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Albert V. Gore, Jr. (former Vice President, Senator, and Representative) laid out his plan to save the planet from global warming in a speech at the Daughters of the American Revolution’s Constitution Hall in Washington on Thursday. As a member of the We (Can Solve It) Campaign, I got one of the first tickets and was able to attend along with four thousand other lucky folks. Americans for Prosperity and CEI’s Bureaucrash added to the gaiety by holding a little demonstration in front of the building. Mr. Gore and his entourage arrived in two Lincoln Town Cars and a Chevy Suburban.  

 

Gore argued that, because global warming is happening faster and the impacts are even worse than even he predicted a few years ago, drastic actions were required immediately. He proposed that the United States replace all of its coal and natural gas produced electricity with solar, wind, and geothermal sources within ten years and also move towards replacing our gas-powered automobiles with plug-in electric hybrids.

 

Coal-fired power plants produce about half the nation’s electricity. Natural gas-fired plants contribute roughly twenty percent. He didn’t mention nuclear (another 20%) or hydropower (7%), so I’m not sure whether he proposes to keep or replace those sources. Electric utility companies are having a hard time building enough new power plants to keep up with increasing demand. Most of the new power being installed is coal or gas. At a minimum, it takes several years to design, arrange financing, permit, and build any new power facility. Gore is proposing that we close thousands of plants worth trillions of dollars and replace them with thousands of new plants costing trillions of dollars in a decade.  hat sounds a little unrealistic to me.

 

Gore argued that the costs would be substantial, but would not be as high as the defenders of Big Hydrocarbon claimed. First, the costs of solar and wind power have come down dramatically in the past few years. Second, building new solar and wind facilities on a massive scale would lower prices even more dramatically. Third, prices for oil, gas, and coal have gone up rapidly in the past few years.  And fourth, hydrocarbon prices could only continue to go up. So within a decade the cost of solar and wind power would be no higher than the cost of continuing to burn coal and gas. 

 

Even if true, Gore seems not to understand the concept of sunk costs or the capital required to build all those wind mills and solar panels. It would require a lot more to accomplish than the sacrifices Americans were forced to make during World War Two, when much of our market economy became a command-and-control economy.

 

The Dark Side of the Force has now spoken: Turn out the Lights! And Back to the Caves! Were only there enough caves for six billion people.

Working as a land clerk for a small Denver oil exploration company in 1981, I did a lot of work that never resulted in a drop of oil. We worked to get a high percentage of the leases covering a certain field, but sometimes another company, such as Anadarko, held too much of the area or we had to wait on cantankerous rancher holdouts. It was a long, many times unsuccessful, process.

 

Oil exploration has come a long way since the ‘80s but many things still hold true. It’s still a risky business—the $50 yearly check I received in the ‘80s from a small percent interest I held in an oil well turned into a $50 liability in the ‘90s. (I foolishly got rid of it.)

 

The number of permits required has increased.  Twenty-five to thirty permits are needed for off-shore leasing, and the permitting required for onshore leasing has become dizzying as well.

 

But the energy companies are filling our government’s coffers. In 2006, the top 27 U.S. energy producing companies paid 21% of the total corporate income taxes ($81.5 billion) collected by the federal government. These 27 companies were responsible for 44% of the total U.S. crude oil and natural gas production, and 81% of domestic refining capacity.(API) In fiscal year 2006, $10.48 billion was also collected in the form of bonus bids, rents and royalties from oil and gas companies operating on Federal lands. (Interior Budget in Brief 2009)

 

It’s also important to know that ANWR’s size is comparable to South Carolina’s and the size of the area that would be drilled is comparable to Dulles airport’s. Jonah Goldberg asks, “Has South Carolina been ruined because it has an airport?” The Congressional Research Service estimates that ANWR production would deliver $191.1 billion in corporate income tax and royalty payments to the federal treasury at today’s prices. (CRS Report)

 

Today, certain congressmen think they are landmen and have decided that oil companies don’t know how to make money and should be making money off their currently-held leases, rather than Congress releasing new areas. They have no desire to open up American soil for American oil with American jobs. This is clearly seen in the fact that the place where such a bill would be considered—the House Natural Resources Subcommittee on Energy & Mineral Resources —has no hearings scheduled for July on this important issue.