Wind, solar, and perpetuating convenient lies

So, one of the campaign issues of interest to Iowa is Mitt Romney's differing approach to wind energy subsidies, compared with President Obama.

No surprise, the businessman in Romney doesn't understand why we throw good taxpayer dollars after bad into an industry that doesn't seem to support itself.

Here's the uncomfortable truth:  Wind and solar are simply not cost-effective.  You won't see a lot of private companies and individuals rushing to be the first in line to throw money at something that shows no indications of becoming profitable any time soon.

But government doesn't have that problem, because they're always spending someone else's money, and right away the incentive to spend that money wisely is taken away.

Look at solar.  I recall one caller to a talk-radio program years ago that sang his praises of solar.  He'd put the panels on his house, and they'd paid for themselves in energy cost savings after about 10 years.  But, he cautioned, he didn't pay full cost on the panels.  He'd gotten a sizeable tax credit.  He told the talk-radio host he'd run the numbers on if he'd paid full cost:  It would've taken 20 years for him to recoup the money on his investment.  Guess what the life expectancy of the panels are?

If you said "20 years", you get a gold star.

Wind energy is no different.  For the amount of land each windmill takes up, you'd think they produce a fair amount of power.  Not so.  I've heard from sources of questionable veracity that wind energy accounts for 20% of the energy market.  In the windier, wide-open spaces outside of Des Moines, I could see that the windmills, collectively, produce that power in windy conditions.

But what about the cost?  Does wind energy provide a return on investment?

Not exactly.  About 50% of the total cost of energy production through wind is subsidized by taxpayer dollars (citation needed).

 On 17 August, the Des Moines Register carried this letter to the editor:

Yes, wind energy supports employment in Iowa. But there are hidden costs.
We all know about tax credits subsidizing wind energy. But there are costs included in all of our power bills. Wind energy is an unreliable source of power. But the utilities are required to purchase the electricity whenever it is available, whether they need it or not. Of course the predetermined price of wind-energy power exceeds the cost of energy generated by more conventional means.

We have been told by green energy groups that profitability is just around the corner. I am tired of waiting. When is the government going to cease picking winners and losers in the marketplace? If the wind-energy tax credits are abolished I suspect that wind power will be “gone with the wind.”

— Richard L. Powell, Grimes

Amen!  Every time,  I see or hear the ad criticizing Mitt Romney for his refusal to support subsidies for wind energy, I cringe.  The ad cites how the Republican governor and both the Democrat and Republican senators from Iowa support this spending of taxpayer dollars.

Uh, yeah, that's not a surprise.  But tell me how it makes it right, just because Iowa politicians support this particular earmark because it keeps their constituents happy.  I remember when Sen. Paul Wellstone (D-MN) supported continued funding of the Crusader artillery vehicle when Secretary of Defense Donald Rumsfeld put the program on the chopping block, despite Wellstone being a dove his whole political career.  Wellstone, despite the belief that he was some sort of populist, was still a politician.  He acknowledged that a defense contractor in his home state employed a great many of his constituents.  Constituents whose jobs were threatened.

I've never understood this faith some people place in politicians.  When voting, a healthy dose of cynicism and a questioning of the politician's motivations is warranted.  I recall when then-candidate Sen. Barack Obama (D-IL) was going to let his closest supporters know of his pick for running mate by text message at 3 a.m.  But the system failed, and many already knew it was to be Sen. Joe Biden (D-DE) by 1 a.m.  So the text messages weren't sent.  A Obama-supporting friend of mine complained about the text message business the next day.  I made the following cynical comment:

"Imagine that.  A politician saying one thing and doing another."

Her reaction was priceless:  It was like I'd clocked her on the side of the head with a 2x4.

And yet, my cynicism still doesn't prepare me for how uninformed some of the commenters to Mr. Powell's letter to the editor were.  Of course, somebody had to pull the oil-and-natural gas card, falsely stating that we should do away with oil and natural gas subsidies.

Agreed.  Except....(deep breath)...WE...DON'T...SUBSIDIZE...OIL...OR...NATURAL...GAS.

Where does this misleading talking point come from?  A very good blog explains it well. From Virginia Right!:

A subsidy is a government payment, usually for doing nothing. Like welfare or payments not to grow crops.

Oil companies simply get tax deductions like every other business. Not subsidies.

What these tax deductions do is encourage things like equipment, machinery and vehicles to be replaced faster than it might otherwise be done. When these items are fully depreciated, businesses are incentivised to to replace them rather than hold onto them for a few more years through tax deductions.

So what Obama wants to do is target the oil industry for higher taxes and fewer deductions, not eliminate of subsidies, because none exist.
And we all know the result. Lower profits due to taxes will be replaced at the pumps in higher prices.

And worse, oil companies will slow down purchases of machinery, tools, vehicles and other items. Which will make a pretty large impact on the rest of the economy – in a negative way.
The fact is, the more money oil companies make, the more money they pay in taxes.

 I recommend reading the whole article.  The author does a good job of disarming a favorite lefty talking point.

Better still, just ask the lefties to identify just one of the subsidies the oil and natural gas companies receive, sit back, and watch their heads spin. 

It's cheap entertainment, but it pays to be frugal in this economy.