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Fair and Equal Energy, GOP Proposes Ending All Tax Breaks

Senator Mike Lee (R-UT) recently proposed new legislation that would end all $16 billion dollars in subsidies on energy, restoring a free market energy sector.

Ordinarily, when legislation such as this is mentioned it is directed at the renewable sector only, allowing oil companies to retain the billions they receive. However, this bill will end all oil and gas subsidies as well, allowing competition to return to the sector. Now the government will be unable to pick winners and losers in the market.

60 years of energy

Source: “60 Years Of Energy Incentives,” Management Information Services for the Nuclear Energy Institute

Credit: Alyson Hurt/NPR

Since 1950, the U.S. government has provided and astonishing $837 billion for energy development, over half of that being oil and natural gas. However, his bill also reduces taxes for these companies which could prove balanced out in the long run.

This is not the first time something like this has been tried. In 2012, Congressman Mike Pompeo of Kansas attempted the same plan and ultimately was referred to the House Subcommittee on Energy and Power. Senator Mike Lee has quite a few more tricks up his sleeve as he currently has 34 sponsors on the bill. He does have opposition however in that many senate democrats and republicans want to extend biofuel subsidies for at least one more year. In order to have a truly effective bill, all government assistance has to be cut.

While renewables were once viewed as the future of U.S. energy, the recent oil and gas boom has taken over the economy. In 5 years alone, oil production on state and private lands has soared an astonishing 61 percent, and natural gas production has risen 33 percent.

Vying for Tesla

In 1978 every person knew that Detroit was the motor capitol of the world, and for good reason as they employed more than 250,000 people. Automobiles began in the North and with it came Ford, General Motors, and Dodge building their world headquarters.

2014 looks vastly different as factories are now automated, most of those workers are now unemployed, and the city shrunk from 1.8 million to a mere 700,000. As the world began to globalize there became a push for financially viable alternatives and now even environmental alternatives. Machine labor replaced human labor, and forced unions out as the remaining worker salaries were far too high compared to the alternatives to the union absent South. The South began an automobile revolution taking in Toyota, Mercedes, and Volkswagen to name a few. However, a new company has risen, and northern states are nowhere on their list of possible destinations.

The first Tesla was sold in 2008 and has since made steady advances to become a household name in the United States. The company has had numerous political problems with their approach to selling vehicles without the need for a dealership license. Tesla has a unique, and somewhat illegal, sales model that sells cars directly to consumers without the need for dealerships. As can be expected, current auto manufacturers and dealers are furious and are spending millions on banning Tesla in their states. While many states such as New Jersey, Arizona, and Texas have banned it, there are four that are biting at the bit to get Tesla to build a factory in their states. With 5 billion dollars, and 6,500 jobs at stake there is a lot to be excited about.

New Mexico. The dark horse in the list of possible locations, New Mexico was originally a candidate for a factory in 2007. However, their incentive package was beaten by California’s at the last minute causing Tesla to pull out of Albuquerque. There were numerous advantages in 2007, but 7 years is a huge difference and other states have climbed to be better potential suitors.

Texas. Currently Texas has banned the sale of Tesla vehicles but it has the second most populated state in the United States. If Tesla wants to move product it must gain Texas as a place where it can sell vehicles. The building of the plant may create the leverage needed to allow the sale of vehicles. Even Governor Rick Perry is an advocate, expressing his support for the opportunity that the plant represents.

Arizona. In the same situation as Texas, Arizona has a ban on the direct sales model created by Tesla and therefore no cars can be sold in the state. Tesla attempted to overturn this policy but it was quickly struck down and no further plans to allow sales are even possible until 2015. Tesla will be looking at the long-term though, as the factory will not even be manufacturing until 2017.

Nevada. Considered the frontrunner in locations for Tesla, Reno, Nevada has immediate access to not only rail systems but a large amount of land and local tech companies ready for positions at the new facility.

A similar situation happened in Alabama when many southern states were fighting for Mercedes. In the end, Alabama offered a huge incentive package utilizing tax breaks and taxpayers dollars to attract the auto giant. Near identical events are unfolding in these states as backroom deals are occurring daily in order to win the bid. While the system is controversial, it outlines the bigger problem. None of these deals would have to happen if barriers of entry were not so tough. Alliance, Texas has seen huge success with their free trade area. Now if only the rest of Texas could get on board.

Agricultural Education – A Growing Field

Since 1928, the United States has housed an organization that connects a home life in farming to the classes students take in high school. The Future Farmers of America (FFA) immerses students in programs to learn where our food comes from and to appreciate how important agriculture is to the world.

From 2007 to 2012, the number of farms in the U.S. dropped by 100,000, while the FFA enrolled an additional 60,000 students, opened new chapters and propelled the organization to its highest number of students. 580,000 students receiving agricultural education is a monumental achievement, one that many people did not see coming. In Nebraska, this is particularly difficult as they are seeing the highest number of students interested in agriculture programs ever. In response to the need, the Nebraska Farm Bureau is creating a scholarship program to help schools find more agriculture teachers. The scholarship is directed by the University of Nebraska-Lincoln’s agriculture education program, and will pay $1,200 during a semester of student teaching. There is also a program to pay off loans for current teachers starting at $500 dollars and increasing for each school year. Meanwhile, other states are fighting to keep their programs running.

Ag. Top 10 States

California has experienced extraordinary difficulties in years past, and they are reaching a peak as the state faces one of the worst droughts in history. Agricultural education is needed more than ever, yet law makers are attempting to cut the Agriculture Education Incentive Grant Program (AEIGP). The AEIGP supports 315 agricultural programs that currently enroll over 75,000 high school students statewide. Free markets and privatization are critical in any growing industry, but high school boosters have struggled in years past to keep up with the growing demand that agriculture places on society. The reason the government places incentives on agriculture is because of how important it is to the continuation of society.

States recognize the importance of agriculture and the benefits that they receive from investing in education. Their return is substantial as those students not only go on to learn about agriculture, but a majority will also take jobs in the agriculture industry and assist states in the production of food. As new techniques are developed, the way food is grown constantly changes. Agricultural education is needed to keep up with those growing changes.

Russian Energy Out, American In

The political climate between Russia and the rest of the world has deteriorated significantly in recent weeks. However, unlike the war methodology of the early world, economic sanctions are the new way to hurt countries.

Russia’s economy is largely dependent on natural gas and oil, producing nearly of 70% of total exports in 2012, 32% of which was crude oil. The majority of these exports go to Europe, as they are wholly interdependent on Russian energy. In order to meet the demands of a full Russian blockade on energy, the European Union would need to invest 215 billion dollars to meet their own energy demands. Even though there is a vast natural gas market to be explored by U.S. companies, the required approvals could take as long as 2019. The companies who have submitted approvals to congress are still having to wait the required times for natural gas.

The closest to exporting is the company, Cheniere Energy, Inc, who can begin exporting as early as 2016. Even if U.S. companies were able to export crude, it would serve only as a motivator because it would take just as long to increase production to sustainable levels since the U.S. still imports 2.7% of its GDP in oil. The European Union is almost identical in its imports. However, if the U.S. were to come together with Mexico and Canada a strong partnership could be created a lot sooner.

amount of oil imported

Congress needs to act quickly on allowing permits because of the European Union’s plan to become energy independent. If the U.S. can begin exporting oil and natural gas quickly then the E.U. would be allowed several years of planning before making risky investments. It is also extremely important to note that while natural gas can be moved by pipeline easily to countries such as Mexico and Canada; there currently exists no infrastructure for exporting to Europe. This makes things even more complicated as it would require billions in research and development.

While it may seem farfetched, the possibility of energy exports to Europe has increased in recent weeks. There is currently a bill proposed that would automatically approve all received natural gas export projects. Since Europe does not have free-trade agreement with the U.S., it would open up the market to all approved companies. Europe has a mounting deficit in energy production, and with Russian relations rocky, the outlook for US companies looks extremely promising. There is a strong push in the U.S. to end the 40 year ban on crude oil, which is the most efficient way to handle the mounting European energy crisis. It would allow a stronger partnership between allied countries and increase the amount of crude production in North America. It would also create the incentive needed to allow U.S. companies to explore and produce for global markets, rather than just the United States.

europe natural gas

There is a strong fear that ending the ban would increase domestic prices but this is not true. Not only would ending the ban create nearly a quarter million jobs but there would be a strong push to increase production and supply, which would level prices in the long term.

Drones Strike the Farms

Technology advances in the United States as quickly as it can be researched and one of the oldest professions is still seeing accelerating growth. The most recent achievement is the use of drones in agricultural surveillance. Also known as Unmanned Aerial Vehicles (UAVs), drones gained fame during the Iraq-Afghanistan conflict as a safer way to attack targets. Their original intention has been lost recently as companies such as Amazon and UPS are researching ways to use drones to deliver packages to your front doors.

While it may sound like drones will be taking jobs away from Americans it is in fact the opposite. One report details that once the Federal Aviation Administration (FAA) establishes guidelines for commercial use, the drone industry could expect to create more than 100,000 jobs and nearly half a billion in tax revenue to be generated collectively by 2025, and most of that is just agriculture.

The agriculture industry represents over 16 million jobs in the United States and nearly 1.1% of all Gross Domestic Product (GDP). With numbers like that it is no wonder that drone surveillance is such an emerging technology for farmers. There are even colleges in the Midwest that are incorporating learning drone technology for farming. However, while there are significant benefits with utilizing drones, there are consequences to the technology.

Right to privacy is a huge factor and how do nearby farmers know that the drones are not watching their land? This could create huge advantages for local farms that are looking to receive an advantage from using highly advanced surveillance techniques. This year alone nearly 36 states, including Iowa, are attempting to implement legislation that would put numerous restrictions on drone use.

The possibility of drones depends wildly on the users definitions of privacy. Citizens in some states may care more than others, thus it may allow one state to have a high level of drone use while another may choose to not allow them. Whatever the decision is, it is my prediction that the use of drones for commercial purposes may make its way up for the Supreme Court to decide. There is too much controversy around the technology to take off immediately; there are several hurdles that the technology will have to jump before it becomes mainstay in society.

Chipotle’s Assault on Farms

Chipotle has recently come into the news as the creator of a new TV series, ‘Farmed and Dangerous’. The series sets out to portray a satirical look at industrialized agriculture, but when the satire is created by a corporation set on organic foods it creates more harm than good. Declaring war on “big farms” is a misguided agenda that can only serve to hurt small farms more than hurt big farms. According to a previous blog post that explored the USDA Census of Agriculture, a survey stated that 75% of farms in the U.S. are still operating under 50k a year.

Farm Size

‘Farmed and Dangerous’ is beyond misleading in that what it attempts as satire is actually misguided facts about industrial agriculture. The series takes the smallest portion of the industry and distorts it to relay a message. Chipotle makes attempts to bring in customers by advocating for local farming. Since the majority of farms are still small and local, it is hurting them more than helping them. The only winner in this scenario is chipotle, as the marketing plan is not about eating responsibly — but to eat at Chipotle.

While it is important to utilize sustainable agriculture and conservative techniques, it is also important to gain truth based on facts and information. In the U.S., there is a good chance that you are eating locally grown food, so keep on eating. Just remember that you are already helping out the local farmer without having to buy at Chipotle.

Stranded on “3-Mile Island”

It is 7am in the morning, and the second cup of coffee is just not cutting it. However, traffic congestion has been relatively smooth along the tollway and work is not too far away. Then, suddenly, traffic bottlenecks from several lanes down to two, and the quality of the road declines considerably. Essentially, a parking lot has been formed between one stretch of the toll road and another. In the Dallas Fort-Worth gridlock between the two George Bush Tollways is a daily occurrence for thousands who commute to work every morning.

Bottleneck Traffic

States around the country are looking for better ways to build roads, without taxpayer funds. Thus, a market for tollways has been created that has been able to keep up with the growing demand of growing metropolises. There are drawbacks to this growth as federal law from 1965 prohibits the removal of Interstate Highways in order to build tollways. Kay Bailey Hutchinson (D-Texas) authored a federal amendment to the same law in order to broaden the ban to include exist such as; turning an auxiliary lane, HOV lane into a toll lane or building a toll lane alongside the existing Interstate or State Highway. None of these are taxpayer friendly as the auxiliary and HOV lanes were originally paid for with tax dollars, and for them to become toll lanes would be an inexpensive way for toll companies to collect revenue at the hands of the taxpayers.

SH 161 in particular creates many problems for the taxpayers, toll associations, and the government to deal with. Because the stretch of road only is 3 miles, and is already a connector between two tollways it would be common sense to transform it into a tollway in order to improve traffic congestion and road safety. The road has minimal lighting and there are only two lanes in each direction which are severely deteriorated. One proposal that exists is sponsored by the Texas Department of Transportation (TxDot) which claims that for 3.7 million dollars it can open the shoulder as another lane to ease bottle necking. The loss of the shoulder would create many hazards for accidents along the road so TxDot would build dead end driveways along the road and increase the amount of tow trucks on call to move stalled vehicles quickly. This however is and can only be a short term solution. This does not repair the roads, or increase the amount of lighting, and without a shoulder the danger of the road could increase as drivers can no longer safely pull off at any given time. One long term solution is to build a lane alongside the free lanes in order to add lanes while giving the benefit of the freeway.

The budget is not what it once was because the funds supplied from the federal government relies directly on the gas tax which has not been raised from 18.4 cents per gallon since 1993. Due to inflation, more fuel efficient cars, and now electric cars the fund is getting smaller and smaller. The population of the DFW metroplex increases 1 person every 4 minutes and needs proper highway infrastructure in order to support the continued growth. These issues are not specific to Texas, and every state with a fast growing metroplex is suffering similar growing pains. In order to support this growth a comprehensive federal plan must be created soon or else the amount of goods and services being transported will continue to slow down.

An Alternative to Uranium

Thorium has been shopped around to renewable energy groups as a valid alternative to both nuclear power and a way to curb CO2 production. Thorium is a common metal often found while mining rare earths such as monazite. Monazite sands normally contain around 45-48% cerium, 24% lanthanum, 17% neodymium, 5% praseodymium, along with a small amount of samarium, gadolinium and yttrium. Thorium contains a minimal amount of radioactivity and is 3 times more prevalent than uranium. The goal is for thorium to harness its potential energy and replace uranium and plutonium in nuclear reactors. The most common type of thorium reactor is the Liquid Fluoride Thorium Reactor (LFTR) that has a freeze plug that allows the radioactive material to flow down into a tank in case of emergencies, creating a far safer alternative to the unsteady nature of uranium or the typical nuclear reactor.

Some Positives:

  • There is four times more thorium in the world compared to uranium and it is cheap than to mine. The U.S. has twice the amount of thorium than uranium.
  • Thorium can utilize recycled plutonium in order to become fissile. This means that we are recycling our reserves of plutonium waste that is given off in nuclear reactors.
  • The United States has the 5th largest thorium deposits in the world, thus leading to the reduction of foreign energy imports such as oil.
  • Thorium is safer in that the liquid actually cools as opposed to plutonium or uranium which stays hot constantly.
  • Thorium creates far less radioactive waste than other contemporary reactors.
  • Thorium can be used 200 times more efficiently than uranium can be.

Some Negatives:

  • The cost of research for thorium is so high that many countries spend millions of dollars in subsidies on stagnant technologies.
  • Thorium still needs plutonium or uranium to operate. Thorium turns into Uranium-233 after it is treated, which can be used to create a nuclear weapon.
  • The market chooses to invest in nuclear power currently because of the immediate payoffs.


Regardless of potential payoffs and risk thorium can be looked to as the future of energy. It currently has far more potential than solar or wind and can create vast amounts of energy very quickly. The possibilities of thorium are endless, and some day it could even be used to power planes and cars as easily as gasoline does today.

The Free Market’s Key Investment in Renewable Energy

This past week Walmart signed a historic deal with Plug Power, ordering nearly 1800 hydrogen powered fuel cells. The cells will be given to distribution centers in order to power their factory vehicles such as forklifts and will be an addition to the 500 they already have operating. Hydrogen fuel cells work by turning both hydrogen and oxygen into electricity. Walmart also bought a significant part of their GenFuel infrastructure, including a 6-year service contract for each site. The landmark deal’s numbers are not exact, but analysts report that it is close to $50 million dollars.

renewable energy

The 2012 Agricultural Census

Every 5 years the United States Department of Agriculture (USDA) compiles a census of all farms in the United States. This data helps analyze trends and growth of not only prices, but number of farms as well. The numbers the USDA published are important for not only their emphasis on the effects of subsidies, but how our local agricultural economy is slowly becoming purely industrial. From the census we can draw several important distinctions.