Monday, August 31, 2009

Colorado’s Conflicted U.S. Senator, Mark Udall

Two of Al Gore’s leading global warming suckers in the U.S. Senate are Mark Udall, D-Colo., and John McCain, R-Ariz.

To his credit, McCain has always been a nuclear energy advocate. Sen. Udall, true to his family’s tradition of being in lockstep with Big Enviro, hasn’t. But he’s beginning to give nuclear energy favorable lip service. Is Udall, like New Mexico Gov. Bill Richardson in his old days in Congress, talking out of both sides of his mouth?

Here is John Dendahl’s commentary with an open letter to Sen. Udall. If the Senator responds, we’ll be sure to let you know.

If Not to Speak Out of Both, Why Have Two Sides to One’s Mouth?
U.S. Sen. Mark Udall, D-Colo., is reported to be among those twisting arms for senate votes on the economically ruinous cap-and-trade scheme already passed in the U.S. House. Hollywood Henry Waxman’s is one of the names on the House bill, and few could name a Member of Congress who deserves more “credit” for laws burdening the U.S. economy and restricting the individual rights of U.S. citizens.
Members of Congress like Udall are exempt from mainstream media criticism for conflicts of interest. However, Udall has one here in spades. His wife, Maggie Fox, is CEO and president of something called Alliance for Climate Protection, founded by Al Gore with money from his global warming horror movie. Typical of Big Enviro’s big bucks “charitable” [i.e., organized under Sec. 501(c)(3) of the Internal Revenue Code] organizations, the Gore/Fox alliance has a companion lobbying organization, the Climate Protection Action Fund. Fox is CEO and president of that as well.

Gore is reported already to have amassed a huge fortune in a market for trading carbon credits, and that’s before any law has been enacted limiting carbon dioxide emissions. Meanwhile, the purported reason for any such limits--the claims that the climate is warming and that atmospheric concentration of carbon dioxide from human activities is the cause--has been reduced to pseudoscience making mischief comparable in scope to eugenics.

Just for the sake of changing the course of the argument, however, why not inquire of Udall and others in the global warming camp as to what sources of, say, electricity they propose as alternatives? “Renewables” like solar and wind is the stock answer. After decades of subsidies, and now laws mandating their use, these sources remain well under one percent of national electric output, and they obviously cannot run 24-7 even when they work.

The correct answer, of course, is nuclear. Udall has whispered that word somewhat approvingly. However, deep skepticism is warranted since most of Udall’s energy talk comes out of the Big Enviro side of his mouth. Despite its unequalled, half-century record for safety, Udall always raises that “issue” and can be expected to hide behind it when the chips are down and Big Enviro says, “No way, Mark.”

Click here for my op-ed on this subject as published in The Denver Post on July 27, and click here for the senator’s limp response.

It’s time, as they say, to get down to brass tacks, so here’s an open letter:

Dear Sen. Udall:

Many friends and I were happy to read your letter-to-the-editor in The Denver Post on July 29, responding to my op-ed published two days earlier. I had been attempting communication with your office for nearly eight weeks before I received two e-mails, slightly different but with substantially the same “boilerplate” I referred to in the op-ed.

It should surprise no one that you have supported WIPP. It commenced operations about two months after you took your seat in the U.S. House and now holds thousands of tons of TRU waste from your congressional district (Rocky Flats). My reference to Udall family complicity in delaying WIPP and adding huge sums to its cost was about events going back more than a decade before you were in Congress and needs no further elaboration here.

However, I’m reminded of the Nuclear Waste Policy Act of 1982. I find at this website that your father was a sponsor. That was 27 years ago. My understandings are that, under this legislation, utilities (read, ratepayers) have now remitted about $30 billion to the federal fund it created; about $10 billion of that has been spent, largely or entirely on the Yucca Mountain project in Nevada; not an ounce of spent fuel has left temporary storage; and Senate Majority Leader Harry Reid, D-Nev., now intends that the Yucca Mountain project be deep-sixed.

I reminded readers of my op-ed, “Preserving the myth that radioactive waste cannot be safely disposed has been a major goal of organized ‘environmentalists’ for decades.” An article in The Denver Post on August 25 quotes you on Yucca Mountain, “a dead project.” Have you just rolled over and died for Sen. Reid?

Your claims of concern about anthropogenic global warming are not credible without a great deal more support for expanded nuclear power than this from your l-t-e: “I am more than open to expanding our use of nuclear power and recently said so on the floor of the Senate.” Frankly, sir, that’s not even a starter. The aforementioned Denver Post article about the bipartisan photo-op you and Sen. McCain, R-Ariz., held in front of trees killed years ago by pine beetles has a terrific headline, “Udall, McCain united in call for nuclear power,” but I hope you’ll excuse my skepticism after experiencing a decade or more of safety-shrouded doublespeak on the subject by Bill Richardson.

Perhaps as a red herring, your letter raised cost as an issue unfavorable to nuclear power. Nuclear power plants are delivering electricity cheaper than any other source today. Your “cleaner sources,” solar and wind, are the choices that have failed for decades on account of cost whenever they aren’t underwritten by direct government subsidies and/or laws like Colorado’s essentially mandatingtheir use without regard to cost. Uncertainty associated with the licensing process, and “leadership” such as you are getting from Sen. Reid, are the primary reasons I’d suggest for any reluctance by utility company boards and executives to build nuclear power plants we need.

Lastly, about global warming. People chasing money mostly from government grants and agency appropriations have now spent many tens of billions on “proving” that global warming continues, is a very bad thing, and is largely the result of increased concentrations of atmospheric carbon dioxide produced by human activities. Others who simply observe the world around us shake our heads in disbelief, wondering what planet you and these researchers live on. The climate is cooling, not warming, and the researchers among the crowd laughably claiming consensus about warming can’t make their expensive, complicated--and might I also suggest falsified in some cases?--models jibe with real world measurements.

I believe global warming is to the late 20th and early 21st centuries what the pseudoscience eugenics was to the early 20th. For a cogent discussion of eugenics and the historic mischief of politicized science, look here.

Isn’t it well past time for you to level with the people you represent and tell them the truth? I wouldn’t suggest that’s a decision that can be reached and implemented easily. You have been prominent among global warming alarmists for a long time. Further, I acknowledge the awkwardness of, uh, breakfast table talk and all if this were juxtaposed against your wife’s prominent position in the propaganda end of Al Gore’s carbon-cap-and-trade crusade.

But wouldn’t a mind change now be better than having most of one’s constituents look back in a couple of years, wondering what kind of fool would defy what was so obvious and vote to accelerate his country’s economic tailspin? You got elected to lead us toward sound public policy. In my experience, that’s occasionally neither easy nor comfortable. Honesty, however, sure makes for better sleeping.

I look forward to receiving a reply that addresses directly what is said in this letter.


s/ John Dendahl
John Dendahl, a Rocky Mountain Foundation senior fellow, is a retired business executive. He resides in Littleton, CO.

Monday, August 24, 2009

The Real Moral Implications of Climate Change Legislation

While Healthcare has captured the airwaves, the issue of cap and trade is roiling just under the surface and will surely attract more attention when our congressional representatives get back to Washington. At the heart of the debate is global warming or climate change as the concerns of catastrophic warming are the impetus for the entire cap and trade scheme.

Here, on CARE’s Blog, we have posted many items on global warming. So many, in fact, that one might think we’d covered everything--which is why this one caught our interest when it came to our in box. Calvin Beisner offers us an new and thoughtful perspective on the topic. We found it interesting and think you will too. Please give it a look and let us know what you think!

(Note: one of the authors of the Heritgae Foundation Study noted below is David
Kreutzer who was the featured guest for CARE's August Confernce Call.)

Today's Global Warming Policy: It's Unbiblical
I've been a pastor, and I know how busy pastors can be. So why would I urge America's Christian leaders and clergy to take on yet another concern, namely, standing against global warming alarmism?

Because while on the surface this might seem like a peripheral issue, it has profound spiritual, moral and economic implications for believers--and especially the poor--that pastors can ill afford to ignore.

It is widely believed that increasing emissions of carbon dioxide are causing global warming that threatens to harm people, wildlife and ecosystems through rising sea levels; increasing droughts, floods and storms; and an altering of natural habitats.

In response, some people propose to fight global warming by slowing or reversing the increase of CO2 in the atmosphere through massive, forced reductions in use of carbon-based fuels--oil, coal and natural gas.

The most recent example is a bill that recently passed the House of Representatives. It would create a so-called "cap and trade" system to reduce CO2 emissions. Emitters would be required to obtain permits, which would be limited in number (the "cap"), from the federal government and could then buy and sell them on the market (the "trade"). The cap would gradually decrease, increasing the cost of energy over time.

A recent study by the Heritage Foundation found that the law would:
• raise the average family's annual energy bill $1,241 (over $100 per month);
• raise electricity rates 90 percent, gasoline prices 74 percent and residential natural gas prices 55 percent;
• raise unemployment by nearly 2 million jobs in 2012, with additional job losses to follow;
• raise the inflation-adjusted federal debt 26 percent by 2035--about $115,00 per family of four; and
• reduce gross domestic product by an average of $393 billion per year, or $9.4 trillion through 2035.

The payoff? About 0.09 degree F reduction in global average temperature in the year 2050. (The real reduction might be only one-tenth as much.) At that rate, counting the costs only through 2035, we'd be paying $940 billion for every one-one hundredth of a degree reduction in temperature. Assuming--optimistically!--that costs after 2035 were slashed in half, we'd end up paying an additional $2.9 trillion, for a total of over $12 trillion, or $1.2 trillion for every one-one hundredth of a degree. That's an awful lot to pay for so little return when growing numbers of qualified scientists reject the case for destructive manmade global warming anyway.

In the face of these facts, we should remember that the Bible requires us to care for the poor. The Apostle Paul wrote that the other Apostles in Jerusalem had one main concern on their minds when he visited them: that he should "remember the poor--the very thing [he] also was eager to do" (Galatians 2:10).

The costs of climate change policy will hit the poor harder than anyone else. Indeed, they can least afford the general rise in prices, and energy constitutes a larger share of their spending than of others with more discretionary income.

But that isn't the only reason pastors should be concerned. Global warming policy is part of a concerted effort to push environmentalism to the fore in American politics and culture. We must recognize such secular environmentalism is hardly limited to good stewardship of God-given natural resources.

Secular environmentalism--in contrast to biblical creation stewardship--is at heart a false religion. It degrades human beings, the crown of God's creation (Genesis 1:26; Psalm 8); it deifies nature in its untouched state as the ideal, contrary to God's mandate for man to fill, subdue, and rule the Earth (Genesis 1:28); and it disregards the poor, who often are harmed by environmental policies like banning DDT, a cheap and safe insecticide that could largely eliminate the malaria-bearing mosquitoes that cost millions of lives every year in the developing world.

Secular environmentalism is also the new face of the anti-human, pro-death agenda. As the Optimum Population Trust put it in 2007, "The most effective national and global climate change strategy is limiting the size of its population. ... A non-existent person has no environmental footprint."

Among many environmentalists, people are the ultimate pollution, and reducing their numbers--through abortion, euthanasia, disease or poverty--is the goal. Replacing wood and dung as fuels for cooking and heating with electricity would prevent 2 to 3 million premature deaths every year in poor countries, yet CO2-restricting policies will make electricity generation more expensive and delay its provision to the poor for decades. Such thinking is more common than you might think; one well-known religious leader once told me that "the last thing" the developing world poor need is cheap, abundant energy. (Brian McClaren, radio interview, 2007)

But there's an alternative. The Campaign calls for stewardship of creation based on biblical principles and factual evidence. The heart of the Declaration is, "With billions suffering in poverty, environmental policies must not further oppress the world's poor by denying them basic needs. Instead, we must help people fulfill their God-given potential as producers and stewards."

As a pastor, I signed on. Please join me. And please help spread the call for biblically based creation stewardship near and far.

E. Calvin Beisner is the National Spokesman for the Cornwall Alliance for the Stewardship of Creation

Tuesday, August 11, 2009

Keeping Energy In The Discussion: Questions To Ask At Town Hall Meetings

We had a lively conversation with Paul Driessen during CARE’s July Conference Call. As we were discussing energy and policies in Washington DC, the conversation naturally went to cap and trade legislation. Paul began giving us some ideas and we asked if he would, from his background on the subject, please give us some comments/questions that we could ask our representatives when they are home for August Recess that would keep energy issues in the dialogue. He promised to give it some thought and the following is what he created.

It suggests a number of important, substantive questions that members of Congress need to address, before proceeding further on energy and climate legislation. It could help inspire and energize people to participate in those sessions--and exercise their First Amendment rights to be fully involved in an informed democratic process. Indeed, many are questions that people all over the world should be asking their elected officials.

Demand Answers From Your Senators And Congressman During Their August Recess
Americans are justifiably wary about Congress rushing to overhaul our healthcare system--17% of our economy--with little debate, analysis or bipartisan input. They worry that the legislation could affect their costs, free choice, doctor-patient relationships and access to quality care.

They should be even more concerned about complex, thousand-page legislation that would overhaul 100% of our economy--the energy system that powers and enables everything we eat, heat, cool, grow, make, transport, drive and do--to prevent hypothetical manmade catastrophic climate change.

Energy is the Master Resource that makes life possible. Without abundant, reliable, affordable energy, opportunity, progress, job creation, health and civil rights are hobbled and rolled back.

And yet, global warming bills are being rushed into law at warp speed, not just without debate, but with debate vilified as climate holocaust denial, criminal acts and treason against the planet.

Proponents insist a planetary crisis demands instant action. The truth is that President Obama wants to present a US commitment to draconian reductions in plant-fertilizing carbon dioxide at the December Copenhagen climate conference. He wants to pressure China, India and other nations to sacrifice their economic growth to the specter of alleged climate disasters. Copenhagen is the last chance for eco-activists to implement a UN-centered system of global governance, global taxes, and global control of energy, economies and living standards.

Open, robust, unfettered debate is absolutely essential. It is our inalienable right, the foundation of democracy and a free and prosperous America. A good place to start that debate is the town hall meetings that our elected representatives will be holding during their August recess. Here are a few questions that concerned citizens might want to ask.
1) Congressman John Conyers said he didn’t bother reading the bill, before he voted on it, because he would need two lawyers to explain the passages to him. Did you read and understand it? All of it? Then how can we be expected to do so? Why should we be expected to obey it? Why should we let congressmen who can’t understand their own bills control 100% of our economy?

2) Global temperatures are not increasing. Thousands of scientists say humans and carbon dioxide are not causing a climate disaster. Hurricanes, tornadoes, floods, droughts and heat waves are not increasing. Emissions from China and India will quickly replace any CO2 reductions the United States might achieve by taxing and restricting fossil fuel use, crippling our economy, and hurting seniors and poor families most. Why does Congress refuse to allow real debate? Why does it simply assume and decree that we have a global warming crisis and must enact legislation immediately?

3) House Speaker Pelosi recently said “every aspect of our lives must be subjected to an inventory,” so that America can slash energy use and emissions, and prevent dangerous climate change. This can only lead to a massive, intrusive Green Nanny State; the end of affordable, reliable energy; a coerced switch to expensive, unreliable wind and solar power; and skyrocketing energy costs that will hammer families and businesses and cost millions of jobs. Why would you support such legislation?

4) Cap-and-trade is a huge tax on the energy we use for everything we make and do. It’s a massive wealth transfer, from consumers to the government, to pay for unprecedented spending increases and more pork for favored businesses and voting blocs. It violates President Obama’s pledge not to tax anyone with incomes below $250,000. It will cost families $1000 to $4,600 per year in extra energy and living expenses. How can you justify voting for such punitive legislation?

5) The average annual temperature in Antarctica is minus 50. Temperatures would have to increase 85 degrees 24/7/365 for a century or more, to melt South Pole ice caps and raise sea levels 20-50 feet. Can you explain how a 0.02% increase in atmospheric carbon dioxide (from 285 ppm in 1850 to projected 485 ppm) can overturn basic laws of thermodynamics, replace the powerful natural forces that caused Ice Ages and other climate changes in the past, and produce ice-cap meltdowns?

6) Replacing hydrocarbons with “green” energy will require millions of acres of land for turbines, solar panels, geothermal facilities and transmission lines. Do you support relaxing environmental study, endangered species and other laws, to fast-track approval of these projects, despite their impacts on habitats? Or do you want them subjected to the same rules that have stymied thousands of other energy projects, so that renewable energy projects can’t be built, either--and we have a huge “energy gap”?

Do you support protecting the rights of land owners? Or do you favor eminent domain, so that government can seize people’s property and expedite construction of these projects?

7) Replacing hydrocarbons with “green” power will also require hundreds of millions of tons of steel, copper, concrete, fiberglass and rare earth minerals for turbines, solar panels and transmission lines. Do you support opening our lands for renewed exploration and development, so that we can produce these raw materials and create American jobs? Or do you intend to keep US lands off limits, allow eco-activists to file lawsuits to prevent development, and force us to depend on imports for renewable energy, too?

8) The United States spent $79 billion on global warming programs between 1989 and 2008. The vast majority went to scientists, bureaucrats, alarmist groups and propaganda campaigns that say we face a climate disaster. Do you support a law requiring that future spending be split 50:50 between researchers who think humans are causing a climate disaster, and those who believe climate change is mostly natural and cyclical--so that we can have honest, unbiased science … and sound public policy decisions?

9) Claims that we face a climate disaster are based on selected use of questionable temperature data, short-term temperature trends, and scary computer scenarios that even modelers don’t call predictions--but merely possible futures, if numerous assumptions about climate systems, energy generation, carbon dioxide and global economic growth 25-100 years from now turn out to be true. How can you justify transforming (and risking) America’s energy and economic future, based on computer models?

10) The White House and EPA suppressed a government report that said scientific evidence does not support claims that we face a global warming disaster--until after passage of a House bill that would send US carbon dioxide emissions back to 1868 levels. Why did you ignore this dictatorial and fraudulent action? Will you now demand a new debate and new vote? Demand that this report be reviewed and debated fully, before the Senate acts on similar legislation? Penalize EPA for suppressing free speech?

11) The economic pain, job losses and government intrusion into our lives under the House-passed global warming bill would reduce projected global average temperatures in 2050 by an imperceptible 0.1 degrees. That’s largely because 97% of the projected increase in CO2 emissions between now and 2030 will come from developing countries that are building new coal-fired power plants every week, according to the International Energy Agency. Why would you support legislation that is all pain, and no gain?

12) Over 1.5 billion people in China, India and Africa still do not have electricity, for even a light bulb or tiny refrigerator. Almost 2.5 billion people around the world live on less than $2 a day. Millions die every year from diseases that would be largely eradicated with electricity for refrigeration, sanitation, clinics, and industries that generate greater health and prosperity. How can you justify telling them global warming is the biggest threat they face, and they need to get by on wind and solar power, and give up their dreams of better lives, because you are worried about global warming? Doesn’t that violate their most basic human rights--including their right to improved living standards, and to life itself?

Exercise your constitutional rights. Write to your legislators. Attend town hall meetings. Ask questions. Demand answers. Demand debate. And safeguard your future, and your children’s future.

Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow and author of Eco-Imperialism: Green power – black death.

Tuesday, August 4, 2009

California says “No” to Offshore Drilling

While energy news has been on a roller coaster, it is currently on a bit of a high. The American public is ready to blast their Senators and Representatives over healthcare and cap and trade. Video of irate crowds drowning out the elected officials at town-hall meetings is beginning to surface on the news.

In the midst of this encouraging environment, comes the news that California has opted to deny an offshore drilling lease that would have provided much needed income to the state and high-paying jobs. And, as they say, as California goes, so goes the nation. Let’s hope their foolhardy decision is not a harbinger of things to come.

Said as only a Californian can say it…

California Says No Thanks to $100 Million; Never Mind to $4 Billion
Governor Schwarzenegger has just vetoed almost $500 million in budget line-item, in order to finalize the state budget. However certain environmental activists convinced the Assembly to deny an offshore oil drilling lease. While the drilling lease narrowly passed in the Senate the proposal eventually stalled in the Assembly. The lease would have provided an injection of $100 million dollars in 2009-2010, and about $4 billion over the next decade; not a bad deal for a state that is quite literally living on borrowed money.

Even after all the spending cuts and state worker furlough days, the state continues to be short on cash. The Assembly’s vote against the offshore drilling lease is troubling because it seems to lack any acknowledgment of California’s dire position both today and in the long term.

Offshore drilling in California would not only provide desperately needed funds to the state coffers but would also create high paying jobs. While the drama of the California budget has played out let us not forget that the state’s unemployment rate is at a historic level, over 11.5 percent. If the economy continues to struggle unemployment rates could move even higher especially in low income and minority communities. California’s foreclosure rates are soaring as people struggle to find jobs, pay mortgages and raise their families. But regrettably it seems the California legislature is content with shipping in energy from around the world as opposed to producing it ourselves. Why would the politicians want to create jobs, cut the budget, grow the economy and be energy independent anyway?

The legislature has also missed an opportunity to clean up the ocean and beaches from oily tarry residue. Less than 1 percent of all oil found in the North American marine environment comes from offshore oil and gas development. According to the National Academy of Sciences, the majority—60 percent—is the result of natural seeps through the ocean floor. In many places, it is even higher. For example, all of the tar on the beaches of Santa Barbara is from natural seeps. Moreover, these seeps are reduced when the oil is produced and transported to shore, where it can be put to use as energy for America.

Tom Tanton is a Senior Fellow with the Pacific Research Institute as well as the Principal of T2 & Associates, a firm providing consulting services to the energy and technology industries. Mr. Tanton has over 35 years experience in the energy, economy, and environmental fields.

Monday, August 3, 2009

Pent Up Demand For Drilling

One of the goals of CARE’s Blog (Comments About Responsible Energy) is to provide a variety of pro-energy viewpoints, gathered from diverse sources—especially sources CARE Members and the average person is not likely to encounter every day. This is one of the reasons we have been so pleased to be able to include the insight from Byron King here. (Byron was recently also the CARE Conference Call guest.)

Coming from an energy investment perspective, he always sheds a unique light on America’s energy situation.

Like the Cash for Clunkers program highlighted the pent-up demand for automobiles, Byron points out the pent up demand for drilling. Whether or not you take his investment advice is totally up to you, but we believe you will find his prediction of increased drilling to be of interest. Be sure to check out the charts.

Prepare for the Rebound in Drilling
Do you remember this time last year? As spring turned to summer, energy prices were moving upward. By mid-July 2008, oil prices peaked at $147 per barrel. But as with Gen. Pickett and his famous charge at Gettysburg, that lofty level of $147 was the high-water mark for oil prices.

By August of last year, the price of oil was retreating, and it was a hard slog on the way down. By midwinter, in December 2008 and January 2009, oil prices were in the $30s per barrel--a drop of over 75% within six months. It was a wild ride.

Natural gas had a similar rise and fall last year. In July 2008, the NYMEX price for natural gas was around $13 per mcf (thousand cubic feet). By October 2008, that price was cut in half. In fact, natural gas prices trended down throughout the chilly winter of 2008-2009.

The current economic pullback--our Great Recession--means that many industries, as well as the electric power sector, are using less natural gas. Think of the mills, plants, factories and other industrial and commercial sites that have scaled back or closed. They don’t need nearly as much natural gas or electric power.

Thus, energy demand has tumbled in North America. The price of natural gas has fallen, and hard. For a while this spring, gas prices couldn’t find a bottom. It’s only been in the past two months or so that the price of natural gas leveled off at around $4 per mcf.

Right now with natural gas prices under $4 we have an extraordinary opportunity! $4 natural gas is the equivalent of $30 oil--it just won’t last. Better yet, I’ve got the perfect way to play this trend--a company that could hand you as much as 340%.

But before we get to the company I’m talking about, let’s take a look at what happened to natural gas drilling…

Drilling Activity Dropped Off a Cliff
Along with the price collapse for oil and natural gas, there was a dramatic worldwide drop in the count of drilling rigs. Drilling activity scaled back precipitously, in a tumble reminiscent of the previous hard times in the oil patch back in 1981 and 1982. Here’s a comparison between then and now.

If you want more exact details, here are the most recent rig count numbers from Baker Hughes, the world’s preeminent drill bit manufacturer.

Look at that change from last year! In North America--the U.S. and Canada combined--the rig count just plain fell through the floor to a recent level below 1,000. (It has crept up to 1,065 in the past couple of weeks.)

With low oil prices, there was less drilling in the U.S. and Canada, of course. But look at the international rig count. It’s interesting that the international count didn’t drop off all that much over the past year--only about 10% or so, as opposed to a drop of almost 60% in North America.
Why the difference between North America and internationally? The big pullback in North American activity was in rigs drilling for natural gas. That is, over half the drilling activity in North America is for gas. It’s different in the international arena, where most rigs are drilling for oil.

The bottom line is this…

The low prices for North American natural gas didn’t support drilling, hence the massive North American rig pullback. Also, much of the North American gas drill-out of recent years was financed with borrowed money. And the credit crunch froze almost all of the funds that were going into the North American gas-drilling sector.

So less demand led to lower natural gas prices. Lower prices could not support the financing model for the North American gas-drilling business. The easy money for gas wells dried up. And the rig count plummeted. Now what?

The Rig Count Has Found a Bottom
It looks like the worldwide rig count has found its bottom in recent weeks. In fact, the numbers are creeping up a bit, according to Baker Hughes. What’s going on?

Since February, the price of oil has steadily crept back to the $70 range per barrel. That’s up 100% from the midwinter low. The oil price increase clearly supports more drilling.

Why are oil prices up? Here are a few reasons. Cheap oil last winter led directly to lower fuel prices worldwide. Hence, overall world demand for oil stabilized, and in some areas, fuel demand has actually strengthened. Meanwhile, OPEC has cut oil output by about five million barrels per day. There’s less supply hitting the markets. Also, China has been filling its strategic petroleum reserve. And Chinese demand is up, year over year. The Chinese are not only buying new cars, they’re driving them.

As for North American natural gas, the price has stabilized at about $4 per mcf. That’s a low number. In fact, it’s barely enough to keep the industry alive in the short term. Some people call it a “gas glut.” It depends on our time frame. Long term? At $4 per mcf, natural gas is barely on life-support. This situation can’t last and it’s our opportunity to get into the KEY ENABLING TECHNOLOGY of the natural gas market, and do it with very limited risk!

Depletion Still Matters
At the same time, old Mr. Depletion is working his efforts. Hydrocarbons are, of course, depleting substances. Every barrel of oil lifted to the surface is one barrel less down in the hole. Every mcf of natural gas that blows out of the formation is one less mcf down there.

So each day of hydrocarbon production brings every well one day closer to the end of its useful life. And with most modern wells, the output curves are falling off pretty steeply in the first year or two. It’s counter to what a lot of people think, but it’s reality.

Wells don’t just produce large volumes of oil and gas year after year. Indeed, it’s a rare well (at least in North America, which has been drilled like a pincushion) that produces strongly after even one year. Most wells just plain slack off and output drops after the first few months or so. Sure, a well eventually will settle in at some level of output. And that level might last for many years. But in almost EVERY case, it’s a much lower level than in the first few months of the well’s existence.

We Need to Drill Wells
The only way around depletion is to drill more wells. In a broad sense, you have to look at well drilling as a long-term industrial process. The energy industry needs a pipeline (so to speak) of thousands of drilling prospects that get drilled on a regular basis. Break the process--with wild swings in the pricing mechanism, for example--and you’ve got trouble. We just plain need to drill wells.

But with the rig counts way down in the past year, a lot of those wells we need to drill have not been drilled. Thus, the energy process is derailed. The future is NOT now. In fact, the energy future is now moving out of our immediate control. The U.S. could be looking at serious depletion-induced natural gas shortages within a year to 18 months. So the drilling cycle needs to kick back into gear.

The bottom line is that the drilling industry is poised for a comeback. If I were you, I’d start looking at investments in this arena.

Prior to joining Whiskey and Gunpowder, Byron received his Juris Doctor from the University of Pittsburgh School of Law, was a cum laude graduate of Harvard University, served on the staff of the Chief of Naval Operations and as a field historian with the Navy. Our resident energy and oil expert, Byron is the editor of Outstanding Investments and Energy and Scarcity Investor.

Climate Change and Government Policies—An Unethical Connection?

When hearing news about global warming, and seeing so many politicians inexorably cling to the theory—despite polls and science showing the issue is far from settled, have you ever wondered, “Where did all this come from?

The pro nuclear aspect of this posting aligns with CARE’s position. It does, however, bring up some ideas outside of CARE’s scope, but it does point out an interesting—if not unethical—connection between some of today’s loudest political voices and the personal benefit received from their promotion of the policies. We believe you will find the connections drawn here to be most insightful. Plus, there is a definite New Mexico element despite the fact that a version of this posting was first published in the Denver Post.
The author, John Dendahl, has an extensive background in nuclear power on which he elaborates in response to comments from Denver Post readers.

Global Warming Worriers Need to Go Nuclear
U.S. Sen. Mark Udall, D-Colo., claims he’s worried about global warming. He wants human production of carbon dioxide radically reduced. Ditto his wife, Maggie Fox, who runs Alliance for Climate Protection, founded by Al Gore with money from his global warming horror flick.

Here we have an inside-outside Udall family partnership working the Senate for votes for the ruinous cap-and-trade legislation Pres. Obama wants.

The parallel is admittedly imperfect, but I’m reminded of the $2.5 million that Global Crossing blew into the pocket of Anne Bingaman, wife of U.S. Sen. Jeff Bingaman, D-N.M.. That was for six months’ lobbying the U.S. government shortly after she left her position in Bill Clinton’s Justice Department. (See “Global Crossing Tossed More Cash Around Town Than Enron,” Business Week 2-11-02, here.)

Imagine the fit thrown by, say, The New York Times and its Copycat Chorus as to either of these situations if the senator in question weren’t solidly Left.

I wrote to ask Udall’s position(s) on carbon – regulate as a pollutant, cap emissions by statute and/or international treaty – the whole arsenal in this campaign against the economy and American sovereignty.

While awaiting a reply, I sent another note inquiring about nuclear energy, since that choice has several attractions. Among those are a half-century safety record unequaled by any major industry in history, zero carbon emissions, low operating expenses, no dependence on bad guys for fuel – and continuous output 24-7.

Udall’s reply is boilerplate any clerk could have sent back to me by return mail, rather than taking six weeks. As Members of Congress have claimed ever since the Arab oil embargo in 1974, Udall wants a “comprehensive energy plan.” In addition to generous portions of New Energy Economy fantasy, Udall would include “responsible onshore and offshore drilling for oil and natural gas ... [and] safely expanding nuclear power.”

The devil’s in the caveats. What offshore drilling would Udall consider “responsible?” What does “safely” mean in the context of expanding industrial safety’s crème de la crème?

This apple didn’t fall far from the tree. Read on.

Preserving the myth that radioactive waste cannot be safely disposed has been a major goal of organized “environmentalists” for decades. When the federal government nearly 40 years ago commenced study of a geologic repository in southern New Mexico’s bedded salt, Big Enviro was there to say “No.” Nonetheless, the study progressed and the proposed Waste Isolation Pilot Plant (WIPP) was supported well by NM’s 1970s congressional delegation. Then in 1982 Santa Fe elected Democrat Bill Richardson to the U.S. House.

Santa Fe is about 300 “crow-flight” miles from WIPP, but only about 30 from Los Alamos, where waste destined for WIPP – like that from Denver’s Rocky Flats – had been in temporary storage for up to 40 years. Despite his district’s need for WIPP, Richardson quickly became a strident opponent, in puzzling contrast to strong support from WIPP’s neighbors and their representative in the House.

Naturally, Richardson hid behind public safety. Only slightly smirking, he could tell a reporter, “I’m for WIPP – as long as it’s 100-percent safe.” Since there’s no such thing as “100-percent safe,” the statement was a straight-out lie to cover Richardson’s pandering to Big Enviro.

As the battles wore on, Udall’s father, Morris Udall, D-Ariz., then chairman of the House Interior Committee, gave Richardson a veto over public lands legislation needed for WIPP. The congressional foot-dragging effected by Richardson and Udall Père probably delayed WIPP by five years, added hundreds of millions to its cost, and increased public safety not one iota.

Now cut to the present. WIPP operations commenced in 1999, ironically while Richardson was Bill Clinton’s Secretary of Energy. Its fine safety record is consistent with the industry’s--for both its construction and operations.

Surprise! Radioactive waste can be safely transported and disposed.

Democrat U.S. senators from Colorado have a poor record on energy. Former Sen. Tim Wirth, who now sits at Ted Turner’s United Nations Foundation, said in 1997, “We’ve got to ride the global warming issue. Even if the theory of global warming is wrong, we will be doing the right things in terms of economic policy and environmental policy.” And just what would those right things be? World government, maybe?

When Wirth, Udall, Gore and the rest of the global warming crowd become true advocates of super-safe, non-carbon-emitting, unmatchably reliable nuclear power, I’ll stop dismissing them as liars very likely covering a hidden agenda.

John Dendahl, a Rocky Mountain Foundation senior fellow, is a retired business executive. He resides in Littleton, CO.