The presidential fuel follies came careening into Michigan this week, advertising two knights battling over America's energy future. Upon closer inspection, however, the fix appears to be in: Underneath the rhetorical weaponry, both knights are wearing the same green armor.
arrived first at Michigan State to give a typically grandiose speech outlining his plan for a "complete transformation of our economy." The Arrogant One has been trying to make up to Michigan since he presumed a year ago to tell her how to make cars (a come-on that went over like a lead balloon) and then blew off her January Democratic primary. Since then, Obama has paid visits laden with armfuls of bouquets and soothing pander.
The Democratic nominee-in-waiting arrived for his speech outlining our post-oil, post-SUV future in three gigantic, gas-guzzling SUVs. Then - taking a cue from Al Gore - Obama mounted the stage to declare a ten-year goal of ending our "addiction to oil" ... or at least the oil from "the entire Middle East and Venezuela" (he also declared an end to war, and to human aging).
He said he would "not pretend we can achieve (his goal) without cost, or without sacrifice." And then he pretended that we could, promising that his "new energy economy . . . will create new businesses, new industries, and millions of new jobs. Jobs that pay well. Jobs that can't be outsourced. Good, union jobs."
The centerpiece of this new Obamatopia was his prediction that "we will get one million, 150 mile-per-gallon plug-in (electric) hybrids on our roads within six years." Or approximately seven percent of new car sales. To put this "prediction" in perspective, consider that:
In 2001, Toyota and Honda introduced the first gas-electric hybrid models (the Prius and Insight). Seven years later, there are 16 hybrids on the market accounting for just 3 percent of all vehicle sales. "That's a real stretch," said David Cole, director of Michigan's Center for Automotive Research (CAR), upon learning of Obama's forecast.
A plug-in car is not yet in production. GM and Toyota are both targeting 2010 for their market debuts, but both companies are struggling with the lithium-ion technology at the heart of those battery-powered vehicles.
Even assuming Obama's omniscience, an electricity-based market growing that fast will put increasing strains on the U.S. power grid. Yet, in his MSU speech, Obama also called on the "American people to meet the goal of reducing our demand for electricity 15 percent by the end of the next decade." Considering that the federal Energy Information Agency predicts an 18 percent increase in electricity consumption during that time - even before you add on electric car demand - it's hard to see how Obama squares his circle.
That was just the beginning. Obama brought a Christmas bag of goodies to Michigan. To purchase all those new plug-in vehicles that don't yet exist, Obama promised a $7,000 federal tax credit - more than doubling the current federal subsidy. And he promised that they would be built "right here in the state of Michigan," which begs the question of whether the $7,000 credit would be limited to American vehicles (currently, the $3,000 credit goes mostly to Toyota Priuses made in Japan, the status symbol of American liberals).
He promised $4 billion in guaranteed loans for U.S. auto companies, which sounded impressive until CAR's Cole reminded a Detroit News reporter that General Motors just lost $15 billion in the second quarter alone.
Perhaps most intriguing was Obama's proposed wealth transfer from one fossil-fuel giant to another: Big Oil to Big Auto. Obama ripped into Exxon-Mobil for making "the largest profit in the history of the United States. This is the company that, last quarter, made $1,500 every second. That's more than $300,000 in the time it takes you to fill up a tank with gas that's costing you more than $4-a-gallon."
As punishment Obama proposes a windfall profit tax on Big Oil that will, in part, go to "helping the auto industry re-tool." Heaven forbid that General Motors ever turn a profit again.
Obama's comprehensive energy prescription was in part a response to the beating he's been taking from McCain on the issue, with the Arizona senator ridiculing his opponent for opposing offshore drilling and touting tire-pressure checks as a fuel-saving measure.
Arriving in Michigan one day after Obama,and his supporters were determined to stay on the offensive. Though McCain made no public appearances, his visit to Detroit Edison's Fermi nuclear plant south of Detroit was a dramatic statement that he sees nuclear as a realistic solution to America's energy needs. An editorial in my newspaper, the Detroit News, pointed to Michigan polls that "support the Arizona Republican's positions calling for the building of 45 new nuclear power plants and allowing oil drilling off of the nation's coasts."
Michigan Republican Party Chairman Saul Anuzis hammered Obama for his insistence on auto job-killing, mandated fuel-mileage standards (so-called CAFE laws). "That shows how out of touch he is with Michigan voters," thundered Anuzis. "He's pandering to San Francisco liberals and environmentalists who would just as soon we not have cars."
Yet, those words of support only highlight McCain's similarities to Obama. On CAFE, for example, McCain himself has been no friend to the auto industry. In 2002, he co-sponsored a bill with John Kerry hiking mileage mandates by 30 percent - a proposal that ultimately became law last year over loud Big 3 protests. On drilling, McCain quickly steps on his message of "oil independence" by opposing drilling in ANWR - just as his opponent does.
As for nuclear power, McCain's strategy has serious flaws - beginning with the fact that the candidate doesn't seem to know the difference between electricity and motor fuel. As the Detroit Free Press reported, McCain "believes that adding 45 nuclear reactors in the United States will help reduce dependence on foreign oil." But nuclear energy is used for powering homes, not cars. Fuel oil, even if it were replaced by more nukes, makes up just 1.6 percent of U.S. electricity generation.
Furthermore, nukes have become expensive to build, in part due to onerous regulation by McCain's Senate colleagues (as well as other factors). While constructing a new coal plant costs about $1,500 per kW, a new nuclear plant will cost anywhere from $4,000 to $6,000 per kW (though, once built, nuclear is the cheapest source of electricity generation). As a result, the only way to construct nuke plants is with massive federal subsidies or the re-regulation of utilities (Detroit Edison will only build another reactor if Michigan guarantees restoration of its monopoly status). Aren't those Democratic solutions to energy policy?
Upon arrival in Michigan, McCain's traveling companion, Sen. Lindsey Graham (R., S.C.) pointed out that France gets 80 percent of its energy from nukes. Said Graham: "My message here today is that we should take our lead from the French. I never thought I'd say that." There was more irony than Graham probably wanted: A Republican was praising a French government that had nationalized its utilities under one company and then mandated that it build nuclear power.
Ultimately, McCain's soft-spot for nuclear is because it's not coal: America's most abundant - and cheapest - energy resource. It is an aversion that McCain shares with Senator Obama, because both candidates are, at root, global-warming alarmists.
And global warming alarmism is not good for the state that they are wooing.
Unmentioned in the media coverage of sparring energy plans is that both candidates are ardent supporters of federal cap-and-trade laws. Writing for the Mackinac Center, a Michigan think tank, author Deneen Borelli reports that "the economic cost of a cap-and-trade bill would hit Michigan especially hard. The increase in energy costs would compound the loss of manufacturing jobs in the state and reduce the disposable income of Michigan residents."
An American Council for Capital Formation study of this year's Lieberman-Warner cap and trade bill found that "Michigan would lose 37,400 to 56,260 jobs in 2020 and 91,490 to 121,786 jobs in 2030" and electricity prices would increase by 126 percent to 177 percent.
Obama and McCain are fighting for the affection of industrial states like Michigan, each touting their own government plan to put America on the proper green-energy course. But the closer one looks at their handsome gifts, the more they look like Trojan horses hiding armies of government regulation.
By Henry Payne
Reprinted with permission from National Review Online