US Chamber of Commerce Blog
Oil and natural gas not only fuel our economy, they provide the basic materials for making health care products that save lives and keep us healthy.
Step into a hospital or clinic, and you’re surrounded by objects that come from petroleum.
Plastics derived from natural gas go into items like MRIs, IV bags and tubes, lights, monitors, stethoscopes, prosthetics, and hearing aids. Chemicals derived from petroleum become soaps, antiseptics, aspirin, and pharmaceuticals.
If we listened to “keep it in the ground” dreamers who think we can live without fossil fuels, we’d not only be left in the dark, we'd be without these life-saving items.
Energy In Depth created the infographic below showing how prevalent and important oil and natural gas are to the health care products.petroleum_hospital_infographic_1600px.png Energy In Depth infographic: Petroleum Products and You: Oil and Gas Materials Used in Hospitals to Save Lives lightbulb_bluegray_100px.png
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Our country’s small businesses aren’t wanting for challenges. Capital and talented workers are hard to come by, technology is advancing more and more quickly, our nation’s tax code and health care system are a mess, and the economy can’t seem to sustain any sort of real momentum. It’s hard enough for entrepreneurs to simply stay in business, let alone expand and create jobs.
So why on earth do environmental regulators seem on hell-bent on making their jobs even harder?
The Environmental Protection Agency has in recent years proposed and in some cases finalized a flurry of onerous new regulations that aren’t merely sticking a thorn in the sides of small companies, they’re downright driving them out of business. It’s not merely one or two sectors that have been clobbered by the new rules, either. It’s everyone from farmers to manufacturers to energy producers to construction companies. Nor are the ripple effects limited to certain areas of the country; the federal agency’s wrath is being felt by small businesses from coast to coast.
The agency’s Waters of the United States (WOTUS) rule, for instance, is threatening agricultural business owners like Jack Field, a cattle rancher in Yakima, Wash. A second-generation rancher, Field currently leases pastures from local landowners to run his 120 cattle, but under WOTUS – which vastly expands the definition of federally protected water and gives federal regulators unprecedented authority over local land use – that leasing model may not be sustainable. From our earlier story:
Under the rule… the agency can claim jurisdiction over any “waters” that are deemed to be adjacent to streams, wetlands and creeks, essentially stripping away broad regulatory power from states and local jurisdictions. In the process, the EPA has opened landowners and ranchers up to a host of new permitting requirements, as well as potentially devastating fines and lawsuits.
“For the price of a postage stamp, someone who disagrees with eating red meat could now throw me into court, where I will have to spend time and money proving that I am not violating the Clean Water Act,” Field told the House Small Business Committee at a hearing last year. “I don't think this is what anyone had in mind when Congress passed the Clean Water Act.”
With the added liability, it’s not surprising that landowners who have leased Field their property in the past have expressed concerns about his operations moving forward.
“It may very well end up that landlords decide that my cattle grazing activity now has too high a risk profile under this new rule, and they may no longer want to rent the land to me,” Field said in an interview. “If that’s the case, and I can’t find somewhere to run my cattle, I’ll have to get rid of them - that’s just the way it works. I’m not sure what we would do then.”
Read the rest of Field’s story here.
On the other side of the country, Drew Greenblatt had been planning an expansion of his small manufacturing company, Marlin Steel, based in Baltimore, Md. However, EPA’s new ozone rules threaten to throw a wrench in those plans, under which Greenblatt was expecting to expand his manufacturing space by 53 percent and hire 15 new workers, as our earlier story explained:
[Under new ozone rules], many of the manufacturing and industrial firms that Marlin Steel counts as customers will see their regulatory compliance costs skyrocket as communities are forced to lower pollution levels even further than they already have (ozone levels have already dropped by a third since 1980). Every dollar spent complying with the new rules is one less dollar those manufacturers have to invest back into their firms and purchase new machinery.
Only when those manufacturers are expanding and investing in new machines do they need more steel containers (like the ones Greenblatt sells) to move goods from machine to machine within their factories. Thus, only when they're expanding does Marlin Steel have customers.
Several longtime clients have already told Greenblatt that the EPA’s new ozone rules will put a freeze on any expansion or investment plans they had in the works.
“My clients are going to clamp down, and my phone is going to stop ringing” Greenblatt said. “When they hit pause, we have to hit pause, too, and as a result, we’re simply not going to be able to expand and hire as much as we had planned.”
Read the rest of Greenblatt’s story here.
Moving to the Midwest, John Cooper, a former mechanic in the Marine Corps, has spent the past fifteen years working for Ameren, an energy utility company in St. Louis, moving up the ladder from a laborer back in 2000 to the plant’s supervisor today. However, another cumbersome EPA regulation has put his and the rest of the plant’s workers’ jobs in serious jeopardy:
Last year, Ameren announced plans to close the Meramec site, the smallest of the company’s remaining coal-powered plants, by 2022. While the company has cited a number of factors that played into the decision, executives acknowledged that the Environmental Protection Agency’s new, much more strict carbon emission limits for power plants – which had been proposed one month before Ameren’s announcement – made it “clearer” the facility would have to close. In fact, the site may be shuttered even sooner depending on how the rules are implemented.
Cooper took notice.
“I have a real concern about the speed at which the changes being implemented by the Clean Power Plan will affect my work location and my life,” Cooper wrote in a comment submitted to the EPA after the agency first proposed the standards last year. “I understand environmental change is coming and I wholeheartedly accept that it is our generation’s responsibility to turn the corner on our lasting effects on the environment. However, you also need to understand that not only is our environment at stake but also the livelihoods of thousands of utility workers and the tax revenues these facilities provide.”
His lone request to the EPA? “For myself and my family, I only ask that you be patient and understanding of our plight and please try to work with my company and the many others like us to help make this transition as painless possible,” Cooper wrote.
Instead, the agency has done precisely the opposite. Officials moved with reckless abandon to implement the new emissions standards, recently issuing a final rule without even taking into account sufficient input from the small business community, as is required by federal law.
Read the rest of Cooper’s story here.
Staying in America’s heartland, new EPA rules finalized late last year have clobbered small brick manufacturers across the country, pouring salt in the wounds of an industry that has already been struggling in recent years. The regulations will require brick makers to purchase and install expensive new equipment that regulators hope will slightly reduce their plants’ mercury output and emissions of so-called particulate matter – basically, a mix of dust, dirt, and smoke particles. The rules have pushed Davis Henry’s 60-person brick company in Selma, Ala., to the brink of closure:
“Our regulators are targeting an industry that has been absolutely crippled by the recession,” said Henry, noting that his company has already had to shut down one of its two brick kilns (a reflection of the downward trend across the brick industry, which is currently operating at less than 50 percent capacity). He pointed out that “a bank is not going to invest millions into a business for something that isn’t going to increase sales one bit and will instead drag down its profits."
Once the rules are finalized, Henry and other brickmakers will have three years to come up with a plan to comply. Henry, his brother and the rest of his management team are mulling their options. But as it stands now, the outlook appears bleak.
“The worst case scenario is that we can’t find a way to avoid these new requirements, a bank won’t give us a loan, and in three years’ time, if we haven’t sold the company, we would just have to cease operations,” he said. “I mean, that’s the worst case scenario: We would have to close the business.”
Read the rest of Henry’s story here.
Some 800 miles to the north, Janet Kaboth’s small brick business is facing a similar fate. Her 100-year-old company based in Alliance, Ohio, which has always made a concerted effort to hire workers who would likely have a difficult time finding employment elsewhere, could be on the hook for $5 million in upfront technology investments and as much as $1.5 million in additional operating costs every year moving forward. Kaboth elaborated:
“I would like to think that after almost 100 years of providing good employment, paying taxes, and being a responsible corporate entity that someone in our government could look at the cumulative effect of regulation compliance and help us,” she [told] Congress.
In Kaboth’s case, for EPA's rules alone, her 80-employee company would be required to purchase and install new equipment that would scrub some of the mercury and particulate matter emissions out of Whitacre Greer’s smokestacks. All told, the new systems will amount to a more than $4 million investment (equal to approximately a quarter of the company’s net worth) to scrub out only a few additional pounds of mercury – or for those counting, less than 1 percent of 1 percent of the amount of mercury currently embedded in American mouths.
“It’s not just that it’s a high cost,” she said. “It’s that it comes with so little benefit.” [...]
“It would be a shame, when you think about all the things we have gone through and all our company has survived over the past hundred years – recessions, wars, housing market crashes – to be brought down by one regulation,” Kaboth said. “It just seems wrong. I don’t make the rules, though, so we’ll just have to do our best to keep surviving.”
Read the rest of Kaboth’s story here.
Unfortunately, these small business owners aren’t alone. The EPA’s runaway regulatory regime has been steamrolling small companies in these and many other industries, and there’s no sign that the agency intends to slow down anytime soon. We have to pump the brakes on this overregulation and fundamentally reform the way federal rules are enacted, so that we help these small businesses grow and create jobs, rather than running them into the ground.
In 2010, Molly Eagen gave herself a challenge: For 100 days the Minneapolis resident would try to live without oil.
Eagen, an architecture student at the time, took the challenge to understand “peak oil,” the flawed idea propagated in the early part of this century that the world would soon run out of oil. (The shale revolution later shot that theory to pieces.) “I knew the issues,” she told Minnesota Monthly. “But it wasn’t real to me.”
Eagen bought and grew locally-grown food, walked or biked everywhere, and limited herself to only the daily amount of water and electricity she could hypothetically collect from the sky (even though oil is rarely used to generate electricity in modern-day America). As part of her research, she expanded on this EIA diagram on U.S. petroleum flow and added where it goes in our daily lives. It detailed how vital petroleum is to productive, comfortable, safe and healthy lifestyles in terms of transportation, food, water, health and energy.Sustainable living in a "post-oil world": Molly Eagen at TEDxUMN Salon 2011
Now, take the idea of oil deprivation and expand it to all fossil fuels: oil plus natural gas and coal.
This far-out notion is going mainstream in the environmental movement. Declaring that we should “keep it in the ground,” activists have gone from opposing oil pipelines like Keystone XL and outlawing fracking to pushing for an end to all fossil fuel use – with little thought about the ramifications.
Imagine living without fossil fuels--waking up in the pre-dawn morning and squinting in the dark as you stumble to the bathroom for something to ease a throbbing headache, only to be disappointed when you open the medicine cabinet.
Little artificial light, no aspirin, and little clean water to wash it down. These are three of the untold comforts of modern life that we would lose if we gave up fossil fuels.
The “keep it in the ground” chorus has been growing.
Bill McKibben, author of The End of Nature and founder of 350.org, is one of the main promoters, declaring, “We have to keep 80 percent of the fossil-fuel reserves that we know about underground.” He wrote in The Nation: “Fossil fuels are the problem in global warming—and fossil fuels don’t come in good and bad flavors. Coal and oil and natural gas have to be left in the ground. All of them.”
Throw in the big environmental groups. Greenpeace is calling for a “revolution against fossil fuels," and the Sierra Club—with its Beyond Oil, Beyond Natural Gas, and Beyond Coal campaigns--has been pushing this far-fetched idea since at least 2014. Maybe they should call their campaigns “Beyond Progress.”Activists are pushing for an end to all fossil fuel use – with little thought about the ramifications.
The message has driven followers of these groups to take action. Federal offshore energy lease auctions are usually mundane events, but in March, protestors unsuccessfully tried to shout one down in New Orleans. In 2015, “kayaktivists” took to Puget Sound to protest Arctic Ocean energy development. Ironically without oil, the flotilla of kayaks—made from petrochemicals and transported on the rooftops of gasoline-burning vehicles—wouldn’t have existed.
The cry has hit the universities with coordinated student movements calling for universities to divest their endowments of fossil fuel company stocks.
Rarely known for their intellectual heft, celebrities and presidential candidates haven’t been able to resist the siren song of a catchy slogan. The Guardian convinced actors to read poems for the newspaper’s anti-fossil fuel campaign. On the campaign trail, Sen. Bernie Sanders (I-Vt.) has gone so far as calling for banning hydraulic fracturing and stopping all future coal, oil, and natural gas development on federal lands. He has even co-sponsored legislation titled the “Keep It in the Ground Act.”
In Washington, D.C., after years of taking credit for increases in oil and natural gas development, President Barack Obama has embraced the cause and their language. When he vetoed the Keystone XL pipeline he declared, “We're going to have to keep some fossil fuels in the ground.”
The president is certainly willing to do his part by having his administration advance all sorts of anti-fossil fuel policies.
There is EPA’s Clean Power Plan and other anti-coal regulations as well as proposed unnecessary regulations on methane. The Interior Department issued a moratorium on coal leases on federal lands, pushed more offshore energy regulations, pushed tough oil and natural gas development regulations on federal lands, blocked energy development off the Atlantic Coast, and has made it nearly impossible to explore for oil and gas in the Arctic Ocean. And these anti-energy measures are just the tip of the iceberg.022862_istk20688951_windowlights_1600x1066px.gif Apartment windows' lights going on and off.
What Does "Keep It in the Ground" Look Like?
What would it mean to “keep it in the ground?” What would life be like if we took McKibben’s declaration seriously and went farther than Molly Eagan’s experiment by giving up oil, natural gas and coal?
There are a few things that would happen. We’d need a lot more candles (made from tallow or animal fat and not petroleum like most are) lying around the house.
According to the Energy Information Administration, coal and natural gas generate two-thirds of our electricity. Renewables—wind, solar, biomass, geothermal, and hydroelectric—collectively produce only 13%. Replacing fossil fuel electric generation capacity with renewables would cost $2.5 trillion, according to energy expert Vaclav Smil. But reliability is priceless, so even this does not capture the true cost of such a transition. If solar and wind were forced to fill in the gap, these resources are intermittent and therefore less reliable, so we would have daily power outages when the wind stops blowing and the sun stops shining.
We would be walking or biking a lot, since there would hardly be any gasoline to use, and not enough corn ethanol to make up the difference. Perhaps we would see the return of horse and carriages, but then we’d have a different type of pollution problem.
But what about electric cars? With two-thirds of electricity generation gone, it’d be hard to power those cars, and as you see later on, green technology wouldn’t exist without fossil fuels.Replacing fossil fuel power with renewables would cost $2.5 trillion.
But it’s more than obvious things like electricity and transportation fuels. Fossil fuels are deeply integrated into modern everyday life. “The U.S. and all prosperous countries are utterly dependent on fossil fuels every moment of the day,” Texas Public Policy Institute Senior Fellow Kathleen Hartnett White told me in an e-mail interview. “The food, services, and goods this fossil-fueled energy systems now daily delivers would be unimaginable to our ancestors one hundred years ago.”
Abandoning fossil fuels would be like going into a time machine. Here’s a sketch of how things would be less comfortable and less healthy. Let’s start with a case study across the Atlantic.Europe as an Energy Disaster Story
In the wake of the 2011 tsunami that struck Japan and led to the Fukishima nuclear power plant meltdown, Germany moved to shut down all its nuclear power plants by 2022. At the same time, it has also pushed for renewable wind and solar to replace coal power—the energiewende.
Germany’s goal is boosting renewable power to 45% of generating capacity by 2025. Between 2003 and 2015, Germany increased wind and solar generation by 148.5 terawatt-hours. Both coal-generation and natural gas generation fell by around 10%.
But the energiewende has a dark side--literally.
Energy costs have gone through the roof, making German industry less competitive globally. The German newspaper Handelsblatt didn’t pull any punches in describing the harm done in an article titled “How to Kill an Industry.”
Losers include laid-off workers in these industries, but also millions of ordinary consumers. Their utility bills have skyrocketed, largely driven by subsidies for eco-friendly fuels. As much as the transition creates new jobs building wind turbines, farming biofuels or installing solar panels on rooftops, the changes are cutting a deep swathe through other parts of the economy. Germany’s “green” revolution has a dark shadow.
Workers in Germany are feeling a similar fate to U.S. workers who have been hurt by attacks on coal-fired generation:
Thousands of workers have already been let go, disproportionately hitting communities in Germany‘s rust belt that are already struggling with blight. RWE has cut 7,000 jobs since 2011. At E.ON, the work force has shrunk by a third, a loss of over 25,000 jobs.
Manufacturing has been so disrupted that German manufacturer Siemens moved its natural gas turbine business to North Carolina. It is similarly unsurprising that more and more “German” cars are now being built in America.
(Ironically, cheap, abundant natural gas produced in the United States has drawn investment from German companies like BASF.)
Crossing the North Sea, the United Kingdom is seeing its own energy catastrophe as a result of running away from reliable fossil fuels.
The U.K.’s steel industry, already hard hit by declines in world steel demand and falling prices, has also been hit by high energy costs. It too is facing factory shutdowns and massive job losses.
The U.K. is legally bound to generate 15% of its energy demand from renewable sources by 2020. But it has additional mandates that require electricity producers to supply a portion of the electricity from renewable sources as well as price-hiking renewable energy subsidies.
This has resulted in the U.K. having the highest industrial electricity prices in the European Union, according to the Energy Intensive Users Group. Electricity accounts for 20% to 40% of steel production costs, according to the World Steel Association. Put these together with slumping global steel prices and the U.K. is facing a crisis of shuttered steel mills that threatens massive jobs losses and could upend communities.
In both Germany and the U.K., these pains only come from a fractional decrease in fossil fuel use. Imagine the human and economic costs from keeping all fossil fuels in the ground?The Poor Will Bear the Brunt
Abandoning fossil fuels disproportionately hurts the poor. According to an American Coalition for Clean Coal Electricity analysis of federal data, households in the U.S. making less than $30,000 annually spend 23% of their after-tax income on energy. Households making more than $50,000 annually spend only 9% of their after-tax income on energy--primarily electricity and gasoline.
Eliminating fossil fuels amounts to a massive regressive tax, as reduced electricity and gasoline supply results in price spikes that hurt the poor the most.
Again, Europe shows us this bleak future.
Robert Bryce, a Manhattan Institute senior fellow, looked at energy markets after the European Union (EU) launched its first cap-and-trade system to limit carbon emissions in 2005.
From 2005 to 2015, Spain “more than doubled its production of electricity from wind” and increased solar production from 5.3 gigawatts to 13.7 terawatts (a 5000% increase!). Meanwhile, Spain’s residential electricity prices rose by 111% from 2005 to “more than twice the average residential price in the United States.” Industrial rates rose 84%.
While renewable generation skyrocketed, abandoning cheap and plentiful fossil fuels meant higher energy costs for Europeans.
Spain’s residential electricity prices rose by 111% from 2005 to 2014, France’s rose 42%, Germany’s rose 78%, and the U.K.’s rose 133%. Overall, the EU’s rose by 63%.
Germany’s situation led the magazine Der Spiegel to editorialize that “electricity is becoming a luxury good in Germany” and lament:
Germany's aggressive and reckless expansion of wind and solar power has come with a hefty pricetag for consumers, and the costs often fall disproportionately on the poor.
“Perhaps one million homes in Germany now can no longer afford electric service at rates that are two-three times higher than average U.S. electric rates. Similar impacts occur in England where the incidence of 'winter deaths' has significantly risen,” explained Kathleen Hartnett White of the Texas Public Policy Foundation.
States like New York, California and Oregon think the EU’s energy policies are great. But the Manhattan Institute’s Bryce told The Daily Caller, “If they are concerned about poor and low-income constituents, they should be rethinking those mandates.”
Without fossil fuels most of the basic comforts in life would be at best very difficult, if not impossible https://t.co/PulbAUEXiK
— Jason Hayes (@jasonthayes) April 22, 2016The Material Basis for Our Society
"This is the Petrochemical Age," Michael Wilson, Chief Scientist of the California Department of Industrial Relations, told The Associated Press in 2010. "It's the material basis of our society essentially.”
Not only do fossil fuels offer us energy, countless products would not exist without oil and natural gas being converted into other chemical compounds. Here are a few examples.Fossil Fuels and Farming
Beyond the agricultural use of fossil fuels to power tractors and farm machinery, natural gas is an important feedstock for fertilizer.
Plants love nitrogen. Using the Haber-Bosch process, hydrogen from natural gas is combined with nitrogen to produce ammonia that’s a key component of fertilizers. Slate’s Jonathan Mingle writes that a National Geoscience paper concluded that without ammonia-based fertilizers, the world “could sustain only 3.5 billion people.” Fossil fuels keep us from starving.One Word: Plastics
Mr. McGuire in The Graduate was right: “There’s a great future in plastics.” Plastics are part of daily life. They’re in your kitchen cabinet, your garage, on your office desk. If you have a credit card or carry a mobile phone, plastics are with you constantly.
Without fossil fuels—specifically natural gas—you wouldn’t have plastics.
Ethane is separated from natural gas liquids and converted into ethylene at a “cracker.” This ethylene then becomes polyethylene resin which is used for everything from chairs to computer keyboards to smart phones to plastic wrap.
What makes plastics useful is they are light and strong, and with innovation we’ve seen impressive improvements. Take carbon fiber. It makes cars, planes, prosthetics, and other products lighter and stronger. But carbon fiber comes from plastic. Giving up fossil fuels breaks this innovation chain: No natural gas; no plastic; no carbon fiber; no improved products.Pharmaceuticals
Because oil and natural gas are made of an assortment of organic materials, they can be converted into feedstock chemicals that are the basis for an assortment of drugs and health care products:Aspirin Anesthetics Antihistamines Cortisone Antiseptics Hard to ‘Go Green’ Without Fossil Fuels
The loss of products derived from fossil fuels really becomes apparent with “green” products.
Carbon fiber is five-times stronger than steel but half its weight, as well as flexible and strong. Carbon fiber along with plastics go into constructing wind turbines and solar panels.
Then there are electric cars like the ones made by Tesla. Plastic and carbon fiber parts go into each car—from the dashboard to the electric battery. And let’s not get into the need for fossil fuels to generate the electricity to power the car.Where to Stop?
“From what energy source could we make steel, aluminum and other basic metals?” asked Hartnett White, the former chairman and commissioner of the Texas Commission on Environmental Quality. “From what energy source could we produce the feedstocks and products for synthetic material for which hydrocarbons are the raw material?”
Asphalt, synthetic rubber for tires, soap, dyes, nylon, artificial joints, and insulation in your home’s walls – the list of products derived from fossil fuels goes on and on.
Back to Molly Eagen and her oil fast. At a TEDx talk, she described her daily pattern from her “self-inflicted experiment”:
I just finished up an eight-mile bicycle commute after having a typical breakfast of oatmeal and maple sugar and taking a chilly one-gallon bucket shower.
Along with spending “countless hours in the kitchen cooking foods from scratch, local ingredients that I could find in bulk,” Eagen noted that she closely monitored her water use, because in the developed world fossil fuels are used to cheaply transport and clean water. It’s a reminder that not that long ago, dirty water transported deadly diseases. According to Wired, “Cholera outbreaks in London and Newcastle in 1853 killed more than 10,000 people.”
Today, sewage treatment plants packed with plastic pipes, water filters (made from coal), and chemicals derived from oil and natural gas, and pumps powered by fossil fuels make waterborne outbreaks nearly unknown in the developed world.
Here’s where we encounter some irony. Although scarce, fossil fuels have given us abundance never before seen by humanity. Dense with energy, fossil fuels keep us warm, keep us fed, make us healthier, and keep us entertained.Water treatment plants packed with pipes, water filters, and chemicals from fossil fuels make waterborne diseases nearly unknown.
The debate about energy shouldn’t be about where it comes from. That puts the focus wrongly on inanimate piles of stuff. The debate must be on how energy can be safely provided so that every man, woman, and child can live vibrant, fruitful, and meaningful lives.
“Keep it in the ground” wouldn’t be some green, pollution-free utopia. Instead, it would mean billions of people trapped in the cold, malnourished, sick, and living shorter, more-miserable lives.
Who wants to turn back the clock? I wouldn’t, and I doubt fossil fuel opponents would either when you really ask them.
Whether people realize it or not, this unworkable and harmful dogma would turn back the clock, force humanity to regress, and take it down an unlit path.