The U.S. energy juggernaut, powered by new technology and common sense, keeps rolling on.
Gains in energy production and productivity probably account for much of the projected 3.5% increase in the gross national product in the last quarter of 2013. Of course, even if it doesn’t get the expected adjustment downward later, the gains represent only a small part of the race to recoup the losses of the past seven years since the 2007-08 financial crisis hit. Nor unfortunately is energy production in itself much of a labor intensive activity, making little contribution toward the most horrendous unemployment problem since the end of World War II or maybe the Great Depression. And it is very much still with us despite some masterful Administration playing with statistics (that notorious form of lying!).
But what would be laughable, if not such a tragic reflection of the Obama Administration’s war on the economy, are the claims in the President’s state of the union address for effecting the energy progress. In fact, this Administration has done just about everything it could to inhibit the expansion of fossil fuel development. Nevertheless, Administration efforts to hike prices in order to force the markets into still high-cost so-called green energy sources and away from fossil fuels has come a cropper. The enormous strides of deep drilling recovery from shale have worked a revolution in energy, the heart and soul, of course, of the American economy. As one spokesman for the industry said at a Congressional hearing a few days ago, until now our gas recovery in America had been largely the oozing from these shale deposits. Now the industry is going after the heart of the reserves deep in the earth.
But gas hasn’t been the only energy source that has had to overcome Washington’s efforts to stifle cheap fuel…
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The President’s stacked Environmental Projection Agency has waged a war against our vast coal reserves–possibly unconstitutionally–instead of speeding the search for new ways of burning and utilizing our almost limitless energy resource. It has stifled leasing of government lands for oil and gas development. (Luckily the successful movement into shale gas and oil production has had private lands for a playpen to demonstrate an entirely new source of energy.) It has thrown up barriers to oil and gas exports which would permit the energy companies to use the cheaper American domestic sources in surplus, not only to enhance energy profits but, by lucky coincidence, to defanging a half century’s use of oil to abet jihadist politics by Middle East producers.
The President’s exaggerated claims for “alternative energy” advances are largely fiction. Hundreds of millions from the Administrative stimulus package have gone into bankrupt entities. Even the President has admitted there were few “shovel ready” projects as he had earlier claimed. Furthermore, fossil plants are still needed to meet increased energy demands in even this relatively stagnant economy. For when the wind doesn’t blow and the sun doesn’t shine electricity demands still have to be met. Never mind the horrendous cost and endless litigation for new high voltage networks that nobody wants in their backyard to carry these “alternative” productions from their origin where they cannot be stored to the urban markets where they are needed.
No more did the ballyhoo of the liberal media die down over an empty rhetorical State of the Union drama–shamelessly ending with an appeal to every patriot’s tears with an endorsement of the struggle of a heroic wounded soldier–than there was a new ringer. The State Department, somehow charged with the audit because of the involvement of our neighbor and near-twin, the Canadians, announced there are no environmental constraints against building the Keystone XL Pipeline. It is the fifth time a government inquiry has said the $5.4 billion project, to be funded entirely by the private sector, has been given a back of the hand environmental stamp of approval. Some fifteen thousand pages of scientific and technical evidence published in four environmental analysis reports since 2010 had already concluded the project would have minimal negative impact on the environment. The trajectory from Canadian tar sands through the Dakotas–where it would pick up increasing oil production from one of the largest finds ever in the U.S.–toward refineries in Texas looks like a thunderbolt, zigzagging to avoid supposed local environmental hazards. Even organized labor, which has been Obama’s most loyal constituency, has been pressing the Administration to go ahead for the tens of thousands of construction jobs it would produce. The proposed 1,179-mile pipeline extension would run from Hardisty, Alberta, to Steele City, Nebraska, and then join up with a southern link already completed in January this year to the Texas refining and petrochemical complex and ports. (The 485-mile southern section of the pipeline operated by Calgary-based TransCanada did not require presidential approval because it does not cross a U.S. border.)
What the Administration could have been doing instead of diddling with this obvious decision is devoting its subsidies to pipelines to carry our now huge surplus of gas in the form of liquefied natural gas (LNG) to a new network of filling stations around the country. Japanese and Hong Kong taxis have been using imported Indonesian LNG successfully and with great economic benefit for more than half a century. We have a few municipal bus and truck fleets around the country using it, ironically, largely because of environmentalist pressure for the reduction of carbon emissions which results from gas rather than burning other heavier fuels.
In fact, again, it has been the growing substitution of gas for old style coal-burning turbines–largely for purely economic reasons–that permitted the President to trumpet the fact that the U.S. has succeeded in the goal more than any other country in reducing carbon emissions. But that has not, as he hinted, taken place because of anything the government has done. (Mandated higher mileage for Detroit’s automobiles, which the Administration crows about, is a minimal contributor, if any at all. What it has done is drive manufacturers toward lighter weight vehicles, hopefully not ahead of the meticulous and difficult development of stronger metal alloys and crash-resistant design.) It has largely come from a growing switchover to natural gas. Some auto engineers point have told me transforming a 1960s standard gasoline-engine car to LNG would only be a matter of a thousand dollars or so The hitch is a network of filling stations to dispense the LNG from transcontinental pipelines.
Even the environmentalistas of NPR have had to acknowledge the explosion of energy in the northern plains states in a series emphasizing the seamier side of the enormously profitable developments there. That has been not only for the companies but it produces the lowest unemployment in the nation. “National People’s Radio’s” emphasis is less on the hundreds of thousands of jobs and taxes paid local governments and additional income for farmers, some dirt scrabble poor–and the benefits for energy consumers created by a traditional American oil boom.
But what the government-subsidized network NPR series does underline is that, in part because of war against expansion of pipelines, “$1 million a day just being thrown into the air” or “flared”, burned into nothingness as an unused by-product of the search and development of the golden light crude oil of the region. NPR’s solution to the problem is, of course, more regulation rather than directing federal subsidies toward the rapid creation of new pipelines. That kind of program could carry this wasted gas wealth to petrochemical and other manufacturing “in-shoring” from earlier flight of American industry and capital to more attractive business environments overseas.
Bottom line: Even the anti-business, anti-free enterprise, anti-libertarian thrust of the Obama Administration and its often mindless Washington bureaucrats have not been able to squelch the vitality of the U.S. economy. The struggle will go on for at least another three years. But in the energy revolution now going forward despite the statism of the current Washington leadership, American initiative and enterprise is reasserting itself for what one hopes will be its inevitable economic victory in the best U.S. traditions.
*A version of this column was published at yeoldecrabb.com on Monday, Feb. 3, 2014