Two Lead Stories In LA Times Today: Both Predicted! Two-Thirds Of Nation's Shale Oil Reserves Taken Off The Table

I first read the stories a couple of hours ago, lying in bed, reading them on the iPad. It was all I could do to keep from jumping out of bed and starting to blog.

I'll just do the headlines now and come back to the stories later, linking them to the appropriate spots in the blog, etc. but for now, here's the important stuff. Again, the lead stories in The Los Angeles Times today.

First, the headline story, front page: billions pledged for possible ObamaCare losses by health insurers; federal funds earmarked to offset Affordable Care Act insurer losses.

The Obama administration has quietly adjusted key provisions of its signature healthcare law to potentially make billions of additional taxpayer dollars available to the insurance industry if companies providing coverage through the Affordable Care Act lose money.

The move was buried in hundreds of pages of new regulations issued late last week. It comes as part of an intensive administration effort to hold down premium increases for next year, a top priority for the White House as the rates will be announced ahead of this fall's congressional elections.

Administration officials for months have denied charges by opponents that they plan a "bailout" for insurance companies providing coverage under the healthcare law.

They continue to argue that most insurers shouldn't need to substantially increase premiums because safeguards in the healthcare law will protect them over the next several years.  [most .... shouldn't .... need ....  substantially ... increase: parsing that sentence will provide fodder for pundits for months]

But the change in regulations essentially provides insurers with another backup: If they keep rate increases modest over the next couple of years but lose money, the administration will tap federal funds as needed to cover shortfalls.

Although little noticed so far, the plan was already beginning to fuel a new round of attacks Tuesday from the healthcare law's critics.

"If conservatives want to stop the illegal Obamacare insurance bailout before it starts they must start planning now," wrote Conn Carroll, an editor of the right-leaning news site Townhall.com.

On Capitol Hill, Republicans on the Senate Budget Committee began circulating a memo on the issue and urging colleagues to fight what they are calling "another end-run around Congress."

Obama administration officials said the new regulations would not put taxpayers at risk.

"We are confident this three-year program will not create a shortfall," Health and Human Services spokeswoman Erin Shields Britt said in a statement. "However, we want to be clear that in the highly unlikely event of a shortfall, HHS will use appropriations as available to fill it."

What this means: in the competitive world of health care insurance, insurers will low-ball premiums to attract customers knowing that the government is now liable for losses. And the losses are open-ended. Blank check. Even some of the 47% who would never vote for Romney can figure this out.

By the way, there is a front-section story in The Wall Street Journal which reports unintended consequence but predicted in this blog: emergency room visits rise despite ObamaCare. Health act isn't cutting emergency volume so far; government says it's too early to draw conclusions.

Early evidence suggests that emergency rooms have become busier since the Affordable Care Act expanded insurance coverage this year, despite the law's goal of reducing unnecessary care in ERs.

Almost half of ER doctors say they are seeing more patients since key provisions of the health law took effect January 1, 2014, while more than a quarter say their patient volume has remained the same, according to a survey to be released Wednesday by the American College of Emergency Physicians.

Eighty-six percent of emergency doctors expect visits to rise over the next three years, though the email survey didn't ask the doctors why. Democrats who designed the 2010 health law hoped it would do the opposite. They wanted to give the uninsured better access to primary-care doctors who could treat routine ailments and prevent chronic disease, with the intent of keeping patients out of the ER and lowering the cost of care.

The median ER charge was more than $1,200 for the most frequent outpatient diagnoses in a study of over 8,000 ER visits in 2006-08, said a 2013 report funded in part by the National Institutes of Health.

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Two-Thirds Of American Shale Oil Reserves Taken Off The Table By The Federal Governent

Okay, now the second story which is even better. I predicted the ObamaCare bailout story above and posted it often on the blog, but I also said the same thing about this second story regarding the Monterey Shale. We're never gonna see it. Right below the ObamaCare story in The Los Angeles Times story was this: Feds deal blow to nation's oil future with California oil estimate. US officials cut estimates of recoverable Monterey Shale oil by 96%.

Federal energy authorities have slashed by 96% the estimated amount of recoverable oil buried in California's vast Monterey Shale deposits, deflating its potential as a national "black gold mine" of petroleum.

Just 600 million barrels of oil can be extracted with existing technology, far below the 13.7 billion barrels once thought recoverable from the jumbled layers of subterranean rock spread across much of Central California, the U.S. Energy Information Administration said.

The new estimate, expected to be released publicly next month, is a blow to the nation's oil future and to projections that an oil boom would bring as many as 2.8 million new jobs to California and boost tax revenue by $24.6 billion annually.

The Monterey Shale formation contains about two-thirds of the nation's shale oil reserves. It had been seen as an enormous bonanza, reducing the nation's need for foreign oil imports through the use of the latest in extraction techniques, including acid treatments, horizontal drilling and fracking.

The energy agency said the earlier estimate of recoverable oil, issued in 2011 by an independent firm under contract with the government, broadly assumed that deposits in the Monterey Shale formation were as easily recoverable as those found in shale formations elsewhere.

If 96% is taken off the table, it's hard worth going after the other 4%. The headline should have been: California takes full loss on Monterey Shale. This has huge implications for the Bakken, the Eagle Ford, and the Permian.

But this was absolutely predictable: the geology alone was going to prevent horizontal drilling success. That was proved by lessons learned in the Bakken laboratory. But even if engineers could have finessed the geology, they never would have finessed the anti-fracking activists. The third strike -- the drought in California; everlasting water battles -- and "they're out" -- the companies who thought they were going to drill the Monterey.