy independence and create an alternative route to the holy grail of Russian geopolitics: Gazprom’s monopoly.

Back in 2006, Gazprom, flexing its muscles, was manipulating the former Soviet states, by setting new records in gas export prices practically every month. It was clear then that the geopolitical climate in Eastern Europe would be severely damaged. In fact, double and triple increases in gas prices were imposed on Russia’s neighbors: Ukraine, then Belarus, then Armenia after all of them were threatened with gas supply interruptions, until new contracts with huge price increases were signed. They had no other choice but to surrender on Gazprom’s terms and conditions.

Georgia resisted the Russian might and that conflict predictably ended up with a war.

Things did not deteriorate all of a sudden. The conflict between Russia and Georgia started with the election in 2004 of the western-oriented president, Mikhail Saakashvili, who refused to accommodate Russia’s ambition of control over his country.

Then, Georgians discovered and expelled alleged Russian spies. In return, Russia’s president, Vladimir Putin, stirred a crass witch hunt against ordinary Georgians in Russia while Gazprom threatened to cut off gas supplies to Georgia unless it agreed to pay new gas prices from $110 to $230 per thousand cubic meters.

The blackmail from Gazprom was blatant: “The Georgian side could still maintain lower gas prices. They could compensate for gas price by trading off some assets… For example, Armenia had already paid Gazprom with its transportation network.” What this referred to was that Armenia saw the writing on the wall and kept the same price for gas supplies as before – $110 per thousand cubic meters. But they relinquished control of their gas network in the bargain.

But it was the talk of the construction of the gas pipelines via Georgia that was bound to create an alternative energy supply route to Russian oil and gas, thus threatening Russia’s energy stranglehold on the vast south European markets. This was not something that Russia could tolerate and the war, no matter what the daily pretexts are, is blatant and punishingly brutal.

Prof. Michael J. Economides, University of Houston and also Editor-in-Chief Energy Tribune Houston, TX

China, Olympics and Energy

With the Olympics upon us, China is in the news on a regular basis. CARE received an e-mail from one of our friends stating that A reporter from Business Week magazine just asked for some contacts who could speak with knowledge about the air pollution situation in Beijing. We wracked our brains, knowing that within our circles was someone who’d spent a great deal of time in China. Bingo! Michael Economides, one of our favorite contributors. He sent us the following posting. (We forwarded it on to the contact with Business Weekly. What happens next remains to be seen.) While it did not directly connect to the Business Weekly topic, we thought it was worthy of passing on to you.

Within a matter of days, the next piece on China—addressing their approach to biofuels—arrived in our inbox. Again, it was worthy of sharing with you. While neither piece is directly fuel focused, both are of from members of our energy counsel and we believe their comments and insights will enrich your overall energy education.

Read them both. Pass on your comments. Let us know what you think!

An Olympic Salute to China from a Greek
I am supposed to write an energy and energy geopolitics column for the China Daily but the temptation is too great to let it pass by. Taking a break from depressing sky-high oil prices and conflicts for energy sources is squarely in the true spirit of the Olympics. Today, we are not close to their ancient requirements: wars would seize while the games were happening. Being of Greek background makes this column all the more appropriate. Let’s all celebrate the Beijing Olympics.

Years ago China won the privilege to host the 2008 Games for all the right reasons. Virtually no other country, established or developing, exemplifies the 21st century more than China. An economic superpower already, it is bound to influence the world economy and politics like no other in the not too distant future. It also has one of the greatest assets, a huge population that is industrious, values education, and is proud of its history and culture.

Only a handful of countries have a historical continuum that spans 5,000 years and, interestingly, China and Greece, now joined by the Olympics, would be in everybody’s very short list that would fit this description.

I have been visiting China for the better part of 30 years and the country has become unrecognizable in almost all good ways. Living in Houston, one of the US’s more dynamic cities, it has been strikingly different for decades on how many more construction cranes have been dotting the Beijing skyline compared to those of my city. Yes, Beijing and China still need work in services, bureaucracy and the environment but there should be no question that what has been achieved in so little time is more than any other country can show, perhaps in all history.

And yet, a world press, thriving incessantly on the negative which always sells more than the positive, applies the same on China, refusing to admit the obvious: the country is the epitome of modern success. A week before the Games, members of the press still harp on whether China can meet air standards and, even more preposterous, whether food would be safe to eat, this in a country where food is an art and people have been known to travel just to taste it. Tibet is the other item that often comes up in spite of the fact that the issue is truly irrelevant in the big scheme of Chinese politics. It is only brought up by misfit westerners and Hollywood types who do not understand the Chinese or even the Tibetan reality. Backlash inside China would have exactly the opposite effect they profess to desire.

What is rarely mentioned, and it should be, is that China has finished state of the art Olympic facilities in record time and along with them the country has produced a huge infrastructure that could only be the dream of every other country. Multiple lane highways have sprung up everywhere seemingly all of a sudden. The United States and Europe would be green with envy if they found out that China can build better highways in a fraction of the time that would take them. The Beijing airport is now the state of the art facility of its kind in the world--and will remain so for years. Chinese airlines, which perhaps just ten years ago would be iffy to fly, has emerged as a world class carrier with excellent service. They are also some of the best customers for Boeing and Airbus.

What is also rarely mentioned is that China has been quite circumspect in world politics and although accusations have occasionally surfaced for its role in the Sudan and Myanmar, in reality China has steadfastly avoided confrontation with the United States and Russia even at times when the Chinese interest might have dictated otherwise. The future historian will be kind to China during this era.

The Games should be China’s celebration. It has arrived in the world scene as an imposing, influential and constructive presence. The country and its people deserve the salute of the world. They earned it both as a nation and as the hosts of the Olympics. Xerete, which in Greek means enjoy yourself and be happy.


Prof. Michael J. Economides, University of Houston and also Editor-in-Chief Energy Tribune Houston, TX


China Releases Biotech Rice, Bars Biofuel
China says short world grain supplies have persuaded it to release biotech rice nationwide, ensuring the broadest-ever use of genetic engineering in a food crop. Chinese plant breeders say biotech crops are certain to produce higher yields, forestalling the need to finance costly rice imports for China’s billion-plus consumers.

To further protect its grain supplies, China has also been discouraging grain-based ethanol for the last two years. Chinese demand for grain ethanol—mainly from corn—had threatened to inflate prices for China’s rice and livestock products as world oil prices hit record levels.

These strategies may quickly become the model for developing countries as the world strives to double food and feed production over the next three decades—with or without biofuels.

Western biofuel mandates have, unfortunately, more than doubled world grain prices since 2005. Corn costs have soared from less than $2 per bushel to more than $7, before settling recently at about $5.50 per bushel. Pork, poultry, beef, and milk producers are still warning of further food price inflation ahead due to biofuels mandates.

The Chinese have already developed genetically engineered rice strains with bred-in pest and disease resistance. They’re also experimenting with new nitrogen-efficient rice that needs only half as much fertilizer to get top yields. The new rice thus costs much less to grow, and emits far less greenhouse gas per ton of rice produced. They also say biotech rice “escapes” will not be a problem, since they’ve pre-programmed the rice to be hyper-sensitive to a particular herbicide.

China already permits the growing of genetically engineered peppers, tomatoes, and papaya, and much of its huge cotton crop is genetically modified to resist pests. Biotech has overcome the deadly ringspot virus, which severely hampers papaya production in much of the world, and provided virus resistance for tomatoes and peppers. Another genetic modification permits Chinese tomatoes to survive the longer shipping delays caused by the poor Chinese roads and lack of refrigeration.

The nitrogen-efficient biotech rice being tested by the Chinese emerged at Canada’s University of Alberta, as breeders were seeking drought-tolerant crops. Someone forgot to fertilize the seeds in the greenhouse, but one set of plants grew vigorously anyhow. They had discovered a new and more efficient pathway for crop nitrogen uptake that allows top yields with half the nitrogen fertilizer.

Arcadia Biosciences is marketing the nitrogen-efficient crops, working with Chinese rice growers and Australian wheat growers and is working to develop the new nitrogen efficiency in corn. Arcadia has already signed a licensing agreement with the Maharashtra Seed Company in India, the world’s second-most-populous country.

Greenpeace claims that rice smuggled from biotech experimental fields has already been sold on consumer markets without government approval, and perhaps even exported. However, with world rice prices recently hitting record highs, no one has seemed to care.

The question today is how to produce adequate food, with cropland per person declining. In addition, fertilizer prices have been sharply inflated by the conversion of power plants to burn much of the natural gas which used to supply fertilizer factories.

World leaders are also welcoming the Bill and Melinda Gates Foundation’s major effort to create a renewed Green Revolution to create the first high-yield farming in sub-Saharan Africa, supply the last surge of human population growth worldwide, and provide higher-quality diets for the tropical countries.

DENNIS T. AVERY is a senior fellow for the Hudson Institute in Washington, DC and is the Director for the Center for Global Food Issues. (http://www.cgfi.org/) He was formerly a senior analyst for the Department of State. He is co-author, with S. Fred Singer, of Unstoppable Global Warming Every 1500 Hundred Years, Readers may write him at PO Box 202, Churchville, VA 2442 or email to cgfi@hughes.net