Thursday, May 15, 2008

How to farm subsidies with the world's biggest wind farm

The result of tax breaks and subsidies for so called renewable energy -- defined as energy produced by means that would be uneconomic without such tax breaks and subsidies -- is that the likes of biofuels and wind farms are used by investors not to farm corn and wind, but to farm tax breaks and subsidies.

The irony for many environmentalists must surely be that the result of their banging the drum for 'renewables' will be to bring on a whole new wave of corporate welfare -- the only welfare most environmentalists object to.

boone_pickens The case of West Texas investor and natural gas man T. Boone Pickens (right) is instructive.  Mr Pickens intends to spend $US10 billion to build the world’s biggest “wind farm,” consisting of 2,700 turbines producing a planned 4,000 megawatts of generating capacity.  According to Reuters, Pickens expects "to turn at least a 25 per cent return" on this 'investment -- an investment only possible because of five particular tax breaks and subsidies that will see large sums forcibly transferred from taxpayers to Mr Pickens's pocketbook, courtesy of the US Government.

Researcher Glenn Schleede summarises the corporate welfare Pickens intends to mop up, all of which he says represent "harmful wealth transfers and misdirected capital investments."  (Not to mention that they're extracted from taxpayers by force.)

For more than a decade, wind industry lobbyists and other wind energy advocates have greatly overstated environmental and energy benefits of wind energy and understated its adverse environmental, ecological, economic, scenic and property value impacts. Only during the last 3 years have the facts begun to emerge about the low quality and value of electricity from wind turbines, the high economic cost, and the adverse environmental, ecological, scenic and property value impacts.

Facts, by the way, are irrelevant to politics -- as I'm sure you're aware by now.

And also by the way, this is not the first time T. Boone Pickens headed to the taxpayer with his hand out.  Back in the eighties when he was losing his shirt in natural gas, he all of a sudden became a lobbyist for tax breaks and subsidies for natural gas in large vehicles (compressed natural gas buses and the like).  He began speeches around that time with "I'm in favour of free markets, but..."

Ayn Rand used to point out that there are essentially two kinds of businessmen.  There are the honest businessmen -- "the producers, the providers, the supporters, the Atlases who carry our whole economy on their shoulders" -- and then there are the moochers, "the products of a mixed economy, the men with political pull, who make fortunes by means of special privileges granted to them by the government."   As she points out, it is the political power behind the activities of the moochers — "the power of forced, unearned, economically unjustified privileges" — that causes "dislocations in the country’s economy, hardships, depressions, and mounting public protests."  

For contemporary evidence of this, just look at the world's food markets and the increasing reports of food riots, products not of the free market and the free businessmen, but of of the biofuels boondoggle and the moochers who use political pull to make (or to supplement) their fortunes.

We're looking at the likes of you, Mr Pickens.

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8 Comments:

Anonymous Anonymous said...

A couple of months ago there was a major problem in Texas due to wind farms dropping off suddenly. The challenge and the real costs around wind are managing these sudden changes and having enough fast start reserve to pick up the slack.

“West Texas wind power production plummeted from about 1,700 megawatts to about 300 megawatts Tuesday night, prompting the crisis. A megawatt is enough electricity to power 500 to 700 homes under normal conditions.”

http://www.dallasnews.com/sharedcontent/APStories/stories/D8V3K14O4.html

Insider

5/15/2008 11:20:00 am  
Anonymous hanso said...

Realy? I can think of nothing other than congratulating the man.
In a society in which the government is actively robbing you, it is justifiable to find ways to lessen the government impact.
As a staunch opponent of all kinds of welfare, I have no moral scruples with collecting any welfare bonuses (boni?) I may be[legaly] entitled to.

5/15/2008 06:15:00 pm  
Blogger ZenTiger said...

Where do the honest stock traders sit on this scale of mooching off producers?

99% of all share market transactions have nothing to do with raising capital for a business. IPOs and new issues are but a grain of sand.

Liquidity is an important benefit of share trading, but I'm not sure the millions made and lost reflect real value.

5/15/2008 09:03:00 pm  
Blogger Cal said...

Hanso, There a huge difference between taking back some of what is one's due versus being the moocher who cheers for more such schemes.

Pickens was on business TV today and they asked him if wind would be worthwhile if there weren't any tax-breaks. He answered that the bill to tax payers would be just US$ 15 billion a year, which -- in his opinion -- is worth it. Can anyone say Orren Boyle and James Taggart.

5/16/2008 02:18:00 am  
Anonymous Elijah Lineberry said...

T. Boone Pickens is a splendid chap and I have long admired his success, especially as he is still working fulltime at the age of 80.

However, he has a history of this sort of nonsense... 30 odd years ago he invented the 'Royalty Trust' concept, which in itself was an excellent idea, but he also sought subsidies to go with it and thereby turned a good idea into a rort.

One further point about Pickens, he is the Grand Master of 'inactivity'.

He does a lot of talking but seldom actually undertakes anything.

Back in the 1980s he was a 'Corporate Raider' but never actually took over any companies (!), contrary to the perception at the time.

He has also been talking about his 1000 mile 'water pipeline' for years, but has yet to even seek planning permission let alone commencing construction.

I strongly suspect his wind farm will go the same way...because at heart 'once and Oilman always an Oilman' and he, frankly, prefers that business to any other.

5/16/2008 08:10:00 am  
Anonymous NotYourBusiness said...

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5/16/2008 02:05:00 pm  
Blogger PC said...

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5/16/2008 05:01:00 pm  
Anonymous NotYourBusiness said...

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The worst was Spontaneous Trader - in the 'whim worshipper' category. It's always interesting to see how philosophy affects eveything.

5/16/2008 05:53:00 pm  

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