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Obama’s SOTU: The Good, the Bad, and the Forgotten

January 21, 2015 by Alex Fitzsimmons 1 Comment

On Tuesday, President Obama delivered his sixth annual State of the Union address. The address was peppered with references to low gas prices (which are good but he has nothing to do with) and booming energy production (also good but happening despite his policies), part of an agenda he described as “middle-class economics.”

The address was also notable for what the president didn’t say. While the president declared that “no challenge poses a greater threat” than climate change, he failed to point out that his policies do almost nothing to solve the climate problem while making life harder for American families, particularly the “middle class” families Obama claims he supports.

Below we read between the lines to bring you the good, the bad, and the forgotten from President Obama’s 2015 State of the Union.

The Good: Gas Prices are Low; Energy Production is Booming

President Obama: “And thanks to lower gas prices and higher fuel standards, the typical family this year should save $750 at the pump.”

Gas prices have fallen for 16 consecutive weeks to just $2.07 per gallon—the lowest levels in more than five years—according to the Energy Information Administration (EIA). Low gas prices are an economic boon for American families, adding disposable income that can be spent on consumer goods like restaurants and movie theaters, used to pay down debts, or saved. The following chart shows the 16-week decline in U.S. gas prices that started June 23:

Source: Energy Information Administration

However, it is disingenuous for the president to claim that higher fuel standards save Americans money just like lower gas prices. Although the administration’s Corporate Average Fuel Economy Standards (CAFE) force automakers to build more fuel-efficient vehicles, the rules also make cars more expensive, pricing millions of Americans out of the new-car market. Low gas prices don’t do much good for the family that can’t even afford a car.

In fact, booming domestic energy production, not fuel efficiency standards, are driving affordable gas prices. The drop in gas prices followed a precipitous decline in world oil prices, which have been cut in half since last summer. And oil prices are down because the U.S. is producing record amounts of energy here at home, reducing our need to import oil from overseas. The following chart shows how U.S. oil production has climbed by 32 percent since 2011:

Source: Energy Information Administration

As we will explain below, America’s domestic energy boom benefits American families, but it is not happening everywhere. It is only occurring on state and private lands outside of President Obama’s control.

The Bad: Obama’s Policies Threaten Abundant and Affordable Energy

President Obama: “We believed we could reduce our dependence on foreign oil and protect our planet. And today, America is number one in oil and gas.”

The president is correct that the U.S. is now the world’s top combined oil and natural gas producer, ahead of Saudi Arabia and Russia. However, President Obama has nothing to do with the domestic energy boom. In fact, the boom is proceeding despite—not because—of the president’s policies.

Energy production is soaring, but not everywhere. On lands controlled by states and private individuals (where the president has little input) oil output has increased 61 percent since 2009. Meanwhile, oil production has actually declined 6 percent on lands under federal control. The following chart compares oil and natural gas production on federal vs non-federal lands:

To make matters worse, the administration is gearing up to impose unprecedented federal rules on hydraulic fracturing and methane that threaten to undermine America’s impressive energy gains. Here’s a rundown:

Methane plan threatens state and private lands with federal control. Last week, the White House announced a plan to reduce methane emissions from certain oil and gas operations. The rule is unnecessary, as methane is already down 16 percent since 1990. Moreover, methane emissions from hydraulic fracturing have plummeted 73 percent since 2011, even as natural gas output has soared (on non-federal lands).
BLM set to impose federal hydraulic fracturing rules. A proposed rule from the Bureau of Land Management would regulate hydraulic fracturing on federal lands. As IER explained in comments to BLM, the rule is “duplicative, costly, and unnecessary” because states and localities already regulate hydraulic fracturing on federal lands. The rule is expected to affect more than 5,000 oil and gas wells and cost up to $1.61 billion per year.

America’s energy producers are thriving on non-federal lands, where state regulators and individuals with local knowledge make development decisions. The continued success of America’s energy boom depends on keeping the federal government off of state and private lands.

The Forgotten: Minorities Suffer Under President Obama’s Policies

Just as important as what the president said during is State of the Union address is whom the president forgot to mention. Climate-change researcher Nicole Hernandez Hammer earned a seat in the First Lady’s guest box during the State of the Union address. The president, however, failed to highlight her work during the address.

Her only mention comes from the White House website, which describes Hernandez Hammer’s work on sea-level issues, including “how cities and regions most vulnerable to the effects of climate change and sea-level rise also have large Hispanic populations—something she learned firsthand growing up in South Florida.”

The administration’s implication is clear: if you’re Hispanic, you should care about climate change. Unfortunately, the president’s climate agenda harms the minority populations it is designed to help and does almost nothing to combat climate change. Here are a few reasons why:

EPA rule fails to reduce sea levels. The cornerstone of the president’s climate action plan, proposed carbon dioxide limits for existing power plants, is expected to reduce sea-level rise by just 1/100^th of an inch, or about the thickness of three sheets of paper.
Hispanics, Floridians, and all Americans face higher energy prices. While doing nothing to abate sea-level rises, Obama’s policies raise energy costs on American families, including Hispanics. A NERA analysis finds that Florida, where Hernandez Hammer resides, could face 17 percent higher electricity rates under EPA’s existing power plant rules. Nationally, households in 43 states could see double-digit electricity rate hikes.
Obama’s climate agenda disproportionally harms minorities. Hispanics and other minority groups spend a larger share of their household budgets on energy, which means they also shoulder a larger burden of Obama’s costly energy policies. According to the Libre Initiative, median household income for Hispanics is $40,979. For households with incomes of less than $50,000 per year, energy comprises nearly 15 percent of total spending and is the second largest category of family expenses, ahead of even food.

President Obama’s rhetoric on “middle class economics” belies his record. His climate agenda harms those it is supposed to help but does little to actually reduce sea levels associated with climate change.

Conclusion

In his 2015 State of the Union address, President Obama referenced booming domestic energy production and low gas prices. Unfortunately, the U.S. has more abundant and affordable energy despite the president’s policies, not because of them. While America’s energy innovators are producing record amounts of oil and natural gas on state and private lands, output on federal lands has been dropping for years. Meanwhile, the president’s costly climate agenda would make energy more expensive for all Americans, particularly minorities and low-income households. A positive vision for energy prosperity lies with America’s energy producers and American families, not with President Obama’s policies.

Filed Under: Blog Tagged With: gas prices, Obama, oil production, SOTU, state of the union

Obama’s Methane Plan Whiffs on Climate Change

January 20, 2015 by Alex Fitzsimmons Leave a Comment

As we explained last week, President Obama’s proposed methane scheme is an attempt to fix a problem that does not exist. Methane emissions are declining as natural gas production is booming—and it’s happening all without federal intervention because natural gas producers have an economic incentive to reduce methane emissions.

The proposal also fails to accomplish its stated purpose to “curb climate change.” A new report from the Cato Institute explains:

The amount of methane that falls under the new EPA regs is very small; in the grand scheme of global warming, it is so small as to be climatically immaterial (which is the other thing wrong with Podesta’s blog headline—it won’t “curb” climate change a whit).

In 2013, methane emissions accounted for about 9% of greenhouse gases emitted in the United States. (Carbon dioxide accounted for 82%.) Of this 9%, about 3% are the subject to the proposed EPA regulations—which seeks to cut those emissions in half.

Cato estimates the plan would reduce global temperatures by just 0.002°C by the end of the century—an essentially negligible amount. Despite grandiose claims of leaving a “more stable environment for future generations,” Obama’s methane rules will do almost nothing to address climate change.

Meanwhile, even the administration admits that methane is already declining without “ambitious” federal rules. A White House fact sheet states, “[Methane] emissions from the oil and gas sector are down 16 percent since 1990 and current data show significant reductions from certain parts of the sector, notably well completions.” Even more impressive is that methane emissions from hydraulically fractured gas wells have plummeted by 73 percent since 2011, according to EPA’s own data.

All of this is happening during one of the largest domestic energy booms in U.S. history. The following chart shows soaring U.S. oil and gas production amid declining methane emissions:

The numbers don’t lie: President Obama’s methane rules are unnecessary. Energy producers already have an incentive to reduce emissions because methane (the primary component of natural gas) is a valuable fuel that provides electricity and heating to millions of American households. Affordable natural gas has also fueled a domestic manufacturing renaissance, encouraging businesses to expand operations and bring more jobs back home from overseas. Instead of adding new layers of red tape chasing non-existent problems, President Obama should simply stand aside and admire the great American energy boom.

Filed Under: Blog Tagged With: climate change, methane, natural gas, Obama

Wind Fall

January 16, 2015 by Mike Morrison 2 Comments

Filed Under: Blog, Cartoons

The War on Coal in One Map

January 15, 2015 by Mike Morrison 21 Comments

The Obama administration likes to deny there’s any “War on Coal,” but the numbers don’t lie. West Virginia, the heart of coal country, now has the lowest labor participation rates among all 50 states — less than 50% of people 16 and up are employed. It is the only state in the country with a labor participation rate below 50 percent. Market Watch reports:

West Virginia quietly passed the ignominious milestone of having less than half of its adult, civilian population in the workforce in November.

State data compiled by the Labor Department shows that West Virginia’s civilian labor participation rate has fallen to 49.8%, from 50% in October. The national rate in December was 62.7%.

The Mountain State is the only state in the history of the series, which goes back to 1976, to have fallen below 50%, though Mississippi at 50.8% isn’t far behind.

The fact that West Virginia fell below 50 percent for the first time in the history of the Labor Department measuring labor participation isn’t surprising. US coal companies let 7,700 employees go in 2012 then lost another 2,000 jobs before May 2013. None of these numbers include the pain suffered by communities supported by the coal industry.

These are the results of a coordinated from our government to end American coal, all from the same President Obama, who said “if somebody wants to build a coal powered plant it will bankrupt them” and Vice President Biden, who said “no coal plants here in America”.

While increased production of inexpensive natural gas certainly plays a role in the demand for coal, so too have new regulations. Without approval from Congress, this administration created new regulations attacking existing coal-fired power plants and essentially banning new high-tech coal-fired power plants. Policies like this could increase electricity rates by as much as 80%, hitting those who can least afford it the hardest.

West Virginia is feeling the heat from Obama’s anti-affordable energy policies; the rest of the country should take note of the canary in the coal mine.

Filed Under: Blog Tagged With: employment, in one map, map, war on coal

Obama’s Methane Scheme a Solution in Search of a Problem

January 15, 2015 by Alex Fitzsimmons Leave a Comment

On Wednesday, the White House announced a long-awaited plan to reduce methane emissions from the oil and natural gas sector, with the goal of slashing methane from new and modified oil and gas processing and production facilities by up to 45 percent from 2012 levels by 2025. The administration directed EPA and other agencies to develop rules to meet its goal.

President Obama’s methane scheme is an attempt to fix a problem that does not exist. Energy producers have an economic incentive to prevent natural gas leaks: methane (the major component of natural gas) is a valuable commodity that provides heating and electricity to millions of American families and serves as a vital feedstock for chemical and manufacturing companies. As a result, methane emissions are declining even as oil and gas production is booming—all without federal intervention.

Any federal rules to tackle our non-existent methane problem will only complicate existing industry-led efforts, resulting in less domestic energy production and thus higher energy costs for American families.

Solution in Search of a Problem

Energy producers have an economic incentive to reduce methane emissions and are already doing so without federal regulation. As the White House states, “reducing methane emissions means capturing valuable fuel that is otherwise wasted and reducing other harmful pollutants.”

Fortunately, energy producers are already reducing natural gas leaks without federal controls, as even the administration admits. A White House fact sheet explaining the plan notes, “Emissions from the oil and gas sector are down 16 percent since 1990 and current data show significant reductions from certain parts of the sector, notably well completions.”

Even more impressive is that energy producers are reducing methane emissions even as energy production is booming. The following chart shows the percent change in U.S. oil and gas production since 2008 compared to U.S. methane emissions.

Source: Environmental Protection Agency and BP Statistical Review of World Energy

These emission reductions didn’t happen by accident—and especially not due to federal regulation. Energy producers had an incentive to reduce waste, so they developed innovative ways to capture more methane, thus lowering emissions even as production soared.

Methane is an energy and environmental success story. It shows how energy producers can balance energy development with environmental protection, all without federal intervention. In the midst of a massive production boom that has made the U.S. the top combined oil and gas producer in the world, we are still managing to reduce emissions and protect our environment for future generations.

It’s a testament to the ingenuity of America’s energy producers and a rebuke of the Obama administration’s attempts to mess with success. Instead of trying to fix what isn’t broken, the president should step aside and let America thrive.

Filed Under: Blog Tagged With: EPA, methane emissions, oil and gas production

No, Republicans Don’t Really Support EPA’s Climate Agenda

January 14, 2015 by Alex Fitzsimmons Leave a Comment

Misinformation abounds at Yale University’s School of Forestry & Environmental Studies. The university’s Project on Climate Change Communication released a new survey that is grabbing headlines but is riddled with flaws.

The survey claims that “Republican voters are actually split in their views about climate change,” with a majority of “moderate” Republicans supporting EPA’s proposed rule to “set strict CO2 emission limits on existing coal-fired power plants.” Overall, the survey finds that 64 percent of registered voters supported the plan.

Readers should dismiss these “results” for several reasons, as explained below.

Biased Question Wording

The survey is worded to pump up the supposed benefits of EPA’s plan (“reduce global warming and improve public health”) without mentioning anything about costs. But numerous surveys show that Americans take a much dimmer view of EPA’s agenda—and environmental regulations generally—when they are told of the potential costs. Some examples include:

After being told that EPA’s power plant rule would result in hundreds of thousands of lost jobs, a majority of voters in key battleground states opposed the regulation, according to a July survey released by AEA.
A recent survey conducted by MWR Strategies on behalf of AEA finds that 60 percent of likely voters believe that it is “mostly a bad thing” to “require States to impose mandates on their citizens to buy certain amounts of renewable energy, whether or not it is cost-effective,” as EPA’s power plant rule would.
Harvard Professor Stephen Ansolabehere finds that people will pay just $5 more per month to combat climate change. “People are not willing to really put their dollars—even people who say they are concerned about global warming—are not willing to put their dollars where their hearts are,” says Ansolabehere.
Fifty-six percent of registered voters in Oregon oppose a state plan to reduce the carbon-intensity of gasoline after being told that doing so could raise their fuel costs by up to 19 cents per gallon (see poll here).

Cherry-picked Results

The researchers claim that Republicans are “actually split in their views about climate change” including the EPA’s carbon-dioxide regulations. If that were actually true, it would be a compelling narrative. After all, “Republican leaders in Congress have pledged to roll back the EPA’s proposed new regulations on coal-fired power plants.” That would put the views of Republicans in Congress at odds with the views of Republican voters.

But Republicans aren’t actually as split as the researchers claim. So-called “moderate Republicans” (62 percent of which support EPA’s plan based on the survey’s biased wording) comprise just 23 percent of “total Republicans” surveyed. “Conservative Republicans” who make up more than half of all Republicans surveyed oppose the rule by a 3:2 margin. Overall, just 44 percent of all Republicans support EPA’s plan.

Yale’s attempt to find a schism in the Republican Party over EPA’s climate agenda may grab headlines, but it is mostly hype.

Voters Give Climate Change Low Priority

There is a difference between supporting an issue in principle and believing that addressing the issue should be a priority. Surveys are conducted in a vacuum, but policy is made in the real world with finite time and resources. That requires the public to decide which issues are most urgent—and the public doesn’t think climate change is one of them.

In fact, addressing climate change consistently ranks near the bottom of Americans’ priorities. For example:

“Dealing with global warming” ranked dead last in a 2013 Pew survey of the public’s top policy priorities. It has ranked at or near the bottom of the agenda every year since 2007, when Pew added the issue to its survey.
A long-running Gallup survey finds that just 1 percent of Americans think the environment is “the most important problem facing” the country.
When likely voters were asked to identify “the most pressing issue facing the United States,” climate change or the environment didn’t even register, according to an AEA survey.

Any discussion of the public’s views on climate change should be tempered by the fact that most people don’t think climate change is a top priority. Yale’s failure to poll voters on their top priorities deprives readers of this key context.

Conclusion

Yale University’s survey of Republican attitudes toward EPA’s climate agenda is flawed and misleading. The survey relies on biased questions and cherry-picked results to advance a narrative that does not exist. Republicans are not nearly as divided as Yale claims: in fact, its own data show that most Republicans oppose EPA’s power plant rule. Before releasing their next survey, Yale’s climate-change researchers ought to bone up on basic statistics—fortunately, their employer has many course offerings.

Filed Under: Blog Tagged With: climate change, Environmental Protection Agency, EPA, power plant rule, regulations, yale climate study

The Oregonian is Mad as Hell and Won’t Take it Any More

January 12, 2015 by Alex Fitzsimmons 1 Comment

Channeling their inner Howard Beale, The Oregonian’s editors are mad as Hell with the governor and they aren’t going to take his tax schemes any more. Last week, the editorial board slammed Gov. John Kitzhaber’s plan to raise gasoline costs on Oregon families, which the editors panned as a “global-warming gas tax.”

The editorial begins by admonishing gas-tax advocates for deceiving Oregonians:

Gov. John Kitzhaber and other proponents of a low-carbon fuel standard, we wrote last month, habitually mislead Oregonians about the program’s pocketbook impact. Full implementation of the complicated mandate, they like to say, could save businesses and individuals up to $1.6 billion in fuel over about 10 years. What they don’t say is that the study from which they cherry-picked this number assumes that Oregonians will realize these “savings” by spending an extra $1.6 billion on electric cars and plug-in hybrids. In other words, they’ll save bubkes. [Emphasis mine]

Far from saving money for Oregon families, the low-carbon fuel standard would likely make gasoline more expensive. As the editors point out, Oregon’s Department of Environmental Quality projected that the scheme would increase pump prices by as much as 19 cents per gallon. When asked, 56 percent of Oregonians opposed the plan if it would raise their fuel costs.

Even if Gov. Kitzhaber gets his “global-warming gas tax,” it will do little to combat global warming. As the editors explain:

Oregon, which accounts for about 1.2 percent of the nation’s population, was responsible for less than seven tenths of 1 percent of the nation’s carbon dioxide in 2011, the most recent year for which the U.S. Energy Information Administration has released state-level data. In the global-warming universe, Oregon is a rounding error, and most people reasonably conclude that 19 cents a gallon is a high price to pay merely to burnish the state’s brand. [Emphasis mine]

Oregon’s proposal is modeled on California’s low-carbon fuel standard. The Golden State requires fuel providers to reduce the carbon intensity of gasoline and diesel fuel by 10 percent in 2020. A lot of factors contribute to the price that motorists pay at the pump, but it’s no coincidence that California’s gas prices are the second highest among the lower-48 states.

A low-carbon fuel standard is a lose-lose for Oregon families: it raises fuel costs and does nothing to combat global warming. Kudos to The Oregonian for calling out the governor and looking out for its readers.

Filed Under: Blog Tagged With: Governor Kitzhaber, lcfs, low carbon fuel standard, Oregon, the oregonian

KiOR Biofuels: Take the Money and Run

January 12, 2015 by Mike Morrison Leave a Comment

Here’s a story about a billionaire investor and a bankrupt biofuel company with nothing better to do than bilk Mississippi taxpayers. From the Associated Press (via Fuel Fix):

It’s the latest turn in what’s becoming a nasty legal fight between Mississippi and KiOR, which state leaders once hailed as an economic boon for the state. [Mississippi Development Authority] at first cooperated with KiOR’s attempts to reorganize in hopes of maximizing how much money the state could collect from the sale of KiOR’s defunct Columbus refinery. But MDA and KiOR have become increasingly confrontational after the company filed for bankruptcy. MDA is deposing Khosla and others, and KiOR says it and others have turned over hundreds of thousands of pages of documents to MDA lawyers.

KiOR is backed by noted Obama donor Vinod Khosla. His investment in KiOR’s Columbus, Mississippi biofuel facility just hasn’t paid off, leaving taxpayers on the hook. Back in 2013 KiOR touted it’s first shipment of biofuels after three years of outright failure to produce fuel in any meaningful quantity. KiOR’s struggles continued as the company “missed” a $1.8 million loan payment, forcing it to pay $312 million immediately, all while producing almost no product. Finally, last year the company declared bankruptcy a mere seven years after its launch.

Biofuel production of cellulosic biofuel industry

After KiOR declared bankruptcy, the MDA came to its senses and is now aggressively pursuing the taxpayer money it loaned the failed biofuel company. The Associated Press continues:

MDA, though, says KiOR’s attempts to refine biofuels are a failure with no immediate prospects of commercial production. The state says KiOR has no real business prospects and that the court should pull the plug.

The state says KiOR’s Mississippi subsidiary, which hasn’t declared bankruptcy, owes it $79 million. But because MDA doesn’t have a mortgage on the assets of the parent company, it could get no money back in the bankruptcy.

KiOR says it won’t pay up as a result of “MDA’s hyper-aggressive litigation scheme.”

KiOR was once touted as the future of the transportation fuels industry. Now the company is bankrupt and has “no immediate prospects of commercial production.” Hopefully the MDA will recover at least some of the taxpayer money it gave away.

Filed Under: Blog, Products and Power Tagged With: biofuel, cellulosic, KiOR, Vinod Khosla

The Bear is Loose

January 9, 2015 by Mike Morrison Leave a Comment

Filed Under: Blog, Cartoons Tagged With: bear, gas, loose, oil, prices, production, sinking

Energy Freeze Continues on Federal Lands

January 8, 2015 by Alex Fitzsimmons 2 Comments

The U.S. Bureau of Land Management (BLM) is out with new data on oil and gas leasing on federal lands—and it isn’t pretty. BLM issued fewer new leases in fiscal year 2014 than in any year since 1988 (though they leased slightly more acres than in 2013).

The following chart shows how new BLM oil and gas leases dropped to 1,157 in FY 2014, a 26-year low that continues a long-term trend of depressed energy development on federal lands.

As we have pointed out for years, BLM keeps most of the country’s federal lands off-limits to energy development. The agency also takes an inordinate amount of time to approve new leases: BLM takes more than 227 days, on average, to approve drilling permits, compared to less than a month for states like Texas and North Dakota—where, unsurprisingly, production is booming.

As drilling permits languish in regulatory morass, production on federal lands is stagnant or declining. Oil output on federal lands grew by just 1 percent in FY 2013, while natural gas production dropped by 10 percent.

The energy freeze on federal lands comes as America is in the midst of a remarkable domestic energy boom on state and private lands. Oil production has surged to 25-year highs, making the U.S. the largest combined oil and gas producer in the world. But those production gains are occurring only on lands in which the federal government isn’t responsible for leasing.

The Obama administration has mostly avoided imposing new burdens on oil and gas development on state and private lands, but that could soon change. BLM is preparing first-ever federal regulations for hydraulic fracturing and EPA is gearing up to issue methane regulations for natural gas production. The continued success of the U.S. energy boom depends on keeping Washington bureaucrats out of energy development on state and private lands.

Filed Under: Blog Tagged With: BLM, Bureau of Land Management, Federal lands, natural gas, oil, state and private lands