Methane History
Things have been tough since October 7th, as we stand witness to a holocaust in Palestine. I’ve been processing the horror with my family and reading through Zionism in the Age of Dictators by Lenni Brenner, which I hope you will look at especially if, like me, you are Jewish or have previously fallen into the specious “anti-Zionism is anti-Semitism” trope. We must stay awake; we must demand a ceasefire, but when it comes, we must not rest a day before we demand urgently an end to the blockade and the right to return for all. As horrific as the last month has been, the movement for a free Palestine is stronger now than it has been in my lifetime; I hope this will be remembered as a turning point.
But I do want to get back to the Autonomous Corpse Juice Project, and I had this section typed in before the war. All facts that are uncited come from The Extraction State by Charles Blanchard, which is not as radical as its title implies; Blanchard is a financial analyst with expertise in gas. But a good overview nonetheless.
The first conquest of the dead god was of the night. Throughout the somatic energy regime, fire persisted alongside animals as a constant companion and survival tool. Heat and light. For light, people burned candles and oil, whatever vegetable oil was on hand. Then there was whale oil, the fuel that was made obsolete by gas light.
The gas light was invented by David Melville in Newport, Rhode Island, in 1805. Specifically, Melville developed the process by which coked coal could be turned into a flammable gas that then could be fed into a lamp. He successfully lit his home and the tavern next-door with burners connected to a small network of gaslines. He formed a company and tried to get municipal contracts, then the whaling industry got wind of his activities in their own home territory of the Northeastern seaboard, and waged a bribery and propaganda campaign to shut him down.1 The Melville clan is large and has a well documented genealogy that says that Herman and David were not related. Yet it is impossible to say that they are entirely unrelated, if only by cultural circumstance and history’s sense of irony.
Nonetheless, ten years later the cities began to get gas light. People loved it, and at first paid admission to see gas lights burning, which is how Rembrandt Peale, a museum owner, started the first successful gas company which lit Baltimore first in 1816. Then the gas industry first hit the big time in New York, where “men of standing and means”2 Samuel Leggett, president of Franklin Bank, and twelve associates owned the New York Gas Light Company, which built a gas grid in lower Manhattan that was ignited in 1823. Chicago got it 1850, San Francisco in 1854, and almost every American city had it by the early 1870s.
The methane burned in those gas lights was obtained by heating coal in the absence of oxygen, which produces coke oven gas that was about half and half, hydrogen and methane, along with plenty of contaminants. Coke oven gas was also called “manufactured gas,” to differentiate it from “natural gas.” That process of manufacturing coke oven gas was horribly unhealthy and done locally, and so it was a major contributor to the famous toxic fogs that plagued both American and English cities at the end of the 19th century. However, at its founding, The New York Gas Company faced a shortage of coal, since the coal deposits of Appalachia would not be tapped until the 1840s, and so they developed an apparatus for making flammable gas from crude oil.
The Haymaker boys, Obadiah and Michael, were out looking for oil (already a very popular commodity) when they popped their gas well on November 3, 1878. Almost immediate, an onlooker ignited it with a lantern, and it became a “flaming fire, issuing from the earth [that] could be seen at night at a distance of eight or ten miles, and its roaring sound was distinctly heard for five or six miles.” (Blanchard). The Haymaker burned millions of cubic feet every day. Eventually, the gas was brought under control, but its ownership was contested. In 1882, an unnamed “promoter from Chicago” tried to buy the well from the Haymaker boys for $20,000 cash. But at the same time, one of the boys’ investors, H.J. Brunot, made a deal to sell the whole operation to Joseph Pew and his partner, Edward Octavius Emerson, cousin of Ralph Waldo Emerson. The Promoter from Chicago arrived at the well with fifty armed men on November 26, 1883. The Haymaker boys showed up with a posse of ten. Obadiah Haymaker was bayonetted four times and died before reaching home. Absent that day were Pew and Edward Octavius, but they cleanly won in the courts and became the uncontested owners of the Haymaker well. They incorporated the Peoples Natural Gas Company and built a pipeline to send the gas to Pittsburgh, which was completed in January 1883. That city was famously polluted at the time. It lived under a constant haze emitted by the steel energy. But it got noticeably better when the city got Haymaker gas, for seven years. After that, the well was exhausted and the city back to manufactured gas. Pew and Edward Octavius Emerson renamed their company into the Sun Oil Company, which, by 1985 was still the 20th largest company in the United States. That was when it pioneered the use of horizontal drilling in the Austin Chalk field, ushering in the Fracking Age.
There began a century-long battle over the flammable gas regulatory regime. The logic of gas, especially of public gas lights, dictates action at the municipal level. Cities came to need a grid of pipelines, which were built at public expense and outside of the War economy. Therefore, gas needed to be controlled by a utility compact, rather than regulated as a pure commodity like oil. Gas companies needed to have some close relationship to the State, which proposed in exchange to grant them a monopoly in their market. However, when cities made the switch from manufactured gas to natural gas, there became three different types of gas companies — utilities, pipelines, and producers — where before there were only the utilities, who manufactured and distributed coke oven gas.
Before that could happen, someone had to build all the pipelines at a significant capital investment. You can move oil by many means, but you can only move gas through a pipeline. Pipeline companies were formed and they determined the shape of the natural gas cashflow. At first, before the War, it wasn’t a priority and, since it was a utility compact, there little exciting profit in it. But during World War II, a private company was founded with public money, War Emergency Pipelines, and they built two pipelines, Big Inch from the crude oilfields in East Texas, and Little Inch from the refineries in Beaumont, Texas, where the pedophile and race terrorist Patillo Higgins still lived, to the East Coast, from whence it was shipped to the War.
Immediately after the War the cities in the Northeastern part of the country were split evenly between consumers of natural gas and manufactured gas. Philadelphia, New York City, and Boston had no access to natural gas. Then, Big Inch and Little Inch were bought by E(lijah) Holley Poe’s company, TETCO, and converted into gaslines. Continuing with the theme, given that Edgar Allan Poe’s best friend’s middle name was Holley it seems likely that TETCO’s boss was related to Master of American Horror, or at least thought of himself as such.3 These transregional pipelines faced competition from the Tennessee Gas Pipeline, run by a “loudmouthed bully” ( Blanchard) named Gardiner Symonds, and from United Gas, run by Norris McGowen. These three inaugurated an age of public corruption as they bribed municipal utilities in cities like New York and Boston. Meanwhile, PG&E in California contracted with Paul Kayser’s El Paso Natural Gas out of Texas.
In 1954 the Supreme Court ruled that natural gas producers — not just municipal distributors — could be regulated by the Federal Power Commission (FPC) under the Natural Gas Act of 1938 as long as their pipelines crossed state lines. This created two potentially divergent streams of gas capital — intrastate regulated gas and interstate unregulated gas. Since the gas market was sleepy and uneventful, and since gas was so naturally abundant in the US, the two prices remained aligned until 1973, where we will pick up next time.
Subscribed
Louis Stotz and Alexander Jamison, History of the Gas Industry, 1938.
Stotz and Jamison.
So to summarize, we’ve got Melville, Emerson, and Poe all involved in the gas industry. What does this say about American letters? That it arose exclusively from a white, aristocratic, capitalist class and therefore was dependent upon petrocaptialism for its very existence.
The 1973
Methane Part 3
Gas runs out in a way that oil just doesn’t. It comes rushing out of the ground of its own accord, and eventually the unfracked ground will just be deflated. Also, gas is geographically constrained in a way that oil isn’t: it can’t travel by ship (without first freezing it into a liquid), only by pipeline, and so the producer, pipeline, and consumer all need to be on the same continent. Even so, there is so much of the stuff in the ground that this didn’t begin to happen in North America until the early seventies, after eighty years of increasingly voracious methane consumption.
The shortage of gas forced the unregulated price of gas that did not cross state lines in a pipeline to increase, while the government continued to regulate the price of interstate gas. This caused a shortage in the national interstate gas network that serves the large, northeastern cities, as producers sold to the higher bidders. Eventually, this dynamic initiated the deregulation of the interstate gas market. Deregulation proceeded slowly, but the rest of methane history sits along an entropic slide from gas being a highly regulated public good to a radically privatized commodity that was still nonetheless used and billed to the consumer as a utility. In the old regime, pipelines acted as gas traders: they bought gas from producers and sold it at the other end of the line to utility compacts (themselves to be deregulated to their own degree). The pipelines prevented utilities from making deals with gas providers. In the new regime, the pipeline is a contracted transportation service, and the trading is done on Wall Street.
Gas lived on the margins of the great petrowars, conquests, and fortunes of the 20th century, but beginning in 1973, it moved on to the center stage, where it coexists today with oil, first by way of this great deregulation.
1973 can be considered a useful narrative pivot from oil to methane because of the value of its scarcity. Of course, throughout everything, oil continued to be the main player of American capitalism. 1973 can only mark the beginning of the methane narrative shift that is only now reaching its maturity.
The disciplining power of the seventies oil shock was so important to the development of austerity that it needed to be buttressed not only by a stage play orchestrated between American allies in the Middle East, but also a material shortage of oil’s offspring, gas. The bubbles of gas beneath America had long been popped. Before horizontal drilling, there wasn’t much that producers could get out of old gasholes. There was never an oil shortage, but there was a gas shortage.
The gas shortage was used as a tool to discipline the public, to generate justification for austerity. Where oil is the godfather of the international stage, gas is a domestic creature. It can only be transported by pipeline. Which means, it can only be transported over land. For this reason, and other reasons directly attributable to the nature of flammable gas, it was considered to be a public good, a utility. This was why the price of interstate gas was regulated until the 1980s. The price of intrastate gas, that was burned in the same state it was produced, was not regulated. This theoretically created two separate commodities markets, with two different prices. During the propulsive phase of market saturation, it was easy to keep those prices identical. As it began to run out in the 1970s, the prices diverged, as nobody would sell gas to the price-regulated municipal markets. School had to be canceled because the building had no heat in the middle of winter. This generated a public demand for gas to become ‘deregulated.’ This of course was tightly aligned with the market incentives of the oilmen. The price of a single-carbon molecule had to correlate to the cost of strings of liquid carbons bonded with hydrogen. Even though the molecules travel through the economy on separate tracks. So, deregulated and thus more profitable, gas began its financial journey from the backburner of petrocapitalism to the sexy desk on the commodities floor. By the 2000s, the gas trading game was high risk, high reward, overleveraged and volatile, despite the fact that it was still consumed as a utility.
The gambling culture that grew up around this market reached a first peak in Enron, which will always be a funny thought to someone of my generation. Biggest idiots in the room type of affair, Marx brothers. Because their core gas trading business was a healthy cashflow. They leveraged that, gambled and lost. Others gamble and win, like Charif Souki, and yet others gamble and win a lot and then lose it all quickly like gas traders John Arnold and Brian Hunter who made and lost $5 billion in the 2000s.
Charif Souki had been born into a wealthy, connected Lebanese family, and made millions investing in real estate in the 1970s. He retired to Aspen, Colorado, and invested in a few restaurants that lost money. By the 1980s, oil and gas assets were dirt cheap after a decade of collapsed prices and oversupply. And there they stayed until the 2000s, before they collapsed even further. But Charif could imagine a world in which gas would begin running low; the same wells had been in service for decades. He decided that demand was growing faster than supply, enough so that in a few years he’d be able to make money importing natural gas. The U.S. had started importing LNG during the energy crises of the 1970s, but the old LNG import terminals had been mothballed for decades. He convinced a bunch of investors to go in with him on building a new LNG import terminal on the Gulf Coast, a facility which was to be called Sabine Pass. He started importing by 2004 and within five years the market was utterly destroyed by a massive surge of frack gas, and Souki’s investors were threatened with total loss.
