#OWS WK4: Kaptur and Gramm and Schumer, Oh My.

Tying the tubes of banks that have been, ahem, fornicating with the global economy and impregnating speculative bubbles only to watch them burst, will only hasten the inevitable seismic crash that looms around the corner. Breaking up the banks will happen one way or another…either by the law of the land or the law of nature.

The only phrase in connection with Occupy Wall Street repeated more often than “We are the 99%” is “What do they want?” The former is, of course, the rallying cry inviting citizens to join the movement against plutocracy in America—a show of strength against corporate greed and government corruption. The latter is the response to the growing number of dissenters in the “American Autumn”—criticism for their lacking a coherent list of specific demands. Personally, the only thing I find lacking is the imagination embodied by this mindless question.

The communal process of exploration and debate taking place in Zuccotti Park is like nothing I’ve ever seen. There are plenty of cogent, specific demands to be heard, but only by those who are willing to listen. A good deal of patience and a pinch of intellect are helpful because this isn’t a bumper-sticker movement and the occupiers don’t suffer fools (Geraldo) gladly.

There is no substitute for visiting the park and absorbing democracy, grassroots style. This past weekend my wife and I brought our two children with us to witness history unfolding in Manhattan, as it will someday grace the pages of a textbook, or a tablet, during their college years. With that said, allow me to indulge the frothing masses with a chunk of raw meat by examining one of the cornerstone issues behind OWS: Glass-Steagall.

Breaking the Bank: A Brief History of Glass-Steagall

In short, this was the name of the Act that prohibited commercial banks from engaging in investment-banking activities, among other things. It was established in 1933 to tame the harmful speculative behavior of an industry run amok in the early part of the 20th century; behavior largely credited for the market crash that precipitated the Great Depression. Fast forward to the waning days of the Clinton administration when the Gramm-Leach-Bliley Act repealed the meat of Glass-Steagall and cleared the way for the greatest, most rapid consolidation of banking interests and wealth in recorded history.

Reinstating Glass-Steagall is, of course, easier said than done. Technically, the mechanics of doing it are fairly simple from a structural perspective, though it would cause massive upheaval in the banking world for several years to come. What is almost beyond comprehension are the circumstances that allow banks to continue gambling promiscuously in the world markets, which is a direct result of complementary deregulatory measures, globalization and an extraordinarily loose monetary policy.

These three factors have allowed banks to engage in worldwide investment schemes using cheap, borrowed money in a manner that is both irresponsible and opaque. In other words, be careful what you wish for. Tying the tubes of banks that have been, ahem, fornicating with the global economy and impregnating speculative bubbles only to watch them burst, will only hasten the inevitable seismic crash that looms around the corner. Breaking up the banks will happen one way or another…either by the law of the land or the law of nature.

Protestors from Zuccotti Park to San Francisco are keenly aware of this reality. They have an extremely sophisticated view of the world that goes beyond what we have seen in other movements both here and abroad. It’s their appreciation for complexity and nuance that makes it impossible to translate demands into bite-sized morsels for the media to gobble up and regurgitate into the mouths of shrieking birds in the nest that many television viewers have become.

To make matters worse, our elected federal representatives have no idea how to respond appropriately to a leaderless, populist movement. Apart from some platitudinous, mealy-mouthed responses from ranking Democrats like House Minority Leader Nancy Pelosi or truculent, dismissive statements from the likes of Rep. Peter King (R-Seaford), the upper echelon of American politics is collectively clicking its heels and hoping to wake up on the farm after the storm.

But there is hope for us yet–from someplace you might not expect.

A Buckeye Bulls Eye

Ohio’s 9th Congressional District cradles the southernmost tier of Lake Erie and has been steadfastly represented by Rep. Marcy Kaptur (D) for the three decades. Despite the presence of rollicking Toledo in the westernmost part of her district, things have been pretty quiet in the ninth. Until now.

Ohio’s much ballyhooed loss of two Congressional seats due to redistricting has resulted in a mash up of Kaptur’s 9th district and the neighboring 10th represented by fellow Democratic Congressman, Dennis Kucinich. Kucinich, who has long-represented the most progressive wing of the Democratic caucus, ran back-to-back failed campaigns for the presidential nomination, but he gained more notoriety when he famously called for the impeachment of co-Presidents George W. Bush and Dick Cheney for manufacturing evidence that pushed us into war with Iraq at a cost of nearly $2 trillion, thousands of U.S. soldiers and hundreds of thousands of  civilians. Somehow, this effort lacked the same traction and enthusiasm as the impeachment trial of President Bill Clinton for, well, you know.

The combination of the 9th and 10th districts has given new life to Kucinich, who might otherwise have been homeless after Ohio’s redistricting plan, as he is planning to primary Kaptur for the seat. Not to be outdone, the GOP has recruited newcomer Samuel Wurzelbacher to run on the Republican ticket. This development would be of little moment, however, if Wurzelbacher wasn’t none other than “Joe The Plumber,” who made headlines during the McCain-Obama race. Although it was later revealed that he was neither “Joe” nor a licensed plumber, Wurzelbacher became an oft-abused example of the disenfranchised workingman in America. Not content to be a footnote in American political history, Wurzelbacher now seeks to extend his 15 minutes of fame by attempting to join the ranks of hundreds of other talentless slobs who also have no business running the country.

This entire hubbub overshadows one of the most interesting things to come out of this part of Ohio. Earlier this year Kaptur revived a failed effort during the previous Congress to reinstate regulations repealed under the Gramm-Leach-Bliley Act of 1999. Kaptur’s bill, H.R. 1489, is appropriately titled “Return to Prudent Banking Act of 2011,” and it has the support of 45 sponsors, one of whom is Dennis Kucinich.

The men behind the original bill in question—Gramm, Leach and Bliley—are an interesting lot; notable because not one of them remains in government today though their impact is felt every day. Phil Gramm, one of the most loathsome scoundrels ever to hold office, is the reprobate who brought us the Enron Loophole, disastrous tax cuts that destabilized the first part of the Reagan era, and this horrendous bill that bears his name. His darling wife, Wendy, was at the helm of the Commodities Futures Trading Commission when her husband was shepherding through the bill that would castrate the agency and lead to the collapse of Enron and the birth of energy speculation. She went on to head the conservative think-tank, Mercatus Center, which is funded by the Koch brothers.

Thomas J. Bliley, former representative from Virginia, was himself a serial deregulator. Before handing America this pile of legislative crap, he authored the Telecommunications Act of 1996, which paved the way for massive consolidation in the media industry and gave us Orwellian juggernauts like News Corp. that control the airwaves today.  Jim Leach, also no longer in office, is more of a curiosity. Brilliant, progressive and, at times, defiant, Leach of Iowa often stood in opposition to the increasingly conservative members of his party and was eventually ousted by a Democrat write-in candidate. Although Leach was a noted fiscal conservative, his true expertise was in foreign affairs. By attaching his name to one of the most destructive economic bills ever written, an otherwise brilliant career has been sullied in a way only Bill Buckner could understand.

Going Forward

So, Marcy Kaptur “gets it.” The protestors on Wall Street also “get it.” And believe it or not, many of us in the media also “get it.” If the banking system is going to collapse under its own weight and hubris because of the sheer volume of horrible investments still filtering through the economy with zero oversight, what’s the next logical play?

Apart from the obvious, which is to enact H.R. 1489, I think it’s time to grant subpoena authority to the protestors on Wall Street so they can hold those responsible for the economic crisis accountable at a people’s tribunal. Since our judicial system has failed to do that, perhaps it should be left to the people in Zuccotti Park. And just to bring things full circle to New York politics, the first star witness to be called should be Sen. Charles Schumer, poster boy for Wall Street and the senior Democratic elected representative of our state.

Time’s up, Chuck. Your silence on the Occupy Wall Street movement is deafening and incriminating.

What New Yorkers Should Know About Hydrofracking

You can’t put the Earth back the way it was. Can’t cure the cancer these companies left behind. Can’t put the pieces of rock back together.

Hydrofracking Operation in PennsylvaniaA seat at the table. This was the going price for tacit support of hydraulic fracturing, “hydrofracking” as it is commonly known (or simply “fracking”), from the New York League of Conservation Voters (NYLCV) and several other state environmental groups. I resigned my personal seat at the table on the Long Island board of the NYLCV after it took such a pusillanimous stance on what will prove to be one of the worst environmental and shortsighted economic blunders in New York’s history.

Late last week, Gov. Andrew Cuomo appointed a blue ribbon panel to advise the Department of Environmental Conservation (DEC) on the regulations and rollout of hydrofracking upstate, effectively ending the moratorium on natural gas shale exploration. Hydrofracking means breaking through shale to extract natural gas trapped in pockets deep beneath the ground, a process that has deservedly come under increased scrutiny recently for countless reasons. But first, a little context.

Hydraulic Fracturing History. Natural gas is a cleaner-burning fossil fuel than oil, and something the United States has in abundance. Increasing access to natural gas is compelling as our dependence upon fossil fuels continues to grow while our tolerance for protecting oil interests around the globe steadily wanes. And since the combination of renewable energy, conservation efforts and efficiency standards have yet to keep pace with our insatiable appetite for energy consumption, any solution with environmental advantages, no matter how marginal, is persuasive.

Fracking has been around for more than a century as a means of pressurizing the drilling process of oil and gas wells. It’s referred to as “Enhanced Oil Recovery”, a process required for the most difficult of drilling scenarios, where oil and/or gas are trapped within rock formations. Essentially, once a well is drilled, a mixture of water, sand and a small amount of chemicals are pumped down the well at extremely high pressure; the mixture bores through the shale to release the gas into the well while the sand and chemical combination help prop open the fracture in the formation. Back on the surface, the gas is separated from the extraction fluids.

It’s important to understand that the pressurization itself is one of the reasons that the declines in the rate of shale production are steeper than from primary and secondary drilling methods. Removing fossil fuels from the ground is a difficult and delicate process that ranges from relatively pristine oil fields that can be easily drilled and pumped to the most extreme cases that require hydraulic fracturing through dense rock formations. The need to maintain intense levels of pressure in the drilling environment—as opposed to tapping an easily accessible reservoir under the desert—means that more can go wrong along the way. These areas reach what is known as “production total decline” faster than other plays—or drilling sites— because the pockets are spread out through the shale formation and difficult to access, and pressurization is hard to maintain over time. In fact, shale gas was considered too difficult to tackle until Halliburton established a new horizontal drilling protocol in the late 1940s that revolutionized the industry; even still, it wasn’t until the technology was enhanced by the chemical mixture in the 1990s that fracking began to catch fire, renewing the natural gas rush primarily in Texas, New Mexico and Wyoming. 

 Where we are today. There is no question that decreasing our dependence on foreign oil is popular and necessary. The question is whether this is the right method of extraction, particularly in a populous place such as New York. The answer is definitively “no.” And the reasons aren’t strictly environmental, though the pernicious effects of fracking on human health and the environment are certainly enough to arrive at this conclusion independently. Advocates of fracking have argued that the proper regulation of the process and the protection of the watershed are enough to satisfy environmental concerns and that the economic benefits of fracking the Marcellus Shale, which runs from Tennessee through New York, are considerable, particularly in hard-hit areas upstate. But taken individually, every argument in favor of fracking falls down under scrutiny. So, let’s get to it.

Environment. Fracking is both an art and a science. This is the most complicated of drilling endeavors. Because of the precarious nature of this technology, it is nearly impossible to contain the spread of contaminants involved in the process; likewise, it is impossible to contain the spread of methane gas once it is released from the shale. Fracking cannot and does not extract 100 percent of the natural gas from the rock, leaving a small quantity behind that can infiltrate surrounding areas. Moreover, the process itself requires millions of gallons of water that eventually return to the surface  contaminated by the chemical mix. In no instance, has there been a system robust enough to thoroughly remediate the return flow from a gas well.

Countless examples have been offered to the public and to state and national environmental agencies of the dangers of fracking, whether they are contaminated drinking wells, methane gas explosions or known-carcinogens found in areas near drilling operations that could only have come from the pressurized mixture being shot through these wells. Despite the growth of cancer clusters near the drilling wells or the evidence of homeowners living in fracking areas being able to set their tap water on fire, New York believes that it has the secret regulatory sauce to control the hazardous effects of fracking. Okay, so let’s look at the regulatory environment.

Regulation. The only reason fracking chemicals have remained proprietary is then-Vice President Dick Cheney’s insistence that the 2005 federal energy bill exclude the Environmental Protection Agency from hydrofracking regulation that would normally have come under the purview of the Safe Water Drinking Act. Cheney allowed his former employer, Halliburton, to do an end-run around the regulations the moment the public started linking environmental contaminants to the new chemicals used in fracking. His actions alone should alert any nose-breathing person to the inherent danger in this process. Instead, we have new “mandatory regulations” from the EPA, which are not yet the law of the land, that require full disclosure of these chemicals. Good luck. If the government had any ability to enforce this requirement, it would already be law. Yet, when Sen. Robert Casey [D-Pa.] introduced a bill (S.1215 Fracturing Responsibility and Awareness of Chemicals Act) in 2009, it died unceremoniously in committee. He attempted again in March of this year to revive the bill (S.587), and it too is sitting in committee where it will also undoubtedly meet its maker.

New York believes that it can keep hundreds of wells in check through the auspices of the state’s Department of Environmental Conservation (DEC). Although Gov. Cuomo’s 2011 budget didn’t hack away at the DEC staff, the resource-strapped agency is incapable of policing leaks below gas stations, let alone monitoring wells throughout New York. The idea that the DEC will have the manpower to regulate these operations is a joke, and everyone knows it. The only logical conclusion here is that the economic benefits of infrastructure spending and job creation are so great that the state is willing to take the gamble. 

Economy. The thought of residents in a small, working-class town upstate coming off government assistance and getting back to work, putting food on the table and earning an honest wage is the kind of post-recession Norman Rockwell imagery the oil and gas industry would like us all to believe. The economic reality of gas drilling of the fracking persuasion is a little different than this ‘Wish You Were Here’ postcard from a bygone era. First of all, the drillers are too smart to buy property anymore. Instead they offer attractive drilling rights in the form of leases to landowners who are indeed paid handsomely for access to their land. Once the rights are sewn up, employment grows. But not necessarily the kind of employment illustrated above. Experienced drillers and machinists come from far and wide to exploit the new territory because they are already trained in this field of expertise. Suddenly, restaurants are packed, car dealers are moving inventory, and supermarkets and drugstores are filled with new faces in the community. I’m not suggesting this is a phantom recovery, because it’s not. These are important economic steps, but not if they are fleeting. The problem lies in the short productive life of the wells being drilled, which ends up curtailing the peripheral employment created during the height of production.

When American think of oil and gas operations, they think of enduring periods of wealth typically associated with the gulf states or Arab nations that went from rags to riches seemingly overnight, awash in the endless supply of crude. Unfortunately, the reality of natural gas stands in stark contrast to this vision. Gary S. Swindell, a well-known petroleum engineering consultant, conducted and published a study in 1999 on the 30-year performance of Texas natural gas wells, some of the highest yielding gas wells in the nation. His conclusion: “There have been substantial changes in the decline profiles of wells drilled in Texas over the last 30 years. This study indicates that for new Texas gas wells, the decline rates in the early years are now on the order of 50 percent per year.” Swindell updated the study in 2005, noting the rate of decline is closer now to 60 percent per year.

What does all of this mean? It means that the easy stuff is gone. Every year we have to look for deeper, more difficult plays, and the only reason the oil companies keep gobbling these operations up is because the market price is so artificially high due to market speculation. If we were in a normal commodities pricing environment, none of these areas would be considered because there wouldn’t be a shale play in America that would make financial sense.

Even the U.S. Energy Information Administration cites that “the average gas well half-life has dropped for all major production regions and for the lower 48 States. Second, the regional gas well production half-lives have converged to a value of between 23 and 25 months.” Translation: At best, the average production life of a natural gas well is four years.

 Four years. After that, they’ll be gone. The customers in the restaurants, supermarkets and auto dealers will have moved on to the next play. That’s called a bubble. But when this bubble pops, there’s no going back. You can’t put the Earth back the way it was. Can’t cure the cancer these companies left behind. Can’t put the pieces of rock back together. When the wells are sucked dry, so too is the local economy when the drillers head for the proverbial hills and leave the land owners high and dry with polluted and devalued properties. This is a zero-sum game, and for some reason, with all of the information and resources available to us, we’re still willing to take a “seat at the table” instead of dismissing the practice entirely.  

Personally, I refuse to vie for a seat at the devil’s table to drink hemlock and swallow my pride. The NYLCV and others are committed to advising the official hydraulic fracturing policy as though it’s a policy worthy of consideration, or worse, a fait accompli. It is neither. We still have a choice. The only question is whether we have the courage to make the right one.