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Energy - not climate change - should be focus of national security debate

Last Wednesday, President Obama gave the commencement address at the U.S. Coast Guard Academy, and said that climate change was a major threat to national security. Maybe if his advisors had seriously considered an opinion-page article in the Wall Street Journal the day before, the message might have been a little different – and a lot more realistic.

In the op-ed piece, Leon Panetta and Steven Hadley – the former CIA director and national security advisor, respectively – wrote that the U.S. ban on crude oil export ban is harming America’s ability to deal with global threats. The abundance of domestic energy, driven by the shale boom, is a “powerful, nonlethal tool,” they said, adding:

“The moment has come for the U.S. to deploy its oil and gas in support of its security interests around the world.”

Their arguments are hard to dismiss.

Panetta and Hadley note that the success of economic sanctions against Iran was in many ways due to reduced imports of the country’s oil by Japan, South Korea, Taiwan, Turkey, India, and China; if the sanctions are lifted, there is a real likelihood the imports would resume. U.S. exports, they explain, would help those countries diversify their energy sources and not become overly dependent on a regime whose interests are inconsistent with ours.

Additionally, they write that 14 NATO countries buy 15 percent or more of their oil from Russia – and that for some nations in Eastern and Central Europe, it’s over 50 percent. They go on to state that revenue from energy sales to Europe provides Russia with money to fund its aggression in Ukraine, which they say “could conceivably spread through Central Europe to the Baltic States.”

Clearly, a Europe that is “vulnerable to Kremlin coercion” is not in the best U.S. security interests.

They also shoot down one of the biggest – and the most erroneous – arguments that opponents of lifting the ban have embraced:

 

The fear that exporting U.S. oil would cause domestic gasoline prices to rise is misplaced. The U.S. already exports refined petroleum, including 875,000 barrels a day of gasoline in December 2014. The result is that U.S. gasoline prices approximate the world price. Several recent studies, including by the Brookings Institution, Resources for the Future, and Rice University’s Center for Energy Studies, demonstrate that crude oil exports would actually put downward pressure on U.S. gasoline prices, as more oil supply hits the global market and lowers global prices.

 

I don’t pretend to be a foreign policy expert. But in a world that’s as politically unstable as ours is right now, it just seems that lifting the ban would help the United States better manage risks and threats that span from South America (Venezuela) to Africa (Libya) to the Middle East (too many to name). America, Panetta and Hadley conclude, should be the “great arsenal of energy.”

They’re right. And for the good of the country, energy security – not climate change – should be a real focus of the national security debate.
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Hidden truths: An anti-fracking study that isn't exactly what it appears

Earlier this month, the Proceedings of the National Academy of Sciences published a paper that alleged a connection between groundwater contamination and hydraulic fracturing in the Marcellus Shale. The media had a field day and environmentalists turned their anti-drilling rhetoric up a few notches.

But there was a problem: The lead author is a consultant who provided litigation support to the families whose drinking water was the focus of the study. Stated differently, he delivered findings that look as if they were designed to help his clients’ court case.

The problem didn’t stop there, though.

The week before it was officially released, a pre-publication version of the study was given to journalists. On the first page, it stated quite clearly: “The authors declare no conflict of interest.” Yet when the paper was actually published, that declaration had mysteriously vanished. Instead, it was replaced with the following:

“Conflict of interest statement: G.T.L. and Appalachia Consulting provided litigation support and environmental consulting services to the impacted households.” “G.T.L.” refers to the author in question; Appalachia Consulting, according to USA TODAY, is the company that sued a Marcellus driller on behalf of the homeowners in question.

I’m not a big believer in conspiracies. That said, it certainly looks to me like someone made a decision to hide the conflict of interest in the pre-production paper out of concern it could impact how the story was reported.

If that was the strategy, it worked. The New Yorks Times coverage was fairly typical. It carried a nearly 1,000-word article under a predictably scary headline; a week later, the paper issued a one-paragraph editor’s note revealing the conflict.

I’m saying all this not to pick a fight with the media; if key facts are intentionally concealed, it’s not the fault of the reporters if those facts don’t find their way into a story.

Nor am I suggesting that conflicts-of-interest with anti-drilling research are anything new. When a Cornell University professor authored a study saying natural gas from hydraulic fracturing could be dirtier than coal, no one mentioned that he was a committed anti-fracking activist or that some of his funding came from an organization dedicating to ending use of fossil fuels.

What I am saying, however, is this:

When research comes out supporting energy companies, the media coverage often uses the phrase “industry-sponsored,” inferring that the findings are somehow tainted. (And I am hard-pressed to think that a firm as highly respected and regarded as IHS, for example, is going to skew its numbers regardless of who’s paying for the study.)

But at least by making full disclosure, the industry is being open, honest, and transparent. Activists should do the same, and the media should demand it.
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In the Denton fracking bill, common sense and compromise prevailed

Last week, the Texas Senate approved and sent to Gov. Greg Abbott H.B. 40, the so-called “Denton fracking bill,” which prevents local governments from unreasonably regulating oil and gas operations. Despite what anti-drilling critics say, it’s a good bill – and absolute evidence that finding a middle ground on a critical matter is possible in the legislative process.

Passed in the wake of Denton’s ill-advised vote in November to ban hydraulic fracturing, the measure affirms that the Texas Railroad Commission (TRC) has the authority to pre-empt city rules on subsurface activity, which includes hydraulic fracturing.

I’ve written before that what happened in Denton was a mistake that could take the state down a slippery regulatory slope.

The last thing an industry this vital to the Texas economy needs is a patchwork of regulations that has it jumping through different (and expensive) hoops in different towns. What’s more, locally elected officials in all likelihood don’t have the necessary depth of technical understanding in disciplines like geology and engineering that effective rule-making requires. And they’re more likely to be affected by activist-driven, emotionally charged politics than state regulators would be.

So when you strip away the rhetoric and look at H.B. 40 from a logical perspective, it just makes sense. You want the right people with the right expertise setting the right rules for the industry. In Texas, that’s the TRC.

But the success of the bill says something else, and it’s something you don’t hear about very much in an era of legislative gridlock:

Different sides, with different opinions, can work together and find agreement on issues of substance. Just take a look at H.B. 40’s journey.

When the bill was first introduced in the House, it drew intense criticism from the Texas Municipal League, which feared the measure could nullify local drilling ordinances that already exist in about 60 Texas communities.

Chief sponsor Drew Darby of San Angelo heard the concerns, and he and other lawmakers worked to soften the bill. They added language specifying which areas municipalities could still regulate, including quality-of-life, surface concerns like traffic, noise, lights, and police and fire protection. They also included new provisions allowing cities to enforce reasonable setbacks and to protect them from lawsuits if their local ordinances had not prompted litigation during the previous five years.

With those concessions won, the Municipal League backed away from its opposition. And Texans got a bill that protects the state’s important industry from punitive rule-making.

Naturally, environmentalists are outraged. That’s to be expected. They have an all-or-nothing approach to drilling: if they don’t get all they want, they harshly criticize whatever policy emerges. But despite their denunciations of the bill, its supporters, and the industry, they cannot change one simple fact:

With H.B. 40, Texas showed that common sense and rational compromise can, on occasion, prevail in the policy debate.

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Approving Pemex request to import U.S. oil could be a key step on lifting export ban

I have written before that it’s time to end the ban on crude oil exports, a 40-year-old policy that has not only outlived its purpose but also makes no sense in the current price and supply environment. Whether Congress will have the courage to do that is anyone’s guess, as Washington fears – without justification, according to any number of studies – that it will increase gasoline prices.

But there is an interim step that can and should be taken in that direction: Lift the ban on exports to Mexico by approving Pemex’s request to import 100,000 barrels of U.S. light crude.

We have been shipping crude to Canada since 1985, when President Reagan concluded that sending oil north of the border did not threaten U.S. energy security. Given the output of our domestic shale plays, I can’t see a reason that sending crude south of the border would pose a threat of any kind.

The Pemex request is being positioned as an “oil swap”; Mexico would receive the 100,000 barrels of light crude in exchange for sending roughly the same amount of heavy crude to the United States. Such swaps are allowed with “adjacent countries,” according to U.S. law, based on “convenience and increased efficiency of transportation” and when the exports are balanced by imports.

That certainly looks to be the case here, and would seem to give the U.S. Commerce Department ample rationale for approving the Pemex request.

U.S. approval – which Pemex officials are confident will come, the Wall Street Journal reported last week – is being seen by some as a potential beginning of the end to the ban on exports to Mexico. I hope that’s true.

Shipping U.S. crude south is a win at so many levels for both countries.

It will make Mexican refineries more efficient, as mixing light, sweet crude with heavy oil will enable them to produce more gasoline and diesel. This is critical, in that Mexico suffers from an insufficient supply of domestically produced refined products, the demand for which is rising at a rate of 2.6 percent per year. Meanwhile, refined output has dropped by more than 12 percent in the past five years.

From the U.S. perspective, it would give price-battered energy producers another market; put oil workers back on the job; spur potential new investment; and put a dent in our trade deficit. From a purely Texas perspective, it would provide an avenue for selling more of the crude produced in the state.

Of course, it would also strengthen the relationship between two traditional trade partners, something that cannot be discounted, as a more robust U.S.-Canada-Mexico alliance could further chip away at OPEC’s global influence.

I don’t think approval of the Pemex ban will suddenly cause Congress to come to its senses on exports. I do, however, think it could lead to lifting the ban on all exports to Mexico, which in turn would get us closer to lifting the ban altogether. If so, that may well be the best argument for approving the Pemex request. Commerce needs to do it now.
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A reminder of what you didn't hear on Earth Day - but should have

Last week, the country celebrated Earth Day. And, predictably, anti-drilling activists took the opportunity to criticize all things fossil fuel, with an equally predictable attack on hydraulic fracturing. Given that, it seems appropriate to revisit a 2013 paper from the Centre for Policy Studies that I’m guessing no one in the environmental community referenced on April 22.

It was written by two researchers who could hardly be called “tools” of the energy industry: Richard Muller, professor of physics at the University of California at Berkeley, and Elizabeth Muller, executive director of Berkeley Earth. Their conclusion: “Environmentalists who oppose the development of shale gas and fracking are making a tragic mistake.”

Here are 10 takeaways from the paper that underscore their argument:

1. Concerns over water usage, CO2 emissions, groundwater contamination, and leaked fugitive methane “are either largely false or can be addressed by appropriate regulation.”

2. Shale gas not only reduces greenhouse gas emissions, but also reduces a pollutant called PM2.5 that kills more than 3 million people every year – including 75,000 premature deaths in the United States.

3. Compared to coal, shale gas results in a “400-fold reduction in PM2.5, a 4,000-fold reduction in sulfur dioxide, a 70-fold reduction in nitrous oxides... and more than a 30-fold reduction in mercury.”

4. When burned to produce energy, natural gas produces half the CO2 of coal; when the heat energy is used to generate power, natural gas can produce electricity with 50 percent higher efficiency than coal can.

5. “Because natural gas power plants are more efficient than those of coal, even with leakage rate of up to 17% (far higher than even the most pessimistic estimates), natural gas still provides a greenhouse gas improvement over coal for the same electricity produced.”

6. While injecting fracking wastewater into the ground can cause earthquakes, no large tremors have been associated with fracturing itself. Rather, there has been a link to disposal wells: “There are about 30,000 such wells in the US, most used for conventional oil and gas wastewater burial. Of these, most show no injection-induced seismicity.”

7. Cheap natural gas can “also make it easier for solar and wind energy to further penetrate electricity markets by providing the rapid back-up that those intermittent sources require.”

8. “Shale gas is urgently needed to address the greatest human-caused environmental disaster of our time, rising levels of air pollution.”

9. “We must help the world switch from coal to natural gas. This is not just a public heath issue but a humanitarian one.”

10.  “Shale gas can be a clean technology, and even though it will not halt global warming, only energy conservation offers a more affordable way to slow it.”

The authors summarize their findings by saying, “Environmentalists should recognize the shale gas revolution as beneficial to society and lend their full support to helping it advance.”
Is that likely to happen? Probably not.

I’ve written before that the main concern of activists is environmental politics rather than environmental policy. But the fact is, as this paper points out, fracking is a “solution to the pollution.” And as Earth Day no doubt demonstrated – and, frankly, as every day no doubt demonstrates – drilling critics are more interested in talking about problems than they are in acknowledging solutions.
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