America / Energy / Environment / Environmental Regulation / Foreign Policy / Regulation

Geopolitical Impacts and Pokemon: Looking for a Bipartisan Voice Amidst an Oil Boom

The Bipartisan Policy Center recently hosted an event discussing the geopolitical impacts

Bipartisan Policy Center

of the US’s recent tight oil boom. Tight oil, or shale oil, production has increased with the expansion of hydraulic fracturing technology used to access shale gas from shale or sandstone formations. Amidst the rallying cries of a “qualified abundance” instead of a scarcity there was also an undercurrent of the need for the government to step aside and let the markets work themselves out.

The panel noted two key areas in which the government was holding up production. First, the so-called ‘mid-continent bottleneck’ needs to be taken care of – either by building a pipeline or expanding railways. Second, policies need to be in place to facilitate the export of domestically available tight, light crude and the import of the heavy crude our refineries are equipped for. It seems that the government’s place is not in regulating development but in facilitating a technical exchange program of best practices and improving our geopolitical posture from a new position of abundance and possible self-sufficiency. With all of this feckless pro-industry talk (as I’ve discussed in a previous blog post), the naysayers seemed surprisingly quiet at a purportedly bipartisan event.

Rather than the balanced affair typically advertised by the Bipartisan Policy Center, this event seemed to highlight the impacts and implications of American crude while taking increased development as a given. Senator Lisa Murkowski from Alaska gave the keynote address and didn’t hesitate to promote the Keystone XL pipeline as a necessity for maintaining good relations with Canada and the rest of the world. She also lauded liquefied natural gas (LNG) exports as an easy decision given our impending surplus. However, when asked about environmental concerns and how to incorporate climate change into the discussion, Murkowski acknowledged responsibility for resources and pointed to a greater need for research and development. In claiming that the best technology is the most responsible, Murkowski shows an irresponsible overreliance on technology and industry despite obvious and unmitigated disasters in recent years.

A few of these disasters were highlighted in the first panel titled, “How Sustainable is the Tight Oil Boom?” The panel members discussed the boom economically to help determine the outlook for crude, gas, and pump prices. Paul Sankey from Deutsche Bank answered a question about how the boom will change the market and infrastructure for energy. As the demand for electricity falls from a slowing economy and increased efficiency, less infrastructure for energy production and distribution is replaced or newly built. This goes against an increasing need for infrastructure by energy developers. Pipes currently in place are old and dangerous and have led to spills such as the Dilbit Disaster in Michigan and a crude oil spill into Yellowstone River in Montana.

Don’t do it!

Dilbit is a combination of heavy bitumen and carcinogenic benzene. The dilbit spill has been one of the worst so far, but received little coverage because it was overshadowed by the Deepwater Horizon spill. Gulf development is difficult but carries a relatively low risk because bacteria is already in place help clean oil which leaks from the ocean floor to the surface. The transfer of dilbit, especially by pipe, poses an enormous threat by comparison. First the carcinogen, benzene, evaporates into the air (where it can be inhaled, causing serious problems). Then bitumen in dilbit sinks to the bottom of a river bed where there are no bacteria adapted to break it down and it becomes difficult to remove. Sankey uses these disasters to argue for more development and newer pipes, rather than considering the huge risk that development always poses. His disregard is clear when he later says that natural gas or methane “just goes away” into the atmosphere. Methane is in fact one of the most potent greenhouse gases and does 20 times more damage than carbon dioxide.

Panelists constantly called for the government to step aside from regulations and “let the market find the sweet spot” of production. However, none mentioned externalities or subsidies that disfigure the prices that markets and consumers face. A direct question about incorporating climate change into this bipartisan discussion was carefully sidestepped, and no questions arose about carbon taxation or the social cost of increased energy development. Rather than the “not in my backyard” stance that Keystone protestors may have, those who stand to gain from the oil boom take the “not my subsidies” approach, leaving bipartisanship out of an increasingly important conversation.

Geopolitical Pikachu?