Address to 2024 Drake Energy Security Forum

The following is a summary of Nick’s October 15, 2024 address at the Drake Energy Security Forum.

It’s awesome to be here, at the birthplace of the modern oil industry. It’s fascinating to think that shortly after Edwin Drake struck oil here, the company I work for, CNX Resources, was just getting started.

For 160 years we have been at the forefront of Appalachia’s energy and economic evolution, and today, we continue to be a regional innovator.

That term – regional innovator – plays to the conference theme this year, “At the Crossroads: Navigating America’s Energy & Climate Dilemmas”. I don’t see a dilemma as much as a crucial need for all stakeholders to accept the realities of the situation.

I’ve got a lot to say and cover, so let’s get into it. You may not agree with everything I have to say today. But, as pointed out earlier, the purpose of this forum is to engage in civil discourse. Let’s have some fun.

Climate, Renewable Fuel Sources, and Geopolitics

Let’s talk climate. Weather is in the news with the recent tragic storms.

Climate change is happening. It’s been happening for millions of years. It will be happening as long as there is a planet Earth. And we know that well before the start of the Industrial Revolution, when human beings figured out how to harness the magical power of that carbon atom, the extent of climate change had been much more severe than what we’ve seen the past couple hundred years.

Three quick examples. Around 5000 years ago the Florida Keys were completely underwater for substantial periods of time because of higher sea levels. In the time of Christ in the Mediterranean region, both sea levels and temperatures were significantly higher than today. And then around 1000 AD, there were Vikings in Greenland doing what? Farming.

Atmospheric carbon dioxide has indeed increased since the start of the Industrial Revolution. It’s gone from about 200 parts per million up to about 400 parts per million today. Think of those proportions as follows. For a college football stadium holding 100,000 fans, a 200 parts per million concentration of visiting fans is only 20 spectators in the stands. 99,980 are home fans. If you double the concentration of visiting fans to 400 parts per million, the number of visiting fans has doubled. It’s gone up from 20 to now 40 fans. Has the atmosphere of that crowd changed to any observable extent?

And despite CO2 levels going up over the past couple hundred years, climate-related deaths globally have plummeted. They’re down 95 percent over the past century. And we know that more people die globally from extreme cold, many more than from extreme heat.

Innovation with the shale revolution allowed natural gas to displace enormous amounts of coal in the power grid, reducing CO2 emissions tremendously the past 30 years.

That wasn’t from government, mandates, regulation, and it certainly wasn’t from wind and solar. It was the private sector innovating with disruptive technology in places like Pennsylvania. Yes, Pennsylvania. Since 2005, using natural gas on our grid dropped state CO2 emissions over 40 percent.

Yet while US and PA carbon emissions are down since 2000, India’s are up 150+% and China’s are up 200+%. The developing world uses more coal than ever. Can’t blame them. They’re after reliable and affordable energy access and who doesn’t want that?

And so-called renewables, that’s false advertising. There’s nothing renewable about wind or solar. Wind and solar are not zero carbon or zero emitting. The supply chain life cycle assessment of what it takes to produce a kilowatt hour from solar or wind betrays huge carbon footprints.

Wind and solar also suffer from very low energy density, making it impossible to scale without ecological damage. The amount of wind turbines or the acreage of solar panels needed to pursue supposed net zero plans would require blanketing entire states with either solar farms or wind farms,

And it brings collateral damage with it. Offshore wind and whale kills along the East Coast of the United States. And onshore wind, the worst thing that happened to birds since the cat.

These realities are why it’s concerning to see what elites and experts are forcing upon society and economies when it comes to policy cures or medicines to ‘tackle’ climate change.

The consequences of those medicines or cures may be significantly worse for economies and quality of life across the globe than the actual symptoms or ailments of climate change.

Consider the carbon dioxide emissions tied to wind and solar and electric vehicles and their supply chains I mentioned.

First you need massive mining and movement of surface area to get to the requisite materials , requiring substantial carbon-fueled energy, transportation, and equipment.

And most of that must happen in faraway lands. Secondly, once you’ve mined the stuff, you need to concentrate it into purified feedstocks. That is going to require even more carbon energy. Again, most occurring in foreign locations.

Once concentrated, all those feedstocks come together in a manufacturing facility to start building the components for wind turbines and solar panels and electric vehicle batteries. Those factories are likely powered by a carbon-based grid, often coal-fired.

Then all those components are transported to the United States and Europe. Whether via ships, rail, trucks, or planes, what’s going to fuel that transportation? Yes, carbon-based energy.

Oh, and constructing the wind turbine towers and the solar arrays requires concrete, clearing trees for pads, clearing right of way, and metal transmission lines for the kilowatt hours. All carrying significant carbon footprints.

And once everything’s installed, if the wind doesn’t blow or the sun isn’t shining, often the case in places like Pennsylvania, you need a reliable back up, which will be some form of carbon-based power.

Add all that up. A very substantial carbon dioxide footprint for wind and solar. And a legitimate accounting of the life-cycle CO2 footprint for EVs will show they are materially higher than the internal combustion engine.

That’s why the consequences will not be positive ones with pursuing the policy medicines that have been prescribed. The promised cure ends up being worse than the vilified disease.

But there are other negative consequences. Wind and solar are not cheap as a foundation of an electric grid. We see proof everywhere. Wind projects are failing because of poor economics and higher costs.

Another negative consequence is general inflation. General inflation is raging as economies and societies embarked on these net zero follies because the latter causes the former. Increase the cost of energy and you create energy scarcity, you reduce reliability of energy, and that will adversely affect the cost of everything in society because everything utilizes energy.

None of this is good news for consumers or the middle class or businesses.

Our balance of trade also suffers, because China has built a stranglehold on the supply chains to manufacture an electric vehicle or a wind turbine or a solar array. The US and EU simply cannot mine, process, or manufacture enough of the stuff needed for a net zero plan relying on wind, solar, and EVs. Ridiculous to assume so.

There are dire geopolitical aspects to climate policies. They enable bad actors across the map.

Russia now enjoys energy leverage over Europe because of EU climate polices. Europe purposely shut down domestic energy sources of natural gas and nuclear. Coupled with a mad dash to wind and solar, which failed to deliver. That created an energy imbalance, and it was filled by Russian natural gas through pipelines like Nord Stream. Putin saw leverage and was emboldened to invade Ukraine not once, but twice.

China has been gifted enormous leverage from western climate polices. Again. it controls the supply chains of wind, solar and EVs. And now China can confidently eye up Taiwan.

How about OPEC. The US shale revolution slayed OPEC. But the climate alarmists with their policies dutifully resurrected OPEC because we need Mideast oil to flow to keep the price of oil down. Crazy.

Crazier with Iran. Iran knows its oil is now necessary due to climate policies. We appease, loosen sanctions, and fly pallets of cash to them on a carbon fueled plane. The debacle reaps hundreds of billions of dollars for Iran, which it uses to fund Hamas, Hezbollah, and nuclear weapon capability.

Totalitarian Venezuela is yet another example suffering from the same root cause: western climate policies. It went from a pariah and under heavy sanction, to where we ease sanctions, respect sham elections, tolerate kidnapping of our citizens by the government, and ask Chevron to flow billions of dollars of Venezuelan crude.

But the biggest tragedy: individuals in the developing world without access to reliable, affordable energy. Climate alarmist policies ensure they continue to be denied reliable and affordable energy. What gives anyone the moral authority to do so?

What’s really behind these policies? They make no sense from a chemistry, physics, math, and economics perspectives. I think I know; it’s an adversary lurking externally and internally.

The natural enemy of western republican democracy is the Left. Communist, socialist, totalitarian, or some combination. The Left benefits from climate policies on an unprecedented scale.

External vanguards of the Left are coauthors of our climate policies. It’s been well established that Russian interests are huge funders behind the Ban Fracking movement. Climate polices force a transition from energy independence of the West to an energy dependency on totalitarian nations of the Left.

But the adversary is found internally here as well. The Left despises the individual and his or her freedom to choose for themselves. The Left wants to tear away that freedom.

And then place that decision making power in the hands of a higher authority. A religion or ideology. The state. The expert class. Or a toxic cocktail of all three.

What better way to achieve the aims of the Left than by controlling energy? If you wanted to control society and the individual, but you could only choose one industry or sector to achieve it by, what would you choose? Health care or maybe finance or maybe tech? Not bad. But I would choose energy. Because the kilowatt hour, HP, and BTU touch everything in a modern economy.

If you control the kilowatt hour, the HP, and the BTU, you control decision making. Folks, climate policies are not about atmospheric carbon dioxide levels. They are not about weather. They are about control.

If my premise is correct, one would see climate policies bleeding into things beyond the generation grid. We are seeing just that.

Consider food. What you can and should eat is being attacked by everyone from radical environmentalists to the United Nations. Now experts demand we consider the carbon footprints of foods. There is a hit list. Red meat, ice cream, beer. So if you like those foods, I’ve got some bad news that might be coming your way when these climate policies continue on their inevitable march toward control.

Driving is another front in the fight. What better expression of personal freedom than the personal automobile? But with EV mandates, the individual now is reliant on the availability of the grid and when and where you may charge. Climate policies aim to transition the personal car from a quality-of-life booster for the masses to a luxury of the 1%. Another form of control.

Did you hear of 15-minute cities? It’s a movement found in climate policies to ultimately force individuals to live in urban areas within so many minutes of walking distance to public transportation. Because that would be the only mode of transportation available. And to force living in small apartments versus larger individual homes.

Climate policy is manifesting in emergency powers. Climate emergency days that you now see in California. When it’s hot, don’t charge your EV or run your air conditioner or open your business. Grid emergency. Created by climate policies.

The end goal is for the individual to lose control over their own decision making. Instead, trust in the higher authority, the government or the expert. In line with the ideology of the Left.

They’ll take care of you and tell you what to do. But history informs what happens once the Left controls.

What is an energy industry, Keystone State, and American to do? There is a quite exciting path if you assess. I admit I have a somewhat contrarian view versus the common consensus. Let me share my thoughts and see what you think.

The Evolving Energy Landscape

First, I agree with certain aspects of the common consensus.

  • Policy and key sectors of the global economy continue to pursue lower CO2 emissions; maybe not zero but much, much lower than current.
  • Policy is mandating an electrification of everything, resulting in unprecedented demand growth for the power grid. The most recent example is data centers and AI.
  • The ability of wind and solar to deliver uninterruptible, reliable, and low-cost energy at scale to feed the growing grid demand is extremely suspect (to be kind).

Natural gas should be the clear winner across energy sources to meet higher energy demand at lower CO2 intensity.

Better yet, the Appalachian basin and Pennsylvania, with the Marcellus and Utica shales, is the premier natural gas deposit on the planet.

If all this comprised the complete analysis and game board, one would rightly conclude that the Appalachian basin is poised to flourish, and one would have expected these results to have already manifested in current market metrics.

Yet that has not occurred. And I believe it will not occur without a shift in the situational assessment by the industry, capital markets, and policy makers. We are misreading things.

This is where I diverge from the common consensus.

I believe:

  • Policy across governments and bureaucracies prohibits the smooth allocation of capital into infrastructure to link Appalachian nat gas to growing grid demand. Attempts to navigate the policy roadblocks are met with a coordinated lawfare campaign that strangles with litigation. The idea of a new pipeline to provide Appalachian energy to Boston is ridiculously obvious. But such a pipe will not be allowed to be built; it is counter to that ideology that permeates a system from which approval must be secured to proceed.
  • Supply from the Appalachian basin is experiencing a step-change evolution with the deep Utica. CNX has pioneered this horizon, and we see it delivering a new level of supply magnitude (higher) and response time (quicker) for the basin.
  • When a basin establishes higher potential supply levels, delivers quicker supply response times, and is artificially bottled-up due to the inability to invest in logical infrastructure, there will be in-basin price consequences. Unless something creates new demand or take-away, a sustained upside for in-basin pricing will remain elusive.
  • The industry looks to LNG export as being the answer. However, to unlock the next wave of Appalachian supply, LNG requires more pipes to move our product to coastal LNG terminals. Even setting aside the infrastructure constraints, a true step-change in LNG export capacity is a nonstarter over the next decade due to policy and legal constraints, the most recent example being the LNG permit ‘pause.’
  • Now many point to growing grid demand to power AI data centers as the answer. After all, such demand in-basin doesn’t require new long-haul pipes or large-scale LNG facilities. But the tech industry who buys the power to feed the data center economy will demand the power come from something that offers a low/net zero CO2 footprint. They don’t want just low-cost and reliable power. They demand low-cost, reliable, and low/net zero CO2 power.

Those realities may depress at first blush, but there is an exciting path available from the herd mentality. What would that look like? Well, it’s been what CNX has been up to.

There are key industrial sectors of today’s economy that are growing and have an appetite for energy. Hydrogen and the IRA, Sustainable Aviation Fuel (SAF), power grid and AI Data Centers, and transportation fleets.

Energy to the above sectors must meet certain criteria. The following ‘boxes’ must be ‘checked’: reliable, uninterruptible, low-cost, short supply chain, ready now, net zero or low CO2, and the ability to demonstrate no harm to local/regional ecosystems.

None of the touted energy solutions check all the boxes. Wind and solar – we covered those fatal shortcomings already. Nuclear has lots of excitement but recent experience is not promising. Ultra-high cost to build, as evidenced by Georgia Power; not ready now and will take years to build.

Natural gas? Many advantages and boxes checked, but one key shortcoming of not net-zero CO2.

So, what energy solutions would check all the boxes? CNX and Appalachia offer a few.

The first is captured coal mine methane, or CMM. As determined by the US Department of Energy, CMM is a carbon-negative product that reduces the methane emissions entering the atmosphere.

When CMM is custom blended with the Marcellus and Utica, companies like CNX can deliver to customers an energy supply with the exact carbon intensity desired. A CMM blend product has a fraction of the cost of new nuclear and offers scalability, reliability, and supply chain benefits that are far superior to wind and solar.

But our solutions are not limited to CMM. Technologies now ready for deployment allow us to harness the unique characteristics of the deep Utica to manufacture low-cost, low-carbon intensity CNG and LNG on-pad, serving markets beyond those linked by existing pipelines.

These products can meet those growing sectors of energy demand.

  • Hydrogen production at scale requires enormous amounts of reliable energy. CNX’s CMM blended with shale gas is ready-now to provide net-zero hydrogen at scale. This, when coupled with the IRA, will kickstart hydrogen production across Appalachia.
  • The creation of SAF to decarbonize aviation has remained elusive as emerging alternatives to existing jet fuels have failed to meet scalability and cost challenges. CMM blended with shale gas provides a net zero CO2 solution. Our project at the Pittsburgh International Airport will be the first SAF plant at scale utilizing CMM.
  • The re-shoring of American industry is another opportunity. CNX is partnering with NewLight Technologies to provide CMM as a critical feedstock into their manufacturing process that creates revolutionary, net-zero, biodegradable, plastics-substitute products. Manufacturers looking to decarbonize and de-risk supply chains will look to Appalachia and CNX.
  • AI will increase energy demand and Appalachia is uniquely positioned to benefit from this growth due to its proximity to CMM, short supply chains to shale gas, and legacy infrastructure. But the AI economy needs energy solutions at scale, today. Data center developers are logical customers for CMM blends and CNG/LNG.
  • Pad-level CNG and LNG are poised to disrupt transportation fleets served by diesel and gasoline. Our solutions are reliable, local, and ready-now to improve emissions and economics by converting away from heavier hydrocarbons.
    The opportunity for this basin is exciting. End markets are just starting to realize it. We are about to experience a transformation of Appalachia.

Real solutions to real problems require policy rooted in objective fact.

There is the need for good macro policy, what we discussed, but also good regional policy.

Radical Transparency

On that note I want to wrap up with an approach CNX is working on to change the paradigm on the local and regional level – we call it Radical Transparency.

An air quality monitor at the CNX RHL37 well pad in Greene County, PA. Visit www.cnxradicaltransparency.com to learn more.

What is it? Data-driven monitoring, analysis and transparency to guide policy that protects the public and recognizes the important role of energy in Pennsylvania and Appalachia.

We built and rolled this out with help from Governor Shapiro and PA Department of Environmental Protection.

We are monitoring air and water quality, waste, and methane in and around our operations.

We are open sourcing data for all to see in real time. This is critical. We can’t continue to hold our data in a black box and release it on our terms to a limited audience. You can find it on the web right now.

The data is collected independently by an accredited third party.

And the PADEP is provided this data unabridged at the same time as it is provided to us – further transparency and confidence.

Simple but powerful. Without real time transparency, industry data will always be questioned and dismissed. So, let’s provide it.

We’re just getting started with this effort so expect to hear much more about it.

For daily insights and commentary from Nick Deiuliis, follow Nick on X at @NickDeiuliis and on LinkedIn.

Nick Joins Southeastern Asset Management’s ‘The P/V Podcast’

 

Nick Joins Southeastern’s CEO and Head of Research Ross Glotzbach for The P/V Podcast

Southeastern’s CEO and Head of Research Ross Glotzbach sits down with Nick DeIuliis, CEO of CNX Resources.

Nick and Ross delve into a range of topics, beginning with Nick’s history in the Pittsburgh area and at CNX, where he has been an employee since the 1990s and became CEO in 2014. Ross and Nick reminisce about Southeastern’s engagement with CNX that led to a new board and approach to value per share creation.

Nick discusses the company’s strategic transformation, which has driven substantial free cash flow per share generation. Topics include share repurchase, balancing the short-term and the long-term, hedging, and M&A. Nick and Ross also discuss CNX’s Tangible, Impactful, and Local sustainability efforts along with their Radical Transparency initiative. To close, Nick shares a glimpse into his personal life.

A New Era of Responsible Domestic Energy Development

For more on CNX’s Radical Transparency initiative, listen to Nick’s recent Far Middle, “Data Driven Truth,” highlighting the program and its initial resutls from the first ten months of data collection.

 

For daily insights and commentary from Nick Deiuliis, follow Nick on Twitter at @NickDeiuliis and on LinkedIn.

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!

For daily insights and commentary from Nick Deiuliis, follow Nick on Twitter at @NickDeiuliis and on LinkedIn.

 

 

CNX Resources’ Authentic Corporate Responsibility

Below is Nick’s introductory message to CNX Resources’ 2023 Corporate Sustainability Report, released June 5, 2024.

Through past years, we have posited and debated the following question, and it warrants revisiting: is ESG truly a panacea for effective capitalism, or merely a well-marketed delusion? As we detailed over the last several years in this report and other company publications, and which has been confirmed across the news recently, the answer depends on the details.

ESG varieties found across corporate America today span the “good”, “the bad”, and “the ugly.”

The bad and the ugly are what you would expect—cliches, greenwashing, and the superficial designed to promote ideology, curry political favor, or lure the quick money. Many are optically pleasing, yet hollow marketing facades; PR glitz lacking substance. Some are simply a deflection tactic to avoid or delay meaningful progress; look over here so we can keep on doing the same-old, same-old over there. And the worst of the bunch attempt to substitute virtue-signaling in place of focus on core business execution and risk management, leading to potential catastrophic outcomes for community, customers, employees, and owners.

Too much bad and ugly ESG has consequences. As rapidly and chaotically as the ESG complex rose, it now seems to be crashing down with equal haste. The tall claims about how ESG is risk-reducing and cash flow-increasing are not being confirmed by the data, despite loud claims to the contrary from self-proclaimed experts. Now some have dropped ESG entirely and some have rebranded to “transition investing,” revealing their true motives of forcing rigid climate ideology.

Not here, folks. The 160-year legacy of CNX is rooted in being thoughtfully different, and that has created our unique ESG effort. We embrace it to materially improve our business and our local communities. Good ESG is hard work and an endless pursuit of perfection. Authentic corporate responsibility goes beyond the PR. It comprises clinical, holistic thinking; ethical decision-making consistent with defined values; and a commitment to long termism. Questioning the status quo, challenging assumptions, and redefining success that extends beyond glossy reports are necessary ingredients.

As always, we extend our open invitation to engage in candid, civil dialogue. Let’s help dismantle the ESG stage props and reconstitute lasting corporate responsibility. Together, we can forge a path that transcends buzzwords—where good deeds and shareholder returns form a self-perpetuating virtuous circle. That’s exactly what CNX has been hard at work building over the last several years, culminating in 2023 with a blueprint for authentic, Impactful ESG.

At the heart of CNX’s strategy lies our hyper-local value creation model. We continue to deliver for all our stakeholders, especially the communities across the Appalachia region. Appalachia First is not just a slogan, it is part of our DNA. We believe that sustainable success requires progress for Appalachia while ensuring CNX’s resilience for generations to come. Our Appalachia First vision uniquely positions CNX in a differentiated ESG performance class. Our efforts to protect and improve the environment are revolutionary and unmatched. Our unique commitment to our communities dictates that we roll up our sleeves and attack the toughest of issues. The Tangible, Impactful, Local results of these efforts in 2023 are detailed throughout this report.

ESG the CNX way avoids the “bad” and “ugly” and embraces the good that Tangible, Impactful, Local focus brings to our employees, communities, and owners. Rest assured that results through meaningful action will remain top priority.

Thank you for your continued support as we work together to serve our communities, our employees, and our shareholders. CNX has established something special with our ESG effort—join us on the journey.

Sincerely,
Nicholas Deiuliis

Nick Joins “The Whole Truth with David Eisenhower”

In this episode of “The Whole Truth with David Eisenhower,” Nick joins host David Eisenhower to discuss energy and climate policy.

Nick leads off the discussion commenting he believes the most critical issue of our time isn’t climate change, but rather the policies that are being forced upon society in the name of climate alarmism. He then explores those policies and their impact on the middle class, individual freedom, grid reliability, and the developing world.

Nick also stresses the importance of civil discourse and “always wrapping yourself in the math, in the chemistry, in the physics, in the science of things, not ‘the science,’ but the scientific method,” to ensure we’re pursuing sound energy policy as “the policy paths we’re on right now are the absolute ones we should be avoiding at all costs.” Nick calls for a free-market approach to addressing environmental challenges as private sector innovation and ingenuity will lead to more efficient solutions than government intervention.

For daily insights and commentary from Nick Deiuliis, follow Nick on Twitter at @NickDeiuliis and on LinkedIn.