Natural gas drilling rigs such as this could someday be subject to Congressional regulation. (image: cedarhilltx.com)

An out clause exists for the Exxon in its merger with XTO Energy if Congress decides to regulate hydraulic fracturing, reported Russell Gold of the Wall Street Journal’s Environmental Capital blog on Wednesday. Exxon will spend $41 billion to purchase XTO, an energy firm known for its expertise in natural gas drilling and production. XTO has invested heavily in the Marcellus Shale, a region in western New York and northern Pennsylvania which is home to large reservoirs of natural gas. However, obtaining this gas is difficult and requires the use of hydraulic fracturing, or hydrofracking, in which thousands of gallons of water are mixed with various fluids to fracture rocks holding natural gas. Critics maintain that hydrofracking causes water pollution, which could force Congress to look at the issue.

If Congress regulates hydrofracking to make it “illegal or commercially impracticable,” in the words of the merger agreement, Exxon can back out of its proposed purchase of XTO.

(image: economist.com)

Worried about carbon sequestration? Wish there was something you could do with carbon emissions besides store the stuff in the ground? How about putting it back in your car? Sandia National Laboratories built a machine that could let you do just that, reports Tyler Hamilton at Technology Review. Sandia’s prototype, the “sunshine to petrol” system, uses solar power to turn water and carbon dioxide into carbon monoxide or hydrogen—the building blocks of most transportation fuels.

Wrangling over the climate bill is far from over in the US, but Australia has managed to pass its own climate bill. At the Wall Street Journal’s Environmental Capital blog, Keith Johnson looks at how they did it and what the US might be able to learn. The most important lesson might be that environmental ambition will have to be tempered to win over political opponents.

As the Copenhagen conference appears likely to come to an anticlimactic resolution, the International Panel on Climate Change has issued a new report—“The Copenhagen Diagnosis”—intended to spur action. Elizabeth Kolbert has the details at Yale Environment 360, but the central message is that climate change is worse than we thought. On the other side of the debate is Sen. James Inhofe, who is calling for an investigation of the “so-called ‘consensus’ of global warming,” reports John Broder at Green Inc.

Here at HeatingOil.com we talk a lot about futures markets (especially when it comes to heating oil futures), and we’ve talked a lot about climate change, so if someone puts into place a climate change futures market as proposed by economist Robin Hanson and supported by Nate Silver at FiveThirtyEight, we’ll be ready to cover it. But such a market wouldn’t necessarily be a transparent reflection of people’s true beliefs about climate change, as Matthew Yglesias of ThinkProgress points out.

Inside the high-tech world of Saudi Aramco. (image: saudiaramco.com)

Saudi Aramco has two new entries on the TOP500 biannual list of the world’s 500 fastest supercomputers, which was released this week, the Wall Street Journal’s Environmental Capital Blog reported Thursday. The supercomputers, which are Dell clusters and run Intel processors, came in at nos. 119 and 134.

Peak oil believers could argue that an interest in supercomputers on the part of Saudi Arabia’s national oil company suggests that Aramco needs significant help to identify new reservoirs in oil fields once believed to be bottomless. And the Saudis are not alone in using a supercomputer in their quest for ever-elusive black gold. The world’s fifth-largest supercomputer—the Tianhe-1 in Tiajin, China—is slated to be used partly for “petroleum exploration.”

The oil industry’s growing interest in supercomputers would seem to corroborate the opinion of geologist and author Jeremy Leggett and the colleagues that he surveyed at this year’s Petroleum Geology Conference in London. HeatingOil.com posted on Nov. 10 that in a poll Leggett conducted during a plenary session, 70 percent of 500 geologists said that peak oil is still a concern.

Will a false sense of price stability detract from the push for market regulation? (image: instituteforenergyresearch.org)

According to Russell Gold on the Wall Street Journal’s Environmental Capital blog, oil has been trading in a fairly consistent band in the last couple months, giving us comfort that dangerous price volatility has subsided. But perhaps the problem is that “it only feels like things have calmed down.”

According to a statistical analysis of recent movements, there’s a two-thirds probability that oil prices could be as high as $99.76 or as low as $43.78 cents over the coming year. That’s a 39 percent swing in either direction.

So, while crude oil is behaving nothing like it was during this time last year, the point is that price movements are still more unpredictable than they have been historically.

Does this means we’ll see commodities market regulation move forward as planned, or will this “faux dip in volatility” make regulation seem less urgent and unnecessary?

Phil Hanser, a principal with the economic consulting firm, the Brattle Group, told the Wall Street Journal that even though volatility is still above the average, “It does seem that we are trending back to the mean and away from the craziness of the last couple of years.”