Morning Bell: Obama’s War on Domestic Energy Production

Amy Payne /

Today, the Senate will vote on the fate of one of the most expensive regulations of all time–a regulation that threatens to create an America with no new coal-fired power plants, where existing energy producers might have to close their doors, snuffing out jobs and making electricity dramatically more expensive.

Citing mercury pollution and air pollution, the Environmental Protection Agency (EPA) ordered businesses to install the “Maximum Achievable Control Technology” (MACT) to control emissions from their plants. Known as Utility MACT, this is no ordinary regulation. So stringent are the standards that potentially dozens of coal-fired power plants will close rather than incur the unsustainable costs of compliance.

The EPA estimates the rule will cost $9.6 billion annually, to be paid by utilities and customers alike for new equipment, monitoring and reporting, loss of generating capacity, and higher electricity rates. Industry insiders consider the agency figures to be a lowball estimate.

Heritage’s David Kreutzer has called Utility MACT “a costly fraud” because it raises the scary specter of mercury but really targets carbon dioxide. He explains:

The proponents of the proposed rule tell stories of mercury poisoning and point to benefit estimates as though they reflect a reduced incidence of mercury poisoning. However, even the EPA’s own cost-benefit calculations reveal that this is not a mercury rule in any meaningful sense–less than one-tenth of one percent of the estimated benefits come from mercury abatement.

Not only is the stated reasoning behind the rule misleading, but it may also be impossible to comply with. Southern Company, America’s largest utility, said that based on company data from actual upgrade projects, the EPA’s compliance timetable for Utility MACT is simply impossible to achieve. Southern has undertaken more upgrade and compliance projects than any other power producer.

Southern warned that it would bring “more power plant closures, spikes in electricity prices, job losses, and increased power outages.” Plants that can’t be upgraded in time must be taken offline in 2015. With less power available on the grid, electricity prices are forecast to spike by 11.5 percent nationwide in 2016, causing hundreds of thousands of job losses across the economy, according to National Economic Research Associates.

Senator James Inhofe (R-OK) calls the rule “the centerpiece of President Obama’s war on coal” and has called for today’s vote in an attempt to declare it void. The President has threatened to veto Inhofe’s resolution if it passes.

After all, EPA’s regulatory rampage is meant to fulfill Obama’s energy vision for America: that “electricity rates would necessarily skyrocket” when energy producers have to comply with regulations and pass those costs on to consumers, and that “if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them.”

This comes at a perilous time for the economy. Forcing businesses to waste tens or hundreds of billions of dollars per year on environmental upgrades of questionable value means that money isn’t available to invest in business expansions or create jobs.

These economic costs have also been felt by consumers and business suffering under three years of unnecessarily high oil prices. With roughly 3 percent of federal land available for exploration–production on that small sliver declining–new regulations and proposed taxes and a host of other anti-oil measures, the President is making it harder and harder to access our nation’s rich oil reserves.

Even in this demoralizing regulatory landscape, Americans are still innovating in energy production. Residents of Tioga, North Dakota, are showing the rest of the country how profitable domestic energy could be–if the federal government doesn’t halt the town’s economic boom.

Thanks to fracking–a process where rock is fractured to tap oil-rich underground resources–the Tioga area is flourishing. So many people are moving to the area that it hasn’t been able to build enough houses to keep up with demand.

North Dakota is proving that the U.S. can develop its resources efficiently and in an environmentally sensible manner. Oil production has quadrupled since 2005–North Dakota is now the second-largest oil producer in the U.S. behind Texas–and state regulators have effectively balanced economic growth and environmental protection.

North Dakota is only one of many states that are beginning to reap the economic benefits of fracking and other advances in drilling technology to harvest previously inaccessible oil deposits. But these leaps forward are only possible because regulations haven’t crushed these efforts–yet.

When Congress has put up roadblocks to the Obama Administration’s agenda, the President has swerved around the legislative process and issued orders through regulation. His EPA has pursued a host of regulations that will kill millions of jobs, challenging Congress to try and stop it. Today, the Senate could take one step in that direction, but it will take a serious fight to maintain the level of economic freedom needed to create jobs and meet the country’s energy needs.

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