RUTHFULLY YOURS

How low can oil prices go? When pundits start competing to predict where the barrel will hit bottom, you know that a rebound is inevitable. It’s the inverse of what happens before a high-price bubble bursts. Only a few years ago forecasters were suggesting that oil might hit $300 a barrel.

The unpleasant reality is that petroleum prices are cyclical. Starting with the 1973-74 Arab oil embargo, they have been through six extremes. Because the peaks and the valleys both wreak financial havoc, producers and politicians imagine a Goldilocks ideal, with prices “just right”—not so high that legislators feel pressure to claw back “windfall profits,” and not so low that suppliers fall like dominoes, destroying jobs and tax revenue.

The latter is what we’re seeing now, with oil falling below $30 a barrel. Survey the damage so far: More than 100,000 jobs are gone, most of them last year. The number of shale rigs in service has collapsed by 60%. Banks are worried about their oil loans. Shale states are readjusting budgets for shortfalls. About $200 billion of oil and gas assets are up for sale world-wide.

American shale oil companies—whose booming production is a principal cause of the global glut—have been hit hard. Last year two dozen defaulted and 15 filed for bankruptcy. Standard & Poor’s puts junk ratings on three-fourths of the oil and gas producers it monitors.

Here’s the big question, the one that makes this cycle different: What happens to shale oil? The jobs and revenues from America’s newest industry literally kept the country out of recession during the years of tepid growth that have characterized the current administration.

A year-long study found that the present legal and regulatory approach to EMP/Space weather threat to America’s nuclear power plants are inadequate and dangerous. This sorry state is anchored in the industry efforts to maintain safety regulations dating back to the 1980s, and a national security mentality relevant at the end of the Cold War.
This has been successful, in part, due to a campaign to brand nuclear power as a clean, safe source of energy. To their credit, the NRC and industry have demonstrated a commitment to safety where design basis events are concerned. However, EMP and GMD are beyond design basis events. Once these occur, there are no guarantees and few strategies with which to cope.

There has only been a handful of nuclear disasters in history, and only one in the U.S. – TMI. It is, therefore, understandable from an economic standpoint that industry is resistant to change. However, this inertia has given rise to a complacent regulatory climate absent adaptive and progressive analysis. More than 30 years have elapsed since this topic was last openly addressed.

Unfortunately, the assumptions borne of the highly controversial 1982 report continue to misinform decision makers even as recent as 2015. Despite these challenges and an NRC and industry galvanized to maintain the status quo, there are signs of progress. Some push for increased standards and regulations has occurred since Fukushima.

However, these efforts have been met with a tepid response from the nuclear industry. To stave off costly infrastructure updates, the industry responded by holding out the FLEX, a plan that is both impractical and dangerous due to an over-reliance on a functioning national infrastructure. Congress recently found, “The current strategy for recovery leaves the United States ill-prepared to respond effectively to an EMP attack that would potentially result in damage to vast numbers of components nearly simultaneously over an unprecedented geographic scale.”