Saturday, November 19, 2016

The Anatomy of a Failed Policy: Open Up Federal Land to New Oil, Coal, and Gas Leases!

Okay, Trump isn't even president yet. But all signs are there that he'll open up vast tracts of federal land to new mineral leases. What will happen? He'll crash the markets.

Who needs wilderness when you can have oil and coal?

Even if you aren't a "believer" in global warming, you might have noticed that oil and coal aren't good for you and in fact are a major pain in the ass. Just google "beijing pollution" and check out the pictures. (Here, I'll do it for you.) Or, for good measure, try "new delhi pollution."

Now look at the Alaska wilderness picture above. Which direction should the world be moving in, regardless of the threat of climate change? Now just for fun, google "climate change flooding." Okay, I'll stop proselytizing by digital image now.

But to the point: What's been happening the last few years but a total crash in oil, coal, and natural gas prices? What do producers do when a market goes south, price-wise? You stop producing. So even if you love fossil fuels, you don't get anywhere by expanding production. You'll just further exacerbate the difficulties brought on by over-production in recent years.

And what will you have to show for it? A greater reliance on fossil fuels at a time when we should be pulling away from them? See-saw markets heading from peaks to valleys and back when the new investments should be in wind, wave, solar, and hydro?

Here's my hope -- call it my bet -- for the future: The coming Trump administration opens up vast stretches of federal land for more oil, coal, and mineral leases -- expecting to get the cash for infrastructure spending that won't be there anymore because he lowered corporate taxes, abolished the estate tax, and dropped taxes on the rich to stunningly low levels -- and nobody comes. Or those who do come find themselves, as early adopters of peak fossil-fuel production that begins to crater the markets, needing either to back out or simply shut down, but only after the whole energy scene has been roiled by job cuts and huge populations of dislocated people wondering what to do next.

Do we do this so America can have more gas guzzling monster trucks and SUVs? By the way, you can expect Trump to roll back the new higher fuel economy standards Obama put in place, as well. It's all part of the nightmare. If he's really the new Reagan, he'll also cut subsidies that encourage alternative energy R&D and production.

Hope I'm wrong about this. But it is econ 101, right?

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