Thursday, August 7, 2008

Offshore drilling and its conceits

We here at DBMIVFK grow tired with the mainstream media's unwillingness to call unsound policy unsound. As much as GWS is an arugula-nomming, Facebook-Twittering, namby-pamby Web 2.0 moral relativist, he finds it irksome when a new source simply passes on a candidate's political posturing without doing any public service by fact-checking. This, of course, is where blogs tend to come in...hooray intertubez!

It's time for GWS's Not the Brightest Bulb, the first in a series (?) of posts on our presidential candidates' energy plans. First up, John McCain's "Lexington Project."

The Lexington Project

A couple snarky marketing pot-shots before we get to dat good shit, dat raaaaawwww policy sheeeit:

1. The Lexington Project sounds like a sinister shadow group in a Robert Ludlum or Dan Brown book. If GWS isn't mistaken, The Lexington Project is staffed by exiled KGB officers who didn't think the Illuminati's booze cruises were up to snuff. In a June 25th speech, McCain went to beat-people-over-the-head levels as he spelled out why his plan is called The Lexington Project:
"...named for the town where Americans asserted their independence once before...this nation will acheive strategic independence by 2025." Ohhhhhhh, thaaaaaaat Lexington. I get it, I get jokes... So to the residents of Concord, MA and Philly, the message is loud and clear: you didn't have shit to do with the Declaration of Independence, and John McCain would know because he was there.

2. John McCain really cares a lot about this issue. It's the first issue listed on the dropdown menu for "Issues" on his campaign site. See? Told you he cared a lot about it.

3. "An all of the above energy solution"? Who's the genius who selected this slogan? All GWS can think of when he reads this is that The Lexington Project is to energy policy as Potpourri is to "Jeopardy!" categories.

With his snark gland fully engorged, GWS now gets down to details.

If we can trust the graphical layout of priorities on McCain's website, a clear hierarchy emerges. McCain's energy policy will focus on the following, in the following order: expanded domestic production, better fleet-wide fuel economy, "clean, alternative sources of energy," carbon cap-and-trade, improved energy efficiency, and finally, not to be outdone by the Obama campaign, cracking down on those dastardly oil speculators. One at a time, please, no need to push...

Expanded Domestic Production: Fuck Flipper, fuck him right in his blowhole! The Outer Continental Shelf has tons of oil and "77 trillion cubic feet of recoverable natural gas." Hot damn! And this shit's already here? Well what are we waiting for!?

In a word, common sense. Right-wing blogs like CNS News and the Conservative Beacon try to pull off some rhetorical sleight of hand, but it's clumsy. Why would McCain be so specific about how much gas is in American territorial waters but never offer similar figures about oil? The Department of Interior's Mineral Management Service estimates there's between 66 and 115 billion barrels of oil, mostly located in the Gulf of Mexico's OCS. These numbers, the MMS stresses, are representative of "Undiscovered technically recoverable resources," which, in layman's terms, means "back of napkin." The Department of Energy's Energy Information Administration isn't quite so optimistic: they predict around 60 billion barrels of oil from the lower 48's OCS (GWS was unable to find EIA numbers that included Alaska).

Total U.S. oil consumption is about 21 million barrels/day
, a figure which is sure to grow in at least the short-to-medium term. The EIA predicts that if we go balls-to-the-wall with OCS drilling, we can improve domestic production to 5.6 million barrels/day by 2030. So, in the next 22 years, John McCain's plan---at best---will fail to expand domestic production by 10%. Compared to the "reference case" the EIA uses to test its hypotheses, drilling the OCS will add only 200,000 barrels/day to American production. To be glib, that's not even a drop in the bucket. Yet this is what McCain leads with.

Expanded domestic oil production---FAIL!!!

Improving American fuel economy standards: GWS is unclear on how doctrinaire McCain's economic views are. Here, he's certainly hewing to accepted conservative dogma about the market delivering results. Basically, McCain would encourage greater fuel economy not by mandating higher mileage standards (like every other developed country) but by offering a $5,000 tax credit for any consumer who buys a "zero-carbon emission car." This, McCain says, will spur private industry to re-tool and somehow come up with a carbon neutral car. Along with this, McCain's willing to offer a $300m prize to people who find a way to increase battery life, and then he pays lip-service to flex fuel, lowering tariffs (finally some good policy! GWS would love to see Brazillian sugarcane ethanol on our shores), and stricter CAFE standards.

Unfortunately, McCain's market-based scheme doesn't hold water. First of all, what the hell is a zero-carbon emission car? Considering the amount of steel and plastic in a car, GWS finds it difficult to believe that any car could ever be truly carbon neutral. Secondly, McCain's plan is dependent on the existence of a latent market for said zero-emissions cars; without massive consumer appetite for these cars, the plan doesn't work because Detroit won't have incentive to change its fleet. And a $5,000 tax credit, while lovely, doesn't seem likely to spur consumers to buy buy buy. Without this massive consumer demand, McCain's reasoning breaks down. Interestingly, he never feels the need to trot out any statistics about this link in his value chain.

Bringing American fuel economy standards up to par---FAIL!!!

Clean, Alternative Sources of Energy: Thomas Friedman should be upset, because the first paragraph in this section is clearly cobbled together from his last 1,000 op-eds: green technology + green industry = green economy! But oh, oh goodness...McCain stumbles right out of the gate on this one. He advances the cause of clean coal, but deftly stays away from the question of carbon sequestration, thus obviating his contention: we've known how to get multiple forms of fuel from coal since the first quarter of the 20th century, but it's among the dirtiest processes (in terms of carbon released) we've got. Moreover, McCain's later cap-and-trade system would seem to make the business case for coal liquefication unfeasible...and once again, he feels no need to address this seeming contradiction.

McCain also wants to build 45 nuclear power plants between now and 2030. GWS is undecided on the nuclear option and welcomes readers' comments. Where McCain plans to put these plants is, of course, not mentioned. Last and certainly least, McCain throws in a passing mention of wind, solar, hydro, and other tree-hugging forms of power.

New energy---FAIL!!!

Cap-and-trade: Cap-and-trade schemes are the darling of most economists who see a market-based way to regulate negative externalities. In truth, it may be the most politically palatable option, but GWS is brought back to his intro to econ course in college and once again finds himself wondering "But...who gets to decide what's an acceptable level of pollution?" McCain seems to think that getting back to 2005 carbon emission levels by the end of his first term is a good first step, and wants to get back to 1990's levels by 2020. GWS feels it's necessary to point out that McCain does not mention a steadily shrinking pool of total carbon credits or a steadily increasing system of penalties for non-compliance, which would seem to be necessary if the goal truly is reduction in overall carbon emissions.

Understanding how to structure incentives---FAIL!!!

Improved Energy Efficiency: GWS will spend as much time on this section as McCain appears to have done. His argument here boils down to two points:

1. Hectoring government employees to turn off the lights when they leave a room
2. Deregulate deregulate deregulate.

Also, SmartMeters. Is Matlock on yet?

Do you kids think electricity grows on trees?---FAIL!!!

Oil Speculators: Seeking to prevent a flanking maneuver from Obama, McCain promises that if oil speculators are indeed distorting American gas prices, he'll bring down the swift hammer of justice and righteousness on their Brooks Brothers-wearing asses. He then also pledges (wink) not to support a windfall profits tax on oil companies (wink wink) just in case any prospective Republican donors (wink wink, nudge nudge) might happen to work in either high finance or at an oil company (nudge nudge, eyebrow raise, elbow to the ribs, say no more) .

Speaking in code---ur doin it rong!

All in all, McCain's energy plan doesn't seem like much of a plan at all. If George Bush's diagnosis of America as an addict is true, McCain's plan seems to be just finding more, cheaper drugs. GWS knows very few alcoholics who quit drinking because they found a store just out to sea with slightly cheaper Jim Beam than they were used to.


Anonymous said...

Funny (and I don't mean "ha ha")that your subsequent blog posts don't spit snark at Obama's plan. I'll sum up for you since you obviously are time-starved:

"We can't drill our way out of this! It'll take YEARS! So instead we'll pump billions into windmills and subsidizing ethanol and in just a few short YEARS we may have something that can power a hampster wheel. Until then we will all follow Jimmy Carter's advice when he faced this issue. 'No drilling, that'll take YEARS! Put on a sweater.' "

If McCain is Bush III, then Obama is Carter II. At least we were smart enough to recognize one Nut in the Oval Office for just 4 years was quite enough for a few decades, thank you very much.

Great White Snark said...

First of all, I don't think McCain is Bush III any more than I think W. was Bush II---his dad ran a decent government, did a great job with foreign policy, and reversed some of Reagan's tax cuts which helped us dig out of a massive deficit, and I don't see any parallels in the son's administration beyond the last names of some of the principles. I think it stands to reason that I don't think Obama's Carter II, either, if for no other reason than that the two men have wildly divergent policies regarding Israel.

I'm not pleased about Obama saying that he would include some offshore drilling in his energy plan because I'm convinced that offshore drilling is bad policy. Opening up the entire outer continental shelf to drilling isn't going to affect price in any meaningful way and by the time those platforms and pipelines come online, demand will have increased and any advantage we might have gained in energy security will be negated. Obama's inclusion of some offshore driling is a craven political move, and one that I don't like.

Obama took flak for telling people to pump up their tires in an episode reminiscent of Jimmy Carter's Mr. Rogers Sweater speech, but that just reeked of anti-intellectualism. What's wrong with telling people to pump up their tires? It makes good sense, both for the individual and the nation as a whole. For a guy who the McCain campaign tries to portray as an out-of-touch celebrity, that seemed like a pretty down-to-earth suggestion (pun intended, if not acheived). It certainly doesn't change the fact that we need a new energy infrastructure, but it also reduces waste within the current system. And since I'm not convinced that Obama's in the pocket of Big Tire Gauge, I'm willing to take his energy plans seriously.