Is U.S. mining for raw materialscoal, uranium and hard-rock mineralsan economic activity whose time has passed? And if so, what can replace it?
The Obama administration certainly has done its best to make domestic mining and energy production much more costly. Its war on coal is well documented. After clamping restrictions on airborne emissions of ground-level ozone and mercury at coal-fired plants, the Environmental Protection Agency has called for carbon-emissions standards that cannot be met even with the most advanced technologies.
The Carbon Power Plant, Utahs oldest coal-fired electricity generating facility, will close in 2015 because not enough physical space is available for the equipment needed to meet the EPAs new mercury limits.
Not surprisingly, these policies have contributed to a sharp drop in coal use. Its share of electricity generation for 2013 is expected to dip below 40 percent, the lowest level since World War II. Coal consumption has fallen dramatically from 1.2 billion tons a year to just over 800 million tons a year.
Dozens of U.S. coal mines have closed, idling more than 150 of them this year and leaving thousands of miners jobless.
Implicit in the administrations hostility to coal is an assumption that other, greener energy sources are available to continue to ensure reliable and adequate supplies of electricity. But that is just whistling in the wind.
Nuclear power now generates 20 percent of our nations electricity. It turns out, though, that we are more dependent on imported uranium than we ever were on crude oil. Once a top uranium producer, the United States has only about nine operating uranium mines, and we import 90 percent of the uranium we use, much of it from Russia and Kazakhstan.
The United States has considerable uranium resources. Domestic supplies could fill electricity production and defense requirements many times over, but former Interior Secretary Ken Salazar banned mining on 1 million acres of the Arizona Strip covering northern Arizona and southern Utah. And, of course, Washington has blocked attempts to create a national repository for spent nuclear fuel.
Meanwhile, mining of another resource linked to energy productionfine-grained sandis under attack from opponents of hydraulic fracturing (fracking) for recovering shale oil and natural gas. Environmentalists want local governments to curtail sand mining, arguing that inhaling tiny particles of airborne silica could cause a lung disease called silicosis. The Greens are certain of this, Im sure.
Without sand mines, many of them in Wisconsin and Minnesota, there wouldnt have been a shale revolution. The United States now has abundant supplies of low-cost natural gas from fracking, in which a mixture of water, sand and chemicals is pumped underground at high pressure to break through shale deposits. The process has been so successful that cheap gas is fueling a surge in U.S. manufacturing of everything from chemicals and plastics to steel.
And sand mining is critical to shale-oil production. Thanks to the surge in shale-oil fracking, mainly in North Dakota and Texas, OPEC is no longer calling the shots. With oil imports at a 25-year low, U.S. refineries are operating at full capacity, and the net benefits from domestically produced oil and gas to the U.S. economy have reached $1 billion per day. Unconventional oil and gas production supported more than 1.7 million jobs last year, and is on pace to support 3 million by 2020. Its also contributed tens of millions of dollars in tax revenues and helped reduce the trade deficit.
If the supply of fine sand is cut off, the boom could go bust.
Energy independence is not a goal that most economists support, but its been an objective pursued by every president over the past 40 years. What is consistent with economic reasoning, though, is to maintain a diversified portfolio of energy sources so as to avoid overreliance on any one of them.
Like it or not, oil and natural gas, coal and nuclear power now and for the foreseeable future are the best available alternatives.
|William F. Shughart II is a Research Director and Senior Fellow at the Independent Institute, J. Fish Smith Professor in Public Choice in the Jon M. Huntsman School of Business at Utah State University, and editor of the Independent Institute book, Taxing Choice: The Predatory Politics of Fiscal Discrimination.|
TAXING CHOICE: The Predatory Politics of Fiscal Discrimination
So-called sin taxesthe taxing of certain products, like alcohol and tobacco, that are deemed to be politically incorrecthave long been a favorite way for politicians to fund programs benefiting special interest groups. But this concept has been applied to such sinful products as soft drinks, margarine, telephone calls, airline tickets, and even fishing gear. What is the true record of this selective, often punitive, approach to taxation?