Tuesday, February 14, 2012

More U.S. Government "Help" for Puerto Rico, Canada and China ... The 2012 Election

Fortuno's Plan to Energize Puerto Rico describes in part the nonsensical results mandated by the Jones Act, federal legislation dating to 1920 which requires that U.S. ships be used exclusively to transport cargo between U.S. ports.

Here's what the editorial says about the effects of the Jones Act on Puerto Rico's energy, poverty and need for jobs:

"Its loud protestations aside, how truly interested is Washington in reducing poverty?

That question occurred . . . during an interview with Puerto Rican Gov. Luis Fortuño . . . . If his plan to boost the island's competitiveness by switching electricity generation from oil to natural gas is to succeed, he's going to need relief from the pernicious 1920 Jones Act. It prohibits any ship not made in the U.S. from carrying cargo between U.S. ports. There are no liquefied-natural-gas (LNG) tankers made in the U.S. Unless Puerto Rico gets a Jones Act exemption, it cannot take advantage of the U.S. natural gas bonanza to make itself more competitive.

The Jones Act is good if you are a union shipbuilder who doesn't like competition, or a member of Congress who takes political contributions from the maritime lobby. But it's bad if you are a low-income Puerto Rican who needs a job. And there are plenty of those. . . .

Life on the island is also expensive, in part because of the high price of electricity, 68% of which is produced using imported oil. The governor's office says that the price of electricity here went up 100% from 2001 to 2011. . . .

But bringing down high energy costs remains a fundamental challenge, and one that is exacerbated by new costly federal regulations on emissions that would require the installation of scrubbers on oil-fired electricity plants. To meet those regulations affordably, Mr. Fortuño wants to convert the island's oil-fired plants to cheaper, cleaner natural gas. To that end, he proposes a pipeline from the southern LNG terminal at Punta Guayanilla across the island to San Juan. The U.S. Army Corps of Engineers has assessed the proposal and said it would produce no significant environmental impact.

It sounds like a plan to help the poor and unemployed. There are only two problems. First, the Sierra Club and local environmentalists have ginned up fears about the project and promised to sue to stop construction. Second, the Jones Act is still in the way."

Now let's move to the mainland.

For a further illustration of the federal government's "help" with meeting our nation's energy needs and generating new jobs, let's review what the governor of Texas has to say about the worldwide consequences of the Obama administration's recent decision to punt on the Keystone XL Pipeline project.

In Texans Are Baffled by the Keystone Decision, Governor Perry says bluntly:

"Canadian Prime Minister Stephen Harper was in Beijing recently signing an agreement and touting his country's growing energy partnership with China. It's good news for Canada, which is rightfully looking to grow markets for its sizeable oil reserves. And it's particularly good news for China, which needs to keep tapping into fresh supplies to feed its growing economy and mounting demand for oil.

Unfortunately, it's bad news for Americans, particularly when you consider that one of the main reasons China has become such an attractive market to Canada was President Obama's recent rejection of the Keystone XL Pipeline. This cross-border connection would have provided a golden opportunity to partner with our neighbors to the north in producing massive amounts of energy, both for our country and the globe.

It seems unimaginable, yet President Obama refused Trans-Canada's request to run its pipeline across the border from Canada to the Texas Gulf Coast. This extensive pipeline holds the potential of moving up to 830,000 barrels of crude oil per day—including oil produced in North Dakota and Montana—to refineries here in Texas. Translated into job numbers, that's up to 20,000 direct jobs and estimates of up to hundreds of thousands of indirect jobs created by this $7 billion project. . . .

Hoping to appease environmental radicals, President Obama said no, claiming he didn't have time to adequately consider the pipeline.

This is despite the fact the original request was made in September 2008, and Keystone was the subject of dozens of meetings on multiple levels of his own administration, as well as exhaustive environmental impact reviews. Certainly, three-and-half years is more than enough time to make a decision. . . .

President Obama wants us to believe he is for jobs, economic opportunity and greater energy security, and his Keystone decision does help meet those goals—for the People's Republic of China. The American people get nothing."


Obviously, all political decisions of President Obama are being heavily influenced by both unions and environmentalists. It's too bad the people who need jobs don't count for much and that energy independence and national security aren't on the administration's front burner either.

2012 is an election year, pure and simple. Accordingly, the Obama re-election strategy is to make the fat cats and oil companies out to be the bad guys.

The President will "save the middle class" by creating a more socialistic equal-in-outcome as opposed to opportunity society. He will also advocate more wealth redistribution programs to pay for all this, including maintaining entitlements for the elderly and others as they currently exist, by imposing "fair share" and higher taxes on the "millionaires and billionaires."

Of course, the "millionaires and billionaires" don't have enough money to save the day, but the President's re-election argument isn't concerned with facts. Its populist appeal is merely intended to win votes and not to make economic sense.

In other words, achieving sustainable economic growth and fiscal sanity aren't 2012 priorities. If the unemployment rate drops on its own, so much the better, but if not, that can wait, certainly until after the election.

Simply put, the President will argue forcefully and unencumbered by the facts that he is the one fighting to save and "protect the middle class" from greedy individuals and corporations alike, millionaires, billionaires, banks and oil companies included. Pretty much a vote for me and I'll set you free pledge. Even though it's garbage, it just may work.

That much about the 2012 election season is pretty clear to see. How this approach plays with the American people, however, will only become clear in the months ahead.

Much will depend on how well the Republican opponent makes the case to the American people for emphasizing individual freedom, smaller government, fewer entitlements, the role of the private sector and fiscal sanity. Probably not well, assuming recent history is a good guide.

But even if the President wins a second term in November against a weak Republican adversary, the fight about smaller and limited government in relation to individual freedom and private sector capitalism won't be over. Not by a long shot.

The moral to the story is this-- if President Obama wins again in November, let's not make the mistaken assumption that we the people have sided with big government and socialism for the long haul.

More likely, we will have decided that the Republican opposition didn't offer up anybody worth supporting. That's what usually happens when second terms are won by unpopular presidents in difficult economic times.

Who wins the House and Senate races will be another story, and perhaps a more important one than the race for the presidency.

Time will tell, but right now divided government looks like the most likely outcome in 2012. And that's not all bad.

Of course, neither is it all good.

Thanks. Bob.

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