Category: Energy Policy

New OPEC Deal Puts Saudi Arabia On The Sidelines

The new OPEC deal to cut oil output, the Cartel’s first since 2008, gives OPEC what it wanted: higher oil prices. It was difficult for the Cartel to achieve an agreement. Russia, a major oil producer that isn’t even a member of OPEC, brokered a deal between Saudi Arabia and Iran. From Oil Price:

The interventions ahead of Wednesday’s OPEC meeting came…from Putin, Saudi Deputy Crown Prince Mohammed bin Salman and Iran’s Supreme Leader Ayatollah Ali Khamenei and President Hassan Rouhani…According to Reuters, Putin’s role as intermediary between Riyadh and Tehran was pivotal, and is a “testament to the rising influence of Russia in the Middle East since its military intervention in the Syrian civil war just over a year ago.”

Prior OPEC meetings failed to deliver consensus, because nobody wanted to cut production. Tehran argued OPEC should not prevent it from restoring the output lost by years of Western sanctions, but the Saudis wouldn’t agree. The animosity between them didn’t help: Proxy wars in Syria and Yemen have exacerbated decades of tension between the Saudi Sunni kingdom and the Iranian Shi’ite Islamic republic.

The brokering started when Putin met Saudi’s Prince Mohammed on the sidelines of the G20 meeting in China. Both felt they could benefit from cooperating to push oil prices higher, and agreed to work together to cut excess production that had more than halved oil prices since 2014. Lower prices had created large budget deficits for both Russia and Saudi Arabia.

Financial pain made cooperation possible, despite the huge political differences between Russia and Saudi Arabia over the civil war in Syria. But Iran also had to agree. Prince Mohammed had repeatedly demanded that Iran participate in any production cuts. Saudi and Iranian OPEC negotiators had debated the point without compromise for months.

Putin stepped in: He established that the Saudis would shoulder the lion’s share of cuts, as long as Riyadh wasn’t seen as making concessions to Iran. A deal was possible if Iran didn’t celebrate a victory over the Saudis.

Reuters reports that a phone call between Putin and Iranian President Rouhani smoothed the way. After the call, Rouhani and oil minister Bijan Zanganeh went to Iran’s supreme leader for approval. During the meeting, leader Khamenei approved the deal. He also agreed that Iran wouldn’t take a victory lap once the deal was announced.

And so the deal got done. OPEC is trimming output by 1.2m barrels per day (bpd) starting January 1st.

The deal is contingent on securing the agreement of non-OPEC producers to lower production by 600,000m barrels per day. Russia says it will contribute half of that, 300,000 bpd. Iran was allowed to slightly boost its output, while Iraq slightly lowered theirs.

We’ll see if the deal holds, and/or, who cheats.

Pundits like to chalk up winners and losers in this type of deal. Since OPEC now accounts for less than half of all energy output in the world, it is a weakened cartel, dependent on the kindness of outsiders (like Russia) to hold together.

Saudi Arabia looks like the biggest loser. First, it cut production by 500,000 bpd. Second, it has presided over a momentous shift in global power, one that is as stunning as Brexit or Trump’s victory.

Saudi’s capitulation to Russia and Iran ends OPEC’s domination of the world’s energy market. The Saudis also made the US shale oil market more powerful in the global energy market, since US shale will produce more oil whenever oil prices are high. However, Saudi oil remains far cheaper to produce than American shale oil, since it requires far less energy to extract and refine.

Russia emerged as the biggest winner. Its economy did not buckle under the Saudi effort to drive oil prices down via increased production. Putin is now the indispensable power broker in the Middle East, something that was unthinkable even 12 months ago. The Syrian civil war will soon end with Russia winning, Assad staying in power, and Saudi Arabia as the regional loser.

And so, this year truly has seen the death of one world order, along with the birth of another. The US and Saudi now have very little to show for their 50+ year joint effort to dominate the Middle East. The EU looks far from stable as a force in Western Europe.

And Saudi Arabia has just become the third dinosaur to be felled by the asteroid called 2016.

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Smart Guys, Smart Power

When we think of entrepreneurs involved in renewable energy, usually just one name comes to mind, Elon Musk, a smart guy who has given Tesla a new meaning. He just merged Tesla with Solar City.

But smart entrepreneurs in solar are emerging. The NYT wrote yesterday about Nicholas Beatty, a former banker who has covered about 25 acres of his farm in England with solar panels. This isn’t a new phenomenon, lots of farms have solar arrays both in the UK and elsewhere, most of which also use Rooftop Solar Forecast software to plan and manage energy use around solar intermittency:

What’s new in Mr. Beatty’s field is a hulking 40-foot-long shipping container. Stacked inside, in what look like drawers, are about 200 lithium-ion cells that make up a battery large enough to store a substantial portion of the electricity the solar farm puts out.

The battery and its smart software give Mr. Beatty an advantage over other solar panel farmers. Power prices rise and fall depending on the supply and demand. The spread between the high and low price can be dramatic. By storing power in the battery, Mr. Beatty can feed it into the grid when prices are high:

The battery effectively takes power off the line when there is too much and puts it on when there is too little…

Farmers, business owners, and homeowners looking to install a solar power system for their own energy needs and uses may want to consider the services of Gietzen Solar to help set this up.
Improved industrial-sized batteries are a way of achieving that flexibility. Mr. Beatty’s battery storage system cost about $1 million, but could increase revenue for his solar farm by as much as $250k per year. Beatty is one of many entrepreneurs and businesses trying to play the fast-shifting electric power landscape. This is a capital-intensive business:

With about a dozen friends and family members…he spent £6.5 million ($8 .1 million) to build the solar farm in 2014. The solar panels…generate about £650,000 ($810k) in revenue a year…

Improved battery storage and its smart controlling software has been one of the two pillars required to make solar power competitive with non-renewable energy sources, you could definitely say that this is a case where the question Deep Cycle Versus Shallow Cycle Solar Batteries comes into play. The other is the cost of solar panels. Tesla has been working on both axis. They have built a solar demonstration project on the island of Ta’u in American Samoa that generates 1.4 megawatts of energy. The microgrid has 60 Tesla Powerpacks, the company’s large commercial battery with 6 megawatt hours of battery storage. These batteries can be fully charged with only 7 hours of daylight from 5,300 solar panels.

The microgrid facility can fully power the island of 600 residents for 3 days on battery power. It is expected to save the island 109,500 gallons of diesel per year or $8 million in fuel costs. Ta’u previously relied on diesel fueled generators for power.

Cost of solar energy per kilowatt or megawatt hour has been uncompetitive for a long time, but that is changing. And most countries and most US states now are willing to purchase power from independent generators, like Mr. Beatty in the UK. Many in the UK, including in locations like derby, are following suit and investigating how they can benefit from installing solar panels to their properties and harness the renewable power of the sun for themselves. The Economist has this chart of the relative costs of sources of energy:

price-of-solar

All of this means that American farmers could open a new revenue stream by becoming smart solar power generators. Farmers own large acreage in sunny locations. They have a deep understanding of farming, another capital-intensive business. They understand that farming is a climate-dependent enterprise, another factor in common with solar power generation.

A key factor is whether their state allows interconnection with the power grid, and whether the state’s program to pay the independent power generator for power sent to the grid at an economic rate.

Let’s hope that Donald Trump’s fascination with coal doesn’t lead to bad policy. The Economist reports that Trump has promised to make more public land available to miners; but access to coal reserves isn’t their problem. Coal employment peaked in the 1920s, and today, fewer electric utilities want to use coal. If he intervenes on behalf of coal, he will be actively handicapping renewables and natural gas. If Trump’s energy policy is focused on a few unprofitable coal-mines, China will take a commanding lead in batteries, solar panels and wind turbines. That wouldn’t be so smart.

We are at a time when the cost of solar energy has dropped dramatically, and with greater economies of scale, it will fall even further.

It is past time for a few smart entrepreneurs to take up the disruption of the fossil fuel industry and its fellow travelers, the electric utilities.

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What’s JOE – 2035?

Haven’t heard of JOE- 35? Not surprising, since it is very difficult to find any mention of it in any major media news outlet. Google JOE- 35, and you get a series of links for a cast stone fire pit that is 35” in diameter.

Wrong. It refers to the “Joint Operating Environment 2035” [pdf] (JOE – 35), issued in July by the Joint Chiefs of Staff. It lays out the environment that the military and the nation will be facing 20 years from now. It is written as a guide to how the Defense Department should be spending resources today in order to protect against tomorrow’s threats. They identify six broad geopolitical challenges the US Military will have to deal with in 20 years:

  • Violent Ideological Competition: irreconcilable ideas communicated and promoted by identity networks through violence. That is, states and non-state actors alike will pursue their goals by spreading ideologies hostile to US interests and encouraging violent acts to promote those ideologies.
  • Threatened US Territory and Sovereignty: encroachment, erosion, or disregard of US sovereignty and the freedom of its citizens.
  • Antagonistic Geopolitical Balancing: increasingly ambitious adversaries maximizing their own influence while actively limiting US influence. That is, rival powers will pursue their own interests in conflict with those of the United States. Think China in the Philippines.
  • Disrupted Global Commons: denial or compulsion in spaces and places available to all but owned by none. Think that the US will no longer be able to count on unimpeded access to the oceans, the air, space, or the electromagnetic spectrum in the pursuit of its interests.
  • A Contest for Cyberspace: a struggle to define and credibly protect sovereignty in cyberspace. That is, US cyberwarfare measures will increasingly face effective defenses and US cyberspace assets will increasingly face effective hostile incursions.
  • Shattered and Reordered Regions: states increasingly unable to cope with internal political fractures, environmental stress, or deliberate external interference. That means states will continue to be threatened by increasingly harsh pressures on national survival, and the failed states and stateless zones will continue to spawn insurgencies and non-state actors hostile to the US.

The report also warns that the rise of non-state actors such as ISIS, described in the report as “privatized violence“, will continue, as will the rapidity by which those groups form and adapt. The spread of 3D-printing technologies and readily available commercial technology such as drones, means those groups can be increasingly effective against a fully equipped and highly technological US military.

The study says:

Transnational criminal organizations, terrorist groups, and other irregular threats are likely to exploit the rapid spread of advanced technologies to design, resource, and execute complex attacks and combine many complex attacks into larger, more sustained campaigns…

John Michael Greer has a review of JOE-35 that is worth reading in its entirety. His criticism of the report is that:

Apparently nobody at the Pentagon noticed one distinctly odd thing about this outline of the future context of American military operations: it’s not an outline of the future at all. It’s an outline of the present. Every one of these trends is a major factor shaping political and military action around the world right now.

Like so many things in our current politics, the JOE projections are mostly about justifying current procurement/pork barreling by a linear extrapolation of today’s threats. That, and the institutional blindness that sets in when there have been no real challenges to the established groupthink, and the professional consequences of failure in the military are near-zero.

The JOE list may not be imaginative or fully predictive, but that doesn’t make it wrong. None of the problems they forecast are going away. For instance, the use of ideology to win and shore up support from potential fighters and allies is as old as ancient times, so why would ideological conflict NOT be an issue in 2035?

Threats to US sovereignty and territory go along with the Joint Chiefs’ recognition that the US is an empire most likely on a downward curve, unless there is great change in our policies, domestic and foreign.

In this sense, the report is quietly critical of our politicians.

The admission in the JOE report that we will be actively required to defend our home ground by 2035 is a mark of just how much our geopolitical environment has changed since 9/11.

It is indeed worth your time to read both the JOE report, and that of John Michael Greer very carefully.

Both will make you smarter than reading about the latest Trump outrage.

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Monday Wake Up Call – March 7, 2016

Today’s wake-up call is for the Republican Party.

Beginning with Barry Goldwater in 1964, the Republican Party began its deal with the Devil by starting their catering to those on the farthest Right edge of the political spectrum, inviting people who traffic in anger, hatred, religious zealotry, and fearmongering of those not like them, inside the GOP tent.

The election of Ronald Reagan helped bring these zealots some legitimacy, not because he was one of them, but because he had courted them in his first run for the White House.

We forget that in 1976, an evangelical Christian who taught Sunday school, and who endeavored to follow Christ in his daily life ran for President and won. But, despite Jimmy Carter’s strong Christian beliefs, Evangelicals went heavily for Ronald Reagan in 1980. Because they admired his Christian faith? No, his faith seemed situational. But he projected what they perceived as strength and leadership.

Evangelicals ignored one of their own in favor of a secular Republican who talked tough and affected an air of someone who could talk tough when events called for toughness. Turns out that for Evangelicals, like many groups, are primarily concerned with political power; their need for a theologically-sound candidate takes a back seat whenever it has to.

That’s the reality today, as it was back then. Trump is barely Christian, and Cruz is solidly Christian, but the politics of the Christian Right demands fealty to a political agenda that tolerates hatred, exclusion, and intolerance. Therefore, Trump and Cruz quality.

The contrast between the Democratic and Republican parties couldn’t be more sharply defined.

Since the late 1800s, when businesses were undertaking tremendous consolidation, leading to the formation of trusts, Republicans supported business, despite the fact that business was beginning to prey on people and overshadow the government.

After the brief Republican Progressive period from 1890-1917, in which Republicans were the force behind “trust-busting”, they have advanced an increasingly exclusionary and discriminatory agenda, denying a collective responsibility to care for our fellow human beings in favor of elevating corporate interests along with their view of individual liberties above all else. Government is an instrument designed to show strength, project American power, and enforce a neo-liberal, dog-eat-dog economic worldview, one that will take the social contract back to where it was in the early 1900’s.

Democrats understood that government needs to be more than a police and fire department. One of the most important roles assumed by government was ensuring that we create a level playing field for all citizens, that corporations were not first among equals in America. They also believed that we must look after those who are down on their luck by providing a social safety net.

Government was not to be primarily an instrument for projecting power and protecting the influential, but rather one of ensuring the American social contract, while protecting our citizens from the abuses of big business.

After years of courting the Radical Right, thinking that they could be kept under control, Establishment Republicans now understand that, not only do they no longer have control, the inmates are now running the asylum – poorly. Faced with the reality that the bill for their deal with the Devil has come due, Republicans trotted out Mitt Romney to make the case against The Donald, who responded with crude personal insults and inappropriate sexual innuendo:

COW Trump Miracle Worker

Congratulations, Republicans, you have only yourselves to blame. Now, you desperately need a Wrongo Wake up Call. To help you wake up, let’s return to the “small hands” innuendo of the last GOP debate.

Here are the Talking Heads doing “Born Under Punches” live in Rome in 1980, from their great album, “Remain in Light”. This 8-minute live version is worth your time, since it includes spectacular guest guitar work by Adrian Belew, who played with Frank Zappa and King Crimson.

Some think the guitar that Belew is playing was originally jimmy Hendrix’s (the one he burned at the Monterey Pop festival). Frank Zappa repaired it, and loaned it to Adrian Belew, whose main influence was Hendrix.

The bassist in the white dress is Tina Weymouth who is (still) married to Chris Franz, the Talking Heads guitarist. Here are some sample lyrics:

Take a look at these hands
Take a look at these hands
The hand speaks, the hand of a government man
Well I’m a tumbler born under punches, I’m so thin

Hmmm. Is Trump a government man?

Those who view the Wrongologist in email can view the video here.

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Sunday Cartoon Blogging – February 14, 2016

Happy Valentine’s Day. The news of Week That Was included the New Hampshire primary, another power grab by the Supreme Court, the Zika virus, and proof of the existence of gravitational waves.

Some people have an embarrassment of riches on Valentine’s Day:

COW Valentines Day

NH reminds Hillary about kids in a different way than before:

COW Comeback Kid

Sanders met with Sharpton before heading to South Carolina:

COW Sharpton Sanders

When the history of early 21st Century US is written, the villains will already be wearing black:

COW EPA Court

Zika virus is all over the news:

COW Zika

 

Proving Einstein right about gravitational waves took 100 years. Hope we do better with market panic:

COW Gravity Waves

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What NH Should Teach Us

The popular vote in NH was about 521,000. Of that number, 278k went to Republican candidates, and 243k went to Democrats. Bernie led all candidates with 145,700 votes, with Trump second at 97,300 votes. Hillary was third at 92,530.

For the record, the 2008 turnout was: 287,342 for the Democrats and 238,979 for the Republicans.

The media is all over the demographics of the NH primary, and how Bernie won all segments except for people over 65 years old, and those who make more than $200k, both of which went to Hillary.

But one headline from NH ought to be that the Dems performed 15% worse than eight years ago, while the GOP performed 14% better than they did when a NH resident (Romney) was on the ballot!

In Hillary’s post-primary speech, she said that there isn’t a huge difference between the two Democratic candidates. Bernie talked about how the party had to come together down the road to prevent a White House take-over by the GOP.

But are these candidates that similar?

Let’s hear from Benjamin Studebaker, who says that Sanders and Clinton represent two very different ideologies, a neo-liberal view represented by Ms. Clinton and an FDR big government program viewpoint represented by Mr. Sanders:

Each of these ideologies wants control of the Democratic Party so that its resources can be used to advance a different conception of what a good society looks like…This is not a matter of taste and these are not flavors of popcorn.

Studebaker thinks that Hillary is ideologically similar to Barack Obama, describing that in 2008: (emphasis by the Wrongologist)

The most prominent difference between them was the vote on the Iraq War. On economic policy, there never was a substantive difference. The major economic legislation passed under Obama (Dodd-Frank and the Affordable Care Act) did not address the structural inequality problem that the Democratic Party of the 30’s, 40’s, 50’s, 60’s…existed to confront.

In fact, while inequality decreased under FDR, Truman, JFK, and LBJ, it has increased under 3 Democrats: Carter, Clinton, and Obama. It also increased under 3 Republicans: Reagan, Bush I, and Bush II.

Now comes the Hill & Bernie show. Sanders is not running to try to implement a set of idealistic policies that a Republican-controlled Congress will block; he is running to take the Democratic Party away from its current leadership that is unwilling to deal with the systemic economic problems that have led to wage stagnation and the shrinking of the middle class in America.

But can he be successful? David Brooks said in the NYT:

Bernie Sanders…has been so blinded by his values that the reality of the situation does not seem to penetrate his mind.

OK, that must mean that Sanders has no shot. The conventional wisdom is that the Democratic Party cannot be reclaimed by the FDR/LBJ types, or that if it is reclaimed, it will lose in 2016.

But, in the 1968 and 1976 Republican primaries, a guy named Ronald Reagan ran to take the Republican Party back from the Richard Nixon types who went along with the Democrats on welfare and regulation. He was bidding to return the Republicans to their 1920’s Conservative roots. Everyone in the 60’s and 70’s knew that Reagan couldn’t pull that off. But he did.

How? Yesterday, we spoke of Movement Conservatism, where Republicans built a conceptual base, a popular base, a business base, and an institutional infrastructure of think tanks, and by the 2000s, Conservatives again controlled the Republican Party.

So, one lesson from the NH primary is that the contest for the 2016 presidential nomination is not just a contest to see who will lead the Democrats, it’s a contest to see what kind of party the Democrats are going to be in the coming decades, what ideology and what interests, causes, and issues the Democratic Party will prioritize.

The Republican Party faces exactly the same problem in 2016.

And these facts make the 2016 primaries far more important than in any other recent election.

This is about whether the Democratic Party is going to care about inequality for the next decade. We are making a historical decision between two distinct ideological paradigms, not a choice between flavors of popcorn.

Choose carefully.

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We Are Victims of Political Misrule

Yesterday we said that 2016 may be the last election we ever need if political division keeps us from getting anything meaningful done for another four years. We also said that none of the current candidates from either party appear to have the ability to lead us towards being a better country.

Despite that, partisans on both sides say their worst candidate would be a fine president, and would certainly do a better job than the best candidate on the other side. Maybe we have a failure to define exactly what our next president needs to accomplish.

We talk as if a president were all-powerful, able to simply wave his/her magic wand, and all will be well. The past 16 years of presidential and congressional misrule has taught us to know better, but candidates still campaign as if we didn’t know better.

If a president can’t solve our problems, what can he/she do? If all they will do is to continue doing what hasn’t worked in the past, why do we bother to elect them, or have elections at all?

If all we can expect is to maintain a defective status quo, what’s the point?

We need America to grow up. We need a president who can enunciate a humane, adult, reasonable worldview, and vigorously promote it at home and abroad. Perhaps over time, that message will resonate with enough people, young Americans in particular, so the next generation can take the first political baby steps towards building a better world.

Either we fix our politics, or resign ourselves to the fact that our democracy is going to continue to give us substandard results.

To succeed at changing the country’s world view, the people would have to insist upon a politics that requires a humane, adult, reasonable, sane worldview from our elected representatives. At best, we would see some compromise, and take a few steps forward. At worst, idealism fails, and we continue the tyranny of a Congress that while elected, is not accountable for the success or failure of the nation.

Donald Trump has broken the GOP, possibly fatally. The party’s recent history seems to have assigned him that task, and he has discharged it well. Thanks to Trump, “lesser evilism” has lost its power to control our politics, making it possible for genuinely progressive politicians to put non-incrementalist policy back onto the mainstream agenda.

That has been Bernie Sanders’s goal. He too has discharged his task well. He, like Trump, has become the polestar for people who are outraged at the status quo, and who want to change it fundamentally for the better. But if the Democrats nominate Sanders, they risk making the same mistake the Republicans would make if they nominate Trump. That is, not recognizing that the very rhetoric that their side likes best will be seen as inherently disqualifying in the eyes of many.

It is the error of the echo chamber–believing that your side is so obviously right that all you have to do is state your beliefs with conviction and honesty and then surely win.

Unfortunately for Hillary, she seems to be on the wrong side of the zeitgeist for a second time. In 2008, she was no match for an aspirational black man who allowed progressives to project their values on him. This time, it’s an actual progressive who may become the road block to her coronation. In different times, HRC would have the perfect resume for the Oval office, and yes, she could yet win the nomination and the big job. Her biggest problem is poor vision. Here is the NYT’s Charles Blow: (emphasis by the Wrongologist)

But possibly the most damaging of Clinton’s attributes is, ironically, her practicality. As one person commented to me on social media: Clinton is running an I-Have-Half-A-Dream campaign. That simply doesn’t inspire young people brimming with the biggest of dreams. Clinton’s message says: Aim lower, think smaller, move slower. It says, I have more modest ambitions, but they are more realistic.

How long has it been since a President has campaigned on a specific platform and also urged the people to vote for his Party in Congress so that he could accomplish that platform. Reagan maybe?

No president has ever changed things alone, and none ever will. If Bernie wins, it’s because he inspires us to join a movement for change. Just like Reagan and Movement Conservatism, where Republicans built a conceptual base, a popular base, a business base, and an institutional infrastructure of think tanks. By the 2000s, movement conservatives controlled the Republican Party.

It took them 40 years, but they succeeded.

And it can happen again.

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Sunday Cartoon Blogging – Super Bowl Edition

Today’s Super Bowl marks the end of the football season, but still overshadows the political silly season, that will be with us for what will seem to be a long, long time.

Things to look for in Super Bowl 50:

COW Superbowl 50a
“And, when we score a touchdown, make sure you know your assignments for the end-zone celebration.”

And what to look for in your living room:

COW Superbowl 50

But, even at the Super Bowl, the problem of football concussions isn’t going away:

COW CTE

So far, the Democratic race is between an idealist Grandpa and a wonk Grandma:

COW Grandpa Bern
In New Hampshire the political woods are full of free running saps:

COW NH Sap

Something not so super this week was this dickhead:

COW Shkreli

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“A Little Bit Is Better Than Nada”

Yesterday we talked about US vs. Texas, the Supreme Court case brought by 26 Republican-controlled states saying that President Obama exceeded his powers by using an executive order to shield millions of illegal immigrants from deportation. In thinking about what Republicans have (not) done in the last seven years, “A Little Bit Is Better Than Nada”, the song from the Texas Tornados came to mind.

And a very little bit is all the legislation that we have gotten from a Republican-controlled House and Senate. Here’s how Ed Kilgore described it:

If you look back at Obama’s record on big executive actions — on guns, climate change, and immigration — you see the same situation. It’s not that he’s fought for “liberal” as opposed to “conservative” policies in these areas. It’s that congressional Republicans, pressured by conservative opinion-leaders and interest groups, have refused to do anything at all…

And as Nancy LeTourneau adds, the agenda that is being articulated by today’s Republican presidential candidates should have been easy for them to enact, given that they control both houses of Congress, but they have done nothing to advance their agenda:

• They say that we need to fight ISIS more aggressively…But President Obama has been asking Congress to pass an Authorization for the Use of Military Force against ISIS for months now.
• They say that we need to secure our borders. Most of them think we should build an impenetrable wall on our border with Mexico. Some of them even say that we should deport all 10 million undocumented immigrants. Have we seen a bill on any of that in Congress?
• They say that they want to repeal Obamacare. OK, they actually passed a bill to do that. But they’ve also said that they want to replace it. Anyone seen that plan floating around anywhere?
• They say that the problem with gun violence is that we don’t do enough to provide mental health treatment…Have they? No.
• We’ve heard a lot about criminal justice reform. And some bills even passed out of committees. But nothing has actually come up for a vote.

And we are still waiting for the jobs bill promised by John Boehner.

All of the campaign issues Republicans have identified are going nowhere legislatively, and choosing to do nothing has consequences.

We are here because there is a faction in Congress that has deliberately pushed our system of governance to the breaking point. Their latest threat to our system of governance is a refusal to legislate. This has ground our system almost to a halt. Couple that with their refusal to fund the agencies responsible for executing laws on the books, and you have a willful effort to overthrow the government.

If you look back at our Declaration of Independence, one of its 5 sections is called the indictment. It is a series of complaints levied against England’s King George III. The indictment contains 25 charges, of which the first nine, with very little editing, could be levied against Republicans today:

• Refusal to enact laws. (Complaints 1 – 3, 6)
• Obstruction of elected Representation at both the State and Central Government level. (Complaints 3 – 6)
• Interference with and failure to facilitate migration. (Complaint 7)
• Refusal to fill vacancies in the Judiciary. (Complaints 8, 9)

So, we are in unprecedented territory: How do we govern when the Legislative Branch refuses?

Republican shouting, doing nothing, and then blaming it on Obama has worked for seven years and could continue to work forever, in part because the media loves the “both parties do it” narrative.

It is also true that Democrats have failed utterly to make a convincing counter-argument (placing blame where it belongs) and have instead bet that the repellent personalities of the GOP would limit the popularity of Republicans as a national party.

It was a losing bet. For the GOP, the strategy has worked: Why do anything, if when you can say you’re against everything, you are reelected to do nothing again?

Republicans can shout all they want about how President Obama is by-passing Congress with his executive actions, but a little bit is better than nada.

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Pacific Gas Gooses Prices: Why?

Pacific Gas and Electric is America’s largest electric utility and the second largest gas utility measured by number of customers. You may remember that their gas pipeline exploded in 2010 in San Bruno CA, just south of San Francisco, killing 8, injuring 66, and burning down 38 homes. The legal fallout is still in the courts, with the trial scheduled to begin on March 8 in US District Court in San Francisco.

PG&E announced a price increase on December 30, when few would be paying attention. SF Gate carried the customer-friendly part of the announcement:

We want our customers and their families to know that we are here to help them make smart energy choices and save money whenever possible…

That’s corporate-speak for turn down the heater, put on another fleece, buy more efficient appliances, and find subsidies available to low-income households.

The increase was effective two days later, on January 1st. It will hike natural gas rates for the average residential customer by 4.0% and electricity rates by a stunning 8.5%, for a combined rate increase of 7%, the steepest since 2006.

Utilities raise prices all the time. But maybe a few things about PG&E’s price increase are worth a look:

• Natural gas prices have fallen steadily since 2008, much of the power PG&E distributes is generated by natural gas. In fact, in its third quarter financial statement, PG&E says its cost of electricity over the first nine months of 2015 dropped 8.8% year-over-year, and its cost of natural gas plunged 36%.
• The California Public Utilities Commission (PUC) agreed in 2014 to let PG&E collect an extra $2.37 billion in revenue from its customers over three years, through the end of 2016. The additional money will pay for maintenance and upgrades to PG&E’s sprawling electricity grid and natural gas pipeline network.
• PG&E pays quarterly dividends of $0.455 per common share. With 489 million shares outstanding, dividends for a year would amount to $890 million.So for the three-year period in question (2014-2016), this amounts to about $2.7 billion, which would have paid for the maintenance and upgrades of its system.

There’s more: In September, PG&E asked the PUC for another $2.7 billion in revenue increases for the three-year period of 2017-2019. That particular amount of money would be used ostensibly to prepare for natural disasters. But, as Wolf Richter reports, over the same period, PG&E would pay out another $2.7 billion in dividends.

The PUC, already under federal grand-jury investigation for its ties to PG&E about the San Bruno disaster, hasn’t voted on this increase. If PG&E had a real regulator, it would be forced to pay for maintenance and upgrades with funds it sourced from something other than rate increases. Particularly when its fuel costs are plunging, and it’s paying out an $890 million annual dividend.

PG&E’s is following the “maximize profits and shareholder value” dictates of a modern market-driven corporation. But in the case of private utilities, the state regulator is supposed to review rate applications and ensure the company is not reaping excessive profits and is charging fair prices.

That the CA PUC allowed these price increases perhaps demonstrates incompetence, or excessive favoritism. Help may be on the way: SF Gate reports that Gov. Jerry Brown shook up the five-member utilities commission, nominating one of his former top advisers, Michael Picker, to be its new president. He also nominated Liane Randolph from the state’s Natural Resources Agency to join the commission. So, perhaps the back-room deals are over, but Californians will have to wait and see.

Capitalism, like any game, needs referees who are beyond influence. The clear operating strategy of the “free market capitalists” is to have regulators of all stripes squeezed by lower funding and by packing the regulatory boards with industry insiders. Far too many of the referees (regulatory agencies) are insiders in the industry game.

Maybe there is help on the way in California. If not, maybe it’s time to put a few corporate heads up on pikes in the California sun!

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