Sailing Into the Abyss

The year is 2013. I am a passenger on a container ship as it voyages for twenty-seven days from Hong Kong to Southampton. Magellan, the third largest container ship in the world, is powered by a huge engine, equalled in size by only one other in the merchant fleet. For the mechanically minded; it is a marine diesel, fuel-injected, internal combustion, two-stroke engine, generating 109,000 hp. It has fourteen pistons, each almost a metre in diameter. I can vouchsafe that it is very large and loud.

On this voyage, the ship is carrying the equivalent of nearly 10,000 standard-sized containers. Containers, which can be more than double the length and taller than standard-sized, can hold up to about 28 tonnes of cargo.

Why mention any of this? A container ship provides a practical and grounding lesson on the realities of modern economic life that school children might be taught. As distinct, that is, from being brainwashed with fairy tales of sustainable development.

Magellan today: there's a metaphor here somewhere.

The lesson might begin thus: Our way of life, our prosperity, our ability to help those among us in need, are all critically dependent on growing, mining, making, trading and transporting things. Needed are entrepreneurship, business acumen, skill, hard work and, critically, cheap and plentiful supplies of energy.

A series of questions might follow to generate discussion. Apropos: If it takes around 4,700 tonnes of marine diesel fuel at $550 per tonne to shift one-hundred thousand tonnes of cargo from Hong Kong to Southampton, how many batteries charged by wind and solar farms would it take and how much would it cost? For mathematics students this would be an instructive introduction to imaginary numbers.

Another question might go like this. Is it possible for us to enjoy the ownership of cell phones, computers, flat screen TVs, cars, and all of our other modern conveniences without the dirty business of their manufacture and shipment? For students of anthropology, this may throw light on the development of cargo cults among primitive peoples. And talking of cargo cults, adult classes might be held for those who vote for green parties who seem equally prone to thinking that goods simply appear out of thin air.

Other instructive questions could be posed for the tutelage of students and greenies alike. Me, I want to stop there and turn back to the crude diesel which powers large ships. According to those who estimate these things, shipping accounts for around 2.5 percent of man-made CO2 emissions. Twice the emissions of Australia by the way. And as Australia is under pressure by the great and good, Joe Biden and Boris Johnson included, to prostrate itself before the deity of net-zero emissions by 2050, it isn’t surprising that shipping is also in the firing line.

No emissions please, we're Norwegian.

The International Maritime Organisation’s voluntary goal is to cut greenhouse gas emissions from international shipping by at least half by 2050 compared with 2008. Bear in mind that tonnages shipped are on course to be far higher in 2050 than they are now. The goal might be described as aspirational. Think of the late Soviet Union’s five-year plans. Even so, it is not going to be nearly enough to satisfy the zealots, when net-zero is their goal.

Norway is doing its bit.  Reportedly, as from January 2026, Norway intends to ban cruise ships from sailing through its fjords unless they generate zero emissions. How to bring this about? I don’t know. However, the Norwegian shipping line Hurtigruten announced in 2018 that it would run its ships on dead fish and other rotting matter. Smelly business. Fish at risk. Has limitations.

In an article in Forbes, development economist Nishan Degnarain echoed the UN in calling for shipping to urgently ditch fossil fuels. He claims that shipping is the sixth-largest emitter after China, the U.S., India, Russia and Japan; which, though mixing categories, is about right. What to do?

Degnarain doesn’t mention dead fish. He lists four possible solutions. These come out of a report by the international conservation group Ocean Conservancy. The report was launched at U.N. Climate Week, held virtually in New York in September 2020. Here are the putative solutions:

  1. Electrification, in other words batteries
  2. (Green) Hydrogen fuel cells
  3. Ammonia
  4. Liquefied Natural Gas (LNG)

To take them in reverse order. Environmentalists aren’t keen on LNG. Apparently, it leaks methane in transit. And, anyway, “cleaner” though it is, it is still a foul fossil fuel. Ammonia carries a risk of blowing up and when burnt emits the greenhouse gas nitrous oxide. Just a guess, but fuel cells powered by green hydrogen might not be quite ready for widespread installation in ships. One solution mooted is the onboard conversion of sea water to hydrogen. I simply assume that’s a joke. And in that same amusing vein, electrification is clearly a risible solution for ocean-going vessels. Consider the magnitude of the problem.

Leave aside the 30 million or so recreational and fishing boats in the world; lots pumping out CO2. As of the beginning of 2020, there were around 56,000 merchant ships trading internationally. This encompasses 5,360 container ships, over 17,000 general cargo ships, more than 12,000 bulk cargo carriers, around 8,000 crude oil tankers, nearly 6,000 chemical tankers, over 5,000 roll-on roll-off ships, and some 2,000 LNG tankers. All running on fossil fuels, overwhelmingly crude diesel, with a bit of LNG thrown into the mix.

Is it possible to get your head around refitting and/orreplacing this fleet so that it's emissions free? Maybe, if you’re an airhead and assume as-yet uninvented technologies will somehow save the day. If burdened with common sense and realism, you will know that it can’t be done. It is Panglossianism on stilts.

This is the situation. Western world leaders, without political opposition, have bought completely into "global warming" alarmism. Extraordinary, but that is the least of it. They are buying into delusional solutions to a non-problem. You’re sane and trying to figure out what the heck’s going on? Forget it. Just cling onto the rails as they do their damnedest to sail us into the abyss.

Net-Zero: the West's Suicide Note

In the 1983 U.K. general election, the Labour Party under the amiably leftish leadership of Michael Foot published a manifesto that amounted to a wish-list of extreme socialist policies long sought by the party’s Marxist wing. It leant so far to the left that one of Foot’s closest colleagues, the late Gerald Kaufman, described it privately (in a bon mot that was soon leaked) as “the longest suicide note in history.”

Not any longer. The last few weeks have seen two longer suicide notes by two organizations more important than an opposition U.K. party. They are the G7 nations, which Marx might have described as “the executive committee of the global capitalist democracies”—aka the West—and the International Energy Agency which is a specialized committee of the United Nations system and as such the globalist bureaucracy serving all U.N. member-states.

The distinctions between the two organizations are not trivial, but they usually say the same things, especially on climate change. Indeed, the global organization of anxiety over climate change was initially launched by the U.N. Secretariat in a series of international conferences—Rio, Kyoto, Copenhagen—at the end of the Cold War. Its greatest support to date has been found in the G7 countries, especially in the United Kingdom and the European Union (minus coal-producing countries such as Poland) where it has become unchallengeable dogma.

America has been the exception to the G7’s enthusiasm, having repeatedly refused to ratify any of the climate change treaties even when, as now, the U.S. administration was in the hands of climate “emergency” zealots who signed them. Partly as a result, the United States under the Trump administration was able both to reduce its carbon emissions and to re-emerge as an energy super-power by liberating “clean, green” natural gas from the land by fracking.

Everybody agrees: the end is near!

Oddly, even masochistically, President Biden was elected to reverse this policy and to embrace the Paris conference aim of achieving Net-Zero emissions by 2050. Seeing this as an opportunity to entrench Net-Zero as a legally-binding international obligation on all governments, the G7 and the IEA each issued a report at around the same time, respectively making the political and the technical case for the inevitability of Net-Zero.

There was neither deception nor coyness about this simultaneity; the G7 applauded the IEA for its help. And the joint advocacy is expected to generate overwhelming diplomatic endorsement all the way to the next climate conference this fall in Glasgow. You can read the G7 report here and the IEA report here.

But you should read both with a skeptic eye. Here, for instance, is one of the most important paragraphs in the G7 report [italics mine]:

In this context, we will phase out new direct government support for carbon intensive international fossil fuel energy, except in limited circumstances at the discretion of each country, in a manner that is consistent with an ambitious, clearly defined pathway towards climate neutrality in order to keep 1.5°C within reach, in line with the long-term objectives of the Paris Agreement and best available science. Consistent with this overall approach and recognizing that continued global investment in unabated coal power generation is incompatible with keeping 1.5°C within reach, we stress that international investments in unabated coal must stop now and commit to take concrete steps towards an absolute end to new direct government support for unabated international thermal coal power generation by the end of 2021, including through Official Development Assistance, export finance, investment, and financial and trade promotion support. We commit to reviewing our official trade, export and development finance policies towards these objectives. We further call on other major economies to adopt these commitments.

Sounds impressive, right? It’s a wordy elaboration of the idea—relentlessly canvassed in climate emergency propaganda—that we can kill coal by cutting off government subsidies to it and thus making it a bad investment. But as my italics show, the governments are building escape hatches into their commitments at almost every point. They will phase out new and direct government subsidies to coal except in limited circumstances at the discretion of each country, i.e., when a government wants to subsidize coal.

Similarly, they’ll take concrete steps to end subsidies for unabated coal. That’s interesting. The official definition of unabated coal is “the use of coal without any technologies to substantially reduce its CO2 emissions, such as carbon capture and storage.” Carbon capture is the technology, still in large part theoretical, that’s cited as one important way in which carbon emissions can be reduced or eliminated in, for instance, the manufacture of concrete. You can be sure that when carbon capture has become a more practical possibility—or even before that—the governments of coal-producing countries will find that their coal is magically no longer unabated.

And they would have a point. The possibility of carbon capture makes the case against fossil fuels much less strong than it otherwise seems—and certainly more attractive than the policies and lifestyle changes that the IEA report lists as necessary to the achievement of Net-Zero.

I’ve written many times before about the lifestyle changes and their lack of electoral appeal. Here’s Irwin Stelzer, the U.S. economist and entrepreneur, making those points with dispatch:

It is simply unrealistic to expect the world’s politicians to rally support for net-zero emissions by 2050 by telling them there can be no more oil and gas furnaces for sale by 2025, half of air travel will have to cease unless emissions-free fuels are developed, car trips must be replaced with walking and cycling, no permits will be issued to develop new oil and gas fields, and no coal plant will be constructed unless fitted with currently unavailable emission-catching equipment.

That unrealism becomes more risky when we look at the IEA’s coldly realistic analysis of the innovations that will be required to make these lifestyle sacrifices worthwhile in terms of emissions reduction:

Innovation cycles for early stage clean energy technologies are much more rapid in the NZE  than what has typically been achieved historically, and most clean energy technologies that  have not been demonstrated at scale today reach markets by 2030 at the latest. This means  the time from first prototype to market introduction is on average 20 percent faster than the fastest  energy technology developments in the past, and around 40 percent faster than was the case for  solar PV.

What’s being proposed by the G7 and IEA is a vast leap into the dark—maybe the literal dark unless renewables become much more reliable than they have been to the present.

And away we go!

That may be why the  G7’s final plea in the quote above: We further call on other major economies to adopt these commitments” shows no sign of being accepted and implemented by either the big energy-producing countries (Russia, Saudi Arabia, Australia) or the big energy-consuming countries (India, China, and most of the Third World).

Maybe the G7 should heed the IEA’s warning that without such international cooperation, Net-Zero simply can’t be achieved. And if possible, before we’ve spent our children’s and grandchildren's inheritance on it.

Caveat Emptor: Ready for 'ESG Misconduct'?

The Securities and Exchange Commission is the ultimate double-edged sword.  On the one hand, it is a regrettably necessary federal agency that has a legitimate purpose for existing, and it has a decent track record of punishing financial fraud.

On the other hand, the SEC wields its disproportionate power far too readily.  The enforcement division often wrongfully targets minor offenders or innocents, puts them through the wringer, and even if they don’t bring litigation, end up bankrupting these unfortunates via legal fees.  The agency is also infamous for missing or ignoring warnings regarding massive fraud, such as that perpetrated by the late Bernie Madoff.

The SEC, particularly its enforcement division, should really be about protecting average investors.  They do very little in the way of educating the investing public, and instead engage in bureaucratic rigmarole more focused on deterrence -- which doesn't seem to work.

It's for your own good.

Regrettably, because it is a government agency, it is also subject to politics.  Theoretically, the agency is independent from any given administration, but it is highly unusual for the president to be on a completely separate page from the agency – unless you’re Donald Trump, and everyone is out to get you.

In the case of the Biden administration, the radical Leftist cabal propping up the doddering hair-sniffer is clearly dictating the SEC’s new priorities, and appointed a like-minded individual to run the show. Just look at the SEC’s new number one priority:  Climate change.  For real.

A March 4 press release trumpets an “Enforcement Task Force” focused on climate and ESG issues.  For those not up to speed, “ESG” means “environmental, social, and governmental" investing strategies. Just substitute “woke” and you get the same result.

But here’s the frightening thing: this “task force” is shaping up to be a climate change gestapo.  Per the release: “consistent with increasing investor focus and reliance on climate and ESG-related disclosure and investment, the Climate and ESG Task Force will develop initiatives to proactively identify ESG-related misconduct.”

“ESG-related misconduct”?  What exactly does that mean?

Worse, what does this part mean? “The Climate and ESG Task Force will evaluate and pursue tips, referrals, and whistleblower complaints on ESG-related issues, and provide expertise and insight to teams working on ESG-related matters across the Division."

Is this as ominous as it sounds? As with anything involving politics, and especially anything involving Leftists, one must read between the lines to parse the meaning.  One must also examine the totality of information provided by not just one agency, but the power players inside the Beltway. That includes speeches by the acting SEC chair Allison Herren Lee before the Center for American Progress, a Leftist NGO, in which she said:

No single issue has been more pressing for me than ensuring that the SEC is fully engaged in confronting the risks and opportunities that climate and ESG pose for investors, our financial system, and our economy…this last year has helped to clarify why the perceived barrier between social value and market value is breaking down.

I'm from the government and I'm here to help.

So, yes, it is as ominous as it sounds because this appears to be the first step in moving the SEC away from its statutory mission of protecting investors, and instead pursuing the Marxist goal of dismantling capitalism via regulation.  It will begin with making certain that “ESG disclosures” adhere to some as-yet-undetermined criteria for which failure will lead to enforcement actions. This is also consistent with the SEC’s long-term strategy to expand its power.  That’s the very nature of government agencies.

Fortunately, it will take herculean efforts on the part of the Left and the SEC to make headway. The courts have generally ruled that it is preferable to let companies and investors interface on what matters are important enough to address and disclose.

In addition, the courts have traditionally given companies wide discretion regarding what is considered material information.  Attempting to expand the definition of “material information” to issues involving "climate change" stands far outside existing case law at the Supreme Court level.

For disclosures (or lack thereof) to be considered material, there must first be a duty to disclose.  It’s one thing for an energy or utility company to make (or fail to make) statements regarding climate or environmental issues.  It’s another for a company that has little or no adjacent exposure to those issues to have such a duty.

Even then, a landmark Supreme Court case, Matrixx Initiatives v. Siracaruso, made is clear that even failed to disclose material information may not be actionable.  The court wrote, “…it bears emphasis that [securities laws] do not create an affirmative duty to disclose any and all material information. Disclosure is required under these provisions only when necessary ‘to make…statements made, in the light of the circumstances under which they were made, not misleading’.”

In another landmark case in 2011, TSC Industries, Inc. v. Northway, Inc., the Supreme Court held that “there must be a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the 'total mix' of information available.”  Specifically, the court refers to the mix of information that investors rely upon prior to buying or selling a security.

Believe it or not, that ruling was unanimous and the opinion written by Justice Sotomayor.  One area where the liberal justices surprisingly get it right (sometimes) is on securities fraud cases.

There’s also a constitutional issue at play, generally referred to as “fair notice."  Multiple Supreme Court cases have determined that laws must give people a reasonable opportunity to know and understand what it prohibited.  Otherwise, enforcement is arbitrary and discriminatory.  That’s why agencies publish “rules” so as to provide some element of fair notice.

In what may turn out to be the height of irony, the National Resources Defense Council sued the SEC in 1978 because it wanted more expansive disclosure of environmental matters that were not mandated by statute.  The SEC actually opposed this, saying that too much disclosure would be unmanageable and expensive.

Without congressional mandate or rulemaking, the SEC stands on very weak footing as far as filing securities fraud cases in ESG matters. That's the good news. The bad news is that this doesn't mean the agency won’t try to satisfy the Biden administrations’ Leftist puppetmasters.   Naturally, this just means more resources taken away from what the SEC should be doing – protecting regular investors from genuine cases of fraud.

A Carbon-Neutral Deity?

Relativity permeates this earthly realm. Not Einstein’s but the common or garden variety of judging people and things against other people and things. For example, when Scott Morrison, Australia’s prime minister, emerged from Joe Biden’s virtual climate summit he was condemned by the usual suspects for lagging behind the U.S., the U.K., and others, in not absolutely committing to net-zero emissions by 2050. On the other hand, he earned plaudits from the local conservative media rump for standing his ground; albeit much greener ground than he occupied a few years ago.

A conservative-leaning cartoonist in the Australian newspaper, Johannes Leak, caught the mood. Boris Johnson, Justin Trudeau, Jacinda Ardern and Greta Thunberg were pictured at Joe Biden’s Mad Hatter’s tea party mocking Morrison approaching the table soberly with his “measurable achievements and realistic goals.” Accordingly, he basks in the glow of being less idiotically alarmist than his peers.

Of course, Australia’s so-called “achievements” (regarding his "realistic goals," more below) rest on a pipsqueak reduction in CO2 emissions which don’t move the gauge at Mauna Loa in Hawaii. Nevertheless, in percentage terms, it’s relatively better than most. That’s what counts, apparently.

Whatever...

Is everything relative? Are there no absolutes? For a dwindling proportion of men and women there remains a God. For climate alarmists (and that’s now about everyone who’s anyone) a new absolute has emerged. This is vitally important. Religions need absolutes. If you are going have interfaith dialogue with the Pope, which John Kerry has just begun, you gotta have something to show. I suggest that carbon neutrality fits the bill.

“We have God, the way, the truth and the life,” the Pope averred.

“Well, Your Holiness, we have carbon neutrality, scary projections and wind turbines preventing the planet from becoming a fiery hellhole.”

“I think we've got a deal,” says the Pope.

OK, it might not have gone down quite like that. But there is no doubting the religiosity of climate change. And religions need an absolute.

Forget Kyoto and Paris and the relativity of comparing by how much this or that country has reduced its own emissions since 2000 or 2005. All now equally have to aim for, dare I say, the sacred number of net-zero. But what does it mean? Akin, if you like, to the old question about the meaning of God. I searched:

An Australian website called Carbon Neutral seemed a promising place to start. This what I found: “Carbon neutrality means that you have to reduce your climate impact to net zero.” OK, I think. But disappointment follows: “As it is almost impossible to avoid the creation of greenhouse gasses emissions entirely, you will need to balance these emissions through the purchase of carbon offsets.” Hmm? There seems to be a fallacy of composition going on here. Sure, any individual, company, state or country can buy offsets. But not all. Short, that is, of Martians turning up with carbon credits in their space knapsacks.

I turned, at random, to the website of OVO Energy, a U.K. "green energy" company. Here I found the answer. This is what it means in terms of what must be done.

We (the world) must switch to 100 percent reliance on renewable energy for electricity, accompanied by battery storage. We must insulate houses, install low-carbon heating and smart energy-saving products. Switch to electric cars but, note, as making them creates emissions we really need to shift to using public transport. And, as air travel is an issue until it is carbon free, we need to replace vacations with, wait for it, “staycations.” Fits in, I suppose, with Covid-fearing isolationism. Farm animals too are a problem, so we need to move to plant-based diets. Massive forest planting completes the future carbon-neutral nirvana.

Welcome to Cloud Cuckoo Land.

As anyone of common sense can see this is completely unachievable; apart from being undesirable for those not keen on regressing to a rude state of nature. But at least there’s an honesty about it, which we don’t hear from politicians, who simply repeat ‘net-zero by 2050’ as a mantra to signify fidelity to the faith. Even arithmetic has fallen victim to the faithful. To wit, take Liddell, a coal power station in New South Wales.

Built in 1973, it can still deliver up to about 1,700 MWh of dispatchable power. It’s due for closure in couple of years. Mooted to replace it: a mixture of wind, solar, batteries and gas. Of these, only gas can provide 24x7 power. In case there is any doubt. Wind is intermittent. The sun doesn’t shine of a night. Battery power drains quickly.

Consider wind. Wind turbines on average deliver at best only 30% of their capacity. A typical turbine with a capacity of 1.67 MW produces just 0.5 MWh on average. Thirty-four hundred such turbines would be required to provide 1,700 MWh; occupying about 60 acres per MW of capacity, or 340,000 acres of land. And hold on, an infinite number would be insufficient when the wind isn’t blowing.

To infinity and beyond!

In other words, wind power is expensive, land-intensive and useless. No ifs or buts. It has to be taken out of the 24x7 equation; as does the sun, as do batteries. This leaves only gas. The idea is to provide 660 MWhs of gas. Let’s see, when I went to school, 660 plus zero, or something very small, does not come close to equalling 1700. Never mind, there is still plenty of coal power around to tap to fill gaps.

The Liddell story is like many. Renewable energy (RE) only works now, when it does work, because it is a small part of the energy mix feeding into grids, which borrow from dispatchable power sources in case of need. Watch out when those dispatchable power sources become fewer and fewer. Unless, that is, of course, Kerry’s yet uninvented technologies come to the rescue. After all, there is no imaginable limit to what can be achieved come uninvented technologies. In other words, come miracles befitting the new religion and its totemic absolute of carbon neutrality.

I noted above that Morrison was lauded for having “realistic goals.” Really? He’s pinning his hopes on reaching net-zero on green hydrogen and carbon capture; to which he’s committing oodles of taxpayers’ money. Relatively speaking, he’s just a little less besotted with uninvented technologies and the new religion than is Kerry.

Russian Pipelines, Da, American Pipelines, Nyet

Let me get this straight. Recently, Russian hackers shutdown North America's largest pipeline for days, massively disrupting the supply chain on the eastern seaboard and leading to shortages and price spikes. Eventually Colonial, Inc, the line's owner, paid a $5 million ransom to get it up and running again, a decision about which the Biden administration officially had no opinion. Of course, anyone with half a brain knows that's a lie, that they must have been working both sides, pushing Colonial to towards a course of action (presumably the one they took) on the one hand, and engaging their Russian counterparts about it on the other.

Well, the cyberterrorists got what they asked for, and now the Putin regime have gotten their dearest wish as well: the Biden Administration will allow construction of the Nord 2 pipeline project which will enable Russia to satisfy Germany's appetite for oil and gas (which has become more voracious since Germany embarked on its foolhardy Energiewende policy) without passing through Ukraine, a country where anti-Russian sentiment is rife. Moreover, Biden is waiving existing sanctions on the company building the pipeline and its president, Putin ally and former Stasi officer Matthias Warnig, to get the project done.

This is surprising, as Team Biden have been very open about their opposition to Nord Stream 2, fearing it would shift the balance of power in the region by getting Germany addicted to cheap Russian energy, boosting Russia's economy, and further subordinating the smaller countries in the region to the larger. Just this February, Jen Psaki was uncompromising when she articulated the administration's view on the matter:

Our position on Nord Stream 2 has been very clear, and it remains unchanged. President Biden has made clear that Nord Stream 2 is a bad deal. It’s a bad deal because it divides Europe, it exposes Ukraine and Central Europe to... Russian manipulation, and because it goes against Europe’s own stated energy and security goals.

And then suddenly Bidenettes backed down. Something strange is going on here. Foreign policy analyst Rebeccah Heinrichs tweeted sarcastically, "How absolutely wild is it that Russians attacked a US pipeline while gas prices were already high and like two days after the US company pays the relatively small ransom Biden lifts sanctions on Nord Stream 2." It's definitely suspicious.

Then again, the two events might be unrelated. What is indisputable, however, is that this move looks  ridiculous in light of Biden's anti-pipeline domestic policy. As Dan Foster put it, "Killing energy jobs in Oklahoma and creating them in St. Petersburg is so comically inept and villainous you could never even try it without the entire press in your back pocket."

It isn't hyperbole to say Donald Trump (alleged Putin patsy, who was actually tougher on Russia than any president since the fall of the Berlin Wall) would have been impeached for this. After all, he was impeached for less.

Biden Administration: 'Actually, Pipelines are Good'

I quoted this the other day, but Kyle Smith's line about how anti-pipeline Joe Biden has been bears repeating. For candidate Biden, "Keystone XL not only was a menace to our American way of life by bringing us energy, Biden thought it had to be cut off before his first afternoon nap." And he did, in fact, kill Keystone on Day 1 as promised.

That's a good fact to remember, since during the Colonial pipeline fiasco at least three officials in the Biden administration have admitted that pipelines are the safest and most efficient way to transport fuel. H/T to Breitbart for collecting the quotes:

First, "Climate Czar" John Kerry:

Kerry, when asked by Republican Rep. Darrell Issa (CA) if it is “true, the pipelines are more carbon-delivery efficient than trains or trucks or other forms of delivery?” Kerry immediately responded and said, “Yeah, that is true.”

Next, Energy Secretary Jennifer Granholm:

Granholm... admitted Tuesday, “pipe is the best way to go” when transporting fuel, during a press briefing regarding the Colonial Pipeline cyberattack.

And finally, Transportation Secretary and former McKinsey Globalist... er, sorry, Small Town Mayor/Presidential candidate Pete Buttigieg. Asked whether he agrees with Secretary Granholm's comments that "pipelines are still the best way to move oil,”

Buttigieg responded by saying, “certainly.” He then continued, especially “when you’re talking about the efficiency of moving petroleum products.” “That’s why we have pipelines,” he added after.

Maybe someone should clue in the old man upstairs, after he wakes up from his nap.

The Colonial Pipeline Experiment

Here's some good news -- after several days offline, due to a ransomware attack by Russian hackers, Colonial Pipeline is back up and running as of Wednesday evening. And sooner then expected -- the initial estimates suggested that it might not be able to be restarted until this weekend. This has led to some questions about whether Colonial (perhaps with some encouragement from the Feds) simply paid the hackers' ransom demand. CNN says no, they just beat the hackers with an assist from the FBI, but Bloomberg is reporting that that's exactly what they did:

Colonial Pipeline Co. paid nearly $5 million to Eastern European hackers on Friday... The company paid the hefty ransom in untraceable cryptocurrency within hours after the attack, underscoring the immense pressure faced by the Georgia-based operator to get gasoline and jet fuel flowing again to major cities along the Eastern Seaboard, those people said. A third person familiar with the situation said U.S. government officials are aware that Colonial made the payment.

Either way, this is an embarrassment for the Biden Administration, but allowing (maybe encouraging) an American company to pay a ransom to Russian cyber terrorists would be hard to come back from. Still, Joe must not have liked the prospect of gas lines -- that totem of Carter-era malaise and harbinger of the Reagan revolution -- lasting more than a few days.

Even so, this crisis won't be ending immediately. Colonial has said, "it will take several days for the product delivery supply chain to return to normal," meaning that souring prices, panic buying, and even rationing are probably going to be with us in the affected states for at least a week.

On the bright side, this is about as close as we can get to a controlled experiment. It would be wildly irresponsible to shut down a pipeline just to spite our obnoxious anti-pipeline protestors and the limousine liberals who fund them. But to see those same liberals sitting in their limousines (or SUVs more likely) in northern Virginia waiting their turn to fill their tanks (and maybe a few plastic bags) with gas? Priceless. Here's hoping the Canadians are watching how this is playing out.

Perhaps the headache will even cause Biden to rethink a few of his own green commitments. As Kyle Smith reminds us,

If Biden himself were not on record as being himself a fan of shutting down fuel pipelines — Keystone XL not only was a menace to our American way of life by bringing us energy, Biden thought it had to be cut off before his first afternoon nap — this brewing crisis wouldn’t be so potentially damaging to him. Biden is an ardently pro-fuel-limits guy in a moment when fuel is limited. As one of his other first acts in office — “Let’s own Trump by endangering our energy future” — he also banned new fracking leases on federal land. Maybe it would be nice to have more energy supply rather than less given what’s happened since?

Don't hold your breath.

Colonial Pipeline Hack May Be Just the Beginning

This week, hackers believed to be the DarkSide ransom gang operating out of Eastern Europe, possibly Russia,  targeted Colonial Pipeline, infecting its  information-technology systems though not its operational control systems. It seems to me the hack is a national security issue, as the pipeline which runs some 5,500 miles from the Gulf State refineries in Houston to customers in the southern and eastern part of the country all the way to New Jersey. It supplies 45 percent of the fuel in this swath and serves 50 million Americans and several major airports. 

The White House apparently takes a different view  announcing it’s a “private sector decision” as to whether Colonial should pay a ransom to get its pipeline back on  line. Anne Neuberger is deputy national security adviser for cyber and emerging technology:

Ms. Neuberger declined to comment on whether Colonial has paid a ransom, and the company hasn’t said so publicly either. She also said the administration hadn’t made a recommendation to Colonial on whether it should pay.

Normally the FBI encourages victims to not pay the ransoms to avoid fueling a booming criminal industry, but Ms. Neuberger said the administration recognized that is often not a feasible option for some companies, especially those that don’t have backup files or other means of recovering data.

Of course, paying the ransom will only make DarkSide’s tools more valuable to both them and to those they sell the programs to, meaning we’ll see more of this and with ever-increasing deleterious economic and energy consequences.

The shape of things to come?

It’s not as if we are in the dark about the need to safeguard cyberspace in critical infrastructure. We have in the Department of Homeland security and  a National Cybersecurity and Communications Integration Center (NCCIC),  with this mission:

DHS coordinates with sector specific agencies, other federal agencies, and private sector partners to share information on and analysis of cyber threats and vulnerabilities and to understand more fully the interdependency of infrastructure systems nationwide. This collective approach to prevent, protect against, mitigate, respond to, investigate, and recover from cyber incidents prioritizes understanding and meeting the needs of our partners, and is consistent with the growing recognition among corporate leaders that cyber and physical security are interdependent and must be core aspects of their risk management strategies.

In an email communication to me Eric Goldstein, executive assistant director for cybersecurity of the Cybersecurity and Infrastructure Security Agency, states they are on the case of the Colonial Pipeline hack. “We are engaged with the company and our interagency partners regarding the situation," he said. "This underscores the threat that ransomware poses to organizations regardless of size or sector. We encourage every organization to take action to strengthen their cybersecurity posture to reduce their exposure to these types of threats.”

Colonial is in the meantime manually operating a segment of the North Carolina to Maryland stream. Gas-station lines have formed in several of the southern states, and truckers are warning of a variety of supply chain problems. The company indicated they may be fully operational in a few days  but Mark Ayala, director of industrial-control system security 1898 & Co., suggests it may take longer:

Given the breadth of the unknowns, the discovery, containment decontamination and remediation effort will be lengthy and likely to result in a gradual return to operations.

 The immediate impact may be less on the immediate availability of gas in the affected corridor than on the rising cost of gas as people prepare their getaways after over a year of Covid-19 lockdowns. The issue that most concerns me, however, is the need to update cybersecurity on energy infrastructure.

Here we go again.

There are political and technical problems with doing this, even if we make the assumption that government cybersecurity operations are doing their job and private firms are working hard to protect it. Mandiant (part of FireEye) did just that in successfully limiting the Colonial damage by persuading a hosting provider to shut down a server that contained the stolen data, thus isolating it from the hackers.

 Last year CISA warned pipeline operators about the threat of ransomware. It doesn’t seem Colonial  adequately responded to the warning. Why not? There are several practical problems with hardening cybersecurity on pipelines. Indeed, such risks seem to exist throughout the energy grid:

  1.  “Legacy assets,” decades old systems to which more recent digital technology has been added on, making them more vulnerable, not less.
  2.  The technology is difficult to update because there’s no down time for the operations, and with no downtime it’s difficult to update software. You cannot shut down a pipeline regularly to update your technology.
  3. The reluctance of rate regulators to allow expansion of cybersecurity budgets.
  4. The recent practice of industrial companies to converge their operational technology and information technology, which  makes it harder to contain infections.

And then there's overconfidence:

More than two-thirds of executives at companies that transport or store oil and gas said their organizations are ready to respond to a breach, according to a 2020 survey by the law firm Jones Walker LLP. But many don’t take basic precautions, such as encrypting data or conducting dry runs of attacks, said Andy Lee, who chairs the firm’s privacy and security team. “The overconfidence issue is a serious phenomenon,” Mr. Lee said.

These are the practical constraints on limiting malware and ransomware attacks on critical energy sectors, like pipelines. And then there’s the political handicap. Despite sending our warnings and calling together task forces of bureaucrats to discuss the issue, the focus of the Biden Administration is not on shoring up cyber liabilities. To it, “infrastructure” means doing away with fossil fuels and making the grid even more vulnerable. In fact, as the editors of the Wall Street Journal argue:

The U.S. government could help companies harden their information systems, but the risks to infrastructure will grow unless the U.S. makes the energy system more resilient and redundant. That won’t happen with Mr. Biden’s 500,000 new EV charging stations and rooftop solar panels on every home.

Just the opposite. The grid and other infrastructure will become more vulnerable as more systems get electrified and connected. The Government Accountability Office warned in March that home solar panels, EV chargers and “smart” appliances that companies control remotely are creating new entry points for cyber criminals to take over the grid.

Defending the U.S. against cyber attacks is the Biden Administration’s most important infrastructure job, but that’s not what its $2.3 trillion proposal would do.

Buckle up for a bumpy ride.

The Fossil Fuels Must Go Through

There is something surrealistically ironic about Joe Biden's Emergency Order to mobilize tanker trucks -- anything -- to keep the fossil fuels going. On the one hand it is a backhanded admission of how vital the products transported by the Colonial Pipeline are. On the other it is a reminder of how policy errors can progressively cascade through the system, one mistake compounding the others.

The federal government issued a rare emergency declaration on Sunday after a cyberattack on a major U.S. pipeline choked the transportation of oil to the eastern U.S. The Colonial Pipeline, responsible for the country’s largest fuel pipeline, shut down all its operations Friday after hackers broke into some of its networks. All four of its main lines remain offline.

The emergency declaration from the Department of Transportation aims to ramp up alternative transportation routes for oil and gas. It lifts regulations on drivers carrying fuel in 17 states across the South and eastern United States, as well as the District of Columbia, allowing them to drive between fuel distributors and local gas stations on more overtime hours and less sleep than federal restrictions normally allow. The U.S. is already dealing with a shortage of tanker truck drivers.

Why is there a shortage of tanker truck drivers? One reason is the Covid-19 lockdown. "We've been dealing with a driver shortage for a while, but the pandemic took that issue and metastasized it," said Ryan Streblow, the executive vice president of the National Tank Truck Carriers. "It certainly has grown exponentially."

Warning: driver shortages ahead.

More fundamentally truck driving has become an unattractive lifestyle choice for young people. "The trucking industry relies heavily on male employees, 45 years of age or older... With an alarming amount of these drivers retiring within the next 10-20 years, we are quickly approaching a dangerous cliff." Given the 18-20-year-old group has the highest rate of unemployment of any age bracket that may sound surprising, but it less so when the strict regulatory requirements for commercial driver's licenses are taken into account.

It is telling that one of the first things Biden did to increase fuel-trucking capacity was to relax federal restrictions. For too long public policy has taken the availability of labor and energy for granted. "There are now more jobs available than before the pandemic. So why aren't people signing up?" asks NBC.

Economic impact payments, or stimulus checks, have also played a factor for some who are sitting out the labor market, some employers say. Factory owners and employers lament that the generosity of unemployment benefits and stimulus payments have some workers avoiding returning to work because they make more money not working.

“I had one guy quit who said I can make more on unemployment. I’ll take the summer off,” said Robert Stevenson, CEO of Eastman Machine Company, a producer of machines that cut specialty fabrics for industry. “I told him I can’t guarantee you’ll have your job back. He said, ‘I’ll take my chances.’”

It's easy to throw away capacity when you've got enough. Activist Kendall Mackey was willing to cancel the Keystone XL Pipeline to make a statement. “The Keystone XL pipeline was never about any single pipeline. It’s about establishing a litmus test rooted in climate science and climate justice for government projects and infrastructure.” Gail Collins wrote in the New York Times that “my instinct is to always side with the folks who don’t want to drill for more oil.”

Oil -- who needs it?

Only a few had the wit to realize the years of fat don't last forever.  As Robert McNally wrote on CNN the years of lean eventually come. "When oil prices next boom (and trust me, they will), investors will resume interest in pipeline projects and whoever is in the White House may regret Keystone XL's cancellation because the United States will have to rely more on less stable trading partners for oil."

The cyberattack on the Colonial Pipeline by the Russians no less is a reminder that old fashioned national security, fuel stockpiles and working class labor still matter in the real world. When you need them you really need them. Well might Joe Biden mimic Augustine's famous prayer: "Grant me chastity and continence, but not yet."

Abolish fossil fuels and rednecks, but not yet.

Gretchen Whitmer in the Enbridge Pipeline Wonderland

The drama surrounding Enbridge Inc.'s Line 5 is getting tense. Michigan's governor, Gretchen Whitmer, has ordered the Calgary-based energy company to cease operating the pipeline by May 12th. Enbridge has vowed to defy that order, which it insists Whitmer has no authority to issue, and await a legal judgement. Whitmer's office has declared that "Enbridge’s continued operation of the Line 5 pipelines in the Straits of Mackinac [after May 12th] would be unlawful." Enbridge executive vice-president Vern Yu shot back, “We will not stop operating the pipeline unless we are ordered by a court or our regulator, which we view as highly unlikely."

Tempers are clearly running hot, and they have been for months. Back in November, Whitmer fulfilled a campaign promise by revoking the easement -- first granted in 1953 -- which has allowed Enbridge to operate a pipeline along the bottom of the Straits of Mackinac en route to refineries in Sarnia, Ont., arguing that any rupture in the line could devastate the ecosystems of two Great Lakes -- Lakes Michigan and Huron.

Line 5 has never had a significant leak in its nearly seventy-year history, but even so Enbridge had already proposed a solution to this potential problem -- a replacement pipeline to be laid beneath the riverbed and encased in concrete, with the object of safeguarding the straits. This was too little, too late for Whitmer and her fellow environmentalists, who pointed out that the proposed project would take years to complete.

Take that, Canada!

Some of that time, of course, is due to agencies in Whitmer's own administration dragging its feet about issuing permits and cheerfully adding extra regulatory hurdles. Most recently, the Michigan Public Service Commission, all of whose members are Whitmer appointees, decided that it was legitimate for them to take into account the environmental impact of the petroleum products the pipeline is transporting when deciding on the environmental impact of a new pipeline.

I'll say that again -- the commission is going to factor the future CO2 emissions of the oil and gas which pass through Line 5 into their decision about whether the pipeline itself poses a threat to the Great Lakes. Utterly insane, bringing to mind a certain tea party from the pen of Lewis Carroll:

Mad Hatter: Would you like a little more tea?
Alice: Well, I haven't had any yet, so I can't very well take more.
March Hare: Ah, you mean you can't very well take less.
Mad Hatter: Yes. You can always take more than nothing.”

Quite a lot is at stake in this dispute. Some 540,000 barrels of Canadian oil and natural gas pass through Line 5 every day, between 40 and 50 percent of Ontario and Quebec's total supply, including all of the jet fuel used at Toronto’s Pearson International Airport. It has been referred to as the “spinal cord of Ontario’s infrastructure,” and through Ontario, to Quebec and points further east as well. A shutdown would have devastating consequences for consumers in eastern Canada, leading to fuel shortages and price spikes. And then there's the effect on employment -- the government of Ontario estimates that killing Line 5 would cost that province 5,000 jobs directly and indirectly almost 25,000.

Whitmer's own constituents would be effected as well -- half of the propane used to heat homes in Michigan passes through Line 5, and a great deal of oil bound for Ohio and Pennsylvania besides. But that's nothing like the effect a shutdown would have on Canada's two largest provinces.

And that makes this a tricky situation for Canada's famed green prime minister, Justin Trudeau. As Rex Murphy has pointed out, for the Canadian left, environmentalism was always supposed to be an anti-Alberta project. Though cloaked in high-flung rhetoric about saving the planet, in Canada the Green Movement has often been a cat's paw of the left-of-center parties for preventing the conservatively inclined western provinces from capitalizing on their natural resources and enhancing their economic might. But, notes Murphy:

Line 5, is not a pipeline OUT of export-blockaded Alberta, heading to the U.S. and hoping for a better market. Line 5 is a pipeline INTO Ontario, and — as Robert Frost was good enough to supply the phrase — that “has made all the difference.”

The 2019 election definitively demonstrated that the Trudeau Liberals can remain in power with essentially zero support out west, but only if they pull big numbers in Ontario, Quebec, and the Maritimes. If, however, voters in those provinces, whose fuel bills have already swelled thanks to Trudeau's carbon taxes, suddenly see their gas prices jump by, say, 30 percent, coupled with related job losses in the tens of thousands, enough of them are going to flip to one of the other parties to boot Justin from power, no matter how hard the CPC appear to be trying to lose.

2019 election by province (Wikicommons)

Consequently, the Trudeau government is desperate for the Line 5 dispute to be resolved in their favor. According to Reuters:

Ottawa’s strategy... is to repeatedly raise the issue of Enbridge Inc.’s Line 5 with numerous U.S. counterparts — including Biden — to get them to pressure Michigan’s Democratic Governor Gretchen Whitmer to keep the pipeline open.

Trudeau has apparently spoken to Biden directly about Line 5 more than once, but with no public response from the president as of yet. And Whitmer's side seem disinclined to back down -- Whitmer ally Liz Kirkwood recently remarked that “[t]he Canadians are awfully silent about our shared responsibility to protect the Great Lakes." Consequently, the Canadian government has begun flirting with more drastic measures, including invoking the (never-before-used) 1977 Transit Pipelines Treaty, which states:

No public authority in the territory of either party shall institute any measures… which are intended to, or which would have the effect of, impeding, diverting, redirecting or interfering with in any way the transmission of hydrocarbon in transit.

Suffice it to say, this is far more than they ever did for Keystone XL. And, of course, that makes this a mess of their own making, at least in part. As I wrote at the time, there was "no obvious limiting principle" to the rationale for killing Keystone, and now the same vacuous arguments are being deployed against Line 5. Had Trudeau been willing to actually defend Canadian interests then, it's unlikely that he would have this problem now. Instead, he played politics while accepting a pat on the head from the global environmentalist crowd.

Well now he's on the receiving end while Gretchen Whitmer does the same thing. Trudeau deserves everything he gets. And it's tempting to say the same for the people of Ontario and Quebec. After all, they voted for him.