March 22, 2013

M.D. Harmon: Obama's idea of weaning us off oil not in sync with reality

It did not escape some people's notice that President Obama boarded a Boeing 747 to fly all the way from Washington to Illinois last week to give a speech on the necessity of saving energy.

The reason appeared to be so he could use alternative-fuel automobiles at the Argonne National Laboratory as a suitable background for photographs.

Surprised at the profligate waste? Don't be. He is, after all, the president who went on a golfing trip while blaming the Secret Service for canceling schoolkids' tours of the White House -- as if he didn't run the Secret Service.

However, the real source of cognitive dissonance about his energy speech is the emphasis he chose to place on "weaning the U.S. off oil use," as one headline put it, based on his statement that "The only way to really break this cycle of spiraling gas prices, the only way to break that cycle for good, is to shift our cars entirely, our cars and trucks, off oil."

The mind boggles. The president apparently is living in some alternate universe, because he is saying this when, in the real world:

His administration's plans to put 1 million electric cars on the road have fallen short by 985,000 vehicles, because buyers cannot even be bribed with subsidies up to $7,500 to purchase them;

North America's reserves of oil and natural gas are substantial enough to turn it into an oil-exporting region within five years and let it become "oil self-sufficient" by 2035, energy analyst Lawrence Solomon wrote in the Financial Post on March 15;

The president himself has boasted that oil and gas production is soaring (as Investor's Business Daily reported Feb. 28, U.S. production of crude rose 14 percent in 2012 to reach 7.1 billion barrels a day), but Michael Conger, writing in the Washington Examiner March 16, said Obama "touts energy production his administration has hindered," noting that the Congressional Research Service reports that all our increased oil production since 2007 has been on nonfederal lands;

In fact, offshore drilling is "the lowest in two decades" and output is down 11 percent on public lands (leases are down 44 percent from 2007, while permits and new wells declined 39 percent, Conger reported);

Obama's State Department has not yet approved the Keystone XL pipeline, which would create thousands of jobs and bring 830,000 barrels of Canadian oil to Gulf Coast refineries a day, some for domestic use and some for export;

The cost of using 40 percent of U.S. corn production for ethanol fuel additives is driving food prices higher while not displacing oil imports, says Mark J. Perry, an economics professor at the University of Michigan.

"Despite a 51-cent-per-gallon tax credit to companies that blend ethanol into gasoline, ethanol costs about 70 cents a gallon more than gasoline on an energy-equivalent basis. Instead of helping consumers, ethanol provides 27 percent lower fuel economy than gasoline," Perry wrote in a Jan. 16 report headlined, "Production of corn ethanol as an automotive fuel source should cease."

And alternative methods of providing power are falling far short of expectations. Consider the sad tales of companies like Solyndra, which lost $500 million in public subsidies when its solar panel business failed. And solar isn't doing well abroad, either.

This week, blogger Walter Russell Mead cited a Wall Street Journal story in noting, "The world's top-selling producer of solar panels has defaulted on a $541 million bond payment. The Chinese firm Suntech hasn't posted a profit since the first quarter of 2011..."

That's what happens when you subsidize things the market is not ready to adopt. When solar and wind power and electric cars are profitable, they will sell.

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