High Prices Coming Down the Pipeline

 “Eventually, the politics of energy has to surrender to the physics of energy.” Randy Udall

Two pieces of news have come together in my mind recently. One is the Vermont Public Service Board approval of a new natural gas pipeline through Addison County. The other is a Wall Street Journal article about investments in shale gas production.

The PSB approval and pipeline story is straightforward. Vermont Gas, a subsidiary of Canadian Gaz Metro, is extending its pipeline from Chittenden County and the population center around Burlington southward through Addison County. Phase 2 of the project will have the pipeline cross the narrows of Lake Champlain and serve the Ticonderoga paper mill in New York. In theory, Phase 3 will bring natural gas to the city of Rutland around 2020.

There are objections to the pipeline by many residents of Addison County, generally on two grounds: First, that this will encourage the use of hydrofractured (“fracked”) gas, which is controversial due to its threat to ground water and the general environment near drilling sites. Second, that it will detour us from the pursuit of renewable energy and energy efficiency. A number of people simply don’t want a natural gas pipeline on or near their land.

The proponents of the pipeline argue that it will bring cheap energy to western Vermont, with the resulting economic benefits. Phase 2, they say, will bring far cleaner, cheaper energy to the Ticonderoga plant, with resulting environmental and economic benefits.

A sidebar on shale gas production:

So-called conventional oil and gas generally reside in underground sandstone formations, like sponges made of rock. The oil and gas are in the holes in the sponge (porosity) and the holes are connected to some extent (permeability) so that the oil and/or gas can flow through the sponge, much the same way that water can soak through from one end of a sponge to the other. These conventional deposits can be miles across and hundreds of feet thick.

Shale oil and shale gas deposits can be described the same way, but with different measurements. A shale deposit might have one one-thousandth the porosity and permeability of a sandstone deposit. A shale formation like the Bakken in the northern Midwest covers thousands of square miles but is only ten to maybe 150 feet thick. To imagine the scale, picture a layer of plastic wrap over a couple of football fields. This distribution means two things. One is that there is a lot less energy per horizontal acre in a shale field. The other is that the oil and gas won’t travel from one part of the field to another without a lot of help.

Horizontal drilling is the process of controlling the drill bit so that after going straight down it curves sideways and follows the thin shale formation. Drillers make a number of these horizontal boreholes out from a central drilling point in order to get access to a large area of shale.

Hydrofracturing is the process of injecting a mixture of water, chemicals, and then sand at extremely high pressures to blast open the cracks and pores in the shale. The sand is a “proppant”, keeping the blasted shale from collapsing back on itself. These two operations are an expensive proposition.

A horizontally drilled, hydrofractured well has a relatively short productive life. After a massive initial rush of production, output could drop by 40-50% in the first year. It might drop another 30-40% in the second year, and 20% or more in the third. The key to maintaining production levels is drilling intensity – quickly drilling more wells to replace declining ones. This is also an expensive proposition.

The Wall Street Journal Article (paywalled), as quoted in the ASPO-USA Peak Oil Review, casts doubt on the cheap energy claim by Vermont Gas. There has been a huge rush into shale gas drilling over the past decade. With that rush came a huge rush of natural gas, driving the price down to the historic lows of the past few years. Those low prices, bottoming out below $2 per thousand cubic feet (Mcf), were below the cost of production. Shale gas exploration companies lost tens of billions annually. As far as I can tell each company’s strategy was to hold on to the mineral leases and produce at a loss until their competitors went out of business. Then the remaining companies could clean up as supply declined and gas prices rose. The industry has been running on continued injections of investor cash.

Recently the investors have been getting cold feet. Here’s the key quotation from the WSJ article:

    “Since 2008, deep-pocketed foreign investors have subsidized the U.S. energy boom, as oil and gas companies spent far more money on leasing and drilling than they made selling crude and natural gas. But the rivers of foreign cash are running dry for U.S. drillers. In 2013, international companies spent $3.4 billion for stakes in U.S. shale-rock formations, less than half of what they invested in 2012 and a tenth of their spending in 2011, according to data from IHS Herold, a research and consulting firm. It is a sign of leaner times for the cash-hungry companies that have revived American energy output. The value of deals involving U.S. energy producers plunged 48% this year from 2012, to $47 billion, the first annual decline since 2008. So U.S. oil and gas producers have started to slash spending.”

                              -- (The Wall Street Journal, Jan 2)

Remember that the key to low prices is continued high production and the key to continued high production is drilling intensity. The key to drilling intensity is investment, and that is going away, dropping by a factor of ten in just two years. Investment will only come back when the price of natural gas rises enough to make shale production profitable. Industry analysts argue endlessly about what the breakeven price of shale gas is for various fields, but my general takeaway is that it could mean a doubling of wholesale prices.

Back in Vermont, the residents and businesses of Chittenden, Addison, and Rutland Counties are being promised a bounty of cheap natural gas. The geology of shale gas dictates the economics, and the economics, via investor flight, indicates that this is a false promise. Just about the time that consumers find themselves hooked up to the pipeline and paying for their new appliances the price will start heading for a profitable range. The politics of energy will surrender to the physics of energy before Rutland ever sees a cubic foot of natural gas.


Snow Peeve

Ok, so this one is personal and limited in scope. Limited, that is, to anyone who drives in the snow belt. Southerners may now go outside and enjoy the nice weather.

A week ago I was driving on the interstate, just after our ice storm. The highway crews had done a bang up job, and I was cruising along behind a minivan at a decent distance at 65 mph. Two pieces of ice, each about a half an inch thick and over two feet square, flipped up off the roof of the van and rotated rapidly for a moment around an invisible axle about eight feet in the air. Then each piece broke into four and crashed to the pavement just in front of my bumper. I don’t think the driver even noticed. If I had been a few feet closer….well, let’s not think about that.

The other day, after a moderate snowfall, I was driving up a secondary highway and saw a car-sized block of snow approach me in the opposite lane. It had wheels like a car and a small porthole cut in the snow in the left front, through which an idiot was peering intently. There was no other break in the snow through which an intelligent human being could see the road, signs, pedestrians, obstacles, or vehicles.

It reminded me of a number of incidents in the past where my car was suddenly engulfed in a momentary blinding whiteout caused by a cubic yard of snow leaving the roof of the vehicle in front of me. Did you know that a car going 65 mph would travel the length of a football field in the few seconds that it would take to get through a snow dump like that and clear the windshield? Anything closer than the opposing 1 yard line would be invisible.

You are undoubtedly way ahead of me on the moral to these stories. Clean off your damned car. The whole car. All the glass. Yes, the roof and the trunk lid too. I know, you’re late. So am I. I am late every time I walk towards my car – it’s congenital. I still take 3 ½ minutes to get my car into a state where it is neither a threat to me nor to others. We drive through this world with a one in 10,000 chance of dying in our vehicles. No need to shorten the odds.

Peeve vented. Thank you.


Seasonal Assortment 

Your Minor Heretic has been busy lately with various projects intended to make him a living. Simultaneously, the inspiration to write a 1200 word essay on something has been generally absent. Here are a few short takes on topical subjects, in no particular order.

There has been much ado in the media, especially the right wing media, about a crime called “The Knockout Game.” The idea is that gangs of black teenagers pick out a white victim and one of them walks up and sucker punches the person. You can imagine, if you haven’t actually witnessed it, the media hype. This is now apparently a huge epidemic of black-on-white violence, except that apparently it isn’t when a reporter actually does some investigating.

What it reminds me of is something told to me by a guy about my age at a party I was at about 35 years ago. I had just met him and out of nowhere he started telling me about a pastime he and his friends enjoyed called “broomsticking n----rs.” It involved a group of white teenagers riding around in the back of a pickup truck with a broomstick, picking out a black victim, and hitting that person with a broomstick as they drove by. If the guy with the broomstick dropped it he was thrown out of the truck and had to go retrieve it, facing the wrath of the injured party. Aside from the use of a weapon and the added cowardice of doing it from a moving truck, it was much the same as the knockout game. At the time I was dumbfounded. I couldn’t believe that the guy was serious. I think the look on my face told him what he needed to know because he found other people to talk to. I guess stupid, angry, bored young men are, and always have been, stupid, angry, bored young men.

I was pleased to see that Federal Judge Richard Leon found that there was actually a constitutional amendment in between the one about quartering troops in people’s houses and the one about not incriminating oneself, and that going on a fishing expedition is only constitutional if it involves a rod, a hook, and bait. He ruled that the NSA’s mass collection of data was unconstitutional and noted that the government had failed to prove that this method of collection was actually effective. He called the program “almost Orwellian”, winning him the Minor Heretic’s Understatement of the Year Award.

I would also like to note that the author of the so-called USA Patriot Act, Rep. James Sensenbrenner, Jr., stated publicly that James Clapper, Director of National Intelligence, should be fired and prosecuted for lying to congress about the extent of NSA surveillance. I seem to remember recommending that myself a few posts back.

Perhaps the lumbering beast of public opinion is raising its head, blinking, and saying, “Everything? You mean, like everything I do on my phone and the internet? As in ‘everything’? Wait a sec….”

On the seasonal front, I must point out that Paul Bibeau at Goblinbooks nails the “black Santa” issue. Saint Nick and Jesus would both get the squinty eye from the TSA. Be sure to check out the link in his article from the Saint Nicholas Center. Some forensic scientists x-rayed the actual skull of St. Nicholas and did a reconstruction of what he probably looked like. It’s the jolly old elf as you have never considered him.

A thought about the Winter Olympics in Sochi, Russia: Given the homophobic tendencies and oppressive laws of that nation, I’m hoping for a touch of 1936 and 1968. Jesse Owens won four gold medals in the 1936 Berlin summer Olympics, a kick in the teeth for racists all over the world, but especially for Herr Schickelgruber. In 1968, at the Mexico summer Olympics, medalists Tommie Smith and John Carlos raised their black-gloved fists on the podium while our national anthem was played. Along with Australian silver medalist Peter Norman, they all wore symbolic items to make statements about racism, poverty, and solidarity. They were sanctioned by the International Olympic Committee, but the gesture had impact.

Any success by homosexual athletes would be a smack upside the head of Russian bigots. I’d like to see athletes from all nations make gestures of solidarity with those on the sharp side of Russian law. Perhaps they could go Godwin on the Russians and all wear pink triangles during the opening parade. Rainbow emblems on the podium would also be appropriate. The IOC would have a tough time sanctioning every last athlete in the games.

Happy Saturnalia from your Minor Heretic. Celebrate Dies Natalis Solis Invicti (the "Birthday of the Unconquered Sun") and party like a Roman.


A Room in Philadelphia 

My memory of the assassination of John F. Kennedy is understandably foggy. I was a couple of days short of two years old when he died. What I remember is my mother crying, my father grim and silent, and the funeral on television. We watched it on our black and white console TV. The one clear image in my mind is the coffin on the horse drawn caisson; the wagon wheels and the dark box. I didn’t know what it was, that the body of a man was in there, but in my infantile way I understood that it was a Big Thing and a Sad Thing. Only much later did I realize that the hopes of millions of people rolled away in that box. Years after that came the understanding of the mixed and nuanced legacy of that man.

Still, it is my ur-memory of sadness and loss. Given my preoccupation with politics, it is a good one to have. The outrage of that murder goes beyond the death of an individual. It was a vicious blow to the core of the nation.

A couple of years ago I visited Philadelphia. I went to some of the usual tourist stops, including Independence Hall. I went into a room on the end of the building, the old Senate chamber. The National Park ranger there told us of some of the history that occurred in that room. The most striking thing for me was this: In 1796, George Washington and John Adams were in that room for Adams to be sworn in as the second president of the United States. The ranger pointed out that when Adams took the oath, it was the first time in recorded history that the executive power in a nation state was transferred without violence or inheritance. No invasion, no assassination, no coercion, no king, queen or prince. Just a Virginia farmer handing over power to a Massachusetts lawyer. And so it has gone, despite Lincoln, Garfield, McKinley, and Kennedy.

This is why the politically charged gun brandishing we witness these days makes me mad as hell. A certain group of conservatives refers darkly to “Second Amendment solutions.” Fuck those guys. They are idiots, in the original Greek sense of the term – those who don’t pay attention to politics. The peaceful transition of power, as corrupt as it has become, is as important to our well-being as water and food.

Ask the average Libyan about the use of firearms in politics, or a Somali or Yemeni. Ask anywhere in the world where a group of armed men has decided that the election results weren’t to their liking. The results are predictably chaotic, terrifying, and lethal. The armed are ultimately as vulnerable as the unarmed. Hobbes had the perfect words for it:

“Whatsoever therefore is consequent to a time of war, where every man is enemy to every man, the same consequent to the time wherein men live without other security than what their own strength and their own invention shall furnish them withal. In such condition there is no place for industry, because the fruit thereof is uncertain: and consequently no culture of the earth; no navigation, nor use of the commodities that may be imported by sea; no commodious building; no instruments of moving and removing such things as require much force; no knowledge of the face of the earth; no account of time; no arts; no letters; no society; and which is worst of all, continual fear, and danger of violent death; and the life of man, solitary, poor, nasty, brutish, and short.” This is what we now call a failed state.

I disliked Ronald Reagan. He was a spiteful, small minded, delusional ignoramus with an aw-shucks persona so polished he fooled even himself. His sole advantage was that he was a second rate actor in the political world of fourth rate actors. His brand of emotional fantasy politics, undergirded with the coded racism that now informs the Tea Party, was the beginning of the post Buckley v Valeo ruination of American politics. Nevertheless, when he was shot I was mightily pissed off. I don’t like it when anyone is shot, but the shooting of an elected official is a denial of rights of the entire nation. It was a shooting of the basic civil rights of each of us. I didn’t like Reagan or his policies, but the fact that he gained and occupied the office through the flawed, yet peaceful methodology of election linked us all to him.

There are any number of theories about who shot Kennedy and why. We’ll probably never know. Those facts are less important to me than the legacy of his death. After JFK (and RFK and MLK) everyone in public life looks over their shoulders. The October Surprise of 1980 and the judicial coup of 2000 were technically effective, but they lacked the edge of fear. Despite all the surveillance and protection afforded the President, he, like the rest of us, depends on the good will of his fellow citizens. At the very least, he depends on the unwillingness of angry men to take that last step.

Maybe that’s the root of it, the thing that makes the Oklahoma City bombing loom larger in my mind than the attacks of September 11th. Timothy McVeigh was supposed to be one of us. We can sustain an attack from outside. We can face that together. An attack from the inside makes us doubt the good will of our neighbors. Disappointed losers pollute our politics with violent symbolism and the dehumanization of the other. A lunatic fringe denies the legitimacy of the President. Certain factions refuse the possibility of political compromise. The legacy of a handshake in a room in Philadelphia is under threat.


Caught up in the personality war 

My last couple of posts have gained some currency online. Sadly, they have been taken up by a few right wing blogs as a stick with which to beat Rachel Maddow. She had done a piece on the obvious plagiarism of Rand Paul, and his defenders had pointed to my piece (A Remarkable Coincidence) as evidence of hypocrisy.

First, my piece about Maddow was not an accusation of plagiarism, despite the deadly serious quotation from Tom Lehrer. Second, or perhaps first, I really do not give a damn either way. I like the activities of Rachel Maddow and dislike the activities of Rand Paul, but I do not know either of them personally and do not consider their footnoting practices important in the least.

Both of these people, as public figures, and in his case as a legislator, are symptoms of something greater. They are not prime causes. They are products of a corporatized society, playing out their assigned roles within defined boundaries. Attacking either of them is like attacking a piece of a jigsaw puzzle for fitting into that puzzle.

Human beings are obsessed with status. By status I mean both placement in a hierarchy and membership in a group. (Read Professor Collins on this) We are also focused on personalities and stories. We love heroes and villains and satisfying plot lines. We love to have our expectations met. Unfortunately, that doesn’t do us any good in politics.

Casting politics as Maddow versus Paul, or Mitch McConnell versus Harry Reid, or any pairing you’d like, is just a tribal sideshow. Likewise the demonizing or deifying of any political figure.

It is structures that we are up against. It is law and the creatures of law. Law and the social constructs it creates do not satisfy us emotionally the way a rip-snorting tribal battle might, but again, that personality pissing contest is a sideshow. By creatures of law I mean corporations. They were created as a means to concentrate the power of individuals into one focused effort. They evolved into a means to focus the wealth of a number of individuals in order to extract more value from the physical and social environment. They further evolved into a kind of reverse parasite, where the parasite is bigger than the hosts.

An effective parasite alters the behavior of its hosts. Consider the bacteria Toxoplasmia Gondii, which lives in the guts of cats and mice. Infected mice become less frightened by the smell of cats, thus hastening their progress into the digestive systems of their fellow host. There is a tiny fluke that infects ants, and also lives in the digestive tracts of cows. When it infects an ant, that ant compulsively climbs to the top of a grass stem and waits, making it more likely to become food for bovines. We get infected with corporate memes such as “free markets,” “free trade,” and the myth of meritocracy. Fossil fuel companies sow doubt about climate change and health insurance companies propagandize against European style health care systems. Corporate media focuses on horse race coverage of elections, celebrity trivia, and personality politics. Most of America climbs to the top of the grass stalk and waits.

 Corporations have become genetically recursive. That is, they have gained the enviable superhuman capability of altering their own DNA in real time. Law is their DNA. Law gives birth to corporations, defines their shape, and regulates their functions. They have a much simpler time of it than actual genetic researchers because the meaning of each segment is explicit and the method for changing it is straightforward.

Their basic methodology has two interlocking parts with reinforcing feedback. One is making sure that mostly corporation-minded candidates get into office. I’ve written about this before: The candidate in a congressional primary who spends the most money wins, about 97% of the time. Most of the money comes in big chunks from millionaires and billionaires, the privileged remoras clinging to the corporate sharks. Ergo, any candidate with opinions offensive to corporations has a very small chance of making it to the general election. We, the voters, get an imaginary choice between two prescreened candidates.

The second technique is what Noam Chomsky called the manufacture of consent. The corporate media allow a vigorous debate within carefully defined limits. Again, we get an imaginary choice. An example that comes to mind is the debate in Congress about the proper interest rate for student loans. 6.8%? 3.4%? Or, thinking oh so radically, the prime rate that banks get? Nobody was allowed to mainstream the idea that we’d be more prosperous in the long run if we copied some European countries: simply pay for the higher education of any young person with enough brains and drive to do it. (Hint: Debt ridden graduates are a corporate two-fer. They pay interest to banks and make docile employees.)

So, Toxoplasmia Corporatii creates a cohort of people who accept corporate policy and fear anti-corporate policy, and then selects among them via campaign finance law to promote the most parasite friendly individuals. Those politicians make the law even friendlier to corporations and give them greater power to filter the electoral process. Those politicians also change the law to make media consolidation easier and dissent more dangerous. The electorate gets bombarded with even more corporate memes, candidates become more slavish, and the cycle spirals downward.

So I do not give a flip about what Rachel Maddow said about Rand Paul or vice versa. Rand Paul got elected by the same system that produced Barack Obama, which also spat out G. W. Bush, Bill Clinton, George H. W. Bush, and Ronald Reagan. The same electoral methods gave us Nancy Pelosi and Michelle Bachmann. We are encouraged to debate the differences between them, but never the similarities. There are a host of assumptions that underlie all their rhetoric, so much in the background, so submerged that they are never questioned in the mainstream of debate. Questioning them puts someone out on the fringe, makes them not serious. I’m not talking about ding dong conspiracy theories. There are fundamental questions about our economy, our budgeting priorities, our military, and our place in the world that never get airplay.

The work pressure is slacking off on your Minor Heretic. I’ll try to post more regularly this winter. More on this subject soon.