No fairness in attack on fossil fuels
Obama’s policies hurt middle class, poor
By Mackubin Thomas Owens
Monday, October 8, 2012 - Updated 11 hours ago
President Barack Obama and his fellow Democrats have sought to make “fairness” a central theme of the 2012 election. But when it comes to energy policy, his administration has engaged in a relentless war on fossil fuels, the costs of which have fallen primarily on the poor and middle class. Meanwhile, his “green” energy crony capitalism has proved to be a boon for the president’s wealthy corporate allies.
Where’s the fairness when the doubling of gasoline prices during the last three and a half years and the rise of electricity prices due to draconian regulations on coal fall disproportionately on those in the lowest income quintile? That group pays on average 24.4 percent of its income for energy, primarily gasoline, heating oil and electricity, compared to 4.3 percent for the highest quintile. By driving coal-operated power plants out of business and curtailing domestic production of oil and gas while mandating the use of “green” energy by utilities, the administration has given the lie to its concern about the poor and middle class.
Meanwhile, the administration continues to throw taxpayer money down the green energy rat hole, to the applause of most Democrats and the benefit of Obama’s corporate cronies. In her first debate with U.S. Sen. Scott Brown, Elizabeth Warren claimed that the “playing field” was “rigged” against green energy. “Our clean-energy industry . . . has to fight uphill against the oil subsidies.”
But this is nonsense. First of all, subsidies for green energy are much higher than for fossil fuel. For instance, federal electric subsidies are $23.37 per megawatt hour for wind and $24.44 for solar, compared to 25 cents per megawatt hour for oil and gas and 44 cents for coal. Second, the former are usually straightforward subsidies, credits, loans, and grants, while the latter are almost exclusively typical business deductions and don’t “rig” the playing field in the same way that green-energy support does.
And government loan guarantees and cash grants for green energy favor big financial firms like Goldman Sachs and Morgan Stanley, conglomerates like General Electric, utilities like Exelon and NRG by largely eliminating the risk to the private investors and guaranteeing them large profits for years to come, while punishing consumers.
We can’t say we weren’t warned. During the 2008 campaign, candidate Obama promised that the cost of electricity would skyrocket. It was only fair, he suggested: “We can’t drive our SUVs and, you know, eat as much as we want and keep our homes, you know, 72 degrees at all times ... and then just expect that every other country is going to say OK ... [when we] keep using 25 percent of the world’s energy.”
In order to “wean” the United States off its fossil fuel energy consumption, the president supported cap-and-trade, stating bluntly that “if somebody wants to build a coal-fired plant, they can, but it will bankrupt them, because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted.” Cap-and-trade ultimately failed in Congress, but undaunted, the administration deployed its regulatory power against the coal industry. To this end, the Environmental Protection Agency (EPA) has imposed draconian emission standards on coal production, leading not only to the announced closures of 175 coal-fired generators over the next few years but also to the cancellation of plans to build new, cleaner plants.
Coal has not been the only target. Energy Secretary Steven Chu openly declared that “somehow we have to figure out a way to boost the price of gasoline to the levels in Europe.” While he may not have reached his goal, gasoline prices have doubled during the Obama presidency. Despite the president’s oft-made claim that higher oil prices—and therefore gasoline prices — are the result of occurrences beyond his control, he and his administration bear most of the responsibility.
One of his first acts as president was to rescind a George W. Bush executive order that permitted drilling on the continental shelf. Shortly thereafter, his Secretary of the Interior, Ken Salazar, unilaterally canceled 77 oil and gas leases in Utah. The administration followed up by increasing the size of the designated wilderness area off limits to the extraction of fossil fuels. The Deepwater disaster became the pretext for blocking or delaying the return of American oil rigs to the Gulf. Finally, the administration blocked the construction of the Keystone XL pipeline, which would have transported crude from Canadian oils sands to Oklahoma refineries.
The Obama administration’s war on fossil fuels has been a disaster for the United States as a whole. But the burden has fallen disproportionately on the poor and middle class. We should remember this the next time the president touts his commitment to “fairness.”
Dr. Mackubin Thomas Owens is a professor of National Security Affairs at the U.S. Naval War College in Newport, R.I.