July 24, 2010

More on energy subsidies and natural gas

What does the future hold for us?

New clean air and water regulations may kick in next year to make coal-burning plants less attractive. T. Boone Pickens may get more 18-wheelers to switch from diesel to natural gas, and we may even see a new interest in nuclear energy. But the fact remains that renewable energy growth is moving at a snail’s pace, as larger subsidies to fossil fuels continue.

Bill Johnson, CEO of Progress Energy that supplies electricity in Florida and the Carolinas, says, “There’s a series of regulations to coal coming under the Clean Air and Clean Water Acts. If you look at the economic impact of those in the next five years, it’s staggering. It’s hundreds of billions of dollars. We’ve decided in advance we’re going to shut down a lot of old coal plants to avoid those regulations. And we are not going to invest in new coal until we have economically viable carbon sequestration technology. At the moment, for new generation, we would favor natural gas in the short term and nuclear in the long term.” I hope that carbon sequestration technology can get off the drawing board and become economically viable for ODEC if the coal-burning plant in Surry County, Virginia, moves forward.

India recently announced that it was removing price controls on gasoline and diesel. What is the U.S. doing? One version of President Obama’s 2011 budget, proposed before the gulf spill, would eliminate annual tax breaks totaling $4 billion for oil and gas companies. As you might expect, those companies spent $340 million on lobbying in the last two years to block these changes. Some argue that cutting these subsidies would result in less production and job losses. Yet we now know (from the BP disaster) that oil companies continue to rack up huge profits.

Taxpayer subsidies to coal, oil, and gas companies should be a political no-brainer during this era of budget deficits. I still cringe a bit about T. Boone Pickens’ initiative to get the eight million 18-wheelers on our highways off diesel and using natural gas. The Pickens Plan, with an admirable goal of getting us off the 21 million barrels of OPEC oil we import daily, focuses on tax breaks for natural-gas-powered vehicles and fueling stations.

Yes, natural gas is cheaper and cleaner—and we have a lot of it under us in the Marcellus Shale (perhaps 500 trillion cubic feet)—but it now has the reputation of fouling a lot of our water during the “fracking” process that gets it out of the earth. We can’t keep fracturing the shale and other rocks by injecting toxic chemicals at high pressure into the ground to access the gas trapped under it. The fracking companies promise these toxic chemicals are so diluted (about fourteen one-hundredths of one percent) that they will not harm our water, but BP’s promises are still fresh in our suspecting minds. On July 23, 2010, an explosion occurred in Indiana Twp., Allegheny County, PA, at a shallow, non-Marcellus Shale oil well, claiming the lives of two workers.

A recent report from the Massachusetts Institute of Technology predicts Marcellus could yield as much as 8 billion cubic feet of natural gas per day by 2030. A May 2010 report from the Pennsylvania State University projects that number could exceed 13.5 billion cubic feet of natural gas per day by 2020 and create nearly 200,000 new jobs in Pennsylvania. Nothing to sneeze at.

One of my favorite church hymns, “Though the mountains may fall, and the hills turn to dust” now makes me envision the photos of mountaintop removal coal mining. There has to be a better way for the human race to light, cool, and heat their world. The Obama administration is now looking at curtailing a major mountaintop mining project in West Virginia that could signal a shift in policy. Mountains cannot heal themselves, and they can turn to dust.

Coal, oil, and natural gas frequently abide in the same location. Interior Secretary Ken Salazar recently announced that he will open 1.8 million acres of the National Petroleum Reserve in northern Alaska (set aside by President Warren Harding in 1923 as a source of oil for the Navy in times of crisis) to oil and gas leasing. Will his promise to protect the habitats of caribou and migratory birds through “environmentally responsible development” be kept? When the new lease sale goes through in August, more than 20 percent of the reserve will be open for development. I’d sleep better if he’d promise to proceed slowly in this reserve since there’s a lot of coal up there too. As we’ve seen, one oil drilling mistake can be a huge one.