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President Obama Misleads on Oil “Tax Breaks"

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President Obama has become the anti-energy president through his determined effort to regulate, tax, and spend in order to prop up the most expensive, least reliable energies at the expense of consumer-chosen ones. Think wind power, (on-grid) solar power, and ethanol at the expense of natural gas, oil, and coal.

In his June climate speech, the President repeated a familiar refrain, asking “Congress to end the tax breaks for big oil companies.” This sound-bite harks back to another anti-energy president, Jimmy Carter, who needed a scapegoat for the energy crisis of his own making. The U.S. suffered through long gasoline lines caused by federal price and allocation controls (much like what is ahead with ObamaCare).

What about the “tax breaks,” which the Administration calculates to be about $4 billion annually? This “oil industry giveaway,” to use another Obama dig, is nothing of the sort. These aren’t giveaways; they are merely the same standard types of tax provisions other industries are allowed to use.

The U.S. Tax Code contains tax incentives to help manufacturers (including oil and gas) recover a portion of their costs and to encourage them to hire more U.S. workers. However, large oil companies are specifically excluded from some of the tax incentives.

For example, the percentage depletion deduction allows companies that extract metals and other natural resources to deduct the cost of leasing land. Gold, iron, and other companies can use the deduction on their tax forms. Large integrated oil companies cannot.

Major integrated oil companies also cannot take full advantage of the intangible drilling costs provision. Small companies specializing in exploration and production are allowed to recover some drilling costs in the same year the costs are incurred, just as your employer gets to deduct your wages as an expense. Their larger rivals, however, can recover only 70 percent of their drilling costs in the first year and must recoup the rest over the next five years.

President Obama’s plan would end these breaks for oil companies—but not other similar industries. The result would be to hurt independent oil and gas companies the most. A Wood Mackenzie study estimates that tens of thousands of (middle class) jobs would be put at risk at a time when oil and gas is leading an otherwise lackluster recovery. Obama is all for new jobs and an expanding opportunity except when it comes to domestic oil and gas.

So why is Obama looking at pennies instead of real dollars—and in the wrong places? Why is he myopically attacking America’s energy dream team for sandbox players?  Fact is that his well-publicized war on coal is really a wider war on carbon-based energies, including oil and natural gas.

Ensuring reliable, affordable energy production under the rule of law and limited government is not the President’s primary goal. As he said in an off-guard moment, electricity costs must “skyrocket” to combat global warming.  Never mind the Earth hasn’t warmed since the Clinton/Gore years.

The President and his agency heads are using the summer heat to raise fears about nebulous climate change and promote politically-correct energies. They are at war against natural gas, oil, and coal—the sources of energy Americans naturally buy because of cost, reliability, and convenience.

It’s time for a new energy strategy from the White House, one based on consumer welfare and taxpayer relief rather than politics and faux environmentalism. A strategy based on competitive capitalism, not cronyism. Will new leadership please step up?

——————

Robert L. Bradley Jr. is founder and CEO of the Institute for Energy Research. His most recent book is Edison to Enron: Energy Markets and Political Strategies.

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FERC's Regulatory Mission Creep

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The Federal Energy Regulatory Commission (FERC)—and predecessor, the Federal Power Commission (FPC)—have been a force against competition and market entrepreneurship since the 1930s. Despite the teachings of economics, federal bureaucrats have rewarded incumbency, discouraged rivalry, and inflated ratepayer cost via public-utility regulation of entry and rates.

The infamous natural gas shortages of the 1970s resulted from FPC/FERC mission creep where “just and reasonable” pricing was extended from interstate transmission to wellhead production in interstate commerce. And today, mission creep with electricity subsidizes politically correct, market incorrect renewable energy (predominately wind power) at the expense of both rival energies and consumers.

Laborious rate cases and certification hearings over the decades have resulted in cost maximization and delay at the expense of disciplined expensing and timely investment. “A minor industry of attorneys are kept busy litigating action at FERC,” complained a Federal Trade Commission official several decades ago. “Why taxpayers or consumers are thought to benefit from this escapes me.”[1] Lamented an industry wag: “The BTU value of [FERC] paperwork now exceeds the BTU value of the gas.”[2]

Stated a Wall Street Journal editorial back in 1985, titled “Abolish FERC:”

Given the total success of oil deregulation, it’s hard to believe that anyone today denies the wisdom of getting the government completely out of the energy business. FERC should be decommissioned and a monument erected to remind everyone of the follies committed in the name of the “energy crisis” in the 1970s, with a fond hope that they won’t ever be repeated.[3]

Recently, FERC has become a new front for President Obama’s climate policy. A major new agency priority is socializing the cost of uneconomic multi-billion-dollar transmission projects to get windpower from nowhere to somewhere. The 620-page FERC Order 1000, specifically, has been a boon/boondoggle for getting uneconomic wind generation over the (uneconomic) transmission hurdle. In this regard, controversial nominee Ron Binz promises to accelerate the activism of departing FERC chair Jon Wellinghoff.

The authority of FERC over interstate natural gas and electricity transmission is premised on the “market failure” of alleged natural monopoly. But a review of the historical record, informed by (realistic) economic theory, falsifies this rationale behind both the Federal Power Act of 1935 and the Natural Gas Act of 1938.

The electricity industry crucially supported state and then federal regulation to tame entry and placate investors. The natural gas industry championed state regulation in the 19th century to block “raiders” introducing “processes that can make gas for almost nothing”—and then swung to federal regulation of transmission a half-century later when a new provision in the proposed Natural Gas Act—Section 7(c)—restricted pipeline entry into occupied areas. Consumers, needless to say, had little voice in whole debate.[4]

The “natural monopoly” argument for public utility regulation, the product of economic unrealism, is suspect now as it was then. As Jeff Makholm stated in his recent book, The Political Economy of Pipelines:

As in the case of perfect competition … natural monopoly is an abstract and static ideal, and there is no particular reason to believe that the textbook definition applies to real pipeline businesses any more than perfect competition applies in other markets.[5]

In the real world, imperfect government must be weighted against imperfect markets. Given that industry rent-seeking has been behind state and federal regulation to limit competition and increase profit, is high time to give free markets a chance.

Specifically, as a permanent deregulation strategy, FERC can sanction long-term “exit” contracts between currently regulated parties. Coupled with immediate deregulation of new projects that require voluntary long-term agreements anyway, FERC can shrink toward oblivion.[6]

The demotion of FERC would not only end the disappointing history of traditional public utility regulation of gas and electricity. It would also end mission creep that is increasingly putting FERC at odds with consumers and its own original rationale.[7]



[1] David Scheffman, Director, Bureau of Economics, Federal Trade Commission, quoted in Gas Daily, October 14, 1986, 3.

[2] Gary Willis, Midcon Services, quoted in Gas Buyers Guide, March 21, 1988, 2.

[3] “Abolish FERC,” Wall Street Journal (Review & Outlook), September 18, 1985, p. 22.

[4] Robert Bradley, Edison to Enron: Energy Markets and Political Strategies. Wiley & Sons and Scrivener Publishing, 2011, pp. 500–11 (gas); 511–15 (electricity).

[5] Jeff Makholm, The Political Economy of Pipelines: A Century of Comparative Institutional Development. Chicago: University of Chicago Press, 2012, p. 30.

[6] See Bradley, “The Distortions and Dynamics of Gas Regulation,” in Jerry Ellig and Joseph Kalt, eds., New Horizons in Natural Gas Deregulation. Westport, CN: Praeger, 1996, pp. 22–24; Bruce Stram and Terry Thorn, “Beyond Regulation: A ‘Social Compact’ for Gas and Electricity,” Public Utilities Fortnightly, March 1, 1993, pp. 1–4.

[7] Comparatively lighthanded federal regulation of interstate oil pipelines, which has also been counterproductive, is not reviewed in this post. For a history of such regulation, see Bradley, Oil, Gas, and Government, chapter 14, and Makholm, chapter 6.

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ICYMI: Federal Foot-Dragging Puts Boom Towns On Hold

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Institute for Energy Research CEO and Founder Robert Bradley published an op-ed yesterday in Investor’s Business Daily. The text of the op-ed follows:

Investors-Business-Daily-logo

Federal Delays On Drilling Permits Put Boom Towns On Hold
By Robert L. Bradley Jr.

Monday, June 9, 2014

Innovative drilling techniques have transformed the U.S. into the world’s top producer of petroleum and natural gas. Recent analysis suggests America is in the midst of the second biggest oil boom in history.

Yet, there are regions in the U.S. where energy production has unjustifiably dropped in recent years. Their common denominator is ownership by the federal government and operation by the Obama administration’s Department of Interior.

According to a new report by the Congressional Research Service, while oil and gas development on private and state lands has surged, production on federal lands has fallen. The dichotomy can only be explained by blatant, pernicious Obama administration policies.

According to the CRS, between fiscal years 2009 and 2013 oil production on private and state lands jumped 61% (an average increase of 2.1 million barrels per day), while federal-land output fell 6%. With natural gas production in the same five-year span, production rose by one-third on private and state lands, but decreased 28% on federal lands.

The same technology and many of the same companies are at work on federal lands as on private and state lands. The difference resides in the back rooms of Washington bureaucracy.

Since 2009, the average time it takes to secure a drilling permit for federal lands has risen by 18% compared to the previous five fiscal years. As recently as 2011, it took an astonishing 307 days to get the Bureau of Land Management’s go-ahead for just a single oil or gas well. By comparison, some states grant permits in as few as 10 business days.

Leasing federal lands has also become more difficult. The BLM has issued 50% fewer leases under the current administration than it did during President Clinton’s tenure.

Why isn’t the administration making it easier for the citizens to reap the benefits of our country’s most valuable resources?

The positive effects of growing domestic energy production are indisputable. In 2012 alone, the newly vibrant oil and gas sectors supported 2.1 million jobs and added the equivalent of $1,200 to the average household income.

A new study by the U.S. Conference of Mayors, meanwhile, finds that, over the last three years, the energy boom has boosted manufacturing employment in metropolitan areas by an annual average of 1.7%. If Obama complains that the economy is leaving the middle class behind, he needs to have a talk with the mirror.

Replacing imports with backyard supply is supposed to be a goal of federal energy policy. Indeed, as Obama said in this year’s State of the Union address, “America is closer to energy independence than we’ve been in decades.”

Yet his multi-front war on fossil fuels, part of his climate-change policy, puts him at odds with the fruits of the hydraulic fracturing/horizontal drilling oil and gas production boom.

By discouraging energy exploration on federal lands, the administration is wasting an unprecedented opportunity to grow the nation’s economy and create jobs.

According to an analysis from my own organization, the Institute for Energy Research, opening up more federal lands for drilling would lead to an annual increase in gross domestic product of $127 billion for the next seven years.

The potential for energy projects to grow jobs and wages is already on display in places where exploration has been allowed to move forward. In 2013, earnings growth in North Dakota, Oklahoma and Texas outpaced the national average for the fourth year in a row, thanks mostly to oil and gas development projects.

If the government created more boomtowns by opening up federal lands to drilling, it could add 552,000 jobs to the economy annually over the next seven years. Wages, meanwhile, would grow by $32 billion a year.

In the long term, expanding oil and gas exploration on federal lands would also help address the growing national debt, which currently exceeds $17 trillion. Such projects would increase federal tax revenues alone by $2.7 trillion during the next 37 years.

It’s the president’s obligation to use government land in ways that benefit taxpayers and strengthen our nation. By effectively keeping federal land inhospitable to oil and gas development, Obama is failing in this important duty.

Bradley is CEO and founder of the Institute for Energy Research and the author of seven books on energy history and public policy.

To see the original op-ed, click here.

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Federal Lands Deserve an Energy Boom, Too

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Institute for Energy Research Founder and CEO Robert Bradley published an op-ed this week on Forbes.com. The text of the op-ed follows:

Federal Lands Deserve an Energy Boom Too

By Robert Bradley Jr.

July 21, 2014

Newly-confirmed head of the Office of Management and Budget, Shaun Donovan, has pledged to reduce the half-trillion dollar annual federal deficit without sacrificing what is seen as important investments. His goal isn’t as farfetched as many in Washington believe if you consider the revenue side.

But don’t think taxes; think about the federal government’s most prized asset, oil and gas in the public domain.

In the last few years, domestic oil and gas have driven job creation and economic growth. But while oil and gas development on state and private lands has grown remarkably, production on federal lands (including offshore) has actually fallen. By refusing to develop these assets, leaders in Washington are ignoring an historic opportunity to strengthen our economy and shrink the federal budget gap.

By not painlessly reducing the debt, the Administration is leaving debt whose interest payments add to deficit. American consumers need oil and gas, and the same qua taxpayers desire fiscal prudence. Obama gets a failing grade on both with static, even regressive, policy.

Few could have anticipated our nation’s current energy revolution. Before the widespread adoption of new drilling techniques like hydraulic fracturing, domestic petroleum production had been in decline for more than twenty years. In less than ten years, however, the United States has become the world’s leading producer of petroleum and natural gas, besting energy-rich countries like Saudi Arabia and Russia.

Not surprisingly, the energy sector is now a significant source of economic growth. According to a recent White House report, in 2012 and again in 2013, increases in oil and gas production added more than 0.2 percentage points to the nation’s economic growth rate.

The real benefits to average Americans have been even more dramatic. In 2012, the newly-vibrant oil and gas industry supported more than two million jobs. And by next year, advances in oil and gas exploration are expected to raise the average household income by more than $2,000.

As the Obama Administration recently noted, the “historic transformation” of the energy sector “has provided key support to the recovery from the Great Recession.” But while the president is quick to extol the benefits of domestic oil and gas development, his administration has made sure that federal lands and offshore areas remain insulated from the energy boom.

In fiscal year 2013, for instance, crude oil production on state and private lands rose by 21 percent. Natural gas production jumped by three percent. In the same year, however, federal lands and offshore areas saw oil production increase by only one percent and drop by one percent, respectively, while natural gas extraction was down by 10 percent.

These declines are due, in part, to the inefficient approval process for drilling on federal lands — an administrative bottleneck that, today, amounts to a prohibition on energy exploration in these areas. Between 2006 and 2011, for instance, the waiting time for a drilling permit, or APD, rose by 41 percent.

According to a new report from the Department of the Interior’s inspector general, there is now a backlog of 3,500 applications for drilling on federal lands. “Target dates for completion of individual APDs are rarely set and enforced,” the inspector general writes, “and consequently, the review may continue indefinitely.”

As permit applications languish, valuable energy resources continue to go undeveloped. Consider the 1.76 billion-acre Outer Continental Shelf (OCS). This federally-owned offshore area contains an estimated 86 billion barrels of recoverable oil, and another 420 trillion cubic feet of natural gas according to the Bureau of Ocean Energy Management. And yet, 97 percent of this offshore area hasn’t been leased for energy production.

The federal government is missing an historic opportunity to bolster the economy and create jobs. According to an analysis of federal data by my own organization, the Institute for Energy Research, expanding the amount of federal land available to oil and gas exploration would increase GDP by $127 billion over the next seven years.

Expanding energy exploration on federal lands could also play a pivotal role in addressing the nation’s budget deficit. Over thirty years, new drilling projects could generate $99 billion in annual government revenue. And as entitlement and healthcare spending continues to strain federal finances in the coming years, lawmakers could even choose to privatize some of the underlying energy assets on federal lands, boosting revenue even further.

At a time when lawmakers either are or will cut real services red meat from everything from defense spending to medical research funding in the name of deficit reduction, it’s high time to liberate federal-land subsoil wealth for government revenue. After all, the federal domain belongs to taxpayers.

It is a modest, noncontroversial call for public policy to liberate the public domain. Just watch–future years may well bring calls for privatization to tame the budget deficit. Perhaps the mineral income streams from federal onshore and offshore lands will be privatized by a one-time sale. Or privatization could encompass the sale of public lands, with the surface area going to the high bidder (an environmental group?) and subsoil rights to the high bidder (development companies).

For now, the answer is easy. Washington leaders need to put locked-up resources into play to improve the economy and help put the fiscal house in order.

To read the op-ed on Forbes.com, click here.

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Exporting U.S. Crude Oil: A Triple Win

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Exporting U.S. Crude Oil: A Triple Win

“The exportation of the materials of manufacture is sometimes discouraged by absolute prohibitions, and sometimes by high duties,” Adam Smith observed in the Wealth of Nations. This barrier remains in our day. A recent op-ed in the New York Times by former Obama administration official Stephen Rattner pleaded for the end of the U.S. ban on oil exports under the title “Let Our Oil and Gas Go.”

A triple-win awaits repeal of the 39-year-old federal ban on U.S. crude oil exports. Consumers would receive lower gasoline and diesel prices from global refining efficiencies. Domestic producers would receive (higher) world prices from new markets and in turn, increase production. The broader economy would benefit from increased activity all around.

Background

Back in the 1970s, federal policy restricted and then banned exports of domestic crude oil for two major reasons.[1] First, price controls on U.S. oil, which began under President Nixon and peaked under President Carter, could be circumvented by exporting the oil to receive the higher world price. Second, political authorities, believing that the U.S. was running out of oil and gas, wanted to keep every BTU in home markets.[2]

President Reagan ended oil price and allocation controls in January 1981, eliminating the specter of gasoline lines that consumers had experienced in 1974 and again in 1979. But Reagan did not champion repeal of the oil-export ban, which had more political support.[3] Fears about future domestic production remained, and the demand to export crude oil was very small.

That was then. The United States today is leading a global oil-extraction boom that is productively shifting international trade in crude oil, oil products, and oil-intensive manufacturing. The “Great Revival,” to use a term of Daniel Yergin, has increased domestic production by approximately two-thirds since 2008, reducing imports by one-half compared to a decade ago.[4] The crude-oil surge is led by lighter crudes in excess of U.S. refiner demand, increasing the need for export.

Current Controversy

Today, the oil-export ban is a policy without a purpose—and distortive of natural market incentives at home and abroad. The fact that domestically produced crude oil cannot be exported—but petroleum products can be—has discouraged domestic production and left U.S. consumers paying world prices for gasoline and other petroleum products.

This peculiar worst-of-all-worlds situation reflects half-slave, half-free regulation in light of new market developments. Domestic consumers do not benefit from U.S. refiners’ lower crude-input costs because the same refiners can (and do) sell their product internationally. (The U.S. is the world’s leading oil-product exporter.) The situation is exacerbated because domestic refineries are geared toward processing heavier oils, largely imported, while surging domestic crude-oil production is of lighter grades.

As explained in a study chaired by energy expert Daniel Yergin:

Gasoline connects US gasoline prices to the global market—and not to the price of domestically produced US crude oil. This creates a market distortion that disadvantages crude production in the United States relative to global production. Permitting US exports of crude oil would put additional supply onto the world market, lowering international crude prices and international gasoline prices. Lower international gasoline prices flow back into the US gasoline market….[5]

If not corrected by export liberalization, the price differential between domestic crude and oil-product prices will grow–and leave the U.S. with the peculiarity of less domestic production and higher oil-product prices.[6]

The gasoline-price savings for U.S. consumers from abolishing the ban is estimated by IHS to average 8 cents per gallon between 2016 and 2030. Another study by Resources for the Future estimates near-term gasoline-price reductions of as much as 4.5 cents per gallon, but no less than 1.7 cents per gallon, from removing the ban.[7]

With such analysis, Yergin has exploded the bogeyman of higher pump prices in the U.S. from repealing the export ban. This simplistic, errant argument appears to be more of a special-interest ruse than an industry-informed insight.

Broad Support

Not surprisingly, legalizing crude-oil exports from the United States has attracted support from across the political spectrum. In his aforementioned New York Times op-ed, Steven Rattner called for liberalization to end a “supply and pricing mish-mash”.

A policy analysis by the Council on Foreign Relations has also called the ban’s repeal, citing the fact that “Republicans and Democrats alike, including President Obama, express support for boosting U.S. exports in general.”

As it is, the growing distortion between domestic production and refining capacity has led the U.S. Department of Commerce to approve applications to export lightly, field-refined oil called condensate. This will be sent to foreign refineries to produce gasoline and other high-valued products. Yet the ban on crude-oil exports remains in place.

Conclusion

“To hurt in any degree the interest of any one order of citizens, for no other purpose but to promote that of some other, is evidently contrary to that justice and equality of treatment which the sovereign owes to all the different orders of his subjects,” wrote Adam Smith in 1776. The same is true with oil exports today where a very few businesses benefit at the expense of the many. Environmentalists, too, want crude oil to be bottlenecked to shut-in production of fossil fuels as such.[8]  This is most evident in their attempts to stop the Keystone XL pipeline, which in reality is designed to slow or stop production of Canadian oil.

It is time for the visible hand of markets to replace the dead hand of a regulatory past. The U.S. and world oil markets have changed, and U.S.-side public policies must too.

 

Additional References:

Berthelsen, Christian, and Lynn Cook. “U.S. Ruling Loosens Four-Decade Ban on Oil Exports,” Wall Street Journal, June 24, 2014.

Phillips, Matthew. “The Fight to Export U.S. Oil,” Businessweek, July 10, 2014.

Phillips, Matthew. “Can the U.S. Double Its Crude Exports in a Year?,” Businessweek, July 28, 2014.

 

[1] Certain exceptions to the ban, such as crude oil sales to Canada, were enacted that remain in place today. In 2013, crude-oil exports averaged 120 thousand barrels per day compared to (legal) oil-product and gas liquid exports of 2.76 million barrels per day. U.S. Energy Information Administration at ttp://www.eia.gov/dnav/pet/pet_move_exp_dc_NUS-Z00_mbblpd_a.htm.

[2] Oil-export limits in 1973 reflected domestic price controls; export bans in 1975 and 1977 reflected the additional concern about domestic energy depletion. See Robert Bradley, Oil, Gas, and Government: The U.S. Experience (1996), pp. 770–74.

[3] Robert Bradley, Oil, Gas, and Government: The U.S. Experience (1996), p. 774.

[4] IHS Global, US Crude Oil Export Decision (2014), ES-2.

[5] IHS Global, US Crude Oil Export Decision (2014), ES-3.

[6] IHS Global, US Crude Oil Export Decision (2014), ES-3–ES-4.

[7] Stephen Brown and Charles Mason, “Lifting the Oil Export Ban: What Would It Mean for US Gasoline Prices?,” (2014) Resources for the Future.

[8] Brown, Stephen, Charles Mason, Alan Krupnick, and Jan Meyers. “Crude Behavior: How Lifting the Export Ban Reduces Gasoline Prices in the United States,” Resources for the Future Issue Brief 14-03, February 2014, pp. 2–3.

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ICYMI: Oil-Export Ban is Holding America Back

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Institute for Energy Research CEO and Founder Robert Bradley published an op-ed last week on Forbes.com titled “Oil Export Ban: Holding America Back”. The text of the op-ed follows:

Forbes-logo

Oil Export Ban: Holding America Back

By Robert Bradley

“Without compelling reasons for continuing to restrict crude exports, and given the potential benefits, Congress should liberalize the crude oil export regime. Republicans and Democrats alike, including President Obama, express support for boosting U.S. exports in general. Crude oil should be no exception.”

- Blake Clayton, “The Case for Allowing U.S. Crude Oil Exports,” Council on Foreign Relations, Policy Innovation Memorandum No. 34, July 2013.

“Because relatively free trade in petroleum products is allowed, the crude oil ban introduces artificial bottlenecks in the refining sector that paradoxically drive up the world (and hence U.S.) price of gasoline…. Ironically, the very people supposedly helped by the export ban—American motorists—are among those hurt by it.”

- Robert Murphy, “Oil Export Ban is Bad Economics,” Institute for Energy Research, August 15, 2014.

Oil tanker BW Zambesi made history last month by carrying $40 million in unrefined American oil from Texas to South Korea. The voyage marked the first time the United States has sold crude oil overseas since Congress banned such exports in the 1970s.

But what’s more remarkable than this landmark event is that the United States — now the world’s leading oil producer — continues to enforce a decades-old prohibition on crude exports. Repealing this arcane policy would drive down domestic fuel costs and create many new high-quality jobs, while spurring growth across the U.S. economy.

The federal ban on crude exports was an example of government intervention trying to solve the problems created by prior intervention. Congress enacted the prohibition in 1975 with two goals in mind. The first was to preserve domestic price ceilings by preventing U.S. producers from receiving higher world-oil prices. The second was to preserve believed-to-be depleting domestic reserves for the domestic market. “We have a classic Malthusian case of exponential growth against a finite source,” President Carter’s energy czar James Schlesinger infamously said.

The real problem was not a shortage of oil but a surplus of regulation. Lawmakers mistook regulatory-induced shortages with physical depletion. Energy economist Joseph Kalt estimated that without price controls, U.S. crude-oil production would have been as much as 1.4 million barrels per day higher, displacing imports and reducing prices from OPEC. Alas, instead of deregulation, the nation got petroleum allocation regulation and a ban on crude-oil exports.

The oil world has flipped since 1975. Federal price controls on oil were abolished by President Reagan in 1981. And breakthroughs in oil extraction techniques, with none greater than hydraulic fracturing and horizontal drilling, have boosted domestic production to levels not seen in decades.

Indeed, the United States will be the world’s leading oil producer this year, developing more of the resource than both Saudi Arabia and Russia. And according to the U.S. Energy Information Administration (EIA), by 2019, crude oil production will reach 9.6 million barrels a day, tying the all-time record set in 1970. Yet despite growing domestic production, companies are still prohibited from exporting crude except by special authorization by the U.S. Department of Commerce.

Such restrictions on crude exports have no public purpose. It is fallacious to believe, as Senator Robert Menendez (D-NJ) recently wrote in a letter to the president, “We must continue to keep domestically-produced crude here to lower prices for consumers . . .” In fact, export restrictions prevent U.S. consumers from enjoying the full benefits of our domestic energy boom, including lower fuel prices.

Case in point: Since there is no ban on exporting gasoline and other oil products, Americans pay the world price at retail, despite the fact that U.S. refiners have lower crude costs. After all, why pass on the savings to American drivers, when foreign consumers are willing to pay a premium for the same gasoline?

Lifting export restrictions would drive down prices at the pump by correcting this market distortion. A study chaired by Daniel Yergin found that removing the export ban could lower U.S. pump prices by an average of 8 cents per gallon from 2016 to 2030. This savings would be $265 billion over the same period.

The impetus for crude exports reflects the current reality of the U.S. refining industry. Our refineries are better equipped to process heavier, imported oil, as opposed to the lighter-grade crudeproduced here in the United States. This situation has created a refining bottleneck that artificially suppresses crude-oil production.

By unleashing global demand for U.S. crude, a repeal of the export ban would lead to an additional 1.2 million barrels a day in domestic production, according to Yergin’s IHS study. This translates intohundreds of thousands of new jobs and hundreds of billions of dollars in new investment. Free trade does just this, as economists from Adam Smith to Robert Murphy have explained.

The ban makes even less sense at a time when leaders in both parties are eager to boost exports. Back in 2010, in fact, President Obama promised to double U.S. exports by 2015. Abolishing the oil export ban would bring the United States far closer to meeting this goal given that petroleum products are among the fastest-growing exports.

The Obama Administration is still considering an end to the ban, while the EIA is scheduled to release several reports on the issue in the coming months. Eliminating an antiquated regulation that suppresses job growth and raises fuel costs should be an easy choice.

Robert L. Bradley Jr. is the founder and CEO of the Institute for Energy Research

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Three Cheers for Holiday Lighting!

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Environmentalists critical of electrified America must have mixed emotions this time of the year. It may be the season of good cheer and goodwill toward all, but it is also the time of the most conspicuous of energy consumption. America the Beautiful is at her best when billions of tiny stringed lights turn the mundane of darkness into magnificent glory. Holiday lighting is a great social offering—a positive externality in the jargon of economics—given by many to all.

While energy doomsayers such as Paul Ehrlich have railed against “garish commercial Christmas displays,” today’s headline grabbers (Grist, Climate Progress, where are you?) have not engaged a public debate over the issue.

Yet holiday lighting is a glaring exception to their goal of reducing discretionary energy usage to help save the world. If holiday energy guzzling is forgiven, why not excuse outdoor heating and cooling, one-switch centralized lighting, and instant-on appliances, not to mention hot tubs and SUVs?

Prancing around to turn on individual lights or waiting for the paper copier to warm up wastes the scarcest and one truly depleting resource: a person’s time. Surely extra energy use for comfort and convenience has priority over purely celebratory uses of energy.

Resourceship: More Energy for All

What about the holiday humbug that celebratory electricity depletes energy minerals, fouls the air, and “destabilizes” the climate? Good tidings abound!

Between 1980 and 2014, despite record production, world reserves of oil and natural gas have both grown by more than 150 percent. The U.S. has been at the forefront of this increase, with domestic increases of as much as 10 percent in one year. World coal reserves compute to 113 years supply of current usage, the highest of these three energy resources.

Political events can drive down supply down and increase prices, but the raw mineral resource base is prolific—and expanding in economic terms thanks to an inexhaustible, cascading human ingenuity and increasing exploratory capital. This points to worldwide energy privatization, beginning with subsoil rights to minerals, as the way forward for citizens and economies.

Improved Air Quality

Growing energy consumption has been accompanied by improving air quality.

The U.S. Environmental Protection Agency reported that air emissions of the criteria pollutants declined by 68 percent between 1970 and 2013, while energy usage increased by 44 percent. Further air emission reductions are expected under existing regulations.

The emissions decline in criteria pollutants between 1980 and 2013 has been between 50 percent and 99 percent: 84% for carbon monoxide (CO), 33% for ozone (O3), 99% for lead (Pb), 58 percent for nitrogen dioxide (NO2), and 81 percent for sulfur dioxide (SO2). For particulate matter (PM), the decline between 2000 and 2013 has been 30% for PM10 and 34% for PM2.5.

y80_13

 

Climate Alarmism Not

Should good citizens think twice about holiday lighting given global warming and other suspected climate change from increasing man-made atmospheric concentrations of carbon dioxide? Hardly!

High-warming scenarios from climate models are increasingly being refuted by reality. Instead of steadily rising global temperatures, there has been a “pause” of global warming since the late 1990s. The discrepancy between models and data is likely to widen, even if average temperatures set a new high (as some are forecasting for 2014).

Climate economists can point to positive externalities, not only negative ones, from the human influence on global climate. A moderately warmer, wetter world, whether natural or anthropogenic, such as experienced since the end of the Little Ice Age in the mid-19th century, has brought significant benefits.

Importantly, the wealth created from affordable, plentiful energy provides the primary means for societies to improve the environment–and protect against weather and climate events. In the final analysis, wealth is environmental health, which explains why increasing energy usage and environmental improvement have gone hand-in-hand in the Western world.

Conclusion

There is much to be thankful for this holiday season with our energy economy. But thoughts about the less fortunate should be with us too. An estimated 1.3 billion people do not have electricity for lighting, heating, cooling, cooking, or water purification. A Christmas tree for us is likely to be firewood for those living in energy poverty.

For the energy impoverished, there could be no greater holiday gift than affordable electricity itself, explaining why the developing world has flatly rejected proposals from environmental elites to forsake future energy usage in the name of global warming.

Energy consumption is good—just ask some of the 1.3 billion people who don’t have access to electricity. Energy makes our lives safer, cleaner, more comfortable, and more convenient. It also gives us the power to celebrate. May one and all in good conscience enliven this holiday season with lights aplenty. With fuels and energy technologies rapidly improving, Americans can look forward to even more energetic celebrations and shared goodwill in the holidays ahead.

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Forbes Op-Ed: Can The ‘Tyranny Of The Status Quo’ Be Broken?

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Robert Bradley, Jr., IER’s Founder and CEO, recently penned an op-ed titled, “The Renewable Fuel Standard: Can The ‘Tyranny Of The Status Quo’ Be Broken?” Below is the text of the piece:

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4/10/2015

Free market economist Milton Friedman explained how government subsidies are very hard to dislodge, once in-place. With concentrated benefits and diffused costs, the status quo can become tyrannical in that the winners, as few as they are, have great incentive to continue their raid on millions of anonymous consumers or taxpayers.

In a recent stop in Iowa, presidential contender Ted Cruz made headlines by slamming the ethanol mandate. Politically, it was a gamble. Iowa isn’t just home to the first big presidential test — it’s a big corn-growing state. That combination has long made for toxic public policy, a tyranny of the status quo.

But Cruz’s opinion is spot on. The federal Renewable Fuel Standard (RFS) requires that some of the fuel Americans pump into their gas tanks come from renewable sources. In practice, that means corn-based ethanol. Would-be aspirants for the nation’s highest office, accordingly, have a powerful political incentive to please Iowans by supporting a policy that actually drives up food and gas prices and hurts the environment. That must end.

The RFS drives up consumer prices in two major areas. The first is food. Corn is an important ingredient in everything from livestock feed to sodas (via high-fructose corn syrup).

In 2000, before the ethanol mandate went into effect, more than 90 percent of this country’s corn fed people and livestock all over the world. Less than 5 percent was used for ethanol. By 2013, thanks to the RFS, 40 percent of the U.S. corn crop was diverted to make ethanol, 45 percent fed livestock, and only the remaining 15 percent was set aside for food. Consumers end up paying more because of the decline in supply available for food use.

The effect is worldwide. The group ActionAid USA has demonstrated that people in the developing world are not just suffering from higher food prices, but are also being driven off their land to make room for biofuel operations. “No one should go hungry to fill up our gas tanks,” the group argued.

The second major impact of the RFS is prices at the pump. The reason for this is simple: Ethanol contains about one-third less energy than gas, which far outbalances its slightly lower per-gallon cost. When ethanol is blended into gas, therefore, each mile driven costs more and a full tank doesn’t last as long.

High prices and more trips to the gas station might be worth it if Americans got some environmental benefit in return. But to the contrary, the RFS actually hurts the environment according to most studies.

Fuel has environmental impacts not only when it’s burned, but also when it’s produced. Ethanol involves a lot of water, fertilizer, and land, including former wetlands and grasslands. A United Nations report by the by the Intergovernmental Panel on Climate Change concluded that these effects “can lead to greater total emissions than when using petroleum products.”

One of the reasons Congress gave for passing the RFS in the first place was to reduce carbon dioxide (CO2) emissions from fuel.

But it turns out ethanol may actually increase overall CO2 emissions. Some life-cycle analyses have concluded that greenhouse-gas emissions for ethanol are one-third higher than for gasoline. In 2011, the National Research Council concluded that “production and use of ethanol to displace gasoline is likely to increase air pollutants such as particulate matter, ozone and sulfur oxides.” Researchers at Stanford University have reported similar findings.

For these reasons, even many environmental groups, including the National Resources Defense Council and the Environmental Working Group, oppose ethanol.

Market Failure — Not

Petroleum transportation fuels have outgrown the “market failure” charge of social costs exceeding private benefits. By 2017, smog-forming emissions from vehicles will have fallen by 99.4 percent since 1970. To put this in perspective, 11 cars emit the same air pollutants as a single gasoline-powered lawn mower per hour of operation, according to the Environmental Protection Agency.

As these emissions have fallen, unsurprisingly, air quality has improved. Since 1970, the aggregate emissions of the six most common pollutants — including carbon monoxide, lead, and sulfur dioxide — have dropped by more than two-thirds.

Ethanol is also supposed to help reduce America’s reliance on foreign oil. But here, the fracking boom has been far more effective. From 2005 to 2014, biofuel production increased by 1,566 trillion BTUs, but oil production increased four-to-five times more to 7,349 trillion BTUs per year. In the last decade, too, America’s net petroleum imports fell from 60 percent to 38 percent.

RFS policies run into the fact that ten percent ethanol is the maximum amount many vehicles on the road today can tolerate. Yet the RFS mandates an increasing amount of biofuel blend every year. This puts millions of older car, truck, boat, lawnmower, and other smaller engines at performance and damage risk.

Plus, according to a report by NERA Economic Consulting, enforcing the RFS as written would cause a $770 billion hit to U.S. GDP.

Members of Congress are upset about all this, and their anger reflects the concerns of their constituents, not to mention environmentalists and limited government advocates. Multiple bills have been introduced in the Senate and House of Representatives to roll back the RFS and its various provisions.

One should expect bipartisan reform, especially because the Environmental Protection Agency just announced that it will finalize blending targets by November 30 for 2015 and last year and issue the 2016 quota as well.

The intellectual and practical case for RFS reform/repeal are sound. Yet of presidential aspirants from both parties, only long-shot Republican Ted Cruz has come out in opposition. It’s time for Congress to step up and take the lead in doing away with this ill-advised policy — and presidential aspirants, Republican and Democrat, should stand up to the tyranny of the status quo.


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James Hansen’s Failed Ultimatums: A Free Market, Anyone?

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Predictions and ultimatums by learned, qualified scientists should be taken seriously. In the case of the father of the global warming scare, James Hansen, formerly a climate scientist with NASA/GISS, and now a full-time scientist/activist, the time is up on a remarkable ultimatum made ten years ago in the New York Review of Books.

“We have at most ten years—not ten years to decide upon action, but ten years to alter fundamentally the trajectory of global greenhouse emissions,” he wrote in his July 2006 review of Al Gore’s new book and movie, An Inconvenient Truth. “We have reached a critical tipping point,” he assured readers, adding “it will soon be impossible to avoid climate change with far-ranging undesirable consequences.”

Several years later, with the publication of his 2009 manifesto Storms of My Grandchildren: The Truth about the Coming Climate Catastrophe and Our Last Chance to Save the Planet, he shared “some bad news” (p. 139) with readers:

The dangerous threshold of greenhouse gases is actually lower than what we told you a few years ago. Sorry about that mistake. It does not always work that way. Sometimes our estimates are off in the other direction, and the problem is not as bad as we thought. Not this time.

“The climate system is on the verge of tipping points,” Hansen stated (p. 171). “If the world does not make a dramatic shift in energy policies over the next few years, we may well pass the point of no return.”

Also in 2009, he told the press:

We cannot afford to put off [climate policy] change any longer. We have to get on a new path within this new administration. We have only four years left for Obama to set an example to the rest of the world. America must take the lead.

Four years from 2009? If anything, the ten-year window Hansen foresaw in 2006 may have gotten shorter.

Fossil Fuels Still Dominant

So has there been a trajectory change with fossil fuels to avert disaster for Hansen? Hardly!

In 2005, the market share of natural gas, coal, and oil was 86 percent, according to the US Energy Information Administration. In 2015, a decade later, the market share of fossil fuels was an identical 86 percent, according to the BP Statistical Review.

EIA forecasts that fossil fuels will supply 79 percent of all energy in the year 2030, down from 86 percent predicted a decade ago but hardly suggesting a major trajectory change.

Hansen’s window for action has been missed. This has left him nonplussed with President Obama and the whole international climate-change crusade. Calling the Paris agreement “a fraud,” Hansen added:

It’s just bullshit for them to say: ‘We’ll have a 2C warming target and then try to do a little better every five years.’ It’s just worthless words. There is no action, just promises. As long as fossil fuels appear to be the cheapest fuels out there, they will be continued to be burned.

This climate scientist has even led a federal lawsuit against the Obama Administration for

… willfully ignored this impending harm. By their exercise of sovereign authority over our country’s atmosphere and fossil fuel resources, they permitted, encouraged, and otherwise enabled continued exploitation, production, and combustion of fossil fuels, and so, by and through their aggregate actions and omissions, Defendants deliberately allowed atmospheric CO2 concentrations to escalate to levels unprecedented in human history, resulting in a dangerous destabilizing climate system for our country and these Plaintiffs.

Conclusion

Recently, though, James Hansen seems to have forgotten about his closing-window ultimatums. There, as yet, is not a new point-of-no-return. Instead, he talks vaguely about the challenge ahead. “What makes [the climate change issue] all the more difficult is the fact that our solutions are going to require changing the energy system, and that requires decades,” Hansen said just last month. “So it’s a very difficult problem.”

Hansen as the scientific father and leader of climate alarmism should not get off so easily. His ultimatum was wrong, as was his science behind it. Which leaves his former high-pressure sales tactics for censure.

“Deadlines are designed to force you into a sale before you’ve had time to think,” the Better Business Bureau warns. Hansen’s tactics are somewhere between an over-eager salesman and a scammer, to which the BBB recommends:

Pay attention to your emotions. This may sound touchy-feely, but high pressure sales are all about manipulation. If you start to feel overwhelmed, anxious, rushed or like you just can’t think clearly, come to your own rescue. Walk out of the room. Hang up. Tell the salesperson to leave.

Wrong-again James Hansen should lose the confidence of his audience. The sky has not fallen and is not about to fall.

Free-market wealth-is-health adaptation is a better strategy than political shenanigans and a government-directed energy future. In fact, it is a strategy whose time has come now that we are out of Hansen’s window of reversal.

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Climate Optimism, Energy Realism for the Next Generation

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I recently addressed a group of highly motivated high school students about environmental and energy issues relating to climate change. The event, Local to Global Politics: Climate Change, was hosted by the World Affairs Council of Houston.

Knowing that climate activists abounded at the two-and-a-half day affair, I pitched an optimistic view of free markets and a cautionary one about intellectual elites identifying problems for the government to solve.

I began my talk with a warning: My view was different, and it would include a number of takeaways that they might not have heard, much less appreciated, before. I added that my perspective was now the very one emanating from Washington, DC and the Environmental Protection Agency. How things change!

My first slide was a quotation from William Happer, Professor of Physics, Princeton University: “I believe that the increase of CO2 is not a cause for alarm and will be good for mankind.”

Happer is focused on the carbon dioxide fertilization effect. Hardly controversial, a New York Times piece earlier this year titled “A Global Greening” explained how plant growth has dramatically increased from CO2-induced photosynthesis. A young tree just planted, I told the students, would grow noticeably faster today than if it had been planted a century or two ago, largely as a byproduct of fossil fuel usage since that time.

What about the enhanced greenhouse effect of higher CO2 atmospheric concentrations acting as a blanket, blocking some of the incoming sun radiation from escaping back into space? I argued that this blanket is more like a bed sheet than a down comforter. The global lukewarming school disputes the catastrophic warming predicted by some climate models.

Climate scientists such as Judith Curry have documented how climate models have overpredicted actual warming, a gap that continues to widen. In fact, the warming “pause” since the late 1990s is actively debated in the peer-reviewed literature.

Climate economics has a role in the debate, I also explained to students. Nature is not taken as optimal; economists see benefits, not only costs, from the human influence on climate. A moderate increase in warming and precipitation (they go together) are positive; higher sea level is not. But recorded sea level increases have been modest, and recent predictions have been for slower increases.

Overall, I painted a very different picture from that expounded in Al Gore’s An Inconvenient Truth (2006) and in An Inconvenient Sequel: Speaking Truth to Power (2017).

Turning to energy policy, I defended fossil fuels compared to government-enabled wind power, (on-grid) solar power, and ethanol. Fossil fuels are energy dense and have built-in storage; they are thus affordable and reliable (non-intermittent) compared to renewables.

Carbon-based energies are the sun’s work over the ages—a stock—compared to the very dilute flow from the sun and wind. This explains why so much infrastructure (steel, concrete, etc.) is required to turn free energy inputs into usable energy (electricity).

It is far better, I opined, to build power plants near the population centers and avoid energy sprawl from land-intensive wind farms that must be sited far away from where people live. (Think of the $7 billion CREZ system built to transmit wind energy from the wilds of West Texas and the Texas Panhandle to San Antonio, Dallas, and other major population centers.)

My last slide made a case that fossil fuels were environmentally superior to renewables for these reasons. I shared a quotation. “The greenest fuels are the ones that contain the most energy,” stated Peter Huber in Hard Green: Saving the Environment from the Environmentalists. “The greenest possible strategy is to mine and to bury, to fly and to tunnel, to search high and low, where the life mostly isn’t, and so to leave the edge, the space in the middle, living and green.”

At the end of my talk, a student raised his hand. He was a climate activist and asked what he should do in light of my postulations.

My answer? Study both sides of the issue. Good intentions are not enough. Decide if the climate issue, on one side or the other, or another issue completely, is worth devoting your personal energy and resources to.

The EPA will soon convene a red team–blue team debate on climate science and its implications for climate policy. This same debate deserves to be held in every classroom and public forum across the country. Let the debate continue with assumptions, theory, and data—not ad hominem arguments—leading the way.

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Al Gore’s Energy Problems

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Climate alarmism was launched almost 30 years ago when the featured scientist before Al Gore’s Senate Committee on Energy and Natural Resources testified that he was “99 percent certain” human activity was behind that year’s unusually hot summer.

For maximum effect, that hearing was scheduled during a Washington, D.C., heat wave. Rumors flew that the hearing room’s windows had been left open so that visible beads of perspiration would accompany the very words of NASA scientist James Hansen.

That was June 1988. The theatrics continue with this summer’s release of Gore’s “An Inconvenient Sequel: Truth to Power,” the follow-up to “An Inconvenient Truth” (2006).

Despite a plea to climate activists to come en masse, the documentary has all but bombed. The general public, much less moviegoers, are just not buying Gore’s latest serial exaggerations.

It’s little wonder why the Left and Right ask whether Pastor Gore is more of a hindrance than a help to the cause. “While Gore’s heart is in the right place, his hyperbole can hurt him,” one reviewer politely stated. “Al Gore is the best friend climate skeptics ever had,” noted Steve Hayward. “Here’s to hoping Gore makes many more sequels to An Inconvenient Truth. With enemies like him, who needs enemies?”

Palatial Energy

Just in time for his movie, the story broke that Gore’s 10,070-square-foot Nashville residence consumed twenty times more energy than the average U.S. home. His swimming pool alone accounted for six times more.

“With an average consumption of 22.9 kWh per square foot over the past year, Gore’s home classifies as an ‘energy hog’ under standards developed by Energy Vanguard—a company specializing in energy efficiency methods,” one writer noted.

Indeed. While Gore’s mansion is about four times larger than the average American house of 2,700-square feet, in some months (for example, September of last year) it has used as much as 34 times more energy than the average American house.

Hypocrisy and irony turn into mystery with another fact: the Gore mansion is certificated energy efficient, and it is partly powered by renewable energy. Appliance retrofits, an array of solar panels, and a geothermal system were installed in 2007 when Gore’s energy bill became a national issue. The U.S. Green Building Council, in fact, gave the property a Gold LEED certification after the quarter-million-dollar renovation.

Offset “Monkey Business”

In damage control, Gore’s spokesperson Betsy McManus stated this month that her boss “leads a carbon-neutral life by purchasing green energy, reducing carbon impacts, and offsetting any emissions that can’t be avoided.” But carbon neutral is not the same as carbon free—and in this case, it’s quite the opposite.

McManus refused to provide data on Gore’s alleged offsets, much less the reasons that Gore’s (Gold LEED) electricity usage is off the charts. (Gore’s other residences in San Francisco and Carthage, Tennessee, are at issue here too.) But even assuming substantive purchases, Gore is supporting a fossil-fueled present and future according to Gore’s go-to climate scientist, James Hansen.

“A successful new policy cannot include any offsets,” Hansen stated in his global warming manifesto, Storms of My Grandchildren (p. 206):

The public must be firm and unwavering in demanding “no offsets,” because this sort of monkey business is exactly the type of thing that politicians love and will try to keep. Offsets are like the indulgences that were sold by the church in the Middle Ages. People of means loved indulgences, because they could practice any hanky-panky or worse, then simply purchase an indulgence to avoid punishment for their sins.

Bishops loved them too, because they brought in lots of moola. Anybody who argues for offsets today is either a sinner who wants to pretend he or she has done adequate penance or a bishop collecting moola.

As government mitigation policy, the Gore approach should be rejected. Hansen continues (ibid.):

A successful new policy cannot include any offsets. We specified the carbon limit based on the geophysics. The physics does not compromise—it is what it is. And planting additional trees cannot be factored into the fossil fuel limitations. The plan for getting back to 350 ppm assumes major reforestation, but that is in addition to the fossil fuel limit, not instead of. Forest preservation and reforestation should be handled separately from fossil fuels in a sound approach to solve the climate problem.

Climate stabilization requires no less than “a global phaseout of fossil fuel carbon dioxide emissions,” Hansen insists (p. 205). Yet the majority of energy molecules used at Gore’s Belle Meade residence are fossil-fuel generated, as much as the former vice president would like to claim carbon neutrality.[1]

Gore Misspeaks

Al Gore will not dare debate climate change issues—the very ones he cares about the most. Joseph Bast at the Heartland Institute tried a decade ago with a national advertising campaign—to no avail. Alex Epstein last year offered $100,000 for Gore to publicly debate—the very amount that Gore charges for his speaking engagements.

While Gore dare not put his own knowledge and convictions to the test, sometimes things can go awry. When a reporter brought up a mainstream climate scientist’s caution about Gore’s (exaggerated) sea-level rise claim in An Inconvenient Sequel, Gore snapped.

As recounted by reporter Ross Clark:

As soon as I mention Professor Wdowinski’s name, he counters: “Never heard of him — is he a denier?” Then, as I continue to make the point, he starts to answer before directing it at me: “Are you a denier?” When I say I am sure that climate change is a problem, but how big a one I don’t know, he jumps in: “You are a denier.”

Professor Shimon Wdowinski, associate professor of marine geology and geophysics at the Florida International University, specializes in the study of flooding in Miami. He is, states Clark, “exactly the sort of expert, one might think, with whom Gore or his team of researchers might have been in touch before making a documentary film involving the issue of flooding in Miami.”

Politics First

One can go on and on about the tensions and contradictions of Albert Arnold Gore Jr., including when the presidential candidate conveniently forgot his end-of-the-world rhetoric in the heat of political battle.

“I think we need to bring gasoline prices down,” Gore intoned in the summer of 2000. “I have made it clear in this campaign that I am not calling for any tax increase on gasoline, on oil, on natural gas, or anything else.”

A climate skeptic or “denier,” and the current president of the United States, could not have said it better.

Conclusion

A quarter century ago, in Earth in the Balance, Al Gore offered a stern diagnosis and gloomy prognosis of the natural state of things. “I believe that our civilization is, in effect, addicted to the consumption of the earth itself,” he complained. The ensuing environmental crisis, he added, was a very difficult “war with ourselves” (pp. 220, 275).

Al Gore is at war with himself. Little wonder that his hypocritical, hyperbolic message goes backward with his every push.

It is all political theater, as Jerry Taylor posited in “Global Warming: The Anatomy of a Debate.” And in this show, actor Al is “the gift that keeps on giving.”


[1] According to the US Energy Information Administration, Tennessee gets about 40 percent of its electricity from coal-fired generation, with natural gas providing 14 percent. Renewables provide about 15 percent, and non-hydro generation less than two percent. Nuclear provides the balance (about one-third).

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Scary Sea Level Rise? Check Your Science

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“Sea level has been overall rising since the last ice age, with some ups and downs. Sea level has been rising for the past 200 years….Humans are not going to stop sea level rise on the time scale of a few centuries by ceasing emissions of CO2.”

– Judith Curry, “The Blame Game.” Climate Etc. August 14, 2017.

Judith Curry is the personification of “one plus the truth equals a majority.” This esteemed climate scientist and erstwhile professor changed her views from climate alarmism and (government) forced energy transformation, a story told elsewhere.

Climate realism—respecting the science rather than getting ahead of it—is her forte. Curry is a leading foe of (faulty) science emanating from groupthink, false certainty, bad incentives, and half-truths. And amid great physical-science uncertainty where subtle assumptions can drive the result, particularly in a politicized environment like with climate change, the ends should not justify the means.

Her transformation to climate optimism, relatively speaking, has produced a middle view of the climate debate that can be summarized in four major points:

  • Climate is changing and has an anthropogenic (man-made) component, with the enhanced greenhouse effect (other things equal) resulting in a warmer, wetter world with higher sea level.
  • The human influence is modest, not pronounced, with climate models overpredicting warming.
  • Carbon dioxide emissions and rising atmospheric CO2 concentrations have ecological and economic benefits, not only costs.
  • Government mitigation policies will have negligible impacts on climate.

Sea Level Fright

Human-caused sea level rise has been implicated in the destruction wrought by Hurricane Harvey in a variety of post mortems. But pre-Harvey, sea level was the scare of the climate lobby to make “climate change” real in ordinary people’s lives.

This seems to be the mantra at Yale Climate Connections, which had these features on their homepage: “Yes. Your Streets are Flooding More ” (August 10), “The Rising Seas of Climate Change ” (August 7), and “Waters Rise, and So Do the Costs of Coastal Insurance ” (August 10).

The same group sent this communication in conjunction with the solar eclipse:

In the hours before and after the eclipse, extra-high tides will occur as a result of the alignment between the sun, Earth, and moon. Those enhanced tides will give us a glimpse of how sea-level rise will affect us – and we want your help to document those tides. The high tides will be visible in many coastal communities, so you can participate even if the eclipse won’t be visible in your region.

Exaggerated sea-level rise was codified with Al Gore’s 2006 prediction of a possible 20-foot increase with the melting or breakoff of Greenland or Antarctica (An Inconvenient Truth: p. 196). Twelve pages follow (pp. 198–209) with glossy photographs showing major areas under water: from southern Florida to San Francisco to Manhattan.

Before/after pictures of The Netherlands is accompanied with the message (p. 203) about how Dutch engineers were designing floating homes.

Enter Judith Curry

A recent blog post by Judith Curry, “The Blame Game,” put the science back into sea level—at least the best research we have now. Yes, sea level is rising, but such is also the natural state of things coming out of the Little Ice Age that ended in the mid-19th century.

Sea level has been rising since the last ice age, with some ups and downs. Sea level has been rising for the past 200 years. The rate of sea level rise during the period ~1925-1960 is as large as the rate of sea level rise the past few decades. Human emissions of CO2 mostly grew after 1950; so, humans don’t seem to be to blame for the early 20th century sea level rise, nor for the sea level rise in the 19th and late 18th centuries. Humans are not going to stop sea level rise on the time scale of a few centuries by ceasing emissions of CO2.

Always meticulous, Curry refers to previous posts at her site Climate Etc. that summarize the peer-reviewed, data-driven literature:

“We need to learn to live with continuing and possibly accelerating sea level rise,” she concluded her post. “The solutions lie in land-use policy and engineering/technology.”

Conclusion

The good news is that sea level rise is much more modest than false prognosticators have led us to believe. Al Gore’s worst case scenario fooled some for a time, but no more.

“I thought sea levels would have risen 20 feet by now thanks to the melting of either West Antarctica or Greenland,” wrote Jasmin Guenette at HuffPost.

Al Gore claimed that this would happen in the ‘near future,’ but thankfully, we’ve been spared so far. In fact, sea levels seem to be rising at maybe three millimetres per year. Twenty feet is over six thousand millimetres, so at this rate, we wouldn’t even be halfway by the year 3017.

Rather than attempt to shave fractions of an inch off of future sea level rise in the distant future, policymakers should keep fossil fuels affordable, plentiful, and reliable to deal with climate and weather events of all kinds. Free-market adaptation, not a futile crusade to ‘stabilize’ climate, is the obvious choice for a free, prosperous world.

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Kathleen Hartnett White: A Scholar for CEQ

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“Public discourse about global warming and climate policies ignores fundamental physical realities about energy and overlooks the profound benefits of carbon-rich energy.”

Stephen Moore and Kathleen Hartnett White, Fueling Freedom: Exposing the Mad War on Energy (Washington, DC: Regnery, 2016), p. 122.

Last week, President Trump announced his intent to nominate Kathleen Hartnett White to chair the Council on Environmental Quality (CEQ). A division of the Executive Office of the President, CEQ “coordinates Federal environmental efforts and works with agencies and White House offices in the development of environmental policies and initiatives … that promote the improvement of environmental quality and meet the Nation’s goals.”

White, formerly chairwoman of the Texas Commission on Environmental Quality, currently heads the energy and environmental program at the Texas Public Policy Foundation.

In addition to her private-sector and public-sector experience, White is a scholar, having written Fossil Fuels: The Moral Case (Texas Public Policy Foundation: 2014) and, most recently (with Stephen Moore), Fueling Freedom: Exposing the Mad War on Energy (Regnery: 2016), as well as numerous shorter pieces.

Fueling Freedom, a 300-page multidisciplinary energy primer, reflects many years of study and analysis by this very well qualified nominee. A major theme is the relationship between sound public policy and clear thinking. “A grasp of a few hard facts, a little arithmetic, and some basic physics are necessary to avoid calamitous blunders in energy policy,” she writes. (p. 78)

A sampling of her conclusions and views is provided below.

Energy Expansionism

“A sustainable energy abundance is no longer in question. We now know that [mineral] energy resources that were thought to be running out will be plentiful for several hundred more years.” (p. 66)

“Like every other nation, we should be developing our own oil and natural gas resources. This is a simple matter of economics.” (p. 245)

“From an economic competitive standpoint, for the United States to stop producing fossil fuels would be like Iowa’s giving up corn or Columbia’s giving up coffee.” (p. 23)

“Producing American energy is the single best means of balancing the federal budget, eliminating our trade deficit, and retiring our nineteen-trillion-dollar national debt.” (p. x)

“If the United States, with its wide-open and decentralized oil industry, can act as the swing producer, the global oil market can function as a genuinely competitive market.” (p. 39)

“Although not in principle renewable, fossil fuels remain abundant enough to sustain economic growth for many centuries until fully comparable or superior energy sources are genuinely available at scale.” (p. 135)

Fossil Fuel Exceptionalism

“Fossil fuels are wonder fuels. If we want a just, prosperous, healthy, and safe world that respects the rights and dignity of the individual, we have a moral imperative to use them in a responsible and productive way.” (p. 26)

“The prophets of doom have the story backward: the abundant energy that is a product of human ingenuity makes our planet habitable, not inhabitable.” (p. 97)

“Fossil fuels have been one of the greatest anti-poverty programs in history, improving the human condition more than all of the trillions of dollars of government welfare programs and foreign aid programs combined. By contrast, most forms of green energy aren’t green at all. They’re a prescription to make the poor poorer.” (p. 166)

“Spread the news! Man’s carbon footprint shrinks his physical footprint on the earth.” (p. 155)

Energy Physics/Energy Reality

“Concentrated energy sources confer enormous advantages for extraction, transport, and storage and allow versatile conversions… Quantifying the power density of different fuels reveals glaring contrasts between renewable energy sources and fossil fuels.” (pp. 82, 83)

“Coal, natural gas, and nuclear generation have far greater power density than wind, sunlight, or wood (biomass) as a source of [electrical] generation.” (p. 84)

“America’s $18-trillion industrial economy cannot be powered with windmills and solar paneling unless we can transcend the four laws of thermodynamics, the application of which put man on the moon, led to micro-processors, semiconductors, and innumerable technological breakthroughs that have extended our life spans and improved human life across the world.” (p. 170)

“Fossil fuels proved to be abundant sources of energy, scalable and reliable in a way that many forms of renewable energy are not.” (p. xiv)

“The inherent limitations of wind and solar are physically intractable.” (p. xv)

“Denial of the severe limitations of renewable energy has been institutionalized in national governments and global organizations such as the United Nations.” (p. 144)

“We will be highly reliant on fossil fuels for at least the next several decades.” (p. x)

Carbon Dioxide: Positive Externality

“Carbon dioxide is an odorless, invisible, harmless, and completely natural gas lacking any characteristic of a pollutant. It does not contaminate or defile as pollutants do.” (p. 212)

“Carbon dioxide in the air we breathe has no adverse health effects, in contrast to carbon monoxide and high concentrations of the genuine pollutants listed in the Clean Air Act, the source of the EPA’s authority to regulate air pollutants.” (p. 212)

“… the chief factor limiting plant productivity—photosynthetic efficiency—is the level of atmospheric carbon dioxide, which is currently at a relatively low level compared with previous eras in the earth’s long history.” (p. 95)

“Human activity over the past two centuries has inadvertently enriched the atmosphere with carbon dioxide. At the same time, fossil fuels have shrunk the human footprint on the natural world by amplifying the food supply per acre of arable land through natural gas–based fertilizers and other fossil fuel inputs.” (p. 155)

“According to hundreds of scientific studies, the relatively slight increase in the atmospheric concentration of carbon dioxide has enhanced native and cultivated plant productivity, growth, moisture retention, and resistance to pests.” (p. 156)

“Labeling carbon dioxide a pollutant is one of the climate-change lobby’s more absurd gestures…. In fact, carbon dioxide is a plant nutrient essential for all human, animal, and plant life.” (p. 211)

“‘Decarbonizing’ is a delusional concept. Our bodies are built of carbon. It is the chemical basis of life on earth.” (p. 46)

“… our carbon footprint is the means by which we live longer, healthier, and freer lives than our ancestors did only a century ago.” (pp. 45–46)

“Show me someone who uses very little carbon, and I will show you someone who is likely very poor (or very, very rich).” (p. 46)

“Global warming alarmists refuse to acknowledge a fundamental truth about carbon dioxide. This natural molecule, which [former] Secretary of State John Kerry calls a ‘weapon of mass destruction,’ amplifies life.” (p. 155)

Energy Politics

“Never before have the rulers of a society intentionally driven it backward to scarcer, more expensive, and less efficient energy.” (p. xv)

“The agenda of the so-called green movement, one of the most influential political forces in America today, does not end with carbon-based energy. It is a war on free-market economics.” (p. 2)

“The Left’s strategy is to make American coal so expensive that the industry can’t survive in global markets.” (p. 9)

“The goal of climate policies is to eliminate the coal, oil, and natural gas on which the world relies for 80 to 90 percent of its energy.” (p. 11)

Energy Freedom vs. Policy Poverty

“Most green energy policies undermine human progress. They are regressive, disproportionately hurting low- and middle-income families by driving energy prices higher, thus eroding their standard of living.” (p. 8)

“Without fully comparable energy alternatives, climate policies to rapidly subvert the energy-rich hydrocarbons risk a necessary foundation for human well-being and economic productivity.” (p. 123)

“Energy scarcity in Great Britain and Germany is the result of a deliberate choice to dismantle a well-functioning system of modern electric power and replace it with a system that is more expensive, uncontrollable, and inadequate.” (p. 196)

Clean Power Plan

“[The] so-called Clean Power Plan … is futile—all pain and no gain. By EPA’s own admission, the mandated carbon cuts will not meaningfully reduce predicted warming.” (p. 9)

“The Clean Power Plan is not merely another heavy-handed, expensive environmental regulation. It is nothing less than a federal takeover of our nation’s entire electric sector.” (p. 11)

Ethanol Policy

“Ethanol policy is a prime example of counterproductive, outdated, and ethically offensive federal energy policy.” (p. 48)

“The ethanol policies of the United States, which transform a basic food into an optional fuel, have been widely condemned by international institutions developed to eliminating hunger.” (pp. 159–60)

“Promoters of ethanol pitch it as a way to reduce greenhouse gas emissions, yet research has shown that ethanol probably increases such emissions.” (p. 161)

Post-Climate Policy

“Given the weakening evidence for severe global warming and the counterproductive consequences of climate policies, surely increased economic growth offers the better bet for adaptation to whatever change in our climate may lie ahead.” (p. 21)

“We have found a $50-trillion treasure [of potential fossil-fuel production] lying under our feet. The income tax and royalty payments to the federal government would be $3–4 trillion over twenty years.” (p. 243)

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Three Cheers for Holiday Lighting!

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Environmentalists critical of electrified America must have mixed emotions this time of the year. It may be the season of good cheer and goodwill toward all, but it is also the time of the most conspicuous energy consumption. America the Beautiful is at her best when billions of strung lights turn darkness into magnificent glory from border to border, from sea to shining sea.

Holiday lighting is a great social offering—a positive externality in the jargon of economics—given by many to all.

While energy doomsayers such as Paul Ehrlich have railed against “garish commercial Christmas displays,” today’s headline grabbers (GristThink Progress, where are you?) have not engaged in a public debate over the issue.

Yet holiday lighting is a glaring exception to their goal of reducing discretionary energy usage to help save the world. If holiday energy guzzling is forgiven, why not excuse outdoor heating and cooling, one-switch centralized lighting, and instant-on appliances, not to mention hot tubs and SUVs?

Prancing around to turn on individual lights or waiting for the paper copier to warm up, wastes the scarcest, truly depleting resource: a person’s time. Surely extra energy use for comfort and convenience has priority over purely celebratory uses of energy.

So, what about the holiday humbug that celebratory electricity depletes energy minerals, fouls the air, and “destabilizes” the climate? Good tidings abound!

Resourceship: More for All

Between 1980 and 2016, despite record production and consumption, world proved reserves of oil and of natural gas have each grown by more than 150 percent.

The US has been in the forefront, with newly found supply outpacing consumption. Between 2000 and 2015, US reserves of oil and natural gas increased by 47 percent and 74 percent, respectively. Globally, the United States is number one in oil and natural gas production and second in coal production.

Coal is even more abundant than oil and natural gas abroad and at home. World proved reserves increased one-and-a-half-fold between 1980 and 2016. US coal supplies compose 21 percent of the world total, second only to China.

Domestic coal reserves are greater on a Btu basis than oil and natural gas combined. In terms of domestic usage, our coal represents 350 years of present consumption.

Political events can drive down supply and increase prices, but the raw mineral resource base is prolific—and expanding in economic terms thanks to inexhaustible human ingenuity, as well as increasing exploratory capital from a growing economy.

Ever greater mineral energy wealth will come with any moves toward worldwide energy privatization, beginning with subsoil rights to minerals. The energy upside from freedom is tremendous.

Improved Air Quality

Growing energy consumption has been accompanied by improving air quality. All told, emissions of the six principal air pollutants have dropped by two-thirds, at a time when the economy and fossil-fuel usage grew substantially. Between 1980 and 2016, the US Environmental Protection Agency reports, “gross domestic product increased 158 percent, vehicle miles traveled increased 111 percent, energy consumption increased 25 percent, and U.S. population grew by 42 percent.”

The reductions per criteria pollutant between 1980 and 2016 have been:

  • 85 percent for carbon monoxide (CO);
  • 33 percent for ozone (O3);
  • 99 percent for lead (Pb);
  • 62 percent for nitrogen dioxide (NO2); and
  • 87 percent for sulfur dioxide (SO2).
  • 57 percent for particulate matter (PM10)

So much for the gloomy I = PAT equation from Paul Ehrlich and John Holdren that correlated a negative environmental Impact from increasing Population, Affluence, and Technology. Just the opposite has proven the case, as Julian Simon recognized.

Climate Alarmism Not

Should good citizens think twice about holiday lighting, given global warming and other suspected climate change from increasing man-made emissions and atmospheric concentrations of carbon dioxide and other greenhouse gases? Hardly!

High-warming scenarios from climate models are increasingly being refuted by reality. “Climate computer model projections of future man-made warming due to human emissions of carbon dioxide are running too hot,” noted Ronald Bailey, referencing a new scientific study. “This is really good news,” he added.

Indeed, there has been a “pause” in global warming since the late 1990s. The discrepancy between models and data is likely to widen, even if average temperatures continue to rise.

It is time to dial back the alarm. “Based on everything that I’ve seen,” summarized Judith Curry, “it is very difficult to conclude that human-caused climate change is potentially a ‘ruin’ problem on the timescale of the 21st century.  But climate change is interesting and important, independently of whether AGW is the dominant factor or not.”

Beware of claims of settled science—and the “consensus enforcers versus the Trump administration.”

Climate economists can point to positive externalities, not only negative ones, from the human influence on global climate. A moderately warmer, wetter world, whether natural or anthropogenic, such as that experienced since the end of the Little Ice Age in the mid-19th century, has brought significant benefits. Even the New York Times has noted the “global greening” from CO2 fertilization.

Affordable, plentiful energy provides the primary means for societies to improve the environment—and protect against weather and climate events. In the final analysis, wealth is environmental health, which explains why increasing energy usage and environmental improvement have gone hand-in-hand in the Western world.

Climate Taxation Not

Perhaps a fourth cheer should be added to the above three. The new tax bill put consumers and America first by not imposing a price on carbon dioxide (CO2). A carbon tax is not tax reform but its opposite. An Obama-level CO2 tax of $40 per ton, for example, would have increased gasoline prices by 18 percent ($0.36/gallon); natural gas by 50 percent ($2.12/MMBtu); propane by 48 percent ($0.23/gallon); home heating oil by 41 percent ($0.41/gallon).

Use coal, buy electricity generated by coal, or work for the coal industry? Think what a 264 percent increase—$84.03 per short ton—would have meant for you and others given a carbon tax.

Prices of US electricity, two-thirds of which is generated from fossil fuels, would rise by about 40 percent ($0.04/kWh) under this tax.

Conclusion

A post at Yale Climate Connections laments that “the holidays have a huge carbon footprint.” Travel and gifts are the villains. “The holidays can be a time of abundance, with lots of food, gift-giving, and fun,” it is stated. “Unfortunately, they’re also a time of abundant carbon pollution.”

Don’t resort to inconvenient carpooling, mass transit, self-made gifts, or recycling as recommended in the above post. Choose convenience and, as they say, don’t sweat the small stuff. When it comes to energy, there is not a depletion, pollution, or climate problem in the United States or other areas of the world where private property, voluntary exchange, and the rule of law prevail.

There is, in fact, much to be thankful for this holiday season with our energy economy. But thoughts about the less fortunate should be with us too. An estimated 1.1 billion people do not have electricity for lighting, heating, cooling, cooking, or water purification. A Christmas tree for us is likely to be firewood for those living in energy poverty.

For the energy impoverished, there could be no greater holiday gift than affordable electricity itself, explaining why the developing world cannot afford to join the global warming/climate crusade—really a war on fossil fuels—to satisfy Western elites.

Free-market energy makes our lives safer, cleaner, more comfortable, and more convenient. The master resource also gives us the power to celebrate. May one and all in good conscience enliven this holiday season with lights aplenty.

With fuels and energy technologies rapidly improving, Americans can look forward to even more energetic celebrations and shared goodwill in the holidays ahead.

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A New, Unanticipated Oil World

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A letter in a November 1999 edition of the Oil & Gas Journal, “Running Out of Oil,” written by an industry consultant, stated 11 facts and predictions. Far from unusual, his facts were generally correct and his prognostications mainstream.

U.S. oil production was in decline in the 1990s. Oil imports were rising. This led George W. Bush to declare in his 2006 State of the Union Address: “America is addicted to oil.”

Until around 2010, in fact, “Peak Oil” was in vogue both inside and outside the industry. Pro-oil voices urged greater public-land access and less regulation to increase otherwise declining production; anti-oil voices favored government subsidies and mandates to fashion a post-petroleum future.

The aforementioned letter (by Jeffrey Hughes, President and founder of HTK Consultants) offered these facts and predictions circa 1999:

  1. World oil discoveries peaked in the 1960s.
  2. World oil production will peak in the next ten years.
  3. U.S. oil production peaked in the mid-1970s.
  4. The U.S. currently imports 60 percent of its oil, mostly from Saudi Arabia, Venezuela, and Mexico.
  5. Nearly 64 percent of the world’s remaining oil is in five Persian Gulf countries.
  6. Saudi Arabia alone has more proved oil reserves than all non-OPEC countries combined.
  7. There is roughly 1,039 billion bbl. of oil remaining worldwide.
  8. The world is finding only 7 billion bbl. of new oil each year.
  9. The world is consuming more than 26 billion bbl of oil each year.
  10. The world could theoretically run out of oil by the year 2050.

The letter ended by predicting that the U.S. would have to “import over 85 percent of its oil in the next 10–15 years.”

Update, 17–18 Years Later

In 2016, net petroleum imports to the United States were 24 percent of domestic consumption. Net imports that peaked in 2005 at 12.5 billion barrels have fallen since, with 2016 registering 4.8 billion barrels. The results for 2017 (not yet finalized) could bring the percentage under 20 percent for the first time since the mid-1960s.

And here are the updated facts from the world of 1999.

  1. World oil discoveries peaked in the 1960s.

World oil discoveries peaked in 1964 at about 70 billion barrels.

Since then, yearly additions have recently averaged 9 billion barrels (2000–2015). Explorers in 2017 discovered the lowest volume of oil since at least the 1940s, according to Rystad Energy, an oil and gas consultancy.

This said, global reserves have increased significantly from additions to existing fields, the result of new technology (see points below).

  1. World oil production will peak in the next ten years.

Approximately 72 million barrels per day was produced in 1999, which increased 12 percent to 81 million barrels per day in 2009.

From the 2009 level, 2016’s output rose 14 percent to 92 million barrels per day—the highest ever.

  1. U.S. oil production peaked in the mid-1970s.

Domestic oil production peaked in 1970 at 9.6 million barrels per day. After dipping to a low of 5 million barrels per day in 2008, 2015 output was 9.4 million barrels per day, the highest since 1972 and nearly a 90 percent increase from the 2008 low.

In 2018, the U.S. is expected to break its 1970 record for oil production.

  1. The U.S. currently imports 60 percent of its oil, mostly from Saudi Arabia, Venezuela and Mexico.

In 2016, net petroleum imports were 24 percent of U.S. oil consumption, a 60 percent decline from the above amount.

Imports from Saudi Arabia fell from 1.5 million to 1.1 million barrels per day between 1999 and 2016, a 25 percent decline. Total OPEC imports fell from 4.2 million to 3.2 million barrels in the same period, a 25 percent drop.

  1. Nearly 64 percent of the world’s remaining oil is in five Persian Gulf countries.

In 2016, 72 percent of world oil reserves were in OPEC, led by Venezuela and Saudi Arabia. But with technically recoverable oil, the U.S. exceeds all of OPEC (1.44 trillion barrels vs. 1.22 trillion barrels).

  1. Saudi Arabia alone has more proved oil reserves than all non-OPEC countries combined.

This is no longer the case. Saudi Arabia’s 2016 proved reserves of 266 billion barrels compares to 486 billion barrels for non-OPEC.

  1. There is roughly 1,039 billion bbl. of oil remaining worldwide.

At year-end 2016, world oil reserves were estimated to be 1.7 trillion barrels, a 65 percent increase from the above despite interim consumption of 565 billion barrels.

  1. The world is finding only 7 billion bbl. of new oil each year.

In 2016, 2.4 billion barrels from new fields of conventional oil were discovered worldwide, down from the average of the last 15 years of 9 billion barrels. However, additions to reserves in existing fields have allowed total reserves to grow significantly (see below).

  1. The world is consuming more than 26 billion bbl. of oil each year.

In 2016, world oil usage of 35 billion barrels was 35 percent higher than the above figure. By 2050, oil consumption is forecast to reach over 44 billion barrels.

  1. The world could theoretically run out of oil by the year 2050.

At current consumption rates versus proved reserves, the world would “theoretically” run out of oil in 2066. But oil exploration and reserve development will not cease. Proved reserve additions can be expected to keep up with if not exceed annual consumption in the years and decades ahead.

Conclusion

Predictions from 1999, in retrospect, were far too pessimistic about the global oil market and the U.S. in particular. The last decade has been among the most prolific in the history of the petroleum industry—and centered right here in America. Human ingenuity, what Julian Simon labeled “the ultimate resource,” has prevailed over the alleged limits to nature.

A month before Hughes’s letter, the economics editor of the Oil & Gas Journal, Robert Beck, predicted that “additional demand for crude oil will have to be satisfied primarily by increased production from OPEC countries, because that is where the vast majority of the world’s oil reserves lie,” in the article “Resurgent Oil Demand, OPEC Cohesion Set Stage for Optimistic Outlook for Oil Industry at the Turn of the Century.” Again, this was the conventional wisdom.

But Beck’s boss was less sure. “Plenty of fluid hydrocarbon remains,” wrote Oil & Gas Journal editor Bob Tippee in his article titled “How an Institution Responds to the Turn of a Millennium” the month after Hughes’s letter. “And OGJ will continue publishing the best material available about the space-age innovations that keep pushing exhaustion of an undeniably finite resource further into the future than anyone seems able to imagine.”

Tippee was sage. More “space age innovation” has happened than could have been imagined. Excitement about 3-D technology and horizontal drilling in the 1990s was but a precursor to what today is a U.S./global oil and gas production boom from hydraulic fracturing, a story told elsewhere.*

The Oil Age, 150 years old, may still be young. Peak-oil predictions made in the second half of the 19th century, and throughout the 20th century, all assumed a nonentrepreneurial world instead of one in which innovation and discovery open the door to more. Resources, after all, are not fixed but created by resourceship, particularly in private property, free-market settings.


*The natural gas breakthrough with hydraulic fracturing technology dates back to 1998. The same would occur with oil about a decade later. For gas, see Russell /Gold, The Boom: How Fracking Ignited the American Energy Revolution and Changed the World (Simon & Schuster: 2014), chapter 6. For oil, see Zuckerman, The Frackers, pp. 235–36, 252, 318–20, 364–65.

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Oil and Energy Security: Another Fallen “Market Failure”

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Rising Oil Prices Give U.S. An Edge in Global Energy,” a front-page headline in the New York Times read last week. And with that, another “market failure” argument against the consumer-driven U.S. petroleum industry bit the dust, joining the “peak oil” argument for government intervention in order to usher in a post-hydrocarbon age.

Actually, the “peak oil” and “energy security” arguments are different sides of the same coin. The doubling of domestic oil production in the last decade to ten million barrels per day has resulted in a two-thirds-plus decline in US net oil imports (to 19 percent).

Some salient quotations from the Times’s piece follow:

  • “This is a 180-degree turn for the United States and the impacts are being felt around the world,” said Daniel Yergin, the economic historian and author of The Prize: The Epic Quest for Oil, Money and Power. “This not only contributes to U.S. energy security but also contributes to world energy security by bringing new supplies to the world.”

 

  • The United States and its allies now have a supply cushion at a time when political turmoil in Venezuela, Libya and Nigeria is threatening to interrupt flows to markets.

 

  • Only a few years ago, such threats — along with a recent pipeline failure in the North Sea and storms in the Gulf of Mexico — would have sent the price of crude soaring. Instead, the rise has been muted, and gasoline at the pump remains below $2.60 a gallon across most of the United States.

 

  • It is a striking contrast to the 1970s, when Arab oil boycotts forced motorists to line up for blocks to fill their tanks and the economy went into a tailspin. Even more recently, during the presidency of George W. Bush, domestic oil output was declining so rapidly that the country set a course to replace oil with biofuels like ethanol.

 

  • Technological advances … [have transformed] unlikely places like North Dakota and New Mexico into world class petroleum hubs. Pipelines are being built across Texas to serve ports where oil can be pumped onto tankers headed for China, India and other markets.

In its recent editorial, “Drilled, Baby, Drilled,” the Wall Street Journal poked fun at the words of then-presidential candidate Barack Obama, who in 2008 called a pro-drilling strategy “a gimmick…not a strategy.”

The Journal then went on to credit the U.S. institutional framework for the unanticipated boom: “These drillers could move fast because they had the support of private capital and could lease private land,” the editorial board stated. “The frackers were also largely regulated by the states, which meant even the Obama Administration couldn’t stop them.”

Beware of Intellectual Planners

The lesson of the U.S. oil renaissance is to trust markets and not an intellectual elite advocating a government to coerce consumers and producers.

Consider the uber-confidence of Peak Oil planner Kenneth Deffeyes, a geologist and Princeton professor. “Planning for increased energy conservation and designing alternative energy sources should begin now to make good use of the few years before the crisis actually happens,” he wrote in his 2001 book, Hubbert’s Peak: The Impending World Oil Shortage.

And in his next book, Beyond Oil: The View from Hubbert’s Peak (2005):

[Global oil decline] is upon us…. Business as usual is not an option…. Whether we like it or not, there will be major rearrangements in the world economy. It would be more orderly if we were to generate a blueprint for a society constrained by the availability of resources. Then we need a non-catastrophic pathway that takes us from here to that blueprint.

Planning? Blueprint? Professor Deffeyes has government in mind—using the superior knowledge that he, but not self-interested market participants, possesses.

Harvard University energy specialists had a similar view about government intervention to correct the alleged market failure. Oil prices were too low, according to Harry Broadman and William Hogan of Harvard’s Energy & Environmental Policy Center. In 1986, they calculated the negative externality (“oil-import premium”) to be between $10–$11 per barrel, implying a “socially optimal” oil tariff of the same amount. Why? To protect us from ourselves!

The authors stated in their study that “any argument for a U.S. oil tariff must bear a heavy burden of proof.” Yet the technical analysis behind their policy recommendation assumed perfect knowledge of both the problem and the solution, as well as a perfect (costless) implementation of the (governmental) solution.

Real-world market entrepreneurship, and real-world government, anyone?

Freedom’s Spark

Compare Deffeyes and Broadman/Hogan to the simple prediction of Julian Simon, whose ultimate-resource theory has proven consistent with real-world developments. In his bookThe Ultimate Resource 2 (1996), Simon explained, “Discoveries, like resources, may well be infinite: the more we discover, the more we are able to discover.” And: “It’s reasonable to expect the supply of energy to continue becoming more available and less scarce, forever.”

Elsewhere, I summarized Simon’s theory of cascading human ingenuity as follows:

Innovation does not appear to be a depleting resource but an expanding, open-ended one. Instead of encountering diminishing returns, new advances appear to be expanding the horizon of new possibilities.

But far from a given, the institutional framework of freedom must be present. The last word belongs to Julian Simon:

The extent to which the political-social-economic system provides personal freedom from government coercion is a crucial element in the economics of resources and population…The key elements of such a framework are economic liberty, respect for property, and fair and sensible rules of the market that are enforced equally for all.

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Climate Math: Adaptation, Not Mitigation

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“[The Paris climate accord] is a fraud really, a fake. It’s just bull— for them to say: ‘We’ll have a 2C warming target’ … is just worthless words…. As long as fossil fuels appear to be the cheapest fuels out there, they will be continued to be burned.” (James Hansen: 2015)

“We need to stop trying to balance the increasingly parsimonious carbon emissions budgets entailed by a two-degree target on the backs of the global poor. There is no moral justification for denying those populations the benefits of fossil-fuel-driven development.” (Ted Nordhaus: Foreign Affairs, 2018)

Ted Nordhaus of Environmental Progress has widened the civil war within the climate mainstream on grounds of social justice. “The Two-Degree Delusion,” subtitled The Dangers of an Unrealistic Climate Change Target, just published in Foreign Affairs, exposes the daunting climate math of carbon-dioxide mitigation strategy. In place of too late, politically unrealistic, all-pain no-gain CO2 rationing, Nordhaus urges a shift to a wealth-based, market-driven adaptation as climate policy.

Nordhaus argument can be reduced to three major points:

  • Global CO2 emissions are rising, confirming that there has not been a “step change” from fossil-fuel reliance (“what progress the world has made to cut global emissions has been, under even the most generous assumptions, incremental”).
  • International efforts to jawbone and ration CO2 emissions—symbolic, nonbinding, and largely inconsequential—have made the 40-year-old goal of keeping man-made global warming to under two degrees Celsius “no longer obtainable.”
  • The “arbitrary” target to limit global warming to two degrees Celsius, which would require “emissions … to fall precipitously,” would leave “the world ill prepared to mitigate or manage the consequences.”

His conclusion?

There is no moral justification for denying those populations the benefits of fossil-fuel-driven development. Lower-emissions levels associated with curtailed development will not provide any meaningful amelioration of climate extremes for many decades to come, whereas the benefits that come with development will make those populations substantially more resilient to climate extremes right now.

Nordhaus works within the mainstream of climate modeling. The incremental effects of postulated CO2-driven climate change are both uncertain and small. (“It is not until modelers project into the twenty-second century that large differences begin to emerge,” he notes.) Alleged “tipping points” for worse-case climate events, he adds, are plagued by “enormous uncertainties.” Relatedly, “the precautionary principle holds equally well at one degree of warming, a threshold that we have already surpassed; one and a half degrees, which we will soon surpass; or, for that matter, three degrees.”

Energy Realism

Nordhaus ties energy realism to climate realism. Today’s low-carbon technologies are costly, inefficient, and a burden for consumers and taxpayers, he notes. The proffered saviors of grid-level wind and solar fall short, for “the value of intermittent sources … declines precipitously as their share of electricity production rises.”

Nuclear, while better, has disappointed: “Outside of China and a few other Asian economies, few nations have been able to build large nuclear plants cost-effectively in recent decades.”

A new generation of low-carbon energy technologies are necessary, but “all are decades away from viable application.” And the fact remains that “almost 30 years after the UN established the two-degree threshold, over 80 percent of the world’s energy still comes from fossil fuels, a share that has remained largely unchanged since the early 1990s.”

Adapt, Don’t Mitigate

Wealth is health—and the means for environmental betterment. This insight from free-market environmentalism is prominent in Nordhaus’s call for a paradigm shift in climate policy. “A natural disaster of the same magnitude will generally bring dramatically greater suffering in a poor country than in a rich one,” he notes, meaning that “the faster those nations develop, the more resilient they will be to climate change.”

“Development in most parts of the world,” he posits, “still entails burning more fossil fuels—in most cases, a lot more.”

Most climate advocates have accepted that some form of adaptation will be a necessity for human societies over the course of this century. But many refuse to acknowledge that much of that adjustment will need to be powered by fossil fuels. Hard infrastructure—modern housing, transportation networks, and the like—is what makes people resilient to climate and other natural disasters.

More, Better Reasons Too

Nordhaus’s adaptation-for-mitigation strategy, or free-market self-help in place of energy statism, is intellectually stronger that his article lets on. He works from the shaky premise of high-sensitivity warming from the enhanced greenhouse effect (he refers to “a planet that is almost certainly going to be much hotter even if the world cuts emissions rapidly”).

Yet sensitivity estimates have been coming down in the mainstream literature. And “fat tail” extreme warming scenarios are being discounted if not ruled out with recent research. A new base case for serious consideration is global lukewarming, as opposed to the (aging) standard IPCC temperature range, which both mitigates the alleged problem and reduces the effect of mitigation itself.

Nordhaus should also acknowledge (if not champion) the benefits of CO2 fertilization and moderate warmth to upend the “social cost of carbon” to justify government mitigation of greenhouse gases.

Conclusion

Kudos to Ted Nordhaus for a well-reasoned scholarly article in a mainstream journal that will be hard for the entrenched climate intelligentsia to ignore. His is an intellectual moment of note for critics of global climate governance—a mistaken, futile, and socially unjust crusade.

As the climate math becomes more and more daunting, or just plain politically impossible, expect the adaption-not-mitigation argument to only grow in stature.

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No, China Will Not Outsmart America’s Energy Renaissance

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Imagine a centrally planned economy out-thinking and out-performing a consumer-driven, free-market one.

That is the prognostication, even hope, of Amy Myers Jaffe, director of the program on Energy and Climate Change at the Council on Foreign Relations, as stated in the current edition of Foreign Affairs (“Green Giant: Renewable Energy and Chinese Power”) and in the Houston Chronicle (“Will Clean Energy Push China Past the U.S”).

Jaffe posits an energy future where America’s “short term win” with fossil fuels gives way to China’s win as “the renewable energy and electric vehicle superpower of a future energy world.” She cites that country’s massive subsidization of currently noneconomic energies, such as $47 billion for solar panels, as well as its expenditures of money on batteries, electric vehicles, and other “low carbon” or “clean” energy technologies.

China’s big bets, Jaffe believes, will not only radically shift its domestic usage. The world’s largest country will also promote clean energy “to challenge the U.S.’s leading role in many regional alliances and trading relationships as well as to fashion an international order more to its interests.”

“At some point down the road, [China’s interest] will not be defending coal use,” she continues. “It will be to sell its clean energy technologies free of tariffs (and possibly aided by subsidies) while European, Chinese and other nation’s fees on carbon emissions hamper U.S. oil and gas exports. It could also make Chinese, rather than U.S., standards for green finance, energy product labeling and advanced vehicles the global standard.”

Jaffe’s is an Orwellian energy future, in which governments, not consumers, direct energy markets via manufacturing subsidies and edicts, repriced energy, and international trade restrictions. Ad hoc global government via edicts from 195 sovereign nations replace the free market’s neutrality.

The Failure of Central Planning

The most obvious question for this view is: Why should a centrally planned economy define the future of any good or service rather than the private property, consumer-driven, taxpayer-neutral free market? Why, in the name of economic freedom and prosperity?

Socialism versus capitalism—that debate was won intellectually by F. A. Hayek and the “Austrian” school of economics, as explained by Daniel Yergin and Joseph Stanislaw in The Commanding Heights: The Battle between Government and the Marketplace that is Remaking the Modern World (1998).

In a famous New Yorker piece back in 1989, socialist Robert Heilbroner announced as much. “Less than seventy-five years after it officially began, the contest between capitalism and socialism is over: capitalism has won,” he wrote in “The Triumph of Capitalism.”

The poverty of central planning starts with the knowledge problem and ends with public-choice issues of politics polluting the “ideal” plan. Thus, Jaffe not only has to prove a market failure from decentralized decision-making but also address the probability of government failure in any solution to the alleged problem. With China energy policy, she has done neither.

Social Justice Issues

Jaffe’s imagined (really postmodernist) energy future brings moral issues to the fore.

China’s central-energy planning is a massive wealth transfer from Chinese taxpayers and workers to government-favored industries and a political elite. Such crony socialism should be challenged by the Left on social justice grounds.

Ted Nordhaus of the Breakthrough Institute made this case for scaling back the government-driven climate-change/energy crusade in the same issue of Foreign Affairs where Jaffe’s article appears. “We need to stop trying to balance the increasingly parsimonious carbon emissions budgets [of international climate agreements] on the backs of the global poor.”

Nordhaus concluded:

There is no moral justification for denying those populations the benefits of fossil-fuel-driven development. Lower-emissions levels associated with curtailed development will not provide any meaningful amelioration of climate extremes for many decades to come, whereas the benefits that come with development will make those populations substantially more resilient to climate extremes right now.

More expensive energy, whatever its justification, is a regressive tax on the poor, whether Chinese or American. Higher electricity rates from (intermittent) wind and on-grid solar capacity may not adversely impact the wealthy (they may well reap crony profits from political energy), but price inflation is certainly a burden for the middle class and those below.

Coal Country

China is coal country. In 2016, according to the US Energy Information Administration’s (EIA) International Energy Outlook, coal’s share of electricity generation in China was 70.4 percent, compared to wind at 3.4 percent and solar at 1.1 percent. Most recently (per Reuters): “China’s coal consumption last year picked up for the first time since 2013, the National Bureau of Statistics said on Wednesday, despite Beijing’s push to promote less-polluting energy sources.”

China is in the middle of a coal-plant building boom, which may increase national capacity by as much as one-fifth in the next five years. China is also building foreign coal plants via the state-owned Power Construction Corporation of China, as well as financing dozens more coal projects.

A key aspect of China’s new Clean Heating Plan was a coal-to-coal switch, with pollution-controlled coal replacing uncontrolled coal capacity.

“To many people’s surprise,” explained Xizhou Zhou of Cambridge Energy Research Associates (CERA), “the most important source identified in the new plan was ‘clean coal burning’.” He continued: “This meant large, centralized coal facilities equipped with state-of-the-art pollution controls. The vast majority of China’s coal-fired electric power plants fall into that category today.”

Even mothballed coal plants are being given new life, which reconfirms China as coal country—and the wisdom of the U.S. pullout from the Paris climate agreement.

Conclusion

“Many forces are driving the shift from state control to market consensus,” Yergin and Stanislaw wrote in the final paragraph of The Commanding Heights. “Yet fundamentally it rests upon a recasting of beliefs and ideas—away from the traditional faith in the state and toward greater credibility for the market.”

Unfortunately, too many intellectual elitists believe that government can define and direct energy policy in place of self-interested, energy-reliant consumers—1.4 billion in China, 300 million in the U.S., and billions elsewhere.

China should recast its energy policy for its citizens, and the U.S. should reject central planning schemes at home and abroad. Electric vehicles, wind turbines, and (on-grid) solar panels are the energy past, not the energy future—as determined by what Yergin and Stanislaw refer to as “market consensus.”

The post No, China Will Not Outsmart America’s Energy Renaissance appeared first on IER.

A New Low in the Media’s War on Fracking

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This article originally appeared at Forbes.

Rolling Stone just dropped a bombshell — or so it claims in its article, “‘The Harms of Fracking’: New Report Details Increased Risks of Asthma, Birth Defects and Cancer.”

Highlighting what it deems an “authoritative study,” Rolling Stone concludes that fracking is “contaminating the air and water — and imperiling the health of millions of Americans.”

Dig into the details, though, and it becomes clear that the study is not scientific. There remains no proof that fracking is dangerous to the general population.

‘Authoritative’ Hogwash

Fracking is a drilling technique used to access energy reserves that are trapped deep underground in shale rock deposits. Developers drill into the shale formations and inject a mixture of water and sand at very high pressures. This infusion of liquid breaks up the rock deposits to free oil and natural gas for extraction.

This process typically takes three to five days. Once a well is fracked, it can produce fuel for years.

The Rolling Stone piece centers on a new report from two activist organizations, Physicians for Social Responsibility and the Concerned Health Professionals of New York. These organizations didn’t conduct original field research but extrapolated data from existing studies to draw a hyperbolic conclusion.

According to Rolling Stone, the report’s central claim is that “residents living near an active [fracking] site breathe air laced with carcinogens,” which leads to an “increased risk of asthma, a decrease in infant health and worrisome effects on the development of a fetus.”

But the vast majority of studies used in this report examine fracking-related emissions out of context. They don’t look at how often, how long, or how much humans were actually exposed to these emissions.

And their report has not been subject to rigorous scientific review. It’s easy to see why. The preponderance of existing evidence directly contradicts the hysterical claims. The new “study” only reconfirms the adage: garbage in, garbage out.

The Fracking Reality

The gold-standard fracking assessment comes from the Colorado Department of Public Health and Environment, which evaluated some 10,000 air samples from fracking sites and found that the emissions levels were “safe.” Department officials reported that there is “no substantial or moderate evidence for any health effects” caused by fracking.

That’s no surprise. Fracking fluid is 99 percent water and sand. Small amounts of chemicals are added to preserve the drilling equipment.

The Rolling Stone report also claims to substantiate the long-standing activist gripe that fracking releases hazardous chemicals into nearby drinking water, putting the people in surrounding communities at risk.

But two dozen studies have looked into the water contamination issue and determined that fracking is safe.

Even the Obama-era Environmental Protection Agency, which harbored little affection for the energy industry, concluded that fracking is “unlikely to generate sufficient pressure to drive fluids into shallow drinking water zones.” Lisa Jackson, the former head of the EPA under President Obama, plainly stated that “in no case have we made a definitive determination that the fracking process has caused chemicals to enter groundwater.”

The Media’s War

Rolling Stone’s fake exposé  is just the latest in a long and growing list of specious anti-fracking studies. For a decade, activists have trotted out shoddy science in hopes of discrediting new-generation fossil-fuel extraction.

There’s Gasland, the 2010 documentary from Brooklyn-based filmmaker Josh Fox. It’s a master class in sophistry.

Just consider its most infamous scene, in which a man living near a drilling site in Colorado lights his tap water on fire, supposedly demonstrating that it’s full of dangerous fracking chemicals.

Colorado regulators have since determined that the man’s water contamination was “not attributable” to energy exploration. Governor John Hickenlooper, a Democrat, has said: “We can’t find anywhere in Colorado a single example of [fracking] that has polluted groundwater.”

There’s also a paper published this spring in the journal Endocrinology. It claims fracking chemicals can disrupt hormone production in lab mice. But the researcher’s chemical concoction doesn’t even resemble the mixtures used in real-life fracking operations.

Then there’s a 2017 report from the NAACP which claims emissions from fracking and other energy industry activities drive up rates of asthma, cancer, and other deadly conditions in African American communities. NAACP researchers make the basic mistake of assuming correlation equals causation. They conclude that, because some African Americans communities near fracking sites suffer higher rates of disease, fracking must be causing those conditions.

But there are other factors at play. For instance, 40 percent of asthma risk in minority children is caused by allergens in the home. That has nothing to do with fracking.

Conclusion

Ironically, activists’ obsession with discrediting fracking blinds them to the well-established truth that fracking is an ecological and environmental godsend. Fracking has enabled an unprecedented boom in American natural gas production. Natural gas isn’t just cheaper than coal; it also burns much cleaner.

It’s no wonder that as power plants have switched from coal to natural gas, air quality has improved. Air pollutants, as well as carbon dioxide emissions, have dropped. And a recent increase in natural gas exports has done wonders for energy market competition.

Activists ought to be celebrating a new era of energy plenty and reliability. Instead, they remain determined to smear fracking with shoddy science. It’s almost as if they have a hidden agenda — one that has nothing to do with what’s good for people and the planet.

The post A New Low in the Media’s War on Fracking appeared first on IER.

Climate Litigation: Grasping at Tort Straws

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Billions of consumers purchase and use fossil fuels for safe, comfortable, prosperous living each day. Presumably, it is all voluntary and legal.

Countless entities and workers provide oil, natural gas, coal, and electricity to themselves and everyone else. Energy, the ubiquitous master resource, is a from-us-to-us activity.

Strange, then, that climate-change alarmists/activists are singling out certain energy companies on a nuisance claim for the latter’s alleged contribution to global climate change.

In California, for example, the cities of San Francisco and Oakland have sued BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell. Other suits are underway as well.

Malthusian Scares, Government Nuisances

History and context matter greatly in these current legal proceedings. In the last half-century, an intellectual (“Malthusian”) movement has direly warned about the sustainability of fossil-fuel-enabled industrialization and material progress. In the 1960s, the fear was food famines from the “population bomb.” In the 1970s, it was the exhaustion of minerals, particularly oil and gas. As the scientific orthodoxy, Peak Oil would remain the “consensus” until recent times.

There was also the global cooling scare in the 1970s, with high-profile scientists (including Obama’s science advisor John Holdren) worried about sulfur dioxide emissions (from coal plants primarily). The mainstream media played up the new Ice Age scare.

But since the late 1980s, the predominant fear has been global warming, or, more precisely, the enhanced greenhouse effect from the production and combustion of natural gas, coal, and oil. “We’ve got to ride this global warming issue,” stated Timothy Wirth, a former US senator and climate activist. “Even if the theory of global warming is wrong, we will be doing the right thing in terms of economic and environmental policy.”

These scares seemed to have escaped ideological litigation, but they inspired government policies to alter free energy markets, enough to create the crony industries of wind power, (on-grid) solar power, and electric vehicles.

But affordable, plentiful, reliable, taxpayer-neutral mineral energies still manage to win the day. Fossil fuels enjoy an 81-percent market share in the U.S. and globally, an amount that would be higher except for government largesse.

Each of the old Malthusian scares, needless to say, has been debunked. Mass starvation did not occur. Peak Oil concerns have been refuted by new-generation technology. Global cooling turned out to be a transient (but illustrative) concern.

Climate Lawsuits: A Last Resort

That leaves the (fading) scare of problematic manmade global warming. Sensitivity estimates are coming down. The temperature “pause” has left climate models significantly overpredicting real-world warming. And high-sensitivity (“fat tail”) estimates are being discounted.

Meanwhile, climate economists debate the pros and cons of a moderately warmer and wetter world—and the pros of the CO2 fertilization effect responsible for greening planet earth.

How strange it is, then, that high-profile lawsuits have been filed against energy companies (and, indirectly, all of their employees and stockholders) for meeting the production, transportation, refining, and marketing needs of a global marketplace.

It is consumers (including every plaintiff of the above suits) who have used fossil fuels incessantly from birth. It is governments who have debated and enacted energy policies after debate. So, who exactly is responsible for the world energy market as we know it?

It is not as if the science of climate change was and is settled. At the same time that some energy companies were investigating the role of carbon dioxide (CO2) emissions, in fact, scientists were debating the same thing—inconclusively, as it turned out.

Remember when James Hansen launched the Great Global Warming debate in the hot, dry summer of 1988? Reporting in Science magazine, the flagship publication of the American Association for the Advancement of Science (AAAS), Richard Kerr duly noted that Hansen was not in sync with his scientific colleagues.

“What really bothers them is not that they believe Hansen is demonstrably wrong,” wrote Kerr, “but that he fails to hedge his conclusions with the appropriate qualifiers that reflect the imprecise science of climate modeling.”

And thirty years later, there is vigorous debate over the magnitude of both natural and anthropogenic factors, and how opposite effects of the latter (SO2 cooling versus CO2 warming) net out.

The good news is that global lukewarming has become a school of thought, a truth-is-in-the-middle answer, one that holds great promise to defuse the whole issue.

Judgment Day

Climate activists excitedly report that climate litigation “has the potential to reshape the way the world thinks about energy production and the consequences of global warming.” But probably not.

Global cooling? Global warming? Global lukewarming? The CO2 fertilization effect. The risks of climate change policy. What’s a judge and jury to think about causality, much less an alleged nuisance and remedy? Cooler heads and humility are called for in place of alarmism and calls for open-ended coercive public policies.

Climate lawsuits are really complaints about natural life, where choices are made by consenting adults in the marketplace and by governments in the political marketplace. The complainants seem to want to live an alternative universe—and one where here-and-now human progress and prosperity are all but forgotten.

The post Climate Litigation: Grasping at Tort Straws appeared first on IER.

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