Topic: Energy and Environment

Enviros Embrace “Free Market Environmentalism”!

We don’t need no stinkin’ environmental regulations to save the earth – all we need are well functioning property rights for environmental resources and common law courts to protect that property against trespass. Pollution is simply a neighbor’s garbage dumped in your backyard without permission. If we simply recognize and enforce property rights for nature, the need for most environmental regulation goes away.

That’s the libertarian pitch anyway, and it goes by the moniker “Free Market Environmentalism,” or “FME” to its acolytes.  FME was given a firm theoretical foundation by Ronald Coase, embellished and blessed by libertarian economist Murray Rothbard, given academic life by the Political Economy Research Center and the Foundation for Research on Economics and the Environment, popularized in Washington by the Competitive Enterprise Institute, and even pitched by yours truly to the Board of Trustees of the Natural Resources Defense Council about nine years ago.

Alas, there has never been much evidence to suggest that libertarians were making much headway with these arguments and I have come to believe that they have less promise than I had once imagined. But what do you know? FME is now all the rage amongst environmentalists who have discovered that suing polluters for tresspass is easier than passing satisfactory laws against the same.

Think I’m pulling your leg? Read this from Darren Samuelsohn in today’s issue of Greenwire (subscription required):

Efforts to force a stronger U.S. global warming policy through the courtroom came under sharp scrutiny yesterday as eight states, New York City and conservation groups pressed for reduced greenhouse gas emissions from the nation’s five largest electric utilities.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals pressed plaintiffs over why their case was necessary when other avenues exist for addressing global warming – from Capitol Hill to state courts. “My basic question is should we be invoking this doctrine in this very unusual case when there are many other remedies available?” asked Judge Sonia Sotomayor, the lone Democratic appointee on the 2nd Circuit’s panel.

Connecticut Attorney General Richard Blumenthal (D) replied that the utilities’ emissions violate federal common law by harming residents in multiple states. The utilities’ emissions are creating a public nuisance and must be reduced to counteract a variety of global warming effects, including California’s diminished snow pack and more intense heat waves.

Addressing Sotomayor’s question, Blumenthal said his case is not unusual compared with other seminal common law challenges upheld by the Supreme Court, including suits over Illinois sewer water running into Lake Michigan and air pollution from two Tennessee smelters.

“We’re dealing with a developing area of science where federal common law provides a remedy under the doctrines that exist,” Blumenthal said.

Plaintiffs singled out the five companies and their subsidiaries for litigation almost two years ago because they are the largest emitters of carbon dioxide from the power sector in the United States.

… The electric utilities’ defense covered some of the same ground offered successfully last summer before a federal district court, which dismissed the case on the grounds it raised political questions better left to the other two government branches. Both current and former sessions of Congress and presidents have not adopted such an aggressive climate change policy, argued Washington-based industry attorney Joseph Guerra.

Guerra also insisted federal common law has not been applied to an issue of such sweeping scale. Of the Supreme Court precedents Blumenthal cited, Guerra replied, “None of those cases could have possibly affected the entire U.S. economy.”

Pushing another line of the industry’s defense, Guerra cautioned the litigation would be a precursor to more global-warming nuisance claims – with no end in sight as plaintiffs tick through other sources of greenhouse gas emissions.

But Sotomayor, who asked the bulk of the questions during the hearing, took issue with the line of industry defense. “That’s the nature of every tort action,” she told the utility attorney.

Sotomayor also said she had a problem with dismissing the case just because potential remedies were so large.

OK, I’ll grant that enviros are going the common law route less out of conviction than out of necessity.  But so what?  What was once a fringe argument has now migrated into the political and legal mainstream with a vengeance.  Good news for libertarians, right?

Well, if libertarians and fellow-travelling conservatives are popping champagne bottles, it has escaped my attention.  FME blogs are dead silent. Conservatives are taking the corporate line that common law is an inappropriate venue for all of this with no dissenters that I can tell.  In short, FME’ers either aren’t paying attention or aren’t willing to back their doctrines when they are employed by the Left.

Sure, one can argue that the plaintiffs don’t have proper standing, that there is really no nuisance here to begin with, that the tort system is so messed up that employing it in such cases is problematic, etc.  But nonetheless, this is a growing trend and libertarians seem surprisingly ambivalent about it.

Bloviating about “Boutique” Fuels

The House Energy & Commerce Committee held a hearing today on the subject of “boutique” fuels. Republicans are positively obsessed with this matter, convinced beyond sanity or reason that gasoline prices are high in large part because EPA is tolerating a large number of different gasoline blends around the country.

Ed Murphy, group director for downstream and industry operations at the American Petroleum Institute, gamely tried to introduce a bit of economic rationality into this debate. While there are certainly reasons to decry the proliferation of gasoline blends around the country, the recent run-up of gasoline prices has nothing to do with them. His testimony, however, apparently failed to impress Republicans according to the trade pub Greenwire.

Now, if EPA were making gasoline more expensive, I’m sure API would be the first bunch to say so. The fact that they are not speaks volumes. That is, it speaks volumes only to those interested in listening. Beating up on Greens is more important to the GOP than beating up on high prices. Having even a scintilla of evidence to back up their charges is apparently irrelevent.

Should We Criminalize OPEC?

Well, should we? An increasing number of Congressmen seem to think so. Last year, Sen. Mike DeWine (R-OH) introduced the “No Oil Producing and Exporting Cartels Act” (S. 555), aka “NOPEC,” which would make oil-producing and exporting cartels abroad illegal. Although the bill went nowhere, supporters have tried repeatedly to attach it to energy legislation moving through the House and Senate. The idea was last spotted when Sen. Arlen Specter (R-PA) embraced elements of the bill in his relatively unhinged “Oil and Gas Antitrust Act of 2006” (S. 2557), and the trade press is full of reports that the next GOP energy bill might well include NOPEC in its legislative basket of economic buffoonery.

You might think that imposing U.S. antitrust law on foreign, state-owned companies that (with the exception of CITGO) operate nowhere near U.S. borders is such a crackpot idea that only an American politician could entertain such a thing with a straight face. You would be wrong. The other day, Ariel Cohen and William Schirano at the Heritage Foundation gave NOPEC an enthusiastic thumbs-up. “If Congress is serious about alleviating the price-gouging that contributes to high gas prices,” they wrote, “it ought to begin by allowing the federal government to sue OPEC.”

The temptation is to simply ignore nonsense like this. But nonsense like this (particularly on the energy front) is increasingly the coin of the legislative realm. So let’s do what its proponents have obviously not done and give the idea a few moments of thought.

First, the obvious question arises—exactly how would the U.S. government enforce such a law? After all, I rather doubt that Saudi Arabia, Kuwait, Iran, Venezuela, et al will quickly disband the cartel in a panic once Uncle Sam deems their club illegal under U.S. law. “You and who’s army?!” is the natural response we might expect. Given that no army would be on the way to stamp out such illegal activity, which leaves trade sanctions or nothing. The former would be counterproductive while the latter would be embarrassing.

Next, exactly what gives the Congress the right to impose U.S. economic regulations on companies that aren’t doing business in the United States? Do all national governments have this right, or only the United States? If the former, what’s to prevent Saudi Arabia from declaring it illegal for U.S. banks to charge interest on loans (an activity ostensibly banned in many Islamic countries)? If the latter, then it’s a naked statement that U.S. policy is premised upon the idea that the biggest guy on the playground makes the rules for everyone else whether they like it or not—might makes right. And if so, then wouldn’t those forced against their will to live under U.S. law rightly argue that subjects of governmental power ought to have a right to vote about the laws they are compelled to live under? Or is that a right that only applies for some and not others?

Finally, there’s an economic principle of real importance at stake. To wit, who should have the final say over how much of a product or service is delivered by a commercial enterprise; the owners or the customers? If the latter, then companies are merely slaves of the state, dictated to produce as much as the public wants regardless of business considerations. Does the Heritage Foundation really want to plant their flag on that proposition?

One might argue that the state can prohibit price fixing and collusion without prohibiting companies from having the final say over their own production schedules absent coordination between firms. But there are a large number of oil economists who maintain that OPEC is not really a cartel at all—it’s simply a vehicle through which Saudi Arabia unilaterally exercises power over the market—and that collusion within OPEC is not particularly meaningful. If so, then NOPEC would have little effect even if by some miracle it could be enforced.

Even so, what if OPEC countries preferred to constrain production so that sufficient reserves would be available down the road when they would presumably be more valuable? In that case, production restraint might simply be another form of national savings. Should the U.S. Congress be in the business of declaring such trade-offs between present and future revenues “illegal”?

Sure, it would be wonderful if private companies owned oil reserves, not national governments. And it would be nice from the consumers’ point of view if those companies produced as many barrels of crude as a normal profit would allow. And it would be wonderful if OPEC disappeared tomorrow. But Congress’ ability to translate those wishes into reality as far as foreign petroleum operations are concerned is probably nonexistent.

The best we can do is to refuse to help the Cartel or its members in the course of their enterprise. Sending the Texas Rangers or some such after them would render us an international joke.

They Don’t Make Trade Associations Like They Used To

For those of us who tire of witnessing British Petroleum apologize for being in the oil business, or roll our eyes over Chevron PR campaigns dedicated to telling us how we can and should buy less of their product, it may seem that it was always thus. But it was not. Check out this 1956 short film produced by the American Petroleum Institute. Now THAT’S what a self-confident, take-no-guff industry looks like. Someone should tell “Big Oil” to take it’s thumb out of it’s mouth and start defending their right to exist.

Smeared by Krugman

Well, Paul Krugman sure smeared me in his May 29 column (sub. req’d.) where he accused me of “fraud pure and simple” in congressional testimony eight (!) years ago.

Krugman’s screed was just another salvo in the current global warming charm offensive, coinciding with Al Gore’s screeching movie, demonstrations against Max Mayfield, director of the National Hurricane Center, because he had the audacity to NOT blame last year’s Hurricane Katrina on global warming (which would have been “fraud pure and simple”), and multiple smearings of any climate scientist who dares to speak out against the current hysteria.

Krugman was incensed with my July 27, 1998 testimony before the House Committee on Small Business.  In it, my purpose was to demonstrate that commonly held assumptions about climate change can be violated in a very few short years.

One of those is that greenhouse gas concentrations, mainly carbon dioxide, would continue on a constant exponential growth curve.  NASA scientist James Hansen had a model that did just this, published in 1988, and referred to in his June 23, 1988 Senate testimony as a “Business as Usual” (BAU) scenario.

BAU generally assumes no significant legislation and no major technological changes.  It’s pretty safe to say that this was what happened in the succeeding ten years.

He had two other scenarios that were different, one that gradually reduced emissions, and one that stopped the growth of atmospheric carbon dioxide in 2000.  But those weren’t germane to my discussion. Somehow, Krugman labelled my not referring to them as “fraud.”

The BAU scenario produced a whopping surface temperature rise of 0.45 degrees Celsius in the short period from 1988 through 1997, the last year for which there was annual data published by the United Nations’ Intergovernmental Panel on Climate Change at the time of my testimony. The observed rise was 0.11 degrees.

I cited the reasons for this.  In fact, the rate of carbon dioxide increase in the atmosphere was quite constant–rather than itself increasing like compound interest–during the period.  Ten years later, Hansen published a paper in which he hypothesized that “apparently the rate of uptake by carbon dioxide sinks, either the ocean, or more likely the forests and soils, has increased.”  This was not assumed in any of his scenarios. In fact, the general hypothesis has been that, as the planet warms, the ocean takes up carbon dioxide at a slower rate.

Then, contrary to everyone’s expectation, the second most-important global warming emission, methane, simply stopped increasing.  Some years have shown an actual drop in its atmospheric concentration. To this day, no one knows why.

There’s also the nagging possibility that we haven’t yet figured out the true “sensitivity” of surface temperature to changes in carbon dioxide.  Scientifically, that’s a chilling possibility.

On May 30, Roger Pielke, Jr., a highly esteemed researcher at University of Colorado’s Center for Science and Technology Policy Research, examined Hansen’s scenarios.  Of the two “lower” ones, he concluded, “Neither is particularly accurate or realistic. Any conclusion that Hansen’s 1988 prediction got things right, necessarily must conclude that it got things right for the wrong reason.” (italics in original)

That’s precisely the keynote of my testimony eight years ago:  in climate science, what you think is obviously true can literally change overnight, like the assumption of continued exponential growth of carbon dioxide, or how the earth responds.

EPA Witchdoctors Get No Peace

A coalition of unions representing U.S. EPA scientists and other specialists sent a letter to EPA chief Stephen Johnson on Wednesday asserting that agency managers and pesticide industry officials are exerting political pressure to allow the continued use of organophosphates and carbamates, which are used in many industrial pesticides. The letter complains that EPA scientists are being pushed to skip steps in their regulatory testing of the chemicals, arguing that ”the integrity of the science upon which agency decisions are based has been compromised.”

This is rich. The methodology being employed by the EPA to ascertain human health risks for these and other chemical substances has long been discredited by academics, who, at best, suggest that it holds promise but has a long way to go, or, at worst, suggest that it is akin to astrology or palm reading. If the environmental Left were serious about allowing scientific concensus to dictate federal policy (a proposition they ardently embrace when the topic turns to global warming), the tests at issue would have been junked long ago.

But by all means, let’s not disturb the witchdoctors!