Why I Continue to Resist
Government-Driven Green Initiatives
By Lee Bellinger
You’ve probably picked up on my skepticism of green energy over the course of the Obama Administration. Despite all the excitement and official government support propping up wind, solar, and battery technologies as the wave of the future, faith in any politically driven enterprise is risky.
I bring this up because so many brokers, bankers, and other hype-sters are big on promoting these politically correct energy boondoggles. Yes, there is the potential for speculative success for investors in these fields, but you’re fighting against fundamentals that make most alternative energy ventures uneconomic.
Does anyone remember the Carter era “Synfuels Corporation?” That particular government-created new energy source boondoggle concocted so many lame-brain projects that even hardcore liberals in Congress had no choice but to quietly put it to bureaucratic death.
Government-created industries can live or die at the whim of voters
Here’s a round-up of trendy green energy “opportunities:”
1) Government-Sponsored “Green Energy” Boondoggles
Harnessing so-called green energy, such as converting sunlight into electricity, is theoretically a promising technology. However, except for specialty applications (such as portable generators and remote installations), this technology is still far from making any economic sense when natural gas is plentiful and cheap, as it has been since Obama took office.
And alternatives such as wind or solar can’t be scaled up to replace more than a small fraction of demand for natural gas and other conventional fossil fuels.
Enter the early melt-downs of favored political energy firms such as Solyndra. Its bankruptcy is one well-known case, but there are dozens more. After putting the taxpayers on the hook with a half billion dollar loan, Obama visited Solyndra’s headquarters and proclaimed, “Companies like Solyndra are leading the way toward a brighter and more prosperous future.”
By September 2011, Solyndra filed Chapter 11 bankruptcy and laid off 1,100 workers.
“We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed,” said Department of Energy spokesman Dan Leistikow after Solyndra announced bankruptcy. “But we can’t stop investing in game-changing technologies that are key to America’s leadership in the global economy.”
The cards started falling fast. Numerous stories have come out on other green energy companies (solar, geothermal, and others) that happily accepted tens of millions of dollars in government money, then laid off thousands of workers, shut down plants, or went belly up. One company, Evergreen Solar Inc., got $25.3 million through state grants, declared bankruptcy to restructure, and mentioned it would focus on building up its taxpayer-financed manufacturing – in China.
Indeed, CNS News reports that out of the $9 billion in green stimulus distributed from 2009 – 2011, only 910 long-term jobs were created; or $9.8 million per job. Talk about unsustainable investments!
2) Electric Cars Are Also a Bad Bet
According to Business Insider, a Congressional Budget Office (CBO) report, “Effects of Federal Tax Credits for the Purchase of Electric Vehicles,” shows that electric cars are a waste of money. Even with nearly $25 billion available for auto industry loans and government subsidies for every electric/hybrid car sold in the U.S., they don’t hold their own, not even environmentally.
The CBO report states: “The tax credits have other, indirect effects: Increased sales of electric vehicles allow automakers to sell more low-fuel-economy vehicles and still comply with the federal standards that govern the average fuel economy of the vehicles they sell (known as CAFE standards). Consequently, the credits will result in little or no reduction in the total gasoline use and greenhouse gas emissions of the nation’s vehicle fleet over the next several years.”
GM’s plug-in hybrid, the Chevrolet Volt, is getting a lot of attention for its dependence on government welfare. Last year, a Mackinac Center for Public Policy report calculated that each Volt costs taxpayers $250,000 in combined federal and state loans, grants, subsidies, and tax credits.
In 2012, GM has halted Volt production twice due to unsold inventory. And the manufacturing plant that is supposed to produce its hybrid battery, and which got $150 million in taxpayer funds to break ground back in 2010, announced this October it is putting its workers on furlough – before it has even produced one single battery!
Even with all the subsidies, hybrids and electric cars cost consumers much more than comparable combustion engine vehicles. This keeps many would-be buyers away. By some estimates, tax credits for buying these cars will have to be about 50% higher than they already are to make the price competitive with conventional gasoline-powered vehicles.
Over the summer, GM enjoyed a boost in Volt sales by offering big discounts. The bad news? A report from September claims GM loses as much as $49,000 per Volt sold. GM disputes the numbers, but admits it continues to lose money on its hyped-up hybrid-electric.
3) Green Policy: Regulating What You Do in Your Living Room
The funding to enforce a federal law effectively banning many types of incandescent light bulbs and mandating compact fluorescent light (CFL) bulbs was cut in Congress this year. But the law is still on the books and may come back with a vengeance.
The law forces Americans to follow federal lighting preferences for their own living room. It phases out and restricts incandescent bulbs so you’re forced to buy the more energy-efficient-but-more-expensive LEDs and CFLs (no doubt a handful of corporatist friends, like General Electric, would pocket a ton of cash with this move). And, by trying to solve one problem through legislative force, it causes another.
The biggest environmental concern found in CFL bulbs is mercury. The EPA even has “safe” suggestions for cleaning up a broken CFL in your home. You can read about it here: http://epa.gov/cfl/cflcleanup.html
In other words, traces of the same heavy metal that the government is using as an excuse to shut down the coal industry can be found in every home in America that takes the government’s energy-efficient lighting “advice” to heart.
Slick speculators are probably right that an entire new government agency will have to be created just to regulate the recycling of these bulbs. In addition to the growing concern of excess mercury seeping into the environment from toxic government-mandated CFL bulbs, consumers complain these lights cause headaches and give off a harsh light not suited for a home environment. CFLs may also expose you to damaging levels of UV radiation, as we reported in a recent edition of our monthly Independent Living newsletter (for paid subscribers only).
4) More Consumer Surveillance in the Name of the Environment
Smart meters can be a great tool for you to use and measure your own utility (electricity, water, and gas) uses. They can help you find areas to cut back and save money. But the TRUE objective of this recent technology is to force you into sharing these details with utilities or the government.
Federal regulatory authorities, grant-seeking high-tech companies, and their “green” allies in Congress are firmly behind the construction of a national “smart power grid.”
The dark side is bureaucrats seem quite interested in the smart grid’s potential to reveal how private citizens utilize electricity in their home. This could be the ideal tool for rationing and controlling an individual’s use of utilities 24 hours a day.
The smart meters are already used by police in drug cases. If the smart meter catches you using an “unusual” amount of energy, there is a chance your home will be raided as police look for marijuana growers. In any case, some bureaucrat gets to decide if you’re using “too much” energy.
Smart meters may also pose a health threat. They emit up to 100 times the microwave radiation of a cell phone, 24 hours a day, potentially increasing cancer risk. The risk may be even higher from clusters of smart meters installed in apartment houses. Homeowners have reported experiencing headaches, drowsiness, and symptoms of depression after smart meters were installed.
The Bottom Line for Investors
My suggestion is that you stay away from these crazy government-driven energy boondoggles at this point, particularly if Romney is elected. If you want to invest in energy, dividend-paying integrated oil and gas producers such as Exxon-Mobil remain an excellent choice.