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The EPA Snake Pit

By Alan Caruba

Under President Obama, two women have been the director of the Environmental Protection Agency (EPA), Carol Browner, who served in the Clinton administration and was one of the “czars” Obama appointed; her acolyte Lisa Jackson, and up for the post is Gina McCarthy. Browner and Jackson went out of their way to conceal their internal communications from Congress and McCarthy lied to the committee considering her nomination.

How bad is the EPA? The Society of Environmental Journalists, on the occasion of the April 11 hearing on McCarthy’s nomination, released a statement that said, “The Obama administration has been anything but transparent in its dealings with reporters seeking information, interviews and clarification on a host of environmental, health and public lands issues.” The SEJ accused the EPA of being “one of the most closed, opaque agencies to the press.”

Apparently, the primary consideration for the job of EPA Director is an intense desire to destroy the use of hydrocarbons, oil, coal and natural gas, for transportation and all other forms of energy on which our economy depends. Obama, when campaigning in 2008, made it clear he wanted end the use of coal to generate electricity. At the time, fifty percent of all electricity was produced by coal and now that figure is in decline as coal-fired plants are being forced to close thanks to EPA regulations.

If Ms. McCarthy has her way, the cost of driving cars and trucks will go up in the name of protecting the health of Americans. As Paul Driessen, a senior policy advisor for the Committee For a Constructive Tomorrow, recently noted, “Since 1970, America’s cars have eliminated 99% of pollutants that once came out of tailpipes.” Joel Schwartz, co-author of “Air Quality in America”, points out, “Today’s cars are essentially zero-emission vehicles, compared to 1970 models.” The EPA’s latest attack on drivers is the implementation of “Tier 3 rules” intended to reduce sulfur levels to achieve zero air quality or health benefits.

Suffice to say that the air and water in America is clean, very clean. Whatever health hazards existed in the 1970s no longer exist. Like all bureaucracies, the EPA now exists to expand its budget and its control over our lives. The Heritage Foundation has calculated that Obama’s EPA’s twenty “major” regulations—those that cost $100 million or more annually—could cost the U.S. more than $36 billion per year. Obama’s EPA has generated 1,920 new regulations.

Don’t think of the EPA as a government agency. It is a weapon of economic destruction.

This has not gone unnoticed. A recent Wall Street Journal opinion by John Barrasso, a Republican Senator from Wyoming, noted that “During President Obama’s first term, EPA policies discouraged energy exploration, buried job creators under red tape, and deliberately hid information from the public.”

“Many EPA regulations,” said Sen. Barrasso, “chased microscopic benefits at maximum cost,” noting for example that “The EPA has proposed dropping the acceptable amount of ozone in the air from the 75 parts per billion allowed today to 60 or 70 parts per billion. The agency concedes that the rule would have a minimal effect on American’s health, but says it would cost as much as $90 billion a year. A study by the Manufacturers Alliance for Productivity and Innovation estimated it would eliminate up to 7.3 million jobs in a wide variety of industries, including refining.”

The other sector in the EPA’s bull’s eye is agriculture. Not content with laying siege to auto manufacturers, oil refineries, coal-fired plants, and all other energy users that might generate carbon dioxide and other so-called greenhouse gases, Barrasso noted that the EPA “has gathered personal information about tens of thousands of livestock farmers and the locations of their operations” which it then shared with environmental groups.

Writing in The Daily Caller, Henry Miller, a physician and molecular biologist and currently the Robert Wesson Fellow in Scientific Philosophy and Public Policy at Stanford University’s Hoover Institution, characterized the EPA as “a miasma populated by the most radical, disaffected and anti-industry discards from other agencies,” adding that there was “entrenched institutional paranoia and an oppositional world view.”

“Unscientific policies and regulatory grandiosity and excess,” wrote Dr. Miller, “are not EPA’s only failings; neglecting to weigh costs and benefits is shockingly common, noting that “The EPA’s repeated failures should not come as a surprise because the agency has long been a haven for scientifically insupportable policies perpetrated by anti-technology ideologues.”

Marlo Lewis, a senior fellow at the Competitive Enterprise Institute, writing in Forbes magazine, pointed out Gina McCarthy, the nominee to direct the EPA, “has a history of misleading Congress and the public about her agency’s greenhouse gas regulations. “At a hearing of the House Oversight and Government Reform Committee in October 2011, McCarthy denied motor vehicle greenhouse gas emission standards are “related to” fuel economy standards. In doing so,” said Lewis, “she denied plain facts she must know to be true. She did so under oath.”

“The EPA has no statutory authority to regulate fuel economy. More importantly, the federal Energy Policy and Conservation Act prohibits states from adopting laws or regulations ‘related to’ fuel economy.”

The point of this exercise is demonstrate that the EPA is the very definition of a “rogue agency” for which neither laws, nor science, are of any consequence as it pursues policies that do incalculable harm at a time when the nation is deep in debt and in need of economic growth, not regulatory strangulation.

© Alan Caruba, 2013

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Coal Vs. Gas: This is why Americans need an Energy Policy that “WORKS’”

Coal Is Dead; Long Live Natural Gas

July 13, 2012

Major coal manufacturers in the United States, including Arch Coal Inc (ACI), Alpha Natural Resources, Inc. (ANR), Peabody Energy Corporation (BTU), and James River Coal Company (JRCC), made the same mistake the predecessors of today’s oil giants, such as BP p.l.c. (BP) and Exxon Mobil Corporation (XOM), made in the 1980s. They built up too much capacity when commodity price was high, raising their own fixed cost structure and increasing their debt burdens along the way.

When reality turned out to be different from expectations, coal price collapsed with natural gas flooding the electricity generating market. Since natural gas is more efficient, cleaner, and now inexpensive, the coal industry as a whole faces major trouble. Power generation from natural gas has matched coal for the first time. This major trend appears unstoppable. And the worst may be yet to come. All coal miners will have to downsize, and more will go bust.

Within the United States, coal consumption has dropped sharply during recent years as natural gas gradually becomes cheap and abundant, replacing thermal coal in power plants. The following chart shows this trend vividly.

In the meantime, U.S. coal stocks have been rising as supply constantly outruns demand, which almost inevitably leads to lower prices. Given coal miners’ razor-thin profit margin in general, a small coal price movement often translates into huge stock price swings.

And finally, as coal production piles up, the export of coal has been rising sharply (in the following chart). The sharp rise in exports is a consequence of price collapse—it becomes so cheap that it’s a better deal for other continents to ship coal across the ocean, still cheaper than digging in their own backyards. Coal mining is a dirty business, polluting self while serving cheap coal to other countries perhaps wouldn’t serve the industry well politically.

Given such overwhelming trends, one has to be very suspicious of the sustainability of this industry for years to come. One possible policy change that might help coal mining is that the environmentalists and the EPA manage to stop hydraulic fracturing of natural gas, which will curb natural gas supply and make dirtier coal a viable option again—a bit ironic, isn’t it?

The one that might do better than the others is Walter Energy, Inc. (WLT), which has a focus on metallurgical coal for the steel industry, and is not so much dependent on thermal coal (for burning).

So what about natural gas? Would major natural gas businesses such as Chesapeake Energy Corporation (CHK) become the new king? Not necessarily. With abundant reserve and a relatively cheap way of exploration, competition will be fierce. Big players like Exxon Mobile still have an edge in financial resources. At the end of the day, companies like Chesapeake are not necessarily winners even if natural gas becomes mainstream.

Overall, investors shall not count on a turnaround of the coal industry like what happened during the last roller coaster cycle of coal prices.

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IER Identifies Coal Fired Power Plants Likely to Close as Result of EPA Regulations

“So if somebody wants to build a coal-fired plant they can. It’s just that it will bankrupt them…”

– Barack Obama speaking to San Francisco Chronicle, January 2008

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Will EPA‘s regulations shut down power plants in your state?

The United States has the world’s largest coal resources. In fact we have 50 percent more coal than Russia, the country with the next largest reserves. But coal use in the United States is under assault.

Before becoming President, Barak Obama promised to bankrupt coal companies. As President, he has tried various strategies to force Americans to use less coal. After failing to pass a national energy tax (cap-and-trade), the President vowed to continue his attack on coal stating, there is “more than one way to skin a cat.”

Currently, EPA is leading the Obama administration’s assault on coal with a number of new regulations. Two of the most important are the “transport rule” and the “toxics rule” (Utility MACT). Combined, these regulations will systematically reduce access to affordable and reliable energy. According to our report:

EPA modeling and power-plant operator announcements show that EPA regulations will close at least 28 gigawatts (GW) of American generating capacity, the equivalent of closing every power plant in the state of North Carolina or Indiana. Also, 28 GW is 8.9 percent of our total coal generating capacity.

  • Current Retirements Almost Twice As High As EPA Predicted

EPA’s power plant-level modeling projected that Agency regulations would close 14.5 GW of generating capacity.  That number rises to 28 GW when including additional announced retirements related to EPA rules, almost twice the amount EPA projected.  Moreover, this number will grow as plant operators continue to release their EPA compliance plans.

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