Freedom. Liberty. Opportunity. All are dependent upon the rights set forth in our Constitution. A culture that allows for freedom and human flourishing must provide national, economic, and health security. As technology has progressed, our need for...
Freedom. Liberty. Opportunity. All are dependent upon the rights set forth in our Constitution. A culture that allows for freedom and human flourishing must provide national, economic, and health security. As technology has progressed, our need for reliable energy sources has increased. To protect our citizens with a strong military, to provide the best in health care, and to allow businesses and individuals to prosper, we must have dependable, affordable energy. What policies are important to protecting our energy resources and economic freedoms? Recorded on Constitution Day, Linda and guest, Tom Pyle from the Institute for Energy Research, discuss the importance of following Constitutional principles when creating energy policies for our nation. American energy independence and innovation is essential to our strength as a nation. Listen to learn how you and your elected officials can support Constitutional policies for growth and prosperity.
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Linda: Welcome. Thank you for tuning in to this episode of the Prosperity 101 Break Room Economics Podcast. My name is Linda J. Hansen, your host, and the author of Prosperity 101: Job Security Through Business Prosperity: The Essential Guide to Understanding How Policy Affects Your Paycheck, and the creator of the Break Room Economics online course. The book, the course, and the entire podcast library can be found on prosperity101.com. I seek to connect boardroom to break room, and policy to paycheck, by empowering and encouraging employers to educate employees about the public policy issues that affect their jobs. My goal is to help people understand the foundations of prosperity, the policies of prosperity, and how to protect their prosperity by becoming informed, involved, and impactful. I believe this will lead to greater employee loyalty, engagement and retention, and to an increased awareness of the blessings and responsibilities of living in a free society. Listen each week to hear from exciting guests and be sure to visit prosperity101.com.
Thank you for joining us today. We are recording this on Constitution Day, an important day for our nation. And I'm glad to introduce my guest, Thomas Pyle, or Tom Pyle. He's a repeat guest and a good friend. Tom is the president of the Institute for Energy Research, IER, and he is also the president of American Energy Alliance. In his capacity, he brings a unique backdrop of public and private sector experience to help manage IERs and AEAs Washington, DC based staff and operations. He also helps to develop the organization's free market policy positions and implement education efforts with respect to key energy stakeholders, including policy makers, federal agency representatives, industry leaders, consumer entities, and the media.
You can learn more about Tom by visiting the website of Institute for Energy Research, and you can read his full bio, but he's been on the podcast before. And I'm so thankful to have you as a repeat guest. I love to bring you back in to talk about energy issues, because it's something that affects all of us. And as we think about Constitution Day, there's so many ideas on Capitol Hill that are just so unconstitutional, and so many of them affect our energy sector, our energy grid, and consumer energy use. So, Tom, I thank you for being here, and I'd love you to start with the constitution.
Tom: Great. A great topic. Got my pocket constitution with me everywhere. Your intro is a long way of saying I've been in Washington way too long, but thank you very much. What's going on right now on Capitol Hill, just for some background, is the Democrats control the House and Senate, president is Joe Biden, a Democrat. And as you probably know, and your listeners know, the margins are remarkably narrow. I have not seen a more narrow majority. I think at the narrowest when I had the pleasure at that time to serve on Capitol Hill, I'm not sure I would say the same today, I think the margin was about six seats in the House. I think there are half of that in the House right now, or barely. The Senate is divided completely evenly. The last election was not a landslide mandate type election for the type of policies that the Democrats are trying to pass on the Hill. And what you're seeing is the desire by the Democrats to pass a, on top of what has already been several trillion dollars, a three and a half trillion dollar, what they call budget reconciliation bill.
Now, there's a lot of things in it obviously. They're also seeking to raise taxes to the same extent. Now, what's constitutional, not constitutional, yada, yada, yada, they can do that, right? Yes. But what's happening more and more frequently, is that the federal government is asserting itself into the roles and responsibilities that have never been envisioned by the founding fathers to be a federal jurisdictional matter. And that is across the board. But in my space, I'll give you an example. The Democrats in the House just unveiled what they're calling the, laugh, but the Clean Electricity Performance Program, CEPP, whatever. What they would like to do in essence is take, because they have this narrow, they call reconciliation, where they can only address taxes and spending measures, they're attempting to create a federal program that would basically take over our nation's electricity grid. They would take over the management of what we could use to generate that electricity.
They would basically create a program that would shove money out the door, into private companies to change the way that they could generate electricity and distribute electricity. And if they don't change the way that they generate electricity and distribute electricity, they will have to pay the government a fine for not doing that. Okay. This is how they've constructed this program. It is a, flies in the face of federalism. And that's where I wanted to get to the point about the constitution. Why is it unconstitutional? These are not things that the government should be doing. These are not in the purview of the federal government. And more directly, or worse than that, they're not even doing it in a normal way, they're doing it in this shifty way so that they can avoid the ability to get more than 50 votes in the Senate.
So, when we talk about electricity, yeah, it's going to have real impacts on people, but when you talk about the constitution, this is just one example of many that's going on right now, where we're essentially just allowing the federal government to assert itself, and the concept of federalism is in deep, deep jeopardy right now. And if you are concerned about the constitution, if you're concerned about the fact that the founders had always set this up so that the federal government would have a set of limited powers and the states, and more to the point, the localities would handle the day-to-day operation. The federal government has no need, or desire, or business managing picking up garbage in our communities. But yet now, what they're saying is, okay, well, we don't care about that, but what we do care about is what type of electricity you're going to use. This is in essence, what they're trying to do with this program. It is crazy.
Now, the other thing that's interesting about it is, this is all in the name of, supposedly in the name of combating climate change, or reducing our CO2 emissions. The program pays utilities that use union labor more than they would if they didn't. Okay. Now, I'm sorry, but this is not about the climate, this is not about electricity generation. This is about political payoffs for two very specific constituencies, environmentalists and the unions, because that is the coalition that they continue to utilize to help them, or be organized, and do the kind of things that help them get elected. I'm just going to be straight up and candid with you about it.
Linda: Mm-hmm (affirmative). Well, exactly. And you bring up some really good points about what is the role of the federal government versus the role of the state and local governments. And I'm just so glad to have this interview, I'm glad that we're bringing up the fact that it's Constitution Day. I want everyone to go read their constitution, but as you mentioned at the beginning, yes, we're talking largely about energy right now, but these type of tactics and these type of overreach, activities and policies are affecting really every area of our life. And energy is a big part of every area of our life too. So it's so broad reaching, and I'm so thankful that you're bringing it up and calling attention to it in terms of, not only how it interferes with state and local government operations and authority, but also how it affects the end consumer, our daily lives, our jobs, our businesses, the cost to the businesses, the cost to the end consumer, the lack of choice and freedom. Thank you for bringing this up.
Tom: Sure. These policies are, the progresses, or the Democrats, continue to talk about how they're trying to help people. They're not helping people when you increase their energy costs. The least wealthy, those on low and fixed incomes, they have to pay more as a percentage of their budgets on electricity, on energy than other people who have more resources, have more money. This doesn't affect their constituencies, because their constituencies, if it did, they wouldn't be doing this, they wouldn't be pushing these things. All of the sum total, in this legislation that's working its way through the House right now, there's a tax on natural gas, which has been fuel choice, the market has moved from electricity generation has moved to natural gas. In part, because society says, hey, we want a cleaner environment, or less emissions. And so gas is certainly cleaner than coal that it has been replacing. Now they want to tax natural gas.
They're canceling pipelines as we've discussed in the past. They want to put another tax at the border on goods so that they can offset carbon offset, or carbon from other countries, that is in the works. They've got "fees everywhere" on basically coal, oil and natural gas, which are those that provide 80% of our electricity and our overall energy. They're promoting spending billions, hundreds of billions of dollars on subsidizing certain energy sources like wind and solar and electric vehicles, for example, of our money, taxpayer money. So why is the federal government in the car business? Why is the federal government in the utility business? Why is the federal government in the refinery business? What business do they have of being in any of these businesses?
And that is, going back to the federalism stuff, this is industrial policy, these are not the kind of things that representative democracies are supposed to be doing. And yet this is what's happening now, is we've become almost yet another country that basically runs everything from the Politburo.
Linda: Exactly. And the effects too, like we talked about, businesses and the end consumer are catastrophic in so many ways. As we have talked about in previous episodes, when you think about even just stopping the Keystone Pipeline, and what that did to so many jobs here in America, as well as to the ability for America to be energy independent, we had finally become energy independent. And now under the current administration, we are no longer energy independent. And I think everybody can relate to the fact that a year ago in the summer of 2020, I know the lowest price that I think I paid for gas in 2020 was a $1,57, and now I'm paying anywhere from $3 and above.
Tom: Yeah. The national average right now is 3,16, which is the highest it's been since 2014.
Tom: And President Biden went on TV and blamed pandemic profiteers, whereas the Biden administration has, since day one of the Biden administration, has canceled pipelines, has canceled leases of oil and gas, has made it more difficult now to permit liquid natural gas, LNG terminals. Pretty much every single decision that the federal government has made since President Biden took office leads to higher gas prices. So I don't know who the pandemic profiteers are, I guess that's our friend supply and our friend demand, but this business of blaming others for problems that you create, or you're responsible for, is stuff I tell my children not to do basically. And that's not even in energy I've noticed.
I just saw a thing the other day that NEC, National Economic Council, head of the NEC said that they're not responsible for the inflationary costs of high food prices right now. It is big meat, basically. They blamed consolidation in the pork and poultry and beef industries for the rise in prices, grocery prices. It just, take ownership [crosstalk 00:16:03].
Linda: Take ownership.
Tom: If this is your platform, this is what happens, and we are all paying more. I know you're paying more for your groceries. It doesn't matter where you shop. We're all paying more for our groceries, for our gas, for our food, for our clothes, for everything, for cars, because these policies have real impacts on folks, and their dollars are not stretching as far as they used to.
Linda: Exactly. And that's inflation, and we're really like in a stagflation timeframe like we've talked about before, but energy affects every single sector. So we're talking about the higher cost of gas, yes, but like you mentioned, groceries, clothing, everything. And I was noticing there was an article on your website about the importance of the oil and gas industry to the medical industry. Just think about all of the hospitals and clinics that need to be operating. Think of all the plastics that need to be manufactured for the vaccinations, for gloves, everything is dependent on energy. And as we look at our American energy supply chain and our ability to produce our energy, we can be energy independent, it's a national security issue. And to see that we were there and now we are not, makes me upset and sad, but I think we need to just help people become aware that some of these things they hear about in the news, or whatever regarding say these clean energy, or green energy policies, aren't always what they're cracked up to be. And they don't necessarily truly help the environment.
So, if you think about what truly helps the environment is a complimentary mix of these things and working to create better technologies to make sure that we are producing cleaner energy, but just talking about the environment, I know I saw some video of solar panels that had, a field of solar panels that had been just turned up, ended and wrecked, and basically destroyed by a recent hurricane. Well, we're going to need fossil fuels to help haul them away, to help fix them. And people don't realize necessarily that it's a complimentary mix. It sounds all great. Oh, let's have wind and solar. It sounds so clean, but what's the other side of that coin, and why do we still need oil and gas? And this complimentary energy sources.
The other thing I try to point out to people sometimes too, is just, you mentioned the federal government shouldn't be in the business of telling us what kind of car we can drive necessarily. And I was thinking about the electric vehicles and the charge time and the distance they can drive and things. And how would we have been served in, especially during the recent pandemic, with all electric vehicles? It wouldn't have been realistic. In an emergency situation, you need dependable transportation. And I would not say that they are, correct?
Tom: Yeah. Well, there's a reason that internal combustion engines dominate the market, is because they're the most effective source of type of transportation. In the early 1900s, the electric vehicle and the internal combustion engine vehicle are gas powered vehicle. And the steam engine were all fiercely competing for market share in the infancy of the auto industry. And Edison and the electric boys were spending a lot of time on the electric vehicle, and there were many, many in the market. And Henry Ford and his boys were tinkering around with cars and they came up with this little fun little thing called the Model T. Edison basically threw his hands up and said, this makes more sense for you, go at it, and have at it, that's the thing. And slowly but surely he faded out of existence. It's not a new technology, it's been around forever.
The biggest advances in technology usually occur when a product comes along that is better, faster, safer, and cheaper than something, or in the case of Steve Jobs, makes a product that you didn't think you needed or wanted, but too bad, and then you realize, wow. This is what befuddles me about the whole EV craze. They're not cheaper, they're more expensive. They're not safer clearly. They're not faster. I guess you can say some of them, yeah, they go to zero to... What the EV is simply, is a transfer of technology from a very complicated engine and a simple gas fuel delivery system, i.e., the $10 gas tank, to a very complicated battery fuel delivery system and a simple engine.
The EV engine is like that engine when you were a kid where you stuck the two wires in a potato. It's a very simple engine, but when an EV goes bad, it's the battery that goes bad. When you change the battery in a gas powered vehicle, it's like, what? A 150 bucks. I haven't bought one in a while, but when you replace the battery in an EV, it's like one to two thirds of the cost of the whole vehicle. Okay. You're not going to, we're not safer in these. They're not cheaper. There's no reason a consumer would choose this. That's why the government is forcing this. That's why they are forcing this. That's why that they're doing the stuff we talked about earlier on the Hill, where they're getting involved and becoming members of the auto industry. Sorry, I did wear my soapbox there. I just thought historical context would have been good.
Linda: It's totally fine. It's totally fine, but that brings up another point that I definitely want to discuss with you. And that is the whole issue of the rare earth minerals. And you brought up the batteries, and that's a big thing. We are so dependent. Now, think of Taiwan. We think of our chip industry. We've had the chip shortages and things, and now Taiwan is at risk with everything that's happened in Afghanistan. And China is looking at Taiwan. The international stage has changed. And as we look at our availability to resource this, we're prevented from doing so in our own country, and we're dependent on other countries. So could you address that?
Tom: Can I throw a few numbers on that?
Linda: Yes. Please do.
Tom: So you mentioned we've recently become energy independent. We produced more energy oil and natural gas than we consumed. And we exported more than we imported for the first time, a couple years back, since the fifties, okay?
Linda: Right. So during the Trump administration.
Tom: So we have this long slog of clawing our way out of being dependent on the Middle East or Venezuela, or other places. Now, oil, yeah, it still goes around. We trade everywhere. We're never going to just produce 100% of our oil. That's not necessary. It's not even smart. What's going on, on the Hill right now with the Democrats is, if they were to be successful, let's just say they got everything. They got everything, and we're hopefully going to prevent that from happening, and others as well, but if they got everything, they would essentially be embodying and powering China. China would have basically control over our energy. And I'll just give you a couple of numbers.
China is both the largest manufacturer and buyer of electric vehicles globally. Okay. They also produce 99% of the world's electric buses. There are provisions in this bill to spend hundreds of billions of dollars on electric buses. So basically we're going to buy Chinese buses. A lot of these batteries, as you know, are made from lithium ion. Okay. In 2019, Chinese chemical companies accounted for 80% of the world's output of raw material for advanced batteries. The components of these products, these things that we are asking our country to switch over to, is completely kit maintained mainly and mostly controlled by China. For example, the Chinese companies accounted for 80% of the world's total output of raw materials for advanced batteries. And that includes the rare earth, the lithium, the cobalt, and the graphite. Out of the 136 lithium ion battery plants in development through 2029, a 101 of them are based in China. China produced 64% of the world's graphite, had 24% of the world's reserves.
Now, cobalt is another important component in these things. Only 1% of the world's cobalt reserves are in China, but they dominate in the processing of raw cobalt. And they have over 80% of the control of the cobalt refining industry in the Congo where a lot of this stuff is mined. They also own eight of the 14 cobalt mines in the Congo. The list is, I can go on and on and on here. They control this market. Almost all of the solar panels that you talked about that were overblown in the hurricane came from China. They're using forced labor, slave labor and coal, and they're undercutting, they're basically dumping these panels on the market so that no one else can develop the technology.
What I see happening here is, the Chinese communist government is using a crystal ball, I'll say, this fixation with climate change, and this fixation that the United States has with all of this stuff, how can we take advantage of that? And they are, essentially they are. What the current leadership in Washington is asking is for the United States to hand over its energy sovereignty to China, to communist China. And I don't see it any other way. That's how it would end up, if they had their way and all this stuff became law.
Linda: Mm-hmm (affirmative). That is a really good point. And I was hoping we would get to all of that in this conversation because, people need to understand the connection between our energy sourcing, our energy production, and our energy consumption with national security. So this is a very deep issue, and I invite people to go to your website. Could you give your website address please?
Tom: Yeah. Instituteforenergyresearch.org. It's a mouthful, but we can't get ier.org. Someone wants us to pay 50,000 bucks for it.
Linda: Well, if there's any donors out there, they're a nonprofit [crosstalk 00:28:37].
Tom: Yes, please.
Linda: If you'd like to have ier as the website, please donate and they can get a new website address, but Instituteforenergyresearch.org, and that it would be great for people to go there and they can learn more about all of these topics and so much more. And the sister organization, American Energy Alliance as well, that's Americanenergyalliance.org, correct?
Tom: Yeah, that is. And actually, that's a great site for y'all because if you sign up on our website, you'll get stuff, you'll see. The conversation we're having right now is an ongoing conversation. Our job, our mission is to update everybody, but I don't know what's going on in Washington, and give them the tools to engage. So I think that's more important than just talking about it.
Linda: Exactly. That gives people tools to learn more and know how to make a positive impact. So there's one that's the education piece and then the action piece as well. So I really appreciate this. Thank you for alerting us to these national security issues, reminding us of the importance of energy policy, and the importance of following the constitution. As again, we celebrate Constitution Day today on this day that we're recording, but following the constitution for our laws in our nation, because that's when we can really truly provide freedom and the best for all of our citizens.
Linda: Yes. Well, thank you, Tom. I appreciate the time you've given to us today and just thank you so much. Keep up the great work.
Tom: Thank you. Good to talk to you as always.
Linda: Thank you again for listening to the Prosperity 101 Podcast. If you enjoyed this episode, please subscribe, share, and leave a great review. Don't forget to visit prosperity101.com to access the entire podcast library, to order my newest book, Job Security Through Business Prosperity: The Essential Guide to Understanding How Policy Affects Your Paycheck, or to enroll you or your employees in the break room economics online course. You can also receive the free ebook, 10 Tips for Helping Employees Understand How Public Policy Affects Their Paychecks. Freedom is never free. Understanding the foundations of prosperity and the policies of prosperity will help you to protect prosperity as you become informed, involved, and impactful. I give special thanks to our sponsors, Mathews Archery, Inc, and Wisconsin Stamping & Manufacturing. Please contact us today at prosperity101.com, to let us know how we can serve you. Thank you.