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Four Fallacies that Fracktivists Use to Scare You

To make intelligent decisions about the future of energy, we need to think big-picture—to look carefully at the benefits and costs to human life of every course of action. Unfortunately, in today’s energy debate we are taught, with politically incorrect forms of energy such as fossil fuels, to only look at the negative picture—often highly exaggerated or taken out of context.

How do we identify and counter this cultural bias against fossil fuels? That’s the topic of my latest Forbes column:

There are at least four common fallacies used to discourage big-picture thinking and breed opposition to fossil fuels. These are things to be on the lookout for when you follow the cultural debate; they are everywhere, and all four are used to attack what might be the most important technology of our generation: shale energy aka “fracking.”

The largest fossil fuel controversy today, besides the broader climate change issue, is fracking—shorthand for hydraulic fracturing—one of several key technologies for getting oil and gas out of dense shale rock, resources that exist in enormous quantities but had previously been inaccessible at low cost.

Fracking has gotten attention, not primarily because of the productivity revolution it has created, but because of concerns about groundwater contamination. The leading source of this view is celebrity filmmaker Josh Fox’s Gasland (so-called) documentaries on HBO. Looking at how these movies have affected public opinion is an instructive exercise.

Florida must become energy independent by 2020

What will promote human life? What will promote human flourishing — realizing the full potential of life? How do we maximize the years in our life and the life in our years? Answer: cheap and reliable power.

Organic Fossil Fuels are the Lifeblood of Civilization!

Florida’s Governor, Congressional delegation and state legislature must make it their number 1 priority to make the Sunshine State Energy Independent by 2020 or sooner!

Florida:

  1. Imports all of its natural gas and 99.9 % of its oil.
  2. Imports all of its refined petroleum based products (e.g. gasoline).
  3. Is the second largest user of natural gas, Texas being the largest.

According to the U.S. Energy Information Administration:

  1. Geologists believe there may be large oil and natural gas deposits in the federal Outer Continental Shelf off of Florida’s western coast.
  2. Florida was second only to Texas in 2014 in net electricity generation from natural gas, which accounted for 61% of Florida’s net generation; coal accounted for almost 23%, the state’s nuclear power plants accounted for 12%, and other resources, including renewable energy, supplied the remaining electricity generation.
  3. Renewable energy accounted for 2.3% of Florida’s total net electricity generation in 2014, and the state ranked 10th in the nation in net generation from utility-scale solar energy.
  4. In part because of high air conditioning use during the hot summer months and the widespread use of electricity for home heating during the winter months, Florida’s retail electricity sales to the residential sector were second in the nation after Texas in 2014.
  5. Electricity accounts for 90% of the site energy consumed by Florida households, and the annual electricity expenditures of $1,900 are 40% higher than the U.S. average, according to EIA’s Residential Energy Consumption Survey.

Even as human populations have grown dramatically and increased their use of fossil fuels, the world has become a much better place.

As CO2 emissions have risen so too have the GDP per person, life expectancy and the population.

Florida politicians are addicted to the precautionary principle (“better safe than sorry”). It is a maxim embraced by government planners and regulators in the Sunshine state at every level. They do not even want to determine what organic fossil fuels lay off of Florida’s coastlines. The precautionary principle worked to stop the building of nuclear power plants in the United States after the 3 Mile Island incident. Today the same tactic is being used to stop off shore drilling using the Deepwater Horizon incident.

Off shore drilling naysayers use the example of the Deepwater Horizon spill to strike fear into the hearts of Floridians. But as FDR said, “The only thing we have to fear is fear itself.”  An example of using the fear factor (precautionary principle) is what happened in Japan following the meltdown of a nuclear power plan in Fukushima. The facts are that no one has died from radiation, nor has cancer increased however, 1,600 did die of stress due to the unnecessary evacuation of people from the area.

Fear kills.

What off shore naysayers, fear mongers, don’t tell you is that mother nature is the greatest polluter in the Gulf of Mexico. According to NOAA over 2,500 barrels of oil naturally seeps daily from fissures in the Gulf. This seeping has been going on for tens of thousands of years, yet the Gulf is doing just fine. Would it not be better to capture this oil, and natural gas, than have it continue to seep into the Gulf?

Some argue that even if natural gas is discovered in Florida’s waters that building an on shore natural gas processing plant is not economically feasible or politically doable. There is an answer to this negative with a positive via new technology. Israel is faced with the same concerns about onshore natural gas processing plants. To solve the problem Nobel Energy and Shell Oil have come up with a solution. Process the natural gas using floating plants. According to Robert Sullivan of the New York Times:

It’s called Prelude, and it’s bigger than big. More than 530 yards long and 80 yards wide, it was constructed with 260,000 metric tons of steel, more than was used in the entire original World Trade Center complex, and it’s expected to displace 600,000 metric tons of water, or as much as six aircraft carriers. Even the paint job is huge: Most big vessels dry-dock every five years for a new coat, but Prelude’s paint is supposed to last 25 years. It will produce more natural gas than Hong Kong needs in a year. And it’s so big that you can’t really photograph it, at least not all at once.

[ … ]

What makes this giant liquefied-natural-gas enterprise feasible, paradoxically enough, is the miniaturization its construction represents. It’s much smaller than landlocked equivalents — imagine shrinking your local refinery until it fits on a barge. Shell Oil, which has the biggest stake in the project, describes Prelude as more environmentally friendly than an onshore site. There are no estuaries under threat, no shorelines to run pipe across and reduced risks to population centers, given the explosiveness of natural gas. And it is designed to ride out extreme weather, thanks to three giant 6,700-horsepower thrusters that can turn it into the wind and waves. “These are the things that the naval architects had to worry through,” says Robert Bea, co-founder of the Center for Catastrophic Risk Management, at the University of California, Berkeley. “It works like a big-ass weather vane.”

Read more.

Environmentalists use the fear factor when talking about drilling for natural gas and oil off of Florida’s shores. The same is true for some of Florida’s Congressional delegation, such as Rep. Vern Buchanan. Fear is not good public policy.

What is good public policy is insuring that Floridians have access to cheap and reliable power in the foreseeable future. Now it the time to take action. Waiting is not an option.

If Governor Rick Scott and Republicans are committed to creating jobs, then they must diversify the economy by promoting energy independence. Energy independence will lead to reduced costs for electricity, gasoline and diversify the economy. That is good public policy.

RELATED ARTICLE: Miami-Dade County school district accepts BP oil spill settlement, sets maximum tax rate

Global Coal Use Growing Faster Than Any Other Energy

Over the last decade, global coal use grew by 968 million tonnes of oil equivalent. That is 4 times faster than renewables, 2.8 times faster than oil and 50 per cent faster than gas. That’s hardly justification for a requiem.

As Master of Oxford University’s Baillol College in the second half of the 19th century, Benjamin Jowett once submitted a contentious issue to a vote among Baillol’s dons and was displeased with the result. “The vote is 22 to 2. I see we are deadlocked.”

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Jowett was determined to ensure that empirical facts were not going to deny him the result he wanted.

When it comes to the coal industry, environmental campaigners and fellow travellers in the media are busy wishing away facts that don’t suit their arguments.

‘‘The end of coal’’ was the tag­line for a Four Corners’ “analysis” of the coal sector last night. It was Episode 14 of Series 3 of the Four Corners’ critique of the mining industry.

Consistent with the established practice, the conclusion of the piece was predetermined and the narrative arranged accordingly.

Facts were in short supply, wishful thinking was not. A trustee of the Rockefeller Foundation, which funds activist groups and co-funded the development of an Australian anti-coal strategy in 2011, was wheeled out as an objective observer.

So the release of BP’s 2015 Statistical Review of World Energy in recent days is timely. Although BP is no friend of coal, the report provides an objective analysis of developments in global energy.

Let’s test some of the anti-coal crusaders’ claims with some objective facts.

First, it is claimed that coal is a dying energy source and its use is being phased out. Not so. According to the BP Review, over the decade to the end of 2014, coal use grew by 968 million tonnes of oil equivalent. That is 4 times faster than renewables, 2.8 times faster than oil and 50 per cent faster than gas. That’s hardly justification for a requiem.

Second, investors are not walking away from coal. Yes, some universities and some funds have decided to divest some of their stocks in fossil fuels. That’s their prerogative. But the overwhelming majority have not and will not divest of coal stocks. Sure the share prices of coal companies fall during a commodity downturn due largely to oversupply. So do the share prices of oil companies and grain producers when prices fall in those sectors.

The empirical evidence suggests that interest in the sector from lenders and investors remains strong. One of the anti-coal movement’s own groups, Bankwatch, has complained that global financing for coal mining rose to $US66 billion in 2014, up from $US55bn in 2013 and a 360 per cent increase from 2005.

The third claim is that renewable energy is capable of replacing fossil fuels, including coal.

Not likely. In 2014, if the world had relied on renewable energy like wind, solar and biomass for primary energy, then the world would have had just 9 days of heat, light and artificial horsepower.

Fourth, campaigners claim that coal has no future in a low emissions world. Not true. New generation technologies are slashing CO2 emissions from coal fired plants by as much as 40 per cent. These high efficiency low emissions plants are being rolled out in China, Japan and elsewhere in Asia. And the first large scale carbon capture and storage coal plant in Canada has slashed its CO2 emissions by 90 per cent. The Intergovernmental Panel on Climate Change has estimated the cost of meeting global reduction targets will be 138 per cent higher without the deployment of carbon capture and storage.

The campaigners also claim that major consuming nations are turning away from coal. But the International Energy Agency predicts that China will add 450 gigawatts of coal fired power over the next 25 years. That’s 40 per cent larger than the entire US coal fleet. As the International Energy Agency has predicted, “China will be the coal giant for many years in the future”.

Energy starved India is also expanding its coal use and is expected to become the world’s largest coal importer in the next decade. The anti-coal crusaders are confused when it comes to India, which, by the way, still has 300 million people without access to electricity.

Their intellectual callisthenics are driven largely by their opposition to the Adani project in the Galilee Basin, which will export high-quality thermal coal to India.

First the campaigners argued that India’s power needs could be supplied by renewable energy. Really? Wind, solar and biomass accounted for 2 per cent of India’s energy needs in 2014. That’s about one week of India’s primary energy needs.

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Filthy Stinking Profits: Entrepreneurs have a nose for potential by DANIEL J. SMITH, ZAC THOMPSON

Imagine a product that leaves your home covered in soot. Worse, imagine it makes your entire neighborhood smell like rotten eggs. The stuff discovered in Lima, Ohio, did just that. “Even touching this oil,” writes historian Burton Folsom, “meant a long, soapy bath or social ostracism.”

Why even bother to pump such “skunk oil” out of the ground?

When John, an entrepreneur, brought a new “investment opportunity” to the board of his company, suggesting that it spend millions of dollars to buy and store the stinking Lima crude, they must have thought it was the dumbest idea they’d ever been asked to risk money on.

But John was confident that a technology could be found to make the rejected oil usable. Many successful entrepreneurs can sympathize with how he must have felt. They likely have been in similar situations, where no one else saw the hidden potential they did in an idea or innovation.

In fact, Sam Altman, the president of the famous Silicon Valley business accelerator, Y Combinator, revealed that to make profits, his firm specifically searches for companies in which other investors don’t see the hidden potential. “We don’t want ideas that are whatever the current fashionable thing is,” says Altman. “So by the time everyone is already starting something in some category, it’s too late.”

Altman goes on to explain that to make a profit, you have to find ideas that look like bad ideas to most people, but have the potential to actually be good ideas. That investment strategy resulted in the creation of successful companies such as Dropbox, Airbnb, and Reddit.

The most assured way to become rich in a market society is to discover a new idea that can enhance the lives of millions of consumers and be the first to invest in it. As soon as the pathbreaking entrepreneur demonstrates an idea’s potential by earning profits, other investors will quickly enter the market. The increased competition will quickly spur innovation, quality improvements, and lower prices, benefiting millions of consumers in the process. In fact, William Nordhaus estimates that, while initial innovators do earn handsome returns, consumers are overwhelmingly the primary beneficiaries of innovations; innovators receive only about 2.2 percent of the total value to society generated by their innovations.

Even computers and televisions, goods and services that, with perfect hindsight, should have been seen as obvious profit opportunities, demonstrate the skepticism that often surrounds new innovations. Ken Olsen, the founder of Digital Equipment Corporation, famously predicted in 1977 that “There is no reason anyone would want a computer in their home.” Darryl Zanuck of 20th Century Fox figured people would “soon get tired of staring at a plywood box every night” and predicted household television would never take off.

The path to enhancing the lives of millions of consumers isn’t always obvious or easy. It is often fraught with great personal risk and financial peril, and met with great skepticism.

Perhaps no one exemplifies taking the risky and difficult path to improving others’ lives more than our skunk-oil entrepreneur: the world’s first billionaire, John D. Rockefeller.

While some have heard of Rockefeller’s humble background and the hard work he devoted to building his fortune, few people know the incredible foresight he exhibited in pursuing ventures that nearly every other investor believed to be bad investments, allowing him unexpectedly to improve the lives of ordinary people.

When it came to skunk oil, Rockefeller saw an opportunity to employ resources that no one else saw a use for. He was convinced that he could purchase up the dirt-cheap crude oil and then invest in discovering a technological innovation that would make it usable. When Standard Oil’s board initially refused to finance the risky project, Rockefeller declared that he would stake some of his own personal fortune, some two to three million dollars, eventually causing the board to grant Rockefeller permission. The investment proved lucrative, as Rockefeller found a technology that would refine the oil while neutralizing the horrid smell. The discovery brought the price of kerosene down to record lows, benefiting millions of consumers (not to mention helping save the whales in the process!).

Rockefeller had a knack for seeing the hidden potential in opportunities that no one else saw. When the Mesabi iron mine was discovered in Minnesota in the late 1800s, investors avoided what they considered to be a risky venture because Mesabi’s ore was notorious for clogging drilling machines. Even iron and steel experts such as Andrew Carnegie saw the ore as worthless; he, too, chose not to invest in the mine. Only Rockefeller made the bold move of investing in the mines. As with skunk oil, he was certain that this ore could be refined and made useable with, at that time, nonexistent technology.

Rockefeller was, once again, proved right when he was later able to provide cheap and useable ore to steel manufacturers after a technology was discovered that made the ore usable. His ability to see a profit opportunity where no one else saw one substantially reduced the costs of steel manufacturing. Cities such as Pittsburgh and Birmingham exploded in economic growth as new factories were opened to utilize the new source of ore. A reduction in steel manufacturing costs allowed for the construction of new railways, bridges, the first skyscrapers in Chicago and New York, and an overall greater infrastructure. Carnegie came to regret his initial judgment and eventually bought the mine’s entire output from Rockefeller.

Not just hardworking and thrifty, Rockefeller also had a natural inclination to see profit where other investors and entrepreneurs saw nothing. Just as importantly, Rockefeller was willing to take great risks investing in projects that no one else dared to invest in. He recognized, as entrepreneurs do today, that substantial profits can only be made by discovering the hidden potential in opportunities that others did not see. Once the first pathbreaking entrepreneur realizes profits, additional investors enter the field, quickly driving down costs and dissipating profits for new investors, all to the benefit of consumers.

Entrepreneurship, when left unfettered, is a continuous process that encourages the creation of seemingly impossible products and services that enrich the lives of billions.

ABOUT DANIEL J. SMITH

Daniel J. Smith is an assistant professor of economics at the Johnson Center at Troy University.

ABOUT ZAC THOMPSON

Zac Thompson is a graduate of the economics program at Troy University.

Oil Boom and Government Glut

The government buys 5 million barrels of oil for its stockpile by JEFFREY A. TUCKER.

It’s a sweet thing when Uncle Sam becomes a mega-buyer of your product.

While the price of oil continues to plunge to record lows, drivers are celebrating, and oil executives are sweating it out. But never fear, the government is running to the rescue — of the oil industry. The Department of Energy is planning to enter the market with a purchase of 5 million barrels. It’s necessary for national security, don’t you know.

Oil prices have fallen 55 percent in the last year. The trend defied every expectation, and it’s been wonderful for drivers, businesses, and consumers. It’s an impressive illustration of how prices reveal information about underlying resource realities.

Technology has blasted away the last decade’s wild and misguided fears of a shortage. Production is at an all-time high in response to unprecedented demand. The stunning events have been a boon to consumers, as downward pressure keeps pushing on prices at the pump.

The market is giving us oil as never before. It is not failing. It is succeeding beyond belief.

“Experts” keep saying the trend is temporary, but no one knows for sure. We could see $20 per barrel before year’s end.

The new purchase is for the Strategic Petroleum Reserve, a hoary leftover from Gerald Ford’s presidency. It pays oil companies for their products, as the DoE says, “to protect the United States from severe petroleum supply interruptions through the acquisition, storage, distribution and management of emergency petroleum.”

But far from seeing “disruption,” we are seeing more and better distribution. You can tell from its language that this is the most thrown-back program imaginable. It illustrates a complete lack of understanding of the price system, which is the signaling mechanism that reveals shortages and surpluses in the market. Prices coordinate the interests of buyers and sellers with facts about underlying scarcity. Rising prices signal facts about supply and demand, incentivizing less consumption and more production. Falling prices encourage consumers to buy more and producers to make less.

The price system actually works, unlike these lame attempts at central planning. The proposed purchase by the government constitutes only half a day’s worth of production in the United States — as if an intervention so small would make the difference between prosperity and disaster.

If it is really necessary to have a “strategic reserve” for oil, wouldn’t we also have to have the same for carrots, beef, iPads, tennis shoes, wine, or raisins? Actually, we have one of those too: a National Raisin Reserve, an equally bizarre anachronism from the Great Depression that requires raisin farmers to give as much as half their crop to the government in order to keep raisin prices high.

The full Strategic Petroleum Reserve covers less than two months of US production, which is itself only 10 percent of world production. Why not make it six months? Why not a year? And what’s a half-day, more or less? There is no rational way to decide.

Let’s imagine there really were some weird catastrophe that caused all distribution to stop. Prices would surge through the roof and inspire a gigantic increase in oil production from all over the world.

But let’s also pretend, because of some foreign policy issue, that the United States also stopped all imports, and then tapped the “Reserve.” It’s not the consuming public that would benefit. It would be the government itself, making sure that the military and all the “essential” government agencies stayed running.

In other words, this program is not about you and me, even in theory. To understand why the Reserve exists, look who benefits most directly: the oil industry itself. It’s a guaranteed market, a kind of subsidy to big business, just as food stamps are for agriculture. Perhaps this is why this proposal is being made again right now, just as prices are falling so dramatically. It’s just thinly veiled corporate welfare.

The Reserve-subsidy came about during a period when oil prices were controlled by the government, and the oil industry was facing very serious financial pressure. The Reserve helped to alleviate that pressure — a classic case of how one intervention leads to others, until all special interests are satisfied with the new equilibrium. The SPR was a fix for a “market failure” created by government-failure.

Oil prices haven’t been controlled since the late 1970s, completely removing any objective conditions for why this needs to exist at all. The only time we ever had gas lines was when we had a “czar” telling people how much they could buy and what they were allowed pay for gas, and the lines disappeared when the controls were removed.

What harm does the Strategic Petroleum Reserve do? Most of the time, it’s simply an unconscionable waste of taxpayer money. When its supplies are actually deployed, dumping oil on the market from a government-mandated reserve, it puts downward pressure on the price and reduces the incentive to step up production right when it is needed most.

The Reserve is a perfect illustration of the dangers of any government program: once one starts, it is extremely difficult to get rid of it, no matter how irrelevant the original rationale has become. Here we are 40 years later, with astounding increases in supply and the technology for refinement and distribution, but we are still paying for this economically illiterate central plan for stockpiling oil.

It needs to be completely abolished, just as Ronald Reagan suggested in 1980 (before he later changed his mind to favor its expansion). The SPR is just like the Post Office in this sense: it exists solely due to that magic combination of economic ignorance and special-interest pleading.

ABOUT JEFFREY A. TUCKER

Jeffrey Tucker is a distinguished fellow at FEE, CLO of the startup Liberty.me, and editor at Laissez Faire Books. Author of five books, he speaks at FEE summer seminars and other events. His latest book is Bit by Bit: How P2P Is Freeing the World.

EDITORS NOTE: The featured image is courtesy of FEE and Shutterstock.

Here’s the Obama Administration’s Response to the Shale Boom: More Regulations

In the last few years, we’ve seen innovative companies combine old and new technologies to tap into shale deposits that were once unreachable. The resulting shale energy boom has made the United States the world’s top oil and natural gas producer while creating jobs and improving the nation’s energy security.

Now that we’ve moved from an age of energy scarcity to one of abundance, the Obama administration wants to add another layer of bureaucracy on energy producers.

The Interior Department released its long-awaited proposed regulations on hydraulic fracturing on federal lands, and on page 12 is this nugget:

Operators with leases on Federal lands must comply with both the BLM’s regulations and with state operating requirements, including state permitting and notice requirements to the extent they do not conflict with BLM regulations.

Federal regulators aren’t known for being speedy, as Katie Tubb and Nicolas Loris of the Heritage Foundation explain:

The [Bureau of Land Management] estimates that it took an average of 227 days simply to complete a drill application—just one step in the approval process to harvest oil and gas resources on federal lands. This is compared to 154 days in 2005 and the average 30 days it takes state governments to do the same.

As a result, the number of acres of federal lands leased for energy development has been declining.

BLM data of onshore acres of federal land leased.

Acres leased on all federal onshore land. Data source: Bureau of Land Management.

Now, don’t think states are failing to regulate hydraulic fracturing. If Pennsylvania is any indication, it’s far from the truth. Check out my favorite scene from the documentary Fracknation:

“There are numerous permits you have to get before doing anything” on the Marcellus Shale, Range Resources’ Tony Gaudlip said.

The only thing these duplicative, redundant federal regulations will do is ensure less of our energy abundance is available for our energy-hungry economy.

EDITORS NOTE: The featured image is of a pumpjack in Los Angeles, Calif. Photo credit: Patrick T. Fallon/Bloomberg.

Is John Kerry a Moron?

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John Kerry testifying before Congress on Vietnam War.

I can recall John Kerry, Obama’s Secretary of State, from the days he testified to a congressional committee and slandered his fellow soldiers as the spokesman for Veterans Against the Vietnam War in 1971. I was appalled then and my opinion of the man has not changed since those days. I opposed the war, too, but I did not blame it on the men who were conscripted to fight it, nor did I believe the charges he leveled against some of them.

These days Kerry is engaged in securing an agreement with the Iranians, if not to stop their program to make their own nuclear weapons than to slow it to a later date. Never mind that the Iranian government is listed by our own government as a leading sponsor of terrorism worldwide or that they have signed such agreements in the past and then tossed out the inspectors.

Kerry is convinced that the Obama administration can get an agreement that is, in his own words, “not legally binding”, nor is it a treaty that the U.S. Senate would have to vote for or against. In point of fact, President Obama can make the deal—sign the agreement—just as Presidents have done for over two hundred years. It can then be abrogated by whoever the next President will be.

Why Obama and Kerry are doing this defies my understanding. It gives the Iranians more time to reach nuclear capability. It is opposed by every nation in the Middle East. It puts every nation within reach of Iran’s missiles at risk and it virtually guarantees the destruction of Israel, a goal of Iran’s Islamic Revolution from the day it was born. Kerry is negotiating with people who took our diplomats hostage in 1979 and have played a role in the deaths of many Americans since then.

Is John Kerry a moron? I think so.

I asked myself this question in regard to another area of U.S. policy which the Secretary of State is also championing even if millions around the world have concluded otherwise.

On March 2nd, Kerry addressed the Atlantic Council in Washington, D.C, telling them what he has been saying in many forums. Let us understand that “climate change” is the name being used to replace “global warming”, because the Earth has been in a cooling cycle for the past 18 years or so. And let us understand that “climate change” has been happening for 4.5 billion years.

Kerry said, “So when science tells us that our climate is changing and human beings are largely causing that change, by what right do people stand up and just say, ‘Well, I dispute that’ or ‘I deny that elementary truth’?”

The problem with this is that human beings are not causing the planet’s climate change. Forces far greater than humans are involved, not the least of which is the Sun.

As for science, its most fundamental methodology is to constantly challenge the various ‘truths’ put forward as theories until they can be proved to be true by being independently reproduced. Nothing about the “global warming” theories has been true. All of the computer models on which it was based have been proven inaccurate. In some cases, they were deliberately rigged.

On television meteorologists remind us that every day, indeed, from morning to night, the temperatures of the area about which they are reporting are in a constant state of change. They show us satellite photography and mapping that demonstrates how dynamic the weather is on any spot on Earth. The climate, however, is measured in decades and centuries. Every one of the doomsday predictions of the global warming “scientists” and propagandists have been wrong.

The enemies of the use of energy to enhance and improve the lives of the residents of Earth began to claim in the 1970s and 80s that carbon dioxide (CO2) was threatening the climate.

At best, CO2 is a very minor element of the Earth’s atmosphere, about 0.04%, which gets it rated as “a trace gas.” As such, it plays no role with regard to the climate.

Kerry asserted that climate change is “one of the biggest threats facing our planet today” and should be ranked with terrorism, epidemics, poverty and nuclear proliferation…” Oh, wait! Isn’t this the same Secretary of State negotiating with Iran to allow it to become a nuclear power?

And what “solution” does he offer to reduce the “threat” of climate change? Kerry urged that the U.S. transition away from “dirty sources of energy” such as coal, oil and natural gas.

Writing in a recent issue of The Wall Street Journal, Matt Ridley noted that “In 2015, about 87% of the energy that the world consumed came from fossil fuels, a figure that—remarkably—was unchanged from 10 years before. This roughly divides into three categories of fuel and three categories of use: oil used mainly for transport, gas used mainly for heating, and coal used mainly for electricity.”

Fossil fuels have made the difference between modern life and burning cow dung to cook dinner. A billion people on Earth still do not have electricity.

Less obvious, but significantly more threatening is the White House effort to get the U.S. signed up for the United Nations Framework Convention on Climate Change and its International Climate Justice tribunal. This is a follow-up to the 1977 Kyoto Protocol that was unanimously rejected by the U.S. Senate. Why? Because such treaties threaten the sovereignty of the U.S. and, just as importantly, because the entire United Nation’s climate program is a huge fraud.

This is what John Kerry wants the U.S. to agree to, just like the Iran deal, and just to be sure the U.S. Senate, as mandated by the U.S. Constitution, doesn’t have a say in it, he and the President are calling these deals anything other than a treaty.

Is John Kerry a moron? Maybe not as dumb as he seems to be, but surely cynical and devious.

Unfortunately, he is the Secretary of State.

© Alan Caruba, 2015

RELATED ARTICLE: California Dem Warns of Global Warming-Induced Prostitution

The Impact of Crude’s Collapse on the Islamic State

As oil prices continue to fall, flirting with the US$40/bbl floor, there has been much talk of cheap oil’s winners and losers. The discussion has focused on big producer and consumer countries, but there may be another contender in the loser category – namely, the Islamic State (IS). In its gambit to become a state, it unwittingly became a hydrocarbon state, and as such has exposed itself to the same economic volatility that plagues other rentier states. However, unlike most hydrocarbon states, the IS has not had the benefit of having been around long enough to build a stabilization fund – the cash reserves that can smooth out the highs and lows of commodities markets – and in this sense it is likely to be even more of a loser than conventional oil reliant countries. (the IS’s own claims to have a budget surplus of US$250 million are not credible.) What this means is that with less revenue the nature and focus of the the IS’s military operations will change and that the IS will have to turn to other financing methods such as extortion and organized crime to address the revenue shortfall.

With the IS’s conquest of oil producing regions in Syria and Iraq during the summer of 2014, it quickly began to derive the lion’s share of its revenue from oil sales, orders of magnitude above its historic sources of revenue such as overseas donations and criminal activities. Because the IS did not have legal title to the oil, it was forced to sell it on the black market at a steep discount from global commodities prices. While crude (Brent) was trading in the neighborhood of US$100/bbl, the IS was selling its own crude for an estimated US$39/bbl. The IS’s average estimated combined production for Iraqi and Syrian fields was 160kbpd, which meant that on the upper end, the IS could have been earning as much US$6 million/day. According to a recent article in the Financial Times citing the local population around IS-controlled oil fields in Syria, anti-IS coalition efforts to disrupt IS hydrocarbons production have had little impact.

Although there is no available information about how exactly the IS allocated its oil revenue, it undoubtedly went a long way toward paying for the provision of social services, for public sector salaries, and most importantly for foreign fighters and military operations.

Since June, however, the price of crude (Brent) has fallen by 50%. Although black market crude prices do not directly track with prices on regulated commodities exchanges, it is safe to assume that black market crude prices collapsed in line with official prices. In other words, 2015 IS oil revenue is likely 50% of what it was in June 2014.

The consequences of missing oil revenue for IS are severe. IS is unlikely to decrease funding for its military operations so it will have to find ways to simultaneously cut costs elsewhere and raise new revenue – and both methods are likely to jeopardize popular support for the group.

In the immediate term, infrastructure projects and social services will have to be curtailed, thereby undermining IS’s efforts to portray itself as an Islamist utopia and likely exacerbating local populist animosity toward the group.

But the IS’s options for raising new revenue are limited. Because it claims to adhere to Sharia dictates regarding fixed tax rates (zakat for Muslims and jizya for Christians and Jews), it does not have recourse to tax hikes to offset falling oil sales. Instead, it could raise import duties, but these are already high and doing so would likely further erode already waning popular support. The IS could also resort to its predecessor’s preferred funding methods – relying on donations from foreign supporters and sympathizers. But there is little likelihood that donations would match oil sales’ value and the IS would face an inevitable financial crunch. It could also intensify its criminal activities like extortion and kidnap for ransom. Again, revenue from these activities would fall far short of oil receipts. Lastly, it could try to capture more oil. It could decide to cede non-oil producing territory and refocus its military efforts on seizing other oil-rich regions in Iraq. Falling oil revenue may also impact the nature of the IS’s military activities. Prior to having access to oil receipts the IS behave more like an insurgency, relying heavily on terrorist tactics, than conventional military strategy. In the face of falling oil prices, it could revert to this style of fighting.

The IS’s most likely way forward is to try some sort of combination – reduced services, increased import duties, overseas donations, heightened criminal activities, a strategic shift to capturing more oil fields and a return to overt terrorist tactics.

Meanwhile, the anti-IS coalition’s campaign to degrade its oil production capacity will continue so that even in the off chance that oil prices make a near term rebound, the IS will not have much oil to sell. The tough lesson for the IS is that when trying to form a new state, an oil state is not the best option.

EDITORS NOTE: The views presented are those of the authors and do not necessarily represent the views of the Department of Defense, the U.S. Army, or any of its subordinate commands.

Israel’s Offshore Gas Discoveries are in Jeopardy

On February 3rd, there was a  Conference  in Tel Aviv co-sponsored by the Israeli Ministry of Infrastructure, Energy and Water and Maala – a group concerned with Socially Responsible Business. Globes Israeli Business and Reuters covered it, “Energy minister: Foreign companies aren’t coming to Israel.”

 Silvan Shalom, Israeli Minister of Infrastructure,  the Israel Manager of  Houston –based Noble Energy, Inc. co-developer with Israel’s Delek Group and a representative of Australian  energy company Woodside, Pty.  appeared among other presenters. They were all  bemoaning the arbitrary, some would say capricious draft ruling of Dr. David Gilo, Director General of Israel’s Antitrust Authority (IAA) , basically stopping development of the offshore Leviathan  gas field and  forcing the possible sale of the existing Tamar gas field in Israel’s Exclusive Economic Zone (EEZ).  Gilo,as we have discussed  in prior posts, has confounded Israel’s energy independence and possible export opportunities with his draft consent order based on misguided consumerist  populism.  His understanding of the economics of pricing of gas as a commodity in the international markets is simplistic at best and simply panders to  misguided domestic  populist concerns over maintaining low energy prices.  His proposals to enhance competition  in the domestic  market come amidst the looming March Knesset elections.  Many  suspect that his actions were in support of the Labor-Hanuat coalition objective of unseating Prime Minister Netanyahu.  Not surprising as Israel’s founding generation, save for  Menachem Begin, were Socialist  Marxists. They created the country’s dual economy with Histadrut – the labor union dominated institution – owning  key sectors in the country’s economy that have  only been partially privatized. The exception being Israel’s much vaunted high tech sector.

Gilo’s  misguided logic is reflected in the comments of the Israeli National Infrastructure-Maala conference presenters. It was bolstered by an announcement that the Noble Energy –Delek Group partners  were on the verge of concluding a deal with Egypt to provide much needed gas from the Aphrodite field in the adjacent Republic of Cyprus EEZ.  Neither Noble or Delek accept the separate marketing proposals and sales of  both Tamar and smaller fields, originally part of an IAA deal agreed to by Gilo.

Note these comments from the Globes article:

“We don’t see foreign gas companies coming to Israel,” Minister of National Infrastructure, Energy, and Water Silvan Shalom admitted. “The foreign companies have interests in countries like Saudi Arabia and the Gulf, and bringing them to Israel is no easy task. Israel is small country, with a small gas market. In a utopian and theoretical world, companies would come, but that’s not how it is in the real world.”

“Unfortunately, our business in Israel was unsuccessful, but our connections with Noble Energy have become stronger,” Woodside VP Corporate Affairs Roger Martin said at a conference organized by the Ministry of National Infrastructure, Energy, and Water and the Maala organization.

Woodside, which planned to acquire 25% of the rights in the Leviathan natural gas reservoir for $2.7 billion, backed out at the last minute, and left Israel. “We’re working together with Noble Energy in Africa, and we signed an additional agreement with them in October for oil and gas exploration off the Cameroon coast,” Martin said.

“Our pride in making our contribution to the community was met with cynicism. They tell us cynically, ‘This is very American’,”  [Nobel Energy Israel Manager]  Zomer said angrily. “What do you want from me? What’s very American? I don’t understand this. Since when is doing good considered American? Why should companies in Israel apologize for their success? Of course Noble Energy hoped to make a profit in Israel, but it also meant to do good for Israel.”

Gidon Tomer [CEO Delek Drilling  Partnership] noted , “That state could expect NIS 250 billion  ($65 Billion) in revenues from the first stage of developing Leviathan. He added, “This revenue doesn’t take into account the immediate saving from the consumption of cheap gas. You have to look at the enterprises saved by natural gas. These enterprises are boosting their competitiveness. It’s a reduction in the cost of living.”

Alexander Varshavsky of the National Gas Authority  asserted that Israel could expect to lose NIS 3 billion ($780 million)  annually starting in 2018 from the delay in developing Leviathan. “Beyond that, it’s a blow to Israel’s credibility,” he argued.

On the matter of Gilo’s express goal of enhancing competition and energy pricing, Globes noted comments of   a conference participant who said, ‘If you want to talk about responsibility, Israel’s responsibility is to bring gas to factories. There are factories in the outlying areas that closed down because of their energy costs. At enterprises like Phoenicia Flat Glass Industries and Shaniv Paper Industry Ltd. (TASE: SHAN), it was a do or die question. Today, they’re hooked up to natural gas and saving money. That’s the most important thing.”

Should PM Netnayahu win the March 17th election perhaps a priority will be to pass legislation amending the mandate of the IAA remodeling it in on 100 year precedent of the U.S. Federal Trade Commission.  Otherwise , director General Gilo of the IAA, will thwart Israel’s economic future and energy independence.

EDITORS NOTE: This column originally appeared in the New English Review. The featured image of the Tamar deep oil platform is courtesy of Oil in Israel.

Obama Disses Alaska

Fifty million Americans who live in the northeast will experience what is predicted to be a historic blizzard from Monday evening through Tuesday. Cities and towns will virtually or literally close down. People will be told to stay indoors for their safety and to facilitate the crews that will labor to clear the roads of snow.

In other words, welcome to Alaska, a place that is plenty cold most of the year and which is no stranger to snow and ice.

Alaska, however, has something that the whole world considers very valuable; oil and natural gas. Lots of it. In 1980 a U.S. Geological Survey estimated that the Coastal Plain could contain up to 17 billion barrels of oil and 34 trillion cubic feet of natural gas.

In 1987, the U.S Department of Interior confirmed the earlier estimate, saying that “in place resources” ranged from 4.8 billion to 29.4 billion barrels of oil. Recoverable oil estimates ranged from 600 million barrels at the low end to 9.2 billion barrels at the high end.

A nation with an $18 trillion debt might be expected to want to take advantage of this source of revenue, but no, not if that debt was driven up by the idiotic policies of President Barack Obama and not if it could be reduced by the same energy industry that has tapped similar oil and natural gas reserves in the lower 48 states by drilling on private, not public lands.

Instead, on Sunday President Obama referred to the Arctic National Wildlife Refuge (ANWR) as “an incredible place—pristine, undisturbed. It supports caribou and polar bears” and other species and, guess what, tapping its vast oil and natural gas reserves would not interfere in any way with those species despite the whopping lie that “it’s very fragile.”

At Obama’s direction, the Interior Department announced it was proposing to preserve as wilderness nearly 13 million acres of land in ANWR’s 19.8 million-acre area. That would include 1.5 million acres of coastal plains that Wall Street Journal reported to be “believed to have rich oil and natural gas reserves.”

Not a whole lot of people choose ANWR as a place to vacation. It is a harsh, though often beautiful, area that only the most experienced visitor might want to spend some time. I would want to make every environmentalist who thinks any drilling would harm the area have to take up residence in its “pristine” wilderness to confirm that idiotic notion.

AA - Alaska and Caribou

Alaska caribou near oil drilling site.

They would find plenty of caribou, polar bears and other species hanging out amidst the oil and gas rigs, and along the pipe line. The Central Arctic Caribou Herd that migrates through the Prudhoe Bay oil field, just next to ANWR has increased from 5,000 animals in the 1970s to more than 50,000 today. There is no evidence than any of the animal species have experienced any decline.

The Coastal Plain lies between known major discovery areas and the Prudhoe Bay, Lisburne, Endicott, Milne Point and Kuparuk oil fields are currently in production In 1996, the North Slope oil fields produced about 1.5 million barrels of oil per day or approximately 25% of the U.S. domestic production. Alaska is permitted to export its oil because of its high levels of productivity.

So why has Obama’s Department of the Interior decided it wants to shut off energy exploration and extraction in a whopping 13-million acres of what is already designated as a wildlife refuge and along its coastlines on the Beaufort and Chukchi seas? The answer is consistent with Obama’s six years of policies to deny Americans the benefits of the nation’s vast energy reserves, whether it is the coal that has previously provided 50% of our electrical energy—now down by 10%–or access to reserves of oil and natural gas that would make our nation energy independent as well as a major exporter.

The good news is that only Congress has the authority to declare an area as wilderness. It has debated the issue for more than 30 years and in 12 votes in the House and 3 votes in the Senate it has passed legislation supporting development and opposing the wilderness designation.

And guess who is the new chairman of the Senate Energy and Natural Resources Committee? Sen. Lisa Murkowski, an Alaskan Republican. She also heads up the appropriations subcommittee responsible for funding the Interior Department!

This latest Obama ANWR gambit is going to go nowhere. It does, however, offer the Republican Congress an opportunity to demonstrate its pro-energy credentials.

“I cannot understand why this administration is willing to negotiate with Iran, but not Alaska,” said Sen. Murkowski when informed of Obama’s latest attack.

© Alan Caruba, 2015

Obama Wants to Close Off Energy-Rich Stretch of Alaska to Development

Pultizer Prize-winning author Daniel Yergin, wrote in the New York Times that global energy markets are at an inflection point. The role of the world’s “swing producer” has swung to the United States:

By leaving oil prices to the market, Saudi Arabia and the emirates also passed the responsibility as de facto swing producer to a country that hardly expected it — the United States. This approach is expected to continue with the accession of the new Saudi king, Salman, following the death on Friday of King Abdullah. And it means that changes in American production will now, along with that of Persian Gulf producers, also have a major influence on global oil prices.

Even though hydraulic fracturing had led this shale boom, conventional oil production is still important.

This makes the Obama administration’s request to close off a big portion of Alaska’s energy reserves to development especially disappointing:

President Barack Obama is proposing to designate the vast majority of Alaska’s Arctic National Wildlife Refuge as a wilderness area, including its potentially oil-rich coastal plain, drawing an angry response from top state elected officials who see it as a land grab by the federal government.

“They’ve decided that today was the day that they were going to declare war on Alaska. Well, we are ready to engage,” said U.S. Sen. Lisa Murkowski, R-Alaska, and chair of the Senate energy committee.

The designation would set aside an additional nearly 12.3 million acres as wilderness, including the coastal plain near Alaska’s northeast corner, giving it the highest degree of federal protection available to public lands. More than 7 million acres of the refuge currently are managed as wilderness.

The U.S. Geological Survey estimates that the area has over 10 billion barrels of recoverable oil.

The wilderness designation will require Congressional approval—not likely with this Congress. However, the Washington Post reports that the Interior Department will take action to limit energy development there [H/t Noah Rothman]:

While Congress would have to approve any new wilderness designation, Interior will immediately begin managing the iconic area under the highest level of protection the federal government can offer.

President Obama, who has not been to ANWR and ironically filmed his announcement on the fuel-guzzling Air Force One said, we must ensure “that this amazing wonder is preserved for future generations.”

In contrast Jonah Goldberg, someone who has visited ANWR, had a different description of the area where oil development would take place:

The oil is on the coastal plain at the very top of ANWR on the coast of the Arctic Ocean. And that ain’t beautiful. Believe me. Winter on the coastal plain lasts for nine months. Total darkness reigns for 58 straight days. The temperatures drop to 70 degrees below zero without wind chill. This is the time of year when the oil companies would do almost all of their work; when nary a caribou nor any other creature would be dumb enough to venture out on to the frozen tundra for long. Regardless, ANWR’s summer is no picnic either. The coastal plain is covered in a thick brick of ice for much of the year. When it melts, it creates, well, puddles. Lots and lots of puddles – and mud. This provides the lebensraum that mosquitoes and other flying critters need to stretch their wings.

But back to the President. In last week’s State of the Union Address he took credit for the oil and natural gas boom, but the facts tell a different story. Under his watch, oil and natural gas development has decreased on federal lands while increased on private and state lands. In fact, his administration has put up barriers to energy development. The ANWR proposal is the latest.

The administration is expected to release a draft of its offshore lease plan. That may include allowing energy development off the Atlantic coast. Such a decision will be welcome for its economic and job growth and bipartisan support, but it will further confirm how incoherent the President’s energy policy is.

Islamic State richest jihad terror group, Hamas second

The Islamic State has money from oil sales. Hamas has money from you and me, taxpayers in the West forking over money at the command of our governments, money that is given to Gaza for “humanitarian aid” — money that goes to the jihad against Israel.

“ISIS Richest Terrorist Group, Hamas Comes in 2nd,” by Lori Lowenthal Marcus, Jewish Press, November 12th, 2014:

Terrorist groups frequently operate as criminal organizations, engaging in activities such as drug trafficking, robberies and extortion, in order to finance their terrorist operations.

Perhaps not surprisingly, the most notorious, barbaric terrorist group at the moment, ISIS, is now officially the richest terrorist group of all time, according to Forbes Israel. Hamas, another Islamist terrorist organization, is in second place.

In addition to their criminal activities, the terrorist groups also raise substantial funds through “charities,” donations, and, incredibly, in some cases by government agencies.

As surreal as it is to be discussing ISIS in terms of a typical business model, the Forbes report also discussed how ISIS acquires and pays for various tasks similar to most other large organizations, including maintenance, salaries, training, acquisition of weapons and vehicles.

Not content with listing the richest men or women in the world, Forbes also provided a ranking of the ten richest terrorist organizations, including their net worth and rankings.

ISIS has an annual income of $2 billion. The terrorists in second place is Hamas, which takes in $1 billion annually. In third place is a non-Middle Eastern terrorist organization, one that has been around for a long time: the Revolutionary Armed Forces of Colombia – the People’s Army (FARC), which rakes in $600 million annually.

In fourth through sixth place are more Middle Eastern Islamic terrorist groups: Hezbollah ($500 million), the Taliban ($400 million), and Al-Qaeda and affiliates ($150 million).

In 7th place is another Islamic group, the Pakistan-based Lashkar e-taiba ($100 million). This group was behind the deadly Mombai bombings in late fall of 2008.

In eighth and tenth places are two more Islamist groups, both based in Africa. In eighth place is Al-Shabab ($70 million), and tenth place is Boko Haram ($25 million)….

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Response to Senator Bernie Sanders on the Keystone Pipeline

Dear Senator Sanders:

As I was growing up one of the things I learned that helped this country become as successful as it did was by having cheap energy sources. Amazingly, the government that helped support achieving cheap energy is now so full of communists such as yourself and many democrats including the president who are trying to cripple the country and drive energy costs high so alternatives like wind and solar are comparably priced since their production costs resist being lowered. High energy costs drive up the cost of all goods and services.

A second thing you mention is the transporting of tar sands oil as being dangerous to transport by pipeline. Are you aware of the tens of thousands of miles of oil pipeline we have in the country today which is the safest form of transport there is.

You say there would be great envrionmental damage if the pipeline would be completed since greenhouse gases emitted are greater. I suppose you stand side by side with the former communists now posing as environmentalist in opposing Keystone. The majority of what you refer to in greenhouse gases is CO2 I assume which is what we exhale as we breathe. Perhaps we could offset that increase by enforcing our immigration laws and deporting the millions of illegal aliens that are here exhaling CO2 24 hours a day and stop mass legal immigration. Doesn’t that bother you? Tell me why environmentalists never complain about mass immigration legal and illegal adding to our environmental woes?

You tout wind and solar as real alternatives. What planet are you on? By the way senator, how many birds do the propellers on the wind farms kill annually (over 300K) and how many are killed by solar reflecting and singing feathers causing birds to crash? Why haven’t you and the other environmentalists stood up for the creatures? You and they certainly would be urinating and moaning if oil or gas was killing as many animals.

I could go on but I think you get the point Senator. You and the rest of the communists posing as environmentalists are very selective in what you recognize as a problem. Coincidentally it always has something to do with impeding our progress as a nation.

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Obama administration chooses environmentalists over unions on Keystone XL and fracking

While some environmental groups applauded the latest delay of the Keystone XL pipeline, unions whose members would be building it ripped the administration. Sean McGarvey, President of North America’s Building Trades Unions, AFL-CIO, called it “a cold, hard slap in the face for hard working Americans who are literally waiting for President Obama’s approval and the tens of thousands of jobs it will generate.”

Laborers’ International Union of North America (LIUNA) general president Terry O’Sullivan was more colorful, saying, “It’s clear the administration needs to grow a set of antlers, or perhaps take a lesson from Popeye and eat some spinach.”

The Keystone XL pipeline isn’t the only energy issue dividing anti-energy environmental groups and unions who want jobs for their members. Over the weekend, the Associated Press reported that development of shale energy using hydraulic fracturing had strong union support in Pennsylvania:

“The shale became a lifesaver and a lifeline for a lot of working families,” said Dennis Martire, the mid-Atlantic regional manager for the Laborers’ International Union, or LIUNA, which represents workers in numerous construction trades.

Martire said that as huge quantities of natural gas were extracted from the vast shale reserves over the last five years, union work on large pipeline jobs in Pennsylvania and West Virginia has increased significantly. In 2008, LIUNA members worked about 400,000 hours on such jobs; by 2012, that had risen to 5.7 million hours.

In contrast, environmental groups like the Natural Resource Defense Council who patted the administration on the back for the Keystone XL delay, strongly oppose hydraulic fracturing.

In his Keystone XL statement, McGarvey head of the building trades union asked a good question:

Why does President Obama continue to side with radicals instead of the middle class that, twice, put him office, and supports this project by a significant majority?

Out of work American union members would like to know.

[H/T Lachlan Markay at the Washington Free Beacon.]

EDITORS NOTE: The featured photo of a rig drilling for natural gas at a hydraulic fracturing site in Pennsylvania is courtesy of photographer Ty Wright/Bloomberg.

Petroleum exports: good for consumers, coffers, companies by Paul Driessen

Eliminating prohibition on exporting US oil and gas will help families, security, allies.

America’s crude petroleum export ban is an antiquated byproduct of the 1973 Arab oil embargo. Repeal is long overdue.

Hydraulic fracturing (fracking) has sent U.S. oil, natural gas, and propane production soaring. Natural gas output is up 36% since 2005. Oil output is expected to increase another 780,000 barrels per day (BOPD) in 2014 and reach 9.6 million BOPD by 2019. The United States is now importing half of what it did in 2005.

All this activity has created millions of oil patch and downstream jobs. Royalty and tax revenues have skyrocketed, and cheaper natural gas fuels and feed stocks have fostered a manufacturing and petrochemical renaissance.

Expanding natural gas use has also reduced carbon dioxide emissions, which should encourage people who still worry about “dangerous manmade climate change.”

petroleumbyproducts

For a larger view click on the pie chart.

Increased production has also enabled companies to export more gasoline, kerosene, jet fuel, lubricants, and other finished products, since refined product exports were never prohibited. Indeed, U.S. refining capacity is at record levels.

However, because they were designed to process heavier crude oils, refineries are limited in how much domestic sweet crude they can handle. Exports would provide an important outlet for excess crude supplies. That in turn would encourage additional exploration and production, protecting jobs, further revitalizing our economy, and multiplying royalty and tax revenues.

That exploration and production must go beyond state and private lands, though. Opening more federal onshore and offshore lands to leasing and drilling is essential and would magnify these benefits many times over. These resources belong to all Americans, not only to those who oppose fossil fuel use.

In many cases, adding fracking to the equation would expand supplies even further, by making otherwise marginal plays more economic to produce, reinvigorating old oil and gas fields, prolonging oil field life, and leaving fewer energy resources behind in rock formations.

Asia needs the energy to fuel its growing economy and support its still inadequate petroleum production infrastructure. Most of Europe’s natural gas comes from Russia, which charges high prices, engages in energy blackmail, and is rattling sabers in Crimea, Moldova, and Ukraine.

Right now, many European countries prohibit fracking, and EU climate and renewable energy policies have sent business and family energy prices into the stratosphere, killing jobs and preventing families from heating their homes properly.

Expanding domestic U.S. oil and gas production and exports would aid EU workers and families, while also improving America’s gross domestic product, balance of trade, national security, job growth, and prestige. Contrary to what some have argued, American consumers would also benefit, because exports would help stabilize global supplies and prices, keep OPEC and Russian price hikers at bay, and make the United States less reliant on imports and less vulnerable to supply disruptions.

What actually hurts consumers are government and environmentalist opposition to leasing, drilling, fracking, pipelines, and hydrocarbons – and their support for expensive, land-intensive, water-hungry, lower-energy-content ethanol and biofuel “alternatives.”

It is possible that the current $9 per barrel difference between U.S. and global oil prices could shrink slightly if some oil is exported. Barclays Bank says eliminating the export ban could add $10 billion a year to overall national gasoline costs.

However, this potential increase is just 3% of an average household’s annual $2,912 gasoline outlay. That’s $87 a year or $1.68 a week – half the price of pumpinggasone Starbucks Latte Grande.

The consumer impact of America’s massive land and petroleum resource lockdowns is much higher.

Of course, realizing these benefits requires producing more, ending the export ban, and building more pipelines, natural gas liquefaction plants, and shipping facilities. That can and should be expedited.

Europe can and should produce more of its own oil and gas. It has vast petroleum potential waiting to be tapped via fracking. Opposition to producing this petroleum is no more ethical than environmentalist demands that the United States keep its own enormous untapped petroleum supplies locked up, while we deplete other countries’ assets and put their wildlife habitats at risk from production-related accidents.

Nor is it ethical or sensible for President Obama to ask Saudi Arabia to send us more oil, rather than telling his energy and environment regulators to foster more production here at home.

In short, America should produce more here at home, export both crude and refined petroleum to Europe and Asia, and support companies that want to take their fracking technology and expertise overseas.

These actions will benefit American companies, workers, families, consumers, balance of trade, environmental quality, and government revenues. We must not let anti-hydrocarbon ideologies or misinformed policy positions perpetuate this antiquated ban.

NOTE: This article first appeared in Investor’s Business Daily.

About Paul Driessen

Paul Driessen

Paul Driessen is senior policy adviser for the Committee For A Constructive Tomorrow (CFACT), which is sponsoring the All Pain No Gain petition against global-warming hype. He also is a senior policy adviser to the Congress of Racial Equality and author of Eco-Imperialism: Green Power – Black Death.