Last week on this blog, I explained how Dow Chemical’s chief rationale for restricting exports of liquefied natural gas (LNG) — the claim that gas used as a feed stock in domestic manufacturing adds more value to the economy than gas exported overseas — would also justify:
- Curbing Dow’s exports of chemicals, plastics, and electronic components to help domestic manufacturers of paints, cosmetics, pharmaceuticals, cell phones, laptops, and other finished goods become more competitive in the global marketplace.
- Empowering bureaucratic agencies to commandeer private property whenever they think the resource would add more value in the hands of some other firm or industry.
Dow CEO Andrew Liveris would no doubt cry bloody murder if Congress proposed to give Dow a dose of its own medicine and restrict the company’s exports in the “public interest.” Presumably, Mr. Liveris would also disavow any sympathy for confiscatory centralized economic planning, although that is in effect what he is advocating.
Other rationales Dow and its allies invoke to oppose “unfettered” gas exports include:
- “Unlimited” gas exports could dramatically reduce the domestic supply of the natural gas liquids (NGLs) on which manufacturers depend as key feed stocks.
- Long-term contracts to export liquefied natural gas (LNG) will “lock in” deliveries to foreign buyers, subjecting U.S. manufacturers to high risks of price shocks and supply disruptions.
- Approving all LNG export applications that have been submitted to the Department of Energy (DOE) could result in “half” of all U.S. gas produced being burned for the Btus in overseas power plants, pushing U.S. gas prices to Asian levels.
These are all false alarms. Let’s take them one at a time. [click to continue…]
President Obama and his obedient lap dogs are out in full force this week attempting to convince voters that those evil guys on Wall Street have moved on from destroying the value of their homes to artificially raising the price of gasoline. Soon they are coming for your first born. From one of Obama’s speeches this week:
So today, we’re announcing new steps to strengthen oversight of energy markets. Things that we can do administratively, we are doing. And I call on Congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families. And be specific.
First, Congress should provide immediate funding to put more cops on the beat to monitor activity in energy markets. This funding would also upgrade technology so that our surveillance and enforcement officers aren’t hamstrung by older and less sophisticated tools than the ones that traders are using. We should strengthen protections for American consumers, not gut them. And these markets have expanded significantly.
Now the ability to place blame for rising gasoline prices on Wall Street (or Republicans) is good politics, but its not true. The Center for American Progress report linked to above, chillingly titled “Is Big Oil Rigging Gasoline Prices?” begins by alerting the reader to the fact that the American people, having been polled, believe that Wall Street must be behind the recent rise in gasoline prices. Apparently the average American’s opinion on financial speculation, oligopoly pricing, and their link to gasoline prices is sufficiently meaningful to include in an article not accusing Big Oil of manipulating oil prices, but just putting the question out there. I hastily blogged about that report here, as did the editors of RealClearEnergy.
Obama pulled the exact same stunt last year. He set up some sort of task force/executive agency/working group/etc. to make sure that there isn’t any illegal price manipulation going on. The agency never found anything, and its unclear if they even really did any investigating:
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The shale-gas revolution in the United States has led to massive increases in natural gas production, increasing our domestic supply and reducing prices. While global trade in natural gas exists, the infrastructure and volume is low enough such that there isn’t much of a single global price for natural gas (unlike oil, where there are a few prices which tend to stick close to one another). You can look at spot prices for various countries here, note the large disparity.
The shale gas revolution in the U.S. has been so enormous that infrastructure that was built with the expectation of importing natural gas is now being switched to export natural gas to other countries. Congressman Ed Markey (D-Mass.) is apparently concerned that producers of natural gas in the U.S. would like to export some of the excess to take advantage of higher prices in other parts of the world. Yet as Markey so often likes to point out, America has in recent decades consumed more oil than we produced. If other countries had decided 40 years ago to shut off their oil exports to keep domestic prices as low as possible, America would be a much different place today (and much worse off).
Believe it or not, low energy prices are good for countries other than just the United States. Trade helps make this possible, so its odd that Markey would want to restrict natural gas exports: [click to continue…]
Coming out of The New York Times of all places, “Number of Green Jobs Fails to Live Up to Promises.” Unsurprisingly, it has the green groups riled up.
A study released in July by the non-partisan Brookings Institution found clean-technology jobs accounted for just 2 percent of employment nationwide and only slightly more — 2.2 percent — in Silicon Valley. Rather than adding jobs, the study found, the sector actually lost 492 positions from 2003 to 2010 in the South Bay, where the unemployment rate in June was 10.5 percent.
Federal and state efforts to stimulate creation of green jobs have largely failed, government records show. Two years after it was awarded $186 million in federal stimulus money to weatherize drafty homes, California has spent only a little over half that sum and has so far created the equivalent of just 538 full-time jobs in the last quarter, according to the State Department of Community Services and Development.
The weatherization program was initially delayed for seven months while the federal Department of Labor determined prevailing wage standards for the industry. Even after that issue was resolved, the program never really caught on as homeowners balked at the upfront costs.
(Note that it took seven months, as in 210 days or almost 60% of a year, to figure out wage standards for an industry. Good enough for government work.)
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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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Get with the Plan
In The National Review, T. Boone Pickens again makes the case for The NAT Gas Act of 2011. I slept through the first few paragraphs (the piece began with a constitutional argument).
There isn’t a whole lot of new information in here, its more of a response to the ongoing attacks on the legislation. He reminds us that Americans get all antsy when gas prices go up, but when prices drop again we are lulled back into indifference.
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1. Everything you’ve heard about fossil fuels may be wrong, Michael Lind (Salon):
The arguments for converting the U.S. economy to wind, solar and biomass energy have collapsed. The date of depletion of fossil fuels has been pushed back into the future by centuries — or millennia. The abundance and geographic diversity of fossil fuels made possible by technology in time will reduce the dependence of the U.S. on particular foreign energy exporters, eliminating the national security argument for renewable energy. And if the worst-case scenarios for climate change were plausible, then the most effective way to avert catastrophic global warming would be the rapid expansion of nuclear power, not over-complicated schemes worthy of Rube Goldberg or Wile E. Coyote to carpet the world’s deserts and prairies with solar panels and wind farms that would provide only intermittent energy from weak and diffuse sources.
A healthy, optimistic look at future energy supplies.
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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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