BrightSource and the Fracking Task Force

Bad stuff always happens on Friday the 13th.  So it was on Friday that BrightSource Energy, the large solar energy company that has already received $868 million of a $1.6-billion loan guarantee, canceled its IPO application.  And that same day, President Obama appointed Heather Zichal to head a new high-level task force to coordinate regulation of hydraulic fracking.  The two events, both highly inauspicious, were not unrelated.

The connection is simple and obvious: in order to prop up failing solar companies, Obama needs to force natural gas prices higher.   

Solar energy companies like BrightSource can't seem to compete without government subsidies, loan guarantees, and mandates.  Left to their own devices, without a trillion dollars in direct and indirect subsidies, state mandates requiring the purchase of green energy at whatever price, and the support of environmentally active nonprofits, companies like BrightSource might not have gotten off the ground in the first place.  One has to assume that the withdrawal of Friday's IPO occurred because private investors were skeptical of the ability of BrightSource to produce a profit.  To date, the company has generated only large losses of $71.6 million in 2010 and $111 million in 2011.  That might have something to do with the market's skeptical outlook, even though at least one major investor claims that the failed IPO will not affect the company's work on the Ivanpath solar-thermal plant, one of its major projects.

It was not just Friday the 13th for BrightSource -- other solar companies had a rough day in the markets as well.  First Solar, whose stock price has fallen over 90% off its peak, fell another 5.4% Friday.  Others solar firms dropped as well, with the global market index of solar companies having fallen 74% in the past two years.  It would appear that without much larger subsidies and mandates, green energy is going the way of the dodo.  Obama would love to be able to write another $100-billion check to green energy, but in the post-Solyndra era, he is unable to do so.  That's where regulating fossil fuels out of business comes in.  

Administration officials have known since last Wednesday that BrightSource planned to withdraw its IPO.  That might not be the reason for Obama's creation of the fracking task force, but it might have something to do with the timing of his announcement.  It is always a bit embarrassing, or it should be, when a company to which one has committed $1.6 billion faces a setback in the markets.  It is all too reminiscent of Solyndra, in which Obama's $528-million politically motivated "investment" went belly-up and taxpayers were left with the tab.  Obama needed a distraction from the bad news of BrightSource's IPO withdrawal.  So why not announce the creation of a federal task force to coordinate regulating of fracking that same day?

More regulation of fracking is sure to shore up Obama's election-year backing by environmental groups.  It will help to boost campaign contributions.  It may reignite a bit of enthusiasm from younger voters.  But it will do a great deal of harm to the American people.

So what?  When is the last time Obama expressed concern for the American people?  Those are the folks he considers the bigoted ones "clinging to their guns and religion."  Those are the ones who caused his wife to never be proud of America until they elected her husband president.  Who cares if an unemployment rate above 8% becomes the "new normal"?  Who cares if they have to pay more for heating and electricity?

Those will surely be the effects of a nationwide tightening of regulation on fracking.  At the same time, by forcing natural gas prices higher, the president's policies are designed to make solar and wind more affordable.  Solar and wind cannot compete with natural gas selling at below $2 per mBtu, as it now is.  It cannot even compete with gas selling at $4.  The only way to stop natural gas from driving solar and wind out of the marketplace -- as is now happening -- is to stop American energy companies from producing cheap gas.  Maybe then the American public won't mind paying more for electricity and home heating.  Or maybe not.

In any case, Obama thinks that if he can drive natural gas prices higher, the public will agree to pay higher prices for green energy.  The creation of a national fracking task force appears to have only one purpose: to drive up the price of fossil fuels.  That, of course, is the same motive behind Obama's veto of the Keystone XL pipeline, which would have brought plentiful supplies of Canadian oil to U.S. refineries.  Now, all that oil is headed for China (the same country that appears to be doubling its strategic petroleum reserves just as Obama talks of gutting our own).

Obama's plan all along has been to drive up fossil fuel prices in the U.S., subsidize wind and solar with extraordinarily large subsidies and mandates, and collect his own election-year bounty from well-funded environmental groups and green energy investors.  The only ones who'll be hurt are those boobs all over America who are still toting their guns and clinging to their religion.  But Obama has nothing but contempt for ordinary citizens who will be paying higher energy prices. 

And he has nothing but contempt for the free market.  The creation of a fracking council headed by an environmental activist is one more example of this contempt.  Instead of allowing markets to work -- and they are working very well, with the production of natural gas increasing by 40% and prices for consumers near all-time lows -- the president believes that a single task force, composed of environmental activists and operating under his direct control, should have the power to regulate oil and gas drilling throughout the U.S.

The creation of a task force to regulate fracking should be seen for what it is: an unprecedented power-grab at the expense of the nation's states, which have always enjoyed the prerogative of regulating drilling within their borders.

Once again, as with socialized health care and expanded regulation of the financial services industry, Obama is attempting to centralize power within a federal bureaucracy controlled by the president alone and unaccountable to Congress.  In other situations where this has happened, in Venezuela under Hugo Chávez or Zimbabwe under Mugabe, it has been understood for what it is: the attempt of an antidemocratic leader to establish a dictatorship.  It is only Obama's disarming (and devilishly deceptive) personality, along with his fanatical backing by the liberal media, that has prevented the public from seeing his consolidation of power as the road to a socialist state in America.  Obama's determination to take over the oil and gas industry is another giant step along that path. 

Friday the 13th was a bad day for BrightSource, but it was even worse for the American people.  It may be that the courts will eventually reverse Obama's backdoor nationalization of drilling, just as they appear willing to reverse ObamaCare.  But that day may be years away, and by then the damage will have been done.  The American people will be paying twice what they need to for energy, and America will have fallen permanently behind its global rivals in securing its energy future.

Jeffrey Folks is the author of many books on American culture, including Heartland of the Imagination (2011).

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