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IN A WORD? GOVERNMENT. Why Energy-Rich Australia Suffers the World’s Priciest Power.

New Yorkers pay half as much as Sydneysiders to keep the lights on, despite Australia boasting among the world’s largest coal and natural gas reserves, as well as ideal conditions for clean power generation. A decade of political dithering and climate policy missteps have set its patchwork power system adrift, ratcheting up manufacturing costs and hurting consumers with a doubling in electricity prices since last year and rising risks of blackouts.

“It is not a bit of a mess, it is a major mess,” said Sanjeev Gupta, 46, the British billionaire owner of Liberty House Group, who saw firsthand the effects of policy neglect after buying an ailing steel-making business in blackout-beleaguered South Australia in July.

Natural gas was meant to bridge the electricity supply gap left by the shutdown of decaying coal-fired stations and the gradual shift to solar and wind energy. But rising exports of the fuel to higher-paying overseas buyers created a local shortage.

With no long-term solution in sight, Prime Minister Malcolm Turnbull threatened gas producers with export restrictions unless they plugged the domestic shortfall. The government is also trying to convince power generators to patch up old and dilapidated coal-run stations, prolonging dependence on a fossil fuel the rest of the developed world is spurning.

Forced scarcity and other market distortions lead to shortages and higher prices — who knew?



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. Our one-party democracy is worse….

Thomas Friedman, September 2009.


GOOD NEWS: U.S. Gas Prices In Some Markets Already Back Down To Pre-Harvey Levels.

IT’S AS IF ALL THIS “GREEN” STUFF IS JUST PROPAGANDA FOR THE RUBES: Germany Isn’t Anywhere Close to Its 2020 Climate Target.

Germany has fashioned itself a new brand for the 21st century as the global green leader, but it’s nowhere close to meeting the ambitious greenhouse gas (GHG) reduction targets it set for itself. The German government has targeted a 40 percent reduction of GHG emissions by 2020, as compared to 1990 levels, but with less than three years to go the country remains far from achieving that goal. Berlin already admitted that the 40 percent goal likely wasn’t possible, and instead lowered its sights to a 35 percent reduction, but even that seems unlikely now. A new study from the green think tank Agora Energiewende says Germany is likely to achieve only a 30-31 percent reduction.

That report lays the blame for this “drastically missed” target at the feet of bargain prices for both oil and carbon. The global crude market is awash in supplies today, which has meant cheap oil products (like transportation fuel) for consumers. People are driving further and more often, and that’s not helping German efforts to cut emissions. The European Union Emissions Trading System (EU ETS) is similarly flooded with supplies, though in this case it’s emissions allowances rather than barrels of crude. This glut of permits has produced a price of carbon far below what is necessary to incentivize heavy emitters to alter their behaviors, which (again) has made the German quest to cut GHGs more difficult.

Europe’s broken carbon market and today’s new oil reality are important trends to help understand why Germany is so far away from that 40 percent target, but the elephant in the room here is nuclear power. As part of Germany’s clean energy transition—its energiewende—nuclear power was phased out, a process hastened following the 2011 Fukushima disaster. Some environmentalists will have told themselves that the zero-emissions power produced by these nuclear reactors was replaced by Germany’s surging renewables sector, but wind and solar produce a much more intermittent type of power, unlike reliable nuclear workhorses. The perverse result is that even as Germany has lauded the “greening” of some parts of its energy mix, it’s had to increase its reliance on lignite coal—just about the brownest energy source around—to compensate for its shuttered nuclear fleet.

Who could have seen this coming?

EXPLAINER: Here’s Why a Storm Surge in Gas Prices Should Settle Down Soon.

IS THERE ANYTHING IT CAN’T DO? Shale oil boom softens the energy blow from Harvey.

HMM: The Latest Red Flag For U.S. Shale.

U.S. shale was thought to be the most competitive source of oil out there, and indeed the industry appears to be ramping up production at today’s prices. Shale had adapted to a $50 per barrel market, producers had streamlined operations to make them almost resemble an assembly line, and in a volatile and unpredictable market, the short-cycle nature of shale drilling made it one of the least risky options for drillers.

But in just a few weeks’ time, investors are starting to ask major questions about the viability of shale drilling at such a large scale.

A couple of notable things have occurred in the past month or so. Pioneer Natural Resources, a top Permian producer, raised concerns when it told investors that its Permian shale wells were coming up with a higher natural gas-to-oil ratio than expected, a potentially worrying sign. The company also reported that it had trouble with some of its wells, forcing it to delay some completions.

Separately, Goldman Sachs reported that top investors are souring on U.S. shale E&Ps, with poor performances leading investors to search for ways to “reallocate capital” elsewhere in the energy space. That is big red flag for the shale industry, which is still struggling to consistently post profits despite the highly-touted cost reductions over the past few years.

For consumers, the big benefit to shale is that under current conditions it effectively caps oil at a price which feels great at the pump and feels terrible in Riyadh and Moscow.

For producers, however, things are a little more complicated.

HAVE YOU HUGGED A FRACKER TODAY? U.S. Oil Drillers Keep Pressure on OPEC With Record Shale Output.

The forecast comes just as Saudi Arabia and Iraq, the two biggest producers of the Organization of Petroleum Exporting Countries promised to strengthen their commitment to cutting production. Crude output in the U.S. meanwhile has climbed in nine of the last 10 months. Prices declined to a three-week low Monday as the growing U.S. output and signs of lower demand from China stoked concern that a global oversupply will linger.

Shale drillers such as Pioneer Natural Resources Co. and Devon Energy Corp. have been taking advantage of price rallies near $50 a barrel to hedge their output for next year and beyond, with some producers locking in prices as far out as 2023, according to data compiled by Bloomberg.

The EIA expanded its monthly forecasts to include the Anadarko shale region, which spans 24 Oklahoma and five Texas counties. The region, a well-established oil and gas producing area, has seen an uptick in improved drilling and completion technology, the agency said in its monthly Drilling Productivity report released Monday.

I’m so old I can remember when America’s peak oil days were well behind us.

HAVE YOU HUGGED A FRACKER TODAY? How America Is Taking the Wind Out of Saudi Aramco’s IPO.

Saudi Arabia’s state-owned oil company, Saudi Aramco, is going public next year. The company’s spokespeople believe this public offering will be record breaking, and expect the five percent of the company expected to be on offer will be sold at a price high enough to value the firm at $2 trillion. If that’s true (a big if, according to most outside observers), it would make Saudi Aramco the most valuable publicly traded company on the planet. Unfortunately for Riyadh, weak oil prices aren’t the only thing working against this landmark IPO. As the WSJ reports, a boom in the U.S. petrochemicals industry—one of the offshoots of the shale boom—is blunting Saudi Aramco’s efforts to move down the oil supply chain. . . .

Fracking’s effect on American oil and gas production is common knowledge at this point, but some of its impact on the petrochemical industry remains underreported. Oil and gas drilling also produces liquid hydrocarbons that can be used as feedstock for companies like Dow Chemical, and the shale revolution has kicked off a mini-boom in that industry, with $185 billion in new projects currently in the works.

That’s been a big boon for American manufacturing, but increasingly it’s looking to shake up the global petrochemicals market. According to IHS Markit (h/t the WSJ), net U.S. petrochemical exports are expected to grow by an order of magnitude over the next ten years.

The noose tightens.

POLITICS: As Gas Prices Fall to 12-Year Low, Schumer Claims Gas Prices ‘Never Go Down.’

HAVE YOU HUGGED A FRACKER TODAY? Permian Basin Operators, Not OPEC, will Determine Normal Oil Prices from Here Out.

Kleptocratic petrostates hardest hit.

HENRY PAYNE: Did Trump Just Save the U.S. Auto Industry?

In condemning the Trump Administration’s withdrawal from the Paris Accords, media darling and former Obama EPA official Marge Oge told the New York Times that “the rest of the world is moving forward with electric cars. If the Trump administration goes backward, the U.S. won’t be able to compete globally.”

In reality, the opposite is true. Thanks to less-stringent emissions rules and low gas prices, the U.S. is essential to most automakers’ profits, driving as it does the high-margin sales of popular pickup trucks and SUVs that can’t be sold elsewhere in the world. GM, for example, withdrew from the European market this year because its small cars are unprofitable there.

Ford joined the corporate chorus in condemning Trump’s Paris withdrawal saying that “we believe climate change is real, and remain deeply committed to reducing greenhouse gas emissions in our vehicles and our facilities.” Yet the politically correct statement would seem a financial death wish. Some 80 percent of Ford’s profit reportedly comes from U.S. pickup sales. A France-like gas-engine ban to satisfy CO2 targets would destroy the company’s bottom line.

Selling vehicles people want at prices they can afford while earning a healthy profit? Outrageous.

THEY PLANNED… POORLY: How Energy-Rich Australia Exported Its Way Into an Energy Crisis.

Australia now exports so much liquefied natural gas, or LNG, it may overtake No. 1 exporter Qatar within several years. It exported 62% of its gas production last year, according to the BP Statistical Review of World Energy.

Yet its policy makers didn’t ensure enough gas would remain at home. As exports increased from new LNG facilities in eastern Australia, some state governments let aging coal plants close and accelerated a push toward renewable energy for environmental concerns. That left the regions more reliant on gas for power, especially when intermittent sources such as wind and solar weren’t sufficient.

Shortages drove domestic gas prices earlier this year in some markets in eastern Australia to as high as $17 per million British thermal units for smaller gas users such as manufacturers. On the spot market, gas prices have gone from below $1 in 2014 to roughly $7 today—well above the roughly $3 that prevails in the U.S.—causing havoc around the country.

In March, Australia’s largest aluminum smelter cut production and laid off workers because it said it couldn’t secure enough cheap energy.

Bad luck.

WHY ARE DEMOCRAT-MONOPOLY CITIES SUCH CESSPITS OF VIOLENCE? A longtime Insta-reader from Chicago explains one huge reason why:

As you are aware, the murder rate in Chicago soared in 2016 and this year it is well on its way to equal last year’s numbers.  There have been a couple of recent cases where they have arrested people for selling guns to the gangs.  The appalling part of the stories are the way the courts are dealing with these cases.  I stumbled onto this one today through [a blog called Second City Cop]:

Man who sold gun used to shoot 2 cops released on $4,500 bond: sources.

There was another case where a woman was sentenced to probation for selling guns to a man with gang ties:

Mount Prospect woman gets probation for illegal gun sales.

Police: Woman with FOID card bought and sold guns for profit.

And as the long-running Chicago-area blog NewsAlert notes, Mayor Rahm Emanuel stands ready to take full national credit for his city’s stunning success: Rahm Emanuel May Run For President in 2020. “One source claims Rahm is very realistic and knows it is not likely he can win the Democrat party nomination: so his ultimate goal is to get the VP nomination. Stay tuned…”

I’d make the usual “Run, Rahm, Run!” jokes, but to be fair, his drafting of leftist “crash test dummies” to pose as centrist “Blue Dog” Democrats for the 2006 midterms was a huge strategic success for his party — and a disaster for the rest of us, leading to Nancy Pelosi as speaker, runaway gas prices, the Great Recession, Obama in the White House, and the Democrats’ passing of Obamacare on a party-line basis.

INDEPENDENCE DAY: Trump tells troops in Fourth of July speech: I have your back.

President Trump told members of the U.S. military gathered at the White House for the Fourth of July Tuesday that he “will always have your back,” as he boasted that the country is doing “really, really well.”

The president addressed individual members of each of the service branches who had gathered outside in early evening for his first Independence Day address before the annual fireworks celebration on the National Mall.

“Each of you here today represents that rare combination of patriotism, virtue and courage that our citizens have always, and I mean always, admired and that our enemies have always feared,” Trump said. “I pledge my unwavering support for you, your families and your missions. I will always have your back.”

The brief speech included no direct mention of North Korea’s apparently successful test Monday night of an intercontinental ballistic missile that could put the rogue regime within reach of hitting the United States. It also seeks to develop a nuclear warhead capable of decimating U.S. cities.

Russia and China issued a joint statement and challenge to Trump Tuesday, calling on North Korea to halt its missile program but also for the U.S. to remove a mission shield from South Korea and stop large-scale joint military operations.

The president, after touting low gasoline prices in an earlier tweet, said the country is on strong footing.

I like the low gas prices.

WINNING: Enjoy that road trip! July 4th gas hasn’t been this cheap in years. Have you hugged a fracker today?


HAVE YOU HUGGED A FRACKER TODAY? Even Shale’s Secondary Effects Are Staggering.

Hydraulic fracturing and horizontal well drilling have given American companies access to vast new reserves of oil and gas, and have dramatically increased the production of hydrocarbons here in the United States. Since 2010, the U.S. has added roughly 5 million barrels of oil per day, and natural gas production is up roughly 33 percent over that same time period.

The effects of this energy revolution have been felt the world over—they’ve brought gasoline prices down for American drivers while remaking the global oil market. But here in the U.S., they’ve been an enormous boon to an industry most Americans are likely unfamiliar with: petrochemicals. As the WSJ reports, cheap petrochemical feedstocks (a byproduct of oil and gas drilling) are pushing the U.S. petrochemical industry to new heights. . . .

That’s a lot of money, and it’s a staggering number of jobs. This is one of the unheralded consequences of this new energy renaissance that the U.S. finds itself in, and it’s creating a rosier economic outlook for years to come.

This big win for America has also produced a number of losers, namely Middle Eastern petrostates who in years past had looked to petrochemicals as an important industry to help them diversify away from simply pumping and exporting crude oil and natural gas. But thanks to cheap shale-sourced petrochemical feedstocks, the lion’s share of new investment money in the industry is heading the United States’ way. Once again, shale is lifting the U.S. up even as it puts petrostates in peril.



North Sea oil and gas production has been waning for years now, leading to major energy security concerns for the United Kingdom. But as fields mature and companies face down the technically difficult and extraordinarily expensive task of decommissioning inactive offshore rigs, bright spots still remain for production in the region. The latest comes to us courtesy of the FT, which reports on the Kraken, a new field that has come online just in time to save the British oil company Enquest from insolvency. . . .

We live in a new oil reality, characterized by low prices and a heightened focus on increasing productivity while reducing expenses. The shale boom has made the global oil market much more competitive, and companies have had to become leaner and meaner to survive. That’s been borne out in the North Sea, where producers have fought tooth and nail to cut costs to stay afloat plumbing a resource well past its prime. Average operating costs in the North Sea have fallen 45 percent over the past few years, and EnQuest’s Kraken project has been similarly streamlined.

I remember when anyone who expressed even modest doubts about “Peak Oil” claims was tarred as a science-denier in the pay of Big Oil.

PLASTICS: The Shale Revolution’s Staggering Impact in Just One Word.

That boom in drilling has expanded the output of oil and gas in the U.S. more than 57% in the past decade, lowering prices for the primary ingredients Dow Chemical Co. uses to make tiny plastic pellets. Some of the pellets are exported to Brazil, where they are reshaped into the plastic pouches filled with puréed fruits and vegetables.

Tons more will be shipping soon as Dow completes $8 billion in new and expanded U.S. petrochemical facilities mostly along the Gulf of Mexico over the next year, part of the industry’s largest transformation in a generation.

The scale of the sector’s investment is staggering: $185 billion in new U.S. petrochemical projects are in construction or planning, according to the American Chemistry Council. Last year, expenditures on chemical plants alone accounted for half of all capital investment in U.S. manufacturing, up from less than 20% in 2009, according to the Census Bureau.

Integrated oil firms including Exxon Mobil Corp. and Royal Dutch Shell PLC are racing to take advantage of the cheap byproducts of the oil and gas being unlocked by shale drilling. The companies are expanding petrochemical units that produce the materials eventually used to fashion car fenders, smartphones, shampoo bottles and other plastic stuff being bought more and more by the world’s burgeoning middle classes.

“It’s a tectonic shift in the hemispherical balance of who makes what to essentially feed the manufacturing sector,” said Dow Chief Executive Andrew Liveris, referring to the growth of production in the U.S. His company now plans to double down on its U.S. expansion with a $4 billion investment in a handful of projects over the next five years.

That feels like winning.

HAVE YOU HUGGED A FRACKER TODAY? Plunging oil prices ‘could go even lower for even longer’

Falling prices could temporarily constrict the rapid growth of U.S. oil production, but energy industry experts don’t expect a significant pullback. American oil producers cut costs during the last downturn spanning from late 2014 to early 2016, which keeps them profitable even at lower oil prices that might have previously shut down wells.

The possibility of what the energy industry calls a “lower-for-longer” scenario is gaining ground. It could accelerate the auto industry’s transition from fuel-efficient cars to thirstier sport-utility vehicles and give Americans unexpected savings in their summer travel budgets, while also raising the prospect of energy worker layoffs if prices dip further.

The price of West Texas Intermediate, the U.S. benchmark crude, dipped below $43 per barrel in afternoon trading Tuesday, a level not seen since last August. It settled at $43.23, down 97 cents on the day.

Less than a month ago, oil was trading above $50 and experts were projecting prices of $60 to $70 later this year. That now looks unlikely.

“We had no idea it would be this low for this long,” said Patrick DeHaan, a petroleum analyst at “It could go even lower for even longer.”

The key takeaway here is that innovative American frackers are learning to prosper at $45 and under, while otherwise-useless petrostates see their gravy trains start coming off the tracks at anything much under $60.

HAVE YOU HUGGED A FRACKER TODAY? Oil From OPEC’s Rivals to Exceed Demand Growth in 2018.

The U.S., Brazil, Canada and other producers outside the Organization of Petroleum Exporting Countries will increase output next year by the most in four years, the IEA said. So while the cutbacks should reduce the world’s bloated oil inventories to average levels by the time they’re scheduled to end next spring, demand for OPEC crude won’t be high enough for the group to reverse the curbs without seeing stockpiles rise again.

“Our first outlook for 2018 makes sobering reading for those producers looking to restrain supply,” said the Paris-based IEA, which advises most of the world’s major economies on energy policy.

Oil prices have slipped 14 percent in New York this year as hopes that supply curbs by OPEC and partners such as Russia would end a three-year surplus have given way to concern that the cuts aren’t deep enough and that U.S. shale drillers will fill any shortfall.

I’ve been enjoying watching the unnatural act of gas prices going down just as the summer road trip season kicks into gear.

So it turns out you can drill your way to lower prices — who knew?

THIS IS AWFUL: The First Impact of the Climate Deal Withdrawal: Falling Oil Prices.

The real, measurable impacts of Trump’s decision to pull out of the Paris climate agreement are going to be few and far between, but the first one we’ve seen thus far has been a drop in the price of oil. This won’t hurt Trump with his voters: market participants think that the U.S. will now pump more oil, leading to long term lower oil prices. . . .

Let’s not give the White House too much credit here, though. The Obama administration, for all of its gesturing towards renewables, was remarkably friendly towards the shale industry. The recent growth we’ve seen in American production is the result of innovation and falling costs in shale drilling, rather than the rolling back of regulations.

But perceptions matter to markets, and Trump’s announcement yesterday has further strengthened analysts’ belief that this Administration will do everything it can to help out America’s oil and gas industry (even though the natural gas boom is responsible for knocking Old King Coal off his throne in the U.S.).

Russia is paying close attention to U.S. oil production these days, and the CEO of the state-owned oil company Rosneft, Igor Sechin, publicly expressed concerns that surging American supplies could overcome petrostate efforts to cut production and push prices back up.

That would be terrible.

HAVE YOU HUGGED A FRACKER TODAY? Gasoline prices ahead of Memorial Day are higher than 2016, but second lowest since 2009.

RECALIBRATING PRODUCTIVITY STATISTICS: Walter Russell Mead explores the implications of Daniel Yergin’s argument that energy markets are experiencing “cost recalibration.”

Information technology has contributed to the drop in energy prices, so much so that productivity statistics may need to be recalibrated.

But this points to two even bigger stories. One is that the same forces that are making oil and gas so much cheaper and easier to find and extract will also be affecting other commodities. We can expect mining to become more efficient as well, and in fact there’s already evidence of that happening.

And there’s more. One of the big mysteries of the information revolution is the question of productivity. We keep using all this tech that clearly lets us do more with less, but instead of galloping higher, productivity levels have stagnated. What’s going on?

It’s possible that the productivity increases are appearing as lower prices rather than as higher incomes. If the price of oil falls from $100 per barrel to $50 per barrel due to increasingly cheap and efficient methods of production, then everybody in the industry is more productive in terms of barrels of oil per hour of work, but since the oil price has gone down, that productivity increase won’t be captured by statistical methods that calculate productivity in terms of money.

FASTER, PLEASE: End the discrimination against nuclear power.

Gov. John Kasich has long championed cost-effective action for clean air and the environment and last year vetoed legislation that would have repealed the state’s solar and wind mandates.

Unfortunately, those mandates exclude nuclear power, which provides 90 percent of Ohio’s clear energy. As a result, Ohio’s nuclear plants are at risk of closing — and killing over 1,300 high-paying, high-skill jobs.

Cheap natural gas has played a role in nuclear’s troubles, but why then have solar and wind been booming during a time of low natural gas prices? The answer is obvious: They benefit from over 23 years of federal subsidies and state mandates like the one Kasich supports for wind and solar — and which excludes nuclear.

Like most environmentalists, I used to be opposed to nuclear power. I thought solar and wind would be enough. But the more I learned about solar and wind, I realized they could never power a high-energy industrial civilization.

Anyone serious about reducing carbon emissions has to be serious about nuclear power, unless their real goal is a serious reduction in the number of living human beings.

STILL NOT TIRED OF WINNING: American Oil and Gas Surge to New Highs.

Shale companies are using hydraulic fracturing to harness a flood of new supplies of hydrocarbons. On the oil side of things, American production has surged from 8.5 million barrels per day (bpd) in October to nearly 9.3 million bpd today—a nearly 10 percent jump in just six months. As the EIA reports, much of that growth is being fueled by west Texas’s Permian Basin. . . .

The last U.S. Geological Survey estimate pegged the Permian Basin’s riches at potentially more than 20 billion barrels of oil and 16 trillion cubic feet (tcf) of natural gas—a veritable bounty. That shale formation is the undisputed engine of this newest shale renaissance.

This oil rebound has come about as a result of OPEC & co.’s decision to cut output to help push prices back up—a move that has helped shale producers as much (if not more) than it has assisted those petrostates.

But natural gas output is surging as well, perhaps a more remarkable feat considering that American production of that hydrocarbon hasn’t suffered as much (though it has declined slightly) as a result of falling global prices. Even in the midst of this natural gas surge, new EIA data shows that natural gas production in the continental U.S. had its biggest monthly increase in February in almost three years. . . .

U.S. shale still produces only a fraction of global oil and gas output, but that fraction is large enough—and has come on the scene quickly enough—to push supply past demand and help keep energy prices relatively low. At the same time, it’s given America more foreign policy options by bolstering our domestic energy security, and changing the tenor of the U.S. energy debate from one focused on scarcity to today’s paradigm of abundance.

Have you hugged a fracker today? A few years ago I had dinner with a former student and her husband, a big investor into fracking. “You’re saving Western Civilization,” I told him. I wasn’t wrong.


American shale gas is, at long last, penetrating into Eastern Europe. Poland just purchased its first cargoes of U.S. liquified natural gas (LNG), an important milestone in Europe’s quest to reduce its dependence on Russian energy imports. . . .

Europe has a gas problem, and America is helping to solve it. The continent has long relied on Russia for its natural gas supplies, and currently sources roughly a third of those hydrocarbons from Russian companies—predominantly Gazprom. That gas comes with conditions, though. Moscow has used contract terms and prices to coerce its European customers, offering cushy deals to countries it sees as friendly to the Kremlin’s interests, and hiking prices or, in the case of Ukraine, halting supplies altogether when a country crosses it.

For years, this seemed to be Europe’s fate, as the continent had few other options for overland pipeline suppliers to help it meet its natural gas demand. The advent of LNG changed that, however, by allowing any country with a port to import super-chilled natural gas on board ships from suppliers all around the world. After Russia’s annexation of Crimea, Europe began to accelerate its development of LNG import infrastructure as a way to help reduce its dependence on Gazprom.

Faster, please.

HMM: How Rising Sand Prices Could Undermine U.S. Shale Recovery.

The techniques used to wring increasing volumes of crude oil, natural gas and natural gas liquids (NGLs) out of shale continue to evolve, and as they do, producers are facing mounting costs for securing frac sand and for disposing of produced water from the wells. These costs are squeezing producer profits, and—in an era of sustained low hydrocarbon prices—sometimes even flip production economics from favorable to unfavorable.

Historically, American business has thrived on solving logistical problems just like these. If prices are rising for sand and waste-water disposal, that’s a strong profit motive for entrepreneurs to create new efficiencies — not a mortal threat to the fracking industry.

YOU DON’T SAY: Blue States May Be Green, But They Have Very Pricey Energy.

Someone living in one of least “green” states paid less for energy than the national average or the greener states, spending 9.89 cents per kilowatt-hour and $2.29 per gallon of gasoline.

Expensive power and gasoline disproportionately hurts poorer families and other lower-income groups since the poor tend to spend a higher proportion of their incomes on “basic needs” like power.

The average Americans’ power bill rose nearly 11 percent since former President Barack Obama took office, according to an analysis of government data previously published by TheDCNF.

When essential goods like electricity or gasoline becomes more expensive, the cost of producing goods and services that use electricity increases, effectively raising the price of almost everything. The higher prices are ultimately paid for by consumers, not industries.

Well, yes. But green energy makes those who can easily afford it feel better about themselves for “saving the planet” on the backs of those who can least afford it.

HAVE YOU HUGGED A FRACKER TODAY? American Drivers Will Enjoy Another Summer of Cheap Gas.

The weather’s getting warmer, and many U.S. drivers are looking forward to another summer of road trips thanks to relatively cheap gasoline. . . .

Prices are slightly higher than they were at this time last year (and are, in fact, at nearly a two-year high), but they still remain far below what they were even three years ago, when a gallon of gas averaged well above $3.50. Today, that average is just $2.41, thanks to relatively low oil prices and an abundance of U.S. crude inventories.

It doesn’t take long to become accustomed to the status quo, but let’s remember that from 2011 to 2014, it was commonplace to be paying more than $4 per gallon at the gas station. Cheap gasoline isn’t just helpful for Americans planning their next vacation, it’s also helpful for any worker who relies on driving for his or her daily commute. The shale boom precipitated the global crude price collapse, and is therefore one of the main reasons why gas is so cheap today. Remember to thank fracking the next time you fill your tank up.

I will!

HAVE YOU HUGGED A FRACKER TODAY? Shale Transforms The Global Gas Market.

Or perhaps more accurately, American shale gas is helping to create a global gas market. For years, natural gas needed pipelines to make its way from seller to buyer, and owing to that, most natural gas contracts were long-term and often linked to the price of oil.

But thanks to liquified natural gas, suppliers can now superchill gas and put it on cargo ships to send halfway around the world, making the gas market more like that of its kindred hydrocarbon, oil. As a result, the differences between regional LNG prices has begun to narrow—the so-called “Asian premium,” more than 50 years old, is starting to evaporate. American shale gas is ready to expedite this transition to a more fungible, global gas market. . . .

U.S. shale is also helping to get rid of destination requirements for LNG cargoes, which will allow intermediaries to buy and then re-sell LNG to the highest bidder. That will help make the market more liquid, and will reduce regional price variation as well.

And it’s reducing carbon emissions much more than the preening of European nations.


“Peak oil” decriers must be used to feeling foolish at this point, but their folly continues (and will continue) to be exposed by discoveries of new oil supplies. The latest example comes to us courtesy of the North Sea waters off the shore of the UK’s Shetland islands, where the oil exploration firm Hurricane Energy claims to have found the country’s biggest new offshore reserve of extractable oil in more than a dozen years. . . .

Many more wells will need to be drilled before we can get a reliably accurate estimate of how much oil Hurricane has discovered, but this is a very good start and comes as something of a lifeline for Britain’s offshore oil industry. North Sea oil supplies made the UK a net exporter of crude in the 1980s, but since then the region’s output has fallen considerably as fields have matured and new discoveries have failed to make up that difference. The collapse in crude prices over the past two years was especially hard on the industry, whose operating costs are among the highest in the world.

In the face of all of this, the UK has been using every tool in its possession to cajole investors to continue to scour its waters for reserves like the one Hurricane just found. And while the road ahead doesn’t exactly look promising, there is at least one reason for Brits to be hopeful: North Sea operating costs have fallen 45 percent in recent years. If that trend continues and exploration keeps yielding valuable new discoveries like this latest one, there might yet be life for Britain’s offshore oil and gas industry.

I also remember when Barack Obama said we couldn’t “drill our way out of” high gas and oil prices.

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?)

YES: Has OPEC Underestimated U.S. Shale Once Again?

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.

Pena’s pulling an Obama and blaming his predecessor for the price hikes.

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.

Stay tuned.

RELATED: A little background on the “impunity issue” that haunts Pena.

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.

CORN, POPPED: In OPEC Poker Game, Iran and Iraq Call Saudi Arabia’s Bluff.

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.

MARKETING: Vegas Gun Store Holds ‘Pre-Hillary’ Gun Sale.

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.


—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.


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.”

Vroom, vroom.

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.


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?


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.

CHANGE: It’s the Middle East’s Turn to Buy American Hydrocarbons.

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.


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.

Chaser: Déjà vu all over again: Obama falsely takes credit for low gas prices.

—Institute for Energy Research, today.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS:  “For American drivers in pursuit of literal rather than figurative fireworks next week, the Brexit fallout could have an unexpected silver lining in the form of flat or even slightly lower gas prices,” NBC reports.

NBC’s Tom Brokaw, hardest hit.

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:



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.”

(Via SDA.)


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.


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.


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.

You don’t need to speak very loudly when all of your enablers and useful idiots have the megaphones (and the Memory Hole.)


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.


Hey, Jerry Brown is simply giving his fellow Obama voters in CA what they asked for, good and hard.


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.

Reminder: The New York Times, the Washington Post, NBC, and the Obama administration all consider this to be bad news.

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.


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.


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.

MISCALCULATING: The Failures of Putin’s Ukraine Strategy: Russia is trapped in an unsatisfying holding pattern, hoping for oil prices to recover, for the West to fragment and for Ukraine to implode.

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.