February 4, 2010
Cheap Natural Gas and Its Democrat EnemiesBy Ed Lasky
We have the power to tap vast shale gas reserves that lie under our feet through large swaths of America, but special interest groups aligned with the Democratic Party are trying to frustrate plans to bring this cheap, plentiful, and clean energy to the surface. Who are the irresponsible parties?
A primer on shale gas
Shale gas is natural gas trapped in rock formations far below the earth's surface. These gas-bearing rock formations run in layers. American energy companies have developed the technology to drill horizontally through the layers. Then "fracking" happens. This is a process whereby a pressurized fluid (composed almost completely of water and sand, with a miniscule potion of commonplace chemicals that speeds the flow of the gas) is used to crack the rock and release the gas.
We are the Saudi Arabia of shale gas. The potential is enormous. Already, landowners and states have benefited from royalty payments. Hard-hit communities are experiencing an economic revival. Small business, people looking for jobs, community centers, fire departments, and schools have all been beneficiaries.
More importantly, Americans have all benefited from low natural gas prices because of the bonanza of shale gas that has just begun to come our way. The talk of the need to build giant, expensive liquefied natural gas ports has ended. Threats of a natural gas cartel formed by our adversaries are just so much gaseous talk. Our national security has been bolstered (if Europe taps their own substantial shale gas reserves, the threats from Iran, Russia, and Algeria will be empty). Even the Russians are fretting about our fracking, expressing concern that this revolutionary development will weaken their own power. There is so much shale gas waiting to be tapped that the dream of natural gas-powered vehicles can very well reach fruition.
Who could possibly want to throw a wrench into these bright prospects?
Low shale gas prices create a problem for the renewable energy industry and for the promoters of solar, bio-fuels, and wind power.
These alternative energy sources all have problems associated with them. They are vastly more expensive than gas. For example, generating a megawatt-hour of electricity using natural gas costs $80; with wind it would cost $142, and solar would cost $396. Wind power is intermittent, interferes with birds, and is terribly inefficient; ironically, wind farms often must be backed up with natural gas-powered plants. Solar farms have a huge footprint and must be located in sunny areas; huge transmission lines trigger the NIMBY (Not In My Backyard) reflex. Ethanol, created by refining corn, has caused a spike in food prices, may require more energy to produce than it creates, and depletes aquifers (corn is a thirsty crop).
Renewable-subsidies have been enormously wasteful, says Michael Liebreich, chief executive of Bloomberg New Energy Finance. Even nuclear power, recently touted by Barack Obama as a way to bolster his political prospects, has no chance of meeting our energy needs. Even if any plants are able to navigate through all the obstacles that have prevented the building of any new nukes for decades, they will take additional decades to go online -- if ever -- and will merely replace the old nuclear power plants being decommissioned.
The technology to meet our energy demands is just not there; but for shale gas production, the technology is ready to go and being used today.
Unlike shale gas (which fills the coffers of communities and governments), all these renewable ventures consume our tax dollars. They could not survive on their own merits. They get billions in grants, subsidies, and tax breaks. The clean-energy industry is among the biggest winners among stimulus money recipients. The windfall? Over thirty billion dollars (and counting), including millions flowing to a geothermal-drilling technology company that has its address at an empty office. Ethanol and bio-fuels get subsidies that, measured on a per-unit-of-energy basis, are 190 times any subsidies given to oil and gas, and the subsidies given to the former are on the way up, while the latter are on the way down. California force-feeds utilities renewable electricity at a price five times more than the current price of electricity.
Democrats pass mandates requiring that a percentage of power be generated by renewable sources, and they force utility companies to buy power from renewable producers at vastly inflated prices. Green jobs are absurdly expensive to generate; studies have shown that for every "green job" created by artificial subsidies, more than two jobs are lost in the real world. Most such green jobs are temporary. Barack Obama's dream to have them filled with felons reveals an agenda at work that has little to do with energy. Green jobs are just another government boondoggle.
Meanwhile, in the real world, Americans who hold acreage in the vast lands above shale gas fields are enjoying having their retirement needs met and their dreams of affording college for their kids and grandchildren fulfilled. Many of them are elderly farmers and are otherwise hard-hit. Should their dreams be denied so that well-connected venture capitalists and their political pals can become enriched with taxpayer dollars?
Because shale gas is cheap and plentiful, it poses a mortal threat to the avaricious dreams of venture capitalists and other "green" and "clean" energy proponents. Their response: Bring in their political pals. Crony capitalism begets many sins.
Democrats are in hock to what can be called the "clean energy-political-legal-environmental" complex. Companies such as General Electric are huge beneficiaries of governmental largess and have been pushing "clean energy" for the past few years as the Democrats took over Congress. They are big purveyors of wind turbines, among other doodads. Wind power gets vast subsidies from the Feds. Indeed, it is the government that brings good things to GE.
Are we surprised that the networks owned by GE (NBC, MS-NBC) are so often considered biased in favor of Democrats? MS-NBC's Chris Matthews is Barack Obama's biggest fan in the media. My favorite magazine cover in 2008 is National Review's photo of Barack Obama patting his pet peacock...or is he feeding the peacock? You be the judge. He may not have been feeding the peacock back in 2008, but he sure is now, as he showers money onto GE and cavorts with Jeffrey Immelt, its chairman and CEO. Bartering positive coverage for taxpayer bucks? Stranger things have happened.
Then there is Ted Turner, who, when he is not running and slaughtering buffalo, wants to slaughter the taxpayer. He happens to be the largest individual landowner in America, and a chunk of it is in the sunny Southwest. He is now seeking to put this land to (his) good use by entering in a solar venture with a big utility company. But where else has he been investing his money? He has become a spokesman for "clean energy," but he also puts his money where his famous mouth is by being the primary funder of the D.C.-based Environmental Working Group http://www.ewg.org -- a front group that has been spreading specious stories about environmental problems associated with fracking.
These claims have been belied by states where fracking has been employed for years. But the goal of the critics is not education, but propaganda. Man-made climate change is not happening around the world. But it is happening in Washington, helped along by front groups such as the Environmental Working Groups and "investigative groups" such as Pro-Publica that may have their own less-than-clean motives (see "Cheap Natural Gas and Its Enemies" and "The Sandlers, Soros and The Marcellus Shale Reserves.")
Not only do environmental groups get funding from people such as Ted Turner, but they may also benefit if they are successful in getting passed laws that lead to the splitting of shale gas royalties with them. The late Michael Crichton wrote of the ulterior motives of environmentalists in State of Fear, but ulterior motives don't exist just in the fictional world. Do Democrats just want to throw the drilling process into the hands of environmental radicals, as a recent Investors Business Daily editorial speculates?
Politicians themselves are huge beneficiaries of the push for renewable or clean energy. The list of politically-tied beneficiaries of government dollars harnessed to clean energy can be as picayune as a window company that received government funds and is headed by the husband of the White House official in charge of weatherization to a nuclear power player with close ties to David Axelrod.
The money can also be redolent of earmarks.
FutureGen -- a project to create clean coal -- is slated to be built in Illinois, courtesy of a billion or so in tax dollars. Is it a coincidence that Illinois was chosen for this plum, given that it is Barack Obama's home state, as it is Chief of Staff Rahm Emanuel's, and Senator Richard Durbin's -- the second-most powerful senator in the Democratic Party?
Is it a coincidence that the government plans to spend billions of our dollars to fund high-speed rail projects, touted as energy-savers, in Illinois (also the home of Transportation Secretary Ray LaHood)? Not if you read an article in the Chicago Tribune regarding how high-powered Democratic money men reached out to Chicagoans in the White House to pull strings to get the rails placed in Illinois. Is it also a coincidence that California, a fiscally tottering blue state, gets a line from Anaheim to Speaker of the House Nancy Pelosi's district?
Maybe the push for rail just shows the European mindset of our Democratic leaders. Maybe Joe Biden has finally found a job (Lyndon Johnson had NASA; Joe gets something more down to earth that he can appreciate as one of Amtrak's few riders). Maybe there's a pressing need to spend $42 billion more, or maybe we just have old-fashioned patronage and pork-barrel politics going on, courtesy of the boys from Chicago -- as the Washington Post believes.
And, of course, there are always the lawyers. They smell blood in the water, turned up by the chum thrown out by this or that environmental group, or by "investigative outfits" such as Pro-Publica. Class action lawyers are a key source of campaign funds for Democrats; the more laws and rules and regulations that are passed, the more profitable their lawsuits may become.
One could go on. Al Gore becomes a Green Earth billionaire, helped by heaps of government money (scratch that, our money -- amounting to $529 million and change) flowing to his Fisker Automotive -- a hybrid car company that has him as an investor, and, in a rare instance of government efficiency, also benefits Joe Biden's home state of Delaware, where the plant to build the hybrids is located. But that is merely the tip of the non-melting iceberg for Gore: His career as a peddler of climate change hysteria has benefited his myriad investments in "clean" and "renewable" energy.
George Soros, the sugar daddy of the Democratic party, allied with the Sandlers (founders of Pro Publica) in various political ventures (among them Moveon.org) and has invested at least a billion dollars in "green projects." His hedge fund's biggest stake is in the Brazilian oil company Petrobas; he also has a big stake in a Canadian energy company, InterOil , that has a huge reservoir of natural gas in Papua New Guinea. All these investments will reap him huge rewards if the development of shale gas is hindered or halted in America -- maybe they'll be as good as his return-on-investment in the Democratic Party and Barack Obama.
While the Democrats engage in an orgy of spending to line the pockets of special-interest groups, the government is preparing to, as Hillary Clinton so eloquently phrased it, "tax everything that moves." A molecule of carbon -- even in the form of a clean fuel like shale gas -- has become the mineral equivalent of an endangered species. The Environmental Protection Agency, headed by regulation-obsessed apparatchiks, is binging on carbon regulations and may well wheel around to regulate the small traces of chemicals found in the fracking fluids. The omnivorous EPA may be angling to take over regulation of fracking from the states -- one more way federal power is being aggrandized at the expense of the people and their state governments. Doesn't the EPA have quite enough on its plate?
Democrats led by Congressman Ed Markey (D-MA) are leading the way in trying to tamp down the development of shale gas by playing up the environmental angle and threatening to derail Exxon's purchase of XTO Energy (a major player in shale gas). Markey is also a strong proponent of cap-and-trade. Why would Markey rather accept subsidized heating oil from Venezuela's thuggish Hugo Chávez than tap our own reserves? Doesn't it get rather cold in Massachusetts in winter?
The federal government, under Barack Obama and his Interior Secretary Ken Salazar, is busy clamping down on leasing of lands with shale gas potential, toughening drilling rules, and imposing a bevy of taxes that will be recycled into subsidies and grants to their partners in the "renewable energy" racket. While he is turning off homegrown energy, Obama is helping China develop its own shale gas potential with technology developed by the American energy companies he wants to hinder.
Perhaps Barack Obama really is a true believer in climate change (despite the cascade of news stories showing it to be snake oil). Maybe we can nickname him President Moonbeam. Perhaps he just wants to punish Big Oil and Gas, many of whom are headquartered in that red state of Texas. Or perhaps there is an ulterior motive. When campaign time comes, the tax dollars gifted to the executives and venture capitalists behind these endeavors will be recycled back into the Democrats' campaign coffers -- one recycling program that does work all too well. Barack Obama was the top recipient of campaign funds from both alternative energy and environmentalists, and received two million dollars from the agribusiness sector (that includes ethanol producers) during his presidential run.
Robbing Peter to pay off Paul is not a path to prosperity.
Who pays the price for this obstructionism? America does. We have the ability to remake the energy profile of our nation, keep our homes warm, our factories buzzing, and our cars fueled up -- all with clean energy liberated from the rocks beneath our feet. All with our own technology. But not if the enemies of cheap natural gas have their way.
Ed Lasky is news editor of American Thinker.