As the price of oil rises, which it is, more emphasis is placed upon alternative forms of energy. As the Middle East shows greater instability, whether it be Egypt, Libya, Jordan or even Syria, oil prices rise. Our dependence on foreign oil has a direct impact on the cost of fuel at the pump. As Egypt and Libya have become more unstable, the usefulness of the Suez Canal becomes more in question.
It was recently announced that Iran is now having its ships go through the Suez Canal. The pipeline that exists from Egypt to bring oil to the docks is more and more in jeopardy. The instability and the risks allow speculators to bid up the price of oil.
A secondary and real problem is whether green is really green. Do we really have an opportunity to obtain energy through sources other than oil?
According to recent research, the leading country in utilizing wind and solar energy is Spain. In fact, President Barack Obama referred in his speeches to the “green policies” of Spain’s socialist government. Spain’s investment in solar and wind energy has not paid off. It is now on the brink of bankruptcy, and its people have the highest electric utility rates. The cost for going green is part of the reason for Spain’s insurmountable debt. Spain’s electric energy rates are higher than any other country in the European Union.
John Droz Jr., an environmentalist and well-known physicist, has compared the cost of energy to the power that is produced. Mr. Droz has committed his life to the analysis of energy. He claims that power fails when based on wind power for the following reasons:
According to the Energy Information Administration, the cheapest way to produce power is to burn natural gas. Second to natural gas is coal, preferably clean coal. Finally, a very inexpensive method of producing energy and by far the cleanest is nuclear energy. However, the United States has not had a new nuclear plant in over 40 years. At this time, the Japanese government would probably be happier if they had never had a nuclear plant.
According to Mr. Droz, wind is significantly more expensive than either gas, coal or nuclear energy. He maintains that the real winners regarding “green energy” are the companies and developers that are receiving government subsidies. These subsidies provide for the recipients to plan, build and provide alternative energy sources. A by-product of the production and construction of these energy sources are jobs, but the end product -- clean and efficient energy -- isn’t there.
A another sad note for our environmentalists to consider is that wind power increases the water loss from the soil. It is also claimed that the wind power produces low frequency noises that can be harmful to the inner ear, as well as triggering headaches. Some even maintain that difficulty sleeping, tinnitus and other medical problems may evolve from the use of wind power.
An alternative to wind power is solar energy, i.e., energy from the sun. A major drawback to using solar energy is that the winter has less sun, and when clouds appear, there obviously would be less solar energy. The cost of solar panels is extremely high, as is also the case with wind turbines. Additionally, both wind turbines and solar panels are visual pollution.
Politics has entered the quest for “green energy” in a major way. It is a sad commentary on our society, as well as our government, that there was major emphasis on the creation of ethanol fuel without examining the ultimate consequences.
To stimulate the conversion of corn to ethanol oil, reducing our dependence on foreign oil, the government provided direct economic grants, as well as tax advantages. The by-product is that now the price of corn has skyrocketed, which has resulted in the rise in the cost of meat and corn by-products. Why would the cost of meat rise? Because farmers buy corn as feed for the animals. Many by-products of corn appear in the supermarket, such as corn oil and margarine.
Our tax laws have been used by the politicians to provide social benefits. Under current law, capital losses can be written off against ordinary income to the extent of $5,000 per year. A simple tax law change that has been recommended is to make corn fuel (ethanol) more palatable to investors by allowing the capital losses from the production of ethanol to be set off against ordinary income. It has been suggested that the government auctioned off these tax losses, allowing for the infusion of capital in the production of the corn-to-ethanol fuel plants.
Currently, as many investors, including farmers, have put huge amounts of capital into corn-to-ethanol plants, there are threats that the subsidies may be withdrawn. If the subsidies are withdrawn, the corn-to-ethanol fuel will probably be a thing of the past. What we have done is created a hybrid pig that really needs to be slaughtered.
Sumner Lipman has practiced law as a trial lawyer for more than 40 years and is a member of the Augusta law firm Lipman, Katz & McKee.
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