In the drilling industry, a lot of the consequences are due to regulations imposed on our industry by government. They may be laws, actually voted on by our elected officials, or they may be regulations imposed by unnamed, anonymous bureaucrats, accountable to nobody, and either ignorant of the industry or paid by a special interest. A good example of this is the desire to protect our ground water from sub-standard construction practices. We decided that water well drillers need to be licensed and standards set to assure that our drinking water is safe. This is a good idea that few would disagree with, but, in some states, examination and licensing are controlled by drillers already in the club, and they really don’t want any more competition. The unintended consequence is that they control a monopoly that prevents honest, hard-working drillers from receiving a license. Do you think this consequence is unintended?
Another egregious example is electric cars. Now there’s a good idea: Run your car on electricity and quit burning all that dirty, polluting fossil fuel. What my neighbor doesn’t realize is that when he plugs in his car and looks down his nose at my diesel pickup, he is plugging into a coal-fired power plant. He might as well be driving a Stanley Steamer.
We may be able, at some time in the future, to power our economy on magic fairy dust, but that day has not yet arrived. For the foreseeable future, we must depend on fossil fuels to maintain our lifestyle and economy. Our government regulates the drilling and production of these resources, often without the proper background, training or industry experience to make good laws and regulations.
Some examples of unintended consequences: Due to the disaster on the Macondo well, the government decided to halt all permits of deep water drilling in the Gulf of Mexico until it could figure out what happened. This sounds like a good idea until you figure that the drillers are losing nearly a half million dollars a day – per rig – waiting. The companies that were drilling safely and making money for their stockholders were shut down. You might not care if “Big Oil” gets punished or not until you look at your 401K and realize that you probably own some Big Oil.
The drillers couldn’t stand it and figured out a way for their rigs to make money. Here are some examples of the 30 or so deep water rigs that were working in the Gulf of Mexico, according to Reuters:
These rigs all signed three- to five-year contracts; they won’t be back for a while. They are waiting for some adults to be in charge – and for a more stable political climate in the United States. The six-month moratorium is meaningless.
The state of New York has decided, in its infinite wisdom, to allow drilling in the Marcellus Shale for the natural gas that America, and especially the Northeast, needs. But since the regulations were formulated by people who flunked 8th grade science, they decided to ban the fracking that would make those wells productive. This was agreed to by an electorate that flunked 6th grade science. The unintended consequence is that the drillers don’t drill there, ’cause there is no way to make money on a well that doesn’t produce.
A few years ago, some well-meaning people who thought we were running out of energy decided we should supplement our energy supplies by burning our food, and came up with the ethanol boondoggle. They took massive amounts of taxpayer money, bought off the Midwestern farmers, and managed to produce an unstable fuel that has about half of the BTUs per gallon as the gasoline it replaces. The unintended consequence is that it takes a tremendous amount of water to produce ethanol. Between irrigation and process water, the ethanol industry is depleting our water supplies at an unsustainable rate. Plus, corn now is selling at almost twice the price. Cattle ranchers, feedlots and others who still use corn for food are having to compete with an unsustainable industry.
Recently, there have been a large number of deaths caused by E. coli poisoning. The cause was finally traced to organic farms in Germany. At the same time, the nuclear disaster in Japan caused the meltdown of one or more reactors there. So far, one death has been reported. The score so far this year -- nuclear power, 1; feces-based agriculture, 162. In response, however, Germany began plans to shut down its entire nuclear industry. The unintended consequence: Germany soon will have a huge power deficit, and will have to import oil, gas and coal to provide for its own needs.
The point to all this rambling is a question: Are the consequences of these decisions unintended? If the answer is yes, then it is time to take a close look at the people whom we allow to make our decisions for us. They obviously are not educated enough to factor in all the ramifications of their arbitrary edicts. Even worse, if the answer is no, then we need to take a close look at what their hidden agendas are. These people may know exactly what they are doing, and I, for one, don’t like it a bit. Being a charitable sort, I would like to think the answer is yes. These people are doing their best with the skills they have, which might help explain why they work for the government in the first place.