The Dispatch Podcast - Abundance Democrats Are Turning Right | Interview: Philip Rossetti

Episode Date: October 6, 2025

Kevin Williamson is joined by Phillip Rossetti, a contributor to the new Dispatch Energy newsletter and fellow at the R Street Institute. The two dive into the “Abundance” movement and why some traditionally pro-regulation Democrats are rethinking their stance and finding common ground with free-market advocates. Show Notes:—Philip for Dispatch Energy: “The Advent of the ‘Abundance’ Movement”—Subscribe to our new Dispatch Energy newsletter Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Dispatch podcast. I'm Steve Hayes. In this episode, Kevin Williamson, Dispatch National Correspondent, is joined by Philip Rossetti, a contributor to our new Dispatch Energy newsletter. Dispatch Energy will be published on Thursdays and cover topics ranging from oil and gas and permitting regulations to renewables, nuclear, the grid, and the climate. Check out the link in the show notes to make sure you're signed up to receive it. On today's episode, Kevin and Philip dive into the abundance movement and its role in shaping the debate over permitting reform. With rising energy prices and housing costs, even some traditionally pro-regulation Democrats are rethinking their stance and finding common ground with free market advocates in the push to make America

more affordable. Let's listen in. So I'm going back and forth in between Phil and Philip here, and I know you most to go by Phil. but I think I'm going to settle on Philip. It feels a little more formal and maybe a little more appropriate to the occasion. I wrote a piece about dress codes today, so I'm having a bit of formality in my brain right now. So you started off by writing about the abundance movement

and how it relates to energy and permitting. I'd like to talk about that a little bit. I was not a huge fan of the abundance book, which I thought was not great, but as a political movement and as a way for Democrats, in particular in people on the left, to engage with policy issues in the political world. I think it's pretty good, and I welcome it.

When people talk about this stuff, maybe the utility permitting process is not the first thing that leaps to mind for a lot of them. A lot of people are thinking about housing and stuff like that at the top of their agenda. But tell me about that and why it's important and why we are talking about it and should be talking about it. Sure. Well, thanks for having me, Kevin. I hope I lived up to the dress code that you wrote about.

But, you know, we always strive for that. So abundance, I would also echo that I think there seems to be a bit of a disconnect between, you know, the way people talk about it and sometimes the pragmatics of it. So I concur that, you know, the way that sometimes a book is written about it might not really reflect, you know, what we're hoping to see. But we do see this really big growing movement under this abundance umbrella. And what I think is really happening is you've got a lot of people on the left especially that are discovering that some of their policies just can't actually do anything without some kind of modification to the regulatory schema that is in the country.

So you mentioned housing. And it's like, well, it doesn't matter how much you subsidize housing or how much you redistribute wealth or tax and spend, whatever you want to call it, if you actually have laws that say you can't build this thing. In the energy space, you know, you always hear people talk about like a clean energy revolution. I think in your piece on The Abundance book, you mentioned, you know, like laser ignition fusion. And it's like, okay, well, why isn't that happening? Well, it turns out that at many points, the government says, you cannot do this.

You need express permission. It's a lengthy process. And especially what we see is litigation being a huge factor in the permitting snarl for pretty much anything energy. So you have a lot of folks who have championed the idea of clean energy in a revolution or whatever you want to call it, have kind of competing things in their mind, where they have now realized that you can't just subsidize your way into this sort of future. Now, I as a free marketeer have never really been a big fan of the subsidized everything approach

because there are a lot of shortcomings to that. And I've always been more of the mind of, well, maybe we should be looking at reducing barriers to market entry. If you want more clean energy, you want to make it so that it actually can enter the market freely and compete on its merits. And that's something that's not a new idea, but I think that people under this unbundance umbrella are starting to discover it in a way that they hadn't before. And that's largely because of the messengers, right? Like, you know, when I say it as a free marketeer guy, is not really trusted the way that as Recline, you know, when he says it. Yeah. And of course, he would say that he also is a free market.

guy, just one with a different set of priorities, I suppose. And again, as much as we could nitpick about that stuff, I'm glad it moves in the right direction. Jonah often quotes our friend Rameshpreneur saying he doesn't mind flip-flopping in politics as long as people are flipping to his position and getting to the right one eventually. And I think there's some real wisdom in that. One of the things always driven me crazy about this kind of discussion more broadly is that, for instance, in the case of nuclear power, which I care a lot about, I'm a nuclear power advocate. People will tell you, well, we can't do nuclear power because even though it's got a really low environmental, at least carbon footprint, it's very expensive and the

processing and the permitting process takes a long time and it's very cumbrous and it just takes forever. And that's true, but the people who tell you that are the people who made the process expensive and impossible to comply with. We have some real sort of, what's the word I'm looking for, kind of organic problems with nuclear power in the sense that for the longest time, every nuclear plant was kind of from scratch. There was no modular nuclear power. So everything was essentially a, everything was a prototype. You know, everything was, and there were no real gains from scale and productivity to be had.

Of course, that's changing now with the advent of small modular reactors. But we saw, you know, similar kinds of things with, with solar power and with wind and things like that, where they were able to actually kind of come to a set of agreed upon standards and sort of engineering homogenization relatively quickly, where, you know, solar panels are pretty much solar panels. They're a commodity, and wind turbines are pretty much wind turbines. So we've seen them get through that process a little bit more quickly, but that's because, in no small part,

because they didn't have the kind of ideological and really moralistic opposition that nuclear power has always had. Nuclear power has had really, really powerful opponents since the 1950s and 1960s, partly because if it's association with nuclear weapons, which is steel, too, can be used for lots of different things. It can be used for surgical instruments or for bullets, depending on what you want to do with it.

So sort of taught me through some of this where there are people out there who want to do permitting reform who want to make it easier to build certain kinds of facilities, but they don't want to make it easier to build LNG export docks and terminals. They don't want to make it easier to build natural gas-fired power plants, even though these are the source of really of pretty much all the greenhouse gas improvements in the last 30 years in American history have been the displacement of coal by natural gas and the displacement of the production of electricity. So in Klein's book, of course,

there is a bit of that moralistic stuff too where, yeah, we want to make it easier to do certain kinds of things, but we don't want to make it easier to do energy projects across the board and let things compete in the marketplace and see what actually works. So talk me through your views on that. Yeah, so this is something that I realize I've been working on for pretty much my whole career about 10 years now. I was actually just talking to one of my former mentors about this big permanent debate that's happening in Congress right now, and he's like, I've been working out for 20 years, his whole career. So it's always been an issue, but I think a little bit of sort of history is kind of in order here.

So the permitting, you know, we always talk about red tape. It's been this ever-present thing. But for a long time, it was always viewed as the purview of Republicans and the pro-business position because basically it was saying, hey, you know, we want to build more of things we like, which are usually in the past. It was, you know, coal, oil, gas, et cetera. And then, you know, it was always the environmentalists that were opposed to that. You know, they were saying, hey, we want to have more regulation, more restrictions. because we're seeing this trade-off of an environmental benefit from this position. Now, what's changed is everything, regardless of what sort of type it is, is encountering the same sort of permitting difficulties.

So one of the things, this is not the only permitting issue, but it's a big permitting issue. It's called the National Environmental Policy Act, which I hate the name of the National Environmental Policy Act, because it makes it sound like the law protects the environment. But it's not really that. It's just a procedural law that says, here's how you comply with all the other environmental laws. So people often think that if you change it, that you're reducing environmental protection, but you're not. But NEPA is this process by which permits can also be challenged and litigated, because it's very vague. It just says, okay, here's, you know, all the laws and you're going to, you know, look into this with a, you know, a good look or a hard look, they sometimes will call it. And that's so vague that you can dream up anything.

And what we've seen is a tactic that has sometimes been used against, you know, fossil fuel projects, LNG export terminals you mentioned, is this idea of, well, you're not looking enough at what the environmental implication is, or you're not looking at, like, climate change or these indirect effects. And that also applies to renewable projects and transmission projects and anything else and needs to move through NEPA, you know, even if it's not climate change, it can be looking at, well, you know, what if there might be like an endangered species that is affected by this? So this is a thing with the Purple Line project, so this is a proposed light Vero project in Maryland.

If you're familiar with the D.C. Metro map, like the Red Line is this big U. So the purple line would connect the top part of the U shape. And people are like, yeah, this is going to reduce congestion, traffic, and be good for the environment. And there was an environmental group that said, well, you know, there are, endangered species nearby, and maybe they could be affected, even though that's not what NEPA requires, you're only supposed to look at the direct effects. So there's all this opportunity to say, okay, the permitting process isn't good enough, and it gets challenged in court, and it seems reasonable enough that a court might vacate

the permit and say, you've got to evaluate this before you do anything. So now when you think about this abundance movement, where they have this idea of like an ecomodernist future or what have you. And they realize that the permitting is also affecting their projects. So renewable projects actually are more likely to get challenged by environmental justice advocates, pretty much. That was the most interesting nugget from your piece, by the way. I was surprised to learn that. And maybe expand on that point a little bit just so people really get it hammered home for them. All right. So it's, you know, it's always kind of hard to put like numbers to it because there are a lot of it's anecdote. But we're starting to see the anecdotes shifting

into data, right? And you see projects getting litigated by Sierra Club, NRDC, etc. And part of it can be environmental, right? You know, like renewable projects actually tend to have a large footprint. Like if you have a solar farm, you need a lot of land for that. So you're going to impact a lot of habitat more so than some of these fossil fuel projects. If you have wind turbines, you're probably going to affect migratory birds because the place that's great to generate wind power is also probably going to be great for, you know, conditions for migration of foul. So they're running into these opportunities to litigate and they might have an environmental tradeoff and they're kind of doing their thing, but we're also seeing that not all of the

core cases are really tied to environmental issues. So the Breakthrough Institute, they did a look into all this data on litigation. They found like, well, even though, you know, environmental groups are doing most of the litigation, like over 70%. of NEPA litigations are coming just from, you know, public interest groups. Only less than 3% of those court cases are actually saying that there's like an environmental justice issue. And, you know, it can be like procedural concerns or saying, hey, you know, you guys didn't issue this permit correctly. And I don't want to like, you know, speculate too much on why that's the case. But I think that there's a certain inertia. You know, if you're a group

that has just litigated against every project and you just, you just, just oppose new construction, then you're going to keep doing that. And that's kind of what we've seen. So now you have, even the clean energy folks are like, yeah, we really need permitting issues. And I think now you're seeing this convergence of constituencies that hasn't happened before and makes a little bit more appetite for it. So if we work out the permitting issues, if we rationalize that process and streamline it and make it easier, what changes in the U.S. economy that people,

are going to notice. Yeah. So I think the caveat I always say is it's probably never going to be the way that people think, right? Like everyone always has this idea of, well, this is the future that I think is most likely and we just need to remove the barriers to that and that's how we get there. But in practice, that's not how markets work. Like the market is profit seeking.

It's going to look to the most efficient technology to satisfy demand. And that's good. You know, that's how you mitigate cost. So I think you've got a lot of folks on the left to think, okay, if you get permitting a form done, then you're going to see a big surge of clean energy because there's so much clean energy that's held up by permitting issues. In fact, there's more, I don't have to check the numbers, but I believe there's still more clean energy and interconnection cues, so trying to seek connection to the United States

grid, than there is actually existing fossil capacity. So there's a huge amount of that. So that makes sense, but you've also got a lot of folks on the right who are kind of like, well, you know, natural gas is still really cheap. We produce a ton of it. And the only thing that keeps it from getting cheaper is the constraints on permitting, whether there's pipelines or, you know, new facilities. And especially there's a global market for natural gas. So there are a lot of folks say, hey, you know, we should be exporting more of this. So you've got a lot of folks saying, hey, it's actually going to be a fossil dominated future with more or an easier permitting framework.

I'd say it's probably going to be somewhere in between those visions, right? That's just kind of reasonable. But I think that when you look at costs, what you want to ensure is that the cost that we face is not because of an artificial, artificially induced scarcity from government barriers, right? Like you want these technologies to compete on their merits. And also, it's the same technology that's cheap in one place is not going to always be the cheapest. So we're going to see, you know, kind of a heterogeneity of this. So I'd say you'd probably expect lower energy costs.

You'd probably expect, you know, like the Northeast might replace some oil plants with natural gas plants because they want more natural gas. You might see more renewable energy in places where they couldn't permit before. But that can also lower cost because if you have more that's actually getting onto the grid and competing, then you're going to get the lower cost as a result. Should we be doing more to price externalities related to fossil fuels? That's a good question. It's always a perennial debate.

And one thing I think is important to understand is we do actually have policies that control externalities. And Kevin, I know you've done a lot of work at CEI, so you're very familiar with this stuff. But we have a very stringent regulatory regime on air quality. And I think there are a lot of people say, hey, you know, we think that that's good. there's some people say it's not good enough. I think the real debate often comes down to like climate change where people are saying, hey, you know, there's a carbon dioxide component because that doesn't have the same sort of like air quality impact. It's not, it's not regulated in the same way, but that doesn't mean that it's not regulated, right? The Biden administration imposed considerable

regulations on carbon dioxide. I think from like a market perspective, if you are trying to mitigate an externality, then you want the market to essentially decide it and say, you know, here's what we think is the best way to do it. Here's the cheapest way and let people figure that out. Regulations are going to be more expensive. But I think the challenge with this question specifically is it's very hard to know what that externality is, right? Like the people will point to the social cost of carbon. And the social cost of carbon has changed considerably over the year. it used to be around $50 a ton. Under the Biden administration, it was like $190 per ton.

Under the first Trump administration, it was $7 per time. And now they're doing away with it entirely. And I think there's a question of like, well, what is the right value? And without getting too much into the weeds, the challenge with discovering that value boils down to what does the world look like 300 years from now? That's actually the benchmark for social cost of carbon is, what is the impact over 300 years?

time scale. And if you think that the world looks poorer than it is today, then you're going to say there's more of a reason to say that cost should be borne by people today and what they call lower discount rate and a higher, higher externality. And if you think that the world is looking better in the future, then you're going to say, well, actually, you would use a lower discount or sorry, a higher discount rate, which would yield a lower value because it might be worth it to have increased economic growth to overtake those potential effects. So I'm not going to say kind of like what the right value is, except to say that we have a lot of information show that the regulators

have done not a great job of trying to find the right value. And they're, one day I will just kind of mention briefly that is interest. Like these discount rates, you get a massively different value. Whether you use 2% or 7%, And the Biden administration just said, okay, we're going to only use like 2%. And they still use 7% for other pollutants. But they're just like, this one pollutant, we're just going to treat differently. So I think there's a big issue of regulatory quality and consistency in the way they evaluate these policies.

Are you trying to tell me that regulators sometimes respond to political pressure? Never, right? You know, they're purely, you know, why is it driven snow, you know? This is one of those things where a couple of things about global warming policy that jump out in my mind. Sometimes you look at a policy that's a pretty good idea or that seems like a plausibly good idea, but would have been a really good idea if it had been implemented 40 years ago or something like that. I tend to think of like cap and trade or carbon taxes being one of those ideas that if we had done it a long time ago, it would actually probably produce some useful results in various ways.

I also think this is a little bit like the top income tax. rate, where I'm sort of okay with picking an arbitrary value. If we're arguing about 36% or 39%, I don't really so much care which one you end up at, is if you could pick one and stick with it for about 50 years to provide some policy certainty for people. And I think if we'd maybe adopted a more proactive policy toward climate a few decades ago, but done so in a way that's kind of a, you know, a Milton Friedman cap-and-trade kind of model, we would have given the environmentalists a lot of what they wanted and taken what I think would have been a relatively conservative risk-averse approach to the issue while providing an atmosphere of,

atmosphere, I may not have the best choice of words, or maybe the perfect word, who knows, but a climate of policy certainty, or at least a climate in which people could be relatively confident that there weren't going to be radical changes in policy in the next few years. I think one of the big underappreciated economic costs of climate policy is that you've always got someone out there, whether it's an AOC type or Bernie Sanders type or someone like that, who is arguing for some sort of radical, disruptive, very expensive change in policy that's not driven primarily by environmental concerns, but it's driven primarily by social justice concerns and anti-capitalism and those sorts of things. And that just makes it difficult

for people to invest. It makes it difficult for people to do long-term projects, which is, of course, what you need in this stuff, because as you point out, some of these things take, was it, a mine takes 29 years to go from discovery to production under our current regulatory regime? That's bananas. Not to take us entirely off topic, but that made me think about, you know, the difference we see in subway construction, where, you know, in Madrid, they're spending like 15% per mile what they spend in New York City. And the Spanish aren't really famous for their efficiency, not for the most part. I mean, they're not as bad as they used to be, maybe, but they're still not, you know,

they ain't Switzerland. They aren't Austria. But for some reason, they're able to do this stuff much more cheaply than we can. You know, we see these shocking numbers. We look at things like the high-speed rail project in California, which will, now be connecting two cities that no one travels between pretty much ever, at a very high rate of speed 20 years from now, or whatever, at a cost of gazillions, gazillions of dollars. So my question, I'm getting around to a question for you on this. I sometimes worried that

this discussion ends up being like the way discussion of federal spending looked in the 1980s and 1990s, where people would talk about the $700 Pentagon wrench and why it cost a $1,000 to make a toilet seat for a ship, and everyone's sort of outraged by it. It's kind of comical, and you can satirize it and do television skits about it and that sort of thing. But it just feels so beyond repair that no one makes a serious effort to do anything about it. Is that where we are with the permitting stuff, or is there more of a real political constituency for fixing this in a substantive way?

I think it's kind of moving more into a real constituency, and that's the thing that gives me a bit of optimism, you know. Why? Why is it moving that way? Yeah. So, you know, my takeaway from your comment is really, we need more siestas. Yeah. Yes. The important, the important thing in mind is there's a distinction between like private sector driven activity and government driven activity, right? Like if you're listening to this podcast, you know, you probably are paying utility bill to cover the electricity cost to listen to and if you drive a car, you know, you're paying for that gasoline. So there's, a motivation for the private sector to say, okay, we want to build things and we want to sell things, and we want to do it in a way that does it better than our competitors, that we can

get market share and increase profits. That sort of competition is what actually drives cost reduction and benefit. So, you know, from the private sector side, it's like, okay, you know, the more that you can address these permitting issues, the more opportunity there is to actually have, like, better competitive forces in the market and a more open market. Because actually, have no opportunity for permitting, that simply preserves incumbents and it shields them from competition, which lets them raise costs without any kind of a loss of market share. To get to the government stuff, you know, the high-speed rail is kind of a good example. This is kind of a big issue with just the way the United States operates on a lot of these things. So other countries have

kind of figured out that if you're going to have government, you know, do things, then you probably want to have it, like, you know, more efficient than it is. And then other, some countries actually have, like, more private sector-driven infrastructure. So, you know, I could ask, like, what's a country that does, you know, subway as well? And it's like, well, Hong Kong had this kind of rail plus property model where it's like, you'd have a business investors would buy land that wasn't very valuable. And then they would subsidize the infrastructure to increase the value of the land. So there's a profit motive there. Whereas in the U.S. It's how the trains got built in New York, by the way.

Right, right. They were subsidized by property developers way back when. Which makes sense because that's where the value is of that infrastructure. But in the U.S., we don't often approach public infrastructure in that way. It's often, you know, saying, hey, you know, here's just a lot of subsidy. And then when the project runs over costs, then here's more money. And there isn't, like, a good look into why those things are happening. Because I think that opens up new questions for people of like, well, you know,

maybe Service Transportation Act has some issues or things like that. It's a question that nobody asks because nobody wants to know. Right, right. So that could be a whole other topic. But I think in the permitting space, the important thing you mind is most of the stuff we're talking about is private sector. Right. Like, yeah, you know, there are some big infrastructure projects that, you know, might be subsidized. But most of it, especially, you know, post the reconciliation bill, OBBBA, you know, big,

beautiful bill, whatever you want to call it, a lot of the renewable energy subsidies are phasing out. So it's really about, okay, just letting the private investors try to make bets on what they think is right. So that's kind of why I see that you have this like growing interest on it. And you also have, you know, people on the right who have been talking about this for a long time say they want this. And they're also starting to converge on the same issue, which is litigation risk and saying, okay, you know, we need to make sure that the agencies that issue these permits actually have some clarity. Because that's kind of the real thing is the agencies have no idea what they might get sued on in terms of this decision. So they just keep increasing

the size of the environmental impact statements, just trying to cover everything. I think the one that came up in the Supreme Court earlier this year, I think it was like a 1,500 page environmental impact statement. And it's just bonkers, right? And people are saying like, well, if they don't need to be that long, we just need to make sure the agencies actually know before they issue the final decision what needs to go in there. And that doesn't reduce environmental quality. It doesn't repeal environmental regulation. It just says here's how you comply with this law. And so there's kind of like fairly light lifts that can potentially make a big difference. And the traditional opponents to it are starting to shrink in number as more of them move into the camp of

like, well, we actually like environmental quality, so we want to make it easier to build things that we think are good for the environment. And that's what gives me a bit of optimism. Did you lock the front door? Check. Close the garage door? Yep. Installed window sensors, smoke sensors, and HD cameras with night vision? No. And you set up credit card transaction alerts, a secure VPN for a private connection,

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And Squarespace goes beyond design. You can offer services, book appointments, and receive payments directly through your site. It's a single hub for managing your work and reaching your audience without having to piece together a bunch of different tools. All seamlessly integrated. Go to Squarespace.com slash dispatch for a free trial, and when you're ready to launch, use offer code dispatch to save 10% off your first purchase of a website or domain. I know I'm oversimplifying this, but under NEPA and then particularly, under some of its state level analogs, and especially in California, basically anyone can sue. It creates a very, very large opportunity for people to exercise veto.

That's the big question. So under the process, you basically get the permit going, and then the agency will issue a draft environmental impact statement if the project requires the environmental impact statement. And then there's a public comment period on that. And then you can say, hey, here's how your comment or your environmental impact statement fell short, or here's something you didn't address, and then they will modify the environmental impact statement and issue a final environmental impact statement. And what we see is that there is an opportunity for projects that just don't get something raised during a comment period can get litigated on that. There's also a very long statute of limitations for these records of decisions. So it's

six years, six years. So you could theoretically have a project permitted, built, and then six years after the fact, have someone say, oh, actually the permit, you know, was not issued correctly. So there's always this, like, threat of litigation. And there was this very small, narrow reform to NEPA back in 2015. So Obama was president, and it was a bipartisan effort called Title 41 of Fixing America Surface Transitation Act. So, Fast 41, they call it. And that basically said, okay, if you're going to litigate a project that is under Fast 41, which are just like really big projects, $200 million plus,

then you have to actually file a comment during the public comment period that puts the agency on notice of what they did deficiently. And that worked out very well. They also reduced the statute of limitations for Fast 41 from six years to two. And the projects that move under Fast 41, even though they're the biggest projects that should take the longest to permit, actually move faster than the average. And you don't see a lot of people saying that they've been adversely affected by this. It seems like it's actually kind of a big success story, a big bipartisan win.

And a lot of the efforts on permit reform, they're actually coming from Republicans especially, is just saying, hey, that worked really well. just make that like the norm instead of something that only 200 plus million dollar you know projects can get so there seems to be like a lot of light lifts that are an opportunity here and don't like reduce protections for anyone but just kind of say the agencies need to know what they actually need to include in these documents so that's you know possible but that also has been a rubicon that you know folks don't want to cross because there are a lot of public industry groups that leverage that opportunity to litigate, and this would reduce their

opportunities to delay projects, if that was the case. So you do have some political constituencies that are vehemently opposed to this. So we'll see what happens. Yeah, that's actually what I wanted to ask you about next, because in our current era of irrational tribal polarization, there are a lot of people in our politics, including the loudest voices in both parties and both major political tendencies. who will insist that there is no such thing as a bipartisan win, that if the other side has bought into a program or a vote or a budget or a piece of legislation, then that is prima facie evidence if there is something wrong with it. Now, an argument I've made for a long time and that you touch on as well

is that if you want to have durability in public policy, which is not only to have good policies, but to have policies that last and are predictable and are stable over the course of decades, months that aren't going to change radically every time there's a presidential election or a turnover in the party affiliation of who controls the White House or the House majority, then bipartisanship, of course, is the only way to get there. And there used to be this way of talking about bipartisanship and compromise that treated those things as they were just moral goods in and of themselves that compromise as a virtue, bipartisanship is a virtue. I don't

believe that, and I never have believed that. There's been a lot of bipartisanship in favor of bad policies. We have a bipartisan consensus debt problem, for instance, that nobody really gets serious about spending. On the other hand, there are real pragmatic values to that stuff, and one of those, of course, is durability and policy, which you've touched on as well. So I wonder if you wouldn't hold forth on that for a bit. Yeah. So, you know, I think there's this kind of idea of bipartisanship doesn't automatically make policy good is important, you know, to the point of the debt. But I think that bipartisan gives confidence that a policy is going to stick around for a while. And to use a corollary example, so the Inflation Reduction Act, which was the, I hate

that name because it did not reduce inflation, but the Inflation Reduction Act that was passed under party lines by Democrats without any kind of hearings or anything just kind push out there has now been mostly unwound on a similar partisan framework. And I think that that actually has been kind of a lesson, which has instigated a lot of this abundance movement idea of like, hey, actually, you know, these kind of big spending packages are kind of politically vulnerable and might not have the effect that they're intended over the long term. So that when we talk about permitting, especially, this is so important. because these projects, you know, to use the mine example, 29 years,

they go beyond any kind of like single Overton window in politics, right? Like, you need to actually know that this permit is going to last for as long as you need it. And we see this with like natural gas exports, you know, natural gas export contracts 20 years, you know. So they're, how are you going to convince a buyer overseas that a future president is not going to say, hey, you know, you can't export natural gas anymore. It's not on a national interest or whatever. And declare an emergency to do it unilaterally do the executive rather than, you know, passing a law or something like that.

All right. So, you know, for permitting, like for business, you want that confidence because it, there's this idea of risk and politics can influence risk. So if you are taking on that risk as an investor, that is going to get reflected in costs because we're saying, hey, I've got 10 projects here. And I know that two of them are likely to get, you know, lose their permit or something like that. Then the cost of those is going to come from the other pool of projects that have to have increased cost. So that's one of the reasons that, you know, bipartisanship is important on this issue.

But, you know, to that point, I think, you know, as your point, Kevin, it's important to understand that, like, good policy matters whether it's biparas or not. I think it's preferable that there's bipartisanship, but you know, you don't want partisan bad policy or bipartisan bad policy. And I think that at least on this issue, it's been kind of this incremental understand, like, hey, let's take out, you know, this problem first and then move on to the next thing. And that gives me a little bit more hope on this issue. Maybe not like taxes, you know, I think that's, you know, the debt situation is a little bit more interesting. But when I'm permitting at least, you know, I can be a little optimistic. do you have other areas of optimism yeah that's a good question you know i think there might be a little bit

of a moment coming up you know you raised this point about like emergency authority and you know i can't guarantee that this will happen but i do think that uh there is starting to be a recognition among folks that the status quo of the president having a largely undefined level of authority and no real constraints on emergency authority where anything can be an emergency is raising the question of, hey, maybe Congress actually needs to be taking back some of this authority. And, you know, I don't know what that would look like exactly, but I think that, you know, having more accountability is something that, you know, helps political function.

So that's, I think, something that's interesting, but I don't want to, you know, say any kind of specific policies I think might get changed. But just the idea that people are starting to think about maybe the idea of just constantly shifting power out of Congress into the executive branch is not the right way of doing things. Yeah, you know, I look at some of these challenges and they just seem so intractable. I do find it discouraging. I guess maybe I'm a, I'm a poster child for the phenomenon I was talking about.

about earlier, where it just seems so bizarre and out there and insolvable that one is tempted to throw up one's hands and give up. Now, just thinking specifically about the case of California where you've got, you know, arguably the most beautiful place in the world, some really, really extraordinary real estate, great workforce, all that kind of stuff, and a great educational institutions and the place is a mess. And if you really wanted to fix it, you know, if you had a trillion dollars at your disposal and you said, what I really want to do is live in Big Sur, but I'm not going to live there because California's got these problems. There's not enough energy. There's not enough water. And now it's impossible to get in and out of Big Sur, essentially unless you're backpacking

because the roads have various kinds of problems. If you had a trillion dollars to throw at that problem, but you didn't have unlimited political authority to preempt all the resistance you're going to run into, you couldn't do it with a trillion dollars, could you? You could not? And I think that's kind of the issue we see here is you see this abundance movement grown because it's not an issue you have money or resources or capital, it's the fact that there are fundamental policies in place that say, you know, you're not allowed to build here, you can't do this, or you can't build in this way. You know, coming back to being like a free marketeer, I think what's important to understand

like why, you know, this whole idea of markets versus government is important is the idea of like picking, right? Like the government is really bad at picking things. And that's just because people generally are bad at picking things. So the idea of saying you're going to have like one person or even a small group of people that are empowered to pick what is the right solution is going to be problematic because they are, they're just not best suited for that. Nobody can overcome the informational barriers. No one is omnipotent. The markets tend to work better because you let people decide, you know, what is best for themselves.

and this sort of collection of decisions together helps to steer it to a more efficient direction. Are there, is that always perfect? You know, of course not. But it generally leads to better outcomes than having government direction. So when you think about like these issues of how the government solves problems, you know, to this idea of like a trillion dollars, very often I think government tries to look at this as a zero-something. thing, like, well, we've got these resources here, we're going to take it, you know, by tax or whatever, and we're going to put it over here. And that just doesn't work because there's this opportunity

cost that is present where whatever you take from, from one is going to lead to a loss of opportunity there. So, you know, California is, it's interesting, you look at kind of pessimistic, but I actually look at some of the developments there where I think they, they kind of realized that the stuff they were doing is not working. Like Newsom is kind of changing his tune on a lot of the oil policy and a lot of the energy costs where he just was focused so much. He had this effort last year, I think it was, to try to have like, you know, profits reined in from oil refiners and say, like, okay, you know, you're going to have to disclose all this and the state is going to make determinations on that. Guess what? Then refiners closed in the state. And this is a huge problem

because California has requirements for different blends of gasoline, formulations of gasoline to improve air quality. So all these regulations have been bad, and I think they're starting to come up to that wall of realizing. I've also heard that people in Southern California drive a lot. Yeah, funnily enough, you know, when you don't have high-speed rail, you've got to drive, right? If you're still overpaying for wireless, it's time to say yes to saying no. At Mitt Mobile, their favorite word is no, no contracts, no monthly bills, no

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Turns and conditions apply. Learn more at amex.ca. slash Y Annex. You know, the refinery is actually, to me, a really interesting issue because, you know, I follow some of this stuff from a foreign policy point of view as well. And it's always fascinating to me when you have. these big petroleum-producing countries like Nigeria or Iran, who have so little refining capacity that they have essentially a state of complete dependence on imports for things like

gasoline. And for the longest time, the Iranians were, they imported 90% of their gasoline or something like that. They built a few refineries since then. Nigeria right now is being paralyzed economically by strikes and other political. activities that have shut down refineries in the country. And we don't build a ton of refineries here in the United States either. Now, sometimes the people who own the refineries will say we don't need any new refineries, which, okay, I suppose that if you ask me if I needed new competition in my marketplace, I'd probably say no too. But it seems like the overall infrastructure of how this stuff happens. It's more complicated than drilled baby drill, right? I mean, you can bring oil

and gas out of the ground in Midland, Texas, and the environment around there. But getting it two refineries, changing it two usable products, getting those usual products to different places is super, super complicated. I remember being in Dallas a few years ago, and there was like a week and a half where you just couldn't buy gasoline because some pipeline had been disrupted because of a storm in Houston, I guess it was. And when you can't buy oil products in Dallas, that's just weird. that just seems that seems strange but but we are most of the country reliant on a very what looks to me like a very fragile underlying infrastructure where I guess the colonial pipeline was was disrupted a while back and that made it very difficult to buy fuel in certain

parts of the northeast I know in Maine a few years ago there were actually importing liquefied natural gas from the Russians because it was so difficult to get supplies to New England from from American producers so in terms of of the infrastructure, which is we always use infrastructure to mean public sector, unfortunately, but the important infrastructure in this country is private sector. There are a lot of choke points. We've seen very successful campaigns against oil pipelines. In my town, I live in right now, I see cars all over the place. They have bumper stickers on this, say no pipeline, which is a really funny thing to put on a car that's not electric. But are we able to communicate the importance of this

stuff to the broader electorate in a way they can understand. And do you also have optimism there that we can move the needle to use a terrible cliche on this broader debate of it's not just about do we permit new gas wells? It's about, do we have enough refineries? Do we have enough transportation infrastructure to get this stuff where it needs to go and to get the Fender Sputters where they need to go? And also for a country that for some reason is very, very concerned about its balance of trade, we do export a lot of this stuff, but it's not. easy to export some of these products. The Europeans very much were wishing there for a moment that we had a much more robust LNG export apparatus than we do because they were relying on

the Russians and they would much rather buy it from us because whatever we do, we're probably not going to invade and occupy any European countries in the near term. I mean, Venice maybe, I suppose you'll have like an effective occupation by American tourists, but the rest of Europe is probably pretty safe from that sort of thing. I know I'm holding forth a little bit here, But it seems to me like a complicated problem that is really very difficult to express effectively in a political culture that thinks in five-minute intervals and tweets. I think that this question is important because whenever we think about this technology and doing more of this or exporting more natural gas or refining more oil into gasoline,

it's important to understand that we know how to build this stuff, right? Like we talk a little bit about, you know, nuclear and there's this idea of like advanced nuclear. It's like, well, that's still like very, very much in kind of this new phase and there's a lot of uncertainty. But when we're talking about a lot of this infrastructure, it's been around for ages. And we know how to do it. We know how to do it pretty cheaply. It's just kind of question of like, is there the opportunity there? So I'll kind of break down the natural gas stuff versus the refining stuff first because they're different issues.

but the natural gas exports, there is a huge demand for U.S. natural gas. This is a real economic opportunity for the country because you've got a lot of foreign countries that would rather buy from the U.S. than other countries. They view it as more secure. We can cheaply produce a lot of natural gas. And you have this growing demand because a part of it is replacing coal with gas. It's really hard to replace like coal with some other reasons.

like wind and solar because they're different, even though electrons are electrons, coal has like black star capability on a grid. It has, you know, dispatchability at any time. So there are reasons why you can't always have one-to-one replacements. So natural gas is a good competitor to coal and foreign countries want that. Now exporting more of it, part of it is, you know, a pipeline issue, getting it to where it needs to go. The other part are the terminals and like actually permade them. One challenge here is it wasn't until the war in Ukraine that people realized, hey, maybe it's actually good for the U.S. to export more gas. You know, Europeans were really into it. They had like way, massive natural gas price spike because they were just stopped,

you know, importing from Russia, of course. And that led you a moment, but it takes a long time to permit and build this stuff. You need a real lead time. And most of our export terminals were actually initially being permitted as import terminals. Yeah, there was a a time we thought, hey, you know, we're going to have a short natural gas, we got to import more. And then they change gears and then switch it over. That is a real missed opportunity. It's one that I think has driven a lot of the permitting reform discussion. But now getting to the refineries, what I think is so interesting is like people are very acutely aware of gasoline prices, right? Like, it's such a big part of our energy expenditure, and it's right there in your face

every time you go to the pump and you talk a little about pricing externalities, the gasoline price I think is the big question of why you don't see a lot of like incentive to do that. People would rather be shielded from the price to regulation sometimes and see the price of the pump. And I think that California

where you have the highest gasoline prices pretty much and you have this these specific formulations that make it scarce, that drives this shift in the political constituency where you can say whatever you want as a politician

but you can't overcome reality right like you this was I think Biden's problem and during the election was he kept saying like you know talking about binomics and how much better things were but people didn't feel it you know like inflation hit everyone really hard and I think with energy prices that's something that happens people can feel when it's really expensive and they feel that what politicians have told them is not working

and Newsom I think is afraid of that as a cover of California and wants to change gears and I think that that also partially drives this where it's like, okay, you know, if we want lower costs that we need more refineries and because profinery capacity is very strained right now like there's a limit to how much oil you can actually turn to gasoline on any given day

and it doesn't matter how much oil you produce if you're not actually able to turn its gasoline. So it's a huge issue, but I can dive more into any of those that you aren't. Yeah, I think a lot of people, it takes them a second to realize there's not much you can do with oil. You can make it into stuff you can do a lot of things with, but oil itself you don't have a lot of uses for. You know, I sometimes say that if I knew someone who were about 22 years old and getting out of college and who was really ambitious and wanted to make an impact in American politics, I would say move to California, take over the state republic. party, which is a mess, and see if you can actually fix California. The American politician who comes along and fixes California will have the reputation that Rudy Giuliani had as a mayor

before he became what he became about which the less said, the better. It's an important job for someone to do, and I hope someone will get around to doing it. We're getting close to bottom of our time here. So what happened I asked you about that I should have that you want to talk about? Well, you know, you mentioned this like reforming the California Republican Party, and this is a bit of a tangent, but it's something I think is interesting, is when you look at like electricity prices in the country and electricity markets, a lot of states still have a vertically integrated monopoly, where you just have one person, one company that you're allowed to buy electricity from, and they're regulated by the state for how much profit they can charge.

And under that model, the incentive is to increase the size of your infrastructure and your book value as much as possible so that your profit margin seems really small. And that used to be the norm for everywhere. But you have some states that actually have competitive systems where they're having wholesale suppliers compete to the lowest cost to supply electricity. And Texas is kind of an exception to this because they're Texas, Texas. They're just like, we love competition. Let's just do this. But when you look at the mix of what states have vertically integrated monopolies and what states have competition, it's mostly the blue states that have competition. It's like, well, why is this?

Why are the folks who are more traditionally left-leaning and more about big government actually, you know, in favor of markets here? And really, it's that they kind of ran into this problem first. You know, like the more government expands, the more impediments there are to production, the higher cost get. And there is a fundamental accountability mechanism that kicks in when prices become unbearable. So the blue stays, just by virtue of being more to big government, kind of reach that first. And I think we see that a little bit in California, you know, the gasoline prices and permitting issues, housing costs, where they've done so much to make it so hard to do anything there that they're starting to realize that this is not sustainable. and they're the first state that has to really course correct in a way that other states happen. So that's another thing, keep in mind, is like when costs get high, people do want change,

and that motivates a lot of what we're seeing now. One thing I definitely should have asked you about maybe we can talk about a little bit here at the end is the state of the grid and vulnerabilities there and opportunities to improve things. So I'm both like optimistic and pessimistic is one thing. I think there's a lot of, when people think about the grid, they often think about the sort of homogenous infrastructure that we all draw from and that if, you know, a new like data center comes online, that they're losing power or something like that. But it's a lot more complicated than that. And one thing I think is kind of useful to think about is that at any given moment, about half of our power generation resources are just not operating, right? because the demand follows this kind of curve

throughout the day where it peaks, but also throughout the year, like you're going to have one day that's really hot and everyone's using their air conditioning and that you're going to have that peak demand. So the grid is really meant to satisfy these kind of like peak demand scenarios rather than like just kind of the day-to-day.

So day-to-day, you know, things can be mostly in good operation, but you also see surging demand, especially for data centers. That demand is not always happening in the same place that, like, residences are. Like, you see this kind of decision to try to co-locate where people are saying, hey, you know, where can I actually permit new generation resources and I'm going to build my data center there for that?

Like, Three Mile Island is getting reopened by Microsoft because they want a power data center, right? So there's some, like, growth that is not in competition with, you know, residential, but it is still, like, there in competition, at least to some degree. So there needs to be, you know, use your permitting for transmission to service new demand. There needs to be easier permitting for new generation sources

to reduce a cost through increased supply if you want to be able to have like increased growth without feeling those sort of effects. But I say that a lot of the issues that we do see are in terms of like justification for policy intervention, I think are maybe a little bit overblown. Like you'd see a lot of the Defense Production Act stuff where they're government's trying to say,

hey, this is an emergency, and we're going to keep power plants open by force, which actually can be bad, because if you are saying, hey, we're going to use government to keep a power plant open that would have retired, then you're also saying the signal to the potential entrance of the market that they don't have a market, that their market share has actually been forcefully taken away from them by government. So those are things that give me kind of more concern, like a lack of efficiency. But in terms of reliability, we have pretty stringent reliability standards. And despite like some events like Winterstorm, Uri, and Texas, and California has had its fair share of blackouts and wildfires that affect the grid, but

you know, generally, like things aren't that bad yet, I'd say. You know, like, I'm not as worried about reliability, but I do think that it's on the horizon if we don't manage to build new infrastructure. The grid is like fine today, but it's not fine for like the future, if that makes sense. And I think it's a question of, yeah, it's like, are we going to get to that future through increased infrastructure or are we going to just like not reach it because we don't, you know, we can't build it. As I, as I repeat ad nauseum on the budget issue, it's easier to fix your problems before their problems. Do you fix them before their emergencies when you have lots of time and resources and choices to make about how you do that?

Philip Rosetti of the R Street Institute and the author of the inaugural Dispatch Energy Newsletter. Thank you for your time, and we'll talk to you soon. Thank you, Kevin. Thank you for having me. Thank you.