The green energy movement in America is dead. May it rest in peace. No, a majority of American energy over the next 20 years is not going to come from windmills and solar panels. One important lesson to be learned from the green energy fad’s rapid and expensive demise is that central planning doesn’t work.
A new International Energy Agency report concedes that green energy is in fast retreat and is getting crushed by “the recent drop in fossil fuel prices.” It finds that the huge price advantage for oil and natural gas means “fossil plants still dominate recent (electric power) capacity additions.”
This wasn’t supposed to happen.
Most of the government experts—and many private investors too—bought into the “peak oil” nonsense and the forecasts of fuel prices continuing to rise as we depleted the oil from the Earth’s crust. Oil was expected to stay way over $100 a barrel and potentially soon hit $200 a barrel. National Geographic infamously advertised on its cover in 2004 “The End of Cheap Oil.”
Barack Obama told voters that green energy was necessary because oil is a “finite resource” and we would eventually run out. Apparently, Obama never read “The Ultimate Resource” by Julian Simon which teaches us that human ingenuity in finding new resources outpaces resource depletion.
When fracking and horizontal drilling technologies burst onto the scene, U.S. oil and gas reserves nearly doubled almost overnight. Oil production from 2007-2014 grew by more than 70 percent and natural gas production by nearly 30 percent.
The shale revolution is a classic disruptive technology advance that has priced the green movement out of the competitive market. Natural gas isn’t $13, but is now close to $3, an 80 percent decline. Oil prices have fallen by nearly half.
Green energy can’t possibly compete with that. Marketing windpower in an environment of $3 natural gas is like trying to sell sand in the Sahara. Instead of letting the green energy fad die a merciful death, the Obama administration only lavished more subsidies on the Solyndras of the world.
Washington suffered from what F.A. Hayek called the “fatal conceit.” Like the 1950s central planners in the Politburo, Congress and the White House thought they knew where the future was headed. According to a 2015 report by the Taxpayers Protection Alliance, over the past 5 years, the U.S. government spent $150 billion on “solar power and other renewable energy projects.” Even with fracking changing the energy world, these blindfolded sages stuck with their wild green-eyed fantasy that wind turbines were the future.
Meanwhile, the return of $2.50 a gallon gasoline at the pump is flattening the battery car market. A recent report from the trade publication Fusion notes: “electric vehicle purchases in the U.S. have stagnated.” According to auto analysts at Edmunds.com, “only 45 percent of this year’s hybrid and EV trade-ins have gone toward the purchase of another alternative fuel vehicle. That’s down from just over 60 percent in 2012.”
Oil production from 2007-2014 grew by more than 70 percent and natural gas production by nearly 30 percent.
Edmunds.com says that “never before have loyalty rates for alt-fuel vehicles fallen below 50 percent” and it speculated that “many hybrid and EV owners are driven more by financial motives rather than a responsibility to the environment.” That’s what happens when the world is awash in cheap fossil fuels.
This isn’t the first time American taxpayers have been fleeced by false green energy dreams. In the late 1970s the Carter administration spent billions of dollars on the Synthetic Fuels Corporation which was going to produce fuel economically and competitively. Solar and wind power were also brief flashes in the pan. It all crash landed by 1983 when oil prices crashed to as low as $20 a barrel after Reagan deregulated energy. The Synthetic Fuels Corporation was one of the great corporate welfare boondoggles in American history.
A lesson should have been learned there—but Washington went all in again under Presidents Bush and Obama.
At least private sector investors have lost their own money in these foolish bets on bringing back energy sources from the Middle Ages—like wind turbines. The tragedy of government as venture capitalist is that the politicians lose our money. These government-backed technologies divert private capital away from potentially more promising innovations.
Harold Hamm, president of Continental Resources, and one of the discoverers of the Bakken Shale in North Dakota tells the story of meeting with Barack Obama at the White House in 2010 to tell him of the fracking revolution. Obama arrogantly responded that electric cars would soon replace fossil fuels. Was he ever wrong.
We don’t know if renewables will ever play a significant role in America’s energy mix. But if it does ever happen, it will be a result of market forces, not central planning.
read more at DailySignal.com
3 comments:
Rest In peace my A. Burn in H for all eternity. On fossil fuels no less. Nothing but rent seeking suckers. Other than that I have no strong opinions.
The Green Energy Movement was raped and gutted by Democrat corruption and cronyism.
Same with every Democrat program, city or state.
We need watchdogs, strong laws and adequate deterrents against corruption in DC, the District of Corruption, Collusion and Crime against the Constitution and Citizens of the USA.
It is past time to clean out the sewer in DC.
Your assessment of federal incentives and grants may be accurate, but the rest is mainly bunkum. This article plain wrong in so many ways: I'll pick just a few. Forget the irrelevant term 'green energy', alternative energy growth in the guise of rooftop solar is the fastest growing energy production method in the U.S. admittedly from a very low level. It gets support from liberals and Tea Party activists alike and is great for freedom of choice and jobs. But when oil state Texas has the largest wind generation capacity by a long ways (14GW, next is CA <6GW), someone should sit up and take notice. The missing factor in your story is battery storage. Millions of dollars are still being spent by private companies on battery research and we should see some impact from these efforts in a year or so. But, even without this, it has been estimated that battery costs are falling by 8% a year due to production efficiency and small chemical formula adjustments. Once cost improvements are manifest at a reasonable level (around $100 / Kwh) you can start saying goodbye to fossil fuels. Julian Simon is correct human ingenuity can find new resources: wind and solar for example; and these are also low cost and don't rely on buying the oil of unstable and politically unattractive regimes, which is propping them up. The shale revolution has been great for the economy, but as the price of oil drops a lot of potential sources become unattractive to companies and investors; then we're back to importing oil big-time. The comparison of high-tech wind turbines with wooden windmills in the middle ages is risible. In any case, the reference to the middle ages is quite tame compared with one I could make about using the stone age method of setting fire to something in order to make it move down the street! In the process, combustion engines waste around 70% of dollars spent on gas, going up in smoke, heat and noise. The survey by Edmunds.com fails to differentiate between pure electric vehicles and plug in hybrids, the latter of which ARE decreasing in popularity. Some potential buyers are putting off buying an electric car based on perceived range issues; they are waiting for new models and cars from companies e.g. Chevrolet Bolt, with huge range advances. Apart from range issues, satisfaction with electric cars is high and the reasons for (re)-buying one include the fact that they are just nicer to drive: quieter, quicker and owners just love one foot driving and being able to sail past gas stations, plugging in at night instead. The cost argument against electric cars as a result of gas price drops doesn't stack up either: you can get fuel for a few cents a gallon equivalent and you don't have the same level of service cost; forget mufflers, oil changes, filters and enjoy greatly reduced brake-part replacements by using mainly regenerative braking.
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