India’s Licence Raj Refuses to Die

India’s central bank last week cut its growth forecasts for 2012 and moved to increase liquidity in an effort to contain a nearly 7.5 percent inflation rate. It specifically cited the government’s “policy and administrative uncertainty” as one of the reasons for India’s weakened economy.

The bank lamented “the absence of credible fiscal consolidation” and urged efforts to “induce investment that will help alleviate supply constraints in food and infrastructure.”

India has made it easier for foreigners to invest directly in domestic firms but structural industrial and labor market reforms, which are critical if the country of 1.2 billion is to live up to its economic potential, are unlikely to be enacted in the short term by the center-left administration in New Delhi. Read more “India’s Licence Raj Refuses to Die”

Canada Prioritizes Energy Over Climate Treaty

Canada will be the first nation to pull out of the Kyoto Protocol on climate change, the country’s environmental minister announced on Monday.

Canada’s conservative party, which took power in 2006, has hinted for years that will not meet emission standards under the Kyoto treaty which was signed in 1997.

The country’s liberal government entered Kyoto last decade and committed to cut Canada’s emissions by 6 percent compared to 1990s levels next year. It’s not going to make that without drastically reining in the nation’s energy sector. In 2009, greenhouse emissions were 17 percent higher than they were in 1990. Read more “Canada Prioritizes Energy Over Climate Treaty”

Obama Punts, Delays Pipeline Decision

So this is leadership. Reuters reports that President Barack Obama plans to announce on Thursday that his administration will explore an alternative route for a Canada-Texas oil pipeline, delaying final approval until after the 2012 presidential election.

The $7 billion Keystone XL project is designed to carry oil — the equivalent of more than a million barrels of oil per day — from tar fields in Alberta to refineries and ports along the Gulf of Mexico. Its construction will be a huge boost to American construction and industry in the state of Texas which is why unions, traditionally a Democratic voting bloc, were in favor.

Environmentalists however, another key constituency for the president’s reelection effort, opposed the pipeline because, they say, tar sands are “dirty.” No matter that their exploitation will continue in Canada whether America builds the pipeline or not.

In June, the Republican controlled House energy committee had pushed legislation that would force the administration to expedite its decision on the Keystone project.

But of course, it’s the Republicans who are “putting party before country” and are more concerned about their election prospects than creating American jobs. No, the president, he is “laser focused” on employment.

Huge Gasfield Discovered in North West England

An enormous gasfield was discovered near the city of Blackpool in North West England by the Cuadrilla energy firm recently. It could contain up to two hundred trillion cubic feet of natural gas. Recoverable reserves will probably be less but the discovery has the potential of providing Britain with affordable and abundant energy for decades to come nevertheless.

For comparison, the Groningen gasfield in the Netherlands, the largest in Europe, is estimated to contain less than a hundred trillion cubic feet of gas. The Troll field in Norwegian waters, the largest North Sea gasfield discovered to date, is approximately fifty trillion cubic feet recoverable. Both areas have supplied Northwestern Europe with cheap energy for two generations and are likely to remain productive for many more years.

The Blackpool discovery should be heralded as a blessing. It could reduce Britain’s dependence on the import of foreign hydrocarbons and keep energy affordable for Britons well in the future. The problem, as the left leaning newspaper The Guardian puts it, “is the holes.” Locals fear shale gas exploration which allegedly contaminates ground water and causes earthquakes. Read more “Huge Gasfield Discovered in North West England”

EPA Continues War on Coal in Texas

Remember when then Senator Barack Obama said in 2008 that electricity rates would “necessarily skyrocket” as a result of his cap-and-trade system? He predicted at the time that he would also bankrupt the coal industry.

So if someone wants to build a coal power plant, they can, it’s just that it will bankrupt them because they are going to be charged a huge sum for all that greenhouse gas that’s being emitted.

Since Democrats failed to enact cap-and-trade legislation before Republicans won control of the House of Representatives last autumn, the president’s Environmental Protection Agency has been working to make life harder for oil and gas producers. It is set to impose limits on carbon dioxide emissions regardless of Congress, citing authority to do so under the 1963 Clean Air Act. In April, the agency rejected Shell a permit to drill for oil in Alaska after the company had spent $4 billion in preparation and exploration already. Last year, the Obama Administration set national rules to improve auto fuel efficiency nearly 40 percent by 2016. The EPA is pushing for Renewable Fuel Standards which would prescribe that a particular measure of “renewable fuels” be blended into transportation fuel.

In Texas this summer, the EPA is placing even more stringent regulations on sulfur dioxide emissions that threaten the use of lignite coal in the state. The agency insists that its new standards shouldn’t disproportionately harm the industry but Kathleen Hartnett White, director of the Armstrong Center for Energy and Environment with the conservative Texas Public Policy Foundation, disagrees. She writes in the Dallas Morning News that retrofitting plants that use lignite would involve three to four years of engineering, fabrication and reconstruction at multibillion dollar costs.

Texas electric companies recently testified to the Texas Public Utility Commission that the rule may force closure of plants and limited operations of other plants.

More than 10 percent of Texas’ energy comes from lignite coal. 10- to 14,000 jobs in the state are supported by lignite mining. It is a $1.3 billion industry that contributes $71 million in state revenue. President Obama’s EPA is trying to destroy it with regulations because it knows that it can never win congressional approval for its irrational war on coal.

Light Bulbs and Obama’s Paternalism

The Obama Administration has voiced opposition to a House bill that would repeal a 2007 law that effectively banned incandescent light bulbs. Energy secretary Steven Chu told The Wall Street Journal that the measure is good one because, “We are taking away a choice that continues to let people waste their own money.”

Indeed. This administration believes that government knows best and that choices are best taken away from people lest they make the wrong ones.

The light bulbs legislation hardly stands on its own. Countless of laws and regulations have been enacted by federal and state governments in the last two years that deny people choice and undermine competition. Health care reform is but the most blatantly paternalistic of “reforms” introduced under President Barack Obama’s watch. Fuel effiency standards, net neutrality, new regulations for credit cards and loans and the nationalization of banks and automakers all stem from the same conviction — that people and markets cannot be trusted to do what’s good for them; that central planners know what’s best for people.

Seventy years of communism apparently haven’t laid the theory to rest. The notion that a panel of “experts” in Washington can regulate an industry the size of France’s entire economy is, of course, preposterous. But it is championed by this administration nevertheless. The notion that government can indiscriminately ban products and services which it deems undesirable is not just preposterous — it is very dangerous. Where is the end?

Electricity Costs Rising in the United Kingdom

ScottishPower, a subsidiary of the Spanish utility company Iberdrola since 2006, recently announced sharp price increases. From August, ScottishPower’s customers will pay 19 percent more for gas and 10 percent more for electricity. The other five integrated energy suppliers that operate in the United Kingdom — Électricité de France, E.ON, RWE, Scottish and Southern Energy and Centrica — are expected to announce similar price rises.

While the hike in gas prices has generated anger in the British news media, according to Nigel Hawkins of the libertarian Adam Smith Institute, they are hardly unexpected. Wholesale gas prices has been rising for months. “This trend heavily impacts electricity generation costs,” he writes: “gas fired plant is now increasingly dominant.”

Looking forward, it is difficult to see much relief. With new nuclear build a decade away at best — the Fukushima accident makes this even less likely — the United Kingdom is becoming ever more dependent on gas generation. Any new coal-fired plant is seriously compromised by environmental issues and the considerable expense of addressing them. And renewable generation is hardly cheap, especially if the cost of backup plant is included.

Germany’s utterly irrational decision to abandon nuclear energy by 2022 only pushes up the price of gas further. Europe’s largest economy will become more dependent on imported coal from Poland and gas from Russia. Meanwhile, environmental policy will prevent Europe’s largest energy suppliers from diversifying as coal and nuclear are anathema to many lawmakers. Électricité de France will dominate the nuclear energy market while the remaining companies grow fixated on natural gas.

“Driven also by rising food input prices,” writes Hawkins, “inflation remains well above target. Serious energy uncertainties and rising inflation are a potent combination for any government,” he points out. “Anybody remember the 1970s?”

Malthusianism for the Twenty-First Century

Thomas Malthus is back.

Ever since the early 1970s, particularly since the Club of Rome postulated its “limits to growth,” the notion that the world is headed for ecological disaster has firmly rooted itself in the Western mindset. The unprecedented economic expansion and population growth, which, by any measure, is only set to accelerate in the decades ahead, is of grave concern to pessimists who fear that we are pillaging our dear planet and imperiling its very survival with our reckless economic policies that are solely concern with profits and growth.

This is hardly a new phenomonon. Not only have alarmists forecast mass famines and resource conflicts as a result of overpopulation when there were still just three billion people in the world; in the early nineteenth century, the British scholar Thomas Robert Malthus (1766-1834) was the first serious thinker to postulate that population growth is unsustainable; that disease and war will wreck havoc on the peoples of the world whenever they reproduce too actively.

The specifics may have changed but the basic theory remains the same — that the Earth can only feed so many. Consider Thomas Friedman’s recent New York Times column which suggests that we are about to cross a red line of growth, climate, resources and population, “all at once,” in just a few years.

We are now using so many resources and putting out so much waste into the Earth that we have reached some kind of limit, given current technologies. The economy is going to have to get smaller in terms of physical impact.

Friedman endorses a move away from “consumer driven growth” toward a model that is “happiness driven,” based on people “working less and owning less.”

Sound familiar? It should. Ever since the Western world broke out of the Malthusian trap with the Industrial Revolution, there have been naysayers who predicted all sorts of tragedy if we continued down this selfish growth path. They have been telling the world’s billions, rich and poor alike, for generations now that they’re just going to have to make do with less.

And they claim to be “humanitarians” at the same time. Read more “Malthusianism for the Twenty-First Century”

Germany’s Irrational Nuclear Energy Policy

The German government last week announced that it will shut all of the nation’s nuclear power plants by 2022 — an utterly irrational decision that only worsens Europe’s long-term energy crisis.

Bowing to misguided political pressure from Germany’s green party — a likely coalition partner for the Christian Democrats after the next general election — Chancellor Angela Merkel infuriated energy giants E.ON and RWE. The latter previously filed suit against the government after it imposed an arbitrary moratorium on nuclear energy production in the wake of the Fukushima disaster in March. A nuclear power plant in the Japanese coastal city was severely damaged in an earthquake and tsunami. Both E.ON and RWE may now pursue the issue through the courts unless enormous financial compensation is paid.

Environmentalists who applaud the German government’s decision should consider that renewables would have to generate an incredible 42 percent of the country’s electricity by 2020 to completely displace nuclear. Since that’s unlikely to happen, Germany will buy more coal from Poland, import from gas from Russia and buy more nuclear power from nearby France.

Gas prices will rise because of increased German demand and Électricité de France will build more nuclear plants at home because Switzerland, too, is set to dismantle its atomic energy industry. E.ON and RWE are unlikely to invest in nuclear anymore so EDF will come to dominate if not monopolize the European nuclear power market. Expect antitrust investigations into them mere years from now.

EPA Ruling Forces Company to Cancel Drilling Plans

The Shell Oil Company was forced to cancel plans to drill for oil this summer off the northern coast of Alaska after the Environmental Protection Agency denied it a permit.

Shell spent five years and almost $4 billion (with $2.2 billion on leases alone) exploring the possibility of drilling in the Arctic but was denied final approval because, according to the EPA, it had not taken into consideration the effects of emissions from a single icebreaking vessel on the 245 people of a village seventy miles away from the proposed offshore drill site!

Shell’s request for a permit had been challenged by two environmental groups. The EPA’s Environmental Appeals Board decided in their favor.

The US Geological Survey estimates that the American portion of the Arctic Ocean contains some 27 billion barrels of oil but the actual reserve is likely to be higher because not all of the area has been fully explored yet. The figure already represents two and a half times more oil than has flowed down the Trans Alaska Pipeline throughout its thirty year history however. That pipeline is now dangerously low on oil. At 660,000 barrels a day, it is carrying just a third of its capacity.

Republican senator Lisa Murkowski of Alaska, who is a fierce proponent of expanding oil production in her state, blasted the EPA for its utter lack of perspective in this latest ruling. “If they’re not competent to handle it,” she said of the appeals process, “they need to get out of the way.”

Murkowski has supported legislation that would have stripped the EPA of its oversight role in Arctic offshore drilling.