The Price of Pristineness

4/15/09 – Tax Day

Today we partially pay for the past administration’s expenditures. The rest of past largess will come due later. However the current administration’s plans will compound this bill to levels never imagined. And we have yet to see how it will work out.

One target as a revenue source will be energy. Energy is a necessary and captive component of the economy. Therefore, it is a tax source that in most cases cannot escape. The current administration can take advantage of this to fund other activities and push policy objectives.

Before I begin pondering, however, I must state that regardless of the causes of pollution in general and global warming in particular minimizing our carbon footprint and keeping our environment as pristine as economically possible is just plain good business.

So how important are “tax preferences” to the oil and gas industry? To much of the independent domestic industry (and this group is not “Big Oil”) it is significant. And the uncertainty with constantly changing and unpredictable policies add a real cost that is passed on to the consumer. Job creation policy must look at the trade off of jobs lost by punitive policy and general impacts of higher energy costs on society compared to any targeted job creation.

It is quite clear that here we see that environmental policy is energy policy. And here I must give Mr. Obama credit for recognizing this link of at least two of the 3 Es I like to emphasize, Energy, the Economy, and the Environment. Maybe there is still hope for policy in this area to be linked to the economy. And perhaps its there when on 2/24/09 Obama said that, “energy is vital to the nation’s economic future.”

The environmental policies covering global warming, the reluctance to produce domestic hydrocarbons regardless of their low cost and obvious domestic demand, the pseudo nationalization of Chrysler and GM, etc. will drive energy policy. The bill for this Pristineness is yet to be determined. I imagine that it will be expensive and I must ponder how much We the People will really tolerate in terms of direct costs and the costs to our standard of living.

Cap and trade
Cap and trade is deserving of its own ponderings. (See Points to Ponder Cap and Trade 3/15/09.) It is only recognized here as a component of the Price of Pristineness.

Who goes to jail?
The issue of mandates such as “X”% green energy is only a noble goal unless there are real teeth in the mandate. Of course, those teeth only make sense if the mandate is feasible and economically justifiable. 

CAFE Standards
CAFE Standards are also deserving of their own ponderings. (See Points to Ponder CAFÉ 3/15/09) They are also recognized here as a component of the Price of Pristineness.

Water
In any discussion of energy and the environment, water must be considered. It takes energy to move water to where it is needed. Many energy production processes are significant users of water.

Is there a better example for the need for truly comprehensive policy? Carbon mitigation is water intensive. Bio-fuels and unconventional fossil fuels are water intensive. Conventional domestic demand for water must be a part of the equation.

The Flight to Coal
Up until the price spike of last summer natural gas, while not really the fuel of choice, was, at least, the hydrocarbon of choice. However, the high cost for natural gas made coal much more attractive, giving us a clue as to what the price of Pristineness is. Now gas is back in the tank (so to speak) and may yet prove to be that hydrocarbon of choice.

Nuclear
Well I’ve promoted nuclear power long enough in this discussion. It is time to look at the real costs of this option. Even though the USA is the largest producer of nuclear power, it is only 20% of our power mix. What is holding us back from producing as much as 70% like France? Does the current silence suggest that this administration is anti-nuke?

Technology must be improved to solve the waste issue. However, we have lost a lot of our manpower with the expertise to solve these problems over the past 25 years of neglect.

Here, investments in research in fast breeder technology and in fusion are key. Such investment would also include developing the security measures need to minimize the threat of weapons grade by-products falling into the hands of the bad guys.

Di-Lithium Crystals
As I have preached to many years, somewhat tongue in cheek, I’m still holding out for di-lithium crystals, the fuel source for the warp drive engines of Gene Roddenberry’s Star Ship Enterprise. Maybe not in my lifetime, but 100 years ago, who could have imagined nuclear power except for Albert Einstein and Jules Vern. So. Don’t rule some wonderful new technology out.

 

Click here for more information about Confessions of an Energy Price Forecaster: A 12 Step Program to Enlightenment

Click here for John Tobin's full bio

 

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