May 9, 2008

Sunder and Sundry

Some law firms continue to use mass, automated phone calls to solicit personal-injury business. Listen to the phone message here, recorded last night at home as a firm trolls for plaintiffs who suffered health troubles after heart surgery.

Saturday is Pangea Day, another opportunity for raising, fund and consciousness, by the anti-global warming movement. There are sure a lot of these new celebrations, seems like, part of some Gaea-based ritual calendar. (The more radical of Southern Hemispheric activists refer to Pangea Day as Gondwana Day. It's really caused a schism.)

CNN's Christiane Amapour is featured prominently at the Pangea Day website. Isn't she supposed to be an objective reporter? Ha, ha. Just kidding.

Speaking of consciousness-raising, The Washington Post's Jeffrey Birnbaum writes about the oil and gas industry's education/PR campaign to explain the industry more effectively, "Oil Lobby Reaches Out to Citizens Peeved at the Pump." Good story.

The American Petroleum Institute has indeed been doing a very good, fact-based job of presenting the industry to the public. We liked the ads like this one explaining who owns the industry: 29.5 percent of U.S. oil and natural gas company shares are owned by mutual funds and other firms; 27 percent are owned by pension funds; and individual investors own 23 percent. So when politicians go after the oil companies, they're also going after your pensions and IRAs.

Loved the reaction from self-styled consumer groups reported in the Post: "'It's basically deceptive advertising that dulls the natural and proper reaction of the public,' said Mark N. Cooper, research director of the Consumer Federation of America." Get the rhetoric right, Mark. The correct term is "false consciousness."

Disclosure: Your correspondent went on a blogging tour mentioned in Birnbaum's story -- the one to Corpus Christi and the Chevron platform, Blind Faith. The latest update on the $1.4 billion project is that its operation has been delayed until the second quarter. Yes, that's right: $1.4 billion. Thank goodness for profits.

Also in the Post, its weekly editorial condemning the farm bill, a good summary of the problems with the bill. The Post also reports that President Bush will veto it.

The API's energy-information and media-oriented website, www.energytomorrow.org, is indeed very good.

Posted by Carter Wood at 8:05 AM | Click here to comment | Send to a Friend

May 8, 2008

Those Who Do Not Learn from the Past

From the AP:

WASHINGTON (AP) — Senate Democrats on Wednesday called for a temporary special tax on oil companies’ profits and a rollback of $17 billion in oil industry tax breaks as part of an energy package. The Democrats are also seeking federal penalties on energy price gouging and a suspension of oil deliveries into the government’s emergency reserve.

Senate Republicans strongly oppose any additional oil industry taxes, which are widely viewed as unlikely to be enacted and would almost certainly prompt a veto by President Bush.

The proposed 25 percent profits tax would apply just to oil company earnings above what would be considered “reasonable” and only if those profits are not reinvested in expanding refinery capacity or renewable energy sources, according to a summary of the proposals.

The proposals for windfall profits taxes show a willful disregard for history. We commend to you a 2006 Congressional Research Service report, "The Crude Oil Windfall Profit Tax of the 1980s: Implications for Current Energy Policy". Start with the executive summary, page 2.

"From 1980 to 1988, the WPT may have reduced domestic oil production anywhere from 1.2% to 8.0% (320 to 1,269 million barrels). Dependence on imported oil grew from between 3% and 13%."

"Reinstating the windfall profit tax would reduce recent oil industry windfalls due to high crude and petroleum prices but could have several adverse economic effects. If imposed as an excise tax, the WPT would increase marginal production costs and be expected to reduce domestic oil production and increase the level of oil imports, which today is at nearly 60% of demand."

The NAM issued a news release yesterday on competing energy measures in the Senate.

UPDATE (11:30 a.m.): Senator Reid's statement and summary sheet on the Consumer First Energy Act.

Posted by Carter Wood at 10:32 AM | Click here to comment | Send to a Friend

Blood Outta Stone

Nice featurette at U.S. News' Washington Whispers column on Ag Secretary Ed Schafer, "boyhood farmer, telecommunications exec, conservationist, Junkyard Wars runner-up, and classic car and tractor restorer ." Don't forget manufacturing executive. And governor, that, too. Meanwhile, President Bush is preparing to veto a "bloated" farm bill.

Texas tea, brewed strong. "Austin, TX (AHN) - While the rest of the nation is reeling from soaring oil prices, Texas is benefiting from the non-stop rise in prices of black gold. Oil revenues' contribution to state budget would result to a $10.7 billion budget surplus." Certainly not limited to Texas: "'I think the bulk of Montana's budget surplus comes from the oil fields of Richland and Fallon counties,' said Richland County Commissioner Mark Rehbein." That's the Bakken play at work.

While Congress stalled, stuttered and stomped: "At Vienna, the EU and Central American nations, including Honduras, Guatemala, El Salvador, Nicaragua, Costa Rica and Panama, agreed to launch free trade talks. The 27-nation bloc also agreed to similar negotiations with four Andean countries including Peru, Colombia, Bolivia and Ecuador."

Sometimes, just the thinking is flat. Henry Payne reports the reaction of airline executives to a recent Thomas Friedman column on global jetting and fossil fuels. Friedman's enthusiasm for biofuel-powered airlines is naive, they imply, and if there's one thing airline execs know, it's fuel usage. Payne: "They are extremely fuel conscious — but not because they are converts to Friedman’s religion. Fuel has always been a major business cost and so airlines are constantly investing in new planes to keep costs down. In the last eight years alone, for example — even as Delta’s fleet number has remained stable — the airline cut its fuel bill by 25 percent." Reading Friedman's columns in recent years, you sometimes think he should get out a little less.

Looks like Law & Order is actually shaping up. They've abandoned the steady beat of anti-corporate propaganda for pro-union propaganda! Yay! Last night's episode summary: "Strike -- A legal aid strike ends in the death of a lawyer, and the investigation leads to a golf pro who proclaims his innocence, again. Then the case takes an even stranger twist when Rubirosa is pitted against Cutter because of the strike that started it all." New detective actor Anthony Andrews must feel right at home, switching from Fox's short-lived "K-Ville" agitprop to "L&O" agitprop.

Posted by Carter Wood at 9:09 AM | Click here to comment | Send to a Friend

May 7, 2008

Meet the Jetsam

High global commodity prices are hitting manufacturers hard these days, as growing global economies (China, India) push demand. It's good news for mining and heavy equipment companies, though, prompting many U.S.-based companies to plan for expanded mining production. As this story from Marquette, Mich., reaffirms, environmentalists are opposed. No, really.

Here's a riddle: How do you discover water on Mars? Submit a permit application for a Martian mine and the environmental groups will be sure to detect threatened wetlands.

But it takes the penny to really focus the public (i.e., media's) attention on commodity prices. Front page story across the land today: "Congress looking at steel pennies and nickels" "Surging prices for copper, zinc and nickel have Congress trying to bring back the steel-made pennies of World War II, and maybe using steel for nickels, as well."

Meanwhile, the effort continues to prevent any renaissance of the U.S. nuclear power industry, starting with demanding impossible standards of uranium mining. In Colorado, " Opponents of uranium mining on Tallahassee Pass today hailed new rules that would govern uranium mining in Colorado if signed by Gov. Bill Ritter. ...House Bill 1161 would require uranium mining companies to clean groundwater at their sites to pre-mining quality after mining the radioactive material."

Let's demand that standard of all things, including parents. You may have a baby if you promise to restore the world to pre-baby quality afterward. We'll accept a $100,000 bond.

Posted by Carter Wood at 7:49 AM | Click here to comment | Send to a Friend

May 6, 2008

Does anyone see a correlation here?

Honestly, as I scanned the news hits this morning, the following headlines were listed one after another. Good lord, does anybody see a correlation here?

• Merck announces 1,200 job cuts
• UAW strikes at Kansas GM plant
• NAM manufacturing index shows sales expectations falling
• Roche moving 300 Indianapolis jobs to Germany
• Oil hits record $120 a barrel

And then,
• Government looks to increase oil industry regulation
• Environmental groups move to stop oil companies from surveying Arctic floor

Let me see, workers are striking, jobs are moving to Germany, manufacturers’ expectations are falling and the price of oil is at an all time high.

What should we do?

Apparently, some in Congress think that this would be a good time to increase regulations and stop companies for looking for more oil. Does this seem odd to anybody else?

Last week, I spoke to a group of UAW workers here at the NAM. Surprising, it was an easy speech because we agreed on a lot. We were all feeling the same pinch. We’re dealing with higher prices at the grocery store and at the pump. We’re worried about sending our kids to college and the future of our country. Although we didn’t agree on all of the solutions to these problems, none of us suggested more regs and less oil supply.

Patty Long is the Vice President for Policy Research and Member Communications and the newest member of the NAM blogging team. She is also the mother of 4 teenage girls and like the rest of America, she worries about gas prices, grocery bills and college tuition.

Posted by Patty Long at 11:36 AM | Click here to comment | Send to a Friend

A Sista Souljah Moment on Energy

From the AP:

ANCHORAGE, Alaska -- Alaska Native and environmental groups sued Monday to stop exploration by oil companies this summer in Arctic waters frequented by whales, seals and other marine species.

The groups are challenging federal permits that allow Shell Oil Co. and BP PLC to search for oil and gas using powerful acoustic devices that have been shown, at times, to harm a variety of marine animals. The technology, known as seismic exploration, is used to determine the geologic makeup of the sea bed.

"The federal government is rushing to approve a burst of new seismic activity without completely studying the effects on marine life," said attorney Clayton Jernigan of Earthjustice. The Juneau-based law firm filed the lawsuit in U.S. District Court in Anchorage.

The oil companies have been cast as villains during the recent presidential campaigns for supposedly profiting too much and causing high gas prices. It's a cynical play designed to take advantage of public anger of high gas prices.

Might we respectfully suggest to the candidates that they look to other sources of the problem(s), such as environmental groups that prevent access to domestic energy supplies, the "energy insecurity" crowd.

How brave, how politically defining it would be for a candidate to repudiate one or more of the environmental groups who restrict demand and make the United States more dependent on foreign oil. Tell these obstensible supporters how much damage they're causing.

A Sista Souljah moment for the 2008 campaign: Rebuke the greens.

Posted by Carter Wood at 9:45 AM | Click here to comment | Send to a Friend

A Blogging Utility

Utility as in electric utility, not software application.

In any case, congratulations and kudos to PG&E for being the first major utility -- that we know of -- to launch a blog, Next100, http://www.next100.com/

The San Francisco-based site describes itself as "a dialogue on the next century of energy," and includes posts and links on clean energy, green energy, carbon dioxide, China's emissions. It's a new site, so more to come, and it IS a dialogue, since there's a comments section.

California is a very tough business environment generally, and policymakers at every level in the state make life very difficult for energy producers to meet the market's demand. It makes sense to have a website devoted to public outreach on the issues, so good for PG&E.

Posted by Carter Wood at 8:45 AM | Click here to comment | Send to a Friend

May 5, 2008

Bakken Formation: Hoily, Moily

John Derbyshire at the National Review's The Corner blog wanted more information about the Bakken Formation, the oil-rich strata underneath the Upper Great Plains we've been blogging about here. Derb was kind enough to mention several responses, including Shopfloor.org's posts, and then later linked to this report at The Oil Drum, a thorough discussion of the formation's potential by Piccolo, a petroeum engineer. Piccolo is not as optimistic as the USGS as to the total recoverable oil, noting the formation may have already reached peak production.

Very good review, although we anxiously await an analysis from Contrabassoon.

UPDATE (9:10 a.m. Tuesday): Much, much more at Next Big Future, including well-by-well production figures.

Posted by Carter Wood at 5:18 PM | Click here to comment | Send to a Friend

Dubai on the Prairies or Buffalo Commons?

The three-to-four billion barrel Bakken play in North Dakota is certainly gaining attention...and prompting some big plans. From Tom Dennis, Grand Forks Herald:

North Dakota’s fate now is tied to the price of oil, in a way that’s likely to influence our state and federal elected officials for years or even decades to come.

While North Dakota’s “original oil in place” figure exceeds the UAE’s currently recoverable reserves, Dubai is a Las Vegas-like showpiece today because the oil there is so much easier to get at. Many Persian Gulf reserves are so accessible that oil companies can profit even when oil sells for a few dollars a barrel. So, the oil flowed decades ago when the price was exactly that, and it has flowed steadily ever since.

Big news in Canada, too. And even Germany.

Shoots holes in the Buffalo Commons theory, doesn't it? That's the theory promulgated back in the '80s by Frank and Deborah Popper of Rutgers, arguing that Great Plains were oversettled in a terrible historic mistake and that natural and economic forces would eventually lead to their depopulation. Best to rationalize the process and have an enlightened federal policy to create an American Serengeti, the Buffalo Commons, they argued.

And are still arguing. From a Bismarck Tribune article, September 2, 2007:

"There's no question now that the Buffalo Commons will happen," Frank Popper said in a recent interview. "The interesting questions are how."

The current rig count suggests Popper may be too stuck on his grand theory.

Posted by Carter Wood at 11:16 AM | Click here to comment | Send to a Friend

May 3, 2008

Flash! Breaking News! Food Prices Up!

A month or two ago, the "world hunger crisis" burst upon the scene, suddenly seizing the media high ground and dropping horror stories and analyses down on the unsuspecting public. A remarkable example of a herd mentality marrying up with pack journalism running with the boys on the bus....oh, and ethanol's to blame.

Not to say there's no connection between ethanol and food prices -- in fact, it's been argued for years -- but the explosion of coverage raises suspicions. It's as if editors who have long disliked government subsidies for ethanol found a new angle that more effectively made the case against this particular renewable fuel.

Alternative theory: Environmentalists who had for decades promoted alternative fuels turned to their global master plan, Page 472, the chapter entitled, "The Promoting Phase is Over. Time to Pull the Rug Out on Ethanol." Because no energy is always preferable.

Cliff May* of the Foundation for the Defense of Democracies seems to share some of the same suspicions. In a smart column, "The Hunger," he notes The Washington Post's recent page one story, "The Global Food Crisis: Siphoning Off Corn to Fuel Our Cars," and comments,

The Post article asserts that corn prices have “been climbing for months on the back of booming government-subsidized ethanol programs.” This has quickly become the conventional wisdom. But while free market types (like me) are skeptical about both subsidies and tariffs, there is actually no evidence that these market manipulations have been a major factor behind rising prices for corn or other grains. Researchers Robert Zubrin and Gal Luft point out that the total U.S. corn crop has increased 45% since 2002. The amount of corn available for food and feed has increased 34 percent --- after the part used for ethanol has been taken out.

But haven’t those farmers cut back on other crops -- soy and wheat, for example -- to plant more corn and hasn’t that led to increases in the prices of those grains? Apparently not. As Zubrin and Luft also note, U.S. soy plantings this year are expected to be up 18%, wheat plantings 6%, and overall, U.S farm exports are up 23%.

Well, then, it's global warming!

The Post article also blames higher prices on global warming. But there is no solid evidence to suggest that whatever global climate change we have experienced in recent years – an increase of 0.31 degrees Fahrenheit per decade since the mid-1970s is the best current estimate -- has reduced food production. In fact, a warmer climate should mean a longer growing season allowing for more food production.

At any rate, there's an odd media/economic/public relations/activist/media dynamic going on here, a dynamic that historically translates into political pressure and impetuous policymaking. Be on guard.

*May is a supporter of federal mandates that would encourage development and use of flex-fuel vehicles. So he's not an anti-ethanol guy, by any means.

UPDATE (3:10 p.m.): Over at Planet Gore, Henry Payne rebuts what he takes to be May's ethanol touting, arguing for a close connection between ethanol as fuel as world food prices. Our post was more about the sudden shift among the public-opinion influencers, which, as said, engenders suspicions.

Posted by Carter Wood at 2:16 PM | 2 comments; click here to read them or submit your own! | Send to a Friend

Answer, Wind, Blowin' -- But Not in Maryland

Today's Washington Times has the best single take we've seen on the energy doublethink on display in Maryland, where Governor O'Malley has blocked construction of new wind turbines on state lands while at the same time demanding dramatic increases in renewable energy. From "Wind power debate whips up controversy":

ANNAPOLIS — Self-styled "green" leaders across the country face a conundrum over wind power: Do they alienate part of their constituency by leveling pristine forests to build wind farms, or irritate the other part by rejecting a promising source of renewable energy?

When Gov. Martin O'Malley faced that choice in April , he opted for the latter, and in no uncertain terms.

"In the end, we could not justify the consequences that commercial wind would have on this land, this publicly held land," he said in announcing his decision to block a wind-farm proposal in Western Maryland. He also barred wind turbines from being constructed on any state land.

"I also want to stress what this decision should not be misinterpreted to mean: This is not a rejection of wind power in the state of Maryland," he told a group of wind- farm opponents.

No?

Another question, less rhetorical: "Pristine" forests? That's the term the anti-wind forces used to block the turbines in Western Maryland, one echoed by the Washington Times' reporter. Pristine means untouched, uncorrupted, unsullied by man. In Western Maryland. Perhaps the more accurate term would be, ""really pretty."

Posted by Carter Wood at 1:25 PM | Click here to comment | Send to a Friend

May 2, 2008

Cap-and-Trade: Cap the Economy, Trade the Jobs

From Medill Reports (i.e., Northwestern's graduate school of journalism), a thorough story on the costs of climate-change legislation and regulation, "Manufacturers blast new climate bill."

While proponents of the America’s Climate Security Act, or Lieberman-Warner bill, have said trades and auctions of pollution allowances would minimize costs, manufacturing officials contend the legislation would inflate energy prices and operating costs, crimping demand at home and making U.S. companies less competitive overseas.

“You’re going to have prices driven up dramatically,” said Keith McCoy, a spokesman for the National Association of Manufacturers in Washington, D.C. “With these short timelines, coal-based utilities will have to switch to natural gas. That’s a very valuable commodity for manufacturers, and the price will get bumped up.”

Posted by Carter Wood at 9:28 AM | Click here to comment | Send to a Friend

May 1, 2008

Mixed Messages

Taking no position on a tax holiday, one still notes ....

Washington Post, May 1: "Clinton Gas-Tax Proposal Criticized"

Washington Post, April 30: "Kaine May Float Gas-Tax Increase to Offset Shortfall"

Posted by Carter Wood at 7:54 AM | Click here to comment | Send to a Friend

April 30, 2008

Samuelson on Energy: Start Drilling

Washington Post columnist and Newsweek editor Robert Samuelson's dispassionate economic analysis leads him to a clear conclusion in today's paper, a column entitled, "Start Drilling."

What to do about oil? First it went from $60 to $80 a barrel, then from $80 to $100 and now to $120. Perhaps we can persuade OPEC to raise production, as some senators suggest; but this seems unlikely. The truth is that we're almost powerless to influence today's prices. We are because we didn't take sensible actions 10 or 20 years ago. If we persist, we will be even worse off in a decade or two. The first thing to do: Start drilling.

It may surprise Americans to discover that the United States is the third-largest oil producer, behind Saudi Arabia and Russia. We could be producing more, but Congress has put large areas of potential supply off-limits. These include the Atlantic and Pacific coasts and parts of Alaska and the Gulf of Mexico. By government estimates, these areas may contain 25 billion to 30 billion barrels of oil (against about 30 billion barrels of proven U.S. reserves today) and 80 trillion cubic feet or more of natural gas (compared with about 200 tcf of proven reserves).

What keeps these areas closed are exaggerated environmental fears, strong prejudice against oil companies and sheer stupidity. Americans favor both "energy independence" and cheap fuel. They deplore imports -- who wants to pay foreigners? -- but oppose more production in the United States. Got it? The result is a "no-pain energy agenda that sounds appealing but has no basis in reality," writes Robert Bryce in "Gusher of Lies: The Dangerous Delusions of 'Energy Independence.' "

Thinking more about the Reuters analysis yesterday that reprised the old argument, drilling in ANWR brings no immediate benefits, etc. (and remember, President Clinton vetoed ANWR legislation in 1995), we speculate about the future:

(Washington, D.C., April 30, 2022) -- Opening the Alaska's North Slope to energy development will do nothing to ease $16 a gallon gasoline, analysts agree, calling for increased conservation and smaller vehicles to help control fuel costs.

"True, the years of additional energy costs has hurt America," said Clich E. Thinking. "The manufacturing sector is down to Pete in Virginia and that little company in Texas. Turns out the green jobs went abroad with everybody else. But with conservation, we can at least spare the pain at the pump."

Posted by Carter Wood at 8:51 AM | Click here to comment | Send to a Friend

April 29, 2008

Bush on Energy, Inaction on ANWR

Dow Jones: "WASHINGTON (Dow Jones)--Addressing a myriad of economic worries, U.S. President George W. Bush pushed lawmakers to expand domestic energy production, streamline a "bloated" farm bill and pass an overhaul of the Federal Housing Administration."

Washington Post:"President Bush today blamed Congress for many of the nation's economic woes, charging that lawmakers have blocked his proposals for dealing with problems ranging from soaring gasoline prices to the increasing cost of food."

Bloomberg: "April 29 (Bloomberg) -- President George W. Bush blamed Congress for blocking his initiatives to mitigate rising energy costs by expanding domestic production and said lawmakers also are delaying action on other measures to address higher food costs and the mortgage crisis."

And the expected analysis, hauled out regularly on occasions like this.

WASHINGTON, April 29 (Reuters) - The Bush administration says the United States would be less addicted to foreign oil and fuel prices would be lower if Congress had only opened up Alaska's Arctic National Wildlife Refuge to drilling.

But that claim doesn't reflect the long lead time to develop the refuge's huge oil reserves, which would not be available for several more years and initial volumes would still be small if Congress in 2002 had approved the administration's plan to drill in ANWR, energy experts say.

This line of thinking invites paralysis: "Since that extra week of overtime won't pay enough to buy a new car by June, I shouldn't do the work, even though it might help raise the funds by November."

Other points:

The market responds to expectations of supply and policy signals, and drilling in ANWR would not be considered in a vacuum. A commitment to domestic energy development as reflected in opening of ANWR in 2002 would have sent a powerful signal.

Bush got to the issue of ANWR as soon as he could. Congress changed the law to open the possiblity of energy development in 1980. Both the Senate and House approved drilling in ANWR in 1995, but President Clinton vetoed the legislation.

Finally, with energy costs rising and reliance on foreign supplies growing, the argument for ANWR has only gotten stronger. It's quite surprising that elected officials previously opposed to ANWR have not reassessed their positions given the serious consequences of inaction.

Posted by Carter Wood at 4:21 PM | 2 comments; click here to read them or submit your own! | Send to a Friend

Environmentalists Hate Solar Energy, Too

OK, OK -- just some environmentalists. But as this entry in the Wall Street Journal's "Environmental Capital" blog details, California is afflicted with many, many people who like the idea of solar power in the abstract, it's just that actual getting it to the consumers who might use it that's unacceptable.

The L.A. Times reports that California governor Arnold Schwarzenegger is throwing his support behind a proposed 150-mile transmission line that would partially run through a state park. Gov. Schwarzenegger pressed the case in a December letter to California’s public utility commissioner Dian Grueneich, though the decision won’t be made until this summer. The “Sunrise Powerlink” would link solar power plants in the Colorado Desert with San Diego—but wold also mean hulking high-transmission towers snaking through a state park enjoyed by a million visitors a year.

It’s hardly a local phenomenon. From Texas to Scotland, new clean energy projects that might disrupt wildlife habitats (or vacation views) have become an internecine battleground among green warriors. Fighting climate change by adding renewable energy is good; but upsetting pristine landscapes is unconscionable.

At what point does NIMBY become NIABY, Not in Anyone's Back Yard?

Related thoughts at The Chilling Effect.

Posted by Carter Wood at 8:48 AM | 1 comment; click here to read it or submit your own! | Send to a Friend

April 28, 2008

Safe, Environmentally Responsible Energy

From FERC:

FERC staff issues Draft Environmental Impact Statement on Sparrows Point LNG and Mid-Atlantic Express Pipeline Project (Docket Nos. CP07-62-000, CP07-63-000, CP07-64-000, and CP07-65-000)
Issued: April 25, 2008

FERC staff prepared a draft environmental impact statement (EIS) for the AES Sparrows Point LNG, LLC and Mid-Atlantic Express, L.L.C. (collectively, AES) Sparrows Point LNG and Mid-Atlantic Express Pipeline Project. The liquefied natural gas (LNG) terminal is proposed for an industrial port setting on Sparrows Point, in Baltimore County, Maryland, and consist of facilities capable of unloading LNG ships, storing up to 480,000 cubic meters (m3) of LNG, vaporizing the LNG, and sending out natural gas at a baseload rate of 1.5 billion cubic feet per day (Bcfd). The pipeline would include about 88 miles of 30-inch-diameter natural gas pipeline (about 48 miles in Maryland and 40 miles in Pennsylvania), ending in Eagle, Pennsylvania.

FERC’s environmental staff concludes that the Sparrows Point LNG Terminal and Pipeline Project with appropriate mitigating measures, as recommended, would have limited adverse environmental impact and would be an environmentally acceptable action.

AES's website for the Sparrows Point project is here, http://www.aessparrowspointlng.com. The brochure does a nice job.

The project is planned for the former Bethlehem Steel Plant site, replacing one industrial site with another. The locals and their elected officials are protesting, now relying on the last argument against any power facility -- terrorist attacks.

Posted by Carter Wood at 2:33 PM | Click here to comment | Send to a Friend

April 25, 2008

Gas Prices: Deja Vu-Doo Economics

WASHINGTON, April 25 /PRNewswire-USNewswire/ -- Speaker Nancy Pelosi and House Democratic leaders sent the following letter today to Federal Trade Commission (FTC) Chairman William E. Kovacic urging him to investigate record gas prices. The Energy Independence and Security Act of 2007 gives the FTC the authority to probe possible market manipulation of gas prices, but to date, the Commission has failed to exercise its power to protect consumers from skyrocketing energy costs.

The letter's text is here.

Seems familiar, this line of argument. Very familiar. In fact, why don't we respond to it by just reposting our post of September 19th, 2007, entitled, "Stop the Presses: Still No Price-Gouging!"

Certain elected officials get months of headlines every other year or so beating up on the people who supply fuel to consumers, claiming that the evil oil companies are manipulating the prices of gasoline. News conferences, congressional hearings, table pounding and news releases -- we get the whole spiel. Repeatedly.

But when the FTC issues yet another report showing that higher prices for gasoline resulted from market forces and no gouging occurred, it's a one-day story. A low-profile story.

Take the August 30th release, with the attention-grabbing headline, "FTC, Antitrust Division Send Report to President on Factors Explaining National Average Gasoline Price Increases During Spring and Summer of 2006." (August 30th, the Thursday before Labor Day. Almost like the FTC wanted the story buried.) Conclusion: "Market factors explain increases in the national average retail price for gasoline during the spring and summer of 2006..." That is, no price gouging.

We make these observations as a set-up to and praise for Paul Greenberg's opinion column, "Economics vs. politics." As usual, Greenberg pulls no punches.

[Every] time gas prices go up, a certain kind of politician is shocked, shocked. Or at least pretends to be. And demands an investigation, which is a lot easier than taking Economics 101 all over again.

Naturally the politician blames some vague, amorphous monster out there like Big Oil rather than the real-life owner-operator of your neighborhood filling station. After all, the little guy votes. If there's an avaricious cartel setting oil-and-gas prices, it's called OPEC. But oil sheiks and Venezuelan caudillos are scarcely subject to a congressional investigating committee.

If there's a conspiracy at work here, it's the dismal science itself — economics. It has been refuting demagogues ever since they've been taking advantage of our anger, suspicion and ignorance.

Thanks for the reminder, Mr. Greenberg.

Trouble is, the demagoguery has left its legislative mark. The Senate passed version of the energy bill (H.R. 6) includes anti-price gouging language, which will discourage companies from responding to the market's price signals, and inevitably lead to shortages. (Heritage looked at the issue here.) So we need to continue paying attention, just as Paul Greenberg has.

Or expect yet another FTC report, demanded in, oh, August 2008, but only to be finished after the November elections.

Well, April instead of August, but otherwise...

Posted by Carter Wood at 3:52 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

April 23, 2008

Dark and Cold, the World Without Coal

We Americans are caught up in one of our periodic frenzies of enthusiasm, this one about global warming and most of the emphasis seems to be on phasing out coal-fired power plants. The only problem is that we get half of our electricity from coal and it would take a very long time to wean ourselves away from it. Wind power and alternative fuels offer promise for the future – the very distant future – but we depend on coal now and will for a long time. Today few coal-fired generating plants are being built and the supply is running low. Soon we will begin to see brownouts and then blackouts. When you flick the switch and the lights don’t come on, when you turn on the air conditioning and nothing happens, the price of this enthusiasm will become clear.

One of the more persuasive arguments against shutting down coal fired power plants is that the Chinese are opening two new ones every week and have already passed us in terms of carbon dioxide emissions. Today’s New York Times has a front page story that Europe also is revving up the coal power.

Enthusiasm and lofty environmental aspirations are just peachy but the question that remains is what good will it do us – and the global climate – if we sacrifice our economy while the rest of the world continues its merry way.

Posted by Hank Cox at 4:57 PM | Click here to comment | Send to a Friend

April 22, 2008

Flash! Ozone Rules Hit Hard

From USA Today, page one: "Strict EPA rules tag unlikely areas
350 counties would violate new smog limit"

Smaller metropolitan areas — not gritty urban centers — are the most likely to be labeled as smoggy under a strict definition that the Environmental Protection Agency announced last month, an analysis by USA TODAY found.

The new limit also would ensnare many communities that contain large expanses of pristine wilderness. Places that would fall under the new ozone limit include Boise; Bar Harbor, Maine; and Biloxi, Miss.

And, according to the USA Today analysis:

Counties in metro areas of more than 1 million people, which now account for two-thirds of U.S. counties with unhealthy air, would account for 40% of new violators.

The number of high-smog counties with fewer than 250,000 people would jump from five to 47.

The number of smog-ridden counties with federal wilderness areas would nearly triple from 16 to 46. The total number of wilderness areas in such counties would rise to 185 from 106.

Many counties that face the prospect of cleaning up their air receive pollutants from elsewhere on prevailing winds. To address that problem, adjacent counties that contribute to smog will be declared in violation, too, the EPA says.

Which is exactly what the NAM and other critics of the then-proposed ozone rules argued, that the new restrictions would hit many, many areas hard -- imposing huge costs on producers and consumers for purely theoretical health gains.

And good for USA Today and all, but this might have been a productive area to explore BEFORE the EPA promulgated its rules.

(The NAM's ozone resources page is here.)

Posted by Carter Wood at 11:07 AM | Click here to comment | Send to a Friend

April 20, 2008

The Military-Industrial Complex Marches On

And good!

MINOT, N.D. — Military and oil industry officials have reached a non-binding agreement to help missile sites and drilling rigs co-exist in northwestern North Dakota.

Col. Marty Whelan, commander of the 91st Space Wing at Minot Air Force Base, said he reached an understanding with Ron Ness, president of the North Dakota Petroleum Council.

It stipulates that oil drillers would stay 400 metres away from the Minuteman III.

That's an article from the Canadian Press -- as you can tell, metre-wise -- and interest in the Bakken Formation is high in the prairie provinces. Don't think any ICBMs come into play.

Posted by Carter Wood at 12:44 PM | Click here to comment | Send to a Friend

April 17, 2008

Bakken: Don't Let this Triceratops Go Unsold

The Examiner editorializes today on the Bakken Formation, a vast, oil-rich shale deposit laid down in the Devonian age. A recent U.S. Geological Survey described it as the largest continuous oil deposit ever assessed by the USGS, holding from 3 to 4.3 billion barrels of recoverable oil -- 25 times the amount previously estimated in 1995. From "Time to tap the Great Plains oil bonanza":

Policy-makers must not allow to happen with the Bakken Formation what has occurred with the Arctic National Wildlife Refuge in Alaska, where 10 billion barrels of oil have gone untouched for a quarter-century because of utterly spurious environmental fears.

Also, huge deposits of oil and natural gas continue to go untapped off the Atlantic and Pacific coasts, again due to environmental hysteria. The truth is that leaks and spills from tankers carrying imported oil and gas exceed, by a large margin, the minuscule problems caused by the far safer use of pipelines from offshore drilling.

New discoveries and estimates from places such as the Bakken Formation and from the Marcellus natural gas fields in Pennsylvania continue to show that the United States has the resources and the wherewithal to be almost “energy independent.” What is lacking is not opportunity, but will.

More...

Regina Leader-Post: "Oil survey brings good news for Saskatchewan."

Energy Bulletin: "An unconventional play in the Bakken."

Financial Post (Canada): "Investors look to stocks from oilpatch to fuel returns."

And the triceratops reference in the headline? Dinosaur skeleton fails to find buyer at Paris auction":

"Bids started at 420,000 euros and quickly climbed to 490,000 euros, but when the bidding stopped there, the auctioneer declared no sale.

The private collector had set a reserve price of 500,000 euros for the specimen that was found in North Dakota in 2004 and had been on display in his own private museum set up in his residence.

From the Paleocene? Cretaceous?

Posted by Carter Wood at 8:17 AM | Click here to comment | Send to a Friend

April 16, 2008

A Windfall Profits Tax on Big Oil, Now!

Venezuela approves windfall oil tax:

CARACAS, Venezuela (AP) — Venezuela moved Tuesday to take a greater cut of windfall oil profits, approving a 50 percent tax on foreign oil companies when crude tops US$70 a barrel.

The tax rate would rise to 60 percent when the average monthly price for benchmark Brent crude exceeds US$100, according to the bill approved by Venezuela's National Assembly. The legislation will take effect as soon as it is published in the official gazette.

Revenues from the tax could reach US$9 billion (euro5.7 billion) annually, Oil Minister Rafael Ramirez said after meeting with lawmakers.

"That's why, for the executive branch, it is urgent to create this law," Ramirez said.

The new legislation will let President Hugo Chavez further extend state control over foreign oil companies operating in Venezuela — home to the largest petroleum deposits in the Western Hemisphere — as he steers the nation toward what he calls "21st-century socialism."

Sound familiar?

Thing about socialism? Failed in the 19th Century. Failed in the 20th. Not likely to succeed in the 21st.

(Hat tip: The Heritage Foundation blog, The Foundry.)

Posted by Carter Wood at 2:12 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

April 15, 2008

Say No to LNG, Expect Higher Prices

The Hartford Courant does the unusual and reports on the consequences of New York and Connecticut's opposition to a liquefied natural gas facility. From Gas Plant Plan's Defeat Could Prove Costly to Consumers":

Gov. M. Jodi Rell said Broadwater's rejection was a victory for the environment. As for the natural gas it would have provided — that will come from projects already being planned elsewhere, she said.

"There are projects underway or already on the drawing boards that will more than meet that future demand without ever needing the disaster-in-the-making that is Broadwater," Rell said after New York announced its decision on the Long Island Sound project Thursday.

But Broadwater's developers warned that without their project in place, households and businesses in Connecticut can expect electricity and natural gas prices to climb. Demand for natural gas, especially by power plants, continues to grow and the region has a limited number of pipelines to get gas into the state.

The other liquefied natural gas terminals proposed, in locations in Delaware and New Brunswick, Canada, will do little for Connecticut, Broadwater officials said, and that's assuming they win approval.

And they sure won't do anything for Oregon's consumers, either.

For more on the Broadwater plan, go here.

Posted by Carter Wood at 9:19 AM | Click here to comment | Send to a Friend

Attack on Property Rights Restoration Act

Rule of Washington, D.C., thumb: If legislation carries the term "restoration" in its title, it will inevitably do far more than restore past law. It will rewrite existing statutes to weaken the private sector and expand government. The Fair Pay Restoration Act doesn't restore "fair pay," but rather makes it possible to sue and sue and sue employers, ad infinitum.

And the Clean Water Restoration Act federalizes control over most occasionally damp pieces of land in the United States.

On Wednesday, the House Transportation and Infrastructure Committee will hold a hearing on the water legislation, which needs much attention beyond the agricultural and property rights groups who are particularily exercised about the federal power grab. (Hearing details here and additional background here.)

Supporters sell the legislation as an effort to clarify the Clean Water Act's authority following several Supreme Court decisions, but in reality, it's a vast extension of the regulatory state over wet areas. For manufacturers, the concern is that modest remodeling or expansion projects that might once had been worked out with local planners or environmental authorities would fall under additional federal regulatory oversight, with all the attendant costs and delays.

And each regulatory decision becomes another point that NIMBY or environmental groups can use in litigation to block a project. That's an especially important issue for future infrastructure or energy projects that meet the economy's needs -- and create jobs.

The National Center for Policy Analysis National Center for Public Policy Research has been working diligently on this issue, and today the group issued a news release and study warning sportsmen of the threat: "[The legislation] would do more to threaten the cherished pastimes of hunters, fishermen and other outdoor enthusiasts than it would to ensure the cleanliness of our nation's water." Earlier in the month the the group released a letter signed by 53 separate groups -- the NAM included -- that highlighted the bill's failings.

The Senate has aleady held a hearing this month and tomorrow a House committee considers the bill, so it's wise to be paying attention -- this legislation may be moving.

Correction: We confused our National Centers. Apologies to both.

Posted by Carter Wood at 9:11 AM | 1 comment; click here to read it or submit your own! | Send to a Friend

Bakken, Good; Now, Can We Get Serious?

Much news this month about the energy potential of the Bakken Formation in North Dakota and Montana, thanks to a U.S. Geological Survey that estimated a mean value of 3.65 billion barrels of oil. Exciting. Worldwide interest. Etc.

Well, then....

The Coastal Plain of ANWR's 1002 area is the nation's single greatest onshore oil reserve. The USGS estimates that it contains a mean expected value of 10.4 billion barrels of technically recoverable oil.

That's former Interior Secretary Gale Norton in March, 2003 explaining the tremendous oil potential in the Alaskan National Wildlife Refuge. Using some of the same drilling technology that makes much of the Bakken Shale Formation accessible, ANWR's oil could be recovered in an environmentally safe manner. And heck, there's a lot more diverse wildlife and fauna in the prairies and Badlands of North Dakota then there is in the frozen wasteland of the Alaskan North Slope.

So if you welcome the Bakken energy, it's hard to see how you could dismiss the ANWR potential. With any sense of intellectual consistency, we mean.

Posted by Carter Wood at 8:40 AM | 2 comments; click here to read them or submit your own! | Send to a Friend

April 14, 2008

Does Anyone Take Energy Security Seriously?

From Oregon:

Opponents of a proposed liquefied natural gas terminal upriver from Astoria are taking their fight to overturn Clatsop County's zoning approvals for the project to a ballot measure and the state land-use appeals board.

From Connecticut and New York:

Connecticut and New York opponents of the Broadwater LNG received a generous helping of good news yesterday afternoon when Gov. M. Jodi Rell announced that N.Y. Gov. David A. Paterson rejected the proposal.
"We did it," said Rell in a press release. Foes of Broadwater's project feared the liquid natural gas (LNG) proposal could radically alter Long Island Sound.

The answer to the rhetorical question is, yes, at least in Oregon, the Clatsop County Commissioners took the issue of energy security (and public safety, and the environment, and the local economy) seriously. And there are many, many other proponents of LNG projects. But NIMBY groups and the anti-prosperity crowd on the environmental left keep throwing up obstacles.

Posted by Carter Wood at 8:51 AM | 1 comment; click here to read it or submit your own! | Send to a Friend

April 13, 2008

Bakken Formation Oil: Yee-Haw, Etc.

The U.S. Geological Survey's release last week of a new study estimating some 3 to 4.3 billion barrels of recoverable oil is indeed good news, but, no disrespect to the good people at the USGS, it's just a study.

It takes investment, ingenuity and innovation to get to the oil. In other words, it takes the oil companies and profits. And exploiting a find is still a 50-50 proposition, profitwise.

Bob Harms of the Northern Alliance of Independent Producers points out the economic realities:

Being able to recover oil technically is different than being in business long enough so can recover it." Harms says it costs six million dollars to drill a well

And even with $110 barrel oil there are some wells in the Bakken that don't break even

(Bob Harms) "If you exclude the sweet spot in Parshalll and Mountrail area - 52% are not going to produce an economic well. Meaning they will not return the investment it took to drill it."

Investor's Business Daily made similar observations in a recent editorial. In a typically tough IBD editorial, the paper took to task those elected officials who welcome available oil in North Dakota but who vote against accessing needed energy in the Alaskan National Wildlife Refuge or off America's coasts, or who would institute a windfall profits' tax.

Yes, oil companies make money. But they spend more than they make on finding new sources of oil. A new Ernst & Young study shows the five major oil companies had $765 billion of new investment from 1992 to 2006 compared with net income of $662 billion.

Over the same stretch, the industry — which includes 57 of the largest U.S. oil and natural gas companies — had new investments of $1.25 trillion compared with a net income of $900 billion and a cash flow of $1.77 trillion.

This is an industry that has redefined innovation, reinvesting profits to find innovative ways to recover oil and gas wherever they find it. This includes fields once considered "dead," vast tracts miles beneath the ocean surface, and sands or even shale in North Dakota.

So that's the context. Touting potential oil resources is fine, but ultimately pointless if you demonize or undermine the energy companies that bring that resource to market.

Posted by Carter Wood at 8:11 PM | 1 comment; click here to read it or submit your own! | Send to a Friend

MD: Making Renewable Energy Not a Reality

From the Baltimore Sun's review of the 2008 General Assembly, that is, just-passed legislation:

Lawmakers approved a package of administration bills to reduce the state's energy consumption 15 percent by 2015 and to double the amount of renewable energy that power companies must provide for sale to customers, to 20 percent by 2022.

And from the Baltimore Sun, "Gov. confirms wind turbine ban."

Gov. Martin O'Malley confirmed yesterday that his administration will not allow commercial wind turbines on state forest land, ending a heated four-month debate.

"While we must continue to explore and make progress on creating a more sustainable and independent energy future for Maryland, we will not do so at the expense of the special lands we hold in the public trust," the Democratic governor said.

What is that term about holding two mutually exclusive thoughts at the same time?

Posted by Carter Wood at 6:51 PM | Click here to comment | Send to a Friend

April 11, 2008

If the Environmentalists Had Their Way ...

The U.S. Forest Service has released new rules to govern the development of management plans for the federal lands the government agency controls. Environmental activists are outraged and accusing the Administration of bad faith. Well, of course they are. (New York Times story; Associated Press story.)

With the new U.S. Geological Survey study out about the 4.3 billion barrels of oil that may lie in the Bakken Formation of North Dakota, we're reminded of another controversy in which outraged environmental groups denounced the U.S. Forest Service. Back in the late '90s, the Forest Service proposed a 10-year management plan for the Dakota Prairie National Grasslands, a plan that would have significantly restricted existing ranching operations and future energy development on these federal lands in western North Dakota. (Not pristine land, we note; much had been settled and farmed at some point and then abandoned in the Dust Bowl years.)

The plan satisfied no one, as these plans tend to do. Ranchers legitimately saw an attack on their way of life, and the oil and gas industry protested the increased costs to develop existing claims and the blocking of vast acreage to any future energy use.

Meanwhile, national environmental groups like the Sierra Club were horrified, saying the plan did almost nothing to protect the unique resources -- always unique -- and crown jewel of this and that. More restrictions! More limits! No development! Above all, more wilderness designations!

No one was satified with the final management plan, naturally. Nevertheless, the energy sector appeared to have reached a modus vivendi with the federal management plan, and oil and gas development continues on the federal land in Western North Dakota -- environmentally sensitive, heavily regulated and monitored development, but the energy can still be accessed.

Underneath much of the western portion of the Dakota Prairie Grasslands is the Bakken Formation, confirmed yesterday by the U.S. Geological Survey as a resource of tremendous potential -- the largest continuous oil accumulation ever assessed by the USGS.

And if the environmentalists had had their way when the Forest Service developed its national grasslands management plan, much of that Bakken resource would be off-limits -- blocked from development or made prohibitively expensive, prevented from being part of the solution to America's energy needs. The investment into accessing Bakken oil would have gone to Kamchatka, Kazakhstan or Angola -- if anywhere.

The grasslands history and the Bakken Formation's tremendous potential make it clear that the goals of the mainstream environmental movement cannot be reconciled with achieving energy security, that is, real, economical energy security, as opposed to the magical, mystical, utopian kind.

More...

Jamestown Sun story, "Oil study released."

Great Falls Tribune story, "Bakken Formation oil field has up to 4.3 billion barrels."

New York Times story, "Billions of Barrels of Oil May Lie Under Northern Plains."

Bismarck Tribune story, "Bakken reserve largest in lower 48."

The USGS survey did not include the portions of the Bakken in Saskatchewan and Manitoba.

Posted by Carter Wood at 8:48 AM | Click here to comment | Send to a Friend

April 10, 2008

4.3 Billion Barrels of Oil is a LOT of Oil

The U.S. Geological Survey's news release summarizing the potential for recoverable oil in the Bakken Formation.

Reston, VA - North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation.

A U.S. Geological Survey assessment, released April 10, shows a 25-fold increase in the amount of oil that can be recovered compared to the agency's 1995 estimate of 151 million barrels of oil.

And this (our emphasis)...

The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest "continuous" oil accumulation ever assessed by the USGS. A "continuous" oil accumulation means that the oil resource is dispersed throughout a geologic formation rather than existing as discrete, localized occurrences. The next largest "continuous" oil accumulation in the U.S. is in the Austin Chalk of Texas and Louisiana, with an undiscovered estimate of 1.0 billions of barrels of technically recoverable oil.

Sen. Byron Dorgan (D-ND) requested the study.

A podcast from U.S. Geological Survey scientists is available here.

P.S. "The USGS has determined that the Bakken Formation, in North Dakota and Montana, has 25 times more technically recoverable oil than was estimated in the USGS's 1995 assessment." Technological advances, made possible by...OIL COMPANY PROFITS. Blast them.

UPDATE (3:26 p.m.) AP story.

UPDATE (4:10 p.m.): A lot, but not as much as some of the more dramatic claims floating around the web in anticipation, notes Glenn Reynolds. More here, and the full report is here.

Posted by Carter Wood at 2:54 PM | Click here to comment | Send to a Friend

More Good Energy News: Natural Gas and Pipelines

A BP and ConocoPhillips news release:

Work to Begin Immediately on New Joint Pipeline Effort to Bring Alaska Gas to Market

BP [NYSE: BP] and ConocoPhillips [NYSE: COP] today announced they have combined resources to start Denali – The Alaska Gas Pipeline. The pipeline will move approximately four billion cubic feet of natural gas per day to markets, and will be the largest private sector construction project ever built in North America. The project combines the financial strength, arctic experience and technical resources of two of the most capable and experienced companies in the world.

BP and ConocoPhillips plan to spend $600 million to reach the first major project milestone, an open season, commencing before yearend 2010. Following a successful open season, a process during which the pipeline company seeks customers to make long-term firm transportation commitments to the project, the companies intend to obtain Federal Energy Regulatory Commission (FERC) and National Energy Board (NEB) certification and move forward with project construction. The FERC and NEB certificates are the critical permits that provide government authorization to construct a pipeline.

The announcement settles at least one part of a longstanding controversy of how to get Alaska's energy wealth to the lower 48. It's a heck of a project, which according to the New York Times article would include a $5 billion gas-processing facility on the North Slope, would cost about $30 billion and take at least 10 years to complete. Other energy and construction companies are definitely interested in participating, the Houston Chronicle reports.

But, of course, you can't have just good news when it comes to natural gas and increasing energy supply. In Congress, Senators have introduced a bill that would give NIMBY opponents the trump card in blocking needed LNG facilities. Presidential candidates Obama and Clinton say they like the bill, competing for the environmentalist vote in Oregon. And what about the people who heat with natural gas?

You can count on the Albany Democrat-Herald to make the basic point that others prefer to ignore:

The price of natural gas has soared the last few years, largely as the result of higher demand and restricted supplies along the West Coast. So families pay $200 or $300 a month for heat in the winter, and even then they are likely to shiver through parts of the day.

One way of reducing the price is to increase the supply, which is why as long as LNG is cheaper, importing it is a sensible idea.

Posted by Carter Wood at 10:02 AM | Click here to comment | Send to a Friend

From USGS and North Dakota, Big News

It's a big news day for the U.S. Geological Survey and North Dakota. Yes, we know, what's next? Worthwhile Canadian initiatives?

But really. Today, the USGS releases a study on the potential oil to be developed from the Bakken Formation, part of the Williston Basin oil patch centered on North Dakota. From the Kansas City Star:

Deep under the northern Badlands, trapped tightly in dense layers of shale, there is oil.

Perhaps hundreds of billions of barrels of it.

A long-anticipated federal report to be released today will examine just how much might be squeezed out of a vast blanket of rock called the Bakken Formation.

Making it profitable to develop are $100-a-barrel oil and new technologies, including increasingly sophisticated methods of horizontal drilling.

Scientific curiosity bubbled up last year — as did the economic hopes of rural North Dakota — when Houston-based EOG Resources reported that a single well it had drilled below the town of Parshall was expected to deliver 700,000 barrels in its lifetime. In 2007, the number of wells in the Bakken rose from 300 to more than 450. Drillers have encountered the formation throughout an area known as Williston Basin, through which the Missouri River flows.

We'll keep an eye out for news, but for now, there's more background and commentary at the Bakken Shale Blog.

Posted by Carter Wood at 9:34 AM | Click here to comment | Send to a Friend

April 9, 2008

Energy Costs Make Rutabagas More Expensive

More prepared testimony from today's House Small Business Committee hearing on the effects of high gas prices on small business, this time from a consultant for studies (works for) the renewable fuels industry. Critics of ethanol as fuel -- and there are legitimate criticisms, to be sure -- are making the case more and more on the basis of rising food prices. Corn is a staple, animal feed and is found in many food products, ethanol has increased the demand for and price of corn, therefore ethanol is to blame for higher food prices.

Yes, but that's not the entire story. From John M. Urbanchuk, director at LECG LLC, a global expert services:

[Since] rising fuel prices increase operating costs for businesses at virtually every stage of production and distribution, high fuel prices eventually affect the prices of all consumer goods and services. Rising motor fuel prices have been a major contributor to the recent increases in inflation measured by the Consumer Price Index. The CPI, all Urban Consumers for all items has been increasing at a year-over-year rate of 4.2 percent over the last four months. During this same period the CPI for motor fuels increased 33.4 percent. The impact of fuel prices on other consumer goods is illustrated by their impact on food prices.

Many critics have blamed the recent increases in consumer food prices on rising grain prices due in part to increased demand for biofuels. While grain and other agricultural prices have
increased sharply over the past year, their impact on consumer food prices is overshadowed by
energy and energy prices. Energy plays a significant role in the production of raw agricultural
commodities, transportation and processing, and distribution of finished consumer food products. An analysis I conducted for the Renewable Fuels Association last year concluded that an increase in energy (fuel) prices has twice the impact on consumer food prices measured by the CPI as does the same percentage increase in corn prices.

So many of the current problems that plagued the U.S. economy keep going back to the failure to have a comprehensive national energy strategy that recognizes the need to increase domestic supplies.

P.S. For a much more dyspeptic view of biofuels, try Ron Bailey at Reason.

Posted by Carter Wood at 9:18 AM | Click here to comment | Send to a Friend

Small Business, Feeling the Squeeze at the Pump

Looks to be a good hearing at 10 a.m. today at the House Committee on Small Business, “The Impact of Increasing Gas Prices on Small Businesses.” For many small businesses -- manufacturers and services, both -- transportation fuel represents a major fixed cost of operations, one that they can't easily replace.

Gary Gilberti of Chesapeake Rehab Equipment in Pittsburgh describes typical conditions faced by numerous small-business operators. From his prepared testimony:

The service and delivery model of this business requires companies to make deliveries and service calls to the homes of customers. Many of the individuals we serve are unable to come to our locations and their equipment is not always conveniently transported.

Companies in this industry are primarily small privately owned businesses that serve a local or regional community. Most have annual revenues under $3M and many are rural providers who may serve an area with a radius of up to 200 miles. These companies employ fleets of their own vehicles which each can make 5-10 delivery/service stops and traveling 150-200 miles per day. The vehicles will cover rural and urban areas and experience highway and city driving conditions.

We can think of a lot of business with similar profiles, although the rehabilitative equipment industry faces another problem -- government programs like Medicare and Medicaid pay the bills, but at a fixed rate, unlikely to rise in compensation for higher fuel prices.

Again, looks like an informative hearing, and we understand the committee will post video highlights tomorrow afternoon.

Posted by Carter Wood at 6:48 AM | Click here to comment | Send to a Friend

April 8, 2008

Key Vote Letter For Clean Energy Incentives

The NAM sent a "key vote" letter to the Senate today (text here) from Jay Timmons, our executive vice president, supporting clean energy incentives.

On behalf of the National Association of Manufacturers (NAM), the nation’s largest industrial trade association representing small and large manufacturers in every industrial sector and in all 50 states, I urge you to support the Cantwell-Ensign Clean Energy Tax Stimulus amendment number 4419 to H.R. 3221, housing legislation currently being considered on the Senate floor. This amendment would¸ among other provisions, extend incentives for clean and renewable energy that are set to expire at the end of this year.

U.S. manufacturers, large and small, have a substantial concern for affordable domestic energy supplies and improved energy efficiency. As a key component to reducing energy demand, increasing energy efficiency will go a long way to lowering energy costs and increasing economic competitiveness. By promoting energy efficiency and the development of renewable and alternative energy sources, the package of incentives included in the Cantwell-Ensign amendment represents an important step in securing our nation’s energy security without raising taxes.

The letter prompted an odd blog post from the Wall Street Journal's "Environmental Capital" blog -- an area of some expertise around here, odd posts -- suggesting that it's strange that the NAM would support renewable energy incentives while opposing a cap-and-trade program.

Where's the contradiction? One works, the other doesn't.

And...

But, for big manufacturers faced with rising energy prices, efficiency clearly has a bottom-line component, too. NAM inked a partnership last summer with the U.S. Department of Energy to promote energy efficiency among its member companies, citing efficiency as an “immediate and cost-effective” way to trim energy bills.

But? But? How about, you betcha!

Posted by Carter Wood at 5:00 PM | Click here to comment | Send to a Friend

A Crisis in Power -- First the U.K., then the U.S.

An observer of the United States energy scene visits London and see the future. No future? Well, England's dreaming.

Even today power is short in particular in London; the situation will grow more dire as the years go by and localized plants are decommissioned; it is unimaginable that new sources of serious generation will be built anywhere near London or the left would go bonkers. The likeliest courses of action is that over time businesses that aren’t forced to be localized (retail, financial services) will bolt London for other parts of the country where the power situation isn’t so terrible. Local businesses will likely start to rely more and more heavily on backup power as the grid becomes more unreliable (on peak days it can fail overall, but it is more likely to just become less reliable over the years).

I don’t know how people can go on consuming electricity and products that require electricity and just pretend that adding new generation isn’t an option; while conservation is useful and perhaps even some localized elements like solar can help they aren’t sufficient for a serious, first world economy unless rotating blackouts a la Nigeria are viewed as OK. Of the options, nuclear emits the least greenhouse gases and new, modern coal plants are quite efficient and emit far less noxious compounds than their predecessors. While these 2 options clearly are not without flaws, they have to be part of the solution else reliability will just crater over time and inefficient local solutions will have to jump to the front.

Nigeria, um? South Africa seems a more relevant comparison.

South Africa's power crisis may last many years unless there is a sustained drop in electricity demand in Africa's largest economy, state power utility Eskom said on Wednesday.

The warning came as Eskom, which produces about 95 percent of the nation's electricity, resumed a wave of planned power cuts and South Africans grew increasingly impatient with an energy crunch that has shaken industry and investor confidence.

Posted by Carter Wood at 7:05 AM | Click here to comment | Send to a Friend

April 7, 2008

Energy Costs: Now It's Personal

From The Examiner:

Pepco will raise rates for its D.C. customers by about 15 percent on June 1, the second increase in five months facing the power company’s 235,000 District customers.

Oh, man. And why is that?

The D.C. Public Service Commission in February approved a lesser rate increase for Pepco’s distribution services. That 2.27 percent jump covered the cost of the poles, wires and high-tech equipment used to deliver power to D.C..

But generation makes up the vast majority of a customer’s bill. And the cost of coal, nuclear power and natural gas are all on the rise, Pepco spokesman Robert Dobkin said.

“Unfortunately we’re in a global energy pricing situation in which energy prices across the board are rising,” he said.

Supply and demand, demand and supply.

Posted by Carter Wood at 9:35 AM | Click here to comment | Send to a Friend

April 6, 2008

Movement Afoot to Ban Oil Sands Import

The desire to destroy U.S. energy security is becoming even stronger among many on the environmental left, as witness this over-the-top essay by the "progressive" writer, Wayne Madsen.

Congress was wise to ban oil drilling in ANWR, one of the most pristine areas on Earth, and it would be equally wise to ban the import of oil from the tar sands of Alberta in Canada. Our Congress also should support efforts by those far-sighted Canadians who are pushing for a moratorium on the further development of Alberta’s tar sands.

Unfortunately, recent reports estimate that Alberta’s tar sands could produce 3.1 million barrels of oil per day by 2015.

That’s a much too tempting opportunity for Canadian businessmen and politicians to line their pockets with increased profits from rising global oil prices by shipping quickly across the border to desperate gas-swilling Americans.

Stop swilling that gas, you crazed Americans!

In any case, appended to Madsen's column is a good refutation from Mark J. Perry, a professor of finance and economics at the Flint campus of the University of Michigan. Perry reports that Congress has outlawed the Department of Defense from using fuels from the oil sands, a much-underreported story. That's not all:

California is moving to disallow the use of tar sands oil under a recently approved low-carbon fuels standard sought by environmental groups, and Illinois is among a dozen states also considering such a standard. And Environment Illinois has vowed to challenge any refinery expansion or modification permits that would facilitate greater use of tar sands oil and has asked the Great Lakes state governors to impose such a ban.

The irony is that countries with fast-growing economies such as those in China, Brazil and India are accelerating energy resource development, while resource-rich North America is becoming captive to environmental extremism and continues to restrict access to oil supplies.

This situation points to an inescapable imperative: Congress needs to address the matter, and it should take action to ensure the civilian and military use of Canadian tar sands oil. Our economic and national security depends on it.

Posted by Carter Wood at 5:40 PM | 4 comments; click here to read them or submit your own! | Send to a Friend

April 4, 2008

Vodcast: Rep. Roscoe Bartlett on Alternative Energy

Rep. Roscoe Bartlett (R-MD) wants the public to know more about the wide array of use and opportunities involving alternative energy and "green technology" and in this week's video podcast of "America's Business with Mike Hambrick," we hear about his plans for a "Maryland Clean Energy Center," a multifaceted rest stop along I-270 near the Monocacy Battlefield.

We'll also hear Executive Director Miguel Gomez