Comparing Government's "Expertise" to the Free Market's Judgment ... This is Getting Ridiculous!

It's becoming more difficult each day to believe that our government officials are even trying to spend taxpayer money responsibly and do what's best for America.

Two recent examples beg the question of when or whether this "government knows best" nonsense will end. Not soon enough, that's for sure.

The Solyndra Rule continues the post-Solyndra saga of government's ongoing waste of taxpayer money by investing in unsound business ventures:

"After the demise of Solyndra (with its $535 million loan guarantee) and Beacon Power ($43 million loan guarantee), last week saw the bankruptcy of Indiana-based lithium-ion battery maker Ener1. In 2009 an Ener1 subsidiary was awarded a grant worth up to $118 million from the Energy Department, with Vice President Joe Biden touring and touting its factory a year ago.

Like Solyndra, Ener1 was a foolhardy bet for taxpayer cash. Founded in 2002, Ener1 had not turned a profit by the time of its grant and has proceeded to hemorrhage the $55 million of the DOE money it has received to date. Its losses in fiscal 2010 were $165 million.

The company has had to compete in a market with a glut of battery makers, all of which are selling into a lackluster electric-car market. This battery glut was created in substantial part by the Obama Administration, which handed out money to no fewer than 48 different battery technology and electric vehicle projects in 2009.

In the small favors department, defenders of the White House's green corporate welfare are noting that, unlike Solyndra, Ener1 is not closing its doors while in bankruptcy. Then again, Ener1 has created fewer than 400 of the 1,700 jobs it had promised by this year, and a successful restructuring is by no means assured.

Mr. Obama is undeterred. In last week's speech, he defended his taxpayer "investments" in private commercial companies, noting that "some technologies don't pan out, some companies fail." He would know. Though perhaps if Mr. Obama weren't throwing hundreds of millions down the green sinkhole, he wouldn't have to target the nation's real job creators for higher taxes to foot his losses."

The takeaway message is straightforward--government OPM won't pick investments as well as private sector MOM participants will.

If private sector players have the good sense not to invest in these enormously risky endeavors, what makes politicians, other than hubris and OPM, go ahead and waste taxpayer money on them? It's nuts.

Now let's consider another example of our government leadership's ignorance or willful neglect, as the case may be, by their continuing refusal to encourage much needed private sector job creation and additional energy to meet our needs. It's a sad situation, to say the least.

Keystone Can Help the Gulf--and the Northeast relates the idiocy of government's reluctance to embrace the many economic and national security opportunities for America offered by the Keystone XL pipeline project:

"Opposition to the Keystone XL pipeline comes in many forms. Former House speaker and current Democratic Minority Leader Nancy Pelosi suggested at a press briefing this month that the pipeline would have no value to the U.S.: "This oil was always destined for overseas. It's just a question of whether it leaves Canada by way of Canada, or it leaves Canada by way of the United States."

Really? The refiners who would be at the end of the pipeline do not re-export crude oil. Instead they produce high-value petroleum products for U.S. and foreign markets such as Brazil, Mexico and Europe.

According to the federal Energy Information Administration, the U.S. exported three million barrels per day of finished petroleum products in October 2011, a new high (versus domestic sales of 19 million barrels per day from all sources, including imports). Yet the U.S. imports two million barrels per day of finished petroleum products thanks to transportation inefficiencies.

For example, increased production of refined products from Gulf Coast refiners could serve East Coast markets but doesn't, thanks to the 1920s Jones Act. This protectionist legislation requires that all goods transported by water between U.S. ports be carried in (high-cost, naturally) ships built, owned, operated and crewed by Americans—and the existing fleet is tied up in long-term charters.

Canadian crude is perfectly matched to the complex and expensive refinery technology of many Gulf Coast refineries. The production of refined petroleum products is a tough, low-margin business operating in an environment of stiff foreign competition, flat domestic demand, congressional mandates for exotic biofuels, and an avalanche of existing and proposed environmental regulations. U.S. Gulf Coast refiners are now well positioned because they have access to growing markets in Latin America, and have made multibillion dollar investments in advanced processing technology that permits them to run lower-cost crudes, such as blended bitumen from the oil sands in Alberta. At least that was the plan before President Obama's war on fossil fuels.

This bright spot in the domestic refining industry is important. High feedstock costs, declining demand, new fuel standards, expanding environmental regulations and foreign competition are now taking a heavy toll on older and less complex refineries. By summer 2012, with the closing of the ConocoPhillips and Sunoco plants in Pennsylvania, the Northeast will have lost over 700,000 barrels per day of capacity since 2008. The American integrated oil company Hess announced Jan. 18 that it would close its refinery in the U.S. Virgin Islands, which provides large volumes of gasoline, heating oil and jet fuel in the Northeast.

If the Gulf Coast refineries can expand access to Canadian crudes, the combination of low-cost refinery fuel in the form of natural gas and currently installed processing technologies will yield a world-class refining center with a competitive advantage in the production of refined products. U.S. refiners will be in a strong position to expand their access to markets throughout the Western hemisphere and into Europe.

President Obama's jobs council has called for an "all-in approach" to energy policy and expedited permitting for energy projects. Meeting these objectives requires open markets that capitalize on production and transportation efficiencies.

Admittedly, the production of refined products doesn't have the politically correct caché of electric cars and the failed, government-sponsored Solyndra solar plant. But the economic value and subsequent employment growth from producing petroleum products is large and long term.

We are at the leading edge of an American petroleum renaissance. The combination of lower costs for both crude oil and natural gas provides a great opportunity for U.S. refinery capacity to increase over the next decade. But this will require a predictable and sensible regulatory regime—a regime noticeably lacking during the Obama administration."

So there we have two examples of our government wasting time and dollars. Pogo was right. We have met the enemy and he is us.

And all too often these days the enemy appears in the form of our elected officials and "public servants." Government doesn't know best. We the people know best.

But we have to start turning that knowledge into national policy. That requires action in addition to knowledge.

Thanks. Bob.