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In the Pipeline: 4/8/13

April 8, 2013 by Leave a Comment

It must be stressful for President Obama to empathize with such a backwards way of thinking. WSJ (4/5/13) reports: “At the home of hedge-fund billionaire Thomas Steyer, Mr. Obama was at pains to explain how the proletariat think. “You may be concerned about the temperature of the planet, but it’s probably not rising to your number one concern,” Mr. Obama said. “And if people think, well, that’s shortsighted, that’s what happens when you’re struggling to get by.” In other words, it’s easier to reach a higher state of liberal consciousness when you can afford a home overlooking the Golden Gate Bridge.”

 

Who was it that the President said is shortsighted? Twitchy (4/5/13) reports: “Not even ABC News could overlook the obvious parallels between layoffs today at Fisker Automotive and another spectacular, high-profile failure of the Obama administration’s “green energy” push. Solyndra, which received a $535 million loan guarantee from the government, wasn’t a total loss; someone found a way to salvage the company’s inventory for an art exhibit. Fisker isn’t a museum piece yet, but things aren’t looking good.”

 

It is not just about natural gas. It is about manufacturing. It is about prosperity. It is about economic growth. Reuters (3/28/13) reports: “Such is the impact of the shale gas revolution in the United States that it’s quite possible that babies born today will no longer play with plastic dolls and cars made in China… It’s almost become a fait accompli that China is the world’s factory, but the early warning signs that this may be changing are starting to show.”

 

What’s really fun is that the masks worn by these eco-occupy-thugs are made from petrochemicals. We wonder what they’ll shield their cowardly lives with once they’ve rid the world of fossil fuels. National Review (4/4/13) reports: “In all my years of reporting on campus conflicts, this is the most appalling instance of political correctness I can recall. That students would advocate paying an articulate libertarian conservative not to speak on campus signifies the near-collapse of the ethos of classic liberal education. If Epstein’s views were as indefensible as Serio claims, questioning him in person would be precisely the way to expose that. Any way you slice it, students would learn from the talk. Yet Serio would prefer to spend thousands in student funds to prevent the dreaded Epstein from speaking.”

 

Yes, George, we should consider the impact of energy sources on human health and well-being. Like lifting billions of people out of poverty, lowering infant mortality rates, and increasing life-expectancy, thereby allowing people to advocate for nonsense like the carbon tax well into their 90’s. WSJ (4/7/13) reports: “We think this idea should be applied to energy producers. They all should bear the full costs of the use of the energy they provide. Most of these costs are included in what it takes to produce the energy in the first place, but they vary greatly in the price imposed on society by the pollution they emit and its impact on human health and well-being, the air we breathe and the climate we create. We should identify these costs and see that they are attributed to the form of energy that causes them.”

 

Here’s what you need to know about Bill Burton. First, he is very good at what he does. Second, he does nothing for free. All Risk No Reward (4/13) reports: “The cost-benefit analysis of this risky venture makes it clear that the pipeline is not in our national interest… The lengthy laundry list of risks—to water1, public health2, and climate3, not to mention the fine print4—is not worth a pipeline that exports oil to foreign countries like China and Venezuela, does nothing to reduce our dependence on Middle Eastern oil, and creates only 35 permanent jobs.”

 

Okay, so we know that wind and solar come up short, but how about Piezolectric Energy? ThinkProgress (4/7/13) reports: “People move. All the time. Wouldn’t it be great to harness that movement and help power our cities with the movement of people living in them? The Paris Marathon will happen on Sunday, and the organizers are going to lay down some special tiles across the course. While runners are concerned with charging their internal batteries with carbs and sustaining them with goo, their footsteps will charge other batteries:”

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

The Biofuel Mandate and EPA’s Costly Tall Tale

April 5, 2013 by Leave a Comment

 

The Energy Policy Act of 2005 requires the Environmental Protection Agency (EPA) to set mandatory levels of cellulosic biofuel for refiners to blend into transportation fuels.  In order to restrain EPA, the law requires that the mandate be based on an estimate from the Energy Information Administration (EIA) as to how much cellulosic biofuel would be produced in the given year.

In 2010 and 2011, EPA mandated refiners to blend millions of gallon of cellulosic biofuel.  However, in both years, no cellulosic biofuel was produced.  Refiners were nevertheless forced to pay millions in penalties to EPA for failing to purchase the nonexistent fuel.

EPA set the cellulosic biofuel mandate for 2012 at 8.65 million gallons.  Unfortunately, by year’s end, only 20,000 gallons had actually been produced.  In January, the DC Circuit Court of Appeals struck down the 2012 mandate because the agency’s estimate was based, in part, on the their admitted “objective of promoting growth in the [biofuel] industry” instead of a neutral analysis of projected production.

Less than one week after the 2012 mandate was thrown out, EPA issued an even higher mandate for 2013 – 14 million gallons.  Despite its wildly inaccurate track record and the intervention of the DC Circuit, EPA seems unwilling to change its ways.

IER was the only free market public policy group to submit comments to EPA demanding that the agency reconsider this costly mandate.  Our full comment can be found here and is also reposted below:

2013 Renewable Fuel Standard: Cellulosic Biofuel

I.               Industry Statements Have Proven Untrustworthy For EPA’s Predictions

In the Proposed Rule, EPA states that its projection of cellulosic biofuel production in 2013 is based both on EIA’s estimate and “individual projections that emerged from” meetings with senior level representatives of companies involved in the process.[1]  While the biofuel industry may have confidence in its ability to produce 14 million gallons ethanol-equivalent of cellulosic biofuel, the actual results in 2010, 2011, and 2012 show that the industry’s statements have little or nothing to do with reality.

The two companies that EPA believes will produce cellulosic biofuel in 2013 – KiOR and INEOS Bio – have a history of making incorrect projections about their abilities to produce fuel.

INEOS Bio

In November 2011, Ethanol Producer Magazine conducted an interview with INEOS Bio CEO Peter Williams.  The article stated:

The project is on schedule and on budget so far, and if things continue to go as planned, the plant will be mechanically complete in April and will be continuously churning out waste-based ethanol by the second half of next year [2012].[2]

The facilities were not completed by April.  INEOS Bio did not issue a news release on the project until July 23rd, stating:

Construction of Ineos’ $130 million biorefinery joint venture project in the US has been completed, with production expected to begin in the second half of 2012, said Peter Williams, CEO of Ineos Bio, the Switzerland-based company’s bioenergy business.[3]

INEOS Bio did not produce any cellulosic ethanol in the second half of 2012.  In a subsequent news release on August 9, 2012, the company stated:

The Center is scheduled to begin production in the 3rd Quarter of this year.[4]

In an October 31, 2012 news release, INEOS Bio stated

Construction on the Center was completed in June 2012, and production of advanced cellulosic bioethanol is scheduled to begin in the 4th Quarter.[5]

As EPA is aware, INEOS Bio produced 0 gallons of cellulosic biofuel from it Florida plant in 2012.  As of the date of this comment, the company still has not produced any cellulosic biofuel in 2013.

KiOR

KiOR President and CEO stated on March 26, 2012 that

…we remain on target to meet our goal of first production in the second half of the year [2012].[6]

Mr. Cannon went further in a July 24, 2012 article in Biomass Magezine, stating KiOR

will be fueling cars of American consumers this year [2012].[7]

On a November 8, 2012 Earnings Call, Mr. Cannon announced that KiOR had “started production at the Columbus facility in October.”  He also stated

we are confident we will start commercial shipments from Columbus later this month.[8]

Even though KiOR is registered to issue RINs for the cellulosic biofuel it produces at its Columbus facility, EPA’s database shows that no cellulosic biofuel RINs were generated in November or December.[9]

Just last week, KiOR announced the first shipment of cellulosic biofuel from its Columbus facilities.  However, KiOR did not announce the quantity of the shipment in its news release or earnings call.

The statements of KiOR and INEOS Bio, as well as other companies in the cellulosic biofuel industry, have influenced EPA’s prior projections of production.  As the chart below shows, reliance on these types of statements has led to wildly inaccurate projections:

 

In fact, the closest EPA has ever come to successfully projecting the actual volume of cellulosic biofuel was in 2010 because that was EPA’s smallest projection.

Recommendation: IER recommends that EPA place very little weight on statements from the cellulosic biofuel industry, at least until the industry demonstrates that their statements are based on real-world data. Instead, EPA should incorporate previous year production levels as a basis for realistic projections.

II.              The First-of-a-Kind Technologies Being Used Are Not Yet Proven At Commercial Scale

As EPA is aware, many companies have produced cellulosic biofuels in the past.  The difficulty is with producing these fuels at a commercial scale.  No company in America has steadily produced cellulosic biofuel in commercial volumes, even though during World War I and II there were cellulosic ethanol plants in the United States.  KiOR and INEOS Bio are operating first-of-a-kind technology that has not yet been proven on a commercial scale.

If these facilities are unable to prove their proprietary process for commercial production, then they will produce far less cellulosic biofuel than their nameplate capacity.

The INEOS Bio facility was completed in June 2012 and began the start-up phase in November 2012.  Four months after start-up, the company still has not made a public announcement of any RIN generation at the facility or any commercial shipments of cellulosic biofuel.

Similarly, the KiOR facility was structurally completed in September 2012.  Despite the company’s statements that it would be shipping cellulosic biofuel by the end of 2012, KiOR just made its first announcement of shipped cellulosic biofuel.  However, the company has not revealed the quantity that was shipped and no RIN information is yet available.

EPA’s projection that both INEOS Bio and KiOR will be producing cellulosic biofuel at their respective facilities’ nameplate capacity by the end of 2013 is enormously aspirational, given that neither company has shown that their first-of-a-kind technology is capable of such a feat.  Until these companies show that their facilities are capable of producing at nameplate capacity, EPA seems to be relying solely on these companies’ advertising, not their proven capability.  As seen in Section I of this comment, these two companies have a history of being unable to produce fuel in accordance with their own public statements.

Recommendation: In order to allow time for the companies to prove their proprietary technologies, we recommend projecting that KiOR and INEOS Bio will not produce cellulosic ethanol in 2013 in commercial quantities.  Until these companies prove their technologies, EPA is making a risky assumption that they will work as planned.

III.            KiOR Has Made A Lower Projection Than EPA

EPA projects that in 2013 KiOR will produce 8 million ethanol-equivalent gallons of cellulosic biofuel, “which is about 5 million gallons of actual pure hydrocarbon fuel.”[10]  However, on its most recent earnings call on March 18, 2013, KiOR President and CEO Fred Cannon stated that “we believe our volume expectations to be approximately 3 to 5 million gallons for the balance of the year.”[11]

This revelation should inform EPA that its estimates are at the very highest end of the estimates made by KiOR itself, which has a history of public statements of overly-ambitious production levels.

Recommendation: In order to “reflect[] EPA’s best estimate of what will actually happen in 2013,”[12] EPA should revise downward KiOR’s projected production for 2013.

IV.          EIA Now Expects Only 5 Million Gallons of Cellulosic Biofuel Production

EPA based its projection, in part, on EIA’s estimate that 9.6 million gallons of cellulosic biofuel would be produced in 2013.  This projection was stated in a letter dated October 18, 2012.  The letter estimated that the KiOR plant alone would produce 5.5 million gallons of cellulosic biofuel, with the INEOS Bio facility producing an additional 4 million gallons.

However, in a February 26, 2013 memo, EIA stated that “output [of cellulosic biofuel] could grow to more than 5 million gallons in 2013.”[13]

EIA has apparently reduced its projection of cellulosic biofuel production that will occur in 2013 to approximately 5 million gallons.  Because EIA’s decreased production estimate comes four months after the initial projection to EPA, EIA must be taking into consideration more recent information.

Recommendation: EPA should use EIA’s most recent estimate as a basis to project how much cellulosic biofuel will actually be produced in 2013.  If EPA does not use this most recent estimate, EPA should at least consult with EIA to determine the reasons why it decreased its estimate.

Conclusion

EPA’s method of analysis has resulted in extremely inaccurate predictions for the past two years.  The Proposed Rule for 2013 mandates an amount of cellulosic biofuel that, once again, surely will not exist by the end of the year.

IER recommends that EPA set the mandated level of cellulosic biofuel at 20,000 gallons for 2013 so as to reflect the most recent proven capabilities of the domestic cellulosic biofuel industry and allow for time to show whether the first-of-a-kind technologies being used by KiOR and INEOS Bio are capable of producing cellulosic biofuel at a commercial scale.


[1] 78 Fed. Reg. 9290.

[2] http://ethanolproducer.com/articles/8327/outlook-2012-patience-is-a-virtue

[3] http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Petrochemicals/8550137

[4] http://www.ineos.com/businesses/INEOS-Bio/News/~/INEOS-Bio-Facility-Receives-Registrations-from-US-EPA-for-Production-and-Sale-of-Next-Generation-Cellulosic-Ethanol1/

[5] http://www.ineos.com/businesses/INEOS-Bio/News/~/INEOS-Bio-Facility-in-Florida-Begins-Producing-Renewable-Power/?items=10&businesses=1428&year=&page=1

[6] http://www.biofuelsdigest.com/bdigest/2012/03/27/kior-on-budget-on-track-for-opening-first-commercial-biofuels-plant-in-2012/

[7] http://biomassmagazine.com/articles/7886/kior-renewable-gasoline-will-fuel-cars-this-year

[8] http://seekingalpha.com/article/992101-kior-s-ceo-discusses-q3-2012-results-earnings-call-transcript

[9] http://www.epa.gov/otaq/fuels/rfsdata/2012emts.htm

[10] http://seekingalpha.com/article/1283971-kior-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single

[11] http://seekingalpha.com/article/1283971-kior-s-ceo-discusses-q4-2012-results-earnings-call-transcript?part=single

[12] 78 Fed. Reg. 9294.

[13] http://www.eia.gov/todayinenergy/detail.cfm?id=10131

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

Prepare for Higher Gas Prices

April 4, 2013 by Leave a Comment

 

EPA Will Increase Gasoline Prices and Reduce Fuel Economy with Its Bid to Further Reduce Sulfur in Gasoline

The U.S. Environmental Protection Agency (EPA) has decided that the sulfur content of gasoline must be further reduced from 30 parts per million to 10 parts per million on an annual average basis by January 1, 2017.  This will bequeath to President Obama’s successor the immediate economic problem of higher gasoline prices for consumers upon assuming office. Refiners are currently meeting the Tier 2 vehicle standards that reduced sulfur in gasoline from 300 parts per million to 30 parts per million, a 90-percent reduction.  Refiners estimate that the proposed new rules will cost the American motorist as much as an additional 9 cents per gallon because it would require additional hydrotreating equipment to remove sulfur as well as revamps and expansions to existing hydrotreaters to achieve the reduction.

However, not only will the rule increase the price of gasoline, but it changes the “vehicle certification fuel” to E15 (gasoline that is 15 percent ethanol). This change will lead to lower fuel economy in automobiles and it will cause even more problems for small engines such as boat engines, lawn mowers and weed eaters.

Tier 2 and Proposed Tier 3 Vehicle Standards

In 1999, the EPA announced its Tier 2 regulatory framework, which tightened emission standards for the first time on all passenger vehicles, including light-duty trucks and SUVs. Also in 1999, EPA introduced the concept of treating “vehicles and fuels as a system.” As a result, the Tier 2 standards not only dealt with passenger vehicles, but also placed mandates on the refinery industry because certain emission reduction technologies work better with lower sulfur content in gasoline. The Tier 2 vehicle standards lowered the vehicle standard for sulfur in motor gasoline in stages down to an average of 30 parts per million with an absolute cap of 80 parts per million[i] in 2006, from a previous standard of 300 parts per million, a 90 percent reduction.

The EPA recently announced its next level of controls, called Tier 3, with sulfur levels down to 10 parts per million. EPA’s proposed Tier 3 standards would significantly tighten the constraints on both passenger vehicles and the refining sector. A study by Baker & O’Brien, a consulting company, finds that the new Tier 3 proposal would impose upfront compliance costs of almost $10 billion on the refinery industry, resulting in a permanent increase in refining costs of 6 to 9 cents per gallon of gasoline. It will also increase the cost of vehicles. Thus, the proposed Tier 3 standard would increase both the price of gasoline and the cost of buying a new car.

Further, it is unlikely that the increased costs that Tier 3 would impose on vehicle manufacturers and refiners would add much benefit to the environment. Existing regulations will continue to make improvements into the future without the need for more stringent Tier 3 constraints. Because the existing Tier 2 standards have achieved significant gains in lowering the sulfur content of gasoline, further reductions become exponentially more difficult to achieve while upping the cost of compliance that motorists would have to pay.

The Baker & O’Brien study modeled the tightening of gasoline sulfur standards and finds the upfront compliance costs to refiners at $9.8 billion with the total annual compliance cost, including capital recovery, to be $2.4 billion. Spread out over the range of projected gasoline production, the higher operating cost would add to 6 to 9 cents per gallon in increased gasoline costs for the American motorist.[ii]

According to the EPA, which solicited each refinery, 16 U.S. refineries would need a major overhaul, while 66 refineries would need modification to existing hydrotreating equipment.[iii] Unfortunately, for U.S. motorists, the United States does not have excess refinery capacity and major overhauls to existing refineries could result in higher prices if adequate capacity does not exist to replace supplies.

Environmental Implications

The sulfur in gasoline itself does not pose a public health problem. Rather, it lowers the effectiveness of catalytic converters, which in turn can lead to greater tailpipe emissions. These emissions (nitrogen oxides, volatile organic compounds, carbon monoxide and fine particles) contribute to smog and soot, which can cause respiratory and heart disease. However, according to the EPA, these pollutants have declined by 68 percent since 1970 due to actions already undertaken by refiners and utilities. (See graph below.)

Decline in Aggregate Emissions (Criteria Pollutants)

The Baker & O’Brien study also found that the additional energy-intensive hydrotreating required would result in an increase in carbon dioxide emissions due to the number of refineries running hydrotreating operations and the severity of the needed operations.

EPA claims that massive amounts (79 to 92 percent) of the benefits from this rule will come from particulate matter reductions. [iv] The problem with this claim is that it is based on EPA’s belief that over 40 percent of the deaths in parts of the United States between 1979 and 1983 were due to PM2.5[v]and 25 percent of all deaths nationwide were due to ambient PM2.5.[vi]  This finding by EPA strains credibility and cannot be replicated because EPA has refused to release the underlying databases (the “Cancer Prevention Study” and the “Harvard Six Cities Study”) to the public,[vii] even though these datasets were funded by the public. One of the tenets of science is replication of data, but this is impossible without EPA allowing the public access. The secret reports EPA has used to justify its regulatory agenda are increasingly gaining the attention of Congress, and demands are escalating for EPA to become more transparent with the documents it uses to regulate.

Fuel Economy Implications

One overlooked part of this proposed rule is that it changes the “vehicle certification fuel” to E15 (gasoline that is 15 percent ethanol). This is a stealthy way for EPA to get much more wide-spread adoption of E15 fuel at gas stations. Currently, EPA has approved E15 for cars of recent model years, but the automakers disagree and are worried that cars might have mechanical or other problems with E15 for which manufacturers will be liable. Despite ordering the fuel’s use, EPA would not pay for E15–related engine damages to consumers’ vehicles. By changing the vehicle certification fuel, new cars would be certified to run on E15, eliminating complaints from automakers.

But there are two major problems with this. First, E15 will contain less energy than current fuel because a gallon of gasoline contains 47 percent more energy than a gallon of ethanol (a gallon of ethanol has 76,100 BTUs, while a gallon of reformulated gasoline has 111,836 BTUs). Increasing the amount of ethanol reduces the energy and reduces fuel economy.  A second problem with E15 is that, as Consumer Reports has reported, ethanol in gasoline (E10) already causes problems for small engine owners. Increasing the amount of ethanol in motor fuel will further harm small engines.

Conclusion

EPA is again burdening consumers and the energy industry that makes their fuel with a new regulation when that industry is already struggling to meet other federal environmental requirements, including renewable fuel mandates. The new Tier 3 regulation is discretionary, not mandated, and its need has not been demonstrated. It will add to the cost of motor gasoline and add to the cost of a new vehicle at a time when the American public is awash in new taxes and regulations increasing the cost of living. With little or no excess refinery capacity, the American consumer is likely to see an upturn in gasoline prices as refineries undertake the retooling and then a permanent increase in the price of gasoline to pay for the additional equipment and increased cost of operation. To top it all off, the EPA has advocated the sale of fuel that may destroy consumers’ engines or lead to costly repairs.

According to Senator David Vitter, “The EPA again seeks to advance a political agenda, disregarding the facts and potential economic costs. The price of gasoline at the pump spiked upwards in the last few weeks, and EPA’s Tier 3 proposal – if implemented – could drive prices up even further without explanation.”[viii]

EPA is spending taxpayers’ dollars on an expensive and harmful new regulation justified with secret evidence they refuse to share with congress or the public, and they’re doing it not because the law requires them to do so, but because they want to.  The new regulation fails on many tests, including transparency and open government, and it uses a questionable cost benefit analysis.  Consumers, as with all EPA regulations, will pay higher prices for their fuel and their vehicles, making personal transportation just that much more expensive when President Obama’s successor is sworn into office.


[i] Fuel Fix, Feds to unveil new sulfur standard for gasoline, March 28, 2013, http://fuelfix.com/blog/2013/03/28/feds-to-unveil-tier-3-sulfur-standards-for-gasoline/

[ii] Baker & O’Brien, Addendum to Potential Supply and Cost Impacts Lower Sulfur, Lower RVP Gasoline, March 2012, http://api.org/news-and-media/news/newsitems/2012/mar-2012/~/media/Files/News/2012/12-March/Addendum-Potential-Impacts-of-Lower-Sulfur-Lower-RVP-Gasoline-Report.ashx

[iv] See Table 8-4: Estimated 2030 Monetized PM-and Ozone Related Health Benefits in the Regulatory Impact Analysis, http://www.epa.gov/otaq/documents/tier3/420d13002.pdf .

[v] Anne E. Smith, Technical Comments on the Regulatory Impact Analysis Supporting EPA’s Proposed Rule for Utility MACT and Revised NSPS (76 FR 24976), http://www.nera.com/nera-files/PUB_Smith_EPA_report_0811.pdf .

[vi] Anne E. Smith, Technical Comments on the Regulatory Impact Analysis Supporting EPA’s Proposed Rule for Utility MACT and Revised NSPS (76 FR 24976), http://www.nera.com/nera-files/PUB_Smith_EPA_report_0811.pdf.

[vii] See Sen. David Vitter & Rep. Lamar Smith, March 4, 2013 letter to the Honorable Gina McCarthy, http://science.house.gov/sites/republicans.science.house.gov/files/documents/EPA%20Ltr%20Smith%20Vitter%20Signed%203-4-13.pdf

[viii] U.S. Senate Committee on Environment and Public Works, Vitter, Bipartisan Group of Senators Oppose EPA’s Tier 3 Gasoline Regulations, February 4, 2013, http://epw.senate.gov/public/index.cfm?FuseAction=PressRoom.PressReleases&ContentRecord_id=a70c480c-ce1b-5ee7-430b-ae4f2e5230d9&CFID=47662043&CFTOKEN=51118700

Filed Under: News, Products and Power, Threats, Tier 3 Standards Tagged With: , , , , , ,

In the Pipeline: 4/3/13

April 3, 2013 by Leave a Comment

I don’t always go to protests, but when I do, I make sure to bring my harmonica. Denver Post (4/1/13) reports: “Longmont and Fort Collins have banned the practice. Hickenlooper said Monday that past court rulings suggest cities can’t do that because mineral rights owners have to have reasonable access to recover the minerals for which they own the rights… Three hecklers were ejected from the debate. One left playing a harmonica.”

 

Times have changed. It’s not like the Old Days, when we can do anything we want. A refusal is not the act of a friend. If Vito Nicastri had all the windmills and solar panels, then he must share them, or let others use them. He must let us draw the water from the well. Certainly he can present a bill for such services; after all… we are not Communists. Washington Post (4/3/13) reports: “Italian police have seized a record €1.3 billion ($1.7 billion) in cash and property from a single person, a Sicilian alternative energy entrepreneur alleged to have close ties to the Mafia… Italy’s anti-Mafia investigators said in a statement Wednesday that Vito Nicastri, a 57-year-old native of Alcamo, near Trapani, was placed under surveillance and must remain in Alcamo for three years. He is accused of declaring for tax purposes a fraction of the value of his businesses.”

 

With Bloomberg vs. Buffet as their surrogates, the Sierra Club and BNSF square off over coal exports. Oregon Live (4/2/13) reports: “At the railroad berm that divides Horsethief Lake from the Columbia River, you can stick your hand between the rocks and come up with fistfuls of crumbly coal-black pebbles and dust… For the Sierra Club and other environmental groups, such spots are Exhibit A in their case against coal export from Northwest ports… Today, five environmental groups filed their biggest legal blast so far, warning BNSF Railway and six coal companies that they plan to sue them in 60 days in federal court for violating the Clean Water Act. If successful, the challenge would require coal trains to have water-pollution permits for the first time.”

 

Volts aren’t exactly blowing out the door… AutoBlog (4/2/13) reports: “On the plug-in hybrid side of the first-two-to-market ledger, the Chevrolet Volt had another solid sales month, but nothing earth shattering. Chevy sold 1,478 Volts last month, down a bit from February (1,626) but up from February (1,140). In March 2012, Chevy sold 2,289 Volts, which was a record at the time.”

 

Really, Jeff? The big problem with EPA is that they don’t have enough money? Apparently, Frank needs to do a much, much better job on messaging. E&ENews (4/2/13) reports: “But the air office routinely blows deadlines that are set by law, drawing scowls from friends and foes alike. Industry groups, environmental organizations and government watchdogs complain that the office responds only to legal action by outside groups. Those who track the office attribute its delays, in part, to a perennial lack of funds and personnel… ‘Funding is a chronic problem at EPA,’ said Jeff Holmstead, who led the air office during the George W. Bush administration. ‘They just don’t have enough people to meet all those statutory deadlines.’”

 

Three of the top six are oil and gas companies.  They pay more in taxes than Jimmy Buffett, or Warren Buffett, or WalMart (and their ideological masters at EDF).  Remember this the next time some corrupt, thieving politicians talks about oil and gas “subsidies”. USA Today (3/17/13) reports: “To identify the companies that pay the most taxes, 24/7 Wall St. reviewed corporate tax payments for the top 150 companies by revenue. Included in our analysis were company financials, including income, employee count and earnings before taxes. These were either provided by Capital IQ, or obtained by 24/7 Wall St. reviews of SEC filings or financial statements. All data, including taxes paid, are for 2012, or the most recent complete fiscal year.”

 

It’s a wonder you don’t see more of these out there when the government makes them practically free. Then again, you could find an old horse buggy, dial up internet modem, and typewriter for free somewhere, but you don’t see a lot of those around either. Slate (4/2/13) reports: “One way to get a car is to buy one. Another way is to lease one. But a variety of tax credit programs exist to encourage people to buy electric cars, which is why Tesla Motors has now devised a “revolutionary new finance product” that will let you lease a Model S while reaping the tax benefits of buying one… The way the program works is that you “buy” your Model S with a loan from US Bank or Wells Fargo, putting 10% down (Tesla helpfully notes that “[t]he 10% down payment is covered or more than covered by US Federal and state tax credits ranging from $7,500 to $15,000”), and then after 36 months you have the right to “sell” the Model S back to Tesla “for the same residual value percentage as the iconic Mercedes S Class”. Get it? It’s not a lease. It’s an agreement to buy the car on credit and then sell it back later to the seller at a prearranged depreciation level.”

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

In the Pipeline: 4/2/13

April 2, 2013 by Leave a Comment

When you’re not gambling with your own money, Vegas must be tons of fun. Grist (3/28/13) reports: “We find that 90% of hours are covered most cost-effectively by a system that generates from renewables 180% the electrical energy needed by load, and 99.9% of hours are covered by generating almost 290% of need. Only [9 to 72 hours] of storage were required to cover 99.9% of hours of load over four years. So much excess generation of renewables is a new idea, but it is not problematic or inefficient, any more than it is problematic to build a thermal power plant requiring fuel input at 250% of the electrical output, as we do today.”

 

The thing is that renewable portfolio standards don’t “promote” increased generation of electricity from wind and solar and what not. They require consumers to buy it under compulsion of law. Bingaman is a perfect choice for an organization that doesn’t understand the difference. Stanford Law School (4/1/13) reports: “Former U.S. Senator and Stanford Law School alumnus Jeff Bingaman will join the Steyer-Taylor Center for Energy Policy and Finance as a distinguished fellow to develop policies to assist states and local communities in promoting increased use of clean energy. Currently, 29 states plus the District of Columbia have adopted policies to promote increased generation of electricity from renewable energy sources in the form of Renewable Portfolio Standards (RPS).”

 

Do these people not know how to talk to each other? Maybe federal agencies should make employees sign up for eharmony or match.com. After all, wind power is very sexy and chic these days. Renewables Biz (3/29/13) reports: “The GAO identified significant duplication among the 82 different federal initiatives subsidizing wind energy. Despite this duplication, the administration wants to expand federal spending even further. We should eliminate duplication, not throw more money at overlapping initiatives. We should also redirect efforts toward research that will help renewable energy companies compete without taxpayer subsidies.”

 

Thank God! Now he can speak freely after being muzzled by three different Administrations. What do you want to bet no one wants to hear him? NYTimes (4/1/13) reports: “James E. Hansen, the climate scientist who issued the clearest warning of the 20th century about the dangers of global warming, will retire from NASA this week, giving himself more freedom to pursue political and legal efforts to limit greenhouse gases.”

 

Yes, the media has cooled on global warming, and so has the earth. Even James Hansen has noted the “pause” in global warming. Media Matters (3/30/13) reports: “Twelve. That’s the combined number of segments that ABC, CBS and NBC’s nightly news programs devoted to climate change throughout all of 2012. This is woefully inadequate. We need coverage that’s consistent with the importance of dealing with this issue… That’s why we and the Sierra Club are joining the League of Conservation Voters in asking those three nightly news programs to do a better job covering climate issues in 2013 than they did in 2012.”

 

This is a little complicated, so let me boil it down. The media got all excited over a new study that they said showed the warming over the last hundred years has been really spectacular. Only one problem. The guy who actually wrote the study specifically said that the data he had for the last 100 years was pretty close to worthless (statistically speaking). So, as my friend Robert Plant likes to point out, the song remains the same. Global Warming Policy Foundation (4/1/13) reports: “Roger Pielke Jr documents the gross misrepresentation of the findings of a recent scientific paper via press release which appears to skirt awfully close to crossing the line into research misconduct.”

 

A new, and ridiculous way into the carbon tax discussion…Washington Post (3/30/13) reports: “CONSUMERS AREN’T paying nearly enough for their energy, and that’s a massive problem for the planet.”

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

If You Watch Baseball, You Support Oil and Natural Gas

April 1, 2013 by Leave a Comment

America’s game is brought to you by oil and natural gas.

FossilFuels_infographic_baseball_20120501_v3_72dpiweb

Filed Under: Infographics

In the Pipeline: 4/1/13

April 1, 2013 by Leave a Comment

Freedom of expression is now freedom of coercion. Sierra Club(3/31/13) reports: “As the effects of climate change cause hardship for families across America, we need better coverage if we want people to connect the dots and demand real action to curb global warming pollution… That’s why we’re launching a petition to the executive producers of ABC, CBS, and NBC’s evening news programs, demanding more — and better — news coverage on climate change this year. Will you add your name to help us reach 60,000 signatures in the next two weeks?”

 

Shocker. Who could have foreseen that all of this would be a disaster? I mean, except for the morons who are trying to run the country. National Legal and Policy Center (3/28/13) reports: “Those interviewed cited predictable reasons for their regret, hesitance or refusal to accept government funding, including bureaucratic red tape, reporting requirements, uncertainty about credit subsidy costs, lengthy review times, and the expenditure of time and resources for an uncertain outcome. But now – with the benefit of hindsight of so many that went before them into the tortured realm of government dependency – apparently many have been deterred by bad publicity surrounding previous loans.”

 

Fisker possibly going bankrupt… Is it wrong to say it’s karma?Reuters (3/28/13) reports: “Fisker Automotive, the green-car company that has not built a car since July, has hired law firm Kirkland & Ellis to advise it on a possible bankruptcy filing, a person close to the matter said on Thursday.”

 

I am a little unclear. Who decides who might be “undesirable”? Because in the past people like Charlie Crist have been desirable while people like Rand Paul and Ted Cruz have been undesirable. Washington Post (3/30/13) reports: “NRSC officials say they are also taking a new approach to contested primaries… In 2010, the committee endorsed preferred candidates, only to see five of them defeated. In 2012, the NRSC chose to make no endorsements and provided only behind-the-scenes guidance to its preferred candidates… This time, the committee intends to stay neutral unless a particularly undesirable nominee begins to emerge. In addition, if Democratic groups wade into GOP primaries to help a candidate they deem weaker and easier to beat, the NRSC promises to fight back.”

 

For instance, after his horrible plan to raise energy taxes on consumers and families, which is a disaster for the Commonwealth and gave cover to collectivists like Governor O’Malley, I think that Governor Bob McDonnell (Bishop Ireton, Class of ’74) is undesirable. Very undesirable. Washington Post (3/29/13) reports: “Under the bill, which passed the Senate 27 to 20, motorists can expect to pay between 13 and 20 cents more per gallon by mid-2016, according to legislative analysts. The increase would be phased in, with the first bump of about 4 cents a gallon coming in July… The vote came just a month after a transportation plan was approved in Virginia, a state led by a Republican governor that competes for jobs in a region with some of the nation’s worst traffic congestion… The two plans share some features, including a new wholesale tax on gas that is intended to keep pace with the price of fuel… In an interview, O’Malley acknowledged that higher gas taxes would not be politically popular: “It’s not the kind of stuff people throw you bouquets for.” But he argued that funding more projects would create jobs and that the action was long overdue. He credited passage in Virginia for stiffening the spines of some lawmakers in Maryland.”

 

So if you start with global cooling, switch to global warming, rebrand as climate change, and then start beating your chest to climate disruption, does that mean we’ve come full circle? Or are there a few more PR tricks left in the bag? Powerline (3/29/13) reports: “The article then went on to survey emerging research (U.S. government funded!) casting doubt on high estimates of climate sensitivity, along with alternative explanations on some climate factors, such as “black carbon.”  The question in my mind at the time was how long this would take to begin to break out into the “mainstream” scientific and media world… That day appears to have arrived.  The new issue of The Economist has a long feature on the declining confidence in the high estimates of climate sensitivity.  That this appears in The Economist is significant, because this august British news organ has been fully on board with climate alarmism for years now.  A Washington-based Economist correspondent admitted to me privately several years ago that the senior editors in London had mandated consistent and regular alarmist climate coverage in its pages.”

 

We’re guessing the Obama administration is spinning this E15 thing as the knight in shining armor for emissions reductions. But the joke is on us – ethanol is a less efficient fuel than gasoline and is more damaging to the environment when you factor in its production. But hey, at least ethanol mandates aren’t bad for poor people and food prices, right? Energy Guardian (4/1/13) reports: “The Obama administration’s new proposal to reduce sulfur in gasoline has the oil industry concerned about refinery costs, but that’s not the only challenge it has to overcome in the draft rule… The Environmental Protection Agency also proposed moving to 15 percent ethanol blends as its test gasoline for emissions tests, a clear rejection of the oil industry’s public effort to stop the E15 blends and the Renewable Fuel Standard.”

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

New Study on the Impact of RFS Implies There Is No Need for the RFS

March 29, 2013 by Leave a Comment

 

Earlier this week, the Renewable Fuels Association released a report arguing that the Renewable Fuel Standard (RFS) is only slightly raising gasoline prices. The implication of the report is clear—there is no need for RFS. If the RFS has positive benefits, as the report claims, or only slight costs, then there is no need for Congress to mandate the use of billions of gallons of ethanol a year.

With gasoline prices spiking recently, the ethanol fuel industry, through its promotion of the RFS, has been criticized as one of the drivers of the increase. To comply with the RFS, refiners are forced to blend 13.8 billion gallons of ethanol in gasoline this year or they have to buy ethanol RIN (Renewable Identification Numbers) credits. The price of a RIN shot up from about seven cents at the start of the year to over a $1 by early March. Economic theory suggests that in the long run these additional costs will lead to higher gasoline prices. The Wall Street Journal, for example, stated that “the price of gas would quickly fall by about five to 10 cents a gallon” without the RFS.

To combat these arguments, the Renewable Fuels Association, the lobbying group for the ethanol producers, commissioned a study by Informa Economics to look at the price impacts of the RFS. The Informa study found that, “The direct effect on retail gasoline prices associated with elevated RIN costs is only $0.004 per gallon” and “the net benefit to consumers from the usage of ethanol is $0.04 per gallon of gasoline in the reference case and $0.02 per gallon in the high case.”

For sake of argument, let’s assume that they are right and the RFS actually produces net benefits. If blending billions of gallons of ethanol in gasoline leads to net benefits, then there is no reason to keep the RFS. If Informa’s numbers are correct, then refiners would gladly blend billions of gallons of ethanol in gasoline every year because it would save them money.

The fact that the RFS exists suggests the renewable fuels lobby doesn’t actually believe that it can compete in a free market, which implies that the benefits in this recent study are illusory.

Another issue with the study is that it fails to account for the fact that a gallon of gasoline has 47 percent more energy content than a gallon of ethanol (a gallon of ethanol has 76,100 BTUs, while a gallon of reformulated gasoline has 111,836 BTUs). This makes gallon to gallon comparisons between ethanol and gasoline misleading without correcting for the difference in energy content.

Nevertheless, the Renewable Fuels Association makes the comparison without correcting for energy content. For example, the study states, “Thus far in 2013, ethanol prices have on average been $0.44 per gallon below wholesale gasoline prices, which translates to a gross benefit of $0.04 per gallon of finished motor gasoline supplied to consumers.”

One reason that a gallon of ethanol costs less than a gallon of gasoline is because it contains significantly less energy. Energy content per gallon is a very important characteristic of fuel. After all, the entire point of using gasoline is that it provides energy for our cars.

Another issue the study avoids is the additional costs of transporting and blending billions of gallons of ethanol in gasoline. The study seems to assume that it’s either costless to blend ethanol with gasoline or that the costs of handling ethanol are the same as gasoline. Both are incorrect.

Ethanol is alcohol—a solvent. It can corrode pipes as well as become contaminated by water. To transport ethanol by pipeline, special additives have to be used and the ethanol can become contaminated with water, damaging the fuel. This is why most ethanol is not transported by pipeline. The first ethanol pipeline entered service in 2008, while the first petroleum pipeline was built in the 1860s. Because ethanol is more difficult to transport than petroleum products, the use of ethanol is more expensive than petroleum products.

While we can debate the methodology used to assess the impact of the ethanol mandate, the study implies something far more important—there is no need for the Renewable Fuel Standard. If the Renewable Fuel industry wants to argue that its product results in lower gasoline price, then there is no need for the RFS to mandate the use of billions of gallons of year. If using this much ethanol is beneficial to refiners and gasoline buyers, people will use it regardless of government mandates.

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

In the Pipeline: 3/29/13

March 29, 2013 by Leave a Comment

We had to recheck the calendar to make sure it wasn’t April 1st.Washington Free Beacon (3/28/13) reports: “After bankruptcy, a buyout by a Chinese firm, and more than a hundred million dollars in taxpayer money, the lithium-ion battery maker A123 Systems, Inc., is getting a new name: B456 Systems, Inc… A123, which produces batteries used in electric cars, has changed its name to B456, the company announced Thursday in a regulatory filing.”

 

What’s the price of gasoline in California, again? Only 38.9 cents higher than the national average. But hey, at least the car companies can have a uniform standard. The White House (3/22/13) presents:

 

 

As we have noted before, Senator Blunt did a great job. So did Downey. And so did Neil Chatterjee, who kept the whole thing between the ditches and moving forward. WSJ (3/28/13) reports: “Proposals for that hardy Al Gore perennial, a carbon tax, are making a comeback. But if last weekend’s votes in the Senate are any guide, the idea is going to require a lot more political persuasion… The media ignored Harry Reid’s budget vote-a-rama, but along the way Senators were allowed to declare on a pair of amendments related to energy taxes. First up was Rhode Island liberal Sheldon Whitehouse, who wanted to reserve any carbon-tax revenues to reduce the deficit or redistribute to certain voters. Apparently Mr. Whitehouse sees a carbon levy as inevitable and wants to make sure he’s the middleman.”

 

It is pretty cool that the earth is a massive repository of organic compounds that we can use to make life somewhat enjoyable and interesting as we cruise through space on what is otherwise just a tiny speck of dust in the universe. But it’s also pretty cool that as our use of these organic compounds (oil, gas, coal) has increased, so has our ability to care for the environment. The bad guys think life is a zero-sum game. They are wrong. Think Progress (3/21/13) reports: “The planet we live on is valuable only as a repository for natural resources, according to Rep. Steve Stockman (R-TX). Stockman, a lawmaker best known for bringing Ted Nugent to the State of the Union and opposing the Violence Against Women Act because it protected “change-gender” individuals, went on an extended Twitter rant Thursday afternoon accusing environmentalists of hating science.”

The following think tank chiefs are opposed to a carbon tax. Please contact us at [email protected] if you wish to join our growing ranks. We are thinking about starting a new list – trade association heads. We fear, however, it will be pretty small.

Tom Pyle, American Energy Alliance / Institute for Energy Research
Myron Ebell, Freedom Action
Phil Kerpen, American Commitment
William O’Keefe, George C. Marshall Institute
Lawson Bader, Competitive Enterprise Institute
Andrew Quinlan, Center for Freedom and Prosperity
Tim Phillips, Americans for Prosperity
Joe Bast, Heartland Institute
David Ridenour, National Center for Public Policy Research
Michael Needham, Heritage Action for America
Tom Schatz, Citizens Against Government Waste
Grover Norquist, Americans for Tax Reform
Sabrina Schaeffer, Independent Women’s Forum
Barrett E. Kidner, Caesar Rodney Institute
George Landrith, Frontiers of Freedom
Thomas A. Schatz, Citizens Against Government Waste
Bill Wilson, Americans for Limited Government
Wayne Brough, FreedomWorks
Rich Collins, Positive Growth Alliance

Filed Under: Blog Tagged With: , , , , , , , ,

The Boom in the Bakken Continues

March 27, 2013 by Leave a Comment

The new era in American energy being brought on innovative hydraulic fracturing and horizontal drilling technologies has made, North Dakota, the poster child of the domestic energy boom.  In 2012, North Dakota was the second largest oil producer, boasting the nation’s lowest unemployment rate at 3.6%. North Dakota’s emergence as an energy giant is a beacon on the hill during our nation’s tough economic times and should be used as an example for other states with vast oil and natural gas shale plays. The development of these vast resources is key to America’s economic recovery and job creation, with the result that every state benefits.

Because of this increase in production and demand, two new refineries are being built in North Dakota. The Dakota Prairie refinery broke ground this week and should be completed in 20 months with a capacity of 20,000 barrels per day. The Trenton Diesel Refinery is also planned for construction in the near future. These new refineries will supply much-need fuels to the growing North Dakota population and the critical industries that support the state’s energy developers.

Doubtlessly, North Dakota’s energy renaissance is benefitting the entire country by providing Americans with affordable, domestic energy and good-paying jobs. Accessing and utilizing our nation’s vast energy resources will lead to increased tax revenue, decrease our imports from the Middle East, and create American jobs. With our national economy still sputtering along, we should be developing as much affordable energy as we can here at home. The great state of North Dakota is an American success story and is an example all other states should try to replicate.

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