By Marita K. Noon:
One of the unique roles of the executive is to be a cheerleader for his/her individual state—or in the case of the President, for his country.
This is, perhaps, best exemplified by Texas Governor Rick Perry who, as ABC News puts it: “has made a campaign-style push in states like California, Illinois and Missouri by hosting business meetings and appearing on TV and radio shows to promise low taxes and incentives for any businesses with an itch to relocate.” In June, Perry was in New York and Connecticut “to woo firearm manufacturers and other companies.” He launched a $1 million ad campaign in New York touting low-tax Texas, with a variety of Texans praising their paradise.
Imagine if President Obama had done this—instead of an apology tour.
He’d air ads in Germany encouraging them to buy American coal—after all, ours is cleaner burning than theirs (and Germany is very concerned about the environment); we have plenty of it (especially since we won’t be using so much after his policies shut down coal-fueled power plants); the price has dropped (while natural gas has gone up); they can get it from a friendly supplier (unlike the natural gas and coal Germany gets from Russia); and most importantly, Germany needs it (and apparently, he thinks we don’t).
Thanks to Obama’s policies, we are prematurely shutting down our coal-fueled electricity generation—with the idea that we can replace it with wind and solar. Germany is prematurely shutting down its nuclear-powered fleet. It has already tried to go with wind and solar—with a goal of producing 80% of its electricity from renewable sources by 2050—but it is not working out so well. Since 2011, when Chancellor Angela Merkel launched the energy revolution, or Energiewende, designed to wean the country off of nuclear and fossil fuels, greenhouse gas emissions have gone up; the average price of electricity for companies has (according to the Wall Street Journal’s [WSJ] August 26 report) “jumped 60%” and are now more than double those in the U.S.; and, as nuclear plants are closed, they are being replaced with coal as “intermittent renewables alone” can’t “replace nuclear power and provide round-the-clock supply.”
Germany’s story is a shock to many who see it as the model of “green.”
On August 27, Jochen Homann, President of the Federal Network Agency, Germany’s energy regulator, told an industry conference: “Those who call for an end to coal power generation don’t have much interest in a reliable energy policy.” Reuters reports: “Germany will continue to need coal-fired power plants.” In Germany, and other EU countries, utilities are looking for “payment schemes” to reimburse them for keeping gas- and coal-fueled power plants on standby to ensure a secure power supply as their inconsistent use make them unprofitable to maintain.
Instead of a Perry-esque campaign to encourage countries like Germany to buy American coal—rather than coal from a country like Colombia that has lower labor costs, lax environmental policies, and, therefore, a less expensive product—Obama, once again, has gone around Congress and, as U.S. News reports: “charges ahead on climate change policy.” His plan is to seek a “non-binding international accord” at next year’s United Nations climate summit in Paris—which “may be the most the U.S. can deliver.” The Democratically controlled Senate will not ratify a treaty now, and if the Republicans take the Senate in November, there is no chance a Koyoto-type deal will get through.
According to U.S. News, Steve Cohen, director of Columbia University’s Earth Institute in New York, says: for “China and India, which are growing rapidly, there’s no way they’re going to accept limitations on their carbon emissions and, by extension, their economic growth. …Economic development is now political development for China and India because their people, because of the Internet and global communications, see how the West lives. The mass of the people of these countries want this and it’s creating a political force that is irresistible. So the way the governing elite in India, China, some of Africa and Latin America hold power, they get energy any way they can.” And that way is going to be coal. Why not have it be American coal that creates American jobs?
It is bad enough that American policies hurt American workers, but why not encourage countries that are going to buy coal anyway, to buy from the U.S.?
Worse, the U.S. is importing coal and killing American jobs when we have the largest coal reserves in the world.
I am a believer in free markets and if utilities in the U.S. Southeast can access coal from Colombia more affordably than that from the U.S., that means lower electricity rates for consumers—which I applaud. However, in other cases, the U.S. government supports industries, through “loans and import restrictions” that have seen competition from “cheap supplies” and, therefore, a “glut” has “sent prices plunging.”
Cheaper supplies, a glut, and plunging prices—all terms that could apply to the U.S. coal industry. The WSJ, on August 13, reported: “Power plants reap benefits from cheap Colombian shipments as mines in Appalachia begin to close.” While coal imports make up only a tiny fraction of coal used in the U.S., the WSJ states: “Coal imports surged…during the first six months of 2014.” At the same time, Alpha Natural Resources—which has been unprofitable since 2010—“may close 11 West Virginia mines and lay off 1,100 workers.” Yet, the coal industry enjoys no “import restrictions.”
Once again, I support free markets, but a free market doesn’t prop up one industry while penalizing another.
“If you are a laid-off Kentucky coal miner, one of more than 7,000 laid off coal miners since January 1, 2012,” Bill Bissett, President of the Kentucky Coal Association, told me, “the idea of using coal from another country is pretty much a slap in the face. We understand that our public utilities should use the lowest-cost fuel source, but we need to be asking what the Obama Administration has done to make the mining of coal more difficult, which also makes it more expensive.”
What industry does get the “import restrictions” and potential new import duties, as high as 17.01%, imposed by the Commerce Department because said industry is having difficulty competing with cheap imports? Sugar. Yes, I said, sugar—another carbon product. For the fifth straight year in a row, “world sugar production is expected to exceed demand” and “prices have tumbled.” According to the WSJ, the “glut” has sent “U.S. prices plunging, sparking loan defaults …costing the U.S. government more than $250 million.” Mexican sugar is (like Colombian coal), apparently, cheaper—and it is flooding the U.S. market. The government solution? A tariff or an import cap—because the cheap imports are “harming America’s sugar producers and workers.”
Hummm… Do you think cheap imports of Colombian coal are harming America’s coal producers and workers? I’m thinking so.
The August 13 WSJ story cites one of the reasons, other than labor costs and a “global coal glut,” that Colombian coal is cheaper for utilities in the Southeast than coal from Appalachia. The article states: “it’s much more cost effective to move coal by ship… than by train.” It goes on to explain: “The problem with shipping U.S. coal by rail is supply. U.S. demand for rail transport to ship crude oil, grain and other products has soared, limiting the number of rail cars available to ship coal to power plants.” The piece continues with details about rail operators’ plans to add locomotives and cars to allow more coal to be shipped—but this will take years.
Steve Piper, an analyst from research firm SNL Energy, states: “Low prices for international shipping have given Colombian coal an edge over high-priced coal from Appalachian mines.”
While it is unlikely that the coal industry will get import caps, as the sugar industry is pushing for, it could benefit from some simple sound energy policy: approve the Keystone pipeline—which would free up rail space, make shipping coal within the U.S. more competitive, create jobs, and boost America’s energy security.
Our chief executive, our President, has the power of the bully pulpit. He should learn from Perry’s efforts and use it to promote America.
While California Governor Jerry Brown mocked Perry’s efforts to lure California companies to Texas by calling the campaign: a “burp, barely a fart” and, according to Bloomberg BusinessWeek: “labeled Perry’s trip a political stunt,” it worked. In April, Toyota shocked California officials by announcing it was pulling up stakes in California and moving 3000 jobs to Texas. While Brown scoffed at Perry’s attempt, he’s apparently learned something from the big-talking Texas governor. On August 29, the Los Angeles Times reported on California’s major new effort to woo businesses: “Now California is firing back. In the state’s first tax credit awards in June, more than 40% of the $29-million package went to companies that have gotten similar offers from Texas: Samsung, Petco and Amazon.”
Mr. President, could you just try to use the bully pulpit to talk up America? This really is a great place. We have more developed natural resources than any other country. Could we please expand them, promote them, and sell them? Like Perry’s plan, “a campaign-style push” in countries like Germany might just work—and save American jobs and reduce the trade deficit in the process.
© Copyright by Marita K. Noon, 2014. All rights reserved.