Friday, February 4, 2011

The Coming Energy Shortage is Now

Governor Susanna Martinez of New Mexico declared an energy emergency Thursday because New Mexico residents could not receive adequate electricity and natural gas during the cold snap. Texas is short of electricity during this cold wave.

California ran out of electricity nine years ago. Populations rise, demand grows, and no new generating facilities come on line. Throw in an economically bankrupt, political “deregulation bill,” and energy traders, and the electricity stopped flowing.

Gas at the pump hit $5 per gallon in 2008, prior to the Housing Collapse. The trucking industry, especially the independent haulers, was crippled. Detroit was headed to bankruptcy.

Cries of “Drill, Baby Drill” were blocked by the Green Lobby and the election of President Obama. He was quoted three years ago as saying his only problem with the high price of gas was that it went up too quickly.

The President has long been opposed to the oil industry, and even today is trying to cut off subsidies to the industry. His mantra is green. He used the BP Blowout to shut new development in the petroleum rich Gulf. ANWAR remains closed to oil exploration, and just yesterday Shell announced because of regulatory delays it was abandoning plans to drill for oil in the Arctic waters this summer.

The opponents of ANWAR always say it will take 10 years to bring the oil to production. Had we started drilling during the Clinton Administration, we would now have benefited from over a half decade of production.

And yet, gas prices are rapidly increasing to the levels of three years ago.

Crude oil was less than $30 a barrel barely two years ago. It passed $101 a barrel on Monday. It had risen $30 since summer, prior to recent events, because of the world’s recovering economy. Any distress in the Mideast, in production or transportation through the Suez Canal or the Gulf of Hormuz, and $5 gas and $2 heating oil will seem a bargain.

The reality is one of basic economics. If demand exceeds supply, prices will rise and rationing set in, driven by market and political forces.

The United States is the OPEC of coal, but environmentalists oppose it at every turn. Thus, few new coal plants are built in the United States. President Obama also made it clear he opposes coal. Several large coal plants have shut down.

Natural gas is odorless and clean burning, but New York is fighting development of large gas reserves in the state. Former Governor Richardson of New Mexico issued an executive order blocking gas development in the state.

Hydro is clean and renewable, but we are slowly tearing down our dams rather than building new ones.

Nuclear is clean, but it is going nowhere and NIMBY forces will fight any new proposals.

Wind and solar have limits. Solar does not heat homes in the dead of a Frostbelt winter.

Green energy will require new transmission facilities, but these too are blocked.

The United States possesses large reserves of oil, but development is increasingly blocked both onshore and offshore. The oil is there, but the will is not. Indeed, Cuba will be drilling for oil off of Florida, but we can’t.

Californians love SUV’s, but don’t want production off the coast. We pay the highest gas prices in the Continental United States, serving as a hidden tax on an already overtaxed state.

Green does not propel cars. Electric cars will need power plants generating electricity. Green will not end on dependency on Mideast oil.

Conservation only goes so far.

Our economy was built on cheap energy. Those days are gone, ending forever with the Arab Oil Embargoes of the 1970’s.

As prices go up, inflation and unemployment will rise. Heating oil prices will sap households’ discretionary spending. And every dollar we spend on imported oil will go to Russia, Saudi Arabia, Hugo Chavez, and Al Qaeda.

President Obama may become the reincarnation of President Carter.

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