Sunday, February 26, 2017

From Ned

More from energy policy insider Ned Farquhar.

Scott Pruitt at EPA.  No need to replay all the news about Pruitt's close coordination with the oil industry over the decades.  Pruitt, based in Oklahoma, was doubtless very close to Oklahoma oil magnate and early Trump supporter/energy advisor Harold Hamm, who strongly supported his appointment to EPA. (See ).  You know he says climate change is still in doubt and that he wants to "return" EPA to its basic mission of clean air and clean water, ignoring climate change.  The nation's environmental watchdog is being leashed and told to bark at the janitor, not at the robbers who have parked a giant truck at the back of the bank in the middle of the night and are vigorously prying open the doors and vaults.

Iraq's oil.  In 2007 Alan Greenspan (former Fed chair) wrote that the Iraq war was about oil, a position he later tempered to say it should have been about oil, if it wasn't.  (See ).  The President has repeatedly said the United States should have appropriated Iraq's oil.  In fact the big multinational oil companies, that see little relevance to national boundaries (see Steve Coll's 2011 book, Private Empire, about the ExxonMobil corporation, or his recent New Yorker article at ), have done pretty well in Iraq, sharply boosting production and taking a share of the revenue, juicing global production and driving oil prices down in the past few years.  Whether the US appropriated Iraq oil or not, in the marketplace the oil companies are doing fine.  On the other hand, the US and its allies are caring for almost a million wounded war veterans ( ), with potentially more to be identified in decades to come.  As of 2015, Iraq held proven oil reserves ranking it in the top five countries in the world, after Saudi Arabia, Iran, Canada, and Venezuela (see ). 

Some more about the oil export ban.  In late 2015, Congress repealed the US oil export ban.  In return, the Obama Administration and Democrats in Congress got a five-year extension of federal subsidies for wind and solar development.  The oil industry got far the better deal in this energy horse trade.

Less than two years later, the US industry is expected to export about 800,000 barrels/day, or bpd (  As context, the US consumes almost 20 million bpd, and produces somewhere around 9.5 million, so exports are now reaching almost 10% of US oil production and moving toward 5% of US consumption.  Contrary to the industry's vague claims that we are energy-secure, we remain more than 50% dependent on foreign oil.  Time after time since the early 1970s, our dependence on foreign oil has led to world economic crisis and economically destructive price spikes.  And we spend hundreds of billions of dollars defending global oil transportation routes and oil facilities and oilfields around the world.  That is a cost borne by US taxpayers, not by the industry.  

By exporting oil, the US industry intends to seek the highest price and flatten the price gap between US crude and world crude prices, as projected by the Economist when the ban was lifted (  What economists call a global market distortion, of course, provided economic relief to American consumers.  It's a boom and bust industry that produces jobs and then eliminates them, as shown by the contraction in oil and gas employment when prices were low in the years prior to the lifting of the export ban.  Despite the boasting about how many jobs the industry provides (when oil prices are high and punishing the American consumer), it isn't a healthy, consistent industry in the fabric of the American economy.

There are environmental implications of rapidly expanding oil exports as well.  The industry is clamoring for more access to the offshore, objecting to President Obama's closures of the Arctic and North Atlantic to offshore leasing, and to natural areas such as the Arctic National Wildlife Refuge (see ).  Further, in the drilling, production, processing, and refining processes, the industry produces and wastes significant amounts of unregulated methane (natural gas) - and the Congress has been preparing to rescind rules intended to control these unnecessary, wasteful, atmosphere-destroying methane emissions from production on public lands.  Production for export requires incrementally more poorly regulated fracking in the US, where shale oil and gas production far exceeds such production anywhere else on earth.  Thus we are generating and accepting the significant impact of other nations' oil and gas consumption, effectively importing impacts, while exporting fossil fuels.

Exporting US oil doesn't really make much policy sense.  But it clearly shows the grip that the oil industry has got on Washington and in the states - a grip growing ever stronger.

New energy campaign from the American Petroleum Institute.  If you saw the Super Bowl, you might have caught the industry's rollout of a new public relations campaign by the American Petroleum Institute, about "power past impossible."  (See ) or ( ).  This follows on their five-year-old "Vote4Energy" campaign (see that has in fact focused on oil and gas, not on energy.  As oil consumers, we are all paying for these campaigns to convince us that we can't ever live without oil, that it uniquely brings us jobs, products, convenience, and other benefits - without addressing the need to reduce carbon emissions radically in future years.  They seem to be so focused on powering past the impossible that they have powered past the possible (such as cap and trade on carbon emissions, with real, hard-shell limits to emissions and a successful record in the electric industry here in New England, see ) on the way!


Dr. Sax said...

"Another Record Week for U.S. Oil Exports as Production Surges (February 24, 2017) See also "Gasoline Glut in New York Has Traders Sending Cargoes Abroad" (Feb 20)

Anonymous said...

"Oil Prices Continue Plunging As Speculators Rush For The Exit" (Mar 09, 2017, 11:37 AM CST)

Anonymous said...

Report from "insider": inside what?