Gasland Round II: Natural Gas Companies Under Fire Again (This Time, From a Hose)
Documentaries frequently succeed in visually portraying the inconceivable better than any other form of story-telling. Eye-opening and shocking, many spark controversial conversations even before they air.
Such is the case with Josh Fox's Gasland Part II.
The sequel, a follow up to Fox's 2010 documentary Gasland, a film that focused on U.S. communities impacted by natural gas companies' drilling – specifically fracking – debuts Monday night on HBO.
Critical reviews run the gamut from "lies" to "pure fiction."
The first film moved scores of eager environmentalists and "fracktivists" to speak out against natural gas drilling across the United States.
Natural gas companies/fracking supporters loudly lashed out in rebuttal.
They claimed many scenes in the film, including a Colorado landowner setting his tap water on fire in what has become known as the iconic flaming faucet scene, are misleading.
Critics cite studies claiming that area residents had reported flammable tap water for decades.
Reports claim that two years before the release of Gasland, Colorado regulators investigated that very case and determined hydraulic fracking and oil and gas development has nothing to do with it.
"There are no indications of oil & gas related impacts to water well," read the Colorado Oil and Gas Conversation Commission report.
Fox failed to inform viewers of that fact saying he didn't deem it relevant. But it is relevant when it questions the validity of the film's signature scene, and the entire film's credibility.
Following Gasland's release, COGCC stated yet again that the landowner's water well "contained biogenic gas that was not related to oil and gas activity."
The Next Famous "Flaming Faucet"
As for Gasland Part II's shocker, a man in Parker County, Texas is filmed lighting the end of a garden hose on fire. The implication is that gas drilling is to blame.
The image mimics the legendary short from the first one, but isn't apt to have the same impact if this court ruling gets out…
Obama’s War on Coal Attacks All of Us
This is not a green jobs story. There are no soirees, no socialites running across the veranda drinking mojitos to hear about the latest Obama electric car boondoggle.
This is not a story of families sharing their latest trip to Martha'sVinyard. This story is a story about Morgantown, West Virginia and cities like Morgantown all across the United States.
This is a story about coal miners, hard-working people who mostly inherited their way of life from their fathers and grandfathers. Every day they go to work and every day the dangers they face could make it their last.
Their workplace has no windows. There are no Alfred Jacob Miller prints hanging on the walls. What there is, is hard work, darkness and dust and at the end of the week an income to support their families. The same as it has been for generations.
There are an estimated 174,000 blue-collar, full-time, permanent jobs related to coal in the U.S., including mining (83,000), transportation (31,000), and power plant employment (60,000).
Coal is used extensively for electricity around the country. Without coal electricity prices will rise and even now they already started to.
Data from the U.S. Bureau of Labor Statistics show a steady climb in the kilowatt hour rate since Obama took office: Price per KWH in May 2009:12.6 cents, May 2010:12.7 May 2011: 12.9, May 2012:12.9, May 2013:13.01.
How to Profit From Obama's War on Coal
Since President Obama climate change speech at Georgetown University last week, Republicans and critics have accused Obama of engaging in a "War on Coal."
This isn't the first time that the President's statements on coal-fired power plants have raised questions about his energy policies. He even campaigned on higher electricity costs in 2008 when he suggested that costs would "necessarily sky rocket" to prevent the construction of new coal plants.
Obama has repeatedly argued for more spending on green investments in energy, despite multiple scandals involving campaign bundlers and billions of taxpayer dollars wasted on Department of Energy loans to companies like Fisker Automotive, Solyndra, and Beacon Power.
Now, as the President seems eager to double down on the "green" policies of 2009, which couldn't come close to creating the promised five million green jobs, the President wants to spend more of your money and execute new environmental and alternative energy laws and regulations by fiat.
But despite the stark reality that green technologies still haven't caught up with the free market solutions when it comes to bang for your buck, there's good news for investors looking to cash in on the President's War on Coal.
Just follow the money on the biggest trend in energy policy today.
It's All About Energy Efficiency
Obama Finds A New Way to Strangle US Economy
The scary question is, is he continuing to wound this recovery on purpose or by accident?
And which answer is worse?
Last Tuesday, President Obama announced his "Action Plan on Climate Change."
One of main "actions" is to kill a core piece of the US energy sector.
Among other things, he promised to use the Environmental Protection Agency regulation of carbon emissions to phase the U.S. out of coal fired power, even for existing stations.
Of course, environmentalists praised this move as a bold step against global warming.
Unfortunately, they're not very good at the economics of this.
So, I ran the numbers. And what I found was infuriating but not surprising: Regulations like this are the principal things slowing U.S. economic growth.
Did the Math
China Gets Hungry for Arctic Oil
China is the world's second-biggest importer of crude oil and its companies are on the prowl for oil all over the world.
By 2015, its oil companies are expected to produce more oil outside of China's borders than Kuwait pumps, according to the International Energy Agency.
The global Chinese search for energy has put a new region on the top of its agenda: Arctic oil.
The Arctic oil race is heating up as more countries look for paths in to this new hot source of energy profits.
You see, with the warming and melting of the Arctic ice cap, it is becoming easier to possibly exploit the energy riches that lie beneath the cold waters.
Money Morning Global Energy Strategist Dr. Kent Moors discussed the search for Arctic oil and gas in a recent article. Moors said the long-awaited U.S. Geological Survey's Circum-Arctic Resource Appraisal study found that 84% of the total undiscovered oil and gas left on the planet is located above the Arctic Circle. The oil and gas are mainly offshore and in three large basins that lie under shallow seas.
The vast potential of the Arctic for oil and gas piqued the interest of nations with territory north of the Arctic Circle such as the United States, Canada, Russia and Norway.
But it also got the attention of countries – like China – with no direct claim there, but with an increasing appetite for energy.
The Race for Arctic Oil: China and Iceland
Drillers Pay Hush Money to Keep Their Fracking Secrets
Hydraulic fracturing, or fracking, the art of separating oil from rock, has the potential of turning America into the world's top oil and natural gas producer.
But as with any bonanza it has some secrets oil and gas companies want to keep under wraps. And some companies are willing to put some big bucks behind that.
The industry has injected possibly carcinogenic chemical cocktails underground in more than 150,000 of wells during the fracking process.
U.S. companies have driven more than 30 trillion gallons of fracking liquid underground in the past several decades.
But not to worry: the U.S. Environmental Protection Agency is monitoring the situation! It is solely charged with conducting long-term studies of the potential impact of fracking on water.
Russia: The Greatest Threat to the Energy Markets
As Yogi Berra aptly put it, It's deja vu all over again.
The Soviet gulag state is coming back and this time it could wreak havoc on the world's energy markets.
I began my energy career in Russia. Back then it was part of a sprawling Soviet Union. For the past 23 years there have been 15 independent countries in its place.
But these days it sure feels like the Beatles song from the late 1960s, "Back in the USSR."
You see, many governments aren't able to work out how to plot the global energy sector because it becomes too wrapped up in local political machinations.
And the bigger the energy producer, the bigger the impact is on the global picture.
Three Hidden Water Costs That Promise to Boost Energy Prices
This may sound funny, but water availability is becoming an issue in energy generation. And it may start to impact prices.
The issue here is not the environmental impact of water usage. That is quite a different debate.
What I'm talking about today is the water supply/demand issue.
Because water is plentiful in those areas of the U.S. where shale gas and tight oil drilling is most concentrated, the price of the water itself is very low.
But there are three other costs involved with the usage of water, and those are beginning to cause some serious concerns.
Here's what I mean…
Oil Price Manipulation Awakens Libor, Enron Ghosts
Last July, we warned you that oil prices could potentially be manipulated in similar fashion to the London Interbank Offered Rate (Libor), and now a recent raid of major oil companies highlights this growing danger to the $3.4 trillion-a-year crude market.
The European Commission last week stormed the offices of Royal Dutch Shell PLC (NYSE ADR: RDS.A, RDS.B), BP PLC ( NYSE ADR: BP), and Statoil ASA (NYSE ADR: STO) as part of the ongoing investigation to find out whether companies are manipulating oil prices and, if so, how long it has been going on and the possible ramifications.
"The commission has concerns that the companies may have colluded in reporting distorted prices to a price reporting agency (PRA) to manipulate the published prices for a number of oil and biofuel products," the EC said in a statement.
Besides major oil companies, big banks are active in the energy market and would likely benefit from any manipulation, David Frenk, director of research at the financial reform group Better Markets and a former commodities analyst, told CNN.
The ordeal has brought back memories not only of last year's Libor scandal but also of the actions taken 12 years ago by Enron to control energy prices.
The Next Big Change in the Energy Markets
Thoughts are again turning to the next big change in the energy landscape.
As it unfolds, I have been working on how to exploit this trend and will be rolling out my recommendations when I appear at the MoneyShow in Las Vegas next Tuesday and Wednesday.
Of course, before I sketch my new approach to the Caesar's Palace audience, I'll outline it here first. You can expect more on this in coming Money Morning editions.
Today, I want to extend on Saturday's discussion and set the stage for the revisions I will be begin sketching out in my next article.
This is once again about hedging.