WE CAN’T JUST DRILL OUR WAY TO LOWER GAS PRICES, HE SAID: Low oil prices prove how wrong Obama was yet again. (Does anyone else wonder where he thinks oil comes from, or is it just me?)
Two and a half months into the supply-cut deal, it looks like OPEC is losing the campaign to prop up oil prices. The drop in prices that began last week saw them retreating to almost exactly the same level as on November 30 – just below $52/barrel for Brent – when the OPEC deal was announced, the International Energy Agency said in its monthly report on Wednesday.
At the same time, reduced breakeven prices in many shale plays and forward locking-in of production is allowing the companies currently drilling in the U.S. to turn in profits even at a price of oil at $40 a barrel.
The U.S. shale patch has not only emerged leaner and more resilient from the downturn, it has also hedged future production with contracts guaranteeing the price of the crude they will be pumping a year or two from now, Bloomberg reports, citing industry executives and analysts.
According to Katherine Richard, chief executive at Warwick Energy Investment Group that holds stakes in more than 5,000 oil and gas wells, many of the U.S. drillers would not see their profits reduced unless the price of oil drops to the $30s or lower.
The drilling spirit is indeed back, and the break even prices in the best shale areas are now below $40. According to Bloomberg Intelligence analyst William Foiles, in the Eagle Ford, for example, drillers in LaSalle County break even at $36 oil price, and at $39 per barrel oil in Gonzales County.
In the Permian (and what’s a shale recovery without the Permian), wellhead breakeven prices in the Permian Midland have dropped from $71/barrel in 2014 to $36/barrel in 2016–a 49-percent decrease–the steepest among the main U.S. shale plays, Rystad Energy said in its Permian Midland review. The average wellhead breakeven price decrease in the main shale plays has been around 46 percent since 2014, Rystad Energy noted.
Saudi oil can’t get cheaper to produce: Poke the sand with a pointy stick, and oil comes up. American shale will never get that cheap, but high-volume fracking at $40 — unheard-of just three years ago — takes away Saudi Arabia’s pricing power.
Have you hugged a fracker today?
HAVE YOU HUGGED A FRACKER TODAY? Oil touches three-month lows, as U.S. supply swells.
The price has fallen by more than 8 percent since last Monday, its biggest week-on-week drop in four months, and analysts said the slide may not have much further to run.
“The market is bearish because sentiment has turned. The risk is still towards the downside, but we are nowhere near the precipice,” PVM Oil Associates Tamas Varga said.
Goldman Sachs said in a note it remained “very confident” about commodity prices and maintained its price forecast of $57.50 a barrel for WTI in the second quarter.
U.S. drillers added oil rigs for an eighth consecutive week, Baker Hughes said on Friday, lifting spending to benefit from an earlier recovery in crude prices since the Organization of the Petroleum Exporting Countries (OPEC) agreed to cut output. [RIG/U]
OPEC and other major oil producers including Russia reached an agreement late last year to rein in production by almost 1.8 million barrels per day (bpd) in the first half of 2017.
Although OPEC states have been complying with supply curbs, led by Saudi Arabia, it has not been enough to overshadow a rise in U.S. inventories to a new high.
I had been assured by no less than the (former) President of the United States that we “can’t just drill our way out to lower gas prices.”
What a noob.
But if we really want lower gas prices, let’s open another oil refinery or two and do something about the country’s crazy patchwork quilt of gasoline blends.
INSTAPUNDIT READERS HAVE BEEN AWARE OF THIS FOR A WHILE: The Next Financial Crisis Might Be in Your Driveway.
Lured by low interest rates, low gas prices, and a crop of seductive vehicles that are faster, smarter, and more efficient than ever before, American drivers are increasingly riding in style. Don’t be fooled by the curb appeal, though—those swanky machines are heavily leveraged.
The country’s auto debt hit a record in the fourth quarter of 2016, according to the Federal Reserve Bank of New York, when a rush of year-end car shopping pushed vehicle loans to a dubious peak of $1.16 trillion. The combination of new car smell and new credit woes stretches from Subarus in Maine to Teslas in San Francisco.
It’s an alarming number, big enough to incite talk of a bubble. In fact, the pile of debt would cover the cost of 43.4 million Ford F-150 pickups, one for every eight or so people in the country.
Another way to look at: Every licensed driver in the U.S., on average, owes about $6,100 in car payments.
The self-inflicted problem which nearly killed GM and Chrysler a decade ago was a combination of two factors: Relying on subprime borrowers to goose sales, and “channel stuffing” unsold (and often unsalable) inventory. When Detroit ran out of customers and was sitting on top of months worth of inventory, the proverbial stuff hit the fan.
A downturn on lean inventory would hurt, but no worse than any typical recession. A downturn on stuffed channels would be like 2007-08 all over again.
I’ve seen reports that GM may have returned to its bad old habits. IWB reported in December that GM had fleetwide average of 87 days worth of inventory on hand (60 days is the industrywide standard/goal), but with four-to-six months worth of certain Chevy, Buick, and Cadillac models left unsold.
The best thing for GM might be for a recession to come too soon for them to build up much more inventory.
FRACK, BABY, FRACK: Geology Helps Shale Boom Anew in Texas Basin.
Don’t look now, but there’s a shale rebound underway, and it’s being powered by Texas’s Permian Basin. The U.S. has added 482,000 barrels of oil per day since mid-October, an increase of more than 5 percent that’s been driven in large part by burgeoning output out of that west Texas shale formation. This resurgence can partly be put down to an uptick in oil prices, itself a result of the recent petrostate production cut that’s helped add more than $10 to the price of a barrel of oil. But, as the New York Times reports, the real driver behind the Permian’s prowess lies in its geology (or, more accurately, its stratigraphy). . . .
Geology is one of the (many) reasons American shale producers have enjoyed such wild success over the past decade while their counterparts abroad have struggled to get any sort of commercial production off the ground. Tectonic movement often “crunches” rock layers into uneven, tangled messes, which can be problematic for drillers looking to hit a specific layer to extract hydrocarbons. Here in the continental United States, our rock layers are relatively evenly layered, so much so that they have even been compared to a wedding cake. That makes it much easier for producers to drill the horizontal wells into productive zones, frack the shale rock, and then extract the oil and gas trapped within.
But in the Permian’s case, multiple shale layers are stacked on top of one another, which makes rigs plumbing plays in the region that much more productive. That in turn has helped to bring down the region’s breakeven costs well below current prices, which helps explain why west Texas is leading the shale rebound.
I’m old enough to remember when President Barack Obama mocked Sarah Palin and said that we couldn’t “drill our way out of” our energy problems.
FRACK, BABY, FRACK: Shale Sent US Natural Gas Prices to Lowest Levels this Millennium in 2016.
The first few weeks of the new year are an excellent time to reflect on what happened in 2016, and that reflection is greatly helped by collated data from organizations like the Energy Information Administration (EIA), which has been rolling out year-end reviews—like this report on falling wholesale electricity prices—all month long. The latest report is one of the more impressive—according to the EIA, last year natural gas prices hit their lowest level since 1999. . . .
As the EIA is careful to note, part of this historic low comes to us courtesy of the fact that temperatures in 2016 were warmer than average, necessitating less consumption of natural gas to heat American homes. But the biggest driver by far comes on the supply side of the equation, where booming production from U.S. shale producers provided consumers with a glut of natural gas at bargain basement prices.
But price wasn’t the only milestone shale gas made last year. . . .
Our first-ever cargoes of LNG exports left for Brazil in February, and slowly but surely that export industry is starting to get off the ground. This is a remarkable achievement when you consider that a dozen years ago we were busy constructing LNG import terminals. Those problems of scarcity have been replaced by those of abundance, as producers are busy working on ways to get more of their product to market—whether that’s here in the United States, or abroad. The fact that two months ago marked the first time the U.S. was a net exporter of natural gas in almost 60 years is yet another feather in the cap of our fracking industry.
I’m old enough to remember when President Obama, mocking Sarah Palin, said we couldn’t drill our way out of our energy problems.
MEXICO’S GREAT GASOLINE PRICE WAR CONTINUES: The attacks on gas stations in Mexico continue. There is no doubt that Mexican citizens across-the-board are angry with President Enrique Pena Nieto specifically and the government in general.
The L.A. Times lead is a bit sensational but essentially correct:
In Tijuana and Nogales, massive demonstrations over rising gasoline prices forced authorities to temporarily close crossing stations on the U.S.-Mexico border, while in Rosarito protesters cheered as a man intentionally drove his pickup into a group of federal police officers.
More than a week after the government of President Enrique Peña Nieto deregulated gasoline prices, which instantly rose as much as 20%, Mexico is engulfed in a nationwide rebellion.
Four people have been killed and more than 1,500 arrested while looting, staging road blockades and marching in protests such as the weekend demonstrations in Rosarito and along the border.
The price hike, which many believe will lead to higher prices for food and household goods, is opposed by 99% of Mexicans, according to a recent poll, and has drawn the condemnation of business groups, truckers unions, leaders of the political opposition and even the Catholic Church.
Do the gas protests connect to the Cartel War? Good question. There is a very reasonable fear in Mexico that some cartel gunmen will toy with political revolt.
That’s why the December 30 report that cartel gunmen had threatened attacks on gas stations caused an immediate sensation. However, within a day the Jalisco state attorney generals office determined the message was a fake.
Here’s part of the alleged message from the Jalisco New Generation Cartel (CJNG):
“The CJNG, in support of the working class, commits itself to making burn all the gasoline stations that to December 30 of the current year, at 10:00 p.m.” — before the price increases go into effect — “have not normalized the sale of fuel at the fair price,” the message said, according to the Mexican news outlet Aristegui Noticias.
ANALYSIS: TRUE. Fracking Protesters Are Putin Puppets.
Fracking is clearly in America’s national interest. There is broad political consensus that the United States would be better off relying on ourselves and our closest allies (like Canada) for energy, rather than on Middle Eastern countries who can be only charitably described as “frenemies.”
In other words, compared to the status quo, fracking is good for the planet and bad for our enemies. Russia’s economy, which is largely dependent on exporting fossil fuels, could face collapse if oil and gas prices fall too far. That is why RT is fearmongering about fracking; it wants to decrease the global supply of fossil fuels (which keeps prices artificially high) as part of a strategy to keep Russia’s economy alive.
Thus, environmentalists like Joe Romm and the protesters who block fracking and the construction of pipelines, such as Keystone XL and Dakota Access, are serving as “useful idiots” for Vladimir Putin. They falsely believe they are doing good for America and the planet when, in reality, they are only doing good for the Kremlin.
Don’t be too sure that they believe it.
CHICKENS, ROOST: Pandemonium at Mexico’s Gas Pumps.
Through the week, roads across Mexico were blocked by protesters and burning tires, thousands of businesses were ransacked, upward of 1500 people—among them, police officers— were arrested, and at least five people were killed as furious citizens took to the streets following the more than 20 percent price gas hike.
The Mexican government has for years maintained artificially low gas prices in Mexico thanks to massive subsidies that are absorbed by the state, but as of this year that all changes. The cost of fuel will finally be adjusted to conform to real market value. The surge in gas prices is the just first major sign of changes to come, but certainly the most tangible so far.
And Mexicans, clearly, are not happy.
Dozens of videos have appeared online showing mass looting across the country in response to the gasolinazo, as the gas price surge is called—from Sinaloa and neighboring Puebla and Mexico State, all the way to the southernmost state of Chiapas, which shares its border with Guatemala.
Statism: Creating rising prices amidst increasing supply since… ever.
SHED NO TEARS: Iran’s Rafsanjani is dead. He died of a heart attack.
I differ with this assessment:
…a moderate counter-figure to the ultra-hardliners clustered around Ahmadinejad, under whom Iran’s relations with the West plummeted…
Moderate counter-figure? Try calculated rhetorician in robes. Here’s one reason why I differ:
He held the chairmanship of Iran’s main political arbitration body, the Expediency Council, since 1990, when he was appointed by the supreme leader Ayatollah Ali Khamenei.
That would be the Expediency Discernment Council.
Khomeini’s Iran plays a long game and it’s a dangerous game. Rafsanjani was a hard line Khomeinist who was dedicated to advancing Khomeini’s violent vision.
RELATED: Yesterday I added a link to a recent StrategyPage update as background to a post. It drew a couple of thank yous and that’s good. Over the years I have shared my disgust with lack of media context with Glenn, Ed and Stephen. The StrategyPage archives are a trove of “deep news” or “deep dive news.” Here’s the latest Iran update, from December 2016. It’s long. But here’s a useful extract:
The new American president-elect was elected in part because of popular anger over the 2015 Iran treaty. Then there is the fact that the most dangerous threat to Israel is not even Arab but Iran. Iranians are constantly reminded by their leaders that the official Iranian position is that any Moslem nation (especially Saudi Arabia and Turkey) that improves relations with Israel is betraying Islam. Iran also insists that the United States cannot be trusted and that the economic sanctions the July 2015 treaty lifted are not the main economic problem for Iran. That would be the two years of very low oil prices, which is Saudi Arabia’s way (along with some other local Sunni oil states) to put the hurt on Iran. That is only partially true but not relevant to the Iranians. One reason for seeking nuclear weapons is to give Iran the ability to persuade the Saudis to ship less oil and let the price go up. After that there will be the demand to let Iran run the Moslem holy places in Mecca and Medina. The Saudis are not willing to make deals that involve Iranian domination of the region. Yet the low oil prices have hurt the Saudis as well and all the Gulf oil states recently agreed to lower production in an effort to get prices up. What Arabs and Iranians both downplay is that the American fracking technology is changing the oil market more than anything else as is the growing use of non-oil fuels for energy. Even with record low prices the fracking industry survives and as the price of oil goes up more fracking operations resume production. Add to that recent natural gas deposits discovered and rapidly developed in Israel coastal waters and you can see why political relationships are shifting in the Middle East.
Together, Iran and Iraq pump more than 8 million barrels a day, up from about 6 million barrels a day from late 2014 when OPEC adopted its current pump-at-will oil policy. Saudi Arabia remains the largest producer at more than 10.5 million barrels a day.
“The reality is that only Saudi Arabia and perhaps the U.A.E. and Kuwait are prepared to make any cuts, and those will be modest and short-lived,” said Bob McNally, founder of consultant Rapidan Group in Washington. “At best, Iran and Iraq will sign for production freezes.”
Perhaps with that in mind, Khalid Al-Falih, the Saudi oil minister, tried over the weekend to change the OPEC narrative. Oil prices will stabilize next year, “and this will happen without an intervention from OPEC,” he said in Dhahran, eastern Saudi Arabia, on Sunday, according to the Saudi newspaper Asharq al-Awsat.
That may be nothing more than wishful thinking:
“If OPEC does not come up with a credible agreement to cut production on Wednesday oil prices will end the year below $40 a barrel and be chasing down $30 a barrel early next year,” said David Hufton, chief executive officer of brokers PVM Group Ltd. in London.
If oil prices do rise, then American frackers will reap much of the benefit — and cap that increase at $50 or $60. If prices fall or merely stay the same, that’s cheap gas for us and slashed budgets for the OPEC nations.
After decades of the Saudis having us over a barrel, it’s nice to be on the other side of the “heads I win, tails you lose” scenario.
FRACKERS ARE SAVING WESTERN CIVILIZATION: America Is Flush with Shale Gas, Just in Time for Winter.
The United States has never entered a winter with more natural gas at the ready, according to the latest data from the Energy Information Administration (EIA). During the warmer months of the year, countries pump drilled natural gas into storage, anticipating a cyclical spike in demand when temperatures start falling. As we head into those colder months now, the amount of natural gas in storage here in the United States has just hit an all-time high, as the EIA reports. . . .
But while the exact rate at which households and businesses consume natural gas in the United States this winter remains to be seen, we do know that we’ve never been in a better position with respect to natural gas. This abundance isn’t just a boon to energy security, it also corresponds to cheaper prices, a development that is especially helpful for poorer families for whom their heating bills make up a larger slice of the monthly budget.
We’d be remiss to not give credit where credit is due for this unprecedented hoard of natural gas: Hydraulic fracturing and horizontal well-drilling of shale formations around the country are entirely responsible for this resurgence in oil and natural gas production over the past eight years.
Fracked gas has also caused U.S. carbon emissions to plummet — even as environmentalists continue to oppose fracking.
Get on in there before the price gouging starts!
The Las Vegas gun store Westside Armory is predicting a Hillary Clinton victory in November, and it has a message for customers: Buy now, because things are going to get expensive.
In an advertisement over the weekend in the Las Vegas Review-Journal, Westside Armory said it was holding a “Pre-Hillary Sale” on tactical rifles, warning of a price surge if the Democratic nominee wins the presidential election next month.
“Don’t wait!” the advertisement reads. “Prices will skyrocket after Crooked Hillary gets in.”
That’s probably true.
Read the whole thing, especially the Washington Post being all aghast.
I’d add that $699 isn’t a bad price for a Smith & Wesson M&P Sport II, although I got mine for $100 less. But I suspect that $599 isn’t coming back any time soon.
FRACK, BABY, FRACK: Shale Gas Drags US Energy Emissions to 25-Year Low.
The United States has emitted less carbon through June of this year than at any other point in the past 25 years. . . .
The EIA wants to credit the growth of renewables like wind and solar for part of this historic decline in energy-related emissions, and while they undoubtedly played a part, it was a minor one. Let’s keep in mind that renewable energy sources accounted for less than 11 percent of our energy consumption in June of this year, a far cry from fossil fuels, which were responsible for more than 80 percent of our overall consumption.
No, it was coal’s sharp decline—a drop of 18 percent in the first half of this year as compared to 2015—that really moved the needle on America’s energy emissions. And let’s not forget that Old King Coal isn’t being dethroned by onerous regulations, but rather by market forces. More specifically, coal’s demise has been precipitated by the sudden rise in domestic natural gas production that has led to an oversupply (and, as a result bargain prices). This, of course, comes to us courtesy of the great shale revolution.
The next time you hear an environmentalist bemoaning the devilish ways of American frackers, remind them that shale gas is one of the very few climate change solutions that doesn’t involve donning an economic hair shirt.
To a lot of environmentalists, that’s a bug, not a feature.
THIS TELLS YOU THAT PURCHASES AREN’T DRIVEN BY GAS PRICES: Americans bought more EVs last month than ever before.
ALL HAIL SHALE: While Europe Gets Gouged, Americans Enjoy Cheap Power.
We told you yesterday that spot prices for German electricity jumped more than 17 percent in one day due to constricted supplies from renewable producers and French nuclear reactors, but as green-crazed Germany continues to wrangle with some of Europe’s highest (and most volatile) electricity prices, American households are about to see the first annual drop in average electricity prices in 14 years. . . .
Plentiful—and therefore cheap—natural gas is one of the biggest drivers behind this drop in average American electricity prices, and this bounty comes to us courtesy of none other than the shale boom. Thanks to fracking, U.S. natural gas production is up more than 37 percent over the past decade, and at this point the hydrocarbon has gotten so cheap that it’s doing something very few other energy sources have ever done: it’s outcompeting coal on price.
Shale gas’s ascendance is undoubtedly a boon for Americans, who as we can see are paying less on their power bills every month. That’s especially helpful for poorer households, for whom these bills take up a larger slice of a monthly budget. Just as expensive energy can be seen as a kind of regressive tax that disproportionately harms the poor, so too can we consider cheap power as especially welcome for lower-income families.
Frack, baby, frack.
It’s also cleaner. Win/win.
QUESTION ASKED AND ANSWERED: Shot: Trump? How Could We?
—Thomas Friedman, the New York Times, Tuesday.
One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century. It is not an accident that China is committed to overtaking us in electric cars, solar power, energy efficiency, batteries, nuclear power and wind power. China’s leaders understand that in a world of exploding populations and rising emerging-market middle classes, demand for clean power and energy efficiency is going to soar. Beijing wants to make sure that it owns that industry and is ordering the policies to do that, including boosting gasoline prices, from the top down.
—Thomas Friedman, “Our One-Party Democracy,” the New York Times, Tuesday September 8th, 2009.
Exit question, from Charles C.W. Cooke of National Review from back in March: “Herewith, an under-asked question for our friends on the progressive left: ‘Has Donald Trump’s remarkable rise done anything to change your mind as to the ideal strength of the State?’”
THANKS, FRACKERS! Don’t Look Now, but the Global Oil Surplus Just Tripled.
Way back in June of 2014, oil was trading above $110 per barrel and producers were sitting pretty. Now, some 27 months later, those same producers have been put through the wringer and been forced to endure prices that dipped as low as $27 per barrel at the start of this year before recently settling in the $40-50 range. A global oversupply precipitated this price collapse, and its persistence has been as much of a boon for buyers as it has been a headache for sellers. Now, as Bloomberg reports, that glut appears to have tripled over the course of the past month. . . .
This ought to give the delegates from various petrostates assembling in Algiers next week extra motivation to come to an agreement to freeze their collective agreement. The Saudis, for their part, seem more willing to play ball this time around, and have reportedly agreed to cut production by 1 million barrels per day if Iran joins in and other countries roll back their output to levels they hit earlier this year.
But while we wait for that meeting and analysts vacillate back and forth on the likelihood of a consensus emerging, it’s worth taking a step back to look at the bigger energy picture here: the world is awash in oil (and natural gas too, for that matter), and those cheap hydrocarbon inputs will be welcomed by all sectors of the global economy besides, of course, the oil and gas industry. Moreover, it bodes well for future global energy security that after all the peak oil hand wringing, suppliers around the world keep finding and extracting more and more of one of civilization’s most important commodities.
I remember when “Peak Oil” was settled science, and if you didn’t believe in it you were a shill for Exxon or something.
OIL PRICES: NOT AS IMPORTANT AS WE THOUGHT?
As you can imagine, oil prices are thought to have a big effect on the economy. When prices rise, that tells us that oil is scarce relative to demand, and therefore that we can make and consume less stuff than we’d like to. When prices fall, we are lolling about in unexpected bounty. A new paper by economists Christiane Baumeister and Lutz Kilian attempts to estimate just how big an effect the recent sharp decline in oil prices has had on the gross domestic product of the U.S. Their answer is … none.
Um, what? Come again?
That’s right, none. There was a stimulative effect on the consumer side, but it was offset by the loss of investment in the oil sector. . . .
If you’re a consumer who felt the pain of high gas prices, and breathed a sigh of relief when they finally dropped, this may seem surprising. But on a larger scale, whether high oil prices are good or bad for your economy depends on whether it’s a net importer or a net exporter. No one finds it hard to believe that falling oil prices were bad for big oil producers like Venezuela (and they were!). Conversely, if you’re a country that uses a lot of oil, and doesn’t produce any, it’s pretty obvious that higher oil prices will hurt, and lower ones will be good. What’s interesting is that, thanks to the shale oil boom in the U.S., this paper finds those two forces roughly balancing out.
It’s also interesting to ask what this could tell us about the coming election.
You can often do a surprisingly good job at predicting the outcomes of presidential races knowing only a few simple things about the economy. And yet, the models don’t all agree. The oldest prediction model, which is based on economic as well as non-economic indicators, has Republicans taking the White House. A Moody’s economist, on the other hand, says that for its model, which shows Hillary Clinton taking 326 votes in the electoral college, “The tie-breaker as of today is really gasoline prices.”
Yet that should show up in the polls, and right now, the polls aren’t showing us a comfortably dominant Clinton lead. This Baumeister-Kilian paper might give us some clue as to why: When America was a net importer of oil, gas prices might have had a substantial effect on elections, but that changed in recent years. The shale oil boom meant that even back when a lot of households were feeling pinched by higher fuel prices, people working in the oil industry, and associated firms, were made much better off. So the effect on the economy became less clear, and so did the effect on elections.
That’s the problem with established models. They stay the same, while the world changes.
EVEN WITH JEFF BEZOS AT THE HELM, NOTHING EVER CHANGES AT THE WASHINGTON POST. Wapo: Gas prices are pretty low, so how about that carbon tax, guys?
Shades of the Post calling for higher gas taxes at the trough of the Great Recession, near simultaneously with the New York Times, and NBC’s Tom Brokaw, in a classic case of Journolisting.
WAIT, I THOUGHT THE EDUCATED YOUNG WERE HEADING TO BIG BLUE CITIES: The States Gaining And Losing The Most Migrants — And Money:
To measure the states that are most attractive to Americans on the move, we developed an “attraction” ratio that measures the number of domestic in-migrants per 100 out-migrants. A state that has a rating of 100 would be perfectly balanced between those leaving and coming.
Overall, the biggest winner — both in absolute numbers and in our ranking — is Texas. In 2014 the Lone Star State posted a remarkable 156 attraction ratio, gaining 229,000 more migrants than it lost, roughly twice as many as went to No. 3 Florida, which clocked an impressive 126.7 attraction ratio.
Most of the top gainers of domestic migrants are low-tax, low-regulation states, including No. 2 South Carolina, with an attraction ratio of 127.3, as well as No. 5 North Dakota, and No. 7 Nevada. These states generally have lower housing costs than the states losing the most migrants. . . .
High costs go a long way to explain which states are losing the most migrants. At the top, or rather, the bottom of the list is New York State, which had an abysmal 65.4 attraction ratio in 2014 and lost by far the most net migrants, an astounding 126,000 people. Close behind was Illinois, a high tax, high regulation, and low growth disaster area. In 2014 the Land of Lincoln had an abysmal 67.2 attraction ratio, losing a net 82,000 domestic migrants.
Most of the other top people-exporting states are in the Northeast and Midwest. But the West, traditionally the magnet for newcomers, now also has some major losers, including Alaska (80.1), New Mexico (84.6) and Wyoming (88.6). The outflow for some of these western states may get worse, unless prices for natural resources like coal, oil, gas and minerals do not recover in the near future.
And then there is the big enchilada, California. For generations, the Golden State developed a reputation as the ultimate destination of choice for millions of Americans. No longer. Since 2000 the state has lost 1.75 million net domestic migrants, according to Census Bureau estimates. And even amid an economic recovery, the pattern of outmigration continued in 2014, with a loss of 57,900 people and an attraction ratio of 88.5, placing the Golden State 13th from the bottom, well behind longtime people exporters Ohio, Indiana, Kentucky and Louisiana. California was a net loser of domestic migrants in all age categories.
Some analysts have claimed that the people leaving California are mostly poor while the more affluent are still coming. The 2014 IRS data shows something quite different. To be sure the Golden State, with its deindustrializing economy and high costs, is losing many people making under $50,000 a year, but it is also losing people earning over $75,000, with the lowest attractiveness ratios among those making between $100,000 and $200,000 annually, slightly less than those with incomes of $10,000 to $25,000.
Overall, many of the most affluent states are the ones hemorrhaging high-income earners the most rapidly. As in overall migration, New York sets the standard, with the highest outmigration of high income earners (defined as annual income over $200,000) relative to in-migrants (attraction ratio: 53). New York is followed closely by Illinois, the District of Columbia and New Jersey, which are all losing the over-$200,000-a-year crowd at a faster pace than California.
But the Blue Model is good for graft, so there’s that, anyway.
THANKS, FRACKERS! Labor Day Gas Prices Hit 12-Year Low.
The last time gas prices leading up to the Labor Day weekend were this cheap, the world was just moving on from the Olympics in Athens, Greece. Thanks to abundant shale’s depressive effect on global oil prices, gas prices this holiday weekend are hitting a twelve year low. . . .
A global glut precipitated the precipitous collapse in crude prices over the past 26 months, and the bulk of that oversupply has come as a result of resurgent American production, courtesy of fracking. With oil trading today around $45 per barrel—a far cry from those heady $100+ days two summers back—it’s not a stretch to say we’re in a buyer’s market. That’s especially helpful for drivers, one of the biggest consumers of (refined) oil, and it’s being reflected in significant savings at the pump.
For producers, it’s an entirely different story. America’s oil production has flagged over the past year as shale companies have struggled to adjust to shrinking profit margins, though the industry continues to surprise observers with its ability to innovate ways to stay in the black—and keep producing the black gold. The world’s petrostates, however, have had a harder time adjusting, which is why we’re seeing so much talk about a potential deal for a group of these countries to agree to freeze their output at a meeting in Algeria later this month.
Fracking empowers ordinary Americans and weakens American enemies. Naturally, all right-thinking people are against it.
ROB TRACINSKI: Don’t Count Out the Internal Combustion Engine.
Notice that we have been talking about all of this simply in terms of fuel economy, granting the assumption that the most important issue is to reduce fuel use. The actual behavior of the market indicates that most people don’t really care that much about fuel economy. Reduced fuel consumption is the mania in the press because they think the electric car is necessary to save the world from global warming. Yet that depends on a whole chain of assumptions: that man-made global warming is actually happening, that the cars Americans drive will make a difference, that electric cars offer significant fossil fuel reductions rather than just a “long tailpipe,” and that we wouldn’t be better off doing something else to save the world.
While the media tends to have its own fixed views on those questions, the buying public clearly does not place as high a premium on fuel efficiency, certainly not at current gasoline prices. And thanks to another big, uncelebrated advance in energy technology—fracking—gas prices aren’t likely to go up very far in the foreseeable future.
The result is that advances in the design of the internal combustion engine have actually focused less on fuel-efficiency and more on performance. As my friend Jack Wakeland summed it up, “The world has just passed through a 25-year-long golden age of car design.”
AT THIS POINT, PROBABLY: Is Doomsday Inevitable For Venezuela?
The problems could grow worse. Several oil service companies suspended or slowed operations in Venezuela this year due to difficulties in obtaining payment from the state-run oil company, Petróleos de Venezuela (PDVSA). Contractors have cut back on drilling in Venezuela amid rising unpaid debt, which threatens to take Venezuela’s output down even further.
On June 28th 2016, Baker Hughes reported that the number of oil rigs in Venezuela dropped from 69 to 59 in May of this year. The CEO of the Italian oil and gas contractor Saipem SpA said that in April the company had suspended 89 percent of its operation rigs in Venezuela (25 of its 28 rigs). Other companies as Schlumberger or Halliburton Co are reducing their activities in Venezuela because of unpaid services bills. Venezuela’s active rig count, a good indication of future production, fell from 71 to 49 in July according to Baker Hughes, the lowest since the end of 2011.
That’s some bad luck, eh?
The author adds, “Even if oil prices increase, the situation is very complicated for Venezuela’s economy.” Those “complications” can be reduced to just three words: Chavez, Maduro, and socialism — but you won’t find those words anywhere in this report.
A BUNCH OF PRESIDENTS TALKED “ENERGY INDEPENDENCE,” BUT IT WAS THE PRIVATE SECTOR THAT HAS MOVED THE BALL: The World Is Gassing Up on US Shale.
We already know that oil drilled from U.S. shale is leading the rise in global crude output—after all, those U.S. supplies were what helped create the glut that sent oil prices crashing from more than $110 per barrel two years ago to under $50 today—but new projections suggest that U.S. frackers will be key drivers of growth in another hydrocarbon market in the coming years: that of natural gas. . . .
The United States already produces the lion’s share of the world’s shale gas, and those fracked hydrocarbons make up the majority of U.S. natural gas production as well. But Canada, Argentina, and China are all beginning to chase after that shale bandwagon, producing small but significant quantities of fracked gas, and in the coming decades Algeria and, importantly, Mexico will hope to join the club.
Shale producers have so far struggled outside of the United States, running up against any number of hurdles—from poor geology to water scarcity, from opaque government regulations to NIMBYism—but countries and companies will refine their methods and eventually start tapping shale reserves abroad on a commercial scale. The United States will continue to lead the pack, but with Canada and Mexico both ready to join in on this energy boom, North America as a whole is emerging as a new center of global energy supplies.
All of this shale gas is helping to keep natural gas prices down, which in turn is helping to topple Old King Coal from his perch as the world’s cheapest source of power. That’s not just good news for the developing world, it’s also good news for Gaia: natural gas emits far fewer local pollutants and roughly half as much carbon as coal.
And yet Greens are overwhelmingly anti-fracking. That’s the sort of behavior you’d expect from tools of Putin and the Saudis, not Gaia-worshipers.
DON’T GIVE THEM ANY IDEAS: Electric Vehicles Don’t Have A Chance Unless Oil Prices Increase 1,000 Percent.
The batteries for electric vehicles cost, on average, about $325 per kWh, which means the price of oil would need to pitch upward by nearly 1,000 percent before Tesla’s auto fleet and the Nissan Leaf would be cheaper than gas-powered vehicles, researchers at the University of Chicago’s Energy Policy Institute noted in February.
The number are not likely to change much over the next few years, as oil traded at an average of $49 per barrel during 2015 and is currently trading at a paltry $39.51 a barrel.
“While alternative sources of energy and energy storage technologies have vastly improved, lowering costs, they still have a long way to go before they are cost competitive with fossil fuels,” Chris Knittel, co-author of the study and director of the Center for Energy and Environmental Policy Research, said in a press statement announcing the study’s findings in February.
Battery improvements are always welcome, but they only store energy which still must be produced elsewhere.
When you listen to Hillary Clinton’s acceptance speech tonight — seriously, America, why? — expect to hear a lot of compassionate talk aimed at working Americans. Specifically, about the Democratic Party’s plans to raise the national minimum wage to $12/hour, force companies to offer paid parental leave, double-down on ObamaCare, expand Medicaid, and push for greater education subsidies.
Then, ask yourself: Are these policies going to make life less or more expensive for Americans?
As I wrote at the beginning of 2009 after watching DNC operatives with bylines infected with a serious case of what Virginia Postrel dubbed “Depression Lust,” and Tom Brokaw begging Obama for higher gas prices, you and I have a rendezvous with scarcity.
Or as Hillary warned us over a decade ago, “We’re going to take things away from you on behalf of the common good.”
And she has a very good chance of making her will a reality next year.
BECAUSE NUCLEAR-FREE ZONES ARE SO 1985: San Francisco Area Bans Fracking, Even Though It Doesn’t Actually Frack.
“San Francisco had the highest average gas price in country last month at $3 per gallon, according to the latest report by the American Automobile Association,” the San Francisco Examiner reported earlier this month.
I FAIL TO SEE THE DOWNSIDE: The Double Edge of Cheap Gasoline — and It’s Getting Even Cheaper.
Analysts say there’s simply too much gasoline and too much oil, and prices fell early this week amid crude supply concerns. West Texas Intermediate oil futures dropped 2.4 percent to $43.13 per barrel. According to AAA, the national average for unleaded gasoline is down 15 cents in a month.
“These are the cheapest gasoline prices for the end of July since 2004. There’s 36 states where you see gas less than $2 a gallon. The really cheap prices will be between Labor Day and Election Day,” said Tom Kloza, global head of energy analysis at Oil Price Information Services. Kloza expects the national average to fall below $2 per gallon, and said another 10 percent decline could easily be in store.
Have you hugged a fracker today?
ARE THERE ANY GREEN PROJECTS THAT AREN’T JUST MONEY-SIPHONS FOR CONNECTED CRONIES? America’s Biofuel Boondoggle Rife with Fraud.
To try and artificially grow a domestic biofuels industry, the United States installed the Renewable Fuel Standard (RFS) in 2007, relying on a system of annually increasing mandates for the quantities of biofuels refiners blend into gasoline. The scheme was created under the Bush administration and dutifully expanded by the Obama administration—and it’s been an unmitigated policy disaster. The RFS has created an arena ripe for hucksters to fraudulently make millions of dollars, and Bloomberg has a long report on some of the most galling examples of these system-cheaters. . . .
It’s worth your time this weekend to go ahead and read the whole thing. It’s a quick overview of what the RFS actually is and how it’s been taken advantage of.
Fraud isn’t the only issue with America’s biofuels problem. The quota system has raised global food prices, starving the world’s poor and potentially inciting riots abroad. It has cost drivers billions of dollars (billions!), and maybe worst of all—it’s actually been bad for the environment.
Our biofuel boondoggle hits one of those rare policy sour spots, making very little sense from every angle and managing to frustrate every relevant stakeholder (excepting the corn industry). If Bloomberg’s story of the brazen fraud this artificial biofuels ecosystem has created makes you angry, well, it should. The sooner we end this farce, the better.
With fracking, we don’t need these scams. In fact, we never actually did.
Hydrocarbon trade between the Middle East and the United States has historically been something of a one-way street, as petrostates have made billions selling off their prodigious oil reserves and Qatar has solidified its position as the world’s largest exporter of liquified natural gas (LNG). But the American shale revolution is shaking up the status quo, and two recent shipments of LNG have recently punctuated that shift. . . .
A decade ago, the United States was busy building massive, costly LNG import facilities along its Gulf Coast. What a difference ten years and an energy revolution can make, as those import projects have been idled in favor of export terminals, where workers are chilling America’s substantial stores of shale gas into liquid form and sending them off to ports around the world. The first shipment went to Brazil, but since then cargoes have made their way to Europe and, now, the Middle East.
Like its oil counterpart, the global LNG market is well supplied at the moment, with Qatar and Australia already exporting larger and larger volumes while the United States looks to become a major player in the coming years as more export terminals come online. It’s a buyer’s market, too, as prices have steadily come down both as a result of contracts that have included linkages to oil prices (which are today less than half of what they were two years ago) as well as sluggish demand coupled with surging supplies.
Selling LNG to Kuwait and Dubai won’t suddenly make the Middle East beholden to U.S. suppliers, but it does signal an important and ongoing change in global energy dynamics. And, as more Middle Eastern countries look to derive less of their electricity from costly and relatively inefficient oil-fired power plants, LNG demand should rise in the region. If and when that happens, there will be plenty of producers here in the United States willing to step up and subvert the traditional energy flows between the Middle East and America.
I think it was Malcolm S. Forbes who said in the 1970s that we should leave our huge reserves in the ground, buy Arab oil until it ran dry, then sell them ours at a steep premium. We’re not there yet, but it’s no longer fanciful.
HURRAY FOR FRACKING: When You Gas Up for Cheap This Summer, Thank Shale.
The average American is going to pay nearly 40 cents less per gallon of gasoline this summer, according to the latest data from the Energy Information Administration (EIA), and save even more at the pump come the fall. . . .
The EIA notes that gas prices are going to be slightly higher than they projected back in April, largely because oil prices have climbed roughly $10 per barrel since those projections were made. This illustrates an important (if obvious) point: cheap gasoline has come about directly as a result of cheap oil. You might be saying that that’s self-evident, as gasoline is a refined petroleum product, and you’d be right to do so—but that causal relationship is important for understanding one of the biggest ways in which the shale revolution is helping Americans, because the oil price collapse has largely been precipitated by surging U.S. oil production. Upstart shale producers nearly doubled American oil output in a few short years, and helped create a global oil glut that drove crude prices—and eventually gas prices, too—down. So we have shale to thank for cheap gas.
Still, even with price expectations slightly up, drivers are far from being fleeced with an average price of just $2.25 per gallon these next few months. And if that’s too much to bear, you can always look forward to September, when gas prices are projected to average just $2.19 per gallon. Hail shale!
Fracking means cheap energy for working people. Naturally, all the best minds are against it.
HERE COMES THE GAS GLUT: Oil Prices Steady but Products Glut Looms.
There are signs that an increasing glut of refined products could begin to weigh on crude prices. The oversupplied products markets, especially gasoline, means refiners will pull back on crude purchases, especially as the autumn maintenance season is only two months away, the New-York-based bank Morgan Stanley said.
“The bottom line is that the gasoline market faces a nasty reckoning, as the consequences of the market’s rush to bid up summer gasoline values last winter are now becoming clear,” the London-based Energy Aspects said in a note.
In China, one of the largest consumers of oil, growing inventories of refined fuels is also jolting some investors, who expect the country’s oil demand to taper off in the coming months as domestic production of fuels, such as gasoline and diesel, outpaces demand.
Getting sub-$2 gasoline again would be nice.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS:
Shot: “As shocking as his remarks are, they shouldn’t come as a surprise. Chu has a long record of advocating for higher gas prices. In 2008, he stated [to the Wall Street Journal], ‘Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.’”
—[Obama’s Then Energy Secretary] “Chu to Congress: We’re not interested in lowering gas prices,” Hot Air, February 29, 2012.
—Institute for Energy Research, today.
MARKETS, HOW DO THEY WORK? Three Amigos “call for action to address excess global steel supply.”
In statements released as the summit began, the three countries announced the Nafta rule-of-origin changes will affect pharmaceuticals, cosmetics, rubber, metals, industrial and electrical machinery, precision instruments and natural gas.
On steel, the countries “agree on the need for governments of all major steel-producing countries to make strong and immediate commitments to address the problem of global excess steelmaking capacity,” a statement from Canadian Prime Minister Justin Trudeau’s office said.
I suppose prices could be allowed to fall until inefficient producers are forced out, but that would eliminate channels for cronyism and graft.
PILING FRESH DIRT ON MALTHUS’S GRAVE: Rediscovering Gaia’s Riches:
As one of the researchers put it, “[t]here’s a lot more fresh groundwater in California than people know.” The breakthrough here involved searching for water deeper underground than aquifers designated for human consumption typically lie. The drawback (there’s always a drawback) is that the deeper water tends to be more brackish, and is naturally more difficult and costly to extract. Moreover, the deeper one drills for water, the closer one gets to oil and gas drilling (typically thousands of feet of rock layers separate hydrocarbons from groundwater tapped for consumption), and the greater the chance there is of contamination. All of that being said, this remains a remarkable find for the parched state.
Halfway across the world a different group of scientists employing a novel new detection technique found an enormous new supply of helium gas—an increasingly scarce element that’s critically important for advanced scientific research and medical technologies—in Tanzania. . . .
In addition to making your voice squeaky or your kids’ birthday balloons float, helium helps keep high-tech gadgets like MRI machines or the Large Hadron Collider cool. As Durham University’s professor Jon Gluyas, one of the researchers, told the BBC, “Helium is the second most abundant element in the Universe but it’s exceedingly rare on Earth.” Helium prices have quintupled since 2000 as supplies have started to dwindle. You can understand, then, why this discovery is being described as a “game changer,” and not just for the fact of this specific supply alone, either: this was the first place these scientists employed their new surveying technique. They’re batting 1.000, and could now apply this technique in areas with similar geology in different parts of the world.
The Malthusians of the world are always right until they’re wrong. They’ll warn of impending resource depletion until they’re blue in the face, but time and again human ingenuity (and natural providence) has made fools of them. We’ve seen two welcome new examples of Gaia’s riches this week—what’ll we find next?
I’m so old I can remember when “peak oil” was a thing, and we weren’t going to drill our way out of it.
VIRGINIA POSTREL: California Hits the Brakes on High-Speed Rail Fiasco. “The total construction cost estimate has now more than doubled to $68 billion from the original $33 billion, despite trims in the routes planned. The first, easiest-to-build, segment of the system — the “train to nowhere” through a relatively empty stretch of the Central Valley — is running at least four years behind schedule and still hasn’t acquired all the needed land. Predicted ticket prices to travel from LA to the Bay have shot from $50 to more than $80. State funding is running short. Last month’s cap-and-trade auction for greenhouse gases, expected to provide $150 million for the train, yielded a mere $2.5 million. And no investors are lining up to fill the $43 billion construction-budget gap.”
CALIFORNIA’S STATE RELIGION, as explored by Joel Kotkin in the Orange County Register:
In a state ruled by a former Jesuit, perhaps we should not be shocked to find ourselves in the grip of an incipient state religion. Of course, this religion is not actually Christianity, or even anything close to the dogma of Catholicism, but something that increasingly resembles the former Soviet Union, or present-day Iran and Saudi Arabia, than the supposed world center of free, untrammeled expression.
Two pieces of legislation introduced in the Legislature last session, but not yet enacted, show the power of the new religion. One is Senate Bill 1146, which seeks to limit the historically broad exemptions the state and federal governments have provided religious schools to, well, be religious.
Under the rubric of official “tolerance,” the bill would only allow religiously focused schools to deviate from the secular orthodoxy required at nonreligious schools, including support for transgender bathrooms or limitations on expressions of faith by students and even Christian university presidents, in a much narrower range of educational activity than ever before. Many schools believe the bill would needlessly risk their mission and funding to “solve” gender and social equity problems on their campuses that currently don’t exist.
The second piece of legislation, thankfully temporarily tabled, Senate Bill 1161, the Orwellian-named “California Climate Science Truth and Accountability Act of 2016,” would have dramatically extended the period of time that state officials could prosecute anyone who dared challenge the climate orthodoxy, including statements made decades ago. It would have sought “redress for unfair competition practices committed by entities that have deceived, confused or misled the public on the risks of climate change or financially supported activities that have deceived, confused or misled the public on those risks.”
California’s state religion has real-world consequences: “California power grid urges energy conservation on Monday due to heat wave,” Reuters noted over the weekend.
Because of California’s 45 years of radical environmentalism, the philosophy of BANANAs is omnipresent — Build Absolutely Nothing Anywhere Near Anything. As a result, Silicon Valley is designing the hardware and software of the 21st century while being powered by an infrastructure that dates from the Eisenhower era.
Similarly, “California’s highways continue to rank among the worst in the nation — a sorry distinction the state has held for more than a decade,” the San Jose Mercury reported in 2013, which will only get worse (into less than zero territory) as Jerry Brown’s “road diet” goes into effect, to force drivers into mass transit and another aspect of Sacramento’s religion, the state’s high speed rail boondoggle.
And California’s drought was greatly exacerbated by decisions made by Jerry Brown and other radical environmentalists in the 1970s, as Victor Davis Hanson wrote at City Journal last year:
Brown and other Democratic leaders will never concede that their own opposition in the 1970s (when California had about half its present population) to the completion of state and federal water projects, along with their more recent allowance of massive water diversions for fish and river enhancement, left no margin for error in a state now home to 40 million people.
More recently, VDH has added that Brown and other gnostic priests of the California religious left have learned nothing from their past mistakes:
The California legislature has dealt with a number of issues since the beginning of the drought in 2012—mandating transgendered restrooms, outlawing the use of hunting dogs in the pursuit of bobcats and bears, and proposing a vast increase in the state gas tax in a state that currently suffers the continental United States’ most expensive gasoline prices. Yet reservoir construction was not among such high priority considerations, despite voters’ overwhelming passage in 2014 of a $7.4 billion water bond that included the building of one or two new reservoirs—none of which are even close to being started.
When my wife and I lived in Milpitas, despite the exceedingly mild winter, power blackouts typically occurred several times a year. Until we switched four or five years ago to Comcast’s cable telephony service, our telephones typically suffered from ground loops and outages in the winter, when an AT&T box dated from when our neighborhood was built in 1970 continually flooded during the winter.
The true believers of California’s state religion are willing to overlook such things, but not everyone can be that faithful:
SHALE OIL AND GAS: STRENGTHENING WESTERN CIVILIZATION AND WEAKENING ITS ENEMIES. And now it’s ready to boom anew:
American shale has weathered the storm better than anyone expected. U.S. oil output has flagged over the past year, beaten back by plunging oil prices, but it would be dishonest to call this a bust. Instead, with oil prices back up around $50 per barrel, shale once again seems ready to boom anew. . . .
The crude oil price collapse was a crucible for shale producers, and it forced companies to accelerate their plans to cut costs, boost efficiencies, and innovate new ways to frack new reserves in greater quantities. Drillers weren’t the only ones in the industry forced to trim the fat: oil services companies had to settle for significantly narrower margins as they offered operators large discounts to keep the crude flowing. And while that has some concerned that shale’s breakeven costs could increase as oil prices go up, others are convinced shale has pioneered some lasting new fixes. . . .
OPEC bet the house on shale’s inability to withstand a bearish oil market, but that gamble doesn’t seem to be paying off as producers around the world start to settle into today’s new market equilibrium. We’ve said it before but it bears repeating: bet against American innovation at your own risk.
That’s why so many lefties are doing their best to squash it, sometimes with foreign help.
RELAX, WE’RE ABOUT TO START ANOTHER “RECOVERY SUMMER,” YOU GUYS. Unemployment is down. Gas prices are low. Why isn’t America shopping?
YOUR SCARY-ASS CHART OF THE DAY: Europe’s Ridiculously High Industrial Electricity Prices.
Flashback: “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” Steven Chu to the Wall Street Journal, shortly before becoming Obama’s first “Energy” Secretary. And as Candidate Obama himself promised the San Francisco Chronicle in January of 2008, as though it was a feature, “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket… “So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them.”
FRACKING, WHICH OBAMA OPPOSED, IS DOING MORE TO CLEAN UP THE ENVIRONMENT THAN ANY GOVERNMENT PROGRAM: This Is The Year That Shale Gas Passes Coal:
2016 is shaping up to be a year for the record books: the Energy Information Administration is anticipating that this year, for the first time ever, natural gas will displace coal as America’s largest source of electricity generation. . . .
Natural gas emits just half as much greenhouse gases as coal, and far fewer of the dangerous local pollutants that can lead to the sorts of toxic smog choking China’s megacities. The fact, then, that natural gas is increasing its market share at the expense of coal is a green triumph.
It’s especially noteworthy because it’s being driven by market forces, not lavish government subsidies. The shale revolution has created a domestic glut of natural gas here in the U.S., and that’s helped depress spot prices here well below $2 per million Btu (among the cheapest prices in the world). Fracking is dethroning Old King Coal, and that controversial drilling practice deserves more credit for the environmental good it’s doing.
Market forces don’t offer the opportunities for graft that “lavish government subsidies” do. Hence the appeal of the latter to our corrupt political class.
UNDER HER PLAN, ELECTRICITY RATES WILL NECESSARILY SKYROCKET. Hillary: ‘We’re going to put a lot of coal miners and coal companies out of business.’ As you can see in the video at link, as one Twitter user notes, “The worst part is how she smiles about it.”
In January of 2008, Barack Obama’s ideology, a toxic blend of environmental correctness, punitive leftism and crony socialism caused his mouth to infamously form the words, “If somebody wants to build a coal-powered plant, they can — it’s just that it will bankrupt them…Under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”
He said that while speaking to the editors of the San Francisco Chronicle. Because the editors at the Chronicle were either (a) in the tank for Obama, (b) agreed with the idea, or (c) too stupid to realize what a front-page scoop they’ve been handed or (d) likely all of the above, Obama’s statement was hiding in plain sight within an hour-long video of his interview that the newspaper uploaded to their page at the Brightcove video distribution platform until an enterprising blogger found it and cut a brief clip highlighting his promise, and it went viral in the late days of the 2008 campaign, too late to influence the election. But it certainly made for a double-whammy when combined with future “Energy” Secretary Steven Chu’s Kinsley-esque gaffe when speaking to the Wall Street Journal in September of 2008 that the administration was also seeking “to boost the price of gasoline to the levels in Europe,” which also flew under the radar as the financial meltdown* dominated headlines that month.
But voters have no excuse this time — Hillary is openly stating, early in the election cycle, that she plans to destroy industries and put people on the unemployment line. (Which is an updated and targeted version of her promise in 2004 that “We’re going to take things away from you on behalf of the common good.”) If you vote for her and your electrical bill increases, or you’re in an industry’s she’s targeting for destruction and out of work, well — she warned you herself what was coming.
* Itself a late-arriving hangover from the Bill Clinton era.
TO BE FAIR, IT’S JUST THERE AS A BASE-PLEASING ELECTION YEAR GESTURE: Obama’s Oil Tax Is Running on Empty.
President Barack Obama’s proposal to levy a $10-a-barrel tax on oil reminds me of an eternal truth that applies to almost all working humans: Once you know you are on short time, about to be transferred or discharged, a certain puckish insouciance seeps into the performance of your daily duties.
Presidential budgets are always more wish list than “To Do,” of course. Assumptions are made, hopeful suggestions offered, and then Congress chuckles and says “Good one, chief” before returning to whatever they were doing before. This is especially true when the opposition controls both legislative houses. And it is most very especially true during the last year of a presidency, when a lonely nation’s eyes turn toward the folks vying to replace you. . . .
After almost eight years of minimal economic growth, the fall in oil prices has brought some welcome relief to strained household budgets. Many U.S. oil companies are losing money, particularly the shale oil folks, making the workers and local economies that depend upon them anxious. Jacking up the price of gas and home heating oil is going to upset all those people, who will in turn do their best to upset any legislators who propose such a thing. Congressional Republicans are certainly not going to stick out their necks for an opposition-party president with whom relations have never been warmer than “testy.”
The administration has made some gestures toward mitigating this opposition, notably by claiming that the tax will be paid by oil companies. But this is obvious nonsense. Oil companies currently have few profits from which to pay the tax. Whoever is responsible for filing the paperwork, the cost will be paid by consumers in higher fuel prices, and the administration surely knows this.
They know, but when have they ever cared that something they said was untrue?
NOTHING SAYS “VOTE DEMOCRAT IN 2016” LIKE A GOVERNMENT-MANDATED GAS PRICE INCREASE: Obama goes full YOLO: Proposes raising gas prices in final budget.
President Obama is expected to include a proposed $10 “fee” on every barrel of oil in his final budget. Obama suggests the “fee” (read: tax) will be paid for by evil oil companies (aren’t they just the worst?), but in reality, we all know the price will be passed along to consumers.
We just got low gas prices back, and this is what we get from the administration?
This is how big government operates. People are finally getting a break in their pocketbooks, so the government looks for a way to stick it to them. Obama knows that people did pay the higher price for gas, so why not go back to that again and make government the beneficiary?
Republicans should add a rider cutting limiting Presidential use of Air Force One to a single trip per month, effective immediately. For the environment!
VICTOR DAVIS HANSON’S Lessons From the California’s Drought:
Government failure was not just due to acts of commission, but of omission as well. In four years, not a single new reservoir was begun, despite warnings that the state’s reservoir capacity long ago was fossilized—designed for a state of 20 million people, not the present 40 million.
Had the state begun work on a few of the long-planned tertiary reservoirs of the now neglected California Water Project—the Sites, Los Banos Grandes, and Temperance Flat projects—the reservoirs would now be nearing completion and ready to capture nearly four-million acre-feet of additional water runoff, should 2016 prove to be a “wet” year.
If Californians have learned anything, it is that droughts are survivable only to the degree that the state’s reservoirs have water, that water projects must follow their original and contracted purposes (irrigation, flood control, hydroelectric power, and recreation), and that finite aquifers are replenished only by surface irrigation water deliveries that both recharge the water table and preclude the need for subterranean pumping. Because of the state’s failure to initiate a new reservoir, the next drought will hit 50 or 60 million state residents—with the ability to survive only a year or two, not four years, of reduced rain and snowfall.
The environmental movement helped to intensify rather than alleviate the drought. Both Governor Brown and President Obama—contrary to the exegeses of reputable climatologists and meteorologists—ignored the demonstrable and historical role of the El Niño effect. Instead they quickly politicized the drought by blaming generic global warming as the culprit, and then suggested that the cure was a reduction in carbon emissions. There is some irony in the fact that what seems to cause California’s frequent droughts is not the supposed man-caused global warming of recent years, but a natural and slight cooling of the Pacific Ocean that, as its centuries-long wont, helps to alter storm pathways over Western North America.
But building a $100 billion-plus high-speed rail or mandating that California public utilities over the next four years meet targets of 33% renewable energy use will not prevent a periodic drought. Such boondoggles will only ensure less funding for proven drought solutions, such as building more reservoirs, pipelines, and canal transfer systems.
The California legislature has dealt with a number of issues since the beginning of the drought in 2012—mandating transgendered restrooms, outlawing the use of hunting dogs in the pursuit of bobcats and bears, and proposing a vast increase in the state gas tax in a state that currently suffers the continental United States’ most expensive gasoline prices. Yet reservoir construction was not among such high priority considerations, despite voters’ overwhelming passage in 2014 of a $7.4 billion water bond that included the building of one or two new reservoirs—none of which are even close to being started.
Read the whole thing; alas no one in Sacramento ever will.
WHY DO DEMOCRATS HATE THE POOR AND MIDDLE CLASS SO? Obama to propose $10-a-barrel oil tax.
Should be fun hearing what Hillary has to say about this, since in the spring of 2008, she “lined up with Senator John McCain, the presumptive Republican nominee for president, in endorsing a plan to suspend the federal excise tax on gasoline, 18.4 cents a gallon, for the summer travel season:”
(Curious how high American gas prices were in that period after Democrats retook both houses of Congress in 2006, and before the oil industry adopted the policy of “drill, baby dill,” to coin a phrase from the fall of 2008.)
JOEL KOTKIN: Serfs up with California’s new feudalism.
California’s new conservatism, often misleadingly called progressivism, seeks to prevent change by discouraging everything – from the construction of new job-generating infrastructure to virtually any kind of family-friendly housing. The resulting ill-effects on the state’s enormous population of poor and near-poor – roughly-one third of households – have been profound, although widely celebrated by the state’s gentry class. . . .
At a time when twentysomething billionaires are being minted, largely in the Bay Area, California’s middle class is being hammered. The state now ranks third from the bottom, ahead of only New York and the District of Columbia, for the lowest homeownership rate, some 54 percent, a number that since 2009 has declined 5 percent more than the national average. The peasants, it appears, are expected to remain landless much longer, or be forced to leave the state.
Rather than a land of opportunity, our “new” California increasingly resembles a class-bound medieval society. The proportion of aggregate income taken by the top 1 percent is greatest in a couple of Californian metros, San Francisco and San Jose, as well as New York. California is the most unequal state when it comes to well-being, according to the report by Measure of America, which is a project of the Social Science Research Council.
These inequities clearly aren’t changing the state’s policy direction. Gov. Jerry Brown explains the state’s leading poverty rate as simply a reflection of how grand things are and California’s natural attractiveness. Poverty, he says, is “really the flip side of California’s incredible attractiveness and prosperity.” It’s a view not far from the old excuse espoused by British tories, that “the poor will always be with us.”
This inequality is being justified – and made worse – by attempts to turn California into a mecca for the most extreme measures to reduce greenhouse gases. Like a good medievalist, Brown blames this one phenomenon for virtually everything, from wildfires to the drought and mass migrations. Like a medieval cleric railing against sin, Brown seems somewhat unconcerned that his beloved “coercive power of the state” is also largely responsible for California’s high electricity prices, regulation-driven spikes in home values and the highest oil prices in the continental United States.
Once the beacon of opportunity, California is becoming a graveyard for middle-class aspiration, particularly among the young. In a recent survey of states where “the middle class is dying,” based on earning trajectories for middle-income cohorts, Business Insider ranked California first, with shrinking middle-class earnings and the third-highest proportion of wealth concentrated in the top 20 percent of residents.
In other words, it’s been fundamentally transformed.
WELL, THIS IS ENCOURAGING: Oil Crash Only The Tip Of The Iceberg. “We may be enjoying amazingly low prices at the gas pump, but as oil prices continueing to slide we must also remember the catastrophic events that have followed almost every drastic oil price slump in the past.”
I’M SO OLD, I REMEMBER WHEN LOW OIL PRICES WERE GOOD NEWS: Fund manager who’s been right on oil has a depressing new prediction: T. Rowe Price New Era’s Shawn Driscoll says the price for a barrel of oil could drop into the teens.
Why? Oil’s oversupply is profound and will last for at least two years, he said, and too many industry people still are in denial.
The oversupply, of course, stems from Saudi Arabia’s efforts to keep pumping to preserve market share from U.S. shale producers and other countries like Russia and Iran, which is chomping at the bit to free itself from international sanctions so it can pump oil again — at any price.
Given current demand — and without new Iranian production — “our model is saying we’re still oversupplied a million barrels a day in ’16,” said the manager of the $2.7 billion New Era mutual fund PRNEX -2.31% . “Our model for ’17 still shows oversupply with above-trend-line demand and without Iran.”
And the oversupply may be even worse than traders and investors acknowledge, because hundreds of thousands of barrels a day of new production are coming online in places like Brazil and Kazakhstan over the next couple of years.
Okay, if I were an oil investor this would be bad. And with the United States shifting from oil importer to oil exporter, our own incentives may change. But at present we’re starving a rogues’ gallery of countries that hate us — from Russia, to Saudi Arabia, to Iran — while getting cheap gas. I can live with that.
FRACKING: IMPOVERISHING THE SAUDIS AND RUSSIANS AND IRANIANS WHILE PUTTING MONEY IN AMERICAN POCKETS. Shale Is Making It Cheaper to Heat Homes This Winter.
The shale boom has a lot to do with these winter savings, as new supplies of fracked gas have helped push spot natural gas prices here in the U.S. well below $3 per mmBtu (read: cheap). But the shale boom has also done its part in pushing down global oil prices by adding to a global glut of crude, and that’s in turn had a knock-on effect in depressing petroleum-based fuels like heating oil.
These savings aren’t negligible, either. Natural gas-heated homes will save on average more than $100 this winter, and households that use heating oil will spend (again, on average) $760 less. These savings will be especially welcome in poorer households, whose heating bills might comprise a bigger slice of their monthly budget. Expensive energy can be seen as a kind of regressive tax, in that it disproportionately burdens the poor. If that’s the case, then it stands to reason that this mild winter’s low heating bills are nothing less than progressive.
Americans might wonder how the recent price plunges in global natural gas and oil markets might affect them here at home, but already we’re seeing two concrete pieces of evidence in cheaper gasoline and smaller heating bills.
Fracking: Helping Middle America at the expense of dictators. No wonder lefties hate it.
ALL HAIL SHALE: Fracking Is Making America Greener.
Hydraulic fracturing and horizontal well drilling have transformed the American energy landscape in the space of a decade, unlocking huge new reserves of natural gas and oil that were trapped in shale formations and thought to be inaccessible. Fracking has therefore unleashed a flood of new supplies of hydrocarbons on the U.S. market, and that’s brought natural gas down to bargain basement prices.
As the EIA notes, we mostly use coal to generate electricity, but natural gas-fired power plants can accomplish that same task, which is why plunging natural gas prices are putting the squeeze on coal producers. For parts of the country that rely on the coal industry, this is a bitter pill to swallow, but for America’s environmentalists, this ought to be seen as something of a game changer. Coal is just about the dirtiest fossil fuel around, and burning it not only releases copious amounts of greenhouse gases, but also emits harmful air pollutants into the local environment. Natural gas burns much cleaner, emitting roughly half of those GHGs, and it’s growing momentum in this battle against coal can only be seen as good green news.
But the modern environmental movement is loathe to give any sort of credit to the shale boom, preferring instead to stick to its doom-and-gloom prognostications and moralist chiding. That’s a shame, because America isn’t getting the credit it deserves for greening its economy without donning the eco-hairshirt: No other developed country is making more progress in moving away from coal than we are. We’ve said it before but it bears repeating (even if it does fall on deaf ears amongst environmentalists): Shale gas is fracking green.
The thing is, the eco-hairshirt is the chief appeal — besides graft — of environmentalism.
JOEL KOTKIN: Where American Families Are Moving.
Much is made, and rightfully so, about the future trends of America’s demographics, notably the rise of racial minorities and singles as a growing part of our population. Yet far less attention is paid to a factor that will also shape future decades: where families are most likely to settle.
However hip and cool San Francisco, Manhattan, Boston or coastal California may seem, they are not where families are moving.
In a new study by the Chapman Center for Demographics and Policy, we found that the best cities for middle-class families tend to be located outside the largest metropolitan areas. This was based on such factors as housing affordability, migration, income growth, commute times, and middle-income jobs. Many of our best-rated cities tend to mid-sized. The three most highly rated were Des Moines, Iowa, Madison, Wis., and Albany, N.Y., all with populations of less than 1 million. Among our top 10 metropolitan areas for families, five are larger than this, but only two—the Washington, D.C. area and Minneapolis-St. Paul—are among the nation’s 20 largest metropolitan areas.
Our bottom 10 includes the media’s favorite two cities, New York and Los Angeles, also the largest metropolitan areas in the nation. Three other large metropolitan areas rank in the bottom 10: Miami, Riverside-San Bernardino, Calif., and Las Vegas. The hipster cities, in other words, are not so amenable to the new generation of young families.
Hipsterville ain’t the kind of place to raise your kids. In fact, it’s expensive as hell. And that’s by design:
America has always had its fancy neighborhoods, often associated also with racial or ethnic exclusion. But increasingly large parts of the country, and this is true in certain cities and suburbs, are evolving into what Dartmouth University’s William Fischel has called “exclusionary regions”—too expensive for middle-class families to access.
Fischel traces much of this development to regulatory policies that restrict housing supply. In 1970, for example, housing affordability in coastal California metropolitan areas was similar to the rest of the country, as measured by the median multiple (the median house price divided by the median household income). Today, due in part to a generation of strict growth controls, home prices in places like San Francisco and Los Angeles are now three or more times higher than in some other metropolitan areas.
This has enriched the rich, at the expense of working families. Democrats supported it. Why don’t Republicans make an issue of it?
DISPATCHES FROM THE PARENTHESES STATES: California, Leading from Behind, Victor Davis Hanson writes:
California somehow has managed to have the fourth-highest gas taxes in the nation, yet its roads are rated 44th among the 50 states. Nearly 70 percent of California roads are considered to be in poor or mediocre condition by the state senate. In response, the state legislature naturally wants to raise gas taxes, with one proposal calling for an increase of 12 cents per gallon, which would give California the highest gas taxes in the nation.
Because oil prices have crashed, state bureaucrats apparently believe that the public won’t notice the tax increase in their fill-up costs* – even though special California fuel mandates already help make gas prices 25 percent higher than the national average.
Consider California’s upside-down logic.
The state wanted to discourage driving and promote hybrid vehicles by upping taxes on carbon fuels. It worked, though it cost the public dearly. People drove less and bought more fuel-efficient cars. But now, because less gas is burned, fewer taxes are collected. So the state wants to reward motorists for their green sacrifices by raising their taxes even higher to make up for missing revenue. If state motorists drive even less and cram into two-seat commuter cars, will California further reward them with even higher gas taxes?
Meanwhile, in the other big blue parenthesis state, “Cigarette tax revenue plunges as smokers buy outside New York:”
New York state cigarette tax collections have plunged by about $400 million over the past five years…sales of taxed cigs in New York are off by 54 percent in the past decade, which is also cutting into the profits of local store owners peddling smokes. In that same period, about 19 percent of New Yorkers stopped smoking, a pace well below the huge sales dip.
“The Germans call it ‘schadenfreude’ when you take pleasure from another person’s misfortune,” noted Dan Mitchell, a tax expert at the Washington DC-based Cato Institute, commenting on the New York smoking tax fiasco.
Mitchell added, “I confess that I get a certain joy from this story because politicians are being punished for their greed. I like the fact that they have less money to waste.”
To paraphrase VDH’s conclusion, both states have governments that ultimately serve one purpose — reminding Americans what not to do.
*And they’re counting on their Democrat operatives with bylines not to point that out — who are all too eager to follow their marching orders.
BIAS BY OMISSION: “Drivers get no gifts at pump,” read the headline on the front page of the dead tree edition of the San Jose Mercury yesterday, with the subhead, “While most of the nation celebrates holidays with low gas prices. Californians get a lump of coal.” The body of the article is online here; note that there’s no reference to California having some of the highest gas taxes in the country — coupled with some of the worst roads, as the Orange County Register noted earlier this month:
Transportation officials have identified about $57 billion in repairs needed for state roads in the coming decade in addition to about $78 billion needed for local roads, which are partly funded with state money.
Lawmakers in the special session, which was convened by the governor in June, are hoping to introduce a plan early next year that would fund at least a quarter of the total need. But reaching agreement has proved difficult.
Beall has introduced a plan to raise $4.3 billion annually while costing the average motorist about $130 a year, including a 12-cent increase in gas taxes. Gov. Jerry Brown proposed a more modest plan that would raise $3.6 billion a year with an average annual cost to motorists of about $84, including six cents more in gas taxes.
For a variety of reasons, average gas prices in California are already about 25 percent higher than the nation. As of Oct.1, the price in California includes about 41 cents per gallon in state and local taxes and fees, the fifth highest rate in the nation, according to the American Petroleum Institute.
And in their role as Democrat operatives with bylines, the MSM has always been in favor of more and more gas taxes — which is also missing from the Merc’s article.
THE BIDEN ECLIPSE AND THE TRUMP PLATEAU: Peggy Noonan makes a couple of miscalculations in her latest essay. First on Hillary and Obama in 2008, Noonan writes, “The 2008 Democratic contest was a rush to the center, with both leading Democrats, Mrs. Clinton and Barack Obama, trying to show they were moderates at heart.”
But in retrospect, that isn’t quite accurate. In January of 2008, Obama famously told the editors of the San Francisco Chronicle in a chilling monotone that “if somebody wants to build a coal-powered plant, they can; it’s just that it will bankrupt them, because they’re going to be charged a huge sum for all that greenhouse gas that’s being emitted…Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.”
But being good Democrat operatives with bylines, they buried the story instead of realizing the front page scoop they were just handed — “LEADING DEMOCRATIC PRESIDENTIAL CANDIDATE TO BANKRUPT COAL INDUSTRY.” In the fall of 2008, Obama’s future Secretary of Energy Steven Chu mumbled, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe,” to the yawn of a largely urban elite MSM who entirely agreed with his punitive goals.
Similarly, when news that Obama spent nearly two decades in the church of a radical socialist — and racist — who shouted “God damn America” in his “sermons,” the media built a wall around Obama that CNN dubbed — on the air while “interviewing” Obama — as “The Wright-Free Zone.” Much the same was true of Obama’s elitist bitter clingers speech.
It wouldn’t have taken much from old media to highlight Obama’s inner liberal fascist and egg him on to reveal more of it, but 2008 was the year in which any vestigial claims of “objectivity” were completely discarded and the mask was dropped.
Which brings us to Noonan’s second misfire, in which she writes:
The only thing I feel certain of is how we got here. There are many reasons we’re at this moment, but the essential political one is this: Mr. Obama lowered the bar. He was a literal unknown, an obscure former state legislator who hadn’t completed his single term as U.S. senator, but he was charismatic, canny, compelling. He came from nowhere and won it all twice. All previously prevailing standards, all usual expectations, were thrown out the window.
Anyone can run for president now, and in the future anyone will. In 2020 and 2024 we’ll look back on 2016 as the sober good ol’ days. “At least Trump had business experience. He wasn’t just a rock star! He wasn’t just a cable talk-show host!”
Yes, the road to Idiocracy’s President Camacho is paved with good intentions — not the least of which from pundits who held themselves out as conservatives, yet found themselves writing in the fall of 2008:
The case for Barack Obama, in broad strokes:
He has within him the possibility to change the direction and tone of American foreign policy, which need changing; his rise will serve as a practical rebuke to the past five years, which need rebuking; his victory would provide a fresh start in a nation in which a fresh start would come as a national relief. He climbed steep stairs, born off the continent with no father to guide, a dreamy, abandoning mother, mixed race, no connections. He rose with guts and gifts. He is steady, calm, and, in terms of the execution of his political ascent, still the primary and almost only area in which his executive abilities can be discerned, he shows good judgment in terms of whom to hire and consult, what steps to take and moves to make. We witnessed from him this year something unique in American politics: He took down a political machine without raising his voice.
Political stances have consequences: “Natural gas is so abundant and cheap in much of the U.S. that producers want to export it overseas. Except in New England, where gas is so hard to get that companies are importing it from as far away as Yemen.” In this particular case, the stance was we do not want any of those dirty, dirty fossil fuel pipelines in our backyards; and the consequences are soaring natural gas prices (2/3rds higher than the rest of the country) according to the WSJ, with the price probably continuing to skyrocket because of increased demand from consumers and what may be a really, really cold winter*. There’s also apparently the consequence that New England air pollution levels have been rising in the last year due to the need to burn stuff that’s less efficient than natural gas, but that’s a whole different issue**.
…Well. Loathe as I am to see a bunch of Americans pay through the nose for electric – and more importantly, heat – many, many people are going to not-really-nicely note that New Englanders have largely brought this fate down upon themselves by voting in Democrats. And it’s true! New Englanders did, and they have.
But who could have seen this coming? Actually lots of people – including Nick Schulz, my editor back in the day at Tech Central Station, who warned:
For example, energy market analysts predict this winter will see steep rises in home heating bills as the demand for natural gas grows and supply remains tight. And yet, for years politicians have known of the need to bolster supply and yet obstructed efforts to help do so.
Consider the Bay State, where politicians are considering energy price controls. Massachusetts Sens. Kerry and Kennedy have opposed siting LNG terminals in their region. They also recently voted against an energy bill that would help get more natural gas to market. The Bay State political class has been blocking the surest way to decrease energy costs for their constituents by opposing measures to ease supply. And now it wants price controls? This makes no sense.
In the past 30 years, most people have learned critical lessons. The knee-jerk reaction of capping prices is seen as deeply imprudent by nearly every serious economist and by most political leaders. The basics of free-market dynamics are now pretty well engrained in the culture… but there are holdouts in bell bottoms.
Nick wrote that a decade ago – but then, time always stands still on the “Progressive” left.
OBAMA VISITS WITH TOP NEWSPAPER EXECUTIVES RAISE QUESTIONS ABOUT MEDIA FAIRNESS:
In recent weeks, the president has gotten cozy with top executives at major U.S. newspapers, headlining a Democratic Party fundraiser at the home of Las Vegas Sun owner Brian Greenspun and dining at the Anchorage home of Alaska Dispatch News publisher Alice Rogoff during a three-day trek across the state last week.
On the surface the events didn’t seem to influence either paper’s coverage of the president during his stays in Las Vegas and Alaska, but journalism specialists say they may have raised questions in the eyes of average Americans about the fairness of the news media.
At the same time, however, a distinction must be drawn between the business leaders at an individual media outlet and the reporters who work beneath them, says John Watson, director of the journalism division at American University.
“Here’s a news flash for you: The people who own newspapers and the people who publish newspapers aren’t journalists. They’re business people,” Mr. Watson said. “Owners and publishers aren’t journalists, even though they own and employ journalists. It’s different.
Nahh, it really isn’t; as the passage I highlighted above regarding a Democrat fundraiser in the home of the Sun’s publisher, he and his journalists are all, as Glenn likes to call them, Democratic operatives — and the vast majority of news consumers on both sides of the aisle know this already and can adjust their expectations accordingly. Nobody is still claiming with a straight face that the media is objective — or even should be – at this late date.
And second, it’s worth noting that even when Obama has been aboveboard with journalists, their role as party operatives supersedes their ability to report news. Recall Obama’s infamous quotes, which rocketed through the Blogosphere immediately before the November 2008 election that he would bankrupt the coal industry and that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”
These promises, spoken in a chilling monotone by Obama sat, out in the open, as part of an hour-long video uploaded without comment in January of 2008 by the San Francisco Chronicle. They were recorded during his meeting with the paper’s editors to discuss his policies in general. No matter what your beliefs on environmentalism are, if you’re a journalist, a major presidential candidate promising to raise consumers’ energy prices and bankrupt an entire industry should be 48-point all-caps front page news. Instead, Obama’s remarks went uncommented on by the Chronicle, meaning either they’re lousy journalists who don’t know when a major story has been handed to them, or they’re Democratic operatives with bylines.
Or both. Any questions about media “fairness” were answered quite a long time ago.
TWO GRAY LADIES IN ONE! “For Labor Day Drivers, Lowest Gasoline Prices in 11 Years,” the New York Times reports today.
IS THIS THE HOPE OR THE CHANGE? Latest California Proposal Features Gas Rationing.
As Obama promised the San Francisco Chronicle in 2008, energy prices will “skyrocket”; Sacramento, already infamous as the source of the highest gas prices in America, seems determined to make that the one campaign promise Mr. Obama delivers on.
TOM STEYER WANTS TO KNOW WHY THE GAS PRICES HE JACKED UP ARE SO HIGH:
It’s impossible to simply skim over the irony of someone demanding to know why gas prices are so high in the very same press release where they push for an additional ten percent tax on oil extraction. Does Tom Steyer actually understand where gas comes from? While it may come as a terrible shock to find out that gasoline is refined from crude oil and the cost of extracting and refining that oil feeds directly into the cost of the finished product, there’s more at work than that. California is a regulation and tax happy paradise and the voters there can frequently be rallied to support all manner of referendum driven schemes when they are portrayed as ways to save the world. Steyer himself has participated in quite a few of these, some of which are coming home to roost in the form of the precise problem he’s now trying to solve.
Isn’t the very essence of 21st leftism a Mobius Loop of more and more regulations and restrictions in a continual effort to “fix” the problems created by earlier generations of leftists?
(Though to be fair, why should Republicans have the lock on the kabuki of “failure theater?”)
UNEXPECTEDLY: Fall in gas prices hasn’t led to increased consumer spending. “Visa CFO Prabhu also said the company felt that the money being conserved at the pump was being funneled into savings accounts, a trend that has been backed up in various economic data reports. . . . But just a few months ago, the collapse in gas prices was supposed to be the next big thing for the US economy. Instead, it seems like nothing has happened.”
Maybe consumers realize that we can’t expect any real economic improvement until after January 2017 at the earliest.
SHALE HAS FAILED IN EUROPE:
Europe has watched the American shale revolution with envious eyes these last few years, and a number of countries—from the UK to Poland to Lithuania—have attempted to replicate U.S. success. But no one has been able to manage to put together the unique set of circumstances that have helped shale flourish here in the states, and the momentum behind fracking operations is stalling across Europe. . . .
Never is a long time, and it’s possible that as fracking technology advances operators will find ways to work with Europe’s trickier geology. But shale is already a high-cost resource, and with lower crude prices threatening American operations that already have a flourishing industry behind them, it’s hard to envisage Europe kick-starting its own boom in these market conditions. The U.S. “fracklog”, booming OPEC production, and sluggish global demand are all conspiring to keep prices down for the foreseeable future, and in so doing will likely keep European shale reserves in the ground.
Moscow is the only big winner here. Putin will be heartened to hear of Europe’s shale failures because it gives him more control over his Western customers and hamstrings their ability to find alternatives to Gazprom gas. For the time being, it looks like the only shale gas Europe will be consuming will be in the form of American LNG.
Fracking technology is advancing very rapidly. But for the moment, the U.S. is way ahead of everybody. We should be exploiting that advantage.
Russia failed to deliver the knockout blow last spring, allowing Kyiv to recover and establish firm control throughout most of the country, even its Russophone portions. Moscow retains the military upper hand as the two countries settle into a protracted stalemate in the Donbass, but the Kremlin’s strategy must take into account a number of factors that bode ill for Russia in the longer run.
Ukraine has stumbled upon a most improbable ally—Saudi Arabia. In a stark example of the law of unintended consequences, the Russian economy has sustained heavy collateral damage from the Saudi campaign against North American shale-oil production (and secondarily, against Iran). The war of attrition in the Donbass is in large measure hostage to the economic war of attrition in the Bakken formation. This situation, unanticipated by Russia (or anyone else, to be fair) when it invaded Ukraine, appears likely to depress energy prices for years to come, sapping the strength of Russia’s economy and hence the country’s ability to wage war. A major cataclysm in the Middle East could turn energy prices around, of course, but it is instructive that oil prices have plummeted even in the face of Islamist depredations in Iraq and chronic chaos in Libya—and the loosening of sanctions on Iran would bring even more oil and gas onto the market.
If the Saudi factor was unforeseeable, the Western response to the invasion of Ukraine appears to represent an actual miscalculation by Moscow. The Kremlin no doubt expected something akin to the reaction over Georgia in 2008—some harsh Western rhetoric, a few pro forma sanctions, and, six months later, a proffered reset button and the resumption of business as usual. Instead, Western governments have imposed fairly extensive sanctions and have thus far stuck to them. Sanctions against individuals are largely symbolic, but restrictions on lending are a genuine hardship to Russian companies, especially in the current economic downturn.
Russia’s problem is that although Putin is bold, he leads a country that is fundamentally weak. Putin’s boldness — especially in the face of Obama’s post-election “flexibility” — can make up for that to a degree, but only so much. And Poland, the Baltics, Finland, etc. are all toughening up in response to the threat that Russia poses. I wouldn’t be shocked if Poland somehow obtained some nuclear weapons from somewhere.
KEVIN WILLIAMSON: With Hillary, Appearances Are Everything.
Every Mystery Machine must have its Velma. You’ll remember Velma Dinkley, the grim-faced young fogey of the Scooby-Doo gang: turtleneck and knee socks, orange; pleated skirt and pumps, red; spectacle lenses a very groovy shade of aqua; hair in a severe, LPGA-ready bob. She was the thick and bookish counterpoint to the comely Daphne Blake. But the id moves in mysterious ways, and Velma has enjoyed a strange post-1970s career as a minor object of erotic fixation, being portrayed on film by the knockout Linda Cardellini and, in a dramatic illustration of Rule 34, by the pornographic actress Bobbi Starr. . . .
Sharon Stone, the Clintons, Scooby-Doo, the man-feminists of the New York art scene, the just-one-name-like-Sting-or-Cher thing: That Hillary Show has a distinctly retro feel to it already. We have seen this movie before: Last Vegas, The Bucket List, About Schmidt, John Podesta and Paul Begala starring in Grumpy Old Men. Once more unto the breach. The Lion in Winter, with all the domestic friction and succession drama but no lion.
Herself, who speaks in clichés and who gives some indication that she thinks in them, too, says that she is in the van — “Road trip!” she tweeted — because she is “hitting the road to earn your vote.” The Clintons — not too long ago “dead broke,” as Herself put it — have earned well more than $100 million since the president left office, the Washington Post reports, with his speech income alone amounting to some $105 million.
That’s armored-car money, and an armored car is of course what Herself is riding around in, as she did during her first Senate campaign. There is something ineffably Clintonesque in that: She declined the use of the customary limousine because she wanted to appear to share the lives and troubles of the ordinary people, so she rides around in a customized armored van, having spent a great deal of money — starting prices for such vehicles are comparable to those of Porsches — to avoid the appearance that she has a great deal of money. . . .
Appearances apparently do matter. That van is the cosmetic surgery of populism, the tummy tuck of a 1 percenter auditioning for a role somewhere between Evita and Auntie Mame. But the Clintons have always had a strange knack for getting people to admire them for their phoniness, not in spite of it. Their admirers — and there are many of them — are like those odd ducks who prefer breast implants to the genuine articles, the more obviously artificial the better.
That’s the strange thing about the career of Herself: Because she is a feminist, or at least a woman who plays one on television, to bring up the subject of her appearance is taken as prima facie chauvinism, boorish boobishness of the sort that illustrates exactly why we need a woman as president. (Maybe. But this woman?) At the same time, appearance is 83 percent of every presidential campaign, and 97 percent — at least — of a Hillary Rodham Clinton campaign. In some cases, the appeal is literally skin deep: When Team Herself unveiled its campaign icon — an uppercase “H” with a vector pointing to the right — the daft young actress Lena Dunham remarked that she wanted to get a “tramp stamp” tattoo of the logo.
Read the whole thing.
FROM MOE LANE: The Bush Era: A Reminder:
Gas prices were low.
So was unemployment.
The labor participation rate was higher.
Minority representation in the middle class was increasing.
We had a manned space program.
We had elections in Iraqi towns, instead of slave auctions.
Our allies in Europe trusted us.
Our rivals worldwide were wary of us.
And our enemies did their absolute damnedest to hide from us. Well. The ones still breathing, at least.
Those were the days.
WELL, GOOD: Green Europe Moves Against “Green” Biofuels:
Brussels put another dagger in the heart of the “green” biofuel industry this week, coming to a preliminary agreement on limiting mandates for crop-based biofuels. . . .
Just a few short years ago breathless greens were touting the environmental merits of growing our gas, but the facts have quickly overtaken those claims—and the myriad government subsidy regimes they spawned.
The more you think about it, the less “green” crop-based biofuels appear: They’re often an inefficient and therefore costly way to produce transport fuel; their ability to reduce emissions is dubious at best (in some cases they’ve been shown to actually increase greenhouse gas emissions); they often lead to local environmental damage as farmers eager to take advantage of government support clear-cut their way to unsustainability; and they drive up global food prices, starving the world’s poor.
Nothing to be proud of, there.
JOEL KOTKIN: U.S. Economy Needs Hardhats Not Nerds.
One consistent theme of blue-state pundits, such as Richard Florida, is that blue states and cities “are pioneering the new economic order that will determine our future.” In this assessment, the red states depend on an economy based on energy extraction, agriculture and suburban sprawl. By this logic, growing food for mass market consumers, building houses for the middle class, making cars, drilling for oil and gas—all things that occur in the red state backwaters—are intrinsically less important than the ideas of nerds of Silicon Valley, the financial engineers of Wall Street, and their scattered offspring around the country.
But here’s a little problem: these industries do not provide anything like the benefits that more traditional industries—manufacturing, energy, housing—give to the middle and working classes. In fact, since 2007, according to the Bureau of Labor Statistics, the information and technology sectors have lost more than 337,000 jobs, in part as traditional media jobs get swallowed by the Internet. Even last year, which may well prove the height of the current boom, the information and technology industry created a net 2,000 jobs. And while social and on-line media may be expanding, having added 5,000 jobs over the last decade, traditional media lost ten times as many positions, according to Pew.
In contrast, energy has been a consistent job-gainer, adding more than 200,000 jobs during the same decade. And while manufacturing lost net jobs since 2007, it has been on a roll, last year adding more than 170,000 new positions. Construction, another sector hard hit in the recession, added 213,000 positions last year. The recovery of these industries has been critical to reducing unemployment and bringing the first glimmer of hope to many, particularly in the long suffering Great Lakes region.
These tangible industries seem to be largely irrelevant to deep blue economies. A prospective decline of energy jobs, for example, does not hurt places like California or New York, which depend heavily on other regions to do the dirty work. Overall, for example, California, despite its massive energy reserves, created merely 15,000 jobs since 2007, barely one-tenth as many as in Texas. Energy employment in key blue cities such as New York and San Francisco has remained stagnant, and actually declined in Boston. . . .
The new ephemera-based economy thrills those who celebrate a brave new world led by intrepid tech oligarchs and Wall Street money-men. The oligarchs in these industries have gotten much, much richer during the current recovery, not only through stocks and IPOs, but also from ultra-inflated real estate in select regional areas, particularly New York City and coastal California. As economist George Stiglitz has noted, such inflation on land costs has been as pervasive an effect of Fed policy as anything else.
Even in Houston, some academics hail the impending “collapse of the oil industrial economy,” even as they urge city leaders to compete with places like San Francisco for the much ballyhooed “creative class.” Yet University of Houston economist Bill Gilmer notes that low energy prices are driving tens of billions of new investment at the port and on the industrial east side of the city. This growth, he suggests, may help offset some of the inevitable losses in the more white collar side of the energy complex.
The emergence of a new ephemera-led economy bodes very poorly for most Americans, and not just Texans or residents of North Dakota. The deindustrialized ephemera-dominated economy of Brooklyn, for example, has made some rich, but overall incomes have dropped over the last decade; roughly one in four Brooklynites, overwhelmingly black and Hispanic, lives in poverty. Similar patterns of increased racial segregation and middle class flight can be found in other post-industrial cities, including one-time powerhouse Chicago, where areas of concentrated poverty have expanded in recent years.
Nowhere is this clearer than in ephemera central: California.
The rich get richer, the poor get poorer, and the middle class gets squeezed. Hope and change!
CHEAP GAS PROBABLY WON’T LAST:
No one knows exactly what factors are causing prices to fall so far, so fast, but there is a strong suspicion that Saudi Arabia, which you can think of as the central banker of OPEC, is letting prices fall in the hopes of killing off the competition from U.S. and Canadian shale oil. The question, then, is: Who will blink first?
At first blush, you might think that Middle Eastern oil producers have the upper hand. Their oil requires relatively little investment to get out of the ground; it’s not quite as simple as sticking a straw in the desert and sucking out the black stuff, but it sure looks like that compared to the complexity of a fracking operation. And fracking wells dry up fairly quickly, requiring even more investment just to stay in place.
But the shale oil producers also have some advantages. First of all, the Saudis need high prices to support their government spending — the IMF estimates that they require a price of about $90 a barrel just to pay the bills. That means they can’t keep up a price war forever. Second of all, upstart industries tend to improve pretty quickly in their first years or decades of operation, and fracking is no exception; my Bloomberg News colleagues report that the break-even point for many operations is $70 or less, which is lower than OPEC nations can sustain.
Even if they manage to push U.S. and Canadian fracking operations offline temporarily, the technology and expertise still exist. It took less than 10 years from the time when prices started soaring to the point where the U.S. was producing more oil than most OPEC members. If oil prices soared again, it would take even less time to get up and running again.
WELL, THEY PROMISED “CHANGE.” Dems change tune after mocking GOP for ‘drill, baby, drill.’
Back when gas topped $4 a gallon, Republicans chanted “drill, baby, drill” at rallies across the country — arguing more domestic drilling would increase supplies, reduce dependence on foreign oil and boost the U.S. economy.
Democrats, almost universally, mocked the GOP plan. In 2012, President Obama called it “a slogan, a gimmick, and a bumper sticker … not a strategy.”
“They were waving their three-point plans for $2-a-gallon gas,” Obama told a laughing audience during an energy speech in Washington. “You remember that? Drill, baby, drill. We were going through all that. And none of it was really going to do anything to solve the problem.”
“‘Drill, baby, drill’ won’t lower gas prices today or tomorrow,” Rep. Janice Hahn, D-Calif., echoed on the floor of Congress in 2012. “But it will fuel our addiction to fossil fuel.”
Today, Democrats are singing a different tune, as increased domestic drilling has led to a record supply of domestic crude, put some $100 billion into the pockets of U.S. consumers and sent world oil prices tumbling.
They fought the law (of supply and demand) and the law won.
HOW SOCIAL COUNTERREVOLUTIONS BEGIN: ‘No’ Is a Woman’s Most Powerful Word.
Whether or not “no means no” might have been adequate to prevent the problems of date rapes behind the sock hop, it was not adequate to all the difficulties we faced. My generation drank more than our mothers had, so that women were more frequently incapable of saying no, or much of anything else. There were no parietal rules to keep us out of each other’s rooms, or force us to come home at an early hour. Nor could we fall back on “nice girls don’t”; we had to refuse this specific man each time, not on the grounds that some external force was stopping us, but because we simply didn’t want to have sex with him. That’s an uncomfortable conversation, and modern though we may be, most of us still hated uncomfortable conversations, especially if we’d had a few and just wanted to go to sleep.
I’m not calling for a return to single-sex dorms, curfew rules, and the presumption that “nice girls don’t.” I’m just pointing out that these things gave our mothers an easy way to say “no” that didn’t have to be explained or defended, and wouldn’t be taken as a specific rejection of this person right in front of you. We were chanting a slogan designed for a world that no longer existed. In the world where we lived, it required an assertiveness and a confident self-knowledge that a lot of 19-year-old girls found hard to muster. It required actions we weren’t always willing to take, like loudly saying “no,” and leaving if he persisted. In other words, it left us vulnerable, though not in the same way that our mothers had been. . . .
It is not the word “no” that women are struggling with; it is the concept of utter refusal. That is what has to change, not the words to describe it. It is perhaps unfair that this burden should be placed on women, especially when we are socialized to be accommodating and “nice” (especially to men). Unfortunately, no one else can bear the burden of deciding who we want to have sex with, and then articulating it forcefully.
Nor should feminists be eager to help women avoid the burden of deciding, and then stating their opinion in the strongest possible terms. “No” and “I don’t want to” are great tools for women to master. For centuries, society protected nice middle-class women from having to use them by deciding what we wanted, and punishing anyone who wanted anything else. Now that those rules are gone, some feminists are essentially advocating handing the burden of deciding what we want over to … men, who are supposed to guess whether we are offering “affirmative consent,” and be punished if they guess wrong.
We’ve reached the point that yes doesn’t even mean yes. Meanwhile, as Don Surber notes, under modern feminism even women bosses in the workplace want men to spare them the pain of definite statements.
The point of her piece was that men have to understand the rules of women in the workplace, and not that women have to understand the rules of business. She uses a wifely logic:
I’ve been at countless meetings at various news organizations where a male editor, suggesting a story idea, loudly declares something like: “We need a piece on the drop in gas prices!” A woman, making the same point, might ask hesitantly: “Has anyone noticed that gas prices are falling? Do we know why?”
Both are saying exactly the same thing: Get me the damn story on gas prices, and get it now.
It’s the old if-you-really-love-me-you’d-know-what-I-mean routine.
But actually they are not saying the same thing. One is giving an order (“We need a piece on the drop in gas prices!”), the other is asking pointless questions (“Has anyone noticed that gas prices are falling? Do we know why?”). The problem is the second speaker is not saying what she means, which means she is a poor communicator, which makes her a bad boss. The whole piece is that kind of passive-aggressive nonsense.
This is what a feminist looks like, at the end of 2014. Women used to be made of sterner stuff. No wonder so few women self-identify as feminist now.
WHAT HATH FRACKING WROUGHT? The New Oil Order: OPEC feels the squeeze from the U.S. shale boom.
Meanwhile, lower oil prices are an unmitigated boon to American consumers. The average gasoline price per gallon in the U.S. fell to $2.79 on Friday, down 50 cents from a year ago. That’s a big difference to the average family filling up the SUV each week, especially wage earners who haven’t had an increase in their standard of living during this entire economic expansion. Consumers who feel less pinched might open their checkbooks for non-energy purchases.
Lower prices will also add to the economic pressure on some of the world’s worst dictators, notably Vladimir Putin . Russia doesn’t belong to OPEC but it has benefited to the extent that the cartel’s production controls have kept prices high. Already under pressure from EU and U.S. sanctions, Mr. Putin’s ability to buy domestic political support will decline along with oil prices.
All of these benefits are flowing from a U.S. oil boom that government didn’t predict and had almost nothing to do with. The political class has force-fed subsidies to renewable energy with little economic benefit. The new oil order is a reminder that markets and American ingenuity are better economic pillars than all the schemes of government planners.
Yes, but on the other hand they offer insufficient opportunities for graft.
The benchmark for American crude, called the West Texas Intermediate (WTI), fell below $80 per barrel for the first time in more than two years in trading today before staging a small rally. Similarly, Brent crude, Europe’s benchmark, traded below $83 per barrel, a four-year low, before seeing a slight rebound on what Reuters explains to be “technical buying ahead of options expiry for U.S. crude oil and contract expiry for Brent crude.”
But temporary rebound notwithstanding, there’s no denying that this is a bear market for crude oil. Brent prices have dropped by more than 28 percent since June, while WTI has tumbled nearly 25 percent in that same time period. Weak demand has collided with an oversupplied market, partly due to Libyan supplies coming back online after protracted disruptions, and, of course, in part due to booming supplies out of the suddenly shale-rich America.
The question on everyone’s minds is, where is OPEC? The cartel of petrostates has colluded in the past to cut production to keep prices artificially high, yet the organization’s largest producer and, historically, the one most likely to take the lead on these cuts—Saudi Arabia—has cut prices, not production, in recent weeks. . . .
There has been some speculation that the Saudis may be looking to abdicate their role as OPEC’s (and therefore the world’s) de facto swing supplier, banking on the fact that U.S. shale producers, the new kids on the block, will soon have to cut production because fracking will cease to be profitable. America’s unconventional oil drilling tends to be more expensive; the IEA recently announced that at $80 per barrel, 96 percent of shale drilling would still be profitable, but if WTI prices were to dip much lower, the shale boom would hit a considerable hurdle.
We’re not there yet, and in fact the price of oil today exists in a kind of sweet spot: high enough to continue to incentivize U.S. fracking, but low enough to benefit American consumers (average gas prices in the U.S. are at their lowest level since 2011) and stymie some of America’s geopolitical opponents. Russia, for example, needs oil to trade above $100 per barrel to balance its budget.
The Saudi strategy isn’t unlike a game of chicken. The Saudi breakeven price hovers around $93 per barrel, and while it can afford to operate in the red to gain market share for now, it may not be able to do so in the long term. Banking on American shale production cuts may be a bigger gamble than the Saudis expect, too: it will take some time for the market to shift and fracking to draw down, even if prices continue to plunge.
And U.S. shale has a final trump card: innovation. Though fracked wells have steep decline rates, drillers continue to optimize rigs and maximize output while minimizing costs.
Under a Reynolds Administration, I’d respond to this “chicken” game by opening up federal lands to exploration and drilling.
UPDATE: Some support for a Reynolds 2016 campaign in the comments. Hmm. What would my slogan be? How about An Inexperienced Law-Professor President Got Us Into This Mess, And It’ll Take An Inexperienced Law-Professor President To Get Us Out!
FASTER, PLEASE: Shale Boom Has America Sitting Pretty.
The shale revolution has quickly and completely remade America’s energy landscape, leaving us in a much stronger position, both economically and geopolitically, than where we found ourselves just a decade ago. . . .
Cheap energy is key for economic growth, and a glut of natural gas is leading to a kind of small renaissance in American manufacturing, especially in energy-intensive industries. More fracking means more gas, lower prices, and growth potential for firms that use that gas. And then there’s the geopolitical aspect of the shale boom. . . .
America is poised to become the world’s top liquid petroleum producer, supplanting perennial hydrocarbon powerhouses like Russia and Saudi Arabia. Where just a decade ago we were busy building liquified natural gas (LNG) import terminals, now we’re busy converting those facilities to handle exports, and the possibility of opening up crude exports has entered the American energy discussion.
By lessening our dependence on foreign sources of oil and gas, the shale boom has given us more options abroad, and in some cases, as is intimated in the NYT story, has given America more clout in diplomatic standoffs.
There’s an economic success story here, and a geopolitical one as well—and both come courtesy of fracking.
And both come without any assistance from — and in fact in the face of some opposition from — the Obama Administration. Imagine what a competent president could do.
IMAGINE HOW WELL OFF WE’D BE IF WE OPENED UP FEDERAL LANDS TO DRILLING: A New American Oil Bonanza. “Most of the price of gasoline is determined by the world price of crude, now hovering around $100 a barrel. Turmoil in major producer countries like Iraq and Libya does matter. But the new source of American energy means more supply has been added to global markets — almost the exact amount that has been taken off the market at times because of unrest in the Middle East and Africa over the last five years.”
JOEL KOTKIN: Democrats Risk Blue Collar Rebellion.
In some senses, this budding blue-collar rebellion exposes the essential contradiction between the party’s now-dominant gentry Left and its much larger and less well-off voting base. For the people who fund the party – public employee unions, Silicon Valley and Hollywood – higher energy prices are more than worth the advantages. Public unions get to administer the program and gain in power and employment while venture capitalists and firms, like Google, get to profit on mandated “green energy” schemes.
What’s in it for Hollywood? Well, entertainment companies are shifting production elsewhere in response to subsidies offered by other states, localities and companies, so high energy costs and growing impoverishment across Southern California doesn’t figure to really hurt their businesses. Furthermore, by embracing “green” policies, the famously narcissistic Hollywood crowd also gets to feel good about themselves, a motivation not to be underestimated.
This upside, however, does not cancel out hoary factors such as geography, race and class. One can expect lock-step support for any proposed shade of green from most coastal Democrats. Among lawmakers, the new Democratic dissenters don’t tend to come from Malibu or Portola Valley. They often represent heavily Latino areas of the Inland Empire and Central Valley, where people tend to have less money, longer drives to work and a harder time affording a decent home. Cap and trade’s impact on gasoline prices – which could approach an additional $2 a gallon by 2020 – is a very big deal in these regions.
Many of these same people historically have worked in industries such as manufacturing and logistics, industries that rely on reasonable energy prices.
Omelettes, eggs, whatever.
IRAQ: Why It’s Worse Than You Think. Not sure I buy this projection, but I sure hope my skepticism is justified.
UNDER MY PLAN, ELECTRICITY PRICES WILL NECESSARILY SKYROCKET: Obama Said to Propose Deep Cuts to Power-Plant Emissions.
THE ROAD TO SERFDOM – NOW WITH E-Z PASS! Obama’s highway tolls take cash, time and privacy, Glenn Reynolds writes in his latest USA Today column.
OBAMA’S HIGHWAY TOLLS TAKE CASH, TIME AND PRIVACY, Glenn Reynolds writes in his latest USA Today column.
THE LAW OF UNINTENDED CONSEQUENCES: Obama’s highway tolls take cash, time and privacy, Glenn Reynolds writes in his latest USA Today column.
THE LAW OF UNINTENDED CONSEQUENCES: Obama’s highway tolls take cash, time and privacy, Glenn Reynolds writes in his latest USA Today column.
THE ROAD TO SERFDOM – NOW WITH E-Z PASS! Obama’s highway tolls take cash, time and privacy, Glenn Reynolds writes in his latest USA Today column:
It’s yet another lesson in the law of unintended consequences — and, as usual, the government wants us to pick up the tab for its poor planning. This time, it’s the Obama administration’s proposal to allow tolls on interstate highways, where such tolls have been banned since the Eisenhower days.
The problem is that government efforts to discourage driving and to encourage fuel conservation have been successful. With people burning less gas, revenues from the gasoline tax are down.
People burning less gas is what the government wanted. But with gas prices at historically high levels (often over four bucks a gallon), and with trust in government at historic lows, politicians aren’t too enthusiastic about taking the obvious step, increasing the gas tax. They don’t want to take the heat. Instead, they’re looking to increase revenue in other, less obvious ways.
Read the whole thing.
#GREENFAIL: Titans of EU Industry: Green Follies Are Killing Us:
Europe’s dogged pursuit of a solar- and wind-powered future has jacked up energy prices for households and industry alike. For families, it has meant higher monthly power bills—a tax felt most keenly by the poor. For businesses, it has even farther-reaching implications. As the EUobserver reports, more than a hundred leaders of European industry are warning that these rising costs are threatening the EU’s economic recovery. . . .
This isn’t just a matter of lower-than-expected GDP growth for EU member states. Europe has staked out a position as a global leader in green initiatives, so for many of these CEOs the recent rise in electricity prices is only the beginning. Overall, the costs of doing business in Europe are edging toward the unworkable. For multinationals, healthier energy and regulatory environments are beckoning. In particular, the shale boom has made the United States an especially attractive home for energy-intensive industry.
Europe is beginning to feel the pains of its policy of placing the environment before the economy. This is a shame, because the two aren’t necessarily mutually exclusive. America is an excellent example of a healthier balance: by embracing shale gas, it has been able to wean itself somewhat off of coal, both reducing emissions and bringing prices down. Europe has plenty of shale itself, if it would only embrace it.
Doing so would also weaken Putin, and Arab petro-states. Greens would oppose it — but that’s because they don’t want you to be rich and happy. Much less independent.
The European Commission wants to forgo ambitious climate protection goals and pave the way for fracking — jeopardizing Germany’s touted energy revolution in the process.
The climate between Brussels and Berlin is polluted, something European Commission officials attribute, among other things, to the “reckless” way German Chancellor Angela Merkel blocked stricter exhaust emissions during her re-election campaign to placate domestic automotive manufacturers like Daimler and BMW. This kind of blatant self-interest, officials complained at the time, is poisoning the climate.
At the heart of the matter is the simple fact that renewable energy comes at a premium, and the costs for propping it up have been passed along to consumers, both industrial and residential, in the form of higher electricity costs.
Yet this turn towards green energy has produced a browner energy landscape. Germany produced more energy from coal in 2013 than it had in nearly a quarter century, and its emissions actually rose. . . .
German businesses are considering jumping ship for cheaper energy prices in the developing world or (gasp!) the United States. For households, these subsidies have acted like a particularly regressive tax: The poor feel the bite of higher electricity bills than do the rich. Germany’s new energy and economy minister Sigmar Gabriel is expected to announce a plan to cut renewable energy subsidies later this week in an effort to keep electricity prices down. That will be a step in the right direction, but significant damage has already been done.
Something that can’t go on forever, won’t.
HIGHER EDUCATION BUBBLE UPDATE, LEGAL EDUCATION EDITION: UC Hastings Law Dean Admits Major Flaws In Legal Education.
Wu compares law schools to Detroit automakers that assumed that when gasoline prices came down, people would flock to American-made cars again. “They mistook the cycle for the long-term trend,” Wu points out. “I believe we’re living through profound structural change. It’s not a cycle.”
Well, it’s both. But the change will remain even when the cycle reverses.
EVERGREEN HEADLINE: Ethanol Still A Boondoggle.
The ethanol targets set by the Renewable Fuel Standard are out of sync with both the demand for ethanol and its potential supply. Gasoline consumption is projected to be relatively flat this year, a change that the Renewable Fuel Standard lacks a mechanism to account for. This shortfall in demand could potentially be fixed if producers up the percentage of ethanol they mix in with their gasoline past the current industry standard of 10 percent, but few oil companies are willing to move past this so-called “blend wall,” citing studies that link higher ethanol content with engine damage. Even if refiners started blending in more ethanol, the supply problem remains: this year’s supply is projected to be less than the mandate.
All of this explains why oil companies are snatching up increasingly-rare RINs at ever-higher prices. Oh, the RIN-sanity!
This is a mess even before you consider the foibles of the source of the lion’s share of this ethanol: corn. Before the Renewable Fuel Standard set these arbitrarily high targets, the US used just 23 percent of its corn to produce ethanol. Last year 43 percent of our corn crops went towards producing the biofuel. That shift has driven up global prices for corn, starving the world’s poor and potentially fueling food riots. And to what end? Corn ethanol is categorized as a biofuel, but it doesn’t reduce emissions. Advanced biofuels produced from such sources as sugarcane and algae pass the green test, but they haven’t yet proven their commercial viability.
It’s a crime against humanity. When do the trials start?
UPDATE: Reader J. Johnson writes:
Something that very seldom is mentioned in re the ethanol boondoogle is the profound effect the ethanol mandate has had on land prices in the midwest USA. The impact of ethanol on corn prices has been monumental, with average prices per bushel nearly double (and sometimes much more than that) what they were prior to the ethanol mandate. In turn, this has driven the prices of ‘corn ground’ profoundly higher, such that there are now hundreds of thousands of acres in the midwestern corn belt and elsewhere with prices (as much as $12,000/acre) which are completely unsustainable if the mandate was eliminated or substantially rolled back. It would result in a farm-belt crisis akin to what happened in the early 1980’s when tens of thousands of farmers went bankrupt when land prices collapsed.
A ‘partner in crime’ in this fiasco is Bernanke, whose zero interest rate policy has allowed farmers, bankers and speculators to pay exhorbitant prices for farm ground that is used strictly for producing corn for ethanol and servicing of the enormous debt associated with much of this acreage depends totally on continuation of the ethanol mandate. This mostly hidden debt bomb probably explains why the mandate not only continues, but is possibly going to get even more onerous. There are just too many money men who have too much to lose if anything changes.
Seems like it’s market-distorting cronyism all the way down, these days.
NEWS YOU CAN USE: How The IRS Wrecked Your Pension.
Back in the day, long before the stock market boom began, the IRS decided that pension funds were a problem, taxwise. As I understand it, this problem was mostly in small professional practices like doctors and lawyers offices. The doctors and lawyers would employ one or two other people, most of them transient single women who could be expected to leave to get married long before their pension vested. So you’d set up a “pension plan” in which, realistically, you were going to be the beneficiary. Then you’d stuff it full of money, far more than you needed to pay out your pension. It was a pretty nice tax shelter.
So the IRS got very strict about pension overfunding: they didn’t allow it. Or rather, they allowed it, but they wouldn’t let you deduct any payments into an already overfunded plan. Farewell, tax shelter.
This was fine in the 1970s, when the market just sort of lay there like a dying fish, occasionally flopping around, but mostly just gasping for air. However, by the late 1990s, a whole lot of pension plans were overfunded. Which created something of a problem. In popular legend, all these pension fund managers were total idiots who didn’t understand that the market was in a bubble, dammit. Undoubtedly, in some cases, this legend is even true. But in most cases, it wasn’t. The pension consultants and money managers who were responsible for calculating the required contributions were well aware that the rocket-fuelled 1990s price increases were not likely to continue forever. They even understood that prices were likely to fall, leaving the funds not-so-funded. They wanted to keep pouring contributions into the funds in order to protect against the inevitable decline. But the IRS wouldn’t let them.
This is excellent news for the US. Greater domestic production is a boon to the economy, and fewer imports gives us more flexibility when dealing with the world’s petrostates. (But as Gal Luft and Anne Korin wrote for The American Interest last July, to speak of true “energy independence” is folly.)
Even if North America becomes completely oil self-sufficient—a possibility if you count Canada’s oil supplies in the equation as well—the continent will still be vulnerable to international oil price spikes. That’s because oil is a globally-traded commodity, and a very liquid one at that. The US has gone out of its way to break down the barriers to global oil trade over the past few decades to ensure a robust, multipolar supply chain. The result is that the price of oil drilled in the US is tied to the price of oil abroad. That’s partly why gas prices aren’t coming down as domestic production rises. It’s also why we can’t expect to be able to completely write off troubled or troubling oil-rich regions. . . .
Having said all that, this is still news to celebrate. It gives the US more flexibility in its Middle East policies and brings the country a new wave of wealth and jobs. That’s yet another reason to be optimistic about America’s future in this still-young century.
FRACKING UPDATE: U.S. Poaches Industry From Europe With Shale Gas:
The sweet scent of cheap gas is luring manufacturing back to the United States. The German chemicals company BASF is one of many energy-intensive firms looking to open plants stateside. . . .
American government got out of the way of innovative drilling companies and allowed the shale boom to take off. Europe took the opposite tack, choosing to stick to its green policies and snub shale. As a result, natural gas prices in the US are a quarter of what they are in Europe. And as industry departs, unemployment in the Euro zone is hitting a record high. That’s yet another failure that can be laid at the feet of Europe’s greens.
Along with those ethanol-fuel “crimes against humanity,” of which our government, alas, is also guilty.
INVESTOR’S BUSINESS DAILY: As Gas Prices Spike, Obama Recycles Failed Policies.
HOPEY-CHANGEY: Soaring gas costs leave consumers anxious about economy. “The government regularly issues reports on unemployment, housing starts and manufacturers’ output to track the economy’s progress. But for the average person, the top economic indicator is the price he or she pays at the pump, experts said. And at a time of record-high gas prices — combined with long-term joblessness, greater personal debt and paychecks reduced by higher taxes — the consumers whose spending drives the economy are unwilling, or unable, to part with their money.”
Plus: “Anybody who’s not depressed, doesn’t know what’s going on.” Nonsense. For the 1% it’s a boon: They can pay for the gas, and there’ll be less traffic on the road and no lines at the pumps. Thanks, President Obama, for energy policies that keep the hoi polloi in their place!