News - American Energy Alliance

PRO-PTC GROUPS NOT LIKELY TO TELL ALL THE FACTS

December 7, 2012 by Johnny Russell Leave a Comment

WASHINGTON D.C. — As lobbyists, big labor unions and advocacy groups ramp up their efforts to push for another extension of the wind production tax credit, including a briefing today on Capitol Hill hosted by the Sierra Club, the BlueGreen Alliance, Oceana, and the United Steel Workers, Thomas Pyle, president of the American Energy Alliance, issued the following statement:

“The last thing Capitol Hill needs is another briefing that doesn’t give all the facts about Big Wind’s failure to grow up after two decades of taxpayer-funded child support. Today offers another example of how Big Labor and Big Wind are working together to protect billion dollar handouts for special interests. If our nation has any hope of averting a fiscal cliff, Washington must stop awarding rent-seekers with huge subsidies we cannot afford.

“Policymakers deserve all the facts about Big Wind’s twenty years of child support. A one year extension of the PTC will cost an additional $12 billion to U.S. taxpayers, and even then it won’t stop a contraction in the industry. State mandates that create a government-induced market for wind energy have already tipped the scale enough. Taxpayers funded wind energy to the tune of $5 billion in 2010, and subsidies for wind increased ten-fold between 2007 and 2010. On a per megawatt basis, Big Wind has been receiving more than $56.00 from taxpayers, more ten times than the total amount shared between coal, oil, natural gas, and nuclear, and yet it still only provides approximately 3 percent of our total electricity generation.

“But Big Wind’s powerful allies aren’t interested in the facts. Nor are they concerned about our nation’s dire fiscal condition. Like all rent-seekers, they’re just interested in getting more free money from Washington.”

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Filed Under: Press Releases

In the Pipeline: 12/7/12

December 7, 2012 by AEA Leave a Comment

This is all run by affordable, reliable electricity brought to you by hydrocarbons. Sometimes by nuclear power. Slate (12/7/12) reports: “So it turns out the Internet really is a series of tubes. Last October, for the first time ever, Google posted dozens of rare photographs inside and around its data centers revealing the absurd level of organization, energy, and design that goes into powering some of the largest, most powerful systems plugged into the Internet.”

It’s probably easier to fool the Nobel Committee than the entire marketplace. Watts Up With That (12/6/12) reports: “Is green energy a fad that has run its course? The investment community seems to think so. RENIXX® World, the Renewable Energy Industrial Index of the world’s top green energy companies, hit an all-time low below 146 on November 21, down more than 90 percent from the December 2007 peak.”

In truly breaking news, elected officials are hesitant to steal money from the people to build wind farms. The cowards!Bloomberg (12/5/12) reports: “Norway put development of its first planned offshore wind farm on hold until further notice, with the company involved citing a lack of political support, a setback in European efforts to boost renewable energy production.”

When is Senator Whitehouse going to debate Senator Inhofe on climate change? Because it would be fun to watch Oklahoma crush Rhode Island. GlobalWarming.org (12/6/12) reports: “In a fiery speech yesterday, Sen. Sheldon Whitehouse (D-R.I.) ”calls out” “climate deniers.” In the first half of the speech he goes ad hominem, attacking opponents as “front groups” who take payola from “polluters” to “confuse” the public by selling “doubt” as their product.”

Well now, this is a good example of why academics are not usually asked to do survey research for political campaigns.Brookings (12/5/12) reports: “Economists of nearly all methodological and ideological stripes concur that the best way to attempt to stave off the worst impacts of climate change is through some form of taxation on the carbon content of fossil fuels. This idea has been around for a long time. Its latest manifestation includes some form of carbon tax in order to raise government revenue as part of a grand bargain to avoid the pending fiscal cliff.”

So it turns out that the Chinese are no more stupid than Americans. Automotive News China (12/7/12) reports: “With a generous array of incentives, China’s government expected to turn the country into the world’s biggest market for electrified vehicles… It hasn’t happened, and the goal is starting to look like “Mission: Impossible.”… Complete sales figures for EVs and plug-in hybrids are unavailable. But data from various sources help us to gauge the situation.”

Canada, like Obama with Keystone XL, finds $30 B of F-35s made in the USA “not in the national interest.” Maybe Lockheed Martin can make it up selling bioenergy. Ottawa Citizen (12/6/12) reports: “The F-35 jet fighter purchase, the most persistent thorn in the federal government’s side and the subject of a devastating auditor-general’s report last spring, is dead.”

The following think tank chiefs are opposed to a carbon tax. The list to date follows. If your guy is not on the list, it is because he either favors a carbon tax, wants to retain the option of favoring a carbon tax at some point in the future, or has yet to contact us.

Tom Pyle, American Energy Alliance / Institute for Energy Research
Myron Ebell, Freedom Action
Phil Kerpen, American Commitment
Fred Smith, 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

Filed Under: Blog Tagged With: carbon tax, electric cars, google, renewable energy, wind energy

Dubious Arguments in Tier 3 Study

December 5, 2012 by AEA Leave a Comment

The EPA is planning to tighten its gasoline regulations from Tier 2 to Tier 3 standards, which would reduce permissible sulfur content from the current 30 parts per million (ppm) down to 10 ppm. (I have written a full overview of the economic issues surrounding Tier 2 and Tier 3 in this earlier IER post.) In contrast to those warning about the impacts on gasoline prices from even tighter regulations, a study from Navigant Economics seeks to defuse these concerns, claiming that Tier 3 standards would have no impact on retail gasoline prices, and would actually help the economy. In this blog post I’ll tackle just two of the more dubious claims in the Navigant study.

Tier 3 Standards Wouldn’t Raise Prices at the Pump?

The issue that most concerns the average American is: “Will these new Tier 3 standards on gasoline sulfur content result in higher prices at the pump?” The Baker & O’Brien analysis (B&O) estimated that Tier 3 (as formulated at the time of the analysis) would impose upfront compliance costs on refiners of $10 billion, and impose continuing higher costs on refiners of 6 to 9 cents per gallon. The analysis did not explicitly predict that pump prices would rise by the exact same amount, but inasmuch as the refining industry is a competitive market with narrow margins, a massive new regulatory burden will surely lead to higher pump prices for the end consumer. After all, when proponents of a carbon tax talk of applying it “upstream” to reduce enforcement costs, nobody has any illusion that this won’t trickle down to the actual motorists and induce them to drive less and to buy more fuel-efficient cars: that’s the whole point of a carbon tax, in the eyes of its environmentalist proponents.

Yet the Navigant study disputes this. The authors first challenge the cost estimates in the Baker and O’Brien study, relying on rival estimates by a MathPro study (which estimated industry compliance costs at much lower levels). The B&O and MathPro studies used different methods to reach their estimates, and one would have to reproduce their work to decisively say which estimate is the more plausible.

However, what we can say with confidence is that the Navigant Study is on shaky ground when it claims that a large compliance cost imposed on the refining industry—whether it is as large as B&O estimated, or a more modest figure as MathPro concluded—will have no noticeable impact on retail gasoline prices. As already stated, this flies in the face of basic price theory: The refining and retail gasoline markets enjoy real-world competition, meaning that their members do not enjoy monopoly or “oligopoly” profits. If the EPA imposes a massive new regulatory cost, raising the costs of doing business, then this will reduce margins. Other things equal, this will make the refining / retail gasoline industries less appealing to firms, meaning the supply will be reduced. With the same consumer demand for gasoline, the end result is a higher price per gallon.

This logic is fairly unassailable. If the government raised the federal gasoline tax, this would surely lead to an increase in prices at the pump—even if the tax is levied directly on the retailers, not on the motorists at the checkout counter. Now it’s true, it might not be a one-for-one increase; the issue involves what economists call “relative elasticities” on the supply and demand side of the market. But the point is, when a new tax is imposed on the producers in a market, some of that burden is absorbed by the consumers in the form of higher prices.

Now the authors of the Navigant study both have PhDs, so they are obviously aware of the textbook framework above. What they are implicitly assuming, therefore, is that in the refining / retail gasoline markets, the producers pick up all of the burden of a new regulation or tax. This is an interesting claim, since gasoline is considered a fairly inelastic good, meaning that a price hike of (say) 10% will not reduce the number of gallons purchased by the same percentage. Thus, compared to other goods and services, we would expect a hike in costs in this area to fall more heavily on the final customers.

How then do the Navigant authors reach their surprising conclusion? They rely on a regression analysis of the earlier Tier 2 studies:

Regression analysis shows that Tier 2 regulations, which required a reduction in the average sulfur content of gasoline from 300 ppm to 30 ppm, had no material impact on the retail price of gasoline. The regression analysis took into account several factors identified in an FTC study that were expected to influence the retail price of gasoline. These factors include the cost of crude oil, refinery margins, the 2005 hurricanes, the 2006-07 transition to ethanol, and the 2008 global recession. Our model explains more than 99 percent of the variation in retail gasoline prices. The price of crude oil was the most significant determinant of the retail price of gasoline, and refining margin was a distant second in importance. Importantly, Tier 2 had no statistically significant impact on the retail price of gasoline. [Bold added.]

An in-depth critique of the Navigant argument would require a statistical analysis beyond the scope of the present blog post. But to summarize the problem in plain English: The Navigant authors are trying to model the actual historical price of gasoline, to see if the introduction of Tier 2 standards had any noticeable impact on gasoline prices, over and above the movement in prices that can be explained by other variables. In particular, the Navigant authors included “refinery margins” in their list of other explanatory variables. Since Tier 2 standards didn’t show up in the regression output as a statistically significant factor, the Navigant authors conclude that they had no impact on gasoline prices.

The problem here is that the Tier 2 standards—if they did have an effect—would of course work through refinery margins. Just think through the standard textbook analysis of the impact of a new tax. When the government levies a higher tax on producers, they can’t automatically “pass it along” to consumers. If they could, they would have already done so, before the tax came along.

No, what happens (in the textbook treatment) is that a new tax on producers causes them to reduce supply (i.e. the supply curve shifts left). Why does that happen? Because they are making less profit with the tax, than they were before. In other words, their margin has been reduced.

To repeat, the immediate effect of a large new compliance cost imposed on refiners, will be to reduce their margin. (They earn a certain amount of revenue at the existing retail price, and now their costs of doing business have suddenly gone up because of the tighter Tier 2 standards.) Thus to say, as the Navigant authors do, that they can explain the change in gasoline prices after Tier 2 by reference to crude prices, refiner margins, and other variables, doesn’t really rule out the possibility that Tier 2 standards caused gasoline prices to go up. Hence, the Navigant study has given us no reason to think that Tier 3 standards will be benign either.

Job Creation Praised for Its Own Sake

Another major problem with the Navigant study is that it counts job creation among the benefits of Tier 3 standards:

As shown in Table 6 below, installation of the refinery modifications produces almost 24,500 jobs for full time equivalent employees with total associated employee compensation of $1.161 billion for each of the three years of installation. The value added to the national economy is $2.027 billion each year. Federal, state, and local taxes on the corporate profits and personal income created by the refinery upgrades is $0.502 billion per year. According to our analysis, the annual operation of the refinery modifications produces almost 5,300 jobs for full time equivalent employees with total associated employee compensation of $0.294 billion. The value added to the national economy is $0.632 billion.

The problem here is that this type of analysis would work for any proposed regulations. For example, if the EPA required that refiners hire workers to dig ditches with spoons, and then fill them back up again, then this too would “add value to the national economy” according to the salaries paid to attract these spoon-ditch-diggers from other possible lines of employment. The implicit assumption in the Navigant analysis is that there is a bottomless pool of surplus labor, such that diverting workers and other resources into meeting Tier 3 standards has no opportunity cost. That assumption could be forgiven in the current depressed economy, but the Navigant study says upfront that Tier 3 standards won’t go into effect until at least 2017.

Conclusion

No one disputes that the EPA’s proposed Tier 3 standards—which would reduce sulfur content in gasoline by 67%—would impose billions of dollars in upfront compliance costs on the refining industry. The argument has just been over how many billions of dollars, and whether this massive new cost will be passed along to motorists.

Common sense and standard economic logic suggests that such a large cost increase will indeed at least partially show up in the form of higher gas prices, rather than being absorbed fully be refiners. The statistical analysis that the Navigant study uses to argue otherwise, is dubious because it includes “refiner margins” as one of the variables in addition to earlier Tier 2 standards. This is a problem because the Tier 2 standards would have worked their effects (if there were any) through refiner margins.

Finally, the Navigant study should not be counting job creation among the benefits of Tier 3 standards. In the long run, with flexible wages the economy can “create” as many jobs as there are people in the work force. If the EPA causes refiners to hire workers to satisfy Tier 3 regulations, these workers necessarily can’t be doing something else productive. The regulations may or may not be economically efficient, but the workers needed to achieve compliance are a cost of the regulations, not a benefit. Put differently, if we could achieve the EPA’s desired sulfur content without using any labor, that would be a blessing, not a curse. The Navigant study gets this backwards, and thereby overstates the potential benefits of Tier 3 standards.

Filed Under: News, Products and Power, Threats, Tier 3 Standards Tagged With: EPA, gas prices, Gasoline, motor fuels, refineries, sulfur, Tier 3

Cass Sunstein’s Garbage In, Garbage Out on Cost/Benefit Analysis

December 4, 2012 by AEA Leave a Comment

In a recent NYT op ed, Harvard Law professor and former Obama official Cass Sunstein cited Ronald Reagan, of all figures, as inspiration for more federal regulation on the transportation and energy sectors. Sunstein’s angle was to say that Reagan endorsed the cost/benefit analysis arguing for the US agreement to fight the “ozone hole,” and therefore Sunstein says, today’s conservatives should also support mandates on fuel efficiency and restrictions on greenhouse gas emissions. The problem is, even on a pure cost/benefit basis, Sunstein’s numbers don’t add up.

Here’s Sunstein’s argument:

Recent reports suggest that the economic cost of Hurricane Sandy could reach $50 billion and that in the current quarter, the hurricane could remove as much as half a percentage point from the nation’s economic growth. The cost of that single hurricane may well be more than five times greater than that of a usual full year’s worth of the most expensive regulations…True, scientists cannot attribute any particular hurricane to greenhouse gas emissions, but climate change is increasing the risk of costly harm from hurricanes and other natural disasters. Economists of diverse viewpoints concur that if the international community entered into a sensible agreement to reduce greenhouse gas emissions, the economic benefits would greatly outweigh the costs.

Skeptics have rightly observed that even aggressive regulatory steps by the United States cannot stop climate change. Greenhouse gases stay in the atmosphere for decades, and many nations, especially in the developing world, are contributing growing levels of emissions. For this reason, the unilateral actions of any country will not do what must be done to reduce anticipated warming and the resulting harms. Nonetheless, cost-effective reductions from the United States would help, both in themselves and because they should spur technological changes and regulatory initiatives from other nations.

For the United States, some of the best recent steps serve to save money, promote energy security and reduce air pollution. A good model is provided by rules from the Department of Transportation and the Environmental Protection Agency, widely supported by the automobile industry, which will increase the fuel economy of cars to more than 54 miles per gallon by 2025.

The fuel economy rules will eventually save consumers more than $1.7 trillion, cut United States oil consumption by 12 billion barrels and reduce greenhouse gas emissions by six billion metric tons — more than the total amount of carbon dioxide emitted by the United States in 2010. The monetary benefits of these rules exceed the monetary costs by billions of dollars annually. [Bold added.]

We should be very skeptical when a Harvard law professor tells us that federal regulations on what cars we can buy will save consumers almost $2 trillion. Elsewhere my colleagues and I have explained why such numbers are bogus; they rely on the assumption that consumers need people like Cass Sunstein to force them to save money on gasoline, because they are too ignorant or weak-willed to grab those savings for themselves. Another possibility, ignored by Sunstein and others who champion the tighter fuel economy rules, is that consumers are perfectly capable of spending their own money in ways that benefit them, and if they want to buy, say, an SUV with lower fuel efficiency, perhaps this is because they value passenger safety more than saving money at the gas pump. But Cass Sunstein will override such choices and make their decision for them.

As far as fighting climate change, here is what the EPA itself had to say about the impact of its tighter rules on vehicles:

The results of the analysis demonstrate that relative to the reference case, projected atmospheric CO2 concentrations are estimated by 2100 to be reduced by 3.29 to 3.68 part per million by volume (ppmv), global mean temperature is estimated to be reduced by 0.0076 to 0.0184 °C, and sea-level rise is projected to be reduced by approximately 0.074–0.166 cm, based on a range of climate sensitivities.

That’s not a typo: The EPA estimated that these rules (which will drive up the price of vehicles by thousands of dollars, and/or will make the manufacturers cut back on other areas such as passenger protection in a collision) will, by the year 2100, make the world about one-hundredth of a degree Celsius cooler than it otherwise would be.

Sunstein’s discussion on greenhouse gas restrictions is also misleading. Yes, it is true that many scientists and economist think that a worldwide, modestly calibrated tax on greenhouse gas emissions would deliver more benefits than costs. Yet that by no means proves that a unilateral US tax would itself pass a cost/benefit test. For sure, it would not pass such a test looking just at Americans. This is because Americans would suffer all of the compliance costs, while other areas of the world (particularly regions closer to the equator and with less advanced infrastructures to adapt to changing conditions) would reap the lion’s share of the benefits. Now some would make a moral case that this is the right thing for Americans to do, but Sunstein leads innocent readers to believe such a move would be good for the United States on net, which is not true, unless we make some optimistic assumptions about the rest of the world following suit and damaging their own economies for the greater good.

For a point of reference, climate scientist Chip Knappenberger recently estimated that the U.N. Intergovernmental Panel on Climate Change’s own simulations show that unilateral US action on greenhouse gas emissions would reduce global temperatures by the year 2100 by about 0.2 degrees Celsius. Again, that’s no typo: Even draconian restrictions on US emissions would perhaps spare the world of two-tenths of a degree of warming, a century from now. This is because emissions would continue to grow in China, India, and other economies, especially as a U.S. tax pushed businesses to relocate (a factor not included in Knappenberger’s analysis).

In summary, Americans should be wary of analysts who produce calculations allegedly proving that more regulations and taxes from DC will improve their lives. A quick inspection will typically show that the assumptions used to generate those results are very dubious.

Filed Under: Emissions Standards, News, Products and Power Tagged With: CAFE, Cass Sunstein, Chip Knappenberger, driver safety, emissions standards, fuel economy, IPCC, regulations

In the Pipeline: 12/4/12

December 4, 2012 by AEA Leave a Comment

The great thing about a carbon tax is that it exposes the entire racket. It is about expanding government; it has never had anything to do with the environment. Only slow-witted people are confused about that. MasterResource (12/3/12) reports: “Yep, that is it. For all the incessant talk as to how the highly consumptive U.S. lifestyle—from SUVs, to air conditioners, to big screen TVs and huge portion sizes—is leading climate catastrophe, the sum total of our contribution to “global warming” this century will amount to the neighborhood of about 0.2°C. Not five degrees. Not two degrees. But abouttwo-tenths of a degree Celsius. And even this number may be on the high side if the climate sensitivity is lower than about 3°…”

My favorite part of this? That Senators Grassley and Thune are raising questions about the disposition of Solyndra’s assets. You may remember that the same two Senators are the biggest proponents in the “Republican” caucus for extending the wind production tax credit. So, apparently it is okay to take money from taxpayers for inefficient and expensive energy sources, but you can’t share any of the spoils with the Chinese. National Legal and Policy Center (12/3/12) reports: “So far Republican Sens. Charles Grassley (Iowa) and John Thune (S.D.) have repeatedly raised questions and concerns about the possible transfer of A123’s business, jobs and technology from the U.S. – where taxpayers have thrown in approximately $132 million only to see many times that amount in losses since its 2009 initial public offering – to China. They’re no longer the only voices speaking out against the transaction.”

Jones is solid. More so than many Republicans we know. Politico(12/3/12) reports: “NARUC’s new president said today that the wind industry is “pretty mature right now” and “does not need the PTC.” But, Philip Jones quickly said that was his personal opinion and not NARUC’s position. Other renewables like geothermal and tidal still need financial help, he said. Yet, with all the fiscal cliff discussions taking place on Capitol Hill, Jones didn’t think the PTC would get renewed. When he asked NARUC lobbyist Chris Mele to chime in on the odds of a PTC extension, Mele said: ‘Toss a coin at this point.’”

That would be an awesome nomination. And Senator Inhofe would finally get to question His Largeness face to face. How do you figure that would turn out? Current (12/2/12) reports: “Al Gore. I first heard this suggestion from my friend David Greenberg, the historian who writes for Slate, and I though, nahhh. But it grew on me pretty fast. Tell me why not. He’d be great. He’s known around the world. He’s respected around the world, about 90 percent of which surely wishes he’d been the president instead of the guy he beat. I’m not saying he’d change the world; no one can do that. But he’d get a hearing everywhere. He knows a huge number of world leaders, and he knows the issues cold. He could dive right into the pool’s deepest end, in the Middle East, on Iran, you name it.”

It must be hard to have a healthy level of self-esteem in an industry where your success or failure has no relation to hard work and merit. Statesman.com (12/1/12) reports: “Hornaday disagrees that the industry can continue to thrive in Texas without the tax credit that pays 2.2 cents per kilowatt hour… In today’s market, Hornaday said he can sell electricity at 3 to 4 cents per kilowatt because the tax credit pays about a third of the cost of a turbine. Without the tax credit, Hornaday said his price would increase to 5 or 6 cents a kilowatt, as compared to natural gas’s 3-cent range.”

This is about average for a bunch of generals and admirals. Some of it is good (increase domestic production); some of it is timid and pointless (send Interior back to revise its Soviet-style five year plan); and some of it is just plain ridiculous (more electric cars!). Small wonder we have trouble winning wars.Energy Security Leadership Council (2012) reports: “The Energy Security Leadership Council (“Council”) believes that America’s energy security can be fundamentally strengthened through a combination of major reductions in oil consumption, increases in domestic energy production, and reforms to energy-related regulations. Most importantly, we must transform our transportation sector so that oil is no longer its primary fuel.”

After they shot Thomas Jackson, North Carolina has been on a pretty steady slide. E&ENews (12/3/12) reports: “What are the opportunities for bipartisanship on renewables heading into the next Congress? During today’s OnPoint, Aaron Nelson, president and CEO of the Chapel Hill-Carrboro Chamber of Commerce in North Carolina, discusses the future of federal clean energy policy and his expectations for the wind production tax credit, which expires at the end of this year.”

Filed Under: Blog Tagged With: A123 Systems, carbon tax, geothermal, renewables, wind ptc

In the Pipeline: 12/3/12

December 3, 2012 by AEA Leave a Comment

Everyone who cares about America should read all 39 pages of this report. Because it kills. NDP Consulting (November 2012) reports: “As put by NERA’s Anne Smith, “Once one strips away the non-credible and inappropriate façade of coincidental co-benefits from reducing an already-regulated non-HAP pollutant, the MATS rule is left with almost nothing to justify its costs.””

Our Rob sets the stage, and he isn’t playing around: “The Theatrics of Fossil Fuel Critics”. Denver Post (11/30/12) reports: “As Manhattan Institute scholar Robert Bryce has noted, ‘Nothing else comes close to oil when it comes to energy density, ease of handling, flexibility, convenience, cost, or scale.’ To stop oil exploration would be to condemn the world to high energy prices and stunted economic growth… Divestment would represent an enormous hit to pension plans. It would make the retirement accounts of millions of average Americans less secure. Rather than improving the environment, divestment would actually slow the development of alternative energy technologies.”

We are going to miss Jim Rogers. He was always a reliable rent-seeker. National Legal and Policy Center (11/29/12) reports: ““Usually shareholders change boards, not public entities,” said Charles Elson, director of John L. Weinberg Center for Corporate Governance at the University of Delaware, who said he had never seen such a degree of intervention in a case that at least did not involve some illegal activity.”

I have no idea why the traditional media is dying. I really don’t.Bloomberg (11/30/12) reports: “The most dynamic executive in his industry, Rogers, the chief executive of Charlotte-based Duke Energy (DUK), has spent a career building ever-bigger utilities. He knows coal, gas, nuclear, solar, wind. He’s done all of them. And he recognizes the need to forge a national energy policy that sharply reduces carbon emissions that contribute to global warming and the extreme weather it is increasingly visiting upon our little planet.”

We only run this because the story is so rare. Bloomberg (11/29/12) reports: “Mississippi taxpayers may have only an empty Senatobia building and solar panel equipment to show for $26 million in loans to Twin Creeks Technologies.”

We are concerned about potential bias as well. After all, this is the crew that brought us Obamacare. Energy & Commerce (11/30/12) reports: “House Energy and Commerce Committee leaders today wrote to Health and Human Services (HHS) Secretary Kathleen Sebelius concerning the Department’s role in the Interagency Working Group to Support Safe and Responsible Development of Unconventional Domestic Natural Gas Resources. The Agency for Toxic Substances and Disease Registry (ATSDR) within the Centers for Disease Control and Prevention (CDC) has expressed its intention to undertake a broad study of potential health impacts associated with hydraulic fracturing and other shale gas development activities. Members are concerned ATSDR’s actions could jeopardize domestic natural gas production and job creation if the agency’s work is not based on sound scientific principles.”

This is both great and sad. Great, because Oklahomans have Senator Inhofe fighting for them. Sad, because this is what the Republic has come to in the 21st Century. Environment & Public Works(11/30/12) reports: “Senator James Inhofe (R-Okla.), Ranking Member of the Senate Committee on Environment and Public Works, today said that Fish and Wildlife Service’s (FWS) decision to propose a ‘threatened’ listing for the Lesser Prairie Chicken under the Endangered Species Act (ESA) is great news for Oklahoma because it provides a crucial step towards achieving a ‘not-warranted’ decision in the coming months.”

Filed Under: Blog Tagged With: carbon emissions, Energy and Commerce committee, MATS rule, natural gas, oil, solar panel

In the Pipeline: 11/30/12

November 30, 2012 by AEA Leave a Comment

Let’s be honest. What happened in New York and New Jersey was an appalling lack of preparedness, in the media center of the planet. When she came ashore Sandy was a Category 1 hurricane. If she had hit the Southeastern United States (like hurricanes usually do), blowhards like Senator Whitehouse would have paid no attention (like he usually does). Politico(11/30/12): “Senate Democrats used an emotionally charged hearing Thursday on the effects of Hurricane Sandy to make an aggressive attack on climate change deniers in and out of Congress. At a Senate Environment and Public Works Committee hearing featuring sometimes tearful reports from lawmakers representing East Coast states, some panel Democrats suggested putting customary congressional collegiality on the back burner to push more forcefully for mitigating climate change.”

Dan makes a good point. Why are the Canadians developing their oil sands? Are they smarter than us? Or is it because we have Ken Salazar and they don’t? E&E News (11/29/12): “Their report advocates hiking a royalty rate that is already five times higher than Alberta’s oil sand royalty rate that has attracted hundreds of billions of dollars in investment,” he said. “The impact of their recommendations would kill potential jobs, royalties and revenues in a quest for a higher percentage of nothing rather than a smaller percentage of a huge resource that could serve U.S. needs for over a century.”

I like what Tolstoy wrote about electric cars: anything is better than lies and deceit. National Legal and Policy Center (11/29/12): “In many cases this is intentional,” Car and Driver reported, “with automakers building EVs to satisfy regulators and leasing a limited number of loss-making vehicles in California and a handful of other states.” One such example is the Ford Focus Electric, whose battery alone costs $12,000-$15,000 and whose sales are measly, with only 200-or-so dealers on the West Coast and in the Northeast bothering with it. Ford received a $5.9 billion stimulus loan guarantee to retrofit five of its plants for the production of electric and hybrid vehicles.

Well now, all those Senators and Congressmen who have been carefully avoiding opposing a carbon tax actually have a chance to act like men and take a stand. I’m betting few take the opportunity. Senator David Vitter (11/29/12): “‘There’s a lot of talk in Washington about raising taxes, and finding ‘revenues’ in creative ways, to avoid going over the fiscal cliff,’ Vitter said. ‘But a carbon tax – which would force more financial hardship upon family budgets, energy consumers and job seekers – needs to be completely taken off the table. Our resolution would enshrine that.’”

What is the obsession with biofuels? At $27 dollars a gallon, Mabus must know the whole thing is bogus. Murkowski surely should recognize the whole thing is a sham and probably tied to some unsavory donors. Institute for Energy Research (11/29/12): “Interestingly, if the military uses 130 million barrels of oil per year, that means that Alaska’s ANWR, which is estimated to hold 10.4 billion barrels of oil at the mean would supply all of the military’s needs for 80 years. Yet Secretary Mabus’s administration opposes the opening of ANWR’s oil, apparently preferring the green biofuels costing 10 times as much. ANWR’s 10.4 billion barrels of oil are worth almost $1 trillion to the US economy at today’s price of oil, and the jobs, revenue and security of supply they would offer our nation draw a bright contrast to the expensive and unnecessary green energy the Senate decided to waste taxpayers money on this past week. In fact, Secretary Mabus’s administration actually closed 50% of the National Petroleum Reserve in Alaska earlier this year for oil exploration.”

Which do you figure is more likely to happen, whatever ridiculous thing the Doha crew comes up with, or 1200 new coal plants worldwide? Institute for Energy Research (11/29/12): “While the war on coal is working, reducing coal generation and consumption and associated carbon dioxide emissions here in the United States, many world economies are looking towards coal for future generation needs. China, India, Russia, and Germany, to name a few, are building coal-fired power plants. Worldwide coal plant construction grew 5.4 percent over the past year and now represents about 30 percent of installed capacity. According to the World Resources Institute, almost 1,200 coal-fired power plants are in the planning stages (a capacity of 1.4 million megawatts) and over three-quarters of them are to be built in China and India, where over 500,000 megawatts each are currently planned for construction.”

Filed Under: Blog Tagged With: ANWR, biofuels, carbon tax, coal, coal plants, oil sands

Intentionally increasing gasoline prices only makes sense to New York attorneys

November 29, 2012 by AEA Leave a Comment

Earlier this week, the Institute for Policy Integrity (IPI)at the New York University School of Law announced they were threatening EPA with a lawsuit to increase the price of gasoline and diesel through a cap-and-trade system. They claim they want to increase the price of transportation fuel to “address climate change,” but they omit the fact that if the United States stopped using gasoline today, it would have an incredibly minor effect on the climate.

Specifically, the faculty at New York University School of Law is petitioning EPA to implement a cap on carbon dioxide emissions from transportation fuels for cars, trucks, boats, and ships. How much will this increase the price of transportation fuels? According to a recent study by the Belfer Center for Science and International Affairs at Harvard University, “Reducing carbon dioxide (CO2) emissions from the transportation sector 14% below 2005 levels by 2020 may require gas prices greater than $7/gallon by 2020.”

The New York attorneys didn’t specify how where a cap should be set, so it’s possible that their plan would drive up gasoline prices beyond $7 a gallon. Seven dollar a gallon gasoline would cause great economic harm to Americans who don’t ride the New York subway to work and play, so it is important to consider the benefits of the law school’s plan.

The dean of New York University School of Law, Richard Revesz, claims that “The benefits of protecting the public from the threats of climate change outweigh the costs.” However, he fails to describe what the benefits will be. Luckily, others have used EPA’s MAGICC climate change model and information from the United Nation’s Intergovernmental Panel on Climate Change to examine the impact U.S. carbon dioxide emissions have on global temperature computer models.

Climate researcher Paul Knappenberger ran EPA’s climate model and he found out that “if the U.S. as a whole stopped emitting carbon dioxide immediately, the ultimate impact on projected global temperature rise would be a reduction, or a “savings,” of approximately 0.08°C by the year 2050 and 0.17°C by the year 2100—amounts that are, for all intents and purposes, negligible.” These small temperature reductions would result only if all U.S. carbon dioxide emissions ended immediately.

The New York University School of Law professors are not talking about reducing all U.S. carbon dioxide emissions, but only a part of the emissions from transportation. According to EPA, in 2010, transportation emissions were 27 percent of the U.S. total. Even if the cap proposed by the attorneys resulted in a 25 percent reduction (which means that the price of gasoline would increase well past $7 a gallon), that would only result in a reduction of 7 percent of U.S. greenhouse gas emissions. If a 100 percent reduction in carbon dioxide would result in a reduction of temperature increase of 0.08°C by the year 2050, just think of what a reduction of just 7 percent would do.

Representatives of the New York University School of Law claim that EPA should cap carbon dioxide emissions to protect the public from the dangers of climate change. But their cap would not have any discernible impact on global warming, and it would drive up the price of gasoline well past $7 a gallon. This sort of trade off might make sense if you are an rich attorney in New York City, but it sure doesn’t make any sense to the rest of us.

Filed Under: Emissions Standards, Products and Power

In the Pipeline: 11/28/12

November 28, 2012 by AEA Leave a Comment

Very exciting in my house this morning. I told my kids they could have any new toy they could get their hands on…as long as they picked it from their toy box. Welcome to the Obama Administration’s gulf lease sale. Fuel Fix (11/27/12): “A 10-year moratorium on drilling within 1.4 nautical miles of either side of that maritime boundary was initially set to expire in January 2011 but was extended until January 2014. Although companies were allowed to submit bids for blocks in the area subject to U.S.-Mexico talks, they won’t be opened during the November sale, and they may never be opened at all.”

Environmentalist “logic”– Solyndra failed because a half billion dollars in subsidies was “too little.” The Buffalo News (11/27/12): “Solyndra failed because China beat us to the punch by subsidizing its solar panel industry with $30 billion. Our $500 million loan guarantee to Solyndra was too little, too late.”

Wind power makes me lose sleep as well. National Review (11/27/12): “In the lawsuit, the residents claim that the noise produced by the turbines on the 74-megawatt facility causes headaches and disturbs their sleep. Some of the residents say they have abandoned their homes because of the noise. Others are claiming that the project has hurt their property values.”

A rational person would support the Keystone project (like about 75% of Americans). An ideologue (like the President) would oppose it, because it is contrary to his view of the trajectory of history. A leader (like Senator Barrasso) would advocate for it, because it means more economic growth, more jobs, more energy security. Star Tribune (11/27/12): “The politics surrounding this decision should also be over,” he said. “If the president is serious about improving our economy and helping America become an energy independent nation, he’ll approve the Keystone XL pipeline immediately.”

Only in the land of the 800 billion dollar “stimulus” could a 2.3 million dollar carousel be built essentially without comment. Keep in mind, that doesn’t even count the cost of the solar panels (which were donated by PEPCO and paid for by its ratepayers). At this rate, maybe they should replace the hand painted endangered animals with hand-painted unemployed Americans. Washington Post (11/26/12): “The Smithsonian’s National Zoo is opening a new solar-powered carousel with hand-carved, hand-painted figures representing many endangered animals.”

Crossfitter by night? I don’t even know what that is. But this dude should forget that and preach on. J. Justin Wilson (11/26/12): “On Point’s host, Tom Ashbrook, warned that the water used for fracking is water we can’t “use for crops” and even went so far as implying that the water used for fracking was contributing to the dropping water levels in the Mississippi River. Something didn’t add up. Americans have a problem comprehending big numbers and I decided to crack out my trusty TI-83 and figure this out.”

Well now… Princeton University (11/27/12): “The United States could eliminate the need for crude oil by using a combination of coal, natural gas and non-food crops to make synthetic fuel, a team of Princeton researchers has found.”

Back-Door “Green Energy” Coercion, the San Francisco treat. Wanna bet Queen Nancy will opt-out? Master Resource (11/26/12): “Thousands of San Francisco residents may be sucked into a green energy plan that will raise their electricity rates 77 percent without their knowledge or consent. Beginning next spring, half of the city’s 375,000 residential ratepayers will automatically be enrolled in CleanPowerSF – unless they take action to opt out of the program.”

Filed Under: Blog Tagged With: coal, Green Energy, Keystone XL pipeline, natural gas, oil, Solyndra, stimulus

In the Pipeline: 11/27/12

November 27, 2012 by AEA Leave a Comment

As we have noted before, the days are evil. Which explains why we fight. The Hill (11/26/12): “Yet the economic advantages of a carbon tax are so manifest that it is still possible, once the fiscal cliff negotiations are finished and talks turn to a truly transformative tax reform deal, that leaders in Congress will begin to reconsider it, especially it if is marketed on economic grounds.”

Finally, someone gets some real benefit out of solar power! Pass the Cheetos! Fuel Fix (11/26/12): Illegal marijuana growers are increasingly using solar power to operate large-scale operations in an attempt to remain off the grid and avoid detection from law enforcement agents, authorities said.

Corruption is a disease. Governments are the carriers. Michigan Capital Confidential 11/26/12: He said a mindset of “crony socialism” is running green energy programs. He points to the 2008-2011 Wall Street Journal surveys of chief executive officers that highlight the top five priorities of CEOs. In each of those annual surveys, CEOs cited a need for some sort of government subsidy as a top priority, Michaels said. “You can’t just blame the government for this,” Michaels said. “You have to understand these large corporations are begging for favors to produce cars that no one wants.”

Kind of makes you glad we won. Renewable Energy World (11/26/12): Britain’s electricity customers will be paying higher bills by 2020 to cover the costs of expanding renewable energy supplies such as solar and wind, government officials said.

What do you want to bet that Facebook gets a permit to build a data center on federal lands in Alaska long before Exxon or Chevron get a permit to drill? Slate (11/27/12): “But once you’ve gotten past the fundamental realization that the cloud is a hulking, polluting, physical thing, there’s another story to tell. It’s the one about how some of the more forward-thinking Internet companies are coming up with wildly creative ways to cut down on all that waste. Facebook is building its latest data center at the edge of the Arctic Circle. An industry consortium is sponsoring a “server roundup” and handing out rodeo belt buckles to the Internet company that can take the largest number of energy-leeching comatose servers offline. And Google has saved huge amounts of energy by allowing its data center workers to wear shorts and T-shirts.”

Filed Under: Blog Tagged With: carbon tax, renewable energy, solar