The Bush Energy "Policy" Takes Shape

When President Bush insisted in his various State Of The Union addresses that America needed to break its addiction to oil, many people, many sober, rational people, thought he meant finding and using alternative energy sources that would be less polluting than oil.

Apparently not. Two stories snuck under the velvet rope of the mainstream media that clearly delineate what the administration is thinking (and more important, doing) about energy policy, as well as global warming. Item #1:

HEILIGENDAMM, Germany (Reuters) - The United States will refuse to agree to targets and timetables for cutting greenhouse gases at a summit of the Group of Eight starting on Wednesday, a senior adviser to President George W. Bush said.

German Chancellor Angela Merkel has been pushing for an agreement at the June 6-8 meeting that global cuts in greenhouse gas emissions of 50 percent below 1990 levels by 2050 are needed to curb global warming.

"At this point in time we are not prepared to adopt that proposal," James Connaughton told reporters hours before a lunch between Bush and Merkel. He said he hoped the G8 would come up with a "common vision" rather than details of cuts.

Connaughton, the head of the White House Council on Environmental Quality, said Bush was working on his own plan announced last week to get the top 15 greenhouse gas emitters to agree to cuts in emissions by the end of 2008.

OK, just sounds like typical Bush intransigence, a sign that the cowboy lives on, despite the fact he rides sidesaddle.

Item #2:

LONDON (Reuters) - Hedge funds are only likely to participate in coal once it has become a fully liquid commodity, but the banks are already active players, the head of electronic trading platform globalCOAL said on Wednesday.

"Over the last year, we have seen more involvement from the banks," Eoghan Cunningham, Chief Executive Officer of globalCOAL, told the Reuters Global Energy Summit.

Speaking in London, he said Morgan Stanley (MS.N: Quote, Profile, Research, Merrill Lynch & Co. (MER.N: Quote, Profile, Research and Australia's Macquarie Bank Limited were involved in physical trade and others were "coming in behind."

"It's partly because of the difference between physical and financial. They can arbitrage," he said.

Admittedly, this story arises because there is, finally, a commodities market for coal.

Coal is far and away the most abundant energy source on the planet, and the United States has been called "the Saudi Arabia of coal" (China would have to be Iraq or Iran, in that analogy).

The interesting part of that story revolves around the involvement of hedge funds. Hedge funds will generally stay directly out of this market as much as possible, to avoid as many regulators as they can. Hedge funds make money in ways that are, while perfectly legal, not necessarily for the fainthearted, often investing in contrary positions in the same market, industry or even company, and then making a profit on timing discrepancies.

In short, they devour information and find the weak spots. Sometimes this means finding out things the general public will not know for quite some time and loading up big bets on the outcome.

That this commodities market is coming on-line worldwide now, and that hedge funds have started sniffing the waters, AND the Bush administration stance going into the G8 summit regarding Angela Merkel's proposal, cannot be coincidences.

Indeed, a quick persual of the advertisers who bought air time on the Sunday morning talk shows this past weekend indicates that the American coal industry has starting selling its line of bullshit that coal can ever be made less polluting that natural gas or oil.

And yet, you may recall that in May, Bush called for a "Twenty In Ten" program to reduce CO2 emissions by 20% in the next ten years.

Depends on what you call "reduce". Here's how they will measure it, from his own words:

was pleased to receive the Energy Information Administration's report today, which includes its "flash estimate" of U.S. carbon dioxide emissions for 2006. The report shows that emissions declined 78 million metric tons over 2005, or 1.3 percent, while our economy grew 3.3 percent. That means CO2 intensity decreased by 4.5 percent - the largest annual improvement since 1990 - putting us well ahead of what is needed annually to meet my greenhouse gas intensity reduction goal of 18% by 2012.

So while greenhouse gas emissions declined by only 1.3%, Bush is claiming more than three times that gain by adding in economic growth! My god! What's he's claiming then is that even activities that in no way contribute to greenhouse gas emissions (online sales, let's say) will be used to amplify an insignificant reduction in those emissions!

This is cynicism at it's uberworst, but it does open the door to allowing the shift to coal, in any form, as a legitimate "greenhouse gas reduction".