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The Obama-Romney Energy Crisis Show

ElectionOracle / US Presidential Election 2012 Sep 26, 2012 - 10:41 AM GMT

By: Andrew_McKillop


Best Financial Markets Analysis ArticleHOW WE ASSASSINATE THE ECONOMY
What crisis? Much like any failed but sincere attempt at assassination, Romney fully intends carrying on and carrying out the Obama plan for using energy of all and any kinds - expensive or not, fossil or not - to further wreck the US economy.  Even in the Romney camp, not too far below the surface, we can find bright advocates of energy apocalypse theory that date from Clinton and Bush times. This is all-party political business as usual, preening and posturing. A typical one-liner is: "fossil fuels burned by industrialized civilization have gravely damaged the ecosystem". That is of course when insufficient fossil fuel production is not ruining the economy. Take your pick.

Whatever ecosystem or economy it is, we don't know, but it all sounds mighty fine.

To be sure Romney doesnt like the Kyoto Treaty, which anyway is dead and was not signed by the Clinton-Gore team when they were in office. But Romney, just like Obama thinks there is still trading mileage left in the train wreck of climate-energy playacting. Above all, Romney says that "the market approach" is vital. With trading, tax breaks, offsets, even carbon credits (gosh), and maybe a rejig of tariffs on imported products from China or anyplace else that cause environmental harm in their production - unlike American manufactured products - paradise now will be in reach.

He says: "The nation will....need to develop and harness alternate sources of energy such as nuclear energy, biodiesel, ethanol along with exploiting more domestic sources of oil such as Outer Continental Shelf and Arctic National Wildlife Refuge", before adding: "America must become energy independent ....We are in a very vulnerable position. Our economic and military strength require us to become energy independent". Trade deficits, which didnt matter to Obama also dont matter to Romney: depending on imported Chinese made Donald Duck rechargeable flashlights is OK, but Arab and Russian oil imports - even Canadian oil imports - is really bad.

Romney has many times said the USA must use less oil, but also produce more of it. He could likely not take a leaf out of Norway's book. Although a major oil and gas exporter also possessing massive hydropower resources, Norway plays market conscious on energy, sending "powerful signals" to consumers in the shape of fuel filling station prices at well above 2 euros per litre - around $9.25 per US gallon. It also limits the maximum speed on any road or highway to 50 miles per hour (80 km/hr), with many roads limited to 38 mph (60 km/hr). Fines for speeding are able to exceed $100 000 or 10% of the annual income of the wrongdoer.

One problem for much more than a generation of US leaderss is that anything they touch in the energy sector either started out as a clunker, or becomes one. Romney's call for developing biodiesel and ethanol fuel is a classic: producing these "vanity tech fuels" is an ongoing economic disaster, but neither Bush nor Obama dared to lay a hand on the new sacred cow, called the Renewable Fuels Scheme. Of course until it was too late: specially concerning ethanol fuel from maize or corn, the incredible amounts of the crop diverted from animal feeds and human foods, combined with reduced harvests due to drought, guarantees high food prices. Soybean biodiesel's draw on soy crops also help propel soy prices ever higher. Even if neither Obama or Romney know that rising food prices are an almost failsafe way to deepen economic recession and cause social strife, they will soon find out.

Nuclear power we dont even need to talk about. The US is in permanent deficit for uranium fuel supply for its current crop/current generation of ageing reactors, depending on decreasingly friendly Russia to "recycle" its declining stocks of leftover nuclear warheads, and other atomic wastes to keep US rectors running. The world uranium industry is one of the most opaque and organized crime-riddled that it is possible to imagine. Building more reactors sounds great on paper and on Obama's teleprompter, year after year, but the reactors never got built for one real simple reason. They cost too much to build and operate, to which we add a supposedly unexpected second reason: US electricity demand is at best stagnant, and growth of US electricity demand has been set - for years - at far below 1% per year, always declining.

According to the US EIA, new build nuclear in the US, if or when it happens, will cost around $7500 per kiloWatt installed: new build windfarms, onshore, come in at about $1400 per kiloWatt installed and do not need to be built  in 1000 MegaWatt increments. Gas-fired power plant is even cheaper, can come in small increments, and have bolt-on carbon capture for the USA's shrinking band of climate crazies. US shale gas is now so cheap that power producers are even abandoning coal - US coal consumption has declined by 25% in the year to date.

This like we said concerns "new build power", of any kind, but as we also said US power demand is either stagnant or declining, but for Romney as for Obama, this is a dangerous trend. Their classic minded expert analysts tell them this slump to zero growth for US electricity, as for oil, with coal declining fast and only gas and the renewables growing is all a symptom of economic recession and de-industrialisation. Only energy growth is healthy - who cares how we use it. Unwilling or unable to look outside the US where exactly the same trend is happening, unsurprisingly in Europe, and very surprisingly in China and India - American leaders are painfully slow in understanding that energy demand is slowing a lot faster than the economy is slowing.

This is an opportunity - not a crisis.

Candice Millard's book, "Destiny of the Republic: A Tale of Madness, Medicine and Murder" tells the story of how president Garfield was killed by the atrocious medical care he received after he was shot in an assassination attempt in July, 1881. Basically he died from infection caused by gross medical malpractice, irself due to American doctors of the time dismissing the "germ theory" pioneered by non-American scientists, like Lister and Pasteur. In a highly primitive version of homeopathy, the doctors attending Garfield used hot cow manure poultices to "heal" his wounds and fight the infection.

American refusal to abandon the belief that energy growth, and economic growth are one and the same thing - in fact that if there is growing energy output the economy "must grow" - can easily be compared with the horse (or cow) doctoring that Garfield received. Alternatively, at the other end of the spectrum, in the US and other western countries we can find Green claims that fossil fuels burned by industrial civilization are like hot cow manure poultices on an open wound, further deepening the grave damage Industrial Man has caused the ecosystems necessary for human survival.

Today and now, we can find growing energy output and declining economic output, in different world regions and economic sectors. The end result is negative for the energy sector, negative for the economy and the environment, with no need to play up the charlatanry of Apocalypse Now, which is an uninvited hanger-on to the energy debate. One clear example is the now increasingly desperate rearguard action of Climate Crazies, facing their opposite extremes of Romney team members, with a now ritual exchange of idiot talk. The Romney Boys will ask how CO2 could be a problem?  CO2 is natural. Linking it to a possibly cyclic, probably long-term climate change process, called "crisis", must be a hoax, just like fairies. The Green fairies will respond with an automatic-generated wave of hysteria.

Romney has said Kyoto Treaty business is not for the US, like Clinton, Bush and Obama said, but energy business is alive and well, like they also said. America's remaining climate crazies, point to blistering heat, devastating drought, crop losses and disappearing water sources, ignoring that the US Renewable Fuels Scheme is itself a fantastic destroyer of water resources. Curiously enough, when extreme flooding occurs, in Sahel African countries after more than 30 years of drought, this is also due to global warming, in climate crazy theory!

Much more important to Obama and to Romney, who dance an almost identical way to the tune of their not too different oil billionaire backers, the New Thing is: Drill, baby, drill. Later on, we will find a use for the stuff. Believe us and count on us to do that! Taking a closer look at what Drill baby drill does to company fortunes in the US energy sector - Chesapeake and XTO Energy, and the others - should be a wake up call, but it isn't heard.

Not at all incredibly, proving he is at least the equal of Obama, Romney has on occasions talked favourably about a carbon tax, but has as yet to take a leaf out of Norway's book and rack up gasoline prices to $9 a gallon - rationally fearing a Garfield solution for himself!

Outside the ring and far below the presidential fairy land, in the real world, the US has to face up to real world energy transition powering ahead - whether the presidential candidates want to be losers, or cannot help being losers. Taking things easier, maybe trying a hot cow manure headset and some transcendental meditation, they will come around to seeing the real world as it is. God willing.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Co-author 'The Doomsday Machine', Palgrave Macmillan USA, 2012

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2012 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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