Credit Where Credit Redux
After President Obama's State of the Union speech, I questioned whether the President was trying to take credit for the amazing advances in technologies that has been made in energy production over the last decade. In an article I titled, "Giving Credit Where Credit Is Due", I asked why Obama tried to take credit for the work of others when he said, "it was public research dollars, over the course of thirty years, that helped develop the technologies to extract all this natural gas out of shale rock — reminding us that Government support is critical in helping businesses get new energy ideas off the ground." In fact the response from that piece was overwhelming and it seems many others are asking that same exact question. Who deserves the most credit for these historic innovations? Is it the government or private enterprise? Whose revolution is this anyway?
The American Petroleum Institute (API) soon was asking those same questions in a piece called, "Matching Words with Action." The API said, "In his State of the Union address this week, President Obama expressed support for more domestic energy development. Citing new government projections that the United States will increase domestic production of oil and natural gas by 2035, he also took credit for increased domestic production in recent years. But oil and natural gas production requires years of planning and investment and today’s production is a result of policy and company investment decisions made years ago."
The API went on to say that, "We welcome the president’s focus on domestic energy development, but his current policies suggest we should wait for always match his words. A few examples: While the president praises shale natural gas development, more than half a dozen federal agencies are considering new regulation of hydraulic fracturing, the technology necessary to develop 70 percent of our future natural gas production.
“Also, while promoting domestic oil and natural gas production in his speech, the president again proposes new punitive taxes on the very companies that make that production possible – and that already contribute some $86 million every day to the federal treasury in taxes, royalties, rental payments and other fees."
The API also said that while the President acknowledge that federal lands should be available for development, his administration is slowing down the processes that make that development possible. And while he calls for increased trade with reliable partners, he shuts down a critical, job-creating project that would have strengthened our energy partnership with Canada, already our largest and most reliable trading partner. The API says that "We look to leaders to make the right decisions so that we can continue to make this country more energy secure. We hope the president will take this opportunity to make the necessary course correction in energy policy so we can produce even more, here at home, of the oil and natural gas we will need. Our industry is ready to join him to make it happen."
History will show that it was It was George Phydias Mitchell of Mitchell Energy and Development that cracked the code for fracking, or is it fracturing or is it "what the frac?” Well if there isn't enough debate, about this issue what the heck do we call it and how do we spell it? Jonathon Fahey of the AP ponders by writing, "A different kind of F-word is stirring a linguistic and political debate as controversial as what it defines. The word is "fracking" — as in hydraulic fracturing, a technique long used by the oil and gas industry to free oil and gas from rock. It's not in the dictionary, the industry hates it, and President Barack Obama didn't use it in his State of the Union speech — even as he praised federal subsidies for it. The word sounds nasty, and environmental advocates have been able to use it to generate opposition — and revulsion — to what they say is a nasty process that threatens water supplies.”
"It obviously calls to mind other less socially polite terms, and folks have been able to take advantage of that," said Kate Sinding, a senior attorney at the Natural Resources Defense Council who works on drilling issues. One of the chants at an anti-drilling rally in Albany earlier this month was "No fracking way!" Industry executives argue that the word is deliberately misspelled by environmental activists and that it has become a slur that should not be used by media outlets that strive for objectivity. "It's a co-opted word and a co-opted spelling used to make it look as offensive as people can try to make it look," said Michael Kehs, vice president for Strategic Affairs at Chesapeake Energy, the nation's second-largest natural gas producer. To the surviving humans of the sci-fi TV series "Battlestar Galactica," it has nothing to do with oil and gas. It is used as a substitute for the very down-to-earth curse word. Michael Weiss, a professor of linguistics at Cornell University, says the word originated as simple industry jargon, but has taken on a negative meaning over time — much like the word "silly" once meant "holy." But "frack" also happens to sound like "smack" and "whack," with more violent connotations. "When you hear the word 'fracking,' what lights up your brain is the profanity," says Deborah Mitchell, who teaches marketing at the University of Wisconsin's School of Business. "Negative things come to mind."
Obama did not use the word in his State of the Union address Tuesday night, when he said his administration will help ensure natural gas will be developed safely, suggesting it would support 600,000 jobs by the end of the decade. In hydraulic fracturing, millions of gallons of water, sand and chemicals are pumped into wells to break up underground rock formations and create escape routes for the oil and gas. In recent years, the industry has learned to combine the practice with the ability to drill horizontally into beds of shale, layers of fine-grained rock that in some cases have trapped ancient organic matter that has cooked into oil and gas. By doing so, drillers have unlocked natural gas deposits across the East, South and Midwest that are large enough to supply the U.S. for decades.
Natural gas prices have dipped to decade-low levels, reducing customer bills and prompting manufacturers who depend on the fuel to expand operations in the U.S. Environmentalists worry that the fluid could leak into water supplies from cracked casings in wells. They are also concerned that wastewater from the process could contaminate water supplies if not properly treated or disposed of. And they worry the method allows too much methane, the main component of natural gas and an extraordinarily potent greenhouse gas, to escape. Some want to ban the practice altogether, while others want tighter regulations. The Environmental Protection Agency is studying the issue and may propose federal regulations. The industry prefers that states regulate the process. Some states have banned it. A New York proposal to lift its ban drew about 40,000 public comments — an unprecedented total — inspired in part by slogans such as "Don't Frack With New York."
The drilling industry has generally spelled the word without a "K," using terms like "frac job" or "frac fluid." Energy historian Daniel Yergin spells it "fraccing" in his book, "The Quest: Energy, Security and the Remaking of the Modern World." The glossary maintained by the oilfield services company Schlumberger includes only "frac" and "hydraulic fracturing." The spelling of "fracking" began appearing in the media and in oil and gas company materials long before the process became controversial. It first was used in an Associated Press story in 1981. That same year, an oil and gas company called Velvet Exploration, based in British Columbia, issued a press release that detailed its plans to complete "fracking" a well. The word was used in trade journals throughout the 1980s. In 1990, Commerce Secretary Robert Mosbacher announced U.S. oil engineers would travel to the Soviet Union to share drilling technology, including fracking. The word does not appear in The Associated Press Stylebook, a guide for news organizations. David Minthorn, deputy standards editor at the AP, says there are tentative plans to include an entry in the 2012 edition. He said the current standard is to avoid using the word except in direct quotes, and to instead use "hydraulic fracturing." That won't stop activists — sometimes called "fracktivists" — from repeating the word as often as possible. "It was created by the industry, and the industry is going to have to live with it," says the NRDC's Sinding. Dave McCurdy, CEO of the American Gas Association, agrees, much to his dismay: "It's Madison Avenue hell," he says .And if you don't like it I guess you need to get a fracking life. Just kidding. Does anyone really care?
Back to oil trading! Looks like we will be range bound with confecting fears of an uncertain Europe and uncertainty surrounding Iranian oil production. That has kept the product markets strong this week. Refinery shutdowns and the possibility of an Iranian oil embargo is increasing worries that products supplies may continue to tighten. Dow Jones News reports that Asian oil product market sentiment will likely get a boost from the upcoming regional refinery maintenance season, with the fuel oil market deriving particular strength from rising Chinese imports. Disruption of Dar Blend supplies from South Sudan is tightening the regional market, as it is a common blendstock for fuel oil traders and Chinese teapot refiners.
Reduced supply from the African country cuts into the "overall fuel oil pool" and "is probably the reason" for the prolonged strength of fuel oil in the region, said a Singapore-based fuel oil trader. In addition, Chinese imports of fuel oil are expected to rise as the country's refiners cut purchases of Iranian crude and replace some of it with West African crude, which yields less fuel oil per barrel, several traders said. "As long as Iranian and Sudanese crudes are not finding their way to China, fuel oil will stay strong," said a fuel oil trader with a Chinese firm. The shortage of feedstock in China comes ahead of the start of a regional refinery maintenance period that could further crimp overall supply in Asia."
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at email@example.com.