Tuesday, October 4, 2011

Is North Dakota The New Saudi Arabia?

I'm lucky, North Dakota is home for me; it’s beautiful and, even if I no longer live there, I love it. The cost of living has always been unnaturally low but that also meant that incomes were fairly low as well. In part that has been because it’s so rural and primarily agriculturally-based but things got worse when the bottom dropped out of the ag markets. However, the low population and the natural self-sufficiency of that population kept things pretty much the same for most folks.

In the early to mid 1970's there was an "oil boom" in western ND that significantly increased the average income statewide. Along with a increase in wealth there was a huge influx of people to work in the oil fields and all the rest of the attendant increases that are the secondary and tertiary effects of a sudden, large increase in wealth. The somewhat "dark side" of this was that North Dakotans in general, both personally and institutionally, became much more aware of, and more dependent upon, the benefits of more discretionary income and the "extras" that were more commonplace in the rest of America.

However, as has long been known, with a "boom" there comes the inevitable "bust" and the ND oil business was no exception. As Mr. Hamm mentioned, in the late 70's and early 80's Jimmy Carter did his thing with "windfall taxes" and suddenly oil, even huge quantities of it, was all but worthless.

In my opinion, the impact of the "bust" was so devastating not just because of the gain and then loss of a lot of money but because it happened in such a short time. It all happened so quickly that ND industry, economy, government and residents simply hadn't the time necessary to become accustomed to all the changes, both positive and negative, as well as the wild fluctuations of the industry as the pendulum swung back and forth and to see the more gradual ups and downs of the industry. The boom just didn't last long enough for both the economic and social environments to become stabilized and normalized. In contrast, other "oil" states such as Texas and Oklahoma have had close to a century of highs and lows and are much more able to absorb them and surf the oil tides.

During the first ND boom one of the most crucial and far-reaching aspects was the sudden, critical housing shortage. Heretofore, the residential real estate market had not been all that important, particularly "in town". However, all those new workers needed somewhere to live and, in the beginning, available land was plentiful and cheap leading to a corresponding building boom as well. As part of the sharp but general downturn from the bust, oil associated workers disappeared but, nevertheless, mortgages for both owner-occupied and rental properties needed to be paid.

In the 90's there was another, shorter and much less extreme oil boom in ND and the state institutions and people were more experienced and better able to avoid getting caught up in the excitement and sudden wealth. But the scars of the first one remain and, I suspect, that people of North Dakota face the prospect of a third oil boom with a paternalistic anti-fossil fuels democrat president with all the joy of a bridegroom facing emergency root canal on his wedding night; it’s gonna happen but it still sucks and it’s gonna hurt a lot.

Much of the country, including the president, has been seduced by pixie dust and the pretty, utopian pictures painted by the environmental, green energy and global warming crowds in much the same way rainmakers and snake oil salesmen seduced the residents of the Dust Bowl and rural American in general.

However, as in Eden, there is a snake in the grass; it's called the environmental industry. And it is indeed an "INDUSTRY" in which billions of dollars and, more importantly, reputations (and campaigns) are at stake.

The smug superiority and blatant hatred of the "Greenies" toward anyone or any business who does not worship in the same church is no different than any other cult. Its saints are John Muir and Patrick Moore; its prophets are Al Gore and Ed Begley Jr.; its apostles are Michael Moore, public educators and a host of celebrities. Make no mistake, this is a church militant with its own army of enviro-sheep shock troops and its General is Paul Watson. Such people are usually (self-) deluded or, like their rather shady predecessors, con-men. If one must put up with such creatures (and, given the climate of spinelessness and political correctness, one MUST) of the two, I prefer the latter; con-artists are in the game for money and one can do business with them. True believers can't even be reasoned with.

If Mr. Hamm is correct, and at this point there is no reason to doubt his knowledge and expertise in his field, there is a strong possibility that the US does not have to wait for scraps at the table of foreign oil. That President Obama, his administration including Secretary Chu or the energy industry refuses to accept or utilize these resources in the face of no specific short- or long-term solutions from so called "green energy" means, to me at least, that their motives are suspect. Although what is even worse is that they may be true believers and have already sampled the kool-aid, in which case their motives might be pure but they are based upon ignorance, delusion and tunnel-vision and that is not only irresponsible, it's stupid.

According to the article, Hamm's company and other oil companies have been targeted recently by the Securities and Exchange Commission (SEC), the Department of Justice (DOJ) and President Obama has stated that it is his goal to raise $40 billion through additional taxes on the oil and natural gas industries.* There can be no clearer warning that, regardless of the ineffectiveness and lack of cost effectiveness of the "green" industries, the Obama administration has decided that the American people shall have no voice and no choice but to accept and join the Green Religion.

I am, by training, experience and nature, a skeptic and a darkly suspicious one at that. I don't automatically believe everything that I read, hear or that anyone says or does, and I never believe ANYthing entirely. However, in this case, I have personal experience and direct information about this situation. As the author of the article, Stephen Moore, says at the end;
"Mr. Hamm calculates that if Washington would allow more drilling permits for oil and natural gas on federal lands and federal waters, "I truly believe the federal government could over time raise $18 trillion in royalties." That's more than the U.S. national debt, I say. He smiles.

This estimate sounds implausibly high, but Mr. Hamm has a lifelong habit of proving skeptics wrong. And even if he's wrong by half, it's a stunning number to think about.* So this America-first energy story isn't just about jobs and economic revival. It's also about repairing America's battered balance sheet. Someone should get this man in front of the congressional deficit-reduction supercommittee."
It is indeed stunning and it behooves us to explore the options associated with it. While I agree with Moore's evaluation of Mr. Hamm's experience and stature in the energy industry, the significance of what Hamm said, and the sentiment behind Moore's proposal, I don't particularly agree with his suggestion to have Mr. Hamm testify before a congressional committee.

If we want to get anything substantive done with the Bakken oil fields, the absolute, very last thing we should do is involve Congress or other politicians. In my opinion, in virtually every situation the very best thing that our government can do is nothing. If it is at all possible we must keep their greedy, stickly little fingers out of it or, regardless of what the issue may be in the beginning, any usefulness that it may retain will be strictly by accident. Anything that comes out of our nation's capital usually bears little resemblance to its original form and intent.

*emphasis added

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