by Alex Gimarc                                Mon., March 3, 2008

Interesting Items 3/03 -

Howdy all, a few Interesting Items for your information. Enjoy -

In this issue:

1. Economy
2. Clean Water
3. Pebble

1. Economy. This one is going to be a bit of a rant, so you have been warned. I am old enough to remember the awful economic performance in the 1970s. That decade was marked by a veto-proof democrat majority in both houses of Congress after 1974, wage and price controls on energy – which created shortages, and a burgeoning environmental movement that made it all but impossible to respond to a declaration of economic war against the United States by the Arab Middle Eastern oil producers in OPEC. Nixon gave in to the greens, created the EPA and instituted wage and price controls. Dick Cheney had an early job in the Executive Branch to put those controls together. A huge democrat majority congress was elected in 1974, shortly followed by Nixon’s dep arture. Indeed, during the period, democrats in the senate held a 56-61 seat majority, and in the House, had a majority that ran 56-67% of all seats. Gerald Ford was the next president, and did a fairly decent job, holding the modern record for presidential vetoes upheld. Jimmy C arter was elected in 1976 as the first of two New Democrats elected in the last 30 years and presided over the most economically inept administration since Hoover. The entire event took 6-8 years, depending on where you st art counting, and ended with the election of Ronald Reagan in 1980. But the trigger to the entire mess was economic and energy public policy incompetence by the Nixon administration and congress. It is now 35 years later – over a generation – and we are well on our way toward reprising that mess, st arting with a similar trigger. Once again, there is trouble in the Middle East, though today we are now draining that p articular swamp of alligators. Once again, we have idiotic and foolish action by a Republican president sitting in the Executive Branch. This time it is a decision to move to ethanol, which has disrupted the worldwide marketplace for food, and has artificially changed decision making regarding from the farm to the grocery store and everywhere in between. Once again, we have a resurgent democrat majority in congress. This time, it is far more beholden to the greens than it was 35 years ago, but it is just as opposed to drilling, new exploration and new energy development as it was then. This new democrat majority may or may not get larger in November. If it does get larger, expect further artificial limits on energy generation and production; expect a carbon tax to be instituted; and expect a move back to bashing Big Oil as the source of all our frustrations. This is all so unnecessary. This nation is awash in fuels – especially with oil at $100/bbl. All we have to go is get the various governments (federal, state and local) out of the way so the marketplace can make logical, intelligent, and profitable decisions about what to do next. Over the last year, around 57 coal-fired power plants were cancelled. That will lead to energy shortages down south. Half of all the electrical generation in the US is done by coal, and we as a nation have more coal immediately available for use than anyone else in the world – centuries worth. You want quick, clean, environmentally friendly energy? Go with coal and scrub the emissions. We as a nation also have more natural gas than we know what to do with. It sits offshore in hydrates, in offshore reservoirs, within the continental US, and on the Alaskan North Slope. St art drilling and producing right now. I am not an ethanol or a bio-ethanol fan. Pound for pound, the fuel is less efficient than gasoline and diesel. My largest beef against ethanol is that it is a top-down government mandate. The marketplace is the vehicle to figure out what our next liquid fuel is going to be. With its support of corn-based ethanol, the Bush administration has placed a bomb in the agricultural marketplace, one that will make it more expensive for everyone of us to eat for year to come. We quit building reactors in the US shortly after Three Mile Island. There has been a two-decade long hiatus in new licenses and permits. Today there are over 30 new licenses in process. There ought to be 300, for if your goal is emission-free energy, reactors are your solution. Oil is also still a significant portion of our energy equation, and can be produced from the Alaskan North Slope (provided we are allowed to open ANWR and develop NPR-A), off the Gulf and California coasts, an in oil shales in the Mountain West. Geothermal energy is also possible throughout the volcanic Cascades from Long Valley Caldera north to the Canadian border. Idiotic, foolish, pandering energy policy is once again giving the great economy we have had over the last 25 years a push toward an unnecessary recession. And as long as we have democrats in control of congress, and pandering Republicans siding with them in congress and in the WH, that slide is going to accelerate. What is to be done? Relax clean air and clean water rules. Just because you can measure something, doesn’t mean it is dangerous. Acceptable levels of metals, gasses and substances ought to be somewhere near the background levels of whatever that substance is at interest at each location. Relax and accelerate licensing and permitting for new production and generation. Keep the producers and new generation folks out of court. Fully 40% of all new generation and production costs are spent in licensing and fighting the greens in court. Get the governments at all levels the Hell out of the way and allow the ingenuity of all Americans to kick in and work this problem. Sadly, I am afraid that we are going to have to relearn the painful lessons of the 1970s in order to do so. Happily, things indeed do move faster in the modern information-rich world, so that 6-8 years of self-imposed economic disaster we had in the 1970s may only last a year or two this time around. This isn’t that hard. We are certainly up to the task. Elect the most conservative dummy you can in the elections this year. Then beat the ever-loving tar out of him or her to get the government at all levels completely out of the energy marketplace. Be just as insistent and demanding as the greens. Hold their feet to the fire. Make it painful to ignore you and people who believe as you do. This isn’t that hard to fix. As always, this isn’t a problem. It is an opportunity to excel.

2. Clean Water. A state judge from Fairbanks threw out the greens’ anti-mining ballot initiative entitled the “Clean Water Initiative.” This ballot initiative was aimed squarely at the proposed Pebble Mine and would have prohibited any discharge of any metals into waters around the mine. It was dressed up in a very pretty “Clean Water” bow, and has been sold to a skeptical public as a way to ensure the mine owners and operators behave themselves and don’t trash the surrounding countryside. Of course if you actually read the language of the initiative, you find that it will essentially shut down every single mine here in Alaska. In principle it could even be applied to recreational gold miners who would “discharge” sand and gravel taken from stream bottoms back into the streams they were mining from, though it is currently limited to mines greater than 640 acres. However, once you put that principle into law, it will not be long before it is extended to other things the greens find distasteful. The judge found that the initiative was an unconstitutional infringement on the Legislature’s ability to allocate state resources. The judge then went on to note that banning the use of water by mines and only allocating it for fish and game removed the ability of the legislature – which is constitutionally mandated – to make those determinations. There is a second, parallel ballot initiative that passed judicial review (so far). Expect the greens to appeal this to the Alaska Supreme Court, which is populated by a number of former democrat governor Tony Knowles’ Sierra Club appointees. We will see how this goes. ADN, Sat.

3. Pebble. Now that we are talking about Pebble Mine, the consortium backing the mine released yet another analysis of the total value of metals expected to be mined over the course of the next 50+ years from Pebble. They estimated that between $350 -500 billion at 2007 prices for gold, copper and molybdenum await mining and shipping. To contrast this, the total value of all oil produced from the Prudhoe Bay oil fields through 2002 was in the order of $280 billion – which is an incomplete number. It is incomplete because it is over 4 years old and it does not include current value of the resource. Still, it is instructive to note that the Pebble Mine all by itself should be within an order of magnitude as valuable to this state as the Prudhoe Bay oil fields have been since the first well st arted producing in 1969 (before natural gas). My source for the oil was a UAA economic analysis. Mining is important. We have learned how to do it better over time. We will figure out how to do Pebble better also. There are open pit mines out there with trout in their tailings ponds. Trout are pretty sensitive to environmental insults. We can do mining and fish at the same time and do it well. Let’s get st arted. ADN, Tues.

More later –

           - AG

"If ye love wealth better than liberty, the tranquility of servitude better than the animating contest of freedom, go home from us in peace. We ask not your counsels or arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you, and may posterity forget that ye were our countrymen."
- Samuel Adams, speech at the Philadelphia State House, August 1, 1776.