City Journal associate editor Matthew Hennessey and Manhattan Institute senior fellow Robert Bryce discuss the possibilities for the domestic energy industry under Trump, the state of American nuclear power, the Left's push for all-renewable energy, and more.
Audio Transcript
Matthew Hennessey: What does Donald Trump's election as President mean for everything from fracking to pipeline construction, from climate change to the price of gas? I am City Journal associate editor Matthew Hennessey. Welcome to the 10 Blocks Podcast. With us to answer these questions and more is Manhattan Institute senior fellow Robert Bryce. Robert is an expert on all things related to the energy economy. He is a snazzy writer and he is an all-around good guy. His books include Power Hungry: The Myths of Green Energy and the Real Fuels of the Future, and his most recent issue Smaller, Faster, Lighter, Denser, Cheaper: How Innovation Keeps Proving the Catastrophists Wrong. Robert, thank you for joining me on the 10 Blocks Podcast.
Robert Bryce: Thanks, I'm glad to be with you, Matthew.
Matthew Hennessey: Now sometimes when a President is elected you can look back and you can point to a specific thing that he said during the campaign that in retrospect turned out to be decisive. Was there anything in your view, in your field of expertise, energy, that you can point to now and say that might have had something to do with getting Trump elected?
Robert Bryce: Well that's a good question. I think overall, Trump's, what he has said on the stump was clearly that he wants to unshackle the hydrocarbon business in America. He wants to relax regulation when it comes to coal mining and coal consumption, and the same with oil and gas. And when you look more recently at some of the headlines, it is also clear that he has been fighting the wind business for some time. And so when he met with the leader from the U.K. he in fact talked about that. So I think that this gives a pretty good indication that here is a President who is going to break with what we have seen from the Democratic administration under Obama where the hydrocarbon sector has been frankly under fire and the renewables business has been getting very favorable treatment, particularly from the U.S. Treasury and the Internal Revenue Service, that this is going to be a far different approach to energy policy overall than what we have been seeing the last eight years.
Matthew Hennessey: So Trump will have a Republican Congress on both sides of the House, he will get to pick his own energy secretary. How many of those campaign promises of the sort that you just mentioned do you expect, I know you don't have a crystal ball, but how many do you think he will actually follow through on and how many do you think will be the kinds of things he will have to either rethink, revise, or renege on?
Robert Bryce: Well I think the first one that is obvious is his claim that he is going to bring the coal industry back. That is simply not going to happen. Trump made a big deal out of this when he went to West Virginia and said you know, Trump loves coal or whatever. You know, he held up a sign, famously, something like that, put on a hardhat. But the fact is that the coal sector in the U.S. has been, frankly, demolished. We have seen just a huge reduction in overall coal consumption. We have had a severe reduction in the amount of coal capacity, coalmining capacity in the U.S. That's not going to come back. I think it's clear that that fuel has been, in many cases, simply been priced out of the market by lower cost natural gas, so that would be the first one. I think more broadly, just as a separate comment, I think the Trump Presidency is rather bearish for prices, in terms of oil and gas. Because if he follows through on relaxing some of the regulations with regard to oil and gas production you are going to see more supply and more supply, then, obviously means lower prices.
Matthew Hennessey: Shifting from coal to climate change, there's a fair amount of panic, I think it's fair to say, on the Left right now that a Trump Administration will move to undo many of the Obama-era commitments that were made with regard to climate change. According to one postelection story that made the rounds, there was a young staffer at the Democratic National Committee who stood up and challenged Donna Brazile by saying that you, meaning Donna Brazile, will die of old age, but I, meaning a young millennial, I'm going to die from climate change. Is that true? Is there any truth to the belief that there is an imminent threat from climate change that is going to cause deaths?
Robert Bryce: I saw that, I saw that story and I laughed out loud. I thought oh my gosh, this is the - the climate catastrophists have really done their job here, where you've got a young kid who is saying oh I'm going to die because of climate change. This is a slow-moving problem, maybe a very slow-moving problem. The reality is I am agnostic when it comes to the issue of climate change. Tell me CO2 is good, tell me it is bad, tell me what you plan to do. That's the question. We can talk about aerosols, forcings, you know all these other issues. You know, what the proper concentration or the optimal concentration of CO2 in the atmosphere is. We don't know the answer to all of those things. What my position has been all along, has been if we are serious about reducing CO2 emissions then we should be serious about natural gas and nuclear. And that leads me to one of the points. In fact I am working on a transition policy paper for Manhattan Institute at the moment and one of the points that I am making is well, Trump can try and make nuclear great again. Here is an area where you don't have to believe or adhere to any orthodoxian terms of climate change to see the value of nuclear energy to the American economy. We are seeing a lot of nuclear reactors be retired, we have a number of reactors that are now slated to be retired. The U.S. has led the nuclear age since the Manhattan Project. We should be, I think there's a conservative case to be made for both preserving our existing nuclear capacity and moving rapidly toward licensing and deploying next-generation nuclear technology. And again, you don't have to believe in certain ideas about CO2, instead you can say look, we need nuclear for generation capacity and more importantly generation diversity. We don't want to - we've moved a lot to natural gas, but we don't want to put all of our eggs in the natural gas basket. We don't want to put them all in the coal basket, or the wind basket, or the solar basket. We want a diverse portfolio. So that's one reason why there's a conservative case for nuclear. Second is that it helps keep cost low. Nuclear has been, traditionally, a lower cost source of generation and one other factor is, as I said technological leadership, this is something we've done for years. Why are we letting the Japanese and the Indians, or I'm sorry, the Russians and South Koreans, dominate this industry? We should be in playing in that same sector. But finally the issue in favor of nuclear is land sparing. Using small footprint nuclear reactors saves land for other uses. In particular you know, wind energy uses roughly five hundred times more land than nuclear. It's only one of the reasons why I am so pro-nuclear.
Matthew Hennessey: Do we know much about Donald Trump's stance on nuclear energy?
Robert Bryce: Well actually he made some very good comments in September. He said, I'm quoting here, in fact I have it in front of me, he said nuclear should be part of the all-of-the-above program for providing power for America long into the future. We can make nuclear power safer and its benefits are extraordinary given the investment we should make. So he's clearly stated that he is in favor of nuclear, so I think he has a real opportunity here for, and with the new Republican leadership, to follow through on that.
Matthew Hennessey: In the news at the moment and for the last few weeks have been these ongoing protests at the Dakota Access pipeline in North Dakota. What can you tell us about what is going on up there? Why has this one pipeline become such a focal point of the environmental movement?
Robert Bryce: I think it brings together a lot of issues that the Green Left really likes, which is, one is this idea that oh, the Native Americans really have been the ones who understand the land and I think that, my read of it, I am not in general a conspiracy theorist, but I think it was very smart tactically by some groups on the Left to say hey, here's a pinch point. It is close to the reservation, we can rally the local, the Sioux tribe, to oppose this, and it has become a flashpoint because now the Left, 350.org, the Union of Concerned Scientists, a number of other groups are pushing this idea of keep it in the ground. In other words we should be producing no more hydrocarbons, no more coal oil or natural gas, and that means we have to block every hydrocarbon infrastructure project that is proposed or is under construction. And this is part of that. So you know, give them credit. They were able to identify a pinch point and you know, I'm fairly sympathetic in terms of the Sioux Indians and the land use issue there in terms of this one pipeline but I also understand you know, from a political standpoint, it has been very effective on the part of the Left.
Matthew Hennessey: Now the Presidential election was not the only big news to come out of November 8th. There was a lot of very interesting and very consequential things happening in the states as well, and Vermont, as you know, a Republican up there won a decisive victory. Republican Phil Scott will be the new Governor and there were several towns, municipalities, that rejected a big, high-profile wind project. What is going on in Vermont? What is the fate of wind energy in Bill McKibben's home state?
Robert Bryce: This to me is one of the most interesting stories to come out of the entire election, Matt, because you look at New York, which abuts Vermont, of course, and you have the Governor in New York, Andrew Cuomo, pushing this 50% renewable electricity plan by 2030. No vote from the New York Assembly, no vote of the voters, instead it is executive fiat. Him demanding 50% electric renewable electricity. Well, Albany is only 90 miles west of the towns of Grafton and Windham, Vermont. Those are the two towns that voted overwhelmingly against a project called the Styles Brook Wind Farm, which had been proposed to be built on the ridges right above these two historic towns. So there's a lesson here for New York, in particular when it comes to the issue of land use and rural communities, and that is where clearly the votes in Vermont are showing this rural backlash against big wind is real and it is growing. You mentioned Phil Scott. Vermont is among the bluest of blue states. Phil Scott is a Republican. He was the lieutenant Governor, ran for governor. He beat a Democrat, Sue Minter, who by the way was in favor of state control of all citing of all wind projects in the state. He beat her by nine points, in a state where Hillary beat Trump, Hillary Clinton beat Donald Trump, by 29 points. Now, was wind energy and Scott's position on wind, he was opposed to wind energy on Vermont's ridgelines and was very public about it and it was a high-profile issue in the gubernatorial race. Was this the defining issue in the race between Scott and Minter? Well, we can't say for sure. But Bill McKibben you mentioned, and the founder of 350.org, backed Sue Minter. So you have these people pushing this all-renewable agenda and saying we don't care about small towns, we don't care about ridgelines, climate change trumps everything. They got their butts handed to them.
Matthew Hennessey: From our northern border to the southern border, still with the state theme here, in the City Journal special issue on Texas a few months back you noted that the Lone Star State is back on top as a major player. It's perhaps the major player in the global oil and gas market, so can you give us an update on the health of the Texas energy economy? Is it still flying high?
Robert Bryce: Another remarkable story, Matt. And in fact there's just some news just in the last few days that again makes the point. Just a quick bit of background, so Texas has always been the leading energy producer - always - for decades now, has been the leading energy producer in America, by far producing more oil and gas than any other state. And this goes back, in fact, to the 1930s, when the discovery of the East Texas Field led to a flood of oil into the market, collapsed oil prices, the result being, a very long story short, the Texas railroad commissioner for the next forty years essentially limited the amount of oil going into the global marketplace. In 1973 OPEC took over that role. They copied directly the railroad commission system of allowables which restricted supply and therefore stabilized price. But in 2014 OPEC effectively gave up and since then we've seen all this volatility in the oil market because there is no break on supply. And that was because of the shale revolution, which really, it was ignited in Texas. And so Texas is once again the state that is called the marginal producer, it's not the swing producer, but the producer that is effectively helping set the global price of oil based on the amount of oil that the state produces at a given price. So we've seen this, what’s old is new again with Texas at the forefront of the global oil market and increasingly, in fact, in the global natural gas market because we've seen the emergence just this year of liquefied natural gas exports from Texas going into countries all over the world, including improbably, into the Middle East into Kuwait.
Matthew Hennessey: Okay Robert, last question. Going into the Trump Administration, are you bullish or bearish on the American energy economy?
Robert Bryce: Well I'm bullish overall. I'm bullish because, and I've been bullish on America overall, because we have incredible advantages. Regardless of who is in the White House we have no enemies at our borders, we have very positive demographics. The dollar is still the world's reserve currency. We have incredible advantages over the rest of the world. But in addition we have low-cost energy, and the rest of the world by and large does not. And I think that even though oil and gas prices may be somewhat lower because of less regulation under a Trump Administration, I think that those lower prices are very good for consumers and generally they are very good for the economy, so I'm incredibly bullish on the United States. And that's not just because of the energy business.
Matthew Hennessey: Robert Bryce, thank you for joining us on the 10 Blocks Podcast.
Robert Bryce: Thank you Matthew.
Matthew Hennessey: You can read Robert Bryce's work on our website, City-Journal.org, or on his own appropriately titled website, RobertBryce.com. That is Bryce with a Y. We'd also love to hear your comments about today's episode on Twitter. We are @CityJournal with the hashtag #10Blocks. And lastly, if you like our show and want to hear more of it, please leave ratings and reviews on iTunes. Thanks for listening and thanks again to our guest, Robert Bryce. Until next time, I am Matthew Hennessey. This is 10 Blocks.
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