Energy futures in federal land states

Ryan McConnaughey’s guest column on behalf of the Petroleum Association of Wyoming presents the daunting challenges facing Wyoming and other land grant states. As a native of the state owing much of my existence to the petroleum industry, I am sympathetic to those concerns. I would however present certain cautions.

Those cautions relate to the political questions that are raised. Whether or not one believes in global warming, the political momentum is in the direction of reduction of fossil fuel use. More intense storms, floods, wildfire threats, and the inability of insurance companies to deal with the associated losses loom over the decisions. Transitions are an ongoing part of our industrial culture.

The founding of our nation occurred only some three decades and two centuries ago. At that time the industrial revolution had only begun to transition from horse and sail to coal and steam. Half a century later we industrialized on a grand scale with factories and railroads demanding gigantic amounts of coal. A century later I still rode a train pulled by a steam locomotive to my flight physical and my induction into the US Navy where I flew aircraft powered by radial engines burning aviation gasoline. Many of us can still remember family members who mined coal in Gebo.

Those mines were history in the nineteen fifties as I began high school. Coal still had a future in our state as we developed surface mines to fuel electric generating plants powered by steam turbines. Oil and gas were thriving as the source of petrochemicals and motor fuels, and the oil industry that started at the beginning of the twentieth century went on to continue production through secondary and tertiary recovery to meet the nations huge demand. When domestic production could no longer meet that demand we sought and imported oil from around the world often at considerable cost. Then another transition occurred as technology and experimentation opened up a huge resource through hydraulic fracturing of oil and gas bearing shales. Every one of these transitions took place because of economic considerations only obliquely influenced by politics.

Now a new technology has developed whose economics are challenging the role of fossil fuels as the energy base for our industrial enterprise. Coal is the first casualty as wind and solar generation becomes cheaper than coal fired technologies. The big banks and investment houses see the writing on the wall and have no intention of continuing to finance coal extraction as we have seen in our state. The economics of oil and gas are also being challenged. The huge investment in hydraulic fracturing requires gas prices substantially higher than the current level and the bank investments are increasingly threatened. Dis-investment is beginning to occur.

It is my belief that as renewable production of electricity continues to become more efficient and inexpensive, oil and gas will become less and less competitive. I foresee that the transition to electric transportation and industrial processes will only accelerate until oil and gas are as disadvantaged as coal. Political decisions may torque the time table, but economics will decide the outcome.

Keith V Becker