Having Energy for Capitalism

Monique took the mic with Matt Allen, last night, to talk about our congressional delegation and its difficulty applying economic principles consistently when it comes to oil (segment streamable by clicking here, or download).

If Supply is not a Factor, Why Should Oil Companies "Use It or Lose It"?

Those opposed to new domestic oil drilling attempt to deflect criticism of their stance by pointing to factors other than supply which may be contributing to the high and climbing price of gas and heating oil. Count all four members of Rhode Island's Congressional delegation in these ranks. In Sunday's Providence Journal, John Mulligan describes the pro-drilling feedback they have received from constituents. [Paragraphs quoted out of order.]

Rep. Patrick J. Kennedy said energy prices were easily the top concern among voters who greeted him during the Bristol parade. “It must have been 30 times along the two-mile route” that constituents raised the topic. “They are saying the most about that over any issue in the 15 years” he has been in the House, Kennedy said.

* * *

Sen. Jack Reed heard it on the Fourth of July parade routes and other members of the local congressional delegation have detected a similar message from Rhode Island constituents worried about the soaring price of gasoline and other oil products: “Drill. Drill. Drill.”

Senators Reed and Whitehouse and Congressmen Kennedy and Langevin have so far resisted the calls, pointing instead to other factors such as oil speculation and attempting to make the case that any new drilling would not affect retail prices for a very long time. Certainly speculation in oil futures and a weak dollar have had an upward influence on the price of oil, though the extent of the former is difficult to quantify.

Contradictorally, however, our Senators and Congressmen have indicated support for the so-called "use it or lose it" bill, legislation currently pending on Capitol Hill that would compel oil companies to promptly drill on the sixty eight million acres for which they currently hold exploration leases or hand the land back to Uncle Sam.

And here we reach the crux of the matter. Let's hold off for a moment consideration of some reasonable questions of the efficacy of forcing exploration on the sixty eight million acres where the location and existence of oil is problematic (unlike in Anwr and off US shores) and remain focused on the logic and thought process of our elected officials. If drilling will not solve the problem, if supply is not the issue, why do all four gentlemen support this legislation? In a related matter, do they support the call by House Speaker Nancy Pelosi to tap US strategic oil reserves? If yes, why?

Cleaning the Attic

Time to clean out the "To do" link "attic" I keep handy. So, before they vanish into the ether, here are some that may be interesting to others.

Part I: Politics and Economy

Obama, Shaman by Michael Knox Beran:

Obama-mania is bound in the end to disappoint. Not only does it teach us to despise our political system’s wise recognition of human imperfection and the pursuit of private happiness; it encourages us to seek for perfection where we will not find it, in politics, in the hero worship of a charismatic shaman, in the speciousness of a secular millennium.

But Obama is for school choice...and for union "card-checks," as Mickey Kaus mentions in his refutation of the same:

It seems to me that a) a tight 90s-style labor market and b) direct government provision of benefits (e.g. health care, OSHA) accomplishes what we want traditional unions to accomplish, but on a broader basis and without encouraging a sclerotic, adversarial bureaucracy that gets in the way of the productive organization of work.

A Newsweek report on the economic feasibility of oil shale.

Megan McCardle on Sweden, cultural homogeneity and the welfare state.

"A behavioral economist explores the interaction of moral sentiments and self-interest." Surprise! The guy who wrote about the "Invisible Hand" and The Theory of Moral Sentiments was on to something.

Part II: History

A piece on America's "special grace" :

If America has been given a special grace, it is because its founders as well as every generation of its people have taken as the basis of America's legitimacy the Judeo-Christian belief that God loves every individual, and most of all the humblest. Rights under law, from the American vantage point, are sacred, not utilitarian, convenient or consensual. America does not of course honor the sanctity of individual rights at all times and in all circumstances, but the belief that rights are sacred rather than customary or constructed never has been abandoned.

"The Paranoid Style Is American Politics" reminds that conspiracy theories have abounded in American politics since, and including, the American Revolution. Mentions one of my favorites, Bernard Bailyn.

How "luck" is an important, if often overlooked, factor in American History (or any History, for that matter). It's not all about conspiracy or inevitability.

A long and interesting piece on Herodotus and why he wrote his history (from the New Yorker--if you're not banning it or anything...).

Book review of Sean Wilentz's Age of Reagan.

A review of a book about the "Black Death."

Part III: Culture

A "conservative" review of Iron Man (I haven't seen it):

The fantasy wish-fulfillment that makes Iron Man so winning is not being a guy who can fly around and shoot fire from his robot suit. It's being the guy with all the money in the world, the guy who can afford to make that suit.

In "Cleavers to Lohans: The Downhill Slide of the American TV Family", Katherine Berry traces the devolution of "quality family TV" to the reduced importance of parental figures. (Isn't the Lohan show reality tv?).

"Violence and the Video Game Paradox," a fairly recent ProJo op-ed by Dr. Gregory K. Fritz:

...the boom in violent video games correlates with the sharpest decline in youth violence in many decades....The answer to this apparent paradox is that correlation does not prove causation.

But, says Dr. Fritz, parents should still pay attention!

Finally, Where'd Generation X go?

In a True Free Market, Speculation Implies Investment

As evidenced by his use of the phrase "mistaken imperial war," Chris Powell and I are hardly simpatico, but he makes an important point, here:

Oil and oil products are hardly the only things whose prices have soared lately; nearly all commodities are up sharply, with the Commodity Research Bureau index reporting an increase of 37 percent in a year as the dollar's value against other currencies having fallen about 12 percent. But Congress has yet to interrogate wheat farmers, copper miners and pizza makers.

I'm neither a financial expert nor an experienced investor, but the term "speculator" evokes the impression of investment for the purpose of exploration. In other words, the speculative dollars building up in the oil industry ought to be going toward exploration and infrastructural development. The problem is that regulations and environmental zealotry are preventing what would amount to a market correction with profound geopolitical implications.

Various liberal commenters have been pointing to OPEC as a symptom of the free market and to the high price of energy as the free market's inevitable result. It seems to me that OPEC's power derives largely from other nations' deliberate restriction of the free market; to the extent that the cartel understands American political realities, it is able to hold production down and prices up.

Increasingly Shrill Anti-Drilling Rhetoric

Think on this Dave Granlund cartoon as you consider whom to throttle (or merely to vote out of office) in reaction to growing energy prices and the resulting inflation. As the costs of necessities go up, it will surely dawn on the Average American that we could drill for oil within our own borders to tide us over until such time as new "green" technologies are able to bear some of the burden of our energy needs.

As that happens, the Dave Granlunds of the country will find it necessary to up the ante from inaccurate declarations of the potential to despoil the "pristine" expanses of nature to downright paranoid warnings of oil rigs drilling holes in our very backyards.

A Little Perspective for NASA's James Hansen

Deliberately withholding aid to hundreds of thousands of cyclone victims under your direct control probably constitutes a crime against humanity. What is going on in Darfur definitely constitutes a crime against humanity. A good case could be made that a "justice system" that prescribes the death penalty for sixty eight different crimes constitutes a crime against humanity.

The sale of a perfectly legal fuel product utilized under some of the most environmentally sensitive conditions in the world to markedly improve the quality of life of 301m people is decidedly not a crime against humanity.

Now that that's cleared up, let's turn to your proposal. At the risk of asking an awkward question: how would it work, carried to its natural conclusion? Fossil fuel executives "see the light" and fall on their swords. Oil spiggots are shut off in the United States and coal goes unmined. How do we get to work; create electricity, heat, AC; put food on the table ...?

Here's the deal. When the Magic Alternate Fuel Source is invented (how about by your agency?), we will all rejoice and embrace it. Until then, the empty "Just Say No to Oil" lectures, hyperbolic pronouncements and borderline hysterical predictions are less than helpful.

Re: Ignoring a Force of Market

The subject of Justin's post is so off base, it has me speechless. (... though not altogether, it would appear.)

This legislation would introduce the seriously misguided concept of, as Rep John Loughlin (R) phrased it on the Matt Allen Show, paying National Grid a 3% commission on "clean" energy purchased, a commission that is to come, inexplicably, out of ratepayers' pockets. Savings to the consumer down the road are projected but not guaranteed.

So, “the only thing we know for sure is that it is going to mean more money on that electric bill?” Loughlin asked. “In the short-term there might be a small increase,” [House Majority Leader] Fox repeated. But, “in the long-term, cost savings are indicated as well as savings to our lives in terms of greenhouse emissions and global warming …”

So in addition, the entire premise of the bill is folly. Only one piece of information - the amount of man's contribution to greenhouse gases - is required to understand that if man is causing global warming, draconian measures would have to be implemented to reverse the effect. Such measures would require the participation of all countries, including those who have openly or effectively signalled a balk (hello, Russia and China) and would have to be on the scale of the complete sidelining of our cars and trucks PLUS one or more of the following: reduction by at least 75% of meat consumption, shut down of electricity generating plants ... and, actually, that should about do it because that last item stops a lot of other "problematic" activity.

Even if this enormous sacrifice is somehow achieved, there is no guarantee that global warming would be stopped because no one has conclusively ruled out the sun as the real cause. In short, the only effect of offering an unwarranted 3% gratuity to an energy provider out of the pocket of the hapless and unwilling public is the creation of a warm, fuzzy and completely false sense that one is accomplishing something.

Further, in the ProJo article, Majority Leader Fox refers to "direction", as though this bill were a new approach. It is actually the same ineffectual approach that Rhode Island state government has taken for decades - have everyone cough up more money. In point of fact, the number of "feasible" alternative energy sources is endless if feasibility is achieved by sticking a gun to everyone's head and making them kick in from a (non-existent) bottomless wallet.

I have the same hearty dislike of "big oil" as everyone else. If I could put them out of business by creating that magical cheap, clean alternate energy source with a snap of my fingers, I would do so, in a heartbeat. At the same time, I have developed a reluctant, resentful defensiveness of fossil fuels as an energy source, a defensiveness spurred mainly by the brainless, dreamy, unrealistic approach that some of our elected officials have taken to this serious problem. Justin's point about market forces is a good one. Well-intentioned elected and public officials who have obstinantly disregarded such forces in simultaneously refusing to tap our own resources, thereby driving up the cost of our primary energy source, while contemplating forced public funding of expensive alternative energy can only leave us impoverished and in the dark.

By all means, let us continue to search for that alternative energy source. But please look elsewhere for funding than our wallets, which are woefully inadequate to such a large project. And while we are searching, start drilling and building refineries. Rather than making us less oil or energy dependent, the only effect to date of refraining from these activities has been the bestowal of record profits on big oil.

Naval War College Policy Re Faculty Pubs

I have been so busy recently that I have not done any blogging for Anchor Rising. I thank Justin for posting something about my recent pieces on energy in the ProJo and the Wall Street Journal.

Justin's post elicited a response from "Ken" concerning the way in which I am identified and the fact that there is no disclaimer to the effect that my opinions do not necessarily represent those of the Naval War College, the Department of the Navy, or the Defense Department. I have been writing pieces for various publications since I arrived in Newport 21 years ago. Although not everyone has been thrilled by my views, the War College's policy has been that my pieces are covered by the principle of academic freedom.

The first time I wrote for the Wall Street Journal several years ago, I added a disclaimer. But the policy of the WSJ was not to publish disclaimers. When I asked why, the editor said, "well, no one is going to confuse you with the secretary of defense."

During the administration of Bush 41, some brainiac in DoD came up with the bright idea that all pubs by War College faculty should have to be scrubbed for policy. As soon as he got wind of the proposal, Adm. Joe Strasser, then the NWC president, got on a plane to DC. He made the simple point that if DoD wanted to ensure a fifth-rate War College faculty, this policy would achieve that goal. The proposal was withdrawn.

Big Oil Myths

Mac's series on domestic energy policy continues in today's Providence Journal:

The attack on Big Oil is a witches' brew of old-fashion demagoguery, economic ignorance and an apparent lack of historical perspective. To the degree that this attack is successful in punishing the oil and gas industry, it will ensure that Americans will be worse off in the future.

Mac in WSJ: "Blame Congress for High Oil Prices"

Mac Owens has a piece in today's Wall Street Journal, "Blame Congress for High Oil Prices." A sample:

To understand the depth of congressional complicity in the high price of gasoline, one must understand that crude oil prices explain 97% of the variation in the pretax price of gasoline. That price, which has risen to record levels, is set by the intersection of supply and demand. On the one hand, world-wide demand has accelerated mainly due to the rapid growth of China and India.

On the other hand, supply has been curtailed by the cartel-like behavior of foreign national oil companies, which control nearly 80% of world petroleum reserves. Faced with little competition in the production of crude oil, the members of this cartel benefit from keeping the commodity in the ground, confident that increasing demand will make it more valuable in the future. Despite its pious denunciations of the behavior of U.S. investor-owned oil companies (IOCs), Congress by its actions over the years has ensured the economic viability of the national oil company cartel.

It has done so by preventing the exploitation by IOCs of reserves available in nonpark federal lands in the West, Alaska and under the waters off our coasts. These areas hold an estimated 635 trillion cubic feet of recoverable natural gas – enough to meet the needs of the 60 million American homes fueled by natural gas for over a century. They also hold an estimated 112 billion barrels of recoverable oil – enough to produce gasoline for 60 million cars and fuel oil for 25 million homes for 60 years.

This doesn't even include substantial oil shale resources economically recoverable at oil prices substantially lower than those prevailing today. In an exchange between Sen. Orin Hatch (R., Utah) and John Hofmeister, president of Shell Oil Company during the May 21 Senate Judiciary Committee hearing, the point was made that anywhere from 800 million to two trillion barrels of oil are available from oil shale in Colorado, Utah and Wyoming.

If Congress really cared about the economic well-being of American citizens, it would stop fulminating against IOCs and reverse current policies that discourage, indeed prohibit, the production of domestic oil and natural gas. Even the announcement that Congress was opening the way for domestic production would lead to downward pressure on oil prices.

Re: A Developing Theme on the Environment

Under Justin's post, Mark Steyn observes

... if the House of Representatives has now declared it "illegal" for the government of Saudi Arabia to restrict oil production, why is it still legal for the Government of the United States to restrict oil production? In fact, the government of the United States restricts pretty much every form of energy production ...

There's a principle in psychiatry - you can't control what other people do but you can control what you do and your reaction to other people's actions. It has been the height of silliness for Senator Hillary Clinton and then other members of Congress to ineffectually hound OPEC as they themselves continue to block drilling in Alaska and the Gulf of Mexico.

Steyn refers to the rising prices of oil and its end products. Has an explanation been offered by those who oppose the building of refineries and any new drilling for oil on US soil as to the benefits/advantages of high gas prices, not to mention higher prices for just about everything that involves or requires energy? Further, under the category of Conflicting Goals, most of those who oppose new refineries and drilling and advocate for a reduction in our use of fossil fuels presumably are not supporters of "big oil", either foreign or domestic, and do not wish it to florish. Is it possible that they do not understand that their policies, in addition to making people a little poorer, are also considerably enriching the very industry that is their bane?

Instead of making empty demands of unmotivated third parties, we need to take the steps necessary to help ourselves.

Mama Don’t Allow No Petroleum Cartels Around Here II

Although the Democrats deserve some credit for taking a decidedly non-blame America first position here, I still don't get how you could realistically enforce any penalty associated with this proposed law (short of say, declaring war) passed by the U.S House of Representatives yesterday…

The House of Representatives overwhelmingly approved legislation on Tuesday allowing the Justice Department to sue OPEC members for limiting oil supplies and working together to set crude prices, but the White House threatened to veto the measure.

The bill would subject OPEC oil producers, including Saudi Arabia, Iran and Venezuela, to the same antitrust laws that U.S. companies must follow.

No Priority for Energy

Michael Zey's op-ed, yesterday, enunciates the factors indicating that the United States of America is just not that interested in developing energy independence — much less developing energy as an export industry.

As the Platts report plainly states, without a growing energy supply, countries face "declining growth rates, diminished standards of living, and growing transfer of wealth from importing to exporting countries." In other words the U.S. either enlarges its energy pool or just waits for accelerating gasoline and electricity prices to erode its global economic competitiveness over the next several decades. ...

Last year saw the first applications for new nuclear-power plant construction in the United States since the 1970s, with 31 new plant-license applications soon to come. ...

Several U.S. governors, purportedly concerned about "greenhouse-gas emissions," have vetoed construction of coal-burning power plants in their states — at least 45 coal plants were abandoned in 2007. ...

The High Arctic region's resources are also critical to U.S. energy independence. But if the government accedes to demands to classify that region's polar bear as an endangered species, we cannot tap the estimated 10 billion barrels of oil in the Arctic National Wildlife Refuge (ANWR), equal to the next 10-15 years of oil imports from Saudi Arabia. A planned privately funded natural-gas pipeline to transport to the U.S. mainland some of the 35 trillion cubic feet of natural gas from Alaska’s North Slope would also be scrapped.

The list of such wasted opportunities is painfully long.

It's a positive thing that we're circumspect about our methods of creating energy, but by thus burdening our homegrown industry, we wind up funding anti-humanitarian regimes and doing the environment no good in the process.

Re: Just Say No to Ethanol

On the blog of Set America Free(*), a coalition of individuals and non-profit organizations dedicated to promoting progress toward American energy security, Robert Zubrin, author of Energy Victory: Winning the War on Terror and Breaking Free of Foreign Oil, challenges the idea that ethanol production is to blame for any recent increases in food prices (h/t Instapundit)…

The ethanol program has actually stimulated corn production so much that, after the part used for ethanol is taken away, the net US corn harvest available for food and feed is up 34% since 2002. Furthermore, contrary to claims in many articles, this has not been done at the expense of soy or wheat production. In fact, U.S. soy plantings this year are expected to be up 18% to a near record of 75 million acres, wheat plantings are up 6%, and overall, US farm exports are up 23%. Much more can be produced as demand requires, since of 800 million acres of US farmland, only 280 million are actually being farmed.

Which is not to say that Dr. Zubrin isn't an advocate for more efficient ethanol production than is available from corn. As quoted indirectly by Instapundit, he claims…

It's possible to make enough ethanol and methanol to replace OPEC's output using only agricultural waste.

(*)Check out this interesting sampling of names from the Set America free website; the organization does seem to embody a wide ideological spectrum. There aren't many Senators names on the list; those who are deserve some credit for taking the lead on this issue…

• Gary L. Bauer
• Senator Lincoln Chafee
• Frank Gaffney
• Cliff May
• Daniel Pipes
• Senator Sheldon Whitehouse
• Hon. R. James Woolsey

Just Say No to Ethanol

From a New York Times editorial almost two months ago:

The world’s food situation is bleak, and shortsighted policies in the United States and other wealthy countries — which are diverting crops to environmentally dubious biofuels — bear much of the blame.

According to the United Nations Food and Agriculture Organization, the price of wheat is more than 80 percent higher than a year ago, and corn prices are up by a quarter. Global cereal stocks have fallen to their lowest level since 1982.

* * *

Yet the most important reason for the price shock is the rich world’s subsidized appetite for biofuels. In the United States, 14 percent of the corn crop was used to produce ethanol in 2006 — a share expected to reach 30 percent by 2010. This is also cutting into production of staples like soybeans, as farmers take advantage of generous subsidies and switch crops to corn for fuel.

In addition to the impact on food supplies and prices which is contributing to riots and starvation in certain countries, ethanol has ultimately proven not to be an acceptable substitute for fossil fuels.

> Calculations of the amount of energy ultimately produced range from negative to at most 34% more energy than ethanol consumes in its own production and delivery. And all of the 64% is fossil fuel. This equation alone renders ethanol a questionable propostion.

> Compounding the energy-yield problem is the fact that a vehicle's fuel efficiency is reduced by 20% - 30% when it runs ethanol.

> In addition to energy, ethanol production consumes water. It also creates dead zones in water bodies (Gulf of Mexico, Chesapeake Bay, etc.) due to the run-off of fertilizer.

> Finally, the ultimate insult: the burning of ethanol actually poses a greater risk to public health than does the burning of petroleum products.

It was a good experiment and well-intended. But the results are in. Ethanol is a non-starter. Congress must end ethanol mandates.

Enervating Energy Production

The topic is energy production, but the implications are much broader for the cast of characters who call Rhode Island, and New England, home. Exhibit A:

The Massachusetts Department of Environmental Protection has given final state approval to a Somerset power plant to use a new technology called coal plasma gasification.

State environmental officials say the new process is a cleaner alternative than Somerset Power LLC's current emissions at its Riverside Avenue coal-burning plant. The technology uses high heat to convert coal to synthetic gas, which is then used as fuel.

The company says it will reduce some air pollutants by 95 percent.

But the state's action Thursday is being criticized by some environmentalists, who say it allows the plant to continue releasing carbon dioxide for decades to come. Opponents have 21 days to file an appeal.

The Fall River Herald News reported that community activists called the decision unacceptable and said it significantly undermined the state's policy against global warming.

To be honest, given life's twists and turns, I haven't followed this issue closely, and living right across the water, I'll be as happy as anybody to see that smoke-spewing monstrosity disappear. That said, it seems to me that every activist statement against the power plant, and every news story about it, ought to include some variation of the phrase "instead we should."

It seems almost to be a native character trait, in these parts, to indulge initial reactions. I dislike looking at those smoke stacks as I drive the local streets; the view that I'd enjoy during future dog walks would be much improved by their absence; and I hate the image of that tendril of smoke drifting toward my neighborhood.

On the other hand, if energy prices were to climb, much, based on the lower production, I might not be able to stay in the neighborhood long enough to enjoy the new scenery. In various scenarios, the economic upshot could be the loss of homes, of jobs, of health. And so, exhibit B:

The Ocean State has great potential sites for wind turbines, both offshore and on land, and it has plenty of room for wave-energy generators — less familiar but also promising given the state's coastal geography. There are several designs, but essentially a wave-energy collector is a large buoy containing some device — a piston or pendulum or air chamber — to generate electricity from the movement of water. These could be arrayed along the state's southern coast, for example, where they might have the added plus of reducing beach erosion. If we get to work, Governor Carcieri's call to generate 16 percent of energy consumed in Rhode Island from renewable sources by 2020 can be met and possibly exceeded. Indeed, the governor has expressed great enthusiasm for the idea of making the state a leader in the alternative-energy field.

But as renewable-energy companies approach the state with cutting-edge wind- and wave-energy proposals, the state Office of Energy Resources is taking its time, handing over a lot of initiative to University of Rhode Island scientists to study (and study and study and . . . ?) alternative-energy projects. It wants them to come up with a statewide alternative-energy zoning plan that would take into account impacts on wildlife, commercial fishing, navigation, coastline views and the environment.

It sounds reasonable enough until one gets to the fine print. Until this study is complete, all proposals are on hold. That gives political figures cover from incoming fire from local people wanting to make sure that the views in the pristine-wilderness area known as Rhode Island are unsullied by reminders that electricity doesn't originate in a switch in the wall.

Running the process backwards, in short, the emphasis is wholly different: study everything before agreeing to think about studying some more. Give those who oppose advances every opportunity to delay them.

When it is a matter of changing the accustomed landscape, no question must be left unanswered, even at the cost of lost opportunity. When it is a matter of improving such critical measures of life's quality as one's view from the car to the front door, the priorities seem more likely to be bulldoze first, ask questions later.

Congress's Energy Bill: Lipstick on a Pig

Not too long ago, I addressed the security aspects of the pending energy legislation in the Christian Science Monitor. Today, I examine some of the economic consequences of the legislation in the ProJo.

Despite the attempt to appeal to environmentalists and advocates of "fairy dust" energy sources, aka "renewable energy," this bill, like most energy bills, is laden with pork, albeit "sophisticated" pork. Pork comes from pigs. You can try to dress up a pig by putting lipstick on it, but in the end, it'S still a PIG.

Energy Security vs. Energy

Congress is considering energy legislation that will create some very bad outcomes. One of the worst will be to make the United States less secure when it comes to access to energy. I addressed this issue Friday in the
Christian Science Monitor. A longer and more detailed version of my argument is over on the site of the Ashbrook Institute.

Why We'll Probably Never Have High-Speed Rail in New England

Megan McArdle of the Asymmetrical Information blog identifies the major limitation of what's supposed to be Rhode Island's high-speed rail link to the rest of the Eastern seaboard…

Why is America's high-speed rail so dreadful? The Acela delivers you, at enormous added expense, to Boston one hour ahead of the regional. On the DC-to-NY run, the added benefit is 10-15 minutes. The answer is that the Acela uses existing track, which is twisty, the better to serve every congressional district between here and Boston. Real high speed rail needs to be fairly straight, for the same reason you don't take hairpin turns at 120 mph in your car.

Alas, any transportation project that would require moving train tracks is a non-starter is this part of the country, doomed by the difficulty of finding an acceptable straight-line route through the densely populated region. I like the way this commenter at Ms. McArdle's site put it…

Since the railpath must be wide and straight, the only way to build it would be a totalitarian use of eminent domain that would be tolerated only by third-world dictators and first-world liberal elites. This would involve literally steamrolling over everyone in the way for hundreds of miles, destroying families, communities, and businesses in the fashion of William T. Sherman.

And even if a reasonable straight-line path were available, the nimby obstructionism prevalent in northeastern politics would almost certainly prevent anything new from being built.

Froma Harrop's Genius Economic Cure-All

And to think — as the cost of driving my work van, carting around the tools and materials of a jobsite carpenter, resumes its upswing — Froma Harrop had the solution all along:

Take oil. It’s not Bush’s fault that fast-growing China and India have fired up the global demand for oil, thus boosting its price. But his administration spurned proposals that could have cushioned Americans against the inevitable upward march of energy prices. It fought efforts to demand greater fuel-economy standards in vehicles. And it ignored calls for higher gasoline taxes, which would have spurred consumers to buy more energy-efficient cars. ...

Europeans are less worried. After decades of paying high energy taxes, they have already adjusted their lifestyles to be more fuel-efficient.

See, if we'd been paying $3.00 to $6.00 per gallon of gas for the past couple of decades, we would have already made the adjustments that the market is now mildly encouraging. Call it preemptive corrective inflation. That millions of Americans are now in a better position to deal with increased costs than they were in the past doesn't appear to enter into Harrop's calculations (nor, by the by, do the efforts of her fellow liberals, among whom she finally admits to belonging, to ensure that oil would remain as much of an import market as it is).

But it is cause for reflection that I would have avoided the harder times ahead if only the taxes on the gas that I pour copiously into my work van, whatever the cost, had forced me to change my lifestyle previously. Forcing me out of work, perhaps, inasmuch as I'm finally seeing the light beyond the hard times of the past decade.

I wonder what other future instances of inflation could use some preadjustment. Food? Maybe we should wean ourselves into starvation now so that we won't be alive to see a $10 loaf of bread in the future.

Why can't I shake the impression that Harropian liberals' brilliant spotlight of economic and social insight ends before it reaches the working class?

Preliminary Rhode Island Wind Farm Planning

Michael Souza of the Narragansett Times has an initial report on sites being considered for a electricity-generating wind farm for Rhode Island…

Monday night’s monthly marine fisheries council meeting featured a presentation by Dan Mendelsohn of Applied Technology and Management Inc. of Newport.

The topic of discussion was the possible location of offshore windmills.

The company has been assigned the task of investigating wind power alternatives for the Rhode Island Department of Energy. The state’s goal is to produce about 15 percent of its energy utilizing power generated from windmills....

The preliminary plan depicts about 12 sites suitable for a wind farm, from as close as Point Judith to as far as Sakonnet Point, Napatree Point and Block Island....

Mendelsohn also specified the wind farm cannot be situated in water more that 70 feet deep.
The wind speed off the coast of Narragansett and South Kingstown varies from 7.5 to 8.5 mph. He also explained that the windmills will be cited about one half mile apart.

Re: A Misplaced Focus

Justin's post about the contaminated land in Tiverton provokes a comparison to the major complication of nuclear energy — the issue of long-term storage of spent nuclear materials — and the advisability of augmenting our generation of nuclear energy which would, naturally, increase the amount of highly toxic waste product to be dealt with.

After the initial cooling off period, high-level radioactive waste requires isolation of 10,000 years . It is safe to assume that geologic and volcanic activity — or the low probability thereof — were a consideration in the choosing of Yucca Mountain .

It's not that ten thousand years is a long time, which of course it is. It's that one thousand years is a long time. However stable the storage location seems now, we cannot leave signs that say, "Nuclear waste buried here. Stay away." And if, heaven forbid, the water table shifts, people's water supply, and then the people themselves, could get contaminated.

Yes, 20% of our energy presently is nuclear generated. To turn to it in earnest seems almost a guarantee that two, three, seven thousand years from now, there will be many more victims like the 250 in Tiverton, except that the price they will pay will not be economic.

Let's Hope Our Senators Didn't Sleep Through Econ 101

I've been on the road for a couple of weeks, so I'm only now catching up. This piece ran in the Newport Daily News of 30 May. Of course, the title is wishful thinking.

By the way, I believe gasoline prices will drop from their high point at the end of May. The last couple of weeks vindicate this view. But the underlying market dynamics--increased demand for petroleum and petroleum products driven by the growth of the Chinese and Indian economies and the continued growth of our own--mean that the overall trend will be toward rising prices.

Let’s Hope Our Senators Didn’t Sleep Through Econ 101

US gasoline prices have surged recently to an average of over $3.00 a gallon. Some energy analysts are predicting that the price will reach $4.00 a gallon later this summer when demand for gasoline normally peaks.

At times like this, the natural, if misguided, impulse of politicians is to “do something.” One of those “somethings” in this case is to legislate against “price gouging.” And sure enough, the House of Representatives recently passed legislation that would make gasoline “price gouging” a federal crime. The Senate is considering similar legislation: On May 8, the Senate Commerce Committee reported to the floor a “fuel economy” bill (S. 357) that includes an amendment offered by U.S. Senator Maria Cantwell (D-WA) that would do the same.

“Anti-gouging” legislation is problematic on at least three levels. First—good intentions aside—“anti-gouging” legislation is a form of government price fixing, which will interfere with the ability of the market to efficiently allocate scarce resources. As any freshman economics student can tell you, the market sets the price of a commodity by equilibrating supply and demand. If the government sets a maximum price that is lower than the one established by market forces, the result is a shortage—the quantity of the commodity demanded at the lower price exceeds the quantity supplied at this price. If passed and implemented, this legislation will ensure that less gasoline is available while simultaneously guaranteeing that consumers will demand more of it.

The fact is that a rise in the price of a commodity is the market’s way of causing consumers to ration that commodity while attracting new supplies. This was what happened in the aftermath of Hurricane Katrina. Higher gasoline prices in the South resulting from the widespread damage to refineries attracted fuel supplies from other regions, both inside the United States and from overseas, eventually driving prices back down. Had “anti-gouging” regulations been in effect at the time, it is very likely that these supplies from outside the region would not have arrived, making a bad situation much worse.

The reason for this is the consequence of the bill’s second problem: its overly subjective language. Subjectivity is hardly a rational basis for establishing criminal liability for refiners, suppliers, or independent gas station owners. “Anti-gouging” legislation increases the uncertainty of those who supply and distribute energy, serving as a disincentive to those who would otherwise redirect resources into an area affected by an event such as Katrina because of the distinct possibility, indeed likelihood, that a supplier responding to market forces could be charged with “price gouging” and subjected to legal action.

Finally, the legislation is unnecessary. As long as gas stations provide motorists with price information, which they do—to the tenth of a cent—on large signs, “price gouging” is difficult, if not impossible.

The fact is that gasoline prices differ locally for a number of valid reasons. For instance, widely varying federal, state, and local taxes and environmental regulations contribute to substantial differences in the price of a gallon of gasoline from one locale to another. A price might be higher in one place than another because of regulations that mandate the use of expensive additives, for example the federal requirement to add ethanol to gasoline in certain places. Such regulations also tend to “fragment” the gasoline market, for example mandating the use of "reformulated gasoline" (RFG) in certain areas of the country, making it difficult if not impossible for suppliers to shift gasoline stocks efficiently from one part of the country—or even one part of a state—to another. But the Stupak and Cantwell bills open the door to criminalizing normal price variations.

So what has caused the recent spike in gasoline prices? The consensus among industry analysts is that it reflects the effects of the seasonal increase in demand for gasoline on the one hand and the fact that refinery capacity lags behind demand on the other. There are currently no refineries being built in the United States.

The capacity problem has been aggravated by accidents and unplanned shutdowns at the time of the year when refineries shift production from heating oil to gasoline. One reason for the recent rash of shutdowns is that refiners deferred scheduled maintenance in the wake of Hurricane Katrina to keep operating. Now they have to deal with the resulting maintenance backlog.

As the Senate considers “anti-gouging” legislation, let’s hope our RI senators didn’t sleep through Econ 101. Let’s also hope they will examine the historical record of government interference in the market, which demonstrates that the unintended consequences of well-meaning legislation usually make the problem worse.

Let's Hope Our Senators Didn't Sleep Through Econ 101

I've been on the road for a couple of weeks, so I'm only now catching up. This piece ran in the Newport Daily News of 30 May. Of course, the title is wishful thinking.

By the way, I believe gasoline prices will drop from their high point at the end of May. The last couple of weeks vindicate this view. But the underlying market dynamics--increased demand for petroleum and petroleum products driven by the growth of the Chinese and Indian economies and the continued growth of our own--mean that the overall trend will be toward rising prices.

Let’s Hope Our Senators Didn’t Sleep Through Econ 101

US gasoline prices have surged recently to an average of over $3.00 a gallon. Some energy analysts are predicting that the price will reach $4.00 a gallon later this summer when demand for gasoline normally peaks.

At times like this, the natural, if misguided, impulse of politicians is to “do something.” One of those “somethings” in this case is to legislate against “price gouging.” And sure enough, the House of Representatives recently passed legislation that would make gasoline “price gouging” a federal crime. The Senate is considering similar legislation: On May 8, the Senate Commerce Committee reported to the floor a “fuel economy” bill (S. 357) that includes an amendment offered by U.S. Senator Maria Cantwell (D-WA) that would do the same.

“Anti-gouging” legislation is problematic on at least three levels. First—good intentions aside—“anti-gouging” legislation is a form of government price fixing, which will interfere with the ability of the market to efficiently allocate scarce resources. As any freshman economics student can tell you, the market sets the price of a commodity by equilibrating supply and demand. If the government sets a maximum price that is lower than the one established by market forces, the result is a shortage—the quantity of the commodity demanded at the lower price exceeds the quantity supplied at this price. If passed and implemented, this legislation will ensure that less gasoline is available while simultaneously guaranteeing that consumers will demand more of it.

The fact is that a rise in the price of a commodity is the market’s way of causing consumers to ration that commodity while attracting new supplies. This was what happened in the aftermath of Hurricane Katrina. Higher gasoline prices in the South resulting from the widespread damage to refineries attracted fuel supplies from other regions, both inside the United States and from overseas, eventually driving prices back down. Had “anti-gouging” regulations been in effect at the time, it is very likely that these supplies from outside the region would not have arrived, making a bad situation much worse.

The reason for this is the consequence of the bill’s second problem: its overly subjective language. Subjectivity is hardly a rational basis for establishing criminal liability for refiners, suppliers, or independent gas station owners. “Anti-gouging” legislation increases the uncertainty of those who supply and distribute energy, serving as a disincentive to those who would otherwise redirect resources into an area affected by an event such as Katrina because of the distinct possibility, indeed likelihood, that a supplier responding to market forces could be charged with “price gouging” and subjected to legal action.

Finally, the legislation is unnecessary. As long as gas stations provide motorists with price information, which they do—to the tenth of a cent—on large signs, “price gouging” is difficult, if not impossible.

The fact is that gasoline prices differ locally for a number of valid reasons. For instance, widely varying federal, state, and local taxes and environmental regulations contribute to substantial differences in the price of a gallon of gasoline from one locale to another. A price might be higher in one place than another because of regulations that mandate the use of expensive additives, for example the federal requirement to add ethanol to gasoline in certain places. Such regulations also tend to “fragment” the gasoline market, for example mandating the use of "reformulated gasoline" (RFG) in certain areas of the country, making it difficult if not impossible for suppliers to shift gasoline stocks efficiently from one part of the country—or even one part of a state—to another. But the Stupak and Cantwell bills open the door to criminalizing normal price variations.

So what has caused the recent spike in gasoline prices? The consensus among industry analysts is that it reflects the effects of the seasonal increase in demand for gasoline on the one hand and the fact that refinery capacity lags behind demand on the other. There are currently no refineries being built in the United States.

The capacity problem has been aggravated by accidents and unplanned shutdowns at the time of the year when refineries shift production from heating oil to gasoline. One reason for the recent rash of shutdowns is that refiners deferred scheduled maintenance in the wake of Hurricane Katrina to keep operating. Now they have to deal with the resulting maintenance backlog.

As the Senate considers “anti-gouging” legislation, let’s hope our RI senators didn’t sleep through Econ 101. Let’s also hope they will examine the historical record of government interference in the market, which demonstrates that the unintended consequences of well-meaning legislation usually make the problem worse.

Mama Don’t Allow No Petroleum Cartels Around Here

I’m all for hawkish actions by the United States Congress, but this one seems a tad strange. From the Associated Press…

Decrying near-record high gasoline prices, the House voted Tuesday to allow the government to sue OPEC over oil production quotas.

The White House objected, saying that might disrupt supplies and lead to even higher costs at the pump. The Organization of Petroleum Exporting Countries is the cartel that accounts for 40 percent of the world's oil production.

"We don't have to stand by and watch OPEC dictate the price of gas," Judiciary Committee Chairman John Conyers, D-Mich., the bill's chief sponsor, declared, reflecting the frustration lawmakers have felt over their inability to address people's worries about high summer fuel costs.

The measure passed 345-72. A similar bill awaits action in the Senate.

On the Judiciary Committee website, Congressman Conyers explains a few more of the details…

My bill, the No Oil Producing and Exporting Cartels Act of 2007 (“NOPEC”), enables the Department of Justice to take legal action against the OPEC nations. It does this by (1) exempting OPEC and other nations from the provisions of the Foreign Sovereign Immunities Act when acting in a commercial capacity; (2) making clear that the so-called “Act of State” doctrine does not prevent courts from ruling on antitrust charges brought against foreign governments; and (3) authorizes the Department of Justice to bring lawsuits in U.S. courts against cartel members.

Any legal experts out there want to take a stab at explaining exactly what remedies are available when you sue a foreign country in an American court for not producing enough oil?

End Ethanol Tariffs and Subsidies, Says Da Governator

Isn’t California Governor Arnold Schwarzenegger expressing the right basic idea about ethanol policy in this report from Reuters…

California Gov. Arnold Schwarzenegger said on Friday he wants markets to set policies on low carbon fuels, and called for eliminating subsidies and tariffs related to ethanol.

"We need to take down the barriers we have created," Schwarzenegger said at a symposium on low carbon fuels at the Lawrence Berkeley National Lab in Berkeley, California.

The United States, he said, subsidizes domestic corn-based ethanol and imposes a 54-cents-per-gallon tariff to limit cheap ethanol imports from Brazil.

"It makes absolutely no sense. It's crazy, and it's definitely not in the best interest of the customers," said Schwarzenegger.

However, Reuters adds this mystifying sentence into its story…

He did not offer specific alternatives to the tariffs and subsidies, but said the market should be allowed to come up with the best solutions after targets are set by governments like California's.

Um, why does there have to be an alternative to removing a tariff and/or ending a subsidy? And couldn't we remove the state-mandated “targets” too, and really let the market set the price?

(Actually, a case can be made that government subsidies which help develop the infrastructure for distributing ethanol-based fuels remove legacy barriers-to-entry into the market and thus serve a legitimate purpose. However, government need not subsidize the production of the ethanol itself ).

Rhode Island Getting Ready for Ethanol

A Worcester Business Journal story on the expansion of the Providence & Worcester Railroad (including P&W receiving new automobiles "for the first time [in] the company's history" for transport to New England dealerships via the port at Davisville) hides the news with the most potential long-range impact at the bottom of the page…

P&W is also working on an agreement with "a major fuel provider" that [company president P. Scott Conti] would not name, to bring ethanol into an underused Providence yard the company rehabilitated to bring in the corn-based fuel additive.

"We all drive our vehicles, and we pump gas into them," Conti said, and in Massachusetts, Connecticut and Rhode Island, that gas contains ethanol.

Ethanol is also thought to have potential as an alternative to fossil fuels.

"You look at ways to grow. These opportunities don't come along each and every day, but when you see one, you try to capitalize on it," Conti said.

I hope I’m not revealing anything that is supposed to be secret about the unnamed partner, but a company called Aventine Renewable Energy announced last year that it was working with the Providence & Worcester rail line to develop an improved ethanol delivery network for the Northeast…

Aventine Renewable Energy Holdings, Inc. (NYSE:AVR), a leading producer, marketer and end to end supplier of ethanol, today announced additions to its existing terminal network footprint....

Aventine has also recently contracted for significant rail and waterborne terminalling capacity in Providence, RI. The terminal facility in Providence will be provided by Motiva, a joint venture between Royal Dutch Shell and Saudi Aramco, and will be served by CSX Transportation via an interchange with the Providence and Worchester Railroad Company. This terminal will provide streamlined logistical infrastructure for ethanol supply for the emerging Rhode Island and nearby Boston area markets.

This is a story to keep an eye on, because as the price of gas climbs towards $4.00 a gallon, more and more businesses are going to decide that investing in the permanent infrastructure needed to provide ethanol as a fuel is a good risk to take. And once an ethanol distribution network is built that parallels our nation's petroleum distribution network, and bunches of flex-fuel vehicles capable of using both primarily-ethanol and parimarily-gasoline fuels come into use, foreign oil suppliers will have to compete directly with ethanol producers when setting prices.

This will be an unprecedented upheaval in the economics of transportation fuel that will change the politics of energy -- and oil in particular -- in ways that will never be reversed.

Brazilian Ethanol Backgrounder

Here’s the background on the ethanol spat between Venezuelan President Hugo Chavez and Brazilian President Lula da Silva going on at the South American energy summit being held this week.

Brazil is a major importer of Bolivian natural gas. About a year ago, Bolivian President Evo Morales, a Hugo Chavez lackey, nationalized his country’s natural gas industry. Morales demanded that all foreign natural gas companies operating in Bolivia, including Brazil's government-owned energy company, renegotiate their existing contracts with terms more favorable to Bolivia. This sudden action led Brazil to realize that an over-dependence on energy controlled by Hugo Chavez and his clients was not in the Brazilian national interest, and President da Silva's government began work on an ethanol cooperation pact with a country outside of the Chavez sphere of influence, i.e. the United States. Agreement on a pact was announced in March.

Since control of natural energy resources is the only international bargaining chip that Chavez has (without oil, his place on the international stage would be exactly that of Cuba’s), Chavez is desperately trying to stop alternatives to oil from being developed. Without high oil prices to pay for Chavez’s subsidies to Venezuela’s poor, it will become obvious to everyone but anti-American ideologues that Chavez’s “Bolivaran revolution” has been a failure.

Chavez will now try a two-pronged strategy. 1) Try to flood Brazil and other Latin American countries with cheap oil to stave off the demand for ethanol. However, Brazil won’t buy into this plan, after the experience with Morales in Bolivia. Plus Chavez can only make the price so low, before he loses the money he needs to subsidize Venezuela’s dead non-petroleum economy. 2) Try to scare people into thinking that increased ethanol production will cause food shortages and demand the governments ban the production of ethanol as a fuel. Translation: We can never have any new technological developments again, because the resources used to produce them might drive up the price of something we already have.

The United States should cement its commitment to the energy pact with Brazil by immediately dropping its 54-cent-per-gallon import tariff on Brazilian ethanol.

The Situational Pragmatism of Congressman Langevin

In addition to talking about Iraq with Dan Yorke, Congressman Langevin also talked about Speaker Pelosi's recent botched Syrian excursion and said she was following the precepts of the Iraq Study Group report (PDF). While Langevin condemned the regimes of both Iran and Syria, he also offered that--as per the Iraq Study Group--pragmatic diplomacy was the way to go. He also talked about how the U.S. should encourage democracy movements, particularly in Iran. So, while the regimes are bad and we'd really like to see them taken down, we've still got to talk to them, despite their past intransigence. It's realpolitick all over again and very pragmatic. (Don't get me wrong, we need to talk, but keep in mind who we're dealing with here.)

On the other hand, when Yorke asked him about gas prices, the Congressman lapsed into the standard alternative energy chant and explained that the U.S. needed to decrease our dependence on oil My first thought was: where's the pragmatism here, Congressman? I agree that we should develop new energy sources. But in the meantime, why don't we take steps to become energy independent by actually taking advantage of some of our own domestic oil resources or expanding our nuclear power capability? Wouldn't the pragmatic approach be to take advantage of the technology we we have now and still provide incentives for new energy sources? Why can't we do both?

Biofuel Pact = Latest Bush Conspiracy!!!!

Well, silly me, here I thought that the Biofuel Pact that will be signed by President Bush and Brazilian President Luiz Inacio Lula da Silva would be viewed as a good thing. Here's what I thought would be the main storyline:

President Bush sees the new agreement with Brazil on ethanol as a way to boost alternative fuels production in the Americas and get more cars running on something other than gasoline....

Bush says he wants to work with Brazil, a pioneer in ethanol production for decades, to push the development of alternative fuels in Central America and the Caribbean. He and Silva also want to see standards set in the growing industry to help turn ethanol into an internationally traded commodity.

The first portion of the above excerpt is the first paragraph of the AP story. The second paragraph is much farther down and leads into a discussion of tariff's. But in between, the AP devotes space to the conspiracy theory that Bush really wants to CONTROL THE FLOW OF ETHANOL IN AN OPEC-LIKE CARTEL!!!!!

UPDATE: Hit the "Continue reading" link below to view the middle--and tone setting--portion of the AP story (removed from above) in full. And it looks like many enviro's in this country were for ethanol before they were against it (via Glenn Reynolds). Why the change? C'mon, you know...if the President is for it.....

UPDATE II: More here from WaPo (via this NRO post--which offers one conservative's reason for why ethanol isn't the way to go). From the WaPo:

The environmental organization Greenpeace issued a statement complaining that whatever environmental benefits ethanol would produce in reducing greenhouse gases pale in comparison to those that would be attained by a cap on carbon emissions, which Bush opposes.

"The U.S. government must take a giant leap forward quickly in order to make the necessary steps to combat global warming," said John Coequyt, an energy specialist with the group. "An aggressive focus on ethanol, without a federally mandated cap on emissions, is simply a leap sideways."

It's that "nothing is ever fast enough...we're all gonna die!" attitude that gives me pause.

:Demonstrators upset with Bush's visit here worry that the president and his biofuels buddy, Brazilian President Luiz Inacio Lula da Silva, really have visions of an OPEC-like cartel on ethanol.

While Bush's nemesis in Latin America, Venezuelan President Hugo Chavez, is using his vast oil wealth to court allies in the region, Bush is sealing the deal Friday on an ethanol agreement with Brazil where nearly eight in 10 new cars run on fuel made from sugar cane.

Call it ethanol diplomacy.

Brazil is the first stop on Bush's eighth trip to Latin America, which also includes visits to Uruguay, Colombia, Guatemala and Mexico. On his 45-minute ride from the airport to his hotel on Thursday night, Bush's motorcade sped by a dozen or so gas stations where drivers in this traffic-clogged city can pump either gasoline or ethanol.

Bystanders gawked at Bush's limousine, but only a few people waved. Anti-American sentiment runs high in Brazil, especially over the war in
Iraq. Bush missed the demonstrations earlier in the day protesting his visit.

Riot police fired tear gas and beat some protesters with batons after more than 6,000 people held a largely peaceful march through the financial district of Sao Paulo. About 4,000 agents, including Brazilian troops and
FBI and U.S.
Secret Service officers, are working to secure Bush's stay in the city that lasts about 24 hours.

Undeterred by protests, Bush says he's on a goodwill tour to talk about making sure the benefits of democracy — in the form of better housing, health care and education — are available to all Latin Americans, not just the wealthy.

He's visiting a community center in a neighborhood where the ultra rich live in close proximity to the desperately poor. U.S. companies have donated equipment to the center where Bush plans to highlight programs to give poor and disadvantaged youth a way forward in life.

In Latin America, however, Bush's trip is widely viewed as a way for the president to counter the influence of Chavez, the populist ally of Cuba's
Fidel Castro, who has led a leftward political shift in Venezuela, Ecuador, Bolivia and Nicaragua.

To taunt Bush, the Venezuelan leader will speak at an "anti-imperialist" rally in a soccer stadium on Saturday in Buenos Aires, Argentina, about 40 miles across the Plate River from Montevideo, where Bush will meet Uruguay's president, Tabor Vazquez.

While in Sao Paulo, Bush also will visit a fuel depot, operated by a subsidiary of the state-owned Petrobras, where about 100 trucks come and go daily.

Some protesters, carrying stalks of sugar cane, protested the ethanol agreement, which is being formally signed by officials with the State Department and the Brazilian foreign ministry. The demonstrators warned that increased ethanol production could lead to social unrest because most operations are run by wealthy families or corporations that reap the profits, while the poor are left to cut the cane with machetes.

"Bush and his pals are trying to control the production of ethanol in Brazil, and that has to be stopped," said Suzanne Pereira dos Santos of Brazil's Landless Workers Movement.

The White House dismisses talk that the ethanol agreement between Bush and Silva is aimed at setting up an "OPEC of Ethanol" cartel led by Washington and Brasilia.

Yup, I guess because that "War for Oil" isn't going as planned, now President Bush is going after ethanol. It's soooooo obvious!

An Economic Development Project Acceptable to Rhode Island?

In the Providence Phoenix from two weeks ago, Ian Donnis quoted University of Rhode Island Political Science Chairwoman Maureen Moakley on Rhode Island’s tendency to reject development of all sorts…

For too long, Moakley believes, there has been a lack of vision and an excess of parochialism on economic development: “We don’t want a port, we don’t want a casino, we don’t want LNG in our backyard, or an airport runway extension,” she says, paraphrasing opponents. “If you look at Boston, and if you look at New York, how can you expect to develop sophisticated economic structures in a global environment under those kinds of restrictions? If we want to remain a pretty backwater, those are the consequences.”

How about this for an economic development project that everyone can get behind: a destination rail yard that would receive ethanol shipments from the Midwest. According to the Sioux City Journal, such a project is being considered for Rhode Island…

In eight years [Union Pacific] has seen a 515 percent growth rate in the ethanol area. The railroad's investment is an effort to make this expanding business efficient, largely through use of unit-trains of 75 or more cars of ethanol and/or distillers' dry grain from and to the same locations, with no car switching en route.

While the UP trackage is mostly west of the Mississippi River, it does serve Chicago, where many grain trains are switched to other railroads such as the CSX and Norfolk & Southern, for destinations on the East Coast. Those facilities are currently located in New York and New Jersey, with a UP yard in Dallas, Texas. New destination yards are planned for California, Maryland, Rhode Island and Florida…

The Wall Street Journal has more detail on the link between railroads and ethanol…

Unlike gasoline, natural gas and oil, ethanol attracts water and other chemicals, so it can't be sent through the long-established pipelines that move those fuels. That means the ethanol industry has been forced into a marriage with the already groaning railroads....

Railroad executives say ethanol, though still a small part of their total freight traffic, promises to be a lucrative growth opportunity. Shipments of ethanol have nearly tripled since 2001 to about 106,000 rail carloads last year and are projected to increase to at least 140,000 in 2007, according to the Association of American Railroads in Washington. Each tank car has a capacity of 30,000 gallons....

After the corn is distilled into ethanol, it's mixed with a small amount of gasoline at the production plant before being shipped by train to a petroleum terminal, where it is blended with gasoline. Large petroleum terminals are accustomed to receiving their product by pipeline and then distributing locally by truck. Most terminals haven't developed the infrastructure of tracks, storage tanks and rapid unloading to receive ethanol by unit trains, says Kevin Kaufman, group vice president of agricultural products of BNSF's rail unit. Expanding is difficult because they are sometimes hemmed in by buildings, highways and bodies of water.

As of data retrieved today from the National Ethanol Vehicle Coalition, there is presently only a single ethanol filling station in the six New England States (Burke Oil in Chelsea, Massachusetts). The lack of ethanol pumps is at least partly the result of the lack infrastructure needed to transport ethanol here. (You know that Vermont would be all over ethanol, because of its reduced greenhouse emissions, if it was easily avialable, right?). Whoe