CONGRESS AGAINST NATURAL GAS? EXCLUSIVE FSM MUSTREAD
http://www.familysecuritymatters.org/publications/id.5087/pub_detail.asp
Exclusive: Is Congress Aiming to Shut Down the Natural Gas Industry?
Scott McKay
One of the topics my readers will become very familiar with is natural gas and its immense potential to redefine America’s energy equation in the coming years.
But just as with seemingly every other industry with growth potential in this country, that potential is under threat by Congress.
Last week, ExxonMobil announced a massive $31.2 billion merger with Fort Worth-based natural gas player XTO Energy, an indication that some of the big boys in the energy market are beginning to see the burgeoning natural gas industry, and particularly the four massive shale gas plays – the Haynesville Shale in North Louisiana, the Marcellus Shale in western Pennsylvania and New York, the Barnett Shale right under the Dallas/Ft. Worth Metroplex and the Fayetteville Shale in western Arkansas – for the game-changer it represents. The deal is expected to fully close some time early next year.
But the XOM/XTO deal has a rather peculiar caveat to it – it’s subject to what the government might do to the natural gas industry. Specifically, the language of the merger deal refers, in the definitions of a “Materially Adverse Effect,†to the potential outlawing of hydrauling fracturing, or “fracking,†as a condition which would break the sale.
That a ban on fracking would show up not once but twice in the agreement is a testament to the fear the two sides have over what the government might do to their business.
The process of fracking is not a particularly new one. It has been going on since the 1940s and it’s a proven technique for extracting fossil fuels from difficult rock formations. Essentially, what fracking entails is pumping water, sand and “drilling fluids†– less than one half of one percent of the total material, and all of which are components of common household products (see page two of the linked PDF file) – into a well at high pressure, thus fracturing the rock which traps the resource and letting it flow to the surface.
The combination of fracking and the new innovation of horizontal drilling (see here for a graphic representation of how that’s done) has opened up immense resources in domestic natural gas where they didn’t previously exist. The Haynesville Shale play contains 251 trillion cubic feet of natural gas, while the Department of Energy estimates the Marcellus play has 262 tcf, Barnett 44 tcf and Fayetteville 41.6 tcf. Combined with the other shale plays out there, the recoverable gas available to America constitutes a supply which could power the country’s needs for hundreds of years at current rates of usage. We could easily exponentially expand our usage of natural gas into the transportation and electricity sectors of the energy market and still have over a century of supply just from current estimates – not to mention the ongoing development of new reserves which is exploding the country’s energy supply.
Given all this, perhaps it’s not a surprise that liberals are looking to shut the whole thing down. And ExxonMobil recognizes this, which is why its merger agreement is shot through with terror about the legislative future.
The first shot fired across the bow of the shale gas industry and fracking has been in the media. A series of articles written by Abrahm Lustgarten, a reporter for a non-profit media outfit called ProPublica.org – which the American Thinker’s Ed Lasky identifies as a front for the George Soros-affiliated Democratic Alliance (ProPublica.org was funded by billionaire sub-prime mortgage swindlers and Soros confederates Herbert and Marion Sandler, who sold their toxic portfolio to Wachovia Bank just before the industry’s collapse, which ultimately sunk Wachovia) – calls into question fracking and the environmental nightmares the procedure supposedly causes. The most recent of Lustgarten’s pieces calls for federal oversight of the practice and limits on the chemicals used in the 0.5 percent share of the fracking solution.
Of course, a study done by the American Petroleum Institute has calculated the economic effects of federal regulation or bans on fracking, and they’re not insignificant. According to the study, done by IHS Global Insight:
IHS’ study compared three scenarios to a reference case: elimination of hydraulic fracturing; a restriction of the fluids that can be used in hydraulic fracturing; and implementation of additional federal Underground Injection Control (UIC) compliance regulations on top of the state and local regulations that currently govern the practice.
Implementation of hydraulic fracturing restrictions would further erode a U.S. economy already struggling to recover from the deep and sustained economic recession, the study found. Restrictions would limit oil and natural gas production, resulting in sharply increased imports by 2018, with purchases of foreign oil and natural gas surging nearly 60 percent under the no fracturing scenario, almost 30 percent under the fluid restriction scenario and nearly 14 percent under the UIC compliance scenario.
Real Gross Domestic Product (GDP) losses, meanwhile, would rise and reach $374 billion in 2014 (in $2008) under the no fracturing scenario, $172 billion in the fluid restriction scenario and $84 billion in the UIC compliance scenario, according to the study.
Unemployment increases would accompany the GDP loss and the reduced spending, leading to peak employment losses in 2015 of nearly 3 million jobs in the no fracturing scenario, 1.4 million jobs in the fluid restriction scenario and 676,000 jobs in the UIC compliance scenario, the study found.
The federal deficit also would expand in each of the restricted hydraulic fracturing scenarios, with the deficit expanding by $139 billion in 2014 in the no fracturing scenario, by $66 billion in the fluid restriction scenario and by $32 billion in the UIC compliance scenario, the study found.
The study also found that the trade balance would deteriorate, with the most dramatic impact – a widening of $135 billion in 2014 – seen with the no fracturing scenario. The current account deficit on trade in goods and services would widen by $95 billion in 2014 in the fluid restriction scenario and by $46 billion in the UIC compliance scenario.
Enter Congressman Ed Markey from Massachusetts. If his name is familiar, it’s likely because he’s the Markey of the Waxman-Markey cap-and-trade bill which oozed through the House this summer. Markey chairs the House Energy and Environmental Subcommittee of Henry Waxman’s Energy and Commerce Committee, and he is now planning hearings early next year into what he calls “some of these unconventional extraction techniques.â€
It’s so blatantly transparent what’s going on in Markey’s committee that in any other time but the present it would be a shocking example of government-as-mafia-capo. Not three weeks ago, Markey had this to say on natural gas:
“Ninety percent of all new electrical capacity in America since 1990 has been natural gas, and it’s going to continue on that way as a base load with the new mandates for renewable electricity in the states having a higher percentage increasingly coming from that source. But natural gas is going to do very well in the future, and the discoveries from the Marcellus Shale all the way through Barnett, that is all the way from New York down to Texas, are going to be big source of new electrical generation.â€
Then last week in announcing his plans for the hearings, he put this forth:
“This proposed merger also raises a number of issues with respect to the future direction of the U.S. domestic oil and gas industry, competition within the industry, and the potential environmental impact of increased unconventional natural gas development.â€
Let’s bear in mind that hydraulic fracturing is not new, it has not been overlooked and it has a track record. As SMU’s Bruce Bullock told the Fort Worth Star-Telegram:
“This is getting a lot of attention in Pennsylvania and New York,†said Bruce Bullock, director of the Maguire Energy Institute at Southern Methodist University in Dallas. “I wouldn’t anticipate there’s much chance of it happening. The EPA has taken a look at it as far back as ’95 in the Clinton years.
“And then it looked at it again in the Bush years,†Bullock said. “I think it’s just a matter of prudence.â€
Bullock is being kind. In fact, on December 9th the Senate Environment and Public Works Committee took up the issue, and the indispensable Sen. Jim Inhofe (R-OK) got to the bottom of this groundwater question:
So the real question is, does Markey want to wet his beak off the ExxonMobil/XTO deal? Or his he carrying water for the leftist Masters of the Universe? As the Romans would ask, cui bono?
Let’s go back to Soros, perhaps the most powerful influencer of liberal politicians on the planet. Turns out that Soros’ hedge fund portfolio is HEAVILY invested in Brazilian oil giant Petrobras, to the tune of $811 million worth of the company’s stock he picked up in August – wasn’t that right about the time the U.S. government backed $2 billion in loans for that company to drill offshore in Brazil? – and he’s also heavily invested in another Brazilian energy firm involved in making ethanol from sugar. What’s more, as Lasky notes in another American Thinker piece, Soros has a huge stake in InterOil, a company sitting on a major natural gas find in Papua New Guinea.
It doesn’t take a genius to see what’s going on here. Markey and his fellow stooges are going to make a run at shutting down a substantial piece of the growth in domestic energy production, using nonsensical allegations of environmental damage despite half a century of proof it doesn’t exist, because to do so helps favor investments that Soros makes. As an added benefit, by tap-dancing on the heads of the energy companies and invading a regulatory area state governments have handled for decades Markey gets to open up a new spigot for danegeld from corporate America.
This brings to mind a passage from Jonah Goldberg’s masterpiece book Liberal Fascism:
Most successful businessmen would prefer not to bother with politics. For years both Wal-Mart and Microsoft boasted that they had no interest in Washington. Microsoft’s chief, Bill Gates, bragged that he was “from the other Washington,†and he basically had one lonely lobbyist hanging around the nation’s capital. Gates changed his mind when the government nearly destroyed his company. The Senate Judiciary Committee invited him to Washington, DC, to atone for his success, and the senators, in the words of the New York Times, “took a kind of delight in making the wealthiest man in America squirm in his seat.†In response, Gates hired an army of consultants, lobbyists and lawyers to fight off the government. In the 2000 presidential election, Wal-Mart ranked 771st in direct contributions to federal politicians. In the intervening years, unions and regulators began to drool over the enormous target the mega-retailer had become. In 2004 Wal-Mart ranked as the single largest corporate political action committee. In 2006 it launched an unprecedented “voter education†drive.
It seems apparent that in this day and age Goldberg has it right – no significant private-sector economic activity will escape the greased paws of America’s political class or their corrupt and power-mad masters. And one wonders why it is that our country’s economic dominance is quickly slipping away amid trade deficits and runaway debt…
FamilySecurityMatters.org Contributing Editor Scott McKay, a sales, marketing and business consultant, is the Publisher/Blogger at TheHayride.com, a news/commentary blog about Louisiana and national politics..
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