Fossil Fuels

This is a guest post by Alex Dick-Godfrey, Assistant Director, Studies administration for the Council on Foreign Relations Studies Program. Last month, Soma Oil and Gas, a London based energy company, searching for hydrocarbon deposits off the coast of Somalia, announced that it had completed a seismic survey to ascertain the potential for recoverable oil and gas deposits. Although further details have yet to be released, chief executive Rob Sheppard announced that the results were encouraging. However, Somalia, and potential investors, should proceed with caution when considering entering this frontier market. East African oil exploration, and in Somalia specifically, is not a secret. Energy firms like Royal Dutch Shell and Exxonmobil operated in Somalia before the government collapsed in 1991. But recent gains against the insurgent group al Shabaab in the south and the decrease in piracy off the coast have sparked a regeneration of the industry. The Somali president, riding these positive evolutions, recently stated that the country is “open for business.” Although recent security developments are encouraging, substantial hurdles still exist. The Heritage Institute recently released “Oil in Somalia: Adding Fuel to the Fire?,” by Dominik Balthasar. The paper discusses how the oil industry in Somalia could have a promising future, but it also explores the risks facing Somalia if the development of its petroleum resources is not carefully managed. Balthasar rightly asks, “is Somalia ready for oil?” The historic challenges that have limited business opportunities in Somalia, domestic insurgency and piracy, have diminished for now, but these threats have not disappeared. Al Shabaab has been largely pushed out of southern Somalia by multinational forces, but has recently proven that it is still able to operate in the north of Kenya. As Kenya flexes to counter al Shabaab in its own country, it could provide an opportunity for al Shabaab to return to its previous strongholds in Somalia. And even as piracy has largely stopped, it is conceivable that al Shabaab or others could see oil tankers as opportunities to resurrect that practice as well. Beyond these security challenges there may be political disadvantages to developing the hydrocarbon sector in Somalia. Balthasar notes, among other things, that oil will likely exacerbate existing rifts and political tensions. In the context of the recent political turmoil and contentious federalism process, it is clear that any foreign oil companies would face a high degree of political instability and uncertainty. Balthasar also points out that the legal and constitutional conditions in Somalia are ambiguous in determining who can enter or negotiate contracts with oil companies. Without a well-defined regulatory environment for oil and gas resources, federal states, semi-autonomous regions, and the central government could all separately negotiate and enter into conflicting extraction agreements with private companies. The opaque regulatory nature of these resources has already proven problematic in the semi-autonomous regions of Puntland and Somaliland. Even with updated agreements on how to negotiate for and claim oil fields, Puntland and Somaliland have already leveraged their autonomy and granted their own licenses without the central government’s blessing. This is all likely to lead to further turmoil and maybe even conflict over profitable fields and the distribution of revenues. Somalia is probably not ready for oil development. With excellent access to shipping lanes and supposedly massive untapped wealth (perhaps as much as 110 billion barrels) it is no surprise that multinational oil companies are intrigued, but responsible investors would be wise to think twice. The underlying political instability and security challenges of Somalia will likely inhibit the long term feasibility and profitability of these projects. It could also cause backsliding for the hard fought improvements in Somalia’s government.

When I was on the road promoting The Power Surge in 2013, I regularly said two things: First, oil prices could easily plunge for a year or two, though it was far from certain that that would happen. Second, we would not see a repeat of 1986, when the hangover from a price crash lasted for well over a decade before high prices finally returned. As oil prices have fallen, it’s been pleasantly surprising not to see people trot out the 1986 episode as evidence that we might be in for a decade or more of low oil prices once again. Earlier this week, though, a Bloomberg writer decided to buck the trend with “Oil Collapse of 1986 Shows Rebound Could Be Years Away”. The "Chart of the Day" from that article, reprinted here, pretty much tells the story. But 2014 isn’t 1986. Then, massive investment in oil production following the twin oil crises of the 1970s led to a buildup of long-lived oil production capacity. With money spent, that production capacity cost very little to operate. Prices needed to stay low for several years to throttle not only new investment but also production back. Non-OPEC oil production fell every year between 1988 and 1993. Weak demand also played an important role. While consumption originally rose after 1986 in response to lower prices, between 1989 and 1993, world oil consumption rose by a mere 1.5 million barrels a day, dragged down by the collapse of the Soviet Union and economic weakness more broadly. The biggest difference today is the supply picture. In 1986, the world faced an overhang of conventional oil production capacity. Today, it is buffeted by a surge in tight oil production. The difference is stark. Once investment in tight oil stops, output from existing wells drops sharply, which is very different from what happens with conventional wells. This can, in principle, balance the market much more quickly than was possible in the 1980s. Of course investment in U.S. production hasn’t come to a halt. That’s why most analysts still expect supply growth this year. But this is a fundamentally different situation from the mid-1980s. If oil prices stay low for as long as they did after 1986, it will be because tight oil production turns out to be massively scalable at remarkably low prices while remaining profitable, not because sunk investment costs have created oil producing zombies that continue pumping at almost any price. (It could also happen if the world rapidly accelerated the deployment of low-cost alternatives and efficiency.) The aftermath of 1986 was almost inevitable at the time given the investment that had already happened. (This brackets the far-from-inevitable decisions by Saudi Arabia and others to boost their own production after 1986.) What happens over the next decade in oil markets still remains very much to be determined.

Three months ago gas taxes were untouchable. Now, with oil prices down, they’re having a moment. Public voices from Larry Summers to Charles Krauthammer are calling for hikes. (Summers argues for a carbon tax; Krauthammer says the tax should be raised “a lot”.) More important, serious lawmakers from both sides of the aisle have gotten in on the game. The general thrust of the arguments on offer is that with oil prices falling, it’s now possible to raise the gas tax and still leave consumers better off than they were half a year ago. That right, but I think there’s an even stronger argument to be made. The standard argument is basically a political case about what voters will tolerate. (The theory is that they’ll tolerate a higher gas tax if they’re still better off than before.) It’s then paired with preexisting economic logic (a higher gasoline tax made economic sense when oil prices were higher too). This is essentially the pattern I flagged in a Financial Times column in November, when I argued that falling oil prices were creating an opportunity for leaders in developing countries to curb gasoline and diesel subsidies. But there is an economic case that’s peculiar to the current situation to be made too. Whenever you impose a new and unanticipated tax, some part of the existing capital stock becomes less valuable than it was before. (Some other part typically becomes more valuable, but if market participants were rational before, this downside should be smaller than the upside.) Adding, say, fifty cents to a gallon of gasoline makes pre-existing gas guzzlers, homes in the suburbs, and oil-based home heating systems worth less than before. Normally, that would reduce the net benefits of any new gasoline tax, particularly one phased in quickly. Conversely, when oil prices fall, fuel efficient cars, homes in city-centers, and public transit investments all drop in value. This can lead to economic waste: underused automobiles, unrented homes, empty subways. A particularly glaring example came on Wednesday when President Obama visited a Ford plant that makes fuel-efficient vehicles: because of the drop in oil prices, that plant was closed, wasting both the factory and the skills of the workers that it would have employed. In this world, a newly higher gasoline tax would actually avoid economic waste rather than creating it. Ford and others that invested money on the expectation that oil prices would remain relatively high (and, if options prices on oil futures as recently as six months ago are any indication, that means most businesses) would see their investments hold more value. The same goes for drivers who, facing higher oil prices, already spent their money on ever-more-fuel-efficient cars. (They’d still pay more at the pump, but the resale value of their cars would rise.) One can go down the list of oil-sensitive consumers and find more examples like this. Similar logic underpinned proposals from Robert Lawrence and from Jason Bordoff and Gilbert Metcalf several years ago for a variable gas tax that smoothed consumer prices (up when oil prices fell; down when they rose): it would allow consumers to better prepare for the future and would thus avoid economic waste. No one is talking about a variable tax now, but by hiking gas taxes while oil prices have fallen, lawmakers would be manually mimicking the mechanisms that these analysts proposed be made automatic. To be certain, there would still be losers as well as winners from raising the gasoline tax now. But almost everyone would come out ahead compared to where they were a year ago, and many would be even better off than they were with low gas prices but without the gas tax. Not everyone fits in one of those two categories – in particular, there is nothing here that’s good for oil companies, who would face less demand for their product over time. (Though combined oil and gas companies could make money on the other side from buildings that switch from oil to gas heating.) But that was always the case with any gasoline tax, and less important than many other policy decisions to the oil companies’ bottom lines. It has always made economic sense to make consumers pay for the full costs of the gasoline they use. There have also always been legitimate worries about the impact of higher gas taxes on vulnerable consumers, but those can be addressed by using the proceeds of a tax effectively. The fall in oil prices just adds to the reasons for getting U.S. energy prices right.

A large proportion of the government of Nigeria’s revenue goes to pay the salaries of civil servants at the national, state, and local levels. With the exception of Lagos state, the heart of Nigeria’s modern economy, the states and the local government authorities have few sources of revenue of their own. They are largely dependent on revenue from the Federation Account, the share of oil revenue distributed by the federal government according to a set formula. In normal times, oil accounts for about 70 percent of the Nigerian federal government’s revenue. But, these are not normal times. The price of a barrel of oil has fallen about 50 percent. The national budget has been recalculated at least twice to take into account falling oil prices and the resulting fall in government revenue. Less money for the federal government means there is less to be distributed to the states and local governments through the federal account. That, in turn, may translate in to public employees not being paid. In Plateau state, in the center of the country where there is a long history of violence between herdsmen and farmers and Muslims and Christians, there are claims that public employees have not been paid for up to seven months. A special assistant to the governor denies this. He says that state salary’s have been paid up to October. Presuming the special assistant is correct, that means there are still arrearages outstanding for three or four months. There are also anecdotal reports of Nigerian soldiers not being paid on time, and that this is contributing to the evident erosion of morale.

The 114th Congress is in session and the Keystone XL pipeline is at the top of its docket. Senate Republicans have vowed to push the pipeline through and President Obama has threatened to veto any bill that does that. After five years of battle, this is mostly more of the same. But one thing about the world has changed radically since the Keystone XL pipeline became a top tier issue: oil prices have plunged. So what do lower oil prices mean for the costs and benefits of the Keystone XL pipeline? Expert discussion has been focused on the State Department Environmental Impact Statement (SEIS). This is more relevant to political handicapping than to actual cost-benefit analysis, but it’s still worth digging into. The SEIS concluded that the pipeline would probably have no “substantial impact” on greenhouse gas emissions. This seemed to line up with President Obama’s statement that he would only approve the pipeline if it did not “significantly exacerbate” climate change. But the SEIS claimed that there was one exception: if oil prices were between $65 and $75, the Keystone XL pipeline could make a significant difference, tipping the economics of Canadian oil production from red to black and thus increasing emissions. Hence the political hook. Indeed as oil prices fell below $75 late last year, I began getting calls from reporters asking if this was a game changer for Keystone. Once oil dropped below $65, the calls stopped. The $65-$75 range was never particularly compelling in the first place. No matter what the prevailing price of oil, if you reduce the cost of transporting it, you will improve project economics, and, at the margin, you should expect oil companies to produce more. How much more is impossible to confidently predict. Among other things, the breakeven price for Canadian oil will likely move with the oil price and with transport costs: if nudging transport costs a little when oil costs $70 a barrel really does threaten to shut in a large amount of Canadian oil, there’s a good chance that the Alberta government will try to blunt the impact through changes in tax and royalty treatment. On top of all that, of course, is the fact that oil is no longer trading between $65 and $75, and no one knows when it next will. It’s much more interesting to ask how lower oil prices affect the costs and benefits of approving the pipeline. As a starting point, it’s important to stipulate that no one really knows where the long-run oil price will settle. And it’s the long-run price, not the current one, which matters when you’re talking about the consequences of a pipeline that has the potential to operate for decades. So let’s focus on what “lower” oil prices mean for Keystone XL rather than what any particular prices does. Lower oil prices reduce both the costs and the benefits of approving the Keystone XL pipeline by reducing the odds that it will ever be fully used. There’s an outside chance that, if prices are sustained at an extremely low level, the Keystone XL pipeline won’t get built. That scenario isn’t likely – among other things, if Canadian production doesn’t grow, the odds of sustained low prices decline substantially – but it’s not zero. Lower prices also raise the odds that the pipeline will be built but not fully utilized. In that case, you still get the up-front construction stimulus, but you get less benefit from greater oil production, and less climate damage from the same. You also have a waste of economic resources. The more likely scenario, though, is that the Keystone XL pipeline gets built and used. In that case, lower oil prices reduce its economic benefits without any clear impact on its climate costs. If you assume a constant elasticity of oil demand, then a given addition to world oil production should push down prices by the same percentage, regardless of what the starting point is. Imagine you think that the Keystone pipeline would boost net world oil production by 100,000 barrels of oil a day and you believe that would cut world oil prices by 0.3 percent. If prevailing oil prices start at $100, you’re cutting them by 30 cents; if they start at $50, you’re reducing them by only 15 cents. In both cases the marginal reduction in oil prices saves Americans money through reduced import costs and reduced absolute price volatility. (There is one countervailing force – at lower oil prices, U.S. imports are higher, and therefore a given reduction in oil prices yields more economic benefit – but this shouldn’t fully offset the main economic effect.) The upshot is that, in the lower oil price world, any savings from Keystone XL are reduced. What about the climate impact? For a given net impact of Keystone XL on world oil production, the climate damages should be unchanged – the impact is a fixed function of how much extra oil is produced in Canada and how much additional oil is consumed worldwide. So whatever you think the excess of benefits over costs is for Keystone at $100 a barrel oil (and many people, of course, think that “excess” is negative), you ought to think that it’s smaller when prevailing oil prices are reduced. Keystone XL, like any oil production project, is less compelling when prices are lower. What about the absolute impact on both economics and climate? This is much more difficult to pin down. The absolute impact of Keystone XL on both depends on how other producers respond in the long run to any additional production that it enables – that’s what determines the net impact on world production and consumption. How that changes depending on the prevailing oil price is unclear. Nailing that down would require knowledge of global oil supply economics, as well as oil producer politics, that no one confidently has. What hasn’t changed is that both the climate damages and the economic benefits from Keystone XL are small in the grand schemes of climate change and the U.S. and global economies. A Keystone XL decision will have much larger consequences for U.S. politics, U.S.-Canada relations, and perhaps the broader rules-based global trading system than it will for climate change or the economy – and that’s where serious decision-makers ought to mostly focus. Lower oil prices haven’t changed any of that.

Geopolitically, U.S. policymakers generally see high oil prices as bad and low oil prices as good for national interests. In a CFR Working Paper I coauthored with Michael Levi and Alexandra Mahler-Haug we find a sustained drop in oil prices will affect at least one of the United States’ closest trading partners and geopolitical allies negatively: Mexico. Modeling the vulnerability of the Mexican federal budget to a range of oil price declines and assessing the different ways the government might react, we found that severe and sustained declines would force major adjustments in taxes, spending, and debt. Here are some major findings from the paper: In response to falling oil prices, Mexico will usually prefer to raise debt rather than boost revenues or cut spending, but will likely not rely only on one tool. A one-year price drop should be straightforward for the Mexican government to cover with new debt—even if oil prices fall by fifty percent or more. Oil prices need to fall below $70 a barrel for an extended period of time for the Mexican budget to come under severe stress. A summary of the paper can be found here, and the full text here: Spillovers From Falling Oil Prices: Risks to Mexico and the United States.  

Coal has been the world’s fastest growing energy source for a decade. That’s largely been driven by China. Increasingly, though, it’s about India too, which has important climate implications. The chart below shows annual changes in global oil, gas, and coal consumption. (The figure for a given year is the change from the previous year; all numbers in this post are based on the BP Statistical Review of World Energy 2014.) Between 1988 and 2002 coal led the pack only once. But between 2003 and 2013, coal led in every year but 2008. This was mostly a China story. The chart below shows annual changes in global oil, gas, and coal consumption but now excludes China. For 2003 through 2012, once you remove China, coal is no longer the world’s strongest growing fuel. (Natural gas largely dominates instead.) But look at 2013: coal is once again the world’s fastest growing source of energy even excluding China. What explains coal’s return to the top? One guess might be the United States, where coal use bounced back in 2013 after a weak 2012. If you remove the United States from the data, though, coal remains the biggest gainer in 2013. Another guess might be Europe, given the drumbeat of stories about Europe’s return to coal. But this was a 2012 phenomenon; European coal consumption actually declined in 2013. Indeed, just as with the United States, if you remove Europe from the data, coal is still on top. To really explain what’s happening you need to bring in India. The chart below shows annual changes in global oil, gas, and coal consumption beginning in 2003 but now excludes both China and India. Presto: coal is no longer the fastest growing energy source around. Indeed it’s not even the second fastest. Why does this matter? One way of simplifying the climate problem has long been climate = coal = China. These were all gross exaggerations, of course, but they contained a useful kernel of truth. The corollary for policy making – and particularly for foreign policy – was that focusing narrowly on China made sense. This is increasingly not the case. The final chart in this post shows the annual change in Indian coal consumption as a percentage of the annual change in Chinese coal use. The series is noisy but the trend is clear. The implication is straightforward: Focusing on China is increasingly insufficient when it comes to climate-related foreign policy. India, long easy to neglect, is becoming more important every year.

Oil prices are plunging. Which U.S. states will benefit most – and which are most at risk? A study that we published about a year ago looked at exactly this question. The research, by Mine Yucel of the Dallas Fed and Stephen Brown of UNLV, ranked Wisconsin, Minnesota, and Tennessee as the biggest potential winners, and Wyoming, Oklahoma, and North Dakota as those with the most to lose. Oil prices have fallen by about twenty percent in the last few months. Brown and Yucel combined statistical analysis of the historical relationship between oil prices and employment with current data about state economies to estimate what a twenty-five percent price rise would do jobs. They note that the same analysis can generate insight into the potential impact of a price plunge. The map below, which I’ve created by assuming that an oil price drop is as bad for jobs as an oil price rise is good for employment (Brown and Yucel discuss the value and limits of such an assumption in the paper), shows the results. Brown and Yucel add some additional insight into the dynamics at work here: “States like Texas and Louisiana that have downstream oil and gas industries that benefit from falling energy prices such as refining and petrochemicals would be less affected. In addition, states in which natural gas is more prominent than oil are likely to see less harm from falling oil prices. With the recent weakening in the relationship between oil and natural gas prices, a decline in oil prices does not necessarily imply as big a change in natural gas prices as it once did, lessening the effect of an oil price decline.” They also provide historical perspective: “When oil prices collapsed to near about eleven dollars per barrel in 1986, the Texas economy went into a deep recession for two years. Economic output contracted 5.6 percent and employment fell 1.1 percent…. Even though oil and gas extraction accounted for 19 percent of the Texas economy in 1981, that share was the second smallest among the eight oil-sensitive states (West Virginia was smallest). As a percentage of state GDP, the oil and gas sector accounted for 49 percent in Alaska, 37 percent in Wyoming, 35 percent in Louisiana, and 20 percent in North Dakota. The 1986 oil price crash also caused a recession in most of these states, with employment declines largest in Wyoming (-5.9 percent) and Alaska (-4.5 percent)—states with the largest oil and gas output shares.” The historical record – both anecdotal and leveraged using statistics – is far from a perfect guide to the future, particular with massive changes in the U.S. oil and gas industry in recent years. And the fall in prices isn’t yet remotely comparable to 1986. Nonetheless, if you’re looking to see where and how falling prices might help or pinch economically, the Brown and Yucel study is a great place to start.

It’s been two years since I turned in the manuscript for The Power Surge, my book about the changes sweeping American energy and their consequences for the world that was published last May. The book is out in paperback today, which strikes me as a great opportunity to take stock of what’s changed, both in the world and in my thinking about it. Here are five things I’d tackle differently if I could write the book again. I’d put the tight oil boom more squarely at the book’s center. I devoted a chapter of the book to potential gains in U.S. oil production. It included sections on tight oil, offshore drilling, Alaska, enhanced oil recovery, and much else. A core part of my case for the bright prospects of U.S. oil production centered on that diversity of opportunities: even if several didn’t pan out, I argued, at least some would. Indeed the United States set record for annual increases in oil production in both 2012 and 2013 – both data points that weren’t yet on the record books when I turned in my draft. But this has been driven centrally by tight oil while the rest has lagged. This fact doesn’t change my basic conclusions, but if I had another go at it, I’d spend more time drilling down into this core driver of U.S. oil. I’d say a lot more about distributed electricity generation. I spent a chapter of the book on the boom in renewable energy, but it was focused largely on large-scale wind and solar generation. In the last two years, though, the biggest news in renewables has been around distributed generation, particularly solar. There have been claims that renewable energy will spark a “death spiral” for traditional utilities and quickly slash U.S. greenhouse gas emissions. All this would have been well worth digging into (I do that a bit in a new epilogue for the paperback), even if it wouldn’t have changed my bottom lines. I’d be less confident of my assessment of the impact of U.S. oil production on oil prices and carbon emissions. I argued in the book that U.S. production would likely have a minimal impact on world oil prices because other big producers would cut back their own output to stabilize prices. A corollary of this was that U.S. oil production wouldn’t lead to much more oil use or emissions. I covered the possibility that things would play out differently, leading emissions to rise and prices to be restrained or even fall, but I put that in a decidedly less likely category. I haven’t flipped, but the more I look at how big oil producers make investment and production decisions, the less confident I am in our ability to predict their future actions. One upshot is that, while I still think that U.S. oil production won’t push prices way down over the long run, and I don’t think that it will push emissions way up either, I do think there’s a decent case to be made that more U.S. production might restrain future price rises considerably. This doesn’t change the cost-benefit balance when it comes to climate change, but it does make both costs and benefits potentially larger. I’d be a bit more generous toward electric cars. It’s tough to believe, but in the two years since I turned in my draft, Tesla has gone from a marginal player to an industry darling. Its share price has gone from under thirty dollars (not too much above its 2010 IPO price) to nearly three hundred dollars last month. In the meantime, it’s booked its first quarterly profit, racked up awards, and sold tens of thousands of its cars. It’s even navigated safety problems – with one person I quoted in the book flagged as an Achilles heel for automotive start-ups – with aplomb. I still stand by my view that the biggest changes this decade in U.S. oil consumption will come from better conventional vehicles, not electric cars, but there’s little question that Tesla has surpassed my expectations when I wrote the book. I’d be more open to larger and longer-term impacts from both fossil fuel and alternative energy production on U.S. employment and growth. The book took pains to distinguish between cyclical and long-term impacts of energy developments on the U.S. economy. I made the mainstream argument that, in the long run, the U.S. economy ought to return to full employment regardless of what happened in domestic energy, which would temper the long-run consequences of any energy boom for growth and particularly for job creation. In my penultimate chapter, though, I delved into five “wild cards” that I thought could force a rethinking of some of the book’s conclusions. One of those was sustained economic weakness. Today, even though indicators like unemployment suggest that the economy is returning to full steam, talk of “secular stagnation” – is far more common. To flesh out exactly what secular stagnation would mean for the value of increased activity in U.S. energy – whether driven by markets or regulation – you’d need to play around with working model of the phenomenon. Regardless of the details, though, I’d move this out of the “wild card” section and into the mainstream. I’d still stick, though, to my bottom lines. We’ll fail to understand how U.S. energy fits into the bigger economic, foreign policy, and environmental pictures unless we ditch a 1970s vintage view of the world that still dominates our thinking; people are overstating the substantive (though not the political) conflicts between exploiting booms in “old” and “new” energy at the same time; and the biggest gains won’t be realized by just sitting by and watching – we’ll need to transform policies to take full advantage of new opportunities that changes in U.S. energy have created across the board.

Calls for lifting U.S. controls on energy exports are mounting as production nears a forty-five-year high.

The People’s Climate March, which drew a reported three hundred thousand people to the New York streets on Sunday, deserves much of the applause and attention it’s attracted. No one who attended the march can deny the enthusiasm of the crowd, or the fact that the gathering has helped keep climate change on the front page for a week.  And yet, throughout the day, I couldn’t shake the feeling that I’d stumbled into an anti-fracking march that also happened to be about climate change.  And I couldn’t escape the conclusion that this focus could end up undermining the very climate change goals that the march was ostensibly about achieving. Five years ago, climate change rallies were typically focused on coal. Whatever one thought of the old protest tactics, or the wisdom of the specific policy demands, there’s no question that the activities were targeting a significant climate problem.  Coal is the largest and fastest growing source of carbon dioxide emissions from energy use. Blunting coal use unquestionably reduces global greenhouse gas emissions. Fast-forward a couple years. With a rally outside the White House in 2011 that generated front-page coverage, climate activism shifted focus to the Keystone XL pipeline.  Now the emphasis was on a project that promised to have little impact on climate change regardless of whether the protesters got what they wanted – perhaps not the ideal place to focus so much energy. Sunday’s climate march had me pining for those good old days. There was barely any anti-Keystone paraphernalia beyond the small, designated anti-tar-sands section. There was little about coal outside the similarly small anti-mountaintop-mining zone. But boy were there a lot of anti-fracking signs. Ed Crooks of the FT noted on Twitter that anti-fracking signs “outnumber anti-coal signs by more than 10:1”; he followed that with an observation that there were “possible even more [signs] about #fracking” than about #climate”. Both are consistent with what I saw. This despite the fact that fracking, notwithstanding its problems and limitations, has reduced U.S. greenhouse gas emissions and helped create the political space for EPA power plant regulations that will do more. Take a step back: In the last five years, organizers have gone from drawing a few thousand people to lonely protests to bringing out hundreds of thousands on the streets of New York. They’ve done that in part through superior organizing and by tapping into growing concern about climate change. But they’ve also done it in part by shifting their emphasis from a central part of the climate problem (coal) to a marginal issue (Keystone) to opposing something that, while decidedly imperfect, actually helps deal with climate change (natural gas). This seems to be a Faustian bargain at best. More pragmatic players in the climate movement often explain this bargain by arguing that anything that gets people mobilized on climate helps the overall cause.  Playing a pure inside game on climate change has its limits. And it’s easier to mobilize people around opposition to energy developments in their back yards that scare them, carried out by companies that can be easily demonized, than to get them revved up about amorphous climate threats and subtle policies that might counteract those. (One friend at the march threatened to chant, “What do we want? Better seals on natural gas compressors! When do we want them? Now!” He wisely decided against it.) It’s also possible, in principle, to mobilize around one thing (say, Keystone) and then pivot to another (say, EPA power plant regulations) when the time for policy action arrives. Take this too far, though, and you back yourself into a corner: one has to wonder, among other things, how much the anti-fracking marchers will support the new EPA power plant rules once they discover that a central impact will be to increase demand for fracked natural gas. It’s great to have leaders who help draw vocal attention to climate change. But those who care about confronting climate change yet understand how wrongheaded some of what’s being called is for need to speak up just as loudly.