Democrats’ Energy Spousal-Abuse Syndrome

Listening to Democrats suddenly begging the oil and gas industry to increase domestic output resembles nothing so much as the serial spouse-abuser who promises to be good, only to resume their abuse as soon as the cops leave, all the while pining to shower their cheap mistresses (in this case solar and wind energy) with ever more expensive gifts.

Energy Secretary Jennifer Granholm, to whom Donald Trump’s famous epithet “low-energy” applies better and more literally than to any other target, is begging the oil and gas industry to ignore the administration’s repeated assaults, and to carry on as if Trump was still in office:

We are on war footing. That means [crude oil] releases from the strategic reserves all around the world. And that means you producing more right now if and when you can. I hope your investors are saying this to you as well. In this moment of crisis, we need more supply. [Emphasis added].

Would those be the same investors that the Biden administration and woke capitalists like Black Rock’s Larry Fink are trying to intimidate from investing in fossil fuel production? The same companies for whom the Biden regime has sought to raise the cost of capital (with partial success already) through administrative harassment, such as setting the Federal Reserve and the Securities and Exchange Commission after them? The same industry whose viability the Biden administration’s Federal Energy Regulatory Commission (FERC) is trying to hobble with restrictions on new oil and gas pipelines? Never mind proposed or half-built pipelines such as the Keystone XL.

Granholm: Big Nurse is not happy.

There are ongoing efforts to shut down existing pipelines such as Enbridge’s Line 5 pipeline under a small stretch of Lake Michigan that transports more than 500,000 barrels of Canadian oil and petroleum products a day to the U.S. A court has temporarily stopped Gov. Gretchen Whitmer’s attempt to close Line 5, and FERC has abruptly halted its anti-pipeline rulemaking. But the crazed anti-pipeline activists will be back. The Biden administration is “studying” the issue, which means attempting to find another means to shut down Line 5, and FERC will surely return to its strangulating ways.

Asking the oil and gas industry to produce more oil while preventing new pipeline construction and shutting down existing pipelines is like asking the auto industry to produce more cars and trucks while tearing up existing roads and prohibiting new ones.

Unknown to most consumers, pipelines are the most versatile part of the energy supply chain, as they transport much more than crude oil between refineries. They can transport a wide variety of distillate products in addition to crude oil—propane in the particular case of Michigan’s Line 5—which adds to the overall resiliency and adaptability to consumer and industrial needs from the energy sector; Line 5 provides over half of the propane supply to propane-dependent parts of rural Michigan, for example. Non-pipeline transport, chiefly trains or trucks, is more expensive and difficult to secure.

Still other administration actions display its fundamental hostility to domestic oil and gas production. The Interior Department is dragging its feet on new required five-year plan for oil and gas leases in the Gulf of Mexico. Due in June, the plan is far behind schedule, and in the absence of the new plan no new leases can be processed. (Needless to say, Interior’s plans for offshore wind power leases are breezing through the department’s review process very quickly).

On the surface a neutral observer might think the Biden administration’s current energy policy is schizophrenic. It is actually mendacious, and rests on a cynical calculation that both the oil and gas industry and finance capitalists won’t play along in the long run. The great irony of America’s self-inflicted energy disaster is that profits for incumbent oil and gas producers are soaring, as are their stock prices. So naturally Democrats are going back to the Jimmy Carter playbook and demanding a “windfall profits tax” on current energy producers. In other words, please produce more, but don’t expect to get to keep any profits from expanded activity!

"Windfall profits" tax, anyone?

Oil and natural gas, like real estate, have been prone to boom and bust periods for more than 50 years, as large global price epicycles have delivered fat profits in boom times and inflicted severe pain during recessions and cycles of overproduction. Following the most recent wave of bankruptcies in oil and gas over the last decade, the domestic industry and its investors have at last become more disciplined about production and investment strategies. Neither producers nor investors are likely to be taken in by the administration’s temporary relief of the government boot on their neck. They know that once the current “crisis” has passed, the beatings will resume.

The last missing piece of this maddening puzzle brings us back to the opening analogy of oil and gas as the abused spouse of American industry. The oil and gas industry, with precious few exceptions such as Chris Wright, founder and CEO of the comparatively small Liberty Oilfield Services, does not defend itself against the green onslaught. Most of the oil and gas majors implicitly apologize for providing a product everyone uses, and promise to “do better” (that is, go out of business slowly) just as the abused spouse will internalize blame for the bruises her husband inflicts.

Not since Mobil Oil’s Herb Schmertz (ironically a liberal Democrat most of his life) fought back against the left in his famous “advertorials” in leading news publications in the 1970s and 1980s has the petroleum industry made a sustained defense of itself. A major oil company that tried this today would likely face an internal revolt from its woke millennial staff in the HR and public-relations departments. But until and unless the petroleum industry stands up for itself again, the abuse at the hands of the left will intensify until they are beaten out of existence.

Ready, Fire, Aim

Over at National Review, Benjamin Zycher has a piece about the Federal Energy Regulatory Commission (FERC), which he argues has been wildly exceeding its mandate to regulate energy companies for the sake of safe and reliable energy for America's consumers. Instead they've promoting so-called "renewable energy." Zycher reports on a particular instance of FERC doing just that -- using it's regulatory authority to give the go-ahead to a dubious utility transaction in order to promote green energy, even if it means a thumb in the eye of consumers:

The latest example of this trend is the recent decision by FERC to approve a request from ISO New England — an independent system operator managing the power grid in six northeastern states — to terminate its contract with the proposed Killingly Energy Center, a 650 megawatt power plant in Connecticut to be fired with natural gas. ISO-NE is less than subtle in its pursuit of applause from the right-minded: Its “vision” is “To harness the power of competition and advanced technologies to reliably plan and operate the grid as the region transitions to clean energy.”

So, as with FERC, reliability ostensibly is a central objective for ISO-NE, a parameter now crucial “amid heightened reliability concerns in New England this winter.” Nonetheless, ISO-NE requested that the contract be terminated, arguing that “the natural gas pipeline system in the northeast is limited,” and in particular “citing project delays.”

Terminate the contract because natural gas is unreliable, particularly because of the lack of pipelines in the northeastern United States, huh? And we wonder why New England is so far behind in pipeline capacity...

The gas-pipeline system in the east is “limited” — that is, there is too little delivery capacity given the region’s energy needs — precisely because of opposition to new pipeline infrastructure from interest groups promoting wind and solar power. And about those “project delays”: Wind and solar projects experience such delays as much or more than conventional power projects.

That is, FERC is cancelling a natural gas fired energy project because of the unreliability of natural energy which is unreliable because environmentalist activists have been so successful in infiltrating and swaying regulatory agencies like FERC.

Agencies like the FERC and the Nuclear Regulatory Commission (which has successfully managed to prevent the construction of all new nuclear power plants in the United States since it came into existence in 1975) exist ostensibly to protect the public, but in reality they serve the interests and enthusiasms of our elite activist class. One day we're going to wake up, scrap them, and start from scratch. Either that or we're going to be eclipsed by countries that care more about winning than the approval of activists.

PennEast Pipeline Beats New Jersey at SCOTUS

Legal eagles might find today's Supreme Court decision, in PennEast Pipeline Co. v. New Jersey, compelling, contending as it does with a tension between the exercise of eminent domain on the one hand and a state's sovereign immunity as guaranteed by the 11th amendment on the other. For a layman like myself, one smart enough not to have attended law school, the discussion makes my eyes glaze over. However, the case might have some important ramifications in the ongoing dispute between the environmentalist movement and the oil and gas industry in the months and years ahead, and we would do well to be aware of it.

PennEast Pipeline Company LLC, a joint venture of energy producers including Enbridge Inc., South Jersey Industries Inc, and New Jersey Resources Corp, has been constructing a 116-mile pipeline that would transport as much as one billion cubic feet of natural gas per day from Pennsylvania's Marcellus Shale and serve customers in both Pennsylvania and New Jersey.

After having secured the Federal Energy Regulatory Commission's approval, the company began acquiring the land along the pipeline's planned route, making use, where necessary, of a provision in the U.S. Natural Gas Act which allow resource companies to utilize federal eminent domain authority. However, some of that land belonged to the state, and the administration of Governor Phil Murphy, a Democrat, refused to hand it over, contending that only privately owned land can be acquired in this way.

When PennEast took the state to court, the Murphy administration argued that the 11th amendment-guaranteed sovereign immunity protected it from being sued by a private entity. The majority, in an opinion written by Chief Justice Roberts (joined by Justices Breyer, Sotomayor, Alito, and Kavanaugh), disagreed, accepting PennEast's defense that their use of eminent domain flowed directly from the federal government.

Roberts argued that the right of the federal government to use eminent domain for the construction of essential infrastructure was well established, that there was nothing stopping it from delegating that power to a private company, and that "[a]lthough nonconsenting States are generally immune from suit, they surrendered their immunity from the exercise of the federal eminent domain power when they ratified the Constitution."

This doesn't mean that the pipeline will definitely be completed. As Greg Stohr points out in Bloomberg, PennEast "still must secure state-level permits, something that may prove difficult in [liberal] New Jersey." But this case is still has the potential to be significant, limiting as it does the ability of left-wing activists to kill major infrastructure projects they couldn't stop at the federal level simply by pumping money into local politics.

Will this precedent affect, for instance, Enbridge's other big pipeline project, which has seen Michigan holding all of eastern Canada hostage just to make a point? It's a hopeful sign.