Fear Of Fracking

Many environmentalists have voiced concerns about the consequences of fracking.  Now they are joined by a billionaire Saudi prince — who is concerned for a different reason.

Fracking is the process by which deep underground rock formations are broken up to free trapped natural gas, oil, and other fossil fuels.  It has produced a nascent oil boom in eastern Ohio and other parts of the United States that are home to shale formations where the fossil fuels are found.

The Saudi prince, Alwaleed bin Talal, is worried because he thinks the increased oil and natural gas production that has been caused by fracking threatens the Saudi Kingdom’s economy, which is almost wholly dependent on oil production.  The outspoken prince is a bit of a rogue element in Saudi Arabia, but his point is irrefutable:  If demand from the United States declines due to the availability of domestic shale oil production, it will inevitably have an impact on suppliers.  Two OPEC countries, Nigeria and Algeria, have already seen a sharp decline in U.S. imports of their oil.

For years, America has talked about the importance of breaking its dependency on middle Eastern oil — a result that also would reduce the pressure on America’s deep involvement in all of the geopolitical issues that are found in that troubled region of the world.  America’s shale oil and natural gas reserves are believed to be enormous and, as Prince Talal notes, may allow us to achieve that goal.  As we address the issues surrounding oil shale production in our country, we need to keep that fact in mind.

Iraq’s Oil Boom

Here’s some good news from a country that could use some good news:  Iraq is experiencing an oil boom.  The country has achieve a 20 percent increase in exports and is now pumping out almost 2.5 million barrels of oil a day.

The increase in production is especially impressive because Iraq has done it despite the bombings and other acts of violence that continue to plague the country.  The government has made port improvements that have allowed for the increased exports and has managed to engineer an increase the flow of oil.  Iraq is now pumping crude at a rate seen only once since Saddam Hussein took power in 1979, and plans to increase its production even more next year.  Indeed, Iraq’s announced goal is to pump 10 million barrels a day by 2017.

This is good news for the world — Iraq’s production has helped to hold down oil prices and has reduced Iran’s oil power — but it is especially good news for the people of Iraq.  People are back at work in the oil fields and ports, oil revenues are pouring into the country, and internal improvements are being made to allow for increased production.  Of course, there are still serious concerns about the ongoing sectarian violence in the country, about corruption and favoritism, and about a fledgling government that has had difficulty governing.  It remains to be seen whether those concerns are exacerbated by the incoming oil money or whether the cash allows the competing factions to paper over their differences and agree upon their shares of a rapidly expanding pie.

Sitting On A Gas Price Spike

Dear President Obama and Members of Congress,

Could you please talk to your chauffeurs about the price of gas?  I know that you probably don’t drive or gas up your own vehicles, but your handlers and advisers and staffers just might, and therefore might know what I’m talking about.

The price of gas is spiking.  Here in Ohio, the average price per gallon increased 20 cents last week, and the price continues to climb rapidly.  This week, on my drive to Cleveland, a three-quarter tank fill-up cost more than $60.  Just to make sure you understand, that is not a good thing.  $60 is a lot of money.  If you have a job that requires you to drive a lot, as many of us do, higher gas prices suck.  As you’re driving, watching the fuel gauge drift down, you feel like you’re sitting on that sharp gas price spike, if you catch my drift.

Please don’t tell us nothing can be done about it right now, because drilling for oil in America wouldn’t affect prices in the short term.  Incidentally, why does that rationale only get used to avoid developing our natural resources, and never when we are talking about things like building commuter rail lines that wouldn’t be ready for years?  In any case, no one expects you to snap your fingers and lower prices immediately.  We do know, however, that the law of supply and demand works, and if we collect the oil and gas within our borders it will result in lower prices than would otherwise exist.  We just want you to stop flapping your gums and get off your duffs and do something to avoid the likelihood that we’ll be dealing with $6.00 or $7.00 or $8.00 a gallon gas for the indefinite future.

Speaking of commuter rail, please don’t lecture us about public transportation.  Out here in the Midwest, we don’t have the luxury of subsidized Amtrak trains as a travel option, and most of us who need to drive can’t plan our business trips around bus schedules.  You need to accept and embrace the fact that ours is a country of car owners and drivers, and we need gas.  Welcome to reality!

So please, figure out how to get our oil and gas out of the ground and into our tanks, and to do so in a way that is environmentally sensitive.  If you can’t do that, we’ll find somebody who can.  If that happens, perhaps you can experience firsthand the joys of crushingly expensive gas as you are driving to your cushy lobbying job or your next lucrative speaking engagement.

Sincerely, the American Commuter

Two Sides to Every Dispute

Here’s is an interesting article which points out reasons why the Keystone pipeline was a bad deal all along. Of course this is contrary to Bob’s article and point of view expressed in his blog earlier today, but in an effort to be fair and balanced I thought it was worth posting. This decision was clearly not an easy one for the president.

If you don’t have time to read the article here is a brief recap.

TransCanada made it known that most if not all of the extracted and refined oil from the pipeline would be exported and sold over seas not kept in the United States.

Currently their are Canadian oil reserves stored in the midwest and part of the pipeline deal was that TransCanada could drain these reserves and export them which would raise gas prices in the United States especially in the Midwest.

The original TransCanada permit application stated there would be a peak workforce of 3,500 temporary jobs.

The current Keystone pipeline in Canada leaked twelve times last year.

Nebraska Republican Governor Heineman opposed the pipeline because the proposed route of the pipeline was to run through an aquifer in the state that supplies clean drinking water to 2 million Americans plus water for the agriculture industry. His reasoning was does it make since to create 3,500 temporary jobs when even a minor spill near the aquifer would jeopardize more jobs not to mention the health of the citizens of his state.

I’m not saying the pipeline is a bad idea, but I have no problem with the Obama administration taking their time to consider this project carefully. Have we already forgotten our frustrations watching video day after day of the Gulf Oil spill releasing oil into the ocean ?

The Keystone Pipeline And Lilliput

Today President Obama rejected a proposal to build the Keystone Pipeline. It is one of those decisions, I think, that carries a deeper message about our country, its leaders, and where we are headed.

The proposed pipeline would run 1,700 miles, carrying oil from Canada to the Gulf of Mexico.  It was opposed by environmentalists, who hate the idea of a pipeline crossing the heartland and argue that it would invade sensitive environmental areas in Nebraska.  It was supported by business and labor unions, who say it would be like a colossal public works project — except the $7 billion cost wouldn’t be paid by the government, but by the company that wants to build the pipeline.

The pipeline issue posed a difficult political choice — so the Obama Administration punted and blamed Congress.  The State Department said that the denial was due to Congress imposing an unreasonable 60-day deadline on the Administration’s decision on the project.  Congress, of course, says the 60-day deadline was necessary because the Administration was dithering and proposed to delay any decision until after the 2012 election.  The story linked suggests that the Administration’s decision today was motivated by various carefully weighed political considerations.

The deeper message, I think, is that we increasingly seem to be a country that can’t get things done.  In my view, approving the pipeline makes sense.  It would create lots of jobs during these tough times.  It would inject huge sums into our economy.  It would allow us to get more oil from a safe source, rather than relying on oil from more volatile areas of the world.  Given Iran’s latest saber-rattling talk about closing the Straits of Hormuz, the latter point may be the most important point of all.  (And don’t talk to me about focusing on alternative renewable sources of energy — the reality is that we need oil now and will need it for the foreseeable future.  Our energy needs aren’t going to be met by the magical ministrations of Tankerbelle, the petroleum fairy.)

Obviously, environmental issues must be considered in deciding where the pipeline should go — but why should they quash it altogether?  It already is designed to run through the sparsely populated  central region of the United States.  We need to remember that we live in a country that is criss-crossed and tunneled through with pipelines, power lines, generators, underground storage tanks, highways, railroad, and other delivery systems.  I’m confident that the experts can find an appropriate location for this pipeline and install the protections needed to make it as safe as is reasonably practicable in an uncertain world.

America used to be fabulous at this type of massive project, like the transcontinental railroad, the Hoover Dam, the Panama Canal, or many others.  Those projects had broad political support because they promoted development and commerce.  Does anyone doubt that Democratic Party icons like Franklin Roosevelt, Harry Truman, and Lyndon Johnson would approve this pipeline?  Conversely, does anyone think the interstate highway system could have been built so speedily if the current regulatory morass that has grown up around consideration of environmental issues existed in the ’50s and ’60s?  Consider that, the next time you drive on our interstates and see the hills that have been sheared off or tunneled through so that you can get from point A to point B at 65 mph.

So now we’ll wring our hands, and hire consultants, and do impact studies for months and years more — all the while leaving people without a job unemployed when they could be working, leaving our economy moribund when it could be helped, and leaving our reliance on energy from volatile regions unchecked when it could be reduced.  Does any of that really make any sense for our country?

America has become like Gulliver, the slumbering giant tied down by thousands of Lilliputian restraints and political considerations and regulations and standards and policies and statutory notice and comment requirements, to the point where it is unable to move.  We need to break those ties and start moving again.