Dear Northeast: How’s that solar working out for you

A reminder from Marita to silly folks on why electricity needs real power plants

Marita Noon

For immediate release: November 24, 2014.

Commentary by Marita Noon

Executive Director, Energy Makes America Great Inc.

Contact: 505.239.8998, marita@responsiblenergy.org

Words: 2189

Dear Northeast, How’s that solar working out for ya?

A couple of months ago, effective in November, National Grid, one of Massachusetts’ two dominant utilities, announced rate increases of a “whopping” 37 percent over last year. Other utilities in the region are expected to follow suit.

It’s dramatic headlines like these that make rooftop solar sound so attractive to people wanting to save money. In fact, embedded within the online version of the Boston Globe story: “Electric rates in Mass. set to spike this winter,” is a link to another article: “How to install solar power and save.” The solar story points out: “By now everyone knows that solar power can save homeowners big money on utility bills.” It claims that solar works even in New England’s dreary winters and cites Henry K. Vandermark, founder and president of Solar Wave Energy in Cambridge, as saying: “Even snow doesn’t matter if your panels have a steep angle. It just slides right off them.”

Solar is not the panacea it is promoted to be, though it is true that—after a substantial investment, heavy government subsidies (funded by all taxpayers), and generous net-metering programs (that raise costs for non-solar customers)—solar systems can save money on the typical homeowners’ monthly bill. (An unsubsidized system averages about $24,000.)

New England has seen one big power plant close within the past year—Salem Harbor Power Station in Salem, Massachusetts went “dark” on June 1, in part due to tightening federal regulations. Another major closure will take place within weeks: Vermont Yankee nuclear plant.

A new, state-of-the-art natural gas plant on 18 acres of the 65-acre Salem site will replace the Salem Harbor plant. The remaining 47 acres will see redevelopment, including renewable energy. But, that plan has received pushback from environmental groups that want it fully replaced with renewables. The Boston Globe states: “A decade ago, replacing the aging plant with a far cleaner natural gas facility would have thrilled environmental and public health advocates.” The Conservation Law Foundation filed a lawsuit against the project’s approval, claiming the state “failed to adequately consider its own climate change law when state energy officials approved the Salem plant.” In February, the group settled the suit after it caused construction delays and reliability concerns.

Just days before the plant closed, a report from The Daily Climate addressed the controversy over usage of the Salem Harbor site: “Many activists pushed back, arguing for wind or solar generation or non-energy uses, such as a marine biotechnology research facility.” One activist group: HealthLink, “has marshaled opposition to running a gas line to the new plant” and another: Grassroots Against Another Salem Plant (GAASP), “has pledged to use peaceful civil disobedience to block construction of the gas plant.”

The state of Massachusetts has offered three closed, or scheduled to be closed, coal-fueled power plant sites $6 million to pursue renewable energy projects—even though wind and solar require full back up from fossil fuel power plants so electricity is available in the frigid Northeast winters. Additionally, a new report from two Stanford Ph.Ds., who spent 4 years trying to prove renewables can, ultimately, replace fossil fuels, have had to admit defeat: “Renewable energy technologies simply won’t work; we need a fundamentally different approach.”

Having lived with the 63-year old Salem Harbor plant in her back yard for 20 years, Linda Haley, doesn’t, according to WGBH News, “understand why Salem would encourage use of a non-renewable fossil-fuel resource like natural gas when alternative investments in green technology finally seem possible.”

These stories reveal the snow job that has been perpetuated on the general public regarding renewable energy. They don’t understand the need for power or how it works. They seem to believe that when a rule passes a magic wand waves replacing older, but still fully functional, power plants with wind or solar—that doesn’t produce electricity 24/7/365 as do the decommissioned coal or nuclear plants and which requires far more land to produce the same amount of, albeit intermittent, electricity.

An iced up wind turbine or a solar panel covered in seven feet of snow—even if some of it slides off—doesn’t generate electricity. And the cold days of a Northeast winter create one of the times when energy demand peaks.

Remember last winter’s polar vortex, when freezing weather crippled the Northeast for days and put a tremendous strain on the electric supply?

Congress, following the near crisis, brought in utility executives to explain the situation. Regarding the nation’s electrical output last winter, Nicholas Akins, the CEO of the biggest generator of coal-fueled electricity in the U.S., American Electric Power (AEP), told Congress: “This country did not just dodge a bullet—we dodged a cannon ball.” Similarly, Michael Kormos, Executive VP of Operations for PJM Interconnection (the largest grid operator in the U.S. overseeing 13 states), commented on operations during the polar vortex: PJM was “never—as some accounts have portrayed—700 megawatts away from rolling blackouts. … On the worst day, January 7, our next step if we had lost a very large generator would have been to implement a small voltage reduction”—industry speak for the last option before power outages.

About last winter’s grid reliability, Glenn Beck claims: “I had an energy guy come to me about three weeks ago. …He said, ‘We were one power plant away from a blackout in the east all winter long… We were using so much electricity. We were at the top of the grid. There’s no more electricity. We’re at the top.’”

This winter’s extreme weather—with new records set for November power demand—has already arrived. Come January, there will be not one, but two fewer Northeast power plants since last year—not because they had to be retired, but because of EPA regulations and public sentiment. In a November 17 op-ed, former Senators Bayh (D-IN) and Judd (R-NH) said: “Vermont Yankee produced 26 percent of New England’s power during the peak of last year’s frigid weather.” The Northeast won’t have Vermont Yankee’s power this January.

Without these two vital power plants, what will the Northeast do?

For several months, since I had a chat with Weather Bell Analytics’ Joe Bastardi at the International Conference on Climate Change, I’ve continued to say that I fear people will have to die due to power outages that prevent them from heating their homes in the winter cold, before the public wakes up to the damage of these policies. AEP’s Atkins seems to agree. He told Columbus Business First: “Truth be known, something’s probably going to have to happen before people realize that there is an issue.”

“New England is in the midst of an energy crisis,” claims WGBH News. The report continues: “residents and businesses are facing a future that may include ‘rolling blackouts’ on days when usage is highest.”

ISO New England, the agency that oversees the power grid, warns, in the Boston Globe: “Boston and northeast Massachusetts are ‘expected to face an electricity capacity shortage’ that could lead to rolling blackouts or the use of trailer-mounted diesel generators—which emit far more pollutants than natural gas—to fill the gap.” Ray Hepper, the lawyer for ISO New England, in a court filing, wrote: “The ISO simply cannot make megawatts of generation materialize that are not on the system.” In an interview, he added: “We’re really, as a region, at the point of needing new power plants.”

As the Salem Harbor story illustrates, natural gas will likely fuel those new power plants and environmental groups are expected to challenge construction. Plus, natural gas faces cost volatility. On November 20, the Wall Street Journal (WSJ), in the wake of November cold, not experienced since the 1970s when global cooling was predicted, featured an article titled: “Chill pushes up natural-gas prices” that stated: “Natural-gas stockpiles shrank by more than expected last week reflecting surging demand.” As in the ’70s, many are now projecting, based on solar activity and other natural variables, a long global cooling trend.

While the Boston Globe, in September, said: “The upcoming winter is not expected to be as cold as last season,” Bastardi told me otherwise. He said: “This winter could be as cold and nasty as last year and in a worst case go beyond that to some of the great winters of the late 1970s, lasting all the way into April. As it is, we still have a winter comparable to last year forecasted, though the position of the worst, relative to averages, may be further southeast than last year.” During a November 19 appearance with Neil Cavuto, Bastardi suggested that we may see a bit of warming after November, but will have one, or two, very cold months after that.

The WSJ quoted Brian Bradshaw, portfolio manager at BP Capital in Dallas: “‘Everyone thinks it’s not possible’ to have another winter like last year ‘But the weather does impossible things all the time.’” WSJ added: “the natural-gas market is setting up for a repeat of last winter.”

So, why, when natural gas prices sit at historic lows that experts predicted will lower electricity rates, is the Northeast facing double-digit increases? The answer: there is no magic wand. The changes have been mandated, but the replacements aren’t ready yet. Ray Gifford, former commissioner with the Colorado Public Utility Commission, told me: “I don’t see how the gas infrastructure in New England can be built fast enough to replace retiring baseload capacity.”

Within the past decade, natural gas went from supplying less than a fifth of New England’s power to one half—which could be great if New England had natural gas, but it is, as Tim Maverick, Commodities Correspondent for Wall Street Daily, says: “gas-starved.” After last winter’s freezing weather, Maverick wrote: “The Northeast was slapped in the face with the reality that there’s not sufficient pipeline infrastructure to provide it with the mega-energy pull it draws in the colder season. This is probably because not one new pipeline infrastructure has been introduced in over 40 years. Natural gas consumption in the Northeast has grown more than 20% in the last decade, and not one new pipeline has been built. Current pipelines are stuffed and can carry no more supply.”

At the Edison Electric Institute financial conference on November 11, AEP’s Atkins confirmed that the proposed timeline to cut pollution from the EPA will shutter coal plants before completion of construction of new power plants using other fuels, or the infrastructure to move the needed natural gas around.

The lack of available supply, results in higher prices. The Boston Globe explains: “gas supplies for home heating are purchased under long-term contracts arranged far in advance, so utilities have the advantage of locking in lower rates. Power plants, on the other hand, often buy shorter-term and are more exposed to price movements in the spot markets.” In the winter’s cold weather, the gas goes to people’s homes first. Different from coal, which is shipped by train, with a thirty-day supply easily held at the point of use, the switch to natural gas leaves power plants struggling to meet demand, paying higher prices.

Addressing the 2013/2014 winter, Terry Jarrett, a former public service commissioner and a nationally recognized leader in energy, utility, and regulatory issues, said: “Natural gas couldn’t shoulder that burden, due in part to a shortage of infrastructure to deliver gas where it was needed—this despite record-setting production in the Marcellus Shale and elsewhere. But more importantly, whereas coal’s sole purpose is to generate electricity, natural gas is also used for home heating. And when push comes to shove, heating gets priority over generation.”

Last winter, coal and nuclear met the demand to keep the lights on and heat homes and businesses. AEP reports that 89 percent of its coal plants, now slated for retirement, ran at capacity just to meet the peak demand.

These shortages in the Northeast occur before the implementation of Obama’s Clean Power Plan that experts believe will shut down hundreds of coal-fueled power plants nationwide by 2016. New pipelines and new plants need to be built, but “not-in-my-backyard” attitudes and environmental activists will probably further delay and prevent construction as they have done in the Northeast, which will result in higher electric bills nationwide.

“Because less-expensive coal generation is retiring and in part is being replaced by demand-response or other potential high energy cost resources, excess generation will narrow and energy prices could become more volatile due to the increasing reliance on natural gas for electricity generation,” PJM’s Kormos told Congress.

The lessons for America’s energy supply learned from the Northeast’s far-reaching experiment, that has only resulted only in price increases and potential energy shortages, are twofold. First, don’t shut down existing supply until the replacement is ready, as legal action and local attitudes can slow its development. Second, you can cover every square inch of available land with wind and solar, but when extreme weather hits, it requires a reliable energy supply, best met by coal and nuclear.

Current policy direction will have all of America, not just the Northeast, freezing in the dark. I hope it can it be turned back before it is too late.

(A version of this content was originally published at Breitbart.com)

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.

Six energy policy changes to watch for in a Republican-controlled Congress

This is a long one from Marita, but it needs to be.  Read all of it … it is worth the few minutes you’ll spend compared to the enjoyment and satisfaction you’ll receive.

Commentary by Marita Noon

Executive Director, Energy Makes America Great Inc.

Contact: 505.239.8998, marita@responsiblenergy.org

Words: 2463

Six energy policy changes to watch for in a Republican-controlled Congress

Now that the dust has settled on the 2014 midterms, we can get a sense of how things will change in Washington under a Republican controlled Senate—and energy will be front and center.

Republicans and Democrats have very different views on energy development and policy. The past six years have seen taxpayer dollars poured into green-energy projects that have embarrassed the administration and promoted teppan-style renewables that chop-up and fry unsuspecting birds midflight and increase costs for consumers and business. Meanwhile, Republicans have touted the job creation and economic impact available through America’s abundant fossil-fuel resources.

Voters made their preference clear: Republicans won more seats, and with bigger majorities, than anyone predicted.

The day after the election, the Friends of the Earth, wasting no time, sent out a dramatic fundraising pitch, opening with: “The election’s over—the planet lost.” (You may not have even known that the planet was on your local ballot, but apparently it was.)

The email’s proclamation, once again, exposes the environmentalists’ agenda: “President Obama hasn’t always done the right thing for the environment. He should have denied the Keystone Pipeline years ago, he should be rolling back unchecked fracking, and he should have taken stronger action on climate both at home and in international negotiations.”

Gratefully, though ideologically aligned with them, he attempted to appease and didn’t take the extreme level of action Friends of the Earth would have liked.

The Keystone pipeline remains a strong possibility, though the Canadians have nearly given up on us. Fracking is regulated at the state level, which, mostly, allows it to continue to increase America’s energy freedom—resulting in lower prices at the pump. Because more than 96 percent of the wells drilled in America today use the decades-old, but new-and-improved, technology of hydraulic fracturing, a federal fracking ban, like environmental groups have been trying to pass through city and county initiatives, would virtually shut down our booming energy economy. President Obama tried, but couldn’t pass a cap-and-trade bill—even when his party controlled both houses. Nor could he get a new Kyoto-like international treaty ratified. Most of the western world is now retreating on the climate pledges made in a different political era.

Friends of the Earth is correct, though. The email states: “Now, with both the Republican Senate and the House salivating and ready to sink their teeth into our most basic environmental laws, the President’s environmental legacy is truly at stake.” The Republicans are likely “salivating”—though not specifically about “basic environmental laws.”

Big changes in energy policy are in the works. Not just because Republicans want to destroy the president’s “legacy,” but because a wealthy country is better able to do things right. A growing economy needs energy that is efficient, effective and economical—which is why countries like China and India will not limit energy availability and why Republicans want to expand access in the U.S.

What energy policies might the Republicans want to “sink their teeth into”?

Keystone pipeline
At a November 13 breakfast presentation on “the unconventional oil and gas revolution,” Senior Director, Energy Insight IHS, Chris Hansen said: “I expect to see action on the Keystone pipeline within the next few months.” While it is widely believed that Keystone would be an easy win in the Republican-controlled congress, the November 4 results are already making a difference.

Post-election, the Keystone pipeline—which the State Department has projected would create more than 40,000 jobs—has suddenly leapt to the front of the lame-duck-legislation line. Months ago, Senators Mary Landrieu (D-LA) and John Hoeven (R-ND), along with 54 others (including 11 Democrats), reintroduced legislation to authorize building the Keystone pipeline—but Senate Majority Leader Harry Reid (D-NV) has blocked the popular bill by repeatedly denying requests to take up the legislation. The House has already approved eight previous Keystone bills and quickly passed an identical bill sponsored by Landrieu’s election opponent Rep. Bill Cassidy (R-LA).

The question remains is whether or not the White House will approve the bill, though spokesman Josh Earnest hinted at an Obama veto—which would further anger his union supporters that have pushed for its passage for the past six years. If the president vetoes what many are calling the Save Mary Landrieu Act, all is not lost for the Keystone pipeline.

With many Democrats already on board with Keystone and a push for more support from union leadership, the new Congress may be able to pass it again—this time with a veto-proof majority.

Federal lands
President Obama likes to brag about the increased U.S. production of oil and gas. In his post-election press conference he stated: “Our dependence on foreign oil is down.” While the statement is true, it falsely implies that he had something to do with that fact.

Reality is, as a Congressional Research Service report makes clear, while oil production has increased 61 percent on state and private lands, it has decreased 6 percent on federal land where the administration has authority. Additionally, the report points out, applications to drill on federal lands take nearly twice as long to process under the Obama administration than they did previously.

Not only has the White House discouraged drilling on federal lands, President Obama has used his pen to lock up federal lands with potential development, such as the newly designated Organ Mountain Desert Peaks National Monument—which blocks production without analyzing the economic impact. “Every time they lock up federal lands, whether through national monuments, conservation areas, or wilderness areas,” Steven Henke, President of New Mexico Oil and Gas Association, told me, “they eliminate the potential for royalties from the federal estate. Those funds benefit both the state and federal government and reduce the burden to the taxpayers.”

For example, one prediction has drilling in the Arctic National Wildlife Refuge (ANWR) becoming a part of the Republican Party’s vision of energy independence: Alaska’s senior Senator “Lisa Murkowski has long argued that drilling in ANWR would help reduce the national deficit.”

Not all federal lands have oil-and-gas, or other mineral-extraction, potential, so a reversal of policy may not increase production by the 61 percent seen on state and private lands—but it could mean the U.S. not only passes Saudi Arabia in oil production, it leaves it in a dust storm.

Oil and natural gas exports
Before the new Congress is sworn in, we already hear a lot of talk about lifting the ban on oil exports that was put into place in response to the 1970s Arab oil embargo. Reuters reports: Senator Murkowski “has fought to relax the ban all year by issuing a series of papers detailing how such exports have been allowed in the past, holding a private meeting on the subject with Commerce Secretary Penny Pritzker, and hinting that 2015 could be the time to introduce ban-ending legislation.”

With the Republicans now in charge come January, Murkowski will become the Chairman of the Energy and Natural Resources Committee. She is expected to start by “holding hearings, pressuring Obama administration officials, and testing the level of support from party leadership.”

Oil producers continue to lobby for the lifting of the ban, as the light crude now being produced in the U.S. is difficult for domestic refiners to process with current equipment. If Congress can increase drilling access to federal lands, even more crude will flood into refineries with limited capacity. Reports indicate exports will have little impact on pricing within the U.S.

“Policy makers need to catch up with the industry,” Harold York, an analyst of the refining sector at Woods Mackenzie said. He projects that easing the crude oil restrictions “would lead to $70 billion in investment spending in the U.S. oil sector and further economic stimulus.”

Different from crude oil, the law currently allows liquefied natural gas (LNG) exports, but the Energy Department has dozens of applications for LNG export terminals languishing on some bureaucrat’s desk. Just six applications have been approved in the past year. Bipartisan support exists for expediting the permitting process—especially in light of Russia’s stranglehold on natural gas supplies to many of our European allies. Legislation must be drafted and passed to allow exports to non-European free-trade countries.

Environmental Protection Agency (EPA)
President Obama’s Clean Power Plan (CPP) has widespread opposition within the Republican Party—including state governors who struggle to interpret the regulations but who are asking the right questions regarding the impact on their individual states. Even coal-state Democrats, such as Senator Joe Manchin (D-WV), have concerns with the CPP.

The CPP has the potential to prematurely shutter hundreds of coal-fueled power plants when viable option exists for the plants’ replacement. This winter, Massachusetts is experiencing a 37 percent increase in electricity rates over last year because plants closed without sufficient infrastructure for their replacement.

The CPP, plus the many other regulations—such as those coming on ozone and methane—have many lawmakers concerned about the EPA’s impact on grid reliability and the economy. President Obama is not likely to sign any legislation designed to rein in his personal priorities, but Republicans can make changes in EPA appropriations.

In a post-election analysis webinar, Scott Segal, founding partner of the Washington, DC-based Policy Resolution Group, declared Obama’s approach to greenhouse gas emissions—specifically the CPP which projections show may cost $42 billion—as the number one priority of the Energy and Natural Resources and Environment and Public Works Committees. He believes the committees’ oversight will look at reliability, cost, and, benefits. Segal said: “I think you can expect tailored legislation to focus on these topics. You can expect use of the Congressional Review Act for resolutions of disapproval when these regulations become final. You can also look to the appropriations process. …that might mean an Interior and Environment appropriations bill might have a rider, not that sets aside the CPP entirely, but that makes narrowly targeted changes to that plan. Then the president would be confronted with a choice: ‘do I essentially shut down the EPA or do I work with Republicans in the House and Senate to reform my proposal?’”

The Endangered Species Act (ESA)
The ESA direly needs revision, updating or outright repeal as, though well-intended in the beginning, it has more recently been used as a funding tool for environmental groups and a way for them to block economic activity, such as oil-and-gas extraction, and ranching, farming, and mining.

Earlier this year, a group of 13 GOP lawmakers released a report, which called for an ESA overhaul, though CBS News called the changes “unlikely given the pervasive partisan divide in Washington, DC.” CBS continues: “The political hurdles to overhaul are considerable. The ESA enjoys fervent support among many environmentalists, whose allies on Capitol Hill have thwarted past proposals for change.”

While repeal is unlikely, this may be the time to introduce legislation that would reform the ESA to curtail litigation from wildlife advocates and give states more authority—two ideas that were brought forth in the report.

Kent Holsinger, a Colorado-based attorney specializing in ESA issues, told me: “As radical groups continue to push their agendas, other parts of the country are now beginning to feel the threat that westerners have long suffered. The House moved significant, but targeted, legislative measures just recently. Perhaps the Senate might follow suit?” Maybe we can encourage them.

Climate Change
The biggest change will come on the climate change agenda. While Obama will not back down, committees have significant influence, as previously mentioned, through the appropriation process. Also, expect oversight on Obama administration policies.

The Environment and Public Works Committee (EPW) Chairmanship will change from one of the biggest supporters of Obama’s climate change agenda (Senator Barbara Boxer [D-CA]) to the biggest opponent of his policies (Senator Jim Inhofe [R-OK]). On election night, Inhofe stated: “I am looking forward to taking back the environment committee”—a role that, according to Environment & Energy Publishing (E&E): “Already has greens cringing.”

“A leadership transition would mark a seismic shift in the tone of the EPA Committee,” states the E&E report. The switch will mean, according to Frank O’Connell, president of the environmental group Clean Air Watch, that instead of serving as a “shield for the executive branch” the committee could turn into “a battering ram against the executive branch.”

This reversal of attitude in climate change policies is already evident in the response to the president’s newly announced pact with China to reduce carbon dioxide emissions and his promised $3 billion contribution to a U.N. climate fund designed to help poor counties deal with potential impacts of climate change.

About the deal with China, Inhofe said: “This deal is a non-binding charade. The American people spoke against the president’s climate policies in this last election. They want affordable energy and more economic opportunity, both which are being diminished by overbearing EPA mandates. As we enter a new Congress, I will do everything in my power to rein in and shed light on the EPA’s unchecked regulations.”

Reports now declare: “Climate change compromises may be easier with China than Congress.”

What does Inhofe have in his power? Andrew Wheeler, EPW staff director when Inhofe was chairman previously, says: “I know he won’t hesitate to conduct oversight of the Democratic Obama Administration.”

The E&E report projects: “Among the topics Inhofe would likely zero in on: EPA’s rules to clamp down on greenhouse gas emissions from power plants, a controversial EPA proposal to clarify the scope of the Clean Water Act and the science underpinning federal environmental rules. EPA management could also be the topic of some oversight hearings.” Wheeler added: “I think his climate work will probably be focused more on the EPA regulation.”

The $3 billion pledge to developing countries is subject to Congressional appropriations. In a statement from Inhofe’s office, he vows to work with his colleagues “to reset the misguided priorities of Washington in the past six years.” He says: “The President’s climate change agenda has only siphoned precious taxpayer dollars away from the real problems facing the American people.”

The National Journal states: Republicans “want nothing less than to send money to poor countries to fight climate change.”

As a part of this shift, watch for environmental activists to be more aggressive on the state level—pushing for increased mandates for renewables and more regulation and/or bans on hydraulic fracturing.

***

For those of us who watch the politics of energy policy, it is going to be an interesting two years. If the Republican policies turn the economy around as predicted—offering a sharp contrast to the stagnation of the past six years, they will pave the way for victory in 2016. Call your Senators and Congressman and ask him or her to support these six energy policy changes that will give America energy security and economic strength.

(A version of this content was originally published at Breitbart.com)

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.

Marita Noon: About elections and petro prices

Marita Noon

Commentary by Marita Noon

Executive Director, Energy Makes America Great Inc.

 

The oil price election connection

After years of rising gasoline prices, people are puzzled by the recent drop that has a gallon of gas at levels not seen in nearly four years. Typically in times of Middle East unrest, prices at the pump spike, yet, despite the violence in Iraq and Syria, gallon of gas is now at a national average of $3.

The public hopes it will last. The oil industry can’t afford continued price suppression.

I believe the price will tick up in the days ahead (post-election)—which will make it economic for producers to continue to develop—but the increases will not be so dramatic as to take away the economic stimulus the low prices provide.

Experts call the low cost the “equivalent to a tax cut averaging almost $600 for every household in the U.S.” while it boosts our gross domestic product by 0.4 percent. Consumers surely welcome the reprieve. But why now and why won’t it last?

As gasoline prices have made headlines, several narratives are repeated. Generally the explanations revolve around two basic truths—but, as we’ll explore, there is more.

The reasons offered for the drop in prices at the pump (which reflects the price of a barrel of oil) are 1) increased North American oil production and, 2) sluggish economic growth in Europe and Asia—which together result in a surplus, or a global glut, of oil.

American Abundance

Following a multi-decade decline, U.S. oil output now stands at a 28-year high—up 80 percent since 2008. Thanks to the combined technologies of hydraulic fracturing and horizontal drilling, the U.S. equaled Saudi Arabia’s production over the summer and experts predict the U.S. to become the world’s top producer by 2015. CNN Money reports: “The U.S. isn’t addicted to foreign oil anymore. The shale gas boom in the U.S. is a game changer for oil prices.” Our country’s oil imports have fallen from 60 percent of consumption to less than 30 percent. The data proves out what any beginning economics student knows: more supply + less demand = lower prices.

ISIS Influence

The U.S. has changed global oil markets, but so has ISIS. Several months ago, when ISIS first emerged as a threat to Iraq’s oil production, oil prices experienced the usual uptick. However, when the Iraqis and Kurds thwarted its southern movement and it did not take over Basra’s oil fields, prices eased.

In this new war, different from the days of Al-Qaeda, rather than blowing up oil fields to hurt Western economies, ISIS captures oil-producing regions in Syria and Iraq and uses the bounty for its own benefit.

ISIS has become a real player in the global oil markets. The territory controlled by ISIS has a pre-war capacity of 350,000 barrels per day (bpd). Estimates vary, but it is widely believed that ISIS produces 50-80,000 bpd—most of which the terror group on the black market at prices assumed to be $25-60 per barrel. ISIS reportedly funds its activities with oil revenues as low as $1 million a month to as high as $3 million a day—with $2 million a day being the most frequently cited (likely paid in cash or bartered goods). Production and revenues could easily increase if it were not for the militant’s limited technical prowess in working in the oil fields. To overcome the lack, ISIS is advertising for experienced engineers to run its oil operations (apparently the we’ll-kill-your-family-if-don’t-work approach hasn’t been successful).

ISIS doesn’t abide by any international agreements or price regulations. This is a “black market.” There are no tangible income or production numbers. We don’t definitively know all of ISIS’ customers.

The region’s long-established smuggling routes make it easy for the oil to be trafficked out of the territory. Once in the hands of middlemen, “no big traders, no serious companies are going to fool around with that oil,” says Matthew M. Reed, vice-president of Foreign Reports, a Washington-based consulting firm that analyzes oil and politics in the Middle East. He continues: “That oil is essentially radioactive at this point. No one wants to touch it.”

But, someone buys it—to the tune of millions of dollars a day. Who would buy the “radioactive” oil?

Some of ISIS’ heavily discounted oil reportedly ends up in Pakistan. A CNN article titled: “How Iraq’s black market in oil funds ISIS” states: “ISIS controls smuggling routes and the crude is transported by tankers to Jordan via Anbar province, to Iran via Kurdistan, to Turkey via Mosul, to Syria’s local market and to the Kurdistan region of Iraq, where most of it gets refined locally.” As Reed pointed out, legitimate traders won’t deal in it, so it likely goes to nations that care little about the rule of law—perhaps, North Korea and China. The outlets that are soaking up the discounted oil, are not buying the full-price oil, which leaves millions of dollars, 50-80,000 barrels, a day of full-price oil, on the table, looking for a buyer.

So, U.S. oil and ISIS oil continue to put a lot of supply into the market, keeping the price low. Unless coalition forces successfully bomb the oil fields in ISIS control, the black market oil supply will grow. If Republicans, who support developing our resources, take control of the U.S. Senate, our production could well increase. Both will help keep supply high, and prices low.

Saudi Strategy

The last piece in the low-priced oil puzzle is Saudi Arabia. BusinessWeek states: “With the U.S. on track to become the world’s largest oil producer by next year, it’s become popular in Washington and on Wall Street to call America the new Saudi Arabia. Yet the real Saudi Arabia hasn’t relinquished its role as the producer with the most influence over oil prices.”

The Saudi kingdom reportedly needs oil at $83.60 a barrel to balance its national budget. Yet, in September, with prices already down, due to a global oil glut, the Saudis boosted production. Then, in October, it lowered prices by increasing the discount offered to its Asian customers. Oil prices have reached the lowest level in nearly four years. Despite calls for price hikes from other OPEC nations, primarily Venezuela (which recently announced food rationing), the Saudi policy will not likely change before the November 27 OPEC meeting.

Saudi Arabia’s price war has surprised the markets and made watchers wonder what they are up to. With its government 85 percent dependent on its oil revenues, the Saudis need to protect their turf as the dominant force in oil.

Some say the move “is the result of a deliberate strategy by the Gulf nation to test the mettle of rival producers from Russia, to fellow OPEC member Iran and US shale producers.” Most experts agree that keeping prices low hurts higher-cost production such as that from U.S. shale oil and Canadian tar sands. Higher prices encourage more discovery and development. A report from Aljazeerah claims: “OPEC leader Saudi Arabia hopes to claw share from U.S. producers.”

The Financial Times reports: “The lower prices also appear to be designed to put a brake on the shale oil boom, which has been the most significant upheaval in global energy for a decade.”

Two years ago, Saudi Arabia did much the same thing—increasing production and dropping oil/gasoline prices. At that time, the U.S. faced an important presidential election where one candidate loudly supported America’s new energy abundance and the other’s energy agenda was all about “green.” Had gasoline still cost in the range of $4.00 on November 6, 2012, the party in power would have suffered; the public would have been screaming: “Drill, baby, drill.” The Saudis came in and with their unique ability to throttle production up or down, took some heat off of the Obama Administration.

Now, in the midst of another election cycle—one that is very important to the future of oil production in America, the Saudis, once again, appear to be orchestrating geopolitical outcomes. OPEC’s oil output is close to a two-year high—despite production drops in Angola and Nigeria. Saudi Arabia has made up the difference.

Some observers say the Saudis’ increased production in a time of global over-supply “is not about a political attack on the U.S.” Others see it, as “more nuanced.” Yet, last week a Saudi industry official, discussing the production/export data leaks acknowledged: “Sorry, it is politics.”

It seems clear that OPEC does not want U.S. production to increase, and Saudi Arabia is in a position to try influence American politics. Lower prices favor the party in power. A shift in control of the Senate would mean a change in America’s energy policy—one that favors our homegrown energy resources; one that Saudi Arabia doesn’t want.

However, it appears, regardless of possible Saudi meddling, the Senate leadership will shift. Once American voters make that decision on November 4, the OPEC leader will no longer have the incentive to inflict short-term pain on its own economic climate for long-term gain. Saudi Arabia will likely dial back production and the intentionally low price will stabilize—but not so much that it hurts the benefit to the American economy that abundant energy provides.

The American consumers win; American energy producers win. America wins.

(A version of this content was originally published on Breitbart.com)

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy—which expands on the content of her weekly column.