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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Now the Majority

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Amid all the hoopla surrounding the elections, the nation passed a milestone worth noting. We now have right-to-work (RTW) laws in place in the majority of states. This is a cause for quiet celebration.

Earlier this month, West Virginia — long a stronghold of Big Labor (specifically, the United Mine Workers) — voted to become the nation’s 26th RTW state. This was as surprising as Michigan’s decision a couple of years ago.

Workers find their dues used to elect politicians who want to close down the very industries that employ those workers.

It took maneuvering. The law had narrowly passed the Republican-dominated legislature the week before, but Democrat Governor Earl Ray Tomblin vetoed it. However, the state constitution allows the legislature to override a veto with a simple majority. The Republican-dominated legislature did just that, by 18–16 in the Senate and 54–43 in the House.

Undoubtedly the driving force for this change is something I have long noted in these pages. Ever since FDR, there has long been an unholy alliance between Big Labor and the Democratic Party. Labor unions freely used enormous amounts of workers’ money to elect Democrats, who then passed laws favorable to unions, but often opposed to the desires of workers. Over the past 20 years, and especially with the election of Obama, Big Labor has elected Democrats who are environmental extremists. This is the ultimate in irony: workers find their dues used to elect politicians who want to close down the very industries that employ those workers!

That is especially true in West Virginia. Of course, the state has long had major coal-mining operations. But Obama’s campaign against coal has devastated those industries. This has been the major reason that West Virginia has the second-highest unemployment rate in the nation — 6.5%, or about a third higher than the average.

Workers of the country, unite, and throw off the chains with which the vicious environmentalist Democrats have shackled you! Not only will you be free — you may just keep your job!




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Credibility vs. Credulity

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Climate catastrophists are distraught. The planet is headed for hellish doom, and few of its inhabitants care enough to alter its climatological trajectory in any meaningful way. The world has ignored catastrophist demands to decarbonize its economies, and rich countries, who have caused catastrophic anthropogenic global warming (CAGW), are not doing enough to help poor countries, who are its victims. Worse yet, the climate cult is crumbling, as its science-challenged leaders struggle to wage a crusade whose viability depends on propping up a scientific hypothesis that cannot stand on its own.

Catastrophist leaders have been unable to make a convincing scientific case for CAGW, or for the solution that they propose to avert it. Decades of advancing their scientific arguments (based on, e.g., flawed climate models, blatant manipulation of climate temperature data, shrill pronouncements of unsubstantiated alarms, followed by shriller, more frequent pronouncements of unsubstantiated alarms) have failed to win public support. So have vigorous attempts to appropriate scientific authority, coerce scientific consensus, and quash scientific debate. Their most ambitious intellectual efforts (incessant ridicule of skeptics, unrelenting vilification of dissenting scientists, and threats to imprison fossil fuel company CEOs, "climate deceivers," "doubt-sowers," and others) have attracted few converts.

According to catastrophist lore, America is the problem. Americans, catastrophists say, are in denial about the coming devastation and the science that predicts it. We dismiss the ominous tweets of President Obama (e.g., "Ninety-seven percent of scientists agree: #climatechange is real, man-made and dangerous"). We chuckle when John Kerry likens global warming to weapons of mass destruction (WMDs), skeptics to Holocaust deniers, and alternative theories of climate change to the work of "shoddy scientists." We are blind to the self-evident truths of climate warming that catastrophists see, everywhere they look: storms, floods, droughts, fires, famines, terrorism, species extinction, heatwaves, cold snaps, allergies, and diarrhea, to name a few.

The climate cult is crumbling, as its science-challenged leaders struggle to wage a crusade whose viability depends on propping up a scientific hypothesis that cannot stand on its own.

America remains doubtful and oblivious. Just how stupid can we be, wonder alarmists? Bill Clinton thinks that such skepticism makes America look like "a joke." It's "almost like denying gravity," muses Joe Biden. Have Americans become even stupidersince Obamacare, which, according to Obamacare architect Jonathan Gruber, relied on "the stupidity of the American voter" for its passage?

Indeed, American ignorance is said to be behind the watered-down Paris climate change accord. Thought to be humanity's last best chance to avert otherwise certain climate disaster, the agreement was not legally binding and fell far short of catastrophist demands. Catastrophist leaders blamed the US Senate. Had that body been willing to ratify a treaty mandating US emissions reductions, then Messrs. Obama and Kerry would have been able to persuade the other 190 or so countries to mandate theirs.

The US Senate, of course, is controlled by Republicans, as is the House of Representatives. That is, the US Congress is controlled by Republicans, for whom climate change is not the most important issue of their time. Congressional Democrats, on the other hand, having been duly indoctrinated by climate science that was settled decades ago, believe that CAGW is the greatest threat to humanity. Unlike Democrats, Republicans do not understand that fossil fuel is the scourge of the planet, abetted by the industrialization, capitalism, and democracy that threaten its very existence. This misapprehension is typified by so-called Tea Party Republicans — "flat-earthers" that Obama has no time to meet with — and "climate deniers," whose ignorance of science, according to Kerry, disqualifies them from "high public office." Presumably they would have been qualified had they attended the kinds of high schools and colleges where, Kerry continued, he "learned that the sun rises in the east and sets in the west and it does so 24 hours a day."

We are blind to the self-evident truths of climate warming that catastrophists see, everywhere they look: storms, floods, droughts, fires, famines, terrorism, species extinction, heatwaves, cold snaps, allergies, and diarrhea.

Which raises the question: in this intractable climate change battle, who are the actual idiots? Where is the evidence that the catastrophist elite is any smarter than the Americans, even the ordinary Americans, that it obsessively derides and belittles? Instead of asking why America is unwilling to buy their planet-saving scheme, catastrophists should ask why their leadership has been unable to sell it. Why is it that — armed with daily evidence of omnipresent climate damage, the pressure of world opinion, the unrelenting propaganda of stroppy environmentalism, the vociferous endorsement of celebrities and journalists, and the lofty, unified validation of the world's climate scientists — such luminaries as Barack Obama, Hillary Clinton, John Kerry, and Al Gore can't make the case? They are losing to the Koch brothers and 40 or so members of the Tea Party!

Part of the answer is that those leading the climate crusade know the least about science. Otherwise, they would be able to explain climate change issues (such as the ongoing warming pause, the elusive tropical hotspot, the pesky Medieval Warm Period, the perfervid climate models, and the profligate green technologies that are "unproven or even illusory") in a way that Americans could understand. Dr James Hansen, the father of global warming, laments Obama's inability to articulate his policies to the public. “He’s not particularly good at that," said a discouraged Hansen.

There has been no measurable global temperature increase for 18 years of uninterrupted, anthropogenic belching of record quantities of CO2 into the atmosphere. This is no small fissure in the CAGW theory; it is a gapping chasm that screams for resolution. Yet in May 2013, more than 15 years into the hiatus, as climate scientists frantically struggled to find an explanation of why the climate had not warmed as fast as everybody had anticipated five or ten years earlier, a clueless Obama asserted, "We also know that the climate is warming faster than anybody anticipated five or ten years ago." Three years later, still clutching a theory in need of serious modification, if not complete revision, he fatuously calls skeptics "deniers," as he remains in obstinate denial of the continuing warming pause.

After injecting over 100 billion tons of CO2 into the atmosphere since 1998 (one quarter of the amount that all humanity has spewed since 1750) with no temperature increase to show for it, one can understand how Americans, even ignorant Americans, would be skeptical of the CAGW hypothesis, and embarrassed by their president's habitual attribution of storms, floods, droughts, and terrorism to rising temperatures that have yet to occur.

Where is the evidence that the catastrophist elite is any smarter than the Americans, even the ordinary Americans, that it obsessively derides and belittles?

While they wait for the missing heat to appear, perhaps catastrophist leaders could use the time to explain the tropical hot spot (the signature of manmade warming, predicted by climate models). It too is missing — as is the rapidly melting Arctic ice predicted by Mr. Gore in his 2006 Academy Award winning documentary, An Inconvenient Truth. In accepting the Nobel Prize for his climate prediction abilities, Gore warned, "The North Polar ice cap is falling off a cliff," and "could be completely gone in summer" by 2013. But in May 2015, NASA reported that polar sea ice has been increasing, and is currently about 5% greater than the post-1979 average.

As an example of another precognitive gem, in his documentary, the doltish Gore proclaimed:

Humanity is sitting on a time bomb. If the vast majority of the world’s scientists are right, we have just ten years to avert a major catastrophe that could send our entire planet’s climate system into a tail-spin of epic destruction involving extreme weather, floods, droughts, epidemics and killer heat waves beyond anything we have ever experienced — a catastrophe of our own making.

With only months until the bomb is scheduled to go off, the vast majority of the world’s scientists are no doubt in denial about ever having belonged to Al's "vast majority" club. Gore has become a laughingstock, and his credibility as a climate forecaster has vanished in the eyes of most climate experts — except for the catastrophist elite, who, as the case for climate hysteria crumbles before their eyes, step up the hysteria.

To Obama, "the scientific consensus" that he cites in his delusional rantings extends to an endorsement of his policies. It does not. That there is scientific authority attached to his policies is the bilge of political dogma. Unfortunately, it is this bilge that Democrats grasp as scientific truth, angrily rejecting divergent ideas as anti-science — promulgated, of course, by fossil fuel company shills. Skeptics should be prosecuted under the RICO Act, and coal company CEOs should be jailed "for all of eternity," says Robert F Kennedy Jr. Such is the preferred catastrophist method of settling science.

The climate cult has hijacked climate science for political purposes. Its hysterical claims of future havoc are disingenuously designed to scare the world into believing that eco-socialism is earth's only hope for survival. But such claims are based on the projections of severely flawed climate models. Even the Intergovernmental Panel on Climate Change (IPCC) admits that “there remain significant errors in the model simulation of clouds." There is observational evidence that “water vapor feedback” used by models to amplify the warming effect of CO2 is offset by clouds. Moreover, a recent study of the earth's albedo (the fraction of incoming solar radiation reflected back into space) found that "climate models fail to reproduce the observed annual cycle in all components of the albedo with any realism" and that the inability to accurately quantify the reflection of sunlight by clouds is "one of the major obstacles in climate change predictions."

(Clouds and water vapor make up 95% of atmospheric greenhouse gases (GHG); CO2 comprises only 3.6%, of which only 0.117% is manmade. Catastrophists claim that this miniscule quantity will significantly raise the temperature of the entire planet.)

Even the Tea Party would agree that, through the greenhouse effect, some level of manmade warming is expected. But where is the evidence for significant warming? It's what the Global Climate Models (GCMs) tell us, catastrophist leaders insist. That is, we are being told that 0.117% of atmospheric GHGs drives our climate, and the information comes, not from scientifc observation, but from GCMs that are incapable of faithfully simulating 95% of atmospheric GHGs. We are also being told that, because we wonder about all this, we are knuckle-dragging morons who may need to go to jail.

There has been no measurable global temperature increase for 18 years of uninterrupted, anthropogenic belching of record quantities of CO2 into the atmosphere.

Climate cultists, in their reflexive attacks against those who question the authority of mystical climate models, demonstrate their own, and more fundamental, ignorance of science. As Thomas H. Huxley long ago noted, the true scientist "absolutely refuses to acknowledge authority . . . For him, skepticism is the highest of duties; blind faith the one unpardonable sin."

Yet blind faith is the price of admission to the cult. Skepticism must be checked at the door. In a study reported by the Huffington Post and Mother Jones, the Tea Party is ridiculed for its skepticism. "Tea Party Members Really, Really Don't Trust Scientists," scoffs the Mother Jones headline. Based on the study sample, Democrats are the most trusting, with 83% of them believing scientists on environmental issues. Independents are next, at 63%, followed by mainstream Republicans, at 60%. The Tea Party comes in last, at 28%.

Only 1% of Democrats distrust scientists, boasts the report, compared to 43% of the Tea Party crowd. That is, Democrats are incurious, credulous lemmings, and 43% of the Tea Party seem to have passed high school physics. This would explain why the Tea Party has a few questions for climate scientists (who, after more than 30 years and untold billions spent on climate research, can't make their case), and why almost all Democrats have no questions at all.

To be fair, what could climate change gurus be expected to know about climate science? They are lawyers. For all Mr. Obama knows, the Stefan-Boltzmann Law is a racist statute, surreptitiously enforced in the South. Harry Reid's total knowledge of global warming is that the Koch Brothers are behind it; they "own that ugly tar stuff in Canada." Harry probably thinks that a CO2 absorption band is an undergarment worn by Al Gore when being theatrically elevated by a pneumatic scissors lift, as he was in An Inconvenient Truth.

John Kerry's closest brush with science was the clean room "bunny suit" that he donned at the Kennedy Space Center (KSC) to promote his 2004 presidential campaign. It was an experiment that went awry: photographs of the event portrayed Kerry as a goofy ass; the Kerry campaign blamed NASA for leaking them to the media; NASA's General Council ordered the removal of all images of Kerry's KSC visit from all NASA websites. Some might consider the removal to be censorship, while others might view it as a scientific contribution — since the display of John Kerry in a bunny suit would have scared dozens of promising space camp kids away from pursuing a career in science.

Climate cultists, in their reflexive attacks against those who question the authority of mystical climate models, demonstrate their own ignorance of science.

Nowadays, as an international climate change star, Kerry imparts climate science wisdom to world leaders, urging them to exploit "the small window of time that we have left in order to be able to prevent the worst impacts of climate change from already happening." At home, when he is not pondering time-travel, Kerry advises the American public about "shoddy scientists" and "extreme ideologues" whom we should not allow "to compete with scientific fact" — fact such as the idea that climate change is the "most fearsome WMD," that Canadian tar sands are a "hydrogen bomb," and that "those who continue to make climate change a political fight put us all at risk," all notions plucked from the meditative, objective, non-ideological mind of John Kerry.

In reality, climate cult leaders are boisterous dilettantes who are distressingly ignorant of science, except for its shameless use as bunting for their political ambitions. Hillary Clinton, who has even less scientific credibility than Kerry, is suddenly, and furiously, following his "small window of time" advice — now that she is running for president. She cannot explain why she thinks that only manmade CO2 causes global warming, that only catastrophic warming will ensue, or that only solar panels and windmills can stop it, but to win the Democrat nomination, she promises to install a half-billion solar panels by 2027, enough, supposedly, to power every American home. Depending on the polls, the theatrics of Gore and Kerry would not be beneath her. With Obama blaming global warming for droughts, and Biden blaming it for forest fires, Clinton could start showing up at tornado sites, wearing a green pantsuit and a whirling, funnel-shaped hat, spinning in proportion to her feigned outrage.

In the Democrat debates, let's just hope that no one asks Mrs. Clinton about the tropical hotspot. She might reply, after a grating cackle, that it's a nightclub on a Caribbean island where Bill goes to sate his albedo. The enraged catastrophist elite would attack the moderator, accusing him of being a denier, a climate-deceiver. "Go to jail, oil company shill," would cry the big government shills. On the other hand, at a Democrat debate involving climate science, only 1% of the audience would doubt her answer. Where credulity reigns, dilettantes have credibility.




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Take This Climate Deal — Please!

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On December 12, 2015, climateers the world over celebrated as a new climate change accord, known as "the Paris Agreement," was approved. It was the culmination of four grueling years of behind-the-scenes negotiations designed to save the planet from catastrophic anthropogenic global warming (CAGW). At the stroke of the gavel marking its acceptance, the more than 40,000 climate change diplomats from 195 countries erupted into cheers, ovations, high-fives, champagne toasts, tearful embraces, and, of course, rampant backpatting.

“This is truly a historic moment,” proclaimed United Nations Secretary General Ban Ki-moon — the first "truly universal agreement on climate change." According to the New York Times, President Obama "strode triumphantly into the Cabinet Room of the White House to declare victory in his quest" for the ambitious deal. An ebullient John Kerry tweeted: "#COP21 agreement is the strongest, most ambitious global climate agreement ever negotiated." It is "the best chance to save the one planet we got," intoned Mr. Obama, perhaps too choked up for grammar. Or perhaps he noticed the Eiffel Tower illuminating the phrase "no Plan B," and the shuddering possibility that the deal — his vaunted legacy — could fall apart.

It is a progressive's dream: a profligate, utopian scheme that will fail, even if it achieves its goal.

Scaremongering climateers tell us that, unabated (i.e., absent the Paris climate change accord), mean global temperature will rise 3.7 °C by 2100, rendering earth uninhabitable. With the accord, the nations of the world pledge to reduce their greenhouse gas (GHG) emissions to levels intended to limit the rise to no more than 2.0 °C. But the decline in GHG emissions resulting from the Paris agreement is predicted to reduce the temperature rise by a vanishingly small 0.2 °C. That is, if the pledges of all 195 participating nations are carried out to a tee, including the expenditure of trillions of dollars on green technology, the mean global temperature will rise 3.5 °C by 2100, rendering earth uninhabitable.

While cameras inside the convention hall captured the joyous tears of climate diplomats as they celebrated fabricated success, they missed the angry tears of climate activists outside, as they rebuked the Paris agreement as an irresponsible, fraudulent charade, too diluted to be of any meaningful value. The soft-spoken Dr James Hansen, father of CAGW, referred to the deal as "a fake," "a fraud," "just worthless," and "just bullshit." But it will establish a colossal, intrusive UN climate bureaucracy that will haunt the world forever. It is a progressive's dream: a profligate, utopian scheme that will fail, even if it achieves its goal. Measured on a scale of maudlin self-congratulation (the auto-aggrandizometer), this is progressivism's finest achievement in central planning.

Although the agreement is not legally binding, climate change luminaries such as Obama, Kerry, and Ban Ki-moon assure us that the emission reduction goals will be met. Signatory nations must fulfill their pledge or face international ridicule through the agreement's clever "name-and-shame" mechanism. There is nothing like peer pressure to bring totalitarian police states such as China into compliance.

Similar pressure will be applied to support the Green Climate Fund — a coffer to be filled annually with $100 billion from rich nations for the purpose of cajoling poor nations into remaining poor.

Without the fund, none of the 130 nations of the developing world would have signed the agreement. With the fund — according to the delusions of progressives from the developed world — dictators, bureaucrats, and crony industrialists from impoverished countries will purchase exorbitantly expensive solar panels and windmills instead of extremely cheap coal, oil, and gas, and they will convince their citizenry that chronic disease and poverty can wait while 0.2 °C is shaved off the 2100 global temperature. (To the 1.3 billion people who have never experienced electricity, what's the rush?)

There is nothing like peer pressure to bring totalitarian police states such as China into compliance.

To ensure compliance, the Paris accord mandates that all nations shall report on their emissions reduction progress every five years — “a serious form of enforcement and compliance,” insists Mr. Kerry. Patting himself on the back, Kerry said that the voluntary pact (a 31-page cornucopia of vague commitment, toothless aspiration, and astounding deceit) would "prevent the worst most devastating consequences of climate change from ever happening." Who knows? With CAGW thought to be so solved, progressives may use the Paris agreement as a model to tackle other vexing problems, such as social injustice or income inequality. At this very moment, liberal thinktanks could be pondering the idea of bribing African or South Asian countries into pledging lower birth rates; or shaming Islamic terrorist organizations when their beheading reduction pledges are not met.

Returning to reality, the pledges of the landmark Paris accord (an agreement that will not work even if its pledges are met) will not be met — not even close. Rich countries will try; they will achieve some token, largely symbolic, degree of success. Poor countries won't bother; they have vastly more pressing challenges. No matter the size of the Green Climate Fund, the developing world will not be persuaded to replace cheap, reliable fossil fuels with expensive, unproven solar and wind technology — technologies that, after more than 30 years of development, still rely on subsidization for survival. These are also technologies that have become staggeringly more expensive after only five years of the enormous, unsubsidized strides in US fracking technology that have produced staggering declines in oil and gas prices. Oil prices, for example, which have been above $100 per barrel since 2011, have plummeted to below $40.

Media accounts credit Obama for the agreement's acceptance. They say that in pledging the US to draconian emission cuts, he leveraged the rest of the world to follow. But the US is in no position to make such a commitment, it is not legally bound to do so, and there is neither congressional nor popular support for it. Warned Senate Majority Leader Mitch McConnell, “Before his international partners pop the champagne, they should remember that this is an unattainable deal based on a domestic energy plan that is likely illegal, that half the states have sued to halt, and that Congress has already voted to reject.”

This lack of enthusiasm is produced, in no small part, by the economic stagnation that has plagued the US economy from the day Obama took office. With unprecedented, and growing, national debt, declining net worth, and labor participation at its lowest since the Carter years, where will the money come from?

Dictators, bureaucrats, and crony industrialists from impoverished countries will convince their citizenry that chronic disease and poverty can wait while 0.2 °C is shaved off the 2100 global temperature.

Ironically, the most promising source of money is the energy bonanza that fracking has created — the very source of prosperity that progressives seek to ban, in their efforts to decarbonize the world's economies. Unleashing US energy production could swiftly stimulate the US economy, lift incomes and wages, expand the middle class, create new jobs, generate enormous tax revenues, and eradicate the debt. But with the 2016 election drawing near, Democrat candidate Hillary Clinton pledges to outdo Obama. She plans to build 500 million solar panels and promises that 33% of all US electricity will be generated from wind and solar by 2027. Not to be outpandered by Mrs. Clinton, rival candidate Bernie Sanders promises 80% by 2050; and Martin O’Malley promises 100%.

It is highly unlikely, however, that a beleaguered American public will allow a Democrat president to shutter its energy goldmine, thereby continuing economic stagnation. As to the prospect of a Republican president, McConnell says that Obama should not make "promises he can’t keep." Nor should he "take credit for an ‘agreement’ that is subject to being shredded in 13 months.”

The Paris deal has no chance of thwarting CAGW — if planet salvation was even an important consideration. For those who are astounded by Mr. Obama's claim of victory, or who are wondering how so much credit could be awarded for so little accomplished, his triumph has nothing to do with saving the planet. It is a purely political victory — one for which he does deserve credit, and the highest of praise from progressivism, considering the coming creation of the UN climate change behemoth.

It is this deceitful absurdity that has progressives doing cartwheels and patting themselves on the back. The agreement itself is irrelevant, serving only to set the stage for future global central planning. The four years taken to write it featured little more than a backroom search for language that would read like a treaty but would be watered down and rendered toothless enough to get 195 nations to sign it — of which, 130 had to be bribed with the Green Climate Fund. It is not legally binding; the emissions reduction pledges are voluntary and aspirational, enforced only by the palsied hand of a “name-and-shame” system of global peer pressure. As to contributions to the slush fund, rich countries are "strongly urged" to fulfill their commitments.

The watering down process persisted to the end, holding up the vote to adopt the agreement for two final hours. Fearing that the Obama administration might be required to seek Senate approval for a binding treaty, US diplomats insisted that the word "shall" be changed to "should" in a clause on meeting emissions targets. They might as well have found a place for "pretty please" or "just bullshit."




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Impossible Dreams

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Climate change experts from more than 190 countries are said to be on the verge of forging a binding international accord that will reduce humanity's CO2 emissions to a level sufficient to stave off future global warming. The details of the agreement will be negotiated this December in Paris, France at the 2015 United Nations Framework Convention on Climate Change (UNFCCC), aka COP-21, short for"the twenty-first session of the Conference of the Parties” (COP) — to distinguish the futility of the Paris summit from thatof the previous 20 such conclaves, the first of which was held at the Rio Earth Summit, by the climate shamans of 1992. Who knows? The 21st time might be the charm.

President Obama thinks so, and is counting on it. According to Politico, Mr. Obama has been working furiously behind the scenes (and the backs of Republican climate deniers in Congress) to "seal his environmental legacy" by creating "the broadest, farthest-reaching deal in history, reworking environmental regulations for governments and corporations around the world and creating a framework for global green policy for decades."

As with the Iran nuclear weapons deal, Obama's objective is the agreement, not what the agreement will accomplish. His goal is to obtain any "broadest, farthest-reaching deal in history" that enshrines his name at the top of the signatory list. The goal of the Paris agreement, which is to reduceglobal greenhouse gas (GHG) emissions to a level that prevents the average global temperature from increasing more than 2°C by 2100, is an irrelevant, environmentalist dream, impossible to achieve — even if Obama possessed congressional endorsement or public support, both of which he does not.

China and India (who, together, are responsible for 30% of the world's CO2 emissions) only pledged to reduce their emissions. A pledge is not a commitment.

Obama's Clean Power Plan (CPP) and his cancellation of the Keystone XL pipeline were not designed to curb global temperature increase. They were merely symbolic gestures contrived to invoke similar gestures from countries such as China and India. The CPP (15 new EPA regulations, estimated to cost Americans $230 billion) will have essentially no affect on global temperature. The Iran agreement will: from four to five million barrels per day of new Iranian oil unleashed into the atmosphere — a glib concession just to secure an agreement, any agreement. Apparently, that was not "the moment" that Obama spoke of in his 2008 nomination speech, "when the rise of the oceans began to slow and our planet began to heal."

To hear Obama tell it, securing an agreement in Paris will be a simple matter of establishing an emission reduction commitment for each nation, a process that will now be less contentious because of his encouragement and leadership. Last month, after a five-day climate session was held in Bonn to draft the blueprint of the Paris negotiations, Obama took credit for persuading India and China to reduce their emissions. He hopes to use their pledges "to leverage the entire world for the conference." Once the Paris deal is reached, the nations of the world will begin the task of fulfilling their commitments by replacing fossil fuels (coal, oil, and natural gas) with renewable energy (solar and wind) — right after Obama proclaims victory for the planet, and, of course, for himself.

Of the climate negotiations, Mr. Obama might tritely say that the devil is in the details. But the real devil is in what he has not mentioned in his crusade to promote the deal. China and India (who, together, are responsible for 30% of the world's CO2 emissions) only pledged to reduce their emissions. A pledge is not a commitment, and no mention was made of the revolt at the Bonn meeting by 130 developing nations, who rejected a preliminary draft because it omitted their most important concern: climate justice — aka reparations for damages done to poor countries by rich countries, whose wealth has been obtained through the rampant injection of CO2 into the atmosphere since the beginning of the Industrial Revolution. That protest, which has now expanded the negotiations into the realm of extortion (of money and technology from rich countries), was led by China and India. Obama may simply have "leveraged the entire [third] world" to line its pockets with climate justice money from the industrialized world.

Developing countries will not install the solar and wind farms that Obama incessantly praises as earth's only salvation. They can't afford to do so — not if they want to raise their burgeoning, destitute populations from what is by Western standards abject poverty. The energy they need will be generated from cheap, abundant fossil fuels. As he blatantly flaunts a storybook promise of renewable energy, Obama is obstinately silent about its harsh reality. Despite technological strides, renewable energy remains prohibitively expensive and woefully inadequate for generating the quantity of clean energy required to stave off global warming. After decades of development and untold billions spent (more than $150 billion by the Obama administration alone), solar and wind power combined generate less than 4.5% of US electricity, and both industries would immediately collapse without taxpayer-funded subsidies.

Developing countries will not install the solar and wind farms that Obama incessantly praises as earth's only salvation. They can't afford to do so.

Nor has he mentioned the global carbon budget, which setsan upper bound on the quantity of CO2 that humanity can emit without pushing the average global temperature over the 2°C threshold before 2100. According to Oren Cass of the Manhattan Institute, under optimistic assumptions regarding energy efficiency and the adoption of renewable energy, total emissions by the end of the century are projected to be almost five times greater than the quantity budgeted to save the planet. What is the point of committing the US to costly emission reductions of 26% to 28% by 2025, when the global carbonbudget will be consumed by the early 2030s?

No matter what the US does by 2025 to reduce its emissions, by 2030 it will already be too late to “save the planet” — a tidbit of climate change knowledge that Obama is reluctant to divulge. Indeed, no matter what wealthy nations collectively do is futile. Observes Cass,

If developed-world CO2 emissions ceased tomorrow, the developing world would still need to instantly slash its emissions by more than half — and hold at that level indefinitely — to remain within the carbon budget until 2100.

Any success that Obama has in Paris, therefore, will depend on his ability to "leverage" developing nations into meaningful emissions reductions. His chances are slim, if he even cares to try. As Cass notes:

In short, no evidence — distant or more recent — indicates any willingness by developing nations to make even nonbinding pledges to slow the growth of CO2 emissions, let alone accept the dramatic reductions required to substantially alter the trajectory of atmospheric concentrations.

To climate catastrophists such as Mr. Obama, the solution to this conundrum is simple, self-evident, and not to be discussed in public: an enormous transfer of wealth from rich nations to poor nations, where the money will be used (a) to buy solar panels and windmills, (b) to create decent jobs and lives of dignity, and (c) to defray the cost of adapting to the coming storms, droughts, floods, famines, terrorism, rape, and innumerable other products of the Industrial Revolution.

The idea is not new, and has captured the effusive support of Hillary Clinton, Pope Francis, and other climate change experts. In his encyclical on climate change, the Pope asserted that wealthy nations owe an “ecological debt” to poor nations and argued for “mechanisms and subsidies which allow developing countries access to technology transfer, technical assistance and financial resources.” As Secretary of State, Hillary Clinton proposed a Green Climate Fund that would provide at least $100 billion annually to developing nations. Last year, at COP-20 in Lima, Peru, Alex Rafalowicz of Friends of the Earth (FOE) demanded that rich countries pay poor countries more than $1 trillion annually.

Obama can be expected to agree. After all, there's not much distance between social justice and climate justice. But he has not indicated what concessions he would be willing to make to the clamoring bloc of 130 developing countries (representing more than 85% of the world's population) who insist that climate reparations must be the centerpiece of the Paris negotiations.

No matter what the US does by 2025 to reduce its emissions, by 2030 it will already be too late to “save the planet.”

FOE has developed a method of allocating the global carbon budget in a manner that it believes should be adopted by climate treaty negotiators. Known as Climate Fair Shares, it calculates the emission reduction commitments and reparation amounts that must be allocated to each nation to preserve earth through 2100. Beyond the appeal to planet salvation, it no doubt has political appeal: what nation could object to paying its fair share?

To illustrate how the negotiations would work out under the FOE scheme, China would be allowed to increase its GHG emissions from its current level of 12.1 billion tons to 16.2 billion tons by 2030. It would also receive $604 billion annually in climate justice payments from rich countries. In contrast, the US would be required to reduce its emissions from its current level of 6.7 billion tons to 1.8 billion tons by 2030 — a reduction of 73%, even though Obama has thus far commited the US to only a 26% to 28% reduction by 2025.

After all, there's not much distance between social justice and climate justice.

The US cost to achieve a 73% reduction would be many trillions of dollars, and require that all coal- and gas-fired power plants be replaced with extravagant solar and wind farms. On top of this immense cost are climate justice payments, $810 billion per year by 2030. According to Climate Fair Shares, these payments, compliments of US taxpayers, will "create 24,291,600 new decent jobs" and "deliver renewable energy for lives of dignity to 810 million people" — in other countries.

The developing world expects the Paris negotiations to produce an agreement along the lines of the Climate Fair Shares scheme. Mr. Obama has not addressed that possibility, nor has he indicated where the money will come from if it materializes. The US, which is in much better shape economically than most countries, is more than $18 trillion in debt, not to mention the crushing debt of Medicare and Social Security, enormous programs that will be insolvent by the early 2030s — right around the time when humanity blows its entire carbon budget and irreversible, hellish climate catastrophe begins, 70 years ahead of schedule.

These are some of the obstacles that face Mr. Obama in his quest for prominence in the annals of climate history. He has dismissed most of them, or chosen not to bother the American public with their stark realities. Then there is the warming pause, now in its 18th year, which threatens the anthropogenic global warming hypothesis motivating the Paris charade, and which Obama denies (a clumsy irony, since “denier” is his principal argument against any and all global warming skepticism). To secure his environmental legacy and fulfill his promise to heal the planet, the desperate Obama must find common ground between rich and poor countries. But in the Venn diagram of possible treaty outcomes, the intersection of planet salvation and climate justice is the empty set. The negotiators from developed nations and the negotiators from developing nations have only one thing in common: both parties seek a goal that they know, and have known all along, is impossible to achieve.




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The Karma of Flaming Cronyism

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In 2009, Vice President Joe Biden announced a $539 million Department of Energy (DoE) loan awarded by the federal government to Fisker Automotive. Fisker, a newly formed crony capitalist firm, would use the money (together with private funding from the venture capital firm Kleiner Perkins Caufield & Byers, whose partners include green crony capitalist and former Vice President Al Gore) to produce hybrid electric vehicles in Biden's home state of Delaware. The investment would create 2,500 American jobs, by 2014 produce an annual 75,000–100,000 "highly efficient vehicles," and by 2016 "save hundreds of millions gallons of gasoline and offset millions of tons of carbon pollution."

With gasoline prices below $2 per gallon at the time, free enterprise could not be counted on to produce planet-saving electric vehicles (EVs) and establish the US as the world leader in EV technology. Capitalism can only be counted on to produce what consumers demand. Then-DoE Secretary Steven Chu believed that the demand for EVs would not materialize until gasoline prices reached nine or ten dollars per gallon. In the interim, only crony capitalism would do.

The Fisker loan was considered a vital, timely investment for America: in 2009, thanks to years of US outsourcing of jobs and manufacturing expertise that propped up its emerging crony capitalist economy, China had become the world’s leader in green technology spending. “We are putting Americans back to work,” exclaimed Chu, “and reigniting a new Industrial Revolution that is paramount for the economic success of this country.” The loan was "seed money," heralded Biden, "that would return back to the American consumer in billions and billions and billions of dollars in good new jobs."

Fisker Automotive was founded by crony capitalist Henrik Fisker, in fall 2007, only to be sued by Tesla Motors, in spring 2008, for stealing design concepts and trade secrets that Fisker allegedly used to develop the Karma — a heavily subsidized vehicle that would compete with the heavily subsidized Tesla Roadster.

The true brilliance of Elon Musk, who is regarded by many as a genius, lies in his ability to hornswoggle governments and investors.

It was also in 2008 when fellow, and far superior, crony capitalist Elon Musk became CEO of Tesla. Barely one year later, Tesla received a $465 million DoE loan. Mr. Musk knows no other form of capitalism. According to the LA Times, he "has built a multibillion-dollar fortune running companies that make electric cars [Tesla], sell solar panels [SolarCity] and launch rockets into space [SpaceX]," with the help of a staggering $4.9 billion in taxpayer-funded government subsidies. Apparently, Musk will have nothing to do with any enterprise from which he cannot obtain "government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It [the $4.9 billion] also includes tax credits and rebates to buyers of solar panels and electric cars."

The true brilliance of Musk, who is regarded by many as a genius ("our generation's Thomas Edison"), lies in his ability to hornswoggle governments and investors. While ordinary crony capitalists are content with bellying up to the government trough for tax breaks and loans to help build their businesses, Musk has the government build businesses for him. He's "so adept at landing incentives that states now compete to give him money."

New York State, for example, is building a $750 million manufacturing plant for SolarCity. With property tax gimmicks, investment tax credits, and cash grants, the entire deal constitutes a $2.5 billion windfall for Musk — courtesy of the taxpayers. Without their coerced support, crony SolarCity, indeed, the entire solar industry, could not survive. Yet in June, New York crony capitalists prevailed over the use of drastically cheaper energy, derived from free market fracking, by officially banning the technology (and denying billions and billions and billions of dollars in lower utility costs for New York residents), ostensibly because of safety concerns: natural gas might leak from wells drilled in the Marcellus Shale bonanza that the state sits on top of, causing flames to shoot out of water faucets.

Inspired by Musk's promises to lead the world into a future without gasoline (he pledged to make millions of electric vehicles by 2025), investors have bid up Tesla stock from $16 per share, when it was first publicly offered in 2010, to $260 per share today. With this runup, Tesla was able to raise more than enough private capital to repay its DoE loan — an event that the DoE declared as "living proof" that "Tesla and other U.S. manufacturers are in a strong position to compete for this growing global market.” Only in the world of green cronyism is debt repayment celebrated as success.

At least the Model S doesn't burst into flames, as did Fisker's Karma, which had a few flaws.

Tesla, which sold 31,655 vehicles in 2014, is valued at $33.8 billion — more than half the value of Ford Motor Company, which sold 6.3 million vehicles during that year. And Ford made a profit, unlike Tesla, which has failed to do so since its inception in 2003. In 2014, Ford posted a profit of $6.3 billion; Tesla lost $294 million. Incredibly, even with its government side business of selling zero-emission-vehicle (ZEV) credits to its competitors, from which it made $217 million, Tesla still lost $294 million. But Musk promises profitability by 2020.

So confident is he of continued government largesse that he scoffs at competitors such as Toyota, which has developed a hydrogen fuel cell vehicle, the Mirai, that sells for $10,000 less than Tesla's $71,000 Model S. Musk's response: “Fuel cells should be renamed ‘fool cells’” — demonstrating a wit as sharp as his automotive genius.

Nevertheless, no one has done more than Mr. Musk to advance EV development in the United States, and, by all accounts, the Model S is a flawless vehicle that has exceeded the expectations of elite Silicon Valley and Hollywood car buyers. It doesn't burst into flames, as did Fisker's Karma, which had a few flaws.

The Karma — which was initially projected to ship in 2009 and to sell over 15,000 units built by 2500 American workers at a refurbished GM plant in Delaware — did not come to market until 2011. But, according to an ABC News investigation, by October of the year only 40 Karmas were produced, all of them assembled by 500 Finnish workers at a factory in rural Finland.

There was not a single US firm with the manufacturing expertise to produce the Karma. "We're not in the business of failing; we're in the business of winning," exclaimed Mr. Fisker. "That's why we went to Finland."

Less than a year later, Fisker Automotive failed — ceasing production in July 2012 and declaring bankruptcy in November 2013. Of the 2,450 Karmas that were eventually built, 1,600 were purchased by consumers, and 2,000 were recalled because of lithium-ion battery-related fire risks (including the possibility that, while parked and disconnected from a charging station, a Karma could mysteriously explode into flames, and burn to unrecognizable rubble).

Numerous reasons have been cited for Fisker's collapse: unrealistic sales goals, compressed launch timeline, insufficient funding, flaming rubble, etc. In the end, however, most subsidized green-technology companies simply find ways to lose money. They can't make a profit, even with government support. The most famous example is Solyndra (the recipient of a $535 million DoE loan), which went bankrupt selling solar panels for half of what it cost to make them. Then there is A123 Systems, Fisker's battery supplier and the recipient of a $249 million DoE grant. A123 sold batteries that cost the company $1.57 for each dollar of sales — leading to its bankruptcy in October 2012, and, in no small part, hastening Fisker's.

A123 might have charged Fisker twice as much, thereby returning a per unit profit of 43%. Why not? Couldn't Fisker absorb the cost increase? It was getting government money too, not to mention the $7,500 tax refund awarded to EV buyers. And, with the price of gasoline heading towards $4 a gallon, surely the demand for EVs was growing. Besides, anyone who could afford the $103,000 Karma might be willing to pay a little extra. Except that, on average, Fisker spent $660,000 for each vehicle produced. To make even a meager profit of, say 10%, Fisker would have had to charge $733,000 — a price that might have scared off early Karma buyers such as pop stars Justin Bieber and Al Gore.

Most subsidized green-technology companies simply find ways to lose money. They can't make a profit, even with government support.

The purpose of the DoE grant to A123 was to help America compete with China. "President Obama was determined not to let China run away with green energy technologies," said a Forbes article covering the bankruptcy auction, where A123 was unloaded for, one could say, a fire sale price. Guess who won the bidding (hint: it wasn't an American company). It was the Wanxiang Group, a Chinese conglomerate run by Lu Guanqiu, an auto-parts magnate with deep ties to the Chinese Communist Party.

Forbes characterized the business acumen of our green cronies as a triple irony:

The U.S. borrowed money from China to subsidize a battery company to compete with state-subsidized Chinese battery companies. The American company gets bought out by a Chinese company for about the same amount of money that the U.S. government gave it. The U.S. still has to pay the money back to China. The Chinese company buying the American company makes a lot of money by providing auto parts for the cars that Americans drive.

Perhaps of greater significance is the national security implication. The sale of A123 included US technology developed for advanced ultra-light lithium-ion phosphate batteries — technology that extends beyond powering EVs, to important applications for electricity generation and distribution, not to mention sensitive military applications. As a presidential candidate in 2008, Hillary Clinton vehemently opposed such sales, asserting the need for "ensuring that technologies . . . critical to U.S. national security are not sold off and outsourced to foreign governments." Yet Clinton, who was secretary of state at the time, did nothing to interfere with the sale.

The Fisker bankruptcy snuffed out the DoE plan of "reigniting a new Industrial Revolution," as well as Joe Biden's hopes of "billions and billions and billions of dollars" for American consumers. It was followed by a DoE announcement that, instead, American taxpayers would get a bill for $139 million, the amount that the government lost in the Fisker debacle. Fisker was sold, in another fire sale, not only to a Chinese company but to the same one that bought A123.

Today, just one year afterward, Mrs. Clinton is running for president and Mr. Biden is thinking about throwing his hat into the race. Mr. Guanqiu is planning to resurrect the Karma with his new company, formed from the old Fisker and A123, businesses he picked up for a song: a measly $406 million. The amount is much less than the manufacturing assets and intellectual property he purchased. They represent a value that the DoE must have believed was significantly greater than the $778 million it invested in these companies. But that's life in the risky world of green cronyism: sometimes seed money leads to abysmal failure, especially when it is other people's seed money.

Mr. Musk is now getting into the battery business, building the world’s largest battery factory, a gigafactory, he says. That is, he bamboozled the state of Nevada into a $1.3 billion incentive package to build it. What crony could turn down a deal projected to generate $100 billion? With capitalist fracking driving gasoline prices down to less than $2 a gal (when $9 gasoline is needed for EV's to be competitive), any capitalist sees folly. But crony capitalists see only the delusion of billions and billions and billions of dollars — that, and taxpayer-funded subsidies for fellow cronies.

That's life in the risky world of green cronyism: sometimes seed money leads to abysmal failure, especially when it is other people's seed money.

And Mr. Fisker is planning to start another automotive venture. He is "intrigued with Millennials, their craving for new kinds of transportation and their fascination with all things digital." It would behoove him to rekindle his relationship with Al Gore, this time for marketing purposes. Who is better than Mr. Climate Change at pitching flimflam to Millennials? Whatever Mr. Fisker has in mind, he remains optimistic, believing that "the timing is right for something completely new."

But none of this is new. Under our current political system, the timing is always right for crony capitalism. And, unlike taxpayers, crony capitalists will profit from another completely new green auto company, even if it goes down in flames.

#39;s Thomas Edison




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Enemy of My Enemy

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Fracking Ferment and Malthusian Myths

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The revolution in American oil and natural gas production brought about by fracking continues to roar. Recently, the price of oil dropped to about $65 per barrel, and natural gas is still hovering around record low prices. In fact, as an article in Bloomberg suggests, it is entirely possible that oil may sink to $40 in the near future.

All of this was unthinkable before the last couple of years, but thanks to the miracle of fracking, it is becoming reality. It is Schumpeterian creative destruction with a vengeance. But as the theory of creative destruction emphasizes, revolutionary innovations typically bring deep disruptions in their wakes. And as a flood of recent reports illustrate, fracking is indeed a disruptive revolution.

On one side are the thieves that want to cut back on production to drive the world price for oil back to its recent high levels.

Let’s start at the level of geopolitics. With barely controlled glee I note a recent Wall Street Journal report that our fracking energy renaissance is fracturing OPEC. You remember OPEC, the cartel that drove our economy to the wall with the “oil shock” of the 1970s. As oil prices continue to fall, a split has developed among OPEC states.

On one side are the thieves that want to cut back on production to drive the world price for oil back to its recent high levels. Venezuela is the leader of this fraction, and for good reason. Its particular brand of socialism has devastated its economy (as socialism is wont to do), and it has been living off its oil imports. Well, it can’t now, and as the aforementioned Bloomberg story notes, the arrogant Mini-Me of Marxist Cuba is running out of hard currency and may have to devalue its money, raise domestic gasoline prices, cut oil subsidies to other leftist states (such as Cuba), and cut imports of consumer goods. In this socialist hell, crime is exploding as quickly as inflation, and the consumer goods shortages are growing as quickly as the rioting is.

On the other side of the OPEC rift are countries such as Kuwait and Saudi Arabia, which oppose limits to production. These countries have indicated that they will respond to the drop in prices by exporting more oil. They appear to have several interlocking motives.

First, they are desperate to hold on to their worldwide market shares. The Saudis have been pushing existing customers — especially European ones — to commit to continued purchases of Saudi oil. Clearly, the prospect of the US loosening its ludicrous laws restricting the export of its own oil (which would put us in direct competition with the vile OPEC countries) is concentrating Saudi minds wonderfully. Moreover, Iraq has cut its prices to its existing European and Asian customers, desperately hoping to hold onto its global share.

Second, as a recent UK Telegraph piece explores, the Saudis clearly want to stall if not snuff out the fracking revolution. They want to force US shale production down from the current million barrels a day (bpd) to 500,000 bpd. As the article note, the last eight years of fracking have seen the US cut net its oil imports by 8.7 million bpd, the equivalent of what it was importing from Saudi Arabia and Nigeria, combined.

We now know for sure that we have virtually endless supplies of oil and natural gas right under our own soil, resources that can profitably be extracted at prices from $40 to $80 per barrel.

To what extent the Saudis and other OPEC countries can really contain America’s frolicking frackers is a matter for considerable conjecture. As another report points out, the International Energy Agency notes that only 4% of fracked oil production requires that the market hit $80 a barrel if the production is to be profitable. Most of the oil from the Bakken field (the most productive field currently being exploited in America) would still be profitable even if the price were $42 a barrel. At that price, yes, American frackers would feel pain, but nothing like the pain the Russia and the OPEC states would feel.

As Ambrose Evans-Pritchard recently pointed out, the Saudis are playing a dangerous game: “A deep slump in prices might equally heighten geostrategic turmoil across the broader Middle East and boomerang against the Gulf’s petro-sheikhdoms before it inflicts a knock-out blow on US rivals.” He quotes Harold Hamm, the main genius behind fracking, as saying the most productive shale field is still profitable at $28 per barrel. And as Evans-Pritchard adds, quoting Citigroup, the break-even cost for oil is $161 for Venezuela, $160 for Yemen, $132 for Algeria, $131 for Iran, $126 for Nigeria, $125 for Bahrain, $111 for Iraq, $105 for Russia, and $98 for Saudi Arabia.

Remember this: even if all American frackers had to halt production tomorrow (say, if oil dropped to $20 per barrel), the shale fields, along with the technology now well developed to exploit those reserves, would remain, however long the Saudis and everyone else tried to keep the price low. We now know for sure that we have virtually endless supplies of oil and natural gas right under our own soil, resources that can profitably be extracted, with even today’s technology, at prices from $40 to $80 per barrel. As the technology develops, that strike price will only go down. Any possible “knock-out blow” would knock us out only momentarily.

The third reason the Saudis and other Arab states are so desperate to keep their revenues at present levels — even if it means precipitously pumping down their known reserves — is that the autocrats in charge have been buying their citizens’ passivity with lavish welfare spending. If that ever gets cut, the citizens would probably rise up and cut the heads off the pompous princes and egotistic emirs who have so greedily gorged themselves on the wealth of their lands. As the Wall Street Journal notes, Saudi Arabia needs oil to be at $99 a barrel to balance its budget. So the current low price of oil is making the Saudis use assets from their reserves of foreign currency — which, while extensive, are not inexhaustible.

Another geopolitical change that fracking has introduced involves the Mexican oil industry. A piece in a recent WSJ notes that Mexico is foreseeing a rebirth of its own oil industry, with the aid of US technology and investment. The new president of Mexico, Enrique Peña Nieto, did something last year that no president before him had done, since Mexico nationalized its oil industry 70 years ago. Nieto got the Mexican Congress to pass a law (actually, to change the nation’s constitution) allowing private industry, including foreign industry, to help develop new production. Until now, Mexico has jealously guarded its industry, out of an excess of nationalism. While enjoying its national pride, it witnessed a decline in national revenues; but with the rise of fracking as a tool to get old wells producing again, it now anticipates a resurgence of a lucrative industry. The national oil company, Petroleos Mexicanos (Pemex), doesn’t have any expertise in fracking, but US and other countries surely do. As Joel Vazquez, CEO of DCM, a Mexican-Canadian drilling company, put it, “A boom is coming. Not a week goes by without an oil company contacting us asking about making a joint venture, or saying they’re interested in investing here.”

The UK, like Germany, is discovering that so-called Green energy is grotesquely costly.

Mexico will shortly start auctioning off leases for oil exploration. One hundred sixty-nine blocks of Mexican land will be opened for outside development, with about a third of them within 70 miles of Tampico. Most will require fracking and horizontal drilling. It looks as if BP and Royal Dutch Shell will go after the deep-water sites, while Canadian company Pacific Rubiales Energy and a new Mexican startup will focus on the shallow-water and mature onshore sites. Mexico projects an increase of half a million BPD over the next four years.

Another geopolitical impact of our fracking revolution on other countries is the subject of another recent Journal story. The surge in US oil and natural gas production — we now produce more oil and natural gas than do either Russia or Saudi Arabia — is making the British rethink their energy policy.

British billionaire James Ratcliffe, head of the petrochemical giant Ineos, is urging that the UK push fracking. To overcome NIMBY (not-in-my-backyard, anti-development sentiment), the resourceful Ratcliffe plans to offer a generous 4% royalty to property owners and a 2% royalty to municipalities that allow his company to drill fracking wells on their land.

The logic for the Brits — a most logical people, indeed — is clear. Fracking has lifted American production of liquid petroleum products over the past ten years by nearly 60% (from 7.3 million to 11.5 million BPD) and has lifted natural gas production by 30%. But the UK’s own production (of its North Sea fields by conventional drilling) has plummeted, resulting in rapidly growing petroleum imports.

The UK, like Germany, is discovering that so-called Green energy costs a lot of green; in fact, it is grotesquely costly. Because of a Green scheme, one of the UK’s biggest power plants (one that supplies 7% of the country’s power) is converting to wood pellets imported from the American South. But compared to natural gas, wood is immensely productive of carbon emissions. And the switch to wood is going to increase the electricity rate consumers have to pay by — 100%!

Of course, the prescient Ratcliffe is already facing opposition from the same fatuous fools — i.e., environmentalists — that our own energy heroes have had to face. But my guess is that the Brits, after seeing their power and tax bills rise, will see the light and finally favor fracking.

Doubtless, however, the biggest geopolitical impact of the American fracking revolution is on Russia. This is leading to what can best be termed “the Russian rage.” The Putin regime is clearly distraught about the fact that our oil and natural gas renaissance is eclipsing Russia as an energy superpower. A number of articles explore aspects of this phenomenon.

It is now obvious why Putin has seized Crimea and parts of eastern Ukraine: he wants to stop Ukrainians from becoming another major competitor in exporting natural gas to Europe.

One of them concerns the recent hubristic boast by the Russian oil tycoon and Putin puppet Leonid Fedun that OPEC’s decision to keep pumping oil and let the price drop will ensure the crash of the US shale industry. Fedun prophesied, “In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again.… The shale boom is on a par with the dot-com boom.”

Fedun’s claim was that when oil breaks $70 per barrel, most American fracking companies will become unprofitable and collapse, or will do so when their existing hedges (prior contracts to sell their crude oil at $90 per barrel) expire. But he made this boast when oil was still over $70 per barrel. We certainly don’t see any American fracking companies hitting the wall even with oil now in the mid-$60 range, and as indicated by the Evans-Pritchard article discussed earlier, other exporters believe most production from the Bakken field would remain profitable in the range of $40 or even lower.

Also amusing was an article in the Russian regime’s propaganda newspaper Russia Beyond the Headlines by Pat Szymczak. She writes about Ukraine, the country that the dictator Putin has invaded repeatedly and dismembered. Her argument is that Ukraine has tremendous shale gas reserves — the US Energy Information Administration estimates them at 42 trillion cubic feet, the third largest in Europe; and Ukraine’s Black Sea oil potential might exceed that of the North Sea. But these resources haven’t been developed, she claims — with evident crocodile tears! — because in the 20 years since it became independent, Ukraine has had only corrupt oligarchical regimes. And recently, when Shell Oil drilled some exploratory wells, fighting amazingly and mysteriously broke out nearby between the government and Russian separatists. This forced Shell to close out operations.

With smarmy alarm, Szymczak warns that, “Ukraine’s inability to get its act together and take advantage of its assets has created an opening likely to be filled by North America. The US has seemingly overnight moved from being an energy importer to a potentially massive exporter, at a time when Russia is struggling to maintain its position in the midst of a production decline in its prolific West Siberian fields.”

She adds that the US may be planning (as part of the sanctions) to divert to Europe some of its diesel exports currently bound for Latin America, and that the EU is apparently pushing the US to end its current ban on crude oil exports (about which more below). And one of Spain’s largest power companies has just signed a 20-year deal to import $5.6 billion in American liquefied natural gas.

Of course, this article is hilarious on many levels. It is uproariously hypocritical that this Russian propagandist should point to Ukraine as a corrupt oligarchy. What is Putin’s regime if not a corrupt oligarchy? And who does Szymczak think caused fighting to break out close enough to the Shell installation to force it to shut down, if not Putin himself? The Putin regime is funding and arming the ethnic Russian separatists. It is now obvious why Putin has seized Crimea and parts of eastern Ukraine: he wants to stop Ukrainians not only from achieving oil independence but also from becoming another major competitor in exporting natural gas to Europe.

Indeed, yet another recent piece — a major New York Times article on the wave of anti-fracking protests suddenly sweeping Eastern Europe — touches on the attempt by Russia to stop Western oil companies from fracking development in Eastern Europe. The article recounts what happened in Romania, when Chevron leased land last year to explore for natural gas. Immediately, a large group of violent “protestors” (read: Putinesque paramilitary provocateurs) showed up and started fighting with the local police. The provocateurs — obviously well-funded — were able to portray the mayor who allowed Chevron in as a traitor to rural Romanians and a sellout to American capitalism. The protestors temporarily made him flee.

Reflecting on the fact that his town never before had demonstrations, and that the moment Chevron showed up, so did a horde of vociferous demonstrators, the mayor concludes that they were a rent-a-mob paid by Russia’s state-controlled oil company, Gazprom. (The Romanian prime minister agrees with the mayor’s assessment). The protestors are, in other words, Putin’s posse, aimed at keeping Western energy companies out of Eastern Europe, which is the former Soviet Empire Putin is eager to reclaim.

What is Putin? He is a megalomaniacal narcissist who wants to be another Stalin.

The story notes that this view — that Russia’s oil arm is funding and fielding anti-fracking armies — is shared by Lithuanian authorities, who saw Chevron chased out of their country by organized violent protestors. The departing secretary-general of NATO, Anders Rasmussen, has voiced the same view: “Russia, as part of their sophisticated . . . disinformation operations, engaged actively with so-called nongovernmental organizations — environmental organizations working against shale gas — to maintain dependence on imported Russian gas.” The statement was echoed by Romanian industrialist Iulian Iancu, who sagely observed, “It is crucial for Russia to keep this energy dependence. It is playing a dirty game.” The rent-a-mob anti-fracking “protests” started three years ago in Bulgaria, which went so far as to ban fracking and cancel Chevron’s licenses.

Of course, both Gazprom and the so-called environmentalist groups heatedly deny that there is Putinesque collusion in all this. And Gazprom exec Alexander Medvedev adds the friendly warning to Europeans that they cannot possibly have a fracking revolution similar to America’s, because of the differences in geology and population density.

The NYT article’s author (Andrew Higgins) gives this view some credibility, pointing out that test wells have proven disappointing in Poland, Romania, and Ukraine. But one might reply that these were only a few wells, all drilled by Chevron, hardly the leader in the art of fracking. My advice to these countries is to ask Harold Hamm, the principal genius behind the fracking revolution, to come out and take a look.

What reasons are there to conclude that the Putin regime is behind these seemingly “spontaneous” demonstrations? Many, I would suggest. To start with, as the prescient Anca-Maria Cernea (leader of a Romanian nationalist group) noted, these “spontaneous” protests involved a coordination of groups that have no natural affinity or historical alliance, such as radical socialists and Eastern Orthodox clergy. Furthermore, the state-controlled Russian “news” media blanketed the airwaves with coverage of the protests over and over, along with warnings about ecological disasters caused by fracking.

Additional evidence is the obvious corporate interest of Gazprom. The Romans bade us ask, “Qui bono?” (“For whose benefit?”). If you want to ask why something is happening, ask in whose self-interest it lies. If Chevron (say) develops Eastern European shale fields, not only will Gazprom (and the Russian regime that controls it) lose out on that market. Eastern Europe could easily become the dominant supplier of energy to Western Europe, displacing Gazprom. Oh, and this could unify Eastern and Western Europe economically, putting the former out of reach by revanchist Russia.

Despite assurances from many of its backers that wind is so efficient that its subsidies would wither away after a few years, the subsidies are proving eternal.

Tied in with this point is another clue — a dog that isn’t barking. By this I mean that while Gazprom is itself exploring (through its Serbian subsidiary Nis) both Serbian and Romanian shale fields, there have been no demonstrations opposing Gazprom. The demonstrating dogs know who their master is. They can smell him even in the dark.

Further, as I noted in a piece not long ago, it’s old news that petro countries fund seemingly independent environmentalists to help stop America’s fracking development. The anti-fracking propaganda movie Promised Land was funded in large part by the United Arab Emirates. And Project Veritas investigative reporter James O’Keefe recently caught on tape a couple of Hollywood producers (Josh and Rebecca Tickell) and a couple of environmentalist activist actors saying they would be happy to work with Middle Eastern petro sheiks.

If American Green ideologues are willing to collaborate with those who want to keep their country energy dependent, why would anyone assume that Eastern European Green ideologues — many of whom were communists working to keep their countries part of the Soviet Empire before it collapsed — are unwilling to see their countries energy dependent? As Joan Rivers would say, “Oh, grow up!”

Finally, who controls Gazprom? Putin. What is Putin? He is a megalomaniacal narcissist who wants to be another Stalin. And what is Putin’s background? He was a career KGB agent who was trained in disinformation campaigns and in the suborning of foreign citizens to work against their own countries. Faced with the threat of the US — which he believed he had neutered because he cowed Obama and Hillary Clinton — becoming the dominant petro-power around the world, enabling the Eastern European countries to be energy independent from Russia, Putin, it is reasonable to assume, would use the tools he was trained to use.

And threatened the tyrant is. As political scientist Ian Bremmer put it recently, Putin has been “backed into a corner” by the drop in prices fracking has caused, “leaving him little option but to continue his aggression toward Ukraine and confrontation with the West.” Bremmer added, “I think that lower oil prices simply squeeze him harder, pushing him farther into a corner. He feels he has to fight as a consequence.”

The theme of Russian vulnerability is echoed by Allan von Mehren, chief analyst at Danske Banke, who said, “Russia in particular seems vulnerable [to dropping oil prices].” He notes that the big decline in oil prices in 1997–98 was a major cause of the subsequent Russian default. The reason for this vulnerability is obvious. Oil and natural gas constitute almost 70% of Russia’s exports, and fund half the country’s federal budget. The country has had to spend $90 billion of its foreign currency reserves to stop the utter collapse of the ruble, which has already dropped in value by over a third.

In sum, as fracking flourishes, look for Russia to become even more aggressive.

Turning from geopolitics to domestic policy, a recent WSJ article explains how the fracking revolution is forcing a long-needed change in America’s ban on oil exports.

Yes, believe it or not, since the Carter era of the 1970s we have restricted the export of our own domestic crude, under the delusion that by restricting the market that our domestic oil producers could sell to we would induce them — to drill for more. Despite calls from major oil companies such as Exxon Mobil for the government to end the moratorium, politicians have been reluctant to deal with populist fears that allowing our companies to sell into an international market will somehow drive up our own prices — as if there were just a fixed amount of oil in this country, and if we sold even a drop of it abroad, our own stash would be diminished.

As the fracking revolution has shown, there is no foreseeable limit to how much oil we can produce. But some oil companies are finding ways around the benighted ban. For example, BHP Billiton has made a deal to sell two thirds of a million barrels of “minimally processed” ultralight crude oil abroad without formal approval from the feds. It is selling the petroleum to the Swiss trading firm Vitol. This move — which is called “self-classification” — is likely to open the gate for many other companies to enter.

The amount of fossil fuel that lies beneath our feet is essentially infinite, and if it ever did reach a limit centuries from now, substitutions would be found.

The idea is clever. Under the decades-old law, the US allows the exporting of refined petroleum fuels (diesel and gasoline) but not of crude oil itself. However, some companies (such as Enterprise Product Partners and Pioneer Natural Resources) have prior governmental approval to export minimally processed oil (called “condensate”). BHP is classifying very lightly processed crude as “condensate,” exempt from the law. BHP is doing its light processing without explicit government approval, although the Commerce Department has been quiet about the practice.

It would be great if more companies followed BHP’s lead. That would encourage more drilling in the long term, and help stymie Saudi Arabia’s efforts to throttle our fracking industry, by making sure that our production can be sold abroad whenever we have an excess here. Of course, it would be even better if we just removed the ban on crude oil exports altogether.

As for the crony, corrupt Green energy industries (the so-called renewable energy producers, especially wind and solar), fracking is pushing them to the wall. Consider wind power. As another recent WSJ piece explains, American wind power has been subsidized for over two decades. Despite assurances from many of its backers that wind is so efficient that its subsidies would wither away after a few years — like the state in the old Soviet Union! — the subsidies are proving eternal. Wind power’s subsidy is a taxpayer gift to wind power producers. This subsidy handed these rentseekers over $7.3 billion since 2007 alone, and it will pay them an additional $2.4 billion next year.

With all subsidies accounted for, the Institute for Energy Research reckons that in 2010 (the last year for which conclusive data are available) wind power received $56.29 per kwh in subsidies, compared with only $3.14 for nuclear power and a meager $0.64 for natural-gas produced electric power. That is, wind power sucked up nearly 90 times the subsidies that natural gas power did.

In short, wind power has managed to shred billions of taxpayer dollars as quickly as it has shredded millions of birds. But this subsidy expired at the end of last year, and wind power producers are desperately trying to renew it before the Senate falls into Republican hands. It looks quite possible that in the face of plummeting oil and natural gas prices, the incoming Congress will end the subsidy once and for all. At which point, wind power will be — well, gone with the wind.

Also worth noting is a WSJ article reporting another possible target for fracking’s creative destruction. I refer to the (again) heavily taxpayer-subsidized electric vehicle (EV) industry. Its only real success has been Tesla, whose zippy, stylish cars have sold well compared to all other EVs. But as gasoline prices have dropped, so has Tesla’s stock. It’s down about 8% recently (after a dramatic rise during the last couple of years).

If oil prices remain low, or fall even further, the EV market will be threatened. And if the EPA manages to kill the coal industry, thus dramatically raising costs of electricity, the EV market will become moribund. It only exists now because of those enormous taxpayer subsidies, and it is unclear how much longer Congress will keep them.

As the Journal noted, we can already guess what the advocates of EVs and the other Green companies will start pushing for if gasoline prices continue to drop: massive new taxes on gasoline to force consumers to go Green. Elon Musk (CEO of Tesla) has already proposed taxing gasoline to make it $10 per gallon at the pump — not from self-interest, you understand, but only from a dispassionate concern for the ecosystem. He thus joins Barack Obama, Nancy Pelosi, ex-GM exec Bob Lutz, and others calling for steep gasoline taxes so that their preferred Green schemes (EVs, ethanol, biodiesel, etc.) will survive. We will see if the new Congress complies with their proposals. I rather doubt it will.

People aren’t bacteria. People consume resources, but they also produce them.

Lastly, however, I want to mention a non-material but very important effect of the fracking revolution: the creative destruction of a myth. The myth is the notion of “peak oil.” That phrase comes from the idea that any oil-producing area (be it a field, a state, or a country) will eventually reach a peak of production, then tail off, making something like a statistical bell curve.

The concept of peak oil has been around since the start of the oil era. Eminent energy analyst Daniel Yergin quotes the state geologist of Pennsylvania in 1885 as predicting that the amazing early production of petroleum was only a “temporary and vanishing phenomenon — one which young men will live to see come to its natural end.” But the notion was given a scientific patina by M. Kind Hubbard, a geologist for Shell Oil company, in an influential paper of 1956, predicting that American aggregate oil production would peak in the early 1970s, then decline forever after. It appeared that Hubbard’s theory was empirically confirmed when America’s oil production hit a peak of slightly less than 10 million barrels per day (bpd) in 1974, and started declining.

It is now clear that this theory is about to be refuted yet again. Fracking has pushed our production of oil past Saudi Arabia’s current level of 9.7 million bpd. And the International Energy Agency projects that we will overtake Russia’s production of 10.3 million bpd next year.

People still keep predicting peak oil — as Paul Krugman did in 2010, when he crowed that “peak oil has arrived.” With fracking, indeed, we will reach another peak; but very likely someone will come up with another technological improvement, maybe “smacking.” The amount of fossil fuel that lies beneath our feet is, almost surely, essentially infinite, and if it ever did reach a limit centuries from now, substitutions would be found — perhaps from the vast spread of methane hydrates that lie on the ocean floors.

The theory of peak oil is a myth, and it is just a special case of a bigger myth — Malthus’ myth. Malthus held that, sustained by resources, the members of any living species will incrp/prsquo;s federal budget. The country has had to spend $90 billion of its foreign currency reserves to stop the utter collapse of the ruble, which has already dropped in value by over a third.ldquo;minimally processedease their numbers exponentially, so that no matter how plentiful the resources, the species will soon exhaust it. So he held that while people may increase agricultural production, it will only increase arithmetically, while the population will increase exponentially, resulting sooner or later in mass starvation.

But as economist Julian Simon argued, people aren’t bacteria. People consume resources, but they also produce them. People have mouths, but they also have hands, minds, and hearts. They can find new ways of getting any resource, and new substitutions for it also, for time without end.




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Their Gamble, Our Win

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A recent news piece in the Wall Street Journal caught my attention. Entitled “Germany’s Expensive Energy Gamble,” it reports on that country’s new grand energy plan, the “Energiewende” (“Energy Revolution”). This is now at the top of Chancellor Angela Merkel’s domestic agenda.

Under this plan, Germany will spend a projected trillion euros — and we all know how government projections tend greatly to understate final costs — laying out a massive new network of high-tension lines to carry power from wind plants in the North Sea to the country’s heavily industrialized southern region. Merkel’s government is gambling that this titanic investment will pay off with cheap, inexhaustible energy.

So far, the dream of renewables replacing fossil fuels and nuclear power has delivered only nightmarish results.

While the EU has a set of rules requiring its member states to achieve a goal of 35% of their electricity from so-called renewables by 2025, Germany has set its goal to hit 40–45% by then and to exceed 80% by 2050. Again, this is without using nuclear power.

If achieving this does cost the German economy a trillion euros (about $1.4 trillion), that would equal about half the country’s annual GDP.

So far, the dream of renewables replacing fossil fuels and nuclear power has delivered only nightmarish results. Despite Germany’s history of no major problems with nuclear power, Merkel virtually shut down the nation’s nuclear industry after the Fukushima disaster. Today, only nine nukes remain open, and they are due to be shut down in about seven years.

The result is that over the past five years, electricity prices in Germany have skyrocketed 60%, because the subsidies for the highly inefficient wind farms are passed on to the consumer. German electricity is now over twice as expensive as America’s.

Even riskier for the German economy is the strain this is placing on the manufacturing sector, one of its key components.

As Kurt Bock, CEO of BASF — the world’s biggest chemical company and one of Germany’s biggest companies of any kind — put it, “German industry is going to gradually lose its competitiveness if this [energy revolution] isn’t reversed soon.

BASF, by the way, has every right to be frightened by Merkel’s energy scheme. The company’s main plant employs 50,000 people in Germany, and consumes as much power as all of Denmark. And Bock is not alone in his concerns. A recent survey by the Federation of German Industry and PricewaterhouseCoopers showed that three-fourths of executives at small- and medium-sized industries feel that the rising energy costs threaten German productivity. A survey by the US Chamber of Commerce showed that a similar percentage of American company executives with operations in Germany felt that the Energiewende made Germany less attractive as a place to do business.

While the unfavorable opinions of the manufacturers, either German-based or with German operations, should worry the German government, even more worrisome are the attendant industry actions.

BASF has announced plans to cut investment in Germany by 8.3% of its world total, shifting it elsewhere. SGL Carbon, another German manufacturer, has decided to triple its $100 million investment in its Washington state plant rather than expand its domestic operations, for the reason that electricity costs only one-third as much in Washington state as it does in Germany. And basi Schöberl GmbH will turn to France rather than Germany as the site of its new plant. (France, note well, has kept its nuclear power plants at full strength.)

As Daniel Yergin has put it, the Germans enthusiastically embraced so-called renewable power, viewing themselves as trailblazers, “But now the Germans look back and see there aren’t many people behind them.”

Meanwhile, as another WSJ piece documents, our own energy revolution continues to flourish — even in the face of an administration downright hostile to it — because ours is based on fossil fuels.

The article notes that while naysayers wrote off our fracking revolution under the theory that shale wells don’t produce for long and must be replaced with ever more wells, the fracking revolution enters its tenth year in fine shape. Shale wells have become far more productive.

For example, in 2013 the most fecund shale well produced, at its peak, 5.9 million cubic feet of natural gas per day. But last year — a mere decade later — the best shale well delivered an amazing 30.3 million cubic feet a day — a fivefold increase! And fracking oil wells have seen similar productivity increases over the last decade.

We have a grotesquely obtuse president, so we will no doubt squander this opportunity to get our manufacturing base to the heights it could reach.

In fact, the focus of the American oil and natural gas industry — which has become the world’s largest energy producer — is now on finding ways to get more from existing wells, as opposed to looking for new shale fields. So while the number of wells has remained roughly constant, the production has jumped.

All this has kept American natural gas prices at historic lows.

This would suggest to a shrewd president — if we only had one! — a national strategy for renewing our industrial sector.

The strategy would be to embrace the American energy renaissance. Take back the regulatory agencies, as well as the Department of the Interior, from the environmentalist activists. Return to issuing leases to develop resources, both offshore and on land, leases dramatically curtailed by the Obama administration. Return to selling public lands — the federal government still owns 28% of the 2.27 billion acres that comprise our national territory. And allow our oil and gas to be exported freely. At the same time, reinvigorate our nuclear energy power industry.

In other words, aim explicitly at allowing the market to drive our energy prices, both the price of fuel and the price of electricity. This would create a cornucopia of benefits.

It would add a massive number of new jobs, first in the energy sector, then, as that wealth spread, in every other sector as well. It would drive down the amount of money that vicious dictators such as Putin and terrorists such as ISIS use to maim and murder free people around the world. That would lessen the probability that young Americans will die to protect our interests.

But we have a grotesquely obtuse president, so we will no doubt squander this opportunity to get our manufacturing base to the heights it could reach.

Elections have consequences — alas! But people get the government they deserve.




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