The Moral Case for Fossil Fuels by Alex Epstein: A Review

December 30, 2014


by Avi Davis

At a parent-teacher conference for one of my children several years ago, I asked my son’s science teacher what he taught our child about global warming.  The teacher, who was a deeply respected school veteran, responded that his instruction was that global warming was real and that it was caused by man’s over reliance on fossil fuels.

I wasn’t startled by the answer.  I had come to expect it.   But I did raise an objection and asked why he didn’t offer an alternative view point.  He look at me a little baffled, murmuring that he didn’t realize there was an alternative viewpoint. The other parents in the room shifted nervously in their seats and one even whispered to me to drop it.

After the conference, I approached the teacher to let him know that there is a whole range of countervailing science which suggests that the question of anthropogenic global warming is not at all settled and that the use of ‘ dirty’ fossil fuels might actually be good for our environment and for our world in general.  He looked at me incredulously and then shook his head, thought for a moment and then muttered:

” Well, you know, I just feel bad for the polar bears.”

That answer almost defines the deep divide between contemporary conservationists and modern environmentalists over the standard of value we should employ when deciding the best use of the Earth’s resources.  For the conservationist, the standard of value is how human happiness can be enhanced though the employment of the earth’s resources.  For the environmentalist the primary concern is the environment’s own needs and its future; For the conservationist, our environment serves human needs. For the environmentalist, human beings serve the Earth.

Alex Epstein is used to entertaining debates of this nature.  As the founder of a for profit think-tank The Center for Industrial Progress in Southern California, Mr. Epstein has invested a great deal of his intellectual energy into challenging those who seem so fixated on the greatest of perceived modern evils- fossil fuels.  He has sought to address the claim of environmentalists who argue that human beings are destroying the earth and ruining any prospects for our future with their addiction to oil, coal  and natural gas.

The only problem with this scenario is that fossil fuels are not ruining anything at all.  Quite the opposite.  Over the course of the past 300 years they have actually enabled the greatest expansion of  prosperity the world has  known and the broadest growth of free enterprise and individual liberty ever experienced by mankind.

The case is made forcefully in Epstein’s The Moral Case of Fossil Fuels – possibly the most lucid and cogently argued work on the subject you will ever need to read.  For the author makes the argument, through the employment of graphs, comparative studies and statistical analyses that a cheap, abundant, reliable and scalable energy source has always been the key to the growth of human prosperity as well as the spread of human liberty over the past half century.  That energy source has been oil and natural gas whose benefits have redounded, not necessarily to the rich and powerful in human civilization but to ordinary people who could not dream of  owning or using such things as a motor vehicle, ready to wear clothes, fast, efficient forms of public transportation, central heating or air conditioning even 100 years ago.  All of these advances were made possible by the extraction of a fossil fuel that have appeared so abundant that it is as if  it has been secretly left it in the ground for us by a benevolent donor, only awaiting our, discovery, extraction and use.  “Oil,” argues Mr. Epstein, “is the fuel of freedom, – the fuel that liberated Americans to go where they want. Economically oil is the fuel  of trade. Our entire standard of living depends of specialization – on people doing what they do best – wherever they are – and then being able to cheaply move  those products to those who most need them.”

Fossil fuels such as oil have also helped solve world hunger.   When Paul Ehrlich published The Population Bomb in 1968, he predicted that the world would exhaust its food resources by the year 1980, the world population was 3. 6 billion.  But over the past 45 years, not only has world’s population grown to more than 7 billion but the ability of nations to feed these burgeoning populations has taken an exponential leap with world hunger reduced from 22% of the world’s population in 1968 to only 9% today. This has been made possible by oil powered mechanization which has increased the amount of farmland that can  be cultivated per worker and the much wider availability of efficient transportation making it possible to reach and export to markets from formerly remote area   The great achievement of plant geneticists such as Norman Bourlang, what is widely known as the Green Revolution,  were made possible only because high powered machines have replaced physical labor – machines that run on fossil fuels.

The central complaint of the environmentalist movement is that all of this development has come at a tragic cost – and that is the pollution of our planet.  That is to say that fossil fuels are ‘dirty’ and their CO2 emissions now threaten our future.  No one doubts that the burning of fossil fuels emit a residue of CO2 which can then escape into the atmosphere. But have CO2 concentrations accumulated to the point where they have been the singular contributor to catastrophic climate change that now threatens the Earth’s future, to the point where, according to those involved in the production of the recent film Interstellar, some day in the not too distant future, human beings might actually need to abandon the planet?

The question of course revolves around the impact of the well known Greenhouse Effect – which states that the introduction of more CO2 into the atmosphere can make the molecules inthe atmosphere more heat absorbent,  which they will then reflect back at the Earth, much as occurs in a greenhouse.  The scientific question which needs answerING is whether CO2 is is the overwhelming driver of the global climate system and thus that its warming impact is predictable over time?

One way to determine  this is to construct climate computer models and feed data  that would indicate whether our continuing CO2 emissions into the atmosphere at the present rate will result in greater global temperatures.   That has been done, over and over again- but most famously by former NASA scientist James Hansen in 1988, but the models have proved spectacularly wrong and we have now reached a general scientific consensus that  no global warming has been reported for at least 17 years.  If, claims the author,  a climate production model can’t predict climate, it is then not a valid model – and the predictions made on the basis of such a model are not scientific.

So too regarding extreme weather – another so called barometer of anthropogenic global warming and climate change. If the climate computer models have failed ( and they have done so almost certainly because predicting climate is an enormously complex undertaking fraught with pitfalls)  there is really nothing much to hang a scientific understanding of extreme weather on except very unscientific guess work.

In this regard,  the author actually offers a full page of headlines of climate catastrophe, but the headlines (eg;  “Antarctic Heat Wave: Explorers Puzzled But Pleased” or “Death’s Toll Mounts to 60 in U.S. Storms”)  derive , not from our present day but from the  year 1934 – before significant CO2 emissions began.   The point is that our climate is a combination of so many factors – the moon’s gravitational pull, the sun’s level of radiation and even the position and rotation of other planets in our solar system, that is almost impossible to predict climate – just as it is impossible to attach severe weather in any given period to a general pattern of  rapid climate change.

Epstein refers briefly to the overt politicization of climate science (although this subject surely deserves another book from him) by pointing out how the figure 97% is bandied around to describe the consensus among scientists about man made global warming.    The figure  goes back to a survey by John Cook who runs a website called and who completed a  survey in which he found that 97% of the papers he studied endorsed the view that man made greenhouse gases were the main cause of global warming.  But the category he chose did not state whether each or any of the scientists selected 1% or 100% as the percentage contribution of man to global warming.  A number of the scientists who were quoted by Cook as confirming his preferred view, vehemently protested.

Finally Epstein dwells on the opposite  of the Greenhouse Effect –  the Fertilizer Effect – the theory that worldwide increases in plant growth over the past 50 years are attributable, at least in part,  to the increases in CO2 in the atmosphere. Although the theory has gained considerable ground among horticulturalists and certain climatologists, Epstein uses it to ask the question what if  there  is, contrary to the doomsayers, a positive impact to our carbon footprint?  Most climate change activists scoff at such a notion  – but their rejection of the argument is not scientific, it is political.

And what of  the alternative technologies – wind and solar and ethanol – ballyhooed as replacements for the fossil fuels to which we have become so presumably addicted? They, argues the author, are nowhere near ready for prime time and being dependent on the weather, are still notoriously unreliable.   And not only are they expensive, they are environmentally hazardous, consuming vast quantities of chemicals and raw materials for the manufacture of their panels and turbines.

Mr. Epstein provides a chilling  account from reporter Simon Parry of a visit to a huge waste dump lake in China where he describes

“a hissing cauldron of chemicals where several million tons of rare earth have been mined. Standing  on the brink of the lake for just a few seconds and my eyes water and a powerful, acrid stench fills my lungs.  People in the nearby village were having their teeth fall out and their hair prematurely turn white and suffered from severe skin and respiratory illnesses.” 

This site is revealed to be, not the toxic dump of a nuclear station or the slag heaps of a nearby coal mine as you might think, but a mining pit for rare earth, a material vital for building wind turbines.  And that’s just some of the collateral damage of shifting from oil to expensive, unreliable and non scalable alternative energies.

Because of their unreliability ( ‘only when the sun shines and the wind blows’) alternative sources of energy require a reliable back up – and guess what that is?   You can’t run huge metropolises, now or in the forseeable future on the kind of wind and solar energy technologies presently available, without a dependable reserve energy.  Without such a back up our cities would come to a standstill.  To pretend otherwise, is  consign ourselves to a future where our central heating may stop functioning in the middle of winter or our cars will cease to operate in the middle of our highways.

The image of a solitary polar bear, floating away on a tiny ice floe has become an iconic symbol of both the global warming movement and of mankind’s degradation of the earth – made even more poignant by Al Gore’s An Inconvenient Truth.  Leave alone the fact the polar bear population of Antarctica is larger than it has ever been and has never faced extinction, we should be taking a much harder look at the facts, figures and arguments supplied by the environmental movement and understand it for what it truly is – a determined, dogmatic ideology for which actual facts and science are only niggling secondary concerns on the road to an alternative (and less free) global life style.

But before we leave this issue, lets not forget the polar bears entirely.

For I once felt bad for them too. But I was a child then. It is a pity, if not an intellectual disgrace, that so much of what we are told by the climate change activists and the alternative energy gurus seems to be the stuff of children’s dreams and not grounded in real world science.  Epstein’s lucid and carefully researched book should make anyone who reads it understand that to plan for a grown up future we cannot allow ourselves to be hoodwinked by juvenile illusions and false promises.  That is not the road to progress and human happiness. It is the road back to the 16th Century, a place very few of us would want to visit and even fewer would wish to live.

Avi Davis is the President of the American Freedom Alliance and the editor of The Intermediate Zone

George P. Mitchell: Person of the Year

December 29, 2014
 by Avi Davis
This week TIME, as it has customarily done every December since 1927, announced its Person of the Year – a designation for the man, woman, organization or ‘thing’ which has most influenced the world over the past twelve months.  The nod this year fell to the Ebola Fighters – the doctors, nurses and administrators who battled the deadly virus in West Africa, in some cases contracting the pathogen themselves.
While the Ebola fighters are certainly worthy of recognition, can it really be said that they, more than any other humans of earth, influenced the course of events on Planet Earth? The fight against Ebola was limited to a rather small of the planet ( perhaps, indeed, due to the ability of these individuals to contain its spread) but it cannot be claimed  that either the outbreak of the virus nor its containment had a significant impact on our lives.
But there is one phenomenon that certainly did.   The year 2014 marked the first time the fracking revolution in the United States sent economic and political shock waves around the world, causing world oil prices to plummet and rogue nations such as Russia, Iran, Venezuela and Cuba to tremble. It was felt in one way or another by every man, woman and child and its swelling impact may be felt for centuries into the future.
For should we fail to remember:  gas prices in the United States at the pump  dropped in some places by close to 30%, a result of  the world wide price of oil itself dropping by nearly a half from a high of  $120 a barrel to $65.  This unleashed a consumer windfall providing a tremendous stimulant to an anemic U.S.economic recovery;  the oil glut which resulted made certain oil and natural gas producers such as Venezuela and Russia almost redundant as they witnessed a dramatic slowdown in revenue, so much so that only a few weeks ago the Russian rouble lost nearly 20% of its value.  Meanwhile the United States became the leading supplier of oil and natural gas in the world and is certain to become energy independent by 2020.
As the New York Times has noted:  “Fracking and other unconventional techniques have doubled North American natural gas reserves to three quadrillion cubic feet — the rough equivalent of 500 billion barrels of oil, or almost double Saudi Arabia’s crude inventory. The increase came after four decades of decline.”
How did this happen?
It happened because one man had the tenacity and vision to stick to developing a controversial technology to drill for oil. It happened because he never gave up and when he succeeded, he gave the inspiration to hundreds of others  to follow in his footsteps.
George P. Mitchell, who died at the age of 94 in July this year, was the son of a Greek immigrant who ran a dry cleaning business and the chief pioneer of hydraulic fracturing, the now common industry process known as fracking that uses chemicals with water under high pressure to crack open rock formations and release oil and natural gas.
Over the course of his career, he participated in drilling some 10,000 wells, including more than 1,000 wildcats — wells drilled away from known fields. His company, Mitchell Energy & Development, was credited with more than 200 oil and 350 natural gas discoveries.

The firm spent nearly two decades developing hydraulic fracturing, finally finding success in North Texas’ Barnett Shale formation in the 1990s.

Hydraulic fracturing has been around since the late 1940s but until only very recently was at all profitable. That profitability came as a result of Mitchell’s far sighted vision and the application of new, risky technologies aimed at extracting oil from shale deposits that even his own employees had cast doubt as likely to ever produce a profit.

In 2014,the results of this persistence had world wide ramifications.  U.S. oil production ballooned from 850,000 barrels a day to 1.2 million, making  the country the  largest oil producer in the world.

The added competition on world markets caused a rapid drop in price per barrel of crude from $120 a barrel to $65 a barrel.  This in turned had a seismic impact on such countries as Russia, Venezuela and Iran, three countries which have used their oil wealth to mount geo-political challenges to the United States and as actual economic leverage against the West in multiple ways.

One can imagine that if this revolution continues, the United States will not only become oil independent (for the first time since the 1920s), will not only re-energize it’s faltering economy, but re establish a sway over international relations that it has lost over the pas six years.  The dominance over energy markets and the booming economy that it is likely to produce will return more investment into R&D, encouraging the development of even more efficient, clean technologies for mining oil and natural gas.  This boom, all other potential offsetting matters aside, could carry the United States through the remainder of this century as the world’s undisputed leader.   It could mean the broader spread of democracy, of free enterprise and of individual liberty than  we have ever seen.

And all this from the vision of one man whose dreams at one time  90% of his own work force and managerial staff thought untenable.

To appreciate George P. Mitchell the oil baron, we need to understand George Mitchell the man.  Married for 67 years, he was the father of 10 children, a devout Christian who gave of his time to hundreds and was his home town Galveston’s most prominent philanthropist.

Mitchell graduated first in his class of 1940 at Texas A&M University with degrees in petrochemical engineering and geology. He helped pay for his school costs by running a tailoring and laundry business in College Station and selling candy and stationery to his fellow students .

He spent four years in the Army Corps of Engineers during World War II. Afterward, he struck out on his own with a brother and a partner as a wildcatter operation.

Over the years, he spent tens of millions rebuilding his hometown of Galveston, resurrecting a long-dormant annual Mardi Gras celebration and singlehandedly providing money helping to restore the city.

He donated the land for Texas A&M University at Galveston.

“To say he was a great man with foresight and generosity isn’t enough,” Adm. Robert Smith III, the school’s president, said. “His contributions to this university literally made this institution possible.”

His Cynthia and George Mitchell Foundation, founded in 1979, has made more than $400 million in gifts.

Former U.S. Sen. Kay Bailey Hutchison and Lt. Gov. David Dewhurst both called Mitchell a true Texas legend.

“George Mitchell was a pioneer in the energy industry and was admired by many around the world for his entrepreneurial spirit,” Dewhurst said.

In the early 1970s, Mitchell began developing The Woodlands, a suburban Houston master-planned community designed as a place for mixed-income residential development with jobs and amenities nearby while preserving the East Texas forest and other natural resources that covered the 27,000 acres. He later would call it his most satisfying achievement.

The Woodlands is now home to about 100,000 people and one of the nation’s busiest outdoor performing arts and entertainment venues there carries his wife’s name, the Cynthia Woods Mitchell Pavilion.

“His ambition and success have transformed our region,” Houston Mayor Annise Parker said. “He was a visionary, and showed his love for Houston through his work and hometown pride>”

George Mitchell did not invent hydraulic fracturing, or fracking;  but he popularized it and made it profitable.  He did not intend to begin a revolution that would challenge rogue regimes and restore U..S. energy dominance, but his ‘can-do’ philosophy, so quintessentially American, made it possible.
It is instructive that in the same issue that TIME Magazine announced it’s Person of the Year, reviewing all the candidates who may have influenced world events, not one mention is made of the fracking revolution or the man who inspired it.  Nor in its special edition, The Year in Review, do we see any reference to these fast moving, extraordinary changes which we can see occurring all around us.  Is it not astonishing how prejudice and a purblind, narrow perspective can shutter the imaginations of even our most reputedly insightful observers?
Others might lay claim to having a more media friendly set of achievements.  But for sheer influence on world events and as the likely progenitor of even greater ones to come, my vote for Person of the Year in 2014 goes to the late, great American entrepreneur, George Phydias Mitchell.

Russia’s New Potemkin Village

December 23, 2014

by Avi Davis

In 1787 , Empress Catherine II ( known as ” the Great”)  was planning a trip to the Crimea to inspect her imperial territory.  According to legend, Prince Grigory Potemkin, her first minister of state, in order to impress his accomplishments upon his monarch ( and lover)  erected a series of fake settlements along the banks of the Dnieper River so as to fool her into believing that the Southern Crimea was actually far more prosperous than anyone had accounted.



Although the story might be exaggerated or even mythical – the images of dressing up a dowdy place to make it look spectacular has come down through history as a sleight of  hand designed to hoodwink the unwary.

Apocryphal or not, Russian leaders have used the Potemkin method quite successfully ever since.  Following the Government sanctioned pogroms which raged through the Jewish Pale of Settlement in  the early 1880s – in which thousands of Jews were either murdered or robbed of their possessions, Czar Alexander II, fearing Western retribution, ordered villages to be hastily erected  in which Jews would be imported and be seen to be living happy, prosperous lives.

Stalin, in the midst of the Ukrainian famine, was able to dupe British intellectuals such as George Bernard Shaw, H.G. Wells and Sydney and Beatrice Webb into believing that the Soviet Union had become a paradise on earth where hunger, destitution and extreme poverty had been erased  by taking them only to places where model communities has been established.


Modern day Russian leaders have become similarly adept at presenting facades which mask some pretty awful realities.  If you visit Moscow today, you might be dazzled by the apparent hipness of the place –  European fashion stores lining malls together with expensive car dealerships and chic foreign restaurants.  It all  lends an aura of cosmopolitanism to the city which can have you leaving it thinking that Moscow  was the equal of any Western city.

But it is a facade which hides an increasingly desperate reality.  In his new book Nothing is True and Everything is Possible, documentary film maker Peter Pomerantsev  portrays Russia as one big reality TV show, with Vladimir Putin  as its permanent star.   Russia today, he shows us, is all about hierarchy and connections, where laws count for nothing and corruption at the highest levels of government is understood and accepted.   Citizens  are alternately terrorized by the Government but then uplifted by heroic stories of national achievement and their leader’s hubris and temerity in challenging the West. The elite, in collusion with the government, rip off as much money as possible and sock it away in London and Switzerland and elsewhere maintaining bulging bank accounts, multiple homes, yachts and expensive boarding schools for their children.

But in the past week it has become clear that this new Potemkin Village is beginning to see its paint rapidly flake and its brilliant luster fade.

In one extraordinary day last week  the value of the ruble dropped as much as 19 percent in 24 hours, the worst single-day drop for the currency in 16 years. Now Russians are reportedly bum-rushing malls to swap cash for washing machines, TVs, or laptops—anything that seems as if it might hold value better than paper money, whose worth is evaporating in real time. .

Russia’s economy has been hurt by two big things: the falling price of oil and continuing economic sanctions.  The oil and gas industry generates about half of Russia’s revenue, so when a combination of the shale boom in the U.S. and weaker demand worldwide pushed the price from $110 per barrel earlier this year to $65, Russia buckled under the strain. The sanctions imposed by Europe and the U.S., designed to punish Russia’s companies for President Vladimir Putin’s actions in Ukraine, have only poured acid on the wound.

The response of the Russian Central Bank last week was to raise interest rates to crushingly high levels – around 17% – which may only result in a temporary brake on the rouble’s free fall.  Putin’s political response was predictably to lash out against the West and to pinpoint the sanctions as the cause of this latest episode in Russian misery.

But the reality is that Russian economy very much floats on a cloud of natural gas, which proves a particularly unstable and ephemeral vehicle of transit when the winds blow in the wrong direction. In  the past ten years Putin has quashed the development of free enterprise, failing to encourage the growth of Russian industry so that the country has nothing much of substance to offer its major trading partners other than its natural resources.

It places Putin in a very delicate position because his popularity has been built on his ability to sustain muscular economic growth during the years where Russian gas was needed by everyone.  If the U.S. fracking boom continues and its domestic oil and natural gas supplies skyrocket, Putin faces a popular backlash which, even his hidebound personality and talent for silencing his opposition will be unable to stem.  Don’t be surprised then, that with the collapse of the rouble will come the imposition of martial law and a return to the bad old days of Soviet food lines and rationing.

For the  West this might portend a return to the Cold War template of an increasingly desperate Russian elite using domestic repression at home and foreign adventurism abroad to maintain leverage over real and perceived enemies.


Mr Putin cannot allow himself to believe that the Kremlin's favoured strongmen in former Soviet Republics are actually unpopular

But it is a different world today.  Russia in 2014 is not the Soviet Union of 1980, dominating a quarter of the world’s land mass and commanding unlimited human and natural resources. its population is now more sophisticated and more knowledgeable about what the rest of the world is like.    The Russian population, having tasted something of Western luxuries, will not go back readily to the deprivations of yesteryear. And the West, confident in its ability to do without  Russian oil and gas could well stand by idly and watch Putin’s Russia thrash around in wild death throes before throwing it a life line –  but not without forcing it to cough up the Crimea, the Ukraine  and the bits of Georgia it has ingested  – while requiring it to behave like a grown up state.

One thing does seem certain:  the building of  beautiful facades can no longer hide some very ugly facts of life about modern day Russia.  A contemporary Potemkin village will only stand as long as the political winds blow in the right direction. Coming from behind, as they are now, they will soon have the whole edifice crashing down around their architects’ feet.


The Retrogressive Progressives of New York

December 21, 2014

by Avi Davis

Andrew Cuomo, Governor of the State of New York, announced on Wednesday that  he will ban all forms of hydraulic fracturing in his state until further information can be obtain about health and environmental risks of the oil drilling process.  The announcement came on exactly the same day that Russia announced emergency measures to shore up the ruble and to prevent the Russian economy tail spinning into collapse; as well as the day that it was announced  that Cuba and the United States will re-commence diplomatic relations after a 53  year lull.  Both of the latter events can be tied directly to the impact the fracking boom has had on the United States.   The ruble has lost 20% of its value against the dollar after prices for oil collapsed under the weight of the global oil glut.  Cuba, reliant on Venezuela for its energy needs and economic subsidies, faces consequences in the near future as the Venezuelan economy buckles  as its oil fetches lower prices and the American market is saturated with domestic supplies of crude. Adrift, Cuba had little choice but to seek rapprochement with the United States.




But just as Cuomo was self righteously patting himself on the back for having stood up to the oil industry, there were  dozens of newly minted millionaires in formerly lowly North Dakota cashing their checks at the bank ; and in nearby Pennsylvania there are farmers and ordinary landowners who are buying themselves mansions;   The ordinary American citizen has not been passed by either.  He has watched,  astonished, as the cost of a tank of gas has plummeted by up to 30% over the past 12 months.  Throughout the world the fracking revolution, which began only five years ago, is not only reviving the world economy; it is challenging the very economic viability of long term U.S. adversaries such as Russia, Venezuela and, yes, Cuba.

But nobody in the heart of Progressive  America would seem to know any of this.  For it seems that liberal elites in the  State of New York, who have placed inordinate pressure on the Governor to thwart the fracking boom, this extraordinary progress and the optimism it has generated –  opening the world to the idea that the oil resources of the Earth may be limitless – is all a chimera. They are certain that fracking is dangerous for the environment and costly to the health of anyone living  near the vicinity of its wells.

Or are they?

For surely they know that hydraulic fracturing has been proven again and again to be safe – with no adverse health affects in the regions of the country in which it has been applied and at no significant environmental cost.  And some of these reports come from the reliably skeptical Environmental Protection Agency itself.  So as the fracking revolution rolls over the United  States, reviving a moribund economy and injecting a much needed rush of adrenaline into our downcast national mood, the progressives of New York State don’t seem to be too happy about  this  unquestionable form of human progress.  Rather they are quite determined to stand steadfast  against it.


But surely they must know this: New York state sits astride the Marcellus Shale Formation, which contains one of the potentially richest sources of natural gas in the country – a resource that could power the state for several hundred years and provide employment to hundreds of thousands.   Cuomo’s ban will be particularly devastating for poor New Yorkers, who can now be expected to struggle with high home heating bills due to expensive imported gas.  If Cuomo and his progressive friends would like an idea of exactly how drilling for natural gas using fracking procedures could help the economy of New York State, perhaps they should should look no further than nearby Pennsylvania.   There they will find, according to the American Petroleum Institute,  energy companies who have generated more than $2.1 billion in state and local taxes since the fracking boom began.  And according to state data, energy employment has more than doubled from 13,059 jobs in the first quarter of 2014  to 28, 229 in early 2014.  The average salary for those jobs is $93,000 per year, which is $40,000 higher than the national average.

And then there are other benefits of the fracking boom.  The United States has seen dramatic reductions in national carbon dioxide emissions, over the past six years –  largely as a result of hydraulic fracturing, which allowed natural gas to become cheap and abundant, and mostly displacing dirtier, higher-emission coal in the generation mix.  And lets not forget  that hydraulic fracturing, and the similar techniques used for “tight oil” drilling, have actually allowed the United States to become the world’s leading oil producer in 2014 and will allow it to become completely oil independent by 2020  – which only strengthens the nation’s geo-political position.

Given this information there are few other conclusions at which to arrive other than the fact New York does not want more natural gas, because it does not want more energy; and it does not want more energy because it fears humans will use it to build more industry; and it does not want more industry because it does not want – wait for it –  more human progress.

For you see more progress means more human development, which means more human intrusion on the natural environment.  And that is the red line which our environmentalists and their progressive allies will not allow us to cross.  Of course you will not hear the Sierra Club propound this philosophy out loud.  But it is written all over their rather limp reasoning for an absolute ban on fracking.

So there you have it.  The retrogressive progressives, determined, at any cost, to resist the juggernaut of fracking that is proving not only good for our economy, good for the environment but also good for maintaining U.S. dominance of the energy markets of the world.  If the U.S. maintains this dominant position, this will be indeed be, not the century of American decline – as so often predicted by the liberal media –  but potentially the greatest  century of American achievement in history where the country reaches its economic zenith.

Its really just too bad that New York State will not be along for the ride.

There Will Be Oil

December 7, 2014

Anyone who grew up in the Sixties knows how Jed Clampett found oil.   The southern hillbilly, out shooting rabbits on his property in East Texas, had one of his bullets glance off a rock which then released a cap on a thundering oil flue.  As the gusher shot into the atmosphere, Jed had to be informed by his family about the exact value of, well, ‘Texas Tea’

And the next thing you know ol’ Jed’s a millionaire……..

If only oil exploration was that simple.  Today we know that oil deposits are buried thousands of feet below the surface and that sophisticated equipment must be used to both locate the deposits and then extract the oil.  Eighty percent of our economy is dependent on oil – and will be for the forseeable future –  but for years we have been told that we are going to exhaust the Earth’s natural  supply.  The ” Theory of Peak Oil” took hold of many engineers worldwide and was loudly amplified by environmental activists.   Take this 2007 assessment from  the Institution of Mechanical Engineers:

” There are an estimated 1.3 trillion barrels of proven oil reserve left in the world’s major fields, which at present rates of consumption will be sufficient to last 40 years.

By 2040, production levels may be down to 15 million barrels per day – around 20% of what we currently consume. It is likely by then that the world’s population will be twice as large, and more of it industrialized (and therefore oil dependent).

First developed  in the 1950s by petroleum geologist M. King Hubbert, peak oil theory held that any individual oil field (or oil-producing country) will experience a high rate of production growth during initial development, when drills are first inserted into a oil-bearing reservoir. Later, growth will slow, as the most readily accessible resources have been drained and a greater reliance has to be placed on less productive deposits. At this point—usually when about half the resources in the reservoir (or country) have been extracted—daily output reaches a maximum, or “peak,” level and then begins to subside. Of course, the field or fields will continue to produce even after peaking, but ever more effort and expense will be required to extract what remains. Eventually, the cost of production will exceed the proceeds from sales, and extraction will be terminated.

Of course Peak Oil  Theory was completely turned on its head five years ago when the shale oil revolution hit  North America.  Hydraulic fracturing (famously known as ” fracking”)  as well as horizontal drilling are the new technologies which have allowed drillers to tap dense, previous inaccessible shale deposits.  Because of this revolution, daily world supply has surged to 1. 2 million barrels a day, an increase  of 400,000 units over 2012 daily production.  And its is only going up.

The incredible boost in world supply has  had the shock of bringing the price per oil barrel down as well, dropping almost by half to now a current $65 per barrel.  And of course this may come down much further as the global glut forces more countries to sell their oil at lower and lower prices.  We have already begun to see this reality at our local gas stations.  Here in California, the price of gas in the most expensive areas in edging down below $3.00 a barrel ( from a peak of $4.85) and in some parts of the country, gasoline is selling at less than $2.50 a gallon. 

The geopolitical consequences of this development are staggering.

The first to feel the bite will be Russia.  Only six years ago, the Russian economy was going through a decade-long boom, allowing Vladimir Putin’s Kremlin to enlarge subsidies, social transfers, government salaries and embarking  on massive development programs including the exorbitant Sochi Olympics.

However rising consumer prices and the closure of markets in the West  is having a severe impact on the average income of Russian citizens who are also fearing that the rapidly devaluing rouble could wipe out their savings. In his annual “Nation Speech” on Thursday, Putin blamed the West for trying to stymie Russia’s growth, even comparing the West’s policy with that of Hitler, and promising Russia would persevere. But even he acknowledged the dire situation when he offered “amnesty” to Russian businessmen who in recent months have transferred at least 100 billion dollars of assets out of the country.   The flight of capital and the loss of confidence in Russia’s long term economic future could stop the Russian juggernaut in its tracts that no amount of nationalistic breast beating nor invasion of neighboring countries will stem.

The second country or institution to be significantly affected is  the OPEC group of oil producing nations. Last week Saudi Arabia, the world’s leading supplier of oil, at an emergency meeting of the OPEC consortium, refused to reduce its supply, which might have placed a brake on prices.   This was done in order to let oil prices drop as far as they can, so that that more highly capitalized drillers will be forced out because their costs of extraction will be too high ( the Saudi cost of extraction is the lowest in the world at approximately $5.00) .  But the good news is that the  stranglehold OPEC has exerted on oil prices since the 1970s is weakening.  The United  States production boom is  accelerating to the point where it may become a completely oil independent by 2020 and a competing exporter of crude oil even sooner.

Iran clings to the hope that OPEC will cut output, pushing the prices back up.  But with its hopes curtailed and nuclear talks with the West still unresolved, the tension between Iranian politicians in favor of reestablishing relations with the West and the hardliners prepared to risk even greater financial hardship to keep the dream of a nuclear weapon alive, will greatly intensify, together with a greater potential for food riots. Iran will also have less ability to continue supporting its regional allies, the Assad regime in Syria, Iraq’s Shiite government (also suffering from the low oil prices), Hezbollah in Lebanon and Hamas in Gaza.   The weakening regime may be ripe for counter-revolution.

Other countries with oil-based economies such as Venezuela which were once ascendant are now fearful of a rapid decline.  President Hugo Chavez had nationalized the oil industry and used the oil money to finance the populist-socialist-Bolivarist fiscal plans. But despite Chavez’s promises to develop a diverse economy, industry and infrastructure, Venezuela’s fortunes remain reliant on the price of oil and under his successor Nicolas Maduro, the growing deficit is already causing shortages of food and other goods that it can’t produce for itself. Dozens of citizens have already been killed in violent demonstrations which are set to get worse. Under Chavez, Venezuela generously supported other nations in Latin America which adopted his strident anti-Americanism and propped up Cuba’s weak economy. Maduro won’t be able to do the same and he will find it difficult to cling to power in his own country as basic commodities become scarcer.  A realignment of South America’s poorer  countries with the richest oil producing country in the hemisphere may be in the offing for those who were once in thrall to Venezuela.

The great winners of this oil lottery will be countries in the West.   The rapid drop in oil prices has given American taxpayers, according to Goldman Sachs, the equivalent of a $75 billion tax savings.  The growth in consumer confidence can only reignite the U.S. economy after six years of stagnation.  “Self sufficiency in oil and gas,” says Mark Papa, the former CEO of  EOG Resources, the leading  crude oil producer in the lower 48 states, “will give the United States a two to three fold competitive advantage over Europe and Asia, leading to a revival of in-sourced manufacturing.  It will result in a state and federal tax revenue bonanza and will diminish the need of  the U.S. to tip toe around Russian and Persian Gulf sensitivities, giving the U.S. a leverage in the exercise of foreign policy, it has not had in years.”

Europe, still struggling with recession and with many of its Southern countries in economic free fall, will benefit from releasing itself from dependence on Russian oil and gas WHICH will buy more cheaply from the United States, Canada and OPEC.  The cheaper gas prices should have the same revitalizing influence it is having in the U.S..

The great blow back to this extraordinary economic windfall is due to come from the environmental movement.   Certain that that the West’s embrace of Peak Oil Theory would lead to the diminishing reliance on fossil fuels –  to the benefit of alternative energy sources such as wind and solar – environmental attacks on fracking will only grow in volume and possibly violence as an attempt is made to prevent further oil and natural gas exploration and to disrupt its transport.

We have already seen the impact of the environmentalist campaign in California, which sits on one of the largest shale oil reserves in the world, and has adamantly refused to allow that resources’ exploitation.   In 2011, the Energy Information Administration (EIA)published a report by INTEK Inc. which stated that the Monterey Formation contains 15.4 billion barrels of technically recoverable shale oil—64% of the entire estimated shale oil resource in the continental U.S.    The EIA/INTEK report was used as the basis of a March 2013 University of Southern California (USC) economic analysis which projected as much as a $24.6 billion per year increase in tax revenue and 2.8 million additional California jobs by 2020.

And yet anti-fracking activist organizations  have mounted an unending campaign to stymie the oil deposits’ exploration and extraction. Drawing on State-wide fears of increased water usage during drought, exacerbated seismic activity and pollution of the water table , county after county has enacted anti- fracking regulations.

A bill proposing a statewide moratorium on fracking failed in  the California House of Assembly  in May . But in January, a state law that requires oil companies to obtain permits for fracking and to estimate how much water they’ll use took effect. State agencies are developing more comprehensive regulations, but many local governments are taking matters into their own hands.

Last month, the City of Carson in Los Angeles County imposed an emergency 45-day moratorium on all new drilling because of fears that Occidental Petroleum would use fracking to drill more than 200 wells near homes and a university.

And in February this year Los Angeles became the first oil-producing city in California to ban fracking technologies.

Drilling wells are pictured in Los Angeles, California (Reuters/Mario Anzuoni)

The joke is how little water is used in fracking and how senseless is the idea that drilling will set off tremors and earthquakes along the San Andreas Fault.

“They’re skilled at marketing and skilled at hyperbole,” said Rock Zierman, CEO of the California Independent Petroleum Association in Sacramento, a group that represents 550 companies and individuals in the oil industry. “But we use less than a total 300 acre-feet of water a year for fracking. That’s equal to what all golf courses in California use in half a day.”

And polluting the water table?

A landmark federal study , released by the Energy Department and issued in July, 2013 found no evidence that hydraulic fracturing contaminated drinking water in western Pennsylvania.  Study after study has turned up little evidence that fracking is unsafe or that it harms suburban or rural water supplies.

“About a third of the 2,000 new oil wells in California are hydraulically fractured,” Zierman said. “They also talk about air pollution from methane leaks.  Our air [quality] laws established regional air districts that regulate all our service equipment, every joint, every coupling [that’s] permitted.”

Reeling from years of business flight and economic recession, if there is a State that could use the injection of economic stimulus afforded by the new drilling technologies, it is the State of California.

Wise Jed Clampett, who moved to Beverly (Hills, that is) after his lucky strike, would probably look upon this blood feud with some amusement.  He knew that economic success is a matter of luck on the one hand and good timing, the right location and the perfect (gun) technology on the other.  He might shake his head and whisper:

Jes’ dang stoopid, ain’t it? ”

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