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Posted on 01/11/2012 10:05:34 PM PST by neverdem
From Australia and China to South Africa and Eastern Europe, the global economy is being transformed by the extraction of huge amounts of natural gas from shale rock. The United States has played a major part in this revolution; new “plays,” as fields of shale gas are known, are now producing in Texas, Louisiana, Illinois, Arkansas, Colorado, West Virginia, and other states. In the last three years, more than 3,000 gas wells have been drilled in western Pennsylvania’s share of the huge Marcellus shale formation. With more and more producers in the business, the price of natural gas has dropped steadily, and the U.S. has become the world’s leading producer of natural gas. A new age of clean, cheap shale-gas energy is about to begin—except, perhaps, in New York State, where influential environmental groups seem to be winning their struggle against shale.
One might expect a no-drill agenda to find few friends in New York, which desperately needs the revenue and economic growth that shale gas has brought to other states. The Empire State faces a $3 billion budget gap for fiscal year 2013. According to State Budget Solutions, a nonpartisan think tank, New York’s deficits, long-term debt, and pension obligations total $305 billion. High taxes, unemployment, and a burdensome cost of living make New York Number One in emigration to other states. Governor Andrew Cuomo has described the state’s financial outlook as “grim.”
Shale gas development would help turn things around, especially in rural areas where jobs are scarce. Much of upstate New York sits directly on top of geological features that hold the promise of an economic bonanza—including the Marcellus, one of the largest shale-gas formations in the world, and the Utica, an even larger formation beneath the Marcellus that extends from Kentucky to Ontario. The Marcellus and Utica formations represent an extraordinary opportunity for New York. Various studies agree that for decades to come, shale-gas development in the state could create billions of dollars in new economic activity and tens of thousands of jobs.
But in 2008, former governor David Paterson imposed a moratorium on shale-gas drilling in New York. Paterson had been pressured by environmental groups claiming that hydraulic fracturing, or “fracking”—a drilling method that shatters shale formations with a mixture of high-pressure water, sand, and chemicals—polluted aquifers and water tables and perhaps caused earthquakes. A year later, Robert F. Kennedy, Jr., the president of the environmentalist Waterkeeper Alliance, seemed to signal a change of heart within New York’s green community when he wrote an op-ed for the Financial Times extolling the virtues of natural gas and hailing it as an energy source much cleaner than coal. The moratorium, however, remained in effect. When Governor Cuomo took office last January, he likewise left the moratorium in place but appointed an 18-member advisory panel to make recommendations about it.
For a while, there was widespread speculation in the natural-gas industry that the panel would recommend that Cuomo give fracking the green light in 2012. Last October, however, that optimism faded when Kennedy—a member of the panel—published a lengthy article in the Huffington Post renouncing his earlier support for shale gas. The industry’s “worst actors,” Kennedy wrote, “have successfully battled reasonable regulation, stifled public disclosure while bending compliant government regulators to engineer exceptions to existing environmental rules. Captive agencies and political leaders have obligingly reduced already meager enforcement resources and helped propagate the industry’s deceptive economic projections.” Kennedy then switched from rhetoric to saber-rattling: “As a result, public skepticism toward the industry and its government regulators is at a record high. With an army of over 40,000 highly motivated anti-fracking activists in New York alone, popular mistrust of the industry is presenting a daunting impediment to its expansion.”
Coming as it did in the middle of Occupy Wall Street’s intimidation tactics, Kennedy’s rhetorical deployment of an “army” of activists sent an unmistakable warning. The day Kennedy’s article appeared, costumed demonstrators marched from the Occupy encampment in downtown New York City to a Federal Energy Regulatory Commission (FERC) hearing in Greenwich Village. “The whole world is watching!” one demonstrator shouted. The hearing was about Spectra Energy’s plan to build a 30-inch natural-gas pipeline from New Jersey to the lower west side of Manhattan, via Staten Island. Though the streets of Manhattan have been piped for gas since 1825, anti-fracking activists and public officials told the FERC hearing that a new source of natural gas meant trouble: possible radioactivity, terrorism, pollution, accidents, and explosions. Manhattan borough president Scott Stringer warned that the pipeline could be used to transmit natural gas from fracked wells in Pennsylvania.
Coal and oil are obvious targets for environmentalists, but why does a clean and useful commodity like natural gas make greens see red? The risks are small: last summer, MIT issued a report on fracking that found that “the environmental impacts of shale development are challenging but manageable. . . . The newly realized abundance of low-cost gas provides an enormous potential benefit to the nation, providing a cost-effective bridge to a secure and low carbon future.” In October, at a panel discussion on shale gas sponsored by the New York Policy Forum (NYPF), Terry Engelder, a professor of geosciences at Penn State and an expert on the Marcellus formation, told the audience that the natural-gas industry was getting smarter about addressing environmental concerns. After a slow start, he said, drilling companies were moving toward nontoxic fracking fluids and state inspectors were making sure that jobs were done right.
Fracking brings enormous economic opportunities. Natural gas heats homes and commercial buildings, fuels vehicles, powers factories, provides raw materials for chemical industries, and—because it has the lowest carbon content of any fossil fuel—can replace coal- and oil-fired generating plants and heating systems with cleaner technologies. Natural gas is produced inside the U.S.—great for America’s balance of payments—and it’s quickly and cheaply distributed by pipeline to consumers around the country.
Perhaps what motivates the environmentalists’ attack on shale gas is worry about the survival of their movement. The green movement gave up on hydrocarbons years ago: it has already announced the arrival of “peak oil,” and the imminent demise of petroleum power—despite many recent discoveries of large oil and gas fields around the world—is a fundamental article of green faith. Environmentalists see shale gas as a relapse, a return to destructive habits, an end run around their self-appointed role as judge and jury for energy policy in America. And they understand that natural gas is a much harder target than dirty coal or imported oil. Further, an acceptably green technology that can compete with natural gas doesn’t exist yet, so once consumers enjoy the benefits of the shale-gas revolution, it will be almost impossible to wean them away from hydrocarbons and steer them to more expensive and less reliable technologies, such as solar and wind.
What will New York do? Governor Cuomo and the commissioner of the state’s Department of Environmental Conservation, Joe Martens, are keeping an eye on the economic boom in Pennsylvania, where shale-gas production has created tens of thousands of new jobs. They are well aware that economic activity and prosperity are spilling across the border from the gas fields of Pennsylvania into the southern tier of New York. They’re also watching Pennsylvania’s efforts to implement and enforce environmental safeguards, regulate drilling, and prevent fracking accidents. However, in the spoken version of his January 4 State of the State address—while hundreds of anti-fracking activists demonstrated outside—Cuomo praised solar and wind power but did not mention shale gas. The text version of his speech simply says that the state will continue to study the situation. There is no indication that shale-gas development in New York will begin in 2012. That’s a shame for the Empire State, because that anti-fracking demonstrator in Manhattan was wrong. The whole world isn’t watching. What the whole world is doing is fracking.
Clark Whelton is writing a book about the environmental movement.
As a New Yorker I can honestly say that the only loser in this situation is...New York State. The state that led the country in commerce in the early 1800’s by building the Erie Canal has decided to put itself on the sidelines during the greatest business boom of the 21st century. Farmers along the southern tier of the state are watching as their neighbors just to the south (in Pennsyltucky) are supplementing their farming business with NG money. If the Pennsyltuckians are smart enough to cash in on this boom why can’t New Yorkers?
Pennsyltucky should put a wellhead tax on the natural gas and pipe it over the border to NYS...which would result in New York gas consumers paying taxes to PA. Wouldn’t that be a hoot!
The garbage company in our area, Waste Management, has fitted a lot of their trucks to run on natural gas. I looked it up and they have over 1000 trucks running on it now.
Indeed. Upstate is chained to policies made by, and for, NY City, and its turning upstate into Appalachia. We are moving in opposite directions. I've always felt the State should be divided. Make NY City a "special district" like Washington DC. Or make a brand new state from Albany South. Upstate NY would then become a normal state, like PA or OH.
I’ve been thinking that Upstate NY and PA’s Northern Tier would make a nice state :-)
Actually, you do. The watersheds which feed water to NYC aren't in the city. That's the big fulcrum the antifracking types have been wedging their lever against. Anywhere west of the divide should be opened up, however, and that might be the solution to getting some of the local enviros to back off.
I think it is safe to say they do not fare well in the face of the unemployment they have imposed on so many others.
As someone anxious to move out of the NY tax sink hole all I can say is — here’s why.
I hear you. Our country - by that I mean the people - is being held hostage by a small bunch of socialists. Get ready for November 2012.
Wrong.
The financial sector reacted to the stupid Federal mandates and Court mandates.
Mixing bad loans with good loans was done so that the total portfolio could be rated A or better, as it was put on the market.
The problem is, that in a portfolio yielding a 5% return on investment, in good times, a 5% default in that portfolio pretty much wipes out the interest return, as the cost of recovery on the principal is is factored in.
When the human body gets infected, our immune system sometimes over reacts. (That is what causes allergies and, perhaps, arthritis, and many other human illnesses.)
The government infected the financial markets with bad paper, and the government does not “prosecute” as you suggest because, for the most part, the financial sector did nothing criminal.
You are confusing subprime (mandated by fed CRA) and liar loans (illegal). Subprime mortgages are properly marked and the investor is aware of it when they buy MBS. What was hidden was within the good mortgages were hidden liar loans.
Rating agencies are paid by the banks to rate the MBS. As time goes on you will learn that rating agency analysts were never given access to the data on the individual loans. They would have detected the liar loans and rated the MBS low. When the analysts pressed for the data, the bank complained to the rating agency that as their customer they were being mistreated by the agency analysts. The rating agency management fearing loss of future business from the bankers basically told their analysts to find a way to satisfy the customer or ELSE (be fired)! Many analysts were forced to comply and reluctantly rated these MBS AAA. The rest is history.
When banks hide liar loans (illegal), rating agencies are forced to rate MBS AAA (riddled with liar loans), FMFM is stupid to buy or back everyone of them without reviewing them, and investors are buying them for pension funds, hedge funds, etc, etc, etc. You have the recipe for a major financial meltdown.
I would recommend you youtube William Black. He was the federal regulator during the S&L crisis. Many of the criminal activity of the S&L bankers are being repeated today in our current banking crisis. The gov can close a financial firm down from an audit that shows massive errors. Right now Fitch, Moody and several major rating agencies on Wall Street can be closed by the state and federal regulators for rating MBS AAA without using common industrial practices in analyzing the data of each loan in the bundle.
The loan applicant can be hauled in for an interview on why the loan application data does not match the loan applicants financial information and the bank can be hauled in to explain why loan information were not verified. If too many applications contain errors, regulators can close down the mortgage department of the bank and make a criminal referral to federal or state prosecutors.
Why isn’t all this being done? US Treasury fear that it would demoralize the banking industry at a time when they are needed to help the gov stabilize and untangle the mess. In the meantime the taxpayer is forced to bailout the situation and the criminal bankers are enjoying the fruits of their past fraud. Worst the public knows something is wrong but cannot fathom it because many of them are financial illiterates and even worst some believe the crisis is entirely the gov fault and the bankers were innocent victims.
Any “criminal activity” during the S and L problems, did not CAUSE the melt down at that time, and the same is true of our current mess.
Failure causes AUDITS which expose illegal activity.
It does not follow that the failure was CAUSED but said activity.
You are confusing subprime (mandated by fed CRA) and liar loans (illegal). Subprime mortgages are properly marked and the investor is aware of it when they buy MBS. What was hidden was within the good mortgages were hidden liar loans.
Rating agencies are paid by the banks to rate the MBS. As time goes on you will learn that rating agency analysts were never given access to the data on the individual loans. They would have detected the liar loans and rated the MBS low. When the analysts pressed for the data, the bank complained to the rating agency that as their customer they were being mistreated by the agency analysts. The rating agency management fearing loss of future business from the bankers basically told their analysts to find a way to satisfy the customer or ELSE (be fired)! Many analysts were forced to comply and reluctantly rated these MBS AAA. The rest is history.
When banks hide liar loans (illegal), rating agencies are forced to rate MBS AAA (riddled with liar loans), FMFM is stupid to buy or back everyone of them without reviewing them, and investors are buying them for pension funds, hedge funds, etc, etc, etc. You have the recipe for a major financial meltdown.
I would recommend you youtube William Black. He was the federal regulator during the S&L crisis. Many of the criminal activity of the S&L bankers are being repeated today in our current banking crisis. The gov can close a financial firm down from an audit that shows massive errors. Right now Fitch, Moody and several major rating agencies on Wall Street can be closed by the state and federal regulators for rating MBS AAA without using common industrial practices in analyzing the data of each loan in the bundle.
The loan applicant can be hauled in for an interview on why the loan application data does not match the loan applicants financial information and the bank can be hauled in to explain why loan information were not verified. If too many applications contain errors, regulators can close down the mortgage department of the bank and make a criminal referral to federal or state prosecutors.
Why isn’t all this being done? US Treasury fear that it would demoralize the banking industry at a time when they are needed to help the gov stabilize and untangle the mess. In the meantime the taxpayer is forced to bailout the situation and the criminal bankers are enjoying the fruits of their past fraud. Worst the public knows something is wrong but cannot fathom it because many of them are financial illiterates and even worst some believe the crisis is entirely the gov fault and the bankers were innocent victims, while the left think it is entirely Wall Street’s fault. In reality it is both. One (gov) is stupid and later complicit (gov working with the bankers during the crisis to loot America) and one is criminal (Wall Street). Unless both are severely punished, a crisis like this will be repeated (assuming the US survives). While you are at it, look up on youtube Ann Barnhardt.
What do you mean by “west of the divide” and “opened up”?
Check out the Time, Jan. 9, 2012, page 14 article, “Where the 1% Lives. Areas with large wealth gaps have more unstable economies” The charts show the inequity income gap has grown substantially in the past 20 years.
I have spent time in Mexico. People who think it is great to have very rich and very poor should go there and have a good look at the results. Then rethink mindless greed. Thirty or 40 years ago, the well off seemed quite comfortable with a much smaller income gap.
The continental divide: Some watersheds upstate drain west, others east. Some of those draining east, iirc, feed NYCs water supply, those draining west do not. (If I am wrong about that, someone correct me).
Areas west of the divide could be produced without any danger of surface contamination, however remote, of the NYC water supply, and that would likely remove most of the resistance to Natural Gas production.
New York may benefit in the long run by waiting, however, as the current boom has depressed Natural Gas prices. As an eventuality, the State might collect more in extraction tax from the same production if that production has a higher value.
In the meantime, though, areas where the pickings are lean will remain that way.
Economic engines run on combustible fuel. Am all in for mining combustible fuel. No alternative is available, electric require combustible fuel or nuclear energy. Time to mine or fail. And of course the environweenies and many of our representatives and the zer0 want America to fail. Therefore we fail or we defeat those wanting America to fail. Though the enemy surrounds us, the enemy hasn’t yet grasped their defeat is nigh. Can see 2012 from this house.
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