A couple of weeks ago, I posted about the economic problems with Spain’s alternative-energy programs, and the apparent unwillingness of the Obama administration and its congressional allies to learn from that experience. Comes now a leaked Spanish government report on alternative energy progress and problems. From the PJ Media summary:
Unsurprisingly for a governmental take on a flagship program, the report takes pains to minimize the extent of the economic harm. Yet despite the soft-pedaling, the document reveals exactly why electricity rates “necessarily skyrocketed” in Spain, as did the public debt needed to underwrite the disaster. This internal assessment preceded the Zapatero administration’s recent acknowledgement that the “green economy” stunt must be abandoned, lest the experiment risk Spain becoming Greece.
The government report does not expressly confirm the highest-profile finding of the non-governmental report: that Spain’s “green economy” program cost the country 2.2 jobs for every job “created” by the state. However, the figures published in the government document indicate they arrived at a job-loss number even worse than the 2.2 figure from the independent study.
The PJ Media post also observes that “On eight separate occasions, President Barack Obama has referred to the “green economy” policies enacted by Spain as being the model for what he envisioned for America.”
From the translation of the slides in the Spanish government report:
Energy is a key input in industrial production processes. In basic industries (cement, industrial gases, metals, basic chemicals and steel), energy costs are three times the labor cost. The electrical cost for the Spanish industry is well above the European average (+17% higher).
The price of electricity determines the competitiveness of Spanish industry.
Switching focus to the U.S., the current Fortune Magazine has an article on Chinese companies that are moving manufacturing to this country. Yuncheng, for example, now has a new plant making gravure cylinders (used for label printing) in Spartanburg, SC. Why there, rather than in China? Two major reasons include: (1)land costs, estimated at one-fourth the price of land in the Chinese area where the company runs its three existing plants, and (2)electricity prices–4 cents per kilowatt-hour in Spartanburg versus 14 cents per kwh back in China.
Energy-intensivity of manufacturing processes differs from product to product, of course, but there are a lot of industries in which energy costs are a primary determinant of cost and selling price…and, hence, of competitiveness.
I suspect that a fair number of our politicians simply lack the intellectual firepower to develop a good understanding of the issues involved in energy policy. Others have the mental ability, but really don’t care about the impact on American competitiveness as long as they can assemble the interest groups necessary to support their re-elections. And there does exist within the “progressive” movement that dominates academia and the media a substantial segment made up of those who believe that American is too powerful and the American people too affluent, and that we need to be cut down to size.