OPEC Death Watch

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A number of recent articles suggest that OPEC — that kleptocratic cartel that has artificially jacked up oil prices for so many decades — is in its death throes.

The cause is something upon which I have long commented in these pages: the roaring renaissance of the American oil and natural gas industry, a renaissance produced by entrepreneurial capitalism — as opposed to interventionist statism. While the Department of Energy funded wind and solar power, along with biomass and ethanol production, all of which together have accounted for only a tiny sliver of American energy production, and that only with massive subsidies and draconian mandates — private enterprise backed the winners: oil and natural gas.

But the recent dramatic increase in production and exportation was occasioned by Speaker Paul Ryan’s success in enacting into law the right of American energy companies to export those resources. This allows frackers (and ordinary drillers) to increase production, because they now have an unlimited world market within which to sell their products.

There's a roaring renaissance in the American oil and natural gas industry, a renaissance produced by entrepreneurial capitalism — as opposed to interventionist statism.

And this is already happening, as several noteworthy articles report. One is a Bloomberg report that of all countries, no less than the United Arab Emirates (UAE) — the fourth largest oil exporter in OPEC — is buying oil from shale wells in Texas. It turns out that the Texas crude is much “sweeter” (lighter and of superior quality) and more useful to the UAE’s refining than the local brand. The 700,000 barrels of oil that it is buying are their first purchase from us.

Bloomberg notes that while American exports to the UAE are not projected to continue, the explosion of American oil exports will. Shipments from America rose from a mere 100,000 barrels per day (BPD) five years ago to 1.53 million BPD in November of last year.

Besides increasing American exports of oil, the fracking revolution has reduced non-American imports to below 3 million BPD, the lowest level since data were first gathered 45 years ago. Our current net imports are only one-fourth of what they were in 2006, and we are likely to become a net exporter in about a decade — sooner, if ANWR is finally tapped, and new offshore areas are opened up for drilling.

The 700,000 barrels of oil that the UAE is buying are their first purchase from the US.

A second story reports the rapid growth in exports of domestically produced natural gas. It reveals that China has signed a long-term contract with Cheniere Energy — a major exporter of liquefied natural gas (LNG) — under which Cheniere will ship LNG from the Gulf Coast to China. Under this contract, Cheniere will provide 1.2 million tons of LNG annually to China, starting in five years, and lasting for 20 years after that.

And there is a third story, which notes that besides a rapid rise in American LNG shipments to China, we are seeing an explosion of exports of American crude oil shipments to that country. These exports have mushroomed from zero, before two years ago, to 400,000 barrels per day during the past two months. And again, if we bust open ANWR and the coastal waters of Alaska, such exports will increase even more quickly.

One nice side effect of this is that the more oil China buys from us, the lower our balance-of-trade deficit is with China. Two months ago our trade deficit with China was $25.55 billion. Last month it dropped to $21.895 billion.

Our current net imports are only one-fourth of what they were in 2006, and we are likely to become a net exporter in about a decade.

For the foreseeable future, of course, China will continue to buy most of its oil from Russia and the OPEC countries. But our share of the Chinese market will grow, for two reasons. First, at $60 per barrel, American crude is more than $4 cheaper than the benchmark (Brent) price. Second, while there are certain infrastructure bottlenecks that have to be overcome, they are being addressed. For example, while we don’t yet have ports capable of handling the biggest oil tankers (“Very Large Crude Carriers”), we have already started expanding one of the largest ports on the Louisiana coast.

All of this has added to the stress on OPEC that may result in its collapse as a cartel: the members of the cartel may go their own ways. The recent uptick in oil prices above the $60 per barrel range has helped OPEC find some relief. The recovery of the old price from its lows in the $40–50 range has two causes.

One is the meltdown of socialism in Venezuela, which has cut its oil production dramatically. Venezuela, a founding member of OPEC, is allocated by the Cartel to produce 1.97 million BPD. But the near civil war in Venezuela has dropped actual production to only 1.64 Million BPD. In fact, Venezuela’s production dropped by a whopping 30% last year alone. This is a steeper decline than that experienced by Russia when the Soviet Union broke up, and that experienced by Iraq following the 2003 invasion!

As noted by the Wall Street Journal article that I am referencing, the drop in Venezuelan petroleum output will likely continue, if not accelerate, because the nation is trapped in a vicious socialized spiral. As it exports less, it receives less foreign currency, which cuts its ability to buy food and other necessities that its own dysfunctional economy cannot produce, which in turn increases its hyperinflation and thus the political and economic failure. Moreover, Venezuela’s declining shipments of crude are deducted to paying creditors (such as Russia) and are in constant danger of being seized by creditors.

All of this has added to the stress on OPEC that may result in its collapse as a cartel: the members of the cartel may go their own ways.

In short, the ill winds that have so badly buffeted the hapless Venezuelan people have blown great good to the rest of OPEC. I suspect this is the real reason why Russia — no longer itself socialist — so strongly supports the Venezuelan socialist regime: it keeps a formidable competitor on the ground. The Russians want nothing so much as fair competition — the history of their Olympic teams shows that!

Speaking of Russia, the second major reason that OPEC has been able to keep the price of oil as high as it has recently (i.e., in the $60–70 per barrel range) is that so far Russia has stuck to its agreement with OPEC to hold down production. In early 2017, OPEC and Russia — which, while not a member of OPEC, is certainly an ally of it — agreed to cut back Russia’s production. This agreement has held up for thirteen months, now, and the Russians have signaled that they are inclined to keep to the bargain through the rest of this year and even into the first half of next year. However, the Russian oil oligarchs are expressing doubts about the deal — since Russia needs to maximize its income in order to arm itself maximally.

Vadim Yakovlev, deputy CEO of Gazprom Neft, the giant Russian oil company, has said that the company views the OPEC agreement as only temporary, and it irks the company to be forced to hold back production. Gazprom’s CEO Alexander Dyukov has said, “Following the OPEC agreement, instead of growing at eight to nine percent, we [Gazprom] have increased by just 4.5 to five percent. Which is, without a doubt, a negative factor for us.”

At this point, American production is a regulator of world prices: whenever the price rises much above $60, the industry jacks up production, and the result brings the price right back down.

It is clear that OPEC’s day of rule is coming to an end. America — already the greatest producer of oil and natural gas combined — is on track to become the world’s biggest oil producer this year. Energy research firm Rystad Energy estimates the US production will rise by 10%, hitting 11 million BPD. America hasn’t been the global leader since — 1975!

The report from which I have drawn that last piece of information notes that in 2015 the Saudis drove oil prices down to $26 a barrel. This lowered American production by 11%. But the American oil industry, not destroyed, became stronger — and more efficient, able to turn a profit with prices as low as $30 a barrel. While some experts are not so sanguine about the US becoming number one, it is clear that our production will continue to grow. At this point, American production is a regulator of world prices: whenever the price rises much above $60, the industry jacks up production, and the result brings the price right back down. A recent article spells this out — oil prices have been driven down by American production’s rise to a new high of 10.25 million BPD.

In sum, the days of OPEC — an evil cartel of evil states, from socialist Venezuela to religious-fascist Iran to duplicitous Saudi Arabia to revanchist neofascist Russia — are numbered. The free market will at last prevail.




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The Geo-Petroleum Order Overturned

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Several recent articles point to the continuing rapid evolution of the world’s geopolitical order in regard to energy — what I dub the “geo-petroleum order”. The upheaval was caused by America’s resurrection as a dominant oil and natural gas superpower, which in turn was caused by the fracking revolution. This resurrection, I would suggest, has had two phases.

The first phase started in the 1990’s, when George P. Mitchel combined hydraulic fracturing (known for decades) with horizontal drilling. This technique — fracking, as it has come to be known — allowed oil production in America to grow like a bodybuilder on steroids. It grew linearly up about 50% between 2011 and 2015. This allowed the US to shrink steadily as a net oil importer. We are close to hitting the goal of zero net imports, which is to say we are close to energy independence. Moreover, fracking drove the price of oil down by something like two thirds, to the current range of $40 to $60 per barrel.

The introduction of that kaleidoscope creator of pointless boondoggles, the US Department of Energy, was another monumental mistake.

The second phase began when House Speaker Ryan managed — amazingly! — to get a bill through Congress allowing domestically produced oil to be sold abroad. And he got President Obama — no big fan of fossil fuels — to sign it into law. As I noted at the time, this was an astounding piece of work. It overturned a grotesquely stupid law (passed during the energy crisis of the 1970s) that forbade the sale of presumably scarce domestic oil abroad. It never occurred to the morons who enacted this law that it would discourage oil companies and innovators from finding different ways to extract oil here, and making them look abroad instead.

Parenthetically, I would suggest that future historians will record that it was primarily our own idiocy that caused our energy shortages during the period running from the OPEC oil embargo to the rapid rise of fracking — a period that saw the greatest transfer of wealth from the US to its enemies ever known, for which we were “rewarded” by terrorist attacks and Russian neoimperialism. The enactment of the aforementioned subhumanly stupid law prohibited the shipment of American-produced oil, incentivizing oil producers and innovators to focus on foreign oil production. The introduction of that kaleidoscope creator of pointless boondoggles, the US Department of Energy (DOE), was another monumental mistake. The projects it forced innovators to pursue exhibited a degree of asininity seldom exceeded in the private realm. These projects range from syn-fuels and geothermal energy to biomass and corn ethanol (the mother and father of all boondoggles) to solar farms and windmills that shred birds and produce expensive energy at the very times it is least needed. Another DOE achievement was killing of the fast breeder reactor, which would have taken the nuclear “waste” we have accumulated and use it as fuel.

The DOE should top the list of federal departments to be eliminated. And for those of you who are worried about a rise of ocean levels said to be caused by global warning, may I offer a helpful hint? Just create a US Department of Water Creation, and the ocean levels won’t just fall; they will simply dry up.

Development in ANWR will provide thousands of high-paying jobs and $60 billion in royalties for the state — some of which goes directly to the people of Alaska.

But I digress. The flawed tax bill recently passed by Congress and signed into law by the president contains a provision allowing limited drilling in the formerly locked away Alaskan National Wildlife Reserve (ANWR). ANWR — which is in the middle of nowhere, and protects nothing but mosquitoes — was created at a time of high oil prices, and with only one purpose: to deny oil companies the chance to develop a small piece of vast Alaska. ANWR was, of course, opposed by the great majority of actual Alaskans but favored by soi-disant “environmentalists” in Silicon Valley and Beverly Hills. But then, neither Silicon Valley nor Beverly Hills has Alaska’s unemployment rate, which is the highest in the nation. Nor do they have Alaska’s large budget deficit.

Development in ANWR will provide thousands of high-paying jobs and $60 billion in royalties for the state — which puts some of the funds in a master-fund, the income of which goes directly to the people of Alaska. ANWR will also rejuvenate the Alaskan Oil Pipeline, keeping that great project alive. Not bad, considering that the drilling will take place on less than 2,000 acres — which is one-hundredth of 1% of the ANWR reserve.

It has also been reported that the $3.8 billion dollar Dakota Access Pipeline — created to ship the burgeoning oil production from fracking operations in North Dakota — is delivering bountiful benefits after only six months of operation. Lowering the cost of shipping has caused an increase in production. October’s production hit 1.185 million barrels per day (BPD), which is about a 13% increase over the peak before the pipeline.

As a result, unemployment in North Dakota is exceptionally low (2.3% in November), state revenues rose by $43.5 million in the first five months since the pipeline opened, and the pipe is projected to deliver $210 to $250 million in extra tax revenue by the end of its first two years. That’s delivering the green!

Saudi Arabia is now looking to invest in — American shale operations! How the geo-petroleum worm has turned.

Speaking of green, there has been a bonus for the environment as well. The pipeline has eliminated about 83% of the train traffic carrying oil, with only two trains a day now needed to transport oil instead of the 12 needed before the pipeline. This dramatically decreases the chance of ecologically damaging oil spills, or hominid-damaging oil explosions when trains carrying oil crash.

Another encouraging report explores an unseen upside of the growth in American fossil fuel production. The domestic steel industry — long an industry under stress from foreign competition — is itself experiencing a rebirth. Both oil and natural gas are shipped mainly by pipeline (unless misguided environmental activists stop the projects) and the pipes aren’t made of wood; they’re made of steel. Recently the newer domestic steel plants have become dramatically more efficient and are increasing capacity in anticipation of the pipeline buildout.

One American steel manufacturer projects growth in domestic oil and natural gas for the next ten to 20 years. Shipments from American steel producers went up 5% in the first ten months of last year — not as good as the 15% experienced by foreign producers, but still on the right track.

Some American manufacturers worry that the domestic buildout in steel plants will lead to a glut. But research done by Pipe Logix estimates that the number of oil and natural gas wells increased by 60% in 2016 alone. Those wells, and the pipes that ship their products, both require steel. So the worry about a “glut” of domestic steel mills seems exaggerated.

The foxy frackers just tightened their operations and kept innovating, winding up with an amazingly flexible industry that remains profitable in a below-$40 per barrel environment.

The American fossil fuel renaissance is having an impact on our major oil competitors. There is fascinating news that Saudi Arabia is now looking to invest in — American shale operations! How the geo-petroleum worm has turned!

Specifically, Aramco — the Saudi state-owned oil company — has approached the Houston based natural gas producer Tellurian, looking to invest. Aramco is also looked at acquiring assets in the two huge fossil fuel basins, Permian and Eagle Ford.

Admittedly, these developments are only incipient. But the fact that the Saudis are knocking at the door marks a major shift. They realize that America — once a pitifully energy-dependent giant brought its knees by despicable dictators sitting on top of large oil reserves — is now the world’s biggest producer of oil and natural gas, eclipsing both the always-treacherous Saudis and the authoritarian Russians. If you add on our coal production, we completely eclipse other countries in fossil-fuel production.

How sad that is for oil potentates, socialist caudillos, and dictators in general, who got fat on oil at an over-$100 price!

Of course, while we are the world’s largest producer of oil and natural gas, we are still net importers, because we consume so much. But as we increase production, we will become a net exporter. And this is what the Saudis realize. Aramco already owns some refineries in the US (and elsewhere in the world), but all Saudi production of oil and natural gas takes place in Saudi Arabia. The new leader of the country (Crown Prince Mohammed bin Salman) plans to privatize Aramco, and the IPO shares would fetch a higher price if Aramco sites production here.

The Saudis have two other reasons for wanting to buy into US oil and natural gas production. First, they aim to understand better how fracking works in such nimble ways. A couple of years ago, the Saudis tried to drive the frackers out of business by jacking up their own production and thus driving down prices. For a while, the price of oil hit about $30 per barrel. This caused the Saudi government to hemorrhage foreign reserves, but the foxy frackers just tightened their operations and kept innovating, winding up with an amazingly flexible industry that remains profitable in a below-$40 per barrel environment. When the price drops that low, less efficient operations get closed, but they can be expanded again, in the blink of an eye, when oil goes over $50 a barrel. How sad that is for oil potentates, socialist caudillos, and dictators in general, who got fat on oil at an over-$100 price!

The Saudis envy this flexibility and deeply resent the fact that it will keep the price of oil below $60 a barrel for the indefinite future. Witness the Crown Prince’s attempt to seize the assets of corrupt relatives and get Saudis used to working, rather than living on welfare paid by the rest of the world.

The Russians have “kept up” with American technology since the time of Lenin, usually by stealing it.

The other reason the Saudis want to have operations here is that they want to shift from their reliance on their own oil to power everything. The world’s natural fossil fuel distribution has involved using oil to power transportation, but natural gas and coal to generate electricity — and coal is a much dirtier fuel. But Saudi Arabia’s own natural gas reserves — which are about equal to America’s — are sulfur-laden and hard to get out of the ground. So to convert its production of electricity to natural gas, the country would have to import 12 million metric tons of LNG annually. Extracting that here in America would make sense.

But I have another, deliciously rich, piece of news. It is said that imitation is the sincerest form of flattery. If that’s true our archenemy Russia is flattering us in the extreme. It is trying to develop its own shale.

Russia’s main shale formation — the Bazhenov formation — is the largest in the world. And Russian oil production is the largest in the world. But Russians are looking at oil fields that are six decades or more old, and have declining outputs. So they want to do what America did: recover peak production by means of fracking. The trick is to replicate America’s technological expertise. To this end, the Russian government — i.e., Putin and his corrupt cronies — is offering tax incentives for shale companies, and incentivizing cooperation among energy companies and research institutes to develop fracking technology.

Alexei Vashkevich, exploration director for Russian energy conglomerate Gazprom Neft, who conveniently worked on the North Dakota’s Bakken formation operations, assures us that the Russians won’t rip off American technology but will develop a totally different Russian technology.

Oh, please, Alexei — as if the new Russian 5th-generation fighter weren’t a direct clone of America’s F35. The Russians have “kept up” with American technology since the time of Lenin, usually by stealing it. Witness A-bomb plans stolen by spies, F35 plans, obviously filched by cyberspies, aka hackers, who use the computer and internet technology they stole from — Americans!

We should work to keep oil prices so low that they delay Russia’s massive military buildup.

The news article just mentioned observes that it will be, perhaps, another six or seven years before Russian fracking operations produce very much, in part because of the embargo placed on Russia when it dismembered Ukraine. But wait: if the Russian technology-to-be is going to be totally different from America’s, why would the denial of that technology hold back Russia’s development?

I think you can expect Russia to do three things in the immediate future.

First, you will see it unleash its hackers to steal massive amounts of American fracking technology. My advice to American fracking companies is this: If you haven’t done so already, set up encryption and other barriers to stop cyberspies from an orgy of theft.

Second, you should be prepared to see mysterious “environmental” groups spew colossal amounts of deceitful anti-fracking propaganda. These groups will be funded by Putin for the sole purpose of retarding America’s own fracking.

Third, you can expect a dramatic increase in Russian meddling with elections, here and in Europe, by feeding propaganda to news media and funds to political activist groups. They likely played a role in strangling Poland’s development of its own substantial shale formations — keeping Poland and the rest of Eastern Europe dependent on Russian natural gas and oil. No doubt they will try to elect anti-fracking candidates here as well.

My strong belief is that we should work to keep prices so low that they delay Russia’s massive military buildup. To do this, we need to open up more offshore sites, and more in Alaska, and push for the systematic exploration of the Arctic.

In this regard, there is some very recent good news. Secretary of the Interior Ryan Zinke has announced a plan that would overturn the Obama administration’s effort to restrict offshore drilling to only 6% of the American coastline. Under the new plan, fully 90% of offshore areas would be opened, in the largest sale of offshore leases in history. This is a huge new step towards the goal of making America, in Zinke’s words, “the strongest energy superpower.”

While oil company CEOs may fear a glut — and lower prices — consumers would welcome it.

This means that Southern California’s coastline would be open for offshore drilling for the first time since the late 1960s, when it was closed because of an oil spill in Santa Barbara. The East Coast offshore areas would also be reopened.

Naturally, environmentalist groups are already screaming. For example, Diane Hoskins of the activist group Oceana called the plan “absolutely radical.” This is to be expected. Democratic governors in several states (including California, Oregon, North Carolina, and Washington) also expressed complete opposition, and some Republicans became alarmed as well. Senator Marco Rubio and Governor Rick Scott both came out against drilling off Florida’s coastline.

Even oil companies have stated reservations, since they are now experiencing what they regard as a glut of oil. But while oil company CEOs may fear a glut — and lower prices — consumers would welcome it.

Zinke has pointed out that the plan will not be finalized until 2019, and only after comments have been received in public hearings around the country. While all that is pending, we can be thankful for inventive frackers and the prosperity they have given us.




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Frackin’ . . . Like the Doo-Dah Man

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Recent stories in the wonderful Wall Street Journal give us the happy news that (while receiving no coverage from the mainstream media, of course) the fracking revolution rolls on.

The first story reports that American crude oil exports are accelerating to new highs, rapidly approaching as much as Kuwait currently exports. Amazing. As of last month, we were exporting 1,984,000 barrels per day (BPD), an increase of nearly 500,000 BPD from the week before, and up an astounding 684,000 BPD in May. Considering that Kuwait ships about two million BPD, this is great news.

Admittedly, the US is still a net oil importer. But we import almost all the decreasing amount of foreign oil we need from our great ally Canada — our great ally, unless President Trump pulls out of NAFTA.

This exporting craze will only continue to build — if we don’t try to destroy our fracking industry, and allow it to flourish.

The reason for this surge in US crude oil exportation is that American crude is relatively cheap. In the week in which the record in exports was set, the US crude price was nearly $7 per barrel cheaper than the world standard. This is a new record low during the period since the 50-year-old ban on oil exports was lifted a couple of years ago, thanks to the much-maligned Congressman Paul Ryan.

In the irony that is the mother and father of all ironies, the second biggest buyer of America’s crude oil is our devoted enemy, China, which now takes about 180,000 BPD from us, up almost 900% from last year.

This exporting craze will only continue to build — if we don’t try to destroy our fracking industry, and allow it to flourish. All it needs is to be left alone in the free market. If so, it will guarantee that we never see $100 a barrel oil again ever. Here I must give Trump his props — he has allowed fracking to go unmolested.

What the frackers have shown is a profound and continuing ability to innovate and lower costs, in the face of an attempt by OPEC, that rent-seeking cesspool of corruption, to drive them out of business by lowering prices. But it was the OPEC companies that were driven to the wall.

This is just more of the daffy Malthusian “peak oil” thinking we’ve heard before.

The Wall Street Journal reports that one of the biggest natural gas fields from a decade ago, the Haynesville Shale field in Louisiana, has been reborn. Ten years ago it was productive, but five years ago it was nearly played out. Yet this field has come roaring back to life. The number of drilling rigs has tripled in the past year, and the current amount of natural gas is up by 17% in the same period.

What has allowed this resurrection of gas fields is “refracking” — the process of using more sand and extending the wells further. In fact, the US Geological Survey now estimates that the Haynesville, Louisiana and adjacent fields hold 300 trillion cubic feet of natural gas. That is a 430% increase over its 2010 estimate.

Helping the process is investor recognition that natural gas has a bright future. The US Department of Energy projects that over the next quarter of a century or so, use of natural gas will outstrip that of all other fossil fuels, especially coal. Cheniere Energy has a large liquefied natural gas (LNG) plant and export facility in Louisiana. Additional LNG plants are being built in Louisiana, Mississippi, Texas, and even Maryland.

Natural gas is the “feedstock” in many industries — petrochemicals, plastics, and fertilizers, to name the biggest. Nearly 80 petrochemical plants are being built in the Gulf Coast region alone, where they will result in jobs, and the continued resurrection of Dixieland.

The major hurdles are an apparent fall in innovation in the fracking industry, wariness among investors, and rising labor costs.

The WSJ notes that some “experts” are worried that the export market will siphon off so much natural gas that prices will rise, hurting manufacturers that are now ramping up. This is just more of the daffy Malthusian “peak oil” thinking we’ve heard before. We can simply increase production of natural gas from all over the US — from the Dakotas to Pennsylvania to Texas — to meet the demand. All the while good paying jobs will be created, and our adversaries (such as Iran, Russia, Saudi Arabia, Qatar, and Venezuela) will be kicked in their teeth.

When will the “experts” finally wake up and realize that in a free market there is no “peak” anything — least of all oil and natural gas?

In fact, during the past year, Castleton Commodities International spent more than a billion bucks to buy 160,000 acres of Anadarko’s Haynesville land. For that it got an infusion of capital from Tokyo Gas America, the largest utility in Japan. This shows the true expert assessment of fracking’s value.

A third WSJ article amplifies the idea that the glut of US production is spooking producers. In other words, it’s such a bitch that prices are set by supply and demand! The piece notes that the growth in the number of rigs — typically used as a measure of future activity &‐ dropped from 20% for the preceding four quarters to “only” 6% in the third quarter of this year.

Many of the OPEC states (especially Saudi Arabia) need oil to be around $100 per barrel to keep their economies stable and their citizens quiet.

This shouldn’t cause any pain. With the buildout of American industry and the roaring appetite of East Asian consumers, demand will just keep increasing. The Journal notes that US oil production may surpass the supposed “peak oil” production of 9.6 million BPD set in 1970. The major hurdles are an apparent fall in innovation in the fracking industry, wariness among investors, and rising labor costs. But despite the slowdown in the increase of production, there is no decrease in production, and the Energy Information Agency expects American oil production to hit 9.69 million BPD at the end of the year. This, despite oil prices stuck at about $50 per barrel.

The last WSJ story that I want to mention points to the continuing geopolitical fallout from the growth of US oil production. It reports that continued low prices on world oil markets have led Saudi Arabia, Venezuela, and other OPEC members to push Russia — which, while not technically an OPEC member, is surely a fellow traveler — to continue to agree to the current limits on production.

The narrative here is as simple as it is delicious. In the face of the American fracking revolution — which dropped world oil prices from over $100 per barrel a few years ago to $50 and below — OPEC has tried to figure out what to do. Many of the OPEC states (especially Saudi Arabia) need oil to be around $100 per barrel to keep their economies stable and their citizens quiet. But Putin’s regime has used Russia’s oil wealth for a huge military buildup, and kept Russian citizens happy by using military power to conquer the Crimea and threaten the rest of the former Soviet empire. To keep this up, Putin is prepared to sell as much oil as possible, even at lower prices, to fund his mechanisms of corruption.

In 2017 Russia agreed with the OPEC strategy to cut back production by 2% to keep prices from plummeting further. While this production cut helped raise the world price of oil by about 13%, American fracking has kept the world price well below $60 per barrel. But Russia’s participation in continuing the cuts is unclear, to say the least. The current agreement ends in March 2018, and OPEC is pushing the wily Putin to agree to extend it. The Saudis are offering to set up a billion-dollar fund to invest in energy projects.

The US should open all the spigots and end net importation of foreign oil once and for all.

Putin so far remains noncommittal. He can see what is obvious, which the WSJ article notes: if OPEC succeeds in raising prices, American shale companies can immediately crank up their output, rapidly driving the price back down.

Now, whether the Russians are bluffing OPEC to get more concessions, or simply intend to cover their drop in revenue by increasing their own production, we will have to wait to see. But I think the US should open all the spigots and end net importation of foreign oil once and for all. The US should make our own oil a major export. This means: opening up more federal land for fracking and offshore drilling, opening up ANWR in Alaska, opening the East Coast for offshore drilling, and pushing to open up the Arctic for the rapid exploitation of the region’s resources.

I would suggest to Trump that he get over his fears about free trade agreements and cut a deal that would allow him to sign the TPP agreement, but with one new provision: the TPP members should agree that if the US can sell them oil and LNG at world market prices, they will buy from us. That would eliminate the trade imbalances that so anger Trump (though not economists, of course). It is, alas, very doubtful that Trump can grow that much in strategic thinking.

that the export market will siphon off so much natural gas that prices will rise, hurting manufacturers that are now ramping up. This is just more of the daffy Malthusian ‐




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Gas Expands!

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An amazing and welcome development has been achieved. As the Wall Street Journal just reported, for the first time in six decades, America exported more natural gas than it imported. It has once again become a net exporter of natural gas, and this new export sector will grow rapidly.

The net export volume is starting modestly: in November we exported 7.4 billion cubic feet (BCF) per day, while still importing 7.0 BCF per day. But no one doubts that from this modest start the volume of exports will grow. American gas exports have gone up by 50% over the past six years, and the Energy Department projects that we will be the third-largest exporter of liquefied natural gas (LNG) by 2020 — behind only Australia and Qatar. Citigroup estimates that by 2020 the US will be supplying to the rest of the world about 20% of the natural gas it produces.

No one doubts that from this modest start the volume of natural gas exports will grow.

To cite one example of success: Cheniere Energy opened a facility in the Sabine Pass (on the border of Texas and Louisiana). It was originally intended to import LNG, but the fracking revolution so decreased the price of natural gas that the plant was quickly “reverse-designed” to export it. Since February, when the plant started shipments of LNG, its output has grown to an average of 1.5 BCF exported per day. Not surprisingly, Cheniere is expanding the Sabine Pass plant rapidly, and will open more export facilities over the next two years.

Three years ago, the Freeport LNG facility at Quintana Island, Texas, got approval to export LNG, and it will begin exporting massive quantities of LNG in two years. Next year, Dominion Resources will start exporting LNG to India and Japan.

The only way this US export industry won’t grow is if the government — intentionally or by simple bungling — stops it.

So this trend toward America becoming the dominant reliable supplier of LNG for the whole damn planet will not just continue — it will accelerate. Thank you again, free market: remarkably shrewd private individuals, acting primarily out of self-interest, came up with a way — fracking — to make domestic oil and natural gas plentiful again, and plentiful indefinitely. Government subsidized losers — technologies such as wind and solar energy — but the free market found the efficient answer.

In fact, the only way this US export industry won’t grow is if the government — intentionally or by simple bungling — stops it. The progressive liberal Democrats hate fracking, of course. Obama did everything he could to impede it — such as taking an unprecedented amount of land out of public use — although most of the land upon which fracking operations are happening is private. Hillary Clinton repeatedly stated her total opposition to fracking (not to mention coal), which likely was a major factor in her ignominious loss to Donald Trump.

Speaking of Trump, he may ironically set back the natural gas export boom brought by fracking. For while he certainly claims to support it, the largest customers of our natural gas are, outside of ourselves, our NAFTA partners, Canada and Mexico. Together they are buying a record high of our total output. But Trump — a populist to the core — hates free trade, and has targeted NAFTA as a “bad deal” for America. His bungling trade policy could well get us into trade wars with the very countries that could become our biggest future energy export markets.




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Once Again, Spontaneous Order Beats the Dead Hand of Statism

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A number of recent reports on American energy illustrate anew the power of markets to deliver prosperity — rapidly — and the impotence of government to do the same. In short, spontaneous order has once again accomplished what the dead hand of statism could not.

The first report concerns the unsurprising demise of yet another solar power company. SunEdison is filing for bankruptcy, after seeing its stock price drop a whopping 98% in less than a year. Wall Street mavens such as David Einhorn (billionaire owner of a hedge fund called Greenlight Capital) and Leon Cooperman (of Omega Advisors) had considered the company a sure bet, but it proved to be a sure loser.

SunEdison is just one of an endless stream of solar companies that started, during the reign of the Obama administration, with the promise of giving us cheap power while healing the planet of global warming. Typically, they began with direct or indirect government subsidies — only to fail miserably.

Other stories tell us of better news. Just two months ago — in a nice piece of negotiation for which he received only vilification from the pestilent swarm of populist talk show hosts — Speaker of the House Paul Ryan (R-WI) reached a budget deal with the administration that once again (after a ban of biblical proportions — 40 years) allowed the exportation of domestically produced oil abroad. I have argued before that this is a major geopolitical game changer. We can now sell the fruits of our petroleum fracking revolution on the world market, thus ending, once and for all, the power of the oil cartel (OPEC) to gouge the rest of the world. Oil prices can now be kept low indefinitely. If Russia or the OPEC thieves try to cut back on production to extort more money from Europe and Asia in the form of higher prices, or if the demand for oil goes up because of a future worldwide economic boom, the Great American Frackers can just drill more wells, with no shortage for the foreseeable future.

SunEdison is just one of an endless stream of solar companies that started with the promise of giving us cheap power while healing the planet of global warming, only to fail miserably.

Less remarked upon, but no less remarkable, has been the flourishing of American natural gas production — driven again by the fracking companies. The miracle of fracking has dramatically reduced the prices of domestic natural gas — in fact, driven the price of natural gas to the lowest it has been in 17 years. Moreover, North America’s natural gas production is now about 450% greater than Africa’s, 80% greater than the Asian Pacific’s, 50% greater than the Middle East’s, and only 5% smaller than Eurasia’s; and it is set to grow apace over the next few years.

Why? Because the domestic price is now so low that American energy companies find it attractive to liquefy natural gas and ship it abroad. And that’s what is starting to happen. For example, just last month, the first shipment of American produced natural gas — ethane — left the Marcus Hook terminal in Philadelphia, headed for Europe. The purchaser of the liquefied natural gas (LNG), Swiss petrochemical company Ineos, plans to use it in its Norway facility. (Ethane is primarily a feedstock for plastic production. Methane is what is typically used for heating and power generation.) Given current trends, the US could become the world’s third largest exporter of LNG, right behind Qatar and Australia — in just four years.

Now consider the Cheniere Energy company’s Sabine Pass facility (located on the Gulf Coast), which aims to be fully operational in less than three years. By itself alone it will be able to export 3.5 billion cubic feet (Bcf) per day.

US producers have a key cost advantage: they can reconfigure import facilities to become export facilities relatively inexpensively. So as domestically produced natural gas replaces all imports, we can seamlessly start sending LNG abroad. The US Department of Energy has approved projects that will increase the potential exports of LNG to 10 Bcf per day, and is swamped with new applications that if granted could boost those exports another 35 Bcf per day. That is nearly the size of today’s global market.

Of course, already some people have raised worries that by exporting so much of our domestically produced natural gas, our own consumers will face shortages and see domestic prices soar. This is doubtful. For one thing, the US already has something like four trillion cubic feet (Tcf) of natural gas stored underground, and produces 30 Tcf a year. So even if the Department of Energy approves all the projects under submission, the effect on domestic prices will be limited. One recent estimate by the US Energy Information Administration is that an increase of 12 to 20 Bcf per day in exports would raise domestic natural gas prices by 4–11% per million Btu.

The miracle of fracking has driven the price of natural gas to the lowest it has been in 17 years.

Making the chance that increasing exports will raise domestic prices of natural gas even more remote is the fact that, with the colossal amount of American shale deposits of natural gas — not to mention our immense amount of conventional supplies — the number of fracking operations will grow dramatically as our exports increase. That will increase domestic supplies as well, and hold their price down. Moreover, because building out export facilities is costly, the rate of increase will be relatively tame.

Still, the excellent economic news is that we will have another great export market to exploit, providing hundreds of thousands of high-paying blue-collar jobs all over this country — jobs sorely needed, as our older manufacturing jobs are automated away. For example, it is estimated that America will need 100 more LNG tankers over the next 15 years, as our exports surge ahead.

American natural gas exports will soon be headed to Asia as well as Europe. China is increasing its own production of natural gas, in part because the pollution caused by all its coal-fired power plants is making city life intolerable, but developing its own shale resources is proving difficult. Japan is perennially in need of natural gas (and petroleum as well). The export route to Asia will be dramatically improved by the $5.3 billion expansion of the Panama Canal just being completed. This will cut an average of 11 days off the time it takes to ship oil from the Gulf Coast to Asia.

This is also great geopolitical news. We will be able to supply natural gas to Europe, which right now depends upon the thoroughly corrupt and evil Russian company Gazprom. Russia has shown a vicious propensity to price-gouge when it can, and it uses its supply as an instrument of state power in the revanchist quest to reestablish the Soviet Empire. That quest will be sharply curtailed by American natural gas exports to Europe.

The prospect of American natural gas liberating Poland, the Baltic states, and other formerly Soviet-controlled countries from Russian hegemony was the subject of another recent report. It notes that several countries are eagerly awaiting buying LNG from the United States, and some — such as Poland — are building import terminals in anticipation that American shipments will increase. Russia supplies about a third of all Europe’s natural gas. Some of the former Soviet countries (such as Bulgaria) get 90% of their supplies from Russia.

As Lithuania’s energy minister has said, “In Russia, gas always goes together with politics.” But he added, “Russia is extremely aggressive in gas pricing and the arrival of US LNG will change that.” Goldman Sachs estimates that the arrival of American LNG should drop the price by one-quarter in just two years.

The US will have another great export market to exploit, providing hundreds of thousands of high-paying blue-collar jobs all over this country.

Russia feigns unconcern about the arrival of American LNG. Alexander Medvedev, Gazprom’s deputy chairman, discreetly claimed, “We are very relaxed about US LNG, though very attentive.” Analyst Trevor Sikorski explains that while Russian gas currently costs about $4.60 per million Btus, American gas will cost about $3.60 (when the cost of shipping is included). So Russia could “chase out” the US (as Sikorski suggests) by, say, lowering its price to $2. But I think the Russians are merely whistling past the graveyard. For one thing, Russia has for several years funded European environmentalist organizations, enabling them to propagandize against fracking. If it were so easy for the Russians to undercut the price of gas produced by fracking, why does Russia so oppose it in other countries?

Second, there is a flaw in the argument that Russia can just chase the US out of the European market by dumping its own natural gas at (say) half what it currently charges. The problem with that argument is — against all “dumping” arguments — that the Americans would stay out only as long as Russia incurred that 50% lower revenue stream. But the reduction would severely limit Russia’s ability to continue upgrading its military and taking over more of Eastern Europe. Worse for Russia, the minute it decided to raise its prices back up, American oil companies would need only a day to start shipments to Europe, and only a couple of weeks for the oil to arrive.

It seems likely that Russia will simply lower its prices to match or slightly undercut the American pricing — say, pricing its natural gas at $3.50. But this will still be quite damaging to Russia’s revanchist goals, and therefore good news for the rest of us. Russia will lose 20–25% of its current revenue stream — a major hit indeed. More importantly, even if Russia charges approximately what American companies do, the former Soviet countries will probably still order American gas, the better to keep their freedom from Russian domination.

In sum, American LNG may forever free the Eastern Europeans from Russia’s paws. This is reason for rejoicing.

But there are two reasons for not rejoicing. First, both candidates for the Democratic nomination for president — Clinton and Sanders — have said that they utterly oppose fracking. No doubt whichever one wins the nomination will be lavishly, if covertly, funded by the Russians.

Worse, the two leading candidates for the Republican nomination — Trump and Cruz — would almost certainly lose to the Democrat in the general election. The Republicans are hellbent on losing the best shot they have had to take back the White House in eight years. Go figure that out.




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Now the Majority

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Amid all the hoopla surrounding the elections, the nation passed a milestone worth noting. We now have right-to-work (RTW) laws in place in the majority of states. This is a cause for quiet celebration.

Earlier this month, West Virginia — long a stronghold of Big Labor (specifically, the United Mine Workers) — voted to become the nation’s 26th RTW state. This was as surprising as Michigan’s decision a couple of years ago.

Workers find their dues used to elect politicians who want to close down the very industries that employ those workers.

It took maneuvering. The law had narrowly passed the Republican-dominated legislature the week before, but Democrat Governor Earl Ray Tomblin vetoed it. However, the state constitution allows the legislature to override a veto with a simple majority. The Republican-dominated legislature did just that, by 18–16 in the Senate and 54–43 in the House.

Undoubtedly the driving force for this change is something I have long noted in these pages. Ever since FDR, there has long been an unholy alliance between Big Labor and the Democratic Party. Labor unions freely used enormous amounts of workers’ money to elect Democrats, who then passed laws favorable to unions, but often opposed to the desires of workers. Over the past 20 years, and especially with the election of Obama, Big Labor has elected Democrats who are environmental extremists. This is the ultimate in irony: workers find their dues used to elect politicians who want to close down the very industries that employ those workers!

That is especially true in West Virginia. Of course, the state has long had major coal-mining operations. But Obama’s campaign against coal has devastated those industries. This has been the major reason that West Virginia has the second-highest unemployment rate in the nation — 6.5%, or about a third higher than the average.

Workers of the country, unite, and throw off the chains with which the vicious environmentalist Democrats have shackled you! Not only will you be free — you may just keep your job!




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Credibility vs. Credulity

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Climate catastrophists are distraught. The planet is headed for hellish doom, and few of its inhabitants care enough to alter its climatological trajectory in any meaningful way. The world has ignored catastrophist demands to decarbonize its economies, and rich countries, who have caused catastrophic anthropogenic global warming (CAGW), are not doing enough to help poor countries, who are its victims. Worse yet, the climate cult is crumbling, as its science-challenged leaders struggle to wage a crusade whose viability depends on propping up a scientific hypothesis that cannot stand on its own.

Catastrophist leaders have been unable to make a convincing scientific case for CAGW, or for the solution that they propose to avert it. Decades of advancing their scientific arguments (based on, e.g., flawed climate models, blatant manipulation of climate temperature data, shrill pronouncements of unsubstantiated alarms, followed by shriller, more frequent pronouncements of unsubstantiated alarms) have failed to win public support. So have vigorous attempts to appropriate scientific authority, coerce scientific consensus, and quash scientific debate. Their most ambitious intellectual efforts (incessant ridicule of skeptics, unrelenting vilification of dissenting scientists, and threats to imprison fossil fuel company CEOs, "climate deceivers," "doubt-sowers," and others) have attracted few converts.

According to catastrophist lore, America is the problem. Americans, catastrophists say, are in denial about the coming devastation and the science that predicts it. We dismiss the ominous tweets of President Obama (e.g., "Ninety-seven percent of scientists agree: #climatechange is real, man-made and dangerous"). We chuckle when John Kerry likens global warming to weapons of mass destruction (WMDs), skeptics to Holocaust deniers, and alternative theories of climate change to the work of "shoddy scientists." We are blind to the self-evident truths of climate warming that catastrophists see, everywhere they look: storms, floods, droughts, fires, famines, terrorism, species extinction, heatwaves, cold snaps, allergies, and diarrhea, to name a few.

The climate cult is crumbling, as its science-challenged leaders struggle to wage a crusade whose viability depends on propping up a scientific hypothesis that cannot stand on its own.

America remains doubtful and oblivious. Just how stupid can we be, wonder alarmists? Bill Clinton thinks that such skepticism makes America look like "a joke." It's "almost like denying gravity," muses Joe Biden. Have Americans become even stupidersince Obamacare, which, according to Obamacare architect Jonathan Gruber, relied on "the stupidity of the American voter" for its passage?

Indeed, American ignorance is said to be behind the watered-down Paris climate change accord. Thought to be humanity's last best chance to avert otherwise certain climate disaster, the agreement was not legally binding and fell far short of catastrophist demands. Catastrophist leaders blamed the US Senate. Had that body been willing to ratify a treaty mandating US emissions reductions, then Messrs. Obama and Kerry would have been able to persuade the other 190 or so countries to mandate theirs.

The US Senate, of course, is controlled by Republicans, as is the House of Representatives. That is, the US Congress is controlled by Republicans, for whom climate change is not the most important issue of their time. Congressional Democrats, on the other hand, having been duly indoctrinated by climate science that was settled decades ago, believe that CAGW is the greatest threat to humanity. Unlike Democrats, Republicans do not understand that fossil fuel is the scourge of the planet, abetted by the industrialization, capitalism, and democracy that threaten its very existence. This misapprehension is typified by so-called Tea Party Republicans — "flat-earthers" that Obama has no time to meet with — and "climate deniers," whose ignorance of science, according to Kerry, disqualifies them from "high public office." Presumably they would have been qualified had they attended the kinds of high schools and colleges where, Kerry continued, he "learned that the sun rises in the east and sets in the west and it does so 24 hours a day."

We are blind to the self-evident truths of climate warming that catastrophists see, everywhere they look: storms, floods, droughts, fires, famines, terrorism, species extinction, heatwaves, cold snaps, allergies, and diarrhea.

Which raises the question: in this intractable climate change battle, who are the actual idiots? Where is the evidence that the catastrophist elite is any smarter than the Americans, even the ordinary Americans, that it obsessively derides and belittles? Instead of asking why America is unwilling to buy their planet-saving scheme, catastrophists should ask why their leadership has been unable to sell it. Why is it that — armed with daily evidence of omnipresent climate damage, the pressure of world opinion, the unrelenting propaganda of stroppy environmentalism, the vociferous endorsement of celebrities and journalists, and the lofty, unified validation of the world's climate scientists — such luminaries as Barack Obama, Hillary Clinton, John Kerry, and Al Gore can't make the case? They are losing to the Koch brothers and 40 or so members of the Tea Party!

Part of the answer is that those leading the climate crusade know the least about science. Otherwise, they would be able to explain climate change issues (such as the ongoing warming pause, the elusive tropical hotspot, the pesky Medieval Warm Period, the perfervid climate models, and the profligate green technologies that are "unproven or even illusory") in a way that Americans could understand. Dr James Hansen, the father of global warming, laments Obama's inability to articulate his policies to the public. “He’s not particularly good at that," said a discouraged Hansen.

There has been no measurable global temperature increase for 18 years of uninterrupted, anthropogenic belching of record quantities of CO2 into the atmosphere. This is no small fissure in the CAGW theory; it is a gapping chasm that screams for resolution. Yet in May 2013, more than 15 years into the hiatus, as climate scientists frantically struggled to find an explanation of why the climate had not warmed as fast as everybody had anticipated five or ten years earlier, a clueless Obama asserted, "We also know that the climate is warming faster than anybody anticipated five or ten years ago." Three years later, still clutching a theory in need of serious modification, if not complete revision, he fatuously calls skeptics "deniers," as he remains in obstinate denial of the continuing warming pause.

After injecting over 100 billion tons of CO2 into the atmosphere since 1998 (one quarter of the amount that all humanity has spewed since 1750) with no temperature increase to show for it, one can understand how Americans, even ignorant Americans, would be skeptical of the CAGW hypothesis, and embarrassed by their president's habitual attribution of storms, floods, droughts, and terrorism to rising temperatures that have yet to occur.

Where is the evidence that the catastrophist elite is any smarter than the Americans, even the ordinary Americans, that it obsessively derides and belittles?

While they wait for the missing heat to appear, perhaps catastrophist leaders could use the time to explain the tropical hot spot (the signature of manmade warming, predicted by climate models). It too is missing — as is the rapidly melting Arctic ice predicted by Mr. Gore in his 2006 Academy Award winning documentary, An Inconvenient Truth. In accepting the Nobel Prize for his climate prediction abilities, Gore warned, "The North Polar ice cap is falling off a cliff," and "could be completely gone in summer" by 2013. But in May 2015, NASA reported that polar sea ice has been increasing, and is currently about 5% greater than the post-1979 average.

As an example of another precognitive gem, in his documentary, the doltish Gore proclaimed:

Humanity is sitting on a time bomb. If the vast majority of the world’s scientists are right, we have just ten years to avert a major catastrophe that could send our entire planet’s climate system into a tail-spin of epic destruction involving extreme weather, floods, droughts, epidemics and killer heat waves beyond anything we have ever experienced — a catastrophe of our own making.

With only months until the bomb is scheduled to go off, the vast majority of the world’s scientists are no doubt in denial about ever having belonged to Al's "vast majority" club. Gore has become a laughingstock, and his credibility as a climate forecaster has vanished in the eyes of most climate experts — except for the catastrophist elite, who, as the case for climate hysteria crumbles before their eyes, step up the hysteria.

To Obama, "the scientific consensus" that he cites in his delusional rantings extends to an endorsement of his policies. It does not. That there is scientific authority attached to his policies is the bilge of political dogma. Unfortunately, it is this bilge that Democrats grasp as scientific truth, angrily rejecting divergent ideas as anti-science — promulgated, of course, by fossil fuel company shills. Skeptics should be prosecuted under the RICO Act, and coal company CEOs should be jailed "for all of eternity," says Robert F Kennedy Jr. Such is the preferred catastrophist method of settling science.

The climate cult has hijacked climate science for political purposes. Its hysterical claims of future havoc are disingenuously designed to scare the world into believing that eco-socialism is earth's only hope for survival. But such claims are based on the projections of severely flawed climate models. Even the Intergovernmental Panel on Climate Change (IPCC) admits that “there remain significant errors in the model simulation of clouds." There is observational evidence that “water vapor feedback” used by models to amplify the warming effect of CO2 is offset by clouds. Moreover, a recent study of the earth's albedo (the fraction of incoming solar radiation reflected back into space) found that "climate models fail to reproduce the observed annual cycle in all components of the albedo with any realism" and that the inability to accurately quantify the reflection of sunlight by clouds is "one of the major obstacles in climate change predictions."

(Clouds and water vapor make up 95% of atmospheric greenhouse gases (GHG); CO2 comprises only 3.6%, of which only 0.117% is manmade. Catastrophists claim that this miniscule quantity will significantly raise the temperature of the entire planet.)

Even the Tea Party would agree that, through the greenhouse effect, some level of manmade warming is expected. But where is the evidence for significant warming? It's what the Global Climate Models (GCMs) tell us, catastrophist leaders insist. That is, we are being told that 0.117% of atmospheric GHGs drives our climate, and the information comes, not from scientifc observation, but from GCMs that are incapable of faithfully simulating 95% of atmospheric GHGs. We are also being told that, because we wonder about all this, we are knuckle-dragging morons who may need to go to jail.

There has been no measurable global temperature increase for 18 years of uninterrupted, anthropogenic belching of record quantities of CO2 into the atmosphere.

Climate cultists, in their reflexive attacks against those who question the authority of mystical climate models, demonstrate their own, and more fundamental, ignorance of science. As Thomas H. Huxley long ago noted, the true scientist "absolutely refuses to acknowledge authority . . . For him, skepticism is the highest of duties; blind faith the one unpardonable sin."

Yet blind faith is the price of admission to the cult. Skepticism must be checked at the door. In a study reported by the Huffington Post and Mother Jones, the Tea Party is ridiculed for its skepticism. "Tea Party Members Really, Really Don't Trust Scientists," scoffs the Mother Jones headline. Based on the study sample, Democrats are the most trusting, with 83% of them believing scientists on environmental issues. Independents are next, at 63%, followed by mainstream Republicans, at 60%. The Tea Party comes in last, at 28%.

Only 1% of Democrats distrust scientists, boasts the report, compared to 43% of the Tea Party crowd. That is, Democrats are incurious, credulous lemmings, and 43% of the Tea Party seem to have passed high school physics. This would explain why the Tea Party has a few questions for climate scientists (who, after more than 30 years and untold billions spent on climate research, can't make their case), and why almost all Democrats have no questions at all.

To be fair, what could climate change gurus be expected to know about climate science? They are lawyers. For all Mr. Obama knows, the Stefan-Boltzmann Law is a racist statute, surreptitiously enforced in the South. Harry Reid's total knowledge of global warming is that the Koch Brothers are behind it; they "own that ugly tar stuff in Canada." Harry probably thinks that a CO2 absorption band is an undergarment worn by Al Gore when being theatrically elevated by a pneumatic scissors lift, as he was in An Inconvenient Truth.

John Kerry's closest brush with science was the clean room "bunny suit" that he donned at the Kennedy Space Center (KSC) to promote his 2004 presidential campaign. It was an experiment that went awry: photographs of the event portrayed Kerry as a goofy ass; the Kerry campaign blamed NASA for leaking them to the media; NASA's General Council ordered the removal of all images of Kerry's KSC visit from all NASA websites. Some might consider the removal to be censorship, while others might view it as a scientific contribution — since the display of John Kerry in a bunny suit would have scared dozens of promising space camp kids away from pursuing a career in science.

Climate cultists, in their reflexive attacks against those who question the authority of mystical climate models, demonstrate their own ignorance of science.

Nowadays, as an international climate change star, Kerry imparts climate science wisdom to world leaders, urging them to exploit "the small window of time that we have left in order to be able to prevent the worst impacts of climate change from already happening." At home, when he is not pondering time-travel, Kerry advises the American public about "shoddy scientists" and "extreme ideologues" whom we should not allow "to compete with scientific fact" — fact such as the idea that climate change is the "most fearsome WMD," that Canadian tar sands are a "hydrogen bomb," and that "those who continue to make climate change a political fight put us all at risk," all notions plucked from the meditative, objective, non-ideological mind of John Kerry.

In reality, climate cult leaders are boisterous dilettantes who are distressingly ignorant of science, except for its shameless use as bunting for their political ambitions. Hillary Clinton, who has even less scientific credibility than Kerry, is suddenly, and furiously, following his "small window of time" advice — now that she is running for president. She cannot explain why she thinks that only manmade CO2 causes global warming, that only catastrophic warming will ensue, or that only solar panels and windmills can stop it, but to win the Democrat nomination, she promises to install a half-billion solar panels by 2027, enough, supposedly, to power every American home. Depending on the polls, the theatrics of Gore and Kerry would not be beneath her. With Obama blaming global warming for droughts, and Biden blaming it for forest fires, Clinton could start showing up at tornado sites, wearing a green pantsuit and a whirling, funnel-shaped hat, spinning in proportion to her feigned outrage.

In the Democrat debates, let's just hope that no one asks Mrs. Clinton about the tropical hotspot. She might reply, after a grating cackle, that it's a nightclub on a Caribbean island where Bill goes to sate his albedo. The enraged catastrophist elite would attack the moderator, accusing him of being a denier, a climate-deceiver. "Go to jail, oil company shill," would cry the big government shills. On the other hand, at a Democrat debate involving climate science, only 1% of the audience would doubt her answer. Where credulity reigns, dilettantes have credibility.




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Take This Climate Deal — Please!

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On December 12, 2015, climateers the world over celebrated as a new climate change accord, known as "the Paris Agreement," was approved. It was the culmination of four grueling years of behind-the-scenes negotiations designed to save the planet from catastrophic anthropogenic global warming (CAGW). At the stroke of the gavel marking its acceptance, the more than 40,000 climate change diplomats from 195 countries erupted into cheers, ovations, high-fives, champagne toasts, tearful embraces, and, of course, rampant backpatting.

“This is truly a historic moment,” proclaimed United Nations Secretary General Ban Ki-moon — the first "truly universal agreement on climate change." According to the New York Times, President Obama "strode triumphantly into the Cabinet Room of the White House to declare victory in his quest" for the ambitious deal. An ebullient John Kerry tweeted: "#COP21 agreement is the strongest, most ambitious global climate agreement ever negotiated." It is "the best chance to save the one planet we got," intoned Mr. Obama, perhaps too choked up for grammar. Or perhaps he noticed the Eiffel Tower illuminating the phrase "no Plan B," and the shuddering possibility that the deal — his vaunted legacy — could fall apart.

It is a progressive's dream: a profligate, utopian scheme that will fail, even if it achieves its goal.

Scaremongering climateers tell us that, unabated (i.e., absent the Paris climate change accord), mean global temperature will rise 3.7 °C by 2100, rendering earth uninhabitable. With the accord, the nations of the world pledge to reduce their greenhouse gas (GHG) emissions to levels intended to limit the rise to no more than 2.0 °C. But the decline in GHG emissions resulting from the Paris agreement is predicted to reduce the temperature rise by a vanishingly small 0.2 °C. That is, if the pledges of all 195 participating nations are carried out to a tee, including the expenditure of trillions of dollars on green technology, the mean global temperature will rise 3.5 °C by 2100, rendering earth uninhabitable.

While cameras inside the convention hall captured the joyous tears of climate diplomats as they celebrated fabricated success, they missed the angry tears of climate activists outside, as they rebuked the Paris agreement as an irresponsible, fraudulent charade, too diluted to be of any meaningful value. The soft-spoken Dr James Hansen, father of CAGW, referred to the deal as "a fake," "a fraud," "just worthless," and "just bullshit." But it will establish a colossal, intrusive UN climate bureaucracy that will haunt the world forever. It is a progressive's dream: a profligate, utopian scheme that will fail, even if it achieves its goal. Measured on a scale of maudlin self-congratulation (the auto-aggrandizometer), this is progressivism's finest achievement in central planning.

Although the agreement is not legally binding, climate change luminaries such as Obama, Kerry, and Ban Ki-moon assure us that the emission reduction goals will be met. Signatory nations must fulfill their pledge or face international ridicule through the agreement's clever "name-and-shame" mechanism. There is nothing like peer pressure to bring totalitarian police states such as China into compliance.

Similar pressure will be applied to support the Green Climate Fund — a coffer to be filled annually with $100 billion from rich nations for the purpose of cajoling poor nations into remaining poor.

Without the fund, none of the 130 nations of the developing world would have signed the agreement. With the fund — according to the delusions of progressives from the developed world — dictators, bureaucrats, and crony industrialists from impoverished countries will purchase exorbitantly expensive solar panels and windmills instead of extremely cheap coal, oil, and gas, and they will convince their citizenry that chronic disease and poverty can wait while 0.2 °C is shaved off the 2100 global temperature. (To the 1.3 billion people who have never experienced electricity, what's the rush?)

There is nothing like peer pressure to bring totalitarian police states such as China into compliance.

To ensure compliance, the Paris accord mandates that all nations shall report on their emissions reduction progress every five years — “a serious form of enforcement and compliance,” insists Mr. Kerry. Patting himself on the back, Kerry said that the voluntary pact (a 31-page cornucopia of vague commitment, toothless aspiration, and astounding deceit) would "prevent the worst most devastating consequences of climate change from ever happening." Who knows? With CAGW thought to be so solved, progressives may use the Paris agreement as a model to tackle other vexing problems, such as social injustice or income inequality. At this very moment, liberal thinktanks could be pondering the idea of bribing African or South Asian countries into pledging lower birth rates; or shaming Islamic terrorist organizations when their beheading reduction pledges are not met.

Returning to reality, the pledges of the landmark Paris accord (an agreement that will not work even if its pledges are met) will not be met — not even close. Rich countries will try; they will achieve some token, largely symbolic, degree of success. Poor countries won't bother; they have vastly more pressing challenges. No matter the size of the Green Climate Fund, the developing world will not be persuaded to replace cheap, reliable fossil fuels with expensive, unproven solar and wind technology — technologies that, after more than 30 years of development, still rely on subsidization for survival. These are also technologies that have become staggeringly more expensive after only five years of the enormous, unsubsidized strides in US fracking technology that have produced staggering declines in oil and gas prices. Oil prices, for example, which have been above $100 per barrel since 2011, have plummeted to below $40.

Media accounts credit Obama for the agreement's acceptance. They say that in pledging the US to draconian emission cuts, he leveraged the rest of the world to follow. But the US is in no position to make such a commitment, it is not legally bound to do so, and there is neither congressional nor popular support for it. Warned Senate Majority Leader Mitch McConnell, “Before his international partners pop the champagne, they should remember that this is an unattainable deal based on a domestic energy plan that is likely illegal, that half the states have sued to halt, and that Congress has already voted to reject.”

This lack of enthusiasm is produced, in no small part, by the economic stagnation that has plagued the US economy from the day Obama took office. With unprecedented, and growing, national debt, declining net worth, and labor participation at its lowest since the Carter years, where will the money come from?

Dictators, bureaucrats, and crony industrialists from impoverished countries will convince their citizenry that chronic disease and poverty can wait while 0.2 °C is shaved off the 2100 global temperature.

Ironically, the most promising source of money is the energy bonanza that fracking has created — the very source of prosperity that progressives seek to ban, in their efforts to decarbonize the world's economies. Unleashing US energy production could swiftly stimulate the US economy, lift incomes and wages, expand the middle class, create new jobs, generate enormous tax revenues, and eradicate the debt. But with the 2016 election drawing near, Democrat candidate Hillary Clinton pledges to outdo Obama. She plans to build 500 million solar panels and promises that 33% of all US electricity will be generated from wind and solar by 2027. Not to be outpandered by Mrs. Clinton, rival candidate Bernie Sanders promises 80% by 2050; and Martin O’Malley promises 100%.

It is highly unlikely, however, that a beleaguered American public will allow a Democrat president to shutter its energy goldmine, thereby continuing economic stagnation. As to the prospect of a Republican president, McConnell says that Obama should not make "promises he can’t keep." Nor should he "take credit for an ‘agreement’ that is subject to being shredded in 13 months.”

The Paris deal has no chance of thwarting CAGW — if planet salvation was even an important consideration. For those who are astounded by Mr. Obama's claim of victory, or who are wondering how so much credit could be awarded for so little accomplished, his triumph has nothing to do with saving the planet. It is a purely political victory — one for which he does deserve credit, and the highest of praise from progressivism, considering the coming creation of the UN climate change behemoth.

It is this deceitful absurdity that has progressives doing cartwheels and patting themselves on the back. The agreement itself is irrelevant, serving only to set the stage for future global central planning. The four years taken to write it featured little more than a backroom search for language that would read like a treaty but would be watered down and rendered toothless enough to get 195 nations to sign it — of which, 130 had to be bribed with the Green Climate Fund. It is not legally binding; the emissions reduction pledges are voluntary and aspirational, enforced only by the palsied hand of a “name-and-shame” system of global peer pressure. As to contributions to the slush fund, rich countries are "strongly urged" to fulfill their commitments.

The watering down process persisted to the end, holding up the vote to adopt the agreement for two final hours. Fearing that the Obama administration might be required to seek Senate approval for a binding treaty, US diplomats insisted that the word "shall" be changed to "should" in a clause on meeting emissions targets. They might as well have found a place for "pretty please" or "just bullshit."




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Impossible Dreams

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Climate change experts from more than 190 countries are said to be on the verge of forging a binding international accord that will reduce humanity's CO2 emissions to a level sufficient to stave off future global warming. The details of the agreement will be negotiated this December in Paris, France at the 2015 United Nations Framework Convention on Climate Change (UNFCCC), aka COP-21, short for"the twenty-first session of the Conference of the Parties” (COP) — to distinguish the futility of the Paris summit from thatof the previous 20 such conclaves, the first of which was held at the Rio Earth Summit, by the climate shamans of 1992. Who knows? The 21st time might be the charm.

President Obama thinks so, and is counting on it. According to Politico, Mr. Obama has been working furiously behind the scenes (and the backs of Republican climate deniers in Congress) to "seal his environmental legacy" by creating "the broadest, farthest-reaching deal in history, reworking environmental regulations for governments and corporations around the world and creating a framework for global green policy for decades."

As with the Iran nuclear weapons deal, Obama's objective is the agreement, not what the agreement will accomplish. His goal is to obtain any "broadest, farthest-reaching deal in history" that enshrines his name at the top of the signatory list. The goal of the Paris agreement, which is to reduceglobal greenhouse gas (GHG) emissions to a level that prevents the average global temperature from increasing more than 2°C by 2100, is an irrelevant, environmentalist dream, impossible to achieve — even if Obama possessed congressional endorsement or public support, both of which he does not.

China and India (who, together, are responsible for 30% of the world's CO2 emissions) only pledged to reduce their emissions. A pledge is not a commitment.

Obama's Clean Power Plan (CPP) and his cancellation of the Keystone XL pipeline were not designed to curb global temperature increase. They were merely symbolic gestures contrived to invoke similar gestures from countries such as China and India. The CPP (15 new EPA regulations, estimated to cost Americans $230 billion) will have essentially no affect on global temperature. The Iran agreement will: from four to five million barrels per day of new Iranian oil unleashed into the atmosphere — a glib concession just to secure an agreement, any agreement. Apparently, that was not "the moment" that Obama spoke of in his 2008 nomination speech, "when the rise of the oceans began to slow and our planet began to heal."

To hear Obama tell it, securing an agreement in Paris will be a simple matter of establishing an emission reduction commitment for each nation, a process that will now be less contentious because of his encouragement and leadership. Last month, after a five-day climate session was held in Bonn to draft the blueprint of the Paris negotiations, Obama took credit for persuading India and China to reduce their emissions. He hopes to use their pledges "to leverage the entire world for the conference." Once the Paris deal is reached, the nations of the world will begin the task of fulfilling their commitments by replacing fossil fuels (coal, oil, and natural gas) with renewable energy (solar and wind) — right after Obama proclaims victory for the planet, and, of course, for himself.

Of the climate negotiations, Mr. Obama might tritely say that the devil is in the details. But the real devil is in what he has not mentioned in his crusade to promote the deal. China and India (who, together, are responsible for 30% of the world's CO2 emissions) only pledged to reduce their emissions. A pledge is not a commitment, and no mention was made of the revolt at the Bonn meeting by 130 developing nations, who rejected a preliminary draft because it omitted their most important concern: climate justice — aka reparations for damages done to poor countries by rich countries, whose wealth has been obtained through the rampant injection of CO2 into the atmosphere since the beginning of the Industrial Revolution. That protest, which has now expanded the negotiations into the realm of extortion (of money and technology from rich countries), was led by China and India. Obama may simply have "leveraged the entire [third] world" to line its pockets with climate justice money from the industrialized world.

Developing countries will not install the solar and wind farms that Obama incessantly praises as earth's only salvation. They can't afford to do so — not if they want to raise their burgeoning, destitute populations from what is by Western standards abject poverty. The energy they need will be generated from cheap, abundant fossil fuels. As he blatantly flaunts a storybook promise of renewable energy, Obama is obstinately silent about its harsh reality. Despite technological strides, renewable energy remains prohibitively expensive and woefully inadequate for generating the quantity of clean energy required to stave off global warming. After decades of development and untold billions spent (more than $150 billion by the Obama administration alone), solar and wind power combined generate less than 4.5% of US electricity, and both industries would immediately collapse without taxpayer-funded subsidies.

Developing countries will not install the solar and wind farms that Obama incessantly praises as earth's only salvation. They can't afford to do so.

Nor has he mentioned the global carbon budget, which setsan upper bound on the quantity of CO2 that humanity can emit without pushing the average global temperature over the 2°C threshold before 2100. According to Oren Cass of the Manhattan Institute, under optimistic assumptions regarding energy efficiency and the adoption of renewable energy, total emissions by the end of the century are projected to be almost five times greater than the quantity budgeted to save the planet. What is the point of committing the US to costly emission reductions of 26% to 28% by 2025, when the global carbonbudget will be consumed by the early 2030s?

No matter what the US does by 2025 to reduce its emissions, by 2030 it will already be too late to “save the planet” — a tidbit of climate change knowledge that Obama is reluctant to divulge. Indeed, no matter what wealthy nations collectively do is futile. Observes Cass,

If developed-world CO2 emissions ceased tomorrow, the developing world would still need to instantly slash its emissions by more than half — and hold at that level indefinitely — to remain within the carbon budget until 2100.

Any success that Obama has in Paris, therefore, will depend on his ability to "leverage" developing nations into meaningful emissions reductions. His chances are slim, if he even cares to try. As Cass notes:

In short, no evidence — distant or more recent — indicates any willingness by developing nations to make even nonbinding pledges to slow the growth of CO2 emissions, let alone accept the dramatic reductions required to substantially alter the trajectory of atmospheric concentrations.

To climate catastrophists such as Mr. Obama, the solution to this conundrum is simple, self-evident, and not to be discussed in public: an enormous transfer of wealth from rich nations to poor nations, where the money will be used (a) to buy solar panels and windmills, (b) to create decent jobs and lives of dignity, and (c) to defray the cost of adapting to the coming storms, droughts, floods, famines, terrorism, rape, and innumerable other products of the Industrial Revolution.

The idea is not new, and has captured the effusive support of Hillary Clinton, Pope Francis, and other climate change experts. In his encyclical on climate change, the Pope asserted that wealthy nations owe an “ecological debt” to poor nations and argued for “mechanisms and subsidies which allow developing countries access to technology transfer, technical assistance and financial resources.” As Secretary of State, Hillary Clinton proposed a Green Climate Fund that would provide at least $100 billion annually to developing nations. Last year, at COP-20 in Lima, Peru, Alex Rafalowicz of Friends of the Earth (FOE) demanded that rich countries pay poor countries more than $1 trillion annually.

Obama can be expected to agree. After all, there's not much distance between social justice and climate justice. But he has not indicated what concessions he would be willing to make to the clamoring bloc of 130 developing countries (representing more than 85% of the world's population) who insist that climate reparations must be the centerpiece of the Paris negotiations.

No matter what the US does by 2025 to reduce its emissions, by 2030 it will already be too late to “save the planet.”

FOE has developed a method of allocating the global carbon budget in a manner that it believes should be adopted by climate treaty negotiators. Known as Climate Fair Shares, it calculates the emission reduction commitments and reparation amounts that must be allocated to each nation to preserve earth through 2100. Beyond the appeal to planet salvation, it no doubt has political appeal: what nation could object to paying its fair share?

To illustrate how the negotiations would work out under the FOE scheme, China would be allowed to increase its GHG emissions from its current level of 12.1 billion tons to 16.2 billion tons by 2030. It would also receive $604 billion annually in climate justice payments from rich countries. In contrast, the US would be required to reduce its emissions from its current level of 6.7 billion tons to 1.8 billion tons by 2030 — a reduction of 73%, even though Obama has thus far commited the US to only a 26% to 28% reduction by 2025.

After all, there's not much distance between social justice and climate justice.

The US cost to achieve a 73% reduction would be many trillions of dollars, and require that all coal- and gas-fired power plants be replaced with extravagant solar and wind farms. On top of this immense cost are climate justice payments, $810 billion per year by 2030. According to Climate Fair Shares, these payments, compliments of US taxpayers, will "create 24,291,600 new decent jobs" and "deliver renewable energy for lives of dignity to 810 million people" — in other countries.

The developing world expects the Paris negotiations to produce an agreement along the lines of the Climate Fair Shares scheme. Mr. Obama has not addressed that possibility, nor has he indicated where the money will come from if it materializes. The US, which is in much better shape economically than most countries, is more than $18 trillion in debt, not to mention the crushing debt of Medicare and Social Security, enormous programs that will be insolvent by the early 2030s — right around the time when humanity blows its entire carbon budget and irreversible, hellish climate catastrophe begins, 70 years ahead of schedule.

These are some of the obstacles that face Mr. Obama in his quest for prominence in the annals of climate history. He has dismissed most of them, or chosen not to bother the American public with their stark realities. Then there is the warming pause, now in its 18th year, which threatens the anthropogenic global warming hypothesis motivating the Paris charade, and which Obama denies (a clumsy irony, since “denier” is his principal argument against any and all global warming skepticism). To secure his environmental legacy and fulfill his promise to heal the planet, the desperate Obama must find common ground between rich and poor countries. But in the Venn diagram of possible treaty outcomes, the intersection of planet salvation and climate justice is the empty set. The negotiators from developed nations and the negotiators from developing nations have only one thing in common: both parties seek a goal that they know, and have known all along, is impossible to achieve.




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The Karma of Flaming Cronyism

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In 2009, Vice President Joe Biden announced a $539 million Department of Energy (DoE) loan awarded by the federal government to Fisker Automotive. Fisker, a newly formed crony capitalist firm, would use the money (together with private funding from the venture capital firm Kleiner Perkins Caufield & Byers, whose partners include green crony capitalist and former Vice President Al Gore) to produce hybrid electric vehicles in Biden's home state of Delaware. The investment would create 2,500 American jobs, by 2014 produce an annual 75,000–100,000 "highly efficient vehicles," and by 2016 "save hundreds of millions gallons of gasoline and offset millions of tons of carbon pollution."

With gasoline prices below $2 per gallon at the time, free enterprise could not be counted on to produce planet-saving electric vehicles (EVs) and establish the US as the world leader in EV technology. Capitalism can only be counted on to produce what consumers demand. Then-DoE Secretary Steven Chu believed that the demand for EVs would not materialize until gasoline prices reached nine or ten dollars per gallon. In the interim, only crony capitalism would do.

The Fisker loan was considered a vital, timely investment for America: in 2009, thanks to years of US outsourcing of jobs and manufacturing expertise that propped up its emerging crony capitalist economy, China had become the world’s leader in green technology spending. “We are putting Americans back to work,” exclaimed Chu, “and reigniting a new Industrial Revolution that is paramount for the economic success of this country.” The loan was "seed money," heralded Biden, "that would return back to the American consumer in billions and billions and billions of dollars in good new jobs."

Fisker Automotive was founded by crony capitalist Henrik Fisker, in fall 2007, only to be sued by Tesla Motors, in spring 2008, for stealing design concepts and trade secrets that Fisker allegedly used to develop the Karma — a heavily subsidized vehicle that would compete with the heavily subsidized Tesla Roadster.

The true brilliance of Elon Musk, who is regarded by many as a genius, lies in his ability to hornswoggle governments and investors.

It was also in 2008 when fellow, and far superior, crony capitalist Elon Musk became CEO of Tesla. Barely one year later, Tesla received a $465 million DoE loan. Mr. Musk knows no other form of capitalism. According to the LA Times, he "has built a multibillion-dollar fortune running companies that make electric cars [Tesla], sell solar panels [SolarCity] and launch rockets into space [SpaceX]," with the help of a staggering $4.9 billion in taxpayer-funded government subsidies. Apparently, Musk will have nothing to do with any enterprise from which he cannot obtain "government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It [the $4.9 billion] also includes tax credits and rebates to buyers of solar panels and electric cars."

The true brilliance of Musk, who is regarded by many as a genius ("our generation's Thomas Edison"), lies in his ability to hornswoggle governments and investors. While ordinary crony capitalists are content with bellying up to the government trough for tax breaks and loans to help build their businesses, Musk has the government build businesses for him. He's "so adept at landing incentives that states now compete to give him money."

New York State, for example, is building a $750 million manufacturing plant for SolarCity. With property tax gimmicks, investment tax credits, and cash grants, the entire deal constitutes a $2.5 billion windfall for Musk — courtesy of the taxpayers. Without their coerced support, crony SolarCity, indeed, the entire solar industry, could not survive. Yet in June, New York crony capitalists prevailed over the use of drastically cheaper energy, derived from free market fracking, by officially banning the technology (and denying billions and billions and billions of dollars in lower utility costs for New York residents), ostensibly because of safety concerns: natural gas might leak from wells drilled in the Marcellus Shale bonanza that the state sits on top of, causing flames to shoot out of water faucets.

Inspired by Musk's promises to lead the world into a future without gasoline (he pledged to make millions of electric vehicles by 2025), investors have bid up Tesla stock from $16 per share, when it was first publicly offered in 2010, to $260 per share today. With this runup, Tesla was able to raise more than enough private capital to repay its DoE loan — an event that the DoE declared as "living proof" that "Tesla and other U.S. manufacturers are in a strong position to compete for this growing global market.” Only in the world of green cronyism is debt repayment celebrated as success.

At least the Model S doesn't burst into flames, as did Fisker's Karma, which had a few flaws.

Tesla, which sold 31,655 vehicles in 2014, is valued at $33.8 billion — more than half the value of Ford Motor Company, which sold 6.3 million vehicles during that year. And Ford made a profit, unlike Tesla, which has failed to do so since its inception in 2003. In 2014, Ford posted a profit of $6.3 billion; Tesla lost $294 million. Incredibly, even with its government side business of selling zero-emission-vehicle (ZEV) credits to its competitors, from which it made $217 million, Tesla still lost $294 million. But Musk promises profitability by 2020.

So confident is he of continued government largesse that he scoffs at competitors such as Toyota, which has developed a hydrogen fuel cell vehicle, the Mirai, that sells for $10,000 less than Tesla's $71,000 Model S. Musk's response: “Fuel cells should be renamed ‘fool cells’” — demonstrating a wit as sharp as his automotive genius.

Nevertheless, no one has done more than Mr. Musk to advance EV development in the United States, and, by all accounts, the Model S is a flawless vehicle that has exceeded the expectations of elite Silicon Valley and Hollywood car buyers. It doesn't burst into flames, as did Fisker's Karma, which had a few flaws.

The Karma — which was initially projected to ship in 2009 and to sell over 15,000 units built by 2500 American workers at a refurbished GM plant in Delaware — did not come to market until 2011. But, according to an ABC News investigation, by October of the year only 40 Karmas were produced, all of them assembled by 500 Finnish workers at a factory in rural Finland.

There was not a single US firm with the manufacturing expertise to produce the Karma. "We're not in the business of failing; we're in the business of winning," exclaimed Mr. Fisker. "That's why we went to Finland."

Less than a year later, Fisker Automotive failed — ceasing production in July 2012 and declaring bankruptcy in November 2013. Of the 2,450 Karmas that were eventually built, 1,600 were purchased by consumers, and 2,000 were recalled because of lithium-ion battery-related fire risks (including the possibility that, while parked and disconnected from a charging station, a Karma could mysteriously explode into flames, and burn to unrecognizable rubble).

Numerous reasons have been cited for Fisker's collapse: unrealistic sales goals, compressed launch timeline, insufficient funding, flaming rubble, etc. In the end, however, most subsidized green-technology companies simply find ways to lose money. They can't make a profit, even with government support. The most famous example is Solyndra (the recipient of a $535 million DoE loan), which went bankrupt selling solar panels for half of what it cost to make them. Then there is A123 Systems, Fisker's battery supplier and the recipient of a $249 million DoE grant. A123 sold batteries that cost the company $1.57 for each dollar of sales — leading to its bankruptcy in October 2012, and, in no small part, hastening Fisker's.

A123 might have charged Fisker twice as much, thereby returning a per unit profit of 43%. Why not? Couldn't Fisker absorb the cost increase? It was getting government money too, not to mention the $7,500 tax refund awarded to EV buyers. And, with the price of gasoline heading towards $4 a gallon, surely the demand for EVs was growing. Besides, anyone who could afford the $103,000 Karma might be willing to pay a little extra. Except that, on average, Fisker spent $660,000 for each vehicle produced. To make even a meager profit of, say 10%, Fisker would have had to charge $733,000 — a price that might have scared off early Karma buyers such as pop stars Justin Bieber and Al Gore.

Most subsidized green-technology companies simply find ways to lose money. They can't make a profit, even with government support.

The purpose of the DoE grant to A123 was to help America compete with China. "President Obama was determined not to let China run away with green energy technologies," said a Forbes article covering the bankruptcy auction, where A123 was unloaded for, one could say, a fire sale price. Guess who won the bidding (hint: it wasn't an American company). It was the Wanxiang Group, a Chinese conglomerate run by Lu Guanqiu, an auto-parts magnate with deep ties to the Chinese Communist Party.

Forbes characterized the business acumen of our green cronies as a triple irony:

The U.S. borrowed money from China to subsidize a battery company to compete with state-subsidized Chinese battery companies. The American company gets bought out by a Chinese company for about the same amount of money that the U.S. government gave it. The U.S. still has to pay the money back to China. The Chinese company buying the American company makes a lot of money by providing auto parts for the cars that Americans drive.

Perhaps of greater significance is the national security implication. The sale of A123 included US technology developed for advanced ultra-light lithium-ion phosphate batteries — technology that extends beyond powering EVs, to important applications for electricity generation and distribution, not to mention sensitive military applications. As a presidential candidate in 2008, Hillary Clinton vehemently opposed such sales, asserting the need for "ensuring that technologies . . . critical to U.S. national security are not sold off and outsourced to foreign governments." Yet Clinton, who was secretary of state at the time, did nothing to interfere with the sale.

The Fisker bankruptcy snuffed out the DoE plan of "reigniting a new Industrial Revolution," as well as Joe Biden's hopes of "billions and billions and billions of dollars" for American consumers. It was followed by a DoE announcement that, instead, American taxpayers would get a bill for $139 million, the amount that the government lost in the Fisker debacle. Fisker was sold, in another fire sale, not only to a Chinese company but to the same one that bought A123.

Today, just one year afterward, Mrs. Clinton is running for president and Mr. Biden is thinking about throwing his hat into the race. Mr. Guanqiu is planning to resurrect the Karma with his new company, formed from the old Fisker and A123, businesses he picked up for a song: a measly $406 million. The amount is much less than the manufacturing assets and intellectual property he purchased. They represent a value that the DoE must have believed was significantly greater than the $778 million it invested in these companies. But that's life in the risky world of green cronyism: sometimes seed money leads to abysmal failure, especially when it is other people's seed money.

Mr. Musk is now getting into the battery business, building the world’s largest battery factory, a gigafactory, he says. That is, he bamboozled the state of Nevada into a $1.3 billion incentive package to build it. What crony could turn down a deal projected to generate $100 billion? With capitalist fracking driving gasoline prices down to less than $2 a gal (when $9 gasoline is needed for EV's to be competitive), any capitalist sees folly. But crony capitalists see only the delusion of billions and billions and billions of dollars — that, and taxpayer-funded subsidies for fellow cronies.

That's life in the risky world of green cronyism: sometimes seed money leads to abysmal failure, especially when it is other people's seed money.

And Mr. Fisker is planning to start another automotive venture. He is "intrigued with Millennials, their craving for new kinds of transportation and their fascination with all things digital." It would behoove him to rekindle his relationship with Al Gore, this time for marketing purposes. Who is better than Mr. Climate Change at pitching flimflam to Millennials? Whatever Mr. Fisker has in mind, he remains optimistic, believing that "the timing is right for something completely new."

But none of this is new. Under our current political system, the timing is always right for crony capitalism. And, unlike taxpayers, crony capitalists will profit from another completely new green auto company, even if it goes down in flames.

#39;s Thomas Edison




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