Conventional wisdom: real and manufactured

Even as winds of change sweep through the media landscape, it remains a truth that the first audience for any pitch is the reporter. Without a compelling pitch that resonates with the reporter, your story will not get written and therefore will not influence the end-reader audience.

FrackingIt’s interesting, then, to see a campaign succeed with that initial target audience even as it butts up against a reality that could torpedo it.

This past Memorial Day Weekend, I happened upon an article in The Boston Globe (yes, I still have dead tree media delivered to my door, daily) assuring readers that the price of gasoline this summer would not be as expensive as last summer. Why the lower price? Well, according to article author Erin Ailworth, “The main reason is the boom in US production of crude oil, which accounts for about two-thirds of the price of gas. As a result of the controversial drilling process known as “fracking” that frees oil from shale formations, US crude is flooding global markets and holding down prices.”

That line has become conventional wisdom in the media, as well it should. As I’ve blogged in the past, vested fossil energy interests have expended a lot of effort to create it. A steady wave of research papers from institutes, investment houses, agencies and academics with ties to the energy industry have received breathless uptake in the media. Those who have taken critical views of those papers have been largely ignored. Not really a surprise because people prefer information that assures them the world they’ve known will continue on untroubled. The media, like corporations, is made up of people and the message they’ve been receiving on a regular basis from fossil-fueled sources is that all is well.

The problem with this manufactured conventional wisdom is reality. If you make it to the bottom of that Globe article you come across this paragraph:

In the meantime, gas prices remain historically high and may convince some people to stay close to home, said Mary Maguire, spokeswoman for AAA Southern New England. The auto association estimates that 34.8 million Americans will journey 50 miles or more from home during the holiday, a decline of about 1 percent from last year, when 35.1 million people traveled.

So, yeah, reality. Fracking for oil is expensive, both in terms of labor and materials. Those sustained high prices are tamping demand in the US, especially among those who remain among the ranks of the unemployed. Faced with a dearth of summer jobs and low wages, teens, too, appear to be less interested in dropping $60 or$100 in the tank every week to cruise around.

Meanwhile in what are still called “the emerging economies” of countries such as China, India, Indonesia and Vietnam, demand for refined petroleum products continues to climb. That rising demand will more than make up for declining demand here in the US. That trend will ensure both high gasoline prices and that fracking for oil remains a profitable endeavor. But, profitable or not, it’s unlikely to result in production rates that can replace that lost from depleting conventional wells and this trend will also help ensure prices for crude stay high enough to keep frackers in business.

And as the fracked oil flows, the conventional wisdom will as well, while people at the pump bump into the underlying reality of a world no longer awash in cheap fossil energy.


At current rates

In the unfolding war of perception around fossil fuel availability, it’s always important to watch for key words and phrasings.

It’s important because they typically take two forms: “soothe and enthuse” and the “fine print.”

“Soothe and enthuse” phrases assure the public that there is plenty of resources available. In the realm of fracking and natural gas, the phrase that soothes and enthuses is “100year supply,” as in “we have a 100-year supply of natural gas in the United States.”

The inline “fine print” wording ensures plausible deniability when physical realities and/or business needs undermine assertions made in the assurance phrases, thus dampening excitement. Again, in the natural gas fracking world, the one to watch for is “at current rates.” Sometimes the current rate cited is of consumption. Other times it’s production. Either way, it’s usually closely tied to the aforementioned “100-year supply” phrase.

With this in mind, I read with interest this story about a recently issued report written by NERA Economic Consulting at the behest of the Energy Department stating that exporting U.S. natural gas would be a big booster for the domestic economy. As I summarized previously, fracking for natural gas is expensive and not currently profitable. In short, fracking produces a quick rush and then a quick fall off in flow, requiring more drilling. That’s expensive. However, that initial rush produces a glut which drops prices, making the whole process rather uneconomic.

Clearly, shipping fracked gas overseas to growing markets such as Japan and China, where prices are currently more than triple what U.S. buyers pay, would do wonders for the bottom line of the frackers. But what would it mean for that “100-year supply”?

That’s where the aforementioned fine print kicks in.

You see, “at current rates” refers to a time when the U.S. natural gas supply isn’t part of a global market; it’s all consumed here for the things natural gas has historically been used for – cooking, heating homes and water, supplying chemical manufacturers with an important feedstock, pre-heating metals in iron and steel making, generating electricity in a power plant, that sort of thing – and produced at rates commensurate with those historical uses.

Open up the U.S. gas supply to the soaring demands of growing Asian economies and you are instantly no longer consuming “at current rates.” You’re consuming at much higher rates, which increases prices. Higher prices will drive driller’s revenue and provide capital for more fracking. Soon you’re no longer producing “at current rates” because it has jumped to meet the new, higher demand.

The boom in jobs fostered by this expensive, messy frenzy of resource extraction is unlikely to focus anyone on the math that “at current rates” encourages. Rather, some day hence, certainly much sooner than a century from now, when the issue becomes more than obvious, an intrepid scribe may wonder why the 100-year promise fell so short. This movie has played out before; but sadly it was a foreign film – British, to be precise – and we don’t really pay much attention to those here in the States.


Good (and bad) to the last drop

Wildfires and heat waves have me thinking about peak oil, climate change and the efforts to convince folks that oil supply is not an issue. Here’s why. Across the Pond at the Guardian, George Monbiot, a British writer well known for his environmental activism, has recently declared Peak Oil a dead letter, lamenting that there is still enough in the ground to fry the climate. True, but also wrong.

Beyond the basic flaw of interpreting “Peak Oil” as shorthand for “imminently running out of,”others have done a detailed job rebutting not only Monbiot’s misunderstandings, but also the study that was his inspiration. My interest, however, is on the “boom” in oil production he mentions and this lament toward the bottom of the piece: “Twenty years of efforts to prevent climate breakdown through moral persuasion have failed…”

And I suspect that failure will continue. While some people are moved to change by the havoc wrought on the environment in pursuit of unconventional sources of fossil fuel, the vast majority aren’t – or are willing to look the other way.

The destruction Canada is doing to pristine wilderness in Alberta isn’t a secret, but it’s only increasing. That Macondo well blow-out in the Gulf of Mexico a couple years back is still showing up in the coastal environment, but that hasn’t prevented large oil companies with spotty safety records from receiving permission to drill in even more hostile and environmentally sensitive places, like the Arctic.

But, humans are risk and change averse. We will stay with what we know, even if it’s got problems, rather than risk a radical change. Oil has proven it has the power – quite literally – to transform life from a nasty, brutish and short struggle for survival into a comfortable, convenient and extended tussle for entertainment. Moral persuasion is unlikely to make headway against that perception. People like comfort and convenience, not to mention entertainment.

The vast majority of “consumers” are not interested in going back to a mythically bucolic future. Even “country folk” like their gas-guzzling pick-up trucks, bass boats, chain saws and ATVs. They make life easier and more fun.

The challenge for those who care about our environment, and the affect fossil fuel use is having on it, is to care about our current lifestyle; what it offers and what it doesn’t.

Green and sustainable are, at base, moral persuasion arguments and they’re not working. Can your alternative, sustainable, greener offering make daily life more comfortable, convenient, secure or safe? Can it help a business be demonstrably more profitable, or insulate it from uncertainty in a key area?

If so, then that’s your lead message because for most consumers the only alternative they’re eager to embrace, especially in times of uncertainty, is one that improves their life.