U.S. Senator Chris Murphy on Energy: Who needs it?

U.S Senator Chris Murphy has made a contribution “to the German Marshall Fund think-tank's Brussels Forum event in the Belgian capital,”according to Public Service Europe.

The discovery and utilization of shale natural gas in the United States, according to the newly elected progressive senator, has given lawmakers a" lazy way out" of making commitments to green technology. "It provides a very convenient excuse for half of the US Congress to sit on the sidelines when it talks about real investment in green energy. I think that's a tragedy."

An “absolute political logjam” on green energy has been produced, according to Mr. Murphy, by the "immense power of global warming deniers and this created a political barrier.

"You already had an enormous political barrier to a major investment in green technology, which is this debate that only happens in the US about the science of global warming. And then on top of it, you've got the convenience of a new enormous stability with respect to shale gas production.

"Many of us believe that the only way that you really incentivize a true green energy revolution in the US is to do what many countries in Europe have done, which is create a real domestic marketplace for it. And you do that either through capping the amount of carbon and allowing people to trade or by putting a new price on carbon with a tax. That can't happen in our political context today."

Let’s take it bit by bit.

The reason energy costs are high in the United States is that there is a product deficit, largely owing to efforts made by legislators such as Mr. Murphy to artificially hike the cost of energy by depriving the market of present resources such as energy from shale extraction. The relatively new technology of fracking is not so much a “lazy way out of making commitments to green technology” as it is an effort to supply a necessary product that is, Mr. Murphy may have noticed, very much in demand. If you increase the product, you reduce the price. Mr. Murphy favors high energy costs because the high cost of energy is a political spook-on-a-stick that can be used to force people to demand so called green energy.

The political logjam in the U.S. Congress and elsewhere has not been caused by an anti-green war on an undeveloped technology. The struggle for low product pricing has been around much longer than green technology. In a competitive free market, product pricing is determined by what Adam Smithy used to call “the invisible hand,” the sum of purchases made by citizens who are not bullied into choosing products by government economic overseers.

The cost of energy in Mr. Murphy’s own state is a drain on business. Among the 10 most expensive states in combined energy costs,Connecticut ranks second, just behind Hawaii, according to some reports the cultural and political nursery bed of President Barack Obama.

Should a bill slowly making its way through the General Assembly pass into law, Connecticut may leap ahead of Hawaii in the national race to cripple the energy sector. As an incentive to encourage forms of energy acceptable to progressives and environmentalists, the state legislature is proposing a bill that would tax oil 1.5 cents per gallon in the first year following passage, increasing by one percent a year until the tax reaches 3.5 cents per gallon in 2015. The tax haul would then be placed in an Energy Efficiency Fund that homeowners may draw upon to underwrite the cost of weatherization, clean burning furnaces and solar panels. Of course, every dedicated fund in the state – including pensions – are either under financed during hard times or raided by legislators before election to reduce deficits arising from their improvident spending. Mr. Obama has recently announced the formation of a similar fund, an Energy SecurityTrust (EST) that would fund clean energy research and development.

Connecticut is a small state that could be energy independent were it to rely on a variety of forms of energy production, including nuclear. But alas, the progressives and the greens in Connecticut are nuclear averse. When Dominion chose Virginia rather than Connecticut as a site for a new nuclear plant, no tears were shed in the governor’s mansion. So long as the price of energy in Mr. Murphy’s state remains high, other low energy cost states will continue to poach Connecticut businesses, established entrepreneurs and recent graduates of the state’s high cost educational establishments.

Shale gas is a natural gas found trapped within shale formations. The governor of Mr. Murphy’s state, not an anti-green, has announced his love affair with this form of energy. So ardent are Governor Dannel Malloy affections that he recently proposed to provide tax credits to home owners in Mr. Murphy’s state who are prudent enough to switch to a lower cost, less polluting form of energy. The tax credits presumably are an effort on the part of Mr. Malloy to tickle the fancy of energy consumers in Connecticut, many of whom will be marching to the polls in a couple of years to vote either for or against Mr. Murphy’s continuance in office, always assuming that voters in Mr. Murphy’s state have not fled to other states that rate much lower than Connecticut on a list of high energy cost states.

It is always possible that Mr. Murphy, a new arrival in the beltway, is very busy mastering protocol in the U.S. Senate. He may have missed the messaging from Mr. Malloy. Or possibly he has not yet had an opportunity to put out feelers to Mr. Obama, whose administration believes that increased shale gas development WILL HELP REDUCE GREENHOUSE GAS EMISSIONS, an eventuality that may not grievously disappoint the folks who received Mr. Murphy’s pro-green missive at the German Marshall Fund think-tank in Belgium.

Reducing Energy Prices The Blumenthal Way

What do you get when you cross an attorney general with a U.S. Senator?

Answer: Dick Blumenthal.

People may not appreciate the joke until they’ve read Sen. Dick Blumenthal’s prescription for lower energy prices.

Appearing on Face the Nation” with Bob Schieffer, Mr. Blumenthal, who as attorney general of Connecticut for 20 years was very quick to pull the litigation trigger on companies large and small, called for “an investigation… involving subpoenas and compulsory process” to hold to the fire the feet of those who “may be driving prices up.”

A grand jury should be assembled, Mr. Blumenthal said, to “uncover the potential wrongdoing… The Justice Department should take the lead, seize this moment, and send a message — a very strong deterrent message — that this country will not tolerate the kind of illegal speculation and trading and hedge fund activity that may be driving prices up.”

The usual Blumenthal press release, when he was attorney general in Connecticut, was full of bluster and weasel words. The statements above are no exception: Stock speculators MAY be driving prices up; the Justice Department should SEND A MESSAGE rather than prosecute wrongdoing; illegal trading and hedge funds MAY be driving prices up.

Mr. Blumenthal’s solutions to high energy prices did not change when he moved from Hartford to Washington. An Environmental Protection Agency (EPA) movement enforcer, Mr. Blumenthal is convinced that energy prices may be sufficiently reduced on the demand side through conservation measures. But the prospect of a descent into Hell – the reduction of energy prices through an increase in energy products on the supply side – is to be assiduously avoided, because some energy products may be injurious to the environment. Supply boosters such as oil mining, Blumenthal has argued, is a long term solution that “will take years to achieve on a scope and scale that will make a real difference.”

There are two ways to reduce energy prices: Prices are lowered when demand decreases, and they also are lowered when the supply of energy increases. The theology of the EPA movement considers the second solution sinful --depending upon the kind of energy that is made more abundantly available.

Politicians in Mr. Blumenthal’s party who announce in favor of nuclear production – a clean form of energy that could make Connecticut energy self sufficient – find themselves flirting with the near occasion of sin. A bill promoted by the Democratic co-chairs of the General Assembly’s Energy and Technology Committee that would impose a crippling $330 million tax on nuclear energy is now making its way through the state’s legislature. As the bill was being pushed through the legislative sausage maker, Mr. Blumenthal was careful not to comment on SB1176, even though Dominion, the owner of Connecticut’s sole nuclear power plant, which provides HALF the energy used in Mr. Blumenthal’s state, had announced it would shut down operations if the bill were written into law.

With a Hartford gas station serving as a backdrop, Mr. Blumenthal last month told reporters in Connecticut that “the U.S. Commodity Futures Trading Commission should go after the speculators and the Justice Department should go after the foreign oil cartels that are ‘holding us hostage,’” according to a report in a Hartford paper.

Blumenthal supports legislation giving the Justice Department the authority to bring legal action against foreign entities. Accustom to brooking no challenges as attorney general in command of 200 lawyers, Mr. Blumenthal evidentially anticipates no retaliation from foreign entities, some of which are sovereign countries. The former attorney general is seemingly unaware that the entities’ equivalent of a Justice Department also may sue the U.S. government, producing a litigation war that doubtless would enrich lawyers even as it would bring international business to a screeching halt.

Mr. Blumenthal’s erstwhile Republican opponent in the late senatorial election, former wrestling impresario and business owner Linda McMahon, could have told Mr. Blumenthal that a good part of the price increase in energy, gas included, is the result of inflation. The price of gas and other products have increased in part because the value of the dollar has decreased. It takes more dollars to buy a gallon of gas because inflation has reduced the purchasing power of U.S. money. In addition, a large part of the dollar pumped into car tanks are taxes imposed by environmentally friendly state politicians who approve of high gas taxes as a means of SENDING A MESSAGE to car owners that they should switch from gas powered vehicles to other modes of transportation. High gas prices  in Connecticut fund Big Budgets and encourage mass transport -- supposedly.

Though inflation leads to higher prices -- the dollar last year lost 9 cents against the battered Euro -- Mr. Blumenthal has yet to demand that President Barrack Obama’s justice Department should convene a grand jury for the purpose of SENDING A MESSAGE to the folk who mind the money in the Federal Reserve that they should cease and desist pumping dollars into the money supply to pay off the unconscionable debt incurred for the last two years by Mr. Blumenthal’s largely veto proof Democratic Party in the U.S. congress.

How To Destroy A State In One Easy Lesson

Energy, as we all know, is the stuff that makes thing go: light bulbs, even the squiggly, earth friendly, energy saving kind that, some say, may cause cancer; cars and buses, preferred by “smart growth” utopianists who drive their non-motorized, non-gas guzzling bikes to work; and computerized presses that produce newspapers of a kind for which Senator John Fonfara of the 1st District and Vickie Nardello of the 89th Assembly District write op-ed pieces.

Mr. Fonfara and Ms. Nardello are co-chairs of the General Assembly’s Energy and Technology Committee, and together they are promoting a bill that at least one non-utopian academic, Richard D. Pomp, the Alva P. Loiselle Professor of Law at the University of Connecticut Law School, considers highly mischievous.

Political watchers may have noticed that there are every so often within the Democratic Party sudden flare ups, quickly suppressed, of economic good sense. Mr. Fonfara and Ms. Nardello have escaped this human frailty. The two are perfectly well aware that the taxing power of the state, always a withering hand, may be used either to destroy or build up industries. A drop in taxes, usually in Connecticut through some form of tax credit – or, equally effective, through the selective use of the transfer mechanism available to every utopian legislator who wants to make the world over – does wonders to suppress unwanted products such as nuclear energy and promote politically desirable products such as wind turbines, provided the flickering blades of the turbines do not disturb the tender eyes of voters in Ms. Nardello’s district.

In a free economy – one not directed by proto-fascists such as operate efficiently in China and utopias elsewhere – the consumers of products direct the flow of goods and services through their purchases. Products considered by consumers to be desirable are purchased, and the industries producing them prosper and make profits that, like the farm in the Robert Frost poem, are “plowed under” to create jobs and an improved product. Under a free market system, whoever makes the most efficient mouse trap at the most affordable price succeeds and enjoys rich dividends. In command economies, the only kind considered tolerable by utopianists, the supply and demand structure is replaced by politicians such as Mr. Fonfara and Ms. Nardello, the invisible hand of a formerly free economy then made visible as a mailed fist. Even in free societies, the jump from a free to a quasi-fascist command economy is but a progressive baby step forward.

Mr. Fonfara and Ms. Nardello are well aware that the joint bill they are promoting -- Senate Bill 1176 (SB1176), An Act Concerning Electric Rate Relief -- slaps a massive punitive tax on Connecticut’s nuclear energy provider. The Bill unabashedly seeks to readjust radically the economic DNA of the state. Dominion Resources, the owners of Millstone, which provides HALF the state’s energy needs, is taxed so strenuously under SB1176 that the owner has threatened to shut down operations.

An idle threat, Fonfara-Nardello charge in a recent op-ed column that should be scrutinized with a jeweler’s eye.

F&N point out in their joint op-ed that the product produced by Millstone is LESS EXPENSIVE than that provided its competitors: “The Millstone nuclear plant, owned by Virginia-based Dominion Resources, generates some of the lowest-cost electricity in New England. For this, the owners of Millstone should be rewarded” – presumably by means of a tax that can only make Millstone’s product more costly for the company to produce.

Although less expensive, the product has never-the-less been economically burdensome to those who use it. Somehow the profits earned by a company that produces a less costly product “has caused all of our state's businesses to be less competitive and left many households on limited incomes to make choices between their electric bill, food or heat.”

But never mind the inherent absurdity: A lower cost product makes companies purchasing it less competitive than they would be were they imprudently to purchase higher cost energy from other companies. Look over here while F&N pull a rabbit out of their bill: The nuclear product is so hedged about by federal regulations that Dominion, F&N imagine, cannot pass along to consumers the increased costs generated by higher taxes. And indeed, it is precisely because such increased costs cannot be passed along to Connecticut consumers that F&N have chosen to put a crippling tax on the company. But just as there is no such thing as a free lunch, so there is no such thing as a tax without consequences.

Here are the real world consequences of F&N’s $330 million tax increase on Dominion:

F&N’s tax will kill nuclear energy production in Connecticut, because no other nuclear energy producer or distributor would enter the market in a state that imposes predatory taxation on nuclear energy. And the absence of competition drives up prices. In fact, that is precisely the thrust of SB1176: It seeks to eliminate a product that lowers the cost of business of everyone in the state using it because…

Because the only way to lower the cost of higher priced energy from undeveloped sources that please the utopianists is to take from Peter the profits he has earned by producing a low cost efficient product and give it to Paul, whose product is a) undeveloped, b) commercially untested, c) very costly to produce and d) favored by utopianists such as Mr. Fonfara and Ms. Nardello, whose dearest desire is to acquire more status and power than is good for either them or us.

Bill SB1176 is constructed in such a way as to permit the energy taxes it imposes primarily on nuclear resources to leech into the general fund. In this way, spine free politicians need not tax citizens to promote their fantasies, and the bill, if passed, will move Connecticut towards an operative command economy under the direction of a political elite that has shown itself to be inefficient and dismally stupid. To control the means of production, the most important of which is energy, is the utopian dream of proto fascists everywhere.

Running On Empty

Energy – particularly those forms of energy that cause green energy proponents to wrinkle their noses in dismay – is quickly becoming in Connecticut the new tobacco, a reviled product susceptible to punitive taxation. The object of punitive taxation is to drive up the price of the undesirable product so as to make it less competitive with other more desirable products, even if the more desirable product is in its larval stage.

The Democratic dominated General Assembly may pass just such a tax on nuclear energy for three reasons: 1) Green utopians and their facilitators in the General Assembly don’t like nuclear energy; 2) they much prefer energy produced by wind turbines, except when the turbines grate on the aesthetic sensibilities of their constituents; 3) they believe all things powered by oil, gas and coal -- cars especially -- are environmentally destructive; and 4) true utopians, they hope to construct out of whole cloth a better society by using the tax code to drive from a quasi private enterprise energy universe products they do not favor, while using the tax code and burdensome regulations to encourage the development of products they do favor.

The two co-chairmen of the General Assembly’s Energy and Technology Committee, Rep. Vickie Nardello of Prospect and Sen. John Fonfara of Hartford, are dangling before energy starved Connecticut a bill that would impose taxes on energy generators that use oil and coal, but their bill imposes especially onerous taxes on nuclear power. Energy producers that rely on natural gas and wind power would be spared the tax drubbing.

The Nardelo/Fonfara bill would be especially deadly for the Millstone plant near New London, the sole operational nuclear power plant in Connecticut. Having passed the Energy and Technology Committee, the bill is expected to raise $340 million in taxes, $330 million of which would come from the nuclear plant owned since 2001 by Dominion. The plant's two reactors, Dominion officials say, are capable of meeting 50 percent of Connecticut’s energy needs.

As might have been expected, Dominion is strongly resisting what it considers a crippling imposition.

Businesses do not pay taxes. Properly understood, they are tax collectors. All business taxes are passed along to product or service purchasers in the form of price increases. Highly regulated energy providers in Connecticut are private/public entities, since cost increases are imposed only with the approval of the Department of Public Utility Control (DPUC).

When a company cannot recover non-productive costs through a pricing structure and when the cost increase is unavoidable, which is inevitably the case both with tax increases and state regulations, the one remaining option available to a company that wishes to maintain a competitive advantage with respect to other companies producing a similar product is removal to a more friendly tax and regulatory environment. And this is precisely what Dominion, facing a bill that looks suspiciously like a bill of attainder against nuclear power generators, has proposed to do.

"If this bill passes, the Millstone power station will not be economically viable to operate and it will be shut down," Dominion spokesman Ken Holt said.

Dominion’s response should surprise neither Ms. Nardello nor Mr. Fonfara – because their bill is designed to make nuclear power generation in the state impossible by imposing strangling regulations and high taxes on those power generators they deplore.

Mr. Holt’s response is an indication that the ambitions of Ms. Nardello and Mr. Fonfara have been achieved. The co-chairs of the General Assembly’s Energy and Technology Committee should be popping champagne corks and congratulating each other at having nudged out of Connecticut a company that, with some encouragement from non-utopian realists in the legislature, could provide the state with half its energy needs.

“Ah!” opponents of nuclear energy say -- “Japan!”

“But,” proponents of energy self sufficiency for Connecticut say, “Nuclear plants will not be built on fault lines in the state, and the last recorded tsunami that hit the New London area was an April Fool’s joke. Ms. Nardello’s well publicized opposition to wind power turbines in her own political bailiwick – she opposes them -- is not an April Fool’s joke.

The inequitable and anti-competitive Nardello/Fonfara bill, designed to haul tax money into a depleted treasury and at the same time stake out a future in which nuclear energy will play little or no part, is itself not in compliance with the mission statement of Connecticut’s Department of Public Utility Control, an agency that “keeps watch over competitive utility services to promote equity among the competitors while customers reap the price and quality benefits of competition and are protected from unfair business practices.”

Indeed, the Nardello/Fonfara bill shamefacedly promotes inequity by giving preferred energy suppliers an unfair business advantage through an inequitable tax code at precisely the point when Connecticut businesses, always in competition with out of state businesses, are reaping the disadvantages of the high cost of energy the state legislature has attempted to address through a partially successful deregulation effort.

The economic benefits of deregulation cannot be achieved by a governmental command apparatus that chooses economic winners and losers by means of a business unfriendly regulatory and tax structure which, in addition to all else, makes planning for the future on the part of energy generators a win or lose guessing game.