Sunday, September 23, 2012

Big Oil will not thank Government for Fracking, and now wants to take all the credit.

If Mitt Romney and the Republicans had their way, alternative energy subsidies would disappear completely. Let the free market decide. But in reality, what should happen is just the opposite, which is typical when we're talking about Republicans.

While the American public would be happy to cut subsidies to big oil, “opposite day” Republicans want to keep giving taxpayer dollars to big oil. Solar and wind...forget it.

They're quick to point to examples like Solyndra, who couldn’t compete with cheap Chinese labor. But China subsidizes solar, and helped drive down prices, killing the American company. But what happened is normal when it comes to developing new alternative energies. The story below shows how big oil is now trying to take credit for developing fracking, even though they would have given up decades earlier if it wasn’t for government subsidies and tax credits:  
AP: It sounds like a free-market success story: a natural gas boom created by drilling company innovation, delivering a vast new source of cheap energy without the government subsidies that solar and wind power demand. "The free market has worked its magic," the Barnett Shale Energy Education Council, an industry group, claimed over the summer. The boom happened "away from the greedy grasp of Washington," the American Enterprise Institute, a think tank, wrote in an essay this year. If bureaucrats "had known this was going on," the essay went on, "surely Washington would have done something to slow it down, tax it more, or stop it altogether."
But the pioneers of fracking tell a different story:
But those who helped pioneer the technique known as hydraulic fracturing, or fracking, recall a different path. Over three decades, from the shale fields of Texas and Wyoming to the Marcellus in the Northeast, the federal government contributed more than $100 million in research to develop fracking, and billions more in tax breaks.

Now, those industry pioneers say their own effort shows that the government should back research into future sources of energy — for decades, if need be — to promote breakthroughs. For all its success now, many people in the oil and gas industry itself once thought shale gas was a waste of time.

"There's no point in mincing words. Some people thought it was stupid," said Dan Steward, a geologist who began working with the Texas natural gas firm Mitchell Energy in 1981.

In 1975, the Department of Energy began funding research into fracking and horizontal drilling, but it took more than 20 years to perfect the process. Alex Crawley, a former Department of Energy employee, recalled that some early tests were spectacular — in a bad way. "There's not a lot of companies that would stay with something this long. Most companies would have given up," he said, crediting founder George Mitchell as a visionary who also got support from the government at key points.

"The government has to be involved, to some degree, with new technologies," Steward said … the fracking pioneers point out that it's impossible to predict how and when research will pay off. "It wouldn't be research if you already knew that it was going to be effective," said Crawley.

Terry Engelder, a Penn State University geologist known for his enthusiastic support for gas drilling, said the story of how shale gas went from longshot to head of the pack — and how long that took — shows that serious support for renewable energy research makes sense, too. "These renewables have a huge upside," Engelder said. "In my view, the subsidies are really very appropriate."

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