Reflection on Energy Policy

After watching the most recent CNN Presidential Debate, it has become clear our "leaders" are clueless about energy policy. This is an attempt to enable us to discuss our energy future more adequately.

Anecdotally, if you desire to read about fracking or disposal injection wells, you can read our nationally published thoughts on Induced Seismicity.

Why are we listening to our "leaders"?

On October 12, 2012, Mitt Romney came prepared - mostly due to Continental Resources' Harold Hamm - to debate energy policy with President Barack Obama who, after four years in office, was terribly misinformed in the Town Hall Presidential Debate. As I wrote in October 2012:

"I'd like you all to realize that this President - after serving for 4 years - still knows nothing more about energy than he did when he took office. I also want to preface this note with the fact that it's completely non-partisan.

Per the Town Hall Presidential Debate, here are some comments he made:
Videos: http://www.youtube.com/watch?v=2HJpOf0_d-s and http://www.youtube.com/watch?v=IVBfcQsO3jE

"Here is what I have done since I have been President: we have increased oil production to the highest levels in 16 years. Natural Gas production is the highest it’s been in decades. We have seen increases in coal production…”

While oil and gas production is spiking under Obama's tenure, it has nothing to do with his administration or policies:

Average Federal onshore acres leased per year is down 86% since Reagan and a down 49% since Clinton. In fact, federal leasing is at a 30 year low!

Out of the entire Federal mineral estate, only 6% is currently leased onshore

Out of the entire Federal mineral estate, only 20% is currently leased offshore

"We continue to open up new areas for drilling." "We have opened up public lands. We are drilling more on public lands than in the previous administration."

Obama, again, is 100% incorrect. Both Bill Clinton and George W. Bush had nearly identical federal leasing rates. Under Obama, that number has plummeted to it's lowest level in 30 years!

"We make it a priority for us to go after natural gas."

100% false. When you look at legislation and rhetoric, Obama didn't even mention natural gas until the past 6 months. He has completely left it out while spending billions of federal dollars on failed solar companies [like Solyndra] that are presumably his friends pockets.

“You have a whole bunch of oil companies who have leases on public lands that they weren’t using. So, what we said was, “You can’t sit on this for 10, 20, 30 years, decide when you want to drill, when you want to produce. These are public lands, you use it or you lose it. And so what we did is we took away those leases.”

All I can say is, wow. His complete ignorance of the oil and natural gas industries is completely on show with this comment.

Every Federal Onshore lease is for a term of 10 years - never 20, never 30.
When you lease something, it's yours for the given period of time that you've leased it for. For example, if you lease a home or a car for 12 months, the Lessor is not able to take the home or vehicle back after 6 months. This logic makes no sense whatsoever. So, yes, they can sit on it and decide when they want to drill as long as it's within the primary term of the lease!

I will add to this post later when I have more time."

Unfortunately, I never added to that post - until now. Reflecting on what I wrote four years ago, it's clear nothing has changed. Obama spent his entire presidency crowing about an "all-of-the-above" energy strategy without really ever being serious about it. As he stated in 2012, he seemed to champion American-made energy.

We can’t have an energy strategy for the last century that traps us in the past. We need an energy strategy for the future – an all-of-the-above strategy for the 21st century that develops every source of American-made energy.”  President Barack Obama, March 15, 2012

He even touted natural gas in his 2014 State of the Union:

"The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we’ve been in decades... one of the reasons why is natural gas, if extracted safely, it’s the bridge fuel that can power our economy with less of the carbon pollution that causes climate change,"

It wasn't until his final State of the Union that he admitted to his true energy agenda however - killing fossil fuels.

Now we’ve got to accelerate the transition away from old, dirtier energy sources. Rather than subsidize the past, we should invest in the future -- especially in communities that rely on fossil fuels. We do them no favor when we don't show them where the trends are going. That’s why I’m going to push to change the way we manage our oil and coal resources, so that they better reflect the costs they impose on taxpayers and our planet.

Ironically, right before he made this statement, he actually championed fossil fuels for cutting imports and carbon pollution more than any other country,

...meanwhile, we’ve cut our imports of foreign oil by nearly 60 percent, and cut carbon pollution more than any other country on Earth.

So, President Obama did everything in his power to block oil and natural gas development on Federal lands, then turns around and claims credit for reducing our reliance upon OPEC, and reducing carbon pollution more than any other country on Earth?! It's unconscionable.

us-production-federal-state-private.jpg

The private sector of the oil and natural gas industry, specifically, is responsible for these great achievements. As this article in The Hill covered well, "Obama's love affair with gas is over."

What about Bernie and Hillary?

Although Obama's policies are misinformed and misguided, the message emulating from the Clinton and Sanders campaigns is baffling. Their energy policy has the potential to demolish the very middle class they are claiming to protect. Bernie has routinely called for a nationwide ban on fracking, putting his ignorance on full display (detailed in our previous paper Induced Seismicity). Meanwhile, Hillary has stated,

By the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place."

Their policies will drastically increase gas prices at the pump, reliance upon OPEC imports, United States carbon dioxide emissions, and ultimately electricity costs. Germany's Energiewinde programme gives us a glimpse into the reality they wish to create for our country - soaring electric costs, which will reverse our industrial manufacturing renaissance and all but eliminate disposable income for the middle class. These policies will hit the middle class like a ton of bricks as generation companies will be forced to pass along the massively inefficient costs to their consumers.

What's further is their positions are not representative of the Democratic or Republican Parties as this article op-ed in the New York Times - Can Liberals Frack? - does a great job of concisely conveying.

global-electricity-prices-by-country-per-kilowatt-hour.jpg

In the most recent CNN Democratic debate held in New York, which already banned fracking, energy was a focal issue on which Clinton and Sanders sparred.

At one point, Bernie Sanders beamed, "

We ain't gonna excavate for fossil fuel on public land."

Excavated? Really? Does Sanders actually believe oil and natural gas are excavated like coal? I have to give him the benefit of the doubt; he can't be that dumb. It might, however, explain something inherently wrong with our energy discussion. Most will lump coal, oil, and natural gas into a single term - "fossil fuel".

This is strictly political jargon as idiotic as the English lumping Agape, Eros, Philos and Stergos into a single word called "love" - why the English couldn't add three more words to their already twenty thousand plus word dictionary I'll never know. As vastly different as Agape is from Eros, coal is also to natural gas. Did you know, for example, pound for pound, natural gas provides 4x more energy while emitting less than 50% less carbon dioxide when burned? Did you know one gram of U-235 isotope equals about 4 TONS of coal? Did you know Britain switched to an oil-fired naval fleet during the first World War which was the reason the Allies won the German surrender in 1918? They did this even though they had to rely 100% upon foreign nations for their fuel, a very risky move for any Nation! Understanding these fuels, and their benefits is part of understanding our energy future.

First and foremost, energy density is a MAJOR reason we use "fossil fuels" today. They provide more work in less space.

Illustration from The Bottomless Well by Peter Huber

Illustration from The Bottomless Well by Peter Huber

Fossil fuels are the reason we have constant electrical generation which enables us to enjoy the highest quality of life in the world, and innovate the greatest technological advancements known to man.

As my grandfather illustrated in his book The Grand Energy Transition, our energy history begins with solids, transitions to liquids and ultimately gasses.

The Grand Energy Transition, 2009

The proponents of wind, solar and biomass are pushing against a powerful historical trend however - no nation has ever adopted a less energy-dense fuel source, no matter how cheap it becomes. Left to its own devices, the market pays steep premiums for fuels that pack more energy into less weight and space.

energy-density-eia

Refusing to listen to these basic warnings would be of consequence to the middle class and America. About three decades ago, my grandfather was called to testify before Congress as the only independent producer on a panel. As majors like ExxonMobil scoffed at him, he stood tall and delivered the testimony of a visionary - the United States is awash in natural gas. Even the Secretary of Energy at the time, James Schlesinger, dismissed him.

It was a mistake which cost our country dearly as we transitioned away from natural gas out of fear we would run out! For the record, no nation in the history of the world has adopted a new energy source because they ran out - it just doesn't happen. We always find a superior energy source prior to running out of our current source.

In this case we transitioned away from natural gas, which produces 50% less carbon dioxide when burned, is four times more energy-dense than coal, and easier to transport, toward more coal and oil use. Today, Dr. James Schlesinger sees the errors of his ways and has admitted, "Years ago, he [Robert Hefner III] was scoffed at for his belief in ample supplies of natural gas and now he turns out to be right and those who disbelieved him turned out to be wrong." Can you imagine if we had began our switch to natural gas back in the 1970s as we should have?

“Years ago, he [Robert A. Hefner III] was scoffed at for his belief in the ample supplies of natural gas and now he turns out to be right and those who disbelieved him turned out to be wrong.”
— Dr. James Schlesinger, Economist; former U.S. Secretary of Energy; former U.S. Secretary of Defense; former CIA director; Homeland Security Advisory Council; consultant, U.S. Department of Defense

Even IF you believe solar and wind are up to the task, how could you possibly believe these technologies have the ability to satisfy energy demand, today or in the future? The EIA projects global energy demand will increase 56% by 2040 - or 820 quadrillion BTU. For reference, all renewable energy sources produced in 2014 in the United States only accounted for 8 quadrillion BTU... you tell me how that's going to work out for us? This doesn't even factor in all the other issues with renewable like wind or solar, including: infrastructure issues, storage issues, transmittance issues, intermittentcy issues, and more. As the EIA projects, all fuels will be needed as we move forward.

world-energy-demand

So, until such time we are able harness a superior energy source to natural gas or nuclear, we should not be so quick to vilify energy sources which are the backbone of American GDP and the middle class.