According to E&E Times, last week, the House killed funding for oil shale research in the 2013 energy and water spending bill. Had the funding been left in place 25 million dollars would have been allocated for oil shale R&D. It was a close vote, 208 to 207, but the funding was eliminated.
People in Parachute, Colorado remember all too well the Black Sunday on May 2nd 1982 when Exxon suddenly closed its oil shale development there. Over 2,000 people found themselves out of work.
People still don’t trust oil shale, and given the story of Parachute, Colorado, one can understand why. Heretofore, oil shale has been too difficult to extract and required too much energy and water to make it viable energy source.
In recent years, a company called Enefit American Oil, based out of Estonia has moved into Utah and plans on setting up shop to extract oil from the shale. Enefit and its supporters point to Estonia as a country where oil shale has been in use for a hundred years, and also claim that the company has developed a method by which the oil can be extracted from the shale with almost no water. The company also points to its track record on reclamation in Estonia and to the fact that its emissions exceed the stringent requirements of the European Union.
The company appears to have found the Rosetta Stone that will allow it to crack the shale code in the United States. Its arrival will mean energy jobs in the State of Utah and will also add another alternative to the energy options box. By all indications, the company is a bright spot in the difficult history of oil shale development in the America.
Interestingly enough, in a move that will undoubtedly earn him the ire of some energy proponents, Republican Congressman Jason Chaffetz of Utah voted against the funding for oil shale development. Chaffetz represents the one of the states, where oil shale deposits can be found, although they are not found in his district. I was curious as to why a Utah congressman would vote against an amendment which would have positive ramifications for his home state. I spoke with him via the phone on Monday about the matter.
Congressman Chaffetz was very straightforward in his response. He simply does not believe that the federal government has any businesses subsidizing private industry, whether it is wind, solar, or in this case, oil shale.
Conservative commentators, including this one have taken the government to task for funding a host of green energy projects such as Solyndra, Fisker and A123. And rightly so, as those companies have turned out to be money pits that have horrible track records on jobs and productivity. Further, conservatives across the nation have decried the GM bailout. And one of the rallying cries of Tea Partiers has been “Not another TARP!” and “No more bailouts!” And those on RINO safaris have cited TARP as one of the reasons for removing some incumbents from office. Pick a conservative, any conservative and he or she will tell you that the best thing the Federal Government can do for private industry is to not get within 20 city blocks of it.
One could argue that at the heart of Chaffetz’s vote is the idea that true believers in a free-market economy should be ready to concede that if the federal government has no business giving money to banks, auto dealers or solar companies, it has no business giving money to oil shale, either. Further, one could argue that if Enefit is going to make oil shale work and is going to do so on its own nickel without the helping hand from the government that should in fact spur other energy companies to put that greater effort into developing their own processes. Success would mean that the market will have options for shale oil offered at competitive prices.
That line of thinking however should come with two caveats. If the federal government is not going to provide money for oil shale, it should stop funding green energy as well. It should do so immediately and take steps to recoup the losses to the taxpayers post haste. And the Department of the Interior should follow its original mandate from Congress and not reduce the acreage that was originally made available for oil shale research and development. If the product is viable, the market will bear that out, and be the better for it.
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