Palin's Folly

by | Oct 5, 2008 | Uncategorized

by Michael Vickerman, RENEW Wisconsin
October 7, 2008
What three things do Saudi Arabia, Russia, Iran, Mexico, Nigeria and Venezuela have in common? The first commonality is that they are among the top 10 leading exporters of petroleum worldwide, which is another way of saying that they are the biggest accumulators of foreign cash on the planet.

Commonality No. 2: Gasoline prices in those nations are lower than they are in the United States. The swollen river of revenues that flows into their national treasuries enables these governments to subsidize the price of motor fuel sold to their citizens. In Iran, the portion of federal revenues spent on maintaining price caps on gasoline approaches an astonishing 40%.

This is worth a moment’s rumination. Under this arrangement, the profits from petroleum exports are immediately distributed to the car-driving public in the form of inexpensive gasoline. However, that kind of share-the-wealth policy presents trade-offs to their governments. Yes, rising oil prices will fatten their treasuries, but the outflows required to hold down domestic gasoline prices will also swell, potentially offsetting the revenue increase.

Moreover, the artificially low price of motor fuel encourages more domestic consumption, which eats into the percentage of petroleum that can be sold to foreign countries. This becomes particularly problematic in nations that are struggling to keep extraction volumes from declining, as with Mexico, whose output peaked in 2004. Since then export volumes have fallen by 15%, due to plummeting yields from Cantarell, which until recently was the world’s most productive oilfield outside Saudi Arabia. Indeed, the combination of declining petroleum exports and subsidized gasoline is guaranteed to result in permanent economic austerity for that nation.

Considering the finite nature of their chief exports, these nations would do well to reinvest their windfalls into domestically developable sources of wind and solar energy, to name two energy sources that do not have decline curves associated with them. However, that brings up Commonality No. 3, which is their shared aversion to all energy sources that have the capacity to displace oil and natural gas in some capacity. Renewable energy sources like wind and solar certainly figure prominently in that category.

It is nothing short of amazing to watch these nations squander their colossal fortunes on ephemeral social control measures that only hasten the drawdown of their most economically valuable resource. Subsidizing gasoline is simply a wealth distribution scheme that discounts the future for the present. Its legacy will be to leave billions of people without the capital to invest in building up a sustainable energy future.

Under more enlightened regimes, these nations would be plowing their retained earnings into technologies that harvest locally available self-replenishing energy sources to serve future citizens. They would make it a point of emulating Germany, a nation bereft of native oil and gas reserves but certainly not lacking in foresight and political will. Cloudy skies and weak winds notwithstanding, Germany is deploying considerable amounts of social and financial capital to retool its energy infrastructure so that it can take full advantage of its modest solar ration.

In contrast to Germany, there is not a single commercial wind turbine operating in Saudi Arabia, Nigeria, Venezuela and Russia. While Mexico and Iran look like go-getters by comparison, their efforts to date amount to less than one-half of Wisconsin’s current wind generating capacity. Moreover, even at this late date, oil-exporting nations have invested only a piddling amount of their capital investments in solar energy.

To demonstrate the aversion that oil-exporting jurisdictions have towards renewable energy, consider the example of Alaska Governor Sarah Palin. According to Michael T. Klare, who covers defense and foreign policy for The Nation, Alaska is a “classic petrostate,” featuring a political system that is “geared toward the maximization of oil ‘rents’–royalties and other income derived from energy firms–to the neglect of other economic activities.”

Among the economic activities neglected is renewable energy development. Like Russia, with which Alaska shares a “narrow maritime border,” Alaska does not have a single utility-scale wind turbine in operation, a rather remarkable statistic given its sprawling size and a wind resource that in certain locations can be accurately described as “screaming.” But as long oil revenues are sufficient to allow Alaska to dispense with a state income tax, renewable energy development will remain in a deep freeze.

In a recent article, Klare recounts a talk Palin gave at a February 2008 meeting of the National Governors Association, where she said that “the conventional resources we have can fill the gap between now and when new technologies become economically competitive and don’t require subsidies.”

When asked to elaborate on that point, Palin’s antipathy towards renewable energy was revealed. “I just don’t want things to get out of hand with incentives for renewables, particularly since they imply subsidies, while ignoring the fuels we already have on hand,” Palin said.

Had those words been uttered by the Secretary General of OPEC, they would have been forgotten in a matter of seconds. Coming from someone who could become the next vice president, however, is cause for consternation, in that she is clearly recommending a course of action that would invariably lead to greater dependency on oil.

Certainly, the Palin prescription would reverse the decline in oil revenues propping up Alaska’s state government. But the amount of petroleum that could be extracted in 2020 from Alaska and the Outer Continental Shelf is trifling compared with current U.S. imports of Mexican crude. Even if a mini-surge of petroleum materialized as a result of a McCain-Palin energy policy that put Alaska’s wishes above the best interests of the other 49 states, it wouldn’t even compensate for the declining yields from such aging oilfields as Cantarell or Prudhoe Bay, let alone achieve the chimerical goal of energy independence.

Like the other petrostates of the world, Alaska has no Plan B to fall back on when its endowment of fossil fuels is no longer sufficient to support a state government in the style to which it is accustomed. Let us hope and pray that the voters of the other 49 states see the “drill, baby, drill” mantra for the folly it is, and reject it out of hand in favor of an energy policy that stresses energy security through conservation and renewable energy development.

Sources:

“Palin’s Petropolitics.” Klare, Michael T., The Nation, September 17, 2008.
http://www.thenation.com/doc/20081006/klare

“Gas Subsidies and Iran.” Cohen, Dave, Association for the Study of Peak Oil and Gas – USA, July 5, 2007.
http://www.aspo-usa.com/index.php?Itemid=91&id=165&option=com_content&task=view

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Michael Vickerman is executive director of RENEW Wisconsin, a sustainable energy advocacy organization. For more information on the global and national petroleum and natural gas supply picture, visit “The End of Cheap Oil” section in RENEW Wisconsin’s web site: www.renewwisconsin.org. These commentaries also posted on RENEW’s blog: http://renewenergyblog.wordpress.com, and Madison Peak Oil Group’s blog: http://www.madisonpeakoil-blog.blogspot.com

Energy: A challenge to us all

by | Jul 29, 2008 | Uncategorized

An editorial from the Milwaukee Journal Sentinel:

Former Vice President Al Gore’s recent call for the nation to produce all electricity from wind, solar and other renewable sources within 10 years appears unattainable, energy wonks have been quick to note.

And we appear to be part of that naysaying pack.

In the editorial above, we commend Gov. Jim Doyle’s Task Force on Global Warming for setting goals of reducing greenhouse gas emissions by 22% by 2022 and a 75% reduction by 2050. That’s not zero in 10 years.

We commend those Wisconsin goals because they are “realistic,” as in doable, but that doesn’t mean that we oppose speeding things up.

We put those quotation marks around the word because we also realize that citing “realism” often has been just another way of slowing progress.

So, here’s the real utility in Gore’s call for speedier progress: It recognizes that deeper commitment can produce speedier results.

Too costly to move quicker? Those costs have to be weighed against those already levied by our reliance on fossil fuels. And the time allowed to break this addiction to oil has to be weighed against how every minute, every hour, every day of carbon emissions brings the world closer to that tipping point that spells global catastrophe.

Expect higher heating bills

by | Jul 7, 2008 | Uncategorized

From an article by Tom Content in the Milwaukee Journal Sentinel:

Consumers should expect energy price sticker shock to continue well past the summer driving season, as pain at the pump is poised to give way to furnace frustration next winter.

The price of gasoline, above $4 for the past month, is on people’s minds — and it’s visible at nearly every major intersection. But another energy jolt may be coming as the price of natural gas, the primary fuel used to heat Wisconsin homes, is at historic highs for this time of year.

Natural gas futures have jumped 82% since the start of the year. Heating oil and propane prices are also soaring.

The increased natural gas prices already have resulted in electricity bills jumping twice since March for customers of Milwaukee-based We Energies and Green Bay-based Wisconsin Public Service Corp. Including increases authorized for three other state utilities, customers of the state’s five investor-owned utilities have seen rates rise by $210 million since the start of the year.

Spokesmen for the state’s large natural gas utilities said it’s too early to predict what customers may pay this winter. The futures price of natural gas, which finished last week at its highest point in more than 2 1/2 years, could still fall below its current, abnormal high, they said.

“Prices right now are in the scary range,” said Kerry Spees, spokesman for Wisconsin Public Service, an electric and natural gas utility. “It makes you look toward the winter with a little trepidation.”

Movie: Escape from Suburbia, June 17, Urban Ecology Center

by | May 21, 2008 | Uncategorized

The interest group Paths to a Sustainable Future will show Escape from Suburbia, the sequel to the award-winning film, The End of Suburbia, about the future of the American dream after the oil age. This film focuses on viable alternatives for communities working at the local level.

The movie will be shown at the interest group’s meeting which begins at 6:00 p.m. at the Urban Ecology Center, 1859 North 40th Street, (414) 344-5460.