Keystone XL controversy

I have watched this political development and have just sent a letter to the State Department encouraging Secretary Clinton to approve the Keystone XL pipeline.  There are several points to be made.  First, most environmentalists are on the receiving end of donations.  They make their living off of the generous contributions of everyday concerned citizens.  These contributions frees their guilty consciences.  However, they typically do not follow up on the environmentalists stances and actions.   You, the tax payer, feel their anti-business results - higher prices or more regulation.  They spend your money on preventing economic development.  They are essentially job destroyers.  Do not get me wrong, I am not anti-environmental.  I do however, believe that everything has economic consequences that must be rationalized.  This is one of those rationalizations.  Second, we import over 50% of our oil needs.  The Middle East is not going to be any safer now that the Arab Spring has occurred.  I believe that it gets worse before it gets less worse.  Take a look at what happened to Egypt over the weekend.  They invaded the Israeli consulate and are making it more difficult for tourism.  This type of action will occur across those Arab countries as they try to "find themselves" and the appropriate leaders.  Act 2 will be an Arab Spring  realizing that they will need petrodollars to run their economies and pay their social programs.  This will result in a tighter alignment with the OPEC hawks, thereby being less friendly (at least economically) to the developed and emerging market economies.  The end result is higher prices and more dependency on the Middle East.  Third, I have yet to find out what the environmentalist is for when it comes to decreasing prices, increasing employment and advancing our economy.  They tend to be short-sighted, which matches the donor cycle for whomever the work.  It generally is not in the country's best interest.  We are a hydrocarbon-based economy.  We need oil and gas, at least until we find something better.  But do not let everyone take down our energy sources without already having a backup plan.  As I read voraciously, I see  various environmental groups and citizens aligned with environmental groups saying:

• no to oil (off shore leasing and drilling, no to the above mentioned pipeline), oil represents about 94% of the transportation sector demand; 
• no to natural gas development (hydrofracing has been attacked from all angles - we imported 15% of our natural gas needs from Canada - now we don't, it is about 18% of our electricity generation); 
• no to nuclear (22% of our electricity generation); 
• no to coal (about 48% of our electricity generation, we have 100% of our needs for decades - and utilities have made strides to reduce all kinds of emissions); 
• no to hydropower (about 6% of our electricity generation);
• no to wind as in most cases they are eye sores to those who want it (but not in my backyard); and
• no to solar as some of these utilities want to construct solar thermal systems in the desert which impact the desert tortoise.  

How many jobs have they said no to in the above list?  How many tax dollars have they said no to in the above list?  How much energy security have they said no to in the above list?  Everything they have said no to will result in much higher prices, lower employment and lower tax revenues.  Do you want to pick up that tab?  Remember they are taking your money and telling you that you can not have jobs, while they keep theirs.

Germany's Energy Trade

Summer is over and it is time to get blogging.  On September 6, 2011, a Russian JV started filling natural gas into the first of two new pipelines, called Nord Stream.  Gazprom holds a 51% ownership in the JV with BASF SE/Wintershall Holding GmbH and E.ON Ruhrgas each holding 15.5%, and Gasunie and GDF SUEZ each holding 9%.   The first pipeline runs 1,224 kilometers along the Baltic Sea bottom to Germany.  This pipeline will transport 27.5 billion cubic meters of natural gas directly to Germany and from there to France, the UK, the Netherlands and Denmark.  A second pipeline (and identical to the first - 27.5 billion cubic meters capacity) to run parallel, is 54% complete and is expected to be completed by the fourth quarter of 2012.

I wrote an earlier blog about Germany shuttering its nuclear power industry by 2022, with 8 of 17 nuclear power plants to be shut this year.  The reduction of 10% of its power needs are to be made up elsewhere - where?  This may be the where.  It seems to me, someone across the pond, that Germany is trading one onerous energy source for another.  Gazprom is the world's largest producer of natural gas.  It has held Ukraine hostage in 2006 and 2009, over natural gas price disputes.  It is embarking on another as the buffer gas is being injected into the Nord Stream pipeline before commercial natural gas can be pumped.  This time the dispute is over a reduction in price and volume by Ukraine, but Gazprom has refused unless the Ukraine's state gas company agrees to merge with Gazprom.  The natural gas comes from Russia and begins its trip in Russia and is 51% owned by a Russian company.  Could disputes occur in the future with Germany?

This sounds like more of a monopolistic grasp over Europe than there was previously.  As Germany reduces its own ability to generate electricity or energy and replacing it with imported energy, safety issues are being traded for trade issues and less energy freedom; particularly, when the nuclear power industry has had a great track record, despite several accidents.  I think that the timing of Germany's nuclear decision was premature, but only time will tell.