I never thought I’d be agreeing with liberals on the issue of renewable energy sources, and yet here we are:
“We’re hearing a lot about renewables, presumably wind and solar. Those are the most expensive ways of generating of electricity that we have available to us,” he said. “In a system that is impoverished and in desperate need of simple generation — particularly on an island favored by trade winds — why aren’t we pursuing much less expensive and much more reliable conventional electricity generation?”
Assistant Energy Secretary Bruce Walker responded flatly, “Your assertion that it’s the most expensive generation would assume that you’re sitting in Arizona paying 1.6 cents per kilowatt. However, when you’re sitting in Puerto Rico paying 20-plus cents per kilowatt, some of the cost effectiveness of wind and solar actually become economical,” he said, noting that Energy Department modeling — “the most sophisticated in the world” — takes into account both energy costs and other market factors. “Recognizing that Puerto Rico relies on bunker [oil] fuel for the most part for their energy and/or coal, hitting below those price points is not that hard,” Walker added.
Walker noted the fact that high-voltage transmission lines in Puerto Rico currently have to cross the mountainous center of the island, to bring it from centralized coal- and oil-fired plants in the south to where most of the energy demand is in the north, around San Juan, at tremendous cost. On top of that, all of the fossil fuels used in Puerto Rico need to be imported, tacking on significant costs.
I listened to this entire hearing from start to finish via YouTube on Friday afternoon, and The Intercept’s reporting of Tom McClintock’s and Bruce Walker’s comments is accurate.
The major difference between the Caribbean islands and the US in terms of power generation is that with the exception of Trinidad and Tobago, the Caribbean is forced to rely on imported fuels to power their countries. As a consequence, energy prices in the region are extremely high in comparison to those in the United States. Many of these nations are also poorly run with electrical grids that are not exactly state of the art, though most aren’t as bad off as Puerto Rico is.
The problems with Caribbean oil dependency have caused diplomatic issues for the US. The continued challenges the Caribbean faces in regards to the price of oil have lead directly to Venezuela gaining influence in the region at the expense of the United States.
In 2004, Hugo Chavez established the Petrocaribe program, which offered PDVSA’s oil to Caribbean nations on favorable terms. These countries were allowed to pay for just a portion of the oil up front, with the remainder to be paid for through a 25 year financing arrangement at 1% interest. They also purchased stakes in many Caribbean oil refineries
This allowed Chavez to buy an enormous amount of influence throughout the region. I don’t think I need to do into detail why it is bad for a crusading communist dictator, who hates the United States, buying influence in America’s backyard. Petrocaribe has since fallen apart with the collapse of PDVSA, but Russia and China are now seeking to replace Venezuela as a sponsor to these nations.
The Intercept, later in the article, criticizes the US for talking about trying to make Puerto Rico a regional hub for oil distribution, from which US oil companies could theoretically ship natural gas to the other countries in the region. This criticism is wrongheaded.
While I’m guardedly supportive of renewable energy solutions in the Caribbean, if many of these Caribbean nations are still going to be using oil for the foreseeable future, then we should be doing what we can to help America’s oil companies ship their product to the region at low cost and engaging in “resource nationalism” of our own to keep our enemies from buying influence there.
As annoying as the green energy activists are in trying to force us all to go to renewable energy in the United States, we should hope they succeed in Puerto Rico and the Caribbean. If Caribbean nations are unable to reduce costs with renewable power, then the US should be working to help its own oil companies to sell oil into the region as cheaply as possible.
Either option will do a lot to help turn the region’s precarious financial situation around, and also give Russia, China, and other US foes fewer tools with which to influence our neighbors.