Nutter's Washington

Desparate Biden Taps Strategic Petroleum Reserve

President Biden--Mr. Climate Change-- has ordered in an act of total political desperation, 50 million barrels of oil be released from America’s strategic reserve to help bring down energy costs. Since he can not get the OPEC nations to increase their production after humiliating begging them, he has decided to tap our own domestic supplies in storage in a futile effort to reduce gasoline prices.

Whoa, wait a minute, I thought fossil fuels were verboten and inflation was a temporary problem.

The Strategic Petroleum Reserve is an emergency stockpile to preserve access to oil in case of natural disasters, national security issues and other extraordinary events. The SPR was created in 1975 as a hedge against the “Energy Crisis” created by the Arab Boycott. The reserves are stored in caverns created in salt domes in Texas and Louisiana, about 600 million barrels.

The Biden administration has argued the reserve is the right tool to help ease the supply problem. However, the amount will not have a significant effect on supply, or any meaningful effect on prices. America uses an average of 20 plus million barrels a day, so the release is about two-and-a-half days of additional supply. Yawn.

Mr. Biden has done everything possible with more to come to discourage domestic oil and gas production. Now, he wants to use the SPR to influence the market and show he is doing something about inflation, a purpose for which it was never intended. Pathetic political gimmickry.

Report Card for Biden: Not going to pass out of Kindergarten

The Biden Administration has been of office for a little more than 6 months so it is time to grade the performance. Given the performance, I would not pass them to the first grade.

Border Security and Immigration: Under this regime, there is no southern border. The flood of illegal crossings is astounding. More than 212,672 people were encountered trying to cross the southern line illegally in July, the most seen in more than 21 years and nearly three times as many as in January. The policy of catch and release without medical testing is just wrong on so many levels.

Grade F

Energy: Mr. Biden is determined to undermine the use of fossils fuels and make the county an importer of petroleum rather than an exporter. He halted the construction of the Keystone pipeline and banned new leasing of federal lands.

Yet even as he is taking specific steps to cripple the domestic energy industry, Biden for the second time this year has begged OPEC to increase oil production in order to bring prices down. Not sure how that squares with the climate change agenda.

Grade D

Federal Spending: The rampage of federal spending is remarkable. First the unnecessary $1.9 trillion for more Covid Aid, (badly allocated) then the Infrastructure spending on its way (not paid for and lots of non-structure) and then the proposed $3.5 trillion in more spending to subsidize new programs, social objectives, entitlements and free this and free that. This will be accompanied by increased taxes on everyone and I mean everyone

Grade F

Inflation: Not sure if anyone on the Biden team knows that prices have been rising and real wages are declining. The wave of federal money just stokes the flames. Oh, it is just temporary? Not really

Grade D-

Afghanistan: This is just the latest example of perceived intelligent arrogance without the intellect. Not debating the merits of pulling out but the lack of planning, thought and then the lack of responsibility and all the blame pointing is just pathetic and intolerable. As former Secretary Gates once said, Mr. Biden has never been right on any foreign policy matter. Enough said about this piece of incompetence.

Grade F-

Covid and Vaccinations No question people should be vaccinated and frankly any progress in getting the vaccination program underway was not due to any great action by the Biden Administration. In many cases, they have tried to politicize the process and focused only on Republican-led states. The CDC has become a puppet of the White House and their edicts and findings seem to be confusing and often a reversal of the edicts before. The revised “eviction moratorium” was a blatant abuse of power. The right to use the term “rule of law” has been forfeited. The issue is much more than masks.

Grade C-

There are other issues to evaluate but how do you like the Biden-Harris team now? And will you like it and the Democrat controlled Congress next election.

Highway Trust Fund: Spending or Funding?

The Highway Trust Fund, used to finance a variety of transportation projects across the county, is projected to dry up in coming weeks unless reauthorized.

The HTF receives money from the 18.4 cents per gallon tax on gasoline and 24.4 cents per gallon of diesel fuel and other related excise taxes. It was established in 1956 to finance the federal interstate road system. 

The gas and diesel tax rates have not changed since 1993, and account for 90 percent of the fund’s revenue. The remainder comes from taxes on tires, trucks and trailers, and certain kinds of vehicles

The Highway Trust Fund is essentially divided into two accounts. The Highway Account disburses about 85 percent on roadway infrastructure and other projects with the Mass Transit Account expending about 15 percent on such items as rail, buses, and streetcars.

The key word in the Highway Trust Fund is, of course, Highway. The gas tax is paid,  under the theory, by the people who use the roads—classic user fee. You use it, you pay for it. However, the program now subsidizes mass transit and other programs -- like, bike trails and lanes, hiking trails, streetcars, ferries and more. Federal spending on such side projects has increased dramatically in the last few years while actual highway spending has been flat.  

In addition, Congress and the states divert roughly 25 percent of the Highway Trust Fund spending to non-highway projects. The largest of these diversions is the Mass Transit Account, which spent some $8 billion in 2014 on buses, rail, streetcars, and other projects, really local not federal responsibility. Other programs include the Transportation Alternatives Program, which spent almost a billion dollars last year on the critical needs of sidewalks, bike paths, scenic overlooks, vegetation management, and recreational trails.

So what we have here is not a highway spending problem but a program that has overflowed its original banks of its purpose. As usual in government programs, it is the lack of money, not the amount of spending that is important.  

Congress has not passed a long-term transportation-funding bill since 2005 but instead has passed 33 short-term fixes. 

In the past few years, spending shortfalls have been made up of general revenues. However, these short-term fixes are unsatisfactory and some sort of solution has become the “must do legislation de jure”.

The issue, however -- is how will a new transportation bill be funded?  The proceeds from the original three-cent gas tax built the interstate system. Increases in the federal gas tax have paid for expansion and upgrades since. However, better fuel economy, the recession, less driving has not provided the funds for the voracious spending appetite of the expanded program.  

The focus is centered on taxes, not on programmatic issues.  Both parties love to dole out highway money. Liberals get subsidized mass transit, bike paths and plenty of money for their unions buddies. Republicans get roads built and giant projects for all the construction companies.

The House Ways and Means Committee and the Senate Finance Committee have given lots of lip service but not much action. Well, no action. As there has been much talk about broader and long-term "tax reform," both committees are weighing the short-term potential of using "corporate tax changes" or "international" tax changes to fund transportation programs. The idea faces significant hurdles. The simple solution of just raising the gas tax is a nonstarter. Suggestions of charging for miles driven through some sort of big brother monitoring systems are chilling as well as a long way off.  It is a mess.

The honest way would be to scrap the HTF and admit that the HTF is a general transportation program and treat it as such.

If the effort to use a tax overhaul to pay for roadwork fails, lawmakers likely will fall back on a patchwork approach to fund the program for the next six months or whatever from a hodgepodge of sources or perhaps not to offset the cost of some or all the highway spending, as they have in the recent past.

Now, for the most important part.  Why does it take so so long to ever get anything built? I have driven by the same construction zones for years and years. In my area, it took more than a year to build a bridge not much longer than my car and this was after work actually started.

Drive by a construction site and no one is working and if there is some movement, there is still 14 guys holding a shovel doing nothing and another 14 just squatting on the ground. With millions of people not employed, leaving the work force, it would seem you could throw say 5,000 people on a project and get it done in 2 weeks, not 4 years. 

 

Keystone XL Pipeline: Veto a Coming

 

The new Republican Congress will consider in the next few days legislation to remove Presidential authority and impediments preventing the construction of the Keystone XL pipeline. This construction project to bring Canadian tar sand oil into the United States for refining and use has been studied and examined for many years. I mean many years. If the pipeline is not built, the oil will be transported by other means and a good deal of it will be exported to Asia.

This is not a government project. It is a private endeavor needing government approvals. It is not like Solyndra, needing hundreds of millions of dollars in subsidies to be feasible and then still fail. The companies are big boys and they can make their decision based on the “market”. The fact is: this country will be using petroleum as a primary fuel for the next 50 years. Having a secure and reliable supply from friendly and neighborly Canada is in the national interst. 

The Obama government has done all it can to stop the project. Delays, studies, more permits, confusion with their climate policy agenda, right of ways, aquifer problems, litigation and more. The Administration has been less than candid (no surprise there) and has made one excuse after another.

Time is up and a majority in this Congress has had enough.

The White House has issued a veto threat and I have no doubt the measure, if passed, will be vetoed. Mr. Obama beholden to his anti-oil, anti-fossil fuels, anti-business, no growth environmental friends never, ever intended to allow the construction of the pipeline. Oh, there will be reasons given for the veto but hardly digestible. The fact remains, Mr. Obama could have given support to Keystone, could have push the approval process along, could sign the legislation. He simply for does not want it and he refuses to fess up about it.

This is what we have done to ourselves; this is the continuing consequences of 2012. 

War on Coal: Much More Than That

The Environmental Protection Agency (EPA) released a proposed new rule yesterday pursuant to section 111(d) of the Clean Air Act) that seeks to change the way electricity is generated and to push its cost up so alternative, renewable and more expensive forms of energy can be used. It intends to impose a state-by-state carbon dioxide (CO2) emission reduction goal for existing fossil fueled electric generating facilities. Depending on what piece you are reading, it is all in the name of preventing the climate from its inexorable change, a health initiative or a giant jobs creator.

Under the proposed rule, EPA would require states to meet CO2 emission “goals” or targets starting in 2020 on a statewide basis. States could allow their power plants to use a number of measures to meet those goals, including energy efficiency, plant retirements, and renewable energy. EPA projects power sector emission reductions of 30 percent from 2005 levels by the 2030.

The action is very controversial with the sides clearly drawn. The cry of a “war on coal” is in the air. Indeed, one of the purposes of the dictat is to reduce the use of coal. However, this is a much larger issue, a more insidious issue. It is about government growth, influencing or controlling the means of production. I have no doubt the sincerity of some of those who believe reduction of carbon dioxide, a pollutant that living organisms also produce, is the solution to ensure the civilization survives. I simply do not know.

The Government is proceeding using a little used provision of the Clean Air Act that was never intended to be used for this purpose. The action will be challenged in Court for years but like most things, in the end, the government will prevail. As in most government action, there will be winners and losers. However, on thing is clear, the results will be higher, artificially induced cost of the use of electricity.

Those that oppose this proposed rule, its adverse impact are powerless to mitigate its consequence much less stop it. That is the price of an arrogant system that goes on not caring of the consequences of its actions. With nations like China and India and charcoal burning for all kinds of things in third world countries, this unilateral action is ineffective except for making costs go up here and eventually making producing businesses to seek other venues. A real legacy, indeed.

Politically, the opposition will roar. States that depend on coal fired generated electricity will howl. This included both Republicans and Democrats. Again, the Administration does not care. They are immune to criticism. After the Rule becomes final in a year or more, it opponents will use a procedure called the Congressional Review Act to repeal the regulation. The law allows CRA resolutions to pass with only 51 votes, and it cannot be kept from being considered, even under the no-amendment tyrants in the Senate leadership. Even if it did pass, there is no doubt the President would veto it.

Trying to repeal the measure by other means or measure would also elicit a veto. Therefore, like it or not, Congress is impotent to counteract the regulatory juggernaut.  

 

 

 

Energy Efficiency: Not on the watch of Harry Reid

The U. S. Senate failed yesterday to move to consideration of a bill which was largely thought as benign, not very intrusive, not very expensive as far as federal largesse goes and was supported by nearly everyone. The measure –sponsored by Senator Jeanne Shaheen (D-NH) and Senator Rob Portman (R-OH) called for tighter energy use efficiency guidelines for new federal buildings and incentives to make homes and commercial buildings more efficient.

The bill failed to pass for one reason and one reason only. The Majority Leader of the U.S. Senate Harry Reid (D-NV) refused to allow amendments sponsored by Republicans, including preventing a measure that would have approved construction of the proposed Keystone XL pipeline from even being considered. Republicans also were seeking amendments to speed up natural gas exports and prevent certain EPA regulations on coal-fired power plants from going into effect.

Mr. Reid offered to eventually have a vote on the Keystone pipeline but many of his promises of this nature seem to never get fulfilled. I am not sure what is the difference of having the vote now or later--other than later never comes. Senator Reid, of course, blamed Republicans for the bill's failure. He blames the Republicans for everything. In this case, he cannot legitimately blame them for denying a vote-even debate- on very serious national issues.

Senator Dan Coats, (R-IN) was quoted as saying "Over the past 10 months, the majority leader has allowed just nine roll call votes on Republican amendments," Wow, nine votes, How did ole Harry allow those?

I believe that in order for democracy to work, in order to maintain a sustainable system, the process must be open, fair and robust. Not the case anymore in the U.S. Senate and Senator Reid should stop being so chicken. If measures like the Shaheen-Portman bill cannot even get to consideration he can blame himself.  Let them votes. 

 

What are you afraid of, Senator Reid? Let them vote

 

I was wondering where democracy has gone? What has happened that the will of the elected representative is so thwarted/ Where is the ability that allowed issues to be discussed and voted in Congress, an ability that has vanished.  How did we get such into such a partisan dead end?

In this case I am referring to the United States Senate. Why are the Senators-particularly the Majority Leader Harry Reid (D-NV)- afraid to permit the minority party from offering amendments? What is Mr. Reid afraid of? Why is there such an impediment? He has the votes to defeat any Republican amendment. 

There is a bill pending now in the Senate sponsored by Senator Jeanne Shaheen (D-NH) and Senator Rob Portman (R-OH). The substance involves the low hanging fruit of energy efficiency. The legislation has bipartisan support, is loved by the business and environmental community and has been around for the last 3 or 4 years. Seems like some good policy there. It is about as noncontroversial as you can get and still do some good.

Consideration of this benign energy efficiency bill is set to fail in the Senate early next week at the hands of a filibuster by Republicans who are again livid of their inability to secure and votes on several amendments. Many will say the bill is a victim to the poisonous partisan atmosphere that pervades the Capitol.  In a way it is, but it is more than that.  It seems Harry Reid and Mitch McConnell (R-KY), the Republican leader are unable to agree on the process to consider the bill. Senator Reid took the usual action to block consideration of any amendments through a series of procedural steps to bar Republican amendments to the bill.

Republicans want to offer and get a vote on amendments involving on KXL pipeline, liquefied natural gas exports and U.S. EPA climate regulations. These are important issues, they deserve to be debated. The voters deserve to know the positions of their representatives.

 I understand the power of the majority. I know how the process works. Republicans have used the process when in the majority, although not to this extent. Every time, time and again, the minority party and even his own Democrats are denied a chance. What is he protecting? 

The conduct by the Majority Leader is wrong, it is destructive to the institution and it cheats the country. But, as I said, why are you afraid?

 

 

Congressional gridlock is no more due to lack of conflict:

 

Congress has been in and out of session over the last month. The only constant here in DC it seems has been snow and cold weather. There has been little accomplished in Congress since the earlier funding of the federal government for this fiscal year passed followed by the passing of legislation to increase the debt ceiling until March 2015.  

These usually confrontational economic measures are out of the way until this fall, and probably beyond the election, ending possible disruption of government.

The President did submit a budget in early March, albeit a month after statutorily required, but little attention has been paid to it. It is doubtful a new budget outline will be considered this year.

Natural gas exports

There are a couple of issues that are receiving considerable attention. The first is the export of liquefied natural gas (LNG). The Department of Energy has been gradually reviewing and approving licenses to allow the export of gas but the political and diplomatic situation involving Russia and Ukraine has energized some lawmakers to urge a fast-track of exports from U.S. gas supplies to other countries dependent on energy from Russia.

The Department of Energy in the last few days gave the go ahead to a seventh project that would send gas to countries that do not have a free-trade agreement with the United States -- bringing allowable exports to 9.3 billion cubic feet per day. Of course, there are still other hurdles-like retrofitting facilities and other legal challenges, to face before significant gas starts flowing abroad. 

The gas export debate will be around for a while as both Senate and House deliberation will feature pleas from abroad for the gas, warnings from domestic manufacturers worried about supply and price and competing reports from “experts” about what would happen to domestic energy prices, jobs and emissions.

So far the Administration has stuck to its policy of continuing its case-by-case review of LNG export projects. However, pressure to speed up is increasing.

Tax Reform

The second major issue is tax reform being championed by Ways and Means Chairman Dave Camp (MI-R). While major tax reform is unlikely to be seriously considered this year, Mr. Camp is proceeding ahead using his proposal released last month of eliminating deductions and credits while reducing marginal rates as the foundation.  However, there is only lukewarm support by the House leadership to tackle such a large issue – especially in an election year.  There is little support of tax reform in the Senate by either party. In addition, an inactive Administration makes this an issue for the next Congress.  

The matters bears watching for the future as Mr. Camp intends to: 

Hold additional bipartisan meetings with the staff of JCT on the draft;

Hold public hearings on specific portions of the bill; and

Begin advancing permanent legislation through the Committee that paves the 
way for tax reform by making incremental progress towards full reform.

The other tax issue outside but related to tax reform on the horizon deals with 50 or so provisions that expired at the end of last year, the so-called “extenders”. New Senate Finance Committee Chairman Ron Wyden (D-OR) has made dealing the expiring provisions a priority and Mr. Camp as also has stated his Committee will continue its work of going policy by policy to determine which extenders should be made permanent in a series of hearings and mark-ups on dates not yet announced.

There is a sense that gridlock is on the wane. However, what Washington has entered is a state of “non-lock”. There are not enough big substantive issues that either side will consider to lock the process. The House and Senate operate almost without recognizing the other body.

The real state of affairs is the November election. For Republicans, it is all about the election even more so than for the Democrats. Votes, positions, policy, investigations, action and inaction are all designed to put the opposition into difficult positions. However, Republicans know that unless they can control Congress, they will continue to be nothing more than an obstructive nuisance. Mr. Obama knows that without the backstop of the Democrat Senate, the last two years of his term will be quite different.

 

 

 

Congress: Politics, Committee changes and retirements

Washington has been relatively quiet for the past month. News from Capitol Hill has been more about retirements and changes at the top of Congressional Committees than legislation.  

The funding of the federal government for this fiscal year was accomplished with relatively ease and that action was followed by the passing of legislation to increase the debt ceiling until March 2015.  The House passed a “clean” debt ceiling bill and, beyond a Ted Cruz-led revolt in the Senate, the debt ceiling debate went smoothly.  

With the two usually confrontational economic measures out of the way, possible disruption of government has been postponed for a while.

The real focus has been on the politics of Washington and the coming election -- not on substance. There has been a rash of retirements announced in both the House and Senate.  The most significant is the departure of Senator Max Baucus (D-MT) to become U.S. Ambassador to China, setting off a series of changes in the Senate Finance and in the Energy and Natural Resources Committee. 

Senator Ron Wyden (D-OR) has become the chair of the Finance Committee, succeeding Baucus.  Wyden stepped down from the chair of the Energy Committee and turned the gavel over to Senator Mary Landrieu (D-LA).  

Climate Change: Unleash the EPA to Save our Future

The Obama Administration announced yesterday its intent to raise the price of electricity for everyone in the country. The feat will be accomplished by regulatory fiat by the Environment Protection Agency on existing power plants by forcing an artificial reduction of the emissions of carbon dioxide known as one of the Green House Gases. GHG are thought in some circles to be a chief cause of the pheromone of climate change or global warming.

 

I have worked for the past five years of analyzing various proposals to curb GHG.  I have to say, I no idea if there is climate change or not. I am pretty certain CO2 levels have been rising over the years in the world, but that is not the issue here.

 The action by the Administration was predictable and inevitable. Having failed to get Congress to pass a “cap and trade” scheme in 2010, the Administration waited until after the election to move their program forward and forward it will come.

The EPA has been asked to issue proposed regulations in the next 12 months. I suspect they have working on them for some time so this will not be a problem.  

Power plants that currently use coal (about 38% of electricity is generated from coal) will have figure out a way to comply either by fuel switching, technological change or just shutting down. However that plays out, electricity cost will increase and in some areas increase considerably. Although the details of what is to come is not known, cost increase is certain, also predictable, and inevitable.

Battle Brewing over LNG in Washington

There is a new battle about to happen in Washington that will pit some of the biggest names in Washington politics, including some of the giants of American industry, against each other.

 

It's not about taxes or the debt ceiling, or immigration or gun control; it involves natural gas, the now carbon-based fuel of choice. Strangely, it does not involve what we think of natural gas that powers heaters, stoves, mammoth generators and factories. It is the kind of gas that is liquid or LNG and there are big players in Washington and in Corporate American who think it is worth arguing about

Expanded production of LNG could have adverse effects on many industrial and manufacturing companies that directly and indirectly use enormous amount natural gas in their business. This means production of steel, fertilizer, chemicals, cement, aluminum, metal smelting, glass and paper, for example. If over the next few years, enough gas is liquefied for export, gas prices could rise, erasing the benefits of current low prices.