In the Pipeline: 8/25/11

Leaving no doubt that the only paper read in the White House is the formerly great New York Times, the Obama Administration unleashed another attack against the last remaining bright spot in the American economy….the miracle of hydraulic fracturing Wall Street Journal (8/25/11) reports: The Securities and Exchange Commission is asking oil and gas companies to provide it with detailed information—including chemicals used and efforts to minimize environmental impact—about their use of a controversial drilling process used to crack open natural gas trapped in rocks… The federal government’s investor-and-markets watchdog is stepping into the heated environmental debate surrounding hydraulic fracturing, or “fracking,” according to government and industry officials, even as state and federal environmental officials have begun to bring greater pressure on the industry. The process, which involves pumping water, chemicals and sand underground to free difficult-to-reach natural gas in shale basins, has come under criticism from environmental groups ad some lawmakers over concerns toxins in the mix may contaminate air and water…The SEC move shows the broad interest among Washington regulators in taking a closer look at fracking and suggests companies that are betting billions of dollars on the technology will increasingly need to weigh disclosing techniques they often consider proprietary. Battles over disclosure have already broken out at the state level, including in states such as New York and Pennsylvania that sit on the giant Marcellus Shale, an underground formation that has become a fracking hotbed because of the large quantities of natural gas there. Just last week, Noble Energy Inc. paid $3.4 billion for a stake in developing 663,350 acres there… Regulators in several states have identified cases in which drilling—although not necessarily the fracturing process in particular—has allowed natural gas to seep into residential water wells, and at least one scientific study has linked drilling and gas contamination more broadly. But there have been few if any documented cases of contamination by the chemicals used in hydraulic fracturing. The industry acknowledges that improperly constructed wells can allow gas to escape, but says such cases are rare and aren’t directly tied to fracturing itself.

This is a convoluted way of saying there’s a general consensus to be made that we can save a lot of money by cutting all energy subsidies and letting energy companies compete in the open market U.S. News (8/24/11) reports: With the task of slashing federal spending levels by as much as $1.5 trillion over the next decade, the congressional bipartisan, bicameral debt “super committee” has its work cut out for it. But a new report called Green Scissors 2011 may offer a starting place toward finding a passable solution…The report offers a kind of give and take between the right and left: Tackle wasteful federal subsidies, while protecting the environment. Its sponsors, which include a range of political groups from Friends of the Earth, a progressive environmental organization, to conservative free-market advocate the Heartland Institute, represent a genuine bipartisan consensus—one that they can only hope transfers to the halls of Congress later this year…Subsidies, as the contributors to Green Scissors have realized, are a good place to find common ground. For one, while conservatives and fiscal hawks are mostly against revenue increases to the federal government, genuine subsidies—generally defined by those on the right as narrow carve-outs that disrupt the free market and favor certain industries and special interests over others—are often an exception. So, with the mentality that the fewer subsidies the better, they’ve met progressives and green advocates halfway to at least start with repealing subsidies that negatively affect the environment…Energy subsidies make up a huge bulk of the $380 billion worth of cuts on the Green Scissors list. It’s no surprise that subsidies to fossil fuel industries—like royalty relief and manufacturing tax deductions for the oil and gas industry—made it, but the report also targets incentives for the presumably cleaner nuclear industry and alternative energy sources like biofuels.

I don’t think these greenies thought through their protest…they are being arrested and driven away in gas powered vehicles and being detained in a coal powered jail. Meanwhile, President Obama needs the union jobs to build the Keystone XL Pipeline The Hill (8/24/11) reports: Top officials with several prominent environmental groups are voicing support for demonstrations at the White House that call for President Obama to block a pipeline that would greatly expand imports from Canada’s oil sands…Their joint letter Wednesday adds to the political pressure on the White House over the proposed Keystone XL pipeline, signifying that it’s emerging as a priority for a key part of Obama’s liberal base. Signers include the heads of the League of Conservation Voters and the Sierra Club, which have the environmental movement’s largest political operations, as well as the Environmental Defense Fund, a group more often known for playing a less confrontational, inside game (although that may be changing)…“It’s perhaps the biggest climate test you face between now and the election. If you block it, you will trigger a surge of enthusiasm from the green base that supported you so strongly in the last election. We expect nothing less,” states the letter from top officials with groups that also include the National Wildlife Federation, the Natural Resources Defense Council, Environment America, Greenpeace,, Friends of the Earth, and the Rainforest Action Network…More than 275 people have now been arrested near the White House in civil disobedience protests that began Saturday, organizers say.

China has become the gate keeper of key ingredients for renewable energy, but only because our government will not let us mine rare earth minerals New York Times (8/25/11) reports: China has long used access to its giant customer base and cheap labor as bargaining chips to persuade foreign companies to open factories within its borders… Now, corporate executives say, it is using its near monopoly on certain minerals — in particular, scarce metals vital to products like hybrid cars, cellphones and energy-efficient light bulbs — to make it difficult for foreign manufacturers of high-tech materials to build or expand factories anywhere except China. Companies that continue making their products outside the country must contend with tighter supplies and much higher prices for the materials because of steep taxes and other export controls imposed by China over the last two years…Companies like Showa Denko and Santoku of Japan and Intematix of the United States are adding factory capacity in China this year instead of elsewhere because they need access to the scarce metals, known as rare earths…“We saw the writing on the wall — we simply bought the equipment and ramped up in China to begin with,” said Mike Pugh, director of worldwide operations for Intematix, who said the company would have preferred to build its new factory near its Fremont, Calif., headquarters.

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