Of the U.S. companies highlighted in our new U.S. Investment Heroes report, eight of our top 25 U.S. Investment Heroes of 2013 were energy companies. Together, we estimate these eight companies invested a total $56 billion over the last year in plants, property, and equipment in the United States, comprising almost 40 percent of the total $150 billion invested by the top 25 companies. Exxon Mobil, the top energy company on our list, invested over $12 billion in the U.S. in 2012 alone.
In a similar report that looks at investment by foreign companies in the United States, the energy sector again takes center stage:
Due to incomparability across financial statements, our non-U.S. Investment Heroes report separately considered companies in energy production, automotive manufacturing, and industrial manufacturing.
Still, our research found that of the three categories, energy companies were by far making the biggest bet on America’s future. Global energy giant BP was the top non-U.S. Investment Hero out of all the companies we considered across the three categories, putting a combined $19.3 billion into the U.S. economy in 2011 and 2012. (To the best of our knowledge, these funds did not include any payouts related to the Deepwater Horizon oil spill.) Together, the top four energy non-U.S. energy companies we considered invested an estimated $58.7 billion in 2011 and 2012.
Billions of dollars in investment from both American and foreign companies leads to faster economic growth and new jobs. This is an indication that policies that embrace America’s energy abundance are good for the economy.
Here are the top 25 non-financial American companies investing in America:
And here are the top four foreign energy companies betting big on the United States:
Hydraulic fracturing may be scary to some anti-energy groups like the Sierra Club, but two former members of President Obama’s cabinet say that it’s a safe method for producing oil and natural gas.
Former Energy Secretary Steven Chu told a Columbus, OH audience that hydraulic fracturing “is something you can do in a safe way,” and the Carlsbad (NM) Current-Argus reports that former Interior Secretary Ken Salazar echoed Chu saying, "I would say to everybody that hydraulic fracking is safe."
Other current and former members of the President’s cabinet also have stated that hydraulic fracturing is safe. Current Energy Secretary Ernest Moniz told National Journal in August, “I still have not seen any evidence of fracking per se contaminating groundwater.” And in 2011, then EPA administrator Lisa Jackson told a House committee that there have been “no proven cases where fracking has affected water.”
Hydraulic fracturing’s environmental safety isn’t breaking news, since the technology has been used safely for decades. However, if there’s all this agreement, then let’s not have the federal government impose duplicative regulations. State regulators are doing well in tailoring rules to the unique geographies and economies of their states. As the trope goes, “If it isn’t broke, don’t fix it.”
[H/t Washington Examiner]
In an election result that surprised almost no one, German Chancellor Angela Merkel retained her place at the head of the German government on Sunday for a historic third term.
Now she’ll have to tackle head-on a problem much bigger than getting elected: soaring energy costs.
As Bank of America-Merrill Lynch economist Laurence Boone puts it:
"Euro-area policies have not been a major issue in the campaign so far. In our view, the main challenge facing the new government will remain the implementation of 'Energiewende' (energy transition).This could significantly impair Germany’s competitiveness and, absenting as yet undebated structural reforms, poses a risk to Germany’s recent economic miracle."
So how did an economy with 0.8% GDP growth and record low unemployment get to this state? Following the Fukushima nuclear disaster in Japan, Germany decided in 2011 to phase out remaining nuclear power plants by 2022. In addition, the government wants to cut greenhouse gas emissions by 95%. Without nuclear energy or fossil fuels, Germany has put all its eier in the renewable energy warenkorb, so to speak. (That would be "eggs" and "basket.")
That effort to quickly expand relatively expensive renewable energy sources (primarily wind and solar power) has increased the cost of energy in Germany. In fact, Germans are paying about 30% more for a kilowatt-hour of electricity than the euro zone average.
The program has not been popular. BDI, Germany’s top industry group, came out with a statement just days before the September 19 election, calling for a radical overhaul of government policy on renewable energy. A recent survey by polling institute Forsa found that 63% of Germans say they believe it is wrong for Germany to switch off the last nuclear plant by 2022.
The energy transition program has also added a new term to the German lexicon: “energy poverty,” the New York Times noted.
The cost of the plan is expected to be about $735 billion, according to government estimates, and may eventually surpass even that of the euro zone bailouts that have received far more attention during Ms. Merkel’s tenure. Yet as the transition’s unknowns have grown, so have costs for the state, major companies and consumers.
In addition to subsidizing consumers to the tune of about $22.7 billion and shielding more than 700 companies from the increased energy costs, Germany is also footing the bill to upgrade its power grid, a bill that is expected to top out at $27 billion over the next decade.
What the slew of articles about Germany's soaring energy costs haven't mentioned is how Germany has been increasing significantly its use of coal over the last two years. With nukes getting phased out, gas prohibitively expensive, and the penalty for CO2 emissions relatively low, utilities have begun shuttering gas plants and burning more coal. The EU took steps to increase penalties for GHG emissions, but so far, the entire model is a failure.
In a positive development, the Merkel government seems to be taking a page from the U.S. handbook. It’s been considering rules that would allow hydraulic fracturing of Germany’s shale formations, at least those not near water protection areas. The industry has been fracking existing conventional wells for decades; this would open up shale formations (of which Germany has its fair share) and help offset declining production from conventional wells. Now that the elections out of the way, there could be more movement there.
The good news is that there is a way for Germany to pull itself out of this energy poverty situation. By embracing an all-of-the-above energy strategy that includes a mix of traditional sources of energy like coal and oil, and renewables like solar and wind, German leaders would give businesses greater certainty to invest and create jobs, and lower costs for consumers.
EPA’s proposed greenhouse gas emission regulation on new power plants will have a “negligible” environmental effect according to the agency’s own analysis.
The EPA anticipates that the proposed EGU New Source GHG Standards will result in negligible CO2 emission changes, energy impacts, quantified benefits, costs, and economic impacts by 2022. Accordingly, the EPA also does not anticipate this rule will have any impacts on the price of electricity, employment or labor markets, or the US economy.
Yet EPA administrator Gina McCarthy touts this rule as an “important step” to fight “carbon pollution.”
If this proposed regulation will have little effect, why press for it? The answer is because it will improve the prospects of Carbon Capture and Sequestration (CCS) technology, according to EPA.
Wait, didn’t EPA administrator McCarthy tell the House Energy and Commerce Committee last week that CCS is already “feasible.” She has more confidence in the technology than her agency. The RIA states that because “CCS technologies have had limited application to date,” the proposed regulation would “incentivize innovation” leading to performance improvement and cost reductions.
You have to love EPA’s circular logic. Through the regulatory process, it wants to push a technology that is supposedly “feasible” in order to incentivize its innovation in order to make it feasible.
The fact is, while CCS has promise, experts acknowledge that it is decades away from economic viability. Norway provided the latest example when it announced that it will stop funding the Mongstad CCS project. A regulation declaring CCS technology mature will not make it so. This is poor policymaking for sure.
Not one, but two of the Obama administration’s top regulators on climate change reiterated their support of developing natural gas reserves.
“The EPA views natural gas abundance as a positive for air quality, as an opportunity for us domestically to be safe and secure in our energy supply,” EPA Administrator Gina McCarthy said during a House Energy and Power Subcommittee hearing.
“Our policy is to do what we can to support clean, safe production of natural gas” said Energy Secretary Ernest Moniz.
These two ringing endorsements of natural gas were slightly surprising, particularly since they came the same week as an editorial by the Wall Street Journal that noted that Federal Energy Regulatory Commission nominee Ron Binz had declared natural gas as a “dead end" technology, a speech in March. Binz used his September 18 confirmation hearing at the Senate Energy and Natural Resources Committee to backtrack, and tout his support for natural gas. “I fully embrace the use of natural gas. I’ve said that in many speeches over many years,” Binz said.
Except, apparently, that one time in March.