oil

Trade Deficit - One Root Of Many Problems

Dave Johnson — Mon, 04 Jun 2012 12:56:27 -0400

You buy things till your wallet is empty. So you raid the savings account to buy more stuff. Then you get a loan, and buy more stuff. Another loan, another, you keep buying stuff... Finally you're selling off the tools you had used to make a living. That's where the country is now because of the huge imbalance in our trade relationships. We buy more from them than they buy from us and we have let this go on and on and on. This is the deficit we should be worried about.

The Root

Pick a national problem, and the odds are that our trade imbalance is aggravating it. Our trade deficits literally suck money out of the country. When looking up the numbers I had to double check, our annual trade deficits are so huge. In the chart below that first line under the dates represents $100 billion. Look at what happened in the late 90s, when we opened the China flodgates. (Click to enlarge):

In the 70's the trade balance dipped below zero because of oil, and the country responded with conservation and the beginning of the search for alternatives -- until Reagan. To make matters worse, Reagan preached "free trade" -- as in use cheap foreign labor to break American unions. (But Reagan also enforced rules against "dumping" and other trade violations.) The real break in our balance of trade clearly begins around the time that NAFTA and the World Trade Organization went into effect, and then went absolutely nuts after China was brought in. Between 2001 and 2009 we lost 1/3 of all of our manufacturing jobs, more than 50,000 factories, and entire industries. We drained trillions of dollars out of our economy.

Causes

Energy. The trade imbalance started with OPEC and the oil price shocks in 1970s, and oil imports since then. This is a huge problem but the beneficiaries of this trade imbalance fight to keep things the way they are. (By the way, next time you hear someone of FOX running down our country's green energy efforts, knocking the Chevy Volt or denying climate change, think abougt this: Fox's second-largest shareholder is a billionaire Saudi oil prince. Also, FYI, Koch brothers == oil.)

"Asymmetries." One-sided trade relationships are now draining money from our country at a dramatic rate. We are much more open to imports than many of our "trading partners" are. We buy from them, they don't buy from us -- and we just let this continue year after year.

"Strong" dollar policies, combined with currency manipulation by others. A strong dollar is great for Wall Street, but is terrible for manufacturers and producers. When the dollar is "strong" it means that goods made here cost more than goods made elsewhere. The dollar went way up in the early 1980s because of the borrowing following the Reagan tax cuts for the rich and the trade deficit went up along with it. Dollars had to be purchased to buy our bonds, creating a "demand" for them, which increased their "price," contributing significantly to the then-record U.S. trade deficits. Meanwhile, we let countries like China manipulate their currencies to make them "weak," which means goods made there cost must less in world markets.

Trade cheating. Many countries violate trade rules (like manipulating currency), which brings them a competitive advantage in world markets. We don't call them on it for various reasons, largely because powerful interest groups benefit from the cheating. When goods from elsewhere cost less than they should it undermines our own manufacturers and producers, but the lower prices enrich distributors, retailers, and others.

The Trap

Here is the trap of our one-sided trade agreements: these "free-trade" agreements increase exports. The reason this is a trap and a problem is that they increase imports more. So, on the one hand the agreements create and enrich interest groups that push for continuation and expansion of the agreements, while on the other hand they increase trade deficits, which drain our economy.

Example: We opened up trade with China. China lets their imports grow, so we have some appearance of increasing sales to China, but they keep barriers while manipulating currency and subsidizing their companies, and their exports to us grow faster than their imports from us, which increases the imbalance. They can steadily reduce their import barriers and let their currency rise slowly, giving the appearance of moving toward open trade and providing what appear to be incentives to keep the relationship going, but by also increasing their exports they continue to drain us.

The Answer: Balance

We must balance our country's trade. Of course, to do that we must understand ourselves as a country again. Our competitors certainly do.

We're A Country. Deal With It.

Here's the important thing to understand, even if you think the idea of "countries" is out of date, and don't think of the United States as a country is important anymore: Others see themselves as countries and they organize their countries to win as countries. And you don't live in those countries. They see us - this geographic region we live in -- as a country, even if we do not, and they plan their efforts accordingly. They attack us as a country and you happen to live in the geographic region called a country that they are attacking. So as they seize the jobs and factories and industries from our country all of us who happen to live within the geographic borders that we refuse to call a country lose out economically, whether we believe we are part of this country or not. This means we have to respond as a country regardless of whether our ideology says we shouldn't. We are under economic attack as a country, so national government still matters as the only force capable of organizing a national response.

Our government must say that the amount coming in must match the amount going out. Period.

(Note, The Causes of the U.S. Trade Deficit, Robert A. Blecker, Ph.D., August 19, 1999 is a good read.)

Devastating, Job-Killing, Socialist Regulations

Dave Johnson — Sun, 18 Dec 2011 12:13:31 -0500

Conservatives, their movement funded by big oil and king coal, constantly complain about "job-killing regulations." They say that the Environmental Protection Agency is pushing "socialism" because it wants to lower the amount of pollution that energy companies pump into the air. And here is a story that makes their point.

From the AP: Russia oil spills wreak devastation,

Environmentalists estimate at least 1 percent of Russia's annual oil production, or 5 million tons, is spilled every year. That is equivalent to one Deepwater Horizon-scale leak about every two months. Crumbling infrastructure and a harsh climate combine to spell disaster in the world's largest oil producer, responsible for 13 percent of global output.

Oil, stubbornly seeping through rusty pipelines and old wells, contaminates soil, kills all plants that grow on it and destroys habitats for mammals and birds. Half a million tons every year get into rivers that flow into the Arctic Ocean, the government says, upsetting the delicate environmental balance in those waters.

It's part of a legacy of environmental tragedy that has plagued Russia and the countries of its former Soviet empire for decades, from the nuclear horrors of Chernobyl in Ukraine to lethal chemical waste in the Russian city of Dzerzhinsk and paper mill pollution seeping into Siberia's Lake Baikal, which holds one-fifth of the world's supply of fresh water.

OOPS

Oh, darn, sorry. My bad. Big mistake. Oops. That's a story about what happens if we don't strictly regulate the energy companies.

The oil industry in Komi has been sapping nature for decades, killing or forcing out reindeer and fish. Locals like the 63-year-old Bratenkov are afraid that when big oil leaves, there will be only poisoned terrain left in its wake.

"Fishing, hunting — it's all gone," Bratenkov said.

Conservative Message Machine In The Service Of Big Oil

Dave Johnson — Mon, 28 Nov 2011 14:13:21 -0500

See if you can spot the common theme in the latest the conservative message machine pumped out today and in the last few days.

Heritage Foundation: Obama Keeps Turning His Back on Jobs:

This week, President Obama is again set to make a pitch for his latest plan to stimulate the economy, but meanwhile he is turning his back on projects that would put tens or even hundreds of thousands Americans to work. And he’s doing it all to appease his left-wing, environmentalist base at the expense of domestic energy production.

An editorial in the Examiner: Don't let Big Green stymie boom in energy jobs,

Thanks to the new technologies, additional vast untapped energy resources in Texas, Alaska and off-shore could make America energy independent in the 21st century, allowing U.S. policymakers to tell Orgazniation for Petroleum Exporting Countries nations to go pound sand. But Big Green environmentalists - and their political allies in the White House and Congress -- are determined to keep the country from enjoying this boom.

And the Examiner just the other day, Obama's EPA is killing the economy with costly rules

Under President Obama's hand-picked administrator, Lisa Jackson, EPA is hog-tying the economy with dozens of proposed major new rules. One of them, which is aimed at coal-fired power plants that generate electricity, will add at least $18 billion in compliance costs by 2020. As Kathleen White of the Texas Public Policy Center told the House Energy and Commerce Committee earlier this year, "never in its 40-year history has EPA promulgated -- at the same time -- so many costly new regulatory dictates. The rules on track to go into effect in the next three years could cost more than $1 trillion and result in hundreds of thousands of jobs lost."

It's not just the raft of new rules that is killing economic growth, however. Jackson and her EPA minions have been purposefully slow-walking the agency's already hideously complex process for approving permits in a crucial sector of the energy industry.

Wall Street Journal -- note, Fox News, the Wall Street Journal and other Murdoch outlets are co-owned by a Saudi oil billionaire: The Non-Green Jobs Boom,

So President Obama was right all along. Domestic energy production really is a path to prosperity and new job creation. His mistake was predicting that those new jobs would be "green," when the real employment boom is taking place in oil and gas.

... The ironies here are richer than the shale deposits in North Dakota's Bakken formation. While Washington has tried to force-feed renewable energy with tens of billions in special subsidies, oil and gas production has boomed thanks to private investment. And while renewable technology breakthroughs never seem to arrive, horizontal drilling and hydraulic fracturing have revolutionized oil and gas extraction—with no Energy Department loan guarantees needed.

Townhall: Dump the EPA,

Like a bad lover, the EPA is a nagging, beguiling mooch. The EPA unconstitutionally barged into our lives and we need to break free from this destructive relationship; let’s give the EPA a two-letter title beginning with ‘E’ and ending with ‘X.’

... The EPA’s regulations are so burdensome, sweeping and impractical that it’s nearly impossible for energy companies to comply without going out of business. Hence, businesspeople in the energy industry increasingly find themselves facing enormous fines and even criminal allegations.

... Today, tens of thousands of oil jobs (and therefore the public health) are in jeopardy because President Obama is citing faulty EPA data on greenhouse emissions to delay building the Keystone XL pipeline.

Townhall: Obama Gets Money Bonanza by Killing Energy Jobs

A coordinated oil industry campaign can have a long reach...

LA Times: Democrats need to get real about US energy policy,

Today's Democratic leadership has reached a nadir in rational energy policymaking. In the last several years, congressional party leaders have squandered opportunities for a nuclear waste management storage program and have shown opposition to shale gas production. This month, the party reached a new low: The Obama administration's delay of the Keystone XL pipeline from Canada, in spite of its promise of an additional 750,000 barrels of oil per day and the thousands of new jobs it would create, was an inexcusable political decision unbecoming of a pragmatic leader.

Sacramento Bee, Obama Again Fails Energy Independence for America

The anti-Chevy Volt theme is a little less direct, but is obviously in support of an oil agenda:

Townhall: Chevy Volt Batteries Catching on Fire

Drudge Report: Gov't Motors offering loaner cars to worried Chevy Volt owners...

Powerline: MORE GREEN ENERGY FAIL.

So, we learned in recent days that Chevy Volt batteries can catch fire in accidents. Welcome to the Pinto of our time. Oh goody: another product liability suit in the making.

Meanwhile, Google has quietly abandoned an alternative energy program that it launched with great fanfare just two years ago.

Hot Air: The untold jobs boom: Non-green edition,

But no… the boom in jobs and opportunity isn’t coming from “green.” It’s being found in “brown” – the same old reliable energy sources we’ve been dealing in for decades. Yep.. oil land natural gas.

... And yet, as the WSJ editors note, Washington somehow seems to continue pursuing policies which inhibit growth in these areas while flushing more taxpayer dollars we don’t have into technologies which routinely fail to bear economically viable fruit.

These are just from today and a few from the weekend. If you look around you'll see many, many similar articles and posts. If you look over the last week you'll see hundreds. If you look at the month you'll see thousands.

These can't all come from oil money - can they?

Oil-Backed Conservatives Try To Kill Green Jobs Effort

Dave Johnson — Thu, 22 Sep 2011 14:37:40 -0400

For more on how we can fight for green jobs, hear Rep. Chris Murphy, United Steelworkers' Leo Gerard, Alliance for American Manufacturing's Scott Paul and Leo Hindery, Jr. at the Oct. 3-5 Take Back the American Dream conference.

Oil-backed Republicans are doing everything they can to turn the public against ... alternatives to oil. Today a Republican Congressional committee held a hearing, named the hearing "How Obama's Green Energy Agenda is Killing Jobs," and released a "report" with the same name. The report calls the push for green-energy jobs "a propaganda tool designed to provide legitimacy to a pre-determined outcome that benefits a political ideology." Here's the thing: the report itself actually is "a propaganda tool designed to provide legitimacy to a pre-determined outcome that benefits a political ideology." Heh.

The Report

The Republican House Committee on Oversight and Government Reform has release a 33-page report, How Obama’s Green Energy Agenda is Killing Jobs. This "report" is a stunning document that reads like an oil-company promotional piece raised to he level of Glenn-Beckian, conspiratorial hysteria. From the Executive Summary,

The Obama Administration’s green energy campaign has been pursued while it simultaneously implemented a regulatory agenda that is choking American businesses and restricting access to abundant domestic natural resources which have traditionally provided cheap energy that supports economic growth.

... By sacrificing domestic carbon-based resources upon the altar of an ill-fated “green energy” experiment, the President has put U.S. economic security in jeopardy and wasted billions in taxpayer money at a time when our fiscal health is in peril.

One "finding" of the report is that green jobs might help people who are members of labor unions, and that "payment of union-level wages" might be mandated! Along with this, a press release promoting the report warns:

It also points out that the guise of "green jobs" has become a rallying cry for a political coalition comprised of environmentalists and union leadership to consolidate an ideologically-based agenda, and notes that many federal green jobs programs have strings attached that require union workers, union-level wages and other mandates.

Shocking, Americans might want a clean environment and good pay. We must warn our constituents about this terrible possibility before communists take over!

Key Findings

Among the report's "key findings:"

Labeling an occupation as a green job does not mean it has any special economic worth;
The guise of “green jobs” has become a political rallying cry aimed to unite environmentalists and union leaders in a deliberate effort to consolidate an ideologicallybased agenda;
Labor unions are profiting from the many so-called “green” programs because there are often “strings attached” that require hiring union workers, the payment of union-level wages and other mandates;
The metric of a “green job” is nothing more than a propaganda tool designed to provide legitimacy to a pre-determined outcome that benefits a political ideology rather than the economy or the environment...

The Conspiracy

The report lays out in detail a grand, Glenn-Beckian conspiracy theory, claiming that environmentalists and labor unions are working together to promote a grand, "green jobs" conspiracy. The section titled, PART I: OBAMA’S GREEN AGENDA DECONSTRUCTED lays out this conspiracy,

...union leaders support “green jobs” because much of the subsidized work is designated to be awarded to unionized workers. For their part, environmentalists benefit from having a broader base of support for policies that seek to “green” the economy. The outcome is a political alliance with incredible power.

The genesis of promoting so-called “green jobs” can be traced to a group known as the Apollo Alliance, which has been the center of gravity for the green jobs movement since 2001. ... Accordingly, the Apollo Alliance and other coalition efforts like the Blue-Green Alliance bring together two major components of the Democratic political base – environmentalists and labor unions. ...

Labor Unions are Profiting under the Pretense of Green Energy

While the green jobs movement clearly advances the interests of environmental special interest groups in the green jobs movement, the interests of labor unions may not be as readily apparent. However, a careful look at statutes passed in the Democrat controlled 110th and 111th Congresses reveal that unions stand to benefit from many of the so-called green programs because these programs have “strings attached … that require paying union-level wages, hampering lower cost, nonunion firms from competing for the jobs produced by the grants.” The left-wing magazine, The American Prospect, noted in September of 2007 that Leo Gerard, the President of the United Steelworkers, has played a major role in the development of the Apollo Alliance and its political influence...

The report goes on to make the case that one goal of this conspiracy is to promote American steel, and require other parts of this effort to be American-made, which would benefit members of the Steelworkers union.

Another reason why Gerard and the United Steelworkers, in particular, are drawn to this coalition is the amount of steel required to manufacturer green energy products, such as wind turbines. To the extent that manufacturers use American steel, the assumption is that the government subsidies and regulations would benefit their membership as well. As Gerard has stated, arguing for steel protections, “If we are not going to do solar panels and fluorescent bulbs and wind turbines here, the next generation of R and D will not be here."

Oil Good, Green Bad: Promoting Oil Companies

Another section of the report, Fossil Fuel Use Has Been a Major Driver of American Prosperity, explains the benefits to America of promoting oil companies and getting rid of any green jobs effort to promote alternatives to fossil fuel use. You can almost hear the patriotic music welling up as you read this section.

The positive relationship between access to affordable energy sources and economic growth is undeniable; fossil fuels have been the backbone of American prosperity.

... The U.S. Energy Information Administration (EIA) credits carbon-based energy with spawning “one of the most profound social transformations in history.” Fossil fuels currently meet more than 80% of U.S. energy demand, with petroleum satisfying half of that demand.

The expanded use of fossil fuels throughout history has facilitated the development of some of our nation’s most productive industries. ...

Oil is credited with “the rise and development of capitalism and modern business” itself. Today, coal, oil and natural gas form the backbone that supports the American economy. [emphasis added]

Misstatements Of Fact

The report also contains what can politely be called "misstatements of fact." The report talks about "a private investor—one who happened to be a prominent Obama fundraiser." This is just flat-out false, In my post, Five Biggest Right-Wing Lies About Solyndra I pointed out the way this lie is used to create an appearance of impropriety:

5. The biggest investor in Solyndra was an Obama donor.
Conservatives (and now picked up by corporate "mainstream" outlets) make the accusation that there was corruption in the process by which Solyndra received its loan because a major Obama donor named George Kaiser is a major investor in Solyndra. The charge is that Solyndra only received the loan guarantee as a result of campaign contributions by people "connected to" Solyndra. The problem with this is that George Kaiser was not an investor in Solyndra. According to Tulsa World,

In an emailed statement to the Tulsa World, a representative of the George Kaiser Family Foundation said the organization made the investment through Argonaut.

"George Kaiser is not an investor in Solyndra and did not participate in any discussions with the U.S. government regarding the loan," the statement said. "GKFF invests in a globally diversified portfolio across many different asset classes."

The Kaiser Family Foundation is a philanthropic organization, which means Kaiser (or anyone else) could not personally profit from a successful investment by the foundation.

Please take the time to skim through this astonishing report. A copy of the Committee report is available by clicking here.

At Politico Darren Sameulsohn explains what Republicans are up to, in President Obama's green losing streak writing, "Now, with Solyndra's collapse, Republicans are promising to make the green jobs concept politically toxic for years to come."

This Mark Fiore animation sums it up.

How Koch Front Groups Influence Laws

Dave Johnson — Wed, 02 Mar 2011 22:15:14 -0500

Tuesday the House of Representatives voted to continue tax breaks and subsidies for oil companies. Every Republican voted to support the tax breaks and subsidies.

Thursday House Republicans are expected to introduce legislation to prevent the Environmental Protection Agency from regulating the CO2 put into the air by burning oil and coal.

Why does the oil industry have so much influence over our government?

Think Progress examines the influence just one oil company has over our government in a series:

From the report series, Part 1:

As ThinkProgress has carefully documented over the last three years, Koch groups have spent tens of millions to influence government policy — from financing the Tea Parties, to funding junk academic studies, to undisclosed attack ads against Democrats, to groups promoting climate change denial, to a large network of state-based and national think tanks.

[. . .] Koch funds both socially conservative groups and socially liberal groups. However, Koch’s financing of front groups and political organizations all have one thing in common: every single Koch group attacks workers’ rights, promotes deregulation, and argues for radical supply side economics. Not only do the Koch’s front groups pad Koch Industries’ bottom line, they supply the Koch brother’s talking points.

From the series Part 2:

Koch Industries has cornered the market in monetizing some of the most dirty industrial businesses. Koch imports oil from the Middle East, refines high-carbon Canadian crude, maintains coal-burning plants, owns one of the largest oil pipeline networks in America, runs environmentally hazardous lumber mills, produces toxic chemicals, and manufacturers fertilizer. The University of Masschusetts Amherst has scored Koch as among the top ten worst air polluters for its carcinogenic chemicals.

Much of the entire Koch political machine is geared towards ensuring that Koch Industries never has to compensate the people and ecosystems damaged by Koch Industries pollution. Koch front groups — from Tea Party groups to think tanks — have diligently promoted Koch Industries’ bottom line by denying global warming, fighting regulations on Koch’s cancer-causing chemicals, and snuffing out investigations into Koch’s environmental crimes:

The report shows how a series of Koch-funded organizations -- some even tax-deductible supposed "charities" -- are presented to the public as "independent" and are used in a campaign to persuade the public that climate change is a "hoax" or that different ways that Koch Industries pollutes are actually not harmful and should not be regulated.

Not Just Pollution Laws

While the Think Progress series examines how Koch Industries uses front groups to influence the government's efforts to enforce pollution laws, Politico examines an entirely different way that Koch Industies is using front groups to influence government. In For right, Wisconsin battle was years in making, Politico examines how Koch and others waged a campaign to convince voters that public employees, their pensions and their unions are responsible for state budget deficit, leading up to efforts like the ones in Wisconsin, Indiana, Ohio and other states to get rid of public employee unions.

From the Politico story,

The conservative assault on public sector unions that seemed to explode out of nowhere in Wisconsin and spread across the Midwest was in fact months – if not years – in the making, the result of methodical polling, lobbying, messaging, grassroots organizing and policy crafting by a coterie of well-funded conservative groups.

The Politico story provides an important piece of the puzzle in understanding what has happened to us, our wages, our jobs and our democracy in recent years. But the story is hardly limited to influence over pollution laws or the fight over public-employee unions. Other investigations have looked into other uses of these front groups, astroturf, think tanks and other influencers. For example, looking just at Koch influence see here, here, here, here, here, here, here, here, here, here, here,and so many more.

See also Think Progress' related posts:

March 10 Summit on Jobs and America's Future

On March 10, 2011, the Summit on Jobs and America’s Future will bring together leaders and activists who understand that America faces a jobs crisis – and who are committed to building a political movement for sustainable economic growth, dynamic job creation, and a revival of the American economy.

Free. $15 with lunch. Register here.

Fairy-Tale Social Security Policy

Dave Johnson — Thu, 09 Sep 2010 12:41:50 -0400

Lots of kids believe in Santa Claus. This is because people repeat the fable to kids over and over, telling them that Santa Claus will deliver presents to them if they're good. And then there's the Boogeyman, the "amorphous embodiment of terror." In some regions stories of the Boogeyman are repeated and repeated, and to keep the Boogeyman away little children do what they are told.

A popular Boogeyman is "Social Security is going broke." This fable originated from a 1983 Cato Institute Journal document, "Achieving a Leninist Strategy" by Stuart Butler of Cato and Peter Germanis of the Heritage Foundation. The document laid out a long-term strategic plan to dismantle Social Security. Part of the idea was to manufacture public beliefs like those we hear repeated (and repeated and repeated) today, "Social Security is going broke" and "Social Security is a Ponzi scheme."

Meanwhile a popular Santa Claus myth tells the pubic that energy independence can be achieved at low cost if only we would open up more land (and sea) to oil drilling.

Enter Rick Berg, candidate for Congress in North Dakota. Berg is proposing to scare away the Boogeyman by bringing in Santa Claus to fight the good fight. News story, Berg proposes Social Security fix,

Drilling for oil underneath western North Dakota’s Theodore Roosevelt National Park and other federal lands nationwide could be a way to ensure Social Security funding for the long haul, Republican U.S. House challenger Rick Berg said.

During a meeting with The Forum’s editorial board Wednesday, Berg discussed his ideas for how to make the Social Security system viable for future generations. He said one option is drilling for oil and other mineral resources on federal government land.

Oh yeah, there is one more thing that is repeated over and over. The other day I wrote, "The way a lobbyist argues for or against anything today is to say it will create or cost jobs." And right on queue, here's Berg:

Berg told the editorial board his proposal was just one way the government could add more money into the Social Security system.

“It needs to be solvent, and I’m supporting putting more money in that — mineral money in there — and getting people working again,” he said.

Yes, that's the ticket. Santa Claus fights the Boogeyman, and delivers jobs. All we have to do is open up national parks to oil drilling.

Social Security isn't broke, doesn't need fixing, and the last thing we need is more drilling. We need a Renewable Energy Standard and we need to set a price on carbon to trigger the new green technology revolution, get us off of oil and coal and create millions of jobs.

Obama: We've Been Outflanked, Cap & Trade Dead

Dave Johnson — Wed, 16 Jun 2010 13:10:19 -0400

The headline of my local paper today is Obama: Act on clean energy. (But a different headline online - do they do that just to mess up bloggers?)

In the speech the President paid homage to President Carter's efforts to change America's energy policies, saying,

For decades, we have known the days of cheap and easily accessible oil were numbered. For decades, we’ve talked and talked about the need to end America’s century-long addiction to fossil fuels. And for decades, we have failed to act with the sense of urgency that this challenge requires. Time and again, the path forward has been blocked -- not only by oil industry lobbyists, but also by a lack of political courage and candor.

Outflanked

Then the President said we have been outflanked on the coming green manufacturing revolution by countries like China,

The consequences of our inaction are now in plain sight. Countries like China are investing in clean energy jobs and industries that should be right here in America. Each day, we send nearly $1 billion of our wealth to foreign countries for their oil. And today, as we look to the Gulf, we see an entire way of life being threatened by a menacing cloud of black crude.

Cap And Trade Dead

In the Huffington Post today, Teryn Norris, Director of Americans for Energy Leadership writes that the President also signaled the death of cap and trade legislation,

Instead of using last night's prime-time opportunity to push cap and trade ... President Obama pressed the reset button on energy and climate policy, saying he was "happy to look at other ideas and approaches from either party, as long they seriously tackle our addiction to fossil fuels." He made no mention of setting a price on carbon or establishing an emissions cap and trade system.

Others are trying to get things done on this front. Norris discusses the emerging Innovation Consensus,

The energy innovation consensus currently includes dozens of Nobel Laureates, Breakthrough Institute, Brookings Institution, National Commission on Energy Policy, Third Way, Association of American Universities, Clean Air Task Force, Information Technology & Innovation Foundation, Google, and Americans for Energy Leadership, among others. The latest group to join is the American Energy Innovation Council (AEIC), made up of several of the nation's top business leaders: Bill Gates, Jeff Immelt, John Doerr, Chad Holliday, Norm Augustine, Ursula Burns, and Tim Solso. Last week, these leaders released a new report, "A Business Plan for America's Energy Future," calling for major new federal investment in clean energy technology RD&D -- at least $16 billion annually, more than triple the current level (see our news roundup).

Here is the problem. Action on energy requires direct government action and rejection of deficit hysteria to do it. But every single initiative of the Obama Presidency has been blocked by powerful interests, playing on the use of the filibuster on almost every major bill in the Senate. Health care reform was severely weakened by the pharmaceutical and insurance lobbies. Financial reform has been severely weakened by the financial lobbies. Jobs measures and further stimulus have been blocked by a strategic lobbying campaign to make people think the Bush-created deficit must be cut first. Now cap and trade may have been killed by the oil and gas lobbies.

We are in a direct confrontation between the big corporations and We, the People over who will run things and control the resources of the United States, and We, the People are losing. There is time to turn it around, but only if we recognize this battle for what it is.

We Already Have A Huge Carbon Tax - But Oil And Coal Companies Get The Money

Dave Johnson — Mon, 08 Mar 2010 13:35:45 -0500

We all pay a huge "hidden" tax when we burn oil and coal. Oil companies get the money. This is holding our economy back.

Today when we burn oil or coal we put the toxic waste that results straight into the air. This causes damage to all of us, in many ways. First, of course, the carbon dioxide accumulates and over time causes the planet to get warmer, which causes the climate to change. Then there is the standard air pollution, smog, etc. that we are so familiar with, and the effect this has, especially on our health.

This pollution is a hidden tax on all of us. We don't make the oil and coal companies pay anything for the consequences of the use of their products. WE pay the price instead of them. They just get the profits. This is called socializing the costs and privatizing the profits. We collectively pay the price of the pollution. They privately get to keep the profits.

This failure to collect the cost of using coal and oil holds our economy back. By collectively paying this pollution price instead of adding it to the price of coal and oil itself, burning coal and oil appears to cost us less than it actually costs us. This makes it appear that other forms of energy are more costly, which discourages investment in these other forms of energy. For example, using solar panels appears to cost more than just getting electricity from the power company. But the power company is burning coal and the public-at-large is directly paying the price for the pollution. This subsidy for coal makes a kilowatt-hour have a lower price on your bill than what solar coasts. This coal and oil subsidy keeps solar power from getting the kind of investment it deserves, which keeps coal and oil on top.

Keeping the price of oil and coal lower than it should be keeps us dependent on oil and coal as our energy source. It keeps us from investing in now, more efficient ways to generate the power we use. It keeps oil and coal companies in charge of the direction of the economy. We should see this for what it is, and see the opposition to a carbon tax for what it is. Enriching an already-wealthy few is not what our public policy is supposed to be about.

So we need to set a "price" for burning carbon - a carbon tax - which makes its use reflect the cost of the damage it does and which we are all therefore paying anyway. Using a tax to add this cost to the price means that investors will find solar, wind, biofuels and other forms of energy production more attractive, and will develop these. And We, the People would get the money for use fighting the effects of burning oil and coal.

Another cost that we are paying is that this oil and coal subsidy is not in effect in the rest of the world. So in other countries investment in energy alternatives is taking off. They are becoming the leaders in the 21st century economy. When the price of oil and coal reflect their true cost the green manufacturing revolution will take off in our own country as well..

In January, Senator Lindsey Graham said,

“Every day that we delay trying to find a price for carbon is a day that China uses to dominate the green economy.”

This is the reason Jimmy Carter tried to wean the country off of oil and coal. We could have gotten started 30 years ago and by now could be well ahead of the rest of the world in green manufacturing. But the big oil and coal companies were able to stop the effort.

This is the reason that Al Gore tried to get a "BTU Tax" in 1991. We could have gotten started 20 years ago and by now could be well ahead of the rest of the world in green manufacturing. But the big oil and coal companies were able to stop the effort.

This is the reason President Obama is trying to get "cap and trade" passed today.

So we haven't gotten started yet. Senator Graham is right. We need to find a price for carbon -- instead of all of us just continuing to subsidize the oil and coal companies. They already have plenty of money.

Despite Energy Independence Efforts, U.S. Dangerously Dependent

Alexander Sewell — Fri, 26 Sep 2008 00:00:00 -0400

Fifty-eight percent of oil consumed in the U.S. is imported.

Decline and Fall of America's Energy Empire

Sara Robinson — Wed, 18 Jun 2008 19:21:49 -0400

The current debate over offshore oil leases has put America's gargantuan energy appetite back on the discussion table this week. I've tried to stay out of it so far for two reasons.

The first is that (here comes the full disclosure) I married into a family that's been making its modest fortune in the oil patches of the American West for over a century, so there's some personal interest at stake here. (The upside: I've got a box seat from which to report on at least some of the festivities.) The second is that as a futurist — trained in America's oil center, Houston, no less — I take a much longer and systemic view of the situation. And that view gives my thinking about our energy future a rather different shape and direction.

For the bigger context on what's happening, we need to think in centuries, not just decades. There's a lot to this view — this article admittedly oversimplifies a lot, and bypasses a few important issues entirely — but that just means there's plenty more to discuss in future posts. For now, some basics.

Energy and Empire

The bottom line is this: All empires are built on vast amounts of energy. And no great empire in history has ever come to power without controlling and dominating the market in whatever the current preferred energy resource was at the time.

University of Toronto futurist Thomas Homer-Dixon lays out the argument in The Upside of Down, which I recommend to anyone seeking to understand the cause-and-effect relationship between energy and economic and political power. He carefully builds the argument that Rome rose on its ability to harness vast amounts of Mediterranean sunshine, turn it into food, and then reliably move that food around the empire to feed vast numbers of soldiers, builders, and horses and thus consolidate its regime. When that system failed, the empire crumbled.

Likewise, the Dutch built their short-lived empire on the ability to supply oil for Europe's lanterns. They were supplanted by England, which was able to supply better, cheaper fuel out of its vast coal resources. British dominance lasted until a rising America turned out to have unimaginable amounts of coal, which allowed it to undercut the British pound as the world's most stable currency — and outperform the UK economically.

And then came oil, which was soon preferred to coal because it proved to be a far more efficient (hence, cleaner and cheaper) and versatile fuel. You could get far more energy output from a smaller unit (coal's comparative inefficiency made it impractical for small vehicles like cars, for example) and with far less effort; and you could turn it into far more different kinds of products -- not just fuel, but plastics, fertilizers, wonder drugs, and much more.

As the world moved toward oil at the beginning of the last century, the UK — eager not to lose out again — made an early bid for the oil fields of Arabia. But North America counted among its original blessings more oil reserves than any other continent on the planet; and that, argues Homer-Dixon, was decisive. Unable to compete, the British Empire faded, and the American Century began.

But controlling the energy taps isn't the whole equation. To build the boon into a full-fledged empire, a country needs to create and export a whole infrastructure, a new and more productive way of life, based on the energy resources they control. The English built the first coal-fired railroads, ignited the Industrial Revolution with coal furnaces and steam power, and built a fleet of great ships that ran on coal oil. These, in turn, powered their global trading network and their military. Through the 18th and 19th centuries, Great Britain developed a complex and tightly interrelated technological, political, and economic system that established the pound as the global currency standard, and the Brits as lords of everything they touched.

In the 20th century, America repeated the feat. We built oil-fueled cars, power plants, farms and factories; and then exported that technology to client states all over the world. The American dollar, backed by control of both the world's oil and most of the technology that made it useful, became the global currency standard. Powered by oil, we became the richest nation in history — so permeated with the stuff that very few of us can even see the degree to which we're soaking in it, let alone really grasp the fact that almost all of the wealth we have originally flowed out of the ground as crude.

Regime Change Begins At Home

Homer-Dixon also points out another, more sober lesson. It's never happened that an empire that built its wealth on one energy resource also succeeded in dominating the next resource that supplanted it. Human nature being what it is, societies that are deeply invested in the current energy regime tend to fall into denial when that regime comes to its natural end — either because it simply runs out, or because it's superceded by something even more efficient and versatile. People can't believe things won't go on as they always have, or imagine that life could be any different. They shut their eyes to looming trouble, ignore the signs of impending doom, and refuse to make any reasonable plans to navigate the coming changes.

In the meantime, as old system falls apart, someone hungrier and more nimble finds a way to capitalize on a new, more efficient energy resource. And so old empires die, and new ones rise to take their places.

Put it in this perspective, and it becomes obvious that when we talk about running out of oil, we're not just talking about higher prices or low-carbon lifestyles or making an easy transition to something else that America (we like to think) will also dominate. When we fully grasp the foundational role oil played in securing America's wealth and global power, it becomes obvious that when we talk about moving off oil, we're really talking about nothing less than the demise of American power throughout the world, and the end of the American Way of Life as we've known it for generations.

That's serious stuff. But it's the truth that provides the backdrop for everything else that's going on right now. Against this larger process, it's easier to see that the dollar is weakening because our control over the whole oil economy that has supported its value for the past century is in serious trouble — and that we won't be out of financial danger until we can base on the dollar's value on something other than oil. Our political stature is tanking because the world doesn't need to kiss up to us anymore to keep the cars running and the lights on — and it won't rise again until we find something else of equally high value to offer. Our standard of living is falling because it always floated on a sea of oil — and that sea is drying up. Oil prices are high not because of market manipulations and oil company profit-taking (though plenty of oil economists are sure that's part of the story, too); they're high because the whole system is destabilizing, heading for a major tipping point.

There may be brief reprieves, rallies, and respites over the next few years; but over the long haul, we shouldn't assume that "normal" as we've known it will ever be coming back.

Even before 9/11, the Bush Administration has always had a sense of panicked desperation about it — a desperation we've usually attributed to conservative revolutionary zeal, religious fanaticism, or free-market fundamentalism. But it's also plausible to interpret some of this as the desperation of people who were tasked with protecting the American empire by keeping the oil taps open and under control at any cost — and who know, deep in their guts, that time is running out.

The Project for a New American Century's stated strategy for maintaining the American superpower in the face of a rising China was to invade and dominate the Middle East, and thus control China's access to oil for the next several decades. That was the intended long-term payoff of the Iraq War: control the oil, and thus control the world. In their minds, if we have to bankrupt the country, tear up the Constitution, and piss off every other country in the world along the way, it's worth it — since they know we're not worth a damn economically or politically without the oil anyway. Sure, the means are ugly; but according to their view of the ends, there's simply no alternative — and no other possible future worth discussing. They don't care if we hate them now, because they're convinced we'll thank them in 20 years for having the statesmanlike foresight to do what had to be done.

(Blame it on too much time in the oil patch. That toxic elixer of crude and money so easily goes to one's head....)

This perspective also provides some extra context for why locally-based power generation, like on-site or community wind and solar, are political non-starters for energy execs and their government minions. It's obvious that they hate it because they can't take profit from it; but they also know that America's global hegemony depends on keeping the world dependent on energy supplies they control. Since nobody can capture a monopoly on the wind or the sun, there's no way to build the next global empire on them. And therefore, renewables simply aren't very interesting to people whose first priority is geopolitical dominance and stratospheric profit.

The Long View

From this 10,000-foot view, it's easy to interpret the political spats and economic machinations and deal-making and climate debates and regional wars — the whole parade that dominates the news now — as simply opening acts in a long transition that could end up taking most of this century. Unless a) we discover vast new reserves on a globe that's been already explored from pole to pole (unlikely) and b) we come up with dramatic new evidence proving conclusively that climate change isn't a problem after all (even less likely), then the hard fact is: We will be spending the next several decades moving off oil.

It's going to be the most important work of this century. And Americans can either get out in front of this change and come out of it at the century's end with much of their greatness intact — or continue to fight it, and end up as another of history's has-beens.

Meeting this challenge means we're going to have to get very smart, very fast, about a lot of things.

• First, we need to accept that this change is happening, and start having serious conversations about how we're going to handle it. The Bush Administration's denial has already cost us eight valuable years. It's an understatement to say that the longer we avoid the issue, the worse the transition will be.

• Second, we need to stay mindful of the horrific pitfalls. The unimaginable grimness of the worst-case scenarios alone should be enough motivation to get and keep us talking.

Even the most-likely-case scenarios are disturbingly short on sunshine and roses. Historically, energy transitions (involving, as they do, the collapse of vast economic and political systems) have never happened smoothly. Rome fell so hard that it took a thousand years for anything like it to rise again. The stable world order held together by the British coal empire shattered apart in two vast world wars and another dozen colonial revolutions (some of which still aren't resolved decades later). It's not unreasonable to expect similar disruptions as the American oil empire begins to unravel. It's not going to be pretty.

When complex economic systems fail, they almost always fail catastrophically, leaving vast numbers of displaced, disoriented and righteously angry people in their wake. Bad economic and environmental decisions get made. Critical issues are ignored, or abandoned due to lack of resources. If folks get desperate enough for security, it's entirely likely that they'll reorganize into feudal kingdoms or even warlord-run clans, as has already happened in too many Middle Eastern countries in the wake of war. Restoring these lost democracies can take generations. Much of that risk can be averted — but only if we're aware of the potential for trouble, and start figuring out how to deal with it now.

• Third, an important part of that planning will involve taking stock of the carbon-based resources remaining to us, and figure out how to best invest them to smooth the way to the next era. We can use that remaining margin of oil to rebuild walkable cities, construct next-generation energy infrastructure, and install electric transit. We can leverage it to repave the world with agrichar, restoring millions of acres of arable land, creating a vast new carbon sink, and eliminating the need for petroleum-based fertilizers in the bargain. We will still be able to afford to run oil-fueled bulldozers and trucks and ships for a while yet. Let's use them wisely while we can.

• Fourth, "globalization" may take on a whole new meaning, one that's more about global governance than global trade. Executing transition plans necessarily means empowering planet-wide organizations that have the ability to make and enforce the rules. We've already done this on a limited scale in the CFC treaties, international non-proliferation efforts, and so on. But navigating a transition of this magnitude is going to force us to take the whole idea of global government to the next level. (Can't you hear the far right howling about this already?)

Creating these new powers will raise all kinds of hard questions about national sovereignty and the rights of the global collective. In the end, we may revisit the meaning and purpose of government, and perhaps create entirely new forms of government that better balance local needs against global goals.

What's Next?

Over the next decade, some of the most heated political battles of all will be pitched over questions like: Who wins the next round? What new energy regime will rise in place of oil? What countries will take the lead? What price will they exact? What corporations will profit? How do we make sure that the new energy order is more sustainable, just, and humane than the one that's soon to be past?

We can discuss possible answers to those questions in other posts. (This one's already long enough.) In general, I'm keeping an open mind. James Kunstler says that we're looking at the inevitable End Of The World As We Know it — but I see that as an absolute worst-case scenario, and far from the most likely one. The people who say we'll invent our way out of it have a somewhat better claim. We're well aware by now that all technologies come with a cost; but there are also a great many promising ideas already floating around out there, and we've barely started looking. Who knows what we'll find when we get serious about the search?

But the evidence is now overwhelmingly supporting the idea that the Age of Oil — and an American empire built on oil — is coming to an end, and there is no turning back. The small debates we're having today are the opening strains of a change process that most of us probably won't live to see the end of; but the choices we make now will have long-term reverberations down the century as that process unfolds.

And the conservatives who continue to distract us from that reality and commit atrocities in the name of maintaining an unsustainable status quo and "securing our future" are, in fact, setting us up for a decline of historic proportions. The future they want for us is no longer possible — or even desirable. When the century is over, we may not be an empire anymore -- but do have the choice to become a different kind of force for good in the world. The sooner we recognize that the 20th Century is over and that the 21st Century will demand different things of us, the sooner we can get on with remaking ourselves to fit the new era ahead.