Appalachian Basin

Let the Market Decide and Natural Gas Will Carry the Day

Editors note:  This article first appeared in the Oneonta Daily Star.

It’s time to let the market decide the future of renewables because the government is making a mess of it everywhere, while New York State, as one example, ignores the tremendous potential of natural gas to meet our energy needs in an environmentally sound way.

If you visit the crime section of your local Barnes and Nobles  you’ll find Elmore Leonard’s recent novel “Raylan.”  It is the story of a man named Marshall Raylan Givens’ encounters with a pair of thieves who steal kidneys from the healthy, then sells those vital organs back to their victims. Talk about creating a market!  Move down the aisle to economics, change the heist from organs to electricity, and Mr. Leonard could have a category busting best seller.

By mandating a certain percentage of power generation from high cost renewable sources, the government steals from its citizens the opportunity to buy cheap electricity. The electric companies (read: the ratepayers) are forced to buy a blend of electricity at higher rates. What are you going to do? Go without electricity? Like kidneys, electricity is vital to your wellbeing.

Currently, this mandated theft is chump change in New York. However, in Germany, it is causing real havoc.

Germany’s goal is that 35% of its electricity must come from renewables by 2020 and 80% by 2050. After the nuclear accident at the Fukusima power plant in Japan, German politicians further decided to phase out nuclear energy. The resultant squeeze – less energy, increasing demand, and unreliable, high cost renewables – drove prices sky high. German factories, unable to compete internationally, got exemptions from the surcharges. Other large and influential employers demanded parity and also got a pass.

Who pays the freight? Mr. and Mrs Schmidt, that‘s who! Unable to cover soaring costs, thousands of households have had their electricity turned off.

Germany now has a scandal a week as politicians try to uncover and claw back the subsidies so lavishly given. Meanwhile, Germany burns more coal than ever.  Why? Because the utilities must back up unreliable, but heavily subsidized renewables, with traditional fuel sources. In Germany, it’s coal. You can’t just flip a switch to power up when the wind cuts out or the clouds roll in. Conversely, on clear, windy days, coal fired utilities often produce electricity that sells below cost. They’re losing money.

Welcome to the “green” future. Sustainable Otsego and other like minded antis, although well intended, want to bring this scenario to a country near you, starting in California. See the Wall Street Journal’s “California Grids For Electricity Woes.

Two core problems for electricity from renewables is that it costs a lot of money and it can’t be easily stored. These facts can’t be wished away.

Subsidies attempt to equalize costs. At an energy forum in Oneonta last year, a presenter from Colorado personalized the state and federal subsidy program by telling us his home was powered by a $21,000 solar system, of which he paid $6,000 out-of-pocket. Nice deal for him; someone else is footing the bill.


On the national scale the Institute for Energy Research, using Department of Energy data, determined that oil, gas, and coal interests got government subsidies of 64 cents per megawatt of electricity produced. Wind got $56.29 per megawatt and solar topped off at a staggering $775.64. Again, the taxpayer and the ratepayer pays. There’s no free lunch.

As for storage, Bill Gates calculates that all the batteries in the world can only store two (2!) minutes of the world’s demand for energy. Then it’s lights out.

Recently (2/8/13), a New York Times reporter test-drove the all-electric Tesla from Washington to Boston. He finished his trip in the back of a tow truck when the battery ran out of juice. The all-electrics are OK locally; not so good for the family vacation.

In the meantime, while renewables catch up (hopefully through government sponsored research, not subsidies and crony capitalism), there’s natural gas. It’s abundant, cheap, domestic, 50% cleaner than coal, 40% cleaner than oil. Increasingly used in electric generation, the result is CO2 emissions have fallen 10% since 2007 in the USA and brought total emissions down to levels not seen in 20 years. Meanwhile, the EU, with all their emphasis on renewables, has seen their emissions rise.

As for Mr. Leonard, he can stick around the Economics aisle because oil and gas has always produced some colorful characters.  JR Ewing of “Dallas” fame was based on somebody, or a composite of somebodies. That’s why many of us landowners have joined coalitions. But better yet, we wish Mr. Leonard was a fly on the wall, watching how government mandates are formed. The resulting high price of electricity for all dwarfs the cost of a bad lease here and there. With mandates and subsidies, we all pay.

Now there’s a story for you.


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