Category Archives: Energy Investments

Obama Kicks Keystone XL Down the Road

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A posting on this site was titled “Economic Recovery Versus Red Tape” discussed two pipeline projects. The Ruby natural gas pipeline provided thousands of jobs to construction workers and hundreds of jobs to environmental specialists. It also boosted property taxes in the areas where it was constructed. You would think such a project would have wide support, but the environmental hoops it had to jump through before successful completion, which cost millions of dollars, were tiny. The second pipeline described in the posting was the Keystone XL, which is proposed to bring oil from Canada to be processed in U.S. refineries. I’ve seen estimates that the project would add “shovel ready” jobs ranging from 4,500 (from environmentalists opposing the project) to as many as 20,000.

President Obama has taken the decision to approve the project out of the State Department and announced that he will make the decision after the 2012 election. This comes after three years of intensive study that decided the project had an acceptable environmental impact. (Hmmm, is there any significance to making a final decision after the 2012 elections?) I expect the announcement might have something to do with the fact that environmentalists opposed to the pipeline recently surrounded the White House and the Sierra Club declared that Mr. Obama could not count on the environmental vote if he allowed the project to be approved.

One objection to the project is that the oil from Canadian tar sands has more of an impact on “global warming” emissions than oil from other sources. I’ve seen estimates as low as a 5% increase in “greenhouse gases” to as high as three times by those who don’t like the project. An article in the Washington Post by Steven Mufson points out that any argument on how much more greenhouse gas is produced is meaningless, since the oil will probably be exported to China and consumed if there isn’t a closer market. Mr. Mufson also says several alternatives are being considered, to include a proposal to build a new refinery in Alberta to process the oil. That alternative would of course prevent creation of U.S. jobs to build a pipeline and to process the oil.

Environmentalists of course are demanding that alternate pipeline routes be considered to avoid the Ogallala aquifer (which is at a significant depth under the proposed pipeline). Matthew Brown of the Associated Press points out that there have been thirteen routes rejected. Environmentalists will find a reason, or many reasons, to reject any route. They don’t want a pipeline to be built, and will find compelling reasons to oppose any route.

The New York Times predictably applauded Mr. Obama’s decision to kick the can down the road. They point out that labor unions had supported the project while environmentalists oppose it. Call me a cynic, but I’m guessing that preventing the project until after the election will allow environmentalists to eagerly support Mr. Obama’s reelection, and that he already has done enough to earn the votes of labor union members.

It is interesting that there is already “Plan B” to transport the Canadian oil to U.S. refineries by expanding current pipelines with additional pumping stations. The delay to making a final decision on Keystone XL until after the 2012 elections will probably provide Mr. Obama cover for maintaining votes, but it won’t have any measurable impact on the eventual pathway for the oil except for preventing addition of “shovel ready jobs.”

Economic Recovery versus Red Tape

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The story of two pipeline projects provides one explanation of how a morass of government regulations is obstructing economic activity and recovery. President Obama proposed work on “shovel-ready projects” to spur economic activity, and it would be tempting to think that the number of shovels needed to build long pipelines would be viewed favorably by a government and country hungry for new jobs. One of the pipelines has been completed despite massive regulatory interferences, and will transport natural gas from the Wyoming to Oregon. The other is a planned 1711 mile pipeline that would transport crude oil from the tar sands in Alberta to refineries in Oklahoma and Texas.

El Paso, a Texas-based company, constructed the 682 mile Ruby natural gas pipeline at a cost of $3.65 billion in the three-and-a-half years required to obtain regulatory approvals and complete the project. The project came in at 23% over budget and missed scheduled completion by four months, primarily because of delays in meeting demands of dozens of U.S., State, and local agencies.   The project created thousands of jobs and provided revenues for communities, counties, and state governments.

The Ruby project provided jobs not only to construction people but to environmental specialists who had to complete studies and publish a detailed Environmental Impact Statement (EIS). The EIS had binding requirements for rights of way and endangered species such as the black footed ferret and the Ute ladies’ tresses orchids. There were also descriptions required on how the nearly 6000 workers would be housed. Paleontology rules required that the pipeline had to avoid the “rock stacks” used by Native Americans as navigational tools, even though the pipeline did not cross any reservations. It took two and a half years and 125 meetings and agency “scoping hearings” for El Paso to receive the final signoff to build the pipeline. There were 215 archeologists in the field at the height of construction to “mitigate affects to cultural resources,” as required by the National Historic Preservation Act of 1966. A Forty-four member team monitored migratory bird protection, and they did succeed at moving a nest containing four eggs. The ditch where the pipeline was being laid had to be outfitted with temporary ramps so wild horses and burros could climb out if they fell in. Apparently the workers couldn’t be trusted to hoist out an animal if one did fall in.

The expensive gamble by El Paso to build the pipeline was initiated in the face of natural gas prices that would be slashed in half during the construction of the pipe line. The workers, land owners where the pipeline was constructed, regulators, and environmental groups (who were paid to secure their cooperation) all profited from the risk taken by El Paso. Property tax revenues were boosted by 25% in some areas.  Pre-filling the pipeline has begun under the watchful eye of regulators. A Federal Energy Regulatory Commission director warmed El Paso that they are monitoring El Paso efforts to prevent the spread of nonnative foliage and will take corrective action if restoration doesn’t meet their requirements.

The other proposed pipeline, called Keystone XL, is intended to deliver tar sand oil from Canada to U.S. refineries. It is estimated that the $20 billion dollar project would produce 13,000 union jobs, and would seem to be the kind of “shovel ready” project that people looking to stimulate the economy would favor despite the fact the jobs aren’t “green jobs.” Applications were filed in 2008, and there have been dozens of public meeting with the entire large mix of regulatory agencies. Even State Department approval will be required because the pipeline would cross the 49th parallel. The draft EIS concluded the project poses little risk to the environment. The EPA didn’t like that EIS, and sixteen months later a new eight volume report that included consideration of “direct impacts to beetles” also concluded “no significant impacts to the environment.” The EIS now goes into a 90 day review to determine whether the project is “in the national interest.” In addition to environmental impact the project must prove economic, energy security, and foreign policy benefits to at least eight federal agencies.

The “green movement has geared up against the project, and there have been organized protests outside the White House. The Sierra Club is warning President Obama that he can’t count on their votes in the next election if he approves projects such as Keystone XL. We’ll see whether those 13,000 workers standing by with their shovels to build a pipeline take precedence over bureaucratic red tape.

Japanese Nuclear Reactor Disaster

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I did an Internet search to learn the status of the containment structures of the damaged reactors, and the most recent posting I could find was April 6. Most of the articles were posted in March. I’m guessing major news media outlets are losing interest because a “China Syndrome” meltdown (although the exit point from Japan would be somewhere in or near Uruguay) hasn’t occurred. So what is the impact of the disaster if the containment structures hold? There is no doubt the disaster will further add to the fear of nuclear power generation. Japan is hydrocarbon deficient, and had been generating a third of their power needs with nuclear plants. They have stepped up their importation of liquid natural gas via tankers to fill the immediate needs, but that will undoubtedly add expense to an economy that doesn’t need additional expenses.

Do I continue to advocate that nuclear power generation should be a part of our future? You bet I do, and I write that despite Three Mile Island, Chernobyl, and now Fukushima. My favorite source of information about energy generation is Dr. Petr Beckman, who published the book “The Health Hazards of NOT Going Nuclear” in 1976. The primary point of the book, which is still very valid today, is that there is no safe way to make energy. “Energy is the capacity for doing work, and as long as man is fallible, there is always the possibility that it will do the wrong kind of work; to ask for safe energy, therefore, is much the same as asking for incombustible fuel.” Nuclear energy is “…far safer than any other form of energy.”

I’m baffled at how casually we accept risks from activities that don’t have the word “nuclear” in their title, even when we have no control over these risks. Anyone who advocates that no risk is acceptable should cut themselves off the power grid. About 1000 people die per year in the U.S. from electrocution. If you overlook the risk of electrocution, what about the risk from mining and burning coal to generate power? There have been 819 deaths in the United States and 52,785 in China from coal mining since 1990. That doesn’t consider the risks to people from the emissions and wastes generated from burning coal. As Dr. Beckman said, there is no method of making energy that is completely “safe.” He advocated that producing plentiful energy is required to preserve economic freedom and prosperity. China, India, Korea, and Russia are not delaying construction of new nuclear reactors, but the United States and some European countries are responding to the Japanese crises by rethinking plans for nuclear facilities. France generates 75% of its energy with nuclear power, and I haven’t found that they intend to shut down their plants.

One consequence of the reactor crises is an increase in “atomic tourism.” Attendance was up by 12 percent on a recent weekend at the Atomic Testing Museum in Las Vegas and by 20 percent at the National Museum of Nuclear Science & History in Albuquerque. A spokesman there was quoted as saying, “Folks definitely want information about nuclear reactors and nuclear radiation.” People pay $250 a person to tour Chernobyl and the nearby ghost town of Pripyat in the Ukraine. I didn’t find any indications that visits are up at the Nagasaki and Hiroshima museums. However nuclear engineer Joseph Gonyeau said that visits to his excellent and extensive web site was up by 119 percent in March. There are updates on that site about the Japanese disaster from the International Atomic Energy Agency, Japan’s Nuclear and industrial Safety Agency, and the Tokyo Electric Power Company.

The bottom line is that we should do everything possible to learn from this disaster to improve safety. We should not cripple our economic prosperity in decades to come by being the only country that decides not to use nuclear energy to produce electricity.

Global Warming Reporting

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This will be the third posting about the issue of global warming. The first point I will make is that the advocates for the idea that man’s activities are causing damage to the climate are moving to change “global warming” to “climate change.” They were wrong in the 1970s when they warned that a new ice age was a certainty, and they might be wrong that the temperatures are rising.  One of them was quoted as saying the fact that temperatures haven’t continued to rise the last few years with increasing levels of carbon dioxide as predicted by the computer models was “a travesty.”  (How dare nature to not comply with the computer models!) However, if they can complete the transition of the mantra to be “climate change,” they are assured of being right. The climate has always changed, and it would be quite safe to predict it will continue to change.

A majority of American people have been convinced that a climactic disaster is looming based on what they have heard about the certainty of coast lines being flooded, increasingly ferocious hurricane seasons, and famines.  I will admit that the level of the oceans has increased.  There was once a land bridge between Russia and the United States. In fact sea levels have increased by about 7 inches in the past 100 years. Of course that isn’t sufficiently dramatic to make a point in a movie, so you should show a depiction of most of Florida and other coastal areas being swallowed by water. The predictions of horrific hurricane seasons have not materialized, and some years have been exceptionally mild. That apparently wasn’t as news worthy as the warnings. And we should stop converting corn into ethanol if we are actually worried about food shortages.

Would you predict that there has been a continuation of the shrinkage of the Arctic sea ice based on recent reports?  Check out the National Snow and Ice Data Center and look at the charts.  The amount of ice coverage is well below the 1979 to 2000 average, but the line is bouncing along near the 2006-2007 level.  I previously printed their charts for 2005 to 2009.  Ice coverage decreased from 2005 to 2007, but there was a significant increase from 2007 to 2008 and 2009. Reading through the explanations of their data you will find that “this month had the sixth-largest snow cover extent since the record started in 1966.”  There is another statement that “Reduced sea ice extent and extensive snow cover are not contradictory…”  I admit I didn’t understand their explanation.

I want to close this by referring to an entertaining lecture given by Michael Crichton titled “Aliens Cause Global Warming.” I recommend reading the entire lecture, but I will mention a couple of points.  He dismisses the idea that there is “consensus.”  His discussion of that is brilliant. Later in the paper he discusses the United Nations International Panel on Climate Change (IPCC).  The draft of their 1995 report concluded, “No study to date has positively attributed all or part of observed climate changes to anthropogenic causes.”  That statement was removed and replaced in the final report with “The balance of evidence suggests a discernible human influence on climate.” Reread both statements and contemplate them.  The first draft said their studies hadn’t connected man’s activities to global warming.  The final report “suggests” a “discernible human influence…”

I want to emphasize that I am strongly in favor of showing good stewardship to the planet.  I favor conservation of resources and research into how to make us more energy efficient and less dependent on countries that don’t like us very much for most of the oil we burn.  I’ll stop doing blogs criticizing how the story is being reported when I believe the reporting is being done honestly.

History of the Global Warming Theory

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The history of how we have arrived at the current “consensus” that man-made carbon dioxide is causing or will cause catastrophic climate change is interesting. The idea isn’t new.  A Time Magazine article published in 1972 describes how, “As they review the  bizarre and unpredictable weather pattern of the past several years, a growing number of scientists are beginning to suspect that many seemingly contradictory meteorological fluctuations are are actually part of a global climatic upheaval.”  The conditions that caused concern included a six year drought in Africa, record rains in the U.S., Pakistan, and Japan, a poor wheat harvest in Canada, dry conditions in Britain, and bitter winters in some areas while other parts of the globe where having the mildest winters in anyone’s recollection. Those words could come from the headlines today about the certainty that we are in a period of global warming. However, read on in the article. It says that meteorologists “…find that the atmosphere has been growing gradually cooler for the past three decades. The trend shows no indication of reversing…the weather aberrations they are studying may be the harbinger of another ice age.” (emphasis added) We still have a “consensus” that there will be climate change, but the certainty of global cooling has somehow transitioned into global warming.

There was a politician credited with the transition from believing that global cooling was a certainty to the current belief that global warming is a certainty, and that politician was Margaret Thatcher. I’m certain many readers thought they were going to read Al Gore’s name, but he came late to the party. Ms Thatcher became Prime Minister of Great Britain in 1979, and she believed coal miner strikes were crippling the English economy.  She wanted to promote nuclear power as a replacement for coal, and began committing large amounts of government money to researchers charged with investigating climate change caused by the carbon dioxide that is emitted when coal is burned. Temperatures began to creep up, and researchers who had advocated global cooling adjusted their computer models or created new ones to arrive at the conclusion that carbon dioxide emissions were going to cause global warming.

Scientists have been debating the effect of carbon dioxide on climate since the late 1800s. Savante Arrheius, a Swedish scientist, is credited by some as being the first to theorize in 1896 that fossil fuel combustion would eventually result in global warming. The theory lay more or less dormant until the flood of government grant money began by Margaret Thatcher and then made available to researchers in the U.S. created opportunity for those who found a connection between carbon dioxide and temperatures.  Of course the research might not even involve that direct relationship.  It might involve the effect of increased carbon dioxide on the growth rate of hickory trees, and rapid increases in squirrel populations because there were more hickory nuts (as an example that I just invented).  However, studies that came to a dire prediction followed by the consistent conclusion “that more study is needed,” were more likely to be given news coverage followed by more government grant money. The Environmental Protection Agency has joined the party by finding that carbon dioxide is a toxic pollutant, but that is the subject of another posting.

The Climate is Changing

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Over it’s historical record, in January, Northern Hemisphere snow cover averages 47 million square kilometers (18.1 million square miles), and in February it averages 46 million square kilometers (17.8 square miles)—approximately 45 to 46 percent of the land area in the region. While sea ice extent was below average for January 2011, this month had the sixth-largest snow cover extent since the record started in 1966, at 49 million square kilometers (18.9 million square miles). Snow was unusually widespread over the mid-western and eastern United States, eastern Europe, and western China. Snow cover in February remained above average at 47.4 million square kilometers (18.3 million square miles), with more snow than usual in the western and central U.S., eastern Europe, Tibet and northeastern China.

Reduced sea ice extent and extensive snow cover are not contradictory, and are both linked to a strong negative phase of the Arctic Oscillation (see our January 5, 2011 post). A strongly negative AO favors outbreaks of cold Arctic air over northern Europe and the U.S., as many people experienced first-hand these last two winters. Whether this is a trend, or in any way linked to ongoing climate warming in the Arctic, remains to be seen.

Then, in 1979, Mrs Margaret Thatcher (now Lady Thatcher) became Prime Minister of the UK, and she elevated the hypothesis to the status of a major international policy issue.

Mrs. Thatcher could not have promoted the global warming issue without the support of her UK political party. And they were willing to give it. Following the General Election of 1979, most of the incoming Cabinet had been members of the government which lost office in 1974. They blamed the National Union of Mineworkers (NUM) for their 1974 defeat. They, therefore, desired an excuse for reducing the UK coal industry and, thus, the NUM’s power. Coal-fired power stations emit CO2 but nuclear power stations don’t. Global warming provided an excuse for reducing the UK’s dependence on coal by replacing it with nuclear power.