Category — Policy Issues

“How much oil seeps out from the ocean floor — and into the environment — around the Santa Barbara area? SOS California identifies offshore Santa Barbara as having “the second largest marine oil seeps in the world.” Centered around an area referred to as Coal Oil Point, some 10,000 gallons of crude oil seep from approximately 1,200 fissures in the ocean floor in any given 24-hour period.”

- Sylvia Cochran, “Natural Oil Seeps Harm Birds off California Coast, March 8, 2012.

This April 25, 2013 Wall Street Journal article, “Chilly North Sea Comes Back to Life: New Technology Is Set to Liberate Natural Gas That for 25 Years Was Trapped Beneath Sea Floor,” tells the story of significant advances in deep sea drilling technologies.

If companies can discover, drill, and deliver oil from stormy North Sea locations, why can’t firms similarly find and drill oil from Santa Barbara and other offshore California oil fields?

But environmentalists, as well as average citizens, fear offshore oil spills and oil-drenched sea birds–and that gets back to the Santa Barbara oil spill (1969), the third largest in history after the Deepwater Horizon (2010) and Exxon Valdez (1989) spills.

Natural Oil Seeps

Yes, it is a tragedy when seabirds and other animals are caught in manmade oil spills. But what about natural oil seeps? [Read more →]

“The pipeline would be a $7 billion stimulus package unto itself, without costing taxpayers a dime and requiring no act of Congress to get under way.”

In recent weeks President Obama has talked about the need for investment in new infrastructure to drive U.S. economic growth. “There are few more important things we can do to create jobs right now and strengthen our economy over the long haul than rebuilding the infrastructure that powers our businesses and our economy,” he said:

As President, my top priority is to make sure we are doing everything we can to reignite the true engine of our economic growth – and that is a rising, thriving middle class.  A growing economy that creates good, middle-class jobs – that’s got to be our true North.  That’s what has to guide our efforts every single day.

In that same speech not too long ago, the president noted the plight of the nation’s construction workers during the recession – and the lift infrastructure projects would give to thousands of working men and women. On both points the president is absolutely right.

Leadership is about actions and accomplishments, not rhetoric. For going on five years, President Obama has had one of the largest shovel-ready projects ready to go – needing only his approval to increase demand for thousands of components and subcomponents to help put America back to work: the Keystone XL pipeline. [Read more →]

“No matter whose carbon dioxide emissions estimate is used, the climate impact of the oil transported by the pipeline is too small to measure or carry any physical significance. In deciding the fate of the Keystone XL pipeline, it is important not to let symbolism cloud these facts.” [1]

Climate change results from a variety of factors, both human and natural. The primary concern raised over the pipeline involves the carbon dioxide emissions that will result from the production and use of the oil that the pipeline will carry. It is the potential climate change from these emissions that will be the focus of my testimony.

In its Draft Environmental Impact Statement, the State Department finds, and I think that there is broad agreement on this point, that a barrel of oil produced from the Canadian tar sands carries about a 17 percent carbon dioxide emissions premium compared to the average barrel of oil finding its way into the U.S. market.

Disagreement: EPA vs. State Department

The disagreement between the State Department, the Environmental Protection Agency, and several environmental groups, involves how many new carbon dioxide emissions this 17 percent premium results in when considering the 830,000 barrels of oil that the pipeline will carry each day when operating at full capacity. [Read more →]

“The energy and economic welfare of the United States and Mexico are intertwined by our shared geography, geology, and peoples. The Transboundary Hydrocarbon Agreement will help to tie our countries together and grow our economies.”

- Daniel Simmons, Testimony before House Natural Resources Subcommittee on Energy and Mineral Resources, “U.S.-Mexico Transboundary Hydrocarbon Agreement and Steps Needed for Implementation,” April 25, 2013.

Mexico is America’s third largest trading partner and has been one of the largest sources of oil exports to the United States. Mexico is the largest recipient of U.S. gasoline exports and the second largest recipient of our natural gas exports.

The energy trade between the United States and Mexico is growing, especially for America’s finished petroleum and natural gas exports. Mexico’s heavy oil production is falling, but that means more spare refining capacity on the Gulf Coast if Canadian oil sands can be transported to the Gulf Coast.

The Gulf of Mexico is one of the most prolific hydrocarbon-producing areas for both the United States and Mexico. Oil production, especially in deepwater on the U.S. side of the border, has moved closer to the U.S.-Mexico maritime border in recent years. Until last year, however, there was no agreement on how to divide resources between the United States and Mexico for resources that straddle the border.

The Agreement

A Fact Sheet released by the U.S. Department of State on February 20th announced and described the Transboundary Hydrocarbon Agreement. [Read more →]

“Industrial development would have been greatly retarded if sixty or eighty years ago the warning of the [coal]conservationists had been heeded. . . . [T]he internal combustion engine would never have revolutionized transport if its use had been limited to the then known supplies of oil. . . . Though it is important that on all these matters the opinion of the experts about the physical facts should be heard, the result in most instances would have been very detrimental if they had had the power to enforce their views on policy.”

- F. A. Hayek, The Constitution of Liberty (Chicago: The University of Chicago Press, 1960), pp. 369-70.

Government energy planning is a long tried, long failed exercise. The inner Obama in his Argonne speech last week surely channeled Jimmy Carter; and Carter circa 1977 foreshadowed the 44th president of the United States. And President Carter did not introduce the idea of federal energy planning either.

To make these points, consider the following ten quotations, four from Carter, four from Obama, and two from the U.S. Department of Interior in 1939. Can you tell which is which? (Answers at the end)

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Milton Friedman famously remarked: “Concentrated power is not rendered harmless by the good intentions of those who create it.” But how can good intentions be squared with an Administration that plunders our taxes, energy resources, and the overall economy to satisfy select businesses (wind, solar, ethanol, battery) and an anti-industrial elite? They win, while we the 98 percent lose.

It is time for more Americans to learn about the real energy boom that the Obama Administration is trying to keep under wraps in major and countless minor ways. From this basis, baronyism and cronyism can be exposed and then expunged.

Our North American Energy Boom

An oil and natural gas boom is underway in the United States, born of horizontal drilling and hydraulic fracturing, or “fracing.” It has created tens of thousands of well-paying jobs directly, and hundreds of thousands more in hundreds of businesses that supply and support the industry and its workers.

In North Dakota, the unemployment rate is 2.4 percent, in large part because of a huge increase in natural gas and crude oil production from deep shale rocks that yielded nothing prior to fracing. The new technology is also driving job growth, higher incomes, and increased tax revenues for hard-pressed state and local governments in Louisiana, Pennsylvania, Texas and other states.

Meanwhile, 350 miles north of Edmonton, Alberta, other innovators are producing billions of barrels from oil sands that stretch across an area the size of Utah. Shallow deposits are accessible via surface mining, while deeper lodes are tapped using in situ drilling and steam injection. As work is completed in an area, the land is restored to woodlands, grasslands, lakes and marshes, and the process moves on. [Read more →]

“America can continue paying billions in subsidies annually to finance “green” technologies and agenda-driven science. Or we can generate hundreds of billions a year in royalties and taxes, create millions of jobs, and rejuvenate our economy by applying commonsense regulation to the Big Three consumer-chosen energies–oil, gas, and coal.”

The United States is now Balkanized into five distinct voting blocs, notes Joel Kotkin (two blue, two red, one blue?red). Other political analysts see the nation bifurcating along “makers” and “takers” lines, while still others say 50.6% of the popular vote is hardly a mandate.

In any event, when American voters reelected President Obama, they also returned his wide-ranging agenda at the EPA, Interior, Energy, and Justice departments for “fundamentally transforming” our nation from its limited-government roots. And not in the name of sound science and realistic tradeoffs between market failure and government failure. 

This won’t mean just ObamaCare, higher taxes on businesses and families, deficit spending, and tens-of-thousands of pages of new regulations. It will also bring more disputes over energy and environmental policies, the vanguard of Mr. Obama’s determined campaign to substitute so-called “green” energy for hydrocarbon energy.

Six-Front Interventionism

This conflict will be fought primarily on six battlegrounds.

1. Carbon taxes

Hurricane Sandy presented another pretext for regulating and taxing hydrocarbons. No respectable climatologist or meteorologist believes atmospheric carbon dioxide conjured up the destructive storm, but climate alarmism has always been about political science, not real science. [Read more →]

[Editor Note: In "Speaking of Power" (October 2012), POWER editor-in-chief Robert Peltier takes issue with a recent analysis concluding that the EPA's new CO2 rule for powerplants was inconsequential. Since his editorial was published, it was reported that a second wave of CO2 powerplant regulations are in the works.]

Cato Institute senior fellows Jerry Taylor and Peter Van Doren suggest in a recent Forbes blog that the U.S. Environmental Protection Agency’s (EPA’s) carbon pollution standard for new coal-fired power plants (Standard) is a meaningless skirmish in President Obama’s “war on coal.” But while the Standard may have no tangible impact on the industry in the future, it has great strategic benefit to the administration.

Going from Facts …

The blog posting, “President Obama’s Alleged ‘War on Coal’—Climate Change Edition,” correctly assesses the situation: First, the EPA’s recently proposed Standard covers only new coal-fired power plants built 12 months after the Standard goes into effect, perhaps in 2014, probably in 2015. The Standard limits carbon emissions from new plants to those of a typical gas-fired combined cycle plant. Because any additional emissions must be captured and sequestered, building a new coal plant under the proposed Standard isn’t practical or economic. The result: There are no new coal-fired plants on the drawing board in the U.S. The EPA, as the authors correctly point out, counts perhaps 15 “transitional sources” (other sources list 22) that may still be constructed as “grandfathered” plants. Ironically, if no new coal plants are constructed, the Standard produces no CO₂ reductions.

Second, the authors correctly note that the long-term price of natural gas is expected to remain low. As they say, the “futures price for natural gas in August 2012 (the farthest out that one can buy gas on the New York Mercantile Exchange) is $3.01 per million BTU.” Industry new construction has focused on gas-fired plants and wind turbines for the past few years. [Read more →]

The Heritage Foundation (founded 1980) is a think-tank leader in the current debate over energy policy and related environmental issues. Heritage’s energy worldview is stated at their website:

Energy and environmental policy is a national priority. Lawmakers should implement a long-term plan that allows free markets to balance supply and demand, ensures reliable and competitively priced energy for the future, and creates incentives for responsible stewardship of the nation’s resources and environment.

A recent report, “President Obama’s Taxpayer-Based Green Energy Failures,” lists 34 examples of “faltering or bankrupt green-energy companies” (with * denoting companies that have filed for bankruptcy). The at-risk total is approximately $7.5 billion, of which $1.6  billion is in receivership.

The numbers will only get higher. Yesterday, it was reported that the Solyndra loss could be $849 million (not $535 million). And there might be a rush after the election with or without an extension of the Production Tax Credit.

Here is the Heritage Foundation list: [Read more →]

[Ed. note: An important front in the energy-policy debate concerns the moral case for rich, dense, plentiful, reliable energy that is handmaiden to industrial society. In addition to the post below, see the contributions of Alex Epstein at this site.]

The duplicity and hypocrisy of environmental pressure groups seem to be matched only by their consummate skill at manipulating public opinion, amassing political power, securing taxpayer-funded government grants, and persuading people to send them money and invest in “ethical” stock funds.

In the annals of “green” campaigns, those against biotechnology, DDT and Alar are especially prominent. To those we should now add the well-orchestrated campaigns against Canadian oil sands and the Keystone XL Pipeline.

Background

Oil has been seeping out of Northern Alberta soils and river banks for millennia. Native Americans used the bitumen to waterproof canoes, early explorers smelled and wrote about it, and “entrepreneurs” used it in “mineral waters” and “medicinal elixirs.”

Today, increasingly high-tech operations are extracting the precious hydrocarbons to fuel modern living standards in Canada and the United States. Enormous excavator/loading shovels and trucks used in open pits during the early years are giving way to drilling rigs, steam injection, electric heaters, pipes and other technologies to penetrate, liquefy and extract the petroleum.

The new techniques impact far less land surface, use and recycle brackish water, and emit fewer air pollutants and (plant-fertilizing) carbon dioxide every year. Water use for Alberta oil extraction is a tiny fraction of what’s needed to grow corn and convert it into ethanol that gets a third less mileage per gallon than gasoline. [Read more →]