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AEA Joins Coalition to Save Our Cars

September 12, 2023 by Leave a Comment

WASHINGTON DC (09/12/2023) – The American Energy Alliance has proudly joined the Save Our Cars Coalition along with 31 other national or state-based organizations. The coalition will fight to preserve and expand consumer choice in the selection of cars and trucks and ensure that all Americans will continue to benefit from them, as they have for more than a hundred years.

The Biden administration and California Governor Gavin Newsom have launched two different regulatory programs directed at gradually eliminating the sales of gasoline-powered cars and mandating the sale of electric vehicles.

The Save Our Cars Coalition will alert and educate the public to the threats posed by these and other harmful regulatory programs adding more to the price tag of vehicles – which are already at record highs – and eventually eliminating gas-powered cars and trucks altogether.

The coalition launches just as lawmakers in the House of Representatives are expected to vote on a bill that would prevent California from banning gas-powered cars and trucks. The American Energy Alliance will score that important legislation on our American Energy Scorecard.

AEA President Thomas Pyle issued the following statement:

“I am proud to join the Save Our Cars Coalition, which will fight to preserve the ability for all Americans to choose the cars and trucks that best suit their needs.
The Biden administration and the State of California want to ban cars and trucks powered by gasoline and diesel and replace them with electric vehicles. Past regulatory efforts have already had an impact on the price of new cars and trucks – which are at record highs. These regulations will make it even harder for people to buy and enjoy a car or truck by making them even more expensive and by reducing the number and types of automobiles available in the market. This is a feature, not a bug, of these rules.

In a nation as expansive as the United States, cars are not merely vehicles, they are integral to the American way of life. They play a pivotal role in our daily lives, especially in suburban and rural settings. This modern-day Prohibition would outlaw a product and a value – in this case, gasoline-powered cars and trucks that have created personal mobility on an unprecedented scale – that it cannot persuade people to forego themselves.

The simple reality is that this aggressive government assault is intended specifically to make cars and trucks much, much more expensive and therefore available only in much smaller numbers to much wealthier consumers. This is not about the environment; it is about personal freedom and mobility.”

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Texas Shows Inherent Dangers Of Renewable Mandates

September 8, 2023 by Leave a Comment

The Energy Reliability Council of Texas (ERCOT) asked consumers to conserve electricity again on August 27 as the state was impacted by a persistent heat wave as well as low wind power and solar generation. Texas is the number one producer of wind energy in the country and the second largest producer of solar energy—both politically correct power sources, according to the Biden administration. More conservation appeals were made in the following days. The fragility of the Texas grid was highlighted in 2021, when a massive blackout killed dozens and left millions without power, water and heat for days due to freezing temperatures and a sharp decline in wind generation as wind blades froze.

On Saturday, August 20, ERCOT had set a new all-time weekend peak demand record of 84,805 megawatts. In 2022, the August peak demand was 78,465 megawatts. This summer, ERCOT has set 10 new all-time peak demand records, and more may still come. Last summer, ERCOT set 11 new peak demand records.

Wind and Solar Power in Texas

In 2022, Texas led the nation in utility-scale wind-powered electricity generation, producing more than one-fourth of the U.S. total. In 2011, Texas was the first, and until 2020 the only, state to reach 10,000 megawatts of wind generating capacity. By February 2023, Texas had nearly 40,000 megawatts of wind capacity, which was more than one-fourth of the state’s utility-scale generating capacity and almost three fourths of its total renewable generating capacity, including from small-scale (less than 1 megawatt) solar installations. In 2022, Texas was the country’s second-largest solar producer, after California. Solar PV capacity at the state’s large- and small-scale facilities rose to more than 13,500 megawatts in early 2023. Solar energy accounted for about 5 percent of the state’s total electricity generation in 2022. Small-scale solar facilities provided about one-eighth of that total.

Texas Wind Plants Come at a Price: Massive Waste

About forty miles west of Abilene on Interstate 20 lies what maybe the world’s largest collection of unwanted wind turbine blades in a town called Sweetwater. The blades are between 150 and 200 feet in length and mostly made of composite materials such as fiberglass with a binding resin. The blades are cut into thirds and each segment is longer than a school bus. The pile of wind blades covers more than thirty acres, in stacks rising as high as basketball backboards. Other used blades are being stored in ten acres a couple miles south of town, and in other locations in the county.

The piles are partly the indirect result of a rule clarification the Internal Revenue Service (IRS) issued in 2016 at the end of the Obama Administration. Before then, a wind farm could collect federal tax credits for only its first ten years of operation. But the IRS restarted the clock on the credits if a wind farm repowered its turbines, replacing most of their equipment with newer parts. Despite the expected twenty-year lifespan for turbine blades, wind farms across Texas and other states began replacing many that were in good shape years earlier to get the added years of the tax credit.

In 2017, Global Fiberglass Solutions, a company based in Washington State, announced its intention to recycle blades from wind farms across the region, but instead has stockpiled them. The company was planning to ground up the blades into a reusable material that could be turned into pallets, railroad ties, or flooring panels. The company set up shop in an empty industrial facility in Sweetwater that was once an aluminum recycling plant, but only a handful of blades have been ground up there so far.

Global Fiberglass has also stockpiled 1,300 blades in Newton, Iowa, and two other cities in that state, according to the state’s Department of Natural Resources. In 2021, after an investigation, the agency concluded there was no recycling going on, nor was any likely to happen, declaring the company to be running an unpermitted dump. By July 2021, the company owed more than $1 million in unpaid rent in Newton.

In Texas, the company failed to pay taxes to Nolan County in 2020 and is three years in arrears, according to tax records. Last year, the Texas Commission on Environmental Quality fined the company $10,255 for what it described as illegally stored solid waste. It allowed the company to pay the penalty in monthly installments for three years. In June, Global Fiberglass defaulted.

In Newton, a city employee indicated that General Electric recently acquired the blades. It is unclear, however, whether GE purchased them from Global Fiberglass or from the landlord who was owed $1 million in rent, who may have taken possession of the blades. The city was promised that they would be sent to a recycling center by the end of the year, although none had been removed by mid-August.

Conclusion

Texas has invested in onshore wind with about 40,000 megawatts installed. But, those wind turbines have not stopped the grid operator from asking consumers to conserve power as the intermittency of wind and solar power has caused possible blackout conditions with a persistent heat wave pounding the state. Wind and solar are the Biden administration’s preferred, politically correct generating technologies, and receive the bulk of all federal energy subsidies.  But as consumers in Texas can attest, wind turbines and solar panels are not reliable generators as they are weather-driven. Further, wind is causing massive waste dumps because its blades are being dropped instead of recycled as planned. The blade piles are forming quicker than expected as the IRS has allowed repowered turbines to get an extra ten years of the federal tax credit, with blade replacement occurring much earlier than needed.

*This article was adapted from content originally published by the Institute for Energy Research.

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The Unregulated Podcast #147 Years Too Late

September 8, 2023 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna review the latest events shaping the 2024 presidential field, economic woes, and the future of American auto manufacturing. This week Ryan Walters, the Superintendent of Public Instruction of Oklahoma, joins the show for a discussion on the state of American education.

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President Biden Raises Energy Prices Intentionally

September 7, 2023 by Leave a Comment

WASHINGTON DC (09/07/2023) – Despite rising gasoline prices, the Department of Interior canceled the seven remaining oil and gas leases in Alaska’s Arctic Wildlife Refuge (ANWR), estimated to hold over 10 billion barrels of oil. The leases were awarded to the Alaska Industrial Development and Export Authority, the state-owned economic development agency, in 2021 under President Trump. Additionally, the Administration will no longer allow new lease sales in Alaska’s National Petroleum Reserve (NPR-A).

AEA President Thomas Pyle issued the following statement:

If President Biden is truly concerned about the rising cost of energy, he should brush up on the basic laws of supply and demand. Canceling these leases, after Saudi Arabia and Russia announced production cuts this week, will only raise prices at the pump. President Biden says he cares about working-class Americans, but this move proves all he really cares about is appeasing his green donors.

Alaskans can be trusted to be good stewards of their environmental resources. They broadly support new development within their state. This federal overreach will stifle their economy and cost jobs. Senator Murkowski and Senator Sullivan should insist on reversing this action in the upcoming budget negotiations.

The Bureau of Land Management (BLM) and U.S. Fish and Wildlife Service (FWS) also released a draft supplemental environmental impact statement (SEIS) used as the basis for canceling the lease. The SEIS will have a 45-day public comment period.

After publication in the Federal Register, the NRP-A rule will have a 60-day public comment period.

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Wheels Come Off Biden’s Offshore Wind Fantasy

September 5, 2023 by Leave a Comment

The first-ever offshore wind lease sale in the Gulf of Mexico attracted only one bid, yet the Biden administration called it a victory. The auction of offshore wind development rights in the Gulf of Mexico ended with a single $5.6 million winning bid, reflecting meager demand despite the productivity of oil and gas production in the region. Germany’s RWE won rights to 102,480 acres off Louisiana, while the other two lease areas on offer off Texas received no bids, according to U.S. Bureau of Ocean Energy Management (BOEM). The resulting sale earned a fraction of the billions of dollars of bids ($4.37 billion) secured in an offshore wind lease sale off New York and New Jersey in February 2022, most likely because those states have passed laws that require utilities to buy power from offshore wind projects as the cost of offshore wind is over three times the cost of onshore wind and over double that of a dispatchable natural gas generating plant. More recent auctions for areas off the coasts of the Carolinas and California drew hundreds of millions of dollars.

Source: Bloomberg

The offshore wind industry faces challenges in the Gulf due to lower wind speeds, soft soils and hurricane activity, but benefits from infrastructure and logistical support built for the oil and gas industry. The Southeast also has low power prices that would make it harder for higher-cost offshore wind generation to compete for electricity contracts unless mandated as they are in the upper Northeast.

According to BOEM, fifteen companies were qualified to bid at the sale. They included offshore wind development arms of European energy companies Equinor, Shell, RWE and TotalEnergies, all of which are already developing U.S. offshore wind leases in other regions. Equinor and Shell also have significant oil and gas operations in the Gulf. European companies made their foray into offshore wind a number of years back because conditions were better suited in Northern Europe for its development with shallow waters, good wind resources and no hurricanes.

Past Interior Department auctions of wind leases along the U.S. East Coast have drawn much larger interest by developers due to near-guaranteed demand from states vowing to procure the power. No Gulf Coast state has established firm commitments to buy the power from offshore wind, despite Louisiana Governor John Bel Edwards setting a goal of five gigawatts of offshore wind power by 2035. That is likely due to the huge cost of offshore wind, which is over 3 times the cost of onshore wind and over twice the cost of a dispatchable natural gas generating plant. The cost of onshore and offshore wind does not include the cost of the back-up power needed when the intermittent and weather-driven technologies are not operating, a significant added cost.

Offshore wind is benefited on the U.S. East Coast by strong wind gusts, typically measuring around 8.5 meters to 10 meters per second (19 miles to 22 miles per hour). By contrast, the winds are less strong in the areas of the Gulf of Mexico that were auctioned for sale–about 7 to 9 meters per second. Further, in the Gulf, developers will have to design the structures to deal with seasonal hurricanes that are more prolific in the Gulf than the Atlantic Northeast.

Developing offshore wind off the Gulf coast does benefit, however, from existing infrastructure and industrial supply chains. There is a vast network of construction companies, shipyards, ports and engineering firms that have long supplied offshore oil and gas development in the Gulf. East Coast states, on the other hand, have had to invest a significant amount of funding to obtain the infrastructure that the Gulf already has. Texas and Louisiana have been involved with offshore oil and gas production for decades that could be leveraged to offshore wind with existing facilities, expertise and a skilled workforce.

Besides being more expensive than other generating technologies, offshore wind on the Atlantic seaboard has faced supply chain challenges and rising costs spurring delays and even project cancellations. In recent months, owners of several planned projects in the Northeast have sought to renegotiate or cancel power delivery contracts due to the soaring cost of inflation. Denmark’s Orsted, the world’s largest offshore wind farm developer, indicated it may see U.S. impairments of 16 billion Danish crowns ($2.3 billion) due to supply chain problems, soaring interest rates and a lack of new tax credits.

Orsted’s Ocean Wind 1, Sunrise Wind, and Revolution Wind projects are adversely impacted by several supplier delays, which may trigger impairments of up to 5 billion crowns ($.73 billion). And, the company’s discussions with “senior federal stakeholders” on obtaining more U.S. tax credits for its offshore wind projects had not progressed as expected, which in turn could lead to impairments of another 6 billion crowns ($.88 billion). Further, the increase in long-dated interest rates in the United States affected both offshore as well as some onshore wind projects and will cause impairments of around 5 billion crowns ($.73 billion).

Siemens Energy announced that quality problems at its wind turbine unit would take years to fix, wiping over a third off its market value and dealing a blow to one of the world’s biggest suppliers of wind turbines. Deeper-than-expected problems affected up to 15 to 30 percent of the more than 132 gigawatts worth of wind turbines worldwide. The repair bill for onshore turbines is expected at €1.6 billion ($1.75 billion) with extra costs leading to another €600 million ($655 million) for its offshore business to fix flaws in rotor blades and bearings that could cause damage ranging from small cracks to component failures that would need to be replaced. Serious problems would require the turbine to be removed and repaired onshore by sending in a massive ship, which can only be done in the summer due to safety reasons.

Biden’s Offshore Wind Goal

President Joe Biden set a goal of deploying 30 gigawatts of offshore wind by the end of the decade and development in the Gulf of Mexico is key to hitting that target as the three offered Gulf leases combined had the potential to account for more than 10 percent of that amount. The auctioned sites have the potential capacity of 3.7 gigawatts that the Biden administration says could be used to produce “green” hydrogen and provide power to Gulf Coast refineries, ports and shipyards. Hydrogen is made by electrolyzing water and it is considered “green” if produced with renewable energy, but is currently much more expensive than “grey hydrogen” produced using natural gas, which makes up almost all of the world’s hydrogen production.

Conclusion

Biden’s dream of 30 gigawatts of offshore wind is having problems as the recent lease sale in the Gulf of Mexico yielded only one bid off Louisiana, where the Governor has a goal of 5 gigawatts of offshore wind by 2035. Prior lease sales off the Atlantic coast have done much better as those states have mandates forcing utilities to purchase the power at agreed-upon rates. Consumers in those areas will pay the price their elected officials are forcing on them. Offshore wind is very expensive—over 3 times the cost of onshore wind—and is intermittent, dependent on wind resources that are weather-driven. Despite its huge costs, offshore wind must also have back-up power available to ensure that the lights do not go out when the wind stops blowing. The Gulf coast areas are less conducive to offshore wind than the Atlantic coasts due to lower wind speeds, greater propensity for seasonal hurricanes and soft soils. But even on the Atlantic coast, offshore wind developers are renegotiating contracts due to supply chain difficulties, increasing inflation and soaring interest rates. Some projects have even been canceled.

*This article was adapted from content originally published by the Institute for Energy Research.

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Biden Running Out Of Cheap Tricks To Bring Down Gas Prices

August 30, 2023 by Leave a Comment

The Biden White House is worried about gas prices now that a number of states have prices over $4 a gallon. Because high gas prices agitate voters, the White House is in discussion with Venezuela again to get Maduro to agree to run “free elections” in return for removing oil sanctions that would put more oil on the global market, thereby reducing oil and gasoline prices. His administration is also in talks with Iran, and that country has been ramping up exports. Biden could easily get more domestic oil from Texas, Oklahoma, New Mexico, North Dakota and Alaska just by removing his anti-oil and gas policies, but that is not in the cards as he campaigned on wanting to end fossil fuels. The last time gasoline prices escalated beyond the $4 mark and into $5 territory, Biden attacked the U.S. Strategic Petroleum Reserve, selling off 260 million barrels in slightly over a year, which succeeded in bringing gasoline prices down. But, selling more oil from the Strategic Petroleum Reserve may not to be an option this time as Biden has yet to refill those barrels in the emergency reserve, citing oil prices over his preferred price of around $70 a barrel.

U.S. Gasoline and Diesel Prices

According to AAA, average gasoline prices were $3.828 a gallon on August 25. However, 10 states had gas prices that day over $4 a gallon: Alaska ($4.566), Arizona ($4.286), California ($5.261), Hawaii ($4.786), Idaho ($4.128), Illinois ($4.100), Nevada ($4.474), Oregon ($4.73), Utah ($4,215), and Washington ($5.069). The $4.00 threshold is believed to be the level where voters get agitated, although many find prices below that threshold hard to endure, especially with prices of everything else are inflated.

On Sunday August 27, regular gasoline still averaged about $3.82 nationally, about 60 cents higher than at the beginning of the 2023 year and about $1.50 higher than when President Biden took office. Diesel prices were down about 31 cents compared with early January but have gained more than 40 cents from a month ago.  According to AAA, diesel prices in all but four states are over $4 a gallon.

Background

Russia’s invasion of Ukraine along with Biden’s anti-oil and gas policies resulted in oil prices reaching over $120 a barrel last year, and gasoline prices hitting the $5 mark. To lower gasoline prices, the Biden administration decided to tap the emergency petroleum reserve and continued to deplete it through the mid-term elections. This year, fears of a recession and a weak economic recovery in China from its COVID lockdowns kept oil prices stable and gasoline prices below $3.60 a gallon for much of the year, which helped to curb inflation. Falling coal and natural-gas prices also helped businesses and consumers by lowering electricity bills. To shore up oil prices and to increase revenues from oil exports, Saudi Arabia and Russia cut oil production this summer, raising oil prices to around $80 a barrel, which also pushed gasoline prices up.

Another factor increasing fuel prices is that U.S. refineries had to catch up on maintenance that had been postponed during the pandemic, removing about 2.2 million barrels a day of refining capacity– about one million more barrels than what would have gone offline because of maintenance during a typical year. Unplanned outages also played a role in the loss of refining capacity due mainly to the searing heat this summer. The outages raised the cost of producing summer-grade gasoline, which resulted in higher prices for consumers.

Refiners are now transitioning to winter-grade gasoline, which is cheaper to produce than summer gasoline, and should take some pressure off prices. Growing demand for diesel from the agricultural sector going into the fall should help increase stocks of that fuel.

Biden Sees Iran and Venezuela as Better Suited to Produce Oil

Instead of supporting domestic oil development, Biden is turning toward Iran and Venezuela for oil exports to keep world oil prices in check. Biden’s hope is that lifting sanctions on Venezuela will mean more oil exports of a coveted heavy blend that would increase diesel output, which is globally undersupplied. Venezuelan oil has properties akin to those from the Alberta oil sands, which would have increased had Biden not halted the Keystone XL pipeline. Sanctions have had a major impact on Venezuela’s oil sales, which is the country’s top export. The Biden administration would grant a license to lift all or some of the sanctions against Venezuela for a temporary term if its leader agrees to “free elections.”

The Biden administration has also been in secret negotiations with Iran on prisoner exchanges, the unblocking of frozen assets ($6 billion in Iranian oil revenue that is stuck in South Korea), Iran’s enrichment of uranium and oil flows. U.S. officials have gradually relaxed some enforcement of sanctions on Iranian oil sales, allowing Iran to restore production to its highest level since the ban kicked in five years ago. Iran is now shipping its highest level of oil to China in a decade and it is confident that it will produce even more oil soon. The increased supply is helping moderate oil prices, which recently eased below $85 a barrel, keeping the cost of gasoline below $4 a gallon, which is in President Biden’s best interests for his reelection campaign in 2024.

Iranian oil shipments to China–the world’s biggest oil importer–have reached 1.5 million barrels a day — by one estimate, the most in a decade.  Another estimate has Iran’s oil exports exceeding 2 million barrels a day. Iran’s production increased to 3 million barrels a day in July, the highest level since 2018, according to the International Energy Agency. Iran expects to increase oil production to 3.4 million barrels a day in the coming weeks and may increase to 3.6 million barrels a day by year’s end. If the country achieves that target which is just a few hundred thousand barrels less than pre-sanctions capacity of 3.8 million barrels, there would not be much more oil to be produced even if a formal agreement with the United States is finalized.

Whether Iran can sustain, or even increase, exports will depend initially on how much more oil it can pull from storage. The country has drawn down a combined 16 million barrels held onshore and aboard tankers this month, leaving it with another 80 million barrels.

Iran’s oil supply increases undermine efforts by OPEC+ to shore up prices. Saudi Arabia, leader of the Organization of Petroleum Exporting Countries, deepened oil output cutbacks over the summer by 1 million barrels a day. Yet, Brent futures have retreated 5 percent since hitting a six-month high in early August.

China has been purchasing Iranian oil to fill its strategic reserves, encouraged by discounts Iran is offering to compete against Russian supplies. Iran’s two main grades currently trade at discounts to Brent oil of more than $10 a barrel.

Conclusion

Biden does not want to increase domestic oil and gas production and has cut federal lease sales, delayed drilling permits, added federal land to conservation efforts, and significantly raised royalty rates and other fees on oil producers to discourage U.S. production. He would rather make deals with Iran and Venezuela to allow them to sell oil aboard in hopes of keeping gas prices below the $4 mark that agitates voters. In the meantime, oil and gas prices are inching up and Americans are paying at the pump.

*This article was adapted from content originally published by the Institute for Energy Research.

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The Unregulated Podcast #146: Beyond Capable

August 30, 2023 by Leave a Comment

On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the proceedings of the Trump trial saga, new hysterics from “Special” Envoy Kerry, EV graveyards, and the latest from the 2024 presidential race.

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Gavin Newsom’s California Continues War On American Energy

August 29, 2023 by Leave a Comment

California, the seventh-largest U.S. oil producer, has put a near halt on issuing permits for new oil and gas drilling this year. The state’s Geologic Energy Management Division has approved seven new active drilling well permits in the first half of 2023, which compares with over 200 it had issued by this time last year. The delay in approvals is due to California’s progressive environmental laws and standards against fossil fuels despite its role as a major oil producer and a major oil-consuming state. While new drilling permits have steadily declined since Gavin Newsom became governor in 2019, the current rate of approval represents a sudden and dramatic drop. The oil industry has more than 1,400 permit applications for new wells awaiting state approval, half of which are over a year old. Newsom wants to phase out oil drilling in the state by 2045.

The state’s agency indicated that the smaller number of approvals were due to the decline in California oil production and litigation that has paused permitting by Kern County, the center of the state’s oil industry. However, according to the state’s agency, it is processing far more approvals to permanently close wells than for any other activity and it expects the trend to continue as California transitions away from fossil fuels. Nearly one in five Californians now live within a mile of an active oil well as homes have been built near wells that have been in place for many decades, as the first producing well in California was in 1876.

In a concession to the oil and gas industry, approvals to improve or repair established wells are up nearly 50 percent to 1,650 in the first half of this year. Reworking existing wells to boost their production, however, cannot replace oil from new wells that are needed to meet California’s energy needs.

Last year, California passed a law banning oil and gas drilling within 3,200 feet of structures including homes, schools and hospitals. The California Independent Petroleum Association blocked implementation of that law by qualifying a referendum to overturn it for the November 2024 ballot. Nearly half of the wells with rework permits approved this year are within the contested buffer zone. Opponents criticized those approvals as a threat to public health because they extend the lives of low- and non-producing wells, which the group argues would likely have been plugged had the setback law not been paused.

California currently has about 102,000 unplugged oil and gas wells. Out of those, about 40 percent are idle and not producing oil or gas at this time. Nearly half of the state’s idle wells have been idle for more than 15 years. Oil producers are allowed to idle wells, but must pay a fee to the state.  As new technology is developed to get at difficult oil resources, wells may become productive again. For example, much of the revolution in horizontal drilling and hydraulic fracturing of shale basins in the United States happened in areas long considered “played out.” The oil and gas industry must comply with state and federal regulations as it is one of the most regulated industries in in the world.

Federal Approvals in California

Permit approvals on federal lands in California so far this fiscal year, from October 1, 2022 through April 30, 2023, amount to just 3 despite having 106 applications pending. That compares to 166 approved for the same period of time the previous fiscal year, a huge drop.  In fiscal year 2022, the Biden Administration approved 201 drilling permits in California and had only 50 pending.

Receiving a permit to drill is a necessary step for oil and gas companies to undertake once they have purchased a lease. However, the determination to drill depends on many factors including finances, local regulations, the availability of materials such as steel, and worker availability. Workforce availability and supply chain issues can be obstacles to oil field development, as they are in many other industries. Also, given that the Biden administration has said repeatedly that its policy is to end drilling on federal lands, the oil and gas industry is “skeptical” regarding the true nature of the approvals and whether further investment is in their economic interest. This is particularly true since the Biden administration has increased royalty rates from 12.5 percent to 18.75 percent and cut about 80 percent of the acreage proposed by industry during environmental reviews.

Conclusion

It appears that drilling permit approvals for oil and gas in Newsom’s California and on California public lands are being delayed as both Governor Newsom and President Biden want to end the use of fossil fuels even though they represent almost 80 percent of the energy supply in this country. Between the Biden administration and the Newsom government, California has received 10 drilling permits this year—a small fraction of what the industry has received in the past in that state—which will hinder the state getting the oil and gas its residents need. It seems that in the race between two potentially vying presidential candidates, the real losers are the American people and the economy.

*This article was adapted from content originally published by the Institute for Energy Research.

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Working Families Priced Out Of Car Ownership Under Biden’s Proposals

August 28, 2023 by Leave a Comment

New car prices are up 25 percent under Biden’s Presidency and they will likely increase further as Biden’s proposed auto efficiency standards will increase automakers’ production costs. In 2018, there were a dozen new car models that sold for less than $20,000, but in 2023, there was only one: the Mitsubishi Mirage, which accounted for about 5,300 of the 7.7 million new vehicles sold in the United States in the first half of the year and is scheduled to go out of production in two years. The average new car now costs $48,000 and the average used car now costs over $27,000–up more than 30 percent from pre-pandemic levels and almost as much as the average new car did just a few years ago. And in Biden’s America, the average new car loan now has a monthly payment of over $750, with an interest rate of 9.5 percent. For used cars, the average car interest rate is 13.7 percent.  As Biden continues with his net zero carbon policies, his regulatory costs are skyrocketing and prices reflect that.  Biden’s proposed rule regarding “Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027-2032 and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030-2035” is estimated by the Department of Transportation to cost $88 billion.

Source: Wall Street Journal (WSJ)

Last year, Biden got behind the wheel of a Corvette Z06 at the Detroit Auto Show. The price tag for that car starts at $106,000, which is nearly $25,000 more than the previous-generation Corvette. If buyers are willing to spend more than $100,000 for a vehicle, they can choose from 32 models. For the average American, paying off a new car at current prices requires 42 weeks of income, up from around 33 before the pandemic.

Supply chain issues post-pandemic have helped to boost prices for autos. According to General Motors, the average price paid by its buyers last month rose 3 percent quarter over quarter, to $52,000. The profit from the higher prices has helped U.S. automakers make the transition that President Biden is demanding to an expensive, all electric vehicle America. Companies make up their sizable losses on electric vehicles by charging more for internal combustion vehicles, driving up the cost of transportation for all Americans.

Biden’s Auto Efficiency Standards

Biden’s fuel economy regulations that essentially mandate a transition to electric vehicles will increase the cost of buying a new vehicle for Americans. The Transportation Department’s proposed fuel economy regulations indicate on page 56,342 of volume 88 of the Federal Register, that: “Net benefits for passenger cars remain negative across alternatives,” which means that mandating more stringent fuel economy for passenger cars will increase prices for consumers as automakers pass those costs on.

Transportation’s proposed rule regarding “Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027-2032 and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030-2035” sets fuel economy standards for passenger cars and  trucks. Proposed fuel efficiency standards for model years 2027 to 2031 increase at a rate of 2 percent per year for passenger cars and 4 percent per year for light trucks. Proposed fuel efficiency standards for heavy-duty pickup trucks and vans for model years 2030 to 2035 increase at a rate of 10 percent per year.  These are vehicles used by businesses and tradesmen and increasing costs for their transportation will be made up by anyone requiring construction, plumbing, electrical work or handyman services, driving inflation higher.

Biden’s Transportation Department estimates that its plan of increasing passenger-car standards by 2 percent each year will reduce private welfare by $5.8 billion over the life of the cars. After accounting for alleged social benefits, such as reduced climate-change damages in foreign countries, the standard reduces total public welfare by $5.1 billion. The other “alternatives” the Transportation Department is considering have higher net costs of about $11 billion, so this is the preferred proposal. Of course, other options not analyzed exist, but the process is driven by Biden’s fixation with the “existential threat” of climate change he is using to push his proposals.

Transportation’s cost estimates, however, are questionable and are likely designed to underestimate costs. For example, the Transportation Department assumes that investing in fuel economy has no opportunity costs. To improve fuel economy, however, carmakers must sacrifice other improvements that drivers like, such as towing capacity, safety features, trunk space, acceleration and the spare tire, which has been cut to reduce weight and cost. Because modeling these trade-offs is difficult, the department’s analysts pretend the trade-offs do not exist, but that is likely to attract litigation.  Rulemaking by executive agencies is a very complex process in which the courts have shown increasing interest, and refusing to consider things which may complicate a political narrative is apt to be frowned upon.

Unlike previous rulemakings, the costs of Biden’s efficiency rule are now so high that regulators can no longer pretend that mandating greater fuel economy for passenger cars is a good thing for society. Increasing the costs of transporting Americans, as well as their goods and services, simply hurts them.  The mission of the White House Office of Information and Regulatory Affairs is to stop regulatory proposals that would harm American society, and it should have squashed this proposal. But, because it is part of President Biden’s climate agenda, the proposal has survived. Page 5-39 of the department’s accompanying environmental assessment, however, estimates that in 2060 the proposal would reduce average global temperatures by 0.000 percent. The modeled effect is so small that there are insufficient decimals to notice a deviation. So, what are Americans paying higher auto costs to achieve?

Conclusion

Biden’s Transportation Department has no real basis for claiming that it can make better choices than drivers in the competitive market. In fact, it has been noted that the government has a poor track record for picking winners and losers. And, essentially taking away automobiles that are cost effective hinders mobility for Americans. Perhaps, that is the goal of the Biden Administration. That is, to make cars so expensive that everyone has to take mass transit, and perhaps relocate to urban areas to do so. So far, the result of Biden’s climate policies on American transport is “All pain; no gain.”

*This article was adapted from content originally published by the Institute for Energy Research.

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DOE Under, Biden’s Directon, Twists Numbers On Climate Spending

August 25, 2023 by Leave a Comment

Biden’s Department of Energy (DOE) has projected that President Biden’s infrastructure bill and his Inflation Reduction Act will save Americans up to $38 billion on electricity costs over the remainder of the decade, using a version of the Energy Information Administration’s (EIA) National Energy Modeling System (NEMS). Despite EIA being part of the DOE, EIA was not asked to perform the analysis using NEMS. That was likely due to the spurious assumptions used by the DOE, as explained below.  As The Hill reported, “The report customized the National Energy Modeling System, which the Energy Information Administration uses in its Annual Energy Outlook, to model energy costs and national emissions in a scenario where the two laws were never implemented, based on the 2022 outlook report.” By “customizing” the model, the authors disclosed their view of our future energy picture based upon Biden’s goals rather than facts.

Further, the $38 billion does not even come close to covering the cost of the bills that will be paid by taxpayers. Goldman Sachs believes that the Inflation Reduction Act (IRA) will cost U.S. taxpayers $1.2 trillion—more than triple the Congressional Budget Office’s (CBO) estimate of $391 billion for the climate provisions. The difference in cost mainly arises from lucrative tax credits in the IRA that are not capped, and the fact that the Biden Administration is loosely interpreting conditions for those credits, driving their costs up. The President’s infrastructure bill is costing taxpayers another $580 billion in new spending, with the total cost of that bill also at $1.2 trillion. Clearly, the savings in electric consumer bills that DOE estimates are not even close to being commensurate with the cost of the two pieces of legislation to taxpayers, even by the debunked CBO scores.

DOE’s Questionable Results

The DOE reports that between now and 2030, the two laws will allow for the deployment of up to 250 gigawatts of new wind energy and up to 475 gigawatts of new solar. These numbers are vastly higher than what EIA projects in its Annual Energy Outlook 2023, where it has accounted for these laws. The EIA projects that between 2022 and 2030, wind capacity is expected to increase by 156 gigawatts and solar capacity is expected to increase by 263 gigawatts. In other words, the DOE modelers would have had to change the model’s inputs and/or assumptions to get about 100 gigawatts of additional wind capacity and over 200 gigawatts of additional solar capacity by 2030 than the EIA has forecasted.

Further, development activity for wind energy has slowed with the year-over-year downtrend in installations now stretched for nine consecutive quarters. For full year 2022, wind installations dropped by 56 percent from 2021 and in 2023, wind installations are down from 2022 levels. The industry’s pipeline of projects that are expected to come online between 2023 and 2027 increases by just 5 percent to 81,265 megawatts of capacity, from the fourth quarter of 2022 when developers had a total of 77,220 megawatts of planned capacity.

To get those huge increases in renewable capacity, the DOE assumed a Biden administration proposal that would accelerate electricity demand by assuming that 65 percent of new car sales in 2030 would be electric. This assumption is not current regulation as the Environmental Protection Agency proposed a rule this past spring that two-thirds of new car sales would need to be electric by 2032, which was followed by the National Highway Traffic Safety Administration proposing new car efficiency standards this summer that would also reach that level, but neither proposal has been finalized as the comment and review periods on both are still ongoing. Further, automakers claim that the new rules are not attainable as there are technical issues with electric vehicles, and even if they could reach those numbers, the U.S. electric grid would not be able to handle millions of electric vehicles plugging into the grid at different times of day and in a multitude of locations.

The Reason for the Study

President Biden wants the American public to believe that the economy on his watch is robust, despite inflation of about 15 percent since he took office and higher prices for necessities, including food and gasoline. Biden is using the first anniversary of his signature Inflation Reduction Act to pitch the climate law as an economic powerhouse. However, the U.S. public remains largely unaware of its contents despite the legislation providing billions of dollars in tax credits to push consumers into buying electric vehicles and companies to produce renewable energy. Biden claims that the legislation already created 170,000 “clean” energy jobs and will create some 1.5 million jobs over the next decade. He makes those claims despite the fact that only one percent of fossil fuel employees have moved to “clean” energy jobs. Fossil fuel jobs pay better than the “clean” energy jobs, according to Biden’s Labor Department.

Further, according to Robert Bryce, under the Inflation Reduction Act which incentivizes the production of electric vehicles among other green technologies, each new “green” job at the GM’s battery plant (which the company is developing with Korea’s LG) in Spring Hill, Tennessee, will cost taxpayers $7.7 million and each new “green” job at the Ford plant (which Ford is partnering in with China’s CATL) in Marshall, Michigan, will cost taxpayers $3.4 million. Clearly, green jobs do not come cheap.

Also according to President Biden, the legislation has shifted production of critical components away from China and into the United States. But, that is not true. China still dominates the battery supply chain for electric vehicles, processes most of the rare earth and other critical minerals needed for electric vehicles and renewable technologies, and supplies most of the solar panels the U.S. needs either directly or indirectly from other Southeast Asia countries. While Senator Manchin added provisions in the Inflation Reduction Act to industrialize the United States in critical minerals, Biden has done all he can to waylay that by revoking leases, delaying permits, and adding flora and fauna to the endangered species list. His actions conflict with his words.

Conclusion

The Department of Energy has posted a report that uses the National Energy Modeling System to show that President Biden’s signature laws will produce savings in electric bills for American consumers. However, the estimated savings are a drop in the bucket of the cost that taxpayers will have to pay to cover the provisions in the bills that incentivize “clean” energy. While Biden is traveling the country, trying to make Americans believe that his economy is robust despite inflation and high gasoline and food prices, he is finding that Americans are unaware of the bills and their supposed successes. That’s because those successes do not exist, at least not yet! Biden realizes this and is having his regulators do more to push Americans into buying electric vehicles and in furthering his climate plan. Unfortunately for Americans, the Biden climate plan will be all grief and no joy as American energy will become unreliable, expensive and dependent upon China.

*This article was adapted from content originally published by the Institute for Energy Research.

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