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Straight Talk On Energy |
| Our Boomer-In-Charge here at BBHQ, Hershel Chicowitz, writes frequently about current events... from a boomer perspective. He is sometimes funny, sometimes provocative, sometimes a little of both. We hope you get a kick out of our Boomer Essays. |
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This is the BBHQ position on energy. Hershel wrote this essay in December 2000, before any sign of an energy crisis had surfaced. He updated it in May and June 2001. This was our position then, and it is our position now. We are both passionate and adamant about this.
OK; I have some simple, straight talk on energy. And I'm not talking about Viarga or Ginko-Biloba. Sit back down and read on.
Here's the story: most boomers should remember the ugly shortages of gasoline in the 70s. After the energy crises back then, President Carter defiantly proclaimed that the U.S. would never be as dependent on foreign oil as it was then. He called his campaign the "moral equivalent of war." His critics referred to it as "MEOW." At the time, we imported about 25% of the oil we used. Today, we import about 50%. So much for Jimmy Carter's defiance, huh? Looks like we lost two wars in the 70s, doesn't it? But in all fairness, we can hardly blame Jimmy Carter for our increased dependency on foreign oil. After all, he was gone by 1981. But is it my fault that we have to import so much oil? Is it your fault?
Of course not. I expend a lot of words here at BBHQ criticizing our government for getting involved in matters that are none of its business. But the assurance of an adequate supply of the energy that fuels our economy and our lives is something we, as individuals, cannot guarantee. This is PRECISELY something in which the government MUST be involved! And yet, despite the warnings of the seventies, today we are more at the mercy of OPEC and other foreign suppliers than ever before. This is our government's fault; this is our government's failing.
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The Logic of La La Land In the summer of 2000, the wholesale price of electricity in California - the price that the utility companies pay to purchase electricity - went up. (We can debate the reasons why it went up, but the reality is that it went up.) But despite this, the California Public Utilities Commission (PUC) did not allow the state's power companies to pass this cost increase on to consumers. In other words, power companies were forced to operate at a huge loss; they were forced to sell electricity to consumers for less than they paid for it. And the PUC thought this was a good idea? Sure, politically, perhaps it was. But did it make an ounce of good fiscal sense? Of course not. A year later, the state's largest power company, Pacific Gas & Electric, declared bankruptcy. Oh, the company is still in operation; but who is going to benefit from this mess? The lawyers, naturally. And who will suffer from this debacle? Those who pay the bills, that's who. Reminder: it is the consumer who pays the bills; the consumer always pays the bills. Demonstrating that she has not any discernable understanding of the market, Loretta Lynch, head of the California PUC said, "I think it's pretty appalling that the folks who sell us power can charge whatever they want." (PBS Frontline, June 5, 2001.) No Ms. Lynch, the folks who sell you power do not charge whatever they want. They adhered to the rules that your commission established. You created a system that guaranteed failure. California Governor Gray Davis demagogues the issue, too. The evidence of an impending disaster was evident when he took office. But he chose to do nothing for fear of upsetting the voters and angering the eco-terrorists. California did nothing to increase its own energy production. It has done nothing for a decade. Nonetheless, several times in the spring of 2001, the governor proudly proclaimed, "No governor in California has ever built as many power plants as I'm building - not one." I might argue that he is not building anything, but his parsing of words sounds pathetically Clintonesque. He claims he is building power plants. Now he is, now that blackouts are inevitable. So the fact that he is building power plants absolves him of blame for the current mess? In fact, as of June 2001, he had not built any power plants - not one! The governor reacted only when the crisis surfaced, not when it could have been avoided. The governor's actions and statements are nothing short of disgraceful. |
The mess over the shortage of energy in California came about because of the state government's bungling of the deregulation of the energy industry. It is disappointing but not surprising that they are now trying to blame the federal government for a problem they created. And it is amazing that California's voters would now place reliance on that same government to fix the problem. You say you don't like the high price you are paid to heat your home last winter? Well, the primary reason for the high price was that it has been the policy of this government to discourage the discovery and production of energy in this country. Period! In his final days in office, Bill Clinton declared thousands of square miles of federal property off limits to energy exploration. What he did, friends, is make our country more dependent on foreign oil and raised the price of electricity for you! Meanwhile, the press fails to mention this ugly little detail, because it too, is working on Bill Clinton's legacy. How does it look when our energy secretary has to go to Saudi Arabia and plead with the Arabs not to cut production of oil? What does it say about us, the most powerful country in the world? Doesn't that bother you, just a little bit? We have a serious energy problem. It is time to admit it; it is way past time to do something about it. The population of California has skyrocketed in the last decade. Naturally, so has the demand for energy. This comes as a big surprise? But how many energy-producing plants have been constructed in California in the last decade. None; zero; nada! Folks, this is simply a matter of supply and demand; Economics 101. The eco-terrorists in California have made it nearly impossible to find and generate new supplies of energy in California. And the result should come as no surprise to anyone. We need more energy. Period. Computers, cars, people, and a vibrant economy require more energy. Yes, we can, and we should, conserve energy. Why did we forget all about turning out the lights in the 90s? We should not waste energy. But all reasonable conservation and all reasonable efforts to minimize waste will not solve our energy problem. California has the highest rate of conservation of any state in the union. Yet still, they have a serious energy problem. Conservation alone will not cut it! We need to generate more energy.... oil, coal, hydro-electric, solar, nuclear... whatever; we need to generate more energy! And yet, how many new oil reserves were tapped for more oil in the last decade? Nuclear energy was once touted as the solution to our energy needs. How many nuclear power plants have come online in the last quarter century? Try.... none! Don't tell me they are not safe. Currently, they provide about 15% of the electricity we use. France gets about 70% of its energy from nuclear power. Where are the stories of French power plants exploding? Are the French that much better than we are? No American has ever been killed in a nuclear power plant accident. By comparison, how many have died mining coal? |
Over the last decade our entire energy policy has consisted of placing barriers to the production of energy while increasing our dependency on foreign oil. That is a recipe for disaster! And our government sat by and encouraged... indeed, they orchestrated this disaster in the making. This is from the president that you "so dearly love."
Meanwhile, George W. Bush was criticized for picking Dick Cheney, a "big oil tycoon," as his vice-presidential candidate. Well, if we have an energy problem, wouldn't it make sense to bring in some adults who actually know something about energy to help solve it? Obviously, no one in the Clinton administration knew or cared one twit about energy. They helped create this mess.
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Price Controls: Oh sure, sounds like a good idea; let's cap the price that the greedy oil companies can charge for a gallon of gas. Politically, it's a winner; policy-wise, it is a disaster. Suppose that at a mandated maximum price of $1.75 per gallon, we would consume x gallons of gasoline per day. If the price were based on the free market price, say $2.25 per gallon, how much gas per day would we consume? More? I don't think so. So, does putting a artificial cap on the price of gas serve to conserve gas? Of course not. Now, suppose a producer of energy (or any other product or service) is told that he (or she) must sell that energy for less than the free market price would bear. Is the producer of energy going to have the incentive to produce more energy... or less? The obvious conclusion is that price caps do not serve any valid purpose, except for a political one. Is this really what we should be doing? OK, don't take my word for it. Let's see what happened the last time the federal government placed a freeze on prices. It happened during the Nixon administration in the 70s. And as the economists predicted, it created shortages, and in the long term, caused prices to rise. As a method of controlling prices and stabilizing the economy, it was a total failure. Why are we unwilling to learn from this? Because it does not make us feel good, that's why. We don't care about the long term effects; we just want a quick fix. |
So the answer to this problem is, in part, to institute government policies which encourage the production of energy. We need to open up offshore oil reserves. We need to open up federal land for the exploration of oil and other natural resources. We have enough oil, coal and other natural resources to fuel our country for the next century, if we but have the courage to go get it! (Certainly, Californians do not.)
Let's see now... how much worse off is Alaska since the construction of the Alaska pipeline? Well, every resident of Alaska gets a check for about $2,000 every year. Not bad, huh? And the environment? How many thousands of acres of land have been permanently destroyed as a result? How 'bout.... none! And how about the precious caribou... what do they seem to think of the pipeline. Well, they graze next to and walk under the raised pipeline. They seem to have no problem with it. So the Alaska pipeline has served us all well... all of us except the eco-terrorists.
Yes, there is a risk that digging for oil and gas may have a negative impact on our environment. But the alternative is to put our country at the mercy of some foreign country that could not care less about our energy needs.
The government should demand the most strict controls over the drilling for oil and enforce the most strict penalties for carelessness or violation of safety standards. Oh sure, Exxon's shareholders and customers had to pay dearly for the Exxon Valdez disaster. But how many individuals were punished for this most blatant stupidity? Let's put a few oil executives and oil tanker captains in jail for a few years the next time they do something really irresponsible! Our safety record has been pretty good over the last decade; but it is not good enough. We can and must do better.
That is, unless we want some meathead in the middle east to dictate how much a gallon of gas will cost, or how low we have to set our thermostats next winter. Surely that is the path we are on now. Is that what you want? Are you willing to wait till that happens to take note and demand our government do something about it?
Fine; but don't come complaining to me; and don't say I didn't warn you.
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If you like what we're doing here at BBHQ, please help us by buying stuff through our link to Amazon.com:
| The BBHQ Album of the Month is "Old Friends Live on Stage (Deluxe Edition) (2 CD/1 DVD)," by Simon & Garfunkel. If you were fortunate enough to see them in concert last year, I do not have to sell you. The concert was terrific! This album collection includes 55 songs, plus their new recording, "Citizen of the Planet," and one of the songs sung by the Everly Brothers during the concert. The DVD was recorded during their concert in Madison Square Garden in 2003. For any S&G fan, this is a must have! But then, you knew that already, didn't you? |
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The BBHQ Book of the Month is
"Vinyl Highway," by
Dee Dee Phelps. You remember her as Dee Dee, of Dick and Dee Dee.
Together, they took a decade long ride on the rock and roll roller
coaster. It was a heck of a ride! Dick Clark, Quincy Jones, the Beach
Boys, Glenn Campbell, Dionne Warwick, Bobby Vinton... Dick and Dee Dee
rubbed shoulders with all of them. This is her "behind the scenes" story.
It's pretty cool.
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