There are any number of things that decades in manufacturing have taught me, not the least of which is the inherent wisdom of the marketplace. In fact, for a guy whose political bent, sense of environmental responsibility, and pro-social conscience can tilt proudly left at times, my belief in the absolute wisdom of the marketplace is as far right as right can be. That is especially true in matters of energy. Consider these few recent examples of how the market proved more sage and powerful than any one policy, any one ideology, or any one man – even when that man turned out to be President of the United States. When manufacturing came roaring back over the final few years of the Obama administration, it wasn’t because of any specific policy, regulation, or executive order. It was because the price of natural gas cratered to the point that natural gas-generated energy suddenly became more affordable and accessible for us manufacturers, and we and countless capital investors responded in kind. When fracking came to a screeching halt around that time, it wasn’t because environmentalists said or did something that made a light bulb go on over the heads of fracking’s proponents. It was because, again, natural gas proved to be cheaper than shale oil and the market (and investors looking at fracking start-ups) simply reacted accordingly. And now, a company called Xcel, Colorado’s largest and most powerful utility, and a company with millions of customers from Texas to Michigan, has embraced wind and solar power as a way of augmenting its massive portfolio of energy sources.
Was doing so a matter of environmental responsibility? Or maybe a philosophical desire for a cleaner and more renewable relationship with the planet? Maybe to a degree, but the far more compelling reason was purely financial.
Xcel looked at the future, assessed the present, and made a cold, hard business decision – one based on this simple fact; renewable power is now cheaper to produce than traditional fossil-burning power.
Wind and solar capture technology has developed to such an extent, and the cost for wind and solar power has reduced so dramatically that Xcel’s CEO, a dyed-in-the-wool finance guy, has said his company can now build all-new a renewable power facility for cheaper than it can maintain and operate a fossil-burning one – including coal plants, which for decades had been the standard bearers for cheap production.
As a born-again conservative, one would think President Trump would embrace such a market-driven phenomenon. After all, a free and open marketplace – a global one, that was unfettered by such things as tribalism, regulation and government-based sanctions, price supports and import/export duties – should be the be-all and end-all for any card-carrying market conservative.
Yet, at least to this point, that’s not been the case.
We’ve seen instead, our president go all-in in his support of coal – including trying (unsuccessfully) to federally subsidize coal companies, while pulling similar support from firms focused on the further development of wind and solar power.
Mario Cuomo once said we campaign in poetry but govern in prose. To that end, it was understandable – especially given the fact that at the time he was courting disenfranchised coal mining voters who’d been displaced by a toxic combination of globalism, shifts in consumer demand and advances in technology – for candidate Trump to promise to bring coal back to a place of prominence in the economy. After all, to paraphrase Cuomo, it was West Virginia; a state (and, frankly, situation) that was just begging for some juicy political poetry.
Similarly, when President Trump imposed duties on all Chinese solar panel imports, it made for a great pro-worker sound byte – especially for those who voted for him and who continue to view him as a champion of the American working man.
But in doing so, Mr. Trump not only attempted to put a chill in one of the most exciting and fastest-growing segments of the energy sector, but he threatened the livelihoods of thousands of men and women who earn a paycheck working for companies tasked with the installation of those Chinese solar panels.
Similarly, by embracing coal so unabashedly – a group hug that flew in the face of current market demand, growth potential, and virtually every new technology – he created a void in global clean-technology leadership, a void that was immediately seized upon by our most dangerous and ravenous competitor, China.
Now that he’s president, Mr. Trump owes it to free-market capitalists everywhere – people like me and the hundreds, if not thousands of U.S. manufacturers who think as I do – to cease his penchant for campaign poetry and to start governing in real-life, real-world, bare-knuckled prose.
The U.S. needs a national energy policy that is purely and quintessentially market-driven. It needs a policy that does not discriminate on the basis of politics, ideology, campaign contributions or nostalgia for dying industries. And our economy, especially the industrial sector, needs such a policy desperately – one devoid of any personal biases and cheap, campaign rhetoric.
Let’s hope, 13 months into his administration – at least when it comes to American manufacturing’s relationship with the global energy marketplace – our president does the right thing. Let’s hope finally shuts up and he lets those two wise, dynamic and powerful forces – one named supply and the other demand – do his talking for him.