• Tag Archives oil
  • The Government’s War on Pipelines Made Us Vulnerable to Attacks on Our Infrastructure

    Vickie Phillips received an unpleasant surprise when she stopped in for a fill-up at the Pop Shoppe in Greensboro, North Carolina on Monday.

    There was no fuel.

    “I can’t believe that we’re here and can’t even get gas,” Phillips told a local TV station. “People are tired of sitting in the house and they just want to get out and try to resume something of normality with their life and they’re definitely going to need fuel and gas to do that.”

    Phillips was just one of thousands of people who saw their travel plans disrupted in the wake of a cyberattack on Friday targeting the Colonial Pipeline, a vital network of pipelines that run some 5,500 miles from the US Gulf Coast to New York Harbor.

    The New York Times reported that many stations in southeastern states have placed caps on the amount of fuel consumers can purchase, while many stations have run out of fuel altogether.

    In the wake of the disruption, North Carolina Gov. Roy Cooper declared a state of emergency, while Georgia Gov. Brain Kemp suspended the state’s gas tax. The Biden administration, meanwhile, lifted environmental regulations on the sale of gasoline in several states and the nation’s capital.

    Following the attack, fuel futures jumped to $2.217, a three-year high.

    There’s no question that the Colonial Pipeline is a key piece of infrastructure.

    Analysts have described the pipeline as one of the most vital energy arteries in the country, one capable of carrying up to 3 million barrels of fuel—gasoline, diesel and jet fuel—per day to the East Coast.

    “This is as close as you can get to the jugular of infrastructure in the United States,” Amy Myers Jaffe, research professor of the Climate Policy Lab, told Reuters. “It’s not a major pipeline. It’s the pipeline.”

    Still, the widespread disruption seemed to surprise even the hackers responsible for the cyberattack.

    “Our goal is to make money and not creating [sic] problems for society,” DarkSide, the group the FBI confirmed is responsible for the attack, wrote on its website.

    This invites an important question: how was a single cyberattack able to derail an entire region of the most prosperous country in the world, disrupting the lives of millions of Americans?

    One answer is that we simply don’t have enough oil pipelines. The Colonial Pipeline provides nearly half—45 percent—of the fuel consumed on the East Coast. As other astute commentators have noted, “one pipeline network shouldn’t be serving half of the East Coast’s fuel needs.”

    The reality is regulatory hurdles have made it all but impossible to build new pipelines, which has placed a great deal of pressure on existing energy infrastructure. And it’s getting worse. Indeed, politicians are now actively scrapping pipelines that are instrumental to meeting future energy needs.

    One of President Biden’s first initiatives was to scrap, by executive order, the Keystone Pipeline, a 1700-mile pipeline that could have carried roughly 800k barrels of oil each day from Alberta to the Gulf Coast. (Instead, the bulk of that fuel will be transported by railways, which are less environmentally friendly and more dangerous.)

    Biden’s scrapping of the Keystone Pipeline received a great deal of attention, but it’s worth noting the action was part of a trend that has been largely overlooked. Across the US, pipelines are being targeted by politicians, regulators, and courts with great zeal.

    A year ago, Michigan Gov. Gretchen Whitmer took legal action to force the shutdown of the Line 5 Pipeline, which links Lake Michigan and Lake Huron and carries about 500,000 barrels of crude each day.

    “Here in Michigan, the Great Lakes define our borders, but they also define who we are as people,” said Whitmer, who gave Enbridge Energy a deadline of May 2021 to stop the oil.

    As of Tuesday, with the deadline rapidly approaching, the oil was still flowing. And news reports say Enbridge Energy and the Michigan governor are likely heading for a legal showdown.

    Then there is the Atlantic Coast Pipeline. Last year Duke Energy and Dominion Energy announced the cancelation of the 600-mile project—which would have piped gas from West Virginia to eastern North Carolina—because delays and regulatory uncertainty had threatened “the economic viability of the project.”

    The 1,200 mile-long Dakota Access Pipeline, which has been flowing since 2017, currently carries hundreds of thousands of barrels of crude through the Dakotas to Iowa and Illinois. While the Biden administration has announced it will not shut down the pipeline, a US district court judge did in July 2020. That ruling was overturned by a federal appellate court, but the pipeline’s fate hangs in the balance pending an environmental review.

    For many, the lesson of the recent gas shortage is that we need more cybersecurity oversight.

    “This pipeline shutdown sends the message that core elements of our national infrastructure continue to be vulnerable to cyberattack,” Mike Chapple, a professor in University of Notre Dame’s Mendoza College of Business, told Reuters. “Securing our energy infrastructure is a national security issue that involves several different federal agencies and requires centralized leadership.”

    Anyone who understands the “knowledge problem” will be rightly skeptical of solutions based on “centralized leadership,” especially when it comes to a “national security issue that involves several different agencies,” given the track records of the NSA, the TSA, the CDC, etc. What we really need is, not more, but less government oversight getting in the way of more pipelines.

    The current disruption should serve as a reminder that fossil fuels are an essential part of human prosperity.

    No one has made this point better than Alex Epstein, the author of The Moral Case for Fossil Fuels, who noted that cheap, plentiful fossil fuels—when married with human ingenuity—allow humans to improve the world around them.

    “Fossil fuel technology transforms nature to improve human life on an epic scale. It is the only energy technology that can currently meet the energy needs of all 7+ billion people on this planet,” wrote Epstein. “Ultimately, the moral case for fossil fuels is not about fossil fuels; it’s the moral case for using cheap, plentiful, reliable energy to amplify our abilities to make the world a better place – a better place for human beings.”

    The other side of that coin is that when energy is made needlessly expensive, scarce, and unreliable—whether by cybercriminals or politicians—it makes the world a more frustrating and unhappy place for human beings, as Vickie Phillips and many other Americans discovered this week.


    Jon Miltimore

    Jonathan Miltimore is the Managing Editor of FEE.org. His writing/reporting has been the subject of articles in TIME magazine, The Wall Street Journal, CNN, Forbes, Fox News, and the Star Tribune.

    Bylines: Newsweek, The Washington Times, MSN.com, The Washington Examiner, The Daily Caller, The Federalist, the Epoch Times.

    This article was originally published on FEE.org. Read the original article.


  • Socialism – Not Oil Prices – Is to Blame for Venezuela’s Woes

    So the Left is finally talking about Venezuela again. That is a good thing. For about a decade, large sections of the Left were in the grip of Venezuelamania. We would not hear the end of it. Venezuela’s version of socialism was their shining example, the model which the rest of the world should emulate.

    When the country’s meltdown could no longer be denied, they dropped it like a hot potato. And a long period of silence ensued. But recent events have forced the issue back on the agenda again.

    The Double Life of Oil Prices

    The responses vary. Commentators on the Stalinist Left now sound like a copy of the Pravda from the 1930s, fabulating about saboteurs and counter-revolutionaries undermining the economy. The more media-savvy sections of the Left, however, realise that they are unlikely to win many people over if they sound too much like the villain in a Cold War movie.

    So they have adopted a more innocuous-sounding line, blaming Venezuela’s woes primarily on the decline in oil prices. Of course, Venezuela is doing badly, they argue. Any economy that is so dependent on commodity prices would do badly under those circumstances. It has nothing to do with socialism.

    It sounds superficially plausible. But do you remember which prominent Chavista said this during the oil price boom:

    Of course Venezuela is doing well. Any economy that is so dependent on commodity prices would do well under those circumstances. It has nothing to do with socialism.”

    You guessed right: none of them. Oil prices lead a double life in the Chavista-Corbynista mindset. When oil prices skyrocket, the ensuing boom is proof that social works, but when they fall again, the ensuing decline has nothing to do with socialism.

    It is true that low oil prices would hurt Venezuela’s economy. But here’s the thing: we don’t currently have low oil prices. We had abnormally high oil prices in the decade leading up to 2014/15. Oil prices have not “collapsed”. They have merely reverted to a level which is more in line with the long-term average. More precisely, they are back (in real terms) to where they were in 2004, about the time when Venezuelamania started. And they are still noticeably higher than they were in the two decades before then.

    When Oil Prices Were Peaking

    Perhaps more important, though, the problems that we commonly associate with Venezuela, especially shortages of basic essentials like food and medicine, predate the drop in oil prices. Take this description:

    …of milk, eggs, sugar and cooking oil there was no sign. Where were they? … Welcome to Venezuela, a booming economy with a difference. Food shortages are plaguing the country at the same time that oil revenues are driving a spending splurge … Milk has all but vanished from shops… eggs and sugar are also a memory.”

    This is from a Guardian article, published in 2007 – when oil prices were about to reach their historic all-time peak. Or this one, from a year before the drop in oil prices:

    …food shortages in Venezuela have not only peaked but they have lasted longer than ever. … Venezuela’s central bank … has been publishing a scarcity index … [It] puts this year’s figure at [a level which] is similar to countries undergoing civil strife or war-like conditions.”

    There are a handful of alternative history novels in which the fall of the Berlin Wall never happens, and the German Democratic Republic still exists today. It is a fascinating thought experiment, but the authors all face a problem in creating that backdrop: when the Wall fell, the GDR was not just politically, but also economically finished. How do you get around this, if you want your alternative history to be at least somewhat plausible?

    Two authors have found a simple, but seemingly effective solution: in their version, the GDR regime discovers oil reserves just off the Baltic coast. The GDR is soon swamped with petrodollars; it becomes a socialist, Northern European version of Saudi Arabia.

    The authors’ thinking must have been: “Let’s just give them oil reserves. Surely oil revenue can make any economy work, even a socialist one.”

    I like the idea. But Venezuela’s experience shows that the authors were over-optimistic.

    Oil Isn’t Enough

    Socialists have always argued that socialism will eventually work, it just needs the right circumstances. They are now effectively saying:

    Of course socialism works. All you need is the world’s largest proven oil reserves, the longest oil price boom in history, and the highest oil price level ever recorded in history. That boom must obviously go on forever. Even then, you will have constant shortages of food, medicines and other basic essentials. But on the plus side, you will have Western intellectuals lining up to tell you how lucky you are.”

    It doesn’t quite cut the mustard, does it?

    Reprinted from CapX.


    Kristian Niemietz

    Dr. Kristian Niemietz is the Institute for Economic Affairs’ Head of Health and Welfare.

    This article was originally published on FEE.org. Read the original article.



  • Shale Threatens Saudi Economy, Warns Prince Alwaleed

    Saudi billionaire Prince Alwaleed bin Talal has warned that the kingdom’s oil-dependent economy is increasingly vulnerable to rising U.S. energy production, breaking ranks with oil officials in Riyadh who have played down its impact.

    In an open letter dated May 13 addressed to Saudi Oil Minister Ali al-Naimi and several other ministers, a link to which was published Sunday on Prince Alwaleed’s Twitter account, he warned that the boom in U.S. shale oil and gas will reduce demand for crude from members of the Organization of the Petroleum Exporting Countries.

    A Saudi official confirmed that ministers received the letter in May.

    Not long after the prince issued his warning, a report from OPEC published Monday showed the group’s oil export revenue hit a record high of $1.26 trillion in 2012. However, forecasts from the group raise questions over whether that level of earnings can be sustained amid the competition from shale oil.

    Saudi Arabia, the world’s biggest oil exporter, is now pumping at less than its production capacity because consumers are limiting their oil imports, Prince Alwaleed said in the letter. This means the kingdom is “facing a threat with the continuation of its near-complete reliance on oil, especially as 92% of the budget for this year depends on oil,” said the prince.

    Full article: http://online.wsj.co … 635500251760848.html