Energy Prices

Dingell and Boucher Release Cap and Trade Legislation

Today, U.S. Rep. John Dingell, Chairman of the House Committee on Energy and Commerce (D-MI) and U.S. Rep. Rick Boucher (D-VA), Chairman of the House Subcommittee on Energy and Air Quality released a much anticipated 461 page discussion draft of their climate change legislation. From their statement to the members of the House Energy and Commerce Committee:

Politically, scientifically, legally, and morally, the question has been settled: regulation of greenhouse gasses in the United States in coming. We believe that elected and accountable representatives in the Congress, not the Executive Branch, should properly design that regulatory program. The only remaining question is what form that regulation will take.

Indeed, as we learned from the debate on Boxer-Lieberman-Warner in the Senate, the remaining question – what form the regulation will take – is the hardest one to answer. The Dingell-Boucher proposal is a welcome addition to the conversation that will occur in Congress next year.

With the economy in a recession, the political feasibility of passing climate legislation appears tougher now than just a few months ago. Maybe in a forum with presidential candidates, someone can ask a question about it. I believe there’s one coming up sometime soon….

Have Some Borscht with Your Apple Pie

In the presidential debate last Friday, Jim Lehrer asked the candidates about their position on Russia. Characteristic of the dreadfully dull debate, they managed to give precisely the same response. Senators Barack Obama and John McCain both called Russia’s aggression into Georgia “unacceptable,” recognized the need to reassure our European allies, and stressed the importance of working with Moscow, rather than against it

Peering into the recent past, Obama has been consistently firm on Russia, but has stuck to his broader theme of making diplomacy and negotiation a first-string response. McCain takes a harsher tone, and has been accused of trying to take the U.S. back into a Cold War with Russia. He has talked up the threat Russia poses, proposed ejecting Russia from the G-8, and advocated the creation of a League of Democracies—an organization from which Russia would be excluded.

It is true that Russia has been flexing its military muscles recently—most obviously with the incursion in Georgia. In the conflict, however, the Russian military did little to show it deserves to be feared. The army’s most senior commander in the field was wounded when poor intelligence led them into a Georgian ambush. The military’s limited technology was nearly useless—even their radios didn’t work, forcing officers to communicate via cell phone. And most of the bombs dropped were not modern smart bombs, but older, dumber bombs.

Still, by most measures, Russia’s performance in the field was better than in either of the Chechen wars in the ‘90s, and Moscow is getting serious about upgrading everything from equipment to tactics. The Kremlin will increase defense spending by 26% next year, much of which will go toward improving and updating the country’s nuclear program.

Beyond bombs and submarines, Russia has been looking for friends among America’s antagonizers. Moscow just offered a $1 billion military loan to Hugo Chavez’s government in Caracas. In November, Russian warships will enter the Caribbean for the first time since the Cold War, on their way to joint exercises with the Venezuelan Navy. Russia has 10 warships docked in Syria, and is helping to renovate Tartus port; in Iran, Russian technology and fissile material is helping to build a nuclear reactor, and Russian surface-to-air missiles may protect it.

Higher oil prices have gotten Russia back on her feet, and the Kremlin’s activities of late indicate that the government seeks to be taken seriously. Increasingly isolated on the world stage, Russia is responding by building its own coalition and trying to establish power within its historical sphere of influence. Moscow is asserting itself particularly in the Middle East, establishing its own version of the Monroe Doctrine: This is our backyard, so keep your meddling fingers out.

Though Russia’s military is a shadow of its former self, and from a security perspective, Moscow does not presently pose a credible threat, Russia is capable of making life difficult for the U.S., whether by turning off the gas, by giving cover (both literal and political) to Iran, or by bolstering Chavez in Venezuela.

But Russia and the U.S. share a number of interests, many of which were laid out last week by Secretary of State Condoleezza Rice: Fighting terrorism, stopping nuclear proliferation, denuclearizing North Korea and finding a secure, stable resolution between Israel and the Palestinians, among others. John McCain’s aggressive, antagonistic ideas about Russia have the potential to become self-fulfilling prophecy. What we need now is not to escalate tension with a powerful state that has the capability of causing us great trouble, but to work together where we have common ground. The U.S. would be best served by keeping Russia engaged, rather than forcing it out into the cold.

Senate Bailout Bill Challenges Pay-Go

With news coming that the Senate has loaded up the bailout bill with a number of tax provisions, including an AMT patch and crucial tax credits for renewable energy, the House vote on the proposal, should it pass the Senate, looks to be a defining moment for pay-go.

Pay-go has been the largest stumbling block in extending renewable energy tax credits – a package so popular that it recently passed the Senate with a vote of 93 to 2. Now, a bipartisan agreement by Leaders Reid and McConnell to include these provisions in the bailout bill, which is predicted to pass the Senate tonight, will only be derailed if some in the House continue to insist on pay-go.

NDN has long argued that pay-go creates far too much arbitrary, artificial rigidity in the legislative and governing processes, and this bailout serves as a perfect example. Should a bipartisan bill designed to rescue the economy on the order of $700 billion fail due to a pay-go fight over far less costly tax provisions that are partially offset, the legacy of pay-go, a provision that doubtless has limited life to it anyway, will go from murky to downright laughable.

As the economy slides into recession, one can only hope that the popularity and job creation benefits of the tax credits, especially those for renewable energy, will garner enough votes to more than offset the votes lost from pay-go proponents.

Launching a Clean Infrastructure Investment Agenda

Last week, NDN Fellow and Green Project Director Michael Moynihan released an essay calling for an investment in new, clean infrastructure. Clean infrastructure investment, which includes electricity grid modernization, public transportation, renewable energy and efficiency, and a variety of other ideas, is crucial in both ensuring near-term economic growth and long-term prosperity, as we create a low-carbon economy.

Saturday in the New York Times, Thomas Friedman issued a similar call, arguing to "Green the Bailout."

The point is, we don’t just need a bailout. We need a buildup. We need to get back to making stuff, based on real engineering not just financial engineering. We need to get back to a world where people are able to realize the American Dream — a house with a yard — because they have built something with their hands, not because they got a "liar loan" from an underregulated bank with no money down and nothing to pay for two years. The American Dream is an aspiration, not an entitlement.

Indeed, when this bailout is over, we need the next president — this one is wasted — to launch an E.T., energy technology, revolution with the same urgency as this bailout. Otherwise, all we will have done is bought ourselves a respite, but not a future. The exciting thing about the energy technology revolution is that it spans the whole economy — from green-collar construction jobs to high-tech solar panel designing jobs. It could lift so many boats.

A national agenda focused on investing in new, clean infrastructure has the potential to begin to pull America out of the current economic downturn, enhance energy security, confront climate change, and ensure future prosperity through the creation of dynamic new 21st century, low-carbon economy. Stay tuned to the Green Project’s work on clean infrastructure moving forward.

NDN in the (New) Media

This election cycle, many people have complained that the traditional media has not been doing its job all that well. The general complaint is that instead of giving voters the information they need to make informed and intelligent decisions, the ratings-driven mainstream media increasingly focuses on distractions and sound bites. Some have called for the reform of our traditional media; others have simply bypassed it.

We believe in engaging the non-traditional media. Here are a few of our new-media mentions from the past week:

DailyKos, The Latino Journal, and The South Chicagoan referenced our recent polls of Hispanic voters in key battleground states.

Simon and Rob Shapiro are featured in The American Prospect’s blog, Tapped, as well as Biodun Iginla’s BBC weblog, for their joint statement, “Keep People in Their Homes.” Shapiro also appears in Campaign for America’s Future.

Finally, Michael Moynihan, Director of NDN’s Green Project, has posts in The Huffington Post and Gristmill.

Economic Stimulus? - Reid and Byrd Unveil Economic Plan

Here's the proposed Economic Recovery Package. The overall intent to "not forget Main Street" and "create good-paying American jobs" is a noble one, I question whether this package achieves such a goal. There is a great deal of progress in the area of Energy, allocating funding for key energy initiatives of which NDN has been an advocate (see NDN's Green Project blog). However, there is no mention of International Trade or initiatives to export new technology; the section on job creation mentions infrastructure, which is an important step forward, but no mention of how to use globalization to create more high skilled, better paying jobs. I would ask why the section designed to help small businesses - by all accounts the "job creators and drivers of the economy" - only allots $275 million for microfinance and other assistance to "Main Street," while it provides $776 million for border facility construction and "other homeland security infrastructure." I hope our taxpayer dollars don't continue to go towards a border fence that has not worked instead of small and medium-sized businesses that sustain our communities. The stimulus includes $466 million for DHS to begin construction of a consolidated headquarters in Washington, D.C., as "DHS has a critical need for a permanent, unified headquarters" - maybe having everyone under one roof will help reduce the backlog in naturalization and immigration applications! THAT must have been the hold-up all this time. While the $466 million are being allocated for offices, only $100 million is going to help communities along the southwest border fight the illegal flow of guns and drugs between the U.S. and Mexico that is fueling violence along the border. Call me crazy, but I think the offices can wait in line behind the safety of border patrol and citizens on both sides of the border. The conflict on the border similarly contributes to the economic downturn in that the violence has effectively killed business and tourism that previously made border cities job creators and places that flourished with commerce and (legal) economic activity.

Senate Passes Renewable Energy Tax Credits

Last night, the U.S. Senate passed tax credits for renewable energy, including extending crucial tax credits for solar and wind energy. NDN congratulates the Senate for mustering overwhelming bipartisan support for this legislation, and encourages the House to follow suit and deliver this legislation to the President's desk as soon as possible.

WASHINGTON (Reuters) - The U.S. Senate Tuesday approved a package to extend $18 billion in tax credits for using renewable energy sources like wind, solar and geothermal and also provide incentives to cut energy consumption.

The move, which alternative energy companies had been lobbying for all year, sent shares of solar power companies higher in after-hours trade. The delay in extending the tax credits had been a major damper on those stocks this year. The Senate was seen as the biggest roadblock after it shot down the extension eight times this year.

"Getting past what has been largely the deal-breaker in the past should be positive," Wedbush Morgan analyst Al Kaschalk said of the impact the vote would have on solar stocks.

Under the proposal, which will be part of a much bigger tax bill, the tax credit for producing electricity from wind would be extended for one year. The credit for other renewable sources, such as wave and ocean tide projects that generate power, would be extended for two years.

The residential and business tax breaks for solar energy would be extended for eight years.

"Solar is the winner here," Raymond James alternative energy analyst Pavel Molchanov said.

For more on the importance of solar energy to the American economy, read Solar Energy: The Case for Action, an extensive report released in August by NDN Green Project Director Michael Moynihan.

The Highest Oil Price Spike in History

New York City -- What did it mean when oil prices today spiked by their largest amount in history, $16 in one day?  It means something is seriously wrong with the oil price market.  Analysts had no obvious explanation for the rise other than to say that it may have had something to do with the October contract expiring.  But a price spike of this magnitude --oil prices have now traveled from lows in the $90s last week to $130 today --is alarming. And oil price volatility of this magnitude in the absence of any magic changes in supply or demand is frankly unacceptable over the long term for a commodity on which so much of our economy depends.

A hint into the source of this volatility was provided at the U.S. Senate's recent summit on energy.  The fireworks commenced when Senators Bill Nelson of Florida and Maria Cantwell of Washington asked Goldman Sachs' COO, Gary Cohn, about the need to reign in speculation in the oil markets.  The Senators cited a recent study by Michael Masters, manager of a hedge fund and a trader himself, blaming volatility on speculation on indices. 

Northwestern CEO Doug Steeland echoed his belief that speculation was responsible for the bulk of volatility in the price of oil. Cohn answered that Goldman's position was that market prices were set by supply and demand and, in support, he cited a recent CFTC, trade by trade analsysis, that showed no outright market manipulation.

However, Cohn also noted that in setting up the index market, Goldman and others' goal was to create a buy side among pension funds and other long term investors for oil futures to balance the supply side of oil producers seeking money for exploration.  And, indeed, pension and others have become large players in the index market as energy futures have become another investment "class."

Today's volatility showed signs of institututions or traders shifting large blocks of money into an asset class to balance chaos in other markets.  This is not outright market manipulation.  But the emergence of oil futures indices as an asset play for huge non-energy investors, chasing yield, may be responsible for the unacceptable volatility in these markets. 

Congress and the CFTC should be examining whether this is the case and, if so, devise measures to reduce the the exposure of this nation-critical market to large shifts in money and what hedge fund traders like to call, cross market correlation.  

Hispanic Heritage Month 2008

Every year the United States takes a time out from September 15-October 15 to recognize the contributions of Hispanics in the United States as part of Hispanic Heritage Month. Hispanics are now recognized as the largest minority in the U.S. - the Census estimates that by 2042 one in four persons will be of Hispanic origin. As this year's Hispanic Heritage Month kicked off this week, it becomes clear that an unprecedented number of Latino voters could decide this year's election, Latinos are increasingly represented in government and industry, Latinos are a growing force in the media - as evidenced by the launch of shows like "Agenda" and "Al Punto" on Spanish language networks, and Hispanics are also becoming web and technology users in rapidly growing numbers.

For these reasons and more, the Pew Hispanic Center reported this week on a survey it conducted on the overall state of Latinos. The report reflects how Hispanics are bearing much of the current economic crisis, combined with suffering increased instances of discrimination.

Half (50%) of all Latinos overall (native and foreign born) say that the situation of Latinos in this country is worse now than it was a year ago, according to this nationwide survey of 2,015 Hispanic adults (higher than the average for non-latinos). Fully 63% of Latino immigrants say that the situation of Latinos has worsened over the past year. In 2007, just 42% of all adult Hispanic immigrants - and just 33% of all Hispanic adults - said the same thing. These increasingly downbeat assessments come at a time when the Hispanic community in this country--numbering approximately 46 million, or 15.4% of the total U.S. population--has been hit the hardest by rising unemployment.

Due mainly to the crisis in the housing and construction industry, the unemployment rate for Hispanics in the U.S. rose to 7.3% in the first quarter of 2008, well above the 4.7% rate for all non-Hispanics, and well above the 6.1% rate for Hispanics during the same period last year. As recently as the end of 2006, the gap between those two rates had shrunk to an historic low of 0.5 percentage points--4.9% for Latinos compared with 4.4% for non-Latinos, on a seasonally adjusted basis. The spike in Hispanic unemployment has hit immigrants especially hard. For the first time since 2003, the unemployment rate for Latinos not born in the United States was higher, at 7.5 percent, than the rate for native-born Latinos, at 6.9 percent, the report found. Latinos make up 14.2% of the U.S. labor force, or roughly 22 million people.

In addition to the economy, issues like immigration, access to health care, and discrimination continue to be of concern to Hispanics and to Hispanic voters. In the Pew survey, one-in-ten Hispanic adults - native-born U.S. citizens (8%) and immigrants (10%) alike - report that in the past year the police or other authorities have stopped them and asked them about their immigration status. Some Latinos are xperiencing other difficulties because of their ethnicity. One-in-seven(15%)say that they have had trouble in the past year finding or keeping a job because they are Latino. One-in-ten (10%) report the same about finding or keeping housing.

On the question of immigration enforcement, the Pew Center's research demonstrates the same data NDN found through our polling on immigration, released last week. Latinos disapprove of current enforcement-only measures - more than four-in-five Hispanics (81%) say that immigration enforcement should be left mainly to the federal authorities rather than the local police and 76% disapprove of workplace raids. Two-thirds (68%) of Latinos who worry a lot that they or someone close to them may be deported say that Latinos' situation in the country today is worse than it was a year ago, as do 63% of Latinos who have experienced job difficulties because of their ethnicity and 71% of Latinos who report housing difficulties because of their ethnicity.

Most Hispanics in the U.S. are native born, i.e., U.S. citizens legally not susceptible to deportation, therefore the fact that most Hispanics worry about raids, immigration, and even facing possible deportation reflects how the existing reckless "enforcement-only" policies are impacting not only foreign Hispanics, but U.S. citizens.

NDN has a history writing and speaking about the Hispanic community as one of the great American demographic stories of the 21st century, recognizing that it will be hard for any political party to build a 21st century political majority without this fast-growing electorate. Hispanics have become one of the most volatile and contested swing voting blocs in American politics, and they are responding to this attention. As reported in Hispanics Rising II, an analysis of the Hispanic electorate and their motivation, Hispanic immigrants are becoming increasingly involved, as reflected by the data released this week by the Immigration Policy Center, demonstrating a spike in citizenship applications. Immigrants want to be U.S. citizens, they want to apply for citizenship, often having to overcome virtually impossible obstacles to be able to pay the obscenely high application filing fees.

Therefore, political candidates will do well to pay attention to the many challenges facing Hispanics today. At the onset of Hispanic Heritage Month this week, both Presidential candidates released statements praising Hispanics' contributions to American society and their military service. The difference between the two statements is that Barack Obama also called for comprehensive immigration reform. On the other hand, John McCain didn't mention it. This is curious because polling for the last 3 or 4 years, including the latest polls conducted by NDN, consistently shows that immigration is of top concern for Hispanic voters.

House Passage of Energy Legislation

The passage last night by the House of Democratic-sponsored legislation to extend renewable tax credits and impose a national renewble electricity standard in exchange for expanding drilling is good news.  Crafted specifically to appeal to Republicans with the inclusion of generous drilling provisions, but also including incentives for renewables which ostensibly enjoy bi-partisan support, this comprehensive legislation should have garnered many Republican votes.  Instead, only 15 Republicans voted for the legislation and President Bush has threatened to veto it.  Given the reluctance of the Bush Administration to take yes for an answer, one has to ask, what exactly does it want?

The answer appears to be legislation entirely favorable to oil without support for renewables, or else, no legislation at all.  While the legislation thus faces significant hurdles to eventual passage, it at least serves to call the Republican leadership out on their real view toward building a low carbon energy future.  

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