Russia/Georgia Conflict: Another Oil War

The conflict that erupted last Friday between Russia and Georgia has shut down two of that country's three major oil pipelines, according to news reports. On Sunday, Russian jets dropped more than 50 bombs on an area where the world’s second longest oil pipeline passes just to the south of the Georgian capital. Local police say they have no doubt that oil infrastructure was the target of the attack, citing the large craters straddling the pipeline. The BTC pipeline across Georgia and Turkey, completed in 2006, was designed to bypass Russia and reduce that country’s control of oil supplies coming out of the Caspian Sea and going to Europe. The $4 billion dollar project was built by Bechtel and a British partner, and is operated by British Petroleum.

Wisconsin Task Force Recommends Feed-In Tariffs

A report by the Wisconsin Governor’s Task Force on Global Warming has recommended implementation of Feed-in Tariffs – the same policy mechanism that has successfully spurred rapid growth of renewable energy in Spain, Germany, and elsewhere. Feed-In Tariffs have become commonplace in Europe, but the report represents the first time an advisory committee to a U.S. governor has formally recommended the policy. Under the recommendation, generators of renewable energy would be paid a premium rate for the energy they produce, in recognition of the system-wide benefits created by diversification of the electric supply. The Wisconsin task force has recommended that the tariff system be set up such that it ensures generators receive financial returns comparable to the returns allowed utilities, and that those returns be guaranteed over a period that ensures full recovery of costs.

New Mexico Revenue Windfall

Lawmakers in New Mexico are meeting this week to decide how to spend the projected windfall coming into the state due to higher oil prices. New Mexico is the sixth largest oil-producing state in the U.S., with a monthly production of around 5 million barrels. Taxes and royalties on oil and gas extraction in the State were expected to be around $400 million dollars higher than last year, but the recent decline in oil prices now suggest that $225 million dollars in new money will be available. On the table is a one-time tax rebate of $163 million dollars to help New Mexico families as they struggle with higher energy costs.

It sounds good until you realize that over the past year, the rise in gasoline prices alone has taken more than one billion dollars out of New Mexico’s consumer economy. You can't actually move your economy forward by giving public resources to companies that sell them back to you at enormous profit, even if you tax them and occasionally give taxpayers a rebate.

By Protecting Utilities, We Make Communities Vulnerable

“Revenue Decoupling” programs are the latest in a long series of egregious schemes designed to protect the electric-utility industry. The real name for such programs should be “Revenue Guarantees”. As residents of a community begin to suffer from higher electricity costs, the most powerful tool they have is to reduce energy use. But  with a revenue decoupling law, the savings enjoyed by one resident are simply billed to the other residents.

The full commentary is posted here.