Vol. 48, No. 3

In this edition

by Lou ZICKAR Twenty years ago this fall, 367 Republican candidates from all around the country gathered on the West Front steps of the U.S. Capitol and signed the Contract with America. At the time, it was an historic moment because it helped give Republicans control of Congress for the first time in four decades.

The Contract with America: Where It All Began

The Contract With America is a story of political perseverance. Its real antecedents were in the formation of the Conservative Opportunity Society in 1983. That group, brought together by Newt Gingrich, had as its mission the transformation of the House Republican Conference and ultimately taking control of the House.

The Contract with America: The Power of a Positive Message

In the months leading up to the 1994 Contract with America, then Republican House Whip Newt Gingrich used the pollster he trusted most to develop the content – himself. Yes, the Gingrich team conducted a handful of focus groups but the bulk of the public opinion input that drove the Contract’s 10 major points […]

The Contract with America: A Model for Campaigning… and Governance

Shortly after more than 350 men and women from around the country joined together to sign the Contract with America, a panicked House challenger phoned me. He had just received a call from the political director of the RNC telling him that embracing the Contract was a sure path to defeat and if he wanted […]

“It gave people something to vote for.” – Q&A with Haley Barbour

When Haley Barbour became Chairman of the Republican National Committee in 1993, the prospects for the GOP’s future looked rather grim. The party was coming off an election that saw it lose the White House for the first time in 12 years, and Democrats were led by a charismatic young President who came to town […]

“A Contract for Today”

When 367 Republicans signed the Contract with America on September 27, 1994, they were not only signing onto a document that would help guide them in their campaigns, they were also signing onto a governing agenda that would help guide the party after the election. At the time, providing such an agenda was important. After […]

Republicans, Energy & the Environment

At a time when Republicans are being criticized for showing indifference toward the environment, it is worth noting that the party has a rich legacy on the issue on which party leaders can build. The GOP’s great conservation legacy began with the first Republican president, Abraham Lincoln, who set aside the Yosemite Valley for the […]

The President’s Shortsighted Policy on Coal

As the Environmental Protection Agency wages its war on coal, it seems that the U.S. is exporting hypocrisy. With U.S. greenhouse gas emissions plunging due to our abundance of cheap natural gas, the dirty little secret is that coal exports are beginning to boom.

The Red Tape Factory

Since President Obama moved into the White House in 2009, his administration has been churning out spools of red tape. The Environmental Protection Agency is the administration’s biggest red tape factory, issuing more economically significant rules than any other agency and contributing to making energy prices more expensive.

Leading from the Front on Energy

Recent events such as the rise of the Islamic State of Iraq and Syria (ISIS) and the crisis in Ukraine demonstrate that it is in our national interest to assume global leadership. The idea that “energy independence” would somehow free us from global responsibilities and promote the benefits of isolationism now ring hollow as the […]

States, Not Localities, Should Control Fracking

This past June, the New York State Court of Appeals issued a ruling that could have repercussions in all 50 states. In a 5-2 decision, the Appeals Court ruled the towns of Dryden (in Tompkins County) and Middlefield (in Otsego County) are allowed to ban fracking completely. The way they can do this is through […]

Ripon Profile of Mike Pence

From the September 2014 edition of The Ripon Forum, the Governor of Indiana and presumptive 2016 VP nominee discusses his record in the Hoosier State and the need for Republicans to offer a “positive alternative” to the failed policies of the Democrats.

The President’s Shortsighted Policy on Coal

Phil FlynnAs the Environmental Protection Agency wages its war on coal, it seems that the U.S. is exporting hypocrisy. With U.S. greenhouse gas emissions plunging due to our abundance of cheap natural gas, the dirty little secret is that coal exports are beginning to boom. While the EPA wants to take credit for closing our coal plants, the truth is that the shale gas revolution, courtesy of the energy industry, has been one of the main factors in reducing carbon emissions.  The EPA may be slowing coal burning in the U.S., but the reality is that our coal will be exported to countries out of the reach of the agency.

According to the U.S. Energy Information Administration, in 2013, U.S. coal mines produced just fewer than one billion short tons of coal — the lowest output level since 1993. They say that more than 90% of this coal was used by U.S. power plants to generate electricity. That is 37% lower than the all-time high in the U.S. Yet, while more coal plants shut down in the U.S. — putting our electric grid at risk of failure — coal usage around the globe will rise and the U.S. will be exporting coal to countries that may not be as concerned about the environment as we are.

The Wall Street Journal reported that U.S. coal shipments outside the country in 2014 are expected to surpass 100 million tons for the third year in a row, a record string of U.S. coal exports. Those exports look to rise as the global appetite for coal also increases.

In Europe and in Asia, after a slowdown in demand due to economic factors, we are starting to see demand boom again. Instead of retrenching, the U.S. coal industry is looking to add capacity and export even more coal. Accordingly, the U.S. coal industry feels like it is ready to take on the world. A report released by the National Mining Association says U.S. coal to Europe and Asia added $16.6 billion to the U.S. economy in 2011, and that could surge even more as demand around the globe is expected to grow.

While more coal plants shut down in the U.S. — putting our electric grid at risk of failure — coal usage around the globe will rise and the U.S. will be exporting coal to countries that may not be as concerned about
the environment as we are.

There is a feeling in the coal industry that if the EPA closes plants here, there are plenty of places around the globe that will happily buy our coal. U.S. coal will not just sit in the ground.  In the United States, instead of writing the epitaph on coal – the industry is experiencing a real rebirth as an exporting nation that will feed energy to places all around the globe. Thermal coal, shipped by sea, rose 22% between 2011 and 2013 according to data provided by Glencore, and that should surge as demand will rise.

Germany for example will be an active buyer with the closing of their nuclear power plants. While they have spent big money on clean coal technology, other countries in the world have not.  Japan plans to increase its coal-fired capacity by a whopping 21 percent over the next 10 years. India is also adding huge capacity.

Yet in the U.S., the EPA’s desire to reduce our coal addiction could come at a cost. At a time when electric prices should be falling, they could be set to spike. Tim Maverick, of the Wall Street Daily, reported that last winter it was the coal plants that actually kept the lights on. He reported that the PJM Interconnection — a regional electric transmission organization that serves a large swath of the United States from New Jersey to Illinois — was key last winter. On January 7, 2014, it saw the largest-ever peak winter load of nearly 142,000 megawatts. In the rest of that month alone, 8 of the top 10 peak winter loads for PJM occurred. PJM survived, thanks to old coal-fired power plants that are scheduled to be shut down by the EPA soon. “Eighty-nine percent of the coal electricity capacity, that is due to go offline, was utilized as that backup to meet the demand this winter,” said Alaska Republican Senator Lisa Murkowski at a Senate hearing in April.

So what happened this winter? The Wall Street Daily says that about 12,000 megawatts of coal-fired capacity are scheduled to be retired in January 2015 to fulfill regulations established five years ago. Most of those coal-fired power plants are owned by American Electric Power (AEP), the country’s biggest owner of coal-burning power plants. AEP is being forced to close down almost a quarter of its coal-fired generating plants over the next 10 months. This will reduce the total capacity available for some of the country’s most densely populated regions just when the weather may once again push the demand for power to unprecedented levels. AEP’s Chief Executive Officer, Nicholas Akins, told Congress last April, “This country did not just dodge a bullet [this winter] – we dodged a cannonball.” Even the Commissioner of the Federal Energy Regulatory Commission, Philip Moeller, believes the electric grid in parts of the country is “now already at the limit”. This is not good news with regulations removing some of that already-strained generation capacity.

According to Wall Street Daily, while AEP believes the EPA could be willing to extend the coal plant shutdown deadline date, it is possible political pressure will not allow the EPA to grant that deadline. Fears that environmental groups will likely bring lawsuits under the Clean Air Act will force closures regardless. Unless environmental groups give the coal-powered plants a reprieve, a blackout is almost guaranteed in the event of another polar vortex winter.

Demand for U.S. coal will be even higher with geopolitical risk around the globe. The possibility that U.S. coal exports will be needed desperately in Europe will increase if Russia decides to cut off supply because of the conflict with Ukraine. Twenty-five percent of Europe’s gas goes through Ukraine, and if Russia plays hardball, that will only cause the demand for U.S. coal to rise even more.

While the EPA has noble goals, the truth is, like many things in energy, when you try to fix one problem you may be creating many others. 


Phil Flynn is a Senior Market Analyst at The PRICE Futures Group and author of The Energy Report and contributor to the Fox Business Network.