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Obama’s and Trump’s useless gestures on energy

By Chris TomlinsonBusiness Columnist: Dec 22, 2016

Count on politicians to be political.

President Barack Obama banned oil drilling along the Arctic coast and in the Atlantic from Virginia to Maine on Tuesday. Citing questionable authority under an obscure 1953 law, he means to keep any oil found in either of these coastal areas in the ground.

Environmentalists cheered and oil lobbyists jeered. Both will certainly waste a lot of time and electrons writing long tracts of praising and condemning Obama. And then they’ll waste donor funds fighting it out in court.

President-elect Donald Trump, meanwhile, has found allies in Congress for keeping the coal industry alive by granting tax credits for so-called clean-coal technology. He wants the government to pay to companies to capture carbon dioxide and trap it underground. That way we can doom another generation of Americans in Appalachia to premature death in the mines.

This time the coal companies cheered and the environmentalists suddenly got queasy about using tax credits for energy projects.

Obama and Trump are both pandering to their supporters, because the economics make both of these efforts nonsense.

No oil company committed to generating a return for shareholders has any plan to drill in the Arctic or along the mid-Atlantic coast. Shell tried to prove a point in the Arctic only to come up with no oil and a $7 billion write-off.

Exxon Mobil could technically begin drilling in the Arctic once former CEO Rex Tillerson becomes secretary of state and lifts the current economic sanctions on Russia. But don’t expect any major action as long as oil prices are below $150 a barrel.

Drilling along the Atlantic is also prohibitively expensive and faces opposition from the most populous region of the country. Banning drilling there is again only symbolic. Oil prices will likely never get high enough to make drilling in the Atlantic economically feasible. 

As for so-called clean coal, well, providing tax credits for projects that have already wasted hundreds of million of dollars won’t change the economics of burning coal. Whether it is the Texas Clean Energy Project or Southern Co.’s Kemper County, Miss. power plant that cost $7 billion, clean coal technology simply doesn’t make economic sense.

No one is planning any new coal-fired power plants, and no one is proposing to replicate those technologies anywhere else in the nation. Not to mention, if Trump follows through on rolling back Obama’s Clean Power Plan, no existing coal plant will have any financial incentive to add carbon capture systems.

Trump, though, promised he’d do something for coal miners. So he’ll push for these tax credits, which will be a windfall for a lucky few. When nothing happens, he’ll blame cheap natural gas and renewable energy sources for the further demise of the coal industry.

And honestly, who wants their children to work in a coal mine anyway?

You can’t really blame Obama and Trump for practicing politics, that’s what do. But whatever you do, don’t let their reindeer games get you worked up. Producing energy is a business and the economics always rule, the politics are secondary.


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