Lack Of Energy

I filled up the truck today. Not especially noteworthy, except that I paid $3.00 per gallon. Outrageous!

As I've mentioned before, I live in Central Texas but work in South Texas. During my weekly commute I've noticed a lot of oil and gas activity lately in this part of the state.  Most of it is due to the Eagle Ford Shale formation, producing both oil and natural gas in higher concentrations than most shale plays.

The activity is obvious: infrastructure development (roads, utilities, and railroad upgrades); production activity (wells, pipelines, rig yards); and related business development that caters to energy industry workers (mostly landmen and roughnecks). Some anecdotal examples:

• New restaurants (primarily steakhouse-type eateries; one such is the Black Brush Grill and Saloon that recently opened in Cotulla, a small town of about 3000)
• A topless club - Barebacks - just opened in Encinal, a small town of less than 1000 permanent residents (does anyone really think a town of less than 1000 can support a topless joint?), but strategically located in the heart of Eagle Shale.
• Numerous new trailer parks and cheap extended-stay hotels around the region.

Not to mention assorted landowners suddenly facing the so-called 'Cadillac problem' of what to do with unexpected, and large, royalty checks from oil companies (think "Beverly Hillbillies, but slightly more sophisticated).

(Yes, this is stereotyping of oil field workers and small town folks, but I've spent my share of time in and around oil fields and boom towns, and I'm here to testify there's some underlying truth to it.)

All this means an economic mini-boom in South Texas. It's good for the economy, good for the people (more money being spent down here translates into more income for the people living here, which translates into more jobs and higher standards of living). It's also good for the state (more tax revenue) and the country (less dependence on foreign energy).

In contrast, the moratorium on drilling in the Gulf of Mexico has recently expired, but new permits are notoriously difficult to obtain.   

Twenty five new deepwater rigs came out of shipyards this year (2010) — and another 35 are expected in 2011. A moratorium stopped deep-water drilling in the Gulf of Mexico for five months and new drilling is still slow to get approved. But activity in other parts of the globe continues largely unabated.

Businesses dependent on energy activity in the Gulf have surprisingly managed to stay afloat, in large part due to BP's $20 billion compensation fund. However, that fund is beginning to dry up.

Many small regional businesses along the Gulf Coast have largely weathered last year's moratorium on deepwater drilling but could fail if the pace of such drilling doesn't pick up soon, according to a new economic impact study by a non-profit group that studies economic trends.

So why is this so difficult for obama and his stooges to understand? Or perhaps they do understand all too well.

President Bush was queried more than 20 times by reporters about gasoline prices. By contrast, President Obama has been asked two questions by reporters about the newest spike in fuel costs. But the President's critics suggest that White House policies may play a larger role in the price rise this time than in the previous administration. The Heritage Foundation's, Rory Cooper says, "Obviously the policies of the White House for the past two years have been designed to raise energy prices. Their desire for alternative fuels is led by the fact that they are so expensive, they need gas prices to go up, so that way they can convince consumers that dollar for dollar, to choose a different energy source."

Indeed, the President's choice for Energy Secretary, Steven Chu, told the Wall Street Journal in a 2008 interview, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe."

Today, gasoline prices in Europe range from $7.24 a gallon in France, to $7.98 a gallon in the Netherlands -- prices that some economists fear could halt the economic recovery taking hold across Europe.

Dan Leistikow of the Department of Energy says, "We are continuing in the near term to pursue responsible production of our oil and gas resources at home, while at the same time taking historic action to transition to a clean energy economy and reduce our dependence on foreign oil through...vehicle efficiency standards coupled with strategic investments in electric vehicles, bio-fuels and mass transit."

Read that last paragraph again. It pretty clearly states that the obama administration's goal of hamstringing domestic oil and gas production while 'transitioning' to alternate, and heavily subsidized, energy sources. The problem with that plan is that it isn't working. 

Solar Panel Maker Moves Work to China

Aided by at least $43 million in assistance from the government of Massachusetts and an innovative solar energy  technology, Evergreen Solar emerged in the last three years as the third-largest maker of solar panels in the United States.

But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China.

In addition to solar energy, China just passed the United States as the world’s largest builder and installer of wind turbines.

Solar company Solyndra to close factory, cut jobs

It isn’t easy being green for Solyndra Inc., the controversial Bay Area solar power system manufacturing company.

The company said Wednesday that it is shuttering one of its factories to save $60 million in capital expenditures, laying off 40 employees and letting the contracts for more than 100 temporary workers expire.

All this despite a $535-million federal loan guarantee, more than $1 billion in private equity funds and supportive visits from luminaries such as  Gov. Arnold Schwarzenegger, Energy Secretary Steven Chu and President Barack Obama.

Note that these businesses were heavily subsidized by we taxpayers, and milked for their publicity by numerous political figures. In spite of that they failed, while the oil and gas industry thrives, regardless of administration oppression. There's a lesson in there somewhere.

And I haven't even touched on the negative impact of rising energy prices on a still-fragile economic recovery...