It’s “Energy Week,” and the Trump administration has been touting U.S. potential to achieve international dominance thanks to American-made sources for power generation and transportation fuel.
I have great sympathy for the coal miners of this nation. Their job in supplying this nation with coal is among the toughest in the world. Their historical contribution to the nation’s economic well-being is well established. They were, and many remain, beset with long hours, moderate pay (currently $22,000 to $64,000 per year), negative health and safety problems, and, at times, an unsavory public and private sector bureaucracy.
The glory years for coal appear to be over. Increasingly, the public and environmental experts and policy leaders view coal as a dirty fuel. Succinctly, coal emits significant amounts of greenhouse gases and other pollutants. Most analysts believe the future of the coal industry is dim.
Clearly, in the past decade, market forces, not public policy, have forced many electric utilities to substitute natural gas for coal, and the competition with coal to date suggests coal will be the economic loser. The cost differential between the two, generally, has favored natural gas.
Without a bipartisan commitment to find transitional pathways for miners and/or successful economic development options for their communities, present-day miners will regrettably become part of America’s throwaway society — consumed and discarded by technological change and the fear of global warming. Congress, the White House and the American public have a moral — if not an economic, social and political– obligation to look hard at training and mobility initiatives for miners, as well as economic development strategies in their places of residence and work.
Regrettably, the conservative American Energy Alliance (AEA) has put its muscle behind a frontal attack on the president’s effort to substitute alternative fuels for coal to power utility plants instead of a well-defined effort to define workable strategies to help miners find other than declining mining positions. If a coalition cannot be built to find feasible solutions to expand job opportunities for miners, many miners, whose experience is often limited, will find themselves locked in place and will face a life of poverty or near-poverty — even when the economy returns to health and unemployment decreases. The structure of the American economy has changed, and the change does not favor mining.
Surprisingly, given its history in opposing social welfare initiatives, AEA indicates that the EPA’s recently announced Clean Power Plan, which requires the states to cut back significantly on GHG emissions, is “justice denied” to millions of minorities and low-income households. While analyses of the impact of the Clean Power Plan on different demographic and income groups are not yet precise, the AEA statement does not acknowledge the fact that alternative fuels, like natural gas, have been on a per-dollar kilowatt-hour cost cheaper than coal. The AEA also fails to note the potential savings in health and other societal costs (for low-income families in particular) resulting from lower GHG emissions and other pollutants. A disproportionate number of low-income people live near utilities, refineries and coal mines because of the absence of affordable housing and cheap transportation. Until relatively recently, gasoline prices limited the ability of many low-income households to travel from decent housing to their current or potential jobs. Several respected economists view the current drop in oil and gasoline prices as a relatively short- to intermediate-term phenomenon (1-2 years), and that the norm, once the world economy improves, will much higher than it is today.
The American Energy Alliance is pro-oil and pro-coal. That’s okay — this is its right. But in this context, its support of both fuels should mute its legitimacy as a research organization or the research of many of the organizations it supports or its supporters support. The AEA is, plain and simple, an advocacy group whose causes are predetermined by the self-interest and ideology of its donors.
Unfortunately but understandably, the AEA is unlikely to ever support the considered use of high-octane alternative fuels or their independent study, whether for utilities or transportation. Placing alternative before fuels, even though it could mean improved choices and lower costs for low-income consumers, improved environmental conditions, less GHG emissions and greater overall economic benefits is and will not be in AEA’s lexicon. In this context, AEA seems to have hijacked the term or phrase “justice denied” in a manner that does not fit the intent of some of the original users — Martin Luther King, Jr., William Gladstone, and Frederick Douglass. Their respective purposes in using the term were to expand choices, to redress societal inequities and to lessen the burdens of the disadvantaged. It is time we consider alternatives to weaning the nation and the world off of oil and coal, and acknowledge the fact that justice denied diminishes justice everywhere, and in the ethicist John Rawls’s words, hurts the least advantaged among us.
Utah Gov. Gary Herbert believes in an “all of the above” approach to energy. That means renewable fuels have to stand on their own merits and compete against established transportation fuels like oil and natural gas.
“We don’t think government should pick winners and losers; we think consumers should pick winners and losers,” Herbert said Thursday at the fourth annual Governor’s Utah Energy Development Summit in Salt Lake City. “The competition between the greener sources of energy and the traditional sources of energy are acute and demanding. What I see is, because of the competition between the various sources of energy, those that are greener and cleaner are having to find ways to compete and be economic.”
That also means that there’s pressure on the oil and gas industry, too, to get cleaner. Herbert, a Republican, said energy must achieve three objectives: sustainability, affordability and less dirty.
“There is a raised sensitivity in our society to make sure we’re responsible stewards of our home, the Earth.”
Although he announced no new initiatives for cleaner energy, he touted a new state report showing the strong impact the energy sector has on the state economy. Oil, natural gas, coal and other natural resources contribute $21 billion a year in activity for the state, the report said.
Herbert said the biggest challenge he faces is how to make sure there’s sufficient infrastructure, including enough energy — coal and natural gas for electricity generation, cost-effective gasoline and diesel for drivers — to meet the demands of a growing state.
“If anything keeps me awake at night, it’s, ‘How can I handle the challenges of growth? Well, energy is a big part of that also. Part of the challenge we have is planning and anticipating for the growth pressures that surely are going to happen, whether we like it or not. I actually think growth is a healthy thing.”
Later, during an onstage discussion with Gov. John Hickenlooper of Colorado, Herbert maintained that working with the private sector has helped Utah clean up its notoriously dirty air, which accumulates along the Wasatch Front in wintertime, an affliction known as “inversions.”
“We’ve reduced the pollution levels on the Wasatch Front by 87 percent,” he said. Some critics “it’s dirtier now than ever … well, it’s not.”
After a joke from moderator Jack Gerard of the American Petroleum Institute about Hickenlooper, a Democrat, possibly being a Democratic contender for vice president, Herbert said energy policy shouldn’t be a partisan issue in the 2016 campaign.
“The focus should be on the economy, having a healthy economy. We’re not there yet in this country. This is the longest, driest recovery period we’ve had since the Great Depression. Something’s not working right. … If your focus is on the economy, it’s got to be at least part of the focus on energy.”
“We have an opportunity to have a sustainability where we don’t have to risk national security, or our economic well-being, because the people we have to deal with [importing oil] don’t like us.”
(Photo: Utah Office of Energy)
Did you read about Andrew Mackenzie, CEO of BHP Billiton, and his plea to his colleagues in the oil and gas industry? He asked them to stop publicly asserting that natural gas and oil produce fewer carbon emissions than coal. Interpreting, liberally: You guys (a euphemism for men and women) are hurting BHP and its mining and resource development businesses, as well as the entire sector.
Mackenzie said it nicely. He suggested that they lay off the criticism. Because we live in a peaceful, collaborative, problem-solving era (you’re supposed to laugh at this point), his solution, sort of Isaiah-like, was, “Come, let us now reason together.” On behalf of BHP, a conglomerate and the biggest mining company (dollar capitalization) in the world — a company that also has big stakes in oil and gas — Mackenzie asked that fossil fuel companies break bread together and find mutually beneficial solutions to the carbon problem — assumedly consistent with their respective bottom lines. Put another more interpretive way, why should his colleagues in the industry undercut each other by demeaning each other’s products? Paraphrasing a common phrase today, Mackenzie seems to believe that we are all BHP; we are all Exxon; and we are all Texaco. We all have carbon issues and face government emission regulations.
Mackenzie called for the industry to develop carbon capture and storage solutions. His proposals can be construed as relatively company-friendly in that they start off seemingly focused on protecting the diverse resource production menu of each company, particularly, but not only, coal. They also may help each company avoid (at least initially) caps, taxes and fixed emission or production targets.
We shouldn’t be cynical. Carbon capture and storage have been, and continue to be, supported by some respected environmentalists and scientists. Both are endorsed in their many papers, speeches and media.
By his proposal, Mackenzie suggests that the resource-development industry is stronger when the companies that are in it work together. Accordingly, they should not be at each other’s throats and denigrate products of their competitors. We should have peace rather than war! The calls from oil and gas companies to switch from coal to gas, as a strategy to reduce GHG emissions, Mackenzie indicates, is a “very western, rich country solution.” People in many developing countries have easier access to coal than gas. To get out of poverty, they will need to “burn coal cleanly.” He said: “I think there is a marketing ploy, which is ‘give up coal and burn more gas.’ ” Very insightful! Wow! When did he discover this?
The transition to natural gas from coal among utilities has led to a visible reduction of GHG emissions. Natural-gas-based ethanol promises the same kind of reduction in transportation. Don’t knock competition or abort it unless his desired industry collaboration can result in something better and cheaper!
Whether Mackenzie’s thoughts generate from the public interest or the bottom line, from expiation of guilt or inner wisdom, it doesn’t really matter. The industry, as a whole, has been laggard in coming up with and carrying out proposals concerning GHG or criteria pollutants. Maybe we need an Australian-based firm to energize it to ultimately play or pay! But maybe not!
Mackenzie said: “I still accept the drift from coal to gas is a good thing, but these things happen gradually. We need the power of the whole oil and gas industry and the whole mining industry, together aligned on this agenda to move the needle.” What needle, and where is it being moved? Doing good while making money? Perhaps. But his language doesn’t quite go that far. Sounds more like making money by doing as much good as we have to do. From a business standpoint, both are consistent with the view of those that the business of business is business.
It’s hard to know, from a policy perspective, exactly what to do with Mackenzie’s industry-wide collaboration idea or his proposals. It’s not a case of like them or leave them. But caveat emptor!
Sequestration, the fancy name for what he opines as a solution to GHG emissions, is expensive, uses lots of energy, takes a lot of time to initiate, and is unsafe in some areas, depending on geology. Contrary to his words, it may not be relevant to poor nations or poor areas. Yet, on the other hand, it’s worthy of consideration by both the public and private sector because its strategic use can reduce emissions. We need to weigh relative benefits and costs of emissions-reduction strategies. Further, and most important, if public funds are sought, the opportunity costing analyses must be transparent and convincing before moving toward scale-up possibilities.
Elimination of competition within the industry could end up muting the value of alternative fuels and alternate power sources. It could be very costly to the public. Most experts indicate there is no such thing as “clean” coal. There is cleaner coal, but it’s still dirty, and oil remains a major GHG emitter and criteria pollutant. Reliance on both coal and oil, when we have access to cleaner alcohol-based transitional fuels for power, industrial plants and transportation is problematic, at best, and bad policy concerning GHG and other pollutants, at worst.
Lots of questions: Is Mackenzie an enlightened business leader or a leader mainly interested in preserving the value of his coal reserves? Is sequestration in its various forms a viable option that would allow the use of coal, and other portfolio resources, without major GHG impacts? Are there better alternatives? Since market segmentation is external and will likely result in increased sensitivity by CEOs to criticism concerning the public harm caused by multiple energy related products, will collaboration among them generate controlled energy markets and ultimately minimize efforts to reduce GHG emissions and provide a cleaner, healthier environment? Remember that the industry, particularly the companies in it that produce lots of oil, has been and remains against open fuel markets and increasing the number of flex-fuel vehicles. There are no easy answers.
Mark Twain, a great oil and gas man, once said, “It takes your enemy and your friend, working together, to hurt you to the heart: the one to slander you and the other to get the news to you.” Finally, borrowing and amending Shakespeare, maybe Mackenzie doth protest too much!
Photo Credit: africagreenmedia.co.za
What goes up in the physical environment, generally (at least until recently), must come down, according to Newton’s law of universal gravitation and Einstein’s theory of relativity. But does what goes down often keep going down? No, not when it’s primary a financial market measurement and the indices reflect a company or companies with a reasonable profile and future.
What goes down in the marketplace often comes up again — not always, but maybe, sometimes — and with varying degrees of predictability? Don’t be confused! The variables often aren’t subject to the laws of physics. The phrase, “it depends,” is often used by purported financial analysts to explain stock, hedge fund and bond trends and their predictions. Indeed, a whole new industry of cable economic shouters has grown up to supposedly help us understand uncertainty. Generally, their misinterpreted brilliance shows after the fact (the markets close) and their weaknesses reflected in their attempts to predict and project trends accurately in the future.
Happily, the ongoing decline of oil and gas prices has been seen as generally good for the overall economy, stimulating consumer purchasing and investing. Regrettably, the decline is becoming a lodestone tied to the necks of an increasing numbers of workers and communities affected by layoffs in some shale oil areas where production has started to slow down and where some small drilling, as well as service firms, have either gone out of business or have pulled back significantly. Texas is suffering the most. The state is down 211 rigs, about 23 percent of its 906 total rigs. The decline in production is not uniform because newer wells drill far more efficiently than older ones. Overall, however, several major petroleum and oil field service companies in Texas have cut budgets and employees.
I surmise that the number of psychotherapists in the nation has increased in areas where investors in energy, particularly oil and gasoline stocks, hedge funds and derivatives ply their trade, hopes and dreams. Little wonder, after often intense coverage by some of the decline, the media’s coverage, by many newspapers and TV outlets, of the modest increase in the price per barrel of oil and the minuscule increase in the price of gasoline per gallon reads like a secular holiday greeting. Happy days are here again, at least for the oil industry and their colleagues!
But the skeptics have not been silent. This week’s headlines based on stories from many analysts read like a real downer, particularly if you were in the market. Listen, my children, and you shall hear little cheer to sustain yesterday’s investment optimism. For example, as one journalist put it, “Sorry, but the oil rout isn’t over yet,” or another, “Report: U.S. production growth could stop this year,” or a third, “Careful what you wish for: Oil-price recovery may sting.” It’s a puzzlement that only a Freudian therapist can address if you have enough money to pay him or her.
Fact: Very few analysts, even the best, can now honestly claim with certainty that they know where the price of oil and gas will be a year from now and beyond. And they are probably overwhelmed daily by their egos, by their practice of magic and by (a few in the groups) their seemingly habitual exaggeration and what feels at times like prevarication.
There likely will be frequent, short-term blips in the economics of oil and gas until non-market behavioral variables concerning what the Saudis will do or what the American oil companies will do about production to secure market share and other objectives are settled. Further, tension in the Middle East, if it escalates, may well disrupt oil supply while other global, as well as internal U.S. factors, could well affect the value of the dollar and convert it into significant price changes. America’s oil and gas investors, big or small, should probably learn to count to ten and take a month or two off in Sedona, Ariz. It’s really nice there.
Current uncertainty concerning the economics of oil and gas should not make consumers or policymakers lethargic. It’s not time to take Ambien. While I am not certain when or by how much, what has gone down will likely begin to go up, relatively soon.
Regrettably, the world is still dependent on fossil fuels and market, as well as broad economic, social and political conditions, should relatively soon, begin to boost prices. If we are serious about providing consumers with a better long-term deal regarding gas prices, reducing monopoly conditions created by government policies and oil companies should be granted priority. Ending government subsidies for oil in an era of budget deficits would be a good start.
Low gas prices have diminished investor and provider interest in developing alternative replacement fuels. But this is short term. Fuels, like E85, once gas prices begin to rise, will once again become very competitive and consumer friendly. Because the extended use of renewable fuels that satisfy broad market needs — from low-income to high-income households and from short to long trips — is still probably at least 5-10 years way, a national and local leadership commitment to alternative fuels is important if the nation and the communities in it are to meet environmental, economic and social welfare goals.
The policy and behavior issues relate to perfectibility, not perfection. Ethanol is not a perfect fuel. But it is better than gasoline — much better. Arguing for reliance now on electric cars or hydro fuels makes for easy rhetoric and receipt of awards at dinners, but the impact on the environment, for example, and GHG emissions will be long in coming in light of the small share electric vehicles will have for some time among older cars. Let’s push for renewables and facilitate an early choice for alternative replacement fuels including ethanol.
Image from jimdakers.com/2013/10/15/are-you-in-motion/
In the throes of a severe prolonged drought, California energy leaders, environmental scientists, and activists convened recently in advance of the 25th annual Bioneers Conference at the Marin County Civic Center for an energy and climate strategy session that could have national and global implications.
Read more at: Communities Digital News
From 2005 to 2008, John Hofmeister ran the U.S. operations for Royal Dutch Shell. Then he turned 60. The Dutch have a cultural thing about 60. John said it roots back to post-WWII, when too many “older” folk were clinging to their jobs, so the unemployment rate among the youth was unacceptably high.
PUMP is an inspiring, eye-opening documentary that tells the story of America’s addiction to oil, from its corporate conspiracy beginnings to its current monopoly today, and explains clearly and simply how we can end it – and finally win choice at the pump.
While many are breathlessly waiting for liquefied natural gas (LNG) exports from the United States to begin in 2015, there’s a natural gas export boom already happening right under the noses of most investors. I’m talking about rapidly growing gas exports from the United States to our southern neighbor, Mexico. LNG exports, which are travelling via pipeline, are at their highest levels ever and growing.
It doesn’t take an international studies scholar to realize that the chaos level in the world is surging upwards. Sectarian violence in Iraq is on the rise once again. Syria is still mired in a bloody civil war with no end in sight. Russia continues to inflame tensions in Ukraine, even after its annexation of Crimea. And Israel and Hamas are once again clashing in Gaza.
