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Pyle Urges Senate to Cut Red Tape on Energy Development

May 2, 2014 by Leave a Comment

WASHINGTON — American Energy Alliance President Thomas Pyle sent a letter today to Sens. Harry Reid and Mitch McConnell urging them to use the debate over the Shaheen-Portman bill to discuss policies that would cut red tape on American energy development. The letter reads:

The Shaheen-Portman bill will not grow the economy nor will it reduce energy prices for American families. At best, it will increase the government’s micromanagement of our daily lives, something Americans are growing increasingly concerned about. If the Senate intends to debate the Shaheen-Portman bill, it is imperative that there be a thorough discussion of policies to end the red tape that is shackling energy development in America. Here are some important issues that should be part of any discussion of an energy bill:

  • Electricity Security and Affordability Act. EPA’s GHG regulations will drive up electricity prices and according to EPA itself will not affect climate change in any meaningful way. Congress must step in to stop these regulations that provide no gain, but will further imperil our struggling economy.
  • American Energy Renaissance Act. Oil production increased by an impressive 61 percent on private lands between 2009 and 2013, but oil production fell on federal lands over the same time period.  Federal lands contain the largest known energy reserves in the world, but the federal government keeps these resources off limits. The AERA will allow for the development of some of these resources and rein in the red tape that is strangling our economy.
  • Encourage the exports of LNG to ensure that production of natural gas in the United States will remain strong, which will, in turn, keep prices low for American consumers.
  • Allow the Keystone XL pipeline to be built. Getting more oil from Canada is in the national interest. It is that simple. It should not take five years to figure out if transporting oil from Canada in the most environmentally sensitive and economic way possible is a good thing. We cannot sit by and let the Obama administration continue to play politics when we could be getting people back to work.

To read the full letter, click here.

Filed Under: Press Releases Tagged With: , , ,

Watch out for the spin machine

May 1, 2014 by Leave a Comment

Big-Wind

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If Solar Is So Great, It Doesn’t Need Mandates

April 30, 2014 by Leave a Comment

The environmentalist Outrage Police are at it again, this time over solar power. Specifically, a new LA Times article explains that utilities and America’s most feared brothers (since the identical twins from GI Joe) are trying to get rid of arbitrary government mandates on how much electricity must come from renewable sources, so that consumers and producers can determine how much power various sources should contribute. In their outrage over this development, progressive commentators neglect to mention this awkward fact of compulsion in their pet policy.

For example, here’s how Paul Krugman reacts to the LA Times story, in a blog post titled, “There Goes the Sun”:

Like just about everyone who has looked at the numbers on renewable energy, solar power in particular, I was wowed by the progress. Something really good is in reach.

And so, inevitably, the usual suspects are trying to kill it.

What makes it even worse is that one (not the only) reason to like the solar revolution is that it helps fight climate change. So if you’re a card-carrying conservative, who believes that climate change is the biggest, most intricate, and most incredibly successful conspiracy in history — thousands of scientists around the world, and not one of them squealing! — you want to block solar even if it saves money.

But wait a second. If “[s]omething really good is in reach,” and solar “saves money,” then why does the government have to force utilities to use it so heavily? Remember, this is what the dispute is over. Contrary to Krugman’s claim, nobody is trying to “kill” solar, rather the effort is to lift mandates requiring a minimum percentage of renewable power, and in addition to get rid of the “net metering” schemes that privilege customers with solar panels on their homes at the expense of everyone else.

You really have to marvel at Krugman’s worldview. He thinks that greedy power companies hate the planet so much that they actually will spend their own money on campaigns to make their businesses less profitable. That’s actually what Krugman must believe (or at least, what he must believe if you take his writings at face value).

For his part, Kevin Drum at Mother Jones concludes his analysis of the LA Times story in this way:

If there’s anything that liberals and conservatives ought to be able to agree on, it’s the benefit of renewable power. It’s as close to a no-brainer as you can get. But President Obama made green programs part of his stimulus package, and that was that. When tea-party hysteria took over the conservative movement, renewable energy became one of its pariahs. Griping about Solyndra is ancient history. Today’s conservatives oppose renewable energy for the same reason they’ve gone nuts over Benghazi and the IRS and Syrian rebels: to show solidarity to the cause. Welcome to modern American politics.

No, actually Mr. Drum, conservatives (and libertarians) don’t oppose renewable energy. We oppose renewable energy mandates.

It is truly shocking that Krugman and Drum can write entire blog posts without once bringing up the distinction between a certain technology (like solar power) and the government forcing people to use it.

Welcome to modern American politics—at least from the New York Times and Mother Jones.

IER Senior Economist Robert Murphy authored this post.

Filed Under: News, Products and Power Tagged With: , , ,

Cellulosic Ethanol Continues to Fail

April 28, 2014 by Leave a Comment

In 2007, President Bush signed the Energy Independence and Security Act. The bill amended the Renewable Fuel Standard and mandated that increasing amounts of cellulosic ethanol be blended with gasoline and diesel every year, with the provision that the Environmental Protection Agency (EPA) may reduce the mandated amounts. But year after year, the technological advances that President Bush and the Congress assumed would happen have not occurred and cellulosic ethanol production remains stuck in neutral.

Normal ethanol is made from the sugary or starchy plants of plants. For example, corn ethanol is made with corn kernels. But cellulosic ethanol is made from the rest of the corn plant—the corn stalks for example. While cellulosic ethanol sounds interesting in theory, in practice it is expensive and the ethanol industry cannot make very much of it, let alone the amounts mandated by the Renewable Fuel Standard.

For 2013, the Renewable Fuel Standard mandated that 1 billion gallons of ethanol be blended with fuel and in 2014, the law mandates that 1.75 billion gallons are blended with fuel. But actual production has met just a fraction of the mandate. In 2013, a total of 818,517 gallons of cellulosic ethanol were produced—a mere 0.082 percent of the Congressionally-mandated volumes.

Because the cellulosic ethanol producers have fallen so far short of producing the mandated amounts of ethanol, the EPA has been forced to reduce the mandate for every year so far including for 2013. EPA originally forecast that 6 million gallons of cellulosic ethanol would be produced in 2013—far more than the 800,000 gallons that were actually produced. This is just one example of how EPA’s forecast of cellulosic production have been notoriously inept with EPA year-after-year overestimating actual production.

For 2014, EPA forecast that a whopping 17 million gallons of cellulosic ethanol would be produced. Once again, EPA’s estimate is proving grossly incompetent. So far in 2014, the cellulosic ethanol producers are on track to produce a mere 307,292 gallons of cellulosic ethanol for the year, or only 2 percent the amount EPA forecast a few months ago. 

It is now seven years since Congress passed the cellulosic ethanol mandate and cellulosic ethanol producers are producing far, far less than is required by the law. EPA can reduce the amount required every year, but EPA does a terrible job of estimating actual cellulosic production. It’s about time EPA comes back to reality an only require as much cellulosic ethanol as was produced in the previous year instead of trying to forecast increased production.

This is just one more example of how Congress and bureaucrats do a poor job predicting the future. Hopefully, this Congress and future Congresses will look at the failure of cellulosic ethanol, despite massive mandates, and be much more circumspect about mandates in the future.

IER Director of Regulatory and State Affairs Daniel Simmons authored this post.

Filed Under: News, Products and Power Tagged With: , , , , ,

No More Wind Welfare

April 25, 2014 by Leave a Comment

WASHINGTON — The American Energy Alliance joined today with 30 other organizations in a letter to the House Ways and Means Committee urging them to oppose an extension of the wind Production Tax Credit. The letter comes as the committee prepares to examine a tax extenders bill. The letter reads:

“Choosing to extend the wind PTC further will only serve to place more burden on taxpayers. The projected cost of another one-year extension is $6.1 billion dollars and a five-year concession would cost $18.5 billion. The American people deserve a full airing of the cumulative economic impacts of wind subsidies.

“What is so dangerous about the wind PTC is not only that we are choosing to throw away money on a technology completely incapable of keeping the lights on, but the PTC is designed to harm reliable sources of energy like nuclear and coal  through predatory negative prices that the PTC enables. The PTC is so large that it allows wind producers to pay the electricity grid to take their electricity and still make money.

“The PTC has been a failure for taxpayers and ratepayers. In exchange for tens of billions of dollars in handouts to wind producers, the states with the highest wind production have seen their electricity rates increase nearly five times faster than the national average. In fact, states with at least 7 percent wind power have seen their electricity rates increase at an average of 17.4 percent over the last 5 years compared to an increase of only 3.5 percent for the U.S. as a whole”

To read the full letter, click here.

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Filed Under: Press Releases Tagged With: , ,

Unnecessary Flatulence

April 25, 2014 by 2 Comments

Cow-Stuff-AEA-590

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Domestic Production Causing Oil Imports to Plummet

April 9, 2014 by Leave a Comment

For decades, the American presidents and congress have promised to reduce our dependence on foreign oil (as you can see in this video below):

Promises were made to reduce imports  of foreign oil by everything from cellulosic ethanol to solar energy. None of these big-government programs worked. After the oil shocks of the 1970s, U.S. oil imports steadily increased from the mid 1980s through 2005 when high oil prices put a damper on U.S. oil consumption.

But starting in about 2008, private enterprise began production from shale formations like  the Bakken formation in North Dakota and Eagle Ford formation in Texas started to dramatically increase and as a result, U.S. net oil imports have been plummeting. In fact, our oil imports are the lowest they have been since 1987.[1]

Source: http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mttntus2&f=m

In a new report from the Energy Information Administration, they project that the U.S. could completely eliminate oil imports if oil production continues to increase.

EIA’s best guess of future oil production also has the U.S. approaching all times highs in oil production by 2019 and surpassing it earlier if production continues to increase at current rates.

Oil production in the U.S. is booming, but it has been limited to those areas where the federal government’s role is non-existent. This could change, if the Obama administration got serious about increasing oil production by opening up the less than 3 percent of federal lands and waters that are leased for oil production. The future of oil production in the U.S. could be bright if the federal government began to see increased energy production as a good thing for the nation.

IER Director of Regulatory and State Affairs Daniel Simmons authored this post.

[1] Energy Information Administration, U.S. Net Imports of Crude Oil and Petroleum Products,

Filed Under: News, Products and Power Tagged With: , , , , , ,

More Trouble for KiOR

April 4, 2014 by Leave a Comment

On these pages, we have been chronicling the sad saga of alternative-fuel company KiOR, which is facing class action lawsuits and an SEC investigation because it allegedly misled investors about the plausibility of its biofuel production targets. In the present post we’ll summarize the latest developments, which show that KiOR is teetering on the edge of collapse but has gotten a last-minute stay of execution.

Last month, KiOR stock fell 39 percent (the biggest drop on record since the company went public in 2011) when its management announced. As Bloomberg reported at the time:

The company needs additional capital by April 1 and its only potential source of near-term financing is a March 16 commitment letter from billionaire investor [Vinod] Khosla, according to a filing with the Securities and Exchange Commission yesterday.

…

If the company doesn’t receive additional financing, it will “likely” default on its debts and may file for bankruptcy. “We have substantial doubts about our ability to continue as a going concern,” the Pasadena, Texas-based company said in the filing.

It turns out that Khosla did come through in the nick of time, and now has enough funding to stay in business through August, as the Sacramento Bee reports: “KiOR… had completed a deal to borrow $25 million from an entity controlled by Vinod Khosla, who also owns 64 percent of the company’s stock.”

If this were just a matter of a biofuel company getting a new lease on life from a big investor, it would be unremarkable; wealthy people can sometimes take risks on an idea that takes a while to prove itself.

The problem here is that it’s not just Khosla’s money that’s on the hook. As the SacBee article goes on to explain:

KiOR had warned that without the money it would default on nearly $280 million in debt, including $69.4 million it owes to the state of Mississippi.

The state loaned KiOR $75 million to help its startup, one of a number of investments made by Gov. Haley Barbour’s administration in alternative-energy companies. KiOR has been making scheduled payments on the loan, but still owes $69.4 million. If the company were to file bankruptcy or default, the state would be the first creditor in line, and could seize the company’s plant.

Governments—whether at the state or federal level—have no business picking winners and losers in the energy sector and KiOR shows exactly why. If a business needs government loans to get off the ground, it means the business is not promising enough to attract money from people who are willing to bet their own money. This means that company is not efficient and can’t stand the market test.

Even if we concede the “negative externality” and “market failure” arguments regarding fossil fuels and climate change, it would still be ludicrous for the states and feds to be acting as venture capitalists. It would be difficult to dream up a worse idea than letting political officials lend taxpayer money to companies that can’t raise private funding. These alternative energy loan programs are just asking for corruption and inefficiency.

In order to protect taxpayers, as well as promote efficiency in the energy sector, governments should leave company financing up to the private sector.

IER Senior Economist Robert P. Murphy authored this post. 

 

Filed Under: Facts, News, Products and Power, Threats Tagged With: , ,

The PTC Has Overstayed Its Welcome

April 3, 2014 by 3 Comments

WASHINGTON – American Energy Alliance President Thomas Pyle issued the following statement responding to attempts to include the wind PTC in the Senate Finance Committee’s tax extenders bill:

“The death of the wind PTC in 2013 was a victory for taxpayers. Unfortunately, this wasteful subsidy is once again rearing its ugly head. Although not included in the initial extenders bill, Senator Grassley has made it clear that he intends to amend the bill to include the PTC. This is a case of cronyism trumping the interests of the American people.

“Rather than cutting wasteful handouts that would save taxpayer dollars, Senator Grassley and other PTC proponents continue to carry water for Big Wind’s well-heeled lobbyists who have been claiming for decades that the wind industry is on the cusp of economic competitiveness. Handouts like the PTC have serious implications for taxpayers and they should be debated out in the open, not behind the closed doors of the Senate halls.

“The notion that the wind industry is an infant that needs the PTC to get on its feet is simply not true. The PTC has overstayed its welcome and any attempt to extend it would do a great disservice to the American people.”

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Filed Under: Press Releases Tagged With: , ,

AEA Launches Major New Ad Initiative

April 1, 2014 by Leave a Comment
WASHINGTON – The American Energy Alliance continues its carbon tax accountability initiative with television and online ads beginning today in West Virginia’s Third Congressional District and tomorrow in the State of Alaska. The West Virginia effort will run until April 12and the Alaska initiative will continue through April 23. These new ads hold Congressman Nick Rahall and Senator Mark Begich accountable for the positions they have taken on the carbon tax.
AEA President Thomas Pyle released the following statement:

“Even though they are on opposite sides of the country, West Virginia and Alaska are quite similar in that they produce the abundant, affordable, and reliable energy resources that power the American economy and create good paying jobs in the process. Unfortunately, West Virginia Congressman Nick Rahall and Alaska Senator Mark Begich are also remarkably similar in that they both have mastered the art of saying one thing at home and doing the opposite in Washington. In this case, it is their support for the carbon tax.

“West Virginia is coal country, and yet Nick Rahall voted for a budget that included a carbon tax, which in any form would kill coal and destroy the jobs West Virginia coal miners depend on. Congressman Rahall should be embracing his state’s energy resources instead of working with the liberals in Washington whose agenda would harm the well-being of the people who put him into office.

“Mark Begich has voted not once, but twice, to advance a carbon tax agenda and went even further by signing a letter urging his Democratic Leader, Harry Reid, to immediately advance legislation that would put a price on carbon. This is the same Harry Reid who believes that ‘oil makes us sick’ and insists that we must ‘stop using fossil fuels.’ A carbon tax would drive up energy costs and have a damaging effect on our already fragile economy. Alaska would truly be impacted by a carbon tax, and yet Senator Begich refuses to stand up to the liberals in Washington who are seeking to advance this harmful anti-fossil fuel agenda.

“The American Energy Alliance is committed to holding lawmakers accountable for their actions, especially when those actions raise energy costs on American families. We will continue to use all the tools at our disposal to educate and inform the American people of what their elected representatives are up to in Washington.”

To watch the West Virginia TV ads, click here and here.

To read the fact sheet for the West Virginia ads, click here.

To watch the Alaska TV ad, click here.

To read the fact sheet for the Alaska ads, click here.

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Filed Under: Press Releases Tagged With: , , , ,
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