Note: A nearly identical version of this column appeared last week in Forbes Online. I am reposting it here with many additional hyperlinks so that readers may more easily access the evidence supporting my conclusions.
The November 2012 elections ensure that President Obama’s war on coal will continue for at least two more years. The administration’s preferred M.O. has been for the EPA to ‘enact’ anti-coal policies that Congress would reject if such measures were introduced as legislation and put to a vote. Had Gov. Romney won the presidential race and the GOP gained control of the Senate, affordable energy advocates could now go on offense and pursue a legislative strategy to roll back various EPA global warming regulations, air pollution regulations, and restrictions on mountaintop mining. But Romney lost and Democrats gained two Senate seats.
Consequently, defenders of free-market energy are stuck playing defense and their main weapon now is litigation. This is a hard slog because courts usually defer to agency interpretations of the statutes they administer. But sometimes petitioners win. In August, the U.S. Court of Appeals struck down the EPA’s Cross State Air Pollution Rule (CSAPR), a regulation chiefly targeting coal-fired power plants. The Court found that the CSAPR exceeded the agency’s statutory authority. Similarly, in March, the Court ruled that the EPA exceeded its authority when it revoked a Clean Water Act permit for Arch Coal’s Spruce Mine No. 1 in Logan County, West Virginia.
A key litigation target in 2013 is EPA’s proposal to establish greenhouse gas (GHG) “new source performance standards” (NSPS) for power plants. This so-called carbon pollution standard is not based on policy-neutral health or scientific criteria. Rather, the EPA contrived the standard so that commercially-viable coal plants cannot meet it. The rule effectively bans investment in new coal generation.
We Can Win This One
Prospects for overturning the rule are good for three main reasons. [click to continue…]
[* This column is a lightly edited version of my post earlier this week on National Journal's Energy Experts Blog.]
You know we’re deep into the silly season when ‘progressives’ champion reverse protectionism – banning exports – as a solution to America’s economic woes. Congress should reject proposals to ban exports of petroleum products and natural gas for at least six reasons.
(1) Export bans are confiscatory, a form of legal plunder.
As economist Richard Stroup has often pointed out, property rights achieve their full value only when they are “3-D”: defined, defendable, and divestible (transferable). A total ban on the sale (transfer) of property rights in petroleum products or natural gas would reduce the asset’s value to zero (assuming no black market and no prospect of the ban’s repeal). To the owner, the injury would be the same as outright confiscation. A ban on sales to foreign customers would be similarly injurious, albeit to a lesser degree.
The foregoing is so obvious one is entitled to assume that harming oil and gas companies is the point. I would simply remind ‘progressives’ that the politics of plunder endangers the social compact on which civil government depends. Why should others respect your rights when you seek to deprive them of theirs? Every act of legal pillage is precedent for further abuses of power. Do you really think your team will always hold the reins of power in Washington, DC? [click to continue…]
Arthur Brisbane of the NYT this weekend published an op-ed which reads a bit like a ‘mea culpa’ in response to repeated criticisms of reporter Ian Urbina’s jumbling attack on natural gas hydraulic fracturing published late last month:
I also asked why The Times didn’t include input from the energy giants, like Exxon Mobil, that have invested billions in natural gas recently. If shale gas is a Ponzi scheme, I wondered, why would the nation’s energy leader jump in?
Mr. Urbina and Adam Bryant, a deputy national editor, said the focus was not on the major companies but on the “independents” that focus on shale gas, because these firms have been the most vocal boosters of shale gas, have benefited most from federal rules changes regarding reserves and are most vulnerable to sharp financial swings. The independents, in industry parlance, are a diverse group that are smaller than major companies like Exxon Mobil and don’t operate major-brand gas stations.
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In a hastily written post, I erroneously conflated the difference between ‘oil shale’ and ‘shale oil’ and incorrectly thought that the report mentioned below was referring to ‘shale oil.’ Had I been more careful, I would have noticed the end of the report where the author meticulously differentiated between the two. As written, the post below is mostly useless now as I criticize claims that weren’t made. The phrases ‘laughably naive’ and ‘willfull ignorance’ would seem to be more appropriately directed towards my own writing in this case. I apologize to the authors, and thank them for politely pointing out my error in a personal e-mail. Mea culpa.
Unedited, original post below:
So says The Checks & Balances Project.
As evidence for a shale oil boom being science fiction, the report cites a bunch of newspaper articles in the past (seriously, some from the early 20th century) where oil shale is mentioned as a potential future energy source. So, because analysts or politicians (or journalists) thought shale oil would come around sooner than it did, present day shale oil production is apparently science fiction. How about a current newspaper article that actually shows companies using fracturing techniques to get shale oil out of the ground, wouldn’t that disprove the whole ‘science fiction’ notion? The New York Times, Oil in Shale Sets Off a Boom in Texas, from late May: [click to continue…]
In the worst Spitzerian tradition, New York Attorney General Eric Schneiderman (D) today announced that he is suing the federal government for failing to conduct an environmental analysis on the impacts to drinking water caused by ‘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 5 years.
New York could be a huge beneficiary of fracking, as much of the state is situated above the Marcellus Shale, an enormous gas deposit in the American Northeast that can be tapped only with this new technology. But environmentalist special interest groups oppose the practice, because it would expand America’s supply of hydrocarbon energy, and they have whipped up alarm among Manhattanites by making unfounded claims that fracking would pollute New York City’s water supply.
In fact, these allegations are bunk. Just ask the British Parliament, which recently concluded that fracking is safe for water supplies. Closer to home, AG Schneiderman could have sought counsel from New York State Geologist Dr. Taury Smith, a self-described liberal Democrat, who told the Albany Times Union that the state’s natural gas deposits are “a huge gift.” Dr. Smith dismissed the environmentalists’ allegations about water contamination as being “exaggerated,” and “the worst spin.”
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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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British columnist Johann Hari recently took to the Huffington Post to try to whip up alarm about the supposed dangers posed to drinking water by ‘fracking,’ a.k.a hydraulic fracturing, an American-made technological miracle in natural gas production that has roughly doubled known North American gas reserves in only the last five years. I rebutted Hari’s baseless environmentalist talking points in a previous post, and I am much pleased to report this morning that the British Parliament agrees with my debunking of his nonsensical claims.
According to Public Service Europe (by way of the Global Warming Policy Foundation),
“Shale gas drilling has been given the go-ahead by members of the UK parliament who have insisted that the process is safe. An inquiry by the Energy and Climate Change committee concluded that fracking, the process by which gas is extracted from shale rock, poses no risk to underground water supplies as long as drilling wells are properly constructed.”
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London Independent columnist Johann Hari feels betrayed by British Prime Minister David Cameron’s decision to embrace the American-made revolution in natural gas production, known as hydraulic fracturing (a.k.a., ‘fracking’). Recently, he wrote in the Huffington Post,
“When the British Prime Minister David Cameron gazed into the dewy eyes of a husky and promised to lead “the greenest government ever,” what did you think that would involve?… you certainly wouldn’t have expected David Cameron’s latest plan. He has decided to convert us to a new energy source [fracking] that seems, in the US, to have released cancer-causing chemicals and radiation into the water supply…”
“Cancer-causing chemicals” AND “radiation” have been released “into the water supply”….that sounds really scary! Fortunately for this American tap-water enthusiast, Hari is full of it. As I explain here,
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Two days ago, the New York Times reported that the French Parliament is “leaning” towards a ban on hydraulic fracturing, the American-made technological revolution in production that has vastly increased the known economically recoverable global reserves of natural gas. According to the article,
French lawmakers opened debate on Tuesday on proposals to ban a method for extracting oil and gas deposits from shale because of environmental concerns, throwing up the first serious stumbling block to firms that want to use the practice.
Looking with alarm at the experience in the United States, where shale gas is booming, even members of President Nicolas Sarkozy’s governing conservative party have come out against the practice, known as hydraulic fracturing, in which water, sand and chemicals are pumped deep underground under high pressure to free scattered pockets of oil and gas from dense rock formations.
The article, while interesting, misses the big picture. For starters, it’s unclear why French lawmakers would look “with alarm” at the U.S. experience. While there is some evidence that poorly built “fracking” rigs could lead to the escape of methane into local groundwater wells, this isn’t as disturbing as it sounds. Methane (ie, natural gas) does not make water poisonous, and there is no evidence that the fluids used in the process, which could be toxic, have leaked into well water. Much more importantly, there is ZERO evidence that the process affects water tables used for utility scale water supply, although environmentalist special interests are quick to try to conflate well-water methane contamination with water table contamination. The upshot is that hydraulic fracturing has been used in this country for fifty years, without harming public health and environment.
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The New York Times has a story on the front page of its business section headlined, “Natural Gas Now Viewed as Safer Bet.” Politico’s Morning Energy reports that Van Jones tweeted a response: “At least until the public learns that fracking poisons H2O.”
Van Jones appears to be a serious person. He is certainly highly respected in the liberal academic and political establishment. He earned a law degree at Yale University, founded three leftist activist organizations, and wrote a book, the Green Collar Economy. Time magazine named him a Hero of the Environment.
President Barack Obama appointed Jones in March 2009 to the new position of Special Advisor for Green Jobs, Enterprise, and Innovation at the White House Council on Environmental Quality. Jones resigned in September 2009 after controversies arose about several of his past statements and associations.
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