The latest drama surrounds the film, "Promised Land." Matt Damon and John Krasinski were on set in Western Pennsylvania for a few weeks late last spring. The trailer for the movie was recently released, once again stirring up drilling controversy. I have a hard time imagining Hollywood providing a balanced view of the issues. I wouldn't expect the preview to be well received. Still, I was blindsided by the flimsy support for the xenophobic critique of one of the producers of the film, Image Media Abu Dhabi:
While left-leaning Hollywood often targets supposed environmental evildoers, Promised Land was also produced “in association with” Image Media Abu Dhabi, a subsidiary of Abu Dhabi Media, according to the preview’s list of credits. A spokesperson with DDA Public Relations, which runs PR for Participant Media, the company that developed the film fund backing Promised Land, confirmed that AD Media is a financier. The company is wholly owned by the government of the UAE.
The UAE, a member of the Organization of Petroleum Exporting Countries (OPEC), has a stake in the future of the American fossil fuel industry. Hydraulic fracturing has increased the United States’ domestic supply of crude oil and natural gas in areas such as the Bakken shale formation and has the potential to increase domestic production much more in the foreseeable future. That means more oil on the market, and hence lower prices for a globally traded commodity.
Fracking is boosting the country’s natural gas supply as well. While the market for American natural gas is primarily domestic, the Energy Department recently approved Cheniere Energy’s plan to export about 2.2 billion cubic feet of liquefied natural gas per day from Louisiana. The Department is considering LNG export applications from seven other companies.
A strong global market presence for American natural gas could also work to the UAE’s disadvantage. The Arab nation ranks seventh worldwide in proven natural gas reserves. For instance, Japan’s energy imports are expected to rise significantly over the next five years. The country is currently a major importer of UAE natural gas. If it decided to import more LNG from the United States to accommodate its increased energy demands, it could deal a blow to the UAE economy.
Another source of competition might come from other industries that use natural gas to manufacture other products. As American gas grows cheaper the United States becomes a more attractive destination for industries that manufacture petroleum-intensive products. The UAE, meanwhile, has invested billions attempting to shore up its own share of the plastics and chemicals markets, both of which rely on petroleum products and are likely to gravitate towards the cheapest sources of those products.
All of this suggests a direct financial interest on the UAE’s part in slowing the development of America’s natural gas industry. Pop culture can be a powerful means to sway public opinion. While Promised Land, like anti-fracking documentary Gasland, appears to inflate the dangers of hydraulic fracturing, it may have an impact on the public’s view of the practice.
Before I shred the above nonsense, I want to point out the lousy journalism of CNBC's John Carney:
The UAE has the world’s seventh largest oil reserves, according to the CIA Factbook. It is ranked ahead of Russia and just behind Kuwait in proven oil reserves. It is the fourth largest exporter of oil in the world. And, of course, it is a member of OPEC.
Very obviously, the UAE has an interest in slowing down the expansion of hydraulic fracking that has created an energy boom in the United States. A popular film—there’s even talk of it being an Oscar candidate—might give a boost to the opponents of fracking.
Emphasis added. Very obviously, John Carney is a hack. He repeats misinformation uncritically. His reasoning is specious. The UAE's position on hydraulic fracturing is not so clear cut. In fact, the UAE may benefit from the glut of natural gas locked up inside the US border. Carney is toeing the line for The Heritage Foundation.
The line for The Heritage Foundation is that the UAE supports the anti-drilling movement in the United States. Why? Shale oil poses no threat to state revenue. There's a demand side to the equation. I guess Heritage needs a refresher in basic market economics. The biggest blow to the UAE would be if the United States stopped consuming oil. That would free up the Bakken for export while blowing a huge hole in global demand. As it stands now, whatever the US won't buy, China will. Furthermore, the main markets for UAE oil are Asian (Japan, South Korea, and Thailand). The oil rationale for anti-fracking doesn't hold up to minimal scrutiny.
What about UAE natural gas? We live in world of spot pricing because natural gas doesn't travel well. All Heritage can do is speculate about a time that the United States might export LNG and how that might undermine UAE revenue. As I indicated, it might benefit the UAE. Two graphs for your inspection (from the EIA):
Due to rising domestic consumption, the UAE is increasingly dependent on natural gas imports. This is confusing. The UAE is a net importer of LNG. Yet, the country continues to export to Japan. What gives?
Below is a map (Bloomberg News) of spot prices for natural gas around the world:
Say the UAE could import LNG from the United States. That much cheaper natural gas could be used domestically. That frees up UAE reserves for export to Japan where the resource fetches a much higher price. Right now, the UAE is getting LNG from somewhere else that is less in price than what UAE gas will fetch in Japan. Because the UAE is a net importer of LNG, the US glut actually helps the country. As in today. Heritage, that's called arbitrage. You need to learn about the concept.
The Heritage Foundation is preying upon American unease about foreign direct investment. The UAE is awash in petrodollars. Investing that money in global industries is a smart move. Movie making is a global industry that can generate nice returns. Back to our CNBC hack:
The more interesting twist here isn’t in the move—it’s in the movie’s creation. The film was produced “in association with” Image Media Abu Dhabi, a subsidiary of Abu Dhabi Media, as first reported by the Heritage Foundation. Abu Dhabi Media—which has never had a role in a major American film before—is wholly owned by the government of the United Arab Emirates, a small but extremely wealthy federation of absolute monarchies along the southern coast of the Persian Gulf.
Emphasis added. Bold claim, John Carney. Care to back that up with a little research? Took me about 90 seconds to find this:
Abu Dhabi reached the pinnacle of motion picture recognition yesterday, winning its first ever Oscar for “The Help” at the 84th Annual Academy Awards in Los Angeles. The Award was given to Octavia Spencer for Best Actress in a Supporting Role for her portrayal as Minny Jackson, a headstrong and outspoken African-American maid in Mississippi at the dawn of the Civil Rights era.
Image Nation co-produced the film with Participant Media. Image Nation’s Chairman Mohammed Al Mubarak said, “We are extremely proud for Abu Dhabi to be associated with such a successful and recognized film. I want to extend our heartiest congratulations to Octavia and all involved. In 2011, we were happy to have the film’s producer Brunson Green in Abu Dhabi to meet with aspiring filmmakers and we expect him to return in the near future to share his experience in the film industry. Brunson is a perfect example of how our international partnerships provide guidance and support to aspiring filmmakers from the U.A.E.”
Image Nation CEO Michael Garin said, “Current Oscar not withstanding our commitment to Abu Dhabi and building the foundations of a motion picture industry remain the focus for Image Nation. We hope that one day one of our Emirati filmmakers could be on stage accepting on Oscar for him or herself.”
Very obviously, Carney has zero interest in doing any investigative reporting. He's using CNBC as a soap box to promote his own agenda. But don't take my word for it. Go ahead and peruse Abu Dhabi Media's press releases to get an idea about their portfolio.
When the mainstream press starts promoting xenophobia, we have a problem. The Heritage Foundation spewing propaganda is par for the course. The organization is acting irresponsibly. It is partisan. As for CNBC, the news agency is held to higher standard of journalistic integrity. Carney is paid to report the facts, not make them up.
2 comments:
I think you're missing the point of the Heritage Foundation. They are simply trying to turn the tables on the standard leftist critique that right leaning studies are corrupt because they are funded by oil companies, the Koch brothers, etc. Here's an oil interest bankrolling an anti-fracking film, hence the throwing the argument back in their face. I don't think xenophobia is needed as an explanation.
The Heritage Foundation is intentionally making a silly and ignorant argument? Read the comments.
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