A buyers’ market is hardly exceptional in the history of U.S. oil and gas markets. Remember the ‘gas bubble’ of the 1990s when there was more natural gas than pipelines could contractually market, creating a take-or-pay problem? Or remember when domestic oil production brought prices to less than one dollar per barrel, resulting in government proration where supply was reduced to ‘market demand” from the 1920s until the early 1970s? Import tariffs and quotas were also necessary from the U.S.-side to prop up oil prices in this half-century.

An exception to the rule occurred during the 1970s when, not coincidentally, our federal government had price controls on oil and natural gas. The gasoline shortages of 1974 and 1979, and natural gas shortages in the winters of 1971/72 and 1976/77, came from the same cause: federal price and allocation controls that did not let supply and demand naturally mesh. Price controls also caused energy shortages during World War I and World War II.

Price ceilings and inadequate supply go together. “As an economist, whenever I hear the word ‘shortage’ I wait for the other shoe to drop,” stated Thomas Sowell. “That other shoe is usually ‘price control’.”

Oil today at north of $100 per barrel is hardly a buyers’ market, and price controls do not exist to explain it. But political factors around the world add a premium to what otherwise could be considered a free-market price. And the Obama administration’s anti-production policy on oil-bearing public lands, onshore and offshore, creates a ‘what-if’ scenario of more supply/lower price.

The general point is that energy minerals, as other so-called depletable resources, are not unusually scarce compared to the general basket of goods and services. Julian Simon popularized this profound and admittedly counter-intuitive idea by his standing bet that future mineral prices would be less than the present, adjusted for inflation. And he won what was the most famous bet in the history of economics against Paul Ehrlich, John Holdren, et al. with five such minerals over a ten-year horizon.

No doubt that some gas producers will look to government to (artificially) increase demand through special favor. The T. Boone Pickens-led New Alternative Transportation to Give Americans Solutions Act (Nat Gas Act), an opening scheme to convert the motor vehicle fleet from petroleum products to natural gas, is a taxpayer drain in the guise of national energy policy.

But instead of government market-rigging, natural gas producers should practice free-market self-help to reduce supply and increase demand in the face of gas gluts. To this end, domestic producers should:

1. Further penetrate the Northeast home heating oil market, continuing the trend of natural gas-for-oil of the last several decades.

2. Build/rejigger existing import LNG infrastructure to export U.S. gas to high-price markets.

3. Construct gas-to-liquids plants to turn natural gas into gasoline and other liquid products, a global opportunity (and increase exports of the same).

4. Offer long-term pricing deals to lock-in niche transportation markets (fleet vehicles).

Some of the above (#1, #4) are incremental, and some (#2, #3) require lots of capital and lead time. All require dedicated effort in a market where the energy competition is keen. But who said the free market was easy, especially for an industry that is breaking its own records for new production?

Just as the oil industry had to become efficient and sustainable amid the price collapse in 1986 without special government failure (Congress rejected an oil tariff plea), natural gas producers today need to become efficient at $3/MMBtu wellhead prices. This is certainly a challenge, but it is the way forward for the gas industry to win the future.

WASHINGTON D.C. — The interior department announced Tuesday that oil and gas lease sales on public lands increased 20 percent in 2011, generating more than $250 million in profits for taxpayers.  The fact, however, is that oil production on federal lands, lease sales, and revenue have drastically declined during the Obama administration.

“The American people need only to check their electric bills or the price they are paying at the pump to see just how well the Obama administration’s energy policies are working. Today’s announcement by the interior department that lease sales are increasing is misleading and disingenuous. The president promised to make energy prices “skyrocket,” and so he has. The American people deserve the facts about this administration’s anti-energy agenda, not more propaganda from Ken Salazar,” said IER Senior Vice President Dan Kish.

The Institute for Energy Research released the following facts to set the record straight:

Obama Claim:  The administration is increasing lease sales on public lands. Total leases issued on public lands were up 20 percent in 2011.

FACT:  Lease sales on public lands have steadily decreased over the last 25 years.

Obama Claim:  The administration raised more than $250 million in lease sale revenues in 2011, up 20 percent over 2010.

FACT:  Oil production on federal lands is down 13 percent in 2011: 97,721,813 barrels in 2011 versus 112,124,812 barrels in 2010.

FACT:  Offshore lease sales have plummeted more than $9.4 billion since the Obama administration took over. This means that Americans collected 258 times less revenue from offshore lease sales than they did during the last year of the Bush administration.

• 2008:  $9,480,806,620
• 2009:  $1,181,075,491
• 2010:     $979,569,294
• 2011:       $36,751,111

Obama Claim:  The administration is increasing the amount of federal lands available for domestic energy production.

FACT:  The average annual leases issued during the Obama administration is down 35.5 percent from the George W. Bush administration, down 50.7 percent from the Clinton administration, down 69.5 percent from the George H.W. Bush administration, and down 78.9 percent from the Reagan administration.

Fossil fuel consumption subsidies measure what developing countries spend to provide below-cost fuel to their citizens.  That is, these countries artificially lower energy prices to their citizens, paying the difference from their government resources.[iii] Such welfare transfers are akin to the U.S.’s Low Income Home Energy Assistance Program (LIHEAP)[iv], and are differentiable from subsidies in the name of commercializing uneconomic energy sources such as on-grid wind or solar. The United States and other developed countries offer support to energy production in the form of tax credits or loan guarantees, which are not included in IEA’s fossil fuel consumption subsidy calculations since they are directed towards production rather than consumption of the fuel.

IEA’s estimate for global renewable subsidies (biofuels and renewable electricity) in 2010 was $66 billion, 10 percent higher than in 2009, with $44 billion subsidizing the cost of renewable-based electricity and $22 billion subsidizing biofuels. In contrast to fossil fuel consumption subsidies, renewable fuel subsidies often take the form of tax credits for investment or production, or premiums over market prices to cover the higher production costs compared to traditional fuels.

Fossil Fuel Consumption Subsidies by Country

Iran leads the world in fossil fuel consumption subsidies providing over $80 billion from its government resources in 2010 to lower the cost of fossil fuels to end-users in its country.[v] Of the $80.84 billion in fossil fuel consumption subsidies, over 50 percent covers oil, 32 percent funds natural gas, and the remainder (18 percent) goes towards electricity. Saudi Arabia is the second largest country subsidizing end-use fossil fuel prices, providing 70 percent of its over $43 billion in fossil fuel consumption subsidies to oil and 30 percent to electricity. Russia comes in third with over $39 billion in fossil fuel consumption subsidies, with natural gas getting 43 percent and electricity 57 percent of the total.  India and China rank fourth and fifth, respectively, both funding over $20 billion in fossil fuel consumption subsidies. Over 70 percent of India’s fossil fuel consumption subsidies of $22.29 billion in 2010 fund lower oil prices in India. China is one of the few countries that subsidize coal consumption. Of its $21.32 billion in fossil fuel consumption subsidies in 2010, electricity receives the most (54 percent), then oil (36 percent), and coal at 9 percent.

Uzbekistan leads the world in the amount of its GDP that it subsidies; its $11.9 billion in fossil fuel consumption subsidies represents almost one-third of its economy. Iran’s subsidies for natural gas, oil and electricity represent 22.6 percent of its economy while Turkmenistan’s abundant natural gas supplies are subsidized to the level of 19.3 percent of its economy. China has the largest coal subsidies among the 5 countries that subsidize coal, but China’s fossil fuel consumption subsidies represent only 0.4 percent of its GDP.

On a per-person basis, fossil fuel consumption subsidies are highest for Kuwait at $2,798.6 per person, the United Arab Emirates at $2,489.6, and Saudi Arabia at $1,586.6.[vi]

Many of the countries providing fossil fuel consumption subsidies own state energy companies, including countries that comprise the Organization of Petroleum Exporting Countries, including Iran, Saudi Arabia, and Venezuela. Net exporting countries see these subsidies as an opportunity cost. For net exporting countries of oil and gas, fossil fuel consumption subsidies totaled $331 billion in 2010, compared to $78 billion for net importing countries.  Since 2007, about 80 percent of fossil fuel consumption subsidies have been in net oil and gas exporting countries.

Fossil fuel consumption subsidies are often used to alleviate energy poverty, but are an inefficient means for doing so, creating market distortions that result in wasteful energy consumption.  In 2010, only 8 percent of the $409 billion spent was distributed to the 20 percent of the poorest population, demonstrating inefficiencies in assisting the poor.

Renewable Energy Subsidies

Renewable energy subsidies cover biofuel production and renewable electricity generation. They are production type subsidies in contrast to fossil fuel consumption subsidies and are generally tax credits, grants or premiums on the electric generation they produce to pay for their cost compared to traditional electric generating sources.[vii]

The European Union and the United States were responsible for almost 80 percent of the $66 billion in renewable energy subsidies in 2010, with the European Union spending $35 billion, almost twice the amount spent by the United States. According to the IEA, production mandates for biofuels in the United States are expected to raise those subsidies to $70 billion in 2035.

Subsidies for global electricity-based renewable energy totaled $44 billion in 2010, 12 percent higher than in 2009. Non-hydro renewable capacity increased by 22 percent, with wind and solar representing 90 percent of that increase. Wind subsidies were the highest at $18 billion, receiving on average $53 per megawatt hour of electricity generation. Solar photovoltaic technology received 28 percent of the renewable energy electricity-based subsidies, receiving $425 per megawatt hour of electricity output, accounting for only 4 percent of subsidized renewable generation.

Subsidies to biofuels totaled $22 billion in 2010, 6 percent higher than in 2009. According to the IEA, the cumulative cost of biofuels between 2011 and 2035 is expected to total $1.4 trillion to meet mandates for blending and other biofuel targets and to cover tax credits to the industry. Except in Brazil, biofuels are not cost competitive with oil-based conventional fuels and subsidies are required to meet legislative targets.

Conclusion

Many Americans are confused by the large amount of global fossil fuel consumption subsidies that the IEA calculates, not realizing that these subsidies have nothing to do with tax policy, research and development or loan guarantees, where most U.S. programs are directed. In fact, most liberalized countries do not offer fossil fuel consumption subsidies that artificially lower the end-use price of the fuel. Such subsidies are common and even pervasive, however, in the developing world, particularly in economies with state-owned energy companies.

The IEA has been advocating for years that fossil fuel consumption subsidies should be eliminated since they encourage wasteful consumption.  According to the IEA, if fossil fuel consumption subsidies were completely phased out by 2020, 4.4 million barrels of oil per day would be saved in 2035, global primary energy demand would be reduced by nearly 5 percent, and carbon dioxide emissions would be reduced by 5.8 percent.[viii]

While eliminating fossil fuel consumption subsidies would help reduce wasteful consumption of fossil fuels, it would need to be accomplished gradually so citizens of those countries that subsidize fossil fuel consumption can more easily make the necessary adjustments. Peru, for example, was able to zero out these subsidies. In 2008, Peru provided $.62 billion in fossil fuel consumption subsidies to oil, natural gas and electricity, but zeroed them out by 2009.[ix] Iran is trying to reduce fossil fuel consumption subsidies. In December 2010, the country started a 5-year program to bring fossil fuel consumption subsidies for oil, natural gas, and electricity in line with international market prices.[x]

These welfare transfers can be differentiated from subsidies in the name of commercializing or sustaining uneconomic energy sources such as on-grid wind or solar, which the United States and other industrialized countries have been heavily subsidizing. These forms of energy subsidies that help promote production of uneconomic energy sources can be abolished without detrimental affects to the U.S. economy or its citizens, and in fact would increase economic efficiency since by their very nature, they are more expensive than competing forms of energy.

President Obama disagrees.  Currently, the President admits that he is in talks “with the major oil producers like Saudi Arabia to let them know that it’s not going to be good for them if our economy is hobbled because of high oil prices.”  The President obviously believes that increasing oil output from the world’s major oil producers would decrease the price of oil.  Unfortunately, he does not consider the United States to be one of those major producers.

In response to President Obama’s statements, Dan Kish, vice president of policy at the Institute for Energy Research, issued the following statement:

“The President now says his administration is pushing major oil producers to increase oil output in an effort to lower prices.  What he really needs is to have someone tell the government of the world’s 3rd largest oil producer to boost output.  In case he is unaware, that oil producer is the United States.”

“He could do that at his next cabinet meeting by telling EPA to stop holding up Shell’s drilling in Alaska and by telling Secretary Salazar to stop closing access to our nation’s energy supplies, which the Congressional Research Service says are larger than any country on earth.”

“The President is beginning to look like the Ugly American in his attempts to point the finger of blame anywhere but his record, which includes seeking higher taxes on energy and stopping energy production wherever possible.  It requires a suspension of disbelief to accept his protests about higher energy prices when that is his policy.  His chickens are coming home to roost.”

“The President’s efforts to “make electricity prices necessarily skyrocket” failed with cap-and-trade; his decision to lock up natural resources in the Gulf Coast was met with resounding opposition; his Administration’s threats to use the EPA to target the forms of affordable, reliable energy they dislike have been met with nothing but dismay; the ever-increasing subsidies for unproven, unreliable, expensive wind and solar are widely decried as examples abound of similar policies’ failure in Europe.  But, instead of changing direction on his failed energy approach, the President has changed nothing.

“The President continues to talk about how America needs to become more competitive.  But his Administration’s plans do nothing but hurt our ability to compete.  We don’t have a competitiveness problem, an innovation problem, or a resource availability problem; we have a government problem.

“We have the ability to produce nuclear, but can’t get a permit to build a plant.  We have the world’s largest coal supplies, but the Administration is halting construction on even the cleanest plants.  We have vast resources offshore, but 97 percent of our ocean energy lands are not least for oil and gas production.  We have enough oil shale to free us from any imports, but his Administration stopped development.  If the President and his government will just get out of the way, our energy problems might not be solved, but it’d certainly be an improvement.”

Video: IER released a 2 minute video today that looks back at 40 years of presidents promising American energy independence in the State of the Union Address

###

With the advent of the new Congress, it seems a good time to assess the good, the bad and the ugly that occurred in the waning days of the previous Congress and to look forward, to the most pressing issue that faces the 112th Congress.

First, the energy policies that were enacted (or allowed to continue) during the lame duck and most of the session that preceded it, were worse than one might have hoped, but not nearly as bad as it could have been. On the plus side, the lame duck was also unable to ram through either a national renewable portfolio standard or huge omnibus public lands bill – either of which would have robbed citizens of choice, and states of control and revenue.

On the minus side, the Republican’s seem to have learned little from the elections (I never had hope for the Democrats).  Rather than holding out for a clean bill continuing the Bush era tax cuts — something they would have gotten with the new Congress since the President would have signed such a bill rather than allow taxes for the “middle class” go back up (for which he and the Democrats would have taken the blame) — instead they allowed the Democrats to load the bill down with green pork.  In a time when it preaches the need for budgetary constraint and federal downsizing, Congress continued the foolish, bad for the environment, bad for the economy, subsidies and grants for ethanol and other so called “green” energy technologies.  These are technologies that the vast majority of people won’t choose unless forced or bribed, and thus can’t compete in the marketplace.  Rather than playing the role of “public servant,” and listening to the will of the people, Washington, once again, played the role of Lord and Master’s taking our money and giving it to industries that would largely cease to exist without government support.

And, despite an earlier commitment to Jay Rockefeller (D-WV), Senate Majority Leader Harry Reid, did not allow a vote on Rockefeller’s bill to delay EPA climate regulations.  Which brings us to the most pressing issue facing the newly minted 112th Congress.  Congress should, by hook or by crook, prevent these rules from actually coming into effect.  A frontal assault on the rules — for instance, a law prohibiting the EPA climate rules from coming into effect — seems likely to fail since President Obama has indicated he would veto such a bill.  And why not, he is using the threat of regulations to force Congress to enact his version of greenhouse gas legislation.  It’s extortion par excellence.

Instead, Congress should develop a bill that prohibits the EPA from expending any resources or funds, enacting or enforcing greenhouse gas regulations unless and until Congress, itself,  writes a law specifically addressing greenhouse gasses.  Then, rather than a stand-alone bill, it should attach this bill as a rider to every must pass piece of legislation it takes up.  It is doubtful, for example, that the President would veto an increase in the debt limit, or funding bills for various agencies, just because it contained language halting the EPA regulations.

That is exactly what is happening in Washington today.  Dozens of federal lawmakers, who were fired by the American people on November 2, are still hanging around town giddily negotiating a trillion dollar spending bill and stuffing a measure to extend the Bush tax cuts with all kinds of special interest goodies, most notably a multi-billion dollar boondoggle for Big Corn that the New York Times called “wasteful and unnecessary tax breaks for corn ethanol – an environmentally dubious fuel…”

It seems the ethanol producers have managed – once again – to convince farm state senators from both parties that they need one last fix of taxpayer money before those pesky tea party reformers come to town and put Washington big spenders on methadone.  And of all the people who you think would have gotten the message from the recent election results, Senator Ben Nelson (D-NE), author of the Cornhusker Kickback, says the ethanol mandate along with a batch of other goodies for wind and solar are “…deal breakers” for his vote on the Bush tax cut extension.

The U.S. ethanol industry is the embodiment of everything that is wrong with our energy policy today.  Generous federal subsidies, a guaranteed market share in the form of a federal mandate, tariff protection from lower-price imports like Brazilian sugarcane, and consequent higher costs for American consumers who in this instance are not only forced to buy something they would not otherwise purchase, but are also taxed for the privilege of doing so.  Even the Washington Post gets it, calling for lawmakers to remove the provision from the tax deal.

At some point, Washington is to going to have to deal with the ruinous effects of subsidies on the American economy.  Economists like to say that things that can’t continue, won’t continue.  We are starting to get down towards the end of that sentence.  Let’s hope that ethanol – a product that enjoys both a government mandate on consumers to purchase as well as a tax credit from those same consumers – is one of the first things to not continue.

In the meantime, we probably need to be vigilant about the upcoming tax vote.  Unfortunately, I expect most Republicans to go along with this (hopefully) last, shameful bit of robbery.

WHAT IT MEANS FOR ENERGY

• Results
• What Will the New Congress Do?
• U.S. House of Representatives Results
  
• U.S. Senate Election Results
  
• The White House
  
• Election Results in the States
  
• Conclusion
  

RESULTS

Yesterday’s election clearly demonstrates that the American people reject President Obama’s handling of the economy. Just as the 2008 elections were interpreted as a repudiation of President Bush’s agenda (particularly with respect to foreign policy), the 2010 mid-term election shows that America does not support President Obama’s domestic priorities.

Specific to energy and the environment, one clear message from the election is that cap-and-trade, top-down, command-and-control regulations are a losing argument with the voters. Candidates who voted for cap-and-trade, with few exceptions, ran away from that vote. Voters understand that cap-and-trade is a national energy tax.

With respect to energy policy, the election results will likely yield a modest and marginal improvement. While it will certainly not be the “environmental doomsday” that the national environmental lobby claims, unless the Republicans have truly changed their stripes, it will also not be the dramatic improvement that some predict or hope.

The Good
With the Republicans in charge of the House and a narrowly-controlled Democratic Senate, massive new federal programs like cap-and-trade appear to be off the table for now. The biggest improvement we can expect is that the new Republican leadership in the House will carry out the necessary job of conducting oversight hearings and trying to rein in an out-of-control Obama Administration, whose goal from day one has been to fundamentally transform America.

Hopefully, the new Republican majority in the House will provide a counterweight to the Obama administration’s goal of making coal, oil, and natural gas more expensive and more difficult to produce domestically. In the past, Republicans have not exactly been paragons of the free-market, so it is as important as ever to continue to hold Congress and the administration accountable whenever they move towards government intervention in energy markets.

The Not-So-Good
One doesn’t have to think back long to remember what previous Republican majorities have delivered—policies such as the ethanol mandate, subsidies for inefficient and unreliable energy sources, and moratoria on oil and gas exploration and development, just to name a few. In recent weeks, leading Republicans have already pushed for a federal renewable electricity mandate, a carbon tax, utility price caps, a tax on oil imports, and a newer, larger ethanol mandate. Unfortunately, many Republicans, it seems, are willing to compromise free market principles for the sake of political expediency.

WHAT WILL THE NEW CONGRESS DO?

As noted above, there are both positives and negatives to Republicans increasing their numbers in Congress.

• “All-of-the-above” energy Republicans. With this new political landscape, President Obama will try to advance his energy agenda in piecemeal fashion. Some Republicans will be tempted to go along with the President to support misguided notions of their “all-of-the-above” energy policy. While “all-of-the-above” makes for a good rhetorical device, it is deeply flawed as an actual policy since it seeks to increase federal involvement in all types of energy production.

Instead of increasing federal involvement in energy, Republicans should move away from “all-of-the-above” and instead focus on creating a level playing field for all sources of energy. Congress should focus on removing impediments to all types of energy production so that individual Americans, not politicians, can decide which types of energy work best for their individual needs. This agenda would be much more in keeping with the renewed (and welcome) emphasis on smaller government, more freedom, and less federal involvement in all aspects of our lives.

• Oversight. We expect to see hearings on EPA’s continued and unprecedented assault on affordable energy access and use—starting with the agency’s ongoing development of greenhouse gas rules, and extending to new fuel economy mandates, ozone regulations, industrial boiler regulations, dust regulations, and others. Also expect to see hearings on the Administration’s hostility to oil and gas production, the Nuclear Regulatory Commission’s agenda for the Yucca Mountain, and analyses of the renewable energy projects funded through the 2009 economic stimulus package to name a few oversight topics.

• More benefits for nukes and electric cars. In the past, some powerful Members of Congress have supported tax credits and increased government funding for nuclear power and natural gas and electric vehicles. For example, Sen. Burr, who would replace Sen. Murkowski as chairman of the Senate Energy and Natural Resource Committee, has previously supported these policies.

• Offshore oil and gas exploration and development. The Republicans in Congress will no doubt seek to pressure the Department of the Interior to accelerate the pace of permitting for offshore energy development.

• Renewable Energy Mandate. As improbable as it seems, some Republicans lead by outgoing Senator Sam Brownback (the Governor-elect of Kansas), are talking openly about imposing a federal renewable energy mandate on electricity users during the upcoming lame duck session. Such a mandate would increase energy costs and reduce electricity reliability and result in a transfer of money from ratepayers to well-connected wind and solar companies and their lobbyists.

U.S. HOUSE OF REPRESENTATIVES ELECTION RESULTS

It is no surprise that Republicans regained control of the House. As of this writing, it appears that the Republicans are poised to pick up at least 60 seats—more than enough for a comfortable majority. The only real question is, what does this mean for energy policy?

Committee Chairmanships:
• House Energy and Commerce Committee. Under current House Republican rules, Energy and Commerce Ranking Member Joe Barton (TX) may be barred from seeking the full committee gavel in the 112th Congress, owing to term-limitations. Barton, however, will request a waiver from that rule—with a final decision likely handed down in a few short weeks. If that dispensation is not secured, next in line for the top spot is Congressman Fred Upton (MI). For supporters of less government intervention, Upton has a spotty record. For example, he has consistently voted to place more federal lands off limits to domestic energy production, was an architect of the incandescent light bulb ban, has voted for ethanol mandates, and has cast votes in opposition to oil and gas production from offshore areas.

• House Natural Resources Committee. Representative Doc Hastings (WA), the current Ranking Republican on the House Natural Resources Committee, will likely serve as its chairman in the 112th Congress. This committee plays a central role in crafting policy with respect to energy production on federal lands, both onshore and offshore. Hastings has a solid pro-energy record, which should bode well for those interested in reigning in the Obama agenda of curtailing domestic energy production on federal lands.

• Select Committee on Energy Independence and Global Warming. An important first test for the Republicans in the House will be whether or not they dissolve this toothless committee. Speaker Nancy Pelosi (CA), as a payoff to her pal Congressman Ed Markey (MA), invented this committee. It has no legislative authority. It is “feathers on a fish,” according to Democratic Representative John Dingell (MI), the dean of the House. Unfortunately, Representative Jim Sensenbrenner (WI), the Ranking Republican on the committee, has argued strongly that it not be dissolved (with him serving as Chairman, naturally) so it can focus on oversight. The fact that Sensenbrenner, regardless of his rationale, is unable or unwilling to look beyond his own parochial interests and call for an end to this charade of a committee is a discouraging sign.

U.S. SENATE ELECTION RESULTS

While all of the results are not yet in, it appears the Democrats will cling to a narrow majority in the Senate.

Senator Harry Reid is expected to retain his post as Majority Leader. He is openly hostile to affordable, domestic energy production. Senator Reid has been the President’s lead advocate in the Senate in promoting an agenda to deliberately increase the price of energy, impose additional regulations, and decrease domestic energy production.

Committee Chairmanships:
• Senate Energy and Natural Resources Committee. Senator Jeff Bingaman (NM) will remain the Chairman of the Senate Energy and Natural Resources Committee. Senator Bingaman is a lead proponent of a renewable electricity mandate. He is expected to push for this policy during the lame duck session in the coming weeks. Bingaman is hostile to offshore oil and gas production, as demonstrated by his vehement opposition to state revenue sharing of royalties from offshore energy production.

Due to the time zone difference and the complexity involved in counting write-in votes, the outcome of the Alaska Senate race remains undecided. Senator Lisa Murkowski, the Republican incumbent and current ranking member of the committee, is fighting to save her seat as a write-in candidate against the Republican nominee Joe Miller. Senator Murkowski’s record has not always been seen as a good one. For example, when she fought to pass a ban on EPA moving forward on its greenhouse gas rules, she said she was doing it—above all else—to protect the Senate’s prerogative to pass the same type of regulation; regulation that would increase costs to consumers and drive jobs offshore. If she ultimately loses, Senator Richard Burr (NC) will likely replace her as ranking member.

• Senate Environment and Public Works Committee. Senator Barbara Boxer (CA) has won reelection and will remain Chairwoman of the Senate Environment and Public Works Committee. Boxer is a darling of the anti-energy environmental lobby and will continue to use her platform as Chairwoman to serve as a foot solider in Obama’s war on affordable energy.

Senator James Inhofe (OK) will likely remain the ranking member on the committee. Inhofe has been a tireless champion in the fight against new draconian greenhouse gas regulations such as cap-and-trade.

THE WHITE HOUSE

Typically there is a shakeup in White House staff after the President suffers an electoral defeat as stunning as this election. And nowhere in the Obama Administration would a staff shake up be more welcomed than in the agencies that deal with energy and environmental issues.

But even if a shakeup were to occur, there is no reason to believe the administration will back down from its regulatory assault on affordable energy. EPA is moving full speed ahead with its offensive on affordable energy, namely through the implementation of greenhouse gas regulations. EPA will also continue forward with new regulations on dust, ozone, “conductivity” of surface water in Appalachia (in an effort to stop coal mining), industrial boilers, water-cooling intakes, and more.

Yesterday’s election, among other things, is a direct referendum of the administration’s anti-energy agenda. The administration will recognize this and switch its focus to the less democratic arenas of regulation and litigation to achieve its ends—which include increasing the costs of all traditional and reliable forms of energy and transportation.

The new Republican leadership in the House has the power to prevent this from happening by defunding the White House’s ability to implement their draconian greenhouse gas rules through the budget and appropriations process. The big question is whether they will have the resolve to take on these powerful agencies.

ELECTION RESULTS IN THE STATES

If the money spent on campaigns indicates their relative importance, the three most important races last night weren’t U.S. Senate or House races, but the contests for governor in California, Florida, and Texas. While the fight to control the House and Senate dominated the news and election coverage, the races at the state levels might be even more important than control of the U.S. Congress since the states will redraw all 435 Congressional districts for the next decade. Last night, 37 governorships and 6,118 state legislative seats were up for grabs. As of this writing, eight governorships and five state legislatures have changed from Democratic to Republican hands. Among the big three prizes, Florida and Texas appear to remain in Republican control.

California Prop. 23. California Prop. 23 failed. This proposition would have suspended the implementation of California’s Global Warming Solutions Act unless unemployment in California fell below 5.5 percent for 4 consecutive quarters. California will face some severe economic challenges because of the Global Warming Solutions Act as it tries to implement policies that have failed everywhere they have been tried.

The passage of this initiative was always a long shot, but its failure has given some momentum to the proponents of substantial energy limitation and regulation. Thanks to your efforts and support, we have given environmentalists and their allies precious little to cheer about in the past two years. They will surely cheer that they have retained the Global Warming Solutions Act for the time being.

In the future, this defeat will have little practical importance outside of California. States are not following California’s lead off the economic cliff. Instead, other states such as Florida and Maryland, which have passed greenhouse gas regulations laws have taken a much more tentative approach and will likely limit their losses during these difficult economic times.

Regardless of the fact that Proposition 23 failed, the reality of the election is that states are going to take one step back from both regional greenhouse gas initiatives (both Nevada and New Mexico have new, conservative governors who will exit the Western Climate Initiative, which in turn will hasten the collapse of its counterpart in the East, the Regional Greenhouse Gas Initiative), as well as renewable mandates (there are about a half dozen governor candidates who have explicitly said they plan on either repealing or scaling back their state’s mandates).

CONCLUSION

The election may be over, but the fight has just begun. Thanks to your support, many important battles in Congress were won on the energy front. The stakes, however, are just as high in the coming two years. The White House will continue to dictate policy, but hopefully its power will be somewhat restricted by the new Republican majority in the House. Too many times in the past Republicans have compromised important principles and imposed harmful energy policies. We must work to ensure that history does not repeat itself.

The Institute for Energy Research exists to hold Congress and the President accountable on energy issues. With your support, we can move forward with better energy policies and make America stronger. Now more than ever, we need your help in four key areas:

1. Stay informed. Closely monitor Congress and the administration’s activities. Every day we update our Energy Townhall blog, and we frequently update Twitter, Facebook, and our YouTube channel.

2. Stay involved. One of the reasons environmental groups are a powerful force in Washington, D.C. is because they have a large number of vocal activists. To successfully promote free market energy policies, we need to increase our numbers and we need to be vocal. We must hold Congress accountable for bad policies and we must support good ideas as well.

3. Recruit others. We need more activists to amplify our message. Forward this email to your family and friends. Together we can achieve real progress towards a better future.

4. Support IER. IER exists because of you. Please continue to join us in the fight for a better energy future by contributing $3, $5, $10, $20 or whatever you can afford. We must hold our elected leaders accountable for their actions.

Thanks again for your tireless commitment to liberty. We look forward to continuing the fight for freedom and prosperity for our great country.

Rolling Stone magazine just pulled off another coup with the Obama Administration by landing an interview with President Barack Obama which included his insights on energy.  Unfortunately, his insights as disclosed in the lengthy piece are neither insightful nor inspiring, but simply more of the sky-is-falling, government-needs-to-do-more, we-need-to-make-energy-more-expensive nonsense that has characterized Washington’s approach to energy for the last several decades.  It seems the president’s outlook on our future is more informed by the lyrics of the magazine’s namesake song than the powerful message of American exceptionalism that was demonstrated in both word and deed in Reagan’s vision of the “Shining City on the Hill.”  In fact, his policies are seeking to turn off the lights in the Shining City on the Hill.

For example, he insists on making energy more expensive for consumers and businesses, when he says “One of my top priorities next year is to have an energy policy that begins to address all facets of our overreliance on fossil fuels. We may end up having to do it in chunks, as opposed to some sort of comprehensive omnibus legislation. But we’re going to stay on this because it is good for our economy, it’s good for our national security, and, ultimately, it’s good for our environment.” This is reminiscent of his famous description of his energy plan as making “electricity prices necessarily skyrocket.”

The president and his advisors “get” the importance of energy and its importance to economic growth.  In fact, his Energy Czar Carol Browner understands energy and technology quite well. But it is only now becoming clear that their vision of an America with less energy, more expensive energy and resulting “smart growth” is part of “spreading the wealth around.”  And while Americans can differ on whether that’s good economic policy at home, we had no idea he was talking about spreading the wealth around to other countries.  Because that is what’s happening on his watch. (note, you’ll have to scroll down to 157^th on the list to see the US ranking)

Given the approach of the Administration to energy, maybe it’s appropriate at this time in history for a nation whose president once spoke of the Shining City on the Hill to now choose Rolling Stone to deliver the current occupant’s vision of our energy future.  After all, Dylan pretty much summed it up 45 years ago:

Once upon a time you dressed so fine
You threw the bums a dime in your prime, didn’t you ?
People’d call, say, “Beware doll, you’re bound to fall”
You thought they were all kiddin’ you
You used to laugh about
Everybody that was hangin’ out
Now you don’t talk so loud
Now you don’t seem so proud
About having to be scrounging for your next meal.

Like a Rolling Stone, Bob Dylan, 1965

“This moratorium is nothing but a kick in the face to the hardworking men and women who have lost—and will continue to lose—their jobs as a result of this Administration’s politically motivated actions. A federal court and an appeals court ruled the first moratorium was illegal, in large part because the Administration overrode the advice of engineers and experts with a political decision. In addition to politicizing science, the Obama Administration is putting the wishes of anti-energy special interest groups ahead of the American people. Americans will now undoubtedly face higher prices at the pump, more job losses and even more uncertainty each day energy exploration is banned in the Gulf of Mexico.

“In addition, this new moratorium will force Americans to purchase more oil from unfriendly nations—compounding an economic disaster with potential national security concerns—despite the fact that America has a plentiful supply of job-creating, energy stimulating energy resources right here at home. Unfortunately, these resources are now off limits as a result of this politically driven ban on domestic energy exploration. ”

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FOR IMMEDIATE RELEASE:
July 12, 2010
CONTACT:
Laura Henderson, 202.621.2951