The EPA itself has been trying for years to find an excuse to restrict fracking, and on a number of occasions it has come close. In Texas, the agency investigated a case of alleged contamination for more than a year before conceding there was no evidence fracking was to blame. The public face of that anti-fracking campaign, a local homeowner, had produced a widely disseminated video showing flames coming out of his garden hose. The man’s water well, it turned out, had been drilled straight into a naturally occurring gas deposit just below the surface.19 A judge found there were grounds to believe he had, “under the advice or direction” of a local environmental activist, chosen to “intentionally attach a garden hose to a gas vent—not to a water line—and then light and burn the gas from the end nozzle of the hose.” The stunt, the judge theorized, “was done not for scientific study but to provide local and national news media a deceptive video, calculated to alarm the public into believing the water was burning.”20 Nonetheless the scene was included in Gasland II this year.
Complaints that fracking had poisoned the wells of eleven families in Dimock, Pennsylvania, inspired a major Hollywood motion picture, Promised Land, starring Matt Damon and John Krasinski. The film’s anti-fracking activist hero turns out to be a double agent employed by an evil energy corporation to discredit the environmental movement. Curiously enough, Promised Land “was financed in part by a company that is wholly-owned by the government of the United Arab Emirates.”21 The royal family of the UAE, like the environmentalist Left, isn’t eager to see fracking succeed in the United States—but for very different reasons. They’re happy to fund America’s green prison guards if it means we keep buying oil from the Middle East.22 In Dimock, too, the EPA and the state environmental protection department found no evidence of serious contamination and no contamination from fracking.
Perhaps the most high-profile claims of groundwater pollution were in Pavillion, Wyoming, population 231. The EPA’s troubled four-year investigation of the wells there made national headlines, especially when the agency released its draft report in 2011 theorizing, for the first time anywhere, an “impact to ground water that can be explained by hydraulic fracturing.”23 The major news outlets, already primed with propaganda from environmentalists, ran with the story. The Associated Press trumpeted, “EPA Implicates Hydraulic Fracturing in Groundwater Pollution at Wyoming Gas Field.”24 “E.P.A. Links Tainted Water in Wyoming to Hydraulic Fracturing for Natural Gas,” the New York Times reported enthusiastically.25
In fact, the EPA had conducted its test outside of town near a natural gas reservoir. The USGS had noted naturally occurring chemicals in the town’s well water for several decades. Moreover, as Energy in Depth reported, the EPA’s own drilling process for its test wells could have contaminated the results.26
You can imagine the prison guards’ surprise in June 2013 when the agency, after redoing its tests, quietly dropped the case without issuing a final report, “abandoning its longstanding plan to have independent scientists confirm or cast doubt on its finding that hydraulic fracturing may be linked to groundwater pollution in central Wyoming.”27
To date, there is not a single confirmed instance of groundwater contamination resulting from hydraulic fracturing, after hundreds of thousands of wells have been fracked.
Facts Matter
Americans care about the environment. We want clean air and clean water. We want to protect biological diversity and to conserve our country’s natural beauty for future generations. If fracking really is risky, we want to know. But the debate must be based on the facts, and the green prison guards have no interest in a debate like that. Like the teachers’ unions responding to innovations in education, the green prison guards are not interested in making the technology of energy production better or safer. They simply want to kill it. The environmental Left has an aesthetic, not a scientific, opposition to fossil fuel, and the facts don’t matter. They hate it and the industry that produces it.
The Fish and Wildlife Service, the Department of Justice, the EPA, and environmentalists have all launched attacks on energy producers that were intended not to ensure the safe production of oil and gas but to restrict and destroy the industry.
Greenbacks for the Greens
Not every energy company gets the “restrict and destroy” treatment. Some get the “coddle, fund, and protect” approach.
In his weekly radio address of July 3, 2010, President Obama had words of praise for a Colorado solar panel manufacturer, Abound Solar. The company, he boasted, “will manufacture advanced solar panels at two new plants, creating more than 2,000 construction jobs and 1,500 permanent jobs.”
“A Colorado plant is already underway,” the president continued, “and an Indiana plant will be built in what’s now an empty Chrysler factory. When fully operational, these plants will produce millions of state-of-the-art solar panels each year.”28
The president had reason to root for Abound apart from the imagined jobs for Colorado and Indiana workers. The company was one of the administration’s marquee recipients of stimulus money under a Department of Energy loan program for green tech. Interior Secretary Ken Salazar had already visited an Abound facility the previous year. Companies like Abound would produce the “green jobs” that the White House insisted would drive the economic recovery.
The icing on the cake of the Abound deal was that one of its largest investors, the billionaire Pat Stryker, was a major Democratic donor. She gave $50,000 to President Obama’s first inauguration and bundled $87,500 more. She also donated $35,800 to the president’s reelection effort and spent at least $220,000 on other Democrat-affiliated groups in 2012.29 According to the visitor log, Stryker came to the White House in October 2009, before President Obama announced that Abound would receive $400 million in DOE loan guarantees.30 The White House has not disclosed details about the meeting.
Stryker’s relationship with the Democrats was not unusual for a recipient of a Department of Energy loan guarantee. Prologis received a $1.4 billion loan guarantee; the brother of company board member Lydia Kennard bundled at least half a million dollars for Obama in 2008.31 NRG Energy received $3.5 billion in loan guarantees; Arvia Few, wife of NRG executive Jason Few, raised between $50,000 and $100,000 for Obama’s reelection.32 And, famously, Solyndra executives donated more than $100,000 to the president.33
There was, however, one big problem with Abound Solar. Despite the president’s praise, its solar panels were duds. As a source inside the company told the Daily Caller, “Our solar modules worked as long as you didn’t put them in the sun.” Apparently, sources said, “the company knew its panels were faulty prior to obtaining taxpayer dollars … but kept pushing product out the door in order to meet Department of Energy goals required for their four-hundred-million-dollar loan guarantee.”34
The ratings agency Fitch gave Abound a “B” credit rating (“highly speculative”) in November 2010, projecting a 45-percent chance of recovery. The loan was approved the next month.35 In July 2012 the company filed for bankruptcy and within months was under investigation for securities fraud.36 It is left with thousands of “unsellable” solar panels to dispose of.37 Taxpayers will lose tens of millions of dollars.
Why do green energy companies get multi-billion-dollar loan guarantees or millions in grants from the government while other energy companies are attacked by the federal bureaucracy at every turn? Because our leaders are committed to forcing an outdated vision of the future on the American people. The exotic replacements the administration advocates were conceived as solutions to the mythical problem of “peak oil.” These were always expensive alternatives, but when many Americans believed the world was running out of oil, some thought it was pragmatic to develop them.
We know for certain, however, that the world is not running out of oil—in fact, we have more than ever, and the estimates keep going up. Yet the environmental Left’s hostility to the fuel our economy depends on, and their dedication to forcing a transition to boutique alte
rnatives, remains undeterred. They are like devotees of vinyl records or Betamax videocassettes, refusing to give up even though times have changed. There is one important difference, however: the green prison guards have the coercive power of government on their side, and they’re employing it aggressively.
President Obama is not the only one pushing the green-energy vision, but he certainly jumped to the head of the parade. In his victory speech after the 2008 Iowa caucuses, he promised to “free this nation from the tyranny of oil once and for all.”38 Then he went to the automotive capital of the United States and compared “the tyranny of oil” to “fascism and communism.”39 Even as estimates of American oil resources were skyrocketing, he vowed to “end the age of oil in our time.”40
As president, Obama has assumed the role of green prison guard in chief, committed to forcing an expensive and now unnecessary transition to exotic replacements. Harold Hamm, one of the pioneers of the Bakken oil field, had a revealing conversation with the president, which he recounted to the Wall Street Journal’s Stephen Moore:
“I told him of the revolution in the oil and gas industry and how we have the capacity to produce enough oil to enable America to replace OPEC. I wanted to make sure he knew about this.”
The president’s reaction? “He turned to me and said, ‘Oil and gas will be important for the next few years. But we need to go on to green and alternative energy. [Energy] Secretary [Steven] Chu has assured me that within five years, we can have a battery developed that will make a car with the equivalent of 130 miles per gallon.’” Mr. Hamm holds his head in his hands and says, “Even if you believed that, why would you want to stop oil and gas development? It was pretty disappointing.”41
Green energy was a headline feature of the stimulus, a ninety-billion-dollar “investment” that would “save” Americans money.42 The president was apparently taken in by the “green jobs” fad, believing solar panels and wind turbines would drive the economic recovery. In his book The Escape Artists, Noam Scheiber reveals Obama’s “particular obsession” with green energy; the president asked his advisors “week after week” where all the green jobs were.43
Since there was no green energy sector to provide the millions of green jobs they promised, the prison guards set out to create one. They engineered government programs to support handpicked technologies at every step of the production process. And they embarked on this quixotic project at the expense of American taxpayers in the middle of the worst economy since the Great Depression.
If you wanted to launch a green-energy project, $12 billion in grants was available from the Treasury and Energy Departments. You didn’t even have to give the taxpayers—your “investors”—a stake in the company.44
If you needed a commercial loan for your green-tech startup, the government would underwrite it. Obama’s stimulus legislation contained $14.5 billion in loan guarantees from the Department of Energy.45 Of the twenty-six recipients of those guarantees, twenty-two were not even creditworthy, receiving junk ratings.46 Sixteen loan guarantees went to ventures in solar energy, a technology unlikely to be commercially viable after the fracking-induced collapse in natural gas prices.47 This was just one of six federal loan programs for green energy.48
Still need special tax advantages to keep your green business open? You can get tax credits for producing green electricity,49 for making capital investments in green energy,50 for conserving energy,51 and for building energy-efficient buildings.52
Need federal dollars because nobody wants to pay for your green upgrades? You can get up to $3 million in federal grants for “improvements” in rural energy installations.53 You can get up to 50 percent of total project costs for converting “biorefineries” to operate with “renewable biomass.”54 Rural agricultural producers and small businesses can get up to 25 percent of the cost of renewable energy systems to help them “become energy efficient” and “use renewable energy technologies and resources.”55
If you are in the solar energy business and foreign products are cheaper than yours even after all the federal subsidies for you and your customers, the government will give you a boost by hitting the Chinese competition with a tariff of between 24 and 36 percent.56 If you make wind turbines, the government adds a tariff of up to 72 percent on your rivals’ products.57 (How driving up the cost of solar and wind energy equipment advances the wide adoption of green tech is unclear.)
Do you want to export green products abroad? The Export-Import Bank is required to “allocate 10 percent of its annual financing to renewable energy and environmentally beneficial products and services.”58
Does your green company suffer from a shortage of green workers? For this unlikely situation, the stimulus allocated $500 million for training programs to “prepare workers for careers in energy efficiency and renewable energy.”59
Do you need customers for your green tech? Every federal department, including the Department of Defense, is ready to invest in “sustainability.”
Is there no demand for the overpriced power your boutique energy firm generated? Government will simply force consumers to buy it. In thirty-seven states, renewable portfolio standards require electric utilities to get a certain portion of their power from renewable sources. Electric utilities in California, for example, must get 33 percent of the electricity they sell from green sources by 2020.60 The explicit purpose of these standards is artificially to support green-energy providers. Home electricity costs in these states are on average 32 percent more expensive than in states without such mandates.61
Do you make a green consumer product and need a little extra help? The federal government can cut your customers some big breaks. They can take tax credits for 30 percent of a variety of renewable energy systems for their homes.62 The stimulus included credits for homeowners of up to $1,500 for energy efficiency improvements.63 Rural agricultural producers and small businesses can get grants for up to 25 percent of project costs to purchase renewable energy systems.64
In all, the federal government has nearly seven hundred initiatives devoted to supporting a green-energy agenda at an enormous cumulative cost.65 These programs keep Americans trapped in a world of artificial scarcity and expensive energy, and they have failed to produce breakthrough technologies. In fact, the heavy federal involvement in green tech has probably inhibited breakthroughs. By picking certain companies or technologies to be “winners,” the government doomed their competitors to be “losers.” In a normal market, consumers make those choices. They vote with their wallets. The businesses that offer the best value rise to the top. But when the government gives advantages to some companies or technologies not because of the promise of the product but, for example, because of whom the investors know, it distorts this natural process. Bad ideas live on, while good ideas, which can’t compete with their privileged and protected competitors, fail.
Nothing illustrates the catastrophic results of picking winners and losers as well as the Department of Energy’s loan guarantee program, the centerpiece of Obama’s stimulus legislation. The program selected some green companies for federal underwriting on loans worth hundreds of millions, sometimes billions, of dollars. How can anyone compete with that?
A remarkable number of the businesses that received loans were, like Pat Stryker’s Abound, friends of the Obama administration, and the White House was intensely involved in the process of selecting them.
At least some senior officials were aware of the program’s serious flaws. Jim McCrea, who was in charge of credit analysis for the loans, wrote in an email to colleagues, “I really cannot fathom how one figures out whether a loan to a PV [photovoltaic] manufacturer is being made to one that will survive. Everything about the business argues for the failure of many if not most of the suppliers.… All in all in the solar field, I think it is extremely easy to pick losers and I really do not know how to pick winners.”66
This is a man whose job is to pick winners in the solar field!
Lawrence Summers, one of P
resident Obama’s chief economic advisors, apparently agreed with McCrea’s observation. A venture capitalist who was invested in Solyndra wrote to Summers in December 2009, warning, “While that [loan] is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.” As Reuters reported, “Summers agreed that the government is a ‘crappy VC’ (venture capitalist).”67
The government provided assistance to companies that clearly did not need it, harming their competitors while unjustly enriching private investors. In a memo to President Obama, three of his top economic advisors (including Summers) offered Shepherds Flat as an example of a project that “would likely move forward without the loan guarantee.”68 Another company, NRG Energy, received $3.5 billion from taxpayers despite generating more than $9 billion in revenue in 2011.69 It is a Fortune 500 company. Cogentrix received more than $90 million despite being wholly owned by Goldman Sachs.70 Prologis received a $1.4 billion loan guarantee despite revenues of nearly $2 billion in 2011.71 And Ormat Technologies received $350 million despite revenues approaching $450 million in 2011.72
It is little wonder that an industry in which the government arbitrarily determines which companies have a chance and which ones don’t has seen so little of the progress President Obama promised. If the cell phone market operated by those rules, we would never have gotten the iPhone. Indeed, under those circumstances, Steve Jobs would never have bothered to create it. Green tech is no different. The green prison guards are not just holding our oil and gas resources prisoner but their pet industry as well.
A Convenient Excuse
The only way to make solar and other green energy sources economically competitive is to drive up the cost of the abundant and affordable alternatives—oil and gas. Why would anyone pursue policies that amount to economic sabotage? Because, the environmental Left believes, a shift from fossil fuels is necessary to prevent impending disaster from climate change.
Breakout: Pioneers of the Future, Prison Guards of the Past, and the Epic Battle That Will Decide America's Fate Page 11
