Tag Archives: energy

We’re Capable of So Much More

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In a related article, I described how even Progressive Europe recognizes the retreat of the US from the global stage and from our responsibilities as a major power.  Yet we have the economic and resource capacity to do so much better, as Spiegel International Online notices.  Fracking provides an example of both our capacity and of our willful impotence.

The United States is sitting on massive natural gas and oil reserves that have the potential to shift the geopolitical balance in its favor.  Worries are increasing in Russia and the Arab states of waning influence and falling market prices.

And

American drilling experts began using a method called “fracking,” with which oil and gas molecules can be extracted from dense shale rock formations.  The International Energy Agency (IEA) estimates that the United States will replace Russia as the world’s largest producer of natural gas in only two years.  The Americans could also become the world’s top petroleum producers by 2017.

And

…the boom could generate 600,000 new jobs, and some experts even believe that up to 3 million new jobs could be created in the coming years.

And

…the United States will benefit the most from the development of shale gas and oil resources.  …the political threat potential of oil producers like Iran will decline. Optimists assume that, in about 15 years, the United States will no longer have to send any aircraft carriers to the Persian Gulf to guarantee that oil tankers can pass unhindered through the Strait of Hormuz….

However.  There’s always a however.

President Barack Obama’s EPA continues to manufacture “investigations” of ground water pollution from fracking where none exists—their Wyoming fiasco, for instance.  His EPA continues its war on oil, gas, and coal by instituting output regulations that Congress already had rejected.

Obama continues to slow-walk oil and gas drilling permits on Federal lands and at offshore sites.  He has moved to cancel unused oil leases, never caring that the lessees had been reluctant to act on their leases due to uncertainty over Obama’s handling of hydrocarbons generally.

Obama even is slow-walking approval (and that approval is not a foregone conclusion, even now) of the Keystone XL Pipeline project, now that all environmental objections have been cleared with Nebraska’s approval of an alternate route.  This pipeline doesn’t directly address the resource explosion that fracking provides, but it remains symptomatic of his administration’s disdain for practical energy self-sufficiency.

It’s very unclear whether we will be allowed to realize the fruits of this technology and to bring into use these vast energy resources.

When even the Courts

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…ridicule Progressives.

From Bloomberg comes this item.  Our illustrious regulatory engine, the Environmental Protection Agency, has (rather, had) a rule that required refiners to mix 8.65 million gallons of cellulosic ethanol into their gasoline output last year.  In light of the fact that last year’s actual US production was 20,000 (!) gallons, all of which was exported to Brazil, the American Petroleum Institute went to court to get the mandate overturned.

Last week, the DC Circuit agreed.  In the court’s ruling is this gem:

Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry.  “Do a good job, cellulosic fuel producers.  If you fail, we’ll fine your customers.”

Of course, the court also was serious in its ruling.  Citing Railway Labor Executives’ Ass’n v. Nat’l

Mediation Bd in the bowlegs, the court noted

(“Were courts to presume a delegation of power absent an express withholding of such power, agencies would enjoy virtually limitless hegemony….”).  Yet that is precisely what EPA appears to have done in projecting cellulosic biofuel production for 2012.

The case is American Petroleum Institute v U.S. Environmental Protection Agency, and the ruling can be seen here.

Naturally, in response to the ruling, Progressive whining has begun.  Bloomberg reports this, as well.

As a result of the ruling and uncertainty, investments in the nascent industry may fall, said Michael Frohlich, a spokesman for Growth Energy, which represents ethanol producers.

“It dampens any future investment, and creates a further level of vulnerability[.]”

Never mind that if the “nascent industry” can’t stand without government favoritism, it’s not ready for market in the first place.  But the collective views of individual Americans—free market imperatives—don’t count.  Only the collective views of Big Government do.

Well, Isn’t This Special?

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The British newspaper The Sun ran this interesting article the other day.  It seems the Brits have found a way to make petrol—gasoline to us colonials—from thin air.

[Air Fuel Synthesis] from the north of England has developed “air capture” technology which creates synthetic petrol with only air and electricity.

The technology was presented to a London engineering conference this week.

It mixes sodium hydroxide with carbon dioxide before zapping the resulting sodium carbonate with electricity, to form pure carbon dioxide.

At the same time, hydrogen is produced by electrolysing water vapour captured with a dehumidifier.

The carbon dioxide and hydrogen are then used to produce methanol which in turn is passed through a gasoline fuel reactor, creating petrol.

Wait, what?

This process works on air, but it adds sodium hydroxide to the mix?  But that’s minor; it’s not at all unusual to identify a process with a primary source, while adding additional chemicals along the way.

The really confusing part, to me, is this.  This process takes CO2 as an input and then messes with it to get, as a goal, CO2 as an output?  And then, to get the hydrogen, the process captures water vapor from the air and electrolyzes that?  I confess, I don’t understand.

Aside from processing carbon dioxide to get carbon dioxide, unless things have changed a bit since I took high school chemistry, reacting sodium hydroxide (NaOH) with carbon dioxide (CO2) generally produces “the resulting sodium carbonate” (Na2CO3) and…wait for it…water.  No need to collect water vapor with a dehumidifier.  Unless they wanted more water than that reaction would produce.  But that reaction produces a lot of water.

I’m no engineer, but a “breakthrough” isn’t what I see here.

Do the Brits do April Fool’s in mid-October?

Solar and Wind Energy Subsidies

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There was sort of a debate presented in The Wall Street Journal a few days ago concerning the efficacy of Federal subsidies for solar and wind energy companies.  I say “sort of” because the Mark Muro’s arguments in favor of the subsidies demonstrate an utter cluelessness of the basics of economics as well as of how well the subsidies have already performed.

For instance, the WSJ‘s lede cites generic proponents as saying in all seriousness,

There is widespread agreement that pulling the plug on the subsidy at this point could hobble the wind-power industry.  Meanwhile, the biggest federal subsidy for solar power, a tax credit for 30% of the cost of installed equipment, is set to drop to 10% at the end of 2016.  A cash grant for up to 30% of solar equipment costs expired at the end of last year.

Proponents say wind and solar subsidies are needed for a few more years to allow these clean, renewable sources of energy to develop to the point where they can compete on price with electricity produced from coal and natural gas.

Yet, if the technology can’t compete in a free market on its own, if it needs the subsidy to survive, the technology is not ready for commercial use or sale.  Spending taxpayer money—private citizen money—on such a thing is a textbook example of Fraud, Waste, and Abuse.  As the proponents admit without realizing it in that second paragraph: “…wind and solar subsidies are needed for a few more years to allow these clean, renewable sources of energy to develop….”

Muro then says in his argument,

Let’s remember the point of these temporary subsidies: to help emerging clean-energy technologies gain toeholds in challenging markets and advance toward unsubsidized price-competitiveness.

And

The ultimate reward is cheaper, cleaner energy and greater energy diversity, which will help guard against price shocks, keep energy costs down through competition and lessen the damage our energy consumption does to the environment….

Except that it isn’t cheaper if it needs subsidies coupled with coal, oil, gas (hydrocarbon) prices that are artificially elevated by government mandates to include “green” additives as the Feds do, or to buy electric power from solar and wind generators, as California does, in order to compete.  Moreover, diversity is reduced, not expanded by limiting us to solar and wind—or even by demanding that we buy a certain amount of solar and wind, regardless of market forces—and actively blocking access to hydrocarbon energy.  And finally, if these really are viable technologies that will deliver cheap energy easily, private investors will flock to invest, and no taxpayer subsidy will be even in the picture.

On top of that, there’s no case for environmental “damage,” given the great amount of cleanup already done, and the falsified “damage” attributed, for instance, to fracking by the EPA.

Muro goes on:

Wind and solar need the help because the barriers for new technologies in the energy industry are tougher than those in any other industry in this country.  Fossil fuels, with the help of their own government subsidies over the years, are thoroughly entrenched, with trillions of dollars’ worth of infrastructure in place.

Never mind that that entrenched infrastructure sits on top of centuries’ worth of economical, unsubsidized hydrocarbon deposits in the ground right here in the US and Canada, and the infrastructure easily can be extended to reach into the deposits in our respective territorial and economic zone waters, as the People’s Republic of China already is doing, filling the vacuum left by the present administration’s slow-walking of drilling permits for American companies.

Additionally, the beef that “the barriers for new technologies in the energy industry” are tough is just a cynical red herring.  Those technical barriers existed for the hydrocarbon industries, also, as they were developing.  Why should solar and wind get special treatment?  Muro has no answer; he merely asserts the “need.”

Muro concludes with this long-standing “promise:”

In sum, onshore wind is likely just a few years away from true subsidy independence, while several forms of solar aren’t far beyond.

Like commercial fusion, we’ve been “just a few years away” for decades.  It’s an empty promise.

As Dr David Kreutzer points out in his argument against these subsidies, though,

Surely some alternatives to fossil fuels will be developed, but they will only work if they are affordable.  Wind and solar aren’t, and that isn’t changed by shifting the costs from consumers and producers to the taxpayers.

Bureaucrats and politicians shouldn’t be the ones deciding which technologies are the most promising or what timeline is too long or what losses are too deep.  The market will do a much better job of answering the question: are wind and solar power really viable?

Let’s get rid of the subsidies and find out.

Lies of my President, Part 2

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This is Part 2 of my series on the lies told by Democratic Presidential Candidate Barack Obama in the nearly four years in which he’s been in office.  As I said earlier, I’m not concerned with his broken campaign promises so much as I am with his dishonesty while in office.

This post consists entirely of a letter from Senators David Vitter (R, LA), Jeff Sessions (R, AL), and John Cornyn (R, TX) to Interior Secretary Ken Salazar regarding “claims” made by the Secretary about energy production in the US.  I lay these lies off on Obama because, in the end, Interior is a Department within the Executive Branch and because Salazar, like all Cabinet appointees, is Obama’s man, serving at Obama’s pleasure (who can demand the Secretary’s resignation at any time, even though formal firing is done via Congressional impeachment), and so his words are what Obama instructs or permits him to speak.

Dear Secretary Salazar:

We are concerned with the veracity of statements you made in recent weeks regarding domestic energy production on our federal resources.  These statements are similar to claims made by other members of the Administration including the President himself.  As you may know, the federal government owns almost 2.5 billion acres of mineral estate, an area larger than the entire land mass of the United States.  As director of the Bureau of Land Management, Robert Abbey, testified this month, oil production on our federal property is actually down 14% and offshore production from federal areas is down 17% from only a year ago.  Just last week, the Congressional Research Service issued a report revealing that 96 percent of the increase in domestic oil production since 2007 has occurred on non-federal lands.  It further revealed that in 2011 production on federal public lands has actually declined by an average of 275,000 barrels per day.  Oil production on private lands is indeed up year-over-year, but the Administration does not manage private lands and should not attempt to take credit for private market decisions.

Oil production on federal lands increased in 2009 and 2010 as a result of leasing and permitting decisions made before your Administration took office.  However, the falloff in leasing and permitting actions under the Obama Administration is apparent, and even your own Energy Information Administration anticipates continued falloff in production in 2012 and beyond.

We also ask that you rectify the President’s claim that we only have 2% of the world’s oil.  Nothing could be further from the truth, as even the Washington Post reported last week.[1] He bases this statement on US “proved reserves” but the US Energy Information Administration has stated that proved reserves is “not an appropriate measure for judging total resource availability in the long-term.” As Secretary of Interior, surely you are aware of the vast oil resources we possess both onshore and offshore that are currently off limits due to this Administration’s combined actions.  America is endowed with resources that exceed a TRILLION barrels of oil.[2]

According to the Institute for Energy Research, “USGS estimates that unconventional US oil shale resources hold 2.6 trillion barrels of oil, with about 1 trillion barrels that are considered recoverable under current economic and technological conditions.  These 1 trillion barrels are nearly four times the amount of oil resources as Saudi Arabia’s proven oil reserves.
We provide the following examples of what we would view as further inaccurate statements by the Administration regarding the state of federal energy production and resources:

  1. Claim: “Expanding offshore oil and gas production is a key component of our comprehensive energy strategy to grow America’s energy economy, and will help us continue to reduce our dependence on foreign oil and create jobs here at home.” Secretary Ken Salazar, DOI Press Release 1/26/2012

Fact: You made the two most pivotal decisions to shrink domestic offshore energy production over the last three years that could have been made.  First, you eliminated the 2010-2015 OCS lease plan that would have opened areas of the Atlantic, four geologic basins off S.  California, one geologic basin off N.  California, while expanding areas in Alaska, including the Cook Inlet.  Instead, you have proposed a new 5-year plan that excludes all of the areas of the OCS where the moratorium was lifted in 2008, and reduces the number of planned lease sales by roughly half.  Essentially, the moratorium lifted by President Bush and a Democrat Congress in 2008 will continue in effect for a decade under your plan.

  1. Claim: The proposed 5-year offshore lease plan will “make more than 75 percent of undiscovered technically recoverable oil and gas estimated on the OCS available for development.” Secretary Salazar, DOI Press Release 11/08/2011

Fact: These numbers distort the facts.  The Outer Continental Shelf (OCS) is 1.76 billion acres.  Of that 1.76 billion, less than 35 million acres are actually leased (less than 2%).  Your proposed 5-year lease plan does not open a single new lease planning area, and therefore we have no way of knowing what estimates of “technologically recoverable” oil in all of the areas that remain off limits are because you have chosen to keep them off limits.  Most of our OCS has not been explored for decades, and providing access to only a fraction gives us no clue what is truly there.

A more accurate statement is that your 5 year plan opens 75% of the oil and gas in areas where we think it exists because we have drilled there.  We don’t know about the vast majority of the OCS that isn’t leased, much of which has not been assessed with the benefit of new information for a quarter century.

  1. Claim: “Since we put in place new safety standards in the wake of the Gulf oil spill, we have approved more than 400 drilling permits.  In fact, we are now permitting at levels seen before the spill, all while meeting these important new standards.” Secretary Ken Salazar, 3/12/2012

Fact: There exists no evidence that permitting for production has indeed reached pre-moratorium levels.  In fact, the families impacted in the Gulf are still reeling from the impacts of the slowed pace of permitting.  Exploration and permitting have yet to recover to pre-2010 levels on account of the moratorium and ensuing permitorium on shallow and deepwater permits.  According to one recent study, “Prior to the deepwater drilling moratorium, the US oil and natural gas offshore industry was forecasted to grow significantly due to identified prospects, mostly in the deep water.  With the establishment of the moratorium and the subsequent slowdown in the issuance of drilling permits at all water depths, an estimated $18.3 billion of previously planned capital and operational expenditures did not occur in 2010 and 2011.”[3] The study further concludes that the permitting challenges have already cost 90,000 jobs.  It is of importance to note that the moratorium was never endorsed by the National Academy of Engineers, as you had attempted to represent.  An Inspector General investigation was required to uncover the political influence and misrepresentation by the White House and your office in an important scientific document.

  1. Claim: “The fact of the matter is that we are producing more from public lands, both oil and gas, both onshore as well as offshore, than at any time in recent memory.  And when you look back at the years of 2009, 2010, and 2011, we’ve continued to make millions and millions of acres of the public estate available both on the land, as well as on the sea.” Secretary Ken Salazar, 3/12/2012

Fact: As we pointed out earlier in this letter, there is significant lag time to production after the process of leasing.  Presumably this is the reason for your repeated observation that “there is no immediate fix” for higher gas prices.  After a company has leased property they then have to explore, develop and produce, with each stage requiring new permits and compliance with federal processes.  The production gains we saw in 2009 and 2010 were the result of leasing and permitting that occurred in the Clinton and Bush Administrations, and was just beginning to come online.  However, by 2011 we began to experience the impacts from the moratorium and falloff of leasing and permitting under your leadership.  Total oil production on federal lands is down 14% over the previous year, offshore is even worse at down 17%, and federal lands saw the fewest number of new onshore leases since 1984.  You also failed to hold a single offshore lease sale in fiscal year 2011.

As a further example, in 2008 the industry spent $2.6 billion to obtain 487 leases in the Chukchi Sea for production offshore Alaska.  So far, not a single well has been drilled on any of these leases.  There have also been numerous new regulatory roadblocks and permit withdrawals from federal onshore production since you took over leadership of the Agency.  Examples of onshore leasing challenges include your withdrawn and slowed leasing in the West, including Montana and the Dakotas.

In July of 2008, then as a United States Senator, you had an opportunity to support increasing domestic energy production, if the price of gas increased beyond a certain threshold.  You repeatedly objected to increasing domestic energy production, even if the price of gas were to have reached $10 per gallon.

Although gas prices are not $10 per gallon, they are increasingly impacting our economy and fellow Americans, particularly low-income and middle-class families.  We are hopeful that similarly to Secretary Chu, you have reevaluated your position on gas prices and will redirect your efforts to alter what the agency has done to limit future production, and will instead work to develop our truly vast domestic oil resources, resources that well exceed “2%” of the world’s oil.

[1] http://www.washingtonpost.com/blogs/fact-checker/post/pinocchios-obama-gets-a-downgrade-romney-an-upgrade/2012/03/21/gIQAX7uPSS_blog.html#pagebreak
[2] NORTH AMERICAN ENERGY INVENTORY, Institute for Energy Research, December, 2011. http://www.instituteforenergyresearch.org/energy-overview/oil-shale/
[3] The State of the Offshore U.S. Oil and Gas Industry, An in-depth study of the outlook of the industry investment flows offshore, Quest Offshore Resources, Inc., December 2011.

Sincerely,

Jeff Sessions
David Vitter
John Cornyn