Ever-anxious to put another corporate head on a pike, religious proxy shareholders are boasting that their efforts landed them the big daddy of them all – ExxonMobil. Religious investor group As You Sow pats itself on the back that the energy company bowed to its pressure to reveal hydraulic fracturing (fracking) risks. According to the Wall Street Journal’s Daniel Gilbert:
Exxon Mobil Corp. agreed to publicly disclose more details on the risks of hydraulic fracturing of oil and gas wells, reversing a long-held resistance after negotiations with environmental groups and investors.
The Texas oil company’s decision is the latest evidence of a shift by Exxon’s top executives to address growing environmental worries about fracking, a contentious technique in some North American communities.
The report by the biggest energy company in the U.S., expected in September, will cover how Exxon manages risks from fracking in shale-rock formations, including impacts to air quality, water and chemical usage as well as damage to roads, according to correspondence reviewed by The Wall Street Journal.
Exxon’s disclosures are a response to a shareholder proposal brought by the New York City Comptroller and social-responsibility advocate As You Sow, which agreed to withdraw the measure ahead of the company’s annual meeting next month.
Discerning whether this counts as an actual victory for AYS, however, is not so cut-and-dried. WSJ’s Gilbert again:
The company’s move is hardly a surrender to environmental interests, but does indicate a greater push by executives to press their case for oil and gas development at a time when public opposition to domestic drilling has unnerved some in the industry. But Exxon’s forthcoming report won’t include some measures sought by the shareholders, such as data on methane that leaks from its operations into the atmosphere, though it agreed to explore disclosing some metrics in the future.
What is becoming more apparent is the endgame for AYS and its anti-fracking cohorts. The big environmental risks – for them – aren’t fracking specifically but the entire idea of fossil fuel use writ large. Burning fossil fuels, you see, emit carbon dioxide, identified by environmentalists as the chief culprit in global warming or climate change. Given their myopic zeal, the simple act of throwing a spanner in the works is touted as a success in itself. Writing for the American Enterprise Institute, Benjamin Zycher noted:
The heat is on. The environmental Left is on the attack, and the target now is not ExxonMobil, or the Kochs, or the Keystone XL pipeline, or fossil fuels, or the efforts of the world’s desperately poor to escape grinding poverty, or plastics, or indoor plumbing, or those who fail to worship Gaia, or any of the other usual suspects. Instead, it is President Obama, urged last month in an open letter by 16 environmental groups to prevent the exportation of liquefied natural gas (LNG) and to make a commitment to keep ‘most of our nation’s fossil fuel reserves in the ground, in line with the recommendations of most of the world’s leading climate scientists.’
The larger goal is the imposition of severe constraints on hydraulic fracturing of underground oil and gas resources in deep shale formations, a massive success story for the U.S. economy generally and for energy costs, employment, and aggregate wealth. The economic benefits of this technological revolution have been so large and so obvious and so popular politically that the Obama administration has found it necessary to voice support for fracking and its attendant expansion of energy supplies and employment, at least as a short-term ‘bridge fuel’ to an (illusory) future of ‘clean, renewable’ energy, which, as an aside, is neither.
Zycher’s essay was prompted by an open letter submitted to President Obama by a consortium of environmental groups. The letters’ signatories encourage the President to place a moratorium on exporting liquid natural gas derived from fracking:
However, we are disturbed by your administration’s support for hydraulic fracturing and, particularly, your plan to build liquefied natural gas export terminals along U.S. coastlines that would ship large amounts of fracked gas around the world. We call on you to reverse course on this plan and commit instead to keeping most of our nation’s fossil fuel reserves in the ground, in line with the recommendations of most of the world’s leading climate scientists. And as a good-faith test case in this direction, we ask you to hold your Federal Energy Regulatory Commission accountable to completing a full Environmental Impact Statement for the proposed “Cove Point” LNG export facility, located just 65 miles from your home on the shore of the Chesapeake Bay in Lusby, Maryland….
The life cycle of exported fracked gas, from drilling to piping to ‘liquefaction’ to shipping overseas and eventual burning, results in huge levels of carbon emissions and widespread leakage of methane, a greenhouse gas much more powerful than CO2. Emerging and credible analyses now show that exported U.S. fracked gas is as harmful to the atmosphere as the combustion of coal overseas–if not worse. We believe that the implementation of a massive LNG export plan would lock in place infrastructure and economic dynamics that will make it almost impossible for the world to avoid catastrophic climate change.
To which Zycher responds:
In a recent volume of Environmental Research Letters, Francis O’Sullivan and Sergey Paltsev report the findings of a survey of each of approximately four thousand horizontal shale gas wells brought online in 2010. Their finding is that modern operations and control technology (essentially, flaring and low-pressure valves) have reduced methane emissions from each well from about 228 metric tons to about 50 metric tons (for a total of about 216 thousand metric tons), so that modern hydraulic fracturing has not changed the overall GHG intensity of natural gas production. Another paper by Allen et al in the Proceedings of the National Academy of Sciences reports an estimate of 2.3 million metric tons of annual methane emissions from aggregate natural gas production activities in the United States. The EPA estimate for 2011 is substantially higher: For the ‘field production’ component of methane emissions from ‘natural gas systems,’ the estimate is about 53.5 million metric tons.
To the letter’s last assertion – “a massive LNG export plan would lock in place infrastructure and economic dynamics that will make it almost impossible for the world to avoid catastrophic climate change” – Zycher responds:
Wow. The sudden concern of the environmental Left for Americans confronted with higher natural gas prices is touching, but rather inconsistent with its decades-long general opposition to drilling for fossil fuels. Nor is it consistent with the Left’s support for hugely expensive ‘renewable’ (wind and solar) electricity, which cannot compete without massive subsidies, and which has yielded sharply higher power prices in states with mandated market shares for such unconventional electricity. In any event, the most rigorous analyses of this issue find that exports of LNG might raise domestic gas prices by an amount on the order of $0.50 per thousand cubic feet. (From the summer of 2013 to this past February, prices increased by over $2.00.) But even that is irrelevant analytically: In terms of aggregate economics, the argument that LNG exports will harm Americans by increasing gas prices simply is incorrect, in that freer trade expands the economic pie for all. Other things equal, LNG exports would strengthen the dollar, yielding a decline in the prices of imported goods generally and a downward shift in the aggregate price level.
One anticipates Zycher’s reasoning will be lost on AYS as well as the progressive environmental groups signing the letter to President Obama. This is to be expected from groups that traditionally have ignored science and economics in the pursuit of agendas having a real negative impact on all of us, rich and poor.
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