Address to the Jonathan Club, World Affairs Group

The following is a summary of Nick’s June 12, 2024, address to the World Affairs Group of the Jonathan Club.

Thank you for that too long but kind intro. Only a third is true, but I’m not going to tell you which third.

I am so happy to be here, with this wonderful group of what I reference as ‘doers’. I am honored to be the first speaker in the revived World Affairs Group of the Jonathan Club. I think you will be intrigued with the topic today; it is right down the power alley of world affairs.

You know I always feel a degree of pressure speaking to a group like this. It’s normal, I suppose. You are all smart and many of you are coming in with a very different view of what I am going to posit on policy. And some of you may still disagree with me by the end of the talk, but I bet you that I at least having you rethinking your premises. Rest assured I do welcome the feedback, it’s part of the wonder of civil public discourse, after all.

But now you heap tremendously higher pressure on me by putting me on a podium in the Reagan Room, surrounded by all these portraits of unbelievable achievers who were here before. And with a portrait of a prior Jonathan Club honoree and fellow Pittsburgher, David McCullough, literally looming just over my left shoulder. I am feeling the heat, friends.

I typically decline many of these invitations to speak and interact. It’s much more comfortable for me to publish thoughts on my website or discuss issues on my weekly Far Middle podcast than to take the much bolder step of interacting with fellow human beings. I love to create and express, but I struggle with that human interaction thing.

But I couldn’t resist coming today.

One reason is this place, or the idea of this place. Since you are from California or the LA area, you may take something for granted about the position this wonderful state holds within our nation. My family, like most of yours depending on how far you go back, were not from America. Our people came to America. More specifically, our people aspired to come to America. Because of what it represented and offered, which was in stark contrast to the places where our people left. People from all over the world dreamt of coming to America; don’t worry I’m not going to break into Neil Diamond’s America.

But within this great nation sits California. You see, people from all over America dreamt of…going to California, to borrow the title of a great Led Zeppelin song. California for decades was the dream within the dream. The next level of the American ideal.

I sure had that dream but never realized it. Since I was a kid. My favorite TV shows were centered in California, hello CHIPs. The first movie I ever saw in a theater was Earthquake, where my perceived ideal of a place was devastated by a natural disaster.

I love sports, or at least used to. As a kid I became obsessed with the late 70s/early 80s Dodgers. Vin’s voice and that shrine of a stadium. Lasorda, Garvey, Dusty, and my personal favorite, third baseman Ron Cey. The Dodgers perfectly mirrored my image of California and LA.

And today is a special day indeed in southern Cali sports history. On June 12, 1970 LA native Doc Ellis pitched a no-hitter down in San Diego, allegedly under the influence of LSD. And the crazy event started here in LA. You see, after the Pirates had flown to San Diego on Thursday, June 11, Ellis visited a friend in Los Angeles and used LSD “two or three times.” Thinking it was still Thursday, he took a hit of LSD on Friday at noon, and his friend’s girlfriend reminded him at 2:00 p.m. that it was Friday and that he was scheduled to pitch that night in San Diego. Ellis leaves LA and gets to San Diego at the stadium at 4:30 and the game started at around 6.

Ellis said that he threw the no-hitter despite being unable to feel the ball or see the batter or catcher clearly. As Ellis recounted: “I can only remember bits and pieces of the game. I was psyched. I had a feeling of euphoria. I was zeroed in on the [catcher’s] glove, but I didn’t hit the glove too much. I remember hitting a couple of batters, and the bases were loaded two or three times. The ball was small sometimes, the ball was large sometimes, sometimes I saw the catcher, sometimes I didn’t. Sometimes, I tried to stare the hitter down and throw while I was looking at him. I chewed my gum until it turned to powder. They say I had about three to four fielding chances. I remember diving out of the way of a ball I thought was a line drive. I jumped, but the ball wasn’t hit hard and never reached me.”

Even without the uniqueness of Doc Ellis, there is nowhere in the world like here. Although I never left Pittsburgh and God willing never will, I remain fond of California and LA. And I am deeply troubled about both. And America. And my hometown as well. We’ve all got issues. Allow me to explain.

AN ENDANGERED AND VILIFIED COMPOSITION

Understand my makeup. Like most of us here today, I am a mosaic of things.

I am engineer by training, which means I am passionate about the scientific method and objectivity when setting policies. I am not a fan of, and am deeply troubled by, ‘The Science’.

I am a liberal, as in the endangered species of classic liberal, when it comes to individual rights. The Constitution and our republic were structured to protect the rights of the individual. From the tyranny of the majority and certainly from the state. The individual should be free to choose.

I am most definitely a fiscal conservative. I never spent more cash than I took in, including when I was young, starting out with basically nothing, and no car. So why should our government constantly grossly outspend what it takes in?

And philosophically, I am best defined as libertarian. But I’m not voting for RFK Jr. I recognize we need some level of government – to protect property rights, protect individual rights, and to defend from outside threats. But that level should be minimal so that the individual is optimal. PM Modi of India has that phrase ‘minimum government, maximum governance’; good summation of my desire.

And I am a proud capitalist. And an unapologetic domestic energy producer of natural gas. And a believer in meritocracy. And a free market advocate.

What’s interesting is how that mosaic makeup I just listed is outright vilified today by experts and elites as something in need of silencing and eradicating.

Think about it. The Science reigns over science. Individual rights are trampled by the official views set by the elite and expert classes. Fiscal responsibility in government has been obliterated and we pretend the bill will never come due. Government has become a monster, light years away from minimal. Socialism eats away at capitalism. Zero carbon myths are used to attack domestic energy. And equal outcomes destroy meritocracy.

Why are all these things coming to bear at the same time across our great land and this awesome state? It boils down to one culprit, friends: the Left. Indeed, if you take the opposite composite of the things that I love, that I associate with, that I just listed, you will come up with today’s Left.

AMERICA’S SHALE GAS MIRACLE

Learn how CNX Resources produces natural gas.

And there’s no better case study of how the Left attacks a culture of achievement, value creation, and doing than what is going on in the world of energy. My world, which I assure you, impacts your world. Everyone’s world.

I mean come on. Not only is the Left the antithesis of all that I hold near and dear, it also—quite astutely I might add when one considers the Left’s end game—attacks and vilifies the industry and region that are in my DNA. Those being the domestic natural gas industry and Appalachia, with Pittsburgh serving as its beating heart.

And there is much that we all stand to lose if the Left succeeds. Allow me to illustrate with my world, which seems far from here but in fact impacts everything here in Cali. It’s the greatest success story never told.

The U.S. went from being a net annual importer of natural gas as recently as 2016 to the largest global producer of natural gas and a net annual exporter today. The Appalachian basin is a big reason why; the Marcellus and Utica shale horizons underneath where I live represent cumulatively the second largest natural gas field in the world.

What catalyzed this stunning rapid transformation and dominant position? The free market bringing innovative and disruptive technology in the form of horizontal drilling and advanced completions techniques. American ingenuity allowed methane, aka natural gas, to be liberated from shale rock deposits at prolific rates and low cost.

Cumulatively, the benefits across this virtuous value chain total in the trillions of dollars. Because of capitalism and efficient market theory.

You see these benefits locally in places where the manufacturing of energy occurs, often in rural and underserved locales. Landowners have enjoyed a windfall from gas rights leasing that they’ve reinvested into family farms, homes, kids’ education, and local businesses. Communities ravaged economically now see improved employment in jobs that pay family-sustaining wages. Where no hope existed, attention has now turned to a future with promise.

You see the benefits regionally. Pennsylvania retooled its power grid to feed off domestic natural gas and the state’s carbon dioxide intensity declined nearly 40 percent in just 12 years while its manufacturing sector was revived and businesses and homes enjoy lower energy bills. Using PA DEP emissions data and EPA values for emission reductions, the increased use of nat gas in power generation delivered up to $1 trillion in public health benefits for PA residents. Old-line industries are resurrected across the Rust Belt by the jolt of cheap and reliable energy. Which means the building trades are booked solid.

Benefits are evident across America and North America. Canadian heavy industry in western Ontario is now fed by new pipeline infrastructure conveying Appalachian carbon-based molecules, making it more competitive. Mexico is the largest importer of U.S. natural gas.

The US shale industry and free market have done more for North American prosperity than the NAFTA and USMCA, combined.

America’s domestic energy industry is redrawing the geopolitical map.

We broke OPEC’s back. Domestic carbon manufacturing allows the U.S. to withdraw from endless conflicts in faraway lands since we now deliver our own energy security. U.S. natural gas is the biggest strategic lever against the growing threat of the ominous Chinese communist state and its global ambitions, as well as Russia and Putin.

There are basic underlying reasons why this miracle occurred in a very short time.

First, the free market was able to function without major government intervention. The industry innovated faster than bureaucrats and the Left could keep up to meddle. Second, the free market allocated capital across the value chain, and what were once fragmented pieces quickly become integrated and efficient.

And if left unmolested by the Left, we are just getting started. Two big opportunities are on the horizon.

First, another round of disruptive and innovative technology is coming to bear, much of it being developed and demonstrated by CNX in Appalachia, that will allow natural gas manufactured at the wellhead to be efficiently transformed from gaseous methane into compressed natural gas and liquified natural gas. Or CNG and LNG, respectively. That’s a game changer, because CNG and LNG will instantly displace massive volumes of foreign sourced oil used in the transportation sector.

When you utilize CNG or LNG into a truck, heavy equipment, bus, or airplane in place of gasoline or diesel, a few things happen. Costs go down because the natural gas derived BTUs are less than half the cost of gasoline or diesel BTUs. Huge savings.

Supply chains shrink drastically, from tens of thousands of miles with oil currently, down to as short as dozens of miles under this development chain.

Global CO2 and local emissions plummet, because you are now using the lowest methane intensive natural gas on the planet to displace higher emission pieces of the energy portfolio.

Employment and tax base go up as workers earn family-sustaining wages and pay taxes. Trade balance improves and trade deficit shrinks as energy imports drop. And our geopolitical leverage increases as we create not just improved energy security for ourselves, but also our allies.

Yeah, allowing doers to do their thing in domestic energy has the geopolitical reach of several aircraft carrier groups, when one thinks about it.

Second, once you displace the foreign sourced gasoline and diesel transportation markets, you can start to expand the exporting ability of domestically produced natural gas to other nations.

Liquified natural gas (LNG) terminals allow the product to be shipped to Poland, South Korea, Spain, Japan, and India. Our carbon-based molecules are being utilized globally to help spur improved quality of life for billions of people.

THE LEFT’S ENERGY BATTLE PLAN

But…the doers in domestic energy and Appalachia are not being left alone by the Left. Quite the contrary. It’s as if the success of the domestic energy industry drove the Left mad, to the point where their zealotry to destroy and appropriate the value of doers exponentially increased.

Code Red for humanity and climate alarmism serve as the overarching religion to destroy not just the domestic energy industry, but everything tied to it. Which is effectively the entire private sector economy and the freedom of the individual. There are three tactical prongs to the Left’s attack under the ideology of climate alarmism.

The first prong of attack is heightened regulatory standards on domestic energy production and reduced access to natural gas reserves. You see this attack every time an administrative state bureaucrat issues a new regulation on the industry. Often without the specific backing of a statute, I might add.

The second prong of the attack targets the industry’s access to capital and looks to cut off supply of the vital lubricant for any capitalistic endeavor. This attack will be evident when major banks bow to pressure from environmental groups to stop lending to the carbon economy (read that as the same as the real economy, since no carbon, no economy), when foundations or endowments of universities chest-thump about their divestment from carbon producing companies, or when credit ratings firms assign poor credit ratings to such companies not because of quantitative metrics but instead because of subjective views of the industry’s social worthiness. Starve a growing industry of capital and you can slowly strangle it to death.

The third and final prong of the attack is the most insidious of all: thwarting the future demand growth for natural gas. This attack manifests through the throwing of regulatory and legal roadblocks into the paths of new pipeline projects that would convey natural gas from the producing basins to the growing demand centers. And it includes direct and back-door regulatory attacks on gas stoves, gas lawnmowers, and internal combustion engine cars. The over-arching objective is to replace energy abundance with energy scarcity and to replace individual choice with state control.

The Left justifies the three-pronged attack with a few convenient energy myths.

The first myth: wind and solar and EVs are zero carbon. Nonsense; they have massive carbon and CO2 footprints on a life cycle basis, higher than natural gas power generation for sure. EVs require 600+% more metals and minerals than gasoline-powered cars. Mandating wind and solar power generation and EV adoption will increase atmospheric CO2 net-net, not decrease it.

The second myth: we can manufacture wind, solar, and EV batteries at scale here in the US. We can’t because the stuff you need sits largely in Africa and South America and China. And all the processing capacity to purify that stuff is controlled by China, who dominates the markets for nickel, graphite, copper, lithium, polysilicon, and magnets. A mad dash to wind, solar and EVs necessarily creates energy dependency on the CCP, as designed.

And the murky supply chain of wind, solar, and batteries brings epic human rights abuses, with little kids toiling in open pit cobalt mines in DR Congo and Muslim prisoners working in solar factories in Xinjiang. It’s a new form of brutal colonialism. Brought to you by the Left, the Church of Climate, and Code Red. Not sure if you are following what’s going on in New Caledonia, the French territory in the Pacific. France covets its nickel deposits for battery making mandated by climate policies and demands export of nickel back to France. New Caledonia pushes back and erupts in riots. Like I said, climate policies reimposing colonialism and economic servitude across the globe.

And the third and final myth: you can electrify everything with mandates, spiking demand for power, that you can force a reliance on unreliably intermittent solar and wind on the grid, and that the grid will function just fine. It won’t and increasingly, it isn’t. The DOE says wind is only reliable 33% of the year while solar is dependable for just 25% of the time. Get this: wind energy generation decreased last year, despite 6.2 GWs of new capacity. Why? Um, because the wind didn’t blow when we needed it to.

Yes, the consequences of the Left’s peddling of myths in energy are real. It creates energy scarcity, which creates energy inflation, which then stokes general inflation. It helps create energy insecurity in the West and a dependency on places like Russia and Iran, because when wind and solar inevitably fail to perform at scale, the energy needs to come from somewhere. Putin feels emboldened and decides he can take a nation or two because of his energy stranglehold over the EU that the Left gave him. Iran feels emboldened because we need its oil and it sees us pleading with EU nations to not censure Iran for violating rules and pursuing nukes.

The Left’s climate policies suppress individual freedoms. Did you see Cali is testing car tracking? Why? Officially because EVs don’t pay gas tax, so tracking allows state to tax EVs as heavy as gas cars. But the real reason: once driving is tracked, it’s easy to start assigning social/climate scores to individuals. Climate policies: nothing to do with CO2, everything to do with social engineering.

Climate change is not the problem. It’s been happening for millions of years. Climate change policies and the myths they embody are the problem.

President Coolidge once wrote: “Isn’t it a strange thing that…men have the notion that they can pass a law and suspend the operations of economic law?” Today it’s worse, as elites have the notion they can pass climate policies that defy the operations of physics, and scientific law.

THE DUTY OF LEADERSHIP

Nick speaking at the announcement of CNX Resources and the Commonwealth of Pennsylvania’s “Radical Transparency” initiative.

Now you get my anxiety. The Left, everything I am not, is looking to eradicate my beloved industry and region out of existence, with serious consequences for a range of stakeholders, from the local to the global.

That realization built over time and changed me. I used to subscribe to what I referenced as ‘political quietism’. Keep your head down, ignore the babble, and do your job. But with everything I just discussed looming larger, I began to ponder if that is what good leaders do. Is it ethical to not speak in defense of the accurate, of the rational?
So I began to focus on policy advocacy. And here we are today.

A FEW ‘HARD TRUTHS’

I’d like to spend a few minutes highlighting some of the major themes that I discussed in my book Precipice, which are the major challenges for us reflecting the major tactical avenues of attack the Left has adroitly applied the past number of decades. Let’s call them ‘hard truths’ to add to the hard truth I discussed earlier of there being no zero carbon world awaiting us. I will tie many of these to national levels and back to where I started this speech: California and LA. Our wonderful nation, this epic state, and this great city once represented the ideal but now unfortunately are the playthings of the Left.

Hard truth #1: Government today is a voracious beast and the bureaucratic state has grossly overstepped its constitutional boundaries. I tag the administrative state as the Deep State in Precipice. Not ‘deep’ as in secret; I wish. No, ‘deep’ as in rooted and entrenched everywhere and with everything. There is a historical lineage of how it came to be, from Wilson to FDR to LBJ to Obama to what we have today. The individual can do nothing today without government approval. And California is in many ways ground zero of the Deep State movement. Everything you do today must be permitted and approved by a faceless and unelected bureaucrat. 25% of all jobs in this nation added since Covid are in government. And that diminishes our efficacy as an economy and society greatly.

Hard truth #2: The US government is guaranteed to default on its debts and commitments. Closing in on $35 trillion in debt, or 120+% of GDP. Haven’t seen that since WWII. $2 trillion annual deficits that add to the debt pile. Hundreds of trillions in entitlement promises that don’t get added to the official debt. Trustees say Social Security has $25+ trillion shortfall and Medicare has $52+ trillion shortfall, or $78 trillion combined. About $1 trillion of new debt is being added every 100 days. The fiscal plane is flying right into the mountain and there is not enough time or space to gain sufficient altitude. Default or devalue, pick your poison, and both are indeed poison. Same for Cali, where Governor Newsom was asked: “Can we explain to Californians how we moved from a $100 billion surplus to such a significant deficit in just a matter of a few years?” His answer: delay in tax collection due to “rain bombs” and “atmospheric rivers” proving “climate change has impacts”. Right. Don’t look there, look over here.

Hard truth #3: Our education system is broken, perhaps beyond repair. Student proficiency rates in English, math, and science declined sharply across all grade levels and across the nation. Including LAUSD. Student proficiency levels have not come close to recovering to where they were before pandemic. Many districts lower the passing score on high school exit exams so that the statistics will show that more seniors graduated. Form over substance. Ideology over reality. The new mottos of our nation’s public education system.

The demographic that pays the heaviest price are the poorest. As of 2019, 2/3 of African American 12th graders did not possess even partial mastery of basic 12th grade math. That’s defined as being able to do arithmetic and to read a graph. And the number who are advanced in math was so small it didn’t show up statistically in the national data. Pretty much the same story in reading competency. Half of African American 12th grade students did not possess even partial mastery of basic reading and only 4% were advanced.

These statistics infuriate. We are assigning a generation to unrealized potential. We are dooming them to a life unfulfilled. And for what? And why? We know the answers: to instead have the system serve the desires of special interests who could not care less about the quality of life and future prospects of millions of Americans. That’s why funding levels skyrocketed over decades as scores have declined. What happened here with education during pandemic and who called the shots? Who benefits and who pays the price says a lot. Do we care about our kids? Sometimes I wonder.

Not much better with higher ed. Academia went from the marketplace of ideas to an Iron Curtain of ideology. From where a student was challenged and expanded horizons to one where the student is coddled and comes out indoctrinated with narrower horizons. The most common grade gifted at Harvard these days is an A. The California state university system was once the envy of the world. Today it is a massive burden, fiscally and culturally, for state taxpayers and citizens.

Hard truth #4: Inflation is here to stay. On the business news networks today everyone was excited about the inflation rate being a tick lower than expected and how inflation is now tamed, and the Fed can start cutting rates again. Hogwash. Unabated growth in the regulatory state makes everything more expensive. Languishing worker productivity creates skills scarcity and means more cost per unit of output. Climate alarmism is making the kilowatt-hour and HP expensive and scarce, which everything relies upon. Hyper government spending creates private sector scarcity. Taxes are rising everywhere and for everything, and the tab will be passed on, through the stream of commerce. The Fed’s free money policies pump asset bubbles and motivate excessive outspending. Crime adds to costs. Geopolitics stress already brittle supply chains. This isn’t our parent’s inflation from the 1970s. This is driven by policy and stoked by ideology. Until those reverse, inflation is here for the duration, as the cost of living in LA attests.

Yes, John Adams was right with his famous line: “Facts are stubborn things.” They make for hard truths, indeed. Sadly, the rest of America is gravitating toward where Cali is. Because the Left never sleeps, it’s always growing by consuming the value of others. Day by day. Profession by profession. State by state. In the words of ZZ Top, it’s going ‘nationwide’.

FOLLOW ALONG AND SPEAK UP

To wrap, thank you for being kind. Consider giving Precipice a read. Or follow me if you use LinkedIn or Twitter or YouTube. The Far Middle, as in not far right or far left but far middle, podcast is always looking for new constant listeners. Join those growing ranks – we issue episodes weekly, and they run under half an hour. I think you will enjoy them. Prior episodes are archived and available as well.

And my website nickdeiuliis.com is the depository for all the advocacy content, from book to podcast to news. Check in regularly.

Last, please speak up in defense of free enterprise, capitalism, individual rights, fiscal responsibility, value creators, and the middle class. For LA, for California, and for America.

God bless and thanks!