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IER President Calls for Investigation into Navy Biofuel Contracts

July 10, 2012 by 1 Comment

 

WASHINGTON D.C. — IER President Thomas Pyle sent a letter today to four congressional chairmen calling for an “immediate, exhaustive and unyielding” investigation of the Defense Department’s decision to fuel naval exercises in the Pacific ocean using biofuels that cost $27 per gallon. The letter was sent to Chairman Buck McKeon of the House Armed Services Committee, Chairman Carl Levin of the Senate Armed Services Committee, Chairman Darrell Issa of the House Oversight Committee, and Chairman Joseph Lieberman of the Senate Government Affairs Committee.

“The Obama administration’s push to develop the biofuel industry around America’s military is a textbook example of government cronyism . . . The American people have a right to know if the Defense Department is awarding their tax dollars to certain biofuel industries for reasons other than strategic military purposes,” Pyle wrote.

“Already the government’s joint ventures with biofuel companies are creating ripe opportunities for waste, fraud and abuse . . . For the Defense Department to launch so boldly into partnerships with renewable industries fast becoming known for financial insolvency and fraud appears to be more about shoring up the administration’s failing green energy agenda than about securing the future of our sea and air power supremacy.

“The Obama administration is squandering limited national defense dollars on a political agenda premised on their insistence that the United States has insufficient supplies of conventional energy sources to meet our current needs. This claim is false, and the agenda it informs is wrongheaded.”

To read the full text of Pyle’s letter, click here.

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

EPA’s Folly; Refiners’ Punishment

July 9, 2012 by 1 Comment

 

The Environmental Protection Agency’s (EPA’s) Renewable Identification Numbers, RINs, are causing the refining industry a lot of grief and the American public a lot of money.  If nothing changes, the grief and the money wasted could grow rapidly, damaging the economy and family budgets. RINs are a byproduct of the Renewable Fuels Standard that mandates a certain amount of biofuels (e.g. ethanol) to be produced and used by refiners each year. The purpose of RINs is to track biofuel sales. But, fake RINs have become a problem and refiners are caught in the middle. Refiners pay for the purchase of mandated biofuels via a RIN only to have it turn out fake and then be fined by EPA for not using the required amount of biofuels.

History of Biofuel Mandates and RIN Development

The Energy Policy Act of 2005 established the Renewable Fuel Standard (RFS), which mandated the use of at least 4 billion gallons of biofuels in 2006 and at least 7.5 billion gallons by 2012 to be blended into transportation fuels. Two years later, the Energy Independence and Security Act of 2007 vastly expanded the mandate to 9 billion gallons of biofuels in 2008, increasing to 36 billion gallons by 2022. It also stipulated that the 36 billion gallons should consist of not more than 15 billion gallons of corn-based ethanol and at least 16 billion gallons of cellulosic biofuels with additional requirements for other advanced biofuels.[i] Thus, fuel blenders must incorporate minimum volumes of biofuels in their transportation fuel sales regardless of market prices, or be fined. The fines are assessed on the refiner or blender, not the producer of the biofuel.

EPA is responsible for implementing the program and ensuring that the mandates are met for 4 specific categories of biofuels: advanced biofuels, biomass-based diesel, cellulosic ethanol, and total renewable fuels. Each year, EPA calculates blending standards for the 4 biofuel categories that refiners, blenders, and importers of gasoline and diesel fuels must meet with each company receiving a renewable volume obligation (RVO). The RVO is calculated by using the EPA standard for each of the 4 biofuel categories and applying them to the firm’s annual fuel sales. EPA checks that the mandate has been met through the RINs that each firm has. RINs were developed to deal with regional differences in biofuels production and availability and to ensure that the blending requirements have been met.

Source: Congressional Research Service, http://www.fas.org/sgp/crs/misc/R40155.pdf

 

A RIN is a unique number consisting of 38 characters that is initially issued by the biofuel producer or importer at the point of production or importation. Each qualifying batch of renewable fuel has its own RIN. RINs consist of

RIN=KYYYYCCCCFFFFFBBBBBRRDSSSSSSSSEEEEEEEE

Where

K = a code that distinguishes RINs still assigned to a batch from those detached
YYYY = the calendar year of production or import
CCCC = the company ID
FFFFF = the company plant or facility ID
BBBBB = the batch number
RR = the biofuel equivalence value
D = the renewable fuel category
SSSSSSSS = the start number for the batch of biofuel
EEEEEEEE = the end number for the batch of biofuel

The latter 2 components of the RIN provide the number of gallons of biofuel in the batch, adjusted for its equivalence value. For example, a 1,000 gallon batch of biodiesel with an equivalence value of 1.5 would start with 00000001 and end with 00001500. When biofuels change ownership, the RINs are transferred and the Code K is updated accordingly. RINs are valid for the calendar- year generated, or they can be extended into the following year.

To deal with geographic and other differences among refiners, RINs can also be traded. If a blender has already met its mandated share, it can sell extra RINs to another blender who has not met its mandate. Thus, blenders that have not met their quota have the option to buy RINs instead, making them a replacement for an actual purchase of biofuel.

Some Issues with the Renewable Fuel Standard

The EPA Administrator has the authority to waive the requirements if there is inadequate domestic supply to meet the mandate, or if “implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States.” In particular, EPA must make a market determination of the amount of cellulosic biofuel that will be available each year—a fuel that is not yet commercially available. The EPA has lowered the mandate for cellulosic biofuels tremendously, but is still vastly overestimating actual production.  As we explained, in an earlier post, even the amount mandated for 2012, 8.65 million gallons, does not exist commercially, necessitating refiners to pay fines.[ii]  For reference, EPA’s Moderated Transaction System shows zero gallons of cellulosic produced as of April of this year.

EPA had also lowered the amounts of cellulosic biofuel mandated for 2010 and 2011. In 2010, the law mandated 100 million gallons of cellulosic biofuel; EPA reduced the mandate to 6.5 million gallons, and in 2011, the law mandated 250 million gallons of cellulosic biofuel; EPA reduced the mandate to 6.6 million gallons. The USDA Office of Energy and New Uses projects that cellulosic biofuels are not expected to be commercially available on a large scale until at least 2015. But yet, the Renewable Fuel Standard mandates that 3 billion gallons of cellulosic biofuel be produced by 2015.[iii]

According to the Congressional Research Service, there are no large scale commercial cellulosic biofuel plants in operation in the United States. Moving an industry from the laboratory to commercialization is nontrivial as demonstrated  when two recipients with total grant funding of $113 million dropped out of the program—in at least one of those cases, the company determined that the risks outweighed the anticipated benefits.

Because current production costs are so high for some biofuels, especially cellulosic biofuels and biodiesel from algae, either significant technological advances or significant increases in petroleum prices are needed to make them competitive with gasoline. Without such cost reductions, requiring large amounts of biofuels will have the unfortunate consequence of raising fuel prices. The fees that refiners have had to pay for not blending non-existent ethanol are on a per gallon basis, $1.58 in 2010, $1.13 in 2011, and $0.78 for 2012. For 2011, the total fee paid by refiners and blenders is estimated at $6.8 million. EPA will announce the 2013 fee amount on November 30, 2012. The statutory minimum fee is 25 cents. The waiver fee formula is $3.00 per gallon less the wholesale gasoline price with the difference adjusted for inflation since 2008.  Thus, as the price of gasoline goes up, the fees go down, and vice versa.

Even corn-based ethanol has increased prices–food prices– due to the amount of corn that has been diverted from home and livestock uses to produce ethanol. Today, about 40 percent of corn production is used to make ethanol, making it the largest use for corn in the United States; in 2001, just 10 years ago, it was only 7 percent.

Source: Congressional Research Service, http://www.fas.org/sgp/crs/misc/R40155.pdf

U.S. taxpayers have supported the renewable fuel program through tax credits, subsidies, loans and grants. In 2011, federal subsidies were estimated at over $7.8 billion, of which almost $7.5 billion were tax credits. While most of these tax credits expired at the end of 2011, the $1.01 per gallon credit for cellulosic biofuels remains.  According to the Congressional Research Service, the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) provided authorized research programs, loans and grants in excess of 1 billion dollars to “support the nascent cellulosic industry.”[iv]

To make matters worse, the program is fraught with fraud and abuse. Due to the tradable nature of RINs, the requirement to produce non-existent biofuels and lax oversight from EPA, a market of fake RINs has developed. Dishonest producers have generated RINs without manufacturing any corresponding renewable fuel since they can be bought and sold like shares of stock. EPA puts the burden on refiners and importers to ensure the credits they purchase are valid, fining them for insufficient biofuel blending even though they paid for what they thought were legitimate RINs because the sellers were on EPA’s approved sellers list.

For example, Exxon paid a fine of $165,407; Shell, $110,331; ConocoPhillips, $250,000; and a unit of BP, $350,000. Janet Grothe, a spokeswoman for ConocoPhillips, said in an email, “ConocoPhillips purchased the RINs in good faith and was the victim of fraud committed by the seller. The civil settlement does not constitute an admission of liability.”[v]

Since November, 2011, the EPA has accused three companies (Clean Green Fuel of Baltimore, Absolute Fuels of Lubbock, Texas, and Green Diesel LLC of Houston) of selling RIN credits without producing any biofuel.  Each company sold between 32 million and 60 million RINs for a total of about 140 million fake credits, or about 10 percent of the annual credits.[vi] Some companies selling fake RINs remained on EPA’s approved sellers list even as the agency was investigating fraud charges.[vii] As of early June, the EPA issued “notices of violation” to 30 refiners and blenders that unknowingly bought fake RINs to comply with their production mandate.[viii]

Conclusion

Charles T. Drevna, president of the American Fuel & Petrochemical Manufacturers, recently said “EPA officials should have alerted members of my trade association when they suspected that some companies registered with the agency were producing fraudulent credits.  Penalizing refiners who unknowingly bought fraudulent RINs from sellers registered with EPA is unjust, irresponsible and bad policy because it punishes crime victims instead of criminals.”

To fix the problem the industry is proposing that EPA–or third parties that the agency chooses—administer a voluntary enhanced certification and validation program for RIN producers that buyers could use as a defense if fake RINs were issued.

The RIN situation once again shows EPA’s antipathy toward energy producers. EPA creates RINs, but fails to police the RIN market, allowing fraudulent RINs to be traded. Instead of stopping fraud, EPA fines the companies that were defrauded. EPA, not the refiners, should bear the burden of a program that EPA has failed to develop satisfactorily. This is just another example of what EPA Regional Administrator Al Armendariz’s disclosed regarding the agency’s policy of “crucifying” oil companies as an enforcement strategy.  In the end, however, targeting energy producers simply targets energy consumers…the American public whose tax dollars pay the salaries of the EPA officials whose policies bring public disdain on their own agency and contribute to declining public trust in governmental institutions.


[i]  Congressional Research Service, Renewable Fuel Standard: Overview and Issues, January 23, 2012, http://www.fas.org/sgp/crs/misc/R40155.pdf

[ii]  Institute for Energy research, Government forces refiners to pay for non-existent ethanol, January 12, 2012, http://www.instituteforenergyresearch.org/2012/01/12/government-forces-refiners-to-pay-fine-for-nonexistent-ethanol/

[iii]  Congressional Research Service, Cellulosic Biofuels: Analysis of Policy Issues for Congress, January 13, 2011, http://assets.opencrs.com/rpts/RL34738_20110113.pdf

[iv]  Ibid.

[v]  Bloomberg, U.S. EPA Settles With 30 Companies Over Fake Fuel Credits, April 30, 2012, http://www.bloomberg.com/news/2012-04-20/u-s-epa-settles-with-refiners-over-fake-renewable-fuel-credits.html

[vi]  New York Times, Fraud Case Shows Holes in Exchange of Fuel Credits, July 4, 2012, http://www.nytimes.com/2012/07/05/us/biofuel-fraud-case-shows-weak-spots-in-energy-credit-program.html?_r=3

[vii]  Politico Pro, House plans RINs probe while W. H. talks to industry, June 26, 2012, https://www.politicopro.com/story/energy/?id=12339

[viii]  Washington Examiner, EPA punishes the innocent for green fuels fraud, June 7, 2012, http://washingtonexaminer.com/article/702811

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

NRDC Jumps for Joy Over Court Win for EPA

July 6, 2012 by 1 Comment

 

The Natural Resources Defense Council (NRDC) was ecstatic over the recent appellate court ruling, upholding the EPA’s power to regulate carbon dioxide emissions under the Clean Air Act. Yet the NRDC’s description misleads the innocent reader on several crucial points. Contrary to their claims, federal regulations in the energy and transportation sectors won’t help the economy, and the EPA’s own projections of climate benefits are quite humorous.

Here’s the gist of the NRDC reaction:

“This is a huge victory for our children’s future. These rulings clear the way for EPA to keep moving forward under the Clean Air Act to limit carbon pollution from motor vehicles, new power plants, and other big industrial sources,” said David Doniger, senior attorney for the Climate and Clean Air Program at the Natural Resources Defense Council.

The three-judge panel also upheld the Obama administration’s first set of clean car and fuel economy standards, issued jointly by EPA and the Transportation Department in 2009. This gives EPA the green light to finalize a the second round of clean car standards later this summer that will cut new cars’ carbon pollution in half and double their fuel efficiency to 54.5 mpg by 2025.

These historic agreements with the auto industry, auto workers, states and environmental group will cut carbon pollution, create jobs, and save consumers thousands of dollars at the pump.

These claims are very misleading. As we have stressed repeatedly, the government does not promote job-creation or consumer welfare by imposing new regulations that restrict product variety. Consumers of new vehicles value many things besides fuel economy, such as the purchase price of the vehicle and its safety in a crash. By artificially raising the fuel economy standards of new vehicles, the government will raise sticker prices—making new cars unaffordable altogether for some poorer motorists—and indirectly lead to more traffic fatalities.

Yet if government regulation of carbon dioxide emissions has hidden costs that the NRDC fails to mention, even the alleged benefits are much lower than the NRDC’s triumphant claims would suggest. By their very nature, federal mandates (such as fuel economy standards) are an incredibly blunt instrument to attack the alleged dangers of manmade climate change, meaning that even in theory they will achieve very little.

Indeed, the EPA itself projected that its new standards for light duty trucks and cars would reduce global temperatures by at most 0.02 degrees Celsius in the year 2100. That’s right, the EPA itself says that its latest batch of CAFE standards—part of the suite of powers that will allegedly do such wonders for our grandchildren—will, 90 years from now, render the earth two one-hundredths of a degree Celsius cooler than it otherwise would be.

We have entered an Orwellian world with climate regulations, where carbon dioxide—what trees breathe—has been classified as a harmful pollutant, where federal regulations on energy and transportation are supposedly going to make citizens wealthier, and where infinitesimal climate benefits in computer simulations are trumpeted as monumental achievements. We are not legal experts, but the economic impacts of the appellate court ruling on the EPA will be harmful indeed.

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

Scathing “Green Jobs” Report

July 2, 2012 by 2 Comments

 

The Subcommittee on Oversight and Investigations recently released a scathing memo on Section 1603 of the Obama stimulus plan. The grant program, administered by the Department of Energy, was frequently touted as a way to create “green jobs” while simultaneously benefiting the environment. Yet the new memo documents that the program was a complete flop on the jobs front, which should come as no surprise.

The Scope and Alleged Benefits of the Program

Section 1603 offered cash payments in lieu of tax credits to qualifying renewable energy projects. Since it’s always better to get cash sooner rather than later, the idea was to provide an even greater incentive for firms to invest in so-called clean energy technologies. Through March 15, 2012, more than $11 billion had been awarded to 34,140 separate projects. Of this total, $8.2 billion in grants had been awarded to wind projects, $2.0 billion went to solar, and about $920 million went to geothermal, biomass, and other alternative technologies.

When the Obama Administration pushed through the American Reinvestment and Recovery Act (aka “the stimulus package”), it was typical for proponents to claim that the measures killed two birds with one stone. On the one hand, federal incentives for renewable energy projects were supposed to be good policy because of the threat of climate change. Yet at the same time, supporters promised Americans that these policies also made sense on a purely economic level, since the new investments would fuel growth in sustainable “green jobs” and help pull the nation out of its terrible slump.

Even after the lackluster performance of the stimulus package, officials touted this familiar line. For example, on March 16, 2011 Secretary of Energy Steven Chu claimed “the Section 1603 tax grant program has created tens of thousands of jobs in industries such as wind and solar by providing up-front incentives to thousands of projects.”

Memo Uncovers the Truth on Job Creation

In this context we can see just how explosive the new memo’s findings are. For example, in contrast to the self-reported estimates of job creation from the grant recipients, the memo reports the results of an April 2012 NREL study. If we focus just on the direct jobs created by Section 1603, the study finds that the large wind and photovoltaic projects—which account for 92 percent of Section 1603’s awards—will “account for approximately 910 jobs annually for the lifetime of the systems,” where the lifetime is 20 to 30 years.

Simple arithmetic shows that these estimates are simply shocking. Even using the long-term estimate of 30 years for the lifetime of a renewables project, the price tag of $8 billion, divided by 910 jobs in an average year, works out to $293,000 in taxpayer money given per job-year.

These types of results are not surprising to those familiar with government efforts to “create jobs.” The free market tends to allocate resources efficiently, taking into account resource constraints, technology, and consumer preferences. When the government arbitrarily uses the tax code and regulatory mandates to alter the market outcome, efficiency is reduced. The same amount of resources lead to less total output, or—what is the same thing—a desired amount of output takes more resources to produce.

Other Problems

The new memo uncovers other problems. For example, even the above figures—dismal as they are—can’t be taken at face value. This is because some of the projects that received cash grants under Section 1603 would have occurred anyway. Therefore, it inflates the estimates of “jobs created” to include such projects, since these particular jobs actually can’t be attributed to the program. A similar problem is that many of the projects received other federal incentives, in addition to Section 1603. Thus, when trying to tally “jobs created per dollar of cash grants,” not only should the numerator be smaller, but the denominator should be larger.

Conclusion

As the Subcommittee on Oversight and Investigations’ new memo indicates, the federal government has a terrible track record when it comes to job creation, whether green, red, or orange. If policymakers want to provide incentives for truly sustainable job creation, as well as economic growth and energy security, the answer is staring them in the face: Remove federal obstacles to the development of domestic energy deposits.

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

The Flawed BlueGreen Alliance Report on CAFE Standards

June 28, 2012 by Leave a Comment

 

The BlueGreen Alliance has released a new study arguing that tighter fuel economy standards on cars and light trucks will not only mitigate climate change, but will also create jobs. As with most studies in the “green jobs” literature, this one too rests on faulty economic analysis. The federal government doesn’t do consumers any favors by restricting their options in the marketplace.

The BlueGreen Alliance study at least has the honesty to admit—albeit in a very low-key way—that tighter federal regulations will raise vehicle prices for consumers. Yet the proponents of the increased interventions try to make lemons into lemonade in this fashion:

These proposed standards would reach the equivalent of 54.5 miles per gallon (mpg)…for the average new vehicle in 2025…

Our analysis finds that the proposed standards will create an estimated 570,000 jobs (full-time equivalent) throughout the U.S economy, including 50,000 in light-duty vehicle manufacturing (parts and vehicle assembly) by the year 2030…

The proposed standards create jobs by helping to save drivers money on transportation fuel through improved average fuel economy over time and increased variety of more fuel-efficient vehicles. These new, more fuel-efficient vehicles are incrementally more expensive due to technology upgrades, but fuel savings are expected to more than outweigh the added cost. [Emphasis changed from original.]

Although they don’t shout it from the rooftops, the BlueGreen Alliance is here admitting that these new regulations will make it costlier to produce vehicles, and hence will lead to higher prices for consumers. BlueGreen Alliance does not admit that according to a study from the National Automobile Dealers Association this price increase will force nearly 7 million drivers out of the automobile market by making cars more expensive.

The BlueGreen Alliance argues that in the long run, however, consumers will end up saving money, from lower fuel expenses. This is the source of the alleged job creation.

There are so many things wrong with this analysis, it’s hard to know where to begin. First of all, on the face of it we should be very suspicious when someone claims that a new government regulation will force businesses to become more productive and consumers to become richer. If switching to these new fuel economy standards really is good for the industry (look at how many jobs it will supposedly create!) and makes consumers better off, then why isn’t the market doing it already? At least with climate change issues, there is an alleged “market failure” that the regulations are supposed to address. Yet here, the BlueGreen Alliance is effectively claiming that federal regulators know more about the auto industry than the shareholders.

Another major problem is that consumers might not be able to afford the upfront higher prices for vehicles. Many households don’t have the almost $3,000 (the Obama Administration’s own estimate) in extra upfront cash, and might not even buy the same vehicle at such a higher price. Moreover, the National Automobile Dealers Association (NADA) points out that the EPA’s alleged fuel savings calculations assume the vehicles will be driven 211,000 miles.

Yet another problem is that consumers and businesses won’t respond to the tighter mileage requirements simply by raising prices, as the government’s models assume. Instead, they will “spread the pain” over a variety of dimensions, including vehicle safety. In other words, rather than increasing the sticker price and producing an otherwise identical vehicle (with better fuel economy), manufacturers can make lighter vehicles that offer less protection in a collision. Studies have estimated that since CAFE standards were introduced in the late 1970s, anywhere from 42,000 – 125,000 motorists have died in traffic accidents because the regulations led to a different vehicle design.

In the long run, federal regulations don’t “create jobs” for the simple fact that wages and other prices can adjust, so that the labor market reaches equilibrium. The real issue is the productivity of labor, and the corresponding standard of living for workers as well as consumers. By arbitrarily forcing vehicle design that attains better mileage, the government will simply violate consumer preferences, raise vehicle prices, and actually contribute to more traffic fatalities.

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

Have Lawmakers Turned Their Backs on Keystone XL?

June 27, 2012 by Leave a Comment

 

WASHINGTON D.C. — On breaking news that a congressional conference report for the transportation bill will not include a provision forcing the approval of the Keystone XL Pipeline, American Energy Alliance President Thomas Pyle issued the following statement:

“House Speaker John Boehner and Senate Leader Harry Reid seem ready to push a major, multi-billion dollar transportation and infrastructure bill through both chambers just in time to meet a deadline this weekend. But nowhere in the package is a provision to finalize approval for the most important infrastructure project currently blocked by the Obama administration — the Keystone XL pipeline. The American people deserve decent roads, and they need the fuel for their cars to drive on those roads. Coupling Keystone XL with the highway bill makes good sense for our economy and our energy future.

“Already, the Obama administration delays have cost the United States more than $15 billion dollars — money that apparently Senator Reid would rather send to overseas oil cartels rather than our closest North American trade ally. Members who support a transportation bill that doesn’t force the Obama adminstration’s hand to approve — once and for all — the TransCanada permit application are taking a Keystone cop-out.”

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

In the Pipeline: 6/22/12

June 22, 2012 by Leave a Comment

And you shall know the truth.  And the truth shall set you free.  At least that is what my friend John says.




We offer this without comment.  Except to say that in every instance subsidies are corrupting.  You know, like the Food Stamp bill just passed by the Senate. The Hill (6/21/12) Reports: Low natural-gas prices mean that it’s economical to power heavy trucks with the fuel even without federal incentives, according to a new report that finds up-front investment costs for the vehicles could be recovered in three years.

I’m willing to bet the response from the bad guys is going to be to attack the professors who did the study.  Anyone want that action? The Colorado Observer (6/7/12) Reports: Wherever WildEarth Guardians goes, the economy suffers, according to a newly released report… The study, “Economic Impact of WildEarth Guardians Litigation on Local Communities,” found that household income drops by an average of $2,503 in communities where the non-profit group WildEarth Guardians is active in litigating environmental issues.

You know who didn’t sign this letter?  That’s right, the taxpayers who are being robbed so corporate farms can be paid off by their pals in Congress. Agriculture Energy Coalition (4/5/12) Reports: “We recognize the fiscal challenges facing your committees as a new Farm Bill is drafted this year. However, for all of the reasons noted above, we urge you to ensure the vital Energy Title programs are re-authorized and afforded significant mandatory funding over the life of the legislation.  Helping to grow the economy in these relatively inexpensive, but transformative ways will help ease the fiscal challenge in the years ahead while also addressing other critical national challenges.”

We hope you don’t retire.  It will be fun watching you explain your comments to voters during an election campaign. Politico (6/21/12) Reports: Rockefeller flatly denied to him that his vote Wednesday against an effort to derail Obama administration rule targeting mercury emissions from coal-fired power plants and his floor speech should be taken as a sign he won’t run in 2014.

Usually we don’t run press releases, but the egregiousness of DOE’s “Beyond Solyndra” is too much to ignore.  Apparently, Nobel prizes are not won for honesty or integrity. Energy and Commerce (6/21/12) Reports:In an astonishing piece of propaganda entitled “Beyond Solyndra,” the Obama administration today points to an electric car company whose loan has been suspended as an example to validate their massive federal efforts. Unfortunately, the sad reality is even when you get “Beyond Solyndra,” the Obama Department of Energy’s risky investments are still littered with failure…

Filed Under: Blog

Climate Regulations Raise Gas Prices

June 22, 2012 by 3 Comments

 

A new study put out by the Western States Petroleum Association concludes that California’s statewide cap-and-trade plan, known as AB32, would raise gasoline prices and shut down refineries. The study, performed by the Boston Consulting Group, affirms basic economics by realizing that government regulations will raise the cost of business and necessarily impact retail prices and jobs. This is a welcome dose of common sense in a sea of rhetoric arguing that climate change regulations will reduce greenhouse gas emissions and help the economy at the same time, a claim that is simple nonsense.

An article in the SFGate summarizes the report’s main findings:

California regulations designed to fight global warming could force half of the state’s refineries to close, trigger fuel shortages and add $2.70 per gallon to the cost of gasoline…

The study…argues that California’s upcoming cap-and-trade system to cut carbon dioxide emissions could wreak havoc with fuel supplies as early as 2015. So could the state’s low carbon fuel standard, a policy requiring refiners to lower the carbon intensity of the fuel they sell in California.

…[A]s many as seven California refineries would no longer be profitable, said Brad VanTassel, senior partner of the Boston Consulting Group.

Should they close, the state could lose between 28,000 and 51,000 jobs, with the losses occurring not just at the refineries but at businesses frequented by refinery workers. California also could lose $3.1 billion to $3.4 billion in tax revenue.

Although different approaches would yield different numerical estimates, the basic logic of the study is quite straightforward: By forcing refineries to produce a different type of gasoline for California motorists from what the market would naturally provide, the regulations embedded in AB32 raise refinery costs. This will make it less profitable to stay in the industry, leading refiners to either scale back operations or even (in the extreme) to shut down altogether and leave the California market. The reduced supply of refined gasoline, in turn, leads to higher pump prices for California motorists.

These points shouldn’t be controversial. Even many environmental economists, who endorse cap-and-trade programs as a way to mitigate climate change, acknowledge that there is a tradeoff involved. They recognize the obvious point that when the government levies more regulations on business, the economy suffers.

Even though these observations are intuitive, many proponents of AB32 and other government intervention into the energy sector try to have their cake and eat it too. They claim that a low-carbon fuel standard, and strict limits on the total emissions of greenhouse gases (i.e. cap-and-trade), will force businesses to invest in new technologies and thereby create “green jobs.”

Yet this logic is absurd. If it were really profitable and “good for the economy” to make such investments, it wouldn’t take government coercion. Indeed, if the logic of these arguments were actually correct, then the government wouldn’t need to restrict itself to climate change regulations. It could, for example, mandate that businesses every month put on a different color coat of paint over their buildings. Then we could create thousands of jobs for the painters and the firms that supply them, which we could call red, blue, purple, and orange jobs.

The new Boston Consulting Group’s study on AB32 affirms the obvious: More government regulations on business will lead to higher prices and job destruction. Citizens need to be aware of the tradeoffs when considering government interventions in energy markets.

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

Contact Your Congressman to Support the Domestic Energy and Jobs Act

June 20, 2012 by Leave a Comment

 

Click here to Take Action and write your Congressman.

America is blessed with abundant and affordable energy resources, and we need to increase energy production to grow our economy and create more jobs. Unnecessary red tape, inefficient permitting processes and lack of access to federal lands have made American energy production more expensive for consumers and businesses, especially on federal lands and waters.  In fact, the Congressional Research Service reported that 96% of the increase in U.S. oil production since 2007 has come from non-federal lands.  And this should be no surprise, since less than 3% of federal lands are even leased for energy production.

The government needs to get out of the way, and while not perfect, this bill is a good place to start. Some of the language in the Domestic Energy and Jobs Act focuses too much on federal planning and merely delays the implementation of regulations instead of eliminating them.  Nonetheless, it is an important step in the right direction as it would increase energy supply and create good paying American jobs.

In places like North Dakota, energy production is booming on state and private lands helping to substantially reduce unemployment and increase revenue for the state’s budget. By opening more federal lands to energy development, streamlining permitting processes and making the EPA study the impacts of its regulations, Americans in all fifty states will be able to enjoy the benefits of more energy production and a stronger economy.

The regulatory process for energy production on federal lands does not resemble a sensible cost-benefit approach. It lacks certainty, transparency, and is mired in bureaucratic red tape. The EPA, for example, is on a destructive path that is making it impossible for energy developers and manufacturers to continue to operate in the United States. This measure will require the EPA to do its job and study the costs and benefits of regulations and – more importantly – report the results to the American public before they are imposed.

Technology and free markets have been the driving forces behind our ability to develop resources in ways that are safe for the environment and that benefit the American people. The Domestic Energy and Jobs Act will help unleash the collective energy of our businesses and natural resources, breathing life back into the economy and creating hundreds of thousands of jobs.

Please follow this link to contact your Congressman and pledge your support for H.R. 4480, the Domestic Energy and Jobs Act.

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

'The Fracking Miracle'

June 19, 2012 by 5 Comments

 

WASHINGTON DC — The Institute for Energy Research, in a joint venture with The Heritage Foundation, released today a video telling the story of economic freedom, energy abundance, and job creation that are happening in North Dakota’s oil-rich Bakken shale formation. “A Fracking Miracle” provides first-person narratives of lives transformed, record employment, and economies bolstered by sensible state regulation, private land ownership, and safe drilling technologies.

“North Dakota is one of the nation’s most remarkable success stories — where free markets and American entrepreneurship are working together to create an economic miracle. The rising tide of robust energy development made possible by sensible regulation and private land ownership is truly lifting all boats — from farmers who were facing bankruptcy to unemployed machinists who are back catching up on their bills,” IER President Thomas Pyle noted.

“From all across the country, people are moving to North Dakota to find work and get a new start on life. Yet Washington is trying to limit hydraulic fracturing and stop the economic boom in North Dakota and other energy-rich parts of the country. From the Environmental Protection Agency to the Department of Interior, regulators are working overtime to close the pages on these success stories. ‘The Fracking Miracle’ explains why these regulators must be stopped to secure America’s private sector job creation, economic prosperity, and energy future.”

To view “The Fracking Miracle,” click below.

To read The Heritage Foundation’s Foundry Blog on the video’s production, click here.

To read the facts about North Dakota’s energy boom, click here and here.

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