High Gas Prices by Design

Printerby Rich Stoisits, KWTP Director

Obama_takes_creditThe proposed Keystone XL pipeline, would carry over 800,000 barrels a day of crude oil from Alberta to the Gulf coast refineries. This would reduce U.S. dependence on crude oil from the Mid-East and create jobs in the U.S. and Canada. The Obama administration’s blocking of the Keystone XL Pipeline is just the latest attack in the anti-fossil fuel war being waged by this administration. The fact that this pipeline would be an economic boon to the economy and that labor, a major constituency of this administration, is in favor of XL cannot trump this administration’s strident anti-fossil fuel ideology.

No American should be shocked by the sacrificing of the XL Pipeline on the altar of the new age religion of environmentalism by the Obama Administration. Obama clearly told us it would be necessary for electricity prices to increase dramatically. Energy secretary Chu went on public record after his appointment stating that the U.S. must find a way to get gasoline prices up to the cost of gasoline in Europe. At the time he made that statement, gasoline in the U.S. was approximately $2 per gallon and approximately $8 per gallon in Europe. Interior secretary Ken Salazar when he was a senator from Colorado went on public record stating there should be no offshore drilling in the U.S. even if gasoline is $10 per gallon.

This anti-fossil fuel policy is driven by the moral imperative of saving the planet from becoming a scorched barren wasteland due to global warming caused by the burning of fossil fuels. The environmental scientists at East Anglia University in the UK have produced research which supports the link between carbon dioxide and global warming. The Inter-governmental Panel on Climate Change (IPCC) policy has relied heavily on this research to justify their position that the nations of the world must implement anti-fossil fuel policies in order to save the planet from environmental disaster. Not only were these scientists exposed for manipulating data to support their hypothesis and suppressing publication of evidence contrary to their opinion; they have now reversed their position on global warming.

The UK Daily Mail reported on Jan 29th, that the supposed ‘consensus’ on man-made global warming is facing an inconvenient challenge after the release of new temperature data showing the planet has not warmed for the past 15 years. The figures suggest that we could even be heading for a mini ice age to rival the 70-year temperature drop that saw frost fairs held on the Thames in the 17th Century. This conclusion is based on readings from more than 30,000 measuring stations. The data was issued the week of Jan 23rd without fanfare by the Met Office and the University of East Anglia Climatic Research Unit. It confirms that the rising trend in world temperatures ended in 1997. Meanwhile, leading climate scientists told The Daily Mail that, after emitting unusually high levels of energy throughout the 20th Century, the sun is now heading towards a ‘grand minimum’ in its output, threatening cold summers, bitter winters and a shortening of the season available for growing food.

How much has this adherence to the false religion of man-made global warming due to increases in carbon dioxide from burning fossil fuels cost the American People? The answer is an astronomical amount. Thanks to the National Environmental Policy Act (NEPA), EPA has the power to intercede and effectively veto any project funded or permitted by the federal government. And that’s just what the agency did to Keystone XL (along with the 20,000 immediate jobs and millions in economic activity it would have generated). Even though the State Department spent more than three years producing two separate environmental impact studies clearing the project of any significant risks, EPA objected to the conclusions both times. This is not a unique occurrence. A study by the U.S. Chamber of Commerce found that NEPA interfered with 351 privately funded infrastructure projects in 2011 alone. The delay or cancellation of those projects cost $577 billion in investment and killed 1.9 million jobs.

The Obama administration insists that U.S. oil and gas resources are insufficient to make America independent of Mid-East oil. The truth of the matter is that the federal government will not grant leases to oil and gas companies to explore and produce from much of America’s prime oil and gas acreage; offshore California, Eastern Gulf of Mexico, offshore Alaska, Arctic National Wildlife Reserve, the outer continental shelf of the West and East coasts.

In addition to abundant conventional oil and gas, the U.S. has abundant unconventional oil and gas. Shale gas was considered uneconomic; however, with advances in fracture stimulation and horizontal drilling, the American Petroleum Institute’s (API) estimate of U.S. gas reserves in the past decade have increased from approximately 20 to more than a 100 year supply. This increase in supply has dramatically reduced natural gas prices. Back in the early part of the 2000’s spot market natural gas prices in California during the winter hit $15 per MBTU. Today natural gas in the U.S. ranges between $2-$3 per MBTU. Fracture stimulation of wells began in the 1940’s. Advances in fracturing technology combined with advances in horizontal drilling technology have unlocked huge resources here in the U.S. Now that this technology has been highly successful and driven down natural gas prices, environmentalists want to stop fracture stimulation through regulation, even though this is a technology that has been used for more than half a century.

Fracture stimulation combined with horizontal drilling is also being applied to oil bearing shale. Currently one of the most economically attractive shale oil plays in the world is the Eagle-Ford shale in Texas. This year approximately 3000 wells will be drilled in the Eagle-Ford Shale trend. By 2020 production from the Eagle-Ford is forecast to be approximately 3 million barrels per day. According to a Rand Corporation Report, oil bearing shale in the Green River Canyon Basin (NW Colorado, SW Wyoming, E Utah) contains estimated recoverable reserves of 800 billion barrels of oil, which is more than three times the oil reserves of Saudi Arabia. The federal government controls this land and isn’t permitting oil companies to develop this huge resource. Shale oil and gas development which has taken place is on land which is not controlled by the federal government.

The bottom line is the Obama Administration’s energy policy has caused great damage to the U.S. economy in order to prevent an environmental catastrophe which is non-existent. In ancient times the high priests of discredited religions were executed. The discredited high priests of the new age religion of environmentalism should be relieved to know that in the Constitutional Republic of the United States of America, the citizens simply vote them out of office.