December 07, 2012 09:26 PM UTC

Oil shale: Energy's pink unicorn

• 8 Comments
• by: checksandbalancesproject

Grover Norquist, founder of the right wing, anti-tax group Americans for Tax Reform, recently spoke out about the folly of spending tax dollars on pink unicorns, since they don’t exist. Following his logic, government shouldn’t create handouts for oil shale, since it doesn’t exist as an energy source.

We want to see if Mr. Norquist is willing to join us in calling for an end to all oil shale subsidies.

After a century of efforts to turn oil shale into a viable energy source, no commercial industry for it exists. And, that’s even after the federal government has risked billions in taxpayer-backed handouts to oil companies in the name of oil shale, including a brand new $50 million subsidy that was just introduced in Congress.

Mr. Norquist’s position on pink unicorns came in response to Sen. Lindsay Graham’s (R-SC) statement about voting for tax increases. Norquist claims that spending cuts to ‘match’ tax increases won’t ever happen (In other words, the cuts will never come to exist, like pink unicorns).

“If you had a pink unicorn, how many dollars in taxes would you raise to trade for the pink unicorn? Since pink unicorns do not exist in the real world, it’s never occurred to me to worry about the senator from South Carolina.”

– November 28, 2012, NPR

Oil shale is the pink unicorn of energy.

Commonly confused with the shale oil being drilled for in the Bakken and Eagle Ford fields, oil shale is actually a rock that contains a fossilized organic substance called Kerogen. Kerogen was never subjected to the titanic heat and pressure that forms liquid oil. To take the place of Mother Nature’s process, oil shale speculators have to superheat the rocks to 700 degrees or more over months or even years, to create oil.

After a century of investment and research, oil companies haven’t found a way to duplicate those geologic forces in a commercially viable way.

In late November, the nonpartisan budget watchdog group Taxpayers for Common Sense released a report examining the billions of tax dollars that have been risked on oil shale speculation. Nearly $7 billion taxpayer-funded handouts in the form of loan and price guarantees for oil shale were made to oil companies in just the 1980s alone.

Coincidentally, just as Taxpayers released their report, Rep. Ralph Hall (R-TX) introduced a bill (H.R. 6603) with $50 million in new government handouts for the pink unicorn of energy, oil shale.

And, Rep. Hall is trying to give away this money even though companies involved in oil shale speculation say they don’t want or need taxpayer subsidies.

“We’re not asking for any special treatment[.] We’re asking to be able to proceed as any other industrial development would.

– Rikki Hrenko, CEO of Enefit American Oil, Bloomberg, February 27, 2012

Hall’s bill comes even after a Congressional Budget Office (CBO) analysis found that opening up public lands to commercial oil shale development would provide zero revenue.

That CBO analysis was sparked by Speaker Boehner and Rep. Lamborn’s proposal to use oil shale royalties to fund transportation projects. That plan had a number of flaws, including the fact that there is no commercial oil shale industry to generate royalties, and that another section of the bill slashed any potential royalties to bargain basement levels.

Oh, and Rep. Lamborn said oil shale wouldn’t help transportation funding.

After the Lamborn bill went nowhere in the Senate, the House again tried to prop-up oil shale by including new spending on oil shale research other legislation.  Cooler heads prevailed, and the amendment offered by Reps. Jared Polis (D-CO) and Gerry Connolly (D-VA) that struck funding for oil shale research from the appropriation, passed.

Rep. Hall’s bill is the third attempt by supposedly conservative members of Congress to prop up an industry that says it doesn’t need or want subsidies.

Maybe Mr. Norquist’s influence is waning in Congress, because Republicans continue to offer up pink unicorns as solutions to real energy challenges. We hope that he will lend his voice to the chorus of Americans asking our government to stop giving billion-dollar oil companies more of our tax dollars for a rock that supplies as much energy as a pink unicorn.