Don Briggs – Louisiana Oil & Gas Association –

While the U.S. House of Representatives and Speaker Nancy Pelosi focused their attention to the all-important debate over healthcare this past week, the Senate launched three days of hearings pushing President Obama’s Cap and Trade agenda.

Energy Secretary Steven Chu kicked the meetings off by saying that the United States has fallen behind other countries in a clean energy race to produce wind turbines, advanced batteries and solar cells.  Chu said, “We must enact comprehensive climate legislation, the most important element of which is a cap on carbon emissions that ratchets down over time.  That critical step will drive investment decision towards clean energy.”

Senators Barbara Boxer, D-Calif., and John Kerry, D-Mass., are the authors of Senate Bill 1733, the 923-page climate change bill being debated in the Senate Environment and Public Works Committee. The bill is similar to a bill passed by the House a few months ago.  The basic crust of the Senate bill would set up a cap-and-trade system allowing polluters to comply with the new caps by either cutting emissions or buying and selling a limited supply of legal allowances that would allow them to pollute.

Two questions come to my mind in the debate over cap-and-trade and global warming: 1) what about global warming, and 2) what is cap-and-trade really about?  I readily admit there is no possible way for me to fully present the answers to both of these questions in a 500 plus word column, but I can present some conclusions of fact that are important to the discussion.

What about global warming?  We turn our attention to the scientists that study the atmosphere and such issues.  At least that is what I do.  I certainly will not leave my conclusions to the whims of politicians.

Is CO₂ a pollutant?  No, it is not.  CO₂ is odorless, colorless and non-toxic. We actually drink it in soft drinks and beer.  That is where the burp comes from.  CO₂ is necessary for life (photosynthesis converts CO₂ into O₂ and carbon.)  Without CO₂ nothing grows.  Increased CO₂ means greener and more productive vegetation and crops.

Al Gore says the science is settled, and 2,500 IPCC (Intergovernmental Panel on Climate Change) scientists agree CO₂ causes climate change. NOT TRUE.

In an IPCC study, 62 scientists (not 2,500) reviewed the last chapter, which examined what causes climate change.  The bottom line is only five of those scientist concluded that there was a 90 percent certainty CO₂ caused climate change.

On the other hand, over 31,000 independent U.S. scientists have signed a petition saying no conclusive evidence demonstrates CO₂ causes climate change.  Science shows that over the last 5,000 years three warm periods occurred where the climate was warmer than it is today.  Climate change is natural, and warmer periods occur with no relation to human CO₂ emissions.

In 2007, Hungarian scientist Dr. Ferenc Miskoczi published a peer-reviewed paper, which has not been refuted. He also worked out new laws about the atmospheric recordings and created a theory that the greenhouse effect is saturated and extra CO₂ will not affect the Earth’s temperature.  Fellow Hungarian scientist and IPCC reviewer Dr Miklos Zagoni now champions this work.

Miskolczi’s work concluded that the Earth’s temperature varies according to the amount of heat from the Sun and other sources, and extra greenhouse gases like CO₂ will not change the Earth’s greenhouse effect.

What is cap-and-trade really about?  The answer in two weeks.

When you peel back the onion, the boogieman of “global warming” is nothing more than a happy face. Actually, accurate temperature measurements from balloons, and satellites show planet earth has cooled significantly in the last three years, and enough to slowly chip away at the claimed warming, which occurred over the past 100 years.

The facts are, yes, planet earth is warming, but only by one degree Fahrenheit (half of one degree Celsius) over the past 100 years. Since the “Little Ice Age” 250 years ago, the global average temperatures have increased by about one degree per century.

High concentrations of man-made carbon dioxide (C02) in the atmosphere have increased over the past 250 years. Scientist claim the increase is the cause of global warming and comes from the burning of fossil fuels.

The Oregon Petition, a petition of 18,000 signatures from scientist around the world says there is no evidence for “man-made” global warming. Regardless, the increased C02 concentrations in the atmosphere over the past 250 years has gone from 280 parts per million in 1750 to about 380 parts per million today, which is a mere trace. Without C02 in the atmosphere, planet earth would be covered with ice.

There is no argument in my opinion, the consensus among the scientific community and mainstream media has intentionally misled the public by promoting a threat to mankind that in fact does not exist. Our children are being terrorized into believing their world, as they know it is soon coming to an end.

In reality, the use of fossil fuels will be with us for decades to come. The Energy Information Agency (EIA) forecast shows fossil fuels will supply about 85% of the world’s energy demand through 2030, which is approximately the same percentage as today. Whatever the alternative fuel of the future is going to be, it’s a long way from happening.

There is a lot of talk about wind and solar power as alternatives to fossil fuels. I like what Keith O. Rattie, CEO of Questar Corporation said in discussing wind and solar power as alternative energy sources, “A more honest description would be ‘supplements’. Taken together, wind and solar power today account for just one-sixth of 1% of America’s annual energy consumption per day. Let me repeat that statistic, one-sixth of one percent–.0016.” President Obama plans to double that in the next decade and spending hundred of millions in taxpayer dollars to do it…and accomplish what.

The footprint for wind energy is huge. To build a wind farm capable of generating the same electricity as a natural gas fired 1000 MW power plant would require 500 giant windmills occupying 40,000 acres of land. To put that in perspective, 40,000 acres covers 60 square miles. To build a 1000 MW natural gas plant would require approximately 10-15 acres. A solar electric 1,000 MW power plant is somewhat better, only requiring 20,000 acres.

Keith O. Rattie said it better than I, in the closing of his speech at Utah Valley University three weeks ago; “Let me close by returning to the lessons my generation learned from the 1970s energy crisis (the oil embargo). We learned that energy choices favored by politicians but not confirmed by markets are destined to fail.”

Don Briggs, President – LOGA (Louisiana Oil & Gas Association)

On Thursday of this past week, Sec of the Department of Interior, Ken Salazar held the second of a series of public hearings at Tulane University. “The purpose of these meetings is to have an open, honest conversation with the American people to solicit the best information possible about an offshore energy plan,” said Ken Salazar. The first meeting was held in Atlantic City, N.J. and focused mostly on wind energy and the future of the Atlantic OCS. The New Orleans meeting focused on the Gulf of Mexico.

What is this really all about? It’s about four hearings around the country, spending taxpayer’s dollars to hear the obvious, and to give us all the illusion that the President and his Administration are listening. Politics, not discussion, prevails at the meetings. The New Orleans presentation catered to a predominately pro-drilling crowd. “In Atlantic City we had a lot more people talking about renewable energy,” Salazar told journalists after the hearing. In Louisiana “it is not at all surprising for me that we have many advocates for oil and gas production because it’s part of the life of the Gulf Coast,” he said.

Senator Mary Landrieu was the only US Senator present and the first to speak after Secretary Salazar. She took the opportunity to talk about the President’s Budget Proposal and the taxes he wishes to place on the oil and gas industry. Landrieu said the President’s plan would tax independent operators, not the large integrated companies, out of business and thousands of jobs would be lost. Salazar did acknowledge the energy industry uproar against the $31 billion in taxes proposed by the administration, “it’s a hot issue, we will continue to look at it,” said Salazar. And what does that mean? The rhetoric from the administration is by no means settling.

The oil and gas industry testified that it was time to lift the moratorium that has been in place since 1981. President Bush lifted the moratorium prior to the end of his administration, only to have President Obama put a hold on it. President Obama has charged Salazar to explore the potential for offshore energy production and to return a comprehensive energy plan to the President’s desk. If Salazar recommends the OCS to be open for wind energy and not just for drilling, we may then be able to enter the Eastern Gulf in the near future.

The greens (environmentalists) testified against oil and gas exploration saying offshore drilling polluted the beaches and oceans. Representatives of the Sierra Club attacked industry on the spills that occurred during the hurricanes of the past few years. “We had 8 million gallons of oil spilled post-Katrina — much of it was from land-based rigs,” Darryl Male-Wiley said, citing Coast Guard reports. “We think there needs to be additional research on the hurricane survivability of oil rigs and onshore infrastructure.” You cannot help but wonder the impact of 100ft. waves on wind turbines.

Salazar said, “We’re in the information-gathering stage, so I’m learning a lot”. That’s the good news.

Mid-year 2008 $4 gasoline produced a different attitude toward drilling in the Eastern Gulf off of Florida’s coast, Floridian’s were saying, “please come and drill”, however, as prices have declined, so has the enthusiasm for exploration off Florida’s coast. Now it’s back to, “not in my backyard”. What a difference $2 can make.

Congressman Bill Cassidy best echoed the sentiments of the oil and gas industry- “Although it may look like it could be a substitute to oil and gas production, reality is that renewable energy is just a fraction of the energy the nation needs.”

Don Briggs, President – LOGA (Louisiana Oil & Gas Association)

“We will harness the sun and the winds and the soil to fuel our cars and run our factories”, said President Barrack Obama in his inaugural address on January 20, 2009. The rhetorical power of President Obama’s statement rings true with his commitment to renewable energy.

In the days following his inauguration, President Obama appointed the “Dream Green Team” to build his “Green Energy Economy”, appointing, scientist Steven Chu Secretary of Energy, former EPA Administrator Carol Browner Energy Czar, Lisa P. Jackson EPA Administrator and Ken Salazar as Secretary of Interior.

Promoting the use of fossil fuels as an energy source is not on the agenda of the “Dream Team”, but instead renewable energy from the sun, wind and soil, will be the focus of the Obama “Green Energy Economy”.

President Obama’s stimulus plan calls to double renewable energy production by 2012. Today, wind and solar energy make up barley 1% of America’s energy infrastructure. All renewable energy sources, solar, wind, hydro and ethanol make up 7% of Americas energy infrastructure.

No one disagrees that renewable energy has a place at the table in the total energy infrastructure, but realistically it will remain a small part of the big picture, even if you double it and double it again.

On February 27th, President Obama released his FY 2010 Budget, which is titled A New Era of Responsibility Renewing America’s Promise. In the proposed budget, President Obama strips from the oil and gas industry all of the incentives that are critical in raising the investment capital to explore for oil and natural gas.

If 70% of the US oil consumption is used for transportation and 96% of the fuel used for transportation is from oil, why would you devastate the very industry that produces the fuel that drives your transportation engines? That is exactly what President Obama is proposing in his 2010 budget.

In defense of his budget, President Obama said, “I know these steps won’t sit well with the special interests and lobbyists who are invested in the old way of doing business, and I know they’re gearing up for a fight as we speak. My message to them is this: So am I”. President Obama is not just referring to the oil and gas lobby in this statement; his 2010 budget raises over 3 Trillion dollars on the backs of industry and taxpayers.

US Treasurer Secretary, Timothy Geithner, however, was more direct in his discussion on the proposed budget, “We don’t believe it makes sense to significantly subsidize the production and use of sources of energy (like oil and gas) that are dramatically going to add to our climate change (problem). We don’t think that’s good economic policy and we think changing those incentives is good for the country”. For the record, there are as many scientists that do not believe global warming is caused by oil and natural gas as those that do.

President Obama’s 2010 budget is a direct attack on Americas oil and gas industry. Stripping the economic incentives from the thousands of American producers across the country will shut down oil and gas exploration and cause thousands of producing wells to be shut in. Secretary of Interior Ken Salazar said, “But this is not, as some have suggested, a war on the oil and gas industry”. I guess that would depend on what end of the barrel you are looking down.

By Don G. Briggs, President – LOGA (Louisiana Oil & Gas Association)

“So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. That is what we need.” President Barack Obama during his first address to Congress.

The Cap and Trade Tax and why we should care.

We have been hearing about Cap and Trade since 1990 when a similar program was enacted by the Clean Air Act to reduce sulfur emissions that caused acid rain. The Cap and Trade we are now hearing about has the goal of reducing carbon emissions and therefore, slowing or stopping, global warming. The debate on whether global warming is the cause of carbon emission is another story.

The program works by limiting how much carbon a company can produce: The Cap. The emitter would have to have a permit for every ton of carbon dioxide (CO2) they emit. As time passes, the government would reduce the number of permits available, thereby forcing the companies to reduce emissions. Some companies will not emit their allowance of CO2 because of better procedures or reduced activity. These companies will then be issued Carbon Credits. The companies with Carbon Credits will then be able to sell these credits to companies that emit larger amounts of CO2: The Trade.

Warren Buffet, a staunch supporter of President Obama, does not agree with the Democratic party on this issue: “Anything you put in that effectively taxes carbon emissions is – somebody’s going to bear the brunt of it…. that tax is probably going to be pretty regressive.”

The President’s FY 2010 budget includes revenues from Cap and Trade totaling over $650 billion, which is a very conservative estimate. The Congressional Budget Office (CBO) estimates that revenues will be closer to $900 billion. Peter Orzag, the President’s Budget Director, said that he was “sure there will be enough there to finance the things that we have identified” and maybe “additional money” too. (source WSJ). It appears that even the White House agrees that the $650 billion is a conservative number.

Where is this $650 billion or more going to come from? The answer, Louisiana and other industry heavy states: Louisiana ranks 6th in per capita CO2 emissions, California 47th. We have 19 refineries and dozens of chemical plants throughout Louisiana; they will be hit the hardest. It appears that the spread-the-wealth program not only applies to income levels of families, but also where you live.

The problem is that companies are not going to just absorb $650 billion in new costs. Those costs are going to be passed directly on to the US consumer. The largest increase will come in the form of your electricity bill. Fortunately, the Congressional Budget Office has crunched the numbers for us. The lowest 20% of income earners would see an increase in out-of-pocket expenses of about $680/year. The middle 60% would see an increase of about $900-$1500/year, hardly the-no tax increases the President has promised 95% of Americans.

The companies that choose not to pass on the cost to the consumer will likely just pack up and move to Brazil or China. These countries are starving for the manufacturing and refining industries that we are driving away.

The cost of President Obama’s “cap & trade” tax combined with the estimated $31 billion tax on the American natural gas and oil industry will have dire consequences on Louisiana’s oil and gas, petro chemical, and refining industries. The policy of taxing your way into prosperity is a policy doomed for failure