September 22, 2010

FudgingIt: LSU Prof., AEA, Walk Through How WH Cooked the Books on MoratoriumAnalysis, Sliced Job Loss Numbers in Half. E&E News(9/21, subs. req’d) reports, "The Obama administration manipulated its data tounderstate the economic impact of its moratorium on deepwater drilling, aneconomist charged today. Joseph Mason, a Louisiana State University professorand critic of the administration’s offshore drilling policies, said theadministration’s own data suggested the moratorium had cost approximately20,000 jobs in the Gulf of Mexico region. But in an interagency report on thematter last week, the administration made an arbitrary adjustment to itsfigures to suggest the policy had cost between 8,000 and 12,000 jobs, Masonsaid. "We’re still not being realistic with the effects of themoratorium," said Mason, whose work on the moratorium is funded in part bythe pro-drilling American Energy Alliance. "There was no justification forcutting [the] effects in half. It was really outside anything that could beconsidered a standard economic analysis." The Interior Department imposedthe moratorium on deepwater drilling in July, saying drilling needed to bepaused while new regulations were crafted to respond to the BP PLC-DeepwaterHorizon oil spill in the Gulf of Mexico. The moratorium is set to expire Nov.30.

ForEvery $92,000 In, One Job Is Created – That’s What Stimulus Backers Told Us;Why Doesn’t Equation Work in Reverse in Assessing Obama Offshore Ban? WallStreet Journal (9/22) editorializes, "According to the analysis, theexpected six-month ban on deep-water drilling will result in 8,000 to 12,000jobs lost. The report crows that "these estimates are lower" thanthose predicted by other studies and that, moreover, the jobs will "not bepermanently lost," but will return when the ban is lifted. For anAdministration that loves to tout stimulus projects that create a handful jobshere or there, it takes some nerve to describe the loss of up to 12,000high-paying Gulf jobs as a triumph. The report’s numbers violate the logicoffered earlier on the stimulus spending. According to the authors of thestimulus, every $92,000 the government injected in the economy was supposed tocreate one job-year. Yet according to the moratorium report, pulling $92,000out of the economy doesn’t result in the reverse. Instead, the authors offerseveral imaginative explanations for why it is important to"discount" that $92,000 by 40% to 60% when estimating how many jobswill be lost because of the $1.8 billion decline in spending. Thus they arriveat 8,000 to 12,000 lost jobs. LSU Joseph Mason, who has penned a rigorouscritique of the report, notes that if the government had not engaged in such"ad hoc" discounting, the estimate of lost jobs would be about 20,000-inline with prior estimates.

ProducingBetter, Cheaper and More Reliable Products Than Competitors Is Hard Work, Solarand Wind Guys Finding Out – Far Easier to Hold Fundraisers for SenateDemocrats.  WallStreet Journal (9/22) editorializes, "In a free energy market, companiessucceed by producing cheaper, better products than competitors. In a"green" energy market, companies succeed by holding Beltwayfundraisers. For more on the distinction, ask Senate Majority Leader HarryReid, who will benefit today from a tony Washington money-raising breakfasthosted by top "renewable energy" industry groups. The companies thatbelong to the American Wind Energy Association or the Solar Energy IndustriesAssociation (among the fundraiser’s hosts) produce costly products that can’tcompete against traditional fuels. Their business plans are written aroundWashington subsidies and mandates. They’re obviously worried a Republicanmajority might pare back the grants, loans and tax credits, in the name ofcutting government waste. One can hope. As the event invitation noted-inrequesting $2,500 to attend-Mr. Reid’s Nevada Senate competition againstRepublican Sharron Angle is an "incredibly important race." Indeed itis if your balance sheets depend on the Democrats’ special way with taxpayermoney.

AddAnother One to the Pile – the Pile of Respected Studies and Academic Journalsthat Find a Low-Carbon Fuel Standard Won’t Reduce Emissions, But Will RaiseFuel Costs. Toronto Globeand Mail (9/21) reports, "In a report released Tuesday, Cambridge EnergyResearch Associates (CERA) calculates that a legislated 10-per-cent reductionin the carbon content of fuels – which California has already mandated andother states and provinces are now considering – would require a one-third toone-half drop in the emissions used to extract and refine crude. Without majoradvances in the adoption of other transportation fuels such as natural gas,that level of reduction will be virtually impossible for industry to achieve,at least in the next decade, CERA concludes. The impact could be even worse foroil sands exports, which are already 6 per cent more carbon-intensive thanaverage U.S. crude, the group calculated in a report entitled Oil Sands,Greenhouse Gases, and U.S. Oil Supply: Getting the Numbers Right. "Even whenyou think about carbon capture and storage or better fuel efficiency in therefinery, it’s very difficult to envision a case where you could take a thirdof your emissions out of that whole process," said Jackie Forrest, IHS CERA’sdirector for global oil, and one of the report’s authors.

1.4Billion: Number of People In the World Without Access to Electricity; SenateMight Love It Some RES, But Folks In Namibia Would Settle for Some Coal RightNow. NYTimes (9/21) reports, "Without electricity, social and economic developmentis much more difficult," Fatih Birol, the energy agency’s chief economist, saidby telephone. "Addressing sanitation, clean water, hunger – these goals can’tbe met without providing access to energy."  The problem of energy inequality mirrors the gap betweenrich and poor countries, Mr. Birol said. "The amount of electricity consumed bysub-Saharan Africa, with 800 million people, is about the same as that used inNew York State, with about 19 million people," he said.  The agency, which produced the reportin conjunction with the United Nations Development Program and the UnitedNations Industrial Development Organization, looked at both the lack of accessto electricity and the reliance on and use of traditional biomass like wood ascooking fuel. In sub-Saharan Africa, the report notes, the electrification rateis 31 percent. About 1.4 billion people around the world lack electricity, andthey are overwhelmingly in rural areas, the report said. In addition tocontributing to deforestation in poor nations, traditional cooking fuelsdegrade air quality, causing serious health problems and premature deaths, theenergy agency report says.

Yes,Virginia, There Is an Exploratory Well: This One Operating Off the Coast ofGreenland – Potentially Massive Oil and Gas Find for Cairn Energy. WallStreet Journal (9/21) reports, "Cairn Energy PLC said Tuesday it foundtraces of oil and gas in a second well drilled off the coast of Greenland, butfailed to make any commercial discoveries from its first well and wrote off $84million in exploration costs. "The presence of both oil and gas confirms an active, workingpetroleum system in the basin and is extremely encouraging at this very earlystage of our exploration campaign," Cairn Chief Executive Bill Gammellsaid in a statement. The Scottish firm’s second Greenland well is continuing todrill deeper, but preliminary tests on that bore revealed the presence of twotypes of oil intermittently over a 400-meter section of volcanic rock, and somereserves of gas, the company said. Cairn’s first well, which found noncommercial volumes of gas last month,has been plugged and abandoned. The company has written off the cost of thewell, in accordance with standard industry accounting practice.  Cairn plans to continue exploring foroil for several years off Greenland’s west coast-a little-explored regionsimilar in size to the North Sea. Before drilling commenced, the company hadgiven itself just a 10% chance of making a significant oil discovery in itsfirst batch of wells.

Don’tSay Calzada Didn’t Warn You: Facing Prospect of Reduced Subsidies, German SolarDevelopers Rush to Lock-in 20 Year Guarantee of Well-Above-Market Prices. Bloomberg(9/22) reports, "Germany is installing 10 times as much solar power capacitythis year as the U.S. Investors are racing to lock in above- market rates for20 years while they can. Germany’s parliament decided July 8 on a 16 percentreduction in solar subsidies, and another reduction in the so-called feed-intariffs is scheduled for January. Mikio Katayama, president of Sharp Corp.,Japan’s biggest solar-panel maker, said last week the Osaka-based company mayboost sales by 50 percent this year, faster than it earlier forecast, onincreased demand in Europe. Sharp today agreed to buy California’s RecurrentEnergy for as much as $305 million. The all-cash deal will be completed by theend of the year, the companies said. Global 2010 sales for photovoltaic panels may more than double to asmuch as 18,000 megawatts and then flatten next year as countries includingGermany, Italy and France cut solar energy subsidies, Bloomberg New EnergyFinance estimated.  Germany meetsas much as 10 percent of its power demand from the sun on some days, AndreasHaenel, chief executive officer of German solar-plant developer Phoenix SolarAG, said in an interview last month. In the southernmost state of Bavaria,solar power contributes as much as 25 percent of total electricity when the sunshines and demand is low, he said.

DarrenSamuelsohn, NRDC’s Writer-In-Residence at Politico, Pens Article on Coal, Oiland Natural Gas Industries – But Forgets to Get Any Quotes From Them. Politico (9/22)reports, "A series of high-profile disasters this year, topped by the country’sworst-ever oil spill, has brought unprecedented attention to the country’s coalmines, oil drillers and natural gas pipelines. Energy industry officials insisttheir safety record is still second to none as the nation’s thirst for theirproducts continues to grow. But they still have an escalating PR disaster ontheir hands thanks to the series of fatal and visually powerful events. "We’renot hearing about wind turbines falling and chopping up chickens on a farm orsolar panels frying somebody’s head," said Daniel J. Weiss, senior fellow atthe Center for American Progress Action Fund. "Fossil fuel production, as wellas combustion, is a dirty business." Congress has kept busy responding to the various disasters, from holdinghearings to writing major safety bills dealing with each of the key industrialsectors. And environmental groups have tried – unsuccessfully – to use theevents as a launching pad for legislation to cap carbon dioxide emissions.Environmentalists also see in the series of accidents a golden opportunity topush for other energy-saving measures, highlight problems with the industry’saging infrastructure and attack government regulators they say are guilty oflax oversight.