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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Energy
June 10, 2014 at 2:05 PM

High-level Asia forum set for Seattle

The Boao Forum for Asia brings together high-level leaders from business, government and the academy to discuss the most pressing issues involving the Pacific Rim. On Sept. 4-6, its first North American conference will be held in Seattle. Gov. Jay Inslee and Bill Gates will be the keynote speakers. The theme will be “Energy, Resources…

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Comments | More in China economy and business, Energy, International economy

June 26, 2013 at 8:44 AM

Obama, the climate, the economy

President Obama unveils his plan on climate change in Washington, D.C., on Tuesday (Photo by Alex Wong / Getty Images).

President Obama unveils his plan on climate change in Washington, D.C., on Tuesday (Photo by Alex Wong / Getty Images).

I’ll have more to say about President Obama’s climate-change initiatives, announced Tuesday, in a column soon. In the meantime, some initial impressions:

It was a good speech, courageous, tough in many ways (“we don’t have time for a meeting of the Flat Earth Society”) and long overdue. Only so much can be done by executive order. Only Congress could do the thing that would most address the greenhouse gases that are a heavy cause of climate change: Levy a carbon tax. That would be a game-changer because it would, for the first time, assign a cost to this pollution and make it more (and appropriately) costly. Alternatives would be competitive from a price standpoint. Fossil-fuel industries would have an incentive to do one essential thing necessary to prevent the worst: Keep most hydrocarbons in the ground. Without a carbon tax, any other efforts will be working the periphery.

On the other hand, he gives a good speech. How will the inspiring rhetoric about future generations and tough talk about using the Environmental Protection Agency to regulate CO2 mesh with the Army Corps of Engineers deliberately excluding a broad environmental study of coal exports from the West, including coal ports from Washington and Oregon? Mr. Obama has a history of drawing lines in the sand and retreating in the interests of compromise that never happens. It was also disheartening that he never mentioned Amtrak — facing devastating cuts in the U.S. House on top of funding cuts for short-distance trains — and under-funded transit as important tools to reduce carbon and give people choices, too.

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Comments | More in Climate change, Energy | Topics: clean energy, climate change, EPA

October 17, 2012 at 12:59 PM

The gas-price scam

Much gas was wasted in Tuesday night’s presidential debate over pump prices of $4 a gallon. Americans deserve better, we’re led to believe, particularly by Gov. Romney? Why? If Americans choose to drive long distances in single-occupancy automobile trips, choose to live far out, without choices of transit, this is exactly what we deserve.

Oil is a global commodity whose price moves in response to supply and demand. Democrats are particularly dense here because they believe there is some evil speculator troll keeping prices “high.” Or the oil companies are “evil” because they make big profits. Yet in most instances prices move with market forces and expectations. Prices were low four years ago because the world economy was entering the worst freefall since the Great Depression. They are higher now because the global and American economies are healthier. We’re bidding against the world. The miracle of the price mechanism is that we can pay enough to get the gasoline to the pump.

We face a higher-cost energy future. Much or most of the inexpensive-to-refine “light sweet” oil has been extracted and burned into the atmosphere. This caused a moment in history that gave birth to happy motoring and suburbia. It’s over. Now there’s a global race on to lock up fossil fuel supplies for the future, bringing with it geopolitical instability. Most of these supplies will be more costly. The reason Bakken or Alberta is viable is because energy costs are rising. The price mechanism, again.

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Comments | More in Energy, Oil prices

February 22, 2012 at 1:10 PM

Speculating about oil prices

Today’s front page of the Seattle Times featured the most persuasive case I’ve yet read for the role of speculation in higher oil prices. It was reported by McClatchy’s Kevin G. Hall out of the fine former Knight Ridder Washington bureau, so it deserves attention. That said, some skepticism is in order to counter American magical thinking that we have a God-given right to cheap gasoline.

The traders and trading systems dubbed as “speculators” are essential to ensuring the efficient flow of commodities. Did you fill up today to drive 100 miles around the metro area? Thank a speculator, along with that oil company reaping obscene high profits. It’s also true that oil trading was one of the areas largely and infamously excluded by the deregulation of commodities trading in 2000, pushed through by then Sen. Phil Gramm and signed by President Clinton. There’s plenty of wiggle room for our financialized economy to run up big profits thanks to good ole Commodity Futures Modernization Act (the pair also teamed up to deregulate banking, and you see where this got us).

But it’s unclear how much speculation is actually behind today’s current higher oil prices. “Speculation!” was hurled as the blame behind a similar spike in the 2000s, but investigations failed to produce a clear connection. Instead, supply and demand were the big factors, particularly as the developing world radically ramped up its appetite for petroleum.

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Comments | More in Energy

January 19, 2012 at 10:15 AM

After Keystone, energy policy still lacking

Neither the drill-baby-drill lobby nor environmentalists should be taken in by the “Obama rejects Keystone XL pipeline” crawler headlines. The pipeline has been postponed, in no small measure because of the stubbornness of the company and the fossil fuels lobby in refusing to consider an alternative route that would steer clear of the most sensitive environment. I have no doubt the pipeline, bringing tar-sand oil from Alberta to the Gulf Coast of the United States, will be approved and built with minor adjustments.

In reality, the tar sands, along with whatever oil can be extracted from the Bakken formation in North Dakota, produce extremely “heavy” petroleum, aside from its horrific environmental consequences. As a result, it is much more costly to refine (and extract) than the light-sweet crude that built the modern automotive/industrial age. In addition, getting at these oil deposits requires an enormous amount of fossil fuel “inputs.” So Alberta is not the next Saudi Arabia.

As for the pipeline itself, the routing takes it to the petrochemical complex that mostly lines the Houston Ship Channel and nearby locations. This is for refining and shipping to the highest bidder. If that happens to be Americans, fine. If Chinese, well, that’s capitalism. So the tar-sand and Bakken oil will not necessarily add to “energy independence.”

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Comments | More in Canadian economy, Energy

January 4, 2012 at 9:48 AM

Iran and oil: The year of living dangerously

A reader asks if Iran can block the Strait of Hormuz, the narrows between the Persian Gulf and the Gulf of Oman, though which approximately a third of the world’s seaborne oil passes? The answer is, yes.

Iran, which conducted naval exercises last week, has invested in small patrol boats armed with ship-to-ship missiles and perfected “swarming” techniques to fight an asymmetrical battle against superior forces of the U.S. Navy patrolling this strategic choke point. Iran warned America against sending another aircraft carrier to the region, a threat dismissed by the Fifth Fleet. Still, this ratchets up tensions already high because of Iran’s pursuit of nuclear weapons. Iranian saber-rattling has grown as the United States and European Union consider tougher sanctions against Tehran.

The EU is considering an embargo of Iranian oil. “The big winners here will be China and India, who do not fear rising Iranian influence and who will gladly soak up any additional oil exports they may have to offer. However, ending this small dependency upon Iranian oil imports in Europe does clear the way for military action without the need to ponder the immediate consequences on oil imports,” according to the blog The Oil Drum. Higher oil prices are already happening as a result of just the rhetoric, a drag on economic growth.

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Comments | More in Energy, Oil prices

December 29, 2011 at 10:00 AM

Looking back: Green energy scandal, market stability

Continuing a look at readers who weren’t satisfied with Friday’s poll on the stories of 2011 that will matter the most going forward. “cdbtx928″ wrote: “Climate Change Scandal, or the incestuous ‘Green Energy’ companies — Solyndra just being the tip of the Iceberg.” The commenter added, “How about one of the most humorous… Jeffrey Immelt the head of GE.. yeah the same Jeffrey Immelt that Obama appointed or anointed to head his commission on Job Creation — announcing that he’s closing the 115-year-old GE X-ray division in Wisconsin and moving it to China… Of course.. that’s the same GE that paid 0 in taxes last year..”

(General Electric spokesman Gary Sheffer says, “Our X-ray move to China involves the transfer of four executives. The rest of the business stays in the U.S. He also stated that since 2009, GE has added more than 12,000 manufacturing jobs in the U.S. “We are in the midst of refurbishing or building 16 new factories. For example, yesterday we announced a new manufacturing plant in Pennsylvania.” And, “We paid $1 billion in taxes in the U.S. for 2010, including federal income taxes.)

You’re onto something in that the issue of climate change has completely disappeared from the American consciousness, even as human-caused climate change continues to worsen. It will carry enormous economic, as well as social and environmental, costs — and they won’t just affect poor people in the Third World. Solyndra, which took government loan guarantees and went bankrupt, can be seen as a boondoggle or the kind of alternative-energy bets that must be made if we’re going to move beyond fossil fuels. Some of those bets naturally will fail to pan out.

Forbes reports that the fuel-cell sector continues to move ahead with government support even after the Solyndra collapse. But without a carbon tax or cap-and-trade system, along with the removal of corporate welfare for the fossil-fuels sector, the market won’t lead this desperately needed change. Meanwhile, China continues its efforts to dominate renewable energy.

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Comments | More in Energy, Stock market

December 7, 2011 at 10:00 AM

Gates glowing with optimism about nuclear power for China

Here’s the “hmmm” story of the day: Microsoft co-founder Bill Gates is in China discussing jointly developing with Beijing a “new and safer” nuclear reactor. “All these new designs are going to be incredibly safe,” Gates told the audience in China, according to the Associated Press. “They require no human action to remain safe at all times.”

Now hold your Terminator jokes about “Skynet became self-aware…” Same with Homer Simpson humor. According to the AP, Gates said he has mostly funded TerraPower, a Bellevue-based company that is working on a fourth-generation nuclear reactor that can run on depleted uranium. “TerraPower says it has discussed its plans with India, Russia and other countries with nuclear energy programs.”

What is unanswered is how such a reactor would perform in the aftermath of the lessons still being learned from the meltdown of the Fukushima Daiichi nuclear power plant in Japan? That event’s dire details, still coming out, have been swamped by more important news, such as Kim Kardashian’s wedding and divorce.

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Comments | More in Bill Gates, Energy

December 1, 2011 at 9:46 AM

A decade later, Enron seems so quaint

Friday marks the 10th anniversary of Enron’s chapter 11 bankruptcy filing. Americans learned that this lionized giant, which seemed to represent the future of energy and corporate success, was in fact a bundle of frauds and hustles.

Led by the politically connected Ken Lay and Jeff Skilling, Enron was honored as “America’s Most Innovative Company” for six consecutive years by Fortune magazine. There was no there there. In the place of actual productive work was a bunch of complex frauds and gambling in energy markets that led to blackouts in California. In the end, 22,000 employees lost their jobs and shareholders — the stock was heavily pushed to investors by Wall Street — were wiped out. So were the workers, who put most of their 401(k) savings in Enron shares. They’re still picking up the pieces of their lives.

Enron’s sins sound familiar: Using deregulation to create swindles, a lapdog board of directors and the co-conspiracy in the whole con by one of the world’s most respected accounting firms, Arthur Andersen, and Citigroup’s Sandy Weill. As the house of cards collapsed, the entire poker game fell down for similar frauds at WorldCom, HealthSouth and Tyco.

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Comments | More in Business legal issues, Business scandals, Energy

November 14, 2011 at 9:40 AM

The pipeline, Canada and the energy future

The United States’ decision to delay the Keystone Pipeline, which would have brought Canadian oil to U.S. refineries, is making us few friends in the north. The Globe and Mail reported on how Canada’s energy industry is now in an urgent hunt to get its product to Asia. And Prime Minister Stephen Harper says the delay shows why Canada needs to diversity its trade beyond the U.S.

President Obama and Harper met privately during the weekend’s APEC summit in Hawaii:

Strains in the Canada-U.S. relationship and efforts to mend fences were at the top of the agenda as Mr. Harper and Mr. Obama met. They talked about a pending Canada-U.S. trade and security pact as well as the consequences of the State Department’s decision to put off until 2013 approval of the $7-billion Keystone KL pipeline that would carry oil sands crude to refineries in Texas.

Mr. Harper played down that and other setbacks, saying politics is temporarily clouding what’s best for the two economies. “This is simply the political season in the United States, and decisions are being made for domestic political reasons,” he told reporters.

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Comments | More in Canadian economy, Energy, Environment

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