Monday, February 19, 2018

Sound and Fury

I have written a lot of columns about the consequences of human-caused climate change, describing those both current and projected. My wife tells me my columns are getting depressing.
So this column is about the energy policy of our current Federal Government. It should not be surprising that the Trump administration is basically attempting to implement whatever the fossil fuel industry wishes.
First off is the Department of Interior’s recent decision to open up the entire US east and west coast’s outer continental shelves to oil and gas exploration because the administration wants to make America “energy dominant”.
We already produce almost as much oil as Saudi Arabia, due to fracking and sophisticated drilling technology, which allows energy companies to extract oil and gas from shale formations that have been ignored since the first oil well was drilled back in 1859.
Kinda makes us energy dominant already and thus a big player in the world’s energy markets.
Last year, the USGS estimated that one shale formation in West Texas’ Permian Basin contains 20 billion barrels of oil and 16 trillion cubic feet of natural gas. Not only that, but the 75,000 square mile Permian Basin already has the infrastructure in place to extract, transport, and refine these hydrocarbons.
In contrast, the USGS estimates that mostly likely the entire 1.56 MILLION square mile outer continental shelf from Canada to Florida contains only 1.4 billion barrels of oil. In addition, there is no infrastructure off the east coast. No pipelines, no platforms, no nothing.  In addition, wells might have to be drilled in waters up to 12,000 feet deep.
The Macondo well, you know, the one that blew out in the Gulf of Mexico in 2010, was in waters 5,000 feet deep. Coupled with the recension of regulations to make such deep-water drilling safer – What could possibly go wrong? But I digress.
Offshore oil exploration and production is expensive and oil prices have to be very high to make it worthwhile, like north of $100 per barrel. The price of oil has been anything but for the last decade, because the US is energy dominant . . . already. It’s currently $64 per barrel.
Along with laughably bad economics is the laughably rapid reversal of the new policy that took Florida off the table almost immediately to placate Governor (soon to be Republican Senate candidate) Scott (former offshore drilling advocate) because “Florida is unique and its coasts are heavily reliant on tourism as an economic driver”.
I think every governor up and down the east and west coasts could make the same argument and most assuredly they will when (not if) they sue the Interior Department. #WhatAboutUs?
Thus, I doubt we will see any drilling platforms off our coasts for a very, very long time.
Then there is the Department of Energy Federal Energy Regulatory Commission or FERC. The Secretary of Energy asked FERC to institute a policy of supporting coal power plants under the guise of energy resilience, because they can stockpile their sources in the event of an emergency. This policy would slow the retirement of uneconomic coal power plants, prop up the price of coal power, and jack up consumer electricity prices by billions of dollars. So much for free markets.
This proposal was a sop to the coal industry, nothing more.
To everyone’s surprise, FERC, whose members are dominated by Trump appointees by the way, rejected the proposal.
Did I mention that Republicans made sure the Tax bill passed late last year preserves tax breaks for wind and solar, the two most rapidly growing sources of electricity in the US? Iowa gets a third of its electricity from wind and to no one’s surprise, Senator Chuck Grassley (R – Iowa) made sure the provisions remained.
Of course, the oil and gas industries have long benefited from all sorts of tax breaks.
Regardless of incentives, the price of alternative energy continues to drop, making it competitive with fossil fuels, even when wind and solar tax incentives end in 2022.

These are examples of Trump administration energy policy proposals that are running into the headwinds of reality, both economic and political. They will end up being, as the Bard put it “. . . full of sound and fury, signifying nothing.”

Published in the Westborough News, January 19, 2018