In the Pipeline: 9/11/12

Wow!  A win, win, win.  Unless you are poor, in which case an energy tax is regressive.  Or unless you consume anything that uses energy when it gets made, or grown, or transported.  Or unless you think the link between carbon dioxide and catastrophic climate change is tenuous at best.  In those instances, it is a loss, loss, loss. Common Dreams (8/28/12) reports: “While noting the raising taxes is never embraced by the mainstream of US politics, a new study released by researchers at MIT on the impact of a national carbon tax claims that such a scheme could be “a potentially a win-win-win solution.””

 

Is anyone surprised?  How could anyone be surprised? Reuters(9/10/12) reports: Nearly two years after the introduction of the path-breaking plug-in hybrid, GM is still losing as much as $49,000 on each Volt it builds, according to estimates provided to Reuters by industry analysts and manufacturing experts. GM on Monday issued a statement disputing the estimates.

 

It is a challenge to remain outraged.  After all, the federal government has already mandated that we buy enough insurance to top off our tanks.  And John Roberts said that was OK. Committee on Science, Space, and Technology (9/10/12) reports: “The EPA has no business telling Americans how much fuel they must purchase,” the lawmakers said.  “This unprecedented attempt to remedy the consequences of EPA’s E15 waivers will not prevent widespread misfueling of millions of vehicles and products already owned by Americans that are not covered by the waiver decisions and introduces an unacceptable intrusion into the daily lives of drivers.”

 

Just about everybody was wined and dined by the energy scarcity myth. The important thing is that the dinner tables are starting to turn on this horribly misguided mindset. Politico (9/10/12) reports: “Years before becoming famous as an advocate of fiscal restraint, Paul Ryan supported a now-controversial Energy Department loan program aimed at developing greener cars — and even called for DOE to hand out lump-sum payments to companies.”

In the Pipeline: 9/10/12

This is from the Democratic Party platform.  It is like the Keystone XL pipeline project was never proposed.  It is an unperson. DNC (9/12) reports: “In the last four years, President Obama and the Democratic Party have taken concrete steps to make us more energy independent. We’ve supported nearly 225,000 clean energy jobs and Americans are importing less oil, breathing cleaner air, and saving money on energy costs. Historic investments in clean energy technologies have helped double the electricity we get from wind and solar.”

 

It’s all fun and games until someone loses an ear (of corn). Rewire(9/6/12) reports: “Among the flurry of action — or inaction — on renewable energy bills in the last days of the state’s legislative session comes a striking but largely unheralded statement of policy from the state of California. Last week, Governor Brown signed into law a bill that excludes corn-derived ethanol fuel from the state’s Alternative and Renewable Fuel and Vehicle Technology Program.”

 

As in so many other things (especially how he feels about Senator Frank Church) Senator Roberts is spot-on here. The Wichita Eagle (9/9/12) reports: “Rep. Jim McDermott, D-Wash., introduced legislation last month to impose a “carbon tax” on the American people. We’ve been down this road before. It was a bad idea then, and it is now. A carbon tax is an additional tax on the essential fuels that power our economy – gasoline, diesel, natural gas and electricity. It would cause prices at the pump to increase, electricity rates to go up, and natural gas bills to rise. Because nearly everything we buy is transported by trains or trucks, or grown on farms that use diesel equipment, or derived from oil and gas, significant increases in energy prices will ripple throughout the entire economy.”

 

Everybody thinks they love wind… until they have to pay for it. Tulsa World (9/7/12) reports: “The numbers opting into those programs is far less than the positive response on the poll. American Electric Power-Public Service Company of Oklahoma’s WindChoice program, which offers wind options at $1.72 extra per 100-kilowatt blocks, only has 669 takers so far out of approximately 530,000 customers.”

 

So, Secretary Salazar went to the convention and talked about how great he was doing.  But out here in the real world, the assessment is a little different. Anchorage Daily News (9/7/12) reports: “A Norwegian oil and gas company is delaying plans to explore for oil offshore in the Alaska Arctic until at least 2015 because of concerns about regulatory challenges faced by rival and sometimes partner Shell Oil Co., according to a company spokesman… The decision by Statoil came in August, before federal regulators decided to allow Shell to drill in the Chukchi Sea, but that development doesn’t change things, said Jim Schwartz, a Houston-based spokesman for Statoil… “The bottom line is, in light of the significant uncertainty regarding Alaska offshore exploration, we’ve decided to take what we believe is a prudent step of observing the outcome of Shell’s efforts before finalizing our own exploration decision time frame,” Schwartz said”

In the Pipeline: 9/7/12

You do have to say this for the President:  he has no trouble separating himself from the reality of his record.  That is a really valuable skill in politics. AEA (9/6/12) reports: ““On the eve of the one-year anniversary of Solyndra’s bankruptcy, Barack Obama made the latest in a four year string of empty promises about his plan to achieve American energy independence. Despite his pledge to create 600,000 jobs in the energy sector and 1 million new manufacturing jobs, President Obama has presided over the worst economic recovery in a generation. He has refused to permit the Keystone XL pipeline, which would create tens of thousands of jobs, and he has instituted a de facto embargo on offshore energy development that has left the Gulf coast economy struggling to recover. At every turn, President Obama has denied access to taxpayer owned energy resources on federal lands, including more than a trillion barrels of oil shale.”

 

Congressman Markey just can’t win.  At the risk of piling on, we would point out (again) that wind, solar, oil, and natural gas are merely some of the above.  And for our friends in the natural gas business, you may want to reflect that Jimmy Carter’s favorite fuel was . . . coal.  Mutatis mutandis. Grist (9/6/12) reports: “Let me say this because I think it’s important: When George Bush left office in January 2009, we as a country were 57 percent dependent on imported oil. Today we are 45 percent dependent on imported oil. That’s Obama drill, baby, drill! Why do I say that? We are at an 18-year high for oil production in the U.S.! Let me say that again: We are at an 18-year high for oil production in the U.S. right now! And we are at an 18-year low with greenhouse gas emissions [thanks to Obama’s push for] natural gas, wind, solar, and new vehicle standards.”

 

You are a damned fool if you live in coal country and don’t register some sort of disapproval with the current President. The Atlantic (9/6/12) reports: “As the delegate roll call at the Democratic National Convention neared West Virginia last night, the jokes started to fly on Twitter. “It’s going to be awkward when the West Virginia delegation gives delegates to federal inmate Keith Judd,” quipped BuzzFeed’s Andrew Kaczynczki, a representative example.”

 

I think Celinda Lake is probably right.  The economy is a much bigger and less comprehensible mess than one, small, ugly instance of corruption involving billionaire donors, White House involvement, skirting the law, and the usual efforts to avoid talking about the whole thing. Politico (9/12) reports: “But Democratic pollster Celinda Lake contended that Solyndra still isn’t as hurtful to Obama as Bain Capital is to Romney… “Solyndra doesn’t have any victims,” she said. “Bain does. People lost their health insurance. Solyndra is a bank shot.””

 

When you actually ask voters to list important issues, environment (in total!) gets mentioned by about 1% of respondents.  Climate change gets even less.  Which is why the President has spent approximately zero percent of his political capital on the issue.  Coral can be a good reporter, but when it comes to this issue she has jumped the shark. National Journal (9/6/12) reports: “But on Thursday night, under the spotlight at the Democratic National Convention in Charlotte, just two months from the general election, Obama made his most high-profile mention of the controversial issue this year. “And yes, my plan will continue to reduce the carbon pollution that is heating our planet—because climate change is not a hoax,” Obama said. “More droughts and floods and wildfires are not a joke. They’re a threat to our children’s future. And in this election, you can do something about it,” he said, to a sustained ovation.”

 

Meeting this goal would probably be a lot easier if the President had approved the Keystone pipeline.  Or if Secretary Salazar would open up more than 3% of the federal estate for exploration.  Or if the Administration would follow the law on oil shale leases.  I could go on, but you get the point. Politico (9/6/12) reports: “President Barack Obama will call for cutting net oil imports in half and supporting 600,000 natural gas jobs by the end of the decade, according to excerpts of his address to the Democratic National Convention released by the Obama campaign.”

This is pretty good.  Or terribly bad, depending on how you think about the world. SchiffReport (9/5/12) reports: “Posing as an anti-business crusader, Peter Schiff found a number of DNC delegates and attendees who support explicitly outlawing profitability. We deliberately avoided speaking with the occupy protestors camping outside in tents to get a more “mainstream” Democratic perspective!”

 

AEA President Responds to President Obama’s DNC Speech

“The United States must not embrace the failed policies of the last three years that have led to higher energy prices, more restrictions on domestic energy production, and reward the president’s political cronies with lucrative loan guarantees at the expense of hardworking Americans who deserve a better use of their tax dollars.”

WASHINGTON D.C. — American Energy Alliance President Thomas Pyle released the following statement in response to President Obama’s speech tonight before the Democratic National Convention meeting in Charlotte, NC:

“On the eve of the one-year anniversary of Solyndra’s bankruptcy, Barack Obama made the latest in a four year string of empty promises about his plan to achieve American energy independence. Despite his pledge to create 600,000 jobs in the energy sector and 1 million new manufacturing jobs, President Obama has presided over the worst economic recovery in a generation.

He has refused to permit the Keystone XL pipeline, which would create tens of thousands of jobs, and he has instituted a de facto embargo on offshore energy development that has left the Gulf coast economy struggling to recover. At every turn, President Obama has denied access to taxpayer owned energy resources on federal lands, including more than a trillion barrels of oil shale.

President Obama has a record, and he cannot run from it. He’s waged a three year war on coal, directed a federal regulatory assault on the hydraulic fracturing technologies that are responsible for our natural gas boom, and enacted numerous policies that prohibit American job creators from unlocking more than 200 years of oil supply that lies under our feet and off our coastlines.

Meanwhile, he’s spent the country into the poor house by pumping billions of taxpayer money into Solyndra-style renewable ventures, in some instances increasing the handouts by as much as 1700 percent.

America indeed has a choice. The United States must not embrace the failed policies of the past three years that have led to higher energy prices, more restrictions on domestic energy production, and reward the president’s political cronies with lucrative loan guarantees at the expense of hardworking Americans who deserve a better use of their tax dollars.

America’s energy future is less secure, less independent, and more expensive because of Barack Obama’s policies. It is unlikely that the next four years would offer a different course under his continued leadership.”

###

Let the Wind Production Tax Credit Expire

WASHINGTON D.C. — American Energy Alliance President Thomas Pyle joined the leaders of 63 other organizations to oppose extension of the wind Production Tax Credit (PTC), which is schedule to expire at the end of this year.

“Whenever the government protects a particular industry, as it has with wind energy production, the industry tends to remain dependent on it. As Nobel laureate Milton Friedman noted, ‘the infant industry argument is a smoke screen. The so-called infants never grow up.'” The wind PTC, like other green energy incentives, is a prime case in point,” the letter notes.

“The PTC was created in 1992 to get the wind industry off the ground. Yet 20 years later, we have little to show for it. We’re still providing a $5 billion special tax break each year for an industry that supplies just over 2 percent of our power.”

To read the entire letter, click here.

*Since September 6th, 24 more organizations have signed the letter. Below is an updated list of organizations who have signed on.

###

In the Pipeline: 9/5/12

He definitely should.  It would help the campaign tremendously. National Journal (9/4/12) reports: “A large group of Democratic donors is threatening to withhold money from President Obama’s reelection campaign unless he breaks his silence on climate change and responds directly to GOP presidential candidate Mitt Romney’s denigration of the issue at the Republican National Convention last week.”

 

I had no idea that Pleistocene-era caliche deposits release carbon into the atmosphere when exposed to the elements. WSJ(9/4/12) reports: “A couple of weeks ago we wondered if green lobbying groups would object to new Department of Interior rules to streamline environmental approval for solar energy projects on hundreds of thousands of acres of federal land. (“The Solar-Painted Desert,” Aug. 13, 2012.) Well, here we go. Three environmental groups—Western Lands Project, Basin and Range Watch, and Solar Done Right—have filed a formal complaint of the kind that often presages a lawsuit… But here’s the real shocker: The letter complains that “no scientific evidence has been presented to support the claim that these projects reduce greenhouse emissions.” And “the opposite may be true. Recent work at the Center for Conservation Biology University of California, Riverside, suggests that soil disturbance from large-scale solar development may disrupt Pleistocene-era caliche deposits that release carbon to the atmosphere when exposed to the elements, thus ‘negat[ing] the solar development C [carbon] gains.'””

 

You know the really sad part?  No one is really surprised. Inside Climate News (9/4/12) reports: “Mitt Romney has vowed to drill the nation’s way out of its foreign oil addiction instead of investing in clean fuel technologies—but according to Dan Senor, one of Romney’s closest political advisers, that’s bad economics.”

 

This is discouraging.  Again, not surprising, but discouraging. E&ENews (9/4/12) reports: “Man-made global warming is happening, President Obama and Republican presidential nominee Mitt Romney agreed in answers released today on the independent website ScienceDebate, but neither candidate provided specifics about what kind of future policies would be needed to slow climate change or guard against its adverse effects.”

In the Pipeline: 9/4/12

 

So the new automobile mandates kill people, increase the cost of cars, punish poorer people, and erode the solvency of the Highway Trust Fund.  Is there anything this crew can’t wreck? American Road & Transportation Builders Ass. (8/29/12) reports: “As new cars and light trucks are purchased in the future and old ones retired, average fuel economy will improve, reducing the 2009 forecast of gasoline sales and HTF revenues by the amounts shown in the table.  The baseline for computing percentage losses is total HTF revenues.”

 

Is Reuters trying to imply that Senator Reid is a corrupt politician trying to compel a utility to purchase expensive, unreliable energy?  Because if they are, they need to write this story on just about every Member of Congress who favors utility mandates.  Or, looked at through a different prism, everyone who favors the ethanol mandate. Reuters (8/31/12) reports: “In 2003, the Nevada Democrat publicly banned relatives from lobbying him or his staff after newspaper reports showed that Nevada industries and institutions routinely turned to Reid’s sons or son-in-law for representation. Now, questions surrounding family ties are flaring again in Nevada around the Senate majority leader. He and his oldest son, Rory, are both involved in an effort by a Chinese energy giant, ENN Energy Group, to build a $5 billion solar farm and panel manufacturing plant in the southern Nevada desert.”

 

Hey, I’m pretty sure Solyndra and the rest of the crew went under babbling about how the Chinese were killing them.  Let’s make it easy.  No one on the planet wants a product that doesn’t work as well as its competition.  When was the last time you bought a VHS tape? The Telegraph (8/29/12) reports: “At the same time, the quality of the solar equipment being made by Chinese companies, even by the biggest companies, is often not export-grade… While the Chinese government has promised to hugely increase its purchases of solar panels, there is a significant excess capacity in the domestic market that has kept prices low.”

 

What?  You mean FERC does not rule the entire planet?  Does Joe Kelliher know about this? Platts (8/28/12) reports: “While the US Federal Energy Regulatory Commission can retroactively determine what the electricity rates in California should have been during the Western energy crisis of 2000-01, it cannot use that information to make non-jurisdictional entities, such as municipal utilities and the Bonneville Power Administration, pay refunds, a federal appeals court has determined.”

 

On Friday we noted that some in New York did not want the Champlain Hudson line bringing in electricity from Canada.  Now, we note that some in New England would rather not have the Northern Pass line bringing electricity in from Canada.  Sense a theme?  On a separate note, kudos to ISO-NE for acknowledging that switching to natural gas may be a lot more complicated than people think. Union Leader (8/29/12) reports: “On Friday we noted that some in New York did not want the Champlain Hudson line bringing in electricity from Canada.  Now, we note that some in New England would rather not have the Northern Pass line bringing electricity in from Canada.  Sense a theme?  On a separate note, kudos to ISO-NE to acknowledging that switching to natural gas may be a lot more complicated than people think.”

In the Pipeline: 8/31/12

This is why my native New York is doomed.  Even the “Republicans” are idiots. WSJ (8/27/12) reports: “Upstate legislators are opposing a plan to build an electricity transmission line from Canada to New York City, claiming the proposal to import lower-cost hydroelectric power would cost New York jobs.”

 

You would think that Nancy Pelosi would take time out from increasingly ridiculous press conferences to make sure that San Francisco is doing its part to destroy what is left of California. SF Weekly (8/29/12) reports: “Now, more than four years and one mayor later, that program has also done almost nothing to offset greenhouse gas emissions. The fund has reaped in $203,152 from city departments since 2009, plus a $14,000 donation and $1,129 from travelers who purchased carbon offsets from a kiosk at SFO.”

 

Does anyone really think this crew was going to let Shell explore in the Chukchi?  Seriously? BSEE (8/30/12) reports: “It’s an upside-down world when a company forks over more than $2 billion to the government for the right to explore for energy and it becomes a news story 5 years later when the government allows them to stir up some mud – but not actually drill for oil — on the ocean floor dozens of miles off shore.  Sort of makes one wonder how the process will work for getting the government to allow an operation that will actually cost them something when they run our health care.”

 

Congressman Pompeo is rarely wrong.  He is not here. Politico(8/29/12) reports: “There’s been a steady drumbeat recently from those seeking an extension of the wind production tax credit. For many reasons, including some that former Massachusetts Gov. Mitt Romney has carefully highlighted in his opposition, this is a bad idea.”

 

We won.  You might have missed it in all the mayhem. Politico(8/29/12) reports: “T. Boone Pickens said natural gas vehicles can survive just fine without Congress approving his so-called Pickens Plan.”

Is Ethanol Cheaper Than Gasoline?

 

CLICK HERE to tell the EPA to waive the ethanol mandates and  relieve pressure on our nation’s food supply, fuel prices, and vehicle fleet.

No doubt feeling the heat from record corn prices, defenders of the ethanol mandate are now claiming that ethanol is actually something that the market would embrace, without government intervention. If this were true, it would simply prove that the mandate is unnecessary. But of course it’s not true. In particular, claims that ethanol is currently “cheaper than gas” are very misleading because they ignore differences in energy content.

To give an example of what we mean, consider this recent article from Bloomberg:

Ethanol, the best-performing energy commodity this year, is cheaper than gasoline, encouraging refiners to use the biofuel even if President Barack Obama’s administration ends a requirement to do so.

A 49 cent-per-gallon discount to gasoline provides…an opportunity to profit by blending the corn-based additive into fuel, while easing prices at the pump for consumers. Marketers may use ethanol as they look for the cheapest way to boost engine performance and reduce pollution.

The most severe U.S. drought in 56 years has prompted lawmakers from both parties to ask the Obama administration to suspend the mandate because of the potential impact on food costs. Ethanol will consume 42 percent of this year’s corn crop, according to government estimates, up from 41 percent last year. The biofuel has been blended into more gasoline than ever this year, Energy Department data show.

“It’s just ingrained in the supply and distribution and it’s having a moderating effect on pump prices,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy, said by phone. “As long as they were still allowed to use it, most would. The lower price and just the logistics of taking it out, most would still use it.” [Bold added.]

This analysis is extremely misleading. But first, note the stakes: As we put in bold above, ethanol is currently absorbing 42 percent of the corn crop. At a time of drought and record agricultural prices, the federal ethanol mandate is particularly disastrous.

Yet what of the claims that ethanol is “cheaper than gasoline” and would be used anyway? This ignores the fact that ethanol has lower energy per unit volume. Once we adjust for the fact that your car will go more miles on a gallon of conventional gas, compared to a gallon blended with ethanol, then ethanol is more expensive. Consider the following table from AAA, captured on August 28, 2012:

 

Regular

Med

Premium

E85

**E85 MPG/BTU adjusted

$3.756

$3.900

$4.042

$3.385

$4.455

 

Yes, superficially it looks like fuel with higher ethanol blends (e.g. E85, which is 85 percent ethanol and 15 percent gasoline and can only be used in flex fuel vehicles)  are currently “cheaper than gas.” But adjust the price for the difference in energy content per volume shows that the one fuel on the market that is the closest thing to pure  ethanol  is still far more expensive. As Dan Simmons quipped, “A gallon of water is cheaper than a gallon of ethanol.” This observation doesn’t mean refiners are rushing to mix water into the fuel mixture in order to boost profit margins.

In conclusion, nobody is saying that ethanol would completely disappear in the absence of federal mandates. Rather, the claim is that it is currently being supported at an artificially high level. Yet in a sense, this debate is irrelevant: The federal mandate on refiners to use ethanol is unjustified. If it simply mandates what would happen due to market forces anyway, then it is unnecessary. But if—as we suspect—it is diverting an enormous amount of corn away from food and distorting markets—then the ethanol mandate is clearly disruptive.

CLICK HERE to tell the EPA to waive the ethanol mandates and  relieve pressure on our nation’s food supply, fuel prices, and vehicle fleet.

ICYMI: The Oklahoman's Editorial

 

Below is an editorial from the Oklahoman about the American Products, American Power bus tour, a project of the Institute for Energy Research and the American Energy Alliance.

Get out of the way.

That, in a nutshell, is the message preached by the American Energy Alliance, a right-leaning nonprofit that stumps for free-market energy policy. The AEA, whose multistate bus tour stopped in Oklahoma City last week, has its megaphone aimed squarely at the Obama administration, which has spent nearly four years looking for ways to curb the production of energy that doesn’t have a distinctly green hue.

While fast-tracking approval of projects such as Solyndra, and burning through hundreds of millions in government money in the process, the administration has tried to increase the tax burden on oil and gas producers — the one segment of the economy that’s actually creating jobs — made it more difficult to drill, and rejected the Keystone XL pipeline.

“This tour is about American products and American power, about the goods made from these products and about the threats from government,” AEA President Tom Pyle told The Oklahoman’s Opinion Page writers. “The only thing standing in the way is Washington, and in some places statehouses. Not here in Oklahoma, though.”

That’s because we get it here in Oklahoma. We understand the benefits of a robust oil and gas industry. Obama doesn’t — which helps explain why, as The Wall Street Journal noted in an editorial Friday, federal acres available for leasing and exploration are down 18 percent since 2008, and the permitting rate is 37 percent slower. The average time needed to get a federal drilling permit? More than 300 days!

Mitt Romney gets it, too. Romney’s energy plan, unveiled last week, would untangle many of the burdensome regulations imposed by this administration and allow this sector to expand and create more jobs.

The fact that Romney’s plan was immediately dismissed by Obama’s minions as a sop to “Big Oil” speaks volumes.

Electing Romney would help get Washington out of the way. It’s something to consider on Nov. 6.