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Category — Environmental Policy

America’s Bounty vs. Federal Frac Rules: Will We Lead or Lag the World?

Articles on this blog have consistently made the point that shale gas in the U.S. represents an unprecedented pathway to abundant, low-cost, clean energy supplies. In previous posts it was noted that unconventional gas resources, combined with new production technologies, could potentially break the global oil-natural gas price bond, just as has happened in the U.S.

Shale gas is now subject to active exploration in England, Australia, Poland, Ukraine, China, India, and to a lesser extent, South America. Canada has already moved to the development stage with its shale formations in British Columbia (Montney and Horn River). Mexico shares the prolific Eagle Ford shale formation with Texas, but its state-owned PEMEX has done little to develop that resource yet.

Other nations have rejected the gift of unconventional gas. Romania and Bulgaria, both heavily dependent on Russian gas, have said “no” to shale gas production, as has France. [1]

Even with the dropouts and the laggards the International Energy Agency (IEA) sees unconventional gas comprising more than 30% of total world gas output, up from today’s 11%, by 2035:


Source: IEA, “WEO 2012 Golden Rules Report, Table 2.4

However, IEA stresses the need to adhere to its ‘Golden Rules” so as to achieve the golden age of gas. [Read more →]

June 29, 2012   No Comments

Fracking Good News: American Energy Stepping Up

All too often it seems we are inundated with bad news – or, at least, presumably bad news – about the impacts of domestic energy development, particularly hydraulic fracturing. We see headlines every day that suggest this proven and tightly regulated technology is damaging local communities and the environment.

Of course, the stories are rarely based in scientific facts (or even a basic knowledge of the processes discussed), and the real track record of shale development speaks for itself: more than 1.2 million wells hydraulically fractured, without a single proven case of water contamination.

Still, those who are eager to write attention-grabbing headlines and sensational reports often win the day, as a recent University of Texas study demonstrated quite clearly: two-thirds of all stories about hydraulic fracturing are decidedly negative in tone. Thus, against that backdrop, it’s worth noting that the past week has actually been dominated by good news – great, even – for those who support responsible domestic energy development.

Polling Results

The first item was a new poll released early last week that found 57 percent of Americans support the use of hydraulic fracturing. Only 22 percent oppose the process, which means nationwide support exceeds opposition by a more than two-to-one margin (sorry, Mark Ruffalo). The poll fits nicely with other recent surveys, such as one by Harris Interactive that found 66 percent of Americans believe the economic benefits of natural gas far outweigh any concerns about environmental impacts, despite “intense negative media focus.” [Read more →]

April 6, 2012   5 Comments

UT Study on Frac Water Contamination: “No Evidence” (Anti-drilling false alarm cut down to size)

A recent study from the University of Texas at Austin’s Energy Institute found “no evidence” of groundwater contamination resulting from hydraulic fracturing. Concluded lead author Charles Groat: “We found no direct evidence that hydraulic fracturing itself – the practice of fracturing the rocks – had contaminated shallow groundwater.”

Here is the list of the UT Energy Institute’s overview of findings:

  • Researchers found no evidence of aquifer contamination from hydraulic fracturing chemicals in the subsurface by fracturing operations, and observed no leakage from hydraulic fracturing at depth.
  • Many reports of groundwater contamination occur in conventional oil and gas operations (e.g., failure of well-bore casing and cementing) and are not unique to hydraulic fracturing.
  • Methane found in water wells within some shale gas areas (e.g., Marcellus) can most likely be traced to natural sources, and likely was present before the onset of shale gas operations.
  • Surface spills of fracturing fluids appear to pose greater risks to groundwater sources than from hydraulic fracturing itself.
  • Blowouts — uncontrolled fluid releases during construction or operation — are a rare occurrence, but subsurface blowouts appear to be under-reported.

Why Past Media Misperception?

Another interesting finding in the UT study, though, related to the media’s coverage of hydraulic fracturing. “For the nation as a whole,” the authors write, “the attitudes were found to be uniformly about two-thirds negative.” The accompanying chart in the study bears that out: [Read more →]

February 27, 2012   4 Comments

Perry’s Energy Speech: Part II (EPA vs. abundant energy)

“The third part of my plan is to reform the bureaucracy, in particular the EPA, so that it focuses on regional and cross-state issues, providing scientific research, as well as environmental analysis and cost-comparison studies to support state environmental organizations. We will return greater regulatory authority to the states to manage air and water quality rather than imposing one-size-fits-all federal rules.”

- Gov. Rick Perry,  Energizing American Jobs and Security, October 14, 2011.

Part I yesterday described Governor Rick Perry’s call for greater oil and gas resource access to government land to help create economic and job growth–and open-ended opportunity given technological developments.

Indeed, ‘peak oil’ and ‘peak gas’ concerns have been waylaid by reality. At a recent conference of the U.S. Association for Energy Economics in Washington, D.C., it was clear that energy economists believe that demand for petroleum will not fall around the globe for many years, decades, and possibly centuries to come.

Therefore, if we do not produce it here, production will occur by countries, such as China and Venezuela, that do not currently have the resources we do to efficiently drill for oil and take care of our beautiful planet. Moreover, many of these countries are not friendly to us and will use the funds in a way that may not be helpful for future peace and prosperity.

EPA’s Ram: The ‘Precautionary Principle’

Governor Perry is correct that individual states are better prepared to decide on public policy initiatives that reflect the needs of their citizens. Allowing for a competitive environment between states will bring about innovation and quality energy production that is beneficial to the states and the nation.

Regulations put in place by the U.S. Environmental Protection Agency (EPA) are based on the precautionary principle, which is defined at dictionary.com as follows:

In environmental matters, the theory that if the effects of a product or actions are unknown, then the product should not be used or the action should not be taken.

This better-safe-than-sorry principle, however, does not take into account the real costs, which include opportunity costs, to the economy and society. Therefore, making policy based on the precautionary principle is misguided and could do more harm than good in reducing greenhouse gas emissions and providing healthier outcomes for citizens. [Read more →]

October 18, 2011   6 Comments

Go Industrial, Not ‘Green’ (Part II)

[Editor note: Mr. Epstein, a new Principal at MasterResource, is Founder of the Center for Industrial Progress. Part I appeared yesterday.]

But what about the “environmental impact” of industrial development? Isn’t the “green” movement providing a salutary influence us by helping us combat that problem? Again, no.

The idea of “environmental impact” is what philosopher Ayn Rand called an “intellectual package-deal.” Such a concept dishonestly packages together two very different things—the impact of development on the human environment and the impact of development on the non-human environment.

Industrial development will certainly often harm various non-human environments—but it is a godsend to the human environment. By lumping together concern with the non-human environment (e.g., displacing some caribou to get billions of barrels of the lifeblood of civilization) and the human environment (e.g., air quality), anti-industrialists are able to dupe Americans into thinking that sacrificing to caribou somehow benefits them.

Historically, industrial progress brought with it a radical improvement of the human environment. Indeed, industrial progress essentially is the improvement of the human environment. The reason we develop is to make our surroundings better so that our lives are better, cleaner, healthier safer—in the face of a natural environment that is often hostile to human life.

Contrary to “green” mythology, man’s natural environment is neither clean nor safe. In a non-industrialized, “natural” state, men face all sorts of health dangers in the air and water, from the choking smoke of an open fire made using plant matter (a cause of over a million deaths a year to this day) to the feces-infested local brook that he must share with farm animals.

Industrial development gives men the technology and tools to make their environment healthier—from sanitation systems to sturdier buildings to less onerous job conditions to comfortable furniture to having healthy, fresh food at one’s disposal year round, to the wealth and ability to preserve and travel to the most beautiful parts of nature. And so long as we embrace policies that protect property rights, including air and water rights, we protect industrial development and protect individuals from pollution.

As for the “sustainability” of industrial progress, an accusation that dates back to Marx, this fails to recognize the fact (elaborated on by Julian Simon and Ayn Rand) that man has an unlimited capacity to rearrange nature’s endless stockpile of raw materials into useful resources—which is why the more resources we use, the more resources we have. [Read more →]

September 24, 2011   12 Comments

Go Industrial, Not ‘Green’ (Part I)

[Editor note: Mr. Epstein, a new Principal at MasterResource, is Founder of the Center for Industrial Progress. Part II of this post is here.]

In the wake of two recessions following two fleeting, largely service-sector bubbles—the dot-com bubble and the housing/financial bubble—America’s intellectual and political leaders are championing the need for industrial progress.

The ubiquitous Thomas L. Friedman takes on the subject of industrial progress in his latest book, That Used to Be Us, coauthored by political scientist Michael Mandelbaum. The book begins by describing a China full of fast trains, stupendous buildings, and an aura of dynamism—and contrasting it to an America in which repairing a subway is a multi-year project. Such images resonate with readers and voters, who wonder with frustration why so much industrial innovation, production, and job-creation is happening overseas rather than in America.

In President Obama’s recent address on jobs, he angrily complained about the state of American industry:

Our highways are clogged with traffic. Our skies are the most congested in the world. It’s an outrage.

Building a world-class transportation system is part of what made us an economic superpower. And now we’re going to sit back and watch China build newer airports and faster railroads?

Obama is right about this much; the state of American industry is an outrage. America has enormous, incalculable, untapped potential to make industrial progress—to radically increase our standard of living through far greater productivity in energy production, in manufacturing, in construction, in mining, in transportation. Unfortunately, the statist philosophy of Obama, Friedman, et al leads them to speciously attribute the problem to lack of government—despite the unprecedented expansion of government over the last 50 years. They propose still more increases in government spending and controls, as if some magic manipulation is going to spark the next industrial revolution.

At the same time, they ignore the most blatant impediment to industrial progress—an impediment caused by policies they support. This impediment is an open secret readily discoverable by asking American industrialists what is holding them back.

When I do this, I hear one theme repeated over and over: it is ruinously difficult to start new industrial projects because of our anti-industrial, “green” policies. [Read more →]

September 23, 2011   14 Comments

A West Texas Lizard vs. Oil and Gas Production (Controversial government evidence with consequences)

Most People have never heard of the dunes sagebrush lizard, but it may soon hit them where it hurts: the wallet.

The U.S. Fish and Wildlife Service wants to classify the lizard as an endangered species. This could stop production of more than 1,000 oil wells and reduce annual oil production by at least 7 million barrels.  The resulting burdens and lost opportunities for America’s working families would be outrageous on their own, but they are especially outrageous in this case given how paltry the evidence is underlying the federal government’s proposed action.  

The agency considers five factors in designating a species as endangered. These include whether the habitat is threatened, overutilization of the species, disease, inadequacy of existing regulation mechanisms, and natural or manmade factors that hinder the existence of the species.

Out of these five factors, the agency primarily focuses on how the habitat of the lizard is threatened and manmade causes, particularly from oil and gas production.

This lizard‘s habitat is in the shinnery oak dune system, which consists of short shrubs and sandy dunes. That system is found in southeastern New Mexico and west Texas, where there is at least 140,000 acres of habitable private land that covers four counties in Texas.  [Read more →]

August 5, 2011   5 Comments

LADWP vs. Los Angeles: Expensive Renewables Hit the Fan

Just what shape is California in?

Several weeks ago, credit default swaps on state bonds were at 200 basis points. Kazakhstan’s were at 170. At the end of 2009, California’s cost of debt was the treasury rate plus 310. Mexico’s was plus 185. The state is temporarily solvent thanks to a great legislative fix: they took an extra month of state income tax withholding from all state workers’ paychecks, which they get back (without interest) in their next tax refunds.

When it comes to gauging the state of California’s government, however, you can’t do better than follow the conflict between Los Angeles’ municipal electric system – the Department of Water and Power (LADWP) – and the city’s mayor and council.

Municipals are an odd American institution, a significant presence of publicly funded entities in a system that is largely private. Exempt from regulation in most states, municipal utilities are governed by local officials or appointed independent panels. LADWP has the latter. Cities usually get a percentage of the utility’s revenue off the top (the analogue of a corporate utility’s taxes), and some, including Los Angeles, give municipal agencies “free” power.

LADWP is governed about as well or poorly as any other electric system, public or private, and it does give the city $200 million a year. There have been embarrassments – two years ago, for example, it spent $50,000 on “lactation consultants,” hoping to discourage absenteeism by certain employees.

And now renewables and global warming. [

April 28, 2010   7 Comments

Time to Repeal New Source Review? (Up to 30 GW of coal-plant upgrades hangs in the balance)

The typical pulverized coal power plant in the U.S. is about 35 years old, yet the fleet will continue to operate for many years to come. New coal-fired plants, meanwhile, will continue to enter service but at a slow rate. There may not be a future price for carbon dioxide (CO2) given the dramatic scientific and political developments that we are going through, but cheap natural gas makes it difficult to justify the higher up-front costs of a new coal plant.

Still, there is significant new electricity generation capacity is possible from these older plants, perhaps as much as 30,000 MW–twice EIA’s projected growth of coal power over the next two decades. In addition, new technology upgrades have the potential of improving the operating efficiency by 3% to 5%. But the impediment for such win-wins is the risk of a New Source Review violation, years of litigation, and possibly fines.

Given the Obama Administration’s stance against coal, many attendees of the National Coal Council’s December meeting were caught flat-footed when DOE Assistant Secretary for Fossil Energy James Markowsky suggested an exception be made under Clean Air Act’s New Source Review (NSR) program. Mr. Markowsky proposed easing the NSR requirements for power plants that make modifications to improve their operating efficiency–assuming those plants would be good candidates for a later retrofit of a carbon capture and sequestration (CCS) system.

Markowsky’s trial balloon also suggested that candidate plants would already have installed flue gas desulfurization (FGD) systems. The concept is intriguing but doesn’t go near far enough in solving the nation’s energy woes.

NSR Definitions Remain Murky

NSR is the process established by the Clean Air Act (CAA) that requires utilities to add a host of new and expensive emission controls should they make any “major modifications” to the plant that increase emissions. The definition of a major modification has been the subject of numerous court battles since the Clinton Administration yet stills remains murky. Even when upgrades were discussed with the EPA in advance of their installation, Justice has routinely lowered the legal boom on utilities that made common maintenance changes to their plants The usual result has been a decade of legal maneuvering followed by a consent decree agreement where the utility agrees to install new emission controls and pay a fine. [Read more →]

February 4, 2010   2 Comments

“Cap-and-Trade” Is Dead–Will the “Federal Renewables Mandate” Be Next? (An “environmental tea party” may be brewing against industrial windpower)

Temperature trends, Climategate, Copenhagen, IPCC falsification, and now the Massachusetts Revolution–cap-and-trade is dead, the political pundits say. So much for the  inevitability argument that I heard from my colleagues during the Enron years (“come on Rob, get out in front of it and shape it!”), as well as the science-is-settled that had been the Word.

But what about a scaled back energy/climate bill with the key provision of a federal renewables mandate? Has the ‘Massachusetts Revolution’ killed that too?

We will soon find out. But one thing can be certain: Americans from coast-to-coast and border-to-border are going to look more closely at wind power, and I do not believe they are going to like what they see. (Enron, anyone?) Witness the growing complaints from the grass roots–including in-the-trenches real environmentalists–that industrial wind is intrusive, costly, and unreliable.

As an indication of the grass roots revolution against wind, consider the summary I received today from Glenn Schleede on the activities of a group call the Industrial Wind Action. Schleede, a longtime voice in the wilderness on the problems of wind, said this in his note.

Ladies & Gentlemen:

Here’s a recent newsletter-summary of recent articles on wind energy.

Perhaps you, too, have noticed that the negative environmental, energy and economic impacts of wind energy are totally ignored by the people on the payroll of the US DOE’s Office of Energy Efficiency and Renewable Energy (DOE-EERE), the DOE’s National “Laboratories” (particularly, NREL and LBNL), EPA, and Interior.

Since these folks are totally dependent on taxpayer dollars for their jobs, one might think they would be somewhat objective and responsive to the public interest — but perhaps they think that they have a higher calling.

Thank God for the tea party movement!!  May it grow and grow!!

Glenn Schleede

Here is the snapshot of action and analysis on the wind front from WindAction.

Is the Obama Administration watching and listening to this “Environmental Tea Party”? They had better. Energy is the master resource and second only to health care as a percentage of the national economy. The masses want and expect affordable, reliable energy for their homes, businesses, and vehicles. [Read more →]

January 20, 2010   9 Comments