Last week,
I circled up on a number of energy-related articles I found most interesting and/or informative. I added comments of my own as well as several of my collegues. Below is Round 2 in what may well become a series.
Again, thanks to those of you at TWS and the Coalition for the Valle Vidal for helping to gather this information.
Here's a well crafted series:
Santa Fe New Mexican:
The 'whys' behinds the 'highs'
Santa Fe New Mexican:
Energy group's true intent under fire
Santa Fe New Mexican:
Refineries winners in profit margin
Santa Fe New Mexican:
Tourism economy fuels city's high gas costs
In these articles, reporter Wendy Brown, in a generally excellent series of articles in the Santa Fe New Mexican exposes the oil and gas industry front group "CARE" and its ridiculous report on the "reasons" for high gasoline prices in New Mexico.
Mark Mathis, executive director of CARE, said while the organization receives some money from the petroleum industry, it is definitely not an industry front group. "We are a front group for the people of this country who are dependent on energy for their lives," he declared.
Heh. Thats a good one.
The Los Angeles Times prepared a series of reports (June 18-20, 2005) detailing price and resource manipulation by refiners and oil companies, including "zone pricing," also mentioned in the Santa Fe New Mexican articles:
"The primary culprit is zone pricing, a secret and pervasive oil company strategy to boost profits by charging dealers different amounts for fuel based on traffic volume, station amenities, nearby household incomes, the strength of competitors and other factors. It's a controversial strategy, but the courts have thus far deemed it legal, and the Federal Trade Commission recently said the effect on consumers was ambiguous because some customers got hurt by higher prices while others benefited from lower ones."
Thus, the oil & gasoline industry (not unlike many other industries) simply charges what the local markets will bear. For example, the gasoline prices in destination resort towns like Taos, NM, Aspen, CO, and Jackson Hole, WY are significantly higher than in nearby towns like Cimarron, NM, Carbondale, CO and Rock Springs, WY. Also, the gasoline prices in more affluent neighborhoods of major metropolitan areas like Los Angeles, CA and Denver, CO are higher than in neighboring communities. Gasoline pricing has little or nothing to do with "remoteness from pipelines, etc." or most of the other factors contrived by CARE and its oil and gas industry backers.
Next we have another story on the hydraulic fracturing issue. Haliburton is credited with the original development of hydraulic fracturing for oil field use in 1949. The article correctly reports that very large numbers of different chemicals may be used in the hydraulic fracturing process, and that compositions of many of the compounds used by the industry are proprietary. Some portion of fracturing fluids can be withdrawn from the ground after the fracturing process, but significant amounts of the fluids will remain in the ground. These may have significant health effects as I reported some months ago here and here.
Salon.com News:
EPA to citizens: Frack you
The Federal Energy Regulatory Commission statements on natural gas include speculation that "drilling permits issued this year will likely boost domestic production." :
Rocky Mountain News:
Heat is off natural gas, until winter
However, industry and government data continue to support the statement by BP Global and anyone else who looks at production figures and trends:
"Natural gas production has increased in every region of the world except North America where US output continued to decline."
In fact, North American natural gas production has been in decline for the past decade, despite heavily increased drilling, for the simple geologic reason that the North American Continent does not hold large reserves of natural gas. Additionally, North American reserves cannot meet USA economic demands for natural gas.
This past weekend, NPR had a story on the destruction of LA wetlands by the oil-gas industry. Industry presented an interesting argument why they should not have to pay for damages. Essentially, channelizing and dredging the wetlands was not illegal, there were no regulations in place to stop them, so industry should not have to pay the bill. Instead, industry is funding a campaign asking taxpayers to foot the bill.
The LA wetlands story offers some historical lessons for residents, the press, and politicians in the Rockies concerned about the pace and scale of the current drilling boom. The story provides us with support for the need to strengthen laws and regulations now, in order to hold industry accountable for future damages to our environment. For example, increasing the bonding amounts is an effective way for internalizing some of the hidden costs -- in this case, the hidden cost was the loss of ecosystem services provide by intact coastal wetlands:
May 6, 2006 · Southern Louisiana's wetlands, a buffer against hurricanes, are slowly disappearing. Oil exploration has contributed to the damage. But who should pay to repair the wetlands? The state government and oil companies are asking the federal government to foot a bill that will run into the billions.
For you wonks we have BP's "Natural Gas By Area" statistics in its continuing global data summary show that USA natural gas production has been flat or declining since at least 1979. FERC says it is now working on rules to improve transparency in the natural gas market.
Next comes more hints that the whole industry is lying to us. Ya, I know this is a shocker but...Jack Grynberg, a Colorado oil man, charges that the energy extraction industry owes the U.S. government more than $30 billion in unpaid royalties for natural gas alone. He is suing, and Indian tribes are considering lawsuits:
Washington Post:
Firms Harvesting Energy From Public Land May Owe U.S.
Under the False Claims Act, Groups Sue for More Fees
In another shocker, Williams Cos. lobbyists "educate and advocate" while writing checks for an "appropriate contribution" to an "energy summit" golf weekend with Congressman Tom DeLay:
Denver Post:
Western driller's gifts scrutinized
Next we have some information had some info that was new to me:
Farmington Daily Times:
Council considers renewable energy
The article reports that Farmington, NM is looking at options for supplying renewable energy for Farmington Electric Utility (FEUS) system customers. FEUS says that "wheeling" fees - fees for shipping energy through another company's utility lines - jump the cost of wind energy from 5-1/2 cents per kilowatt hour to 18 cents per kilowatt hour. So, wind power may actually be cheaper than any of us thought. Wow. I learn something new every damn day. The FEUS study shows that 65 percent of customers are willing to pay more for renewable energy, and that FEUS wants to invest in renewable energy.
There is nothing particularly exciting in this next article:
Rocky Mountain News:
Big oil beefs up across West in search for gas
...and the industry exaggerations about natural gas continue. Exxon Mobil estimates a natural gas resource of about 35 trillion cubic feet in Colorado's Piceance Basin. This is probably true; BUT, the recoverable natural gas under the restraints of current technology and prices is more on the order of one-tenth that volume. As we know for the Raton Basin in New Mexico & Colorado, the industry claims a resource of 21 Tcf, but the U.S. Geological Survey estimates that 2.35 Tcf is currently recoverable. The recoverable volume increases very slowly with time [e.g., from about 1.78 Tcf in 1995 to 2.35 Tcf today for the Raton Basin], and the ultimate recoverable volume is unknown.
The article says that 35 Tcf is:
"...enough to fuel the nation for almost two years."
at the USA's current natural gas consumption rate of about 24 Tcf per year, I suppose one could stretch the claim that slightly less than 18 months is "almost two years."
The Denver Post and the Washington Post both report that El Paso's earnings have tripled in the first quarter:
The latest quarter included gains of 14 cents per share from derivatives to hedge prices for natural gas and oil production. A year earlier, the company's results included a loss from such derivatives. The year-ago results also included gains from asset and investment sales, and a charge for early payment of a settlement.
Finally, Per BP's "Statistical Review of World Energy (2005) this website was pointed out to me. ," the U.S. had 2.9% of natural gas proved reserves and 2.5% of oil proved reserves at the end of 2004. There are downloadable data reserves, prices, production, consumption, and more at the report website.