CLICHÉS OF PROGRESSIVISM #41 – “Rockefeller’s Standard Oil Proved That We Needed Anti-Trust Laws” by Lawrence W. Reed

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Among the great misconceptions about a free economy is the widely-held belief that “laissez faire” embodies a natural tendency toward monopoly concentration. Under unfettered capitalism, so goes the familiar refrain, large firms would systematically devour smaller ones, corner markets, and stamp out competition until every inhabitant of the land fell victim to their power. Supposedly, John D. Rockefeller’s Standard Oil Company of the late 1800s gave substance to this perspective.

Regarding Standard Oil’s chief executive, one noted historian writes, “He (Rockefeller) iron-handedly ruined competitors by cutting prices until his victim went bankrupt or sold out, whereupon higher prices would be likely to return.”

Two other historians, co-authors of a popular college text, opine that “Rockefeller was a ruthless operator who did not hesitate to crush his competitors by harsh and unfair methods.” That’s what the superficial orthodoxy holds.

In 1899, Standard refined 90 per cent of America’s oil—the peak of the company’s dominance of the refining business. Though that market share was steadily siphoned off by competitors after 1899, the company nonetheless has been branded ever since as “an industrial octopus.”

Does the story of Standard Oil really present a case against the free market? In my opinion, it most emphatically does not. Furthermore, setting the record straight on this issue must become an important weapon in every free market advocate’s intellectual arsenal.

Theoretically, there are two kinds of monopoly: coercive and efficiency. A coercive monopoly results from, in the words of Adam Smith, “a government grant of exclusive privilege.” Government, in effect, must take sides in the market in order to give birth to a coercive monopoly. It must make it difficult, costly, or impossible for anyone but the favored firm to do business.

The United States Postal Service is an example of this kind of monopoly. By law, no one can deliver first class mail except the USPS. Fines and imprisonment (coercion) await all those daring enough to compete.(Editor’s Note: In the years since this article was written, technology in the form of fax machines, overnight delivery services, the Internet and e-mail have allowed the private sector to get around the government monopoly in traditional, first-class mail delivery).

In some other cases, the government may not ban competition outright, but simply bestow privileges, immunities, or subsidies on one firm while imposing costly requirements on all others. Regardless of the method, a firm which enjoys a coercive monopoly is in a position to harm the consumer and get away with it.

An efficiency monopoly, on the other hand, earns a high share of a market because it does the best job. It receives no special favors from the law to account for its size. Others are free to compete and, if consumers so will it through their purchases, to grow as big as the “monopoly.”

An efficiency monopoly has no legal power to compel people to deal with it or to protect itself from the consequences of its unethical practices. It can only attain bigness through its excellence in satisfying customers and by the economy of its operations. An efficiency monopoly which turns its back on the very performance which produced its success would be, in effect, posting a sign, “COMPETITORS WANTED.” The market rewards excellence and exacts a toll on mediocrity. It is my contention that the historical record casts the Standard Oil Company in the role of efficiency monopoly—a firm to which consumers repeatedly awarded their votes of confidence.

The oil rush began with the discovery of oil by Colonel Edwin Drake at Titusville, Pennsylvania in 1859. Northwestern Pennsylvania soon “was overrun with businessmen, speculators, misfits, horse dealers, drillers, bankers, and just plain hell-raisers. Dirt-poor farmers leased land at fantastic prices, and rigs began blackening the landscape. Existing towns jammed full overnight with ‘strangers,’ and new towns appeared almost as quickly.”

In the midst of chaos emerged young John D. Rockefeller. An exceptionally hard-working and thrifty man, Rockefeller transformed his early interest in oil into a partnership in the refinery stage of the business in 1865.

Five years later, Rockefeller formed the Standard Oil Company with 4 per cent of the refining market. Less than thirty years later, he reached that all-time high of 90 per cent. What accounts for such stunning success?

On December 30, 1899, Rockefeller was asked that very question before a governmental investigating body called the Industrial Commission. He replied:

I ascribe the success of the Standard to its consistent policy to make the volume of its business large through the merits and cheapness of its products. It has spared no expense in finding, securing, and utilizing the best and cheapest methods of manufacture. It has sought for the best superintendents and workmen and paid the best wages. It has not hesitated to sacrifice old machinery and old plants for new and better ones. It has placed its manufactories at the points where they could supply markets at the least expense. It has not only sought markets for its principal products, but for all possible by-products, sparing no expense in introducing them to the public. It has not hesitated to invest millions of dollars in methods of cheapening the gathering and distribution of oils by pipe lines, special cars, tank steamers, and tank wagons. It has erected tank stations at every important railroad station to cheapen the storage and delivery of its products. It has spared no expense in forcing its products into the markets of the world among people civilized and uncivilized. It has had faith in American oil, and has brought together millions of money for the purpose of making it what it is, and holding its markets against the competition of Russia and all the many countries which are producers of oil and competitors against American oil.

Rockefeller was a managerial genius—a master organizer of men as well as of materials. He had a gift for bringing devoted, brilliant, and hard-working young men into his organization. Among his most outstanding associates were H. H. Rogers, John D. Archbold, Stephen V. Harkness, Samuel Andrews, and Henry M. Flagler. Together they emphasized efficient economic operation, research, and sound financial practices. The economic excellence of their performance is described by economist D. T. Armentano:

Instead of buying oil from jobbers, they made the jobbers’ profit by sending their own purchasing men into the oil region. In addition, they made their own sulfuric acid, their own barrels, their own lumber, their own wagons, and their own glue. They kept minute and accurate records of every item from rivets to barrel bungs. They built elaborate storage facilities near their refineries. Rockefeller bargained as shrewdly for crude as anyone before or since. And Sam Andrews coaxed more kerosene from a barrel of crude than could the competition. In addition, the Rockefeller firm put out the cleanest-burning kerosene, and managed to dispose of most of the residues like lubricating oil, paraffin, and vaseline at a profit.

Even muckraker Ida Tarbell, one of Standard’s critics, admired the company’s streamlined processes of production:

Not far away from the canning works, on Newton Creek, is an oil refinery. This oil runs to the canning works, and, as the new-made cans come down by a chute from the works above, where they have just been finished, they are filled, twelve at a time, with the oil made a few miles away. The filling apparatus is admirable. As the new-made cans come down the chute they are distributed, twelve in a row, along one side of a turn-table. The turn-table is revolved, and the cans come directly under twelve measures, each holding five gallons of oil—a turn of a valve, and the cans are full. The table is turned a quarter, and while twelve more cans are filled and twelve fresh ones are distributed, four men with soldering cappers put the caps on the first set. Another quarter turn, and men stand ready to take the cans from the filler and while they do this, twelve more are having caps put on, twelve are filling, and twelve are coming to their place from the chute. The cans are placed at once in wooden boxes standing ready, and, after a twenty-four-hour wait for discovering leaks, are nailed up and carted to a nearby door. This door opens on the river, and there at anchor by the side of the factory is a vessel chartered for South America or China or where not—waiting to receive the cans which a little more than twenty-four hours before were tin sheets lying on flat-boxes. It is a marvelous example of economy, not only in materials, but in time and in footsteps.

Socialist historian Gabriel Kolko, who argues in The Triumph of Conservatism that the forces of competition in the free market of the late 1800s were too potent to allow Standard to cheat the public, stresses that “Standard treated the consumer with deference. Crude and refined oil prices for consumers declined during the period Standard exercised greatest control of the industry.”

Standard’s service to the consumer in the form of lower prices is well-documented. To quote from Professor Armentano again:

Between 1870 and 1885 the price of refined kerosene dropped from 26 cents to 8 cents per gallon. In the same period, the Standard Oil Company reduced the [refining] costs per gallon from almost 3 cents in 1870 to 0.452 cents in 1885. Clearly, the firm was relatively efficient, and its efficiency was being translated to the consumer in the form of lower prices for a much improved product, and to the firm in the form of additional profits.

That story continued for the remainder of the century, with the price of kerosene to the consumer falling to 5.91 cents per gallon in 1897. Armentano concludes from the record that “at the very pinnacle of Standard’s industry ‘control,’ the costs and the prices for refined oil reached their lowest levels in the history of the petroleum industry.”

John D. Rockefeller’s success, then, was a consequence of his superior performance. He derived his impressive market share not from government favors but rather from aggressive courting of the consumer. Standard Oil is one of history’s classic efficiency monopolies.

But what about the many serious charges leveled against Standard? Predatory price cutting? Buying out competitors? Conspiracy? Railroad rebates? Charging any price it wanted? Greed? Each of these can be viewed as an assault not just on Standard Oil but on the free market in general. They can and must be answered.

Predatory price cutting is “the practice of deliberately underselling rivals in certain markets to drive them out of business, and then raising prices to exploit a market devoid of competition.”  Let’s see if it’s a charge that holds water or just one of those one-liners progressives like to toss out whether the evidence is there or not.

In fact, Professor John S. McGee, writing in the Journal of Law and Economics for October 1958, stripped this charge of any intellectual substance. Describing it as “logically deficient,” he concluded, “I can find little or no evidence to support it.”

In research for his extraordinary article, McGee scrutinized the testimony of Rockefeller’s competitors who claimed to have been victims of predatory price cutting. He found their claims to be shallow and misdirected. McGee pointed out that some of these very people later opened new refineries and successfully challenged Standard again.

Beyond the actual record, economic theory also argues against a winning policy of predatory price cutting in a free market for the following reasons:

  1. Price is only one aspect of competition. Firms compete in a variety of ways: service, location, packaging, marketing, even courtesy. For price alone to draw customers away from the competition, the predator would have to cut substantially—enough to outweigh all the other competitive pressures the others can throw at him. That means suffering losses on every unit sold. If the predator has a war-chest of “monopoly profits” to draw upon in such a battle, then the predatory price cutting theorist must explain how he was able to achieve such ability in the absence of this practice in the first place!
  2. The large firm stands to lose the most. By definition, the large firm is already selling the most units. As a predator, it must actually step up its production if it is to have any effect on competitors. As Professor McGee observed, “To lure customers away from somebody, he (the predator) must be prepared to serve them himself. The monopolizer thus finds himself in the position of selling more—and therefore losing more—than his competitors.”
  3. Consumers will increase their purchases at the “bargain prices.” This factor causes the predator to step up production even further. It also puts off the day when he can “cash in” on his hoped-for victory because consumers will be in a position to refrain from purchasing at higher prices, consuming their stockpiles instead.
  4. The length of the battle is always uncertain. The predator does not know how long he must suffer losses before his competitors quit. It may take weeks, months, or even years. Meanwhile, consumers are “cleaning up” at his expense.
  5. Any “beaten” firms may reopen. Competitors may scale down production or close only temporarily as they “wait out the storm.” When the predator raises prices, they enter the market again. Conceivably, a “beaten” firm might be bought up by someone for a “song,” and then, under fresh management and with relatively low capital costs, face the predator with an actual competitive cost advantage.
  6. High prices encourage newcomers. Even if the predator drives everyone else from the market, raising prices will attract competition from people heretofore not even in the industry. The higher the prices go, the more powerful that attraction.
  7. The predator would lose the favor of consumers. Predatory price cutting is simply not good public relations. Once known, it would swiftly erode the public’s faith and good will. It might even evoke consumer boycotts and a backlash of sympathy for the firm’s competitors.

In summary, let me quote Professor McGee once again:

Judging from the Record, Standard Oil did not use predatory price discrimination to drive out competing refiners, nor did its pricing practice have that effect. Whereas there may be a very few cases in which retail kerosene peddlers or dealers went out of business after or during price cutting, there is no real proof that Standard’s pricing policies were responsible. I am convinced that Standard did not systematically, if ever, use local price cutting in retailing, or anywhere else, to reduce competition. To do so would have been foolish; and, whatever else has been said about them, the old Standard organization was seldom criticized for making less money when it could readily have made more.

A second charge is that Standard bought out its competitors. The intent of this practice, the critics say, was to stifle competitors by absorbing them.

First, it must be said that Standard had no legal power to coerce a competitor into selling. For a purchase to occur, Rockefeller had to pay the market price for an oil refinery. And evidence abounds that he often hired the very people whose operations he purchased. “Victimized ex-rivals,” wrote McGee, “might be expected to make poor employees and dissident or unwilling shareholders.”

Kolko writes that “Standard attained its control of the refinery business primarily by mergers, not price wars, and most refinery owners were anxious to sell out to it. Some of these refinery owners later reopened new plants after selling to Standard.”

Buying out competitors can be a wise move if achieving economy of scale is the intent. Buying out competitors merely to eliminate them from the market can be a futile, expensive, and never-ending policy. It appears that Rockefeller’s mergers were designed with the first motive in mind.

Even so, other people found it profitable to go into the business of building refineries and selling to Standard. David P. Reighard managed to build and sell three successive refineries to Rockefeller, all on excellent terms.

A firm which adopts a policy of absorbing others solely to stifle competition embarks upon the impossible adventure of putting out the recurring and unpredictable prairie fires of competition.

A third accusation holds that Standard secured secret agreements with competitors to carve up markets and fix prices at higher-than-market levels.

I will not contend here that Rockefeller never attempted this policy. His experiment with the South Improvement Company in 1872 provides at least some evidence that he did. I do argue, however, that all such attempts were failures from the start and no harm to the consumer occurred.

Standard’s price performance, cited extensively above, supports my argument. Prices fell steadily on an improving product. Some conspiracy!

From the perspective of economic theory, collusion to raise and/or fix prices is a practice doomed to failure in a free market for these reasons:

  1. Internal pressures. Conspiring firms must resolve the dilemma of production. To exact a higher price than the market currently permits, production must be curtailed. Otherwise, in the face of a fall in demand, the firms will be stuck with a quantity of unsold goods. Who will cut their production and by how much? Will the conspirators accept an equal reduction for all when it is likely that each faces a unique constellation of cost and distribution advantages and disadvantages?

    Assuming a formula for restricting production is agreed upon, it then becomes highly profitable for any member of the cartel to quietly cheat on the agreement. By offering secret rebates or discounts or other “deals” to his competitors’ customers, any conspirator can undercut the cartel price, earn an increasing share of the market and make a lot of money. When the others get wind of this, they must quickly break the agreement or lose their market shares to the “cheater.” The very reason for the conspiracy in the first place—higher profits—proves to be its undoing!

  2. External pressures. This comes from competitors who are not parties to the secret agreement. They feel under no obligation to abide by the cartel price and actually use their somewhat lower price as a selling point to customers. The higher the cartel price, the more this external competition pays. The conspiracy must either convince all outsiders to join the cartel (making it increasingly likely that somebody will cheat) or else dissolve the cartel to meet the competition.

I would once again call the reader’s attention to Kolko’s The Triumph of Conservatism, which documents the tendency for collusive agreements to break apart, sometimes even before the ink is dry.

A fourth charge involves the matter of railroad rebates. John D. Rockefeller received substantial rebates from railroads who hauled his oil, a factor which critics claim gave him an unfair advantage over other refiners.

The fact is that most all refiners received rebates from railroads. This practice was simply evidence of stiff competition among the roads for the business of hauling refined oil products. Standard got the biggest rebates because Rockefeller was a shrewd bargainer and because he offered the railroads large volume on a regular basis.

This charge is even less credible when one considers that Rockefeller increasingly relied on his own pipelines, not railroads, to transport his oil.

Did Standard Oil have the power to charge any price it wanted? A fifth accusation says yes. According to the notion that Standard’s size gave it the power to charge any price, bigness per se immunizes the firm from competition and consumer sovereignty.

As an “efficiency monopoly,” Standard could not coercively prevent others from competing with it. And others did, so much so that the company’s share of the market declined dramatically after 1899. As the economy shifted from kerosene to electricity, from the horse to the automobile, and from oil production in the East to production in the Gulf States, Rockefeller found himself losing ground to younger, more aggressive men.

Neither did Standard have the power to compel people to buy its products. It had to rely on its own excellence to attract and keep customers.

In a truly free market, the following factors insure that no firm, regardless of size, can charge and get any price it wants:

  1. Free entry. Potential competition is encouraged by any firm’s abuse of the consumer. In describing entry into the oil business, Rockefeller once remarked that “all sorts of people . . . the butcher, the baker, and the candlestick maker began to refine oil.”
  2. Foreign competition. As long as government doesn’t hamper international trade, this is always a potent force.
  3. Competition of substitutes. People are often able to substitute a product different from yet similar to the monopolist’s.
  4. Competition of all goods for the consumer’s dollar. Every businessperson in competition with every other businessman to get consumers to spend their limited dollars on him.
  5. Elasticity of demand. At higher prices, people will simply buy less.

It makes sense to view competition in a free market not as a static phenomenon, but as a dynamic, never-ending, leap-frog process by which the leader today can be the follower tomorrow.

The sixth charge, that John D. Rockefeller was a “greedy” man, is the most meaningless of all the attacks on him but nonetheless echoes constantly in the history books.

If Rockefeller wanted to make a lot of money (and there is no doubting he did), he certainly discovered the free market solution to his problem: produce and sell something that consumers will buy and buy again. One of the great attributes of the free market is that it channels greed into constructive directions. One cannot accumulate wealth without offering something in exchange!

At this point the reader might rightly wonder about the dissolution of the Standard Oil Trust in 1911. Didn’t the Supreme Court find Standard guilty of successfully employing anti-competitive practices?

Interestingly, a careful reading of the decision reveals that no attempt was made by the Court to examine Standard’s conduct or performance. The justices did not sift through the conflicting evidence concerning any of the government’s allegations against the company. No specific finding of guilt was made with regard to those charges. Although the record clearly indicates that “prices fell, costs fell, outputs expanded, product quality improved, and hundreds of firms at one time or another produced and sold refined petroleum products in competition with Standard Oil,” the Supreme Court ruled against the company. The justices argued simply that the competition between some of the divisions of Standard Oil was less than the competition that existed between them when they were separate companies before merging with Standard.

In 1915, Charles W. Eliot, president of Harvard, observed: “The organization of the great business of taking petroleum out of the earth, piping the oil over great distances, distilling and refining it, and distributing it in tank steamers, tank wagons, and cans all over the earth, was an American invention.” Let the facts record that the great Standard Oil Company, more than any other firm, and John D. Rockefeller, more than any other man, were responsible for this amazing development.

Summary

  • If the Standard Oil Company was any kind of “monopoly,” it was not a “coercive” one because it did not derive its high (and temporary) market share from special government favors. There were lots of competitors to it, here and abroad. If it was a monopoly, then it was of the “efficiency” variety, meaning that it earned a high market share because consumers liked what it offered at attractive prices.
  • The prices of Standard products (chiefly kerosene in the company’s early history) steadily fell. The quality steadily improved. Total production grew from year to year. This is not supposed to be the behavior of an evil monopolist, who supposedly restricts output and raises prices.
  • Accusations against Standard—predatory price cutting, buying up competitors, conspiracy to restrict output and raise prices, securing railroad rebates, etc—sound plausible on the surface but fall apart upon close inspection.

For further information, see:

“John D. Rockefeller and the Oil Industry” by Burton Folsom

“How Capitalism Saved the Whales” by James S. Robbins

“John D. Rockefeller and His Enemies” by Burton Folsom

“A Review of Chernow’s biography of Rockefeller” by D. T. Armentano

“Herbert Dow and Predatory Pricing” by Burton Folsom

ABOUT LAWRENCE W. REED

Lawrence W. (“Larry”) Reed became president of FEE in 2008 after serving as chairman of its board of trustees in the 1990s and both writing and speaking for FEE since the late 1970s. Prior to becoming FEE’s president, he served for 20 years as president of the Mackinac Center for Public Policy in Midland, Michigan. He also taught economics full-time from 1977 to 1984 at Northwood University in Michigan and chaired its department of economics from 1982 to 1984.

EDITORS NOTE: The Foundation for Economic Education (FEE) is proud to partner with Young America’s Foundation (YAF) to produce “Clichés of Progressivism,” a series of insightful commentaries covering topics of free enterprise, income inequality, and limited government. See the index of the published chapters here. This article first appeared in The Freeman, the journal of the Foundation for Economic Education, FEE, in March 1980. Footnotes can be found in that version on FEE.org. The author is president of FEE and the editor of this series of “Clichés.” If you wish to republish this article, please write editor@fee.org.

Obama Has Two More Years Left to Destroy the U.S. Economy

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As 2015 began the Journal Editorial Report on Fox News was devoted to having its reporters, some of the best there are, speculate on what 2015 holds in terms of who might run for president and what the economy might be. The key word here is “speculate” because even experts know that it is unanticipated events that determine the future and the future is often all about unanticipated events.

How different would the world have been if John F. Kennedy had not been assassinated? One can reasonably assume there would not have been the long war in Vietnam because he wanted no part of the conflict there. Few would have predicted that an unknown Governor from Arkansas would emerge to become President as Bill Clinton did. Who would believe we are talking about his wife running for President? That is so bizarre it is mind-boggling.

Most certainly, few would have predicted that an unknown first term Senator from Illinois, Barack Hussein Obama, would push aside Hillary Clinton to become the first black American to be nominated for President and to win in 2008. Despite the takeover of the nation’s healthcare system with a series of boldfaced lies, he still won a second term.

Obama now has two more years in which to try to destroy the U.S. economy; particularly its manufacturing and energy sectors. The extent to which he is putting in place the means to do that still remains largely unreported or under-reported in terms of the threat it represents.

Obama Says Planet is WarmingThe vehicle for the nation’s destruction is the greatest hoax of the modern era, the claim that global warming must be avoided by reducing “greenhouse gas” emissions.

A President who lied to Americans about the Affordable Care Act, telling them they could keep their insurance plans, their doctors, and not have to pay more is surely not going to tell Americans that the planet is now into its 19th year of a cooling cycle with no warming in sight.

To raise the ante of the planetary threat hoax, he has added “climate change” when one would assume even the simple-minded would know humans have nothing to do with the Earth’s climate, nor the ability to initiate or stop any change.

In 2015, the White House is launching a vast propaganda campaign through the many elements of the federal government to reach into the nation’s schools with the climate lies and through other agencies to spread them.

In particular, Obama has been striving to utilize the Environmental Protection Agency to subvert existing environmental laws and, indeed, the Constitution unless Congress or the courts stop an attack that will greatly weaken the business, industrial and energy sectors. It will fundamentally put our lives at risk when there is not enough electricity to power homes and workplaces in various areas of the nation. At the very least, the cost of electricity will, in the President’s own words, “skyrocket.”

Why doesn’t anyone in Congress or the rest of the population wonder why White House policies are closing coal-fired plants that provided fifty percent of our electricity when Obama took office and now have been reduced to forty percent? Did you know that more than 1,200 new coal-fired plants are planned in other nations with two-thirds of them to be built in India and China? We live in a nation that has such huge reserves of coal we export it.

The EPA attack on these plants is so illegal and unethical that one of the nation’s leading liberal attorneys, Laurence H. Tribe, who began teaching about environmental law 45 years ago, went on record to declare the EPA’s proposed Clean Power Plan is unconstitutional.

The plan is a regulatory proposal to reduce carbon emissions from the nation’s electric power plants. Tribe pointed out that a two-decade old Supreme Court precedent forbids the federal government from taking action to commandeer the powers of state governments by leaving them no choice but to implement it.

“The brute fact,” said Tribe “is that the Obama administration failed to get climate legislation through Congress. Yet the EPA is acting as though it has the legislative authority anyway to re-engineer the nation’s electric generating system and power grid. It does not.”

As 2014 came to a close, the Obama administration either proposed or imposed more than 1,200 new regulations on the American people.

Alex Newman, writing in the New American, calculated they will add “even more to the already crushing $2 trillion per year cost burden of the federal regulatory machine.” Not surprisingly, “most of the new regulatory schemes involve energy and the environment—139 during a mere two-week period in December, to be precise.”

“In all,” Newman reported, “the Obama administration foisted more than 75,000 pages of regulations on the United States in 2014, costing over $200 billion, on the low end, if new proposed rules are taken into account.” Just one, the EPA’s “coal ash” regulation, “is expected to cost as much as $20 billion, estimates suggest.”

Then add to that the EPA’s “ozone rule” that is estimated to cost “as much as $270 billion per year and put millions of American jobs at risk under the guise of further regulating emissions of the natural gas.” Released the day before Thanksgiving, “Experts also pointed out that the EPA’s own 2007 studies showed no adverse health effects from exposure to even high levels of ozone.”

These are just two examples of the regulatory strangulation of the nation’s economy and energy infrastructure.

This is Obama’s agenda for the remaining two years of his second and thankfully last term in office. Whether you know anything about the science of the climate or have ever even read the Constitution, the sheer disaster of ObamaCare should have told you by now that everything Obama has put in motion has had the single objective of destroying the nation’s economy in every possible way.

The voters have put Republicans in charge of both houses of Congress and their primary responsibility will be to reverse and repeal the damage of Obama’s first six years. The courts will play a role, but this is a job for our elected representatives.

© Alan Caruba, 2015

Friends of the Earth are the Enemies of Mankind

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It’s such a benign sounding name, Friends of the Earth. This multi-million dollar international organization is a network of environmental organizations in 74 countries. If its agenda was adopted and enacted much of mankind would lose access to the energy sources that define and enhance modernity or the beneficial chemicals that protect food crops from insect predators and weeds.

I am on FOE’s mailing list and the most recent email informed me and the thousands of others who received it that “the oil lobby and the Republican leadership in Congress are plotting a full frontal assault on our environmental protections…” I bet you didn’t know that the Republican Party was an enemy of the environment. That’s curious because it was a Republican, Richard M. Nixon, who created the Environmental Protection Agency with an executive order!

FOE was upset by the $1.01 trillion bill to fund the U.S. government for the coming year through to September. “What’s more, in a surprise giveaway to the super-rich, the bill raised the maximum contribution limit from individuals to political parties—opening the door for billionaires like the Koch Brothers to purchase even more seats in government.”

The sheer hypocrisy of FOE defies the imagination. No mention was made of the secretive “billionaires club” that was revealed in August in a report by Republicans on the Senate Environment and Public Works Committee. It was titled “The Chain of Environmental Command: How as Club of Billionaires and Their Foundations Control the Environmental Movement and Obama’s EPA.” Didn’t read about it in the mainstream press? That’s because it was hushed up.

You may, however, have heard of San Francisco billionaire Tom Steyer who in February pledged to spend up to $100 million, half his own money and half from other billionaire donors, to get candidates who promised to pass anti-global warming legislation elected in the midterm elections. Steyer has been a leading opponent of the Keystone XL pipeline, but for sheer hypocrisy, Steyer made his fortune by investing in fossil fuel companies!

As far as FOE is concerned, only conservative billionaires are evil.

“At Friends of the Earth, we’re working to protect people and the planet from Big Oil and its profits.” Translation: We don’t want oil companies to provide the source of energy that fuels our cars, trucks, and other devices that improve our lives. We don’t like profits because they are the result of capitalism.”

FOE (1)For good measure, FOE tells its supporters the “future would be great for companies like Dow, Syngenta, and Monsanto — but terrible for bees, butterflies, and people like us. Take away pesticides and all you have left are the pest insects that spread disease and harm food crops.

According to Wikipedia, “Originally based largely in North America and Europe, its membership is now heavily weighted toward groups in the developing world.” It’s the developing world that has been the focus of the United Nations greatest hoax, global warming, now called climate change, as a means to transfer money from wealthy nations to those less well governed, often because there is a despot or larcenous group in charge.

It is little wonder that FOE is upset by the decision of millions of American voters to elect candidates who want to rein in the excesses of the Environmental Protection Agency and take steps to improve the economy. Senate Majority Leader, Mitch McConnell (R-KY) is denounced as “a climate denier with close ties to the coal industry.” He has made it clear that getting the Keystone XL pipeline approved by Congress will be a priority.

FOE’s email even named the American Legislative Exchange Council (ALEC) as “a policy group that helps develop anti-environmental state laws across the country. Right now they’re focused on plans to erode the President’s Clean Power Plan and EPA’s ability to carry out its mission.”

What FOE’s email decrying Big Oil and Republicans doesn’t mention is that, among the elements of the 1,603 pages of the omnibus appropriations bill, is a reduction in the funding of the Environmental Protection Agency which received $60 million less than last year. At $8.1 billion, the EPA is operating on its smallest budget since 1989.

I would like to see the EPA eliminated as a federal agency and that funding go as grants to the individual state environmental protection agencies to address problems closer to those responsible to do so. As it was, the omnibus bill put a variety of limits on EPA “greenhouse gas” programs, some of which verge on the totally idiotic such as permits for gas emissions—methane from cows!

The bill also disallowed President Obama’s promise to give $3 billion to the United Nations Climate Fund, a means to take our money and give it to nations for “environmental” programs that are more likely to end up being something else entirely.

With its anti-energy, anti-capitalism agenda, Friends of the Earth are in fact enemies of mankind. They would happily return the planet to the Dark Ages. That’s why people like me shine a very bright light on them so you will not be duped in the way far too many others are.

© Alan Caruba, 2015

EDITORS NOTE: The featured image is of the Mahogany protest, London, 1993. Photo: Friends of the Earth.

The EPA’s Methane Madness: The EPA thinks cow flatulence is a serious problem

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The Obama administration’s attack on America’s energy sector is insane. They might as well tell us what to eat. Oh, wait, Michelle Obama is doing that. Or that the Islamic State is not Islamic. Oh, wait, Barack Obama said that.

Or that the Environmental Protection Agency (EPA) is about protecting the environment. It used to be decades ago, but not these days.

There was a time when the EPA was devoted to cleaning up the nation’s air and water. It did a very good job and we now all breathe cleaner air and have cleaner water. At some point, though, it went from a science-based government agency to one for which science is whatever they say it is and its agenda is the single minded reduction of all sources of energy, coal, oil and natural gas, by telling huge lies, citing junk science, and generating a torrent of regulation.

Americans have been so blitzed with global warming and climate change propaganda for so long one can understand why many just assume that these pose a hazard even though there hasn’t been any warming for 19 years and climate change is something that has been going on for 4.5 billion years. When the EPA says that it’s protecting everyone’s health, one can understand why that is an assumption many automatically accept.

The problem is that the so-called “science” behind virtually all of the EPA pronouncements and regulations cannot even be accessed by the public that paid for it. The problem is so bad that, in November 2014, Rep. David Schweikert (R-AZ) introduced a bill, HR 4012, the Secret Science Reform Act, to address it. It would force the EPA to disclose all scientific and technical information before proposing or finalizing any regulation.

As often as not, those conducting taxpayer funded science studies refuse to release the raw data they obtained and the methods they used to interpret it. Moreover, agency “science” isn’t always about empirical data collection, but as Ron Arnold of the Center for the Defense of Free Enterprise, noted in 2013, it is “a ‘literature search’ with researchers in a library selecting papers and reports by others that merely summarize results and give opinions of the actual scientists. These agency researchers never even see the underlying data, much less collect it in the field.”

The syndicated columnist, Larry Bell, recently noted that “Such misleading and downright deceptive practices openly violate the Information Quality Act, Executive Order 12688, and related Office of Management and Budget guidelines requiring that regulatory agencies provide for full, independent, peer review of all ‘influential scientific information.’” It isn’t that there are laws to protect us from the use of junk science. It’s more like they are not enforced.

These days the EPA is on a tear to regulate mercury and methane. It claims that its mercury air and toxics rule would produce $53 billion to $140 billion in annual health and environmental benefits. That is so absurd it defies the imagination. It is based on the EPA’s estimated benefits from reducing particulates that are—wait for it—already covered by existing regulations!

Regarding the methane reduction crusade the EPA has launched, Thomas Pyle, president of the Institute for Energy Research, says “EPA’s methane regulation is redundant, costly, and unnecessary. Energy producers are already reducing methane emissions because methane is a valuable commodity. It would be like issue regulations forcing ice cream makers to spill less ice cream.”

“The Obama administration’s latest attack on American energy,” said Pyle, “reaffirms that their agenda is not about the climate at all—it’s about driving up the cost of producing and using natural gas, oil, and coal in America. The proof is the EPA’s own research on methane which shows that this rule will have no discernible impact on the climate.”

S. Fred Singer, founder and Director of the Science and Environmental Policy Project as well as a Senior Fellow with The Heartland Institute says “Contrary to radical environmentalists’ claims, methane is NOT an important greenhouse gas; it has a totally negligible impact on climate. Attempts to control methane emissions make little sense. A Heartland colleague, Research Fellow H. Sterling Burnett, says “Obama is again avoiding Congress, relying on regulations to effectively create new laws he couldn’t legally pass.”

As Larry Bell noted, even by the EPA’s own calculations and estimates, the methane emissions limits, along with other limits on so called greenhouse gases “will prevent less than two-hundredths of a degree Celsius of warming by the end of this century.”

That’s a high price to pay for the loss of countless plants that generate the electricity on which the entire nation depends for its existence. That is where the EPA is taking us.

Nothing the government does can have any effect on the climate. You don’t need a PhD in meteorology or climatology to know that.

© Alan Caruba, 2015

EDITORS NOTE: The featured image is courtesy of The Peoples Cube.

In Veto Threat, President Claims 6 Years Isn’t Enough Time to Study Keystone Pipeline

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On the first day of taking control of the U.S. Senate, Republicans ran into some trouble:

Democrats managed to put the kibosh on a planned Energy and Natural Resources [ENR] Committee hearing today on Keystone XL, forcing Republicans to cancel the event. Sen. Dick Durbin, on behalf of Barbara Boxer, objected to a GOP floor move seeking unanimous consent to appoint Lisa Murkowski and Maria Cantwell as the leaders of ENR. The appointment was necessary for the move to take place because Democrats do no formally organize until today. Objecting to the UC request prevented the committee from being able to organize in time for today’s hearing, which was then scrapped.

While a minor setback, it typifies the many delays and obstacles put in front of the Keystone XL pipeline since permits applications were filed in 2008.

However, as soon as the bill to approve the job-creating, energy infrastructure project was filed in the Senate, theWhite House threatened to veto it.

The Statement of Administration Policy on the bill states the bill “seeks to circumvent longstanding and proven processes for determining whether cross-border pipelines serve the national interest” and “prevents the thorough consideration of complex issues.”

In other words, the President wants you to believe that there hasn’t been enough time to study the pipeline.

That’s absurd.

The Keystone XL pipeline has been studied for over six years. Five times, the State Department has issued reports that the project would have minimal impact on the environment.

Oil Sands Fact Check Keystone XL timeline.

For a larger view click on the chart.

In the time it’s been studied you could have built one Golden Gate Bridge (with time to spare), built three Pentagons, or watched all six Star Wars movies 3,917 times.

The most recent State Department analysis found that along with little environmental impact, the Keystone XL pipeline will create 42,000 jobs, generate $3.4 billion in economic activity, and generate $55.6 million in local property taxes once it’s operating.

Estimated local property taxes from the Keystone XL pipeline. Source: Tax Foundation.

 Reaction to the President’s veto threat was greeted with bipartisan disappointment. Senate Majority Leader Mitch McConnell (R-KY):

I assure you, threatening to veto a jobs and infrastructure bill within minutes of a new Congress taking the oath of office — a bill with strong bipartisan support — is anything but productive.

Bill co-sponsor, Senator Joe Manchin (D-WV):

His decision to veto such a commonsense bill prior to the unfolding of regular congressional order and the offering of amendments appears premature and does little to mitigate the congressional gridlock. It is time that we address the critical issues of moving America toward energy independence and fostering job growth and economic prosperity.

By working at a snail’s pace, the administration has turned this project into a mobilization tool for anti-energy activists. It has allowed special interest demagoguery to trump sober policy analysis and made the Keystone XL pipeline a symbol of a dysfunctional federal permitting process.  People in Montana, South Dakota, Nebraska, and the rest of America have waited long enough.

The Wall Street Journal editorial board advised Congress to vote to approve the pipeline anyway [subscription required]:

Members of both parties should move ahead despite the veto threat and call his bluff. At least the country will see who is the real obstacle to faster growth and job creation.

Agree. Tell Congress to support the Keystone XL pipeline.

Businesses, investors, and entrepreneurs wondering if it’s still possible to build big things in America are watching,labor unions that support the pipeline are watching, and a majority of the public who supports the pipeline is watching.

Pew Research Poll on the Keystone XL pipeline.
EDITORS NOTE: The featured image is of pipe to be used for the Keystone XL pipeline in a field in Gascoyne, ND. Photo credit: Sean Hackbarth.

Could Israel Lose the Energy Prize in the Eastern Mediterranean?

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Major Israeli Offshore Gas Fields

Source: Jerusalem Center for Public Affairs, Daniel Wurmser “The Geopolitics of Israel’s Offshore Gas Reserves”, April 4, 2013.

In December 2011, we published what might have been a prescient prediction of Israel‘s emerging energy independence, Will Israel Win the Energy Prize in the Levant Basin? We drew attention to the geo-political opportunities and security risks to the Jewish nation from the discovery and development of significant off shore gas deposits in its Exclusive Economic Zone (EEZ) in the Levant Basin. These have been developed by Houston, Texas-based Noble Energy, Inc. and its Israeli partner, Delek Group, Ltd. (hereafter referred to as “the Consortium”). In 2009 came the discovery of the Tamar gas field with estimated reserves of 7.9 trillion Cubic Feet (TCF) by the Consortium followed by the giant Leviathan field a year later in 2010 with estimated reserves of 21.9 TCF. Production from Tamar began flowing in April 2013 with immediate economic benefits to Israel. A third major gas field discovery in Israel’s offshore EEZ, the Royee, with estimated reserves of 3.2 TCF was announced in mid-December 2014 by Ratio Oil. The potential significance of these energy developments for Israel is huge.

Combined, Israel’s current gas reserves in the leading Tamar and Leviathan gas fields amount to more than 31.6 trillion cubic feet (TCF). The US Geological Survey has estimated that the Eastern Levant Basin in the Mediterranean may conservatively hold upwards of 125 TCF of gas and 81 billion barrels of oil at lower depths.

Using the US Energy Information Administration current NYMEX natural gas futures price as of December 26, 2014 for delivery January 2015 of $3.07 07 per MBTU, the estimated value of the 31.6 trillion cubic feet of estimated reserves in Israel’s offshore fields developed by the Consortium could be worth approximately $97 billion. That is equivalent to over 35.5% of Israel’s 2013 GDP of $273 billion. The impact on the country’s GDP growth would be significant.

As evidence of how Israel values these offshore gas discoveries in September 2014, the Ministry of Defense after a delay of several years, issued tenders to naval shipyards in Germany, South Korea, US and Israel for procurement of four specialized patrol vessels at an estimated cost of NIS 2 Billion ($510 Million dollars) to provide security for offshore gas production platforms. Israel was also concerned about Hezbollah threats to these offshore gas facilities. One of the suspected reasons for an Israel Air Force covert attack in Syria on December 8, 2014 was to prevent delivery of long range missiles including Iranian supplied Yakhont anti-shipping missiles to proxy Hezbollah that might used to attack offshore platforms and Israeli Naval patrol vessels.

However, these prospects of an energy independent future may have been thrown in jeopardy by a ruling in late December 2014 by Israel’s independent Anti-Trust Authority (IAA) essentially declaring the Consortium a monopoly and reneging on prior compromise deals with the Consortium partners. Noble Energy, Inc. and Delek Group had agreed in the compromise to sell interests in smaller developed offshore gas fields in exchange for retaining ownership of both the Tamar and Leviathan gas fields in Israel’s EEZ. The Consortium partners have requested an early 2015 hearing on the IAA ruling. Many believe this unprecedented IAA ruling may have been a political maneuver aimed squarely at the caretaker government of Israeli PM Netanyahu in the midst of a campaign for a snap election on March 17, 2015. The question before us is could Israel lose it’s much sought after energy prize in the Eastern Mediterranean?

Potential Economic Benefits to Israel from its Off Shore Gas Developments

One indication of the importance is reflected in the long term economic benefits to Israel. An Ernst & Young report released at a January 2014 energy conference in Israel pegged the value of those economic benefits to Israel at $52 billion reported by Globes Israel Business:

The Tamar gas field, which began production in April 2013, boosted Israel’s GDP by almost half a percentage point, and it is projected to boost GDP by 1.5 percentage points in 2014.

Ernst & Young Israel found that the main component of the gas’s value is not the government’s expected tax revenues from oil and gas, but the savings to the economy from the purchase of cheaper natural gas for electricity production, industry, and transportation. Gas currently costs Israel Electric Corporation (IEC) (TASE: ELEC.B22) about $6 per million BTU, a third of the cost of the alternative fuels – diesel, industrial oil, and liquefied natural gas (LNG) – all of which are imported.

Tamar Gas Platform offshore Israel: Source Noble Energy, Inc.

Tamar comes on line beginning Israel’s Energy Independence

The intervening three years have witnessed the opening of production for the Tamar field and negotiations of several deals to export production authorized by the Israeli cabinet.

The Consortium had opened up smaller gas deposits before discovering on January 1, 2009  the Tamar gas field with 7.9 TCF, 50 miles offshore Haifa. The Consortium committed $3 billion for development of Tamar. In March 2012 the Tamar Consortium “signed a 15-year, US$14 billion deal with the Israel Electric Corporation (IEC) to supply it with 42 billion cubic meters (BCM) of natural gas, with an option to increase the gas purchases up to $23 billion. By March 2012, the consortium developing Tamar had signed deals worth up to a total of $32 billion with six Israeli companies, committing up to 133BCM.” Delivery of Tamara’s first gas to Israel’s national power company began in April 2013. The growing Tamar field deliveries to the IEC eliminated reliance on supply of Egyptian gas via pipeline from the Sinai frequently disrupted by terrorist bombings.

Leviathan gas platform offshore Israel Source Ynet.org.

Leviathan Emerges but Strategic Investment Deals Falter

In 2010 came word of the discovery and development of the large Leviathan gas field located 81 miles West of Haifa and 29 miles southwest of the Tamar field with an estimated 21.9 TCF that lies in Israel’s EEZ. Leviathan is due to begin producing gas in 2017. Leviathan attempts at exports have taken its lumps. That is reflected in the failure to reach a deal with Australian energy concern, Woodside, Pty.

Meanwhile, the Woodside Leviathan Partners deal hasn’t been inked. UPI had this update on talks with the Delek Group:

Bloomberg News reported that Woodside, the No. 2 oil and gas producer in Australia, would pay more than $2 billion for a 30 percent stake in the Leviathan natural gas field from partners Delek, Noble Energy and Avner Oil Exploration.

Delek said, however, that a formal deal was still in the works.

“The negotiation between the Leviathan partners and Woodside toward signing a binding agreement is ongoing,” the company said. “Should a significant development in relation to the above-mentioned negotiations take place, the partnerships will publish an immediate report.”

Woodside’s CEO Peter Coleman at a Houston HIS/CERA energy conference in early March 2013 expressed “confidence” about closing on the purchase of Nobel partner interest in the overall Leviathan deal.

Negotiations between the Consortium and Woodside continued. In February 2014, a Memorandum of Understanding (MOU) was signed for final negotiations between the Consortium and Woodside. There was the hope that the Woodside deal might finally close at an enhanced its price for purchase of a minority interest in Leviathan which would provide LNG technology.

On May 21, 2014, Bloomberg reported, “Woodside Scraps $2.6 Billion Israeli Gas Deal as Talks Fail”:

Woodside Petroleum Ltd. (WPL), Australia’s second-biggest oil and gas producer, scrapped an agreement to buy a quarter of Israel’s largest natural gas field for as much as $2.6 billion after talks to complete the deal collapsed.

“Negotiations between the parties failed to reach a commercially acceptable outcome,” the Perth-based company said today in a statement. Woodside had been in talks with a group includingNoble Energy Inc. (NBL) to invest in the Leviathan venture.

Tamar and Leviathan Consortium Potential Gas Deals with Jordan and Egypt

Agreement between the Consortium and the Israeli government allotted up to 40 percent of Tamar and Leviathan production for export. The US State Department thought this might be useful for development of regional economic and peace prospects. That resulted in negotiations of gas delivery projects with a Palestinian energy group and major Jordanian potash and bromine companies. A potential Egyptian contract may be in the works, as well. Consortium partner Noble Energy played a key role in facilitating these initial agreements. The New York Times reported:

Noble helped break the impasse by striking a separate deal with two Jordanian mineral companies, Arab Potash and Jordan Bromine. The companies will buy about $500 million of gas over 15 years from Tamar.

Jordan is one of the latest deals for Leviathan. In January, Noble and its Israeli partners reached an agreement to supply a power plant under construction in the West Bank by a Palestiniangroup.

Industry experts say that Noble will need more long-term commitments to support the expense of Leviathan. The project is expected to cost as much as $8 billion, and the Jordan deal accounts for only about 9 percent of the gas.

The most likely anchor customer is Egypt, a huge and growing market. Today, two gas export facilities on the Mediterranean are sitting largely idle. The Egyptian government is blocking exports in order to meet high domestic demand and stave off power blackouts.

This year, Noble reached nonbinding agreements with the owners of both of these facilities — British Gas, the large British producer, and a joint venture of Italy’s ENI and Spain’s Gas Natural Fenosa — to supply their facilities from Tamar and Leviathan. As part of the deals, the gas would also probably flow to the domestic market in Egypt.

Source: Turkish News September 8, 201.

Turkish Double Dealings over Offshore Gas in the Levant Basin

Turkey under Islamist Premier, now President, Recep Tayyip Erdogan had threatened the Republic of Cyprus with retaliation over the discovery of the Aphrodite gas field off the southern coast of the Republic an EU member. The Aphrodite field with 7 TCF of natural gas is located 24 miles west of the giant Leviathan field with 21.9 TCF in Israel’s EEZ. Both the Aphrodite and Leviathan fields were developed by the Noble Energy, Inc. and Delek Partners consortium. We noted the quickening pace in November 2011 of geo-political moves and countermoves over exploitation of these strategic gas fields in the Levant Basin:

  • On November 2, 2011 Israel signed a bilateral energy development agreement with Cyprus, and Noble Energy announcing the development of a major LNG facility off the Island nation’s south coast;
  • On November 16th Turkey announced an offshore drilling deal with Shell Oil in an area in the waters close to the Turkish enclave in northern Cyprus;
  • On November 20-21, Israel’s then deputy Foreign Minister Danny Ayalon met with Greek officials to discuss joint exploration of the region’s gas fields;
  • On November 23rd, Turkish Energy Minister Taner Yildiz said Israeli and Cypriot energy exploration in the Mediterranean was illegal, an agreement should first be reached with all relevant parties, and resources should be equally shared; and
  • On November 25th, Russia announced that it was sending its aircraft carrier the Admiral Kuznetzov for maneuvers in the disputed area offshore of Cyprus in a clear demonstration of support for Greek Cypriot claims and as a warning to the Erdogan regime in Ankara.

In mid-September, 2011, two Israeli Air Force (IAF) F-15s flew over both the Republic of Cyprus and the Turkish northern enclave after buzzing a Turkish research vessel off Cyprus’ southern coast in violation of Cyprus’ EEZ. An Israeli helicopter loitered overhead near a Turkish research vessel, Piri Reis, while the later was in the Aphrodite gas field claimed by the Republic of Cyprus. IAF AWACs aircraft were patrolling along the EEZ of Cyprus and Israel, at an altitude of more than 40,000 feet. They were monitoring Turkish intrusions over Cypriot airspace. In symbolic retaliation, Turkey’s Air Force jets made passes over a Greek island off Turkey’s southwestern coast.

A week prior to these confrontations over Greece and Cyprus, Turkey and Turkish Cyprus concluded an agreement delimiting maritime boundaries in the eastern Mediterranean. Agreements that conflict with the Republic of Cyprus-Israel EEZ. Turkey declared that it would protect its sole research vessel with warships. These actions raised the prospect of possible armed conflict.

Turkey’s posturing in 2011 was based on its seizure of an enclave, the rump Turkish Northern Cypriot ‘Republic’ carved out by a Turkish invasion in 1974. An opportunistic invasion contrived by the Turkish government at the time to counter the Greek military coup of the Archbishop Makarios government of Cyprus. All of Cyprus is recognized by the EU. The Island’s offshore EEZs are divided among the Republic, the North Turkish “Republic” and two British bases on the Island.

Machinations over the Turkish Northern Cypriot Republic’s stake hold in the Cypriot EEZ gas field surfaced in an embarrassing episode at an international energy conference in Tel Aviv on November 6, 2014. That was the surprise address by Özdil Nami, the foreign minister of the self-declared Turkish Republic of Northern Cyprus (TRNC) at an Energy and Business Conference. Turkey is the only country that recognizes the TRNC enclase it seized from Cyprus in 1974. The Jerusalem Post noted these remarks of Nami that drew the ire of Cypriot businessmen at the conference and an official involved with pursuit of joint development of the proposed Eastern Mediterranean Pipeline:

Natural resources of Cyprus belong to all Cypriots and must benefit all Cypriots.
Nami called for a united Cyprus comprised of Cyprus and Turkish federations, with cooperation fueled by the offshore natural gas discoveries. Dealing with a united Cyprus expands the options available.

That led to this comment in a press release from Prof. Toula Onoufriou, president of the Cyprus Hydrocarbons Company:

The invitation of Mr. [Özdil] Nami to this conference and his appearance in the opening session without any mention in the conference program is unacceptable and is not in the spirit of collaboration that has been developed between our countries.

Earlier in 2014, there was an abortive round of Turkish negotiations with Cyprus over “unification” of the Republic of Cyprus. Meanwhile Turkey was pressing for a lucrative share of the gas development offshore Cyprus and transmission to EU markets via its network of pipelines.

Erdogan threatened to bring Israel before the International Criminal Courts over the deaths of Turkish nationals in an Israeli naval commando raid on the Turkish ferry vessel, the Mavi Marmarathat pierced the enforced blockade during the May 2010, Free Gaza flotilla. The dispute threatened a diplomatic impasse between the two countries until the March 2013 trip by President Obama to Jerusalem. He prevailed upon Israeli PM Netanyahu to call then PM Erdogan and apologize. Israel offered compensation to the Turkish victims in the Mavi Marmara incident. That cleared the way for bi-lateral discussions for possible transmission of gas via a submarine pipeline from the Leviathan field to on-shore Turkish receiving facilities at Ceyhan on the Mediterreanean coast with its network of pipelines servicing the EU. Today’s Zaman in February 2014 reported the burgeoning commercial rapprochement with the Consortium over a possible gas pipeline deal:

Turkey’s Vatan daily said that representatives from US-based Noble Energy and Israel’s Delek Group, two of Leviathan’s largest stakeholders, are in talks with four Turkish energy firms for a possible deal in the construction of a natural gas pipeline via Turkey to Europe. Vatan said the Leviathan shareholders are in negotiations with Turkey’s Turcas, Zorlu, Çalık and Enka Enerji for a pipeline that would carry 8 billion cubic meters (bcm) of Israeli gas via Turkey starting  in 2017, the year Israel expects to start extracting gas.

Globes Israel Business reported:

In March 2014 “that two Turkish companies, Zorlu Holding and Turcas Petrol, had participated in a tender for the possible construction of a 7-10 bcm/y gas pipeline to link Leviathan with the Turkish mainland. The proposed 500 kilometer pipeline would cost about $3.5 billion. Zorlu Holding has stakes in several power plants in Israel and its chairman, Ahmet Nazif Zorlu, is known to have close links with the governing Justice and Freedom Party (AKP) in Turkey.

Then, Israel’s 50 day summer 2014 war with Hamas erupted, that virtually ended these discussions. In early August Turkish Energy Minister, Taner Yildiz announced that a deal was unlikely until a cease fire was concluded between Israel and Hamas. The Jerusalem Post  noted:

Calling for “an end to the cruelty in Palestine,” Yıldız said that his country’s “door will be closed,” until calm has been attained, the  Hurriyet added.

“If we build a natural gas pipeline from Israel or the eastern Mediterranean under these circumstances, the blood of innocent infants and mothers, not natural gas, would flow through it,” Yıldız said, according to the Hurriyet report.

Turkish parliamentary opposition in Ankara and Israeli Consortium partner Delek Group optimistically suggested that there might be renewal of talks. Erdogan’s opposition over the 2014 IDF conflict with Hamas virtually ended the discussions. As we shall see the Consortium’s hopes for a means of transmitting Leviathan gas fields output the lay in the EU’s interest in the Eastern Mediterranean pipeline with Cyprus.

Russian President Putin and Turkish President Erdogan Ankara, December 1, 2014. Source: Turkish Presidential Photo Service.

Putin’s December 2014 “Surprise” Gas Deal with Turkey

Turkey’s President Erdogan a new card to play in the energy geo-politics of the region with Russia’s embattled President Putin. On December 1, 2014 at a meeting between the two heads of government in Ankara, Putin announced abandonment of the yet to be completed South Stream pipeline to the EU via Bulgaria. In its stead, Putin proposed a proposition to Erdogan that was hard to pass up despite Turkey’s increasingly being beholden to Russia as its principal gas supplier. As reported by Eurasia.net, the pact presented compelling opportunities for both countries:

Energy-poor Turkey stands to benefit from Moscow’s surprise decision to drop the $45-billion South Stream natural gas pipeline project. At the same time, it raises questions about whether Turkey will become a pawn in the broader energy contest between Russia and the EU.

Ankara has long been keen to wean itself off Russian energy, which currently accounts for an estimated 57 percent of its gas needs, according to the 2014 BP Statistical Review of World Energy. Both the Turkish government and the European Union had seen gas imports from Azerbaijan, a cultural cousin and close ally of Ankara’s, via the Trans-Anatolian Pipeline (TANAP) as the answer to decreasing their level of energy dependency on the Kremlin.

Eurasia.net detailed Putin’s deal noting:

He proposed a new, 63-billion-cubic-meter-per-year gas pipeline running under the Black Sea from Russia via Turkey to the Greek border, which would serve as a forwarding point to Europe. He pledged a 6 percent discount on the price of the 14 bcm of gas available for sale annually to Turkey from the pipeline.

The deal would increase Turkey’s reliance on Russia for supply of gas, while reducing the cost for its power and commercial requirements. However, it places Islamist President Erdogan in a diplomatic quandary given Putin’s support for the embattled Syrian regime of Bashar Assad. Erdogan has argued to the Obama Administration that the toppling of the Assad regime was the price of Turkey’s joining the US-led coalition seeking the “degrading and destruction” of the Islamic State occupying large swaths of both Syria and Iraq. The Putin Erdogan deal is presently embodied in a Memorandum of Understanding awaiting further negotiations. Given both US and EU sanctions against Russia over its takeover of the Crimea and support for the irredentist conflict in Eastern Ukraine, the deal between the two autocrats over gas deliveries to the EU market is problematic.  Enter the Eastern Mediterranean Gas Pipeline involving Israel, Cyprus and Greece.

The Eastern Mediterranean Pipeline Project Rises to the Fore.

President Erdogan has been relentlessly pursuing a reckless geo-political strategy for several years disputing Cyprus’ sovereign right to exploration and development of offshore gas and oil in its EEZ. We saw that reflected in actions Erdogan directed in 2011 sending research vessels, Turkish air craft and naval vessels to violate the United National Convention of the Law of the Seas (UNCLOS). Turkey issued a NAVTEX (Navigation Telex) warning on October 3, 2014 that rattled the Cypriot Republic, EU and spurred Israel to suggest a counter proposal – The Eastern Mediterranean Pipeline. Moreover, as we saw on November 6, 2014 the  sudden appearance of the foreign minister of the Turkish Northern Republic of Cyprus disrupted a Tel Aviv Energy conference. He conveyed less than subtle demands of Ankara for development of undersea resources benefitting “all Cypriots” and presumably Turkey. When Vice President Biden visited President Erdogan in Istanbul in November 2014, while primarily concerned about enlisting Turkey in the war against the Islamic state, he also expressed the Administration position on Cyprus. He suggested that moribund unification talks be resurrected and that both sides on the Island seek joint development of the EEZ energy resources.

In partial response, the European Parliament passed a resolution on November 5, 2014, titled, “European Parliament (EUP) resolution on Turkish actions creating tensions in the exclusive economic zone of Cyprus.” The EUP resolution underscored the illegal actions of the October 3, 2014 NAVTEX issued by Erdogan’s Turkey violating UNCLOS. Turkey was conducting seismic surveys in Cyprus’ sovereign EEZ over the period from October 30 to December 30, 2014. These illegal actions by Turkey violated Cyprus’ maritime border with Egypt. Moreover, it jeopardized exploration by Italy’s ENI and KOGAS in blocks of the Cypriot EEZ. The EUP resolution drew attention to Turkey’s 2005 accession filing to the EU, as it required approval of all EU members and poisoned prospects for unification discussions between the Republic of Cyprus and the Northern Turkish enclave on the Island. The resolution suggested that Turkish withdrawal of troops stationed in the enclave was a pre-condition for accession to the EU. It urged immediate revocation of the offending NAVTEX and negotiation of bilateral agreements with the Cypriot Republic covering exploration and developments of undersea resources to benefit all Cypriots. The EUP Resolution suggested that Turkey sign the UNCLOS and honor its provisions.

In late November 2014 Israel’s Energy Minister, Sylvan Shalom, raised the Eastern Mediterranean Pipeline project in meetings with the European Commission’s new energy chief Maros Sefcovic at a meeting hosted by the Italian EU President. An article in Natural Gas Europe reported, “The Cypriots also seem supportive of such an endeavor, the Cypriot Foreign Minister receiving Israel’s suggestion positively and stating that a viability study was being conducted” for joint development of a submarine pipeline to Greece connecting the gas fields in the Israeli and Cypriot EEZs for delivery of gas to EU.

This was a geo-political gauntlet thrown down to counter the illegal moves of Turkish President Erdogan. It was an outgrowth of the bi-lateral agreement struck in November 2011 between Israel and Cyprus that would enable the Noble Energy-Delek Group to undertake exploration of the feasibility of the Eastern Mediterranean Pipeline. The announcement came just before the strategic December 1, 2014 meeting in Ankara between Putin and Erdogan during which the Russian President announced abandonment of the $45 Billion South Stream Pipeline that would deliver Russian gas to the EU. The Eastern Mediterranean Pipeline offered a secure means of transmitting gas through several EU members and associate member Israel.

On December 9th, Israel, Cyprus and Greece pitched the Eastern Mediterranean pipeline a day before a conference organized jointly by Natural Gas Europe, the Greek Energy Forum, ESCP Europe, RCEM and the European Economic and Social Committee (EESC). The conference was titled “2030 EU Energy Security, the Role of the Eastern Mediterranean Region” and took place at EESC headquarters in Brussels. Natural Gas Europe in an article on the EESC conference noted the comments of Greek Energy Minister, Ioannis Maniatis:

Europe will need an extra 100 bcm of natural gas in the next 15 years, and in light of Europe’s increasing dependence on imports to fulfill its energy needs, the EU must find a sustainable model to ensure it is a competitive economy.

The EU needs to reduce external dependence, increase efficiency, diversify its sources and routes of supply, and improve interconnectors, he added. Fully connected energy grids, greater transparency, good governance and a thorough understanding of global events should also be the focus of the EU according to Maniatis. He explained that Greece’s importance is growing. TheEast Med pipeline pitched by Israel, Cyprus and Greece would run from Israel and Cyprus via Greece to Italy and then to the rest of Europe is technically feasible and attached to attractive prospects said Maniatis. He told the audience that the results of a feasibility study on the East Med pipeline will be released next year and that the pipeline would serve as a new source and provider of natural gas comparable to the Southern Corridor. The attractiveness of the East Med Pipeline, said Maniatis, is that unlike the Southern Corridor, it would pass exclusively through four member states and hence deserves strong EU backing for its materialization.

The Eastern Mediterranean Pipeline had received the endorsement of the EC as a priority project for underwriting in November 2013. According to The Guardian that could provide the Eastern Mediterranean pipeline project “access to a €5.85bn fund, and preferential treatment from multilateral banks.”

Natural Gas Europe reported at the time the options under consideration:

The basic plan will see the pipeline stretch from the Leviathan field offshore Israel on to Cyprus ending in eastern part of the Island of Crete in Greece. Three alternate routes were discussed:

  • To the Peloponnesus Peninsula joint via spur with the Trans-Adriatic Pipeline (TAP)
  • From Crete to northern Greece where it would join the Interconnector Greece-Bulgaria (IGB)
  • From Crete to the Revythousa LNG terminal close to Athens. The terminal would be significantly upgraded to accommodate large amounts of gas exports thereafter.

The technically difficult 1,880 kilometer long submarine pipeline project, reaching depths of more than 2,000 meters, would connect Leviathan and Aphrodite gas fields ultimately to Italy. Cost for the project  was  estimated at over $20 Billion and would likely not be concluded at the earliest until 2020, assuming that production of the Leviathan field in the Israeli EEZ begins in 2017. With the demise of both the Turkish Leviathan-Ceyhan pipeline and the Australian Woodside Pty. Ashdod LNG –Eilat pipeline for delivery of gas to the Asian markets, the Eastern Mediterranean pipeline project may have serious consideration. There is the alternative of the onshore LNG facility at Vassilikos on Cyprus’ south shore to be built by the Consortium at an estimated cost of $10 billion. A Memorandum of Understanding for planning the Vassilikos LNG complex was signed by Cyprus and the Consortium in June 2013. In the interim, offshore floating LNG processing platforms that might be leased to ship processed gas via pressured LNG vessels to receiving terminals in Greece and Italy. However, Noble Energy was not initially supportive of the Eastern Mediterranean pipeline option, instead concentrating on sales from Leviathan to regional users like Jordan and Egypt and building the proposed Cypriot LNG processing facility. As we will shortly see, as a result of regulatory actions by the independent Israeli Anti-Trust Authority (IAA), both Noble Energy and its Israeli consortium partner Delek Group plans for Leviathan as well as the Eastern Mediterranean Pipeline may be in jeopardy

Watch this CNBC video: Israel-Cypriot Pipeline: Game Changer for EU Energy?

Dr. David Gilo, Director Israel Anti-Trust Authority.

Could Regulatory Zeal and Politics Deprive Israel of its Offshore Energy Prize?

Israel’s pursuit of energy independence and potential gas exports may have been upended by a ruling regarding Israel’s Cartel Law by the head of the independent Israel Anti-trust Authority (IAA). Dr. David Gilo of the IAA effectively ruled that the Noble Energy – Delek consortium constituted a monopoly and would be forced to sell the Leviathan or Tamar fields in Israel’s offshore Exclusive Economic Zone. Gilo was cited by the New York Times saying, “The entry of Delek and Noble into Leviathan has created a situation in which these groups control all the gas reserves on the coast of the state of Israel.” Gilo’s rationale for his ruling was the prior agreed to sale of smaller gas fields Tanin and Karish owned by the Consortium “did not create a real competitive solution to solve the problem of a monopoly in the market.” Globes, Israel Business reported in an article, Regulator decides Tamar and Leviathan form monopoly:

[Gilo] is going back on his decision, subject to a hearing, to let the companies continue holding both the Tamar and Leviathan gas fields. The State will now require the companies to sell their holdings in one of the fields.

Sources in the energy market believe that such a step will delay development of the Leviathan field by several years and could see Israel dragged into the international court of arbitration by US company Noble Energy, which has been developing both fields.

The reaction from Noble Energy was swift:

Noble Energy Israel Country Manager Binyamin (Bini) Zomer said, “For 16 years, Noble Energy has invested in the exploration and development of Israel’s gas and oil resources. To date we have invested with our partners close to $6 billion in developing the country’s oil and gas sector. These investments contribute to the Israeli economy and environment, and at the same time grant Israel energy independence while providing an opportunity for regional cooperation and contributing to regional stability.”

[…]

He warned, “The antitrust regulator’s decision to go back on the agreement. casts a shadow over the future of Israel’s gas and oil sector and influences Noble Energy’s continued investment in the country.”

Zoma’s comments were mirrored in official statements from Houston-based Noble Energy’s Chairman in a news release:

Earlier today, Noble Energy, Inc. (NYSE: NBL) and its partners in the Leviathan field were advised by the Israel Anti-trust Authority of its decision to not submit the Consent Decree to the Anti-trust Tribunal for final approval. In response, Noble Energy and partners have requested a hearing on the topic with the Anti-trust Authority, which Noble Energy expects to occur in the next few weeks.

In March 2014, Noble Energy, its partners, and the Anti-trust Authority reached agreement for the Consent Decree that included the divestiture of the Tanin and Karish gas fields. This agreement is a key component for the final investment decision on the Leviathan development.

Charles D. Davidson, Noble Energy’s Chairman, commented, “The actions of the Anti-trust Authority are another disturbing example of the uncertain regulatory environment in Israel. Specifically, this is a matter that we believed was resolved some time ago and follows on recent assurances from the Anti-trust Authority that approval was forthcoming. We believe this is a harmful precedent for Israel to set and we will vigorously defend our rights relating to our assets.”

Ominously, the ruling may delay, if not stop, development of the significant Leviathan gas field with more than 21.9 TCF. Further, the IAA would significantly delay indefinitely the implementation of the Eastern Mediterranean Pipeline connecting Leviathan with the adjacent Cypriot Aphrodite gas field with 7 TCF via Greece and Italy to securely supply gas to the EU thereby stymieing geo resource hegemony by Russia and Turkey. The Noble-Delek Consortium had signed agreements with the Republic of Cyprus in 2011 for the joint development of Cyprus’ offshore gas fields, despite threats from Turkey and its enclave the Northern Turkish Cypriot Republic.

Billions of Israeli tax revenue, billions of returns to the Noble Energy–Delek consortium and billions in sales to Egypt, Jordan and other regional markets in signed agreements are now at risk. The effects on the trading values of the Noble Energy-Delek consortium stocks on the NYSE and Tel Aviv Stock Exchanges were immediate. Noble Energy stock (NBL-NYSE) plummeted by over 6.4 % from $50.97 at the market close on December 22nd to $ 47.73, currently. Globes reported the fall off in trading for the Delek and Tamar partners caused by the IAA announcement:

In the stock market, Delek Group Ltd. (TASE: DLEKG) fell 16.5% for the largest fall on the Tel Aviv 25 Index following the antitrust order to sell either its Leviathan or Tamar holdings. Delek’s energy exploration units Avner Oil and Gas LP (TASE: AVNR.L) and Delek Drilling Limited Partnership (TASE: DEDR.L) fell 11.75% and 12.73% respectively. Tamar partner Isramco Ltd. (Nasdaq: ISRL; TASE: ISRA.L) fell 7.44% on the day’s largest turnover, and Leviathan partner Ratio Oil Exploration (1992) LP (TASE:RATI.L) fell 16.9%.

This ruling comes amidst the snap election campaign triggered by a no-confidence vote confounding the ability of the Netanyahu caretaker government to seek possible redress via the Knesset. There are suspicions in Israel that the IAA ruling may have been politically motivated by Labor Party and Histadrut leaders, given the latter’s control over the Israel Electric Company, the national power authority.

These rapid fire developments brought troubling assessments from Gal Luft in an article in  The Journal of Energy Security, “Israel’s Energy Dream- the End is Nigh”:

After years of delays and billions of dollars spent, a new and increasingly likely scenario should be considered – the premature – and tragic – death of the Israeli gas dream. I alluded to this option in an August 2013 article titled “Israel’s Zero Gas Game” in which I warned that Israel has become so busy dividing the pie that its leaders forgot it must first be baked and that due to the failure of the government to present a clear vision for the country’s energy sector, articulate the rights and responsibilities of foreign investors and most importantly set rules and stick to them.

[…]

There are very few oil and gas companies who have both the experience of drilling in deep waters and the willingness to associate themselves with Israel, especially in light of Noble’s experience. With falling energy prices worldwide, the chance of a Noble-like operator popping out of nowhere is slim. This means that in its desire to avoid the creation of a monopoly, Israel is taking the risk that Leviathan, the world’s largest offshore gas discovery of the past decade, will not be developed for many years to come – if ever.

Dr. Norman A. Bailey, former Reagan era National Security Advisor on national economic security, offered this assessment of the IAA ruling in a Globes Israel Business column, “Israel shoots itself in both knees”:

This is not Israel shooting itself in the foot, it is Israel shooting itself in both knees. This incredibly stupid, illegal and immoral decision will undoubtedly be reversed by the courts and/or international arbitral tribunals, but by the time that happens much of the damage will have been done and recovery will be difficult or perhaps impossible. Even if an accommodation is reached without legal action, the image of Israel as a reliable partner will have been severely degraded.

Echoing Dr. Bailey’s concerns, our NER colleague Dr. Richard L. Rubenstein commented:

The Israeli regulators are both insane and suicidal, but not that different than some U.S. regulators, save that America has a greater margin of error to protect it from comparable damage. Instead of being glad that an American firm has taken the huge risk in this investment, they prefer ideological rigidity to a quantum leap in Israel’s economic and political situation. Will petty little men who probably never managed anything approaching the magnitude of this project have the power to ruin it?

Given this maligned IAA ruling, will Israel in 2015 come to its senses, overcome misplaced regulatory zeal and re-gain the prospect of a  promising economic future fueled by these  important energy discoveries in the Levant Basin?

EDITORS NOTE: This column originally appeared in the New English Review.

Take Your Pick of Lies about Ozone, Methane or Mercury

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Is it surprising that the Environmental Protection Agency continues to tell big fat lies about anything it wants to ban, but is reluctant to show the “science” on which the bans are based?

There is currently a piece of legislation under consideration by Congress, the Secret Science Reform Act, to force the EPA to disclose its scientific and technical information before proposing or finalizing any regulation.

This is what Nicolas Loris of The Heritage Foundation had to say regarding the mercury air and toxics rule that the EPA claims would produce $53 billion to $140 billion in annual health and environmental benefits. “The two studies that represent the scientific foundation for 1997 ozone and PM2.5 National Ambient Air Quality Standards are highly questionable and the data concealed, even though the studies were paid for by federal taxpayers and thus should be public property.”

In addition to claims about carbon dioxide as a dreaded “greenhouse” gas, methane is also getting the attention of those opposed to “fracking”, a technique that has provided access to both natural gas and oil. James M. Taylor, a Senior Fellow with The Heartland Institute, a free market think tank, noted in January that “Natural gas has high methane content, but the methane is converted to energy when natural gas is burnt.” Citing U.S. Energy Information Administration data, Taylor noted “The ongoing decline in methane emissions supplements ongoing declines in U.S. carbon dioxide emissions.” Since 2000 both are down between 6% AND 9%.

The EPA is forever claiming billions in “health benefits” that result from their regulations. The public never gets to see the data on which such claims are based. The regulations, however, cost billions.

The day before Thanksgiving, the EPA announced that it intends to propose an updated national standard for ground-level ozone, otherwise known as smog, based in part on the enforcement of rules concerning mercury. The previous day, the Supreme Court said it would review the agency’s standards requiring reductions of mercury emissions and other elements the EPA regards as toxic air pollution.

To put all this in perspective, in August CNS News’ Penny Starr reported on a study by the National Association of Manufacturers regarding the EPA’s proposed regulation of ozone. It found that “it could be the costliest federal rule by reducing the Gross National Product by $270 billion per year and $3.4 trillion from 2017 to 2040, and adds $3.3 trillion in compliance costs for the same period.” NAM president, Jay Timmons, said “The regulation has the capacity to stop the manufacturing comeback in its tracks.”

Concurrently with NAM, the American Petroleum Institute released an analysis of the NAM study that said “The nation’s air quality has improved over the past several years, and ozone emissions will continue to decline without new regulations.” NAM’s vice president of energy and resources policy, Ross Eisenberg, said, “We are rapidly approaching a point where we are requiring manufacturers to do the impossible.”

That, however, is exactly what the ozone regulation is intended to do. This has nothing to do with health and everything to do with destroying the nation’s power producers and manufacturers, reducing vital electrical energy, and forcing factories of every description to close.

At the upper levels of the atmosphere, the stratosphere, ozone is essential to the survival of life on Earth because ozone filters harmful ultraviolet (UV) radiation from sunlight. Otherwise the radiation would damage both plant and animal life. The reason you get sunburned is that too much UV radiation has caused it. Like everything else in nature, too much or too little determines the harm or benefit it provides, but that too is largely determined by nature.

Ozone is a form of elemental oxygen, but it’s not something you want to breathe. As Wikipedia notes, “It is not emitted directly by car engines or by industrial operations, but formed by the reaction of sunlight on air containing hydrocarbons and nitrogen oxides that react to form ozone directly at the source of the pollution or many kilometers down wind.” The initial mandate of the EPA to clean the air and water has been achieved. That is why smog is relatively rare nationwide. Further regulation is regressive.

As for mercury, in 2011 the EPA issued 946 pages of new rules requiring U.S. power plants to sharply reduce their emissions of mercury even though they were already quite low. As with the proposed ozone rules, the EPA claimed that they would cost $10.9 billion annually to implement, but would save 17,000 lives while generating $140 billion in health benefits. This is all just hogwash. Such figures are just plucked out of the air or, worse, based on “science” the public paid for but is not allowed to see!

Does anybody find it bizarre that, while the EPA is trying to remove the tiniest amounts of mercury in the environment, in 2011 Congress passed a law eliminate the incandescent light bulb and required their replacement by fluorescent lights that contain mercury?

As Willie Soon and Paul Driessen wrote in a 2011 Wall Street Journal commentary, “Mercury has always existed naturally in Earth’s environment. Mercury is found in air, water, rocks, soil and trees, which absorb it from the environment.” They noted that “Since our power plants account for less than 0.5% of all the mercury in the air we breathe, eliminating every milligram of it will do nothing about the other 99.5% in our atmosphere.”

The fundamental EPA lies about ozone and mercury involve the issue of toxicity. Since both are a natural part of the Earth, and since the Earth is 4.5 billion years old, and since life expectancy has been increasing dramatically in recent decades, the likelihood that either represents a threat requiring the expenditure of billions to reduce tiny amounts of their emissions is based on environmental ideology, not on science.

Even if it was based on alleged science we would, as noted, not be allowed to see the data. If this reminds you of the way ObamaCare was foisted on “the stupid voters”, you’re right. The EPA hopes you are stupid enough not to realize that it is engaged in the destruction of the economy.

Editor’s Note: Help Dr. Jeremy W. Grabbe of SUNY Plattsburgh at Queensbury by participating in his survey about climate change. Go to www.surveymonkey.com/s/WHLF7XS and take a minute to answer the questions.

© Alan Caruba, 2015

Fracking is Fundamental

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“It is a sad day when a state chooses to listen to the fear, uncertainty, and doubts spread by anti-fossil fuel agitators rather than making a decision for economic strength that would benefit schools, communities, and many of its poorest citizens—especially when the vilified technology, hydraulic fracturing, has been used safely and successfully for more than 60 years and has brought prosperity to other formerly struggling regions.” – Marita Noon, Executive Director, Citizens Alliance for Responsible Energy Policy Advisor, The Heartland Institute.

Responding to the announcement by New York Governor Andrew Cuomo that the state would ban fracking, Ms. Noon joined others, bringing their expertise to bear on a topic that remains a concern only because environmentalist enemies of energy in America continue to lie about it every chance they get.

The Fracking Truth book coverIn his book, “The Fracking Truth–America’s Energy Revolution: The Inside, Untold Story”. Chris Faulkner wrote “Furthermore, it’s been commonplace for decades. Worldwide, it’s estimated that more than 2.5 million wells have been fracked and the U.S. accounted for about half of those. Today, about 35,000 wells are fracked each year in all types of wells. And it’s impact on industry? It’s been estimated that 80% of production from unconventional sources such as shales would not be feasible without it.”

The Governor’s decision has everything to do with wooing the support of environmentalists in New York and nothing to do with the jobs and billions in tax revenue that fracking would have represented.

New York’s acting health commissioner, Howard Zucker, justified the decision saying that “cumulative concerns” about fracking “give me reason to pause.” Are we truly expected to believe that five years of study since the initial 2009 memorandum about fracking any provided reason to ban it? If the use of fracking technology dates back to 1947 without a single incident of pollution traced to it, what would it take to create “cumulative concerns” except ignorance or prejudice against the facts?

Even the Environmental Protection Agency has never found evidence of the chemicals used in fracking entering the nation’s groundwater. Moreover, fracking fluid is 99.5% water and sand. The rest is a mixture of chemicals similar to household products that could be found under the kitchen sink.

As Dr. Jay Lehr, Science Director of The Heartland Institute, a free market think tank, points out, “Today we only fracture wells that are drilled horizontally and that requires 1,500 feet of vertical depth for the well” and thus “all such wells are way below local water wells.”

How idiotic, then, is it to seal off some twelve million acres of the Marcellus Shale, an underground rock formation with natural gas reserves that have helped create energy production booms in North Dakota, Pennsylvania, West Virginia, Colorado, and Ohio?

A December 19 Wall Street Journal editorial noted that just across New York’s border with neighboring Pennsylvania, “A 2011 Manhattan Institute study estimated that each Marcellus Shale well in Pennsylvania generates $5 million in economic benefits and $2 million in tax revenue.” Companies there have generated more than $2.1 billion in state and local taxes since the fracking boom began. As one observer noted, “The ban ignores New York’s “6% unemployment rate, a depressed upstate region, and the fourth highest electricity prices in the nation.”

I don’t know how long it will take for the vast majority of the U.S. population to conclude that everything the environmentalists and their propagandists in the nation’s schools and media have to say about energy is as vast a hoax as the now discredited “global warming”, since renamed “climate change.”

Energy is the master resource, the lifeblood of ours and the world’s economy, the basis for electricity, for the ability to travel vast distances, for machines that enable vast harvests of crops by barely 2% of the U.S. population, to power all manufacturing, and to heat or cool our living and workplaces.

Fracking is yet another technological miracle and, of course, the environmentalists oppose it.

© Alan Caruba, 2014

RELATED ARTICLE: CIA Veteran Sees Russian Connection to 2 Anti-Fracking Groups.

The Florida Public Service Commission: Smart Meters, Fracking and the Love Fest

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The Florida Public Service held its last Commission Conference Agenda Meeting for the year on  December 18, 2014. On the Agenda were two important items for Florida ratepayers – the challenge to FPL’s smart meter opt out fees and the inclusion of FPL’s oil and gas exploration (fracking) investment in the rate base for recovery through the fuel clause.

The Commission meeting and the following Internal Affairs meeting was more of a love fest than a meeting, as they each gave their lengthy send off remarks for two members of the team – Commissioner Balbis, who chose not to seek another term and FPSC General Counsel Kirk, who is retiring.

Balbis gave a speech of his proud accomplishments of his four years claiming customers have benefited from a “stable regulatory environment”.  He bragged about the goodness he sees in the controversial nuclear recovery costs clause stating it has saved $3 Billion in fuel costs and took the equivalent of 7 million cars off the roads by removing carbon emissions.

The biggest chuckle I got is when he thanked his colleagues “for their patience with me asking a question of every single witness”. This is a lie and I can prove it. On September 30, 2014 in that same very room, almost 3 months ago to the day, I was sworn in as a witness in Docket 130223, was given a paltry 3 minutes to summarize my pre-filed testimony, and then when it was time for questions not one Commissioner or their staff asked one question. I guess the cat got his tongue that day.

Docket No. 130223 is FPL’s smart meter opt out fees, which I filed a formal protest against on February 4, 2014. Staff issued their recommendation a few weeks ago calling for a couple of adjustments that would reduce the upfront fee from $95 to $89, a whopping  $6. Staff ignored many of the arguments before them; instead their analysis just parroted what FPL said. I’ll write in more detail about that another day, particularly how they doubled-down on an incorrect adjustment in their latest recommendation.

A few days ago I received the Conference Agenda for todays meeting. Of the 15 items on the agenda, all but three had double asterisks beside them, denoting they would be handled as consent agenda items (no discussion). I was relieved to see that Docket 130223 did not have such asterisks, so I expected at least some discussion. Wrong! I guess Commissioner Balbis had run out of questions – for at the start of the meeting they put the smart meter docket into the consent agenda pool. (They have a lot of discretion to do as they please.) The staff recommendation was quickly rubber stamped and approved with no discussion.

FPSC General Counsel Kirk’s love fest speech talked about the dysfunctional Commission of 5 years ago and their “lack of civility” and how much better it was now. He bragged about how the FPL settlement appeal win was a huge decision. In the electric utility market he predicted change similar to that of the telephone industry. Citing his work as a state legislator, he reminisced about his legislation to bring forth peak load pricing. Then he did a no-no. He let the cat out of the bag. He said that the investment in smart meters would now make peak load pricing easier. I guess the truth always comes out eventually.

The Commission also took up the FPL fracking investment issue. This was the fun theater of the day. The script was written in advance to put Balbis up as the chief proponent of this project. Why, you ask? Well, because he is leaving in 12 days, of course. If it goes sour in the next few years, you can point to the man that is no longer there. Each of the others brought up their hesitations pretending to put up some resistance and thoughtful oversight – the contract term is too long, the accounting might not be transparent, who will do the audit?

The best actor award will go to Brise. There were four issues/questions being considered. The first one they tackled was Issue #6 – whether the 2012 rate case settlement agreement precluded FPL from seeking to increase rates as it proposes. When they voted on that issue, Brise voted Yes – meaning that he believed the settlement agreement precluded FPL from seeking rates for this issue. All the other Commissioners voted No.

Edgar so concisely stated before the vote why they were taking up Issue #6 first. Because if the vote was that the majority of the Commissioners felt the settlement agreement precluded this increase, then the other issues are moot.

So how did Brise vote on whether to allow rate recovery for this proposal after the first vote? Well, he concedes he lost the first battle and then votes in line with the others to unanimously approve all the other issues. What? Yes, he believes the rate case settlement precludes FPL from seeking rates on this investment BUT he believes the Commission should approve FPL’s request for cost recovery. Folks, that is what is meant by “civility” – getting along, showing solidarity is much more important than the facts and your convictions to how you see the facts.

There are other supporting actor awards to give out, like Brown’s statements of prudency. She poses very important questions regarding risks for rate payers if state legislators act unfavorably on fracking, for which the legal staff answers, after a long period of silence, “I don’t know” and then she smoothly doesn’t seem to care that she doesn’t get an answer and powers on and votes for it anyway. Once I figure out how to get video clips off the site, I think I can make a pretty good award video.

Not to be out done, they had a rival love fest today in California too for their outgoing Chairman Peevey. He was caught up in just a little scandal of participating in judge shopping for the California utilities. One would think that little event, discovered through freedom of information requests for e-mails, would get you fired for ethic violations. But no, he got to keep his job until the end of his term and throw himself a love fest. California, after a three-year review, also voted today to keep their smart meter fees that were being challenged by the public. But at least they had discussion AND public comments on the issue, unlike the Florida cowards.

130 Million Americans could Suffer Extended Blackouts due to Solar Storms

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In the latest official confirmation about the acute vulnerability of the U.S. electric grid, the Washington Free Beacon has revealed that a Freedom of Information Act request produced a fact sheet describing a 2012 Federal Emergency Management Agency interagency plan for severe space weather.  The FEMA document refers to a 2010 study by the National Oceanic and Atmospheric Administration (NOAA) that “an extreme solar storm could leave 130 million people without power for years, and destroy or damage more than 300 hard-to-replace electrical grid transformers.”

According to Dr. William Graham, President Reagan’s Science Advisor and chairman of the congressionally mandated Electromagnetic Pulse Threat Commission, in the wake of widespread and prolonged blackouts, nine out of ten Americans could perish.

Importantly, the level of damage described by FEMA and NOAA could be caused by what is known as a G5 class storm, the last of which hit the earth in 1921.  That geomagnetic disturbance (GMD) is estimated to have been roughly one-tenth the power of an 1859 solar storm known as a Carrington Event.  Congressional testimony before the House Homeland Security Committee earlier this year established that the likelihood of another Carrington-class solar storm, to say nothing of less powerful ones, striking our planet in the foreseeable future is one-hundred percent.

In fact, on December 5, Robert Rutledge, who directs NOAA’s Space Weather Forecast Office, advised the DuPont Summit – a conference in Washington, D.C. on grid vulnerability and steps needed to mitigate it – that such storms are as certain as earthquakes and hurricanes, and should be planned for accordingly.

NOAA’s 2010 Strategic Plan was performed for the National Research Council and drew upon a study by well-known experts in the field of geo-magnetically induced currents (GIC) and their impact on the grid, Drs. William Radasky and John Kappenman.

FEMA’s fact-sheet notes, however, that unnamed engineers from the electrical industry downplay the severity of predictions in the NOAA Strategic Plan.  Unfortunately, the industry has long withheld data on geo-magnetically induced current flows that could shed light on the magnitude of the impact of even normal solar weather on the nation’s bulk power distribution system.

Dr. Kappenman, who is a member of the Secure the Grid Coalition, responded to the Free Beacon report:

The industry itself continues not to make publicly available important information on observations of geo-magnetically-induced current (GIC) and power grid impacts and failures that have occurred for smaller, more frequent storm events that can be used to validate models to examine impacts for rare larger storm events.  This is somewhat like airlines withholding critical black box recorder data from the National Transportation Safety Board and Federal Aviation Administration.

The Secure the Grid Coalition is concerned that such a lack of transparency is a product of the U.S. electrical industry’s reluctance to harden its infrastructure against such threats.  The practical effect of industry non-disclosure and opposition to providing robust protection to its own assets is to cause important planning scenarios to be watered down.  That, in turn, has impeded consideration and adoption of standards meant to mitigate such dangers, as regulators rely on assumptions that do not meet modern scientific standards or independent and widely accepted threat assessments.

The Center for Security Policy sponsors the Secure the Grid and its President, Frank J. Gaffney, Jr., noted:

The evidence continues to accumulate that our most critical of critical infrastructures – the nation’s electric grid – is exceedingly vulnerable not only to certain naturally occurring phenomena, but to a variety of possible enemy actions. The federal government knows we face, accordingly, potentially nation-ending threats.

The House of Representatives recently unanimously approved the Critical Infrastructure Protection Act (H.R. 3410) that would require the Department of Homeland Security to develop a plan for protecting the grid against, among other things, the sorts of devastation a massive solar storm could inflict.  In light of the latest revelations from FEMA and NOAA, there is simply no excuse for the Senate failing to assign top priority to approve H.R. 3410, ideally in the remaining days of the lame duck session.

Secure the Grid Coalition members are available for comment on the electric grid’s susceptibility to severe solar weather events and other threats and what needs to be done to protect it against all hazards. More information can be found at www.securethegrid.com.

The New Congress Must Save the USA from the EPA

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When the Republican Party takes over majority control of Congress in January, it will face a number of battles that must be fought with the Obama administration ranging from its amnesty intentions to the repeal of ObamaCare, but high among the battles is the need to rein in the metastasizing power of the Environmental Protection Agency.

In many ways, it is the most essential battle because it involves the provision of sufficient electrical energy to the nation to keep its lights on. EPA “interpretations” of the Clean Air and Clean Water Acts have become an outrageous usurpation of power that the Constitution says belongs exclusively to the Congress.

As a policy advisor to The Heartland Institute, a free market think tank, I recall how in 2012 its president, Joe Bast, submitted 16,000 signed petitions to Congress calling on it to “rein in the EPA.” At the time he noted that “Today’s EPA spends billions of dollars (approximately $9 billion in 2012) imposing senseless regulations. Compliance with its unnecessary rules costs hundreds of billions of dollars more.”

Heartland’s Science Director, Dr. Jay Lehr, said “EPA’s budget could safely be cut by 80 percent or more without endangering the environment or human health. Most of what EPA does today could be done better by state government agencies, many of which didn’t exist or had much less expertise back in 1970 when EPA was created.”

The EPA has declared virtually everything a pollutant including the carbon dioxide (CO2) that 320 million Americans exhale with every breath. It has pursued President Obama’s “war on coal” for six years with a disastrous effect on coal miners, those who work for coal-fired plants that produce electricity, and on consumers who are seeing their energy bills soar.

AA - EPA the EnemyAs Edwin D. Hill, the president of the International Brotherhood of Electrical Workers, noted in August, “The EPA’s plan, according to its own estimates, will require closing coal-fired plants over the next five years that generate between 41 and 49 gigawatts (49,000 megawatts) of electricity” and its plan would “result in the loss of some 52,000 permanent direct jobs in utilities, mining and rail, and at least another 100,000 jobs in related industries. High skill, middle-class jobs would be lost, falling heavily in rural communities that have few comparable employment opportunities.”

“The United States cannot lose more than 100 gigawatts of power in five years without severely compromising the reliability and safety of the electrical grid,” warned Hill.

In October the Institute for Energy Research criticized the EPA’s war on coal based on its Mercury and Air Toxics Rule and its Cross State Air Pollution Rule, noting that 72.7 gigawatts of electrical generating capacity have already, or are scheduled to retire. “That’s enough to reliably power 44.7 million homes, or every home in every state west of the Mississippi river, excluding Texas.” How widespread are the closures? There are now 37 states with projected power plant closures, up from 30 in 2011. The five hardest hit states are Ohio, Pennsylvania, Indiana, Kentucky, and Georgia.

If a foreign nation had attacked the U.S. in this fashion, we would be at war with it.

The EPA is engaged in a full-scale war on the U.S. economy as it ruthlessly forces coal-fired plants out of operation. This form of electricity production has been around since the industry began to serve the public in 1882 when Edison installed the world’s first generating plants on Pearl Street in New York City’s financial district. Moreover, the U.S. has huge reserves of coal making it an extremely affordable source of energy, available for centuries to come.

The EPA’s actions have been criticized by one of the nation’s leading liberal attorneys, Harvard law professor Laurence Tribe, who has joined with Peabody Energy, the world’s largest private coal company, to criticize the “executive overreach” of the EPA’s proposed rule to regulate carbon emissions from existing power plants. He accused the agency of abusing statutory law, violating the Constitution’s Article I, Article II, the separations of powers, the Tenth and Fifth Amendments, and the agency’s general contempt for the law.

It is this contempt that can be found in virtually all of its efforts to exert power over every aspect of life in America from the air we breathe, the water we use, property rights, all forms of manufacturing, and, in general, everything that contributes to the economic security and strength of the nation.

That contempt is also revealed in the way the EPA spends its taxpayer funding. Senator Jeff Flake (R-AZ) released a report, “The Science of Splurging”, on December 2 in which he pointed to the $1,100,000 spent to pay the salaries of eight employees who were not working due to being placed on administrative leave, the $3,500,000 spent to fund “Planning for Economic and Fiscal Health” workshops around the nation, $1,500,000 annually to store out-of-date and unwanted publicans at an Ohio warehouse, and $700,000 to attempt to reduce methane emitted from pig flatulence in Thailand! “After years of handing out blank checks in the form of omnibus appropriations bills and continuing resolutions,” said Sen. Flake, “it’s time for Congress to return to regular order and restore accountability at the EPA.”

Whether it is its alleged protection of the air or water, the only limits that have been placed on the EPA have been by the courts. Time and again the EPA has been admonished for over-stating or deliberately falsifying its justification to control every aspect of life in the nation, often in league with the Army Corps of Engineers.

If the Republican controlled Congress does not launch legislative action to control the EPA the consequences for Americans will continue to mount, putting them at risk of losing electricity, being deprived of implicit property rights, and driving up the cost of transportation by demanding auto manufacturers increase miles-per-gallon requirements at a time when there is now a worldwide glut of oil and the price of gasoline is dropping.

The United States has plenty of enemies in the world that want it to fail. It is insane that we harbor one as a federal agency.

© Alan Caruba, 2014

RELATED ARTICLE: How Obama and His Environmental Base Are Planning to Eradicate the Oil and Gas Industry

Are Power Plant Transformers America’s Weakest Link?

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By Wallace Bruschweiler and Alan Kornman:

On November 6, 2014 The Guardian reports, “Three arrests fail to staunch mystery of Drones flying over French nuclear plants.”  Several drones were reported flying over the protected airspace of nuclear power plants raising questions about electrical grid security.

As the sophistication of commercially available drones increases our electrical grid becomes more vulnerable.

Who was piloting the drones and for what purpose?

What lies behind the suspicious flights at night?

What if these drones were outfitted with infrared cameras to spot the strong heat signatures emanating from the vulnerable ‘open air’ giant transformers responsible for delivering electricity from the generating plant, to the municipal substations, then to your home?

Plant To Home

If several of these ‘giant transformers’ were to unexpectedly go offline, for any reason, would it could cause a ‘cascade effect’ resulting in rolling blackouts all along France’s electrical grid?

California Attacks

On August 28, 2014, Matthew Wald, of The New York Times reports, “California Power Substation Attacked in 2013 is Struck Again.”

Federal experts who examined a California substation after an attack last April were attached to the Joint Warfare Analysis Center at Dahlgren, Va, yields clues about the importance of this issue.

The attack to the California substation went unchallenged for over an hour.

“The Silicon Valley power substation that was attacked by a sniper in April 2013 was hit by thieves early Wednesday morning, according to the Pacific Gas and Electric Company, despite increased security.

The substation, near San Jose, Calif., is the source of energy for thousands of customers, and the idea that it was the target of a well-organized attack, and that it might have been disabled for an extended period, raised anxieties about the possible broader vulnerability of the grid.”

In the 2013 attack, shots were fired into the radiators of giant transformers.  Without these giant transformers no electricity would enter the grid disrupting power along that particular grid matrix.

power grid

Are there enough replacements of these giant transformers readily available and in the right locations to repair the damaged power stations without a significant disruption of electricity to its customers?

We should be aware the time delay of manufacturing and delivering these giant transformers can be a lengthy process taking months or even years.

Arkansas Attacks – You Should Have Expected US

Arkansas experienced three attacks to its electrical grid in August, September, and October of 2013.  These attacks were not as sophisticated as the California attacks but did cause over $2 Million dollars in damage and 10,000 people temporarily lost power.

The Arkansas attacker left an ominous note at the entrance of the electrical power station in black marker, “You should have expected US”

The drone nuclear plant flyovers are a wake up call to those who are tasked with the responsibility of protecting our United States, Regional, and Local power grids.

Remember when:  Ten years ago in Ohio, a high-voltage power line brushed against some trees, which shut down a power line, which knocked out a transformer, which cascaded through the northeast electric power grid until 50 million people from Ontario to New Jersey were without power. The Northeast Blackout resulted in 11 deaths and cost about $6 billion. It affected every segment of our society—from healthcare, transportation, and commerce to public safety and national security. In a modern world, electrical power is more than a convenience. It’s a necessity. (MITRE.org)

Important Questions

What would happen to the national and regional power grids if a small number of these giant transformers are put out of commission?

If a number of these giant transformers are simultaneously taken out, will an uncontrollable ‘Cascade Effect’ overwhelm our regional and or nationwide electrical grids?

What if a number of simultaneous attacks on these giant transformers were to happen today, are we prepared to successfully block the effects of this nightmarish scenario?

Greenhouse Gas Deal with China is an Attack on the American Economy

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Ignore the cheers from the White House, the State Department, Mother Jones, and elsewhere over the U.S.-China greenhouse gas agreement. It’s simply another attack on abundant American energy and the economy.

Secretary of State John Kerry detailed the deal in the New York Times: “For the first time China is announcing a peak year for its carbon emissions – around 2030 – along with a commitment to try to reach the peak earlier.” In exchange, the “United States intends to reduce net greenhouse gas emissions by 26 to 28 percent below 2005 levels by 2025.”

Here are a few points:

1. Reason’s Ronald Bailey estimates how much the United States will have to reduce its greenhouse gas emissions under the agreement:

In 2005, the U.S. emitted the equivalent of 7.26 gigatonnes of carbon dioxide. So cutting emissions by 28 percent by 2025 implies emissions of 5.23 gigatonnes in 2025, which is about the amount that the U.S. emitted in 1992. Assuming that Chinese emissions did peak in 2030, the country could by then be emitting three times more than the U.S.

2. China’s peak emissions year will be “around” 2030? Does that mean 2031, 2035, 2040? For international commitments to be meaningful and effective, they need to be precise. To put it mildly, “around” is not very precise.

3. This agreement is nonbinding and according to Reuters’ analysis is loaded with nebulous “intentions”:

The joint announcement employs language very carefully. Throughout, the operative word is “intend” or “intention”, which makes clear the statement is not meant to create any new obligations.

China’s 2030 emissions target is set in terms of a date but says nothing about the level at which emissions will peak.

4. Did China really agree to something that it expects will happen anyway? Ben White in Politico’s Morning Moneypoints to a 2012 story in The Guardian:

[B]arring any significant changes in policy, China’s emissions will rise until around 2030 – when the country’s urbanisation peaks, and its population growth slows – and then begins to fall.

5. Along those same lines, under the International Energy Agency’s baseline scenario (IEA-NPS) of greenhouse gas reductions, China’s emissions are projected to peak by 2030 anyway [see slide 17].

6. There’s plenty of international skepticism. A German newspaper commented on the deal, “[It’s] as if a grizzly bear and tiger discuss how the world can be more vegetarian.”

Add this all up and you have a one-sided agreement in China’s favor, as Karen Harbert, president of the U.S. Chamber’s Institute for 21st Century Energy said in a statement:

If actually implemented, this agreement would give an unfair advantage to Chinese manufacturers while forcing dramatic changes to America’s energy supply that will raise prices, threaten reliability, and increase the burden on hard working American families.

EDITORS NOTE: The featured image is of workers moving coal out from a mine in Shanxi Province, China. China is the largest producer and consumer of coal in the world. Photo credit: Nelson Ching/Bloomberg.

Being Anti-Energy is Being Anti-Humanity

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Everything you need to know about how perverse and dangerous the U.N. Intergovernmental Panel on Climate Change (IPCC) is summed up in its latest report. Released on November 2, it issued the same tired, old and untrue claims of “severe, pervasive and irreversible impacts for people and ecosystems”

The IPCC wants the world to stop using coal, oil and natural gas, saying that they must be “phased out almost entirely” by the end of the century. The report reeks of their contempt for humanity.

Losing electricity, no matter where you live, is losing every technology that enhances and preserves your life. You lose the ability to cool or warm your home, apartment or workplace. You lose the ability to keep food safe in your refrigerator and freezer. You most certainly lose the lighting. You lose the ability to turn on your computer or television. Indeed, to use everything you take for granted.

Since the discovery and generation of energy with coal, oil and natural gas, generations have lived lives not only different from all who preceded them, but better in so many ways, not the least of which is extended life expectancy. Nations with energy are places where people live longer, healthier lives. They are also wealthier nations where the energy translates into industry, jobs, transportation, and all the other attributes of modern life.

Cover - Moral Case for Fossil FuelsAlthough we usually don’t associate energy with morality, Alex Epstein has. His book, “The Moral Case for Fossil Fuels” ($27.95, Portfolio, an imprint of the Penguin Group) is the finest case for the role coal, oil and natural gas has played in our lives and the positive, emancipating impact they have had on humanity. Everyone should read it.

“I hold human life as the standard of value” says Epstein. “I think that our fossil fuel use so far has been a moral choice because it has enabled billions of people to live longer and more fulfilling lies, and I think the cuts proposed by the environmentalists in the 1970s were wrong because of all the death and suffering they would have inflicted on human beings.”

“Eighty-seven percent of the energy mankind uses every second comes from burning one of the fossil fuels: coal, oil or natural gas.” That has not stopped environmentalists from denouncing coal and oil as “dirty” or because their use generates carbon dioxide (CO2) emissions. What they never tell you is how small those emissions are and that they play an infinitesimal role to influence the Earth’s weather or climate. They never tell you that the Earth has centuries more of untapped reserves. The modern world could not exist without them.

“In the last eighty years, as CO2 emissions have most rapidly escalated, the annual rate of climate-related deaths worldwide fell by an incredible rate of 98 percent. That means the incidence of death from climate is fifty times lower than it was eighty years ago.”

Epstein points to “the power of fossil-fueled machines to build a durable civilization that is highly resilient to extreme heat, extreme cold, floods, storms, and so on” to demonstrate the foolishness of those who oppose their use. Primary among them is the UN’s Intergovernmental Panel on Climate Change. As part of its 40th session, in early November the IPCC adopted the final “synthesis” report of its Fifth Assessment Report; a full-scale update calling for the reduction of energy worldwide. They base this on the claim that “human influence on the climate system is clear.”

It is not clear. Despite the CO2 emissions, the Earth has been in a cooling cycle for the last nineteen years, during the same time the IPCC’s “climate experts” and others were telling us the Earth was going to become dangerously warm.

Epstein reminds us that “In 1972, the international think tank, the Club of Rome, released a multimillion-copy-selling book, “The Limits of Growth”, which declared that its state of the art computer models had demonstrated that we would run out of oil by 1992 and natural gas by 1993 (and, for good measure, gold, mercury, silver, tin, zinc and lead by 1993 at the latest.)

It is essential to understand that every one of the “global warming” predictions made in the 1980s and the decades since then has been WRONG. Every one of the computer models on which those predictions were based was WRONG.

A younger generation graduating from high school this year has never spent a day when the overall temperature of the Earth was warming. The Earth’s natural cooling cycle is based on a natural low cycle of solar radiation. The Sun is generating less heat. Indeed, the Earth is nearing the end of the Holocene cycle, one of warmth for the past ten thousand or more years that has given rise to human civilization.

Epstein’s book is more than just philosophical opinion. It is based on documented facts regarding fossil fuel use. At one point he quotes Paul Ehrlich who, in his 1968 book, “The Population Bomb”, declared that “the battle to feed humanity is over.” Epstein notes that in 1968 the world’s population was 3.6 billion people. “Since then it has doubled, yet the average person is better fed than he was in 1968. This seeming miracle was due to a combination of the fossil fuel industry and genetic science…” Farming today is mechanized and that requires fuel!

The claims that Epstein debunks are accompanied by the fundamental truths about fossil fuel use and science. His book, comprehensible to anyone whether they have any knowledge of science or not, should be on everyone’s reading list.

At the heart of environmentalism and its “save the Earth” agenda is the reduction, if not the elimination, of humans from planet Earth.

© Alan Caruba, 2014

Israel Launches ‘Cyber Iron Dome’ to Protect its Electrical Grid

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The Israel Electric Company (IEC) is concerned about protection of the Jewish nation’s electrical grid. The recent 50 day summer 2014 war with Hamas in Gaza witnessed more than 2,300 rockets reining death and destruction on Central and Southern Israel. Several hundred rockets headed towards major population centers in the State of Israel were detected and literally knocked from the skies by the Iron Dome system batteries. Hamas and Palestinian Islamic Jihad rockets over the period from 2006 to 2014 have targeted the Rutenberg Power Plant of the IEC in Ashkelon. The power plant has also been subject to periodic outages. The vulnerability to physical attack was illustrated by Gaza’s sole power plant destroyed during the conflict.

Physical threats are only one aspect. There are also Electromagnetic Pulse (EMP) and cyber attacks. Cyber attacks on critical operating systems, such as Siemens’ SCADA (Supervisory Control and Data Acquisition) are something that Israel may know about. There was the development of the Stuxnet malware that disrupted Iran’s nuclear enrichment program. Israel to this day remains silent about any involvement in the malware’s development.  Israel’s electrical network vulnerabilities led the IEC to partner with the Israeli firm of mPrest that had developed the critical sensor and detection software system at the core of the Iron Dome System. The objective was to develop a means of intercepting and deterring cyber threats to the national grid.  On Tuesday, the Information Grid (IG) system was unveiled at a Homeland Security Conference in Tel Aviv.

The Times of Israel, Start Up-Israel technology publication reported this ground breaking development; Israel presents an ‘Iron Dome’ for ‘electricity terror’. Eugene Kaspersky of the eponymous cyber protection concern that discovered Stuxnet recently commented:

“We’ve seen numerous cases of attacks on industrial infrastructure – Stuxnet was far from the only one,” said Kaspersky. “There is an international army consisting of tens of thousands of engineers out there developing SCADA malware. One day, a terrorist organization is going to get the bright idea to acquire one of these tools and deploy it to make their ideological point. If it hasn’t happened yet, it’s just a matter of time until it does.”

Because of the terrorist threat to Israel’s national grid, the IEC reached out to mPrest to develop a solution. Start Up –Israel described the process and what IG does:

IEC partnered with a subsidiary of mPrest Systems, called mPrest Electric, which was a member of the IEC’s KARAT Incubator. Drawing on the tech used by mPrest to design and operate Iron Dome, the companies designed the Information Grid, which checks the flow of electricity to ensure that lines are not overloaded, and that electricity “viruses” — attacks on specific sections of the grid – don’t spread, allowing administrators to quickly identify suspicious activity and isolate it.

The heart of IG is:

a command and control system similar to the one that controls Iron Dome. When an attack is detected – if a SCADA system that is controlling electrical flow starts acting “funny,” for example – the Grid will notice it right away, and it will automatically shut off connections to the substation or segment of the system that has been compromised, preventing further damage and allowing security personnel to better track the source of the attack.

The system allows integration and control in real-time of thousands of sensors, which are installed at about 300 different sites in Israel. The sensors measure a wide variety of data, which flows into the Grid and is analyzed in real time. The Grid is based on a unique architecture which allows the integration of an infinite number of systems and assets, with no limitation on the number of links or data, said the IEC, and it can also handle additional information from a wide variety of legacy programs that measure and record data.

Here in the US we had investigative articles by the Wall Street Journal about a purported terrorist attack against the Metcalf substation of Pacific Gas and Electric in Silicon Valley. Aroused by the Metcalf substation attack, Jon Wellinghoff ,the former head of the Federal  Energy  Regulation Commission (FERC),   directed that   simulation studies  of  possible attacks be made  at key substations in the national grid. Those simulations of the national grid alarmingly revealed that terrorist attacks at just 9 strategically located substations in the US could collapse the entire grid.   The Congress has also been concerned about the vulnerability of the national grid arising from a Commission that released a report in 2006 about how to protect the electrical infrastructure from both natural and man-made EMP attacks.  That  led to development of   H.R. 2417 SHIELD (Secure High-voltage Infrastructure for Electricity from Lethal Damage Act)  and  H.R. 5026 GRID  (Grid Reliability and Infrastructure Defense Act) -proposals to harden the nation’s electrical system and protect the infrastructure from EMP, physical and cyber attacks.  Neither of these legislative proposals has progressed due to  opposition by the US electrical power industry because of alleged significant additional investment to achieve security. We wrote in a March 2014 Iconoclast post:

The North American Electric Reliability Corporation (NERC), the principal electric utility standard setting organization, has opposed passage of the SHIELD Act calling the network “resilient”.  Au contraire says an official of Electric Power Research Institute (EPRI) cited by the WSJ: “The breadth and depth of the attack was unprecedented” in the U.S., said Rich Lordan, senior technical executive. “The motivation”, he said, “appears to be preparation for an act of war.”  When we checked the websites of the  House Energy and Commerce Committee  Chairman  Fred Upton (R-MI ) and  Energy and Power Subcommittee Chairman Ed Whitfield (R-KY) their major concerns  were the vulnerability of the grid to cyber attack.

The  joint IEC-mPrest  Information Grid cyber protection  development should be of interest to  FERC, NERC and EPRI given  Congressional concerns over the vulnerability  of the  national  grid to terrorists, EMP  and cyber threats.

This latest display of Israeli high tech ingenuity should raise interest in protecting currently vulnerable US, EU and other electrical grids.

EDITORS NOTE: This column originally appeared on the New English Review. The featured image of a hacker is by Dreamstime.