Obama Was Wrong on Oil. We Did ‘Drill Our Way Out of the Problem.’

When gas prices topped $4 per gallon in May 2011, President Barack Obama said, “We can’t just drill our way out of the problem.”

Throughout his presidency, Obama stated some version of that sentiment every time he wanted to push to subsidize alternative energy sources.

More than seven years later, human ingenuity, technological innovation, and the power of the free market have proven him wrong. To the benefit of American families across the country, the United States is now the largest global producer of crude oil.

According to a report from the federal government’s Energy Information Administration this week, U.S. crude oil production surpassed that of Saudi Arabia and Russia. When Obama made his statement in May 2011, U.S. monthly production was 174 million barrels (5.67 million barrels per day). In June 2018, monthly production stood at 320.23 million barrels (10.67 million barrels per day).

The dramatic increase in supply shows drilling is not just a “bumper sticker” slogan, as Obama called it in his weekly address in February 2012, but a path to energy independence, prosperity, and jobs.

Domestic extraction has lowered gas prices for millions of drivers and savedthem hundreds of dollars a year at the pump. A number of factors contribute to the price of gasoline, but crude oil is the largest.

In 2017, crude prices made up 50 percent of the price of gas, with federal and state taxes (19 percent), distributing and marketing (17 percent), and refining (14 percent) accounting for the rest. Over the past decade, crude oil accounted for 61 percent of the total cost of a gallon of gas.

The economic benefits of the shale boom extend well beyond crude oil production and lower prices at the pump. When combining natural gas and other petroleum products, the U.S. has been the world leader for seven years.

Thanks in large part to smart drilling technologies, increased energy supplies lowered household energy bills. Businesses are spending less on shipping and electricity costs and can invest in new technologies or hiring more people.

In the last eight years alone, chemical companies have invested more than $200 billion in 333 projects—and cited the shale boom as the reason why they’re investing in America.

There’s no time like the present, but the future of U.S. oil and gas production looks incredibly bright, too. According to a recent report from IHS Markit, production in the Permian Basin of West Texas and New Mexico could double by 2023. The Bureau of Land Management’s lease sale in New Mexico grossed nearly $1 billion in bonus bids for 142 parcels.

In its draft proposed program in January, the Department of Interior listed 47 potential lease sales off the coasts of Alaska, and in the Pacific, the Atlantic, and the Gulf of Mexico, and would make more than 90 percent of the total federal acreage available for exploration and development. These changes stand in stark contrast to the Obama administration’s last order, which placed all but 6 percent of the Outer Continental Shelf off-limits.

Drilling doesn’t have to be the solution. But Obama and others who have dismissed conventional resource extraction are ignoring that drilling has been an extremely effective solution when energy prices get uncomfortably high.

Free, competitive markets are the solution. Higher prices for oil incentivize energy companies to extract and supply more oil and incentivize entrepreneurs to invest in innovative alternatives to oil—batteries, natural gas vehicles, or biofuels.

Drivers will examine their options as well, whether carpooling, finding alternative modes of transportation, or, over time, purchasing a more fuel-efficient vehicle.

Washington does not need to dictate the solutions because it can do more harm than good by catering to special interests and breeding cronyism. A successful energy policy is one that unleashes free enterprise and not government planning, quotas, or subsidies.

Commentary by Nicolas Loris. Originally published at The Daily Signal.

Ratepayers Get Cold Shoulder as Green Energy Gets ‘Preferential Treatment’ in Delaware

Delaware residents are the victims of deceptive business practices associated with a green energy scheme resulting from elected officials’ sweetheart deal with a fuel cell company, policy analysts and academics argue.

Bloom Energy had pledged to create 900 full-time jobs in Delaware by Sept. 30, 2016, and to continue employing these workers for at least seven years.

But a filing with the U.S. Securities and Exchange Commission from Bloom Energy’s initial public offering in June shows that as of March, it had only 277 full-time employees.

“Bloom has been able to milk Delaware taxpayers and ratepayers for massive subsidies, gain preferential treatment on multiple fronts, and avoid rules that are rigorously applied to other industries,” energy researcher Paul Driessen said during an event Friday at The Heritage Foundation’s headquarters on Capitol Hill.

The Delaware General Assembly extended financial inducements to Bloom Energy through legislation in 2012, a major topic during the panel discussion at Heritage, as was what Driessen and other speakers called preferential treatment from state regulators and other government officials.

The Sunnyvale, California-based company manufactures solid oxide fuel cells that use an electrochemical reaction to transform natural gas into electricity.

Bloom Energy traces its roots to 2002, when a Silicon Valley venture firm, Kleiner Perkins Caufield and Byers, invested in the green energy company. (That firm is now known as Kleiner Perkins.)

In April 2012, Bloom Energy opened a manufacturing facility in Newark, Delaware, on a site owned by the University of Delaware that previously was occupied by a Chrysler assembly plant.

David Legates, a professor of climatology at the University of Delaware, told the Heritage audience that Bloom Energy isn’t a genuine green energy company because its fuel cells use fossil fuels and release more carbon dioxide than traditional natural gas plants.

Bloom Energy’s fuel cells also run on methane gas, which produces hazardous waste, he said.

Even so, the company qualifies for renewable energy credits under Delaware’sRenewable Energy Portfolio Standards Act, which calls on utilities to draw 25 percent of their energy from renewable sources by 2025. The company also is exempt from the state’s hazardous waste rules.

“Bloom Energy asserts that nothing on either side of the chemical equation is hazardous material, which technically is true,” Legates said. “However, no clean commercial source of methane exists. Thus, it contains many hazardous products that must be removed from the methane before it can be added to the fuel cell to avoid contamination … These compounds must be removed in sulfur canisters.”

A Sweetheart Deal

Legates’ slide presentation quoted Bloom Energy’s permit application as saying its manufacturing process “neither uses nor produces hazardous waste.”

The statement is misleading because it “ignores the presence of hazardous waste in the methane source,” he said.

But because Delaware officials accepted the company’s description of its manufacturing process, state rules governing hazardous waste aren’t applicable, he said.

In 2012 legislation amending Delaware’s Renewable Energy Portfolio Standards Act to allow fuel cells to be used as a renewable energy source, several provisions worked to the disadvantage of state residents, Legates said.

The law calls for a mandated surcharge, described as a tariff, on the bills of every Delmarva Power ratepayer that state lawmakers guaranteed to Bloom Energy for 21  years. The law also includes a clause that says Bloom Energy is entitled to all of the 21-year tariff if the law ever is repealed.

Legates described the arrangement between the state government and Bloom Energy as a sweetheart deal.

Delaware government officials charge Bloom Energy annual rent of $1 for its Newark manufacturing plant, and pledged to spend more than $16 million to upgrade the facility, he said.

“To date, Delmarva Power ratepayers have paid Bloom Energy approximately $200 million, and the total take by Bloom Energy from the state has been $300 million,” Legates said. “Moreover, the energy produced by Bloom Energy was more than three times as expensive [as traditional natural gas sources] in 2012, and now estimates place [it] as much as six times more expensive than traditional natural gas sources.”

Newark-based Delmarva Power, a subsidiary of Exelon Corp., provides electricity and natural gas to customers on portions of the Delmarva Peninsula in Delaware and Maryland.

The Daily Signal sought comment from Bloom Energy, but had not received a response by publication time.

Citizen Activist Denied Standing

John Nichols, a retired financial planner from Middletown, Delaware, who filed two lawsuits challenging Bloom Energy’s business practices and government policies that facilitate those practices, also spoke during the Heritage event.

In June 2012, Nichols sued then-Gov. Jack Markell, a Democrat, and members of the state Public Service Commission. Nichols argued that the state’s deal with Bloom Energy is unconstitutional.

In January 2013, Nichols appealed a decision by the state Coastal Zone Industrial Control Board that he didn’t have standing to challenge the permit issued to Bloom Energy by the state Department of Natural Resources and Environmental Control.

Nichols argued that the permit violated Delaware’s Coastal Zone Act, which regulates industrial activity in specific areas.

The courts ruled that he did not have standing in either his state or federal lawsuit.

“To violate both the spirit and intent of the Delaware Coastal Act took failure on a massive scale,” Nichols said during the Heritage event. “Ironically, these failures may serve a valuable public purpose.”

That’s because government agencies are responsible for  consequences to ratepayers and taxpayers that are beginning to gain attention, he said.

“The notion that all these failures are a coincidence strains credulity to the breaking point,” Nichols said. “These failures demand accountability for Delawareans, Delmarva ratepayers, taxpayers, Bloom investors, and everyone who values the beauty of the Delaware coastline.”

‘Duped Investors’

Although the state’s favoritism to Bloom Energy deserves further exposure and investigation, the company also benefits from “deep state” relationships at the national level with government and corporate figures, chemical engineer Lindsay Leveen told the Heritage audience by telephone.

Leveen, who is a consultant to corporations on energy deregulation and writes for the website Green Explored, reviewed the history of Bloom Energy and what he called its “collusion” with the internet company Google.

John Doerr, chairman of Kleiner Perkins in 1999, invested in Google and sits on the tech giant’s board. Doerr helped to organize financial support for Bloom Energy on behalf of Kleiner Perkins in 2002, Leveen said.

In July 2008, Google became Bloom Energy’s first commercial customer. Three months earlier, the American Society of Mechanical Engineers had released a report funded by the Department of Energy concluding that Bloom Energy “had by far the worst fuel cell on market,” Leveen said in his own slide presentation.

Bloom Energy installed four “Bloom Boxes”—devices used to convert natural gas to electricity—at Google headquarters, but only one of them had to operate at limited capacity for 30 days to be deemed a commercial success, Leveen said.

“The performance test at Google simply duped investors,” he said. “We also know from the S-1 [the Securities and Exchange Commission filing] that many of the Bloom Boxes failed and were decommissioned, and that Bloom took a major financial loss on the decommissioning of those boxes.”

Leveen called for executive branch agencies to investigate Bloom Energy, including the Federal Trade Commission, the Securities and Exchange Commission, and the Environmental Protection Agency.

Say the Magic Words, Answer No Questions

Despite financial setbacks, Bloom Energy remains afloat because it received government subsidies, tax breaks, and other favors from high-ranking government officials, Driessen, a senior fellow with the Washington-based Committee for a Constructive Tomorrow, said during his presentation. CFACT advocates free market solutions in energy policy.

“Bloom has been able to milk Delaware taxpayers and ratepayers for massive subsidies, gain preferential treatment on multiple fronts, and avoid rules that are rigorously applied to other industries,” Driessen said, adding:

The Delaware state legislature has allowed Bloom to operate under a unique definition of renewable energy that lets it qualify for special treatment and subsidies by claiming that its equipment could run on biofuels like methane from cows or landfills even if they never have done so, and even if they’ve always run solely on natural gas and even if they generate hazardous waste in the process.

Bloom Energy’s federal investment tax credit was eliminated in 2016, but Senate Minority Leader Chuck Schumer, D-N.Y., worked to restore the tax credit and make it retroactive to the date it ended, Driessen said. Sens. Tom Carper, D-Del., and Richard Blumenthal, D-Conn., helped Schumer revive the tax credit, he said.

Driessen cited figures showing state and federal officials have given fuel cell makers $3 billion in subsidies over the past decade, with $1.5 billion going to Bloom Energy. Even with this assistance, fuel cell companies lost $6 billion and Bloom lost $2.4 billion, he said.

“Bloom clearly appears to have made questionable statements and outright misrepresentations of material fact to legislatures, regulators, investors, and journalists,” he said, adding:

You might ask how do they get away with this? Actually, the formula for success is pretty simple. Invoke the magical, infinitely malleable terms climate change, renewable energy, sustainability, and environmental protection, and you can pretty much deceive, exaggerate, fabricate, and manipulate all you want. Few difficult questions will be raised, little transparency will be required, and no accountability demanded.

Report by Kevin Mooney. Originally published at The Daily Signal.

This Bill Eases ‘Recovered’ Species Off Endangered List

It will be easier to take wildlife off the endangered and threatened lists if Congress passes a bill introduced by Rep. Andy Biggs, R-Ariz.

“The Endangered Species Act has been used as a sword instead of a shield,” Biggs told The Daily Signal in a phone interview.

His bill would streamline the process of removing a species from the endangered list if the nation’s secretary of the interior “receives an objective, measurable, and scientific study demonstrating a species has recovered,” the Arizona Republican said in a press release.

Enacted in 1973, the Endangered Species Act provides a “framework to conserve and protect endangered and threatened species and their habitats,” according to the U.S. Fish and Wildlife Service.

Biggs’ bill is one of several measures introduced last week by House Republicans aimed at updating the Endangered Species Act.

His legislation includes provisions addressing the issue of a species being “wrongfully listed,” as well as penalizing those who “intentionally submit false or fraudulent data in order to cause a species listing.”

The bill would also provide a way for the U.S. Fish and Wildlife Service to “promptly take action when a species is wrongfully listed, rather than letting the problem linger in federal bureaucracy,” according to the press release.

“This will allow us to focus resources to protect species that actually need it,” Biggs said in a written statement.

The Fish and Wildlife Service currently lists 1,459 species of wildlife considered at risk of extinction in the United States, from the red wolf to the Kemp’s ridley sea turtle to the Northern sea otter. Classifications include endangered, threatened, and experimental populations.

Biggs so far has 23 co-sponsors, predominantly from Midwestern states. No Democrat has signed on as yet.

The Trump administration has begun to push related reforms through the Interior Department. The Western Governors Association, meeting last month, advanced its own version of bipartisan reforms. Wyoming Gov. Matthew Mead, a Republican, has been a leader in the effort.

Biggs told The Daily Signal that some environmental groups want to take control of private property and economic activity in the name of defending a species, and that such groups “don’t want to delist species that have come back.”

Some colleagues on the other side of the aisle have given the “usual diatribe” about proposed reforms, Biggs said, arguing that he and other Republicans are “out for the big bucks and don’t care about animals.”

But Rep. Kurt Schrader, D-Ore., has co-sponsored certain measures in the package of bills.

Other Democrats “don’t want to give in on environmental issues at all,” Biggs said.

Kevin Mooney contributed to this report.

Report by Jeremiah Poff. Originally published at The Daily Signal.

More Power to the States Will Enhance US Energy Dominance

In the midst of a growing global economy, the world’s demand for energy is booming.

In 2017, global demand for energy grew by 2.1 percent, more than double the previous year’s rate. Oil, gas, and coal accounted for about 80 percent of global energy consumption with oil alone accounting for 32 percent of global consumption.

Producers in the United States have stepped up to meet that demand. The U.S. has been the world’s leading natural gas producer for nearly a decade. Domestic oil and gas production has increased 60 percent since 2008.

Despite America’s energy dominance and the economic benefits that accompany it, an abundance of natural resource potential in the U.S. remains untapped.

Why? A key reason is the federal government owns and manages those resources. Federal regulations and federal land ownership have rendered vast quantities of recoverable oil and natural gas onshore and offshore either inaccessible or costlier to extract.

The current leasing and permitting process has frustrated people of all political beliefs. On average, the federal processing of an application for permit to drill in the last year of the Obama administration was 257 days, while state processing has typically been 30 days or fewer.

While the Interior Department is working tirelessly to reduce permitting delays, this massive time disparity prevents market forces from working effectively. When prospective drillers have to wait many months to get approval, the prospect of drilling in a timely manner can often be implausible.

Even though many federal proposals are approved, fluctuations in the price of oil combined with a long waiting period create the type of uncertainty that often prevent prospective drillers from even attempting the process. Authorizing states to manage onshore and offshore resource production for a greater percentage of the revenue than the current system will create a new and better system that permits industry to better respond to changing market conditions.

Last week, the House Natural Resources Committee held a hearing to discuss enhancing state management of natural resources on federal lands and waters. Draft legislation introduced by the committee would empower states to have more control over the leasing, permitting, and regulations of oil and gas production.

It would also authorize a state to approve or disapprove of each lease sale offered in federal waters if the area is within the state’s administrative boundaries. The amount of royalty revenue a state would collect would depend on how many lease blocks a state approved.

State control, local governance, and private-sector participation would result in more accountable, effective management. While the federal government can simply shift the costs of mismanagement to federal taxpayers, states have powerful incentives for better management of resources on federal lands. State governments can be more accountable to the people who will directly benefit from wise management decisions or suffer from poor ones.

Opponents of the proposed legislation said this bill would give oil and gas priority over other economic interests a state may have. For instance, coastal states have stated concerns that offshore drilling would possibly hurt their tourism and fishing industries.

But states like Louisiana have proven you can have your oil and seafood, too. In 2014, the Louisiana oil industry generated $44 billion for the state economy and another $36 billion when including related infrastructure and refining activity.

In addition to energy production, seafood and tourism industries stand out as significant contributors to Louisiana’s economy. Louisiana represents 30 percent of the commercial fishing for the continental United States and are substantial producers of shrimp, oysters, crawfish, and crabs. Annually, the industry creates $2.4 billion in economic growth for Louisiana.

These industries work hand-in-hand for the economic benefit of the state.

Opponents of the draft legislation have also held inconsistent views on the principles of federalism. The proposed legislation would empower states with a choice that, under the current system, they simply do not have.

Under current law, the Department of Interior could easily make choices for all states and allow for energy exploration in federal waters, regardless of whether those states want it or not. The proposed legislation would at the very least give states a say in the decision.

As Chairman of the Natural Resources Committee Rob Bishop, R-Utah, pointed out during the hearing, Democrats seem to only want federalism in certain cases. The same Democrats who now want federalism in the case of coastal states did not want federalism in the recently reversed case of the Bears Ears Monument issue in Utah. They’ve opposed empowering states to oversee natural resource production and other land use decisions on federal lands.

Bishop noted the hypocrisy of the Democrats specifically by contrasting their rejection of the wishes of local citizens in the Utah case with their support of the wishes of citizens who opposed drilling on federal waters. Federalism seems to have been lost to the Democrats and their current stance is, at best, inconsistent.

A Washington-centric approach to management stifles creative, collaborative solutions to competing interests that could be resolved at local, state, or regional levels without the added baggage of national political battles and federal regulatory processes. While states and local communities may not always make perfect decisions, the best environmental policies are site-specific and situation-specific and emanate from liberty.

The Natural Resources Committee should be commended for introducing draft legislation that would improve the current process by engaging the appropriate stakeholders and better aligning incentives for economic development and environmental protection.

Commentary by Nicolas Loris and Bryan Cosby. Originally published at The Daily Signal.

State Management Plans Are the Only Path to Successful Sage Grouse Conservation

The House Committee on Natural Resources held a hearing to review the success of Western State sage grouse management plans and the need for continued local control over sage grouse management. Western States sage grouse management plans have been the primary driver of improvements to the species range-wide.

[T]he federal government under the Obama administration insisted on managing Greater Sage Grouse recovery with a Washington, D.C., one-size-fits-all approach that fails miserably to address the individual management challenges present in each state. The purpose of today’s hearing is to provide further evidence that state and local control leads to lasting success. States have consistently proven to be masters at caring for their own lands and wildlife, and sage grouse is no different,” Chairman Rob Bishop (R-UT) said.

In 2015, the U.S. Fish and Wildlife Service decided that listing the Greater Sage Grouse as either threatened or endangered under the Endangered Species Act was not warranted. Instead, the Obama administration developed an equally-restrictive de facto listing scheme by amending 98 Western resource management plans.

The Obama administration’s de facto sage grouse listing and the 20 year mineral moratorium on ten million acres of land has been one of the greatest threats to the livelihood of western communities. Some of the most stifling consequences of the Obama era regulations were targeted at businesses,” Rep. Paul Gosar (R-AZ) said. “Thankfully President Trump’s Department of [the] Interior cancelled the massive proposed withdrawal allowing job creators and hardrock miners to get back to work.”

Decades of activist litigation and efforts by the Obama administration to circumvent successful state management plans have been “bad for the West, bad for jobs and bad for sage grouse,” according to Idaho Speaker of the House and fifth generation rancher Scott Bedke.

In the process of placating anti-grazing activists, federal agencies have made the number one threat to the Greater Sage Grouse in Idaho worse. In fact, these federal amendments, if left to stand, will create an explosive wildfire situation throughout the Great Basin,” Bedke added.

In 2017, Bedke’s family ranch lost their entire winter grazing allotment due to overly prescriptive federal land use restrictions. A wildfire, which could have been easily contained by local firefighter, was allowed by federal managers to grow out of control burning tens of thousands of acres of prime sage grouse habitat.

My home state of Colorado has spent more than ten million dollars, set aside 130,000 acres for habitat and is developing a mitigation marketplace all for protecting the sage grouse,” Rep. Doug Lamborn (R-CO) said.

State management plans have been developed with local stakeholders and experts on the ground for more than a decade to address unique and varying geographic differences within their boundaries.

It should be no surprise that Western States are actively implementing plans within their respective states that are having positive impacts on habitats,” Chairman of the Eureka County Nevada Commissioner, Vice Chair of the National Cattlemen’s Beef Association Federal Lands Committee and Fourth Generation Cattle Producer J.J. Goicoechea said.

Utah, for example, spends an average of $5 million a year protecting sage grouse, and has seen the state population of sage grouse steadily increase since 1990. The state has been especially successful at mitigating the threat of catastrophic wildfire within sage grouse management areas.

I am here to do more than just share a feel good success story of a program that is working. I am here to protect these programs,” Deputy Director of the Utah Department of Natural Resources Darin Bird, in reference to the state’s management strategies, stressed.  

Similarly, in Montana, male sage grouse are up 153% compared to 2014 numbers due to the investment of almost $8 million in conservation funds in 2016 to restore over 1,000 acres of critical sage grouse habitat.

Click here to view full witness testimony. 

Bills to Modernize Endangered Species Act Advance Through Committee

The House Committee on Natural Resources passed five bills to reform the Endangered Species Act (ESA). Chairman Rob Bishop (R-UT) issued the following statement:

The ESA is a landmark statute created with noble intent. It also includes fatal design flaws that inhibit greater success and handicap state-led, science-based recovery strategies. These flaws must be addressed and the law must be modernized. This slate of bills provides a framework for this discussion that we will build upon in coordination with the Senate, Trump administration, states and all interested stakeholders. I thank the bill sponsors for their work on these important pieces of legislation and look forward to our work ahead.”

H.R. 424 (Rep. Collin Peterson, D-MN), the “Gray Wolf State Management Act of 2017,” reissues the final rules from the Fish and Wildlife Service (FWS) to delist the gray wolf in the Western Great Lakes region and maintains effective state wolf management in Wyoming. The bipartisan bill passed by a vote of 26-14.

H.R. 717 (Rep. Pete Olson, R-TX), the “Listing Reform Act,” allows for the consideration of economic factors in threatened listing decisions. It also provides flexibility to agencies’ prioritization in processing listing petitions, which relieves FWS from excessive litigation and allows more resources to be used for species conservation and recovery. It passed by a vote of 22-13.

H.R. 1274 (Rep. Dan Newhouse, R-WA), the “State, Tribal and Local Species Transparency and Recovery Act,” fosters greater cooperation between the federal government and states by ensuring state, local and tribal scientific data is factored into ESA species listing decisions. The bill passed by a vote of 22-14.

H.R. 2603 (Rep. Louie Gohmert, R-TX), the “Saving America’s Endangered Species Act” or “SAVES Act,” removes duplicative permitting requirements for interstate movement of nonnative endangered species enhancing opportunities for conservation. The bipartisan “SAVES Act” passed by a vote of 23-16.

H.R. 3131 (Rep. Bill Huizenga, R-MI), the “Endangered Species Litigation Reasonableness Act,” combats the recent proliferation of ESA-related litigation by capping attorneys’ fees to the same reasonable levels allowed for other types of citizen lawsuits against the government. It passed by a vote of 22-16.

Click here to view full markup action. 

Bishop Statement on Sage Grouse

Department of the Interior has announced plans to reverse the former administration’s 10 million acre mineral withdrawal across six western states, overhaul the de facto Sage Grouse listing and improve management of the species through greater state input. Chairman Bishop (R-UT) issued the following statement:

These withdrawals were never about Sage Grouse conservation. It was all a ploy to assert more federal power, ignore actual data and best science, and diminish the influence and authority of states. States have proven to be more than capable of managing wildlife and conservation within their borders and will continue to be the best advocate for the species.  

“Secretary Zinke is developing a better policy through input from states and people on the ground with local knowledge and expertise.”