Bjorn Lomborg, "the skeptical environmentalist," has a good piece in Slate taking on the myth of the "green energy" economy -- which should be required reading for all those who are still drinking the "new energy economy" Kool-aid peddled by one former Colorado governor. The claimed economic benefits are largely an illusion, Lomborg explains, which results from studying only one side of the ledger, a common mistake among economic illiterates.
Lomborg's analysis is straight out of Bastiat, the free-market pamphleteer and popularizer who explained this oft-made mistake in a famous essay, "What is seen and what is not seen." Wikipedia explains Bastiat's point as follows, for those who aren't inclined to read the essay:
"One of Bastiat's most important contributions to the field of economics was his admonition to the effect that good economic decisions can only be made by taking into account the "full picture." That is, economic truths should be arrived at by observing not only the immediate consequences – that is, benefits or liabilities – of an economic decision, but also by examining the long-term consequences. Additionally, one must examine the decision's effect not only on a single group of people (say candlemakers) or a single industry (say candles), but on all people and all industries in the society as a whole. As Bastiat famously put it, an economist must take into account both "What is Seen and What is Not Seen." Bastiat's "rule" was later expounded and developed by Henry Hazlitt in his work Economics in One Lesson, in which Hazlitt borrowed Bastiat's trenchant "Broken Window Fallacy" and went on to demonstrate how it applies to a wide variety of economic falsehoods."
The "green energy economy" is an illusion generated by looking at only one side of a multi-sided equation -- by focusing on the apparently-obvious benefits and beneficiaries, while ignoring the less-obvious costs and economic casualties that stem from a government-ordered reallocation of scarce resources. The economic illiterate applauds the new job being "created" in the wind turbine plant -- a job being subsidized by federal or state "incentives" -- but ignores the job that's destroyed at the coal mine or on the drilling rig, all because politicians decide that they know better than the market does about how to organize the energy sector.
True "economic literacy" requires an ability to see not just what seems obvious, but what is harder to see but is just as consequential. When you see the picture in totality, the "green jobs" delusion disappears.
Showing posts with label the new energy economy. Show all posts
Showing posts with label the new energy economy. Show all posts
Thursday, February 17, 2011
Saturday, January 16, 2010
Blind Faith
Sometimes I get really annoyed with Denver Post columnist Vince Carroll. I guess it's a case of pundit envy.
He keeps writing the columns that I would be and should be writing, if only I had the time (and the skill). He did it again this week with a piece on New Energy Economics, a field of theory that has nothing to do with Real World Economics, as Carroll points out. But trying to reason with people on so-called "green energy" is like trying to get a Jihadist to join a kibbutz. It's a discussion, as Carroll point out, in which reason doesn't apply and trying to make sense is a waste of time.
Here's an excerpt:
"Maybe he needn't worry about making sense. A surprising number of Americans seem to believe the normal rules of economics and government investment don't apply to clean energy — that subsidies, for example, create more jobs than they destroy. Recently, when an Associated Press-Stanford University survey asked people whether policies to combat global warming "would cause there to be more jobs, fewer jobs or wouldn't affect the number of jobs," 40 percent said more jobs, 33 said "no effect" and only 23 percent said "fewer."
The most sensible answer — "government industrial policy is almost never an efficient way to allocate resources, so I'm guessing job growth will be slower as a result" — wasn't even an option.
Most commentators who support growing subsidies for clean energy dismiss the possibility that the money might do as much or more good invested, say, in other cutting edge technologies where the returns would be higher. Or, if they're like The New York Times' Thomas Friedman, they simply ignore the inevitable trade-offs. Friedman tirelessly promotes the idea that "building a clean-power economy" at government direction and support will make us "stronger, more innovative and more energy independent" — without ever asking the question, as George Mason professor Don Boudreaux points out, "compared to what?"
As Boudreaux explained on his blog, "How can Mr. Friedman be so sure that the benefits of windmills, solar panels, and battery-powered electric cars will exceed the costs of making — will exceed in value that which must be foregone to make — these green fetishes a reality?
"Of course, he cannot be sure. Not even close. Like so many other pundits, Mr. Friedman simply ignores, or arbitrarily discounts, the costs of turning his oh-so-lovely daydreams into quotidian actuality."
Last week, The Wall Street Journal's Jeffrey Ball reported that "government spending and price supports accounted for about one-third of the roughly $145 billion invested worldwide in clean energy in 2009 . . . ." Little wonder that under the Obama stimulus plan, "renewable energy producers are eligible for cash grants totaling 50 percent of the cost of projects they do this year — however high those costs go."
At what point does this gusher of subsidies become a scandal?"
Not any time soon, apparently.
It's not just the subsidies but the government mandates that are helping to prop-up an "industry" that can't stand on its own, an "economy" that makes no real market sense. Carroll points out that members of the Church of New Energy Economics, Colorado Chapter, are preparing to push for even higher statewide renewable energy production quotas this legislative session.
Heaven help the common ratepayers of Colorado if they succeed.
He keeps writing the columns that I would be and should be writing, if only I had the time (and the skill). He did it again this week with a piece on New Energy Economics, a field of theory that has nothing to do with Real World Economics, as Carroll points out. But trying to reason with people on so-called "green energy" is like trying to get a Jihadist to join a kibbutz. It's a discussion, as Carroll point out, in which reason doesn't apply and trying to make sense is a waste of time.
Here's an excerpt:
"Maybe he needn't worry about making sense. A surprising number of Americans seem to believe the normal rules of economics and government investment don't apply to clean energy — that subsidies, for example, create more jobs than they destroy. Recently, when an Associated Press-Stanford University survey asked people whether policies to combat global warming "would cause there to be more jobs, fewer jobs or wouldn't affect the number of jobs," 40 percent said more jobs, 33 said "no effect" and only 23 percent said "fewer."
The most sensible answer — "government industrial policy is almost never an efficient way to allocate resources, so I'm guessing job growth will be slower as a result" — wasn't even an option.
Most commentators who support growing subsidies for clean energy dismiss the possibility that the money might do as much or more good invested, say, in other cutting edge technologies where the returns would be higher. Or, if they're like The New York Times' Thomas Friedman, they simply ignore the inevitable trade-offs. Friedman tirelessly promotes the idea that "building a clean-power economy" at government direction and support will make us "stronger, more innovative and more energy independent" — without ever asking the question, as George Mason professor Don Boudreaux points out, "compared to what?"
As Boudreaux explained on his blog, "How can Mr. Friedman be so sure that the benefits of windmills, solar panels, and battery-powered electric cars will exceed the costs of making — will exceed in value that which must be foregone to make — these green fetishes a reality?
"Of course, he cannot be sure. Not even close. Like so many other pundits, Mr. Friedman simply ignores, or arbitrarily discounts, the costs of turning his oh-so-lovely daydreams into quotidian actuality."
Last week, The Wall Street Journal's Jeffrey Ball reported that "government spending and price supports accounted for about one-third of the roughly $145 billion invested worldwide in clean energy in 2009 . . . ." Little wonder that under the Obama stimulus plan, "renewable energy producers are eligible for cash grants totaling 50 percent of the cost of projects they do this year — however high those costs go."
At what point does this gusher of subsidies become a scandal?"
Not any time soon, apparently.
It's not just the subsidies but the government mandates that are helping to prop-up an "industry" that can't stand on its own, an "economy" that makes no real market sense. Carroll points out that members of the Church of New Energy Economics, Colorado Chapter, are preparing to push for even higher statewide renewable energy production quotas this legislative session.
Heaven help the common ratepayers of Colorado if they succeed.
Tuesday, February 17, 2009
Green Smoke and Mirrors
Part of what President Barack Obama will be touting today, when he signs the stimulus bill in Denver, are all the “green energy jobs” that will be created, and the “new energy economy” that will materialize, when this blizzard of federal greenbacks hits the fan. Gov. Bill Ritter will be there, too, to make his own overblown claims about how the “new energy economy” is working in Colorado.
But take it all with a grain of salt.
We’re likely to hear, again, how Ritter’s support for higher renewable energy mandates and more “investment” in alternative energy helped create more than 91,000 jobs in Colorado – a claim Ritter made last fall, citing a then-unpublished report by the American Solar Energy Society in Boulder. That this statistic was generated by an advocacy group, in a study underwritten by the state, might have raised red flags, though all except a few in the media reported it as fact. But now the complete report is available and the truth can be told.
The claim is a fabrication, which falls apart under closer scrutiny.
The 91,000 jobs Ritter takes credit for can only be concocted by defining the “new energy economy” so broadly that the term loses meaning, and by lumping renewable energy jobs in with “energy efficiency” jobs. The first group is more easily identified and quantified than the second, which ASES determines by casting its net widely, like a fisherman desperate for a big catch. Caught up in the net are any jobs even remotely linked to energy efficiency. It could be the gal who cuts the hair of the guy who drives the truck that delivers the energy-efficient refrigerator to the department store. Or maybe you work as a security guard at a recycling center – voila! You’re part of Ritter’s “new energy economy.” Or perhaps you’re an accountant at a utility company that offers an energy efficiency program (as almost every utility does): That means you’re a part of the new energy economy too.
Maybe I should be counted as part of Ritter’s economic miracle, since I’m typing this on a PC with an energy-efficient screen saver.
The study exaggerates the importance of the NEE by inflating the numbers, counting not only the assembler of the energy efficient furnace, but the person who services it; not just the builder of the hybrid vehicle, but the hybrid vehicle salesman. Also lumped in are accountants, cashiers, “management analysts,” roofers, truck drivers, welders, janitors, security guards, and stock clerks.
Roughly 80,000 of the 91,000 jobs counted as part of the NEE in 2007 were of this kind -- though these jobs could just as easily be credited to market forces or consumer choice, since government action isn’t the only thing that encourages efficiency.
That left about 10,000 jobs directly related to renewable energy in 2007. But more than half those jobs – 5,100 – were at a federal government facility, the National Renewable Energy Lab, and predated Ritter’s tenure. That means less than 5,000 private sector jobs could be directly linked to renewable energy in 2007 -- a paltry number, considering that 600,000 new jobs are created in the state each year.
Brad Collins, the executive director of the ASES, concedes that Ritter and his administration have no legitimate claim to having created these jobs when, in a Rocky Mountain News opinion piece published last week, he notes, almost in passing, that “these are not newly created jobs in 2007, but the total number of jobs at the end of 2007, including many jobs created in 2006 and earlier.”
Yet no such footnote came attached to Ritter’s boast of last fall, which was reported as fact by many media outlets and has yet to be corrected. Where standard political spin crosses over the line into dishonesty is hard to pinpoint with precision. But Gov. Ritter was certainly pushing the boundary when he made these claims.
As of two years ago -- the most recent year for which actual data exists -- Ritter’s “new energy economy” was insignificant, in terms of its economic importance and contribution to the state's overall energy portfolio. And while it’s undoubtedly more significant today – given the massive benefits the industry enjoys as a result of government mandates, taxpayer subsidies and political allies – it’s still far less consequential than the governor claims.
Here, in passages pulled directly from the report, is the reality behind the rhetoric.
From Pg. 110:
“... the (renewable energy) industry in the state is small and, except for the federal sector – primarily NREL -- does not currently play a major role in the state economy or job market. For example, in 2007:
* (Renewable energy) RE accounted for less than 0.6 percent of Colorado gross state product
* Excluding NREL, RE accounted for less than 0.4 percent of Colorado GSP.
* The total jobs created by RE accounted for only about 0.4 percent of total Colorado employment
* Excluding NREL, direct employment in the RE industry represents only about 0.2 percent of total state employment”
The report also throws cold water on the idea that the NEE is an equal opportunity jobs creator:
“. . . Despite various proposals that have been made in recent years to use RE as a job creation program for the disadvantaged, the chronically unemployed, or for other target populations, this is simply not feasible at present in Colorado.
Total employment in Colorado is over 2.6 million and unemployment totals over 100,000. The total number of jobs generated by RE (excluding NREL) is only about 4,600, and direct RE employment (excluding NREL) is only about 2,000. Excluding jobs that are not realistic targets for retraining the unemployed or those lacking adequate skills or training – such as jobs in R&D, hydropower, biomass power, DOE laboratories, financial institutions, etc. – leaves direct RE employment in the state at about 1,500 jobs. Even if RE jobs grew 10 percent annually, this would create only about 150 new jobs each year. And, if most of these were somehow allocated to the unemployed – which is not a realistic assumption, the impact on state unemployment would still be negligible.”
The report predicts the future job-creating prowess of the NEE under scenarios of increasingly-remote plausibility. The sunniest scenarios, not surprisingly, all depend on more mandates, more “investment” (read: subsidies) and more government interventions on behalf of the industry. And here’s where the report actually does enhance our understanding of the situation. Clearly, without leaning on a government crutch, and taxpayer support, the New Energy Economy would fold up like a Bedouin camp and vanish into the night.
My definition of a true economy is something that operates largely independent of government meddling and management, responding to private initiative, voluntary exchange, market forces, entrepreneurial creativity and consumer choice. The new energy economy flunks most if not all these tests, and more strongly resembles the "economies” socialists attempt to fashion through command and control methods. It’s a creature of government, which will continue to rely on government intervention, support and subsidies for decades to come, and may never stand on its own.
A few statehouse skeptics chided Ritter for using such a flimsy piece of research in such a self-serving way. State Sen. Scott Renfroe, a Greeley Republican, said he hasn’t seen many of these 91,000 jobs in Weld County, and wondered where they all are. "It doesn't pass the laugh test," said Assistant Republican Leader Greg Brophy, who supports the green energy industry but says he thinks “we ought to tell the truth about the size of it." Noting that the report was done with state support, Brophy joked: “I guess if you can't use tax dollars to effectively promote green energy, you always can use them to promote the promotion of it."
I don’t expect that Ritter will correct the record, or temper the hyperbole today, when he and President Obama sing the praises of the NEE at the stimulus bill signing ceremony. But a little more truth in advertising as we move forward would be a breath of fresh air.
But take it all with a grain of salt.
We’re likely to hear, again, how Ritter’s support for higher renewable energy mandates and more “investment” in alternative energy helped create more than 91,000 jobs in Colorado – a claim Ritter made last fall, citing a then-unpublished report by the American Solar Energy Society in Boulder. That this statistic was generated by an advocacy group, in a study underwritten by the state, might have raised red flags, though all except a few in the media reported it as fact. But now the complete report is available and the truth can be told.
The claim is a fabrication, which falls apart under closer scrutiny.
The 91,000 jobs Ritter takes credit for can only be concocted by defining the “new energy economy” so broadly that the term loses meaning, and by lumping renewable energy jobs in with “energy efficiency” jobs. The first group is more easily identified and quantified than the second, which ASES determines by casting its net widely, like a fisherman desperate for a big catch. Caught up in the net are any jobs even remotely linked to energy efficiency. It could be the gal who cuts the hair of the guy who drives the truck that delivers the energy-efficient refrigerator to the department store. Or maybe you work as a security guard at a recycling center – voila! You’re part of Ritter’s “new energy economy.” Or perhaps you’re an accountant at a utility company that offers an energy efficiency program (as almost every utility does): That means you’re a part of the new energy economy too.
Maybe I should be counted as part of Ritter’s economic miracle, since I’m typing this on a PC with an energy-efficient screen saver.
The study exaggerates the importance of the NEE by inflating the numbers, counting not only the assembler of the energy efficient furnace, but the person who services it; not just the builder of the hybrid vehicle, but the hybrid vehicle salesman. Also lumped in are accountants, cashiers, “management analysts,” roofers, truck drivers, welders, janitors, security guards, and stock clerks.
Roughly 80,000 of the 91,000 jobs counted as part of the NEE in 2007 were of this kind -- though these jobs could just as easily be credited to market forces or consumer choice, since government action isn’t the only thing that encourages efficiency.
That left about 10,000 jobs directly related to renewable energy in 2007. But more than half those jobs – 5,100 – were at a federal government facility, the National Renewable Energy Lab, and predated Ritter’s tenure. That means less than 5,000 private sector jobs could be directly linked to renewable energy in 2007 -- a paltry number, considering that 600,000 new jobs are created in the state each year.
Brad Collins, the executive director of the ASES, concedes that Ritter and his administration have no legitimate claim to having created these jobs when, in a Rocky Mountain News opinion piece published last week, he notes, almost in passing, that “these are not newly created jobs in 2007, but the total number of jobs at the end of 2007, including many jobs created in 2006 and earlier.”
Yet no such footnote came attached to Ritter’s boast of last fall, which was reported as fact by many media outlets and has yet to be corrected. Where standard political spin crosses over the line into dishonesty is hard to pinpoint with precision. But Gov. Ritter was certainly pushing the boundary when he made these claims.
As of two years ago -- the most recent year for which actual data exists -- Ritter’s “new energy economy” was insignificant, in terms of its economic importance and contribution to the state's overall energy portfolio. And while it’s undoubtedly more significant today – given the massive benefits the industry enjoys as a result of government mandates, taxpayer subsidies and political allies – it’s still far less consequential than the governor claims.
Here, in passages pulled directly from the report, is the reality behind the rhetoric.
From Pg. 110:
“... the (renewable energy) industry in the state is small and, except for the federal sector – primarily NREL -- does not currently play a major role in the state economy or job market. For example, in 2007:
* (Renewable energy) RE accounted for less than 0.6 percent of Colorado gross state product
* Excluding NREL, RE accounted for less than 0.4 percent of Colorado GSP.
* The total jobs created by RE accounted for only about 0.4 percent of total Colorado employment
* Excluding NREL, direct employment in the RE industry represents only about 0.2 percent of total state employment”
The report also throws cold water on the idea that the NEE is an equal opportunity jobs creator:
“. . . Despite various proposals that have been made in recent years to use RE as a job creation program for the disadvantaged, the chronically unemployed, or for other target populations, this is simply not feasible at present in Colorado.
Total employment in Colorado is over 2.6 million and unemployment totals over 100,000. The total number of jobs generated by RE (excluding NREL) is only about 4,600, and direct RE employment (excluding NREL) is only about 2,000. Excluding jobs that are not realistic targets for retraining the unemployed or those lacking adequate skills or training – such as jobs in R&D, hydropower, biomass power, DOE laboratories, financial institutions, etc. – leaves direct RE employment in the state at about 1,500 jobs. Even if RE jobs grew 10 percent annually, this would create only about 150 new jobs each year. And, if most of these were somehow allocated to the unemployed – which is not a realistic assumption, the impact on state unemployment would still be negligible.”
The report predicts the future job-creating prowess of the NEE under scenarios of increasingly-remote plausibility. The sunniest scenarios, not surprisingly, all depend on more mandates, more “investment” (read: subsidies) and more government interventions on behalf of the industry. And here’s where the report actually does enhance our understanding of the situation. Clearly, without leaning on a government crutch, and taxpayer support, the New Energy Economy would fold up like a Bedouin camp and vanish into the night.
My definition of a true economy is something that operates largely independent of government meddling and management, responding to private initiative, voluntary exchange, market forces, entrepreneurial creativity and consumer choice. The new energy economy flunks most if not all these tests, and more strongly resembles the "economies” socialists attempt to fashion through command and control methods. It’s a creature of government, which will continue to rely on government intervention, support and subsidies for decades to come, and may never stand on its own.
A few statehouse skeptics chided Ritter for using such a flimsy piece of research in such a self-serving way. State Sen. Scott Renfroe, a Greeley Republican, said he hasn’t seen many of these 91,000 jobs in Weld County, and wondered where they all are. "It doesn't pass the laugh test," said Assistant Republican Leader Greg Brophy, who supports the green energy industry but says he thinks “we ought to tell the truth about the size of it." Noting that the report was done with state support, Brophy joked: “I guess if you can't use tax dollars to effectively promote green energy, you always can use them to promote the promotion of it."
I don’t expect that Ritter will correct the record, or temper the hyperbole today, when he and President Obama sing the praises of the NEE at the stimulus bill signing ceremony. But a little more truth in advertising as we move forward would be a breath of fresh air.
Tuesday, January 6, 2009
Boom to Bust: Who's to Blame?
Colorado Governor Bill Ritter's one claim to fame, as he stands at the midpoint of his term, is his over-hyping of what he calls the "new energy economy" -- and the fact that another rising politico, a guy named Barack Obama, stole the phrase from him.
It's more appropriately called the "New Energy Baloney," in my view, since it's largely based on subsidies, mandates and other government interventions in support of niche energy technologies that aren't ready for prime time -- while regulatory and rhetorical war is waged against an "old" energy economy that actually delivers the goods.
But perhaps it's time that Ritter began paying a little more attention to "old energy economy" in Colorado, since his two year effort to undermine it seems to be turning energy boom into bust. Factors beyond one governor's control are involved, no doubt, as the Durango Herald story below points out. But Ritter's anti-energy development attitudes, and the deterrent effect these might be having on the industry, can't be discounted.
The 3 most obvious moves Ritter made against the industry are:
His packing of the state's "greener" oil and gas commission with people who are either hostile or indifferent to (or ignorant about) the industry;
His championing of a ballot measure -- roundly defeated -- that would have jacked-up energy severance taxes;
His efforts to slow or block a balanced and sensible drilling plan for the Roan Plateau (the product of 7 years of careful study and public process by the BLM), and the development of oil shale in Western Colorado, in a pander to eco-extremists who reflexively oppose energy development almost everywhere it's proposed.
Ritter's touting of the "new energy economy" is widely cited as his most notable accomplishment thus-far. But his foolish assault on the "old energy economy," and the toll it is taking on Colorado, is having a much greater real impact -- only in a negative way.
Here's today's story from the Durango Herald:
Legislators get preview of gas debate
by Joe Hanel
Herald Denver Bureau
What killed the golden goose?
The gas and oil industry often bills itself as Colorado's golden goose, but in recent months, drilling rigs have started to leave Colorado. Lawmakers on Monday got a preview of the political mystery that is sure to be one of the hottest debates of the year.
The Legislature doesn't officially begin until Wednesday, but a special committee on job creation has been meeting since last fall. Gas and oil industry representatives visited the committee Monday to argue that new rules of the Colorado Oil and Gas Conservation Commission are chasing away jobs. Legislators will vote on the rules this session.
The debate has raged since Gov. Bill Ritter's administration proposed the changes two years ago. Republicans in general oppose the new regulations, while Democrats defend them.
"I wonder - I hate to say this - why some of the oil and gas companies would want to do business in Colorado," said Rep. Larry Liston, R-Colorado Springs.
Companies indeed are leaving Colorado, according to the latest counts of drilling rigs.
Colorado's rig count declined to 93, according to the latest count Jan. 2 by Baker Hughes, a company that tracks rig data. Colorado has 99 rigs in January 2009, but it had as many as 123 last spring.
However, many other major gas states declined as much or more, including Wyoming, Texas and New Mexico.
Rigs left Colorado even though the industry has unused drilling permits and the new rules haven't taken effect yet, said Harris Sherman, chairman of the Oil and Gas Conservation Commission. "If these rig declines are occurring, they're occurring under the old system, not the new system," Sherman said.
Sherman blames economic reasons for the loss of rigs, not the new regulations.
Jon Harpole or Mercator Energy, who opposes the rules, said companies have quit drilling for four reasons.
The price of gas is too low, the credit markets are frozen, shale gas has opened opportunities in other states and Colorado is about to adopt new rules. Legislators can control only the last factor, he said. Shale gas, in particular, has revolutionized the industry. Companies now have the technology to tap large deposits that they couldn't reach three or four years ago, he said.
"What's happened is phenomenal, and most Americans don't even understand what's happened here," Harpole said.
Montezuma County has a promising deposit of shale gas that could open the county to the industry. States including North Dakota, Louisiana and Arkansas also have large deposits.
"You don't want to be at a regulatory disadvantage to these states, and quite honestly that's where we are now," Harpole said.
It's more appropriately called the "New Energy Baloney," in my view, since it's largely based on subsidies, mandates and other government interventions in support of niche energy technologies that aren't ready for prime time -- while regulatory and rhetorical war is waged against an "old" energy economy that actually delivers the goods.
But perhaps it's time that Ritter began paying a little more attention to "old energy economy" in Colorado, since his two year effort to undermine it seems to be turning energy boom into bust. Factors beyond one governor's control are involved, no doubt, as the Durango Herald story below points out. But Ritter's anti-energy development attitudes, and the deterrent effect these might be having on the industry, can't be discounted.
The 3 most obvious moves Ritter made against the industry are:
His packing of the state's "greener" oil and gas commission with people who are either hostile or indifferent to (or ignorant about) the industry;
His championing of a ballot measure -- roundly defeated -- that would have jacked-up energy severance taxes;
His efforts to slow or block a balanced and sensible drilling plan for the Roan Plateau (the product of 7 years of careful study and public process by the BLM), and the development of oil shale in Western Colorado, in a pander to eco-extremists who reflexively oppose energy development almost everywhere it's proposed.
Ritter's touting of the "new energy economy" is widely cited as his most notable accomplishment thus-far. But his foolish assault on the "old energy economy," and the toll it is taking on Colorado, is having a much greater real impact -- only in a negative way.
Here's today's story from the Durango Herald:
Legislators get preview of gas debate
by Joe Hanel
Herald Denver Bureau
What killed the golden goose?
The gas and oil industry often bills itself as Colorado's golden goose, but in recent months, drilling rigs have started to leave Colorado. Lawmakers on Monday got a preview of the political mystery that is sure to be one of the hottest debates of the year.
The Legislature doesn't officially begin until Wednesday, but a special committee on job creation has been meeting since last fall. Gas and oil industry representatives visited the committee Monday to argue that new rules of the Colorado Oil and Gas Conservation Commission are chasing away jobs. Legislators will vote on the rules this session.
The debate has raged since Gov. Bill Ritter's administration proposed the changes two years ago. Republicans in general oppose the new regulations, while Democrats defend them.
"I wonder - I hate to say this - why some of the oil and gas companies would want to do business in Colorado," said Rep. Larry Liston, R-Colorado Springs.
Companies indeed are leaving Colorado, according to the latest counts of drilling rigs.
Colorado's rig count declined to 93, according to the latest count Jan. 2 by Baker Hughes, a company that tracks rig data. Colorado has 99 rigs in January 2009, but it had as many as 123 last spring.
However, many other major gas states declined as much or more, including Wyoming, Texas and New Mexico.
Rigs left Colorado even though the industry has unused drilling permits and the new rules haven't taken effect yet, said Harris Sherman, chairman of the Oil and Gas Conservation Commission. "If these rig declines are occurring, they're occurring under the old system, not the new system," Sherman said.
Sherman blames economic reasons for the loss of rigs, not the new regulations.
Jon Harpole or Mercator Energy, who opposes the rules, said companies have quit drilling for four reasons.
The price of gas is too low, the credit markets are frozen, shale gas has opened opportunities in other states and Colorado is about to adopt new rules. Legislators can control only the last factor, he said. Shale gas, in particular, has revolutionized the industry. Companies now have the technology to tap large deposits that they couldn't reach three or four years ago, he said.
"What's happened is phenomenal, and most Americans don't even understand what's happened here," Harpole said.
Montezuma County has a promising deposit of shale gas that could open the county to the industry. States including North Dakota, Louisiana and Arkansas also have large deposits.
"You don't want to be at a regulatory disadvantage to these states, and quite honestly that's where we are now," Harpole said.
Subscribe to:
Posts (Atom)