Free Markets, Free People

Energy

Damn the facts and costs, full speed ahead

We often talk about how poorly we’re served by our political class.  The examples are legion (just take a gander at the “Gang of 8’s” travesty of an immigration bill).  But most puzzling about what they do is when there are real world examples of why what they propose is doomed to costly failure, they go ahead anyway.  Hubris?  Arrogance?  Ideology? A giant dollop of all?

Take Obama’s latest – his late entry into the climate change nonsense just as everyone else has realized it’s a costly boondoggle and are pulling out.  For example:

In May, Europe’s heads of state and government at the EU Summit promoted shale gas and reduced energy prices. They would rather promote competition than stop global warming.

Obama just returned from Northern Ireland at the G8 meeting where he evidently didn’t ask why the United Kingdom removed climate change from the agenda.

European carbon markets had collapsed with the price of carbon hitting record lows, wrecking the European Union’s trading scheme for industrial CO2 emissions.

British Gas owner Centrica was buying up shale gas drilling rights in Lancashire for fracking operations. Green investors faced bankruptcy as Spain cut subsidies even further.

Large German companies such as Siemens and Bosch abandoned the solar industry, which had lost them billions, while investments in failed solar companies, including Q-Cells and SolarWorld, destroyed 21 billion euros of capital.

In response, German Chancellor Angela Merkel told a June energy conference in Berlin to expect reduced government spending on energy like wind and solar power to keep Germany economically competitive. Europe’s clean energy economy had become a black hole eating euros.

Last week, Merkel’s government warned EU member states that German car makers would shut down production in their countries unless they support more affordable vehicle emissions rules.

At the same time, our oblivious president spoke at Berlin’s Brandenburg Gate, saying, “The United States will “do more,” before it’s “too late” to prevent “dangerous” global warming.

Yeah.  We’ll do “more”.  Meanwhile, everyone else has decided to do much less or … nothing.  And that “more” Obama is talking about?  Well, apparently it’s time to wreck another industry:

Myron Ebell, director of the Center for Energy and Environment at the Competitive Enterprise Institute, told me, “The centerpiece of President Obama’s climate plan is a declaration of all-out war on coal. The only affordable way to reduce emissions from existing coal-fired power plants – which now provide 40 percent of the nation’s electricity – is to close them down.”

Obama’s plan has political implications as well, Ebell said. “Coal dominates the heartland states that tend to vote Republican. Major industries are located there because coal produces cheap electricity. If electric rates go up to California levels in the heartland, where will American manufacturing go?”

Good question, no?  Answer: he doesn’t really care.  Seriously.  This is all about ideology.  Blinders on, facts ignored, examples discarded, it’s about legacy and “saving the world from itself” even if he has to do so autocratically.  Because, you know, that Constitution thingie just get’s in the way of good governance … or something.

~McQ

And the beat goes on …

And on and on and on:

“We now have an elephant in the room, and its name is peak oil.” –Kjell Aleklett, Professor in Global Energy Systems

Lord I wish I had a nickel for every time I’ve heard that in the last 30 years. And always in the face of something like this:

Nearly a third of the world’s technically recoverable natural gas and 10 percent of its oil can be found in shale formations, according to anew report by the Energy Information Administration.  Thanks to fracking and horizontal drilling, there’s a bounty of oil and gas available to countries around the world .

This report, which has a much larger scope than previous reports, bumped up the estimated global amount of technically recoverable shale gas by 9.3 percent. In its regional breakdown North America looks like a big winner. Of the 41 countries surveyed, Mexico had the seventh and Canada the ninth largest reserves of shale oil, while the US was second only to Russia. Meanwhile, the US, Canada, and Mexico were in fourth, fifth and sixth place, respectively in the EIA’s ranking of the largest technically recoverable shale gas reserves.

Of course part of the reason the peak oil crowd continues to issue it’s predictions is it seems tied into, well, another bit of a scam:

Are you optimistic about the future? Do you think that politicians will, at some point, address the problem of peak oil?

I’ve been working in this field for many years now, and it’s sad to see how little has been done. The measures that have been taken have been implemented largely because of climate change. Energy challenges such as peak oil are closely linked with climate-related issues, so victories within the field of climate change tend to be victories for peak oil as well. The good news is that we have started to tread the right path. Ultimately, we have to act. Whichever way you look at it, we won’t be able to use as much energy in the future as we do today.

I’m sorry, but that’s just nonsense.  A) there’s no reason, at least at this point, that we can’t use as much energy in the future as we do today, and B) perhaps that energy will come from a different source but not necessarily.  Unless, of course, these sorts of people have their way. More importantly though, politicians need to be kept strictly out of this business.

As we note often, this isn’t about energy or climate-related issues – it’s about control.

Make the warnings scary and dire enough and we’ll pitch control over to them.  See “war on terrorism” as a case study.

Meanwhile, in the back forty, a certain cow is still mooing the same old song:

Former Vice President Al Gore lamented today that scientists “will not let us link record-breaking” tornadoes in Oklahoma and elsewhere to climate change because of inadequate record keeping on the twisters.

“But when you put more energy into a system, it gets more energetic,” Gore said at an environmental event in Washington hosted by Sen. Sheldon Whitehouse.

Yeah, darn those scientists anyway. Oh, wait, I thought all his stuff was from scientists.  No?

As to that familiar tune?

“It is well-past time that we put a price on carbon and not just accept the price that it extracts from us,” he said.

He noted that some officials won’t pay for tornado shelters in public schools. But “if we’re having arguments about how to pay to recover” from storms, he said, that’s one more reason to fix the climate change that is leading to stronger storms.

Even if the “price” can’t be supported by science.

Got it.

~McQ

Private oil sector pushes US past Saudi Arabia in output

Funny … despite all the impediments the Obama administration has put on oil production on public land, the private sector – the market – has pushed us into a position we’ve never been in before in terms of output of oil and gas.   We’ve passed the Saudi’s in output:

In spite of the Obama Administration’s hostility to carbon-rich energy, private actors with private capital deployed on private (and state) land have launched a game-changing revolution in domestic oil and natural gas production.

A scarcely reported milestone conveys the magnitude of this turnaround in the global energy landscape.

The U.S. passed Saudi Arabia as the world’s largest petroleum producer in November 2012, according to recently released data of the federal Energy Information Administration.

Now, imagine where we’d be if we didn’t have an obstructive administration bent on punishing those producers in that market via high taxation and regulation.  Or slow-walking permits for drilling on public land.  Or any of a myriad of other things this administration does to try to prevent oil and gas production.  Well, other than taking credit for the rise in production when they had nothing to do with it.

Had they gotten out of the way, had they helped us take advantage of these new finds, Saudi Arabia would have been in our rear view mirror a long time ago and my guess is, gas wouldn’t cost what it does today.

~McQ

Irony today usually has it’s root in government actions

Because government is so completely involved in our lives.  A good example is the UK.

First, here’s a bit of a stunning statistic:

Winter weather has killed a million Brits since the 1980s and will kill a million more by 2050, experts have warned. Age support groups and doctors blame poor housing, high energy bills and pensioner poverty. Many killed by the cold are elderly but the ill, vulnerable and very young also die. A total of 973,000 people died due to winter weather from 1982/83 to 2011/12, Office of National Statistics data for England and Wales shows. ONS data shows another million Brits will be killed by winters by 2050, based on the average of 27,400 cold weather deaths per winter in the last five years.

The government, of course, is responsible for more of the problems listed than high energy bills but I wanted to highlight that and then turn to the irony part of this:

Migrating birds have halted Britain’s embryonic shale gas expansion in its tracks. The company backed by Lord Browne, the former BP boss, admitted yesterday that it must delay resuming fracking near Blackpool until next year because of rules protecting thousands of birds wintering in the surrounding picturesque Fylde peninsula.

Nice to know who or what has the priority over freezing Brits, no?

~McQ

Obama claims credit for something he hasn’t done

I’m sure that doesn’t surprise anyone particularly.  A) it’s Obama and B) he’s a politician who has yet to quit campaigning (mostly because he hasn’t a clue how to govern).

What am I talking about?  His attempt to claim responsibility for the fact that fossil fuel production is up under his watch and he’s somehow responsible for that.

Yes, it is, but that has absolutely nothing to do with him or his policies.   The Congressional Research Service has apparently made that official now:

The Congressional Research Service has released a report finding that, as was already generally known, U.S. oil and gas production has increased substantially over the past four years, but on private lands only, while it’s actually declined on federal land.

Or said another way, where Obama had control and the opportunity to do what he is claiming, he declined that opportunity and in fact impeded further exploration and production with his policies.  Where he had no real control, production boomed.  Federal lands – nada.  Private lands – bunches and bunches.

What has he sacrificed with his anti-fossil fuel polices?  Revenue and jobs.

Again, you have to wonder anymore what it takes to be fired.

~McQ

Keystone XL pipeline: How long will Obama delay this time

In the wake of sequestration, an opportunity to do the right thing for this country arises.  Unfortunately, it arises within an administration ideologically, and therefore adamantly, opposed to the idea of more fossil fuel:

Today the State Department released yet another positive environmental review for the northern portion of the Keystone XL pipeline project. The State Department approved the original pipeline route through Nebraska, which was supposedly less environmentally friendly, without any problems.

It is no surprise, then, that the State Department also seems to look favorably on this second iteration of the project in this fourth report—a report that should have been unnecessary. For the record, the pipeline also received a stamp of approval from Nebraskans.

Yes, that’s right, the Obama State Department has given the Keystone XL pipeline favorable reviews before.  It has been the executive, in this case, arbitrarily overruling the reports, inserting himself in a process he really has no business in and delaying the project.

IER senior VP Daniel Kish sums it up pretty well:

"This is, as President Obama says, ‘a teachable moment.’  It teaches us why our government’s policies continue to stifle job creation, investment and new energy sources and instead spends valuable time and increasingly limited resources studying things to death.

"While we welcome this report, we also note this is the 4th such environmental report on the Keystone XL pipeline proposal and since it is only a “draft” there will be at least 5 federal environmental studies before a decision is made by our government on the pipeline. The Canadian government made a decision in 6 months; our government has taken 54 months so far.  This is an abject lesson in why – when it comes to energy – no one wants to deal with our government.  This is evident also by continuing falling production on federal lands at the same time U.S. oil and gas production on non-federal lands makes historic gains.  It is time for our Leaders to make a decision….Canada’s did a long time ago.  Too many are hurting and too much is at stake for any more time or money to be wasted on trivial matters and long addressed and re-addressed chimeras advanced by opponents of any and all affordable sources energy."
54 months, numerous positive reports and counting.  Canada, meanwhile, has moved on, planning, while we dither, to sell it’s product to China.  Pipelines don’t have to run through other countries which make life difficult, they can run only in Canada, to their coast for shipment to the Far East.
 
What is Obama delaying?
The project will accommodate up to 830,000 barrels of oil per day, create some 179,000 jobs on American soil, and continue good trade relations with a close ally. The benefits won’t stop with the oil sector, though—the Keystone project will have a positive ripple effect even in areas without the pipeline that will provide goods and services to support the pipeline.
And where do we stand in the wake of this latest favorable report?
Before any real decision is made, there will be a 45-day comment period and some time for the State Department to consider the comments. Then the notably anti-carbon Secretary of State, John Kerry, will give his recommendation and the final decision will lie with the President.
Any feeling of confidence that this administration, no matter how late in the game, will make the right decision isn’t exactly surging in me right now.
 
More than anything, it’s just sad that the lives and livelihoods of so many Americans rest in the incompetent hands of Barack Obama and John Kerry.
 
~McQ

The politics – and failure – of going “green”

“Going green” and “climate change” certainly are interlinked parts of a political agenda that have nothing to do with public opinion or will.  In fact:

Seventeen years of continuous surveys covering countries around the world show that people not only do not care about climate change today – understandably prioritising economic misery – they also did not care about climate change even back when times were good. The new information comes in a study released by the National Opinion Research Center at the University of Chicago – a large, long-standing and respected non-profit. The NORC spokespersons said that decades of climate alarmism have had basically no effect on people’s attitude around the world.

Part of that has to do with the fact that they’ve heard it all before.  Dire predictions about population growth that have come to naught.  Warnings about using up the earth’s resources which have proven to be false. Ozone holes. Melting icecaps. Yatta, yatta.

Climate change is just the latest among the apocalyptic prophesies and as the real science – not Al Gore “science” – comes out, fewer and fewer people are staying on the bandwagon.

Of course the promise was a “green economy” in which everyone would benefit.  How’s that worked out?  Well we know how it has worked out in Spain.  Germany is now finding out how mistaken they were to go in that direction.  In fact:

Energy, manufacturing and agriculture are playing a major role in the corridor states’ revival. The resurgence of fossil fuel–based energy, notably shale oil and natural gas, is especially important. Cheap U.S. natural gas has some envisioning the Mississippi River between New Orleans and Baton Rouge as an “American Ruhr.” Much of this growth, notes Eric Smith, associate director of the Tulane Energy Institute, will be financed by German and other European firms that are reeling from electricity costs now three times higher than in places like Louisiana.

Interesting.  It is another reason why they’re also putting manufacturing plants in the US, mostly in Red States.  Skilled labor, right to work and cheap energy.  Obviously neither the “right to work” nor cheap energy are part of any Obama administration design.

And how is it going for green jobs more locally?  Well, the usual state can be consulted for an update on what such a move has wrought and demonstrate for all to see why “going green” is a foolish road to travel – at least in the near future.

It was supposed to be the next big thing. California built decades of broad-based prosperity from the Gold Rush, then Hollywood, then aerospace, and later Silicon Valley. At the turn of the century, “green jobs” were supposed to be the wave of the future. How is that going for them? According to the best numbers from the Bureau of Labor Statistics, fewer than 2,500 green jobs have been created in California since 2010.

Wow … bask in the success!  Government again demonstrates how poorly it does picking winners and losers.  Not that such failures ever hinder the central planners from using your dollars to try again.  What’s Einstein’s definition of insanity?

Meanwhile, the “success” of green energy has brought California to a point where it will have to fish or cut bait very soon:

California is weighing how to avoid a looming electricity crisis that could be brought on by its growing reliance on wind and solar power. At Tuesday’s meeting, experts cautioned that the state could begin seeing problems with reliability as soon as 2015.

Of course, had we heeded the experience of others, we likely wouldn’t see California going through this nonsense:

The former chancellor Lord Lawson has urged the Government to keep Britain’s coal-fired power stations working for as long as was needed to avoid any short-term power shortages. In a House of Lords debate on energy policy and electricity generation Lord Lawson also called on ministers to give “every encouragement  it can” to the quickest possible development of shale gas supplies. Lord Lawson urged energy and climate change minister Baroness Verma to assure the House that “if the need arises our coal-fired power stations will be kept open as long as is necessary, regardless of the European combustion plants directive”.

But our dauntless leaders never learn from others.  Just as with healthcare, they seem bound and determined to recreate the failure of others.

We have abundant fossile fuel resources.  They would generate both jobs and revenue for government.  Wind and solar, while great in theory, have in practice been shown to be woefully inadequate to our needs.  We even have communities wanting wind turbines taken down due to health concerns.

Yet our government and this administration continue to pursue an “energy policy” which is detrimental to the welfare of this nation despite a state that has done everything they want to do nationally and is a dismal failure because of it.  They are bound and determined to make all 50 states Californias.

~McQ

Why won’t this administration look at this revenue source?

Because of their false agenda, that’s why.   They’re still convinced that, despite 17 years of no warming (as recently admitted by the head of the IPCC), oil is bad and “green” is good and that they’re doing something to save the world.  Disregard the fact that green is still unviable.  Disregard the fact that everywhere it has or is being pushed, energy costs are skyrocketing.  Nevermind the fact that we are sitting on a sea of fossile fuel products that we only need to access.  Screw the fact that science can find no discernable warming.  Their minds are made up.

That said, there’s also the fiscal side of the house.  The debt.  The deficit.  And the demand by Democrats to raise more revenue.

Unfortunately, because of their agenda, they’re likely to completely screw up a golden opportunity to bring in much more revenue and drive energy prices down, because their agenda is against fossile fuel.  And we all know the party agenda comes before what is best for the country.

Enter the administration with a renewed plan to tax oil companies instead of opening access to the vast natural riches we enjoy.  The result?  Well this chart will help you comprehend the vast differences in the two policy choices (full size here):

So the either/or is “tax ‘em or open access”.  The difference:

According to a 2011 study by Wood Mackenzie, increased oil and natural gas activity underpro-access policies would generate an additional $800 billion in cumulative revenue for government by 2030. The chart puts into perspective the size of these accumulating revenues – enough to fund entire federal departments at various points along the timeline. By contrast, Wood Mackenize also found that hiking taxes on oil and natural gas companies would, by 2030, result in $223 billion in cumulative lost revenue to government.

It only proves the old saw -“If you want more of it, reward it and if you want less, tax it”.  Think about it – money to help run government and pay down the debt (not to mention the thousands, if not millions of jobs created) being passed up in the name of false science and agenda politics.

Meanwhile, we’ll be left in the cold and the dark, thanks to agenda driven policies with no foundation in reality.

~McQ

Another country from which to “learn”

The question, as posed earlier concerning Britain and France, is will we?

Electricity prices are rising in Germany – and citizen with a low-income are suffering particularly. They are at risk of fuel poverty. 10 to 15 percent of Germans are now struggling to pay their energy bills. 600,000 households have the electricity turned off every year.

Remember, Germany ran scared after the Fukushima disaster and dumped nuclear power (because, you know, German has so many earthquakes and tsunamis).  They then went “green”.  Result?  See above?

Other result?

The CEOs of manufacturing industries are warning that production in Germany is at risk because of low energy prices in the United States. The energy prices there are now only a third of those in Germany. “Many industrial companies are planning to build new factories in the U.S. and not in Europe because of low energy prices there,” said Gisbert Rühl, chief of steel trader Kloeckner. “We are now reacting to this development and plan new business units in the United States.” To move production to the U.S. is especially attractive for companies in energy-intensive industries such as steel and aluminium or chemistry.

That would seem to be good news for us, no?

Well, it should be … except for the Democrats plan to raise taxes on the oil companies.  And Obama’s new wave of regulations.  Oh, and the Obama desire to see fuel prices “skyrocket”, ably aided by his Secretaries of Energy and the Interior.  And the EPA.

Etc.

~McQ

Welcome to the law of unintended consequences

Or here’s what happens when you play the green card and drive up the cost of energy to the point that it is unaffordable:

When the mercury falls, the theft of wood in the country’s woodlands goes up as people turn to cheaper ways to heat their homes. With energy costs escalating, more Germans are turning to wood burning stoves for heat. That, though, has also led to a rise in tree theft in the country’s forests. The problem has been compounded this winter by rising energy costs. The Germany’s Renters Association estimates the heating costs will go up 22 percent this winter alone.

Brilliant!

How much carbon is being emitted by wood burning stoves?  How about the deforestation?

Gee, nukes don’t sound so bad now, do they?

~McQ