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OpenMarket: Energy

  • Fracking: The Gift Keeps Giving

    November 24, 2015 11:18 AM

    “U.S. proved crude oil reserves hit levels not seen since 1972, surpassing 39 billion barrels in 2014, according to newly released federal data,” Michael Bastasch reports in The Daily Caller. He continues:

    America’s proved crude oil reserves have grown for the past six consecutive years, according to the Energy Information Administration, and are now at levels not seen in 42 years. Crude reserves jumped 3.4 billion barrels from 2013 to 2014—a 9 percent increase.

    Similarly, U.S. proved reserves of natural gas are higher than at any time in the past 50 years.

    Proved reserves are those that can be extracted with current technologies under current prices. Recent increases in proved reserves are due to improvements in hydraulic fracturing and directional drilling, which allow drillers to find and extract oil and gas trapped in shale and other “tight” formations.

    The U.S. fracking boom combined with Canadian production from oil sands put downward pressure on global oil prices, “contributing to the price collapse in 2014 from more than $100 in the summer to about $50 a barrel today,” Bastasch observes.

  • Who's Playing Politics on the Keystone XL Pipeline?

    November 4, 2015 2:20 PM

    “The White House on Tuesday said President Obama had no intention of bowing to a request from the company behind the Keystone XL oil pipeline to delay a decision on the project, saying he wanted to take action before his tenure ends,” the New York Times reports. From the article:

    The State Department is reviewing a request made on Monday by the company, TransCanada, to pause its years-long evaluation of the proposed 1,179-mile pipeline, which has become part of a broader debate over Mr. Obama’s environmental agenda.

    Josh Earnest, the White House press secretary, said on Tuesday that “there’s reason to suspect that there may be politics at play” in TransCanada’s request. He strongly suggested that the review, which has been widely expected to result in a rejection of the pipeline as soon as this month, remained on track.

    “Given how long it’s taken, it seems unusual to me to suggest that somehow it should be paused yet again,” Mr. Earnest said about the evaluation at the State Department, which reviews proposed cross-border projects that require a presidential permit.

    The president wants an expeditious decision on KXL—whom does Earnest think he’s kidding? The State Department has been reviewing the project since September 2008—more than five times longer than the average review of cross-border infrastructure projects.

    TransCanada and its allies on and off the Hill have continually pushed for timely review and approval. During the administration’s seven-plus years of indecision, the State Department has conducted four major reviews—a Draft Environmental Impact Statement or EIS (April 2010), a Final EIS (August 2011), a Draft Supplemental EIS (March 2013), and a Final Supplemental EIS (Jan. 2014). The big-picture conclusion is always the same. Under the “No Action Alternative” (i.e. the project is not built and operated), Canadian crude still reaches Gulf Coast refineries, except it does so by other routes—rail, barge, smaller pipelines—that are less efficient, emit more carbon dioxide (CO2) per unit of oil delivered, and carry greater risk of oil spills, industrial accidents, and fatalities.

  • "Losing Our Minds" over Green Energy

    October 15, 2015 3:24 PM

    Eco-theocracy has swept America and Europe, resulting in governments devoting vast sums to build their Green Temples where “renewable energy” and “recycled materials” can be worshipped. High Priest Barack Obama advancing these themes in America often cited Spain as a nation that was leading the world in demonstrating how “green energy” could save the planet and grow the economy. As in the U.S., Spanish politicians from left to right rushed to expand government spending on these “noble” projects. President Aznar began all of this in 2004, launching the rapid development of renewables in Spain. Those programs were consolidated and expanded by subsequent governments led by President Zapatero. In the period from 2004 to 2011 expenditures on renewables grew rapidly, reaching €9 billion a year.

    Zapatero’s Minister of Industry and Energy, Miguel Sebastian, was the first to reign in this program, in 2010. Sebastian acknowledges in his recent book The False Bonanza that in the midst of the economic boom:

    Excited about [increased] economic activity and employment, we didn’t want to hear about the structural difficulties, of imbalances, or of sustainable growth.

    Sebastian’s mea culpa regarding the renewables mandate: “We lost our minds with green energy.” The resulting excesses were partly to blame for the problems, including skyrocketing consumer prices that Spain’s electricity sector has recently experienced.

  • Reasons for Global Warming Skepticism

    October 6, 2015 12:01 PM

    Democrats have developed a cottage industry in ridiculing and condemning Republicans as Luddites. How can any “reasonable” person deny that increased greenhouse gas concentrations in the atmosphere pose a global threat? Certainly dramatic shifts in average global temperatures will have dramatic consequences within a century for many nations?

    But, of course, few skeptics base their arguments on science alone. Critics oppose policies that would restrict current fossil fuel use on a global basis, noting the positive link between energy use and growth and the drastic consequences restricting supplies would pose, especially to already energy-starved regions of the world. Critics suggest a risk/risk approach to the climate change issue: consider the consequences of restricting fossil fuels today versus the consequences of continuing current energy use (with its attendant growth and innovation gains), while relying on those wealth and knowledge gains to make possible adaptations, if needed, at lower costs and pain.

    I outlined that approach long ago (see “The Role of Opportunity Costs in the Global Warming Debate” from the 1997 book Costs of Kyoto). Rational analysis always faces those three options: act now to minimize the threat, act now to reduce the impacts of the threat, and delay while knowledge and wealth increase. Note that most of us delay employment while we acquire greater life skills—do Democrats critique that choice for young people?

    Republicans, noting how past “crises” have been botched by a rush to act, rather than thinking, view the putative risks of climate change as but one of the many risks. The uncertainties of science, economics, and politics—all relevant if a rational, effective policy is to exist—should suggest to critics (some of them running for president), that rather than damaging our economy, as is happening in Germany and other European nations, we should aggressively seek to remove the regulatory and tax distortions that are slowing entrepreneurial growth.

  • Clean Energy Incentive Program: Why It Makes EPA's Power Plant Rule Even More Unlawful

    August 25, 2015 6:24 PM

    EPA’s Clean Power Plan (CPP), which imposes carbon dioxide (CO2) emission rate targets and tonnage caps on state electric power sectors, is unlawful in at least half a dozen ways.

    To mention just one flaw, Section 111(d) of the Clean Air Act, the CPP’s putative statutory basis, authorizes EPA to regulate “particular” “stationary sources,” not the wider marketplace, networked industry, or sector of which a source happens to be a part. Yet the CPP will compel states to revise their laws and regulations on electric dispatch policy, fuel mix policy, and demand-management policy.

    EPA’s final CPP contains a key initiative not mentioned in the draft rule: the Clean Energy Incentive Program (CEIP). EPA added the CEIP to jumpstart investment in wind and solar power, assuring environmental groups and renewable energy interests the CPP won’t trigger a ‘dash to gas’ as it suppresses electric power generation from coal. In other words, the CEIP’s job is to make sure the Clean Power Plan rigs the marketplace against all fossil-fuel generation. 

    The CEIP is an early action credit program. By “early,” EPA means the CEIP authorizes states to award regulatory credits for new renewable power provided before the CPP compliance period (2022-2030). EPA will, in addition, award up to 300 million tons worth of extra credits to ‘early actors’ on a matching basis.

    You might suppose EPA would explain the legal authority for a policy change potentially affecting hundreds of companies’ bottom lines. Yet neither the final CPP, the CEIP fact sheet, nor EPA’s proposed federal implementation plan discusses the CEIP’s statutory basis.

  • Is President Obama's Energy Wish Coming True?

    August 18, 2015 8:19 AM

    In a January 17, 2008, interview with the San Francisco Chronicle, then-Senator Obama said that “electricity rates would necessarily skyrocket” under his plan to fight global warming. He also said that under his plan, “if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them.” 

    His latter wish seems to becoming a reality. Bristol-based coal producer Alpha Natural filed for Chapter 11 bankruptcy protection earlier this month. It follows many other coal companies, such as Walter Energy Inc., Patriot Coal Corp., and James River Coal Co., in filing for bankruptcy.

    For fossil fuels, this may be just the beginning. The Obama administration’s Clean Power Plan is said to “accomplish little in the way of making any significant change in global emissions while simultaneously crippling the oil and gas industry and floating more ‘green energy’ plans which weren’t pulling their own weight.”  

  • Party Bias in EPA's Power Plant Rule?

    August 12, 2015 10:17 AM

    What’s the main difference between EPA’s final rule to regulate carbon dioxide (CO2) emissions from state electric-power sectors—the so-called Clean Power Plan (CPP), released August 3—and the draft rule, published in June 2014?

    “The media have focused on modest tweaks to non-binding national goals—emissions are now expected to drop 32 percent by 2030, versus 30 percent in the draft, and coal is expected to provide 27 percent of our power instead of 31 percent—but those aren’t the changes that matter,” argues Politico reporter Michael Grunwald.

    What does matter? The changes to states’ legally-binding emission-reduction targets, which have “serious political implications.” The final rule is more aggressively anti-coal than the draft rule:

    The original draft took it easiest on states with the heaviest reliance on dirty fossil fuels – states that nevertheless complained the most about Obama’s supposedly draconian plan. The final rule cracks down much harder on those states, while taking it much easier on states that are already moving toward cleaner sources of electricity.

    Check out this excellent chart compiled by my colleague Alex Guillen. North Dakota would have been required to cut emissions just 10.6 percent to comply with the draft rule, the least of any state; it will have to cut emissions 44.9 percent to comply with the final rule, the most of any state except for similarly fossil-fueled Montana and South Dakota. Coal-rich Wyoming, Kentucky, West Virginia and Indiana were also among the biggest losers in the revised plan. Meanwhile, the states that are already greening their grid – led by Washington, Oregon and New York – were the biggest winners in the final rule.

    Is there also a partisan thrust to this pattern? The title of Grunwald’s article calls the CPP a “whack at red states.” The article itself, however, does not use the terms “Red State” and “Blue State.”

    So let’s look at how the draft and final rule targets compare in states won by Mitt Romney (“Red”) and those won by President Obama (“Blue”) in the 2012 presidential election.

  • EPA's Proposed and Final "Clean Power" Plan: Which Is Worse?

    August 4, 2015 6:46 PM

    “Climate Rule Worse than We Thought,” Sen. John Barrasso (R-Wyo.) warned today in an email alert about EPA’s so-called Clean Power Plan (CPP). He explains:

    The final rule cuts coal, which today provides about 39 percent of the country’s electricity, even more than the administration proposed in June 2014. The rule also relies heavily on renewables, which only provide five percent of energy today despite significant investments. And it eliminates the move to natural gas that created thousands of jobs across the country. This all means electricity bills will go up, and jobs will be lost.

  • A Primer on Expected EPA Climate Rules

    July 31, 2015 12:41 PM

    In 2010, during the 111th Congress, Senate Majority Leader Harry Reid shelved a cap-and-trade bill because too many Democrats opposed the bill during caucus meetings. And during his 2012 reelection campaign, President Obama conspicuously dodged speaking about climate change. Despite the failure of climate policy within his own party in the Senate, and after neglecting the issue altogether in 2012, President Obama in the summer of 2013 unveiled a far-reaching executive strategy for addressing global warming, known as the Climate Action Plan.

  • Vatican Downplays Political Involvement in Climate Debate While Joining Forces with Radical Leftist Naomi Klein

    July 1, 2015 7:28 PM

    Kathryn Jean Lopez reports on NRO’s The Corner that Cardinal Peter Turkson downplayed the political intentions of Pope Francis’s encyclical, Laudato Si’, when he spoke to a “high level discussion” in New York City Tuesday night (June 30).

    According to Lopez, Turkson said that the encyclical was, “Rather than a political or doomsday document, it’s a call to better stewardship.” Moreover: “He also insisted that Pope Francis is not against business and never puts them down in it or elsewhere but challenges business and technology to always be used to help the poor.”

    Cardinal Turkson, president of the Pontifical Council for Justice and Peace and the Vatican’s point man on climate action, was apparently speaking to a group of prominent Roman Catholics, many of whom were probably concerned about what they had read about the papal encyclical. And apparently the cardinal thought that he could get away with what he said because few in the audience had read the encyclical. 

    But earlier in the day, the cardinal addressed the United Nations’ High Level Meeting on Climate Change, convened by UN Secretary-General Ban Ki-moon. To that very different audience, Cardinal Turkson had a very different message: “Overcoming poverty and reducing environmental degradation will require the human community seriously to review the dominant model of development, production, commerce and consumption…. Such a courageous review and reform will take place only if we heed ‘the call to seek other ways of understanding the economy and progress’ (quoted from paragraph 16 of the encyclical). The political dimension needs to re-establish democratic control over the economy and finance, that is, over the basic choices made by human societies.”

    Much of what Cardinal Turkson said was in the political code used by leftist international bureaucrats. If anyone doubts that Pope Francis’s Laudato Si’ is a political rant that advocates dismantling modern industrial civilization, then consider the climate conference that the Vatican is hosting this week. Cardinal Turkson invited Naomi Klein to co-chair the conference.


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