While the headline-grabbing topic in the affordability debate is the cost of home ownership, the rising cost of electricity in certain markets is a close second.

However, rates aren’t exploding everywhere; they’re spiking in California and the Northeast. In California, in addition to all the normal California distortions like high taxes and regulations, the main factor is wildfire-related costs.

That leaves the Northeast, and the spike in power costs there is real and consequential. There are lessons to be learned.

In many parts of the country, rates have remained relatively stable due to the right balance of competition, regulation and the right mix of generation and transmission. In others, especially in the Pennsylvania-New Jersey-Maryland Interconnection (PJM), spiking rates serve as a price signal, alerting us that something is wrong.

The way we incentivize power generation, transmit it, and regulate it is one of the most complicated, arcane subjects in public policy, and we aren’t going there (whew). So let’s simplify.

Investor-owned utilities are the backbone of the U.S. electrical system, serving 250 million Americans. In many states, these utilities are vertically integrated, which means they own generation and transmission. They thus operate under state oversight with a simple mandate: plan for the long term, build what’s needed, recover costs from qualified investments in new infrastructure, and keep power reliable and affordable. It’s not glamorous, but it works. Vertical integration plus long-term planning smooths out volatility. That’s why most areas have seen relative price stability even as demand rises.

However, in places exposed to wholesale capacity auctions that spike when supply tightens, where utilities don’t own generation and must buy at market rates, those spikes flow straight through to customers.

We need market reform in places such as PJM to promote proper transparency and oversight with trusted utility partners. Investor-owned utilities have a legal obligation to serve everyone in their territory — urban, rural, wealthy, poor. These utilities have access to lower-cost capital, which reduces the financing costs that customers ultimately pay. And investor-owned utilities plan across decades, not news cycles or quarterly reports. That kind of boring competence is underrated, right up until you don’t have it.

In regions where we offloaded long-term responsibility to an opaque capacity market and hoped price signals alone would summon new power generation on command, things have not gone so well.

A terrible example occurred during the Great Texas Freeze of 2021, when wholesale electricity prices spiked to $9,000 per megawatt-hour, the maximum cap set by the Electric Reliability Council of Texas. This price surge, which was 400 times the typical rate, was intended to attract additional generation by offering extreme market rewards.

However, the spike failed to achieve its intended effect because many natural gas facilities had frozen or lost their fuel supply, rendering them unable to generate electricity regardless of price.  The result was a $52.6 billion price hit on consumers. While the price mechanism was intended to function as a market signal, it instead caused catastrophic financial harm.

Some have identified data centers as the culprit for high energy prices in the northeast, but data centers are being built everywhere. That fails to explain why the price spikes seem limited to areas where utilities can only purchase power from wholesale capacity auctions and cannot connect additional power to the grid. The problem is a poorly designed market, however well-intended.

So, what’s the solution? First, it’s a regional, not a national, problem. Second, barring utilities from owning their own generation has turned out to be a mistake. Instead, grid authorities should be encouraging investor-owned utilities to invest in new generation to ensure abundant, robust sources of power for the future. 

A February 2026 analysis by Charles River Associates modeled PJM’s 2028–2029 delivery year and found that expanding state-regulated, utility-owned generation could reduce total customer supply costs by $9.6 billion to $20 billion in that single delivery year. In Charles River Associates’ scenario, “utility-owned generation” means operating alongside merchant generation, not replacing markets, but adding planned, accountable supply.

When it comes to ensuring a reliable source of power at affordable rates, the evidence suggests that investor-owned utilities are not the problem; they’re a big part of the solution.

Every major innovation seems to inevitably generate an infrastructure fight—generating public and political opposition right up until we can’t imagine life without it. Railroads divided farms and ranches. Telegraph lines “uglified” streetscapes. Highways carved through neighborhoods. Pipelines, cell towers, wind farms, transmission lines—each sparked a familiar chorus: too big, too ugly, too loud, too much. And yet, in the end, the public benefited tremendously because economic growth requires a growing infrastructure.

Today’s favorite target for such opprobrium is the data center.

Just a couple of years ago, policymakers competed to attract data centers. They were symbols of growth, high-value investment, better tax bases, and the digital backbone of modern commerce. Now many of those same policymakers speak as if data centers are some kind of social evil—because they consume power and water, and because the AI boom is making that demand visible. You can see the shift in the sudden wave of proposed moratoriums and “pause” bills rationalized by energy, water, and ratepayer concerns.

Let’s be clear about what a data center is: critical infrastructure. It is the physical home of the digital services we rely on for banking, ecommerce, logistics, emergency communications, healthcare records, education, and—yes—national security. If policymakers are serious about economic competitiveness, they should treat data centers the way they treat ports, rail spurs, and power plants: as necessary facilities that must be sited responsibly, not demonized reflexively.

Critics raise legitimate issues—grid capacity, water use, noise, backup generators, local land-use impacts. But the policy response should be responsible and data-driven, not reactionary.

Start with electricity. Data centers don’t “steal” power; they buy it—often at industrial rates with long-term contracts—and their presence as a predictable buyer can justify new generation and transmission investments that benefit everyone. A rapidly growing load is not a moral failing; it’s a planning challenge. The right answer is to build abundant energy—more natural gas, more nuclear, more renewables where they make sense, more transmission—so that families aren’t pitted against servers in a zero-sum political drama. Lawmakers across the country are already debating how to protect ratepayers while accommodating growth, which tells you the debate is about policy design, not existential threat.

On water: in most cases, data centers use closed-loop systems for cooling, so it’s like filling a swimming pool one time. Over time, data centers consume less water than a car wash. Policymakers can require transparency, recycling, and closed-loop systems rather than discouraging new investment. Indeed, multiple states are moving toward water-use reporting requirements—exactly the kind of targeted, pro-information approach that beats panic.

The broader point is this: America’s economy won’t continue to innovate and remain prosperous by making infrastructure buildout difficult. We stay prosperous by insisting on sensible rules, clear property rights, and predictable permitting—and by letting private capital build the backbone of the next economy, instead of letting political panic veto it.

Today's TexByte was written by IPI President Tom Giovanetti

Kamala Harris seems to be channeling the old TV game show “To Tell the Truth.”

In the original version, three guests would all claim to be the same individual. As the celebrity panel asked the guests questions, the two impostors were allowed to lie to fool panel members. When the questioning ended, the show’s host would say, “Will the real (person’s name) please stand up?”

Well, that’s where we are in this election: Will the real Kamala Harris please stand up? 

As the Democratic presidential nominee, Harris has been taking policy positions that are very different from those of the pre-nomination Harris. Which Harris should voters believe on these issues?

“I’m a capitalist.” Harris recently told Pittsburgh’s Economic Club she’s a capitalist, presumably to counter Trump’s claim that she’s a communist. But what is capitalism? “Capitalism is an economic system in which profit-driven private actors, rather than the government, control economic activity,” according to the Motley Fool.  

Harris and her progressive supporters, by contrast, want the government to control much, if not most, economic activity. That includes health care, retirement, education and now housing. And she wants government to guide economic decisions by subsidizing favored industries and personal activities. Harris’s agenda is almost identical to that of the Democratic Socialists of America, who are anti-capitalists. 

“I was a prosecutor,” Harris says. To counter her soft-on-crime record — including support for decriminalizing illegal border crossings — Harris says she prosecuted people as a San Francisco district attorney and later as California’s attorney general. But we have many George Soros-funded DAs in large, blue cities who routinely refuse to prosecute or hold any offender accountable, even for some of the most heinous crimes.

In 2022, San Francisco went so far as to oust its DA, Chesa Boudin, as public anger grew over rising property crime “and the visible despair and squalor on city streets.” And Alameda County (Oakland), Calif., DA Pamela Price is facing a recall election in November for the same reason. 

The point is that Harris wasn’t the last of the tough-on-crime California DAs; she was, more accurately, the first of the new soft-on-crime DAs. Nothing in her Senate or vice presidential record indicates that she’s changed. 

“I’m a gun owner,” she told Oprah Winfrey. But the issue isn’t whether Harris owns guns, it’s whether she and her progressive allies will let you own guns. There are countless progressive elites who have guns or hire bodyguards who have guns. But that doesn’t mean they will let you have or keep your guns.  

It’s the same double standard when progressive elites fly around in private jets to scold the rest of us about the need to reduce our carbon emissions. 

“I will be pragmatic,” Harris says. Don’t you believe it! Harris is nothing if not a progressive ideologue, much like Sen. Bernie Sanders (I-Vt.). Was she pragmatic about the American Rescue Plan or the Inflation Reduction Act, for which she proudly cast the tie-breaking vote? This was the closest thing we have to a Green New Deal. The only negotiations were with two less-ideological Senate Democrats. No Republican voted for either bill. 

Consider abortion. Has Harris displayed any pragmatism on that very divisive issue? Any effort to find common ground? She now wants to end the Senate filibuster so that Democrats can pass a pro-abortion law by simple majority vote. And she supports packing the Supreme Court to uphold her actions.  

Committed ideologues don’t become pragmatists after winning an election. Rather, they double down on their progressive agenda. 

“I will not ban fracking,” the new Harris says. But she doesn’t have to. As president, she can quietly instruct federal agencies to slow-walk drilling permits or impose so many fracking restrictions and regulations that it will effectively be banned. This has been President Biden’s modus operandi.

Remember last January when President Joe Biden imposed a “temporary pause” on pending approvals of liquified natural gas exports? He didn’t ban liquified natural gas exports, he just put up roadblocks that could last months or years.

But hasn’t Harris claimed that crude oil production has increased during the Biden-Harris administration? Yes, and it has. But nearly 75 percent of that crude oil is produced on non-federal land, where the government has little control. In other words, Harris is taking credit for something she can’t stop.

In “To Tell the Truth,” two people were allowed to lie to the voters — er, to the panel. And panel members often chose one of the liars. The problem we’re now facing is that the real Harris won’t stand up and identify herself until after the election. 

The importance of natural gas to Texas is best demonstrated by the fact that if Texas were a country, we’d be the third largest producer of the fuel in the world. But while Texans understand the value of natural gas, we also appreciate that industry development must work within a framework that respects the rights of others. This is a critical principle that will allow the industry to continue to flourish.

Two energy companies, Williams and Momentum, who are seeking to build new Gulf Coast pipelines in Louisiana on the back of an existing pipeline built by Texas-based Energy Transfer, seem to be skirting traditional property rights agreements. More than ten years ago, Energy Transfer constructed a natural gas pipeline from Panola County in east Texas to eastern Louisiana. That pipeline has been operating safely ever since.

Last year, Williams and Momentum informed Energy Transfer of their plans to build new pipelines in the same area with an intent to cross Energy Transfer’s pipeline more than 140 times. This is irregular, if not unheard of, in the industry.

Before building its pipeline, Energy Transfer spent years obtaining permits, engaging with the public, and securing right-of-way permissions from landowners. Now these other companies seek to build their pipelines on top of Energy Transfer’s pipeline without federal regulatory approval or public support.

Without oversight and approvals from federal regulators like the Federal Energy Regulatory Commission (FERC), Williams and Momentum are also opening the door to legitimate safety concerns.

FERC is tasked with approving new interstate natural gas pipelines. Before reaching a decision, FERC follows an established procedure that includes applications, reviews, evaluations, and public comment. However, this process is only necessary for transmission pipelines, which are often large high-pressure lines traveling hundreds of miles. Smaller pipelines, known as gathering lines, are generally narrower and travel shorter distances and do not require FERC approval. Williams’s and Momentum’s proposed pipelines seem to fit the definition of a transmission line, yet the companies are classifying them as gathering lines, meaning no FERC oversight and no public input.

While it’s not unprecedented for pipelines to cross one another, the Williams and Momentum plans have about ten times more crossings than normal.

Pipeline crossings are kept to a minimum for good reasons. Digging and constructing around an existing pipeline can lead to damage, and operating competing pipelines in such close proximity can raise questions about liability if something goes wrong. 

If a neighbor mentioned they were building a new driveway that was going to cross your property more than 140 times, most people would have questions. Not surprisingly, when these companies suggested these crossings, Energy Transfer asked questions before agreeing. Now, Williams and Momentum are claiming in court that Energy Transfer’s concerns are anticompetitive.

The actions of Momentum and Williams may be clever, but they could undermine decades of established practices in the gas industry. Energy companies need to respect the rights of other companies and property owners, while also respecting the role of well-tested regulatory processes that ensure safety for citizens.

The White House and the Environmental Protection Agency (EPA) are denying that recent EPA regulations are meant to mandate that everyone switch from gas-powered to an electric vehicle (EV). Don’t you believe ’em. Progressive elites rely on the power of government to force you to do what they think you should be doing. In other words, autocrats gonna mandate. 

We’ve seen this movie before. Recall that the Affordable Care Act (ObamaCare) went into effect 10 years ago. One key component of ObamaCare that caused so much resentment was the mandate that everyone have health insurance. 

And not just any ‘ole insurance, but the insurance that President Obama and his fellow Democrats thought you should have. Millions of Americans who had very good, affordable health insurance they liked (including my wife) lost that coverage because progressive elites didn’t think it was good enough. Those who didn’t have ObamaCare-qualified coverage had to pay a penalty.  

Republicans eventually passed legislation that zeroed out the penalty, making the health insurance mandate moot. Yet the health insurance industry didn’t collapse. Yes, the cost of health insurance has risen significantly since 2014 — in contradiction to all the Democratic promises of how much cheaper it would be — but that’s in part because of all the coverage mandates imposed by ObamaCare. 

Or how about the COVID-19 vaccine? The vast majority of Americans lined up to get the vaccine as soon as it was available, with about 1 million a day being vaccinated when Joe Biden took office. But vaccine enthusiasm waned as boosters increased and time passed, so Biden imposed a vaccine mandate (or the taking of a weekly test) on government employees and contractors, the military, health care workers, nursing homes and private sector businesses with 100 or more employees — an estimated 84 million Americans. 

He would have mandated more but the U.S. Supreme Court stepped in. The court upheld the vaccine mandate for health care workers and nursing homes that receive Medicare or Medicaid funds, but struck down the mandate on businesses, asserting the government overstepped its authority — something the Biden administration does regularly. 

Now, Biden and his EPA are taking steps to mandate everyone driving an EV in the near future. Only this time, the administration is using what we might call a “back door mandate.”  

Biden has been handing out billions of taxpayer dollars to the car manufacturers to induce them to transition to EVs. And while they acquiesced, consumers didn’t get the memo. They still want gasoline-powered trucks and SUVs. 

So the EPA is progressively increasing restrictions on tailpipe emissions, in effect making it difficult or impossible for carmakers to make gasoline-powered vehicles that comply with government restrictions. Thus, the government isn’t mandating you have an EV, it’s just making it nearly impossible for you to buy anything else. 

The justification for the EV mandate is similar to that behind the vaccine mandate: The enthusiasm for EVs has waned. Car dealers can’t sell them, so the manufacturers are dropping the prices. Hertz recently dramatically cut its inventory of EV rental cars because no one wanted them. 

Declining EV demand is a problem for Biden, progressives and environmentalists because — like health insurance and the COVID-19 vaccine — they think they know what’s best for you and the country. In their minds, saving the planet may require twisting some arms. 

It is a hallmark of the progressive mentality that if the public won’t do what progressives think best, they will use the power of government to force the public to do so. We saw it with ObamaCare, COVID-19 vaccines, EVs and many other issues — e.g., the mandated use of ethanol in gasoline. And they may be coming for your gas stove next.  

As Wall Street Journal columnist Kimberley Strassel recently wrote, “Today’s Democratic Party is entirely dedicated to the proposition that all Americans should be told how to live.” 

If they continue down that path, they should consider changing their name from Democrats to Autocrats. 

Recall that Victor Frankenstein tried to tinker with nature. Let’s just say it didn’t go well, and he regretted it for the rest of his life. Today, a new group of scientists has announced their own plans to tinker with nature, and it’s yet to be seen whether their efforts will be beneficial or if there will be unintended consequences that all of us will regret.
 
Environmentalists regularly lecture the rest of us on the need to avoid doing things that could damage the earth’s delicate environmental balance. So it is more than a little strange that several scientists are planning to do exactly that.
 
The Wall Street Journal reports, “Dumping chemicals in the ocean? Spraying saltwater into clouds? Injecting reflective particles into the sky? Scientists are resorting to once unthinkable techniques to cool the planet because global efforts to check greenhouse gas emissions are failing.”
 
What’s behind these scientists doing the “unthinkable”? 
 
“These geoengineering approaches were once considered taboo by scientists and regulators who feared that tinkering with the environment could have unintended consequences, but now researchers are receiving taxpayer funds and private investments to get out of the lab and test these methods outdoors.”
 
And there you have the answer: money. And not just private money, but taxpayer funds.
 
One scheme takes place near Australia, where scientists will spray “a briny mixture through high-pressure nozzles into the air” in the hope of brightening clouds so they will reflect more of the sun. A university got $64.5 million for that experiment.
 
Another private group has raised $15 million to release “tiny reflective particles about 60,000 feet in altitude, reflecting sunlight away from Earth …”
 
In a third scheme, a research group plans “to pour 6,000 gallons of a liquid solution of sodium hydroxide, a component of lye, into the ocean 10 miles south of Martha’s Vineyard this summer.” This “ocean alkalinity enhancement” is receiving $10 million from the National Oceanic and Atmospheric Administration.
 
Hey, pouring 6,000 gallons of sodium hydroxide in the ocean, what could go wrong?
 
To be clear, IPI is not opposed to innovative solutions to address real, and even perceived, environmental problems. And no doubt these researchers believe their actions could benefit mankind. So did Frankenstein.
 
The problem here is hypocrisy. We as individuals are constantly warned that we shouldn’t be putting foreign substances in the air or water because it could damage the ecosystem, over time if not immediately.
 
But the scientists who would scold the rest of us apparently don’t mind doing exactly that—if the actions are backed by millions of dollars in funding.

Several states are essentially mandating the shift to electric vehicles in the near future. Voters in many of those states are going to be very unhappy about that mandate once they realize how dramatically EV battery performance drops in cold weather.
 
Dan Avery of CNET points out, “Under Section 177 of the Clean Air Act, states must either adhere to federal vehicle emissions standards or adopt California’s more stringent guidelines.” 
 
California’s current policy is that all new cars, SUVs and light trucks sold within the state must emit zero tailpipe emissions by 2035. As for the transition timeline: “The state's Advanced Clean Cars II rule requires zero-emission vehicles to represent 35% of new cars and light trucks in lots by 2026, and then 68% by 2030, before reaching 100% in 2035.”
 
While 17 states have generally followed the Golden State’s emissions guidelines, several states—Connecticut, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Washington—have announced they will impose California’s timeline. All of them are in the northern part of the country. And that’s going to be a problem.
 
Reporter Coco Liu of Bloomberg explains, “Temperature’s impact on EV range boils down to: The colder it is, the more a car’s range will suffer.” Liu highlights a recent report by pro-EV research firm Recurrent, which looked at 10,000 EVs across 18 models.
 
Recurrent found “the 18 popular EV models that we analyzed had an average of 70.3% of their range in freezing conditions, but each model performs differently as our chart illustrates.”  Yes, and the chart shows some models experienced significant range reductions.
 
 

Maybe this would be a good time to point out it can get a lot colder than 32 degrees in New York, Massachusetts, Connecticut and New Jersey, as well as the other states. What do EV driving ranges look like when the temperature approaches zero?
 
EVs will go further if a driver doesn’t turn on the heater, which also drains the battery. But who wants to drive in sub-freezing temperatures without a heater? Charging times also take much longer in cold weather.
 
Of course, if consumers living in the north choose to buy an electric vehicle, that’s their privilege. Maybe they don’t drive much or have a short work commute, and so a dramatically reduced cold-weather driving range isn’t a problem.
 
But several cold-state politicians are forcing EVs on their citizens whether they want them or not. Unhappy voters may eventually decide to charge up their mandated EV at least enough to get them to the closest voting booth.

If Democrats and environmentalists thought they could save the world by pushing—actually, “imposing”—an electric vehicle revolution, then this is not a Wall Street Journal lede they want to see. “The auto industry’s push to boost sales of electric vehicles is running into a cold, hard reality: Buyers’ interest in these models is proving shallower than expected.”
 
Now, while “nobody came” is hyperbole, so are environmentalists’ assurances that car manufacturers could easily ramp up production and consumers would eagerly embrace the EV revolution.
 
Consider this prediction cited in the Detroit Free Press in November 2020. “GM CEO Mary Barra said the automaker will bring to market 30 all-electric models globally by mid-decade. GM had previously said it would bring 20 electric models to market by 2023.”
 
So, how’s that prediction of 20 EV models by 2023 working out? There are two: the Bolt EV and the Bolt EUV. There are several GM cars, trucks and SUVs scheduled to come out in late 2023, or 2024 and 2025. But given the company’s multiple missed deadlines, skepticism is in order.
 
The Journal does point out that EV sales are increasing, but at a slower pace. Inventories are backing up on car lots, so manufacturers and dealers are cutting prices, including Tesla. And that’s a problem because the Big Three are already losing money on every sale. WSJ columnist Andy Kessler writes, “Ford said it loses $32,000 for every electric car it sells. High labor costs are the culprit.” The company apparently has only two EVs: the F-150 Lightening and the Mustang Mach E.
 
With the United Auto Workers on strike, in part to ensure union workers are included in EV and battery manufacturing, those labor costs are likely to remain high.
 
But while EV sales growth is declining, hybrids—which combine a gasoline-powered engine with battery power—sales are picking up.  The journal writes, “Hybrid sales in the year’s first three quarters jumped 48% over the prior-year period, according to Motor Intelligence.”
 
Recently, Akio Toyoda, CEO of Toyota, which makes the very popular Prius hybrid, announced the company would keep its primary focus on hybrids instead of EVs. “Battery-electric vehicles ‘are just going to take longer than the media would like us to believe,’” he said, according to Fortune, saying the company would provide consumers with several options.”
 
The response: “Environmentalists and shareholders have criticized Toyota for dragging its feet in embracing EVs.” 
 
No clean deed goes unpunished.
 
While IPI has no problem with hybrids or EVs if that’s what consumers want, we do have a problem with the government trying to impose them on unwilling consumers. And backing up that push with billions of taxpayer dollars.

The Electric Reliability Council of Texas (ERCOT) came close to implementing rolling blackouts in the early days of September. And while early September was very hot, it was very hot for nearly all of July and August, and yet the grid seemed to perform better then. So what changed?
 
Texas has the highest wind capacity of any state. When the wind is blowing, that source can serve the state well. But the wind doesn’t always blow, especially when the state is blanketed by a high-pressure area, referred to as a heat dome.
 
Normally, when the heat dome quashes the wind, it also limits cloud formation, and solar panels are able to pick up some of the slack. However, the days are getting shorter as we approach the autumn equinox, which reduces the number of hours the solar panels push energy to the grid. And so ERCOT faced some real challenges in the late afternoon and early evening hours of the first 10 days of September, when both wind and solar were coming up short.
 
Maybe one answer is more offshore wind farms, where wind is more consistent. That was the hope, but the Wall Street Journal now reports, “Offshore wind farms should be one of the best solutions to the climate crisis but are turning out to be a lousy business.”
 
Offshore wind farms are taking longer to install and costing much more than estimated. And higher interest rates are adding to those costs. “Average costs to build an offshore wind farm have shot up 36% since 2019, compared with 5% for land-based ones, in part because of pricier debt,” the WSJ reports.
 
Plus, “Transmission bottlenecks to get power from offshore wind farms to land are now a major obstacle to delivering projects on time.” It seems that even as the government hands out billions of taxpayer dollars in subsidies to encourage offshore wind projects, various government-imposed regulations and restrictions get in the way. Who knew?
 
Since electricity consumers—i.e., ratepayers—rebel at excessively high electricity prices, the government will have to come to the rescue. “While the industry needs to get better at understanding the hidden costs of innovation,” the Journal reports, “governments will have to pay more if they want offshore wind power to help reduce carbon emissions.”
 
And there you have it—governments will have to pay more. Even though the Biden administration has already spent more than ever.
 
We are constantly told that the cost or renewable energy is going down. But those claims often ignore large, government-provided tax breaks and subsidies. When those hidden costs are included, the affordability of renewable energy is less clear.

Environmentalists are demanding that countries reduce their greenhouse gas emissions. Authoritarian governments may pay lip service to greenhouse gas-reduction goals. But in practice, those governments do whatever they believe is in their own self-interests, which means producing, selling, buying and using fossil fuels.
 
That hypocrisy has never been more evident than in Russia’s mad dash to pump and sell as much crude oil as it can to finance its war on Ukraine.
 
But the hypocrisy doesn’t end there. Several countries—including many developing countries that are demanding climate reparations from the developed economies, as outlined in the 2015 Paris Agreement—are more than willing to buy Russian oil if they can get a below-market price.
 
A recent Wall Street Journal news item tells the story: “Russia Nears Deals to Sell Gusher of Oil.”
 
Somehow “gusher of oil” seems in conflict with Russia’s participation in the Paris Agreement, where it asserted, “As part of the implementation of the Paris Agreement, the Russian Federation announces a target for limiting greenhouse gas emissions, which provides for a reduction in greenhouse gas emissions by 2030 to 70 percent relative to the 1990 level …”
 
Of course, sellers can only sell if others are willing to buy. And the WSJ article notes there appears to be a lot of willing buyers.
 
Since the United States, most of Europe, and other allied countries have imposed sanctions and price caps on Russian oil, the sale is being handled by “tenders” (a type of auction), and will likely go through various shell companies so that countries can buy it without incurring the wrath of the West.
 
“The prospective buyers are trading firms competing to send the oil to end users in Russia’s biggest export markets, such as China, India and Turkey,” the Journal notes. Ultimately the oil will end up in countries located in “Asia, the Middle East and Africa.”
 
Some of those developing-nation buyers will likely be on the Paris Agreement’s list of countries demanding reparations from the developed economies for the alleged harm those developing countries face from a warming planet.
 
This example highlights the current problems with the environmentalists’ warnings that we must reduce greenhouse gas emissions. Authoritarian governments, which are not subject to being booted out by the voters, can and will do whatever they think is in their self-interest—even as they make happy talk with the environmentalists.
 
That is not going to change and may get worse as more countries seem to be moving in an authoritarian direction.

The Environmental Protection Agency (EPA) recently released an announcement outlining its newly proposed carbon pollution standards for fossil fuels. If you are trying to figure out how to categorize the new paper, you might try filing it under “fiction,” because the agency just makes stuff up.
 
In its press release, the EPA asserts, “The proposal for coal and new natural gas power plants would avoid up to 617 million metric tons of total carbon dioxide (CO₂) through 2042. … The proposals would also result in cutting tens of thousands of tons of particulate matter (PM2.5), sulfur dioxide, and nitrogen oxide, harmful air pollutants that are known to endanger people’s health.”
 
The proposed new rules, if they survive review and the public-comment process, may reduce CO₂ and particulate matter, but the agency’s other claims are bogus at best: “In 2030 alone, the proposed standards would prevent”:

• approximately 1,300 premature deaths;
• more than 800 hospital and emergency room visits;
• more than 300,000 cases of asthma attacks;
• 38,000 school absence days;
• 66,000 lost workdays.

So, the agency is telling us that in seven years, its new pollution-reduction standards would prevent more than 800 hospital and emergency room visits and 300,000 asthma attacks.
 
How could any econometric model accurately predict how many fewer hospital and emergency room visits there will be seven years from now? Or how many fewer asthma attacks?
 
The U.S. Centers for Disease Control (CDC) estimates there were 10.3 million asthma attacks in the United States in 2020, compared to 10.7 million seven years earlier in 2014.  The estimated number of attacks actually declined between 2014 and 2020, without the EPA’s new restrictions. So, any further decline over the next seven years, were it to occur, could just be the continuation of a trend.
 
The EPA’s prediction of fewer hospital and emergency room visits borders on the ridiculous.  The CDC says there were 131.3 million emergency room visits in 2020. The EPS’s estimate of 800 fewer visits in 2030 is less than a rounding error.*
 
Economists use econometric models to test the impact of various types of economic policies. The models are almost always wrong in their predictions, but some are closer than others.
 
And then there are predictions, like the recent one from the EPA, that aren’t even as good as a wild swing in the dark.
 
The EPA puts out these fictional estimates so that President Biden and Democrats can toss around some authoritative-sounding numbers when pushing their radical agenda, because they know that voters would soundly reject those proposals if they knew the truth. 
 
*Even if the EPA only focused on asthma-related emergency room visits, there was an average of 1,656,920 asthma-related emergency room visits annually between 2016 and 2018.

When is a tax increase not a tax increase? When proposed legislation cuts special tax credits and other tax breaks handed out by politicians who want to pick winners and losers—and please some wealthy donors.
 
Somebody needs to explain that to Wall Street Journal reporter Richard Rubin.
 
He recently ran a story about the House Republican budget proposal with the lede: “Republicans finally found a tax increase they can support.”
 
Republicans want to raise taxes? Say it ain’t so!
 
It ain’t so.
 
In the Inflation Reduction Act (IRA), which passed in August 2022, Democrats on a party-line vote vastly expanded tax credits and other tax breaks to various clean energy pet projects.
 
Here’s how Reuters correctly and non-pejoratively describes that provision in the Republican bill: “It would repeal incentives for renewable energy, electric vehicles and other climate-friendly technology that Democrats passed last year as part of the Inflation Reduction Act.”
 
And here is how Rubin describes it in the WSJ. “The changes would shrink breaks for wind energy, solar power, hydrogen and electric vehicles, effectively raising taxes on some manufacturers, car buyers and others.”
 
Democrats have picked up and are using that “Republicans want to raise your taxes” theme—because they know that cutting taxes is integral to the Republican brand. If Democrats can frame cutting special-interest, clean energy subsidies as a tax increase, they have a better chance of forcing Republicans to back off.
 
Rubin is “effectively” doing the Democrats’ work for them.
 
Let’s take an example. The IRA included a $7,500 consumer tax credit for electric vehicle (EV) purchases. But there are a number of strings attached. Individuals can’t make more than $150,000 a year ($225,000 for heads of households and $300,000 for joint filers). And the suggested retail price can’t be more than $80,000 for most trucks and SUVs, and $55,000 for all other vehicles.
 
So, under the Republican plan, a qualifying, likely high-income, individual buying a qualifying EV might not get the $7,500 tax credit. That would cost more money out of the purchaser’s pocket, but less money out of taxpayers’ pockets, because taxpayers are the ones funding the tax credit.
 
When a store’s special sale price expires, we don’t typically say the company jacked up the price. We say the sales price is no longer available.
 
The best tax policies apply to all people in a broad group. The Republicans' 2017 tax reform legislation lowered the corporate income tax from 35 percent to 21 percent. And it applied the cut to all corporations, not politically favored ones.
 
Repealing special tax breaks to certain politically favored groups isn’t a tax increase. It’s ending political favoritism.

Remember when President Barack Obama’s signature legislation, the Affordable Care Act (Obamacare), mandated that every American have health insurance? Now President Joe Biden is proposing his own mandate, but through the back door, essentially forcing you to buy an electric vehicle.
 
The New York Times explains: “The Biden administration is planning some of the most stringent auto pollution limits in the world, designed to ensure that all-electric cars make up as much as 67 percent of new passenger vehicles sold in the country by 2032.”
 
As is so often the case these days, Biden doesn’t plan to pass legislation through the people’s elected representatives in Congress, which is what one who really believes in democracy would do. Biden plans to impose his will through regulations.
 
The NYT continues: “It would be the federal government’s most aggressive climate regulation and would propel the United States to the front of the global effort to slash the greenhouse gases generated by cars, a major driver of climate change.” (Emphasis added.)
 
It would also “propel” the United States closer to being one of the many autocratic countries mostly governed by presidential decrees. At least Obama passed his health insurance mandate through Congress, though Democrats had to contort the legislative process to do it.
 
Biden’s approach is to use the Environmental Protection Agency (EPA) to propose stricter limits on tailpipe emissions, limits so stringent that it would be hard for automakers to comply. Those changes would force automakers to transition even faster to making mostly all-electric vehicles.
 
Apparently, bribing the auto manufacturers with hundreds of billions of taxpayer dollars isn’t moving them fast enough.
 
But achieving Biden’s goal will be difficult. Obtaining needed rare earth minerals and addressing supply chain challenges will hamper production increases. And the elevated price of EVs will also be a burden for lower-income families.
 
And, importantly, the electric grid doesn’t currently have the capacity to meet the increased electricity demand, nor are there sufficient charging stations for those traveling long distances.
 
Maybe all of those problems will be resolved within his proposed 10-year window. But Biden, or any subsequent Democratic president, will have to throw even more taxpayer dollars at the effort. And as we’ve seen, he’s certainly willing to do that.
 
But there is one more problem: consumer demand. Americans have been very slow to transition to EVs. And those who have are mostly higher-income individuals who can afford a Tesla.
 
Of course, it’s perfectly all right if consumers choose electric cars and trucks, as long as that’s what they, not the government, want.
 
The good news is that Biden’s tailpipe regulations will be challenged in court, and the effort may die there. Or a future Republican president may repeal Biden’s overreach.
 
The best way for Biden to ensure that doesn’t happen is for Congress to vote on and pass his new regulations. But then that would be following the democratic process that Biden so often claims he wants to protect.

Texans are descended from a tough bunch, or moved here because they wanted to be in a place where sterner stuff still exists. But us modern, citified Texans are still scarred from the Great Freeze of 2021.

I should call it the Great Power Crisis of 2021, because that was really the issue. It was the worst energy infrastructure failure in Texas history, causing the deaths of hundreds and nearly $200 billion in property damage. Every heat wave or cold snap since has caused chills to run up and down the spines of Texans like me who never quite got around to buying and installing a home backup generator.

We now understand that it was largely a failure of the natural gas delivery infrastructure, not the failure of renewables, that caused the crisis. I’m a huge proponent of natural gas as a clean, safe, abundant, inexpensive source of energy, but I’m not a hack like those who rushed to try to pin the blame on renewables because of their own financial interests. You have to be truthful about the facts in order to actually solve problems and prevent future disasters.

Far too many of our elected Republicans in Austin have maintained this fiction that renewables were to blame, however, and this lie is affecting policy choices. They mistakenly think that one must prove one’s support for fossil fuels by demeaning and defeating renewable energy sources, when the truth is that Texas needs more of everything, and shouldn’t be discouraging a single megawatt of generation from contributing to the resilience of the Texas grid.

For instance, the debate over renewing Chapter 313, passed into law as the Texas Economic Development Act, includes proposals that would exclude tax breaks for renewable projects. Now, it’s intellectually consistent to oppose tax breaks for any and all development projects, and it’s consistent to allow them for any legal development projects. But by excluding renewable projects from incentives that are available to any other business, Texas Republicans are doing precisely what they claim to reject—having government pick winners and losers, instead of letting markets and competition and the price mechanism determine how energy generation is allocated and distributed.

Too many of my fellow Texas Republicans, who claim to believe in free markets and innovation, are positioning themselves against both, and in the process against enhanced energy reliability and against Texas consumers. We’ve seen the problem with cutting things too close—Texans need more of all of the above: natural gas, nuclear, wind, solar, geothermal and anything else that will feed power into our growing Texas economy.

Soon, Texas will begin to have large-scale battery storage facilities around the state, which will greatly enhance the resiliency of the grid. These storage purchasers will be able to buy power from the lowest cost available supplies and then resell into the grid when their resources are needed. Energy storage providers are going to be agnostic about the source of the megawatts they purchase, and will facilitate a beneficial new market in backup energy.

Texas law should be equally agnostic about our sources of energy generation. Our laws and regulations should not mandate one form of energy over another or subsidize one over another. We shouldn’t favor politically preferred energy sources and discriminate against others. Frankly, politics should have nothing to do with it. More of everything should be Texas’ energy policy, and any and every law passed during this legislative session should more toward abundance, not away from it.

March 15, 2023

Dear Chair McMorris-Rogers, Ranking Member Pallone, Chairman Bruce Westerman and
Ranking Member Raúl M. Grijalva:

On behalf of the undersigned organizations, representing a diverse coalition of free market, consumer, and taxpayer advocates, we write to express the need for regulatory certainty to enable the use of all of America’s offshore energy resources. The United States is blessed with more than enough renewable and non-renewable energy resources to meet our domestic energy needs. This natural wealth should provide abundant and affordable energy for American businesses and consumers, while insulating the nation from foreign energy coercion.

However, federal mismanagement of America’s natural resources has created market distortions and imposed costs on American businesses and consumers. In recent years, as the federal government has sought to inhibit or slow-walk offshore oil and gas development, consumer gas prices have skyrocketed. Across its first 19 months in office, the current administration leased the fewest acres for onshore and offshore oil and gas development of any administration since the Second World War. As the federal government’s own data shows, input fuel represents a major component of the cost of generating electricity. Natural gas is the single largest generating source of electricity in the United States and efforts to curtail its production have a tangible effect upon consumer prices.

At the same time, the current federal leasing system for offshore wind lacks a congressional requirement for a predictable leasing schedule. Without mandating that these resources periodically be made available to the public, federal wind leases remain at the mercy of the executive branch. Federal interference should not preclude consumers and businesses from enjoying the potential benefits of offshore wind electricity. With the benefit of stronger and more consistent breezes at sea, offshore wind generation is both more efficient and reliable than its onshore counterpart. Offshore wind turbines can also be built at a larger scale, allowing for even greater electricity generation. Moreover, by identifying areas of strong evening wind speeds with high evening electricity demand, offshore wind generation help to meet peak electricity demand.

By removing discretionary intervention from the management of offshore resources, Congress can facilitate the diversification of the American energy industry. Among electricity utilities who use different sources of generation, this diversification enables both consumer choice and price competition. Moreover, during extreme weather events or periods of high input fuel prices, a diversified energy industry is capable of balancing shortfalls with greater
production.

We also recognize that the federal government should not be in the business of picking winners and losers in the economy. Nor should the federal government dictate which kinds of energy are or are not available. That is why we are calling for legislation that removes federal interference in both offshore fossil fuel and renewable energy leasing.

To unlock our nation’s offshore resources, Congress should build upon provisions within the Inflation Reduction Act that tie offshore oil and gas leasing to offshore wind leasing. The publication of, and compliance with, schedules for both fossil fuel and renewable energy lease sales should similarly be mandatory. This would provide greater certainty around access to federal offshore resources. Congress should also streamline the regulations that govern the federal approval process of offshore leases. By clearly defining the scope of factors that must be considered by federal agencies, Congress can prevent ‘delay to deny’ litigation. Together, these reforms would help to unlock the nation’s offshore resources.

We thank the House majority for their commitment to unleashing American energy, promoting competition, and lowering consumer prices.

Respectfully,

There are three statements in a recent Wall Street Journal news story that tell you what you need to know about various companies’ new-found desire to be part of Washington’s push toward clean energy.
 
Here’s the first one: “Businesses large and small are repositioning themselves to try to capture some of the tidal wave of government cash from the new law dubbed the Inflation Reduction Act, signed into law last year.”
 
Note the phrase “tidal wave of government cash.” President Joe Biden couldn’t agree more.
 
On signing the IRA, Biden said, “The Inflation Reduction Act invests $369 billion to take the most aggressive action ever—ever, ever, ever—in confronting the climate crisis and strengthening our economic—our energy security.”
 
When the government is handing out wads of cash, there is no shortage of individuals, companies and industries willing to make all kinds of promises and commitments to get a share of the spoils.
 
The second statement is a quote from an analyst who is discussing the role of green hydrogen: “The big risk is throwing out massive subsidies that don’t do anything.”
 
It’s not just a risk that billions of dollars in taxpayer-provided subsidies will be “thrown out” without doing anything. It’s a virtual certainty.
 
As government agencies have been recently reporting, the trillions of taxpayer dollars handed out during the pandemic led to hundreds of billions of dollars being wasted due to fraud, inefficiency and incompetence.
 
That also happened during President Barack Obama’s generous clean energy subsidies, as numerous companies that received millions in grants and loans shut down. Can you say Solyndra?
 
It will also happen under Biden’s IRA, though likely on a much larger scale. Taxpayers won’t get anywhere near the clean energy they’re paying for.
 
Finally, there’s this jewel from the chief executive of a company called Electric Hydrogen: “There’s a lot of self-serving behavior being driven by the availability of a really juicy subsidy.”
 
No doubt he’s correct, but why would Democrats expect anything different? Clean energy companies don’t have to cater to individual consumers; they have to cater to a much smaller number of elected officials and their staffs who have the ability—and desire—to spend lots of other people’s money.  
 
The point is that there may be a growing market for clean energy, but that market is being invigorated and sustained more by government money than consumer demand. If and when government dollars for clean energy declines, don’t be surprised if demand does also.

Well, this is a switch. Now it’s Republicans who think they see evidence of Russian influence pedaling and a media that want to assure everyone that there’s nothing to see here. One has to wonder whether the reason some in the media are dismissing these concerns is that they involve the U.S. environmental movement.

House Republicans say they plan to investigate whether Russia and China have been covertly funding U.S. environmental groups’ efforts to criticize fossil fuel production and limit or stop fracking.

But some in the U.S. media are having none of it. Axios reporter Jael Holzman recently wrote, “House Republicans want to launch investigations into a baseless claim that China and Russia unduly influence U.S. climate activism.”

“Baseless”? Maybe, but we won’t know if the concerns are baseless unless a congressional committee, law enforcement or the media conducts a serious investigation.

It’s not a new concern. In 2014, Anders Fogh Rasmussen, then secretary general of the North Atlantic Treaty Organization (NATO) and the former premier of Denmark, said, “I have met allies who can report that Russia, as part of their sophisticated information and disinformation operations, engaged actively with so-called non-governmental organizations (NGOs)–environmental organizations working against shale gas–to maintain European dependence on imported Russian gas.”

In 2016 the Brussels-based Wilfried Martens Centre for European Studies validated Rasmussen’s concerns when it published “The Bear in Sheep’s Clothing: Russia’s Government-Funded Organizations in the EU.”

That report states: “This paper sheds light on organizations operating in Europe that are funded by the Russian government, whether officially or unofficially…. Their number and activities have been growing, but their financing is often complex and hidden from the public eye.”

The paper explains, “Basically the money is transferred through various informal mediators (hawaladars)—companies or individuals based in tax havens such as Saudi Arabia, the Cocos Islands, the Pitcairn Islands or Nevis—before turning up at a company based in the EU.”

Even former Secretary of State Hillary Clinton complained in a speech to a private audience in 2016, “We were even up against phony environmental groups, and I’m a big environmentalist, but these were funded by the Russians ….”

In 2017, Reps. Reps. Lamar Smith (R-Texas) and Randy Weber (R-Texas) sent a lengthy letter to then-Treasury Secretary Steven Mnuchin making a similar accusation relating to the United States and trying to connect some dots to Bermuda-based Klein, Ltd., which passed millions of dollars to the U.S.-based Sea Change Foundation, which donated to several environmental groups.

The family that runs the Sea Change Foundation tried to clarify the situation by releasing a statement in 2018. The family is very wealthy and says it is the source of the money coming from Klein and the Sea Change Foundation. “Neither Klein nor Sea Change Foundation has ever solicited or accepted contributions from non-family related sources,” according to the family’s statement.

That may clear Klein and the Sea Change Foundation, but the broader question is why many in the media, including Washington Post Fact Checker Glenn Kessler, have been so quick to dismiss Russian efforts to covertly fund or influence the U.S. environmental movement.

Many journalists were quick to pounce on the notion that Russia tried to influence the 2016 and perhaps the 2020 elections, a concern U.S. intelligence later seemed to confirm.

The mainstream media gladly embraced the Russian-Donald Trump collusion hoax that included the now-discredited Steele dossier, which was funded by the Clinton campaign.

And many mainstream journalists were eager to convince the public that the abandoned Hunter Biden laptop and its emails were Russian-created disinformation, though we now know the laptop and emails were indeed Hunter’s.

Finally, the media seem to largely accept the claim that Russians have been covertly funding European NGOs in the hope of influencing European policies, and especially energy policy. And yet, Axios and the Washington Post have quickly dismissed the notion that the Russians would do the same in the United States.

Axios reports that U.S. environmental groups vehemently deny that they have any financial ties to Russia. And that certainly may be the case. But one of the key findings of the Martens Centre’s report is that Russian funding is often laundered through various organizations so that the recipient may not know the real source.

I don’t know if the Russians are covertly funneling money to U.S. environmental groups, or any other U.S. groups for that matter—but it would be nice if we did know. Given that the Russians have been doing that for a while in Europe, and given that the United States became the world’s leader in oil and natural gas production prior to the pandemic, keeping global prices low and hindering Russia’s ability to use access to oil and gas for political leverage against Europe, it seems likely Russia would also be active in the United States.

Some in the media seem to dismiss the possibility. Fortunately, House Republicans want a closer look.

At a time when countries, especially those in the European Union, are scrambling to find affordable energy sources to offset the loss of Russian natural gas and oil, the leftward shift of several Latin American countries will likely reduce the available supply of fossil fuels, exacerbating world shortages. That shift will also put more pressure on the United States to remain the world’s leading oil and gas producer and to become an even larger exporter of both.

In 2021, the U.S. Energy Information Administration (EIA) reported that Central and South America produced 7.3 million barrels of crude oil and lease condensate per day (MBOPD). That’s about 9% of global production. 

It could have been much more. And, in fact, it was more before a few leftist governments came to power in Latin America. But it may also mark a high point since even more Latin American countries are turning left.

From the mid-1990s to the early 2000s, Venezuela and Mexico were Latin America’s leading oil producers, about 3.5 MBOPD each.  Both counties have national oil companies and have suffered from inefficiency and underinvestment.

But Venezuela’s production has declined 82% from its peak, while Mexico’s has declined 37%. That production decline is not because either country is running out of crude oil. Venezuela is the world’s leader in proven oil reserves, 298 billion barrels. Mexico is 18^th with 9.8 billion — not a lot, but enough to keep producing at higher levels for years to come.

What happened? Socialism.

In 1999, Hugo Chavez became president of Venezuela promising a “Bolivarian Revolution,” a socialist political program emphasizing nationalism, a centralized economy, and redistribution of wealth — though poverty and hunger are the only things that have been widely redistributed.

The Venezuelan economy is largely based on oil. And at one time it significantly relied on private sector companies to help extract, transport and refine that oil.

In 2002, Chavez began re-nationalizing the country’s oil and gas industry, expropriating assets of foreign companies, precipitating an exodus of both capital and expertise. As a result, oil and gas production began to level off or decline. Chavez-crony Nicolas Maduro went even further, precipitating a mass private sector exodus. 

With little maintenance capital to deploy and limited remaining knowledgeable human capital to deploy it, the country with the largest proven oil reserves struggles to produce 0.5 MBOPD today, about a one-seventh of its peak production.

Fortunately, Mexico hasn’t followed in Venezuela’s footsteps — yet. That may be changing.

Mexico removed barriers to attract foreign investment in its energy sector under Presidents Vicente Fox, Felipe Calderon and Enrique Pena Nieto, but any gains are fading under leftist President Andrés Manuel López Obrador.

Lopez Obrador says he wants to see “the people benefit from the nation’s oil resources.” History shows us that when “the people” own something, the government class tends to disproportionally benefit.

Brazil has clearly taken a different path.  Brazil’s proven oil reserves at 15.3 billion barrels, yet its current oil production far surpasses Venezuela and Mexico.  Why? Foreign investment. 

While Brazil has a national oil company, Petrobras, many leading international oil companies — e.g., Shell, Exxon, BP and Chevron — may partner with Petrobras. 

The superiority of Brazil’s traditional, pro-market energy investment climate, where there was little to fear from expropriation or non-payment, has been the key.

However, that history of a workable public-private partnership may change with the reelection of leftist Luiz Inácio Lula da Silva to the presidency. Will he embrace the longstanding public-private partnership in energy production, or follow other leftist Latin American governments in restructuring or scaling back those partnerships?

After Venezuela, Mexico and Brazil come Columbia and Argentina. Neither has been a major oil producer, but Argentina’s willingness to keep voting for socialists and Columbia’s recent embrace of its first leftist president means the best we can hope for is stable, or just gradually declining, oil production.

Importantly, Russia is on the prowl. It would love to fill the oil-production expertise gap created by pushing out private sector companies, and many Latin American countries have been, or will be, willing to do just that.

The leftward turn of many Latin American governments is yet another reason why the Biden administration needs to end its war on U.S.-produced fossil fuels. Otherwise, the energy shortages facing Europe will find their way to the states.

With winter approaching, Europe is facing an energy crisis, particularly in a shortage of natural gas to produce electricity and heat homes. But let’s not forget that no country is better positioned to ease Europe’s energy crisis in both the short and long term than the United States.

It was a colossally bad idea for European governments to put so much faith in renewable energy sources, such as wind and solar power, which are intermittent and must be backed up by reliable energy sources, primarily fossil fuels. And it was an even bigger mistake for the EU to put so much faith in Russian-supplied natural gas, especially since Russian President Vladimir Putin had proven his willingness to use access to energy as a hammer to discourage political dissent.

In the short run, the United States must do all it can to maximize liquified natural gas, or LNG, export volumes through winter. And U.S. natural gas producers and LNG exporters have a strong economic incentive to do so.

After touching $100 per million British Thermal Units, or MMBTU, this past summer, natural gas in Europe is now about $45 MMBTU. That compares to about $6.50 in the United States.

Those natural gas price shocks will surely hurt Europe’s economic output, exacerbating both inflation and political tensions.

The good news is the United States is the world’s top natural gas producer and largest LNG exporter. We have approximately 12 billion cubic feet per day, or BCFD, of export capacity. That level is expected to increase to about 14 BCFD by year’s end.

The U.S. Energy Information Administration, or EIA, just announced that U.S. dry natural gas production set a record in 2021, with a 3.5 percent increase over 2020 production, driven by high natural gas prices. In addition, EIA says U.S. LNG exports hit a record last March of nearly 12 BCFD, though exports subsequently declined largely due to a fire in June at the Freeport LNG facility that took about 2.0 BCFD offline.

Is that enough to help the Europe get through the winter?

With Freeport’s 2.0 BCFD back online and the forecast increases in other volumes of about 2.0 BCFD by this December, that’s 4.0 BCFD of incremental supply, or 25 percent of Russia’s 2021 volumes to Europe.

Some U.S. LNG production is under contract to other countries, including China. However, many of those countries have been reselling some of that LNG to European countries at much higher prices. Current European reductions in energy usage and higher prices are having a positive impact on supplies. Plus, increased reliance on other pipelines from Norway and North Africa is helping.

Longer term, the United States must demonstrate the political and regulatory will to rapidly permit and construct the infrastructure needed to substantially increase LNG exports. No other country possesses the low-cost accessible gas reserves, an industry capable of privately funding infrastructure development, and the long-term political stability to be the trusted supplier.

That effort will cost taxpayers nothing, since private sector companies would provide the capital. Indeed, tax revenue from multiple sources would grow from the expansion. Unfortunately, while President Joe Biden appears willing to make short-term concessions, there is no indication he would make such a long-term commitment.

Lawmakers have said for decades they want U.S. energy security to counter threats from authoritarian regimes. That goal cannot be achieved with renewable energy sources any time soon, as Europe now understands. The question is whether the Biden administration understands it.

News coverage of—and speculation about—the U.S. midterm elections has been dominating the news cycle for weeks. The result is that there has been relatively little coverage of COP 27, which is taking place in Egypt.
 
And that’s probably fine, because even though environmental activists and the media think climate change and global efforts to fight it is the most important challenge facing the world, it’s not clear many others do. That’s because actions speak much louder than words.
 
COP 27 stands for the 27^th Conference of the Parties to the United Nations Framework Convention on Climate Change. It began Sunday, November 6, and will end on November 18.
 
We can likely predict COP 27’s results even though it has just started. It will conclude by saying we are almost at the point of no return and that the need to address climate change, by cutting greenhouse gas emissions, is more important than ever. Many of the developed economies will promise to do even more, but then return home and do even less.
 
That’s been the pattern for decades. And it’s why it’s more revealing to see what countries do rather than what they say.
 
Take the push for clean energy. If countries were really serious about reducing greenhouse gas emissions, they would phase out coal-fired electricity generating plants and transition to cleaner-burning natural gas and, better yet, nuclear generation. And the United States has been taking those steps, though much of that change is the result of market forces rather than government forces.
 
But as the Bloomberg graph shows, several countries, especially China and India, are vastly expanding coal plants, and don’t even plan to max out carbon emissions for years. And yet China, India, Indonesia, et al, will join the global chorus calling for countries to do more—by which they mean other countries.
 

 
Even President Joe Biden, who recently revealed he wants to end coal usage in the United States, has been on his knees begging the Saudis and OPEC+ to produce more oil—at least until after the midterm elections. And he’s been negotiating with the corrupt, repressive, socialist strongman Nicolás Maduro of Venezuela to help that failed country pump more.
 
That discrepancy between what the largest emitters say and what they actually do tells the real story.

I don’t believe we have ever seen a president so willing to make policy completely and utterly subservient to politics. In the Biden administration, politics dictates policy.
 
It’s embarrassing for the country, and it should be embarrassing for the Democratic Party. It’s so bad that other countries are now mocking President Biden.
 
Take, for example, Biden’s on-again, off-again embrace of fossil fuels. We know Biden loves green energy and hates fossil fuels and wants to destroy the fossil fuel industry. At least, that’s what he said in his presidential campaign. Though even that position may have been driven by politics—i.e., his need to attract progressives’ support.
 
But with the midterm elections around the corner and the public angry about high gas prices, Biden had to humble himself before Saudi Arabia’s Crown Prince Mohammed bin Salman, whom Biden said he would make an international pariah.
 
Politics dictates policy.
 
But after Biden’s and the Democrats’ public anger over OPEC’s decision to reduce oil production by 2 million barrels a day, and the Biden administration’s asking the Saudis to hold off on the reduction for a month (i.e., after the midterm elections), the Saudis gave Biden a little advice during an international investment conference. If the United States wants more oil on the market, it should produce it.
 
They’re right, of course.
 
But perhaps the most egregious recent example is Biden’s new-found love for the public health law known as Title 42, which allows the government to return undocumented immigrants to Mexico during a public health emergency. That would be the public health emergency Biden recently said was over—again for political reasons.
 
Biden railed against Trump’s use of Title 42, repeatedly claiming Trump’s policies were insensitive and “not who we are.” He’s been threatening to end that policy for months.
 
And yet Biden’s now using Title 42 to turn back Venezuelans, who are surging at the southern border. Given that Venezuela is a failed socialist country that persecutes its citizens, Venezuelans probably have a stronger claim to refugee status than most of those who have crossed our southern border with ease.
 
In interviews, Venezuelan families say they saw how easy it was to get in and thought the U.S. door was wide open. These migrants’ only mistake was showing up right before the midterm elections, when border encounters just hit a record 2.2 million, and voters are sick and tired of Biden’s Open Borders policy. So, Title 42 lives—at least for now.
 
Politics dictates policy.
 
We could go on—and on, and on. But you get the point.
 
When historians look back on Biden’s presidency and ask the question, “What did he stand for?” They will likely conclude he stood for nothing—especially when it meant getting Democrats elected.

If President Joe Biden were looking for a way to exacerbate the energy shortages facing the United States and our allies, he’s found it: imposing an export ban on U.S crude oil and/or refined products (e.g., gasoline or diesel). 

Biden’s flirting with an oil export ban is not—we repeat, IS NOT—driven by good policy or economics. It’s driven solely by politics. He’s doing everything he can to minimize likely Democratic loses in the upcoming midterm elections. But such efforts are completely counterproductive. 

First, the way to promote the increased production of a product or service, any product or service, is to ensure access to the broadest market possible. With respect to oil and natural gas, that means a global market, which means exports. 

Access to the broadest market means there will be demand for a company’s products. Even if there is a decline in demand in the domestic market, other markets may be able to pick up the slack. 

Second, companies need policy and regulatory stability. Oil and gas companies need to know that if they invest the millions of dollars it takes to ramp up production—i.e., drill more wells, build more pipelines, expand refining capacity, etc.—the administration won’t flip-flop in the next few months or years. And yet no oil or gas company has that assurance. 

The fact is the Biden administration has embraced the most chaotic energy policies of any U.S. administration in modern history. Does anyone know what the Biden energy policy is? 

We know he’s willing to throw billions of taxpayer dollars at renewable energy companies. But what’s the plan right now? Oil and gas companies have every reason to be skeptical of this administration and respond accordingly. 

Third, Biden needs to abandon his counterproductive proposals. For example, he’s chided oil and gas companies for not producing more when prices were at record highs. But in the next breath he’s threatened to impose a windfall profits tax on oil and gas companies to take away those very profits he says should be driving them to produce more. 

Finally, energy is a global market. Production changes, such as OPEC+’s recent announcement to cut oil production by 2 million barrels a day, have global ripple effects. A wise and prudent president would have recognized that fact and (1) avoided vilifying and alienating Saudi Arabia, which has been a long and generally reliable ally, and (2) ensured that U.S. oil and gas companies had the freedom and political support they need to increase production. He’s done just the opposite. 

In 2019, former Obama Defense Secretary Robert Gates observed, “I think he’s Biden been wrong on nearly every major foreign policy and national security issue over the past four decades.” 

Add energy policy to that list.

One of the left’s key selling points for the Green New Deal—or is it one of the key distractions?—is that the GND will combat economic, social and racial inequality. However, a recent report casts doubt on at least one portion of that goal.

Here’s how the Sustainability Institute describes the Green New Deal, which it supports, as proposed by Democrats Alexandria Ocasio-Cortez and Edward J. Markey:

“The key focus areas of the Green New Deal were around decarbonizing the economy through the phasing out of fossil fuels and transitioning to 100% renewable energy. The resolution also aimed to fix societal issues such as economic inequality, poverty and racial injustice.”

Historically, the energy industry has been dominated by males, which is understandable, especially since a lot of the work performed at drilling sites, pipeline construction sites and even refineries is hard and dirty physical labor.

But one might expect, given the GND rhetoric, that the effort to expand renewable energy sources—primarily wind turbines and solar panels—would see a much higher participation rate by women. However, apparently the female participation rate is even worse in the renewable energy sector.

As Canary Media, a media outlet that covers the transition to renewables, reports: “A staggering 70% of the U.S. workforce for wind and solar electricity generation is male—even worse than the gender gap in coal and gas power generation.” See the chart.

To be sure, the gap isn’t much worse. But then the fossil fuel industry never promised to reduce racial, social and gender inequality, which is exactly what the Green New Dealers claim.

Yet while it was never a stated goal, the fossil fuel industry has done more than most industries in reducing income inequality, because it is a very high-paying industry, especially for blue-collar workers.

And it isn’t just the U.S. renewables industry that’s lagging. Citing a 2019 report from the International Renewable Energy Agency, Canary Media says, “Only 32% of the global renewable energy workforce was female in 2018. Women were especially underrepresented in renewables jobs related to science, technology, engineering and math (STEM), holding only 28 percent of those roles.”

As the left and President Biden continue to press for Green New Deal expansion as a solution to many of the country’s social and economic inequality challenges, we need to highlight its current failures to live up to its promises. And ask why anyone should believe its future promises.

At a time when European energy-producing companies need as much capital as they can get to invest in increased production to offset Russian President Vladimir Putin’s decision to cut natural gas supplies, the European Union is proposing to … wait for it … take $140 billion of energy-producers’ capital and give it to consumers to offset record high energy prices.
 
The Wall Street Journal explains:
 
“In these times it is wrong to receive extraordinary, record revenues and profits benefiting from war and on the back of our consumers,” European Commission President Ursula von der Leyen said Wednesday. She said the money captured from companies’ inflated profits and revenue should be channeled to those who need it most, such as households and small businesses.
 
Massachusetts Senator Elizabeth Warren said it almost exactly that same way. Here’s how she described the need for a windfall profits tax on oil companies in a bill she introduced last March.
 
“While Putin's war is causing gas prices to go up, Big Oil companies are raking in record profits. We need to curb profiteering by Big Oil and provide relief to Americans at the gas pump — that starts with ensuring these corporations pay a price when they price gouge, and using the revenue to help American families,” said Senator Warren. 
 
So, if profits are taken away from energy-producing companies—and renewable energy companies are included in the EU proposal if their profits are high enough, which they don’t appear to be—what are the companies supposed to use to expand production?
 
The EU solons believe the companies will still have plenty of money. “A cap on earnings at that level would allow producers to cover their costs and should not be a barrier to investment in new capacity, according to the commission,” writes the Journal.
 
Good to know. Who better than politicians and bureaucrats to determine how much money energy producers need to expand production? These would be the same people who were going to ensure EU countries had cheap, clean energy for decades by pushing renewable energy investment—and quietly relying on Russia to fill the sizable energy gap.
 
Now it becomes more obvious why the EU is in this mess. The politicians who didn’t have the foresight to see that relying on Putin for a major share of their energy also don’t have the foresight to see the problem with their windfall profits tax proposal.

There are reasons why European Union member countries never embraced the shale fracking revolution that played such an important role in moving the United States toward energy independence. Most of those reasons had to do with politics and policies, not access to natural resources. Those ill-considered decisions have left Europe in a very difficult position, both politically and economically. It didn’t have to be that way.
 
But it would be that way in the United States if Barack Obama, Joe Biden and the progressives and environmentalists had gotten—or may yet get—their way.
 
Wilkes University political science Associate Professor Andreea Maierean published a paper in 2021—before Russia’s invasion of Ukraine and decision to push Europe into an energy crisis—highlighting why the shale fracking revolution never caught on in Europe, and particularly Eastern Europe. She writes:

“In Europe, the shale story is one of much talk and little action. In Britain, drilling efforts have run into the skepticism of local planning departments as well as sporadic protests. France has kept a ban on fracking. Germany has not yet agreed to allow the exploration necessary to confirm whether the country’s geology is promising.”

However, Maierean notes, “Eastern Europe looked like the region with the best opportunity in Europe to put the lessons learned in the United States to work in relation to the exploitation of fracking resources.” But even there energy companies willing to apply fracking technology hit roadblocks and obstacles, and eventually pulled out.

It’s easy to see why fracking exploded in the United States. “In short, American regulation and legislation follow process and reward market development, but the outcome differed from state to state.” Thus, “decentralization played an important role in promoting shale development as local and state governments are at the forefront of energy regulation.”

By contrast: “In Eastern Europe, decentralization did not play a major role in fracking regulation as countries in the region are unitary states where most of the competences lie with the central government and only minor issues are within the authority of regions or cities. Natural resources are public property, but the use of proceeds and a lack of transparency when allocating concessions have plagued several projects …”

She concludes, “In the end, aside from the differences in physical characteristics, political and social factors prevented the American experience from being replicable in Eastern Europe. In the near future, the prospects of shale gas exploration in Eastern Europe are slim.”
 
If the U.S. anti-fracking movement—which we’ve discussed elsewhere—had been more successful, the United States might be facing similar energy challenges as Europe. Instead, we may be part of the solution to Europe’s energy needs.

In most aspects of life, having a firm grasp of the fundamentals is critical for good decision-making and success. While we may not like the fact that water tends to flow downhill, anyone wanting to swim upstream better take that fact into consideration before venturing into the water. 

As governments and companies seek to transition away from fossil fuels toward various types of renewable energy sources it would be a good idea to take a step back and reflect on some energy fundamentals. Otherwise, they are swimming upstream. 

Beginning in mid-19th century England and spreading rapidly throughout the globe, humanity began to harness the energy stored in fossil fuels. Coal came first, displacing less-efficient and often less-abundant fuels like wood and animal dung. 

Importantly, this transition took place based on traditional economic incentives, not government subsidies and mandates. That’s in large part because fossil fuels possess three immutable characteristics that propelled their rapid adoption and continued dominance in global energy usage.

• They are naturally energy dense.
• They can be relatively easily transported.
• They can be stored indefinitely for future use.

These critical attributes have enabled societies to generate electricity, power transportation and provide industrial heat reliably and at very low cost. 

Today’s renewables, consisting mainly of wind and solar, do not possess these three fundamental attributes. Renewables are naturally diffuse and the electricity they create can only be gathered when the source of that energy is available. This electricity must then be transported, at times long distances with significant energy loss, to power the grid. Finally, while battery technology is improving, electricity storage at industrial scale for long periods of time is not a current or even near-term reality. 

Those are the incontrovertible facts. They may, and likely will, change in the future, but for now those are the fundamentals everyone must acknowledge. 

It’s common to hear statements from proponents of a rapid renewable-energy transition like, “recent improvements in technology now allow renewables to compete effectively with fossil fuels.” 

That’s nonsense. Renewables simply don’t possess any of the three critically important attributes of fossil fuels: energy density, easy transportability, and long-term storage. But like that challenge swimming upstream, the energy-transition crowd wants to talk about the possible, not the actual. 

Some recent experiences in Texas, with the February 2021 freeze and the seemingly annual calls for decreasing power usage in the summer months, should tell us something about the challenges facing a developed, modern economy that thrives on electricity and transportation 24 hours a day. 

Just look at Europe. The European Union and its member states ignored years of warnings that they should produce more fossil fuels because the day might come when Russia would use energy access as a political hammer. Instead, most EU countries wanted to tout their renewable energy expansion, even as they increasingly relied on Russian natural gas to power their economies. 

We should all be skeptical of those with a damn-the-torpedoes mindset when it comes to transitioning away from fossil fuels that have immeasurably improved the human condition. If transition advocates won’t acknowledge the problems we’ve experienced with renewables and provide balanced, logical and actionable solutions, we are right to question their motives and assertions of a smooth transition.

You may recall the 1973-74 Arab oil embargo, and not favorably. The United States learned a lesson from the embargo and took steps toward becoming energy independent. Now that Russia has decided to hit the European Union (EU) with a mini-natural gas embargo, though it isn’t using that terminology, the EU is having to learn a similar lesson, quickly.

Developments leading up to the Russian natural gas embargo of the EU are quite similar to those that preceded the Arab oil embargo. 

As the U.S. State Department explains the history, “During the 1973 Arab-Israeli War, Arab members of the Organization of Petroleum Exporting Countries (OPEC) imposed an embargo against the United States in retaliation for the U.S. decision to re-supply the Israeli military and to gain leverage in the post-war peace negotiations.”

Other nations that supported Israel were also included in the embargo, which banned oil exports to the sanctioned nations.

The issue today is the U.S. and EU’s support for Ukraine (as opposed to Israel in 1973) after Russia’s brutal invasion. In response, Russia has temporarily stopped or reduced natural gas flows to the EU countries.

Of course, one difference between today and 1973 is that the United States still wanted and needed crude oil from the Arab countries, which were willing to forego some revenue from reduced oil sales. By contrast, the U.S. and the EU are voluntarily reducing their natural gas purchases from Russia, in part because Russia uses those revenues to pay for its war.

The Arab oil embargo led to long waiting lines at service stations, significantly higher prices for gasoline and other items, and a loss of U.S. leverage in international affairs.

President Nixon responded by announcing an effort to increase U.S. oil production, though oil reserves available through the then-current extraction technology were declining. Fortunately, diplomatic efforts ramped up, and by March 1974 the embargo came to an end.

Even so, Congress became concerned and passed legislation to create the Strategic Petroleum Reserve and the CAFÉ standards (i.e., mandates that cars and trucks hit certain miles-per-gallon goals) and prohibited crude oil exportation. The goal was to achieve U.S. energy independence.

But then in 1978 Congress took a wrong turn and passed the National Energy Act, which increasingly focused on mandating or subsidizing various types of alternative energy sources. But while the costs and subsidies grew over the next few decades, the alternative energy sources didn’t, at least not much.

The United States did eventually achieve energy independence, or close to it, but only in 2019 or 2020. And it wasn’t from the widespread expansion of renewable energy, because it still isn’t widespread.

Rather it was the fracking revolution, combined with horizontal drilling, beginning in the mid-2000s that opened vast new U.S. fossil fuel reserves. Those advances allowed us to produce enough natural gas and nearly enough oil to meet our own needs, and to become the world’s leading exporter of liquified natural gas (LNG). And it meant we were no longer an energy hostage to other nations bent on punishing us for our foreign policy decisions.

The European Union did not learn that lesson. Even though it was encouraged to embrace the fracking revolution, it never really did.

President Trump pressed Germany to back off the Nord Stream 2 pipeline, which would have made Germany and the EU even more dependent on Russian natural gas. Germany dismissed the recommendation, until the Ukraine invasion. 

While France has continued to embrace nuclear power, which emits no carbon, Germany started shuttering its nuclear power plants after the Fukushima incident in Japan.

But most EU countries have turned to renewable energy (wind and solar power), boasting of their clean energy and Earth-saving bona fides, even as they quietly relied on Russia to supply them with the fossil fuels they needed.

Now, the EU is enduring the Russian version of the Arab oil embargo, in large part because it spurned multiple warnings over several years that Russia could and would use Europe’s energy dependence against it.

The EU is trying to ramp up fossil fuel production, including restarting and supplying coal to shuttered electricity generating plants. 

The EU may experience gas lines, and millions of its citizens may have to endure part of the coming winter without heat. Already, Berlin is turning off lights to some monuments and historic buildings to conserve energy. We don’t know yet what challenges Europe will face.

But one thing does seem clear: The EU countries will finally learn the lesson of the Arab oil embargo.

Joe Manchin, call your office! You’ve just been played.
 
West Virginia Senator Joe Manchin (D) traded his support for Senate Majority Leader Chuck Schumer’s (D-NY) scaled-down Build Back Better bill in exchange for bringing to a vote some permitting reforms relating primarily to energy.
 
According to Manchin, Democratic leaders “committed to advancing a suite of commonsense permitting reforms this fall that will ensure all energy infrastructure, from transmission to pipelines and export facilities, can be efficiently and responsibly built.”
 
Good luck with that, even if those reforms pass.
 
Under the Biden administration what Congress can give, federal agencies can—and likely will—take away.
 
This was made clear in a recent Reuters interview with Environmental Protection Agency Administrator Michael Regan. According to Reuters, “The U.S. Environmental Protection Agency plans to use new limits on traditional pollutants like ozone and coal ash to help encourage the retirement of the nation’s remaining coal-fired power plants.”
 
But wait, didn’t the U.S. Supreme Court limit the EPA’s ability to expand its scope beyond congressional authorization? That decision even focused on Manchin’s home state.
 
“The approach reflects how the administration of U.S. President Joe Biden intends to forge ahead with goals to decarbonize the power sector despite the recent ruling from the court,” according to the Reuters article.
 
Here’s how Regan explains it: “We want to present the industry with a suite of regulations so that they can make the best long-term investments possible. The power sector will ... look at the cost benefit of complying with those and more than likely stay with the conclusion that ... clean energy is more cost effective for them and for their customers.”
 
In essence, Regan says the Court’s ruling makes the EPA’s goal of shutting down fossil fuel electricity generation, beginning with coal, a little trickier. “But are we deterred? Absolutely not. EPA is still in the game,” he tells the Reuters reporter. By which he means the EPA is still in the regulating game.
 
Now, there is no reason to think the pro-Green New Deal EPA or other federal agencies in the Biden administration wouldn’t take a similar approach and over-regulate Manchin’s pipeline permitting reforms.
 
Reform the permitting process all you like, Joe. But if the applicable federal agencies decide to make life difficult for companies seeking permission to build export facilities or pipelines or transmission lines, they can. And Regan assures us they will.

President Joe Biden hasn’t limited himself to scolding gas stations about charging too much for gasoline. He recently scolded the refineries also.