When government tries to pick losers and winners, it typically picks losers. Why? Because in a free market, consumers pick winners to leave the losers for government.
The U.S. energy market is rich with examples. In the 1970s, synthetic fuel projects that went bust, and the Synthetics Fuel Corporation was terminated with much of its funds still unspent. In the same period, the California Energy Commission decided (see p.24) that methanol-powered (M-85) vehicles were the transportation future for their state. But advances in reformulated gasoline and onboard vehicle technology removed the benefits of converting natural gas, wood products, and coal into this transportation fuel. The methanol fad quietly went away.
EV Largesse: $2.2 billion
It seems like only yesterday that electric vehicles (EVs) were a pillar of Obama’s government-knows-best transportation strategy.…
“I can’t downplay this. It’s obviously very exciting for us…. This is opening up a new chapter in Alaska’s oil and gas history that is literally starting today.”
– Pete Slaiby, Shell Alaska. Quoted in Jennifer A. Dlouhy, “Shell Begins Drilling Well off Alaska,” San Francisco Chronicle, September 9, 2012.
Profit-seeking, consumer-directed business is proper, necessary, and heroic. Free-market-based energy enterprises (oil, gas, and coal) are quite unlike government-dependent (crony) businesses (ethanol, windpower, and on-grid solar). Ken Lay’s Enron is (was) a leading example of the latter; Koch Industries’ Charles Koch, writing in the Wall Street Journal yesterday, epitomizes the former.
Shell has scaled back its (scarcely profitable) renewable energy investments and is back to its oil and gas roots. Its advertising is no longer about pie-in-the-sky energies and more about here, now energy.…
“The spate of layoffs that wind industry advocates have warned about has accelerated in recent weeks, with workers losing their jobs in key wind states such as Iowa and Colorado in a trend expected to continue at least into next year.”
– Nick Juliano, “Wind Layoffs Mostly Hitting Constituents of PTC Supporters,” Greenwire, August 29, 2012.
Energy reality continues to set in for the government-dependent energy sector, industrial windpower. Part of the reckoning is economic–the increased competitive gap between electricity generated from natural gas versus wind. But the bigger part is the looming expiration of the Production Tax Credit (PTC) for wind. Twenty years of such political favor has not been enough for a product that is intermittent (read: sub-industrial grade).
As reported in Greenwire last week:
…More than 2,200 jobs have been cut, are at risk or were never created, although an untold number more likely have been affected through cuts at smaller companies that may not have generated formal announcements.