© 2016 Michael Swickard, Ph.D. “In general, presidents and congressmen have very limited power to do good for the economy and awesome power to do bad. The best good thing that politicians can do for the economy is to stop doing bad. In part, this can be achieved through reducing taxes and economic regulation, and staying out of our lives.” Walter Williams
Despite claims otherwise, many elected leaders are the very reason our economy is faltering. They campaign promising to improve our economy yet they support the very government actions which cause critical harm to the economy. These politicians campaign to solve the problems which were caused by them.
Currently there is a political controversy about flaring (burning) some of the gas from New Mexico oil producing wells. The talking points are that petroleum producers should sell that gas rather than just burn it.
Activists claim petroleum producers intentionally throw money away. But people in business do not throw money away and stay in business. Some people understand the oil and gas industry while others do not.
Former New Mexico Land Commissioner Ray Powell wrote in a recent Op-Ed: “The San Juan Basin is one of the most heavily developed energy fields in the Intermountain West. While the downturn in oil and natural gas prices has hit hard, there is a simple way we can boost energy and tax revenue – cut natural gas waste at existing oil and gas well sites.”
Ray Powell’s statement has nothing to do with petroleum engineering. If there was money to be made, the petroleum producers would, especially now when prices have dropped.
Why are these wells flared? Simply, there is no economical way to bring those products to market. There isn’t the infrastructure nor is it economical.
The activists know this. It’s really an attempt to cripple the petroleum industry in New Mexico. Consider: this push follows a long list of industry killing events. The introduction of wolves in cattle country is strangling the New Mexico cattle industry in those areas. That is along with the Jumping Mouse rules which are designed to keep cattle from water.
If new rules require the gas to be captured and sold or the well must be capped, all but the most productive wells will be capped. There is not the infrastructure to capture that low volume gas which also has Hydrogen Sulfide, (H2S) in it. This colorless gas with a rotten eggs smell is poisonous, corrosive, flammable, and explosive. No one is buying this substance so it is flared for safety.
What is the political value in making New Mexico producers cap their wells? The progressive push is to end oil, gas and coal so that the economy goes on the wind and solar standard. The federal government has targeted coal which is used in about half of the national electricity generation. The coal industry is dying.
The problem is wind and solar are not a good source for power generation other than for off-grid homes. For traditional energy uses solar and wind must be backed up by traditional generating stations. So we pay for the generation twice. The price is prohibitive, especially if the energy is used in manufacturing where competing products are produced with low-cost energy-dense power.
In New Mexico curtailing oil and gas production will send the state budget into a financial abyss of epic proportions. The state of New Mexico is already reeling from the drop in oil and gas revenue. The current recession in New Mexico would turn into a never ending depression without oil and gas revenue.
When you see elected leaders talk about reigning in the lost money in flaring, know that the intention is to end the oil and gas industry and replace it with wind and solar. They gain political power in this way but the citizens lose an incredible amount of money for their schools and lots of jobs.
As Walter Williams wrote, “In general, presidents and congressmen have very limited power to do good for the economy and awesome power to do bad. The best good thing that politicians can do for the economy is to stop doing bad.”
But we keep electing people who spend their time harming our economy.