US Energy Policy: follow the money

If greed is good, our elected officials in Washington are great. Jim Jubak at MSN Money looks at the political contributions and pending energy legislation. Excerpts below.

Link: Congress follows the money on energy – MSN Money.

The names may change in Congress. Democrats may replace Republicans in the majority. But when it comes to energy legislation, the same rule always applies: Money talks.

So is it any surprise that agribusiness, a sector that gave $44.6 million to Democratic and Republican candidates in the last election cycle, according to the Center for Responsive Politics, came out the big winner in the energy bill passed by the Senate on June 21? The oil-and-gas industry, which gave $19.1 million as part of a natural-resources sector that gave $46.4 million, didn’t do too badly, either.

Automakers, who gave $14.2 million of the $39.9 million contributed by the transportation sector, wound up with the short end of the stick in the Senate bill but look poised to recover in the legislation now moving through committee in the House. The auto industry is likely to benefit from the second rule of political giving: It’s not how many politicians you buy but which ones. The first rule, by the way, is give early and often.

  • Ethanol: huge winner
  • Oil and natural gas: big winner
  • Coal-to-liquid fuels: big loser
  • Alternative and renewable energy: big loser
  • Energy-efficient technologies: a reasonable victory

Energy: Paying Now or Paying Later

Sara Robinson at Orcinus on There Ain’t No Such Thing As A Free Lunch (TANSTAAFL):

Years ago, bars used to offer a "free lunch" as a way to draw customers. Of course, the drinks in those bars cost twice as much, so the lunches weren’t really "free" at all. Similarly, in complex systems, what looks like the cheapest solution to a problem often turns out to be the most expensive one in the long run. TANSTAAFL is a way of saying, "Don’t expect something for nothing — there’s always a hidden cost somewhere."

Fossil fuels have been a big free lunch, until we found out that there was no "away" with those, either. And now we’re going to get to spend the next 50 years trying to pay for that long lunch. There are a couple lunches that look considerably cheaper right now — biofuels and nukes among them — but anybody who thinks those are going to be free is kidding themselves, too.

Jim Jubak at MSN Money (U.S. economy’s fate in Saudi hands – MSN Money) describes the Saudi stranglehold on the U.S.:

I have bad news for anybody who thinks that this Saudi control over the U.S. and global economies is a brief phase that will end by itself. The decision among oil producers such as Saudi Arabia to shift away from being a mere producer of crude oil to becoming a producer of value-added products made from oil — such as gasoline, fertilizer and plastics — will prolong the economic clout of these countries. Saudi Arabia will go from being the low-cost swing producer of crude oil to being the low-cost dominant producer in gasoline, fertilizer and plastics.

The only thing that changes this game — that redresses the balance between supplier economies and consumer economies — is a change in the price signals that consumer economies send in response to price increases. As long as the response to an increase in the price of oil is an increase in consumption, then oil prices will drift higher at a pace set by the self-interest of oil producers. Those of us who live in the consuming economies will just have to hope that the Saudis and other oil producers efficiently milk consuming countries’ cash-cow economies.

On the other hand, if higher prices lead to less consumption because consumers become permanently more efficient in the ways they use energy, and because consuming economies adopt lasting sources of alternative supply (and don’t abandon them at the next dip in oil prices), then consuming countries have a chance to take back some degree of control over their own economies.

Do we really need alternative sources of energy?

Do we really need to cut back on energy consumption?