Independence Day from foreign energy?

by Wayne Lusvardi | July 4, 2014 4:03 am

As today we celebrate America’s independence from Great Britain, it might also be time to celebrate our independence from foreign energy. Alas, California isn’t playing its part.

During the 1973 Arab Oil Embargo[1] and the 1979 Iranian Revolution[2], there were long lines of cars at California service stations due to gasoline shortages.  In 1979, customers could only buy gas on alternate days based on whether their license plate ended in an odd or even number.

So what happened this time now that the Iraqi government is disintegrating[3] due to the invasion of Iraq by the Islamic State in Iraq and Syria?  This is the question that historian Arthur Herman asks in his story, “Has American Fracking Doomed Iraq?”[4] in the Washington Examiner newspaper. Herman writes that what may be different this time is American fracking – hydraulic fracturing of rock formations about five miles deep to unlock oil and gas and water.

Herman’s attributing of no long lines at gas stations to fracking may be premature, however. Thus far the stock markets are “calm.”

But world energy expert Daniel Yergin[5] is concerned about what the Iraq crisis will do to the price of oil:

“The relatively muted response reflects the supply situation. No Iraqi oil production or export installations have been damaged yet and the unrest may strengthen the hands of Kurdish political leaders in northern Iraq who would like to have a free hand in exporting oil from their province without Baghdad’s interference. And growing oil production in the United States and Canada has helped cut American oil imports, helping to keep global supplies hardy. … Global supplies are up a million barrels a day from a year ago, mostly because of North American production.” 

In contrast, Herman points out that 1990-91 Gulf War, average crude oil prices doubled.  He there was a quadrupling of prices during the Iraq War beginning in 2003 because of political instability in Iraq and Venezuela, compounded by Saudi Arabia cutting back production.

However, despite the resiliency of the U.S. oil and gas markets, many Californians want to stop fracking statewide even though it is nearly nonexistent.

CA keeps flirting with killing nearly non-existent fracking

Some recent developments in California:

• About 15 fracking wells[6] have been drilled in 20 years from oil platforms in federal waters in the Santa Barbara Channel.
• In 2011, Gov. Jerry Brown[7] fired the state’s two top oil regulators for not wanting to relax the rules for fracking of oil in California, which was nonexistent at the time.
• California passed Senate Bill 4[8] in Sept. 2013 to regulate the safety of fracking activities.
• On May 30, the California Legislature[9] defeated a proposed bill that would have placed a statewide moratorium on fracking.
• California has issued 520 fracking permits since 2013, according to the California Department of Conservation, Division of Oil, Gas and Geothermal Resources database. All of them have been in Kern County oil fields. There is no substantial evidence[10], other than minor local oil spills, that fracking has harmed the environment or humans in 40 years.
• Thirty-four of these fracking permits were for exploratory acid stimulation techniques by Occidental Elk Hills Inc., that lasted for one month and ended on January 14, 2014. Thereafter, Occidental spun off its California assets[11] and moved to Houston.
• Petroleum engineers and geologists have still not yet discovered the particular technology to extract oil and gas from California’s strange Monterey Formation. Thus, the U.S. Energy Information Agency[12] downgraded their estimate of the California’s shale gas deposits by 96 percent in May 2014.

This has not deterred California energy hedge fund billionaire Tom Steyer[13] from advocating that oil and gas extraction in California should require a two-thirds vote in each county.  Steyer plans to spend $100 million in the U.S. to put green energy and climate change on the front burner of public awareness during 2014 elections.

California fracking lacking

Oddly, the stability of California gasoline prices benefits from oil and gas fracking production mainly from four other states, as shown below:      

 

California has drilled less than 1 percent of the combined fracking oil wells of Texas, Colorado, Pennsylvania and North Dakota. Although California gas depends on a special blend, it still is part of the overall U.S. energy market. So energy booms in other states help not only national energy independence, but keep Golden State prices under control.

CA local fracking bans mostly symbolic

Santa Cruz[14] became the first California county to ban fracking on May 20, 2014. But the Santa Barbara-Monterey Area (District 3) had only 0.01 percent of all the oil and 2.4 percent of all the natural gas extracted in California in 2012, according to the California Division of Oil, Gas and Geothermal Resources Preliminary Report[15].

The three districts of Bakersfield, Southern California and Ventura extracted 90 percent of all the oil and 97 percent of all the natural gas in California in 2012, all by conventional drilling methods. The city of Beverly Hills[16] sits on top of an active oil field that has been drilled by conventional methods for 100 years with no significant property damages or harm to the environment.

Back on May 6, Beverly Hills became the first city in California to ban fracking.  The ban was entirely symbolic because there are no fracking well operations in the city. Thus far, fracking outside of Kern County in California remains a politically symbolic issue.

Fortunately, during the current political instability in Iraq, long waiting lines at gas stations are thus far nonexistent. It’s something to celebrate on Independence Day.

Source URL: https://calwatchdog.com/2014/07/04/independence-day-from-foreign-energy/

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