Marcellus Shale Update – 7.3.2018

As we approach Independence Day, the disconnect between what is reported in the press and what the world situation actually is remains very curious.

Today, speaking on MSNBC’s Morning Joe, host Joe Scarborough and Council of Foreign Relations President Richard Haass bemoaned the fact that President Donald Trump is eviscerating the post-World War II order and not replacing it with anything.  Haass said we voluntarily are giving up our international position of primacy.  One wonders if Mr. Haass has spent much time looking at Nord Stream 2, the gas pipeline from Russia to Germany through the Baltic Sea, bypassing Ukraine, Russia and the Baltic States.

The effect of this pipeline will be to give Russia greater control over Europe’s energy supply.  It will enrich Putin, remove any control or payment that these other countries would have received, and make German Chancellor Angela Merkel even more subservient to Russia.  Ukraine for example, may lose 2% of its GDP as a result of the loss of trans-shipment payments.

Trump, who according to Morning Joe and much of the Western press is a Russian stooge, adamantly opposes the pipeline.  The Trump Administration is going so far as to have Secretary of State Mike Pompeo announce that the United States has made it clear that Russia should not be allowed to get more opportunities to exert political influence not only in Germany, but also in Europe in general, if Nord Stream 2 is implemented.  The current Administration has threatened to sanction any company involved in the project.

None of this has stopped Merkel, ostensibly the leader of the country blazing the trail toward a “green economy”.  She is determined to get this pipeline built, increase her dependency on Putin’s energy and rely more fully on Russian gas production from environmentally sensitive areas of the Arctic.

All of this sounds upside down, doesn’t it?  Indeed yesterday Estonia’s Minister of Foreign Affairs Sven Mikser said it is in the EU’s best interests to stop the project as it serves Russian geopolitical interest.  Earlier today, the German environmental group Nabu filed a lawsuit with Germany’s highest constitutional court asking to halt the pipeline.

Supporters of the project say that Nord Stream 2 will give Germany access to a cleaner form of energy than it currently uses.  That this might be so shows how dirty Germany’s current power supply is.  Despite refusing to greenlight any power project that is not “renewable” this decade (or perhaps because of this), Germany remains highly dependent on a very dirty form of coal called “lignite”.

Why then, is the Trump Administration, which according to many press reports (a) is in the pocket of Putin, (b) doesn’t care about the environment and (c) is willing to tear apart the old European alliance, so opposed to this pipeline?  Even if its only concerns are geopolitical and economic, the fact that the Administration is opposed to Nord Stream 2 shows that something is missing from the national debate.  A Putin puppet would just go along.  Instead the United States is taking a remarkably hard line.  Nowhere, however, is this nuance reflected in the press.

The topic of energy encompasses so many facets of our modern political debate, from geo-political power to environmentalism to future economic growth, that these stories have to be part of the discussion.  Trump may be secretly aligned with Putin.  None of us really knows.  The fact though that the Trump Administration is fighting so hard against Putin’s interests in this critical field is a story that needs to be told.  Each reader or listener then can draw his/her own conclusions.  It certainly may not show that Trump is an environmentalist, but it argues against the idea that he’s in Putin’s pocket.

Why Scarborough, Haass, the rest of MSNBC, CNN and even Fox News  fail to report on Nord Stream 2 remains mystifying.  It only increases the level of suspicion and derision with which the American press is held.

Questions? Let Dan know.

Marcellus Shale Update – 3.02.2018

Yesterday may have been the most instructive day ever to understand the current international situation involving natural gas.

Russian President Vladimir Putin, in his State of the Nation address, bragged about “invincible” missiles that could carry nuclear warheads.  He showed videos of missiles raining down on Florida.  As he did so much of Europe was battered by two weather storms called “Storm Emma” and the “Beast from the East”.  Today is the coldest spring day in UK recorded history (I guess they consider March 1 spring over there).  Unfortunately they may have no heat.  Britain’s National Grid warned yesterday that it did not have enough natural gas to supply the country.

UK running out of gas, warns National Grid

UK weather: Armed Forces called in as death toll rises to 10 in coldest spring day on record

Britain has a lot of shale gas potential but it has not developed it, running into the same environmental objections that bedevil most of Europe.  We might have been able to help make up the shortfall, but our export capacity remains limited.  Now Britain freezes.   How many people will die in the UK because of their energy policies?

There are other reasons for Britain’s current situation, including the foolish shutting down last year of a natural gas storage facility at Rough, but the result is that Britain may turn in desperation to the same person that New England relies upon in times like these, Vladimir Putin.

Putin has been very busy.  Also yesterday, the Science, Space and Technology Committee of the US House of Representatives released a report detailing how Russia used Facebook, Instagram and Twitter to exacerbate tensions over American energy policy and climate change.  For example, Russians created a group called “Native Americans United” which put out an ad showing a young girl looking out over the prairie with the caption “Love Water Not Oil, Protect Our Mother, Stand with Standing Rock.”  This tension obviously benefitted Vladimir Putin.

In this country, gas prices remain so low that many of the suppliers are hurting badly.  As one of the producers told me yesterday, after fixed costs just about every place production is sold is negative.  In the very short term that’s good for the consumer.  In the long term that’s not.  Were more export terminals operating, the price could rise to a sustainable level, more gas could be sent overseas to break the energy vice grip of countries like Russia and the chances of gaining effective leverage over Russia and other rogue states would increase.

Since the Cold War we’ve had a debate over which is more important, soft power or hard power.  Here’s a tip for the “soft power’ proponents:  Soft Power works best when you have it.  Internationally, our current energy policy seems to be unilateral disarmament.  Again, that raises the possibility that the only way we can project force internationally and protect our allies and our vital interests is through hard power.  In English that means your sons and daughters and mine being sent overseas to fight.

When an “environmentalist” asks why you support hydraulic fracturing, you can answer very simply.  “I love my children.”