Gas Expands!

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An amazing and welcome development has been achieved. As the Wall Street Journal just reported, for the first time in six decades, America exported more natural gas than it imported. It has once again become a net exporter of natural gas, and this new export sector will grow rapidly.

The net export volume is starting modestly: in November we exported 7.4 billion cubic feet (BCF) per day, while still importing 7.0 BCF per day. But no one doubts that from this modest start the volume of exports will grow. American gas exports have gone up by 50% over the past six years, and the Energy Department projects that we will be the third-largest exporter of liquefied natural gas (LNG) by 2020 — behind only Australia and Qatar. Citigroup estimates that by 2020 the US will be supplying to the rest of the world about 20% of the natural gas it produces.

No one doubts that from this modest start the volume of natural gas exports will grow.

To cite one example of success: Cheniere Energy opened a facility in the Sabine Pass (on the border of Texas and Louisiana). It was originally intended to import LNG, but the fracking revolution so decreased the price of natural gas that the plant was quickly “reverse-designed” to export it. Since February, when the plant started shipments of LNG, its output has grown to an average of 1.5 BCF exported per day. Not surprisingly, Cheniere is expanding the Sabine Pass plant rapidly, and will open more export facilities over the next two years.

Three years ago, the Freeport LNG facility at Quintana Island, Texas, got approval to export LNG, and it will begin exporting massive quantities of LNG in two years. Next year, Dominion Resources will start exporting LNG to India and Japan.

The only way this US export industry won’t grow is if the government — intentionally or by simple bungling — stops it.

So this trend toward America becoming the dominant reliable supplier of LNG for the whole damn planet will not just continue — it will accelerate. Thank you again, free market: remarkably shrewd private individuals, acting primarily out of self-interest, came up with a way — fracking — to make domestic oil and natural gas plentiful again, and plentiful indefinitely. Government subsidized losers — technologies such as wind and solar energy — but the free market found the efficient answer.

In fact, the only way this US export industry won’t grow is if the government — intentionally or by simple bungling — stops it. The progressive liberal Democrats hate fracking, of course. Obama did everything he could to impede it — such as taking an unprecedented amount of land out of public use — although most of the land upon which fracking operations are happening is private. Hillary Clinton repeatedly stated her total opposition to fracking (not to mention coal), which likely was a major factor in her ignominious loss to Donald Trump.

Speaking of Trump, he may ironically set back the natural gas export boom brought by fracking. For while he certainly claims to support it, the largest customers of our natural gas are, outside of ourselves, our NAFTA partners, Canada and Mexico. Together they are buying a record high of our total output. But Trump — a populist to the core — hates free trade, and has targeted NAFTA as a “bad deal” for America. His bungling trade policy could well get us into trade wars with the very countries that could become our biggest future energy export markets.




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Once Again, Spontaneous Order Beats the Dead Hand of Statism

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A number of recent reports on American energy illustrate anew the power of markets to deliver prosperity — rapidly — and the impotence of government to do the same. In short, spontaneous order has once again accomplished what the dead hand of statism could not.

The first report concerns the unsurprising demise of yet another solar power company. SunEdison is filing for bankruptcy, after seeing its stock price drop a whopping 98% in less than a year. Wall Street mavens such as David Einhorn (billionaire owner of a hedge fund called Greenlight Capital) and Leon Cooperman (of Omega Advisors) had considered the company a sure bet, but it proved to be a sure loser.

SunEdison is just one of an endless stream of solar companies that started, during the reign of the Obama administration, with the promise of giving us cheap power while healing the planet of global warming. Typically, they began with direct or indirect government subsidies — only to fail miserably.

Other stories tell us of better news. Just two months ago — in a nice piece of negotiation for which he received only vilification from the pestilent swarm of populist talk show hosts — Speaker of the House Paul Ryan (R-WI) reached a budget deal with the administration that once again (after a ban of biblical proportions — 40 years) allowed the exportation of domestically produced oil abroad. I have argued before that this is a major geopolitical game changer. We can now sell the fruits of our petroleum fracking revolution on the world market, thus ending, once and for all, the power of the oil cartel (OPEC) to gouge the rest of the world. Oil prices can now be kept low indefinitely. If Russia or the OPEC thieves try to cut back on production to extort more money from Europe and Asia in the form of higher prices, or if the demand for oil goes up because of a future worldwide economic boom, the Great American Frackers can just drill more wells, with no shortage for the foreseeable future.

SunEdison is just one of an endless stream of solar companies that started with the promise of giving us cheap power while healing the planet of global warming, only to fail miserably.

Less remarked upon, but no less remarkable, has been the flourishing of American natural gas production — driven again by the fracking companies. The miracle of fracking has dramatically reduced the prices of domestic natural gas — in fact, driven the price of natural gas to the lowest it has been in 17 years. Moreover, North America’s natural gas production is now about 450% greater than Africa’s, 80% greater than the Asian Pacific’s, 50% greater than the Middle East’s, and only 5% smaller than Eurasia’s; and it is set to grow apace over the next few years.

Why? Because the domestic price is now so low that American energy companies find it attractive to liquefy natural gas and ship it abroad. And that’s what is starting to happen. For example, just last month, the first shipment of American produced natural gas — ethane — left the Marcus Hook terminal in Philadelphia, headed for Europe. The purchaser of the liquefied natural gas (LNG), Swiss petrochemical company Ineos, plans to use it in its Norway facility. (Ethane is primarily a feedstock for plastic production. Methane is what is typically used for heating and power generation.) Given current trends, the US could become the world’s third largest exporter of LNG, right behind Qatar and Australia — in just four years.

Now consider the Cheniere Energy company’s Sabine Pass facility (located on the Gulf Coast), which aims to be fully operational in less than three years. By itself alone it will be able to export 3.5 billion cubic feet (Bcf) per day.

US producers have a key cost advantage: they can reconfigure import facilities to become export facilities relatively inexpensively. So as domestically produced natural gas replaces all imports, we can seamlessly start sending LNG abroad. The US Department of Energy has approved projects that will increase the potential exports of LNG to 10 Bcf per day, and is swamped with new applications that if granted could boost those exports another 35 Bcf per day. That is nearly the size of today’s global market.

Of course, already some people have raised worries that by exporting so much of our domestically produced natural gas, our own consumers will face shortages and see domestic prices soar. This is doubtful. For one thing, the US already has something like four trillion cubic feet (Tcf) of natural gas stored underground, and produces 30 Tcf a year. So even if the Department of Energy approves all the projects under submission, the effect on domestic prices will be limited. One recent estimate by the US Energy Information Administration is that an increase of 12 to 20 Bcf per day in exports would raise domestic natural gas prices by 4–11% per million Btu.

The miracle of fracking has driven the price of natural gas to the lowest it has been in 17 years.

Making the chance that increasing exports will raise domestic prices of natural gas even more remote is the fact that, with the colossal amount of American shale deposits of natural gas — not to mention our immense amount of conventional supplies — the number of fracking operations will grow dramatically as our exports increase. That will increase domestic supplies as well, and hold their price down. Moreover, because building out export facilities is costly, the rate of increase will be relatively tame.

Still, the excellent economic news is that we will have another great export market to exploit, providing hundreds of thousands of high-paying blue-collar jobs all over this country — jobs sorely needed, as our older manufacturing jobs are automated away. For example, it is estimated that America will need 100 more LNG tankers over the next 15 years, as our exports surge ahead.

American natural gas exports will soon be headed to Asia as well as Europe. China is increasing its own production of natural gas, in part because the pollution caused by all its coal-fired power plants is making city life intolerable, but developing its own shale resources is proving difficult. Japan is perennially in need of natural gas (and petroleum as well). The export route to Asia will be dramatically improved by the $5.3 billion expansion of the Panama Canal just being completed. This will cut an average of 11 days off the time it takes to ship oil from the Gulf Coast to Asia.

This is also great geopolitical news. We will be able to supply natural gas to Europe, which right now depends upon the thoroughly corrupt and evil Russian company Gazprom. Russia has shown a vicious propensity to price-gouge when it can, and it uses its supply as an instrument of state power in the revanchist quest to reestablish the Soviet Empire. That quest will be sharply curtailed by American natural gas exports to Europe.

The prospect of American natural gas liberating Poland, the Baltic states, and other formerly Soviet-controlled countries from Russian hegemony was the subject of another recent report. It notes that several countries are eagerly awaiting buying LNG from the United States, and some — such as Poland — are building import terminals in anticipation that American shipments will increase. Russia supplies about a third of all Europe’s natural gas. Some of the former Soviet countries (such as Bulgaria) get 90% of their supplies from Russia.

As Lithuania’s energy minister has said, “In Russia, gas always goes together with politics.” But he added, “Russia is extremely aggressive in gas pricing and the arrival of US LNG will change that.” Goldman Sachs estimates that the arrival of American LNG should drop the price by one-quarter in just two years.

The US will have another great export market to exploit, providing hundreds of thousands of high-paying blue-collar jobs all over this country.

Russia feigns unconcern about the arrival of American LNG. Alexander Medvedev, Gazprom’s deputy chairman, discreetly claimed, “We are very relaxed about US LNG, though very attentive.” Analyst Trevor Sikorski explains that while Russian gas currently costs about $4.60 per million Btus, American gas will cost about $3.60 (when the cost of shipping is included). So Russia could “chase out” the US (as Sikorski suggests) by, say, lowering its price to $2. But I think the Russians are merely whistling past the graveyard. For one thing, Russia has for several years funded European environmentalist organizations, enabling them to propagandize against fracking. If it were so easy for the Russians to undercut the price of gas produced by fracking, why does Russia so oppose it in other countries?

Second, there is a flaw in the argument that Russia can just chase the US out of the European market by dumping its own natural gas at (say) half what it currently charges. The problem with that argument is — against all “dumping” arguments — that the Americans would stay out only as long as Russia incurred that 50% lower revenue stream. But the reduction would severely limit Russia’s ability to continue upgrading its military and taking over more of Eastern Europe. Worse for Russia, the minute it decided to raise its prices back up, American oil companies would need only a day to start shipments to Europe, and only a couple of weeks for the oil to arrive.

It seems likely that Russia will simply lower its prices to match or slightly undercut the American pricing — say, pricing its natural gas at $3.50. But this will still be quite damaging to Russia’s revanchist goals, and therefore good news for the rest of us. Russia will lose 20–25% of its current revenue stream — a major hit indeed. More importantly, even if Russia charges approximately what American companies do, the former Soviet countries will probably still order American gas, the better to keep their freedom from Russian domination.

In sum, American LNG may forever free the Eastern Europeans from Russia’s paws. This is reason for rejoicing.

But there are two reasons for not rejoicing. First, both candidates for the Democratic nomination for president — Clinton and Sanders — have said that they utterly oppose fracking. No doubt whichever one wins the nomination will be lavishly, if covertly, funded by the Russians.

Worse, the two leading candidates for the Republican nomination — Trump and Cruz — would almost certainly lose to the Democrat in the general election. The Republicans are hellbent on losing the best shot they have had to take back the White House in eight years. Go figure that out.




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The Stains of Social Justice

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The United Nations defines social justice as "the fair and compassionate distribution of the fruits of economic growth." Furthermore, social justice is impossible "without strong and coherent redistributive policies conceived and implemented by public agencies." Social justice is an axiom held dearly by socialists — apparently reconciled by the belief that great wealth and prosperity would have been created in places such as North Korea, East Germany, Cuba, and Venezuela, if only the "strong and coherent redistributive policies" had been, well, stronger and more coherent. In reality, social justice brings stagnation and decline, which, to socialists, look like fruit ever ripening into new and increasingly meddlesome forms of social justice. To socialists, distributing poverty and despair (even abysmal poverty and despair) is acceptable, as long as they are handling the distribution.

The socialists (more precisely, eco-socialists) in charge of US redistribution have managed to create a new American phenomenon: permanent economic stagnation. While speaking at the November 2013 IMF Economic Forum, Harvard University economist Larry Summers, was puzzled as to why, after four years, the US economy had not yet recovered. Noting that efforts to prevent a future crisis might be counterproductive, he concluded his speech by saying, "We may well need, in the years ahead, to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activity, holding our economies back, below their potential."

Translation: even at extremely low interest rates, bank lending has been flat since 2009 because businesses are afraid to invest in an economy tainted by socialist mischief. Since social justice (delivered through the redistributive policies of Climate Change, the Stimulus, Obamacare, Dodd-Frank, etc.) is "a chronic and systemic inhibitor of economic activity;" we need to think about how to manage future stagnation, after some unspecified number of "years ahead" in continuation of the present stagnation.

The socialists in charge of US redistribution have managed to create a new American phenomenon: permanent economic stagnation.

Think about that. In the election year of 2008, we had a do-something-about-it-now problem. Today, in 2014, as the stagnation persists, is Washington ready to do something about it? No. Will Washington be ready to do something in the years ahead? No. But by then it will be ready to think about it. Maybe. The 2008 promises of jobs and economic growth were replaced by the vast, warm fuzziness of social justice vagaries such as equality, diversity, fairness, dignity, renewability, and sustainability. What happened to the grandiose 2008 plan for economic revitalization? In 2009, eco-socialist lawyers and academics reached into their magic hat of "strong and coherent redistributive policies" and pulled out a plan to build a new economy. Why fix an outdated economy that was driven by greed, racism, overconsumption, and planet-heating "fuels of yesterday"? Today, more than five years into the new economy of stultifying compassionate distribution, they reached back in and pulled out a Plan B: inurement.

But as this elite cabal was settling into a genial Washington DC, their big heads bubbling with theories (touted by bigger-headed sociologists and environmentalists) on how to build a shiny new economy, a handful of crass entrepreneurs was settling into the rude world of fracking, creating an oil and gas revolution that would blight the dreamscape of the social justice crowd. The New York Times article "North Dakota Went Boom" eloquently describes the discovery and development of the Bakken Shale Formation in western North Dakota, a rugged, empty area blemished by "roaring fires and messy drill pads." But the blemishes are producing a flood of jobs, prosperity, and cheap energy, infuriating eco-socialists, who have produced but a trickle of anything with their centrally planned economy of government-approved renewable energy. Then there is the horror that the great wealth befalling North Dakota is the result of "an economic imperative that dates back to the triumph of the treaty breakers who usurped the Native Americans and commodified the land, and to the waves that came in their wake, the great white hunters who cleaned out the buffalo." God have mercy. Has there ever been social justice in North Dakota?

Eco-socialists are unwanted in North Dakota, where household income is $2,214 higher than the national average, unemployment is the nation's lowest, and budget surpluses accrue even after major income tax cuts (more than 50% since 2009). But many of them can be found at the North Dakota border, weeping over economic fruits they are helpless to distribute. Tears blind them to "the allure of a derrick dressed up in lights and looming 10 stories over a desolate landscape where the leading academic solution to social and economic stagnation had been to surrender and let the land lapse into buffalo commons." Alas, the North Dakota buffalo commons strains the vision of prying eco-socialists peering into the state. It is a pathetically small plot (only 4% of North Dakota is federal land), barely large enough to hold a respectable climate change sit-in without its whimpers being heard in at least a few of the more than 6,000 wealth-producing drilling sites on private land, where 90% of the wells reside. Other eco-socialists are faced with the task of hawking income inequality or green jobs (such as solar panel installation at $38,000 per year) to the sullied hordes of climate deniers rushing into the state, on their way to oil and gas fields where the average annual wage is $90,225.

It has been said that veterans of the oil patch can estimate the productive capacity of an oil well from the size of its flare gas flame (which burns off the natural gas contained in the well). A seasoned eco-socialist can no doubt make a similar estimate based on the size of the yellow puddle at his stomping feet, as he rages against the carbon emissions that flaring spews into the atmosphere. Out of self-interest, oil companies eventually build gas-gathering pipelines that channel the gas to a processing plant, where they make even more money –while saving the gas. But for wells on federal land, these pipelines require the bureaucratic approval of the National Environmental Policy Act (NEPA) — the same law that has delayed the Keystone XL Pipeline for more than five years. Oil companies, therefore, are forced to flare off gas while they wait for their permits. In Wyoming, for example, the average wait time is seven years. According to Forbes Magazine, the state's "lost opportunity cost associated with the delay of oil and natural gas development is $22 billion in labor income and $90 billion in economic output over a ten-year period." Not a problem, when social justice is at stake.

Eco-socialists are unwanted in North Dakota, where household income is $2,214 higher than the national average, unemployment is the nation's lowest.

Under social justice policies, GDP growth during the "recovery" has averaged 2% annually, dropping to an alarming -2.9% in the most recent quarter. This is stagnation. But to eco-socialists, it is not failure. It is merely an economic aberration that their intellectuals will have to think about managing in the years ahead. In the world of social justice, success is not measured by wealth, growth, jobs, or income; the expansion of "strong and coherent redistributive policies" is the only yardstick. Accordingly, with $17 trillion of debt, medium household income down 8.3%, labor participation down to 62.8% (the lowest since 1978), and 46.5 million Americans living in poverty, eco-socialists shamelessly exclaim that we are "heading in the right direction."

And that they have "more work to do." That work largely involves stifling the US oil and gas industry — the only bright spot in an otherwise moribund economy. While forging the new green economy, eco-socialists have suppressed oil (down 6%) and gas (down 28%) production on federal land. Fortunately for our stagnating economy, oil and gas production has increased dramatically (61% and 33%, respectively) on non-federal land. Thanks to entrepreneurs such as Harold Hamm (who discovered the prolific Bakken shale "play") and innovators who developed fracking and horizontal drilling, the US oil and gas revolution has created well over one million jobs, reduced annual oil imports by 800 million barrels, slashed our annual energy bill by $100 billion, and cut carbon emissions by 300 million tons. It has also increased GDP by more than 1.7% — a contribution without which eco-socialists could not claim (at least not shamelessly) that we are "heading in the right direction."

While most of us celebrate these achievements, eco-socialists fear them. Their vision of social justice calls for our vast oil and gas resources to "lapse into buffalo commons." Otherwise, the income inequality gap might widen or the earth's temperature might rise (by the end of the century) or a flame might shoot out of someone's faucet, etc. Besides, the economic contributions from the oil and gas revolution amplify the failure of their immense, whimsical green energy investments, and expose the disingenuous tenets of their overreaching scheme to rebuild the US economy. According to the insightful Hamm, “That’s why these guys are raising so much hell, because suddenly they realize that everything they’ve invested in isn’t going to work . . . They know they’re misleading the public.”

Nevertheless, the social justice parade marches forward. Armed with NEPA, the Clean Air Act, the Clean Water Act, the Endangered Species Act, and other social justice regulations, eco-socialists won't be happy until our utility bills "necessarily skyrocket" and the price of US gasoline matches the price in Europe — thereby paving the way for government-approved solar panels, windmills, and electric cars. Forget about oil and gas. They are yesterday's fuels, dirty and finite. We will have renewable energy in a sustainable economy, even if it takes permanent stagnation to get there.

Social justice leads to stagnation, which leads to scarcity, which leads to rationing, which is what eco-socialists do best.

The good news is that America's oil and gas boom is winning. Eco-socialists, in denial of its benefits, are resigned to the desperate hope that it will be like other booms — short-lived. But estimates of its increasing longevity have revealed a brown stain on the seat of the pants of eco-socialism. There is no stagnation in North Dakota, where energy experts expect the Bakken play to last for 100 years or more. There, the odor of flare gas is preferable to the stench of socialism and, with an annual salary of $90,000, oil field workers can buy all the social justice they need.

This sentiment, of course, is shared by Texas, home to the Eagle Ford and the Permian Basin, and the leading oil and natural gas producing state in the nation. And recent breakthroughs in drilling technologies have the boom spreading to Oklahoma, Utah, Colorado, Wyoming, and New Mexico, where the combined shale oil production has increased 57% in the last three years — causing, no doubt, a proportionate enlargement of that nasty brown stain. Mr. Hamm — whose oil company is developing a drill pad packing technique that could put more than 100,000 wells into North Dakota — would probably estimate a much larger and darker stain.

Social justice leads to stagnation, which leads to scarcity, which leads to rationing, which is what eco-socialists do best — with their "strong and coherent redistributive policies." They believe that through such policies we now have affordable healthcare, a kinder Wall Street, a cutting-edge renewable energy industry, and a world-class education system. Soon, electric vehicles will pour out of a rejuvenated Detroit, millions of Americans will work at high-paying green jobs, and solar panels and windmills will bring us energy independence. By then, their economists may have begun thinking about how to manage the permanent stagnation. That is their story, and they are sticking to it, even if it means squandering the world's most prolific source of fossil fuel energy, a resource that, if properly exploited, could revitalize the economy overnight, increase the wealth of every one of us, and finance self-help programs for anyone still afflicted by social injustice.

Nothing will change the minds of eco-socialists. But America's enormous, expanding oil and gas revolution may eventually make them change their pants.




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And We All Frack On

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Several recent stories show that the amazing technology of fracking continues to transform the energy world.

First is the news out of Russia that it has begun drilling a well that aims to tap the huge Bazhenov shale formation. The Bazhenov field, in Siberia, may be the biggest shale formation in the world.

Until now, Russia hasn’t bothered with fracking, even though it has the world’s largest reserves of shale oil (and the ninth largest of shale gas), because it has immense reserves of conventional fossil fuels. But lately its conventional production has begun to stagnate.

So Russia is allowing Royal Dutch Shell and Exxon Mobil to partner with its state-owned Gazprom Neft to start the process of developing fracking operations. How quickly it can mimic the American success in this area is hard to tell — certainly, other countries with large shale reserves (such as China, Poland, and the UK) have yet to get any production going, because the technology is tricky. What Russia has going for it is that — unlike the US — Russia has a leader who actually wants to enhance fossil fuel production, rather than destroy it.

Even more fascinating is the report out of Brussels that the European Commission now wants to cut back on the “climate protection” schemes it has pushed in the past and — wait for it — embrace fracking!

Yes, apparently the Commission’s plan is to step back from its aggressively Green agenda, called “20-20-20,” set back in 2007. The plan then was to achieve a 20% drop in greenhouse gas emissions, raise the EU’s output of renewable energy to 20% of all energy consumed, and achieve a 20% increase in the EU’s energy efficiency — all by 2020. The plan now is to switch to pursuing these green energy goals only on a voluntary basis.

As regards fracking, the Commission now intends to establish only minimal rules, instead of the very strict ones it was considering.

The interesting question is whether Germany’s head Angela Merkel will continue to push for an increase in the use of renewables. She has set the goal for generation of renewable energy in Germany at 60% by 2036. Considering that after Fukushima, Merkel ordered that the German nuclear power industry be closed by 2022, and that half the plants are already shuttered, achieving the renewable goals will drive the cost of German power through the roof.

But she is running into flak from German industry. An article late last year noted that the rising energy prices in Germany and dropping prices elsewhere were beginning to put pressure on German manufacturers to start offshoring much of their operations.

I mean, this is just fascinating: when America is finally free from our current Green president, and we once again encourage domestic oil and gas production, we may find that we get back some of the heavy industry we lost to the Germans decades ago. Hell, maybe their automakers will completely relocate here.

Of course if they do, they will need new names. Instead of Bayerische Motoren Werke, might I suggest Tennessee Motor Works? And Mercedes Benz — well, “Mercedes” is so dated. We might try “Miley” (after our famous twerker-girl pop star). Perhaps “Miley Bends” would work . . .

A recent Wall Street Journal piece noted that many EU companies are moving production to the US, because of our relatively inexpensive energy — and, one might add, because at least in the half of all American states that have right-to-work laws, our labor rules are more realistic.

Finally there is a story about a start-up company called Siluria, which may possibly have solved the technological hurdles in the way of turning abundant natural gas into cheap gasoline — gasoline at about half the price of the current product distilled from petroleum.

Siluria is trying to do what so far has been impossible. While gas-to-liquids plants do exist (plants that convert natural gas to liquid fuels, including gasoline), they are very costly. It takes a lot of energy to do the conversion. For years, companies have searched for a catalyst that would make the conversion more cost-efficient, but so far, no catalyst has succeeded. Siluria has a new approach: it has built an automated system for making and trying out new catalysts. The system has already sifted through 50,000 possibilities, and the company feels that the performance of the catalyst currently in use at its experimental conversion plant justifies opening two larger-scale plants to prove to investors that it has a commercially viable approach.

A number of other companies are trying to find a commercially attractive way to convert natural gas to liquid fuels — none of which, please note, receiving the lavish funding accorded Obama cronies’ multitudinous green energy companies (most of which have failed).

In fact, the whole fracking revolution was entirely the creation of a handful of brilliant entrepreneurs in the private economy, operating in the face of the administration, not with its help. Over the decades, the role of the federal government in confronting our energy dependence on the Mideast has been one of trying to pick winning technologies, and failing every time. Not just failing, but failing at a cost to taxpayers of billions of dollars, all the while impeding private enterprise.

It is time just to end the idiotic Federal Energy Department, and let the free market solve the problem.




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Athena 4, Gaia 0

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From the start of the industrial revolution to the present day, many Green critics have decried the rise of technology. Gaia (Mother Earth) worshipers — Green neo-pagans — have viewed with alarm the dramatic rise in human flourishing, and the key determinant in this flourishing, which has been the development of plentiful energy. From the year 1800 to the year 2000, the world’s average per capita income rose tenfold (in real terms), while the world’s population rose sixfold, thanks to this productive and peaceful revolution. But the Gaia cult has resisted every step of the way.

During the past half century, the Gaia groupies have achieved tremendous political power in America and Europe. (They have yet not been able to dominate in Asia — one big reason Asia is so rapidly rising economically.) It is a struggle between those who embrace technological progress and those who reflexively and viscerally oppose it. The struggle can be viewed as a contest between Greek goddesses: Athena, goddess of wisdom and technology, is fighting Gaia, and Athena keeps winning — thank goddess!

Four recent reports of technological progress in energy production are worth noting. The first is about the fracking revolution, which I believe will be viewed by future historians as one of the major turning points in the evolving industrial age. It conveys the news that the largest American railroad, BNSF, is planning to test the use of natural gas as power for its locomotives. Currently, BNSF uses diesel fuel exclusively, and by its own estimates has the largest diesel-burning American fleet, second only to the US Navy.

It is not because but in spite of the neo-pagan policies of the Oval Office that we have the natural gas miracle.

The reason BNSF is considering the move is that because of the fracking revolution, natural gas is getting very cheap. Under current pricing, while a gallon of diesel fuel costs about $4, the same power can be produced for less than 50 cents worth of natural gas — though there are additional costs when you compress or liquefy it.

This is leading BNSF to follow other industries in moving toward natural gas. Utility companies are rapidly abandoning coal for gas, and manufacturers are moving toward it as well. Many municipal bus fleets have been using compressed natural gas (CNG) for years, and other commercial vehicle fleets (such as garbage trucks) are looking into switching to CNG. Already, tugboats are being fitted to run on liquefied natural gas (LNG). And long-haul freight companies are looking at LNG as well — in fact, Shell is planning to provide LNG in Ontario and Louisiana and distribute it at 200 truck stops.

The hurdle that BNSF faces is that it costs upwards of $1 million to retrofit a diesel locomotive to run on LNG as well, and BNSF has almost 7,000 locomotives to retrofit. So this conversion likely will take time, but given that the cost advantage of natural gas shows no sign of going away anytime soon, the conversion seems inevitable.

Lest anybody be addlepated enough to thank the current Green regime for this flourishing of clean, low-cost energy, let me disabuse him now. The crony-capitalist administration has placed all of its — oops! I mean, the taxpayers’ — money on solar and wind power, bankrolling numerous projects (headed by various Obama donors) that have gone nowhere but bankrupt. The EPA and the Department of the Interior have gone out of their way to stop drilling on federal lands. This is documented in a recent report from Marc Humphries of the Congressional Research Service. The report documents the fact that the fracking revolution has increased American natural gas production by 20% over the past five years alone — a total of 4 trillion additional cubic feet of natural gas pumped into the nation’s supply. But this overall increase hides a revealing disparity: while natural gas production on non-federal (mainly private) lands is up by 40% over this period, production on federal land has plummeted by 33%.

In short, it is not because but in spite of the neo-pagan policies of the Oval Office that we have the natural gas miracle.

But the miracle just might become even more miraculous. The second story about technological advances in energy production is a news release from the Japan Oil, Gas and Metals Corporation, which notes that it is preparing the first test of commercial production of natural gas from methane hydrate layers under the ocean. Essentially, methane hydrate is natural gas (methane) trapped in ice crystals along the ocean’s floor. This source of energy is estimated by some experts as potentially exceeding all of the world’s existing coal, natural gas, and petroleum reserves — combined! Developing the resource will be tricky, given the instability of the layers that have to be processed, but then, the minds of self-interested creative individuals are tricky as well.

The third technological development in energy production worth noting is the advent of a new type of nuclear (fission) reactor.

Nuclear power, of course, can’t get no respect from nobody. Despite its exemplary safety record in the US and other advanced economies (which always excluded, of course, the Soviet Union), people fear it. These fears were only intensified two years ago when a Japanese earthquake led to the destruction of four reactors at the Fukushima Daiichi power plant.

Actually, the quake — a massive magnitude 9.0 one that moved Japan’s main island eight feet to the east and shifted the Earth’s axis by six inches — didn’t destroy the reactors. They were ruined by the tsunami it generated (a tidal wave that destroyed 300,000 buildings and killed 20,000 people). Despite the fact that the reactors’ disaster killed nobody, sickened nobody, and is likely to cause few health problems in the future, organized pressure led to the shutdown of the country’s 53 other reactors. These reactors jointly produced 30% of the country’s electric power. As a consequence, last year Japan ran a record deficit ($78 billion) because it had to import more energy, increasing the cost of its manufactured goods, and reducing exports accordingly.

But nuclear power is by no means dead. There is a new company, Transatomic Power, that is perfecting a design for a molten-salt reactor — a design that may well cut in half the cost of future nuclear reactors. It is the high cost of building reactors, especially in the face of the dramatically dropping price of electricity from natural gas plants, along with the Green Regime’s preference for solar and wind power, that has been holding up the expansion of nuclear power in the US over the past few years. But this new reactor will probably reignite that expansion.

Molten-salt reactors were explored as long ago as the 1960s in the Oak Ridge Lab, but the design now being worked on would produce 20 times the power for the same size reactor. It would allow reactors smaller than the 1,000 megawatt behemoths currently running. Besides the smaller footprint, the reactor under design would save money because it could be factory-built (as opposed to being custom-built on site).

Its chief advantage, though, would be the use of molten-salt rather than water as a coolant. Water is the coolant used in all present reactors. The problem with water is that it boils at 100o C, whereas the fuel pellets in the core operate at about 2,000o C. So in the event of an emergency shutdown, unless water can be continuously pumped over the core to cool it, the water will vaporize and the core will melt down (as one did at Fukushima).

But the salt, which is combined with the fuel, has a boiling point much higher than 2,000o C. So if the reactor core starts to overheat, the salt will expand but not evaporate, separating the pellets and thus slowing the core reaction. In a complete shutdown, a stopper at the bottom of the core container would melt, and the molten fuel and salt would flow into a holding container, where the salt would solidify and encapsulate the fuel.

If global warming is real — as all good, pious Gaia supplicants believe — then it’s either nukes or solar and wind power, and the latter is clearly not economically viable.

The clever pups behind this innovative design are the cofounders of Transatomic Power, Leslie Dewan and Mark Massie, who are still only Ph.D. candidates at MIT. These two are Schumpeterian entrepreneurs of the best sort. America is lucky to have them, as the Chinese are also working on a similar design.

This all comes at a crucial time for nuclear power. For as a recent Wall Street Journal article notes, the fracking revolution has lowered natural gas prices so much that gas powered electrical plants are driving both coal-fired plants and many nuclear plants (especially the smaller ones, and the ones facing expensive repairs) out of deregulated markets.

For examples, Excelon has announced that it will soon close its Oyster Creek, New Jersey nuke, ten years before its license expires. And Dominion Energy has announced that it will soon close its Kewaunee, Wisconsin nuke, a full 20 years before its operating license expires.

Pricing makes the reason for this clear. The fixed costs to run a nuke are $90,000 per megawatt; the fixed costs for coal fired plants are $30,000; for natural gas fired plants, only $15,000. And, of course, existing nukes require intensive security and safety costs, precisely because of the risk of meltdown. In the first 11 months of 2012, natural gas plant output rose by 24%, while the output for nuclear powered plants dropped by 2.5%.

This all presents an interesting dilemma for the Gaia communicants. As natural gas prices continue low, gas will, absent extensive subsidies or other protection for other forms of energy, supplant nuclear power. Now, natural gas emits just half the carbon that coal does, but nuclear plants emit none. So if global warming is a hoax, we could easily go all natural gas. But if global warming is real — as all good, pious Gaia supplicants believe — then it’s either nukes or solar and wind power, and the latter is clearly not economically viable. All this is clear except to the blindest Gaia devotees (and the greediest Green crony capitalists).

And indeed, there has been an interesting schism in the Green faith. In a recent piece, the excellent science writer Robert Bryce calls this “the rise of the nuclear Greens.” He notes that an increasing number of Gaia votaries now support nuclear power. One prominent convert is British environmental activist George Monbiot, who has now admitted — belatedly, to understate it massively — that solar energy (in the UK, and by extension everywhere else) is “a spectacular waste of scarce resources,” and that wind power is “largely worthless.” Referring to the Fukushima disaster, he concludes, “Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small. The crisis at Fukushima has converted me to the cause of nuclear power.”

Wow.

Monbiot now joins other Gaia disciples Stewart Brand, Ted Nordhaus, Michael Shellenberger, Mark Lynas, James Lovelock, and Patrick Moore (co-founder of Greenpeace) in favoring nuclear power. This is nauseatingly ironic: it was the environmentalist zealots who stopped the growth of nuclear power 40 years ago. But the pro-nuke Gaia devotees are still a distinct minority. Most of the cult still lights candles in front of wind and solar power.

The fourth interesting development concerns an energy source that has been tantalizing but elusive for many decades: fusion power.

A news report out of Europe indicates that an important international project is moving forward. The “Iter” (Latin for “the way”) project is a collaboration of 34 nations working on building a pilot fusion nuclear reactor. Nuclear fusion is, of course, what powers the sun and other stars. In principle, it offers a chance to provide virtually unlimited supplies of reliable, consistent energy at the levels needed to power an industrial economy. And it would provide that power from clean, nontoxic fuel (extracted from water), with no possibility of any kind of core meltdown.

The new Iter experimental reactor has received an operating license. It is projected to be the first fusion reactor (“tokamak”) to generate more power than it uses — ten times more, in fact. The Iter design would serve as the prototype for the first generation of commercial fusion power plants.

The foundations for the reactor are now being laid, but the work of putting together the million or so components (made at factories all over the world) will take a long time. The tentative date for firing it up is about 15 years in the future — though with a project of this enormity, it will probably be longer. And it has cost about $20 billion. However, it signals that by the second half of this century, commercial fusion power will be a reality.

That would be nothing less than the crowning achievement of the industrial revolution. It would be the human mind harnessing the power of the stars to secure permanent prosperity for our species.

In spite of the Gaia cult, Athena is ascendant.




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Enviromentalists vs. the Environment

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A brilliant piece by Robert Bryce highlights one of the more incredible recent developments in the Green Gaia world — the rising opposition of the soi disant “environmentalists” to a proven weapon against the dreaded Anthropogenic Global Warming that threatens destruction to Mother Earth. That weapon is natural gas — which, to put the point in a scatological way, is an afflatus of said Mother Earth.

Specifically, in the last year, the two major energy bureaucracies — oh, pardon me, “agencies” — have reported what one would naively suppose is very good news: America is dramatically cutting its CO2 emissions, thus sparing Earth further defilement! On May 24, the International Energy Agency (the IEA) in Paris and the US Energy Information Administration both reported that America’s CO2 emissions dropped by nearly 8% (430 million tons) since 2006, the greatest reduction recorded by any country in any region.

Yahoo! We’re number one! (Let’s all chant together: U-S-A, U-S-A!)

The reasons the IEA gives for that drop are that the US is using less oil, especially during this extended recession. But the biggest reason seems to be the flourishing of natural gas production brought by the use of fracking.

The drop in natural gas prices has led to a dramatic switch from coal to natural gas in generating electric power. Last year alone saw an increase in gas-powered electricity production by 34%, and a drop in coal-powered electricity by 21% — a decrease that lowered carbon emissions (not to mention air pollutants) dramatically.

Lawrence Cathles, professor of earth and atmospheric studies at Cornell, recently published a report arguing that moving our economy to natural gas would be a much quicker and cheaper way to replace coal than by moving to “renewables” (solar and wind energy) or even nuclear power — and it would lower carbon emissions by up to 40%.

But the major environmentalist groups, as well as the government regulatory agencies they control (such as the EPA), are still fighting fracking and pushing “green” energy.

What a joke.




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It’s a Gas

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The massive growth in the production of natural gas, the result of using unconventional sources and methods (mainly the fracking of shale deposits) continues to demonstrate how free markets can transform the world, even in the face of statist oppression.

Two recent Wall Street Journal pieces illustrate this anew. The first reports that another industry is now converting its vehicles from diesel to natural gas — an industry you might not think of offhand. Ferryboat fleets, both here and in Canada, are making the switch because of the continuing (shale-)rock-bottom prices of natural gas.

From Staten Island to Washington State and British Columbia, ferry fleets are following the lead of Norway, which a decade ago started fueling ferries with liquefied natural gas (LNG).

One attraction of natural gas is, again, its pricing. Natural gas at the Henry Hub distribution center (a standard benchmark for natural gas pricing) hit a low of $1.95 per million BTUs this year, the lowest price in 13 years. This, while diesel skyrocketed by 140% from 2004 to 2011.

A second attraction is that, if spilled, LNG doesn’t form a toxic slick that requires costly cleanup, even as it should be so unfortunate as to kill off wildlife, or tourists, or both.

Third, LNG is actually less likely to be unfortunate, because it is less inflammable than diesel.

Of course, the switch will take time and upfront investment — as for instance, to build plants to chill and compress the gas, and new holding tanks for the ships. But the cost savings make the decision obvious, even if the timing isn’t.

The second WSJ piece is of more — shall I say — global importance. It reports that more and more US utility plants are switching from dirty coal to clean natural gas, not because of EPA coercion, but because of the coercion of free-market pricing.

Coal consumption by American power companies dropped by 18.8% in the fourth quarter of last year, compared to the previous quarter, and 9.4% compared to the fourth quarter of the year before. Again, the switch was driven by the drop in natural gas prices.

Peabody Energy, one of the biggest coal producers in the world, now estimates that American coal demand will drop by 10% this year, or 100 million tons.

The free market is helping to reduce air pollution. Obama, are you paying attention?




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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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A Step in the Right Direction

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When there is good news, I will report it. In our mathematically “challenged” country, when people add 2 and 2 and — finally! — get 4, I will celebrate. I’m just that kind of guy.

To the idiocy of recent American energy policy — to the extent we have ever had one — I have devoted considerable attention in these pages. I’ve criticized it under Bush, and even more under Obama, because while Bush’s policy (which was to encourage both fossil fuel and “green energy”) was partly idiotic (the green part), Obama’s (which has been to end fossil fuels and substitute only green energy) has been completely, insanely idiotic.

But the free market, led by entrepreneurs (as opposed to academics, bureaucrats, or other parasites), working primarily on private property (as opposed to public lands, which this administration has locked away), and using private capital (as opposed to taxpayer money), has created a Renaissance of oil and natural gas production.

Even as solar, wind, and biofuel energy has generally proven economically unviable even with massive taxpayer subsidies, the new, unconventional, fossil fuel production — from sources such as shale formations and oil sands deposits, by hydraulic fracturing combined with horizontal drilling — has proven very viable, commercially. It has proven viable, please note, despite a firestorm of new regulations created by the Obama administration, which is eager to choke it off.

That's good news. Here's more.

The symbol of our idiotic energy policy is surely the Chevy Volt, produced by a socialized auto company but poorly received by almost all of society. It has been so poorly received that Government Motors has announced that it is suspending production of the “Sparky Lemon.” Even with massive federal and state subsidies, the whole EV concept has been a flop.

But a recent article in the WSJ reports some good news. A number of car makers are producing cars and trucks that can run on compressed natural gas (CNG), that now inexpensive and clean-burning fuel.

Start with Chrysler. It is announcing plans to build a line of bi-fuel (gas and CNG) powered Ram trucks. And GM is announcing that it will build bi-fuel Chevrolet Silverado and GMC Siena pickups in the fourth quarter of this year.

Honda Motor Company (not being government-run!) is nimbler. It has been selling CNG Civics since 1998 at 200 dealerships spread over 36 states. The starting price for these cars is about $26,600.

Ford, which already for several years has been offering CNG conversion kits for some of its cars, has announced that it will start offering some of its pickups with the option.

CNG-powered vehicles make great sense (as I have argued elsewhere). We can get all the natural gas we need from domestic sources, and it is relatively cheap. Indeed, you can buy conversion kits for any car, and gas compressors for your garage. But it makes most sense if the automakers make the cars powered by CNG right on the factory floor. First, that saves money — pure CNG cars don’t need catalytic converters, for example. And there are economies of scale.

Widespread conversion will take years, because people will move to CNG vehicles only when there is a widespread network of gas stations with CNG pumps. Still, it is a welcome development.

If Obama were sincere when he says, “My administration will take every possible action to develop this energy [natural gas],” he would merit some praise, and I would be happy to supply it. The problem is that in this matter (as in many others), he is lying through his teeth. He has bitterly fought fracking, using every tool in his administration — the Department of the Interior, the SEC, the Department of Energy, and even the Department of Agriculture — while locking away as much public land as he could.

Let’s hope a Republican administration (should we be lucky enough to see it replace the current, benighted one) would truly encourage the transition of vehicles to natural gas, and this country to energy independence. Most of the Republican candidates at least get energy, whatever else they don’t get.




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End the Green Nightmare

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There is currently a maelstrom of news about costly failures in the so-called green energy industry. Of course, solar power is prominently featured, and the Solyndra fiasco is only one of the scandals. Rapidly rising to public consciousness is another crony capitalist solar company, SunPower, which looks like it too will go bust and cost the American taxpayer a fortune. Also in this club of losers are solar companies such as First Solar and Abengoa, both again the recipients of taxpayer dollars, thanks to the current administration’s rigid environmentalist ideological mindset.

But not to be overlooked are disappointments in the other segments of the green energy industry. Corn-based ethanol has proven to be such a wasteful boondoggle that even Al Gore has rethought his support of it. And wind power has come in for a good deal of scrutiny. Why, even geothermal companies are proving questionable. A recent report of three on the biggest such companies — Nevada Geothermal Power, Raser Technologies, and U.S. Geothermal — shows that they are all in financial difficulty or are just not profitable. All are recipients all of taxpayer loans or loan guarantees.

This has left the proponents of green power trying desperately to explain away its dismal failure — both here and abroad — to prove itself commercially viable without massive governmental subsidization, and without the corruption that governmental subsidies typically bring. But while we are witnessing the bursting of the Great Green Energy Bubble, we are also witnessing a renaissance of fossil fuels — the very fuels that Malthusian prophets of doom have for decades claimed are “running out.”

This renaissance has been caused by a technological revolution that is transforming oil and gas drilling. Because of it, oil and gas are far more plentiful here and in countries outside the Middle East and other hostile neighborhoods, such as Russia and Venezuela. I am thinking especially of two technologies, fracking and horizontal drilling. The rebirth of fossil fuel production was unimaginable a few years ago. It is completely beyond the ken of the Greens who constitute the Obama Regime, people who never anticipate revolutions that are not run from above, by them, but instead originate in the distributed intelligence of regular (read: creative) people.

We are also witnessing a renaissance of fossil fuels — the very fuels that Malthusian prophets of doom have for decades claimed are “running out.”

Start with fracking. It has certainly made some energy companies rich. For, example, Noble Energy has just paid a whopping $3.4 billion for a half-interest in the Marcellus Shale holdings of Consol Energy. Together they plan to develop a huge chunk of Pennsylvania and West Virginia (663,000 acres). Even after selling off half its holdings, Consol still expects to extract a massive 350 billion cubic feet of gas.

What is fascinating is that Conrol Energy is a Pennsylvania-based coal company — you know, one of those, well, fossils of the fossil fuel industry. It is nicely positioning itself for the inevitable shutting down of coal-fired power plants under the relentless pressure of the EPA. Consol and Noble are just two of the flood of companies moving in to develop the Marcellus Shale formation.

Fracking is also rewarding key players in the industry. Marcus Rowland, the CEO of the small but important player, Frac Tech International, earned a tidy $24.4 million last year. His compensation made him the highest paid CEO of any publicly-traded energy company. He is paid more than the CEO of IBM.

Frac Tech is beating many other energy companies by providing hydraulic fracturing services for big energy companies such as Chesapeake Energy and ExxonMobil. It brought in nearly $1.3 billion in revenues. In the world of fracking, only Halliburton and Schlumberger are bigger.

There is a very recent report about the development of a shale field of truly stupefying proportions. The Utica Shale deposit is an enormous geological formation stretching from Quebec to Kentucky. It may be an even more fertile source for oil and gas than the Marcellus Shale field. Ohio state geologists — a neutral source, please note — estimate that Ohio’s share of this field holds upwards of 15 trillion cubic feet of natural gas and 5.5 billion barrels of recoverable oil (or roughly a third of the production of America’s largest oil reserve, Alaska’s Prudhoe Bay).

Then there is brilliant article discussing one of the unsung creative geniuses of American industry, Harold Hamm. In a week dominated by paeans to the fallen Steve Jobs — who rightly deserved recognition for his amazing success in making Apple what it is — it was nice to see a piece on the remarkable Mr. Hamm.

Far from welcoming the renaissance of the American fossil fuel industry and the jobs it would provide, the Obama Regime has fought it tooth and nail.

Hamm is the founder and CEO of Continental Resources. He rose from humble origins — the thirteenth child of Oklahoma sharecroppers — to become thirty-third on the current Forbes list of wealthy Americans. Yes, Virginia, there is a Horatio Alger. Hamm is almost certainly going to rise to a much higher place on the list, given how much oil he owns.

He made his early success as a wildcatter with a keen sense of where oil could be found. But his greatest contribution was his early employment and improvement of a second innovative fossil fuel technology, a method called horizontal drilling. This is a technique whereby the drilling company drills downward (up to two miles deep), then drills outward, horizontally. This technology has — as dramatically as fracking — allowed energy companies to exploit petroleum and gas reserves hitherto not commercially viable.

Hamm is the discoverer of the famous Bakken oil field that extends from Montana to North Dakota. So fertile has this field proven that it has helped put America back in third place in the world in oil production. He estimates the reserves in Bakken alone at 24 billion barrels — which if true is double our currently proven national reserves. Continental has seen its proven reserves go from 118 million barrels in 2000 to 421 million barrels this year.

One might expect that the Obama Administration would be delighted at the prospects of America’s becoming energy independent — and potentially millions of American blue-collar workers getting high-paying jobs.

But one would be wrong.

Far from welcoming the renaissance of the American fossil fuel industry, the Obama Regime has fought it tooth and nail. It is attacking shale oil and gas with every tool at its disposal. Its Department of the Interior has undertaken a jihad against them. It has locked away from exploration and development vast new areas of the Midwest and has waged a war against conventional offshore drilling. It is now doing its best to stop the new technological drilling, even in lands that have been drilled conventionally before.

The Green Regime’s SEC has entered the fray, demanding that companies like Continental follow new Sarbanes-Oxley requirements about reporting royalty and production figures, meaning that CEOs like Hamm face jail time if some low-level operator misreports production from a field.

Ironically, the feds never apply Sarbanes-Oxley to themselves. If Obama or any of his administration misreports taxpayer liabilities, say, for solar industry loans, nobody faces any consequences.

In addition, the Regime is pushing de facto tax increases for the oil and gas industry, by ending various tax credits the oil industry has long enjoyed. This — coming from an administration lavish in its subsidies to minor and expensive energy sources such as solar, wind, geothermal, and ethanol — is from the point of view of physical science simply bizarre.

Finally, the Green Dream Team has brought its Justice Department into the jihad. It recently brought charges against seven oil companies in North Dakota for killing 28 birds. Continental has been accused of killing — one bird! But this is not a minor matter: the executives face six months in jail if convicted. (Note: The same Justice Department has never even once pursued any American wind power company, even though American wind power facilities kill on the order of half a million birds a year.)

But even as the Regime wages its jihad against domestic fossil fuel industries, other countries are moving ahead with the new fossil fuel technologies. As I noted in an earlier piece, Israel has set about using fracking to free itself from reliance on foreign sources of oil, which would mean changing the balance of power in the Middle East. Israel is using fracking to exploit some major fields, the most recent being a field (named “Leviathan”) which holds 16 trillion cubic feet of natural gas, or about a century’s worth of gas at Israel’s current usage. This field is only part of the massive Levant Basin shale field, which holds upwards of 122 trillion cubic feet of natural gas, or about eight centuries’ worth.

More recently, a small energy player in the UK has announced that the Bowland Shale field, in northwest England, contains an estimated 200 trillion cubic feet of natural gas. This estimate (by Cuadrilla Resources) means that this one shale field contains enough natural gas for two-thirds of a century of the UK’s needs at present levels. And that is only one field.

The British boom is being echoed elsewhere in Europe, where other countries are also turning to fracked gas — except France, which has outlawed shale gas exploration altogether, one suspects to protect its nuclear industry from competition. But Poland, for instance, has an estimated 187 trillion cubic feet of shale gas. This is geopolitically game-changing, considering that Poland now has to import its natural gas from neighboring Russia, a country that historically has kept trying to incorporate Poland into its empire.

Note the extremism of Banks’ demand: don’t even explore, much less try to use, resources until they are proven, to her ilk, to be perfectly safe—something that will never happen.

This discovery in the UK comes just in time to stop its increasing dependence on natural gas from the Middle East and Norway. But — naturally — the British energy suppliers are facing the same kneejerk environmentalist opposition that Hamm and other American suppliers do. Soi-disant environmentalists in Britain are roused in furious opposition. Jenny Banks, the “energy policy officer” for the environmentalist group WWF (World Wildlife Fund) demands, “The government should at the very least halt shale gas exploration in Britain until more research can be undertaken on both the climate-change impacts and contamination risks associated with shale gas.” Note the extremism of her demand: don’t even explore, much less try to use, resources until they are proven, to her ilk, to be perfectly safe—something that will never happen.

What explains this visceral hostility to a product the human race desperately needs, and the pushing of forms of energy that have proven time and again to be commercial losers?

The answer is that much of the environmentalist movement consists of two groups: neo-socialists, and neo-Romantic pagans. The former profess a love of the ecosystem but are really animated by a hatred of capitalism. These are the people who never uttered a peep about environmental degradation when the Soviet Empire was cheerfully despoiling the ecosystem, but who now wax furious at the thought that a capitalist — a capitalist — should even explore for oil. Should Vladimir Putin or Hugo Chavez start using fracking, why, instantly, fracking would be fine.

The second group, even more bizarre, is populated by those I have characterized elsewhere as self-loathing hominids, i.e., people who are ideologically misanthropic. They view their own species as vile and disgusting, literally a blight upon the planet. The thing they fear most is precisely the discovery of inexhaustible, inexpensive energy. They fear it because such energy would allow the human race to flourish, and these self-loathing hominids do not want the human race to flourish. To them, rats and roaches are wonderful, but children are not.

You simply can’t please these worshipers of Thanatos.

But the rest of us should rejoice in the renaissance of fossil fuels. Unlike the green energy sources that have done so pathetically little to help humanity, it holds the promise of inexpensive energy on which our continued prosperity depends.




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