Coal and oil bad. Wind good.
Oil prices are down about 50 percent since June 2014. And since early 2015, more than 40 Texas oil and gas companies have filed for bankruptcy, and some 75 others are on what consulting firm Deloitte calls its danger list.
Low prices good, but not carbon dioxide from oil and gas.
Of course, no one in Washington is calling for subsidies to the oil and gas sector or worried about saving oil-patch jobs. By contrast, in December, Congress made sure to protect the wind industry by passing a five-year extension of the production-tax credit, a lucrative subsidy that pays wind-energy firms $23 for each megawatt-hour of electricity that they produce.
That's about 100% of what I paid for hydro-power electricity in Idaho, 40 years ago, so it's a nice subsidy.
For some Easterners, hard times in Texas are cause for celebration. In mid-2015, when oil prices dropped under $60 per barrel amid layoffs in the oil and gas sector, New York Times columnist Paul Krugman crowed about news that the state's employment growth had fallen below the national average. The explanation, he said, was "all about hydrocarbons."
Got yer own private windmill, do ya, Paul?
Krugman and others may delight in the misfortune of Texas's oil and gas producers, but they forget that the main reason oil prices have fallen so far, so fast, is due to ingenuity, much of it developed in Houston, Dallas and Midland.
All on Obama's watch. Or more precisely, while he wasn't watching.
Technological innovation in everything from drill bits and mud pumps to seismic analysis and digitally controlled drilling rigs has unlocked galaxies of energy that have helped transform America into an energy superpower. The U.S. now has an energy-price advantage on commodities like natural gas, propane, ethane and even electricity over nearly every other country. That advantage is a direct result of the dynamism of the domestic oil and gas business, the epicenter of which remains in Texas.
This is in the Dallas Morning News, not the New York Slimes...
Today's oil-price plunge is largely due to the shale revolution, which started in Texas and has made the U.S. the world's biggest oil and natural-gas producer, leading to record levels of oil in storage. Between 2009 and 2015, U.S. oil production grew by about 3.9 million barrels per day. And nearly 60 percent of that increase - some 2.3 million barrels per day - came from Texas.
Texas now accounts for about 37 percent of daily U.S. oil production and about 27 percent of all domestic natural gas output.
Just like the good ol' days, when California produced a bunch of it, too. How's your production, Governor Brown?
The Lone Star State is once again exerting outsize influence on global prices, an echo of its storied past. But this time around the pace of development of new technologies suggests that we may be headed into a new era of higher oil production and lower prices, with Texas leading the way.
A little bit of history about how one guy went broke drilling for oil, and then - (insert photo of gusher here)
In the late afternoon of Oct. 3, 1930, a gusher of sweet Texas crude blew out over the top of the wooden derrick and onto the nearby pine trees and red clay soil.
Joiner had discovered a gargantuan deposit. The East Texas Oil Field measured 45 miles north to south, from 5 to 12 miles east to west, and covered 140,000 acres, dwarfing anything that had come before. It contained more than 5.5 billion barrels of oil, about a third as much as all the crude produced in the United States up to that time. And the mineral rights to the East Texas Oil Field were highly diffused, with hundreds of individuals and companies owning parts of the land. Within a few months of Joiner's gusher, wells in East Texas were producing more than 1 million barrels of light-as-kerosene crude oil per day, half of America's total consumption.
Everything's bigger in Texas!
Despite the low prices, Texas producers didn't want to reduce production. All were relying on an old English common law known as the "right of capture." On the surface, the wells were owned by different people. Below the surface, all were sucking oil out of the same reservoir. If they stopped drilling and producing, their neighbors could simply pump the oil out from beneath their land.
Eventually, the State regulated production, and - to make a long story shorter - OPEC copied those Texas rules to limit production.
OPEC had roots in Texas: Abdullah Tariki, the first Saudi educated at the University of Texas in Austin, did an internship at the Texas Railroad Commission. As Saudi Arabia's first oil minister, Tariki arranged a meeting in Cairo with ministers from Venezuela, Kuwait, Iran and Iraq that resulted in the formation of OPEC. Years later, when a reporter for The Wall Street Journal, asked Tariki what he had studied in Austin, Tariki replied, "the Texas Railroad Commission."Many oil traders were betting that OPEC would cut production to help stabilize prices. Instead, Saudi Arabia, producer of about a third of all OPEC oil and the cartel's most powerful member, made clear that it would protect its market share, even if that meant lower prices.
They don't get this supply-demand thing?
The Saudis' rationale was simple: If they cut production, the result would be higher prices, which, in turn, would stimulate more shale oil production in the U.S. (and probably more cheating by cartel members).
After OPEC decided to keep the oil taps open, prices dropped 7 percent and kept falling. Many sovereign producers, including Russia, Kuwait, Venezuela, Saudi Arabia and Nigeria, hope that lower prices will shut down U.S. shale oil production and reduce supply.
But that's unlikely to happen soon, thanks to American entrepreneurialism and ingenuity. U.S. drillers are making drilling faster and cheaper, resulting in more oil and gas production from fewer rigs. Domestic oil producers, particularly the ones in Texas, can survive drastically lower prices.Today's oil market, then, looks remarkably like it did in 1931, before Gov. Sterling declared martial law in East Texas. A flood of Texas oil has overwhelmed the market. There are no brakes on supply, prices are weak and producers are acting on their own, hoping to sell as much oil as they can. What's old is new again - and Texas oil is, once again, in the spotlight.
Read the rest of the history at the link - it's interesting.