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Permalink Reply by Skip Peel - Mineral Consultant on February 13, 2016 at 4:28

Mr. O'Keefe isn't exactly an unbiased commentator as his bio reveals.  Solar isn't a good alternative energy choice in all locations.  Where it is, leasing is not the best way to go.  Tax incentives for solar aren't the problem.   Misleading sales pitches and uninformed consumers are the problem.

William O'Keefe is Chief Operating Officer of the George C. Marshall Institute; he was previously Treasurer/Secretary of the Competitive Enterprise Institute and COO of the American Petroleum Institute.  He is also president and founder of Solutions Consulting, of which the Marshall Institute is a client.

 

http://www.wholesalesolar.com/solar-information/solar-leasing-option

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Permalink Reply by JHH on February 13, 2016 at 11:04

Whatever happened to Bloom Energy.  There was a piece on 60 Minutes a few years ago... touting the use of natural gas and the byproduct was water?

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Permalink Reply by Skip Peel - Mineral Consultant on February 14, 2016 at 5:52

"The reality is that the renewable energy tax credit is just a means to promote crony capitalism where big government collaborates with big companies to provide what government decides is in the nation’s best interest. When the government make billions of dollars available to solve a problem, real or imaginary, there will always be financial entrepreneurs who will design ways to accommodate the government and get rich in the process. History has shown that once subsidies are in place, they are very hard to end."

I could pick any one of a number of similar statements in this article but this one will do just fine I think.  Instead of renewable energy as the means to promote crony capitalism lets substitute the government making millions available to solve a problem, one I'm sure we all agree was real, not imaginary - declining domestic oil and gas production.  Think Peak Oil say 10 years ago and efforts to adapt new drilling and completion technologies to producing shale.  Government science and funding supported George Mitchell in his efforts to unlock the secrets to economic recovery of natural gas in the Barnett Shale. A pie in the sky effort largely dismissed by the very industry that it saved. "Big government" in fact promoted the well being of the energy industry (entrepreneurs) - crony capitalism? Or an investment that has paid huge dividends for the well being of our country?  And as to the last sentence, let's look to the horizontal well incentive the financially strapped State of Louisiana provides to energy companies.  When it was passed there were very few horizontal wells because the technology was in its infancy, not perfected.  This past Friday (Feb. 12)  there were 21 rigs drilling in NW LA parishes (the most active region of the state) with  20 horizontal wells and 1 vertical.  That's a ratio that has been common for about eight years now.  Horizontal wells are no longer "an experiment", they are the norm.  Although that is an irrefutable case the state continues to subsidize drilling by exempting the bulk of the severance tax that would normally be paid on production. 

The fact is that every industry that benefits from some sort of government support, however it is characterized, likes to maintain the status quo that benefits them.  In the case of energy companies operating in Louisiana the horizontal well incentive offsets a far too high severance tax rate.  A revision in taxation that takes into account the current realities would do away with the incentive and reduce the severance tax rate for capable oil to a more sensible percentage.  That would support operating companies investing in exploration and production in the state.  The same process of review should look at which companies reap the windfall of cheap hydrocarbons.  In Louisiana that is the refining and chemical industries.  There is a reason that there is an approximate $100B worth of investment in the Gulf Coast Region by those industries.  Low prices for oil, natural gas and NGLs have increased their profit margins substantially.  By all appearances the depressed price of hydrocarbons will last for some decades.  So should the tax load be less on E&P companies struggling to find ways to stay in business and more on the processors of the cheap hydrocarbons they produce? 

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Permalink Reply by Steve P on February 15, 2016 at 17:59

i live in CA, which has lots of sunshine. i have a co-worker whose parents live in the Central Valley (lots and lots of sunshine). they purchased solar panels for house a couple of years ago. the pay-back was less than two years!

The ROI is influenced by the tax credits, but not totally dependent.Geography has everything to do with it.

while i totally support the oil and gas industry (grew up in La, and still have land and minerals here), solar and wind are viable alternatives in certain parts of the country. Like the federal government and many States, tax incentives play a role in the launching of new technologies and new industries. Just look at what state's offer to the auto industry to get selected for a new car assembly plant.

this is, for better or worse, the way public tax policy works these days. i plan on retiring in a few years, back in the South. will closely look at the economics of solar panels on the house i build.

Generally, a person's opinion on the topic depends on what the incentive does to your own bottom line. Too many example to list.

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Permalink Reply by Skip Peel - Mineral Consultant on February 16, 2016 at 1:54

Solar technology has become more efficient and cheaper.  No surprise as that's what nascent technologies do.  Tax incentives can be reduced accordingly, if legislators are paying attention.  Right now they appear to be paying more attention to electric utilities that are fighting net metering. Good to hear that you're coming home when you retire, Steve.

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Permalink Reply by Steve P on February 16, 2016 at 11:03

well, not exactly "home," but east of the Pecos and south of the Mason-Dixon Line.  

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Permalink Reply by Skip Peel - Mineral Consultant on February 16, 2016 at 13:55

That works.

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