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In this episode of Let People Prosper, Vance Ginn dives deep into the complexities of energy markets with Josh T. Smith, energy policy lead at the Abundance Institute and author of the Substack newsletter . We explore the barriers and opportunities in energy policy, the role of permitting reforms, and the importance of innovation in achieving energy abundance. Josh shares how the Abundance Institute is paving the way for new energy technologies and why collaboration and market-based solutions are key to a prosperous energy future.
(0:00) - Introduction to Energy Markets and MotivationJosh shares his passion for influencing energy policy and the challenges he sees in the current landscape. (6:04) - The Abundance Institute and Its MissionThe institute’s focus on creating pathways for new energy technologies and fostering innovation through policy and networking. (11:56) - Federal Energy Policy ChallengesDiscussion on the barriers created by subsidies and the importance of addressing permitting reform to facilitate energy development. (17:56) - Future of Energy Production and InterconnectionExploring the complexities of the interconnection process and the potential of modular nuclear reactors. (24:41) - Reliability and System-Level Attributes in EnergyWhy reliability is crucial for energy systems and how market-driven solutions can improve it. (31:43) - Innovations in Energy: Nuclear and BeyondThe role of cutting-edge technologies and behind-the-meter innovations in shaping the future of energy production. This week’s episode tackles some of the most pressing economic issues before the upcoming election. We dive into both presidential candidates' economic proposals and how policies like tariffs, price controls, and intervention in the Federal Reserve are creating concern among economists. We also explore policymakers’ attempts to control prices and quantities of goods, the ongoing debate over school choice, and how the Nobel Prize in Economics brings new perspectives on prosperity and immigration. Watch the episode on YouTube below, listen to it on Apple Podcast or Spotify, visit my website for more information, and get show notes at www.vanceginn.substack.com. In episode 80 of This Week's Economy, I discuss the SALT tax deduction problems, California’s social media law concerns, nuclear power race with China, VP debate challenges, presidential candidates miss pro-growth policies, and Texas can eliminate property taxes.
Watch the episode, or listen to it on Apple Podcast or Spotify, and visit my website vanceginn.com or newsletter vanceginn.substack.com for more information. In episode 77 of This Week's Economy, I break down the flawed economic promises of presidential candidates who ignore that nothing is truly free. From proposed AI regulations and fracking policies to tax plans and protectionism, I explore the impact these issues have on innovation, energy independence, and economic growth while highlighting why free-market solutions are key to prosperity. Get the show notes and more information at vanceginn.substack.com.
Join me for Episode 111 of the Let People Prosper Show with Dr. Paul Tice, Adjunct Professor of Finance at the Leonard N. Stern School of Business at New York University, to hear his take on the costs of ESG actions and mandates on energy and our future from his book “The Race to Zero.”
Subscribe, share, and rate the Let People Prosper Show, and visit vanceginn.substack.com for more insights.  Originally published at Austin American-Statesman.
Texas remains a magnet for people and businesses, attracting more newcomers than most states. To sustain this influx and support a growing economy, the state must strengthen the infrastructure required to meet Texas’ expanding energy needs. The Electric Reliability Council of Texas (ERCOT) projections indicate that Texas’ energy demand will nearly double by 2030, increasing from 85 to 150 gigawatts in just six years. This revelation has sparked significant concern among state policymakers and industry leaders. The expansion of cryptocurrency mining, data centers, and the burgeoning artificial intelligence industry drives a significant portion of this anticipated growth. These sectors, often viewed skeptically, are integral to the modern economy and are poised to drive the next economic revolution. With the right free-market policies, Texas can maintain its leadership in technological advancement and ensure abundant energy for Texans. By removing barriers that impede energy production and disincentivize entrepreneurs from investing in Texas, the state can look forward to a bright future. Even former skeptics recognize these industries' importance, as seen in President Trump's recent emphasis on Truth Social: "We want all the remaining Bitcoin to be MADE IN THE USA!!! It will help us be ENERGY DOMINANT!!!” Texas has the potential to lead in this arena. The state’s abundant land and natural resources support the technology sector's growth. However, this growth necessitates a reliable, abundant energy supply, a potential that Texas is well-positioned to fulfill. Texas is already a national leader in renewable energy production, with significant contributions from wind and solar. However, reliable natural gas remains the cornerstone of the state’s energy supply, providing power regardless of weather conditions. Furthermore, Texas has a bright path forward with the potential for expanding nuclear energy, providing a solid energy mix through market forces, not government planning. Texas must leverage the free market's incentives to foster an environment conducive to building new power plants, including nuclear power. Policymakers should signal that Texas is open for business and ready to meet its rising energy demands efficiently. Discouraging capital investment in power generation through increased government intervention or propping up some generation over others is counterproductive. Rather than picking winners and losers, Texas should let market competition drive the provision of abundant, reliable energy. By embracing free-market policies, Texas sets a powerful example for other states. As states experiment with different approaches, the best ideas can emerge, fostering a competitive environment that drives progress and prosperity. For starters, Texas needs to show free-market leadership by fighting back against onerous federal regulations that impede the energy industry's growth. The state should remove itself from the bondage of the Biden administration’s flawed green energy agenda items from the so-called “Inflation Reduction Act.” This could be done by rejecting federal funds, tax breaks, and other measures while pushing for Congress to end the IRA. The Biden administration’s industrial policy distorts the market. Texas should not fall into the trap of picking another industrial policy and instead provide a level playing field where all forms of energy can compete. Texas has a bright future, likely leading the nation in economic and technological advancement. By adhering to free-market principles, reducing unnecessary spending, taxes and regulations, and fostering a competitive energy market, Texas can continue to attract people to open businesses, work and raise families. Originally published at American Energy Institute.
Originally published at OCPA.
In 2022, Oklahoma lawmakers passed the state’s “Energy Discrimination Elimination Act” (EDEA), which requires the office of the state treasurer to conduct a review of firms to identify those that boycott investments in oil-and-gas companies due to their embrace of so-called “Environmental Social Governance” (ESG) policies. State entities, including state pension funds, cannot contract with firms on that list. In April, the Oklahoma Rural Association released a study that claimed the Energy Discrimination Elimination Act has increased municipal borrowing costs by 15.7 percent. But now a new study, released by the American Energy Institute, has examined the Oklahoma Rural Association’s work and found it riddled with flaws and omissions that skewed its findings. “As we release this comprehensive analysis, it’s clear that the Energy Discrimination Elimination Act of 2022 is crucial for safeguarding Oklahoma’s economic interests and ensuring sound fiduciary practices,” said Jason Isaac, CEO of the American Energy Institute. “Our research debunks the flawed claims against the EDEA, highlighting its role in protecting vital energy sectors and promoting financial stability for the state.” “Fact versus Fiction: Examining Oklahoma’s Energy Discrimination Elimination Act of 2022” was authored by Vance Ginn, former chief economist of the White House’s Office of Management and Budget and a fellow at the American Energy Institute, and Byron Schlomach, an economist with 30 years’ experience in state-level public policy who served on the Piedmont City Council and was the director of the 1889 Institute in Oklahoma. The two men examined the “Energy Discrimination Elimination Act” and the Oklahoma Rural Association’s critique of the law, and found the critique deeply flawed. “The Oklahoma Rural Association’s report on the state’s Energy Discrimination Elimination Act and its purported impact on municipal borrowing costs contains significant methodological flaws,” Ginn and Schlomach write. “It fails to establish a causal relationship between the EDEA and higher municipal borrowing costs. Changes in federal policy with respect to the oil industry, first positive under President Trump and now decidedly negative under President Biden, are more plausible explanations for Oklahoma’s relatively increased borrowing costs. Furthermore, the push towards ESG investing overlooks the opportunity costs associated with divesting from reliable energy sources like oil and gas, which are crucial to Oklahoma’s economy.” Due to the flaws in the Oklahoma Rural Association study, Ginn and Schlomach conclude that it “should not be used as a reason to question or delay the implementation of protections put in place by the elected representatives of states like Oklahoma and Texas against asset managers using the assets of those states to push ESG-aligned political objectives.” Instead, they write that policymakers should “ensure that investment decisions prioritize profitability and fiduciary responsibilities over politically driven, subjective ESG criteria through increased transparency, independent audits, and clear rules. This approach will better safeguard economic interests and promote sustainable growth, benefiting the broader community and the environment.” Among the problems that Ginn and Schlomach identify in the Oklahoma Rural Association report is the fact that a comparison of Oklahoma municipal bonds with a national index “shows Oklahoma’s interest rates varied by less since September 2022, before the law went into effect in November 2022 and when the Treasurer issued the restricted financial companies list in May 2023.” “This indicates that EDEA did not cause interest rate movements and that the paper’s results come from cherry-picking the data and specific states,” Ginn and Schlomach write. The two economists also write that the Oklahoma Rural Association report overlooked other important factors, “such as the upward trend in interest rates,” and also contained “methodological challenges of correlation versus causation.” The Oklahoma Rural Association’s report claims the EDEA has increased municipal borrowing costs by approximately 59 basis points (0.59 percent), a 15.7 percent increase compared to some states, and attributes that increase to reduced financial competition that the report suggests has been created by the EDEA. However, Ginn and Schlomach note that the Oklahoma Rural Association report notably omitted New Mexico from the selected neighboring states examined, “raising questions about whether the chosen states moved in parallel with Oklahoma before the EDEA’s implementation.” In addition, they note that “a substantial outflow of funds from municipal bonds” occurred nationwide in 2022 and 2023. Ginn and Schlomach note that Oklahoma’s municipal borrowing interest rates were “trending upward long before the EDEA’s passage and implementation.” And the two economists argue that the Oklahoma Rural Association report fails to address the negative impact of ESG investing strategies on Oklahoma. “Divesting from reliable energy sources like oil and gas in favor of renewable energy projects often result in lower returns and economic disruptions,” Ginn and Schlomach write. “States with significant economic output from the oil and gas sector, such as Oklahoma and Texas, face significant spillover effects from reduced investment in these industries. These spillover effects include job losses, reduced economic activity, and lower tax revenues, which ultimately create ripple effects on the broader state economy.” Further, using ESG criteria in public pension funds and state investments “can lead to lower financial performance and increased risks, as highlighted by critiques and evidence.” “EDEA is specifically designed to counteract the growing trend among financial institutions to shun investments in fossil fuel industries due to ESG pressures,” Ginn and Schlomach write. “By enforcing this law, Oklahoma ensures that its oil and gas sectors, which are crucial to its economy, remain robust and well-funded.”  Texas stands as one of the most vibrant and attractive states in the United States, celebrated not only for its robust job market but also as a top destination for new residents. Its economic success and allure are largely due to the free-market model, which has fueled growth and innovation. However, even in such a thriving environment, the electricity market presents significant challenges that must be addressed to ensure continued prosperity. To keep up with its growth, Texas must refine its energy strategies, emphasizing market-driven solutions rather than increased government intervention.
Texas is rich in natural resources, capable of meeting the energy demands of its growing population if managed wisely. Among these, natural gas stands out as a particularly reliable source. In contrast to the intermittent nature of wind and solar power, natural gas provides consistent and robust energy supply, rain or shine, making it a cornerstone of Texas’ energy infrastructure. Despite these natural advantages, there has been a worrying shift towards greater government involvement in the energy sector, potentially undermining the very free-market principles that have driven Texas’ growth. This trend was exemplified by the recent legislative decision to pass SB 2627, establishing the Texas Energy Fund. While intended to support the state’s energy infrastructure, this initiative opens the door for problematic state interventions in the market. Approved by voters last November, the fund is slated to allocate $10 billion, with a substantial portion earmarked for state-controlled power projects and infrastructure developments outside the purview of the Energy Reliability Council of Texas (ERCOT). Such strategies risk taxpayer dollars and discourage the private sector investment crucial for spurring innovation and efficiency in the energy sector. Further compounding the issue is the engagement of large investment firms like BlackRock, which has expressed interest in exploiting the Texas Energy Fund. Historically detached from Texas’ core energy industries, these firms stand to benefit from state-directed initiatives at taxpayer expense. This involvement will centralize power, stifle competition, and suppress the innovation that is vital for a healthy market economy. Instead of continuing down this path, Texas needs a light-touch regulatory framework that promotes competition and fosters innovation through market forces. State policies should remove obstacles for private investment in energy production and distribution, ensuring a competitive market that drives down costs, improves service quality, and encourages technological advancements. The limitations of unreliable energy sources have been made starkly apparent each time Texans receive a conservation notice from ERCOT, with more likely coming this summer. A free-market approach, which minimizes government intervention and allows energy prices to reflect supply and demand, offers the best solution for managing Texas' energy resources efficiently. This strategy is about more than just maintaining an efficient energy grid; it’s about preserving the entrepreneurial spirit that defines Texas. By reducing government overreach and enhancing market dynamics, Texas can ensure that its energy sector remains as dynamic and resilient as its economy. Looking forward, Texas policymakers face a clear choice. They can embrace the principles of free-market capitalism and minimal government intervention across all sectors, not just energy. This path will secure Texas' leadership in economic growth and innovation, ensuring a reliable and affordable energy supply for future generations, which ought to include nuclear energy. By championing policies that reduce government involvement and promote market functionality, Texas can strengthen its infrastructure to support its growing population and sustain its status as a beacon of prosperity and freedom. Emphasizing market-driven solutions will enable Texas to meet the challenges of today and tomorrow, ensuring that the state remains a fantastic place to live, work, and raise a family. Texas has always been a leader, not a follower. By adhering to the principles that have shaped its past successes, Texas can ensure a bright and prosperous future, powered by innovation, competition, and the indomitable Texan spirit. In this episode, we discuss: 1) The flawed green energy agenda, how it centralizes power, enables China, and stifles free markets (watch the hearing before the U.S. House Ways and Means Committee where we both testified on how destructive is the green energy agenda); 2) Why wind and solar can never replace fossil fuels and the harmful effects of trying to eradicate all fossil fuel usage; and 3) How "Bidenomics" is empowering foreign nations while putting the U.S. at a disadvantage, and more. Daniel’s bio:
For show notes, thoughtful insights, media interviews, speeches, blog posts, research, and more, check out my website (https://www.vanceginn.com/) and please subscribe to my newsletter (www.vanceginn.substack.com), share this post, and leave a comment.  The debt ceiling fiasco is over, and with it, the costly Inflation Reduction Act, or as I like to call it, the Inflation Recession Act, was unfortunately left mostly intact. Congress’s lackluster attempt to curb spending will matter even less considering this, as new calculations show. The time is ripe for a reassessment and elimination of at least the ill-advised tax credits contained within the IRA before irreversible damage is inflicted on our already suffering economy.
Last year, the Congressional Budget Office (CBO) estimated that the IRA would cost $391 billion from 2022 to 2031. But with updated data and Treasury rules, new cost estimates show it to be three times higher at $1.2 trillion. During my recent testimony before the U.S. House Ways and Means Committee, I noted the need for a re-estimate of the IRA’s cost for tax credits that subsidize manufactured battery cells and modules for electric vehicles (EV). The CBO’s estimate of these tax credits was $30.6 billion, but new calculations have it at nearly $200 billion–or nearly seven times higher. Battery cells can receive a $35 tax credit for every kWh of energy the battery produces, while battery modules can receive $10 per kWh, or “$45 for a battery module that does not use battery cells.” The CBO’s assessment was conducted prior to the Treasury’s release of draft guidance in March that relaxes mineral sourcing standards to produce EV batteries. And since the IRA passed, there’s more evidence that incentives matter as EV manufacturers substantially increase production to get the tax credits well above CBO’s estimates. Look no further than Tesla for a real-time example of how these tax credits will cost us. Maker of the most-sold EVs in America, Tesla moved its battery production from Germany to Texas after the tax credits were announced. And its Model Y emerged as the best-selling EV in the U.S. last year, with a total of 234,834 units sold. Its battery starts at 75-kWh, so for those sales, Tesla could have received more than $616 million in tax credits had the tax credits been in place. For 2023, Tesla expects to manufacture 2 million EVs, resulting in possibly $5 billion in annual tax credits for batteries. Meanwhile, Ford, which had the second-highest EV sales last year, plans to triple production for its F-150 Lightning, targeting 150,000 units by the end of 2023. The battery size for this model starts at 98-kWh, and assuming Ford meets its goal, that would cost taxpayers $514 million in tax credits. If Tesla and Ford can collectively receive at least $1 billion in tax credits in 2023, it’s easy to see how the CBO’s estimate over the next decade for all EV batteries is too low. This difference between the estimates and the growth of the EV market is concerning in this post-pandemic economy, verging on a recession where more than 60% of Americans are estimated to be living paycheck to paycheck. More government spending, like what’s allotted in the IRA, and more debt, like what’s allowed under the debt ceiling deal, is the last thing America needs. As government spending increases, so do taxes, leading to less work, lower productivity and growth, and, subsequently, less tax revenue. These measures contribute to even higher budget deficits that stifle economic growth, increase poverty, and exacerbate multi-decade high inflation. While the IRA’s green energy initiatives, massive tax hikes, and excessive spending should have been enough reason to reject it initially, Democrats forced it through based on CBO’s massive underestimates of tax credits and other initiatives. Now, taxpayers will suffer the aftermath of this expensive legislation, which is why these costs should be reevaluated and ultimately eliminated before this weak economy is made worse for struggling Americans. For a better path forward, we need more pro-growth policies and less government spending, not bad debt deals and corporate welfare to large businesses on the backs of taxpayers. Originally published at Econlib.  The hearing is scheduled for today at 10 am ET at Longworth House Office Building: Hearing on the U.S. Tax Code Subsidizing Green Corporate Handouts and the Chinese Communist Party. Below is the video of the full hearing (my statement starts at time 27:30 with other comments throughout the 4-hour-long hearing). And below that is my written testimony based on this recent research on The Inflation Reduction Act's Costly New Tax Credits for Electric Vehicle Batteries and the policy brief.  The push to ditch reliable energy is out of control. Politicians are manipulating the energy market through subsidies, tax breaks, and environmental, social, and corporate governance (ESG) initiatives in regulations and government pensions.
It’s also concerning that the “big three” investment institutions, which collectively hold over $20 trillion in assets, too often coerce the companies in which they have significant investments to bend the knee to their big-government political ideology, such as complying with the Paris Climate Accord. Sadly, the result of this virtue signaling to prop up unreliable wind and solar comes at high costs for little benefits—if any benefits at all. And more than hemorrhaged taxpayer dollars are at stake: this green energy agenda increases poverty. It must stop. While the media is constantly ringing alarm bells about the always-changing climate, not enough people are alarmed by the economic trade-offs these unreliable green energy initiatives create. But that requires an honest comparison of the climate change risks versus the economic costs, both of which impact future generations. The International Energy Agency (IEA) finds that there were an expected 20 million more people without electricity globally, totaling 775 million people, in 2022. Many of these people are in sub-Saharan Africa, who are facing increasing hardship due to rising costs for food, fuel and other necessities. This situation is made worse by the left’s insistence on unreliable sources of energy that have forced many Europeans to use wood for stoves and heat instead of much cleaner-burning natural gas. Forcing some of the population to depend on energy sources that don’t work ultimately pushes them into hardship and poverty when those methods fail. Texas experienced this problem in a tragic way two years ago during its historic weather event of freezing temperatures and accumulations of ice and snow that left thousands without power, contributing to an estimated 246 deaths. Such a tragedy should never have happened in America’s energy capital, but these are gambles that politicians take when offering subsidies to unreliable variable energy providers that make it difficult for reliable thermal energy to compete, even though thermal energy is the most stable and reliable form. Fortunately, Texas let a property tax break for businesses called Chapter 313 expire in December 2022. That tax break was often used by renewable energy companies to lower their tax bills (and operating costs). Still, some already want to bring Chapter 313 or something like it back. This should be a non-starter. That’s not to say that climate change couldn’t have consequences, but considering the projected minimal benefits from expensive initiatives by politicians and the need for adaptation, the trade-offs seem hardly worth it. And this says nothing of the benefits of more CO2, which is necessary for life on earth. More broadly, if every signatory of the Paris Accord, including India and China, decarbonized by 2050, the temperature differentiation by 2100 would be just 0.17 degrees. And according to climate change activists, the cost to get there could be as much as $21 trillion through 2050. Businesses attempting to go green would be forced to raise their prices significantly to make a profit, a normally tough task that’s only made harder by present-day sky-high inflation. But if subsidies and other artificial means of skewing the energy market continue, then businesses that don’t receive subsidies and can’t afford to “go green” simply won’t be able to compete. This would result in a massive reallocation of resources that will contribute to less economic growth, more poverty, and less energy stability. Not only can over-dependence on unreliables lead to hardship, but it often counteracts the green energy innovation it wants to spur. One of the reasons the U.S. is so prosperous is that it is the most responsible and efficient at producing and utilizing energy, having reduced criteria pollutants 78% in the last 50 years. And what has supported this is our wealth acquired via free-market capitalism. That’s why the best thing for activists and politicians seeking improved adaptation to climate change is to get out of the way and let the free markets, meaning free people, work. Subsidies, tax breaks, ESG initiatives, and other hindrances to a well-functioning market process should be abandoned. When politicians push funds into green energy agendas, often to win votes through virtue signaling, precious scarce taxpayer resources are wasted. Markets work, but we have to let them. Individuals and entities should be left alone when choosing which energy sources to direct their funds and business. Otherwise, the outcome is less prosperity and more poverty. There is a better way. Originally posted at Real Clear Energy.  The media is quick to explain away the runaway inflation that is squeezing American families and darkening the prospects of Democrats in the upcoming midterm elections.
“The U.S. economy has been hit with increased gas prices, inflation, and supply-chain issues due to the Ukraine crisis,” CBS News tweeted on Tuesday. Its article went on to claim, “Although many Americans may prefer that the U.S. stay out of the conflict between Russia and Ukraine, the brewing violence and political fallout are already hurting their wallets.” Americans know better—because each of these problems has been worsening ever since President Joe Biden took office in January 2021. The West Texas Intermediate crude oil (WTI) price is up 98% since January 2021. Yet WTI is essentially flat since the White House warned that Russia would soon invade Ukraine on Feb. 11. On that day, WTI sold for $93 per barrel. On Tuesday, it closed at $92. It just goes to show that the Biden administration (and its allies in the media) will try to blame anything except its own bad policies. https://www.texaspolicy.com/you-cant-blame-ukraine-crisis-for-rising-inflation-gas-prices/ |
Vance Ginn, Ph.D.
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