The U.S. economy is still far from where it needs to be to see real GDP growth of over 4% and put people back to work, said U.S. Chamber Chief Economist Marty Regalia.
“We’re not making headway,” Regalia said during the Chamber’s quarterly economic briefing on February 8. “Yes, we’re doing better than four years ago, but we’re not doing anything to get it back to where it was before the recession.”
The economy expanded slightly in the fourth quarter, thanks to a drop in the U.S. trade deficit and a decline in wholesale inventories in December. All told, GDP likely expanded 0.3% in the fourth quarter, which is still at a very anemic pace compared to other recoveries, Regalia said.
The non-partisan Congressional Budget Office came out with its’ projections earlier in the week and forecast that GDP would grow 1.4% in 2013 and accelerate to 3.4% in 2014, and an average of 3.6% a year from 2015 through 2018.
Regalia disagreed with the CBO’s long-term projection. “I’m not optimistic we’ll see growth ... as the CBO believes. It’s a recovery that has meandered along, and it’s wallowing around about 2.3%.”
There are, however, a few bright spots in the economy, Regalia said – primarily housing and energy. After years of uncertainty and tighter lending, the housing industry is on an upswing, according to Frank Nothaft, vice president and chief economist at Freddie Mac. Homes sales in 2012 were up 9% over 2011, and housing starts were up over 25%. Nothaft predicts that both trends will continue in 2013, thanks to historically low interest rates and low home prices.
While crude prices are up due to increased worldwide demand, Americans are enjoying sustained affordable energy prices, said John Felmy, chief economist for the American Petroleum Institute. “Increased production of oil and natural gas due to shale is good news in terms of supply, energy costs and employment,” Felmy said.
However, the United States is not unlocking its full potential as long as it puts up roadblocks to more energy development, particularly proposals of a increased taxes on the oil and gas industry, the possibility of more industry regulations, and limiting access to resource-rich lands such as portions of Alaska and offshore, Felmy warned. “Getting access is the biggest hurdle. We need to move on the five year plan for offshore areas that’s been delayed and we need to look carefully at the lease restrictions that have been put in place.”
TransCanada, the company behind the Keystone XL pipeline project, isn’t waiting for the administration to approve the pipeline. They’re determined to move Canadian oil to global markets and have proposed a pipeline project going east:
Canada’s second-largest pipeline company proposes to ship oil 3,000 miles (4,825 kilometers) to the Atlantic Coast, allowing producers to send it by tanker to the Gulf, Girling said yesterday in an interview at Bloomberg’s New York headquarters. While he expects U.S. passage of Keystone “very soon,” the East Coast route makes sense in any event because of rising production from Alberta, Girling said.
“It’s not a Plan B, it’s a Plan A, and it will go if the market supports it, along with Keystone,” Girling said in the interview. “Once you get on tidewater, you can get anywhere, and you don’t need a presidential permit to bring oil into the Gulf Coast.”
As long as it’s economical to produce the oil out of the ground, Canada will do so. That could be east, west, or south. It’s up to the administration to decide if it wants the jobs and economic growth from to benefit the United States.
In related news, the science journal Nature endorsed the Keystone XL pipeline and shoots down a few arguments from anti-energy environmentalists:
[T]he administration should face down critics of the project, ensure that environmental standards are met and then approve it. As Nature has suggested before (see Nature 477, 249; 2011), the pipeline is not going to determine whether the Canadian tar sands are developed or not. Only a broader — and much more important — shift in energy policy will do that. Nor is oil produced from the Canadian tar sands as dirty from a climate perspective as many believe (some of the oil produced in California, without attention from environmentalists, is worse).Tar-sands development raises serious air- and water-quality issues in Canada, but these problems are well outside Obama’s jurisdiction.
Reasons to reject the Keystone XL pipeline continue to crumble.
The Migratory Bird Treaty Act is one of the oldest wildlife protection laws, but despite its longstanding status, the application of the law seems to have its enforcers confused, to put it politely. Where the federal government has aggressively pursued fines for oil and gas companies that have inadvertently killed migratory birds, it has routinely looked the other way for wind producers guilty of the same crimes—in significantly larger numbers.
Wind turbines kill about 440,000 birds a year. And not just any birds. Endangered birds like bald and golden eagles, red-tailed hawks, and more. But wind producers have had zero legal actions brought against them by the Department of Justice (DOJ) for the deaths of these birds.
In sharp contrast, North Dakota-based Continental Resources was hauled into court with six other oil and gas companies for killing 28 migratory birds. A federal judge exercised common sense and threw out the complaint. A Denver-based oil and gas company wasn’t as lucky. It paid a $22,500 fine and was ordered to pay $7,500 to the National Fish and Wildlife Foundation for the deaths of a dozen migratory birds in Montana, Wyoming, and Nebraska a few years ago. The fines were in addition to a $300,000 remediation plan the company is implementing to prevent future bird deaths.
You don’t have to be a math wizard to know there’s something off about those numbers. The inconsistent application of the law has drawn the ire of Senators David Vitter and Lamar Alexander, who sent a recent letter to DOJ calling foul—or fowl, as it were.
In a statement, Sen. Vitter said, “It appears the Justice Department is hand-picking which migratory bird mortality cases to pursue with an obvious preference of going after oil and gas producers … We obviously don't want to see any indiscriminate killing of birds from any sort of energy production, yet the Justice Department's ridiculous inconsistencies begs questioning and clarity."
A mix of energy sources will secure America’s future. But a government that selectively executes the law based on a political agenda is for the birds.
How does an effort to improve the beautiful views at national parks magically turn into a tool in the war on coal? It happens when EPA and environmental groups use a “Sue and Settle” strategy to override state environmental efforts and impose the agency's more-expensive rules.
But the state of Arizona isn't standing for it. It is suing EPA for imposing federal pollution measures on coal-fired power plants. Hot Air’s Ed Morrissey explains:
At issue in the new rules, proposed in December, is nitrogen oxides. The EPA claims that the emissions of nitrogen oxides by coal plants in Arizona creates “haze” in the Grand Canyon and other national parks.
Arizona Attorney General Tom Horne argues that EPA’s regional haze regulations won’t be more effective than the state's rules, and he’s right. The U.S. Chamber report authored by Competitive Policy Institute policy analyst William Yeatman, “EPA’s New Regulatory Front: Regional Haze and the Takeover of State Programs,” contains a case study of the Navajo Generating Station, another Arizona coal plant in the same situation as the Apache, Cholla and Coronado plants involved in this suit. EPA wants to hammer the Navajo plant with regional haze controls that would cost $700 million. Yet peer-reviewed research has concluded that there’s little chance that any discernible visibility would occur.
The path to Arizona’s lawsuit began a few years ago. Yeatman explains EPA’s intention on regional haze:
EPA prefers different, more stringent, and more costly controls. And EPA is determined to force the states to implement these more costly controls over any and all objections. The problem is that the law provides primacy for the states—not EPA—to address regional haze within the states’ borders.
With “Sue and Settle,” EPA, in cahoots with environmental groups, outflanked state environmental agencies. Here’s what happened: In a federal court in California, EPA settled a suit with environmental groups (Sierra Club, WildEarth Guardians, Environmental Defense Fund, and others) over regional haze rules that committed it to “various deadlines to act on all states’ visibility improvement plans.”
Here’s where it gets interesting (emphasis mine):
On the eve of the deadlines that EPA had set for itself in the Consent Decrees, the agency found that it could not approve the states’ submissions due to alleged procedural problems, such as inadequate cost estimates…. EPA claimed that it had no choice but to impose its preferred controls in order to comply with the Consent Decrees.
In Arizona, it would cost the Apache, Cholla and Coronado coal plants over $1 billion to adhere to EPA’s regional haze rules. That would mean higher electricity costs and possibly higher water costs if the rule is extended to the Navajo Generating Station which powers water delivery in the state. And since other states like Montana, Minnesota, New Mexico, North Dakota, Oklahoma, and Wyoming are also covered by these consent decrees, expect EPA to institute rules on those states that target coal-fired power plants.
And there you have it. Just like something straight out of Hogwarts, regional haze rules, an effort to protect national parks’ views, is magically transformed by the “Sue and Settle” process into an arrow used by the administration to attack coal-fired power plants. It joins Utility MACT (the “Blackout Rule”) and proposed greenhouse gas standards in the “War on Coal” quiver. The results are power plants shutting down, people losing their jobs, and and increased electricity costs.
A new study finds that the benefits of opening more federal lands to oil and natural gas drilling would produce vastly more economic benefits and tax revenues than previous government estimates show.
The Institute for Energy Research released a study by Dr. Joseph Mason, a professor at Louisiana State University, in response to a Congressional Budget Office report from August that analyzed the benefits of opening up federal lands and waters that are restricted by law or administration policy from leasing. “Even conservatively estimated, the economic effects of allowing access to U.S. energy resources are significant,” Mason told reporters over the phone. The CBO found that opening up federal lands would generate a total of $7 billion in revenues during the first decade — $5 billion from ANWR and $2 billion from areas of the outer continental shelf. The CBO projected revenues from opening more lands to be between $2 billion and $4 billion from 2023 to 2035. However, the CBO estimates are low because they only take into account revenues raised from leases and ignores the wider economic impacts on the economy from opening more lands, this new study claims. “I analyze a short-run scenario [seven years], which encompasses the next seven years. In the short-run we’re not extracting oil and gas, but of course… the lands that haven’t been explored in thirty years will be explored,” Mason said. “That will employ scientists and that will employ other workers on site to undertake the exploration. They’ll bring those wages home, their families will spend those wages, that will feed jobs, wages, tax revenues throughout the economy, and all of this is ignored by the CBO.” “In the long-run, when you get to the extraction phase, the effects are even greater,” he added. Mason found that opening up more federal lands would generate as much as $24 billion annually in taxes over seven years for the federal government in addition to lease revenues estimated by the CBO. In the long-run, $86 billion annually would be generated in federal taxes from more activity on federal lands and in federal waters. States and local governments would see huge gains in tax revenues as well — $10.3 billion annually over the next seven years and $35.5 billion annually after that. Tax revenues are only tip of the iceberg, according to the IER study, as drilling would increase the size of the economy by $14.4 trillion over the next thirty-seven years — $127 per year for the next seven years, and the economy would grow $450 billion annually after that. This includes “spill-over” effects from economic gains in one area spilling over into another. The study also found that there would be job growth from opening more federal lands, including 2 million new jobs over the next thirty years — with 552,000 being created annually in the next seven years. According to the study, many of these jobs gains would be seen in high-wage and high-skill occupations like health care and education. Wage increases would total $3.7 trillion over the next thirty-seven years, with $32 billion in annual wage increases during the first seven years. “Continuing to downplay the reality of the economic value of these resources just ignominiously prevents the intelligent debate of the Energy industry’s place in the U.S. economy, detracting from real solutions to energy policies, including both energy independence and energy conservation,” Mason said.Editor's Note: This article was orginally published by the Daily Caller News Foundation.
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