The irrational and destructive power sector policies of the Trump administration have put the U.S. on course to higher prices and lower supply. There are a number of ways to arrive at this conclusion, so let’s go through them.
• Wind and solar are well established now as the marginal suppliers of new electricity generation in the U.S. power market. Wind, solar, and batteries are deployed far more quickly—and far more cheaply— than new fossil generation. Constraining and kneecapping your marginal supplier in power therefore is no different than when a marginal supplier of oil runs into output problems: prices are certain to go higher. While it’s true that natural gas capacity continues to expand, and that combined wind and solar output don’t always cover 100% of growth, they have consistently come pretty close to doing so for the past five to six years. As you can see in the chart below, wind and solar (orange bars) make for a beautiful portrait of how marginal supply functions, as they effectively suppress growth of fossil-fueled power (gray bars). This is the same trend underway, at differing stages of development, around the world.
• Using command economy tactics that are truly Sino-Soviet, the administration is literally going to bully states into keeping old coal and natural gas plants open that otherwise would be slated for retirement. Why are they slated for retirement? Because at some point in the lifespan of these plants, no matter how cheap coal or natural gas inputs become, they are uneconomic to run. Accordingly, ratepayers will be forced to pay the higher costs to keep these open through higher fees in their utility bills. Yes, it really is that crazy. To accomplish this authoritarian move, the administration is relying on one of its new, favorite tactics: declaring a (fake) emergency.
• The current secretary of energy, Chris Wright, is either clueless or a dutiful sycophant willing to undertake every mission he’s assigned, whether he believes in the administration’s plans or not. It doesn’t really matter. In a recent op-ed in The Economist, Wright flogged some deep untruths about the current position of energy supply in the U.S. that depend on a deeply ignorant audience. Let’s take a look at a few:
This administration is focused on energy addition, not subtraction—a complete reversal from the previous four years. By the time President Trump took office for his second term, American energy had become more uncertain, more expensive and less reliable.
As informed readers know, American energy has been in terrific shape for over 15 years now, with output of wind, solar, natural gas, crude oil, and petroleum products hitting successive, relentless, all-time highs! The U.S. produces such a large volume of fossil fuels that we’ve been exporting the surpluses for years: coal to the non-OECD, natural gas in LNG form to Europe and Asia, and petroleum products to the world. Indeed, the country’s energy balance sheet started to repair itself during the last term of the Obama administration, kept going right through both the Trump and Biden administrations, and is now so robust that the U.S. is exporting energy on a net basis equal to 10% of the energy it consumes.
Wright’s op-ed continues…..
Keep reading with a 7-day free trial
Subscribe to Cold Eye Earth to keep reading this post and get 7 days of free access to the full post archives.