DrumBeat: March 6, 2009

Betting on big oil’s comeback

NEW YORK (Fortune) — With crude down below $45 a barrel, it’s hard to see the beauty in oil stocks these days. But with analysts forecasting a rebound in prices, now might be a good time to buy.

“Right now, the upsides in the oil sector far exceed the downside risks,” says Fadel Gheit, an analyst at Oppenheimer & Co. “I am absolutely convinced that oil prices will rise.”

After last year’s $100 free-fall rocked expectations, that kind of confidence is surprising. But Gheit is not alone; a strong consensus is growing for a price rebound. While crude isn’t likely to rocket back to the sky-high levels of 2008, even bearish analysts admit that oil can’t stay below $50 for long.

Oil Rises to 5-Week High as Dollar’s Drop Bolsters Commodities

(Bloomberg) — Crude oil rose to a five-week high as the U.S. dollar weakened against the euro, bolstering the appeal of commodities as an alternative investment.

Oil climbed as much as 5.2 percent and the dollar fell the most in a week against the euro after unemployment advanced to the highest in 25 years in the U.S., the world’s biggest energy user. The Organization of Petroleum Exporting Countries will consider a fourth production cut when ministers meet on March 15.

“Oil is up because the unemployment number is causing the dollar pain,” said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. “This rally probably won’t last for long. As bad as things are here, I imagine the data from Europe and elsewhere will be worse, which will strengthen the dollar.”

Venezuela ready to propose OPEC cut if needed

CARACAS (Reuters) – Venezuela would propose another OPEC output cut if needed as the South American country sees oil markets oversupplied and petroleum inventories too high, Oil Minister Rafael Ramirez said on Friday.

Ramirez said OPEC should seek an oil price of at least $70 a barrel. Prices have fallen around $100 since reaching highs in July last year as the global economic crisis crimps demand.

PetroChina, Petrobras pursue Aruba refinery-sources

HOUSTON (Reuters) – Top Asian oil and natural gas producer PetroChina and Brazil’s state-run oil company Petrobras are seen as potential bidders for Valero Energy Corp’s 275,000 barrel per day refinery in Aruba, according to sources familiar with Valero’s attempts to sell the refinery.

New platforms push Petrobras output

State-controlled energy giant Petrobras posted its largest-ever one-day output of Brazilian crude oil this week after several new platforms recently came on line, the company said.

Petrobras produced 2,012,654 barrels on Wednesday which was 12,420 barrels more than the previous record set on Christmas day of 2007.

Petrobras Didn’t Want to Spend Full Investment Plan, Estado Says

Brazilian President Luiz Inacio Lula da Silva in a speech in Espirito Santo state today said he called Jose Sergio Gabrielli, chief executive of Petrobras, as the company is known, and told him to “spend every cent” to stimulate the economy, Estado reported.

BP Risked Causing Explosion on Alaska Pipeline, Report Says

(Bloomberg) — BP Plc, the second-largest oil producer in Alaska, risked causing an explosion when it cleaned an oil pipeline in the state in January, according to a report on the incident by Alyeska Pipeline Service Co.

US Govt may take oil royalty fight to Supreme Court

WASHINGTON (Reuters) – The U.S. government, fearing the loss of up to $10 billion in old drilling royalties from oil companies, may take a dispute with Anadarko Petroleum Corp to the U.S. Supreme Court, Interior Secretary Ken Salazar said on Friday.

In January, the Circuit Court of Appeals in New Orleans ruled Anadarko did not have to pay $150 million in royalties for drilling on federal leases in the Gulf of Mexico issued between 1996 and 2000.

If the case stands in Anadarko’s favor, other energy companies could forgo paying royalties. The Government Accounting Office estimates the government could lose up to $10 billion in royalty revenue over the life of the leases.

OPEC: World will pay for low oil prices by 2013

OPEC, the supplier of 40 percent of the world’s crude oil, said low prices may lead to a supply crunch by 2013 and rejected consumers’ arguments that cheap oil will help the world economy to recover.

“If the current low-price environment persists, this short- term relief may not translate into long-term gains,” OPEC Secretary Abdalla el-Badri said in an e-mailed statement today. “The failure of the industry to invest will result in a supply crunch by 2013 and beyond.”

Badri was responding to Nobuo Tanaka, the executive director of the International Energy Agency, who was cited in yesterday’s Financial Times as saying the global economy would get the equivalent of a $1 trillion stimulus if oil prices stayed at $40 a barrel this year. The IEA advises 28 oil importing nations on energy policy.

Too Cheap to Drill

Canadian Natural Resources Ltd. said it needs natural gas prices to recover to the range of $6.50 to $7.50 per thousand cubic feet before it ramps up drilling in Alberta, regardless of new royalty incentives introduced by the province this week to stimulate activity.

Canada’s second-largest natural gas producer said it is more likely to deploy its cash — it expects cash flow to range between $5.4-billion to $6-billion this year, down from nearly $7-billion in 2008 — on reducing debt coming due in the fall, higher-return projects, and acquisitions.

Ruble Gains for Second Week Versus Dollar on Oil, Loan Limits

(Bloomberg) — Russia’s ruble strengthened for a second straight week against the dollar as the price of oil rose and the central bank curbed speculation against the currency.

Paul Roberts – Spoiled: Organic and Local Is So 2008

Our industrial food system is rotten to the core. Heirloom arugula won’t save us. Here’s what will.

A couple years back, in a wheat field outside the town of Reardan, Washington, Fred Fleming spent an afternoon showing me just how hard it’s gotten to save the world. After decades as an unrepentant industrial farmer, the tall 59-year-old realized that his standard practices were promoting erosion so severe that it was robbing him of several tons of soil per acre per year—his most important asset. So in 2000, he began to experiment with a gentler planting method known as no-till. While traditional farmers plow their fields after each harvest, exposing the soil for easy replanting, Fleming leaves his soil and crop residue intact and uses a special machine to poke the seeds through the residue and into the soil.

The results aren’t pretty: In winter, when his neighbors’ fields are neat brown squares, Fleming’s looks like a bedraggled lawn. But by leaving the stalks and chaff on the field, Fleming has dramatically reduced erosion without hurting his wheat yields. He has, in other words, figured out how to cut one of the more egregious external costs of farming while maintaining the high output necessary to feed a growing world—thus providing a glimpse of what a new, more sustainable food system might look like.

But there’s a catch. Because Fleming doesn’t till his soil, his fields are gradually invaded by weeds, which he controls with “judicious” amounts of Roundup, the Monsanto herbicide that has become an icon of unsustainable agribusiness.

Demand, prices for used hybrid vehicles fade as gas costs less

DETROIT — Consumers have lost their appetite for pricey hybrids, two industry experts say, leading to a drop in used hybrid values and an oversupply of new ones.

Renewable Fuel Producers Lack Credit While Demand Dwindles

Washington, D.C. (AHN) – Smaller renewable fuel producers are struggling to stay in business in the face of a stagnant economy, tightened credit markets and a drop in demand.

A clash over auto emission standards

California wants its own limits, saying carmakers can hit the mark. Others support a national standard.

Alaska: State fuel refineries contribute to rural dilemmas

Almost all of the gasoline and diesel used in Western Alaska comes from a single refinery on the Kenai Peninsula. There is no real competition between refineries and families and communities cannot simply decide not to buy the fuel they need to survive the winter. As a result Alaskans have had to pay the high price charged by the refiners, and too many people in rural Alaska have had to choose between buying the food their family needs and heating their home. This is a choice no one should ever have to make.

My bill would prohibit refiners from charging excessive or exorbitant prices and would establish an objective threshold where the burden of proof would shift to the refiners to justify their prices. It would have strong penalties for violations, which would give the refiners a strong incentive to lower their prices rather than take their chances in court.

Alaska: Poverty of cash, not goods, is witnessed in Bush

I didn’t want to be presumptuous, but what I found when I got out there is there really wasn’t a shortage of food per se, and there wasn’t a shortage of heating fuel per se. There’s a shortage of cash. The economy is in dire straits.

Obama veers from Bush’s environmental course

WASHINGTON — Even before George W. Bush can settle into his new house in Dallas, his legacy on the environment is being dismantled by his replacement in the White House.

In less than two months, President Obama has put on hold Bush’s plans for power-plant pollution, offshore oil drilling, nuclear waste storage and endangered species.

The Obama team has rolled out policies Bush officials delayed, such as requiring higher energy efficiency from appliances.

Such moves have significant impacts and not just on the environment. They could affect electric bills, gas prices and the time it takes to build highways, dams and bridges.

Chile, Argentina Lawmakers Stake Antarctic Claim

Ten Chilean and Argentine lawmakers gathered Thursday in the Antarctic to stake territorial rights after the U.K. laid claim to a wide swath of ocean bottom off the frozen continent, officials said.

The aim of the meeting “is to strengthen our nation’s legal position in the Antarctic Territory…and to support all the legal instruments of the Antarctic Treaty System, or ATS, including the (1998) Antarctic-Environmental Protocol,” Chile’s Chamber of Deputies said in a statement.

Chile and Argentina’s territorial rights claims came in response to a U.K. bid submitted to the U.N. in October 2007 for sovereignty over more than one million square kilometers of seabed off Antarctica.

LUKOIL says proven reserves fall to 19.3 bln bbl

MOSCOW (Reuters) – LUKOIL said on Friday proven hydrocarbon reserves fell to 19.3 billion barrels of oil equivalent (boe) in 2008, but Russia’s No. 2 oil producer more than replaced its annual production with new reserves.

LUKOIL said in a statement its proven hydrocarbon reserves as of Jan. 1, 2009 included 14.5 billion barrels of oil and 29.3 trillion cubic feet of gas. Total hydrocarbon reserves fell from 20.4 billion boe a year earlier.

Petrobras will supply oil to China

Petrobras has closed a deal to supply a volume of 100 to 160 thousand barrels of oil per day to Chinese refineries, according to the Chairman of the public corporation, José Sergio Gabrielli. The Brazilian state-owned company is also negotiating a loan of up to US$ 10 billion with China, an operation that could be concluded by May, added Gabrielli, in an event after the meeting between President Lula and the Chinese Vice-President, Xi Jinping.

Bulgaria backs down on nuclear reactors restart

SOFIA (Reuters) – Bulgaria has backed down on plans to restart two Soviet-era nuclear reactors and will now focus on lobbying for more European Union compensation for the shut units, officials said on Friday.

Big dams are not sustainable — but they continue to be built

Silt build-up behind dams estimated at 1% a year renders large dams useless in the long term, specifically concerning the Boot (Build-Own-Operate-Transfer) development model, allowing corporations to own dams for a period of 20-25 years.

Globally, 80-million to 100-million people have been displaced by dams; 400-million “downstreamers” have been affected by the loss of fisheries (estuaries are habitats for 80% of the world’s fish catch), fertile land and coastal erosion. Mega-dams endanger freshwater biodiversity and wetlands, increase soil salinisation and salt-water intrusion, and release the highest volume of human-engineered methane emissions, all while burdening underdeveloped nations with billion-dollar projects designed to develop Africa.

Guatemalans Resist Mega-Mines, Hydropower Dams

GUATEMALA CITY, Guatemala (ENS) – Amidst the growing controversy surrounding foreign-controlled resource extraction and mega-development projects in Guatemala, populist leader Bishop Alvaro Ramazzini, together with a group of community leaders, is demanding a two-year moratorium on the granting of mining concessions by the Guatemalan government.

Africa must gear up on infrastructure 
to enhance its oil and gas prospects

A lack of infrastructure is a 
 pressing priority for Africa 
 as it underpins the success of the continent’s oil and gas industry, says Arthur Hanna, energy practice industry MD for Accenture, a global management consulting, technology services and outsourcing company.

Africa is increasingly seen as a major global player in the energy field, as it contains about 10% of the world’s oil reserves and about 6% of its gas reserves.

While Africa is no stranger to the challenges facing the global energy industry, such as a shortage of equipment, rising costs of capital and a skills deficit, Hanna tells Engineering News that the continent’s existing infrastructure needs to be upgraded.

To save the planet, the problem is cost

Making the UK into a low-carbon economy will create 400,000 jobs, Gordon Brown is expected to say today. Yet for these jobs to be created, the nation’s green plans must receive the investment they need. Our expert panel give their views on what is required to create this ‘energy revolution’.

Surviving Two Billion Cars: China Must Lead the Way

The number of vehicles worldwide is expected to reach two billion in the next two decades. Surprisingly, China – where the demand for cars has been skyrocketing – just may offer the best hope of creating a new, greener transportation model.

The Worst Global Crisis of All Time

No, I’m not talking about the global financial crisis. Nor am I talking about the AIG disaster … Citibank’s failure … the collapse of GM or Ford. I’m not even referring to the Dow’s recent plunge to below 7,000.

Don’t get me wrong: I am not minimizing the financial crisis that’s affecting people all over the world.

I just don’t want anyone to forget about a crisis that’s killing 12 million people per year, including 10,000 children per day .

I’m talking about the worst crisis of all time, the intense and critical shortage of water … pure fresh water. What I call “blue gold” — a term I coined back in 2004 to describe one of the most precious natural resources of all and to help motivate others to take notice of the growing crisis.

Alberta sparing oil sands water

A new draft directive targeting water management in the oil sands of northern Alberta, Canada, proposes to reduce fresh water use by 220.5 million barrels in a decade.

Russia launches $3.3 bln loan package to farmers

MOSCOW (Reuters) – Russian banks have begun disbursing a record 120 billion rouble ($3.3 billion) loan package to crisis-hit farmers in a bid to secure another bumper crop this year, a senior government minister said on Thursday.

Kurt Cobb: Jeffrey Brown and the Net Oil Exports Crisis

With peak oil comes peak oil exports. Why Texas oilman Jeffrey Brown thinks the world is headed for a drastic energy downsizing and soon.

Texas oilmen who advocate for 1) a massive reduction in oil consumption through the electrification of transportation, 2) large investments in energy efficiency and 3) the relocalization of commerce to reduce the long and energy-intensive logistical lines now typical of the globalized economy are about as rare as vegetarians at a cattlemen’s association luncheon. In fact, Jeffrey Brown, a Dallas-based independent petroleum geologist who manages a joint-venture exploration program, may be one of a kind. The genesis of his rather radical views–radical, that is, for a Texas oilman–are a simple question he asked himself several years ago: What happens to oil exports in a world with constrained oil supplies?

Oil rises above $44 despite grim US corporate news

Oil prices rose above $44 a barrel Friday on investor optimism that falling U.S. gasoline costs amid the worst recession in decades may increase demand for crude.

Gains were limited, however, as markets awaited February U.S. unemployment figures, due for release later Friday and expected to show the highest jobless rate since 1984.

Face to face with T. Boone Pickens

‘If you don’t think that you’re gonna see a $200 barrel of oil, you’re joking.’

Can Natural Gas Break Our Oil Habit?

Pickens, along with a growing number of groups, wants America to slash its oil consumption by making better use of natural gas. In theory, the plan sounds simple. Around 22 percent of the natural gas burned each year is used to generate electricity. If wind energy were substituted for gas at power plants, the freed-up natural gas could be used instead to fuel ground transportation systems, starting with diesel-burning fleet trucks and buses. Advocates say this plan could cut U.S. oil imports by up to 38 percent.

Yet if the nation makes the switch from oil to natural gas to run its vehicles, will it simply be trading one foreign-dependent fuel for another? The answer is, probably. But to what extent is very hard to say. “Welcome to uncertainty,” says Gordon Kaufman, a professor emeritus and oil and gas expert at the Massachusetts Institute of Technology’s Sloan School of Management.

OPEC to Reduce March Shipments by 1.9%, Oil Movements Says

(Bloomberg) — OPEC will reduce crude-oil shipments by 1.9 percent in the month ending March 21 as producers use record cuts to stem falling prices, according to tanker-tracker Oil Movements.

The Organization of Petroleum Exporting Countries, producer of more than 40 percent of the world’s oil, will load 22.67 million barrels a day in the period, down from 23.1 million a day in the month ended Feb. 21, Oil Movements said in a report today. That would be the lowest volume since 2004.

China’s oil imports limited by storage capacity

HAIKOU (Xinhua) — Limited storage facilities are hampering China’s efforts to import large volumes of oil while world prices are relatively low, an official with the Guangzhou customs house told an energy conference here Friday.

Consumers Find Betting on Gas Prices Brings Heating-Bill Hazard

Half of U.S. residential gas customers, some 35 million households, are in states that allow them to shop for the best gas price. Trying to lock in a cheap gas price is usually a losing bet, consumer advocates said.

Low oil could stall auto efficiency drive-firm

WASHINGTON (Reuters) – Falling oil prices could hurt investment in fuel efficient vehicles and capital projects designed to promote energy saving technologies, an automotive research firm warned on Thursday.

CSM Worldwide told the Environmental Protection Agency that some conditions for that scenario appear in play already with recession pushing oil prices down nearly 4 percent on Thursday on expectations of lower fuel consumption overall.

“It’s simple economics – consumers and investors are not likely to invest in fuel efficient vehicles and capital intensive new technologies if a sharp drop in oil prices undercuts them,” said Eric Fedewa, vice president of CSM’s global powertrain forecasts.

Talisman reports 69% surge in income in ‘year of change’

Chief executive John Manzoni said: “We set the company in a new strategic direction and realigned major parts of the organisation in support of the new strategy. We’ve also successfully navigated a very dynamic economic environment, posting record financial results despite the collapse in oil and natural gas prices in the fourth quarter.”

The company reported a record £1.934billion in net income for 2008, a 69% increase on 2007 despite writedowns associated with year-end pricing and reserves.

Norway oil fund shrinks to $297bn

Norway’s sovereign wealth fund – the oil fund – shrank by 7.5% to a preliminary figure of Nkr 2.102 trillion ($297.2 billion) in January from the end of December, the central bank’s monthly balance sheet showed.

Obama’s True Goals

What are the real goals of Barack Obama’s energy plan? The new president entered the White House with three core objectives: combating climate change, reducing US dependence on foreign oil, and building a clean energy future with renewable energy sources. In his first six weeks in office, Obama has moved swiftly to address all three, primarily through a $787 billion economic stimulus package and his first budget proposal — a “once in a generation” fiscal plan that seeks to radically reorder US policy priorities.

In some ways Obama’s energy objectives are complementary — for instance, an expansion of renewable energy sources such as wind, solar, geothermal and biofuels helps reduce foreign oil dependency. However, in others, the goals are contradictory. The president’s pledge to “promote the responsible production of oil and gas” would help cut imports, but would undermine his climate goals.

Clinton warns against ‘energy weapon’

US Secretary of State Hillary Clinton condemned the use of energy as a political lever today, a day after Russia threatened to cut gas supplies to Ukraine in a move that would have hit supplies to Europe.

…”We are … troubled by using energy as a tool of intimidation,” Reuters quoted her telling a hearing at the European Parliament. “We think that’s not in the interest of creating a better and better functioning energy system.”

British solicitor Jeffrey Tesler arrested over gas deal ‘bribes’

A British solicitor accused of taking part in a scheme to bribe Nigerian officials to secure lucrative gas contracts was arrested yesterday.

Police arrested Jeffrey Tesler, 60, at a business address in North London after authorities in the United States requested his extradition and that of another Briton, Wojciech Chodan.

Kazakhstan to Spend $4 Billion Oil Revenue on Economic Boost

(Bloomberg) — Kazakh President Nursultan Nazarbayev promised to spend 600 billion tenge ($4 billion) of oil revenue to bolster economic growth.

It’s “right” to spend the revenue expected in 2009 and 2010 on “a new plan for further economic modernization” and controlling unemployment, Nazarbayev said today in his annual address to the nation in Astana, according to state-run Kazinform. Kazakhstan will keep its foreign currency and gold reserves of $47 billion, he said.

Russia offers oil extraction technologies to Indonesia

JAKARTA (RIA Novosti) – Russia’s Petros company and Indonesia’s Nuansa Group have signed a memorandum on joint implementation of Russian technologies in the development of abandoned oil fields in Indonesia.

“There are many oil fields in Indonesia whose exploration has been abandoned for various reasons. We need new technologies to continue their development, and we are glad that we can now use Russian technologies,” Nuansa Group president Susanto Suparso said at the signing ceremony late on Thursday.

Don’t Regulate the Suburbs: America Needs a Housing Policy That Works

The “smart way,” as the President suggests, is supposedly through the policies of “smart growth” and “new urbanism,” which many communities in America have adopted in recent years to limit growth and upgrade their demographics by making housing less affordable. Under the guise of deterring sprawl—i.e., preventing additional neighbors— many suburban communities have adopted exclusionary zoning, impact fees, involuntary proffers, mandatory amenities, growth boundaries, service districts, infrastructure concurrency, and large-lot zoning to discourage new construction. Inevitably, these strategies raise housing prices.

As the record reveals, states and communities that have implemented the land-use regulations common to “smart growth” strategies are the same states and communities that have seen their housing prices soar over the past decade and have experienced the most severe delinquency and foreclosure rates, as well as the sharpest declines in house values in the past year. In sum, these “smart growth” strategies are an important contributing factor in the housing finance mess and severe recession that now confront the United States and several other countries that have implemented the same abusive land-use regulations.

Yu Koyo Peya

How much longer can industrial civilization last before it undermines the basis of its existence, imploding due to growth and complexity spiraling out of control? Why is this collapse scenario nearly inevitable? These are the questions Yu Koyo Peya attempts to answer. The opening sequence presents a frightening taste of how a desperate world racked by hunger and the breakdown of “orderly society” might react to the cascading effects of Peak Oil on the economy in the near future. The narrator’s fate is not predetermined, however; those of us who are bright and courageous and most of all willing will be able to survive the collapse of global civiliation, perhaps even bringing about the florescence of a new age of human culture: the Afterculture. Those of us intrepid enough to follow this path will do so with one eye on our primitive past and the other on finding creative solutions to building a thriving, organic human community in a post-civilizational world.

Making Wellington resilient

Surrounded by waterways and native forest, Porirua City has a vibrant Pasifika community and the popular annual Festival of the Elements.

The balance of urban and rural environments connected by a rail/road network and deep-sea harbour provides the foundation for a resilient region.

However, the region faces threats to its environment and well being. We are vulnerable to earthquakes, tsunamis and climate-change impacts, such as more intense downpours, floods and droughts. After the catastrophic combination of a heatwave and fire in Australia, nobody could remain unaware of the reality of global warming.

GM unveils plug-in hybrid — in Europe

GENEVA – GM’s Adam Opel GmbH subsidiary presented the lithium-ion battery powered hatchback Ampera on Tuesday at the Geneva Motor Show, where electric-powered vehicles emerged as one way to persuade environmentally aware consumers to buy new cars during the global recession.

Senate leader offers plan for `green’ power grid

WASHINGTON – The Senate’s top Democrat on Thursday proposed new federal authority to build special power lines that carry renewable energy — like solar and wind power — from remote places.

The Federal government would be able override states and direct where the lines would go and who would pay for them.

Gore group backs creation of .eco domain

The group said .eco “will be established for individuals to express their support for environmental causes, for companies to promote their environmental initiatives, and for environmental organizations to maintain their websites in a namespace that is more relevant to their core missions.”

Proceeds from registration fees would be used to fund research on climate change and other environmentally related areas.

Geithner defends U.S. carbon cap-and-trade plan

WASHINGTON, March 5 (Reuters) – U.S. Treasury Secretary Timothy Geithner on Thursday defended the administration’s plan to raise hundreds of billions of dollars in revenues from a carbon emissions cap-and-trade system, saying it would help wean America off imported oil.

Under grilling by Republican members of the U.S. House of Representatives Budget Committee, Geithner said President Barack Obama’s plan was would necessary to change incentives for U.S. energy use.

“It is critically important for our country that we begin the process now of changing the incentives Americans face on how they use energy,” Geithner said. “It’s important for reducing our dependence on foreign oil, it’s critical for climate change.”

US Senate unlikely to pass 100% auction of CO2 permits

The chairman of the US Senate Energy and Natural Resources Committee said
Thursday that it is unlikely the Senate will pass a climate-change bill that
includes auctioning 100% of greenhouse gas emission credits.

New Mexico Senator Jeff Bingaman, the top Democrat on the committee,
declined to say what percentage of credits would likely be proposed for
auction, but said it was under discussion.

Countries that block global climate change deal risk isolation: Miliband

Countries that stand in the way of a global warming treaty now risk international isolation because of the US’s new commitment under Barack Obama to reaching a deal, the climate change secretary, Ed Miliband has said.

Senate clears way to reverse polar bear rule

(AP) — The Senate has cleared the way for the Obama administration to reverse a rule saying that greenhouse gases cannot be restricted in an effort to protect polar bears from global warming.

Geologists map rocks to soak CO2 from air

A new report by scientists at Columbia University’s Earth Institute and the US Geological Survey points to an abundant supply of carbon-trapping rock in the US that could be used to help stabilize global warming.

The Inevitable Solution to Climate Change

One elegant way for President Obama to successfully implement a market-based approach to capping carbon, as he requested to Congress in his Congressional Address, is to grab hold of an idea from entrepreneur Peter Barnes called cap and cash back or cap and dividend.

It works like this: a limit is put on the carbon-producing fuels entering our economy. The atmospheric scientists first determine the limit and then 100% of the credits for the allowable amount of carbon-producing fuels are auctioned off each year. The government makes a profit estimated to be around $300 billion and then distributes the revenue to the American people.

The cash comes every month and the payments get higher as the cap on emissions get tighter. It’s estimated that a family of four would get about $1,200 a year at first, with some energy conserving actions, a middle-income family can come out ahead financially.