There’s so much dangerously wrong about both the Senate and House energy bills that it’s hard to know where to begin. Chagrined by the demise of a poorly-considered cap and trade scheme to reduce greenhouse gases and embarrassed by the administration’s confused, dithering response to the Gulf oil spill, Democrats are desperate to do something – anything apparently – to save face among environmentalists and green energy advocates. The result is two bills that will cost America dearly if passed, in terms of jobs, prosperity and energy independence.
The provision of both bills that has justifiably attracted the most attention is the removal of the $75 million liability cap that currently protects oil companies engaged in offshore drilling. While not an outright ban on offshore drilling, taking away the liability cap would probably be more effective than the current moratorium in halting offshore drilling in both shallow and deep water. Harry Reid claims that the Senate version of the bill will create 150,000 new jobs. Even if we ignore two years worth of evidence of the huge chasm between Democrats predictions of job creation and actual jobs created, it’s clear that the majority of those jobs would be subsidized directly or indirectly. Sure, you can spend billions to develop alternate fuel vehicles that run on electricity and natural gas, but the jobs that are created while doing so are entirely dependent on big government generosity. If the 150,000 new jobs claim is even true, those jobs will look a lot more like wealth-sapping government jobs than wealth-creating private sector employment opportunities.
On the other hand, a study by the American Petroleum Institute suggests that about 175,000 jobs would be lost if the liability cap was removed. Given the way that the gulf states are suffering under the Obama administration’s “moratorium of the week” policy, that figure isn’t hard to believe at all. Worse, elimination of the liability cap would effectively put every small and mid-sized driller out of business, leaving the playing field to those large energy companies who might want to take the chance of drilling in United States off-shore waters rather than in places that offer much more financial surety. Even if some of the big players could be induced into drilling offshore in US controlled waters, the costs of the energy produced would be proportionally higher than anywhere else in the world. Without a liability cap, large energy conglomerates would either face huge premiums from insurers – if any could be found – or would have to set aside billions to self-insure. Either way, those costs would be passed down to already bedraggled consumers.
At least as bad, if not worse, is a provision that would place new restrictions on hydraulic fracturing, or “fracking,” a sixty year old technology that has come of age over the last decade and allowed energy companies to tap vast domestic natural gas reserves economically. Fracking involves injecting a mixture of water and sand into deep rock formations in which natural gas is trapped to break up microstructures and release the gas. A few environmentalists have attempted to link fracking to aquifer contamination and fugitive natural gas releases. Those claims don’t hold up under close examination, but the green legions of doom seem determined to stop even the most innocuous and economical of domestic energy production technologies. Among others, congressman Henry Waxman seems obsessed by the “dangers” of fracking, even more so than Josh Fox whose special Gasland was an instant sensation among environmentalists when it appeared on HBO. Poorly researched and technically unsound, Gasland ignored study after study that shows that fracking is a safe, environmentally sound technology. Instead, Fox focused on anecdotal stories that distort the facts. In one of Gasland’s most famous scenes, a homeowner lights his water faucet on fire. The implication, in the context of the special, is clear: fracking released natural gas into the aquifer and this poor fellow was paying the price. Left unsaid was the fact that the methane in question had an entirely natural origin – bacterial contamination of a well – or that “flaming faucets” were found naturally in areas rich in underground hydrocarbon deposits that were untouched by fracking.
But these are liberal Democrats, so the facts be damned. They have chosen a subtle way to sabotage fracking technology; they’ve focused on regulating the small amounts of proprietary chemicals used in fracking fluids. While these fluid are overwhelmingly composed of water and sand, other compounds – in very small concentrations – are also needed to make fracking work for a specific geology. Environmentalists complain that the formulation of these compounds isn’t disclosed to regulators, which isn’t exactly true. The formulation of fracking compounds is commonly disclosed at the state level, but not to the feds. There’s are good reasons for this. For one, the chemistry of each fracking compound is proprietary and the companies that make and sell the fluids don’t want to share the fruits of their labors with their competitors. Further, such companies are justifiably leery of federal oversight, since the default position of the USEPA – especially when it’s dealing with a technology it doesn’t understand – is to say no. Giving Lisa Jackson’s EPA the authority to regulate fracking compounds would likely effectively kill fracking, since Jackson has taken the Agency’s “just say no” philosophy to new heights.
Rather than working with the oil industry to make drilling safer, Democrats prefer to force draconian measures down their throats that will effectively kill an entire segment of the industry. Rather than exploring the truths about fracking and how important the technology is to our economy, they are once again marching to the alarmist drums that radical environmentalists bang insistently. Rather than exploring ways to truly make America more energy independent, they have crafted two bills that would throw taxpayer dollars away on inefficient technologies and create more dependence of foreign oil than ever in the process. The sad truth is that after a year and half of Democratic leadership in Congress and the White House, there’s nothing at all surprising about any of their choices.