Almost 40 years ago, the last “green" president, Jimmy Carter, went on national TV and glumly told the nation from the Oval Office: "We could use up all of the proven reserves of oil in the entire world by the end of the next decade."
This prediction wasn't just foolish. It turned out to be tremendously expensive to taxpayers, with billions of dollars poured down a rat hole of green energy programs that never worked—including the "Synthetic Fuels Corporation," which was going to provide an economical substitute for scarce oil.
Then Ronald Reagan was elected president and in his first days in office he lifted all remaining Nixon-Ford-Carter-era oil and gas price controls and later repealed windfall profits taxes on the oil industry. This deregulation of the oil and gas markets led almost overnight to a massive increase in domestic oil and gas production and over time a tumbling in the price of oil and gas for two decades. As for the government-sponsored alternative energy programs that had been all the rage during the Carter years: They went bust because instead of oil prices of $50 to $100 a barrel, the price fell below $20. Whoops. The Synthetic Fuels Corporation was long regarded as one of the biggest government "investment" boondoggles of all time.
Well, until 2009. That was the year Barack Obama entered office with a new generation of experts again predicting "peak oil." They lectured us that the price of fuel could soar to $200 or $300 a barrel as fast-growing China and India and other developing countries added more demand for energy. Meanwhile, Obama (on the heels of George W. Bush, whose experts also bought into the oil scarcity nonsense) would ignore the lessons of history and spend well over $100 billion on green energy—battery cars, wind and solar energy, cellulosic ethanol—to replace "dirty energy," as the left calls it, namely oil, gas, and coal.
The excuse for this taxpayer subsidy blitz was that oil and gas supplies were rapidly running out—just as Carter had warned decades earlier. Renowned energy experts told us that oil was "a finite resource" and insisted commodity prices would continue to rise. But no one had the energy story wronger than Barack Obama. From the day he entered office he warned Americans that oil is "a fuel that is rapidly disappearing," and "we're running out of places to drill," and that "we can't bet our long-term prosperity, our long-term security, on a resource that will eventually run out." He even chided his critics that they would soon call for drilling "next to the Washington Monument."
Those lines sound laughable today as global supplies keep deluging the market, with cheap oil now hovering between $30 and $40 a barrel. The shale oil and gas revolution doubled recoverable energy supplies in the blink of an eye. As the Institute for Energy Research recently put it: "Mr. President, America isn't running out of oil, we are running into it." The Financial Times put it best in early 2016: "The world is drowning in oil."
For the vast majority of people, cheap and abundant energy is a gift that will raise living standards worldwide and help the poorest most. The irony, of course, is that the left keeps obsessing about income inequality, but cheap energy is one of the greatest ways in world history to pull up the poor and equalize incomes. It makes everything more affordable.
So why is the left apoplectic? Because the fossil-fuels boom means that green energy is dead again.
To fully appreciate how nonviable green energy is in this new age of cheap oil, consider the economics of electric cars like those made by Tesla. In an article published in the most recent Journal of Economic Perspectives, the authors report that after extensive testing, current battery costs for a Tesla and other electric vehicles are roughly $325 per kilowatt-hour (kWh). How does that cost fare against standard gasoline in the tank? "At a battery cost of $325 per kWh," the authors wrote, "the price of oil would need to exceed $350 per barrel before the electric vehicle was cheaper to operate."
In other words, the price of gas would have to be eight times higher than today for battery-powered cars to make financial sense.
Meanwhile, solar companies are facing the same bleak financial and technological predicament. The infamous Solyndra bankruptcy is proving to be the norm, not the exception, as fossil fuel prices fall. The Wall Street Journal reported in March that "a federally backed, $2.2 billion solar project in the California desert isn't producing the electricity it is contractually required to deliver to PG&E Corp." The Journal story adds that "the solar plant may be forced to shut down" without more government intervention.
The obvious question is this: Could one think of a more foolish national energy strategy than pumping hundreds of billions more tax dollars into this sinkhole? This would be like buying stock in rotary telephones on the eve of the iPhone. Cheap and abundant shale oil and gas are here to stay, but all Hillary Clinton, Bernie Sanders, Barack Obama, the Sierra Club, and the United Nations want to talk about is green energy.
Because the economics are so dismal for renewables, the green-energy left is scrambling for Washington lifelines. They got a big assist from Congress late last year when the omnibus spending bill provided a 30 percent tax credit for wind and solar energy—which basically says taxpayers foot almost one-third of the bill. But oil prices are still so low that the Obama administration has called for a $10 a barrel tax—which would regressively raise gas prices by about 20 to 25 cents a gallon—and would use the revenue for still more subsidies to solar and wind power, which account for about 3 percent of our energy production.
It's important to understand that the solar and wind industries wouldn't even exist today—by their own admission—were it not for the endless corporate welfare funneled to Big Green through refundable tax credits, R&D spending, renewable energy mandates, loan guarantees, consumer incentives, and layer upon layer of other payments. Solar Energy Industries Association executive director Rhone Resch admitted to Congress: "The reality is that we will lose 100,000 jobs if we lose the [investment tax credit]—and these are conservative numbers. Ninety percent of solar companies will go out of business."
Yet even with herculean government support systems to prop up pre-industrial-age energy sources, the money is never enough and the industry is still headed over a financial cliff.
Instead of celebrating the 21st-century gift of abundant energy, Washington is doing all it can to make energy more expensive for taxpayers and ratepayers. Hillary Clinton and Bernie Sanders are all in on green energy.
This isn't just bad economics, it's even questionable environmental policy. Obama's own Department of Energy reported last month that U.S. carbon emissions fell 2 percent in 2015 mainly because of increased use of clean-burning shale gas. Yet the greens are trying to shut down domestic shale gas production.
No matter what the facts show, the green delusion lives on. "In fields from Iowa to Texas," President Obama fantasized in his State of the Union address in January, "wind power is now cheaper than dirtier, conventional power. On rooftops from Arizona to New York, solar is saving Americans tens of millions of dollars a year on their energy bills and employs more Americans than coal—in jobs that pay better than average."
In reality, green energy costs Americans twice, as taxpayers and as ratepayers. The math doesn't lie: Coal and natural gas prices (which account for about 66 percent of our electricity production) have both fallen by more than half over the last several years. But retail electricity prices have risen by about 3 percent per year over the same period. Why? Renewable energy requirements force utilities to buy expensive wind and solar power, which drives up utility bills.
The nation is being snookered into another bad energy bet—and this one too will wind up wasting hundreds of billions of dollars. Time to pull the plug.
Stephen Moore is a senior fellow at the Heritage Foundation. His book Fueling Freedom: The Mad War Against Energy will be published next month by Regnery.