February 11, 2010
Our National No-Energy Policy
Economically sensible states including Texas, Louisiana, and Pennsylvania are developing their enormous, non-traditional, "tight" natural gas reserves. In the process, they are transforming America's energy profile for the next half-century in the face of a federal government indifferent at best to this energy revolution.
In Texas, drillers have become so adept at safely extracting natural gas from shale that wells are often located in suburban subdivisions. In Louisiana, formerly impoverished residents of northwestern counties are now millionaires thanks to exploration leases and production royalties. And in western Pennsylvania, old steel towns have been reinvigorated by natural gas, as well as by the shops and restaurants that follow industrial development. In these places, a high school graduate can complete an extensive ninety-day course in wellhead techniques and earn $50K per year upon graduation.
And then there are states like New York, which, though heavily in debt and losing productive residents by the thousands every year, continues to drive away the nation's best drillers. When New York denied Chesapeake Energy the right to drill in the Catskills because of exaggerated fears about watershed pollution, Chesapeake's CEO Aubrey McClendon remarked: "Why go through the brain damage of that when we have so many other opportunities?"
So McClendon can avoid a stroke and simply hop across the border to Pennsylvania. There, backed with $ 2.25 billion from his newest partner, French supermajor Total, he can exploit the same shale deposit but with more cooperative and supportive Americans.
Unfortunately, at the federal level, our government more closely resembles New York than Pennsylvania or Texas. Ken Salazar's Department of the Interior, Steven Chu's Department of Energy, and Barack Obama's White House are formulating policies not aimed at extracting every barrel of oil (or equivalent) in our country, but instead policies that seem to cry out, "No Energy Development Wanted!"
Thomas Pyle, the president of the Institute for Energy Research, recently offered a chilling description of our national energy focus. "When it comes to paving the way for the responsible development of homegrown, job-creating energy resources, no administration in history has done more to ensure producers do less."
Pyle had Salazar and his army of "lease police" in his crosshairs when he made this brutally honest assessment. Considered one of the most hostile Interior secretary in recent history, Salazar's energy strategy copies much from the foreign policy of his boss: Blame Bush. Instead of establishing clear and ambitious development goals to guide our explorers and drillers, he delivers invective.
The previous administration's approach to oil and gas leasing ... by and large was that leasing should happen almost anywhere, at whatever cost. ... We don't believe we have to be drilling everywhere and anywhere.
In Salazar, Hugo Chávez and the Persian Gulf heads of state could not have a better lobbyist and advocate.
Steven Chu is almost a comic figure, and if the present administration were not so rich in easy targets, he might be the subject of Saturday Night Live sketches. Thankfully, Chu has retreated from claims like "coal is my worst nightmare" and from programs to paint every roof in America white. But his department seems to be nothing but a font of energy clichés in support of wind, solar, clean energy, geothermal, and reductions in carbon emissions while reducing research efforts in deepwater exploration and canceling the expansion of the Strategic Petroleum Reserve. Chu's department offers us not sound analysis and an understanding of the tough choices ahead as we trod on a path towards energy independence, but empty, dead-end, green-inspired slogans.
It might seem impossible, but Obama is even cleaner and greener still, and he typically offers nothing but empty platitudes about supporting clean coal, offshore drilling, and nuclear power. He explained to the Republicans during his post-SOTU outreach that nothing was more important for the country than primacy in green technologies: "And the future is that clean energy -- cleaner forms of energy are going to be increasingly important."
Though rarely admitted, nothing could be farther from the truth. The world's fastest-growing and most dynamic countries are among the least green: China, India, and Brazil. In contrast, those countries that have plunged headlong into green utopianism have nothing to show for it but high employment and crushing debt.
Spain decided that the future was green, and its heavily subsidized solar and wind escapades have led to at least 19% unemployment. Its economists have estimated that the nation lost more than two jobs in the private sector for every subsidized job it created in the green sector.
Though the physics and engineering undergirding energy technologies are complicated, our energy choices would be quite stark and simple if politicians were honest enough to study and communicate them. Clean, green, renewable energy technologies are expensive, inefficient, and uncompetitive, and they will not lead us into a sustainable carbon-free paradise.
For example, there was great excitement recently when the Department of Energy claimed that 20% of the eastern U.S. could be powered by wind by 2024. But fourteen years from now, our electrical consumption will grow by more than 20%, so that we will use the same amount of coal, nuclear, and natural gas in this imaginary future grid that we use today.
Hydrocarbons will never go away. We should feel blessed to have them in such vast quantities here in America. We will always need them. But if political leaders do not stiffen their spines to that reality and devise policies to encourage exploration, development, and delivery of traditional resources, then our futures can be nothing but poor, dark, and cold.
Claude can be reached at email@example.com.