Author: Margo Thorning

Dr. Margo Thorning has frequently testified as an expert witness on capital formation, tax, energy and environmental policies before multiple U.S. congressional committees. She has also traveled coast to coast to present findings to state and local lawmakers, business organizations and the media on the economic impact of climate change policies on local job and economic growth.

Stunning New Propaganda From Anti-LNG Exports Group

The Industrial Energy Consumers of America circulated to Capitol Hill this week a document entitled, “Five LNG Export Facilities; Natural Gas Prices Up 35.6 Percent; Cost of $25.8 billion”.  The document contained talking points built on cherry-picked data that is so misleading you have to see it to believe it… ANTI-LNG MYTH #1: Natural gas prices are on the rise and therefore the department of Energy must delay LNG export applications.  Pasted below is ICEA’s graph it uses to justify further delay of LNG export approvals.  It looks like gas prices are on the rise… right? Wrong!  Natural gas prices often reflect short-term seasonal and political changes; however, the huge increase in supply in recent years has brought natural gas prices down to the low levels of the early 2000’s as shown in the  graph below: Source: http://www.eia.gov/dnav/ng/hist/rngwhhdd.htm ANTI-LNG Myth #2: The Department of Energy must redo its study.  ICEA writes, “DOE is basing its LNG export decisions on domestic demand assumptions that are now three years old, and do not take into consideration that the EPA GHG rule will restrict use of coal in the power generation sector.”  This statement is misleading; according to data from the EIA, even…

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Pass the Cost/Benefit Test to Determine if the Price is Right

This week, National Journal posed the question about determining the right price for energy, whether it’s powering your car or house or weighing diverse issues like the renewable-fuel standard and forthcoming regulations controlling greenhouse-gas emissions from electric power plants. My thoughts: cost/Benefit analysis should be the test by which policymakers craft sound energy policies.  Regulating GHGs through the Clean Air Act fails that standard. As I noted in my testimony before the Senate EPW Subcommittee on Clean Energy and Nuclear Safety, “In sharp contrast to EPA’s $2 trillion estimate of the ‘economic value’ of the CAAA, EPA’s own simulations with its macroeconomic model show that the CAAA has significant negative impacts on U.S. GDP growth over the 2010- 2020 period GDP declines by $79 billion in 2010 and by $110 billion in 2020 relative to the baseline forecast. In other words, the already implemented CAAA regulations have real, quantifiable costs to the economy.”  Also failing the cost/benefit test is the use of tax credits and subsidies to promote the use of renewable and alternative energy in the U.S. This misguided policy adds costs to business, households and the government without delivering commensurate economic or environmental benefits. Data from DOE’s EIA…

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The U.S. Has a Shortage of Jobs, Not Energy

Despite what some policymakers may assert, the U.S. is not facing a shortage of energy.  Domestic oil production has increased by 25 percent over the 2005-2012 period and oil imports are down sharply. Natural gas production has increased even faster, rising by 33 percent over the same period. Wind and solar power have also made strong gains as well thanks to renewable portfolio standards in 30 states as well as subsidies like the production tax credit (PTC) and investment tax credits for renewable energy. As policymakers confront the sluggish U.S. economic recovery and slow job growth, they need to consider the impact of tax, budget and regulatory decisions that promote the use of costly renewable energy compared to the expansion of conventional fossil fuels or nuclear power for electricity generation and for transportation. Another factor to consider as policymakers debate subsidies for new energy technology deployment is that, as is widely understood, the impact of U.S. reductions in GHGs will have almost no impact on the growth in global GHG concentrations since most emission growth is in developing countries like China, India, Indonesia and in Latin America (see Figures 1 and 2). Furthermore, according to recent EIA data, new electric…

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Regulatory Uncertainty Keeping Capital Investment on Sidelines

In today’s Washington Post, Robert Samuelson discusses sluggish capital spending and the recovering economy: In the struggle between capital and labor, capital is winning — and that’s hurting the feeble economic recovery. To simplify slightly: Labor (wage-earners and consumers) can’t spend, and capital (businesses and shareholders) won’t spend. Without a powerful growth engine, the economy advances haltingly. Samuelson highlights a number of reasons for sidelined capital spending: globalization, new technologies, weaker unions, financial market pressures and more.  Read Samuelson’s entire column here. But, there are some critical explanations overlooked by Samuelson on why U.S. investment is still sluggish four years after the recession. Uncertainty about key policy issues has made business cautious about investing and raises the hurdle rate that new investment must achieve. Real non-residential fixed investment is still almost $30 billion below the fourth quarter of 2007 when the recession began. The primary drivers of corporate uncertainty today include Dodd/Frank implementation, the Affordable Care Act, reform of the federal tax code, as well as fiscal and monetary policy. Top at the list of uncertainty for many corporations is environmental and energy policy regulations from agencies such as EPA and DOE. See for example ACCF testimony on the impact of regulating…

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LNG Export Permit Delays: What’s At Stake?

Last week the U.S. Department of energy approved a third application to export LNG after two years of regulatory limbo.  With the approval of Lake Charles LLC’s LNG exports to non-FTA countries, the U.S. will now have the ability to export up to 5.6 billion cubic feet per day of natural gas.  Opponents to natural gas exports claim this export capacity represents a  “sweet spot”  for natural gas exports – although a government study concluded no such sweet spot exists.  To the contrary, every major study has found that the more LNG is exported, the better for America. In fact, expanding natural gas exports will be an economic “win” for the United States.  “Across all these scenarios, the U.S. was projected to gain net economic benefits from allowing [liquefied natural gas] exports. Moreover, for every one of the market scenarios examined, net economic benefits increased as the level of LNG exports increased,” concluded a 2012 major study commissioned by the Energy Department (DOE). The U.S. produced an average of 65.9 billion cubic feet of natural gas per day in 2012, and the global market for natural gas expected to grow over the next decade.    With 19 applications still under consideration, the slow permitting process…

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How Federal Energy Policies Can Support U.S Economic Recovery

Today the Senate Energy and Natural Resources Committee, chaired by Senator Ron Wyden (D-Oregon), holds yet another hearing to investigate the pricing of oil and gas commodities in the U.S. and the restructuring of the U.S. refining industry and distribution system. While the hearing will be a platform for some Members of Congress to point fingers, it’s important to review federal policies that should be adopted to put downward pressure on prices, those which could increase prices and should be abandoned, and the contributions of the energy industry to the U.S. economy. Expanded Access to Onshore and Offshore Reserves Will Positively Impact U.S. Growth Several recent economic analyses suggest that increased access to domestic onshore and offshore oil and gas reserves (including shale gas) could strongly boost U.S. economic recovery, manufacturing and job growth. Fossil fuels, which provide 78% of U.S. primary energy production, can have a positive impact in restoring strong economic growth. A recent Global Insight/CERA analysis, “Restarting the Engine-Securing American Jobs, Investment and Energy Security” finds that allowing exploration and development in the Gulf of Mexico in 2012 could create more 230,000 jobs, a $44 billion increase in GDP and $12 billion in additional tax receipts to…

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