Energy

Hamm On Keystone Pipeline: “Not Relevant”

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What are the Republicans and The Oklahoman editorial board going to do now that local oil baron Harold Hamm has called the northern segment of the Keystone XL pipeline “not relevant”?

The GOP and the right-wing newspaper have lambasted President Barack Obama for delaying action to approve he construction of the pipeline, which would essentially move Canadian-produced oil to the Gulf coast. They made it a campaign issue in the recent election, and a recent Oklahoman editorial argued Obama “has blocked Keystone at every turn, in a nod to environmentalists.” The editorial’s headline even proclaimed, “Keystone project should be near top of GOP to-do list.”

But Hamm, pictured right, the founder and chief executive officer of the energy company Continental Resources in Oklahoma City, recently had this to say to Politico about the pipeline: “It’s not relevant at all in my opinion. And here we are making it relevant now? Forget it.” That was only a few days after The Oklahoman published its editorial.

Hamm has bonafide GOP credentials. He served as an energy advisor to Republican presidential candidate Mitt Romney in his failed 2012 campaign. So why is he trying to interfere with the conservative mojo right after an election with major gains by Republicans on the national level?

Partially, it’s just plain logic. The pipeline just isn’t as necessary for American interests as the GOP has let on. But it’s mainly about business. There’s a world oil glut, and prices are dropping. Hamm said, “If we have an … oil oversupply looking at us, do we need more Canadian oil here? Probably not.”

While it’s true the construction of the pipeline would create jobs, as The Oklahoman has argued, those job would only be temporary, and the potential for environmental damage would remain high during and after the pipeline’s construction.

In essence, the pipeline is yet another GOP issue like Obamacare that is only used as a cudgel to criticize Obama. (New York Times columnist Paul Krugman wrote about this conservative tactic today.) If the pipeline was built, and the oil glut deepened further, it could hurt the economy in Oklahoma as the fracking boom here goes bust. Somehow, The Oklahoman finds this acceptable, right? Well, probably not. It just wants to bash Obama for any reason whatsoever, even if it becomes “not relevant.”

The billionaire Hamm did tell Politico that the pipeline should have been built six years ago, but wouldn’t that have tempered the fracking boom in Oklahoma and Texas? Hamm’s position on the pipleine, of course, comes from his own company’s perspective and interests. Continental has been a big player in the Bakken shale formation in North Dakota.

It will be interesting to note what impact Hamm’s statements will have on the GOP and its right-wing noise machine, which includes The Oklahoman editorial page. Will they persist with criticism of Obama over the issue and still support the “drill, baby, drill” philosophy, which has created an environmentally unsound fracking boom in several states and produced an oil glut? Have the Republicans, once again, lost one of their specious fear-mongering issues because common sense eventually prevailed under the Obama administration?

Just Across The Border From Oklahoma

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The fact that voters in a north Texas town approved a ban on hydraulic fracturing or fracking within its city limits may not have any immediate practical consequences, but it’s a symbolic statement likely to resonate north of the Red River into Oklahoma.

In last week’s election, by a 59 to 41 percent margin Denton voters approved the ban. Denton is just north of Dallas and has been a prime and productive location for fracking, an oil and gas extraction method that many environmentalists oppose. Environmentalists there specifically argued that fracking in the city has contributed to noise pollution, poor air quality and earthquakes that scientists have linked to wastewater disposal wells used in the extraction process.

The vote apparently doesn’t matter for at least one state official, Texas Railroad Commissioner Christi Craddock, who said she will continue to issue permits for fracking in Denton because the city doesn’t have the authority to deny them. In other words, the fracking in Denton will continue despite the vote.

The oil and gas industry, of course, is most often connected to conservative politics or ideology, which supposedly privileges local control of any given issue. The fracking issue in Denton complicates that argument for conservatives. Local governments can’t and shouldn’t pass laws without legal challenge that supersede state or federal law—what about laws that discriminate, for example?—but they should be able to protect their basic viability and self-interest. What is the impact of fracking on the health of any city’s residents? What about home values? What if the fracking boom negatively affects a city’s businesses? These are core issues related to a city’s basic survival, and residents have a constitutional right to protest and take legal action, such as voting in favor of a referendum or filing lawsuits.

Denton is just one of many local cities throughout the country that have become concerned with the environmental impact of a fracking boom that has now led to a glut of oil in world markets. Fracking is the extraction process in which water laced with sand and chemicals is injected by high pressure underground to create fissures in rock formations that release oil and gas. The leftover water/chemical substance is then injected by high pressure into wastewater disposal wells or injection wells.

The fact that a Texas city has become fed up with the destructive environmental impact of fracking carries heavy symbolic value throughout the country, especially here in Oklahoma. Oil and gas companies and their surrogates can’t stereotype the city’s residents as environmental radical leftists. These are people basically concerned about their home values and their quality of life. They are undoubtedly a lot like Oklahomans.

A fairly recent study conducted by the Associated Press showed there have been hundreds of complaints filed by people in four states, including Texas, that claim the fracking process has contaminated water. The other states are Ohio, Pennsylvania and West Virginia. Scientists recently have also linked the injection-well process to a surge in earthquakes. Oklahoma, which is also experiencing a fracking boom, has seen a dramatic surge in earthquakes over the last few years.

The overall larger issue is the impact on the planet by the extraction and burning of fossil fuels. Our planet is getting warmer, leading to rising sea levels that could threaten the existence of major coastal cities. Our oceans have become more acidic because of carbon emissions, threatening the planet’s eco system.

President Barack Obama and Chinese President Xi Jinping announced an agreement Tuesday to cut carbon emissions in future years, an agreement quickly denounced by Republicans. The implementation of the agreement, of course, will be problematic and difficult to monitor, but at least it’s a starting point. The planet, however, may have already reached a tipping point that means we can’t avoid major damage to the planet.

As I’ve written many times, the larger answer is to develop more renewable energy sources, such as solar and wind power and hydropower, that have less of a negative impact on the environment than fossil fuels. We also need to build more public transportation systems, such as high-speed railway lines. We have the answers and technology to power our planet and move ourselves around it efficiently and comfortably while also significantly reducing our environmental footprint. Fracking isn’t one of the answers.

An Oklahoma Story: Boom To Bust

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What happens to Oklahoma if the recent boom in oil and gas production propelled by hydraulic fracturing goes bust?

If it’s anything close to the 1980s glut that led to steep price drops for oil, a devastated state economy and an ensuing exodus of people from Oklahoma, then it could be an extremely bad problem. For those of us who lived through the 1980s in Oklahoma as working adults, the sheer thought of another major bust should generate a lot of anxiety if not downright panic.

All this doesn’t even take into account the damage to the environment that would get left behind because of the hydraulic fracturing or fracking extraction process, which environmentalists claim contaminates water supplies and leads to earthquakes caused by wastewater disposal. Who’s going to pay for the clean up? Bankrupt or financially struggling oil and gas companies?

I’m posting about this topic because billionaire oilman and Oklahoma State University alum T. Boone Pickens recently gave a speech here in Oklahoma City in which he said oil production in the United States has doubled in the last 10 years and is creating a glut in the world market, lowering barrel prices. NewsOK.com quoted Pickens as saying, “Now we’re producing too much oil.”

The prices are much higher per barrel than they were in the 1980s and supposedly the state economy is more diversified now, but let there be no mistake that any major slowdown in the oil and gas patch is going to strain the Oklahoma economy and especially state revenues. Crude oil prices have dropped from more than $110 per barrel to approximately $80 per barrel over the last year, and some experts expect the decline to continue.

This has meant gasoline prices have dropped below $3 per gallon in some American cities, including Oklahoma City, but that savings doesn’t boost the overall state economy as much as a booming oil patch.

I don’t want to sound overly paranoid, but here are a couple of points to consider:

(1) It’s my belief and experience as a journalistic observer here that oil and gas companies are notable for short-term management and fiduciary practices detrimental to a stable energy supply and overall energy policy. These companies are like children eating too much candy and then getting sick. By this, I mean oil and gas companies almost always adopt and promote a boom mentality, if the conditions warrant, expanding their employee base and drilling as much as possible as the boom plays out. Once the boom goes bust, which it always does, employees are laid off in droves. In some cases, larger companies swallow up the assets of smaller companies. Of course, the big benefactors of this system are chief executive officers and other high-level members of oil and gas companies, who essentially take their millions of dollars and run, only to resurface again in the next boom. The cycle of boom and bust, which severely affects energy states like Oklahoma, will only stop when the country develops more renewable and cleaner energy supplies and adopts a sensible energy policy about fossil fuels. That seems highly unlikely over at least the next two years.

(2) It will be interesting to note how Republicans will criticize President Barack Obama over the oil glut. (Republicans, of course, blame Obama for everything.) The GOP has constantly depicted the president as anti-fossil fuels yet domestic oil production has doubled during his tenure. Basic facts like these somehow go unchallenged by Democrats or the president himself. Now that there’s an oil glut, with dropping prices, how will Republicans, with their majorities in the House and Senate, try to rescue the oil and gas companies they depend upon for campaign contributions or, to put it another way, their very sustenance as politicians. How many more tax breaks to oil and gas companies will the Republicans try to hand out under the rhetorical subterfuge of “American energy independence”?

The 1980s in Oklahoma, ironically the era of sacrosanct Republican former President Ronald Reagan, weren’t the best of times for the state economy to say the least. No one here wants to experience such a dramatic economic downturn again, but if we do it’s only fitting that the adoption of the nonsensical GOP “drill, baby, drill” slogan as energy policy will have been the main culprit. Thousands unemployed, plummeting state revenues, even more cuts to education and environmental damage on a large scale could be in our near future in Oklahoma. We’ve seen it before here, and it could happen again.

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