Sand Shortage

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Milton Friedman's notion that "If you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand," has been borne out for decades in US energy policy. Sitting on top of the world's most prolific supply of oil, coal, and gas, every president since Richard Nixon has promised energy independence. The result: an energy dependence that led to the September 11 attack by Osama bin Laden.

With terrorism financed by oil revenues (Saudi Arabian, for the Sunni variety, and Iranian, for the Shiite variety), fretting terrorists evidently anticipated an oil shortage. Who could blame them? When the oil ran out, they would be left with sand. Disconcerted, therefore, by America's voracious energy appetite, bin Laden complained, "Muslims are starving to death and the United States is stealing their oil." That, and our military presence in the Arabian peninsula, provoked his famous 1998 fatwa, exhorting God-fearing Muslims "to kill the Americans and plunder their money wherever and whenever they find it."

But Muslims were not starving because of US oil theft. We paid a fair market price of untold trillions (plus an annual premium of $30–60 billion in taxes to protect the Persian Gulf, even before 9/11). Hunger — along with poverty, ignorance, disease, violence, and despair, to name a few other maladies common to the region — was the result of Muslim governments put in charge of the oil fields.

In the early 1900s, when oil was first discovered in the Middle East, the Muslim world had been in decline from its former greatness for over 100 years. Defying the principles of free market capitalism, and at least a few laws of probability, Muslim political leaders managing Muslim oil — the greatest single source of naturally conferred, easily accessible wealth in the 20th century — extended the decline for another 100 years.

Who would have thought that decades of brutal, totalitarian police states, run by secular tyrants, would fail to restore the tremendous successes Muslims had achieved in the glory days of AD 600–1500?

The descent of Muslim military power, economic strength, and scientific leadership began, ironically, around the time the American republic was born and Adam Smith published The Wealth of Nations. The subsequent adoption of democracy and capitalism by the US and European nations produced immense prosperity and an ever-widening gap between the West and the Muslim world. Today, by any meaningful measure of achievement, Muslim countries lag dramatically behind the West. During a 2010 interview on Al-Arabiya Television, Saudi scholar, Ahmad bin Baz (the son of the former Saudi grand mufti, Abdul Aziz bin Baz), explained,

We Muslims have found ourselves at the tail end of the world's progress. The Muslims are always on the receiving end, and their only role in life is to receive from others. Western society has become the society of innovations. It is Western society that produces and adapts itself to the changes of life, whereas we Muslims have become passive recipients of all these innovations, and all we do is sit down and ponder whether these innovations are permitted or forbidden by Islam.

Muslim leaders are no doubt perplexed by their abysmal failure to rejuvenate Islamic civilization. Who would have thought that decades of brutal, totalitarian police states, run by secular tyrants, would fail to restore the tremendous successes Muslims had achieved in the glory days of AD 600–1500? Why has the terrorism of Islamists (i.e., religious tyrants from organizations such as al Qaeda, Hezbollah, the Taliban, the Muslim Brotherhood, and the nation of Iran) been so slow to advance the Muslim cause? What other strategy might invigorate Muslim innovation, should corruption, cronyism, intolerance, bigotry, homophobia, and misogyny fail?

Give up? Here's a clue: it involves neither democracy nor capitalism. Instead, some Islamist intellectuals have decided that the future of Islam lies in a global Caliphate. They even have annual conferences for indulging in the fantasy. A promotional video for "Caliphate Conference 2012" proclaimed that "the Islamic Caliphate is the only social and political system that has the right solutions to the political, social and economic problems of humanity" and asserted that "the relentless decline of Capitalism has begun. The time has come to fight against poverty. Time to obliterate the injustices. Time for the correct system."

While the precise architecture of the "correct system" is a little sketchy, many of its core concepts — common bonding tenets, mandatory for all self-respecting Islamist intellectuals — are well known. These include (a) totalitarianism, masquerading as religion, (b) absolute rule by Sharia law, the legal codification of the Quran, (c) hatred of Jews, (d) blame to Jews (for caliphate failures), and, of course, (e) death to Israel.

When (or if) the Caliphate begins its transition from a pan-Islamic state to a global empire, the failures produced by the spreading dystopia and cultural havoc will be too numerous and varied to indict Jews alone. Thus, Islamists can be expected to add Christians and other infidels to (d) above.

As a surprise to Israel (not to mention the residents of cities such as Mecca, Damascus, and Cairo), Jerusalem will be the capital of the Caliphate. And as a surprise to capitalism (not to mention the billions of people it has lifted from poverty, more people than any other economic system in the history of mankind), it will be blamed for the world's poverty. Add “Capitalism” to (c) and (d).

A Sunni (al Qaeda) version of the Caliphate is scheduled to be victorious by 2020, right after four years of the "final battles against nonbelievers." However, given the pace at which Iran is developing its nuclear weapons, a Shiite version may be established sooner — unless, of course, al Qaeda steals its nuclear capability from a crumbling and sympathetic Pakistan. Picking a winner is troublesome, as is the idea of a Shiite theocracy having a nuclear bomb among its weapons and a “Death to America Day” among its holidays. Foreign policy experts tell us that Iran seeks its nuclear capability to gain a seat at the table of power. On the other hand, says former CIA director James Woolsey, al Qaeda simply wants to "blow the table up." It's a safe bet that “America” can be added to (c), (d), and (e).

Osama bin Laden was correct to worry about the conservation of oil in a desert region.

America's hedonistic culture mocks the "purity" of Mohammed-era ideals. The conspicuous progress of American capitalism undermines Islamist efforts to reconcile Islam with modernity. To the more eager Caliphate builders, the salve for this incessant irritation might be an EMP attack. A small (1 KT) nuclear weapon or two, detonated at an altitude of as low as 40 km, would destroy our infrastructure (power, communications, transportation, etc.) and, as a bonus, instantaneously fry our blasphemy-spewing smartphones, TVs, radios, and other electronic devices. According to the 2008 “Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack,” its effect would be “something you might imagine life to be like around the late 1800s" — not the 7th century, but a start.

If the Islamists prevail, their caliphate will be the first since the previous Islamic Caliphate was dissolved by Kemal Atatürk in 1924, following the defeat of the Ottoman Empire in World War I. Islamists are nothing if not ambitious, and patient.

That patience is about to be tested. Thanks to capitalism, America is now in the early stages of an oil and gas boom, despite all efforts by our federal energy intellectuals to stifle fossil fuel production. As Gary Jason pointed out in A Totally Fracked Planet, "We will reach energy independence in the not too distant future, thanks not to any corrupt crony green energy industry (solar, wind, ethanol, or biodiesel) but to the vast resources of shale oil and gas made available by advanced fracking technology." Privately owned US companies, employing innovative drilling techniques and private capital, on mostly private land, have made the US the fastest growing oil and natural gas producer in the world. The US is expected to be independent of all foreign oil, except for oil imported from Canada, by 2018.

During the last ten years, capitalism has been turning our long dependence on Middle East oil into little more than a bad memory of the 40 years of feckless policies concocted by our federal energy stewards. And it will turn the dream of Islamists into a nightmare. Try running a totalitarian state on oil revenues, when Brent crude drops from today's price of $110 per barrel to $70 by the end of the decade. What will Caliphate Conference 2020 have to say about world domination when dwindling Saudi Arabian and Iranian terrorism contributions squeeze prospective caliphate budgets to nothing?

Osama bin Laden was correct to worry about the conservation of oil in a desert region. He may have pondered over the use of sand when the oil beneath it ran out. Perhaps he recognized that excessive reliance on oil was the real source of the Middle East plight — that all the while, Muslims were more dependent on their oil than Americans. If Muslim leaders meted out freedom and opportunity, instead of crumbs from the table of oil revenue, economic diversity would result. Industries such as manufacturing, banking, tourism, and agriculture would expand and thrive. Who knows? As America becomes the new Middle East, the Middle East could become the next Silicon Valley, creating thousands of companies, millions of jobs, billions in tax revenues, and trillions in profits to shareholders— as it did here, in capitalist America. Why not? Unless you are an Islamist, there is no reason to believe that Middle Eastern Muslims are not as intelligent, industrious, and ambitious as American Muslims.

Meanwhile, according to an NBC News series on the economic and political ramifications of the American oil and gas bonanza, things will be looking up in America. Lower energy costs are making American businesses more profitable and competitive. New and better jobs are being created. With lower product prices and rising incomes, our standard of living will increase. And we will buy unprecedented quantities of any blasphemy-spewing, Islamist-mocking semiconductor devices Silicon Valley can invent. Semiconductors, by the way, are made from silicon, which is, in turn, fabricated from silicon dioxide — aka, sand.




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The Egyptian Mess

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Behold, you are trusting in Egypt, that broken reed . . .
                                                                                   —Isaiah 36:6

No one should be surprised by the recent events in Egypt. Indeed, this analyst foretold them here. A people unable to rule itself or even get its living without foreign assistance is bound to wind up in a bad place, and right now Egyptians are in a very bad place indeed.

The history of Egypt is well known, so I will touch on it only briefly here. The valley of the Nile was home to one of the earliest and greatest civilizations created by man. That civilization eventually declined, and Egypt became the booty of foreign conquerors — Persians, Macedonians, Romans, Arabs, and Turks. Egypt was the breadbasket of the Roman Empire; the bounty of the Nile fed the Roman mob for centuries. Egypt’s population has been overwhelmingly Muslim since the Arab conquest in the 7th century CE. About 10% of its people are Coptic Christians.

Egypt enjoyed brief renaissances under the Fatimid dynasty (969–1171 CE) and then in the early 19th century under Muhammad Ali Pasha (1805–1848), an able military commander who nearly brought down the decaying Ottoman (Turkish) empire. Muhammad Ali’s descendants were the nominal rulers of Egypt until 1952, though from 1882 until the end of World War II it was Great Britain that actually ran the country. In 1952 the Egyptian Army seized power, which it held until the overthrow of Hosni Mubarak in the popular revolution of early 2011.

We should be under no illusions that there is a libertarian spirit running through the Egyptian body politic.

Mirabeau referred to Prussia as an army with a state. That description would aptly fit modern Egypt. The Army is the ultimate arbiter of politics in Egypt. It also plays a large role in the Egyptian economy, operating businesses and farms that account for a significant portion of Egypt’s GDP. Its businesses pay no license fees or taxes, and all profits disappear “off budget” into accounts under Army control. On top of this, it receives over $1 billion per year in American military aid. Its position in the state is comparable to that of the People’s Liberation Army in China — except that its political influence is probably even greater than that exercised by the PLA. The Egyptian Army projects itself as the guardian of the state and the people, but in reality it is a semi-parasitic organism whose primary goal is self-perpetuation.

The main counterweight to the Army is the Muslim Brotherhood. Founded in 1928, it has survived persecution first by the British and then by its bitter rival, the Army. For decades it too has been a state within a state, operating clinics and schools generally regarded as superior to those provided by the government, and dispensing aid to widows, orphans, and others. Indeed, the social safety net created by the Brotherhood was not only tolerated but partly funded by the government, which came to see the Brotherhood’s work as a pillar of social stability. In part, the poorest of the poor in Egypt survive because the Brotherhood has been there for them.

Of course, the Brotherhood is first and foremost an Islamist organization. Its ultimate goal has been and remains the creation of an Islamic society guided by sharia law. After the revolution of 2011 and the Army’s withdrawal from direct governance, the Brotherhood sought to fill the power vacuum thus created.

The revolution of early 2011 was not instigated by the Brotherhood, but rather by Western-oriented and social network-connected young people, more secular than religious in outlook, who wished to see Egypt become something like a European social democracy. That the revolution occurred just as European social democracy was beginning to crumble is ironic but beside the point. We should be under no illusions that there is a libertarian spirit running through the Egyptian body politic. Even American-style political economy is incomprehensible to most Egyptians.

The young revolutionaries won out in 2011 because the Army had no desire to shoot people down in the streets. Moreover, repression might have forced America to rethink its relationship with the Egyptian military, thus jeopardizing that $1 billion in lucre for the Army’s coffers. Better to stand aside, the Army calculated, and sacrifice one of its own (the dictator Mubarak) to protect its corporate interest. It could wait upon events and intervene later if necessary.

Democracy had come to Egypt. . . Or had it? Only one-third of the electorate turned out to ratify the constitution.

After the revolution the “liberal” forces swiftly fell into disarray. The various groups differed among themselves; they lacked both organizational ability and an agreed-upon program. They frittered away the goodwill they had had garnered in the heady days immediately following Mubarak’s fall. When the interim military government relinquished power in 2012, the liberals were unprepared to govern or even mount an effective political campaign.

Enter the Muslim Brotherhood. At the time of the revolution the Brotherhood had downplayed its political ambitions, even claiming that it would not offer a candidate for president. But its rallies were attended by large and enthusiastic crowds, and as it saw its liberal rivals fragmenting, the prospect of power proved too alluring. With the military partially discredited by its past association with dictatorship, the Islamists (including the Brotherhood and the very conservative al-Nour Party) were free to jump into politics with both feet. In 2012 they won a majority in the new parliament and then elected Mohamed Morsi to the presidency with an absolute majority of 52%. A constitution promulgated by the Islamists was ratified by 64% of Egyptian voters. Democracy had come to Egypt.

Or had it? Only one-third of the electorate turned out to ratify the constitution; many non-Islamists refused to vote on a document that had been shaped along Islamist lines by the majority in parliament. Meanwhile, extra-constitutional steps were being taken against the judiciary and the media. This brought the secularists together again in opposition. The Brotherhood even alienated its Salafist allies in al-Nour, who found themselves marginalized as the Brotherhood’s arrogance grew.

Perhaps most important, the Brotherhood failed to grapple effectively with Egypt’s enormous economic problems. Forty percent of the population survives on the equivalent of $2 per day. Corruption is rife at all levels of society. Services as basic as electricity are often unavailable. It was certainly too much to expect that any man or party could correct these problems in a year’s time. But the Egyptian people were impatient. Many who had voted for the Islamists turned against the government when it failed to deliver basic improvements. Morsi and his supporters understandably took umbrage when the military warned them to compromise with the opposition forces. The president had been elected to a four-year term; surely he should be given that time to work out his plans for Egypt. That he had gone beyond constitutional bounds in some respects was not particularly unusual in the context of Egyptian politics. Nevertheless, when millions upon millions of Egyptians turned out across the country demanding his fall, the Army was bound to act. And the result was the recent coup.

When is a coup not a coup? When American law says that a country in which the military overthrows a democratically elected government cannot receive American aid. And so for the last few days we have witnessed the contemptible performances of the president and the chairman of the Joint Chiefs of Staff, as they wrestle to avoid the obvious. The ongoing massacre of language and truth being perpetrated by these men is prompted by the inexorable demands of empire: the Suez Canal remains a vital link for US forces deploying to the east. And the SUMED oil pipeline that crosses Egypt is vital to the transportation of Gulf oil to Europe. Already the current troubles in Egypt have caused West Texas intermediate to spike above $100 a barrel. If Egypt descends into chaos, that price could go to $140 or $150 a barrel, with terrible consequences for the American economy. So the servants of empire practice the art of obfuscation, and hope for the best.

Egypt is incurably dysfunctional. But as a member of the 21st century’s global society, it will limp along for many years, a charity case too important to be ignored.

What is the best that can come out of the current crisis in Egypt? It is important to recognize the naked truth: Egypt is not a functioning society. Its problems are insurmountable. To declare that something cannot be fixed is discordant to American ears. But Egypt is a basket case that lacks even a basket. Consider the following facts:

  • Two-fifths of the population lives in great poverty, surviving on that $2 a day. Necessities are subsidized by the state; how long this can continue, given the increasing wariness of international lenders, is an open question.
  • The official unemployment rate is 12.5%, but likely much higher, and youth employment is higher still.
  • The country’s principal source of hard currency is drying up as tourism declines.
  • Egypt would in fact be bankrupt were it not for the money it receives in the form of handouts from the US and the Gulf States, and from Suez Canal tolls. National debt is approaching 100% of GDP.
  • Business is mired in bureaucracy and corruption and suffers from a lack of innovation and entrepreneurship (despite recent reforms), not to mention unfair competition from state enterprises.
  • The population has tripled in the past 50 years. It is expected to double again by 2050. Self-sufficient in food as recently as 1960, Egypt now imports over 40% of its total food needs, and 60% of its wheat.
  • Domestic oil production is declining while domestic consumption is increasing.
  • Egypt has virtually no tradition of self-government. The Egyptian people certainly failed to exhibit any real talent for democracy in the 18 months just past.

Egypt is in reality a fellahdom; its people, aside from the small middle class, are a fellah-people. In other words, they are an undifferentiated mass, a rabble incapable of governing or even sustaining itself. As it happens, this fellah-people occupies a strategic piece of real estate; therefore it will continue to receive enough in handouts from outsiders to keep starvation at bay. Egypt is incurably dysfunctional. Left to its own devices, it would undergo cataclysms that would probably kill millions. But as a member of the 21st century’s global society, it will limp along for many years, a charity case too important to be ignored.

The principal actors in Egypt remain the Army and the Islamists. It should be noted that on July 6 the al-Nour party imposed a veto upon the appointment of the liberal, pro-Western Mohamed ElBaradei as prime minister. Nevertheless, the Army, by drawing the secularists to its side, can guarantee continued support from the West. But if Western support should end — the result perhaps of a future crisis in the West itself — then the Islamists might again come out on top. The cry of “Islam is the answer” could resonate once more with the poor and disenfranchised. A descent into religious fanaticism would likely follow. What sort of Egypt would finally emerge is anybody’s guess.

I don’t pretend to know precisely what “solution” will be found for the present, short-term crisis. A patched-up one, no doubt, assuming civil war is avoided. But the long-term trend is clear. There is no way out for Egypt as it is presently constituted.




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Fracking, Jawohl?

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A recent Wall Street Journal piece indicates that the Germans are beginning to face the consequences of their devotion to the environmentalist faith. Two years ago, under pressure from their Greens, the German government announced that it would end its use of nuclear power, and move to the so-called “renewable” energy sources of wind and solar power. It stopped any expansion of nuclear power and started phasing out the sector, with six of its plants due to close over the next seven years.

But this Green revolution has resulted in the same problems that have been experienced everywhere else it’s been tried. Both wind and solar are massively more costly than even nuclear power, which is itself more costly than conventional power, derived from fossil fuels. This is because both the wind and the solar facilities are at best only intermittent (much of the time, the wind doesn’t blow and the sun doesn’t shine), and because the power source is comparatively feeble (winds don’t often blow very hard, and the sun is 93 million miles away). So you need huge installations that have their own environmental costs. All of this requires massive taxpayer subsidization.

In Germany, the subsidies are directly passed on to the consumers, which has resulted in German households seeing what were already some of the highest electricity rates in Europe soar by a staggering 40% in just the past five years. German families now pay 15% more than the average for the EU zone.

Not only are average consumers feeling the pain, but businesses are as well. As you might surmise, businesses that use a lot of energy (such as many manufacturers) are cutting back their investment in Germany.

Ironically, the move to terminate nuclear power has hurt the environment. Since the only scalable and affordable alternative is fossil fuels, mainly coal, Germany say its CO2 emissions actually increased last year by 1.6%. If it has to rely on coal to replace all the nukes it plans to shut down over the next seven years, these emissions — as well as the emissions of other major pollutants — will skyrocket accordingly.

So — surprise, surprise! — fracking is beginning to look good to both the German government and many of its citizens. And — again, surprise! surprise! — German Greens are rising in opposition. Like environmentalists here, they typically only support sources of power that don’t actually work very well.

The German government, seeing the problems that “renewable energy” is causing, now proposes to allow fracking so long as it is not near any water sources, nor in any national parks or other conservation areas, and is subject to regulatory oversight.

While Germany has nowhere near the amount of frackable natural gas as nearby countries such as Poland and Ukraine, it still has an estimated 50-year supply.

But the German government should be under no illusions here. No matter how tightly it regulates fracking, the Greens will oppose it. They will oppose it not because they fear it won’t work, safely and efficiently, but precisely because they know it will.

The hard core of the Green movement consists in many cases of nature-cultists, people who view humans as a blight on the otherwise pristine, garden-of-Eden planet. They want economies to fail, so that humans will die off.

These worshipers of Thanatos can never be happy with anything that helps humanity flourish.




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A Totally Fracked Planet

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For several years, in these pages and elsewhere, I have noted America’s steady progress toward true energy independence — not because of government help but in spite of it.

We will reach energy independence in the not too distant future, thanks not to any corrupt crony green energy industry (solar, wind, ethanol, or biodiesel) but to the vast resources of shale oil and gas made available by advanced fracking technology.

I have not reported on recent developments on fracking progress abroad. A couple of recent articles provide interesting food for geopolitical thought.

First, the report out of Aussie Land of a shale oil field with the promise of prodigious production. The Arckaringa Basin field in South Australia is now being explored by seismic mapping and drilling. The field has between 3.5 billion and a mind-blowing 233 billion barrels of oil (BBO). Even at the lower end of the estimate, it would be on a par with our own shale oil production.

But if the field contains anything like the upper end of the estimate, it would be a geopolitical game changer, with a value, at current prices, of about $20 trillion, which would make Australians among the richest people on earth. This would be several times more than Australia’s current proven reserves of oil, and would turn the country into an oil exporter on a par with Saudi Arabia (with estimated reserves of 263 BBO, or billion barrels of oil) and surpassing Venezuela (211 BBO), Canada (175 BBO), Iran (137 BBO) and Iraq (115 BBO).

Here is both good news and bad news, geopolitically. The good news is that Australia is a long-standing close American ally, so the prospect of its becoming a major exporter (instead of a minor importer) of petroleum means lower prices for us and another source of world oil that is favorable to us (unlike Iran, Venezuela, and to some degree Saudi Arabia).

The bad news is that Australia now becomes a possible target for energy-hungry China, which is growing rapidly in military might and economic size (in fact, it just surpassed the US to become the world’s largest trading economy, holding $1.2 trillion in American assets).

The second report is a Wall Street Journal article about the shale gas boom in Eastern Europe. The pace of exploration in Central and Eastern Europe has exploded, with British/Dutch-owned Royal Dutch Shell, American-owned ConocoPhillips, and French-owned Total SA buying up exploration rights in Poland. Poland is sitting on top of shale natural gas reserves equal to 35-65 years of its current consumption.

Ukraine is also blessed with shale-gas reserves. Chevron, TNK-BP (a joint venture of BP and a group of Russian investors), and Eni (an Italian company), are all vying to develop shale gas there.

Environmentalist groups in Bulgaria, the Czech Republic, and Romania have gotten their governments to put a moratorium on fracking (which American environmentalists are pushing for too). That opposition, together with the higher costs of drilling in Europe (in part because deposits lie deeper there) and the fact that contracts with Russia’s Gazprom are locked in for decades, make development go more slowly.

But the long-term geopolitical prospect is that Central and Eastern Europe — once enslaved by the Soviet regime, now bullied by Putin’s quasi-dictatorship — now have it within their power to free themselves, eventually, from energy dependency on Russia.

Fracking is leading to some interesting geopolitics. One hopes it will lead to some productive politics, right here at home.




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O Canada!

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“Canadians are the only people who take moderation to an extreme.”

— H. L. Mencken

Cross the border into Canada circa 2005, and the convivial pleasantries of the immigration official would only be interrupted — almost apologetically — by the requisite formalities. “Are you bringing in any liquor, beer, wine, or tobacco?” An honest declaration inevitably rendered a generous individual exemption.

No longer. Today Canadian immigration agents have taken a page — the third-degree page — from US Customs and Immigration: all obdurate business without a hint of foreplay.

“Are you carrying any self-defense devices such as guns, pepper spray, or mace?” The eyes narrowed down suspiciously, homing through the response to detect revealing body language.

We were. Pepper spray.

My wife and I were embarking on a mountain bike ride across Canada along the Trans Canada Trail (TCT), a dedicated, mostly back-country route for walkers, skiers, horseback riders, and bikers that crosses the country and which, in typical Canadian all-inclusive fashion, incorporates every province and territory. Our plan was to ride from the Pacific coast to the Atlantic, camping out along the way. Instead of lugging the more traditional panniers to carry our gear, we were pulling single-wheel BOB (beast-of-burden) trailers each loaded with tent, sleeping bags, cooking kit, etc.

British Columbia, with its accordion folds of Coast Mountains, Rocky Mountains, and subsidiary ranges, is teeming with bears. And pepper spray, the provincial parks’ wardens’ (rangers in the US) preferred bear deterrent, was our only legal protection. Curiously, although capsicum aerosols are legal, they must be labeled “for bears.” Ours were not, so they were confiscated. Perhaps some bears can read; or perhaps the label inhibits its use against other predators. Who can say? We later forked out $80 for two Canadian-made capsicum bear repellents with the proper government labels.

Not one question about drugs or suspicion about illegal stowaways. Canada’s priorities are obvious: first, a mirror image of the US concern over terrorism expressed by the immigration officer as a lack of civility; then a concern about liquor and tobacco smuggling (not only are vice taxes an important source of Canadian revenue but they embody a long tradition of reformist social policy that discourages unhealthy habits); and, finally, handgun prohibition. Canadians are proud of their civil society and deathly afraid of contracting what they perceive as a US epidemic of handgun violence.

Perhaps some bears can read; or perhaps the label inhibits its use against other predators. Who can say?

But a demand for handguns persists. Jock Bigjaw, a Dogrib First Nations (not his real name or tribe) leader and self-styled warrior, wanted a .357 Magnum. Jock was a big-rig hauler, a job that allowed him plenty of time to pursue his real passion — alpinism. We’d met on the flanks of Aconcagua in Argentina and hit it off, laughing ourselves into indignity at the 14,000 foot base camp. Politically, he believed in self-reliance and the Canadian government’s duty to adhere strictly to its treaties. Jock fought many of his fellow Indians’ sense of aimlessness, despair, and alcoholism by setting an example of achievement. He dreamed of being the first Native American to summit the Vinson Massif — the highest peak in Antarctica — and toured Canada’s Indian Reserves giving inspirational presentations at schools and community conclaves. In the world of Canadian indigenous peoples, Jock was a hero.

After the climb he asked me if I’d be willing to buy him a handgun in the US, meet him in Idaho during one of his cross-border forays, and sell it to him. Though he was apprehensive about buying the gun, he was untroubled about smuggling it into Canada. I agreed.

* * *

In spite of NAFTA, “free trade” remains an elusive concept — particularly at entry levels. After completing a guidebook (see About this Author) to sea kayaking the Inside Passage (three-quarters of which traverses the BC coast), I submitted the manuscript to Rocky Mountain Books, Canada’s premier outdoor guidebook publisher. They wanted it. However, because of my US citizenship, it did not qualify for certain subsidies offered by the federal and provincial governments — in effect, a quota system for Canadian authors that makes it hard for non-Canadians to compete (which is its intention). So, in the end, they declined it.

Just before crossing into Canada to start our bike trip, my wife and I stopped at Smith Rocks State Park in Oregon to do a little rock climbing. For this sport, Smith Rocks is a world-class destination. It is the birthplace of “sport climbing”, a relatively safe technique that in the 1980s allowed standards of difficulty to be pushed way beyond what anyone ever imagined.

Though he was apprehensive about buying the gun, he was untroubled about smuggling it into Canada.

Lacking a guidebook, I approached a large group of young climbers in the campground to get “beta” — route information. They were from NOLS, the National Outdoor Leadership School, an outgrowth of Outward Bound. NOLS teaches outdoor wilderness and survival skills. These kids had signed up for a month-long rock climbing course that was to take place at Squamish Chief, BC — Canada’s Yosemite. But a Canadian immigration officer had different ideas.

When asked the purpose of their visit, the instructors responded innocently and honestly. Although tuition had been paid in the US — and was already a done deal — the martinet declared that the NOLS program would unfairly compete with Canadian guide services. He refused entry into Canada to the two trailer-hauling vans with 24 kids and instructors. Smith Rocks was their consolation destination.

* * *

In spite of the border crossing unpleasantness and the high prices, it is alwaysa pleasure to be in Canada. A leisurely civility and understated formality barely conceal an endearing earnestness — about the most trivial of life’s minor curiosities — that disarms even the most irascible visitor. Canadians are patient, tolerant, and egalitarian to the core. While the American Declaration of Independence celebrates “life, liberty and the pursuit of happiness,” Canada’s founding document promises “peace, order and good government.” As Pierre Trudeau once belligerently declared, “We are in the extreme centre, the radical middle. That is our position!”Nonetheless, to the average American, Canadian politics are an irrelevant baffle mired in minutiae.

Perhaps what makes Canadian politics so unintelligible, frustrating, and yes, even boring to Americans, is the more than usual lack of congruence between political parties and any sort of principled political philosophy. Consistency has been sacrificed to national unity, growth, and development, which — in such a geographically sprawling and climatically extreme country — all parties promote through vigorous federal intervention and subsidies to make settlement and development of its inhospitable extremities more attractive.

While the American Declaration of Independence celebrates “life, liberty and the pursuit of happiness,” Canada’s founding document promises “peace, order and good government.”

This was all the easier because, unlike the US, which attempted to design a government from scratch based on the latest Enlightenment philosophy hot topic, Canada simply continued being a part of Britain, developing the same structure of government as the mother country, and following its lead in foreign and domestic policy.

Each election seems to be contested by politicians with a big wish-list of concrete promises that expediency and the demands of a fractious confederation often reverse 180 degrees within days of victory. Canada dodged the 2008 financial crisis through fiscal health and well-capitalized banks, with the “Loonie” shooting ahead of the US dollar for the first time ever. The Economist, however, avers that the housing market is frothy and likely to pop.

But we had more practical matters to consider. We drove to a West Vancouver marina and found a safe place to park our van for the duration of the bike ride, spending the rest of the day packing camping gear, tuning up the bikes, and making the myriad arrangements requisite for our trip — with Canadian talk radio in the background.

The controversy du jour was emblematic of Canadian attitudes, politics and the rise of China. A handful of young Oriental men (some of whom couldn’t speak English) had been arrested drag racing on a Vancouver street in Maseratis, Lamborghinis, Alfa Romeos and other such jet engines on wheels. The police had released them without filing charges. Speculation focused on the idea that wealthy and influential parents had pulled strings. Besides the predictable indignity over favoritism, suspected pay-offs, and police malfeasance, callers and host alike were incredulously outraged that common standards of Canadian propriety had been so contemptuously flaunted by drag racing on a staid city street.

Canada, with British Columbia in particular, has had a huge influx of rich Chinese immigrants — crony capitalists and rent seekers who have made fortunes in a changing China that lacks a rule of law and are using every trick availableto get their money out of the country. Unsurprisingly, China has currency export controls. With its lax immigration policy, passports that are virtually given away, comparative economic freedom, and relative proximity to China as a Pacific Rim neighbor, Canada is a preferred destination for Chinese oligarchs.

Our first day out covered 70 muscle-grinding miles through Vancouver and its suburbs, followed by a torrential downpour the following day. We took a rest day. By the end of the second week, we’d hit our stride and required a rest day only every 5 or 6 days. Much of our way was on “rails-to-trails”, old railway beds reclaimed for recreation. When present, these wilderness throughways profiling no more than a 3% grade made pedaling over BC’s mountain ranges a transcendent experience.

I commented to our host that I couldn’t imagine marching into battle to the strains of “O Canada.” She smiled and retorted, “We’re all about peace — and having fun!”

One of the first small towns we passed through, Gray Creek (pop. 125), had a refreshing libertarian flavor. The welcoming sign at the town limits proudly announced, “Gray Creek, still metric free.” When I groused about the $38 one-night, one-tent camping fee and the over-priced stale groceries, the good-humored campground and store owner-manager glibly blamed it all on the government.

Canada’s metric system is a bit of a Potemkin village — but with one real cannon that occasionally lobs a ball and messes things up. For one (as in Gray Creek), revanchists stubbornly adhere to the ergonomic English system. Yet, more fundamentally, the Dominion, surveyed by the British in the 18th and 19th centuries, is stuck with the mile-based Range & Township sectional land division, which rears its head nearly every time a property survey is necessary. In agricultural areas, rural roads retain a mile-based nomenclature (“Mile 154 Road”) and are located according to the old distances.

At Castlegar, a town of nearly 8,000 people located in the Selkirk Mountains at the confluence of the Kootenay and Columbia Rivers, we decided to splurge on an extended rest at a B&B. When we inquired at the tourist office, the attendant — without a hint of irony — informed us that Castlegar had suitably good motels, two campgrounds, but no B&Bs. Since British Columbia is the most British of Canada’s provinces, and B&Bs are a British invention, and they are common in Canada, I sensed something was amiss.

According to a café owner we befriended, a few years before — during an economic development spurt — the city fathers had invited a large, upper mid-range lodging chain to open a unit in town. In the US, when towns come calling for a local franchise, the chain, knowing it has an advantage, is not beyond asking for tax breaks or demanding a location it covets through the use of eminent domain. In Castlegar the quid pro quo took more of a Canadian turn — the elimination of an entire segment of the competition. In return for a fancy motel, the city council banned B&Bs.

An American can never spend much time in Canada without bumping — one way or another — into its famed health care system, usually (at the very least) as one of the first topics of conversation after an exchange of basic pleasantries. We’d heard of doctors going on strike and actually seen nurses striking (all of them are now public sector employees). In Castlegar, signs urging the government not to close 24/7 emergency medical services at the local hospital because of budget constraints were prominently displayed. These were nearly always twinned with another sign, hung by the firefighters’ union expressing opposition to theproposed closure.

As uninvolved tourists, we were entertained to observe another country’s political minuets without directly being involved. They gave us fodder for discussion as we pedaled up the Selkirk Range — but not enough to get us up the western slopes of the Rockies into Banff, where every breath up the technical single track was so precious it precluded conversation.

The town of Banff (Canada’s Aspen, Estes Park or Crested Butte, take your pick — but better), on the BC-Alberta border, is the center of Canada’s oldest national park: Banff National Park, the anchor for a series of parks that straddle the Rocky Mountains. Typical of such quaint alpine villages, it struggles to balance demand and development with retention of the picturesque ambiance that attracts tourists.

No amount of passing grades, accolades and applause, mortar boards and robes, paper diplomas or false confidence can replace or instill competence.

According to the August 30 issue of the Rocky Mountain Outlook, “Banff’s politicians are poised to revisit the controversial issue of setting quotas to control corporate chain stores and restaurants in the national park tourist town,” not only to preserve the community’s character but also because some homegrown businesses had already gone belly-up due to competition from recently opened national chain stores. Banff is already home to Starbucks (of course), Tim Hortons the coffee-and-doughnut chain(it wouldn’t be Canada without Tim Hortons), McDonald’s (which everyone abuses but patronizes), The North Face (it wouldn’t be a mountain town without The North Face), Tony Roma’s, The Gap, and others.

As with any scheme that preferentially treats one business over another, the details of this one are devilish to draw up and subject to corruption, with arbitrary choices that are based on aesthetics but that fundamentally affect livelihoods. As the newspaper reports:

The question of what level to set the quota is a challenging one. Options include back-casting the quotas to reflect the mix that existed during the 2008-2009 period when visitor surveys were done, capping at current levels or allowing a cushion, like 10% more. Banff’s senior planner said a quota below current levels creates instant pressure on existing situations, including the creation of legal, non-conforming uses, while a quota set too high doesn’t achieve the regulatory goals and becomes a zoning “paper tiger.”

So as not to kill the goose that lays the golden egg — not completely, at least — service stations, hotels and banks are not included in the proposedquota system.

Out of seven Banff City Councilors, only one declared unequivocal support for the free market; while the Mayor — like a good politician — concurred with him, but artfully hedged her position.

* * *

We took another multi-day rest at a friend’s home in Canmore, less than 20 miles from Banff and in just as stunning a location, to attend the annual Canmore Highland Games, an event Canadians take very seriously. It is absolutely nothing like the ersatz, corn-ball, out-of-tune bagpipe-screeching “highland games” not uncommon south of the border, attended by pot-bellied old men with giant calves in tams and kilts who can talk at length about Culloden, Bonnie Prince Charlie and what Mel Gibson doesn’t know about Robert the Bruce.

Attendance in the thousands, in spite of a prohibitively expensive admission fee; way over 100 pipe bands from all over the country, with electronically tuned bagpipes played by top-notch musicians of all ages, genders and colors; full-sized telephone poles that few men could even get erect for the caber toss; endless imported tap bitters, ales and stouts; more single malt whiskeys than you ever thought existed; haggis to die for (really!) and fish-and-chips with cod, haddock, salmon, and halibut choices. Even the step dancing competitions, from schools from all over Alberta, were top-notch. All on a perfectly turfed, quadruple-size football pitch ringed by giant, blindingly white campaign tents topped by Canadian flags — the whole surrounded up close by the crenelated limestone summits of the Fairholme and Rundle Ranges.

The festivities opened with a Royal Canadian Mounted Police regiment, an infantry division, and its 50-member pipe & drum band marching to the fore under the skirling strains of Scotland the Brave. The M of C then asked the crowd to stand for an a cappella rendition of O Canada, a composition I’d read much about but never heard — so I was particularly curious. Although the young lady did her best, the anthem was underwhelming. I commented to our host that I couldn’t imagine marching into battle to the strains of O Canada. She smiled, posed as if she were step dancing, and retorted, “We’re all about peace — and having fun!”

Descending the Rockies was a roller coaster ride. Nevertheless, we were concerned that once we were on the prairies, the ride would get boring over the flat, featureless terrain buffeted by endless winds. But when one expects the worst, things can only get better. And so it turned out. Our west-to-east direction virtually guaranteed a tail wind, and the artful design and routing of the TCT avoided traffic and kept our interest at ADD levels.

The prairies are cut by water courses carved through deep declivities and bordered by sirenic glens peppered with deciduous and evergreen copses. Quaint, colorful Hutterite colonies and Mennonite and Eastern Orthodox settlements, complete with metallic onion-domed churches incongruously plopped down in the middle of nowhere, enthralled us.

Even the imported oil-boom labor — people from 127 countries speaking 69 languages — can get mired in way-more-liberal-than-the-US Canadian immigration rules.

Still, we were concerned about a couple of routing questions. The TCT — again in typical Canadian all-inclusive fashion — was designed to go through every provincial capital. Edmonton, the capital of Alberta, is halfway up the province — far from the southern alignment we’d been following. The TCT then heads east and (back) down to Regina (rhymes with vagina, source of many a snicker), capital of Saskatchewan. Additionally, urban bike riding, especially with fully loaded BOB trailers, can be very trying. No worries — the TCT tied into extensive riverside urban trails through Calgary and Edmonton that displayed the best of both cities, slicing through downtowns and suburbs with equal aplomb.

We’d taken to eating breakfasts at fast food joints and cafes where the portions — and the clientele — were gargantuan (giving the lie to the old nutritionist’s tale that eating a healthy breakfast inhibits weight gain). The ubiquitous “We reserve the right to refuse service to anyone” signs posted in US cafes were nowhere to be found — probably too confrontational for Canadians. They were replaced by “Abuse will not be tolerated” signs that seemed to serve the same function — more politically correct, I suppose. These were sometimes coupled (at one Safeway, for example) with a poster of smiling employees — a black, a Caucasian, an oriental, an Indi…er, First Nations member, a Latino, an Inuit, an Indian or Pakistani-origin Muslim (you could tell from the forehead dot or the Muslim kufi), and of course, both sexes — touting diversity in employment practices.

Every one of these establishments in the Edmonton area carried the morning’s The Edmonton Sun with daily reports on the firing of Lynden Dorval, aka “the zeros teacher.” The Ross Shepard High School (part of the Edmonton Public Schools system) physics teacher had been fired after he gave a student a zero for not handing in an assignment.

“If students don’t do the work, they don’t deserve (a grade) and I stand by that,” Dorval was quoted as saying. Students, parents, the principal and even Edmonton Schools Superintendent Edgar Schmidt sported “Real heroes give Zeros” T-shirts in his support. But it was Schmidt, caving in to demands by the school board, who made the final call, stating that the firing was for “insubordinate, unprofessional” conduct.

The Sun, quoting Dorval,claimed that the firing was “for going against school policy by assigning students with a zero, rather than using the code system the school uses to evaluate work.” Both the Alberta Teachers’ Association (the union) and the school board were conducting investigations. Unstated but suspected is that the “code system” assigns some value to all work — including its absence. Perhaps, these people must reason, there is merit to merely being present — like Forrest Gump — when homework is assigned.

Political correctness (PC) run amuck? Definitely. We mustn’t ruin the students’ self-esteem.

I once argued with a couple — both teachers, one in the Pennsylvania Public School System, the other an Outward Bound instructor — about the consequences of failing students. The public school teacher, a union member, supported her school’s policy of never failing or expelling a student. Since “bad” students were usually “at risk” kids, failing or expelling them would just make an already bad situation worse, she argued. Her husband, the OB instructor, agreed.

So I asked them to imagine applying the same logic to instructing in rappelling (a technique for descending a cliff by zipping down a rope). In other words, telling a student who hadn’t mastered the technique that he was actually proficient at it. I said, “If he went out and tried rappelling on his own, the well-intentioned lie could cost him his life.” They couldn’t muster a reply.

The core problem with PC is that it wishfully reverses the order of cause and effect. No amount of passing grades, accolades and applause, mortar boards and robes, paper diplomas or false confidence can replace or instill competence. Moreover, it is condescending and patronizing — visibly signaling that the recipient can’t handle the truth. In fact, PC functions primarily, as David Foster Wallace has so eloquently expressed, “to signal and congratulate certain virtues in the speaker — scrupulous egalitarianism, concern for the dignity of all people, sophistication about the political implications of language — and so serves the self-regarding interests of the PC far more than it serves any of the persons or groups” who are the recipients of it. It is hypocrisy legitimized.

What’s more, many ofthe“at risk” kids (previously known as JDs — juvenile delinquents) are sharp, with well-developed BS antennae that can see right through the hypocrisy of patronizing, deceptive schemes. And they learn from them, using their new insights to game the system, while losing all respect for adults that are complicit in such manipulative behavior. That’s why they supported Dorval, who, by the way, was soon hired by a private school.

We didn’t run short of conversational topics when we turned east out of Edmonton and headed for the Saskatchewan border. Although the architects’ primary reason for this route was running through each province’s capital, there was a bonus: Edmonton’s latitude approximately coincides with the limits of agriculture.

North of the line, farms and roads disappear and the great northern Canadian wilderness rules. This made for a stunning ride. In places, giant combines were harvesting wheat and rape seed, the source of canola oil (Canadian oil) on farms run by Polish and Ukrainian immigrants. In others, hills studded with evergreens alternated with picturesque lakes surrounded by deciduous trees turning red and gold in the mid-September cold.

Peppering both the fields and the glens were “nodding donkeys” (oil pump jacks) and drilling rigs, while the occasional convoy of “thumpers” (seismic prospectors) tested the road shoulders for underground paydirt. Canada has the world’s third-largest proven oil reserves — most of it in northern Alberta’s oil sands — and 3,400 trillion cubic feet of natural gas in its shale beds. BC residents who live near the border nip over to Alberta for a cheaper fill-up.

The new discoveries, advanced drilling and fracking technology, and, as one oil-industry booster puts it — referring to less politically salubrious climes — “no bribes or body bags” are driving a boom no one is able to keep up with.

Several factors are holding back the bonanza. For one, there is no easy way to transport the thick crude out of northern Alberta. The US section of the proposed Keystone XL pipeline from Hardisty, Alberta to Port Arthur, Texas has not yet been approved by the Obama administration; while the Northern Gateway pipeline, proposed from Edmonton to Kitimat, BC, on the Pacific Coast (for exports to Asia) is being held up by environmental concerns and First Nation objections. The pipeline would cross aboriginal reserves.

“The other big bottleneck,” the November 17 issue of The Economist reports, “is human capital.” Hardly anyone lives near Fort McMurray, the closest city, and fewwant to move there in spite of the high wages and attractive incentives. Even the imported labor — people from 127 countries speaking 69 languages — gets mired in way-more-liberal-than-the-US Canadian immigration rules. “An Irish worker in Fort McMurray,” The Economist continues, “complains of having to fly to Calgary to sit a test of English proficiency. It’s her native language, and the test is online.”

* * *

When our canteens began freezing overnight, we decided it was time to go home.

At St. Paul we cadged a couple of discarded cardboard bike boxes from Canadian Tire, a megastore that combines aspects of Wal-Mart, Checker Auto and Sears (and whose business model still escapes me), to pack up our bikes for the Greyhound bus trip back to our van.

Next year — in Saskatchewan.

And, perhaps, another report.




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Distorting the Energy Market

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The government is hurting our ability to develop new sources of energy; and both the Republicans and Democrats are to blame.

In the most general terms, Republicans support continued tax breaks and subsidies for the oil and gas industry, and Democrats support grants, subsidies, and tax breaks for such new forms of energy as wind and solar. Neither party has a good energy policy. Both are blocking the path of innovation.

To create a fossil fuel alternative we must find an energy source that is cheaper, easier, and better than fossil fuel. But when government is picking which alternatives are worth pursuing, in addition to funding traditional energy sources, our view of what energy sources may work out becomes clouded. As long as government provides subsidies and tax loopholes to oil and gas

companies, they will hold an advantage in the market. Not only does government intervention in this manner make fossil fuels a highly lucrative industry, thus attracting many bright businesspeople, engineers, and scientists, but it makes the introduction of alternatives more difficult, since potential new competitors find working in an unbalanced market nearly impossible. Even if there were an energy alternative that consumers would want, the alternative would not be able to seize enough market share to turn a profit, because the coalition of government and big oil cannot be challenged by a newcomer.

With few exceptions, people agree we need to move away from burning fossil fuels if we want to meet future energy needs with as little disturbance to existing ecosystems as possible or beyond what we might consider desirable. And because oil and gas receive government benefits, the conventional thinking goes, so too should alternative energy exploration, in order to “level the playing field.” But what the best alternative might be is still unclear. One reason why it is unclear is that government involvement clouds the picture.

Think of ethanol. For years, because of Iowa's importance in the presidential nomination process, ethanol was highly subsidized by the government. Now we discover that it was not a workable, standalone alternative to fossil fuels. Consider all the resources that were misallocated because of this pursuit. Private resources, such as time and expertise, were focused on making ethanol work — in order to procure government money. If there had been no government money in ethanol research, engineers and scientists in the energy industry would have had a greater incentive to look elsewhere for a good alternative. But when the government creates a market there is no need to look elsewhere. The only problem is that the government lacks anything like a good record as a venture capitalist.

If it is true that necessity is the mother of invention, then the government is stripping us of that necessity. What is necessary for every company to operate is money, and if it doesn’t have a strong need for money, because government is supplying all it needs and then some, its incentive for invention is stripped away. If we want to find the best energy source, both long-term and short-term, the government needs to stop trying to control which sources come to market, or stay in the market.The government needs to divest itself of all financial interests in the energy industry.




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Abundant Resources

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Free market advocates have long argued that there is no shortage of fossil fuel (oil and natural gas) in the US, for as long as that is going to be the dominant energy source in this country — in other words, for the foreseeable future. We have argued that the US ought to use its own abundant supplies.

We argue this on national security as well as economic grounds. Building regulatory walls against exploiting our abundant fuel reserves deprives the nation of jobs and wealth, so it is economically stupid. This is obvious. But it should also be obvious that those walls channel money to regimes that wish us all manner of ills, even extermination — so the restrictions are strategically stupid. We send ever more troops to ever more dangerous places, so we can keep importing that which we have utterly no need to import.

It is with interest, therefore, that I note the complete lack of interest shown by the mainstream media in the congressional testimony of the federal government’s own Government Accountability Office (GAO) regarding America’s fossil fuel reserves.

The GAO reports that the Green River Formation of shale (which lies under the area where Colorado, Utah, and Wyoming join) contains the world’s largest known oil shale deposit, holding an amount of recoverable oil equal to all the world’s proven oil reserves. In fact, Anu Mittal, director of natural resources for the GAO, testified that the formation contains about three trillion barrels of oil, about half recoverable with known technology. And remember — we can only guess at future technological improvements.

In fact, the GAO now estimates that the US has more by way of fossil fuel reserves than any other country on earth by far, with Russia in second place and Saudi Arabia a distant third. Bottom line: even while Obama is telling the public that we use 20% of the world’s oil and have only 2% of the known reserves, his own GAO reports that America has the largest reserves of fossil fuel on the planet.

But while Russia, Saudi Arabia, and other energy endowed countries are moving ahead to develop what they have, our government would rather block our own development. Go figure.




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Memo to Obama: Here’s How the Market Works

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President Obama is running a political campaign as predictable as it is despicable. It is based on attacking capitalism. “Markets never work, government always does” appears to be his meshuggeneh mantra. As it happens, two recent Wall Street Journal stories illustrate the free market (disparagingly called “capitalism” by its opponents) in action. Obama might want to reflect on them, though it is doubtful that he often reflects on anything — he seems to be the epitome of a reflexive instead of a reflective person.

The articles, appearing on the same day and the same page, report on the impact of the fracking revolution in natural gas production, a revolution that has dramatically decreased the price of natural gas — by nearly half in the last year alone.

The first article reports some good news about the rock-bottom prices for natural gas. The price is inducing companies with trucking fleets to switch from diesel to natural gas (NG) — either compressed (CNG) or liquefied (LNG).

For example, Waste Management is now buying NG trucks. It plans to make 80% of the new trucks it buys over the next 5 years NG trucks. The NG trucks cost about $30,000 more than ordinary diesel trucks, but save more than $27,000 a year in fuel expenses. Ryder Systems, a truck leasing company, is making the same move, with one of its vice presidents saying, “The economics favoring NG are overwhelming.”

Other corporations shifting their truck fleets to NG include such huge players as UPS and AT&T.

The article notes the standard problems facing fleets looking to convert to NG, such as the need for bigger tanks, and especially the lack of CNG or LNG fueling stations nationwide. But as the fracking gas revolution continues apace, it is likely that the price of natural gas will remain extremely low compared to diesel, so will tempt more and more gas stations to offer NG fueling pumps. And the article doesn’t note how much cleaner NG is than diesel, which means that as air pollution laws continue to tighten, the cost of diesel trucks will go up. Nor does the article note that as more fleets convert to NG, the price of NG trucks will start to fall as production of them cranks up.

On the bad news side, the companion piece reports that natural gas “giant” Chesapeake Energy has been beaten up by the low price of its product and is now investing heavily in unconventional drilling for shale oil. Specifically, Chesapeake is focusing on the huge Utica shale formation lying under the state of Ohio, betting billions to buy leases for drilling rights to about 5% of the state’s land.

This is either ballsy or balmy, depending on your tolerance for risk. The Utica field is estimated to contain between 1.3 and 5.5 billion barrels of oil, but the company has drilled only 59 wells, and of the nine about which it has released data, the information shows that oil is but a third of what is provided — the rest being mainly that damned cheap natural gas!

All this simply illustrates the view of pricing that Hayek and Kirzner enunciated: that pricing is an information transmission mechanism — more simply, a language. The price of a product tells both producers and consumers how to alter their behavior and plans for the future. When the price of natural gas went up not so long ago, it told producers to produce more, and they did — in spades! Now that it has plummeted while the price of oil has remained relatively high, it tells consumers to switch to it, and it tells producers of natural gas and oil to shift capital from producing the former to producing the latter.

All this would be illuminating to Obama, were he a man capable of illumination. But he isn’t, so it won’t.




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From Russia, with Oil

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While the Obama administration continues to stifle fossil fuel production in the hope — the delusional dream, actually — of replacing it by wind, solar and biofuel, other nations continue to act rationally. In particular, Russia is working assiduously to become the world’s major energy supplier. A recent WSJ article illustrates this.

The story reports that Russia’s state oil company Rosneft (rhymes with “raw theft”) has cut a huge deal with Italian energy firm Eni to exploit oil fields in the Arctic. In exchange for access to the huge Russian Arctic fields, Eni will give Rosneft stakes in Eni’s projects in Africa, the Americas, and Europe.

Eni is getting a third share of a big pie, or more exactly, pies. The Fedynsky field (northwest of Murmansk) alone contains 19 billion barrels of oil. The total estimated recoverable reserves are about 36 billion barrels.

This deal is on top of an agreement that Russia signed last week with Exxon Mobil, which gives Rosneft a 30% share in development of fields in Canada, the Gulf of Mexico, and West Texas.

So Russia is wasting no time in developing the Arctic, while we block oil and gas drilling and funnel our state resources into solar projects that go bust. Thank God we have such enlightened leadership.




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Wait, Mock, and Squander

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In 2006, when gasoline was selling for about three dollars a gallon, an outraged Senator Obama assessed our dependence on foreign oil and proclaimed, “The time for excuses is over.” Today, as gasoline approaches four dollars a gallon, now-president Obama tells us to use less. After three years of profligate spending ($100 billion) on sources of alternative energy, total solar and wind power generates a whopping 0.45% of our electricity, and we are as dependent as ever on foreign oil. Without a single green success story to tout, Mr. Obama tritely blames oil companies, OPEC, the Middle East, speculators, Republicans, and George Bush, his go-to villain.

Evidently, there is still time for excuses.

While the president gripes, we wait. We wait for the clean energy marvels discharged from his subsidized pipeline of foreordained technologies — although none are what we want or can afford. The demand for electric vehicles remains near zero, despite a $7,500 tax credit, which the president, oblivious to market signals, increased to $10,000. Another splash from the pipeline is the $50 light bulb, winner of a $10 million Energy Department prize for being, as Secretary Steven Chu said, “affordable for American families.”Mr. Obama's latest panacea is algae — although the wait time for algae-based fuels ranges from very long to infinite. Meanwhile, the impatient among us can buy hisconventional biofuels (as sold to the Navy last December) for $26.75 a gallon.

Mr. Obama proudly announced that Detroit is on track to build cars averaging nearly 55 mpg by 2025. So if we wait 13 years, and gasoline prices do not rise, we'll be able to drive almost twice as far — in frail, sluggish 2025 Obamamobiles. If we wait 50 years, perhaps technological advances in solar panels and windmills will produce similar payoffs for our utility bills.

In bold defiance of the laws of supply and demand, President Obama insists that offshore drilling and projects such as the Keystone XL pipeline will have little, if any, affect on fuel prices. Calls to increase supply are cynically mocked. Unable to explain the economics of his assertions, he artfully shifts to political derision, "'Drill-Drill-Drill' is not a plan, it's a bumper sticker. It’s not a strategy to solve our energy challenge. That’s a strategy to get politicians through an election."

In bold defiance of the laws of supply and demand, President Obama insists that offshore drilling and projects such as the Keystone XL pipeline will have little, if any, affect on fuel prices.

To be fair, every president since Richard Nixon has promised to end our dependence on foreign oil. These people did little to achieve the goal, but they had the good sense to say even less about their failure. Obama, however, aggressively tries to convince us that his energy policy — three years of bad bets on green energy and abject neglect of everything else — is working. He boasts that “under my administration, America is producing more oil today than at any time in the last eight years.”

It was none of his doing. The production increase is the result of leases issued during the Bush administration and, more significantly, exploration on state and private land. There, thanks to entrepreneurs and the technologies developed at their expense, oil and natural gas production has increased dramatically. In the lands and waters that the president controls, oil and gas production has decreased by roughly 30 to 45%. President Obama's silence regarding the success of production on state and private property, coupled with his earnest and purposeful curtailment of production on federal property, reveals his deep contempt of capitalism and fossil fuels and the wealth they create.

Nowhere is this more evident than in North Dakota, where private developers on private land have tripled oil production over the last five years. The state has had seven consecutive tax cuts. Now, given an unemployment rate of 3.5%, burger flippers make $18 an hour and thousands of $60,000 to $80,000 a year oil industry jobs wait to be filled. But instead of seeing wealth creation in North Dakota that is extensible nationally, Obama chose only to see eight dead birds that were found near the oil fields, and now seeks to stifle the growing prosperity with a lawsuit filed by the US attorney for North Dakota.

Each year, windmills from California to New York swat as many as 250,000 birds to their deaths. An estimated 70 golden eagles, as well as almost 10,000 other birds, are killed annually by the wind turbines at Altamont Pass, near Oakland, California. But no legal action has been taken. This is a political statement profoundly mocking the oil industry. President Obama is telling oil companies that he will sacrifice our very eagles (to repeat, 70 a year by the Altamont Pass bird-o-matic alone) to choke off the supply of the companies' products.

As he mocks, he squanders. He considers our 20 billion barrel reserve of recoverable oil as a fixed asset to be stingily guarded for political purposes. He seesdrilling rigs and gas stations as festering pockmarks on our national landscape, so he tells us that to reduce fuel prices we must use less. But the 20 billion barrels arepolitically recoverable oil. We possess over 1.45 trillion barrels that are technically recoverable with existing technology. We have enough oil and gas to last hundreds of years. According to a 2011 Congressional Research Service (CRS) report, "the United States’ combined recoverable natural gas, oil and coal endowment is the largest on Earth . . . larger than Saudi Arabia, China and Canada, combined."

What civilization ever advanced, what economy ever prospered, by using less energy?

Use less? We should use more. What civilization ever advanced, what economy ever prospered, by using less energy? With our reserves, and such newly developed technologies as steam flooding, hydrofracking, and horizontal drilling, America could become the world's predominant supplier. Obama's mantra, "We can’t just drill our way to lower gas prices," is ignorant folly, no matter how many times repeated. That America's energy supply is too paltry to affect price is supreme fiction; that Obama promotes such a myth is supreme impudence.

US consumption is not one of the reasons energy prices are high. Considering our vast domestic reserves, prices would plummet if the US increased production to meet the country's demands. In fact, since price is a function of expected future supply and demand,it would begin to drop merely upon news of our intention to increase supply. Crude oil hit $147 a barrel and gasoline sold for $4.11 a gallon in July 2008, when President Bush announced he would lift the ban on offshore drilling. In less than a month, oil prices were below $120 a barrel. Within six months, oil was $37 a barrel, and gasoline was $1.61 a gallon.

President Obama knows this well — and he knows its converse. His restrictive energy policy reversed the 2008 trend and resulted in the doubling of prices during his term. And since speculators believe he will continue to squander fossil fuel assets, prices will continue to increase. What the president doesn't seem to know very well is the enormous national wealth lost to his feckless policies: losses in employment, personal income, tax revenue (federal, state, and local), debt reduction, retirement fund value, global competitiveness, and immunity to Middle East turmoil andnational security annoyances from the likes of Russia, Iran, and Venezuela (to name a few).

Incredibly, President Obama chooses to squander resources, inanely attempting to restructure our economy and way of life in preparation for a green fantasy worldin which pock marks are crowded out by tidy, quasi-public charging stations and biofuel dispensers supported by a vast system of government subsidized solar, wind, and algae farms. And, to help him achieve his fantasy, he doesn't think we'll mind paying $40,000 to $100,000 and more for Obamamobiles, $50 for light bulbs, $26 a gallon for algaehol, and "skyrocketing" prices for utilities.

The president's energy campaign, not that of his opponents, is a "strategy to get through an election." He believes that "Drill-Drill-Drill" is a bumper sticker, but that Wait-Mock-Squander is sound policy based on smart projections of industry and technology decades ahead. To him, a future of clean energy and green jobs sounds even better, politically, than ObamaCare. But ObamaCare now costs $1.7 trillion, only two years after Obama projected a cost of $927 billion. Still, with his failure at prognosticating exceeded only by his failure at crony-capitalism, he bets our economy on a future driven by starkly unproven technologies. He can describe the vague green future only by means of deceitful, juvenile mockery of the prosperous past. And he expects that voters will accept, on the face of his trite nostrums, the idea that our immense reserves, the largest in the world, are of little future value. One has to admire the audacity: Obama dares to risk being the president who sent us trudging patiently down the road to national weakness and economic decline, a shiny, extortionate toll road — with a multi-trillion dollar "fuel of the past" bonanza lying just beneath its pavement.

Obama might pull it off, as he did the election of 2008. If so, the pockmarks will begin to be replaced by sprawling rashes of grotesque and witless energy "arrays." Idled oil fields will become hidden relics of our environmentally despicable past, places of interest only to historians and tourists, who will find them by following the eagles seeking refuge from Obama's wind farms.

#39;s predominant supplier. Obama




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