Obama’s new energy plan: Why not put the fed’s trillions into renewables?
Editor’s Note: Worried about the state of our economy, former big pharma executive Chris Martenson sold off everything and moved his family to the country a decade ago. Now, after the recession, he’s no less worried, and he’s especially not a fan of the Fed’s money-printing scheme. That puts him in the same camp as Fed critics featured on this page like British economist Andrew Smithers, and most recently, Terry Burnham.
That Martenson believes the federal government is mismanaging America’s economic future would seem to give him a certain affinity with the American right — until, he starts talking about alternative energy, when he begins to sound like President Obama this morning, announcing the Administration’s new carbon emissions reduction plan. And not just the solar energy he uses on his own property, but about government investment in alternative energy. That’s much more of a crowd-pleaser on the left. Confused about where he stands?
Martenson doesn’t think in right-left terms, he says. In the web exclusive video above, he explains to Paul Solman how he can be against the Fed and for government intervention in energy policy. Read the full transcript of that conversation below and watch Paul’s NewsHour interview with Martenson at the bottom of this post.
– Simone Pathe, Making Sen$e Editor
Paul Solman: When I first heard you speak on the Internet, it was: We’re running out of oil, we’re running out of fossil fuels, it’s only a matter of time… And then the fracking revolution came, and certainly at the very least we’ve bought more time, right?
Chris Martenson: Here’s what peak oil is — it’s not running out. It’s that you no longer can produce more, and more, and more, year after year. World oil production has been going up about 1.8-2 percent per annum for decades. And that’s what the world economy got attuned to.
For the past six years we’ve only been growing world oil output at 0.4 percent per annum. It’s a big flattening out in that, and guess what happened? Oil prices have tripled in that time frame. That’s all consistent still with the idea that it’s not nearly as abundant or as cheap as we would want it to be right now.
Paul Solman: But fracking will buy us some time.
Chris Martenson: Fracking will buy us some time on the energy side of the story. There’s a lot of other reasons that people are rightly concerned about fracking. We’re getting more information about it all the time. The first thing fracking allows you to do is to tap all sorts of new hydrocarbons that hadn’t been factored into many of the calculations for how much carbon we were going to be putting in the atmosphere.
There are all these externalities of ruined roads and other infrastructure damage that are not being recouped at the state level in Pennsylvania and Texas because of the damage these heavy fracking trucks are doing. There’s roads that have been converted from paved macadam into gravel because the state can’t afford to fix them one more time.
And then there are the water issues. Obviously, if you live in a dry, arid region of Texas, there’s just not the water sufficient to both have a town well and fracking going on at the same time. And now there’s actual credible evidence of fracking contamination of wells.
…The insurance industry came out and said that they were no longer going to be insuring houses that were on or near fracking sites in some states. So this tells you that at least one corporation is very concerned about this as well.
Paul Solman: But you think that if we had taken, oh, I don’t know, the money that’s been created by the Fed in the last five years — a few trillion dollars — and had invested that kind of alternative energy that you’ve got arrayed around your own home, that then we would be on the right track and you wouldn’t be worried?
Chris Martenson: I would be far less worried. I’d have to see how that got spent. So here’s an example. What if I could tell you that there’s a technology – it’s proven, it’s been around since the ’70s — that if we deployed it, we would be burning less fossil fuels by a lot. We’d be putting less carbon into the atmosphere, and all of it could be domestically manufactured — in fact, it should be; it would create jobs, both for the installation and the maintenance, and for everybody who bought one of these things it would guarantee to save them money that would have one of these high rates of return. Would we do it?
Paul Solman: Presumably. I mean, we had a post on my website that argued that the very best possible investment anybody could make would be to invest in subsidized renewable energy for their home.
Chris Martenson: Well, that technology I just teed up there, that’s solar hot water panels. Right now, if you have a solar hot water heater that’s conventional – either it’s heated with natural gas or electricity, which is coal, for the most part, or it’s oil, right. So we’re burning fossil fuels to heat something. The sun is great at heating stuff. It’s really, it does that fantastic… I’m not certain how it is at making electricity, but boy it heats stuff great.
Paul Solman: Free photons, right.
Chris Martenson:parked it back at the Fed.
Paul Solman: Well, to be fair to the president, he certainly made considerable efforts to get people to use alternative forms of energy and solar in particular, no?
Chris Martenson: Well, the words have been good, but if you look at the budget — I think the last time I looked at the 2013 budget, 0.1 percent of it was dedicated to what I would call alternative energy. We’re not really serious yet. If we were serious, it would be like a wartime effort and we would say: This is it. We’re going to invest in our country; it’s going to be good for all kinds of things — the environment, jobs, you name it. And we’re going to do all of these things because it makes economic sense, even national security sense, job sense — you name it.
Paul Solman: But you’re a little hard to categorize here because I can imagine a lot of people on the right would go, yes, the Fed has been wasting our resources. Yes, we’re on the wrong track. Yes, we should buy gold. And then you tell me we should invest more in solar energy, and I think those people are going to go, wait a second, while people on the left are going to go, yes, yes, that’s exactly right. Here he finally is on to something!
Chris Martenson:Yeah, this is not a left-right issue. I don’t take left-right on any of my positions. I take common sense and so again, if it saves money, it creates jobs, it enhances national security, it’s good for the environment — I’m trying to find who’s against it, right. The only people I can think are against it might be people in the fossil fuel industry saying, no, that’s competition. But otherwise, who could be against that?
Paul Solman: Well, people who think that government should not be so involved in making decisions for us.
Chris Martenson: When it comes to energy policy, I don’t think that it’s up to the individuals to make energy policy.
Paul Solman: When you talk to conservative audiences and you start talking about national investment in alternative energy, don’t they, at the very least, look at you funny, if not start hissing?
Chris Martenson: Oh, absolutely. Absolutely. But again, if the choice was, listen, we were going to print up $2.4 trillion and we were either going to give it to the banks or we were going to do something else with it, I think this would be something else and I could come up with a dozen other things that I think would have been more fruitful, more productive, more investment-oriented, more rational than bailing out the people who made the mistakes in lending out too much money in the first place.
Paul Solman: But the argument was that if we did not bolster the banks, which remain a key — if not the key — channel through which our collective savings get invested, than we would not be able to go to the store and buy something because our credit card wouldn’t work. The whole system would freeze, as it almost apparently, or at least putatively, did.
Chris Martenson: We’re admitting that what we had was a system which was prone to potentially catastrophically fail. That’s a risky system. If I was a businessman, I would say, I’m going to have to do something about that. In the six years since we almost had our catastrophic meltdown of our banking system, what have we done to create institutions that are no longer too big to fail, or too big to jail, or whatever the terms are that we’re using right now? My estimation – almost nothing. In fact, if you look at total credit derivatives that are outstanding, you would think, oh, 2008 – shot across the bow, you know, we learned with just the smallish CDO, the Collateralized Debt Obligation market, that almost took the system down.
We need to really start walking down the total notional amounts of the other derivatives that are out there, and in fact, they are over $100 trillion higher on the worldwide stage today than they were in 2008. We’ve done, in my estimation, nothing to remedy too-big- to-fail and we’ve done nothing to remedy over-leverage within the system, at least across the derivative markets.
Paul Solman: Too much debt, you mean.
Chris Martenson: Too much debt and too much bets on top of that debt. It’s more complex, and more structured and larger than when the crisis happened.
Paul Solman: Well, the world’s also larger, so maybe it can accommodate a larger set aside…
Chris Martenson: Maybe it can, and maybe I’m wrong and it can do it forever, but if not… that’s the implication that I center on and think about: As a prudent adult trying to raise children and have a family and not want everything I’ve worked for to suddenly vanish in a credit market accident. What does one do?
Paul Solman spoke with Martenson and his wife for the NewsHour earlier this year. Watch their full interview below.