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Next round in the Obama/EPA war on American energy

Cheap, Cheap Gas

Unless you’ve been living under a very remote rock, you know by now that there’s been an actual revolution in natural gas extraction methodology.  The so-called “fracking” technique has made American-produced natural gas so abundant that its price has just about collapsed.  Gas is sold in commercial quantities called “MMBTU” for million British thermal units.  In late 2005, prices spiked above $15/MMBTU.  It’s about $2.50/MMBTU now, and prices show no sign of rising in the near term.  That’d be the equivalent of gasoline dropping from an east coast max of around $4.00/gal to about 60 cents/gal.

Published reports on gas exploration and production indicate drilling companies are starting to walk away from it, curtailing capital expenditures on finding new sources.  When was the last time you heard anything like that about any form of American produced energy, i.e., that it was literally too cheap for producers to bother with it?

What Hath Cheap Gas Wrought?

The electric power industry is building natural gas-fired power plants fast.  Here’s why:  It’s virtually out of the question that the nuclear renaissance will last.  The regulatory empire is seeing to that, again imposing staggeringly expensive and unjustifiable delays on builders.  Further, Mr. Obama’s aggressive strategy of destroying the coal industry is paying off for him.  The Environmental Protection Agency has set carbon dioxide emissions limits at a low point where coal simply cannot compete economically, which is what he promised his radical supporters he’d do to coal producers here.  As old coal plants are phased out, the only option for new electric production is natural gas.

Natural gas plants using combustion gas turbines are relatively inexpensive to build.  Even the so-called “combined cycle” units which use the waste heat in the turbine exhaust to run a small steam turbine are cheaper than nukes by far.

This means the power industry is rapidly shifting the majority of its production from coal-based energy to gas-based energy.  This represents a gigantic increase in demand for gas.  Only the even more gigantic increases in production have kept the price of gas low.  Since gas is cheap and the construction is relatively cheap, this quiet revolution has been virtually invisible in your electric bill.  It’ll probably stay like this for a while, which is good for the country… for now.

The commercial trucking fleet is starting to get serious about shifting to natural gas also.  While that’s a subject for another day, suffice to say that a big shift of heavy trucks from diesel to gas would further add to rapidly rising demand.

Unexpected victims of cheap gas

The Obama administration and his hired radicals at the EPA had intended to force the country to buy into the so-called “renewables” sector, that is, wind power and solar power.  These were always expensive and unreliable sources.  It was thought that the unreliability problem could be overcome by building these sources massively so that isolated power failures could be overcome by production in unaffected areas.  Additionally, energy storage methods such as “pumped storage” were touted as technologies which would make dodgy production methods reliable in the end.

None of these showed real promise of solving the renewables problems.  But what really slew Solyndra and many companies like them was the plummeting price of natural gas.  While wind and solar were always far too expensive, the price spread was believed to be politically manageable when compared with the price of nuclear and coal power.  Remember, the regulatory empire has already imposed wildly inflated the costs of these sources.  With enough continued price pressure on the power industry through absurd, multi-billion dollar backfit mandates such as the so-called 316B rule as well as subsidies on green-gadget producers, the EPA’s radicals seemed to believe they could make wind and solar power price competitive.

But then along came the gas price collapse.  Environmental radicals in the regulatory empire were absolutely blindsided.  Their dream of a country powered by windmills and photocells evaporated as heavily green-gadget companies went bust despite massive federal subsidies.  Solyndra’s abandoned office building has become an iconic symbol of Obama’s failed energy policies and crony socialism.  Even after these setbacks and embarrassing failures, it has not occurred to the radicals to doubt the prudence of their aim, which is the eventual elimination of fossil fuels from the economy at all costs.

Putting America’s head in an EPA noose

The regulatory empire is already striking back.  They’ve imposed new gigantic costs on coal, and nuclear power is forever mired in a regulatory swamp.  It’s obvious to radicals that the solution is to return to the same playbook and cripple the gas industry with environmental regulation.

But this is where things get a little dicey for the EPA.  Those in the know about fracking will quickly tell you that this technique has been used safely for many decades.  The industry’s track record is overall quite good about protecting the environment, especially in regard to drinking water supplies.

To counter this, environmental radicals will enlist comrades from the media to carry out a disinformation campaign of poisoning the public mind against the gas industry and the fracking methodology.  Here’s a sample of what’s to come from the National Geographic web site.  Using tried and true methods of leftist propaganda, the article cites an international agency’s assertion that “the industry must win public confidence by demonstrating exemplary performance.”

Yeah, well, the gas industry has already done that, and for a very long time.  How, then, to create a problem where there isn’t one?  I believe environmentalists are counting on a sustained media campaign to foment an atmosphere of doubt and fear.  This will eventually result in congressional legislation, ruinous interference by the regulatory empire, and consequent price spikes in natural gas.  By the time this strategy bears fruit, gas will be the predominant source of baseload electric power in the United States.  Should prices return to their previous highs, fuel adjustments in your electric bill could triple it, or worse.  If the trucking fleet is also heavily invested in gas, it could prove a crippling blow to transportation costs as well.

But if this comes to pass as radicals hope, the price of energy will be high enough that wind farms and solar panels will be economically back in the running.  And that is the goal of the radicals in the EPA: Get fossil fuels out of the economy at all costs.

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