“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.
Editor note: This post follows those of Walter Donway, who authored Crony Capitalism: Principles (Part 1) and Crony Capitalism: Practice (Part 2).
America’s energy industries (oil, gas, electricity) have been a bastion of crony capitalism for much of their history. Leading gas and electricity firms sponsored state and then federal public-utility regulation during the Progressive Era and New Deal. Like other so-called public utilities, they welcomed the prospect of making commission-approved “reasonable” profits in an entry-restricted environment rather than taking their chances in open-entry markets.
The U.S. coal industry also longed for federal aid. “The bituminous coal industry has been one of the most chaotic industries in the United States in recent years,” an Ohio University professor wrote in 1940. “Because of this lack of order it has recommended itself to the Nation as an industry urgently in need of social control and, as a result, it has come to serve as a significant laboratory for experiments in certain types of government regulation.”…