As readers of this blog are no doubt aware, I’m a big fan of ‘fracking,’ a.k.a. hydraulic fracturing, the American-made technological miracle in natural gas production that has roughly doubled known North American gas reserves in only the last five years. In previous posts, I’ve defended fracking from nonsensical attacks launched by ill-informed environmentalists. Quite contrary to what the alarmists would have you believe, we’re lucky for the fracking revolution. Not only has it dramatically increased our domestic supply of natural gas, but now it’s being used to extract oil, too, and it could prove just as revolutionary for that industry.
Fracking does, however, have one major drawback: it has caused rampant rent-seeking. While gas supply has exploded, American consumption increased only 9 percent from 2005 to 2010. The sagging economy has further increased this disparity between gas supply and demand. For consumers, this is great, as it should usher in a period of relatively stable, low prices in the historically volatile gas market. For gas producers, it could be great. The low prices should make their product more attractive relative to other forms of energy. In turn, this could lead to whole new sectors of demand.The problem is that a couple major players in the gas industry refuse to wait for market forces to work their magic. Instead, these impatient industry titans are trying to convince politicians to enact policies that force Americans to use natural gas.
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The Wall Street Journal has a long piece today about the prospect of using the state to move part of the U.S. transportation fleet from oil to natural gas. It gives prominent voice to the massive public affairs campaign of T. Boone Pickens to add billions to his natural gas fortune as a swansong to a prosperous career.
This campaign takes the form of a bill embraced by ostensible fiscal hawks, causing an uproar from those conservatives who took umbrage at Members abandoning their pledges of fiscal sobriety at the drop of a billionaire’s phone call. This enabled the media to describe the Republicans’ ‘circular firing squad.’ Well played, gentlemen.
The vehicle was not Pickens’ first choice. His first choice was a windmill mandate, transparently pushed by a handful of gas interests, including Chesapeake Energy’s Aubrey McClendon, to put a green hat on their efforts to use the state to displace coal’s market. In this effort, they found natural allies in environmentalist special interests.
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I travelled to Denver twice in the last 7 days to testify before the Senate State Affairs Committee on HB 1291, Colorado’s State Implementation Plan to meet the Regional Haze provision of the federal Clean Air Act.
I told the Committee that HB 1291 is illegal. And I rebutted the distortions peddled by its proponents, who also testified. Illegality and disingenuousness are huge accusations, and I made them twice, in testimonies a week apart, so the bill’s proponents had time to conjure a response. But no one disputed my assertions. Because they were true.
Nonetheless, the Plan passed out of Committee, due to the fact that it enjoys the support of two of Colorado’s richest special interests, for which billions of dollars were at stake. Today, HB 1291 was enacted by the full Senate, by a 25-10 vote. Two weeks ago, by a 58-7 vote, it was passed by the House of Representatives. If there’s one thing a bipartisan, bicameral majority can agree on these days, it’s the importance of currying favor with the deepest pockets.
This is a long blog about the who, what, why, and when of Colorado’s Regional Haze State Implementation Plan, the most outrageous rip-off you’ve never heard of.
The Back Story
Colorado’s Regional Haze State Implementation Plan originated not in the Centennial State, but in Oklahoma. It owes its form to Aubrey McClendon, CEO of Chesapeake Energy, a natural gas company headquartered in Oklahoma City.
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For years, certain natural gas producers, led by Chesapeake Energy CEO Aubrey McClendon, have pursued a myopic strategy of demonizing coal in an effort to seize a larger share of the electricity generation market.
It started in 2008, when Chesapeake funded an unsigned “Dirty Coal” advertising campaign. It featured black and white photos of children, with coal smudged faces, looking sad. Having set the table with anti coal propaganda, McClendon then teamed up with the Sierra Club’s Carl Pope to implement a legislative strategy. The pair traveled around the country, pitching natural gas as the “bridge fuel” to a green energy future.
They scored one major success, in Colorado. There, ex-Governor Bill Ritter had made the “New Energy Economy,” the centerpiece of his administration. As such, he was receptive to fuel switching as a way to meet his Climate Action Plan, a non-binding mandate to reduce the state’s greenhouse gas emissions 20% below 2008 levels. As I’ve written about at length here, the Ritter Administration engaged in a number of deceptions to carry Chesapeake’s water.
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