June 29, 2018 Read More →

The Trump administration is reshaping the country under the guise of national security. The energy sector is next.

The Intercept:

This new memo, first circulated in advance of a National Security Council meeting late last month, appears designed specifically to write out a role for FERC, though energy analyst Cathy Kunkel of the Institute for Energy Economics and Financial Analysis said it’s “hard to imagine that you could change the wholesale market without FERC being involved,” given that it’s the main body responsible for regulating energy markets.

Invoking wartime powers to prop up struggling energy sources is a remarkable step for the administration to take. The Defense Production Act is intended to give the executive branch sweeping powers to nationalize industries that are vital to national security or for dealing with natural disasters. It was first invoked by former President Harry Truman in 1952 to nationalize the steel sector during the Korean War, in an attempt to pre-empt a nationwide strike by the United Steelworkers of America and prove to the nation that he wasn’t “soft on communism.” (The Supreme Court later decided that Truman didn’t have the authority to seize private property, as the war in Korea had never been formally declared.)

As Perry himself stated last month, “There is no free market for energy,” and the new rule he’s backing would actively intervene against prevailing trends in the energy market, where natural gas has reliably outcompeted coal over the last several years. Perry, though, isn’t wrong: The U.S. subsidizes fossil fuels to the tune of about $15 billion per year, according to a recent study from Oil Change International, and it regularly tips the scales in fossil fuel producers’ favor. At most, though, the administration’s proposed bailout could only kick the can of coal’s decline farther down the road. “I would not think that uncompetitive coal plants are going to be more competitive in two years than they are now,” Kunkel said.

The Trump administration is reshaping the country under the guise of national security. The energy sector is next.

Posted in: IEEFA In the News

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