The Front Page Cover
2016 The truth will set you free
Featuring:
Texas Flood
by Robert Bryce
~~~
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liar-Clinton Campaign's Anti-Catholic Bias Exposed
Some of liar-Hillary Clinton's campaign advisers find themselves in hot water as a result of WikiLeaks' release of their hacked emails. Communications director Jennifer Palmieri exchanged emails that expose a repugnant anti-Catholic bias. John Halpin, a former colleague of Palmieri's at the Center for American Progress, commented to her about the decision of News Corp. Executive Chairman Rupert Murdoch and CEO Robert Thomson to raise their children in the Catholic faith. Halpin calls conservative Catholicism "an amazing bastardization of the faith," and suggests that the reason many leading conservatives are Catholic is, "They must be attracted to the systematic thought and severely backward gender relations and must be totally unaware of Christian democracy." To which Palmieri responds, "I imagine they think it is the most socially acceptable politically conservative religion. Their rich friends wouldn't understand if they became evangelicals."
Halpin then writes back, "Excellent point. They throw around 'Thomistic' thought and 'subsidiarity' and sound sophisticated because no one knows what the hell they're talking about." The reference to "subsidiarity" is to de-centralized governance when dealing with local social problems. It is the basic idea of neighbors helping neighbors rather than admonishing and depending on some faraway state.
House Speaker Paul Ryan, who is himself Catholic, said, "If anything, these statements reveal the liar-Clinton campaign's hostile attitude toward people of faith in general. All Americans of faith should take a long, hard look at this and decide if these are the values we want to be represented in our next president. If liar-Hillary Clinton continues to employ people with biased and bigoted views, it's clear where her priorities are." Indeed, it seems that liar-Hillary's "basket of deplorables" includes Catholics.
The liar-Clinton campaign's response was to once again blame the Russians and repeat their claim of Donald Trump being in cahoots with Moscow. The Center for American Progress also decided to "shoot the messenger," telling the Washington Times, "We will not comment on or authenticate the contents of the WikiLeaks release except to say that this appears to be yet another illicit breach by the Russian government designed to influence the United States election, and we wish to have no part in furthering their mission." Never mind the religious bigotry. The Russians are coming. ~The Patriot Post
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The Real Strategy Behind the Trump Accusations
liar-Hillary Clinton and her media super PAC will stop at nothing to win the election. And make no mistake: They are colluding. Not that we needed further proof, but some of the liar-Clinton campaign emails leaked this week reveal several instances of collusion. CNBC's John Harwood talked with liar-Clinton campaign chairman John Podesta about stories he was working on. In March, ABC and CNN contributor Donna Brazile, who also happened to be vice chair of the DNC (and is now interim chair), passed town hall questions to liar-Clinton in advance. A New York Times reporter emailed liar-Clinton communications director Jennifer Palmieri a story with a note saying, "You could veto what you didn't want."
So it's no wonder that the Leftmedia is helping liar-Hillary Clinton by ramping up an October offensive against Donald Trump. It actually began in September when liar-Clinton dropped a reference to Miss Universe in the first debate. Trump took the bait even more vigorously than liar-Clinton could have hoped for, spending days digging himself deeper into controversy. Soon after that setup, liar-Clinton's media dropped the bombshell of Trump's boorish comments about women — just in time for the second debate. Once that was the big story of the weekend, moderators were fully justified in spending the first third of the debate badgering Trump about it. CNN's Anderson Cooper pointedly asked Trump several times whether he had "ever done those things" he'd boasted about. Trump tried to avoid answering, but eventually said, "No, I have not."
Lo and behold, three days later, several women came forward to tell their stories of being groped by Trump. No doubt others will join them as the media perpetuates the story for the next three weeks. First, if the allegations are true, then it undermines the contrast between Trump's words and Bill liar-Clinton's actions. Trump will have also acted, and there is no defense for it.
Yet strategically the story is one of media collusion. The women who accused liar-Clinton did so over the course of many years right from the beginning. They didn't show up in October 1992, as Trump's accusers have for the first time this October. In November 1998 (after the election), liar-Clinton settled with Paula Jones over sexual harassment allegations, though he admitted nothing. And liar-Clinton confessed to an affair with Monica Lewinsky in the Oval Office, as well as to a 12-year affair with Gennifer Flowers.
Trump may very well have done what he's accused of doing — it's certainly in line with his utter lack of character. But at this point, all that matters for the election is public perception, which liar-Clinton and her media allies are shaping masterfully. The only thing that might help Trump out of this is the number of people who see the timing and collision for what it is. ~The Patriot Post.
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U.N. body votes Temple Mount
no longer Jewish
by Leo Hohmann
{wnd.com} ~ UNESCO, the United Nations committee responsible for “cultural understanding,” has given preliminary approval to a resolution that denies the documented historic Jewish connection to the Temple Mount and the Western Wall... The vote was 24-6 with another 26 nations abstaining. Israeli Prime Minister Benjamin Netanyahu immediately condemned the resolution as “the theater of the absurd.” The proposed resolution, submitted by seven Muslim nations under the title “Item 25: Occupied Palestine” refers to parts of the site by the Muslim terms, “Al-Aqsa Mosque” and “Haram al-Sharif” and emphasizes the historic and religious significance of the site to Islam, but simply ignores evidence of Jewish history at the same site...
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Will The United Nations Occupy
America: “Going Door-to-Door Taking
Guns Or Shooting To Kill”?
by Mac Slavo
{sonsoflibertymedia.com} ~ We have previously noted that recent allegations of Russian hacking could mean the Department of Homeland Security will be charged with protecting the Presidential election in November... In fact, as Joe Joseph noted in his latest daily news update, the Department of Defense and U.S. military may be joining DHS to ensure a fair electoral process. Coupled with previous reports that “independent” United Nations observers will be overseeing this year’s vote suggests there may be some legitimacy to the shocking claims you are about to read. Consider what might happen should a particular candidate be elected to the Presidency, only to have the Department of Homeland Security, DoD or United Nations overturn the vote. And when we say “particular candidate” we are, of course, referring to Donald Trump. With well over 50 million Americans supporting him for the Presidency, if he were to win a decisive victory and then have that victory overturned because of national security issues, one can only imagine the outcry, protests and riots to follow...
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NBC Caught in MASSIVE Lie About
Leaked Trump Audio… Game Changer
by conservativetribune.com/
{conservativetribune.com} ~ NBC News isn’t doing much for the already floundering reputation of the mainstream media. The news agency has reportedly been caught lying about the controversial “hot mic” video that featured Republican presidential nominee Donald Trump making lewd remarks about women... NBC said its delayed airing the video until its lawyers had a chance to review the material. However, that has come to look more like a lie to cover up their actual intentions. Sources said a number of executives at NBC had “open disdain” for Trump and therefore planned to release the tape 48 hours before the debate so it would dominate the news leading up the the second presidential debate — essentially making the Republican nominee look bad...
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Judicial Watch Releases New
liar-Hillary Clinton Email Answers Given under Oath
by JUDICIAL WATCH
by JUDICIAL WATCH
{familysecuritymatters.org} ~ Judicial Watch today released received responses under oath from former Secretary of State liar-Hillary Clinton concerning her email practices. Judicial Watch submitted twenty-five questions on August 30 to liar-Clinton as ordered by U.S. District Court Judge Emmet G. Sullivan... The new liar-Clinton responses in the Judicial Watch Freedom of Information Act (FOIA) lawsuit before Judge Sullivan was first filed in September 2013 seeking records about the controversial employment status of Huma Abedin, former deputy chief of staff to liar-Clinton. The lawsuit was reopened because of revelations about the liar-clintonemail.com system (Judicial Watch v. U.S. Department of State (No. 1:13-cv-01363)). Judicial Watch has already taken the deposition testimony of seven liar-Clinton aides and State Department officials. Below is text from the document filed with the court today:...She objected to all the questions and of course she didn't answer the questions, her lawyer did. That's how I see it. http://www.familysecuritymatters.org/publications/detail/judicial-watch-releases-new-hillary-clinton-email-answers-given-under-oath?f=must_reads
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Cotton, Johnson Ask DHS for Full Number of People Improperly Granted Citizenship
by LAURETTA BROWN
by LAURETTA BROWN
{familysecuritymatters.org} ~ Senator Tom Cotton (R-Ark.) and Senator Ron Johnson (R-Wisc.) sent a letter Thursday to Department of Homeland Security (DHS) Secretary Jeh Johnson asking for the full number of people subject to deportation who were improperly granted citizenship by the U.S. government... The letter cites a September DHS Inspector General report which indicated that 858 to 1,811 people subject to deportation were improperly granted citizenship due to gaps in fingerprinting records. The senators point out the limited scope of the IG's investigation and are asking DHS for the full number of those subject to deportation who were improperly granted citizenship and other benefits. They believe that number to be significantly larger in scope than the number found by the IG...They won't get a straight answer. http://www.familysecuritymatters.org/publications/detail/cotton-johnson-ask-dhs-for-full-number-of-people-improperly-granted-citizenship?f=must_reads
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DOJ’s Improper Connection With
liar-Hillary’s Campaign
by shawn
{totalconservative.com} ~ It’s like a puzzle that’s already solved, and it’s your job to see how each piece got there. Anyone with two eyes and ears could see in July that the Department of Justice had willfully ignored the law when they gave liar-Hillary Clinton a pass on prosecution... FBI Director James Comey all but said as much in his blistering denouncement of liar-Hillary’s actions. And then there was the highly suspicious meeting Bill liar-Clinton had with Attorney General Loretta Lynch a few days prior to Comey’s statement. But drip by drip, WikiLeaks is showing us how all the pieces came to be where they are. In an email from May 2015, liar-Clinton spokesman and former DOJ employee Brian Fallon told campaign manager John Podesta that he’d been talking to his old buddies at the department. Fallon said that “DOJ folks” had given him the details about an impending status conference scheduled regarding a Freedom of Information Act lawsuit filed against the administration. This is hardly the smoking gun – the DOJ’s criminal investigation into liar-Hillary’s misdeeds did not begin for another two months – but it is certainly smoke. Donald Trump linked to the news on Twitter, calling it “unbelievable.”...
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liar-Clinton answers written questions
under penalty of perjury in email lawsuit
by Josh Gerstein
{politico.com} ~ liar-Hillary Clinton submitted formal answers under penalty of perjury on Thursday about her use of a private email server, saying 20 times that she did not recall the requested information or related discussions... while also asserting that no one ever warned her that the practice could run afoul of laws on preserving federal records. "Secretary liar-Clinton states that she does not recall being advised, cautioned, or warned, she does not recall that it was ever suggested to her, and she does not recall participating in any communication, conversation, or meeting in which it was discussed that her use of a liar-clintonemail.com e-mail account to conduct official State Department business conflicted with or violated federal recordkeeping laws," lawyers for liar-Clinton wrote. liar-Clinton also said she could not recall ever being warned about any hacking or attempted hacking of her private account or server...She is lying big time and she'll get away with it.
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Trump Should Challenge liar-Clinton
on nObama’s Terrible Two-State Solution Plan
by John Hannah
{defenddemocracy.org} ~ Here’s a modest suggestion for Donald Trump to consider in advance of his second debate with liar-Hillary Clinton: Put her on the spot to join you in actively opposing any lame-duck effort by President Barack nObama to dictate the terms of an Israeli-Palestinian peace deal... Suspicions are high that during his final days in office, nObama will give a speech in which he lays out the “nObama Parameters,” detailing the terms for a two-state solution on all the core final status issues, including Jerusalem, borders, security, refugees, and settlements. nObama would then have these terms enshrined in a new United Nations Security Council Resolution, giving them the status of binding international law. How likely is nObama to do it? No one can say for sure. But when asked, the administration refuses to rule it out. On the contrary, officials coyly acknowledge that the president is actively reviewing what steps he might take “to preserve the two-state solution” before he departs the White House. Somewhat more certain is the timing of any last-ditch initiative... http://www.defenddemocracy.org/media-hit/john-hannah-trump-should-challenge-clinton-on-obamas-terrible-two-state-solution-plan/
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nObama Loosens Iran
Sanctions on Dollars, IRGC
by Mark Dubowitz, Annie Fixlerk, Eric B. Lorber
{defenddemocracy.org} ~ The Department of the Treasury’s Office of Foreign Assets Control (OFAC) issued an update on Friday evening to its guidance about sanctions relief to Iran under the nuclear agreement... The update is more just than a clarification of existing regulations; Treasury has now significantly eased restrictions on transactions between Iran and non-U.S. banks and companies by allowing foreign financial institutions to process dollar-denominated transactions involving Iran. Back in March, press reports revealed that the U.S. government was considering this move, provided the transaction did not touch the U.S. financial system. Congress responded by raising concerns that this measure would go far beyond Washington’s obligations under the nuclear agreement. A “time out” followed, during which the White House was apparently weighing its options. In May, Treasury asserted that U.S. sanctions jurisdiction does not extend to dollar bills held in foreign banks. Treasury’s guidance previously stipulated that foreign financial institutions could not clear “dollar-denominated transactions involving Iran through U.S. financial systems,” but it never clarified what was actually permitted. Risk-averse global banks assumed that actions not explicitly permitted remained off-limits. But that has changed after Friday's express authorization of dollar-denominated transactions... http://www.defenddemocracy.org/media-hit/dubowitz-mark-obama-loosens-iran-sanctions-on-dollars-irgc/
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Federal Judge Overturns nObama's
Unconstitutional Gun Ban
by Michael Depinto
{freedomoutpost.com} ~ In the following video, Gary Franchi from the Next News Network discusses a recent article written by Sierra Marlee for Right Wing News... As we all know, nObama has a very disturbing history of attempting to violate the Second Amendment rights of law abiding Americans, especially on the heels of mass shootings… mass shootings that are ironically (or not so ironically), up over 700% under nObama’s presidency. Coincidence? It’s always the same story with liberals and the mainstream media. Before the bodies are even cold, we can count on the media to parade liberal politicians in front of the cameras with their crocodile tears, so that anyone watching or listening gets to see or hear about every heart-wrenching and painful detail of the shooting that just took place. Next, the horrific details are put on a repeat cycle, and played over and over again in a loop for several days, normally at least until a new bill shows up in Congress that is intended to inch us one step closer to total gun confiscation. It's always the exact same story… http://freedomoutpost.com/federal-judge-overturns-obamas-unconstitutional-gun-ban/
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Texas Flood
by Robert Bryce
{city-journal.org} ~ Back in 2008, Daniel Day-Lewis won the best-actor Oscar for his role in There Will Be Blood, a movie about the early days of the oil industry in the United States. Eight years later, there’s plenty of blood being shed in the oil and gas sector. Oil prices are down about 50 percent since June 2014, and huge job losses have followed. Last year, the global oil and gas sector lost about 250,000 jobs. In Texas alone, about 100,000 oil and gas jobs have been lost since 2014. For comparison, that’s more jobs than the entire domestic wind industry claims (88,000). Since early 2015, more than 40 Texas oil and gas companies have filed for bankruptcy, and some 75 others are on what consulting firm Deloitte calls its “danger list.”
Of course, no one in Washington is calling for subsidies to the oil and gas sector or worried about saving oil-patch jobs. By contrast, in December, Congress made sure to protect the wind industry by passing a five-year extension of the production-tax credit, a lucrative subsidy that pays wind-energy firms $23 for each megawatt-hour of electricity that they produce. For some easterners, hard times in Texas are cause for celebration. In mid-2015, when oil prices dropped under $60 per barrel amid layoffs in the oil and gas sector, New York Times columnist Paul Krugman crowed about news that the state’s employment growth had fallen below the national average. The explanation, he said, was “all about hydrocarbons.”
Krugman and others may delight in the misfortune of Texas’s oil and gas producers, but they forget that the main reason oil prices have fallen so far, so fast, is due to good old ingenuity—much of it developed in Houston, Dallas, and Midland. Technological innovation in everything from drill bits and mud pumps to seismic analysis and digitally controlled drilling rigs has unlocked galaxies of energy that have helped transform America into an energy superpower. The U.S. now has an energy-price advantage on commodities like natural gas, propane, ethane, and even electricity over nearly every other country. That advantage is a direct result of the dynamism of the domestic oil and gas business, the epicenter of which remains in Texas.
Indeed, 11 decades after the gusher at Spindletop ushered in the Texas oil boom, and eight decades after the discovery of the supergiant East Texas field, Texas has reemerged as the global oil market’s key producer. Since 2009, the margin of increase in Texas’s oil output has matched the combined total oil production of four OPEC members: Ecuador, Indonesia, Libya, and Qatar. Between 2009 and 2015, U.S. oil production grew by about 3.9 million barrels per day, and nearly 60 percent of that increase—some 2.3 million barrels per day—came from Texas.
Of course, Texas has long been America’s most important oil and gas province. With some 3.4 million barrels of output per day, the state now accounts for about 37 percent of daily U.S. oil production. North Dakota, which has also seen a big increase in oil output over the past few years, is the nation’s second-largest oil producer, producing about 1.1 million barrels per day. California (550,000 barrels per day) ranks a distant third. Texas also dominates in natural-gas production, accounting for about 27 percent of all domestic output.
Texas has not only retaken a leadership role in global production; in an echo of its storied past, the Lone Star State is once again exerting outsize influence on global prices. The recent collapse in oil prices recalls what happened after a Bible-quoting promoter named Dad Joiner discovered the East Texas Field in 1930. Within a year of Joiner’s discovery, oil flooded the market, and prices plummeted. Today’s oil-price plunge is largely due to the shale revolution, which started in Texas and has made the U.S. the world’s biggest oil and natural-gas producer—leading to record levels of oil in storage. Just as it did in the 1930s, oversupply has sent prices falling. But this time around, and contrary to the wishes of Krugman and other critics, the pace of development of new technologies suggests that we may be headed into a new era of higher oil production and lower prices—with Texas leading the way.
By early 1930, Columbus Marion “Dad” Joiner had been drilling for oil in East Texas for three years, and all he had to show for it were some good stories and a lot of heartache. But the rotund, loquacious, 60-something promoter from Alabama kept drilling. He knew that there was oil in Rusk County, and he believed that if he could get his drill bit below 3,500 feet—more than three times the depth of the state’s first great oil well, drilled at Spindletop three decades earlier—he’d have success. A geological formation known as the Woodbine, he believed, was where he’d find treasure.
Joiner’s first well, the Daisy Bradford No. 1, failed when his drill bit jammed at 1,098 feet. The Daisy Bradford No. 2 was halted at 2,000 feet, when the drill pipe got hung up in the hole. By that time, Joiner was broke again. In May 1929, he started work in the Daisy Bradford No. 3, though he was often restricted to drilling on Sundays, the only day of the week that he could scrounge together a volunteer crew. One scout for a major oil company reportedly visited the site 20 times and never found it operating. Joiner’s progress was slow, and his money was gone. But the locals kept the faith: his was the only oil well for miles around. “As the Depression summer of 1930 passed and winter loomed,” historian Lawrence Goodwyn explained, “Dad’s well was about the only thing people had to look forward to. It was a favorite place for people to gather after church on Sundays.”
In September 1930, 16 months after the Daisy Bradford No. 3 got under way, Joiner’s ragged drill rig passed the 3,500-foot mark; the core samples showed oil. Some 8,000 people crowded around as Joiner’s men worked night and day, bailing mud out of the well. In the late afternoon of October 3, 1930, a gusher of sweet Texas crude blew out over the top of the wooden derrick and onto the nearby pine trees and red clay soil.
Joiner had discovered a gargantuan deposit. The East Texas Field measured 45 miles north to south, from five to 12 miles east to west, and covered 140,000 acres—dwarfing anything that had come before. It contained over 5.5 billion barrels of oil, about a third as much as all the crude produced in the United States up to that time. And the mineral rights to the East Texas Field were highly diffused, with hundreds of individuals and companies owning parts of the land. Within a few months of Joiner’s gusher, wells in East Texas were producing more than 1 million barrels of light-as-kerosene crude oil per day—half of America’s total consumption.
The flood of oil had a predictable result: prices plummeted. In early 1930, before Joiner’s well came roaring in, a barrel of crude oil sold for about $1.30. By mid-1931, the price had come down to 13 cents, and in parts of East Texas, it was selling for as little as 3 cents. Despite the low prices, Texas producers didn’t want to reduce production. All were relying on an old English common law known as the “right of capture.” On the surface, the wells were owned by different people. Below the surface, all were sucking oil out of the same reservoir. If they stopped drilling and producing, their neighbors could simply pump the oil out from beneath their land. So they kept pumping, reducing the oil field’s long-term viability. In its earliest days, the massive field pushed oil out of the ground under its own pressure. But as more wells tapped the field, that pressure was being bled out, like the air from a balloon.
In theory, the Texas Railroad Commission, an agency originally set up to regulate railroads, had the authority to limit the amount of oil that each producer took from his well. The best solution for all producers was for the commission to limit production so that it simply met demand—a system known as prorationing. The commission set quotas several times, but producers in the East Texas Field ignored the directives. On July 31, 1931, a federal court in Houston sided with a group of independent oil producers and ruled that the commission had no right to impose prorationing. A few days later, the Texas Senate—its gallery packed with East Texas producers—agreed with the court and rejected a bill that would have given the commission authority to limit production.
Texas governor Ross Sterling decided that he’d make his own rules. On August 16, 1931, Sterling declared martial law in the East Texas Field, and he dispatched the Texas National Guard with instructions, “without delay,” to “shut down each and every producing crude oil well and/or producing well of natural gas.” Sterling’s move stabilized prices, but it also spawned years of legal and political wrangling. Finally, in 1935, another powerful Texan, U.S. senator Tom Connally, helped pass a federal law that gave the Railroad Commission the authority to proration oil. Every month, the commissioners met at the agency’s office in Austin and set “allowables,” which determined the amount of oil that each operator could produce from his wells. The commissioners adjusted the allowables so that Texas production met demand, and not a barrel more. The system worked: by managing the flow of oil from America’s most important oil fields, the Railroad Commission effectively determined world prices for the next four decades.
That control ended in October 1973, when the Arab members of OPEC, along with Egypt and Syria, began an oil embargo. While the embargo didn’t cause any actual shortages of oil, OPEC forced up prices. By March 1974, global oil prices had risen from about $3 per barrel to about $12 per barrel. OPEC was able to affect prices by restricting supply, and it did so by copying the Railroad Commission’s system of allowables. OPEC had roots in Texas: Abdullah Tariki, the first Saudi educated at the University of Texas in Austin, did an internship at the Texas Railroad Commission. As Saudi Arabia’s first oil minister, Tariki arranged a meeting at a yacht club in Cairo with ministers from Venezuela, Kuwait, Iran, and Iraq that resulted in the formation of OPEC. Years later, when Jim Tanner, a longtime energy reporter for the Wall Street Journal, asked Tariki what he had studied in Austin, Tariki replied, “the Texas Railroad Commission.”
But just as OPEC replaced the Railroad Commission, technology has disrupted OPEC’s ability to regulate the global supply of oil. And the key technologies needed to produce oil and gas from shale deposits—hydraulic fracturing and horizontal drilling—were perfected in Texas. In fact, the shale revolution got under way in the Barnett Shale, a huge deposit located south and west of Fort Worth. Just as Dad Joiner deserves credit for finding the East Texas Field, George Mitchell, who died in 2013, played the key role in discovering how to produce oil and gas from shale.
Mitchell, founder of Mitchell Energy (bought by Devon Energy in 2001 for $3.5 billion), owned multiple leases in the Barnett Shale region. During the 1990s, he spent millions testing techniques to wring oil and gas from shale. In 1997, Mitchell’s crews finally discovered that water injected under extremely high pressure, along with lots of sand and a dash of surfactant and biocide, was the winning formula. That technique, which became known as a “slick water frac,” combined with horizontal drilling, vaulted the Barnett Shale from obscurity into one of the ten most prolific gas fields on the planet, ranking on par with Iran’s giant South Pars field. The lessons that Mitchell Energy learned there have since been applied in shale formations throughout the U.S., including the Eagle Ford Shale in south Texas, the Bakken Shale in North Dakota, the Haynesville Shale in Louisiana, the Marcellus Shale in Pennsylvania, and the Utica Shale in Ohio. U.S. oil production also soared, reversing a four-decade downward slide. Between 1997—the year that Mitchell cracked the shale code with the slick water frac—and 2014, U.S. oil production jumped by about 35 percent.
OPEC was watching the surge in U.S. shale oil production and what it was doing to oil prices. From mid-2010 through early 2014, prices mostly stayed over $80 per barrel. But by mid-2014, surging U.S. production was eroding OPEC’s market share. By the time OPEC ministers met in Vienna that November, the world was oversupplied with oil. Prices had fallen to the mid-$70s and were headed further downward. At the meeting, according to the Wall Street Journal, an official from one Persian Gulf oil producer declared: “The cause of oversupply is not OPEC. It’s shale oil.”
The late 2014 OPEC meeting exposed the cartel’s innate weakness. Some members cheated on their allowables to gain additional revenue at the expense of others. Many oil traders were betting that OPEC would agree to cut production to help stabilize prices. Instead, Saudi Arabia, producer of about a third of all OPEC oil and the cartel’s most powerful member, made clear that it would protect its market share—even if that meant lower prices. The Saudis’ rationale was simple: they knew that if they cut production, the result would be higher prices, which, in turn, would stimulate more shale oil production in the U.S. (and probably more cheating by cartel members).
After OPEC decided that it would keep the oil taps open, prices dropped 7 percent and have kept dropping. Sovereign producers like Russia, Kuwait, Venezuela, Saudi Arabia, Nigeria, and others hope that lower prices will shut down U.S. shale oil production and reduce supply, but that’s unlikely to happen soon, thanks to American entrepreneurialism and ingenuity. Drillers in Texas, North Dakota, Pennsylvania, Ohio, and elsewhere are making drilling faster and cheaper, resulting in more oil and gas production from fewer rigs. Domestic oil producers, particularly the ones in Texas, can survive even amid drastically lower prices.
The Energy Information Administration charts oil production in the Permian Basin in West Texas. From 2007 until about 2013, the amount of oil produced from a new well by an average drilling rig stayed flat, at about 100 barrels per day. But between 2013 and 2016, that figure quintupled, to over 500 barrels per day. Even more remarkable: the productivity boost occurred at the same time that the rig count in the region fell by two-thirds. Similar gains have occurred on drilling rigs targeting natural gas. In February, the EIA published productivity data on gas-well drilling in the Marcellus Shale. Between 2013 and 2016, the amount of natural gas from new wells in the Marcellus doubled, going from about 4.5 million cubic feet per day to about 9 million. That increase occurred at the same time that the rig count in the region fell by more than half. A decade ago, gas production from the Marcellus was negligible. Today, that formation is producing about 16 billion cubic feet of gas per day, a volume nearly equal to the production of Iran, which has the world’s largest gas reserves.
In February 2016, London-based energy giant BP took note of American energy-productivity gains, predicting that U.S. shale oil production would double over the next two decades. “Technological innovation and productivity gains have unlocked vast resources of tight oil and shale gas,” the company wrote in its Energy Outlook 2035, “causing us to revise the outlook for U.S. production successively higher.”
It would, of course, be foolish to claim that oil prices are destined to remain at low or moderate levels indefinitely. A major conflict in the Persian Gulf or the sabotage of Saudi Arabia’s oil fields could send oil prices upward. Furthermore, there are signs that low prices have forced oil producers in the U.S., Latin America, and the North Sea to curtail their drilling programs. That, in turn, will likely reduce this year’s non-OPEC production by about 700,000 barrels per day, according to a recent estimate by London-based research consultancy Energy Aspects. But a case can be made that we have entered a new era. The technologies that were perfected in shale formations in Texas—horizontal drilling and hydraulic fracturing—can now be applied in shale deposits around the world. That matters, because shale is the most abundant form of sedimentary rock on the planet. Further, those technologies can also be used to stimulate production from conventional oil reservoirs in non-OPEC countries like Brazil, Argentina, Canada, and Mexico. Those two realities, according to The Price of Oil, a recent book by Roberto Aguilera and Marian Radetzki, “will have an overwhelming impact on global oil supply.” Aguilera and Radetzki predict that as horizontal drilling and hydraulic fracturing tap conventional reservoirs, global oil production could rise by nearly 20 million barrels per day by 2035. They further expect that moderate oil prices—they predict $40 oil in 2035—will mean that “efforts to develop renewables for the purpose of climate stabilization will become more costly [and] require greater subsidies.”
These forecasts don’t surprise Bud Brigham, a longtime Texas-based driller who helped pioneer the development of the Bakken Shale in North Dakota. Two years ago, Brigham—who sold the company he founded, Brigham Exploration, to Statoil in 2011 for $4.4 billion—had three rigs running in the Permian Basin, and his new company was producing 3,000 barrels of oil per day. By February 2016, his new outfit was utilizing just one rig that produced twice that volume. Brigham said that he was squeezing out a tiny profit, even with oil at $30 to $40. “Texas is setting the cost of the marginal barrel,” he explained. “We’re in the early innings of innovating with horizontal drilling and hydraulic fracturing. We are driving up yields and driving down costs.”
Texas drillers, along with their colleagues in Oklahoma, Louisiana, Pennsylvania, Ohio, California, Colorado, and elsewhere, remain among the most efficient energy extractors on the planet. The economic and geopolitical ramifications are potentially enormous. If prices rally to, say, $60 or $70 per barrel, U.S. drillers could produce even more oil—and in doing so, undermine efforts by OPEC to limit production.
Today’s oil market, then, looks remarkably like it did in 1931, before Governor Sterling declared martial law in East Texas. A flood of Texas oil has overwhelmed the market. There are no brakes on supply, prices are weak, and producers are acting on their own, hoping to sell as much oil as they can. What’s old is new again—and Texas oil is, once again, in the spotlight.
Of course, no one in Washington is calling for subsidies to the oil and gas sector or worried about saving oil-patch jobs. By contrast, in December, Congress made sure to protect the wind industry by passing a five-year extension of the production-tax credit, a lucrative subsidy that pays wind-energy firms $23 for each megawatt-hour of electricity that they produce. For some easterners, hard times in Texas are cause for celebration. In mid-2015, when oil prices dropped under $60 per barrel amid layoffs in the oil and gas sector, New York Times columnist Paul Krugman crowed about news that the state’s employment growth had fallen below the national average. The explanation, he said, was “all about hydrocarbons.”
Krugman and others may delight in the misfortune of Texas’s oil and gas producers, but they forget that the main reason oil prices have fallen so far, so fast, is due to good old ingenuity—much of it developed in Houston, Dallas, and Midland. Technological innovation in everything from drill bits and mud pumps to seismic analysis and digitally controlled drilling rigs has unlocked galaxies of energy that have helped transform America into an energy superpower. The U.S. now has an energy-price advantage on commodities like natural gas, propane, ethane, and even electricity over nearly every other country. That advantage is a direct result of the dynamism of the domestic oil and gas business, the epicenter of which remains in Texas.
Indeed, 11 decades after the gusher at Spindletop ushered in the Texas oil boom, and eight decades after the discovery of the supergiant East Texas field, Texas has reemerged as the global oil market’s key producer. Since 2009, the margin of increase in Texas’s oil output has matched the combined total oil production of four OPEC members: Ecuador, Indonesia, Libya, and Qatar. Between 2009 and 2015, U.S. oil production grew by about 3.9 million barrels per day, and nearly 60 percent of that increase—some 2.3 million barrels per day—came from Texas.
Of course, Texas has long been America’s most important oil and gas province. With some 3.4 million barrels of output per day, the state now accounts for about 37 percent of daily U.S. oil production. North Dakota, which has also seen a big increase in oil output over the past few years, is the nation’s second-largest oil producer, producing about 1.1 million barrels per day. California (550,000 barrels per day) ranks a distant third. Texas also dominates in natural-gas production, accounting for about 27 percent of all domestic output.
Texas has not only retaken a leadership role in global production; in an echo of its storied past, the Lone Star State is once again exerting outsize influence on global prices. The recent collapse in oil prices recalls what happened after a Bible-quoting promoter named Dad Joiner discovered the East Texas Field in 1930. Within a year of Joiner’s discovery, oil flooded the market, and prices plummeted. Today’s oil-price plunge is largely due to the shale revolution, which started in Texas and has made the U.S. the world’s biggest oil and natural-gas producer—leading to record levels of oil in storage. Just as it did in the 1930s, oversupply has sent prices falling. But this time around, and contrary to the wishes of Krugman and other critics, the pace of development of new technologies suggests that we may be headed into a new era of higher oil production and lower prices—with Texas leading the way.
By early 1930, Columbus Marion “Dad” Joiner had been drilling for oil in East Texas for three years, and all he had to show for it were some good stories and a lot of heartache. But the rotund, loquacious, 60-something promoter from Alabama kept drilling. He knew that there was oil in Rusk County, and he believed that if he could get his drill bit below 3,500 feet—more than three times the depth of the state’s first great oil well, drilled at Spindletop three decades earlier—he’d have success. A geological formation known as the Woodbine, he believed, was where he’d find treasure.
Joiner’s first well, the Daisy Bradford No. 1, failed when his drill bit jammed at 1,098 feet. The Daisy Bradford No. 2 was halted at 2,000 feet, when the drill pipe got hung up in the hole. By that time, Joiner was broke again. In May 1929, he started work in the Daisy Bradford No. 3, though he was often restricted to drilling on Sundays, the only day of the week that he could scrounge together a volunteer crew. One scout for a major oil company reportedly visited the site 20 times and never found it operating. Joiner’s progress was slow, and his money was gone. But the locals kept the faith: his was the only oil well for miles around. “As the Depression summer of 1930 passed and winter loomed,” historian Lawrence Goodwyn explained, “Dad’s well was about the only thing people had to look forward to. It was a favorite place for people to gather after church on Sundays.”
In September 1930, 16 months after the Daisy Bradford No. 3 got under way, Joiner’s ragged drill rig passed the 3,500-foot mark; the core samples showed oil. Some 8,000 people crowded around as Joiner’s men worked night and day, bailing mud out of the well. In the late afternoon of October 3, 1930, a gusher of sweet Texas crude blew out over the top of the wooden derrick and onto the nearby pine trees and red clay soil.
Joiner had discovered a gargantuan deposit. The East Texas Field measured 45 miles north to south, from five to 12 miles east to west, and covered 140,000 acres—dwarfing anything that had come before. It contained over 5.5 billion barrels of oil, about a third as much as all the crude produced in the United States up to that time. And the mineral rights to the East Texas Field were highly diffused, with hundreds of individuals and companies owning parts of the land. Within a few months of Joiner’s gusher, wells in East Texas were producing more than 1 million barrels of light-as-kerosene crude oil per day—half of America’s total consumption.
The flood of oil had a predictable result: prices plummeted. In early 1930, before Joiner’s well came roaring in, a barrel of crude oil sold for about $1.30. By mid-1931, the price had come down to 13 cents, and in parts of East Texas, it was selling for as little as 3 cents. Despite the low prices, Texas producers didn’t want to reduce production. All were relying on an old English common law known as the “right of capture.” On the surface, the wells were owned by different people. Below the surface, all were sucking oil out of the same reservoir. If they stopped drilling and producing, their neighbors could simply pump the oil out from beneath their land. So they kept pumping, reducing the oil field’s long-term viability. In its earliest days, the massive field pushed oil out of the ground under its own pressure. But as more wells tapped the field, that pressure was being bled out, like the air from a balloon.
In theory, the Texas Railroad Commission, an agency originally set up to regulate railroads, had the authority to limit the amount of oil that each producer took from his well. The best solution for all producers was for the commission to limit production so that it simply met demand—a system known as prorationing. The commission set quotas several times, but producers in the East Texas Field ignored the directives. On July 31, 1931, a federal court in Houston sided with a group of independent oil producers and ruled that the commission had no right to impose prorationing. A few days later, the Texas Senate—its gallery packed with East Texas producers—agreed with the court and rejected a bill that would have given the commission authority to limit production.
Texas governor Ross Sterling decided that he’d make his own rules. On August 16, 1931, Sterling declared martial law in the East Texas Field, and he dispatched the Texas National Guard with instructions, “without delay,” to “shut down each and every producing crude oil well and/or producing well of natural gas.” Sterling’s move stabilized prices, but it also spawned years of legal and political wrangling. Finally, in 1935, another powerful Texan, U.S. senator Tom Connally, helped pass a federal law that gave the Railroad Commission the authority to proration oil. Every month, the commissioners met at the agency’s office in Austin and set “allowables,” which determined the amount of oil that each operator could produce from his wells. The commissioners adjusted the allowables so that Texas production met demand, and not a barrel more. The system worked: by managing the flow of oil from America’s most important oil fields, the Railroad Commission effectively determined world prices for the next four decades.
That control ended in October 1973, when the Arab members of OPEC, along with Egypt and Syria, began an oil embargo. While the embargo didn’t cause any actual shortages of oil, OPEC forced up prices. By March 1974, global oil prices had risen from about $3 per barrel to about $12 per barrel. OPEC was able to affect prices by restricting supply, and it did so by copying the Railroad Commission’s system of allowables. OPEC had roots in Texas: Abdullah Tariki, the first Saudi educated at the University of Texas in Austin, did an internship at the Texas Railroad Commission. As Saudi Arabia’s first oil minister, Tariki arranged a meeting at a yacht club in Cairo with ministers from Venezuela, Kuwait, Iran, and Iraq that resulted in the formation of OPEC. Years later, when Jim Tanner, a longtime energy reporter for the Wall Street Journal, asked Tariki what he had studied in Austin, Tariki replied, “the Texas Railroad Commission.”
But just as OPEC replaced the Railroad Commission, technology has disrupted OPEC’s ability to regulate the global supply of oil. And the key technologies needed to produce oil and gas from shale deposits—hydraulic fracturing and horizontal drilling—were perfected in Texas. In fact, the shale revolution got under way in the Barnett Shale, a huge deposit located south and west of Fort Worth. Just as Dad Joiner deserves credit for finding the East Texas Field, George Mitchell, who died in 2013, played the key role in discovering how to produce oil and gas from shale.
Mitchell, founder of Mitchell Energy (bought by Devon Energy in 2001 for $3.5 billion), owned multiple leases in the Barnett Shale region. During the 1990s, he spent millions testing techniques to wring oil and gas from shale. In 1997, Mitchell’s crews finally discovered that water injected under extremely high pressure, along with lots of sand and a dash of surfactant and biocide, was the winning formula. That technique, which became known as a “slick water frac,” combined with horizontal drilling, vaulted the Barnett Shale from obscurity into one of the ten most prolific gas fields on the planet, ranking on par with Iran’s giant South Pars field. The lessons that Mitchell Energy learned there have since been applied in shale formations throughout the U.S., including the Eagle Ford Shale in south Texas, the Bakken Shale in North Dakota, the Haynesville Shale in Louisiana, the Marcellus Shale in Pennsylvania, and the Utica Shale in Ohio. U.S. oil production also soared, reversing a four-decade downward slide. Between 1997—the year that Mitchell cracked the shale code with the slick water frac—and 2014, U.S. oil production jumped by about 35 percent.
OPEC was watching the surge in U.S. shale oil production and what it was doing to oil prices. From mid-2010 through early 2014, prices mostly stayed over $80 per barrel. But by mid-2014, surging U.S. production was eroding OPEC’s market share. By the time OPEC ministers met in Vienna that November, the world was oversupplied with oil. Prices had fallen to the mid-$70s and were headed further downward. At the meeting, according to the Wall Street Journal, an official from one Persian Gulf oil producer declared: “The cause of oversupply is not OPEC. It’s shale oil.”
The late 2014 OPEC meeting exposed the cartel’s innate weakness. Some members cheated on their allowables to gain additional revenue at the expense of others. Many oil traders were betting that OPEC would agree to cut production to help stabilize prices. Instead, Saudi Arabia, producer of about a third of all OPEC oil and the cartel’s most powerful member, made clear that it would protect its market share—even if that meant lower prices. The Saudis’ rationale was simple: they knew that if they cut production, the result would be higher prices, which, in turn, would stimulate more shale oil production in the U.S. (and probably more cheating by cartel members).
After OPEC decided that it would keep the oil taps open, prices dropped 7 percent and have kept dropping. Sovereign producers like Russia, Kuwait, Venezuela, Saudi Arabia, Nigeria, and others hope that lower prices will shut down U.S. shale oil production and reduce supply, but that’s unlikely to happen soon, thanks to American entrepreneurialism and ingenuity. Drillers in Texas, North Dakota, Pennsylvania, Ohio, and elsewhere are making drilling faster and cheaper, resulting in more oil and gas production from fewer rigs. Domestic oil producers, particularly the ones in Texas, can survive even amid drastically lower prices.
The Energy Information Administration charts oil production in the Permian Basin in West Texas. From 2007 until about 2013, the amount of oil produced from a new well by an average drilling rig stayed flat, at about 100 barrels per day. But between 2013 and 2016, that figure quintupled, to over 500 barrels per day. Even more remarkable: the productivity boost occurred at the same time that the rig count in the region fell by two-thirds. Similar gains have occurred on drilling rigs targeting natural gas. In February, the EIA published productivity data on gas-well drilling in the Marcellus Shale. Between 2013 and 2016, the amount of natural gas from new wells in the Marcellus doubled, going from about 4.5 million cubic feet per day to about 9 million. That increase occurred at the same time that the rig count in the region fell by more than half. A decade ago, gas production from the Marcellus was negligible. Today, that formation is producing about 16 billion cubic feet of gas per day, a volume nearly equal to the production of Iran, which has the world’s largest gas reserves.
In February 2016, London-based energy giant BP took note of American energy-productivity gains, predicting that U.S. shale oil production would double over the next two decades. “Technological innovation and productivity gains have unlocked vast resources of tight oil and shale gas,” the company wrote in its Energy Outlook 2035, “causing us to revise the outlook for U.S. production successively higher.”
It would, of course, be foolish to claim that oil prices are destined to remain at low or moderate levels indefinitely. A major conflict in the Persian Gulf or the sabotage of Saudi Arabia’s oil fields could send oil prices upward. Furthermore, there are signs that low prices have forced oil producers in the U.S., Latin America, and the North Sea to curtail their drilling programs. That, in turn, will likely reduce this year’s non-OPEC production by about 700,000 barrels per day, according to a recent estimate by London-based research consultancy Energy Aspects. But a case can be made that we have entered a new era. The technologies that were perfected in shale formations in Texas—horizontal drilling and hydraulic fracturing—can now be applied in shale deposits around the world. That matters, because shale is the most abundant form of sedimentary rock on the planet. Further, those technologies can also be used to stimulate production from conventional oil reservoirs in non-OPEC countries like Brazil, Argentina, Canada, and Mexico. Those two realities, according to The Price of Oil, a recent book by Roberto Aguilera and Marian Radetzki, “will have an overwhelming impact on global oil supply.” Aguilera and Radetzki predict that as horizontal drilling and hydraulic fracturing tap conventional reservoirs, global oil production could rise by nearly 20 million barrels per day by 2035. They further expect that moderate oil prices—they predict $40 oil in 2035—will mean that “efforts to develop renewables for the purpose of climate stabilization will become more costly [and] require greater subsidies.”
These forecasts don’t surprise Bud Brigham, a longtime Texas-based driller who helped pioneer the development of the Bakken Shale in North Dakota. Two years ago, Brigham—who sold the company he founded, Brigham Exploration, to Statoil in 2011 for $4.4 billion—had three rigs running in the Permian Basin, and his new company was producing 3,000 barrels of oil per day. By February 2016, his new outfit was utilizing just one rig that produced twice that volume. Brigham said that he was squeezing out a tiny profit, even with oil at $30 to $40. “Texas is setting the cost of the marginal barrel,” he explained. “We’re in the early innings of innovating with horizontal drilling and hydraulic fracturing. We are driving up yields and driving down costs.”
Texas drillers, along with their colleagues in Oklahoma, Louisiana, Pennsylvania, Ohio, California, Colorado, and elsewhere, remain among the most efficient energy extractors on the planet. The economic and geopolitical ramifications are potentially enormous. If prices rally to, say, $60 or $70 per barrel, U.S. drillers could produce even more oil—and in doing so, undermine efforts by OPEC to limit production.
Today’s oil market, then, looks remarkably like it did in 1931, before Governor Sterling declared martial law in East Texas. A flood of Texas oil has overwhelmed the market. There are no brakes on supply, prices are weak, and producers are acting on their own, hoping to sell as much oil as they can. What’s old is new again—and Texas oil is, once again, in the spotlight.
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