How Much Gas is There?

Matthew Kahn has a great post on the big NYT natural gas story:

Asymmetric information and fundamental uncertainty raise interesting issues in economics. Suppose that a natural gas company owns 10 plots of adjacent land and reports the “provable” quantity of natural gas that it can access at one of the plots. It is tempting to multiply this by 10 as optimists extrapolate that all of the plots are of equal quality. But, how do you know if the company is “cherry picking” and simply reporting the truth about its best plot (and hoping you will extrapolate) or is simply lying even about that plot? Do the executives of the firm have the right incentives to tell the truth? Their company’s stock price increases with announcements of “new proven reserves”. The NY Times is very concerned about this new case of winner’s curse. New accounting rules make it easier for gas companies to overstate their reserves and the NY Times is playing a useful role in spreading information about this point. Natural gas is the new thing as it offers domestic energy security and lower GHG emissions than fossil fuels. But, how much of this resource do we really have?

Is Shale Gas a Bubble?

Ian Urbina has a long piece throwing some cold water on the natural gas hype at the NYT:

Natural gas companies have been placing enormous bets on the wells they are drilling, saying they will deliver big profits and provide a vast new source of energy for the United States.

But the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells.

In the e-mails, energy executives, industry lawyers, state geologists and market analysts voice skepticism about lofty forecasts and question whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves. Many of these e-mails also suggest a view that is in stark contrast to more bullish public comments made by the industry, in much the same way that insiders have raised doubts about previous financial bubbles.

“Money is pouring in” from investors even though shale gas is “inherently unprofitable,” an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. “Reminds you of dot-coms.”

Our Solar Future

Stephen Lacy at Grist gives us more reasons to be optimistic about solar. Here’s the price trend:

And so much for natural gas as a “bridge fuel.” We’ve already crossed the bridge:

Is Tom Corbett Accountable to Grover Norquist or PA Voters?

Tom Corbett is complaining that it’s the federal government’s fault that he has to cut education funding, and I agree that the federal government should be bailing out state budgets until revenues recover, but it’s just not true that he has to cut education.

Neal Bisno makes the point well:

“Rich, out-of-state gas companies are using our roads, sending their kids to our schools, and benefiting from our public services without contributing their fair share of taxes,” said Neal Bisno, Secretary-Treasurer of SEIU State Council. “Pennsylvanians need a broad statewide drilling tax that will help support our middle class and grow our economy, not a limited impact tax endorsed by the drillers.”

“My daughter may not have a full-day of kindergarten next year because gas companies and other corporations are not paying a fair share of taxes,” said Kristy Chrostoff, a CNA who lives in Elmora. “Gas companies are profiting off our land while our kids pay the price for their tax avoidance.”

This is not hyperbole. It really will harm kids’ future prospects if school districts have to cut full-day kindergarten. Alfred Lubrano reports:

Numerous studies have shown that full-day kindergarten increases achievement in grades one through three, said W. Steven Barnett, codirector of the National Institute for Early Education Research at Rutgers University.

The vast majority of states, he said, require districts to offer at least half-day kindergarten, but Pennsylvania does not.

“The amount of time children spend in kindergarten does matter,” Barnett said. Cutting that time in half would create problems down the road, compelling teachers to spend more time on remedial courses and causing some students to be left back, he added.

Research has shown that children in full-day kindergarten demonstrated 40 percent greater proficiency in language skills than half-day kids, said Walter Gilliam, an expert on early-childhood education at the Yale University School of Medicine.

Teachers in half-day and full-day kindergartens speak differently to children, Gilliam said: “In half-day, much of the teacher time is taken up saying, ‘Sit down,’ ‘Stand still.’ There’s less time for language skills and social interactions and one-on-one time. It’s a disaster in a lot of ways.”

Acknowledging that many districts must economize during dismal financial times, Samuel Meisels, president of Chicago’s Erikson Institute, a child-development graduate school, said Philadelphia’s decision to halve the kindergarten day was akin to “cutting its own throat.”

Anti-tax extremist Grover Norquist is trying to veto a severance tax because he doesn’t want the revenue going to other government programs, but I think that most people would prefer to raise a lot of money from the gas companies than cut full-day kindergarten. There’s no reason not to do this. The state has the gas companies by the balls. The frackers need to drill within the state’s borders to get the gas, so the usual conservative tax flight warnings don’t apply.

What You’re Getting Instead of a Fracking Tax

Instead of taxing fracking like every other state, Tom Corbett thinks it’s a better idea to do this stuff:

With a 6-2 vote before a sparse crowd, the Bethlehem Area School Board gave its final blessing Monday to eliminate 175 jobs, slash about 40 high school electives, pare down preschool offerings and end full-day kindergarten next school year…

Of the 175 jobs being cut, 96 are teachers.

Both Liberty and Freedom high schools would lose about 20 electives each. The electives would be cut if they do not have a minimum of 20 students enrolled. At Freedom, some of those lost electives include philosophy and literature, Poetry II and Advanced Placement environmental science. Liberty’s lost electives also include similarly titled English and science courses.

Other cost-cutting measures include eliminating a dozen full-day kindergarten classes, slashing in half the SPARK preschool, shuttering most family centers, ending tutoring, increasing student-to-guidance counselor ratios, canceling elementary and middle school intramural sports, and not buying new buses.

Clearly it’s more “Un-American” to tax extractive industries than to end full-day Kindergarten and pre-school programs.

People should also be aware that PA’s budget surplus may be as much as $300 million, making these cuts largely unnecessary. The majority Republicans are making a political choice to cut education. Nothing is forcing them to do it this way.

Fracking Is Worse Than Coal

Ben Geman at The Hill reports that natural gas from fracking is worse than coal, and should not be a part of the clean energy future:

Cornell University professors will soon publish research that concludes natural gas produced with a drilling method called “hydraulic fracturing” contributes to global warming as much as coal, or even more.

The conclusion is explosive because natural gas enjoys broad political support – including White House backing – due to its domestic abundance and lower carbon dioxide emissions when burned than other fossil fuels.

Cornell Prof. Robert Howarth, however, argues that development of gas from shale rock formations produced through hydraulic fracturing – dubbed “fracking” – brings far more methane emissions than conventional gas production.

Low Prices = Less Drilling

“The industry ramps up activity when prices rise and reduces activity when prices fall,” natural gas giant Devon Energy wrote bluntly in its 2008 annual report. “Devon’s sharp reduction in exploration and production capital spending in 2009 reflects our response to the current low-price environment and concern about the global economy.”

Or, to be fair and balanced, it could be Kenyan Socialism that’s reduced natural gas drilling.