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In the Pipeline: 8/16/13

August 16, 2013 by Leave a Comment

You got to know when to hold ’em, know when to fold ’em…

The Boston Globe (8/9/13) reports: “A group of environmentalists has dropped its campaign to place a so-called carbon tax on the next statewide ballot, citing the complexity of the issue, weak fund-raising, and potential constitutional challenges to the question. The group, the Committee for a Green Economy , had hoped to place a question on the 2014 ballot asking voters to approve a new tax on gasoline, heating oil, and other fossil fuels based on the amount of carbon dioxide they produce, with the aim of reducing pollutants that contribute to climate change. The committee, however, failed to file a petition with Attorney General Martha Coakley by Wednesday’s deadline, the first step in qualifying an initiative for the ballot.”

It’s never fun to say I told you so with so many Spaniards suffering as a result of their inept government.

Salon (8/14/13) reports: “The Spanish government is in debt to its power producers to the tune of 26 billion euros, the results of years spent regulating costs. To make up the difference, it’s imposing a levy on rooftop solar panels — effectively negating the economic benefit of generating clean energy. The tax will more than triple the time it takes for consumers to recoup their investment in rooftop panels, reports Reuters. It will also prevent people from selling any extra energy they generate that way back to the grid. Those who leave their panels up without connecting them to the grid, which is how the government will monitor and tax their energy production, face a fine of between 6 million and 30 million euros.”

Intermittent is a four letter word. 

The New York Times (8/14/13) reports: “The 21 turbines at the Kingdom Community Wind farm in Vermont soar above Lowell Mountain, a testament in steel and fiberglass to the state’s growing use of green energy. Except when they aren’t allowed to spin at their fastest. That has been the case several times in the farm’s short existence, including during the record July heat wave when it could have produced enough much-needed energy to fuel a small town. Instead, the grid system operator held it at times to just one-third of what it could have produced.”

We look forward to Admiral McGinn supporting opening ANWR, the OCS, and onshore as part of his readiness efforts.

Politico Pro (8/15/13) reports: “The Navy’s new energy chief doesn’t have any uncertainty about the scope of his mission. As the leader overseeing the service’s push to develop advanced biofuels and deploy more renewable energy, retired Vice Adm. Dennis McGinn says he has ‘to try to take the politics out of something which is essentially a national security issue.’ It’s no easy task. He faces production issues, technological barriers, increasingly tight budgets and scrutiny from congressional Republicans unhappy with the military’s green spending. But McGinn — the recently confirmed assistant secretary of the Navy for energy, installations and the environment and outgoing president and CEO of the American Council on Renewable Energy — says it all comes down to numbers.”

The most transparent administration in history.

The Daily Caller (8/15/13) reports: “A federal judge said that the Environmental Protection Agency’s use of private emails account may have been an attempt to skirt public scrutiny and transparency laws. The court decision comes after investigation uncovered that top agency officials were using such accounts to conduct official business. ‘The possibility that unsearched personal email accounts may have been used for official business raises the possibility that leaders in the EPA may have purposefully attempted to skirt disclosure under the FOIA,’ wrote U.S. District Judge Royce Lamberth in his decision.”

Stop the RINsanity!!!!

The USA Today (8/15/13) reports: “When members of Congress decided in 2007 to require that Americans put 36 billion gallons of ethanol in their gas tanks annually by 2022, they must have thought there was an award for bad public policy. The idea never made the slightest sense. The law, an expansion of a mandate adopted two years earlier, called for impossibly large quantities of corn to go into fuel production rather than onto people’s tables, driving up food prices. This year, the mandate requires 16.6 billion gallons of ethanol, absurdly consuming 37% of the nation’s corn crop and requiring farmland roughly equal to the size of Kentucky. Now unforeseen events are adding a tragicomic twist.”

Happy Friday.

Gizmodo (8/16/13) reports: “Stop me if you heard this before but an electric car and an electric pole walk into a bar… Okay, seriously. This is one of those ridiculous local news stories that are too perfect to be true but actually are. A Tesla Model S crashed into a utility pole in Tennessee and caused a local blackout. An electric car causing a blackout by crashing into a pole is a little funnier than a regular car driving into a gas station, right? The crash, which occurred in the afternoon, was actually a result of a DUI. A 34-year-old woman was behind the wheel at the time and said she was ‘messing with the radio’ (that darn giant touchscreen!) when the crash happened. When police arrived on scene, the electric car was 100 feet away from the downed utility pole and power was out locally: In order to load the crashed vehicle onto the flatbed, officers apparently had to obtain ‘technical instructions’ in how to turn off the Model S.”

Filed Under: Blog, In the Pipeline Tagged With: , , , , , ,

In the Pipeline: 8/15/13

August 15, 2013 by Leave a Comment

Question: Would Warren & Co. go all in on wind if they weren’t able to feed themselves greedily from the public coffers?  

The Daily Caller (8/13/13) reports: “A subsidiary of the Warren Buffett-owned MidAmerican Energy Holdings is looking to capitalize on federal tax subsidies by installing 448 wind turbines across five Iowa counties in order to generate up to 1,050 megawatts of power by 2015. Construction on the wind farms is scheduled to begin next month, meaning MidAmerican will qualify for generous wind tax credits offered by the federal government. ‘MidAmerican Energy Company does plan to use federal wind production tax credits for the recently announced wind expansion,’ a company spokeswoman told The Daily Caller News Foundation in an email. ‘The specific amount is not available.’”

When government becomes the judge, jury, and executioner, it really limits your options. You either play ball or perish. Really though, you can’t blame the refiners for not wanting to participate in Soviet style mandates.  

The Wall Street Journal (8/14/13) reports: “Last week, the Environmental Protection Agency issued its annual renewable-fuels mandate, telling refineries how much ethanol they must blend into the nation’s gas supply. This quota, which grows each year, is becoming a horrific financial burden on the industry, forcing many refineries to buy federal ethanol ‘credits’ to satisfy the rules. The skyrocketing price of those credits is adding hundreds of millions of dollars to refineries’ annual costs. So it was more than a little curious that the EPA, as part of its rule, announced it was exempting just one mystery refinery (out of 143) from this year’s mandate. The dispensation amounts to a significant financial favor to one lucky player, as I wrote in the Journal on Friday. Further reporting has revealed that the refinery is Alon USA Energy’s Krotz Springs facility in Louisiana. There’s reason to wonder why Krotz Springs alone got a deal.”

All the leaves are brown, and the sky is grey. San Francisco regulators, refuse to hike the rates. Green schemers for now, they’re are being held at bay. California green dreamin’, will wait another day.

CBS SF Bay Area (8/14/13) reports: “Proponents of a green power alternative to PG&E in San Francisco are frustrated, but not deterred by delays to the city’s long-awaited renewable energy program. However, this week’s setback when the SF Public Utilities Commission refused to move forward on a key approval has sent the program back to the drawing board. For nine years, the city has been putting together CleanPowerSF, which would cost customers more than PG&E, but would provide renewable or green energy.Supervisor John Avalos, a big supporter, said it’s been an uphill battle to come up with a program palatable for regulators, who on Tuesday, refused to sign off on a rate schedule.”

Come on Josh, if you’re going to keep blatantly promoting “misinformation” the least you could do is say it on the record.

The Washington Free Beacon (8/14/13) reports: “Environmentalist filmmaker Josh Fox grew frustrated during a recent public radio interview when asked about apparent falsehoods in his Oscar-nominated 2010 documentary Gasland. Fox asked an interviewer with Aspen public radio station KAJX to go ‘off the record’ so he could explain why he represented a gas extraction lease created by a group of Pennsylvania landowners as a $100,000 offer from a gas company to extract natural gas from his land. The document presented in Gasland was a draft of a lease that Northern Wayne Property Owners Alliance (NWPOA), a Pennsylvania landowners group, offered to gas companies exploring potential shale drilling operations in the area hoping to secure favorable terms for landowners, according to NWPOA members. It was not, as Fox claimed in the film, an offer from one of those companies. The group also says Fox was never a member, as he told KAJX on Monday.”

 

 

Filed Under: Blog, In the Pipeline Tagged With: , , , , , , ,

In the Pipeline: 8/14/13

August 15, 2013 by Leave a Comment

Watch as the RFS advocates come crawling to Washington and beg them to prop up their industry by forcing you to buy their product. 

Fox News (8/13/13) reports “Only in Washington can an expensive, unnecessary regulation be considered common sense. The Obama administration is digging in its heels when it comes to repealing harmful energy regulations that increase consumer costs with little benefit to the environment. The Renewable Fuel Standard (RFS) is a classic example of hugely misguided energy policy, but to the Obama administration and its environmentalist allies, the RFS is a beneficial regulation aimed at curbing emissions and safeguarding against climate change.What they don’t say, but mean, is that it artificially drives up the cost of gasoline and when that happens, people can’t afford to drive as much. Remember how energy prices need to ‘skyrocket?’ Well, they are. ‘The backbone of our policy is the Renewable Fuel Standard,’ said top Obama energy adviser Heather Zichal at an event last week, adding that ‘calls to repeal the standard are nothing but shortsighted.’”

Elon Musk, having mastered the art of the federal fleece, now sets his sights on California taxpayers. Those high speed rail rent seekers better not underestimate this guy, or they just might lose their gravy train.

Business Week (8/13/13) reports: “‘L.A. to S.F. in 30 minutes?’ the front page of the Los Angeles Times asked this morning, reporting on the promise of Hyperloop, the conceptual superfast, solar-powered, tubular transit system that Elon Musk unveiled yesterday. The news came just a day after another L.A. Times piece about the potential of speedy travel up and down California, that one titled: ‘Shovel-ready bullet train construction delayed again.’ As the blog Curbed Los Angeles put it, ‘Nice timing, Musk.’ The contrast between Musk’s futuristic option for bridging Los Angeles and the Bay Area, and the much-delayed, over-budget, fast train that the state already has in the works, couldn’t have seemed starker or more striking. And that’s the point.”

At least she recognizes it’s much harder to be carbon neutral than just buying the next toy with a pretty green leaf on it.

The Bulletin of Atomic Scientists (8/7/13) reports: “The dynapod appeals to conservation-minded people in the same way that wind turbines and biofuel-powered cars and hand-cranked radios do: They’re hard, shiny machines that purport to produce “free” energy. Not just free in terms of cost and independence (because you no longer have to pay a big, bad corporation for electricity or gasoline), but also free from guilt. Because you’re not polluting the air, right? Unfortunately, things aren’t that simple. Before you even climb aboard your dynapod or generate your first watt of green energy, you’ve already stomped another carbon footprint into the sands of time through the manufacturing process. And until the energy embodied in machines, vehicles, buildings, gadgets, food, clothing, and other consumer purchases comes to be understood as part of total energy consumption, people can’t make well-reasoned choices about how to reduce their climate impact.”

Wait, you’re telling me the scientists could make conclusions based on flawed premises?

Forbes (8/13/13) reports: “Perseveration on global warming naturally inclines one to seek out other areas of  “science” where things aren’t exactly what they so obviously are, which brings me to the remarkable work of the most important toxicological scientist you have never heard of,  Dr. Ed Calabrese of the University of Massachusetts. His work, painstaking and seemingly obscure, is upsetting just about everything we ‘know’ about cancer and other illnesses commonly associated with environmental ‘pollutants.’ If taken to its logical conclusion, it could derail much of Washington’s regulatory bureaucracy, particularly the EPA’s. Not that this is going to happen overnight, but as Calabrese’s work is increasingly accepted (as has been happening in recent years), the current regulatory paradigm will be forced to adjust.”

Hear that popping noise? That’s Harry Reid’s head exploding.

The Associated Press (8/13/13)reports: “In a rebuke to the Obama administration, a federal appeals court ruled Tuesday that the Nuclear Regulatory Commission has been violating federal law by delaying a decision on a proposed nuclear waste dump in Nevada. By a 2-1 vote, the U.S. Court of Appeals for the District of Columbia ordered the commission to complete the licensing process and approve or reject the Energy Department’s application for a never-completed waste storage site at Nevada’s Yucca Mountain.”

This just in: the science is settled.

E&E News (8/13/13) reports: “Scientists know that the Greenland ice sheet is contributing to rising sea levels, but many of the details about how its ice is driving drastic change remain a mystery. A new study aims to fill in a piece of the puzzle by concluding that the gliding of ice on meltwater that has seeped through to bedrock is not a significant factor with sea-level rise. The research dampens a long-held fear by questioning a hypothesis that Greenland’s surface meltwater — flowing through well-like holes to the ground — allows ice to rapidly ride on it like a water slide to the sea. While the gliding of ice from sunken meltwater is happening and is changing the character of Greenland’s ice in general, the lubrication dynamic will only contribute about 8 millimeters of sea-level rise through 2200 under a worst-case scenario. That would be no more than 5 percent of the estimated contribution from Greenland’s ice sheet as a whole, according to the study published yesterday in the Proceedings of the National Academy of Sciences. ‘If we’re right [Greenland’s slippery slopes] are not as slippery — and therefore as worrying — as we first thought,’ Tamsin Edwards, a co-author of the study and a scientist at the University of Bristol, said in a blog post.”

You remember Cathy Zoi. She’s the one who ordered the NREL hit piece on our good friend Gabriel Calzada. It looks like she is more successful talking about green jobs than creating them. We wish her luck.

Greentech Media (8/12/13) reports: “Cathy Zoi is no longer the Chief Strategy Officer at Tom Siebel’s C3 Energy. Insiders have informed Greentech that she has left the firm. C3 management has not responded to inquiries, but C3’s front desk confirms the departure.  As Jeff St. John reported, ‘C3 Energy, the Silicon Valley startup founded by software billionaire Tom Siebel, has quietly been building on an audacious promise: a big data integration and analytics engine, hosted in the cloud, that can aggregate and put to use all of the world’s information, practically speaking, as it pertains to the complexities of big energy systems.’ Zoi joined the utility data analytics firm after a short stint at investment firm Silver Lake Kraftwerk. Zoi has not responded to our inquiries as to why she has left the firm.”

 

Filed Under: Blog, In the Pipeline Tagged With: , , , ,

In the Pipeline: 8/13/13

August 15, 2013 by Leave a Comment

Broken promises. SEC investigations. Empty lots. No product. In other words, pretty standard stuff for anything with the word “Green” in it.

The Washington Post (8/10/13) reports: “Just off the legendary Highway 61, where crop-dusters perform acrobatics above billboards for Mississippi Delta casinos, is the place where Virginia gubernatorial candidate Terry McAuliffe pledged to build a $60 million factory for his electric-car company. On a recent summer day, a bird was skittering over patches of weedy gravel at the vacant site of what is supposed to be GreenTech Automotive’s future plant. Virginia gubernatorial candidate’s “green” car company fails to pay desired political dividends. In Horn Lake, Miss., GreenTech runs a temporary assembly plant in an old elevator factory. There, fewer than 100 workers are producing no more than one car every two or three days, according to current and former company employees.”

Passing on the mantle.

The Washington Times (8/12/13) reports: “China will become the world’s largest importer of crude oil in October, surpassing the U.S. for the first time as the Asian giant’s rising consumer class of drivers grows increasingly thirsty for fuel, the U.S. Energy Information Administration is projecting. China already is the largest importer of oil from the troubled Middle East, taking away a distinction that plagued the U.S. since the 1970s. Its ascendance as the world’s largest importer — even as U.S. dependence on Middle Eastern oil declines to negligible levels — could transform regional and world politics as the focus of global defense efforts for decades has been keeping open the vital oil shipping lanes leading from the Persian Gulf.”

Chinese drivers may be pushing their need for imports up, but our increased oil production is decreasing our reliance on imports. 

The Institute for Energy Research (8/13/13) reports: “The Energy Information Administration (EIA) reports that the China is expected to surpass the United States in oil imports this October and to lead the world in total oil imports in 2014. As the graph below shows, the United States, on a net basis (imports less exports), has decreased its net oil imports fairly dramatically over the last several years. There are several reasons for this decline. Most importantly, U.S. oil production is up. But, other reasons include increased exports of petroleum products, lower or flat liquid fuels demand, and biofuels production that has generally been increasing. China, unlike the United States, has a heavily growing demand for petroleum products and much lower production growth.”

Stop me if you’ve heard this one before.

The Washington Free Beacon (8/12/13) reports: “The U.S. Department of Energy (DOE) has suspended stimulus payments to a major green energy company after the company said it is having trouble finding financing and may have to declare bankruptcy. ECOtality admitted that possibility in a filing with the Securities and Exchange Commission (SEC) last week. Lackluster sales caused revenues to fall significantly short of its expenses, the company said. ‘Although the company is currently exploring options for a restructuring or sale of the entire business and/or assets of the company, the company may need to file a petition commencing a case under the United States Bankruptcy Code as part of any such process or otherwise in the very near future,’ ECOtality said in its SEC filing. ECOtality has received more than $100 million in federal funds, the bulk of which came in a $99.8 million stimulus award for the construction of its electric vehicle charging stations.”

Harry Reid throws a really scary Halloween party in August. If you notice, there is not a soul invited who actually cares about affordable, reliable energy.

National Clean Energy Summit reports: “The National Clean Energy Summit has been the national stage for clean energy development discussions for six years and serves as the country’s most visible and influential gathering of leaders and top policymakers. The day-long clean energy summit is hosted by Senate Majority Leader Harry Reid (D-NV), the Center for American Progress, the Clean Energy Project, MGM Resorts International, and the University of Nevada, Las Vegas. National Clean Energy Summit 6.0: Energizing Tomorrow will focus on empowering individuals, governments, and businesses to continue our transition to a clean energy future. This year’s conference will highlight solutions needed to energize our clean energy economy for tomorrow. By identifying hurdles facing clean energy development today and discussing the solutions needed to clear these hurdles, we can energize tomorrow.”

The battle lines are forming. We’re glad these folks are in the fight with us.

Filed Under: Blog, In the Pipeline

Sorry Ethanol Lobby, RFS Does Not Promote “Free Markets”

August 14, 2013 by Leave a Comment

Growth Energy, an ethanol industry group, issued a misleading statement yesterday in response to news that refiners requested a partial waiver of the 2014 Renewable Fuel Standard (RFS). The headline reads, “Big Oil Files Waiver to Cap Ethanol, Block Free Market Competition.”

There is nothing “free market” about requiring someone to purchase a product, but that is exactly what Growth Energy claims. The RFS requires refiners to blend increasing amounts of ethanol into gasoline, with the goal of blending 36 billion gallons by 2022. This mandate amounts to a subsidy for ethanol producers, one that distorts the market and ultimately harms consumers.

Tom Buis, CEO of Growth Energy, claims, “Biofuels are a clean burning, reliable and sustainable alternative and it is time we start recognizing their cost savings and numerous benefits and end our addiction to a fossil fuels and Big Oil’s price gouging.” Let’s unpack these claims one at a time.

First, Buis describes ethanol as “clean burning,” but fails to point out that ethanol can emit more greenhouse gas emissions than conventional gasoline. A study published in Science finds that corn-based ethanol nearly doubles GHG emissions over the next three decades and continues to increase emissions for the next 167 years. The Union of Concerned Scientists, a liberal environmental group, cautions, “If done wrong, the production of biomass for biofuels like ethanol could destroy habitats, worsen water or air quality, limit food production and even jeopardize the long-term viability of the biomass resource itself.”

Second, far from providing “cost savings,” ethanol is actually more expensive than conventional gasoline. Ethanol contains about 33 percent less energy than conventional gasoline, which means that fuel economy declines as ethanol content rises. Indeed, the BTU-adjusted price of E85 (ethanol that contains up to 85 percent ethanol) is about 16 cents higher than regular gas. At this time last year, when both corn prices and gas prices were higher, E85 was about 70 cents more expensive than E10.

Third, Buis offers scant evidence to support his “price gouging” accusations. As the Institute for Energy Research (IER) explains, less than five percent of gas stations are owned by the “big oil” companies that Buis decries. In reality, the price of gasoline is determined largely by the price of crude oil, a commodity traded worldwide. U.S. monetary policy that increases the money supply through quantitative easing provides a ripe environment for hedge funds to bet on commodity prices, including crude oil.

Congress passed the RFS under the assumption that gasoline use would rise indefinitely, but consumption has actually declined in recent years. With consumption stagnant, the only way refiners can add increasing amounts of ethanol is by blending more than 10 percent into gasoline. But most cars are not certified to run on gas with more than 10 percent ethanol, prompting several car companies to warn that damage due to improper fueling voids any warranties. This problem is called the blend wall.

In a free market, the blend wall would never be an issue. Refiners would adjust ethanol volumes in response to supply and demand. But under the current system, refiners are left with little choice but to increase exports or reduce production, both of which would raise gas prices on American motorists. In fact, NERA Economic Consulting finds that by 2015 the RFS will increase diesel costs by 300 percent, gasoline prices by 30 percent, and reduce take-home pay for American workers by $580 billion.

Recognizing the imminent blend wall, the Environmental Protection Agency (EPA) signaled a willingness to reduce required ethanol volumes in 2014. In response, the American Fuel & Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API) asked EPA to use its authority to reduce the 2014 mandate by 3.35 billion gallons. This would be a tangible first step toward a freer market and lower gas prices.

IER Policy Associate Alex Fitzsimmons authored this post.

Filed Under: News, Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , , ,

As Economy Lags, Shale Boom Spurs Rapid Job Growth

August 14, 2013 by Leave a Comment

While most of the U.S. economy endures a slow recovery process, the energy sector continues to flourish. Job opportunities in oil and natural gas increased by 40 percent from 2007 to 2012, according to new data from the Bureau of Labor Statistics.[i] Compare this to just 1 percent growth for total private-sector employment over the same period.  The key to this job growth has been the boom of domestic energy production on state and private lands.

In 2012, the U.S. recorded the largest oil and natural gas increases in the world, as well as the largest increase in oil production in American history. U.S. crude oil production increased from around 5 million barrels per day in 2007 to nearly 6.5 million barrels per day in 2012, according to the Energy Information Administration (EIA). Natural gas production also increased from 19,266 billion cubic feet in 2007 to 22,902 billion cubic feet in 2011.

As a result of the domestic energy boom, oil and gas companies added 162,000 jobs from 2007 to 2012. The largest job growth has been in the support sector, which includes exploration, excavation, and well construction. The support sector alone has added 102,000 jobs since 2007, employing a total of 286,000 people by the end of 2012.[ii]

This rapid growth does not appear to be slowing down anytime soon, as proved reserves[iii] in the U.S. continue to rise. A recent report from EIA shows that proved oil reserves increased by 15 percent (nearly 3.8 billion barrels) in 2011, the largest volumetric increase in U.S. history. Proved reserves of wet natural gas increased by 31.2 trillion cubic feet (TCF), the second largest increase since 1977. [iv]

The development of America’s vast energy resources is occurring primarily on state and private lands. On federal lands, a sluggish permitting process (228 days on average) continues to stonewall energy production and job creation. As a result, oil and natural gas production declined by 15 percent on federal lands between 2010 and 2012.

The most notable success story has been North Dakota, where it takes just 10 days on average to get a permit to drill. Production on state lands in the Bakken and Three Forks shale plays has skyrocketed in recent years. From 2007 to 2012, North Dakota’s crude oil production increased from 124,000 barrels per day to 663,000 barrels per day,[v] an increase of 434 percent. Production will most likely continue to rise, as proved oil reserves in North Dakota increased by 771 million barrels from 2010 to 2011. The increase in domestic energy production is a driving force behind the state’s 3.1 percent unemployment rate, the lowest in the nation.[vi]

Thanks to domestic energy boom on state and private lands, oil and gas companies are creating jobs at a time when the rest of economy continues to sputter. Opportunities in the oil and gas sector have expanded despite policies that restrict energy development on federal lands. Opening up federal lands to oil and gas development would provide a huge boost to the economy and put even more Americans back to work.

IER Press Secretary Chris Warren authored this post.

[i] http://www.eia.gov/todayinenergy/detail.cfm?id=12451&src

[ii] ibid i

[iii] Proved reserves are resources that are recoverable under current economic and operating conditions.

[iv] http://www.eia.gov/naturalgas/crudeoilreserves/index.cfm

[v] http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPND2&f=A

[vi] http://data.bls.gov/timeseries/LASST38000003

Filed Under: News, Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , , , , ,

Fed Up With Ethanol, Boaters and Bikers Search for Alternatives

August 13, 2013 by Leave a Comment

One of the many problems with the Renewable Fuel Standard (RFS) is that it requires refiners to blend increasing amounts of ethanol into motor fuel, even though ethanol can damage engines. Gasoline blended with even as little as 10 percent ethanol can accelerate engine failure in boats, motorcycles, lawnmowers, and other small engines.

Musa Agil has firsthand knowledge of this problem. Agil, who operates two independent gas stations in Wilmington, North Carolina, started selling ethanol-free gasoline a few years ago. Since then, he says he’s gained a loyal base of customers who are willing to drive across the county to buy his product, even though it is more expensive than conventional gasoline (E10).

“They’re willing to pay it to protect their boats, old cars, motorcycles, landscaping equipment,” Agil said in an interview with the Wilmington Star-News. “They just don’t want that crappy gas going into their engines.”

One of Agil’s customers, Capt. Allen Cain, said he switched his boat to ethanol-free gasoline about three years ago after his friends started having problems with E10.

“Ethanol is bad for your boating outboards and it’s bad for your fuel lines because ethanol will eat through the fuel lines and mess them up, so it’s worth it in the long run to use non-ethanol fuel,” Cain said.

Keith Beasley, owner of Thomasville Lawn and Garden in Thomasville, North Carolina, estimates that fuel problems related to ethanol account for between 75 and 80 percent of his business.

“[Ethanol] being from a corn base it is gritty,” he explains. “Inside a carburetors there are a lot of small tiny passages that the grit will just get stopped and can’t go through.”

Despite the harmful effects of ethanol, the Environmental Protection Agency (EPA) approved last year production of gasoline that contains up to 15 percent ethanol. As AAA points out, use of E15 is “expressly prohibited” for boats, motorcycles, power equipment, lawnmowers, and off-road vehicles.

E15 also poses problems for the 95 percent of cars in America that are not certified to use it. Several automakers have said their warranties will not cover claims related to improper E15 use. In response, AAA has called for a suspension of E15 sales, citing “consumer confusion and the potential for voided warranties and vehicle damage.”

Passed by Congress in 2005 and expanded in 2007, the RFS requires refiners to blend 36 billion gallons of biofuels into gasoline by 2022. Last week, EPA increased the 2013 mandate to 16.55 billion gallons, most of which will come from corn-based ethanol. As the federal mandate continues to rise, ethanol will only cause more problems for boaters, bikers, and anyone who likes to keep a nice lawn.

IER Policy Associate Alex Fitzsimmons authored this post.

Filed Under: Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , , , ,

In the Pipeline: 8/12/13

August 12, 2013 by Leave a Comment

All future measurements should be in fruit-based units.

Forbes (8/10/13) reports: “There’s much screaming and shouting from the usual suspects about the new radiation leak discovered at Fukushima, the stricken nuclear power plants in Japan. What they’re not telling you is that the radiation leakage is around the same as 76 million bananas. A fact which should help to put it all into some perspective. Here’s Greenpeace: Environmental group Greenpeace said Tepco had ‘anxiously hid the leaks’ and urged Japan to seek international expertise. ‘Greenpeace calls for the Japanese authorities to do all in their power to solve this situation, and that includes increased transparency…and getting international expertise in to help find solutions,’ Dr Rianne Teule of Greenpeace International said in an e-mailed statement. Not that Greenpeace is ever going to say anything other than that nuclear power is the work of the very devil of course. And the headlines do indeed seem alarming.”

It takes over 200 days to get a permit to drill on federal lands in the Land of the Free.

The Telegraph (8/9/13) reports:  “David Cameron’s plans to kick-start shale gas fracking faced a fresh setback after the environmental regulator said energy companies could face a six month wait to secure permits despite a government pledge to cut the process to less than a fortnight. In a development that will be welcomed by those concerned about shale gas, the Environment Agency (EA) said the ‘current level of public interest’ in fracking meant that the permitting process was likely to be extended to allow for more consultation. In June, the Treasury pledged the government would take a series of measures ‘designed to kick start the shale gas industry in the UK’ including plans for the EA to ‘significantly reduce the time it takes to obtain environmental permits for exploration’. It said the EA would ensure shale gas permits which currently take a varying length of time would be issued within a “standard 13 week period” by September and then “within 1-2 weeks” by February.”

How many of the assumptions underlying the environmentalist view of the world depend on global warming and scarcity? What are they going to do when both are discredited?

Climate Depot (8/9/13) reports: “Another major European media outlet is asking: Where’s the global warming? Moreover, they are featuring prominent skeptic scientists who are warning of a potential little ice age and dismissing CO2 as a major climate driver. And all of this just before the release of the IPCC’s 5AR, no less! The August 7 print edition of the Danish Jyllands-Posten, the famous daily that published the ‘Muhammad caricatures’, features a full 2-page article bearing the headline: ‘The behavior of the sun may trigger a new little ice age’ followed by the sub-headline: ‘Defying all predictions, the globe may be on the road towards a new little ice age with much colder winters.’ So now even the once very green Danish media is now spreading the seeds of doubt. So quickly can ‘settled science’ become controversial and hotly disputed. The climate debate is far from over. And when it does end, it looks increasingly as if it’ll end in favor of the skeptics. The JP writes that “many will be startled” by the news that a little ice age is a real possibility. Indeed, western citizens have been conditioned to think that nothing except warming is possible. Few have prepared for any other possibility. In its latest 2-page report, the JP now appears to tell its readers that our views on climate science have to be much more open minded and unshackled from the chains of dogmatism.”

The ethanol industry complains of monopoly persecution, but when you talk to customers, they’ve got a very different perspective on monopolies and mandates.

The Star News Online (8/11/13) reports: “For most folks, it’s the price of gasoline that matters. But for a vocal minority, it’s what’s in the gasoline that really matters. Or, to be more precise, what isn’t – specifically ethanol. Several years ago, Musa Agil looked to capitalize on that demand and make his mark in the Wilmington market by starting to sell ethanol-free gasoline at his pair of independent gas stations – Wrightsville Country Store and Masonboro Country Store…Six years later, Agil has a loyal customer base that drives from as far away as southern Brunswick County to fill the tanks of their cars, boats, motorcycles and lawn equipment with his ethanol-free fuels – which he now sells in three grades. The gasoline is a hot seller even though it can cost 30 to 40 cents more per gallon than the fuels that are blended with ethanol.”

The Journal mischaracterizes these people. Most of them are really lobbyists for companies, trade associations, or law firms with interests and issues before the Commission. They want to make sure that the new boss likes them. In short, they are part of the problem.

The Wall Street Journal (8/8/13) reports: “As former commissioners of the Federal Energy Regulatory Commission, we object to your July 30 editorial ‘Ron Binz’s Rules for Radicals’ criticizing Ron Binz, the president’s nominee to chair the FERC, and implying that the FERC is pursuing an agenda unconstrained by law or national policy. Mr. Binz is criticized for helping draft, at his governor’s request, provisions of new utility legislation in Colorado. The law requires utilities to submit regulatory plans so that coal plants comply with expected Environmental Protection Agency regulations. Mr. Binz’s commission implemented the law, issuing a balanced decision that closed older, heavier-emitting coal plants while outfitting newer coal plants with emissions controls.”

Filed Under: Blog, In the Pipeline Tagged With: , , , , , , , , , , ,

E85 Can Break the Bank, but Not the Blend Wall

August 12, 2013 by 3 Comments

The Environmental Protection Agency (EPA) recently increased the amount of ethanol refiners must blend into gasoline under the Renewable Fuel Standard (RFS), despite repeated warnings that the U.S. cannot handle higher ethanol concentrations.

While the RFS requires blending increased amounts of ethanol into gasoline, most cars are certified to run on gasoline that contains no more than 10 percent ethanol (E10). Breaching this “blend wall” would force refiners to decrease production and increase exports, resulting in higher gas prices for Americans.

The Renewable Fuels Association is touting a new report that claims to offer a solution to the approaching blend wall. The study, conducted by economists at Iowa State University, claims that increasing production of E85 (ethanol that contains up to 85 percent ethanol) would allow refiners to meet rising federal mandates without increasing the ethanol content of conventional gasoline.

Unfortunately for ethanol advocates, the study is based on several dubious assumptions about consumer demand for ethanol and E85. When these assumptions are more closely aligned with reality, the argument for E85 as a solution to the blend wall falls apart.

The most serious flaw with the study is that it relies on government regulation to keep the price of gasoline artificially high. As the authors admit:

“However, this expanded ability to use ethanol will not occur under existing policies unless EPA increases mandates significantly above the E10 blend wall because high RIN prices is the only current policy tool that provides the necessary incentives to increase the distribution capacity and demand for E85.”

To comply with the RFS, refiners can either blend the required ethanol volumes or purchase Renewable Identification Numbers (RINs). The problem, as we have explained before, is that RIN prices spiked from $0.07 cents at the beginning of the year to over $1 in March and $1.32 in July. This increases compliance costs on refiners, which puts upward pressure on prices at the pump. By the authors’ own admission, high RIN prices—and by extension high gas prices—are necessary to make E85 economical.

Another flaw with the study is that it depends on an unrealistic drop in the price of E85. The authors claim that E85 selling at $2.00 per gallon would “attract quite a lot of attention.” They fail to point out that E85 isn’t selling anywhere close to that price point. According to AAA’s Daily Fuel Gauge Report, E85 currently costs about $2.86 per gallon.

This figure does not even account for the fact that E85 contains about 33 percent less energy than conventional gasoline. The BTU-adjusted price of E85 is currently $3.76 per gallon, which is significantly higher than regular unleaded gasoline. Stating the obvious, the authors explain that “low levels of E85 consumption should be expected when E85 is not priced to save consumers money.”

Price is not the only factor drivers consider when purchasing fuel; convenience also plays an important role. The authors point out that only 2.7 percent of retail gas stations sell E85, most of which are concentrated in the upper Midwest. Millions of drivers who own flex fuel vehicles (the only cars that can run on E85) do not even live within ten miles of one of these stations. As the authors admit, this geography limits the already small pool of drivers who would be inclined to purchase E85 if it were more competitively priced.

Far from providing a “workable and economic pathway” for refiners to comply with the RFS, the ethanol lobby’s solution to the blend wall is a recipe for higher energy prices. Increasing E85 production at the expense of conventional gasoline would only further reduce gasoline demand, which is part of the reason the blend wall is even an issue. The solution is for Congress to repeal the RFS.

IER Policy Associate Alex Fitzsimmons authored this post.

Filed Under: News, Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , ,

Biofuels: Reality vs. Federal Mandates

August 9, 2013 by 1 Comment

One of the most absurd aspects of the federal government’s energy policy is the Renewable Fuel Standard’s mandate for cellulosic ethanol volume. As we have explained on these pages, ethanol mandates drive up the price of food for no reason. We also wrote, “EPA is incredibly forcing refiners to pay a fine for not hitting cellulosic ethanol targets that even the EIA projects will be impossible, and even though in 2011 there was no evidence that any cellulosic ethanol was available commercially to make it possible for the refiners to comply with the regulation.”

Well, it’s two years later, how have things changed? The EPA based its cellulosic ethanol mandate for 2013 on two particular plants, one of them being  a Kior plant based in Columbus, Mississippi. Yet unfortunately for refiners—who will face penalties for not obeying the mandate—Kior missed its second-quarter production forecast by a whopping 75 percent. Here are the Bloomberg story’s details of the sordid affair:

Kior Inc. (KIOR), a producer of transportation fuels from biomass such as wood waste and non-food crops, fell…as production at its first commercial plant was 75 percent below its forecast.

…

The company shipped more than 75,000 gallons (284,000 liters) of fuel from its Columbus, Mississippi, plant in the second quarter…Kior said in May the facility would produce 300,000 gallons to 500,000 gallons. Revenue in the quarter was $239,000, about 12 percent of the $1.93 million average of five analysts’ estimates…

The Columbus plant opened in October, the first commercial site making cellulosic fuel in the U.S. [Bold added.]

At the same time the EPA is mandating refiners to use more cellulosic ethanol than physically exists, it is also mandating that they blend more total ethanol (including corn-based) than is feasible, because of the slower than expected increase in total gasoline usage. (This had led refiners to hit the so-called “blend wall,” driving the price on renewable credits to record highs.)

It’s one thing for the government to levy costly and inefficient mandates on industry, but it comes out of a Kafka novel to mandate renewables standards that are literally impossible to achieve. The fact that EPA is so wildly off in its forecasts—so that it unintentionally asked industry to do the impossible—casts doubts upon the whole enterprise of renewables mandates.

 

 

Filed Under: Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , , ,
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