Obama Should Stop Trying to Play ‘Energy CEO’
Liz | 06/13 at 10:00 AM
The narrative that President Obama has no idea what he’s doing is gathering momentum – helped, surely, by last week’s boneheaded comments on the economy. Americans don’t think he has done enough to create jobs; worse, they’re not sure he knows how. His sins of omission are significant, but the sins of commission are possibly even worse for Mr. Obama, making him look incapable. This is especially true in energy, where Solyndra’s embarrassing collapse is but one example of many White House misadventures.
Mr. Obama’s single-minded focus on green energy – the only commercial sector for which the president has expressed any enduring affection – has led to a series of initiatives that are coming unraveled. Not only do the failures to capture the world solar panel market or shift to electric cars feed skepticism about government meddling in industry, Americans increasingly see global warming – the rationale for these undertakings – as less important than keeping energy costs low and our companies competitive.
There has always been a Wizard of Oz feel to this president’s clean energy drive, and not just because it has an Emerald City hue. The president and his team think they can wave a magic wand and overturn current day realities, including the fact that the Chinese dominate solar panel manufacturing. They are a low-cost producer of practically everything else; just because we want to be a leading panel maker won’t make it so. Or, can we really double car mileage with no give-ups in terms of higher costs or reduced safety? The Wizard seems to think so. (Can we really add 31 million to our health insurance rolls with no hit to the budget? “Yes, we can!” says the Wizard.)
High on the list of President Obama’s favored industries are wind and solar energy. The White House has backed domestic makers of products like wind turbine towers and solar panels, but competition from abroad has been tough. Imports have driven down prices, bankrupting Solyndra and pressuring others. Solar panel prices have dropped by two-thirds in the past few years, helping to spur demand but also inciting some U.S.-based manufacturers to accuse Chinese importers of unfair trade practices.
In response, the Obama Commerce Department has now levied hefty 31 percent tariffs on Chinese panel makers, which will likely hike prices for domestic buyers. The upshot is expected to be some slowing of the fast-expanding residential solar conversion market – one of the few “wins” on Obama’s green play-card.
A similar scenario is playing out in wind turbine towers, where in response to complaints from a coalition of U.S. producers, the Commerce Department just recently announced that it will impose tariffs of between 13 percent and 26 percent on Chinese imports. Similar penalties are expected to be charged against Vietnamese makers later this year.
Presumably, just as for solar panels, these actions will worsen the economics of wind installations, which had been on the upswing, spurring rapid growth. At the same time, the Chinese government has (not unreasonably) hit back, citing U.S. federal support of green products that they say violate trade agreements.
The Obama administration’s response will almost surely be to ladle even more benefits onto these emerging sectors – either through tax credits, rebates to consumers or by imposing more demanding renewable energy quotas. The already-high price of alternative energy will spike, imposing a tax on American industry at a time when we desperately need to enhance – and not hobble – our competitive position, and at a time when we have plenty of cheap natural gas and coal.
Similarly, the Obama administration has made a hash of its push for electric cars. Having prodded U.S. auto makers to ramp up production of battery-driven and plug-in vehicles, enticed consumers with generous rebates buy the cars and having doled out more than $1 billion to makers of advanced batteries to support the effort, the fledgling industry is nowhere. Instead of the hundreds of thousands of such cars streaming off dealer lots, U.S. makers will be lucky to sell 50,000 this year. The response? Offer even bigger incentives to buyers, doubling down on the great green taxpayer bet.
Meanwhile, the Obama administration has been handed a great gift – a huge new reserve of relatively clean and inexpensive natural gas available through fracking. While slow to recognize the benefits of this development, the administration is now embracing natural gas as a substitute for coal.
So committed is the administration to a shift away from coal, it has decided that we cannot afford to allow companies like Dominion Resources to export natural gas – this, despite President Obama having proclaimed doubling the nation’s export income a prime goal. The White House is afraid to throw their support behind gas exports since any large-scale shipments of gas overseas could eventually ratchet up prices at home – a possibility that would undermine their determined shift from coal.
Will “green” energy be President Obama’s helicopters in the sand? Jimmy Carter’s White House tour was toppled when Americans came to view him as inept. The spectacle of the mightiest nation on earth unable to rescue hostages from a third world country was too much for voters, who ousted Mr. Carter in disgust. Policy differences are one thing; clueless is another.