Energy Politics & Science

[prentice crawford]

Woof,
 Finally our little chameleon Republicans are turning back to their Conservative colors after feasting on taxpayers money and doing their best to destroy our Constitutional Republic along with their Liberal friends pushing through a socialist agenda. I wonder what triggers such a transformation? It couldn't possibly be that an election is coming could it? And I wonder, if reelected, how long will it take for them to change back again? I don't like questioning the intelligence of voters but if the Republicans in the states these people represent are so dumb that this little trick keeps fooling them into voting for them time after time, then they need to start doing scans at the polls just to make sure these aren't brainless zombies voting instead of rational humanbeings.

 www.news.yahoo.com/s/ap/20100722/ap_on_bi_ge/us_senate_energy

                                       P.C.

[Body-by-Guinness]

A Call for Energy Realism
The fossil-fuel economy won’t disappear anytime soon.
 
In the summer of 2008, at a time of widespread anger over historically high oil prices, Al Gore challenged his countrymen “to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within ten years.” This wildly ambitious goal recalled Richard Nixon’s proclamation, issued amid the 1973 global oil shock, that the United States would aim to become fully energy independent by 1980. It also brought to mind Jimmy Carter’s pledge, made during his famous 1979 “malaise” speech, that America would “never use more foreign oil than we did in 1977,” and would seek to cut its reliance on imported oil in half by 1990. For those keeping score, foreign oil accounted for 35 percent of U.S. consumption in 1973 — and 63 percent in 2009.

As University of Manitoba professor Vaclav Smil writes in his new book, Energy Myths and Realities, the various targets proposed by Nixon, Carter, and Gore collided with the harsh reality that “energy transitions are inherently prolonged affairs lasting decades, not years.” It was probably not until the late 1890s, he notes, that fossil fuels provided half of all global energy. While we commonly think of the 1900s as the “oil century,” oil did not become the world’s largest primary energy supplier until 1965; and during the 20th century as a whole, it contributed slightly less energy than coal did.

“In global terms,” says Smil, “1800–1900 was still a part of the millennia-long wooden era, and 1900–2000 was (albeit by a small margin) the coal century.” Commercial oil production started in the 1860s, but it took roughly eight decades for the black stuff to gain even a quarter of the global primary energy market. As for the U.S. market, coal became America’s biggest primary energy supplier in 1885, Robert Bryce writes in Power Hungry, and it held that crown for 75 years. In the 1910s and 1920s, its domestic market share reached as high as 90 percent. Oil did not surpass coal as the top U.S. supplier until 1950; its rise was driven largely by the automobile revolution and military needs during World War II.

By 1958, natural gas had eclipsed coal to become America’s second-largest primary energy source, says Bryce, managing editor of the online journal Energy Tribune and a Manhattan Institute senior fellow. But then, regulatory interventions hindered its growth and gave new life to the U.S. coal industry. In recent years, coal demand has been soaring in China, India, and other developing countries. Smil points out that coal’s portion of the global primary energy market was higher in 2008 than it was in 1973. Over the next 20 years, those hoping for a decline in worldwide coal consumption will almost certainly be disappointed.

Just look at the International Energy Agency projections. In its latest “World Energy Outlook,” released in November 2009, the IEA estimated that, if government policies stayed constant, global demand for coal would increase by 53 percent between 2007 and 2030. Over the same period, coal’s share of global electricity generation would swell from 42 percent to 44 percent, while that of renewable fuels would go from 18 percent to 22 percent. Total energy-related carbon-dioxide emissions would jump by 40 percent, with coal-power emissions growing by 60 percent. Coal would still be “the dominant fuel of the power sector,” and fossil fuels generally would still be “the dominant sources of energy worldwide.”

They will also remain the dominant sources in America. The U.S. Energy Information Administration reckons that, based on current government policies, fossil fuels will account for 78 percent of overall U.S. energy use in 2035, compared with 84 percent in 2008. Coal will provide 44 percent of U.S. electricity generation (down from 48 percent in 2008), and renewables will provide 17 percent (up from 9 percent in 2008). To be sure, the extension of certain tax subsidies and the establishment of muscular greenhouse-gas regulations by the Environmental Protection Agency could boost the market share of renewable technologies and further reduce America’s dependence on fossil fuels. But even if the U.S. launches an aggressive renewable-energy drive, its reliance on oil and coal will persist well into the future.

Indeed, the promise of renewables has consistently been oversold by the political class. Solar and wind energy both suffer from major structural deficiencies. As Bryce observes, they are “incurably intermittent” and very difficult to store, and have low power density. Because of their low density, solar and wind “require huge swaths of land — which often becomes unusable for other purposes.” Smil offers a balanced assessment of wind power: “Conversion of wind’s kinetic energy by large turbines can become an important contributor to the overall electricity supply, but, except for relatively small regions, it cannot become the single largest source, even less so the dominant mode of generation.”

Compared with solar and wind, nuclear and natural-gas energy boast much higher power density and can deliver far greater capacity. Bryce argues that they are the true “fuels of the future,” though he concedes that nuclear plants are extremely costly to build and take a long time to become operational. Therefore, he urges a short-term expansion of natural-gas production and a long-term transition to nuclear. While Smil predicts that “an early and substantial nuclear comeback is unlikely either in North America or in Europe” — partly for economic reasons, and partly because of perennial concerns over plant safety and the disposal of radioactive waste — he affirms that “nuclear generation is the only low-carbon-footprint option that is readily available on a gigawatt-level scale.”

Even if previous energy transitions moved at a slow, incremental pace, might we be able to accelerate them in the years ahead? Smil acknowledges that we now “possess incomparably more powerful technical means to effect faster energy transitions than we did a century or a half century ago.” But there is a crucial caveat: “We also face an incomparably greater scale-up challenge. While the shares of new energies in the global or the U.S. market remain negligible, the absolute quantities needed to capture a significant portion of the total supply are huge because the scale of the coming global energy transition is of an unprecedented magnitude.”

Over the next few decades, he explains, replacing half of all fossil-fuel energies with renewable energies would mean replacing the equivalent of approximately 4.5 billion tons of oil. This would effectively require “creating de novo an industry whose energy output would surpass that of the entire world oil industry that took more than a century to build.” Smil also addresses the ten-year plan laid out by Al Gore: Even if America had the necessary high-voltage transmission interconnections, it would entail the construction of 1,740 gigawatts of new wind- and solar-power capacity — in other words, “1.75 times as much as [America] built during the past fifty or more years.”

Our current national energy debate is heavy on passion and hyperbole; it could use a sizable dose of historical perspective and empirical reality. In that sense, Smil and Bryce have done a valuable service. Their new books should be mandatory reading for U.S. policymakers.

— Duncan Currie is deputy managing editor of National Review Online.

http://article.nationalreview.com/438934/a-call-for-energy-realism/duncan-currie

[Body-by-Guinness]

http://reason.com/blog/2010/08/06/epa-dont-mess-with-texas-green
Reason Magazine


EPA: Don't Mess with Texas' Greenhouse Gases

Ronald Bailey | August 6, 2010

Congress has failed to adopt any program to regulate greenhouse gas emissions. However, the Supreme Court ruled in 2007 that the Environmental Protection Agency had the authority to regulate greenhouse gases under the Clean Air Act. So now the EPA is ordering the states to devise regulations that comply with the EPA's new greenhouse gas emissions limits. If a state fails to do so, the agency will impose a Federal Implementation Plan on the state and issue emissions permits itself. In addition, the EPA decided to regulate only facilities that emit 75,000 tons of greenhouse emissions per year.

Now the Texas attorney general and the head of the state's Commission on Environmental Quality are telling the EPA to back off [pdf]. Among other things, Texas officials assert that the EPA's January 2, 2011 deadline for enacting regulations that conform to the EPA's plans is a hustle that violates its own rulemaking provisions that allow much more time for deliberation. In addition, the Texas officials are arguing that the EPA is further violating the Clean Air Act which requires the agency to regulate facilities that emit more 100 to 250 tons of specified pollutants, not just those that exceed a threshold of 75,000 tons. In this case, Texas is calling the EPA's Clean Air Act bluff because at 100 to 250 tons per year, the agency would have to regulate more than 6 million facilities instead of fewer than 1,000.

If Texas prevails in the federal courts, that would mean that the U.S. would have no federal program regulating greenhouse gas emissions.

[Crafty_Dog]

U.S. Backs $1B Loan to Mexico for Oil Drilling Despite Obama Moratorium

Published September 11, 2010

Despite President Obama's moratorium on U.S. deepwater drilling in the Gulf of Mexico, the U.S. Export-Import Bank intends to guarantee $1 billion in loans to PEMEX, the Mexican state oil company, to bolster the company's oil drilling in the region.

The bank, which is the official American export credit agency, loaned more than $1 billion to PEMEX in 2009 -- when the company was the bank's largest borrower -- in support of its drilling activities. That year, the bank also guaranteed two loans totaling $300 million made by a commercial lender.

The latest request comes during a drilling moratorium that was first imposed by Obama in May to find out what was the cause behind the April 20 Deepwater Horizon oil rig explosion killed 11 workers and led to 206 million gallons of oil spewing from BP's undersea well.

After a federal court struck down the ban amid complaints that it threatened thousands of jobs in the offshore oil industry, the Obama administration issued a new moratorium in July on most deep-water drilling activities that is in effect until Nov. 30.

The Export-Import Bank said the moratorium doesn't affect its pending deal with PEMEX.

"None of these projects involve deepwater drilling," bank spokeswoman Maura Policelli told FoxNews.com in an e-mail.

The $1 billion deal is awaiting approval by the bank's board, which is expected to reach a final decision by Sept. 30, the end of the fiscal year. Because the bank is an independent agency, the deal is not subject to congressional approval.

"Before deciding whether to approve applications for financing, Ex-Im Bank performs rigorous environmental, safety and financial due diligence activities, including on-site inspections" Policelli said.

"After financing is approved, the bank monitors the company's financial, environmental and safety activities and performs on-site inspections as often as twice a year," she said.

The 2010 request will support multiple PEMEX projects, including offshore drilling and a $200 million facility to finance sales to U.S. small businesses, Policelli said.

By law, the bank's financing is "directly tied to the export of goods and services produced or provided by American workers," Policelli said.

Since 1998, the bank has guaranteed $7.7 billion in loans that U.S. and international banks have made to PEMEX. The bank agreed to make the direct loan of $1.05 billion to PEMEX last year in the wake of the financial crisis when commercial lenders tightened their lending.

"This loan supported the purchase of U.S. goods and services," Policelli said.

Over that 12-year period, Policelli said, the bank's financing of PEMEX has "helped create or sustain the jobs of over 47,000 American workers at over 1,300 U.S. companies, including 915 small businesses and 400 large companies."

[G M]

Obama has got to spread the wealth around, just as he told JTP.

[prentice crawford]

Woof,
 The wealth spreading is bad enough but the way he's doing it also weakens our power and ability to recoup and build wealth, and in that way he is contributing to our demise.
                              P.C.

[G M]

Obama believes, like much of the left, that America should be just another country. No richer, or more powerful than any other. He also believes that the wealth and power we have we got unfairly, so it's only fair to spread it around.

[Body-by-Guinness]

http://reason.com/archives/2010/09/17/burning-money-to-turn-coal-int
Reason Magazine


Burning Money to Turn Coal into Gas

In which Science Correspondent Ronald Bailey confesses to his role as a petty Igor to Jimmy Carter's energy-regulating Dr. Frankenstein.

Ronald Bailey | September 17, 2010

North Dakota is all about energy production. The landscape in the Peace Garden State is thick with rocking oil derricks and its byways are clotted with oil tanker trucks. When one drives in at night from the west, Highway 83 just south of Minot is bordered with wind turbines whose string of eerie red airplane-warning lights look like a picket line of giant alien sentries 20 miles out. The hydroelectric Garrison Dam blocking the Missouri river is a graceful feat of engineering and the countryside is dotted with electric power generation plants rising on the prairies from the middle of vast open pit coal mines.

But for me, the most interesting feature of North Dakota’s energy landscape is the Great Plains Synfuels plant located near the town of Beulah, just south of Lake Sakakawea. “If you want to see what $4 billion can build in the middle of the prairie,” says Basin Electric communications director Darrell Hill, “it’s the Great Plains and the Antelope Valley electric station next door to it.” And the two are indeed an impressive sight. From a distance the gigantic coal gasfication plant with its enormous smokestacks billowing white clouds is an easy stand-in for William Blake’s “dark satanic mills.” That is until you learn that the Great Plains billows are essentially steam.

Why did I particularly desire to visit the Great Plains Synfuels plant? I have some small bit of personal history with it. Back in the late 1970s and early 80s, I was a low level federal natural gas regulator and a peripheral member of the team that was guiding the plant’s initial development at the Department of Energy (DOE). I functioned as a petty Igor to President Jimmy Carter’s energy Dr. Frankenstein. I was eager to see up close what I helped in some minor way bring to life. But besides my personal history, the Great Plains Synfuels plant stands as a very apt cautionary tale about massive energy projects promoted and financed by visionary presidents and their equally visionary helpmeets in Congress and in the federal energy bureaucracies.

The Great Plains Synfuels plant is a monument to our ancient Me Decade fears about foreign oil and impending energy shortages. The plant was a public/private project that aimed to demonstrate the commercial feasibility of turning copious quantities of lignite (the least energy dense form of coal) into natural gas. Today it transforms 18,000 tons of coal per day into 150 million cubic feet of natural gas and 150 million cubic feet of carbon dioxide using steam and oxygen. That's enough natural gas to supply the needs of 500,000 homes.

Before arriving, I had arranged to join what I thought would be a tour of the facility. But when I got to the plant, it turned out that the public “tour” consisted of a 10-minute video extolling the heroic efforts to finance, build, and keep the plant open combined with a half-hour walk around a very nice $8 million 1/32nd scale model of the plant, with videos interspersed along the walls describing how various parts of the plant operate. Hardly the gritty hardhat on-the-ground experience I was looking for, but it certainly worked as a way to cage in a noisy reporter from a public policy magazine. I later asked Daryl Hill, who heads up public communications for the plant’s owner Basin Electric, about other reporting on the plant. He happily told me about the wonderful CBS 60 Minutes feature done by reporter Scott Pelley. I mentioned that Pelley probably got an actual tour of the plant. Hill had the grace to blush.

Even my iPhone was forbidden on the grounds that no photos should be taken. Michelle, the very nice tour guide, explained that curious members of the public and reporters couldn’t tour the plant itself or take any photos on orders from Homeland Security, even of the model.

I did pick up a good deal of history on my "tour," however. Construction of the plant was first proposed in 1978, just months after the creation of the new Department of Energy during the “energy crisis.” Natural gas production in the U.S. had been declining since 1971 and nationwide shortages were causing schools and factories to close in the winters as gas was diverted to home heating and cooking. The solution to the shortages? Import liquefied natural gas from Algeria and other places. To that end a number of liquefied natural gas terminals were built on the Atlantic and Gulf coasts. (I got to regulate those, too.)

The other solution was to turn coal into methane. In 1980, Congress created the Synfuels Corporation, endowing it with $20 billion with the goal of eventually building as many as 22 enormous coal gasification plants, each one producing 300 million cubic feet of natural gas per day. Since coal gasification was an unproven technology in the U.S., natural gas pipeline companies were reluctant invest in it. The federal government rushed to the rescue. The Department of Energy helped create a public/private partnership with five natural gas pipeline companies that agreed to put up 25 percent of the cost of building a demonstration plant while the government supplied the remaining 75 percent in the form of loan guarantees. Out of this bold alliance between business and government was born the hugely ambitious Great Plains Coal Gasification plant.

The plant was built at a cost of $2.1 billion and shipped its first thousand feet of natural gas in July 1984. Due to escalating costs, the plant was scaled back to half size so that it was designed to produce 150 million cubic feet of gas per day. In the meantime, the hapless Jimmy Carter unknowingly had already undercut the rationale for constructing a massive coal gasification industry by a simple change in policy—he deregulated the price of natural gas. It turned out that the country wasn’t running out of natural gas; it was running out of natural gas with a government imposed price cap. That old truism—only governments create shortages—was once again proven correct.

Gas supplies soared and the price crashed, meaning that there was no need for the Great Plains Synfuels plant nor for the liquefied natural gas facilities along the coasts. In the face of faltering prices, the five gas pipeline “partner” companies demanded that government give them a price guarantee on the gas, or they would default on $1.5 billion in government backed loans. To its credit, the DOE refused to meet this demand and the companies promptly defaulted, abandoning the project.

The bankrupt plant was sold at public auction by the sheriff of Mercer County, North Dakota, on the local courthouse steps. The auction took five minutes and the only bidder was the DOE which bid $1 billion. No money changed hands since DOE already held $1.5 billion in defaulted loans. The DOE began operating it and looking for someone else to take it off their hands.

As it happens, the electric power generation company Basin Electric had built the next door Antelope Valley station in good part to supply the coal gasification facility with electricity. Closing the coal gasification plant would have had a significant negative effect on the company’s bottom line. In 1988, a desperate DOE agreed to sell the plant to Basin for the fire-sale price of $85 million and a split of future profits, if any. In other words, Basin Electric acquired an operating facility for 4 cents on the dollar. "Not having capital investment is the key,” said Keith Janssen, the head of the Basin Electric subsidiary in a 1990 Washington Post article. Well, yes. But even with taxpayers picking up the tab for building the plant, running it profitably was still a challenge.

The gas pipeline companies were trying to weasel out of their long term contracts with the plant in which they were obligated to pay two to three times more than the market rate for conventional natural gas. Eventually, a federal court ordered them to stop whining and pay up. But those contracts were set to expire in 1995. So Basin Electric developed markets in the byproducts of coal gasification. In 2009, more than two-thirds of the plant’s $400 million in revenues were derived from the sales of byproducts.

For example, the plant produces ammonia fertilizers. In one very technically sweet twist, the plant uses ammonia produced at the plant to capture sulfur emissions from the coal turning it into the valuable fertilizer ammonium sulfate. It also produces industrial chemicals like phenol, crude cresylic acid, and naptha. Since the coal gasification requires pure oxygen, the plant takes in ambient air and liquefies it by cooling it down. This enables the company to separate out the oxygen, but also to supply krypton, xenon, and liquid nitrogen to buyers. Finally, as of 1999, the plant also sells two-thirds of its daily emissions of 150 million cubic feet of carbon dioxide to oil producers 200 miles north in Canada to pressurize their fields. The fields that once produced 10,000 barrels per day are now gushing 30,000 barrels per day.

What was once a waste product is now a profitable business. The plant sold its carbon dioxide for about $53 million last year. But could this work for other companies that produce quantities of the greenhouse gas? Probably not. Hill points out that the plant does not produce carbon dioxide through combustion but as an integral part of turning coal into natural gas. This means that it’s a lot easier to capture carbon dioxide at Great Plains Synfuels than it will be at a conventional coal-fired electric generation plant. “A commercial scale technology for capturing carbon dioxide at conventional power plants simply doesn’t exist now,” says Hill. In addition, few power plants would have the happy coincidence of being located close enough to oil fields that will buy carbon dioxide for pressurizing their wells.

I asked Hill how much Basin Electric sells its gas for, and he declined to tell me, saying that it was confidential company information. However, since the long term gas supply contracts expired 15 years ago, the company has been selling its gas at current market prices. Looking at the company’s annual report one finds that the gasification subsidiary made a nice profit until those contracts expired in the mid-1990s. Between 1997 and 2005, the subsidiary experienced a cumulative loss of over $44 million.

Soaring gas prices in the last few years bulked up the gasification plant’s bottom line with a cumulative profit of $334 million between 2005 and 2009. So the gasification plant is profitable now. But hold on. Let’s make a very rough calculation of what would have happened if Basin Electric had had to make interest payments on the entire $2.1 billion in capital costs for the plant. Again roughly, paying just 5 percent interest annually on $2.1 billion would cost $105 million per year (and that does not include paying principal). In only one year since 1991 (earlier years not available) did the plant’s income exceed $105 million and that was in 2008 when the plant earned $128 million when natural gas prices rose to over $10 per thousand cubic feet. In other words, it’s a whole lot easier to make a “profit” if you don’t have to pay back your loans. Still, it is the case that by taking advantage of federal government ineptitude, Basin Electric executives made a pretty savvy investment at rock bottom prices.

In February of this year, Basin Electric sent a check for $7.1 million as its last profit-sharing payment to the DOE. Since it purchased the plant in 1988, Basin Electric has paid the DOE a total of $388 million. On receiving the last check, the DOE had the gall to declare that it had recovered $1.3 billion of the initial $1.5 billion loan. How? By noting that as an electric power generating company for a series of rural electric cooperatives, Basin Electric could not take advantage of about $800 million in federal tax credits that the feds would otherwise have been obligated to pay out for synthetic natural gas production.

At the end of my chat with Basin Electric’s Hill, I asked what lessons we could learn from the Great Plains Synfuels saga? “It shows us a way to use coal that is different from a burning it in a conventional power plant and it gives us a technological baseline of what could be,” replied Hill. He also recited the same points that I have now heard during a visit to a wind farm and a bioethanol plant: It provides jobs and frees us from foreign oil.

In 2007, John Panek, an analyst for the Energy Department's Office of Clean Energy Collaboration, pretty much summed up continuing government cluelessness when he told the Associated Press, "Technologically, it's always been a success, but it always has been a victim of the marketplace." The Obama administration is embarking on numerous similarly “visionary” subsidized energy R&D technology projects. I expect to see lots of technological "successes" and an equal number of market “victims.”

Note: I am traveling back to the East Coast over the next couple of weeks from a summer in Montana spent working on a new book. Along the way I am visiting various energy production facilities. The goal of this circuitous trip is for me to get a better understanding of energy production and to geek out on technological marvels.

Ronald Bailey is Reason's science correspondent. His book Liberation Biology: The Scientific and Moral Case for the Biotech Revolution is now available from Prometheus Books.

[G M]

http://www.jsg.utexas.edu/news/rels/062505a.html

Of peaks and valleys: Doomsday energy scenarios burn away under scrutiny

By Dr. Scott W. Tinker, Op-Ed for the Dallas Morning News, June 25, 2005

As senators debate the national energy policy, many are aware of the hype surrounding "peak oil." A Web search of the phrase turns up an array of experts who believe that a pending peak in world oil production will soon lead to global economic collapse.

The sun is setting on the oil era, but that doesn't mean we're doomed. In their rosier scenarios, experts predict sky-high gasoline prices that will crush oil-dependent economies, such as the U.S. In their darker forecasts, they say people won't be able to obtain food, heat their homes or live securely during a period of global famine and resource wars.

All of this might be entertaining were it another Hollywood film, but it has become almost a subculture (and cottage industry). For those who wonder whether the global production of oil will peak and begin to decline someday, the answer is yes.

The greater question: Should you care? Although talk of peak oil has rightfully focused global attention on the need to find alternatives to oil, the absolute peak of world oil production is an issue of supply and, in many ways, irrelevant. Unlike the 1973 oil embargo, when high prices were the result of an OPEC-orchestrated supply cut, high prices today largely reflect demand-supply imbalance. The global demand for conventional oil has outstripped, or soon will, the global capacity to supply conventional oil.

Does that mean we are all doomed?

While the shock value of doomsday peak oil predictions is entertaining, it is far more important to recognize the reality of high global energy demand and begin to seek solutions – such as the energy policy being debated in the Senate – that could help mitigate the supply-demand imbalance. Solutions abound but will take planning and coordinated investment.

In 1956, geophysicist M. King Hubbert correctly predicted that U.S. oil production would peak in the early 1970s. He incorrectly predicted that world oil would peak in 1995. What he missed was that advances in technology would allow producers to extract oil from known fields far beyond the technology capacity of his day.

Because of these advances, the shape of the oil production curve is not really a peak at all, but more of a bumpy mesa. If there is an important "peak" of oil, it actually occurred in the early 1980s, when oil consumption as a percentage of total global energy topped out just shy of 50 percent. That has declined today to about 40 percent, a trend that has been remarkably consistent and un-shockingly boring.

Dr. Hubbert can be excused for incorrectly forecasting the impact of technology, but today's forecasters should know better. They often claim that oil supply is made worse by modern enhanced oil recovery techniques that drain reservoirs faster. In fact, the reverse is true. The combination of higher energy prices and advanced technology will continue to extend the life of conventional oil supplies via enhanced oil recovery processes.

So what are the realistic near-term alternatives to conventional oil?

Most experts recognize that the age of conventional oil will fade during the 21st century. Energy demand in Asia and other developing regions will continue to outpace supply and keep oil prices high and volatile. Fortunately, price and technology will allow for production of heavy oil, tar sands and shale oil, whose combined global reserves far exceed those of conventional oil, as well as coal liquefaction and gasification, improved gas-to-liquids technology and alternatives to oil led initially by conventional and unconventional natural gas.

The challenge of natural gas is not resources, but deliverability. As liquefied natural gas ports are permitted and built, natural gas will become a global commodity and help reduce issues of deliverability that have caused price volatility. Natural gas, combined with other non-coal sources of fuel, will likely surpass oil as a percentage of total global energy consumption between 2015 and 2020. This crossover already happened in the U.S. around 1994.

If no substitute for oil existed, the world would indeed be in for an energy shock, and possibly an economic collapse. Fortunately, that is not the case, but investment must start today. U.S. energy policies must be aggressive, focus on efficiency and conservation measures and lead the world in a smooth transition to an unconventional-oil, clean-coal, natural-gas, nuclear and emerging-energy-supply future.

Our economy and environment will be the prime beneficiary.

This is not a shocking prognosis, but rather a boringly achievable one.

Dr. Scott Tinker is Texas state geologist and director of the Bureau of Economic Geology at the University of Texas at Austin's Jackson School of Geosciences, where he holds the Allday Endowed Chair. His e-mail address is scott.tinker@beg.utexas.edu.

For more information contact J.B. Bird at the Jackson School, jbird@jsg.utexas.edu, 512-232-9623.

[Body-by-Guinness]

We Can't Afford the Luxury of High-speed Rail

by Randal O'Toole

This past Tuesday, Amtrak proposed to spend more than $100 billion increasing the top speeds of trains in its Boston-to-Washington corridor from 150 to 220 miles per hour. In August, Secretary of Transportation Ray LaHood estimated that President Obama's proposal to extend high-speed rail to other parts of the country will cost at least $500 billion.

No one knows where this money will come from, but President Obama argues that we need to spend it because high-speed rail will have a "transformative effect" on the American economy. In fact, all it will do is drag the economy down.

The history of transportation shows that we adopt new technologies when they are faster, more convenient, and less expensive than the technologies they replace. High-speed rail is slower than flying, less convenient than driving, and far more expensive than either one. As a result, it will never serve more than a few marginal travelers.

New transportation technologies have a truly transformative effect when they not only replace older technologies but also increase total mobility. Intercity passenger trains, electric streetcars, and mass-produced automobiles offered their customers thousands of miles per year of new mobility. This gave people access to jobs, resources, and opportunities that were previously unavailable.

The numbers
At an inflation-adjusted cost of about $450 billion paid out of highway user fees, the Interstate Highway System, to which high-speed rail is sometimes compared, provides more than 4,000 miles of passenger travel for every American, miles that Americans were not traveling before the system was built. By comparison, a $600 billion expenditure on high-speed rail will provide, at best, around 300 miles of travel per person.

More to the point, most of that travel will not be new travel, but merely a substitute for driving, flying, or other existing forms of travel. The California High-Speed Rail Authority predicts that 98% of its customers will shift from driving or flying. Florida predicts that 96% of the people using its high-speed train will switch from driving.

Almost no new travel means almost no transformative effect. Few people will use high-speed rail or urban rail transit to access new markets, resources, or jobs. Merely substituting rail for other modes will be extremely expensive.

Amtrak brags that its high-speed Acela between Boston and Washington covers its operating costs, though not its capital costs. It does so, however, only by collecting fares of about 75 cents per passenger mile. By comparison, airline fares average only 13 cents a passenger mile, and intercity buses (which, Amtrak doesn't want you to know, carry about three times as many passengers between Boston and Washington as the Acela) are even less expensive.

According to the Bureau of Economic Analysis, Americans spent about $950 billion on driving in 2008. This allowed us to travel, says the Federal Highway Administration, more than 2.7 trillion vehicle miles, for an average cost of about 35 cents per vehicle mile. Since the California High-Speed Rail Authority estimates cars in intercity travel carry an average of 2.4 people, the average cost is less than 15 cents a passenger mile.

Subsidizing the urban elite
In short, high-speed rail is more than five times more expensive than any of the alternatives. Since most high-speed rail stations will be in downtowns, the main users will be downtown workers such as lawyers, bankers, and government officials. Yet less than 8% of American jobs are in central city downtowns, meaning all Americans will subsidize trains used by only a small urban elite.

High-speed trains in Europe and Asia may be a boon to American tourists, but they haven't proved transformational in those regions either. France and Japan have the world's most extensive high-speed rail networks, yet their average residents ride the high-speed trains less than 400 miles a year.

Personally, I love trains and it would be nice to think we were rich enough to build a high-speed rail network that few people will ever use. But we are not. The Obama administration would do better by making our existing transportation systems safer and more effective.

http://www.cato.org/pub_display.php?pub_id=12188

[Crafty_Dog]

Similar problems are presented by the high speed line between LA and SF here in CA for which the voters voted to borrow billions of dollars which we don't have.

[G M]

http://www.popularmechanics.com/science/energy/next-generation/the-truth-about-thorium-and-nuclear-power?click=pp

Three to four times more plentiful than uranium, today's most common nuclear fuel, thorium packs a serious energetic punch: A single ton of it can generate as much energy as 200 tons of uranium, according to Nobel Prize-winning physicist Carlo Rubbia. In the mid-twentieth century, some U.S. physicists considered building the nuclear power landscape around thorium. But uranium-fueled reactors produced plutonium as a byproduct, a necessary ingredient for nuclear weapons production, and uranium ended up dominating through the Cold War and beyond.

Thorium could recapture the lead if a Virginia-based company called Lightbridge (formerly Thorium Power) fulfills its promise. Lightbridge was founded on the vision that the existing fleet of nuclear reactors would continue to function for decades to come, so its proprietary nuclear fuel assembly—which features a small amount of uranium surrounded by a blanket of thorium—is designed to work in light water reactors, the most common variety in service worldwide. The company is also developing an all-metal fuel capable of incorporating thorium. "This is like going from leaded to unleaded fuel for your car—the operation [of the reactors] is the same," says Seth Grae, Lightbridge's CEO.

[Freki]

I was very excited by this until I read some of the comments.  I still think this is fascinating.  Run ships on sea water!  I hope this becomes economical.  Maybe a cost effective way to desalinate seawater.

http://www.physorg.com/news/2010-10-hydrogen-generating-technology-power-boats-energy.html

[Body-by-Guinness]

Obama's electric-car cult
By Charles Lane
Saturday, October 30, 2010; 12:00 AM

General Motors' Chevy Volt is finally here, heralded by a new TV ad. "This is America, man," the narrator purrs, as the sun rises over a solitary Volt tooling along a country road. "So doesn't it make sense that we build an electric car that goes far, really far?"

The pitch is lyrical, almost religious. It asks consumers to make an economic and technological leap of faith - just as both GM and the firm's biggest backer, the Obama administration, have invested, financially, politically and psychologically, in plug-in hybrids and other electric vehicles.

How else to explain the fact that both Washington and Detroit persist in their costly electric-car project despite mounting evidence that the vehicles serve no particular purpose, environmental or economic?

Maybe it was karma, but the Volt's launch coincided with publication of a 72-page report by J.D. Power and Associates that confirmed, in devastating detail, what many other experts have found: Electric cars still cost too much, even with substantial federal subsidies for both manufacturers and consumers, to attract more than a handful of wealthy buyers - and this will be true for at least another decade.

What little gasoline savings the vehicles achieve could be had through cheaper alternative means. And electrics don't reliably reduce greenhouse gas emissions, since, as often as not, the electricity to charge their batteries will come from coal-fired plants.

The Obama Energy Department has suggested that, with the help of federal money, manufacturers can ramp up mass production and bring the price of electric-car battery packs down 70 percent by 2014 - thus rendering the cars more affordable.

But J.D. Power is skeptical. "Declines of any real significance are not anticipated during the next 5 years," the report notes, adding that "the disposal of depleted battery packs presents yet another environmental challenge."

Nor are industry and government close to resolving the lack of a nationwide recharging infrastructure - or the vehicles' poor performance in cold weather or on hilly terrain.

Fine print on the Volt ad promises just "25-50 miles of electric driving in moderate conditions." Translation: Much of the time the car will be running on gas, just like ones that cost far, far less than the four-seat Volt's price of $33,500 (after a $7,500 federal tax credit).

In short, the Obama administration's commitment of $5 billion in loans and grants for electric cars is the biggest taxpayer rip-off since corn-based ethanol. It benefits no one but a few well-to-do car buyers and politically connected companies. Any "green" jobs these rent-seeking firms create will vanish when consumers reject their products and/or the subsidies cease.

The administration's objectives - reducing carbon emissions and U.S. dependence on foreign oil - are legitimate. But $5 billion wasted on electrics is $5 billion that cannot be used to meet these goals. And then there's the private capital that Obama's policy is attracting to this losing proposition.

J.D. Power suggests, sensibly: "Rather than rushing to commercialize [battery-electric vehicles], the industry might be better served to pursue continued fuel economy improvements in [internal combustion engines] and the mass production of [conventional hybrids]."

For a president who claims to make policy based on "facts and science and argument," lavishing subsidies on electric cars is an intellectual scandal. The J.D. Power study is hardly an outlier. It jibes with similar work by Deloitte Touche, Boston Consulting Group, Roland Berger Strategy Consultants, professor Henry Lee of Harvard's Belfer Center for Science and International Affairs, and the Massachusetts Institute of Technology's Energy Initiative.

Last year the National Academy of Sciences' National Research Council concluded: "Subsidies in the tens to hundreds of billions of dollars. . .will be needed if plug-ins are to achieve rapid penetration of the U.S. automotive market. Even with these efforts, plug-in hybrid electric vehicles are not expected to significantly impact oil consumption or carbon emissions before 2030."

Yet, like a rural voter clinging to his guns, the Obama administration brushes aside the experts because - well, who knows why? Perhaps subsidizing electric cars helps a Democratic administration make corporate welfare and tax breaks for the wealthy seem progressive. It's possible President Obama feels bound by his grandiose campaign promise to put a million plug-in hybrid electric vehicles on the road by 2015.

Or maybe Republicans aren't the only ones susceptible to ideological obstinacy and magical thinking after all.

The writer is a member of the editorial page staff. His e-mail address is lanec@washpost.com.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/29/AR2010102905959.html

[Body-by-Guinness]

2nd post. Wow, 2 in a row out of the WaPo dispensing with the usual leftist sweetness and energy light. Could this be a trend?

Calif. rail project is high-speed pork
By Robert J. Samuelson
Monday, November 1, 2010;

Somehow, it's become fashionable to think that high-speed trains connecting major cities will help "save the planet." They won't. They're a perfect example of wasteful spending masquerading as a respectable social cause. They would further burden already overburdened governments and drain dollars from worthier programs - schools, defense, research.

Let's suppose that the Obama administration gets its wish to build high-speed rail systems in 13 urban corridors. The administration has already committed $10.5 billion, and that's just a token down payment. California wants about $19 billion for an 800-mile track from Anaheim to San Francisco. Constructing all 13 corridors could easily approach $200 billion. Most (or all) of that would have to come from government at some level. What would we get for this huge investment?

Not much. Here's what we wouldn't get: any meaningful reduction in traffic congestion, greenhouse gas emissions, air travel, oil consumption or imports. Nada, zip. If you can do fourth-grade math, you can understand why.

High-speed inter-city trains (not commuter lines) travel at up to 250 miles per hour and are most competitive with planes and cars over distances of fewer than 500 miles. In a report on high-speed rail, the nonpartisan Congressional Research Service examined the 12 corridors of 500 miles or fewer with the most daily air traffic in 2007. Los Angeles to San Francisco led the list with 13,838 passengers; altogether, daily air passengers in these 12 corridors totaled 52,934. If all of them switched to trains, the total number of daily airline passengers, about 2 million, would drop only 2.5 percent. Any fuel savings would be less than that; even trains need energy.

Indeed, inter-city trains - at whatever speed - target such a small part of total travel that the changes in oil use, congestion or greenhouse gases must be microscopic. Every day, about 140 million Americans go to work, with about 85 percent driving an average of 25 minutes (three-quarters drive alone; 10 percent carpool). Even assuming 250,000 high-speed rail passengers, there would be no visible effect on routine commuting, let alone personal driving. In the Northeast Corridor, with about 45 million people, Amtrak's daily ridership is 28,500. If its trains shut down tomorrow, no one except the affected passengers would notice.

We are prisoners of economic geography. Suburbanization after World War II made most rail travel impractical. From 1950 to 2000, the share of the metropolitan population living in central cities fell from 56 percent to 32 percent, report UCLA economists Leah Platt Boustan and Allison Shertzer. Jobs moved, too. Trip origins and destinations are too dispersed to support most rail service.

Only in places with greater population densities, such as Europe and Asia, is high-speed rail potentially attractive. Even there, most of the existing high-speed trains don't earn "enough revenue to cover both their construction and operating costs," the Congressional Research Service report said. The major exceptions seem to be the Tokyo-Osaka and Paris-Lyon lines.

President Obama calls high-speed rail essential "infrastructure" when it's actually old-fashioned "pork barrel." The interesting question is why it retains its intellectual respectability. The answer, it seems, is willful ignorance. People prefer fashionable make-believe to distasteful realities. They imagine public benefits that don't exist and ignore costs that do.

Consider California. Its budget is a shambles. To save money, it furloughs state workers. Still, it clings to its high-speed rail project. No one knows the cost. In 2009, the California High-Speed Rail Authority estimated $42.6 billion, up from $33.6 billion in 2008 - a huge one-year increase. The CHSRA wants the federal government to pay almost half the cost. Even if it does and the state issues $9.95 billion in approved bonds, a financing gap of perhaps $15 billion would remain.

Somehow that is to be extracted from cities, towns and investors. The CHSRA says the completed system will generate annual operating profits, $3 billion by 2030. If private investors concurred, they'd be clamoring to commit funds; they aren't.

All this would further mortgage California's future with more debt and, conceivably, subsidies to keep the trains running. And for what? In 2030, high-speed rail trains would provide only about 4 percent of California's inter-regional trips, the CHSRA projects.

The absurdity is apparent. High-speed rail would subsidize a tiny group of travelers and do little else. If states want these projects, they should pay all costs because there are no meaningful national gains. The administration's championing and subsidies - with money that worsens long-term budget deficits - represent shortsighted, thoughtless government at its worst. It's a triumph of politically expedient fiction over logic and evidence. With governments everywhere pressed for funds, how can anyone justify a program whose main effect will simply be to make matters worse?

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/31/AR2010103104260.html

[ccp]

Good post.

Also the trafiic created when people drive and park near the rail stops.
Huge lots with huge numbers of cars.  Most People aren't getting to the trains on bicycles, or car pooling.

I suppose next will be tax breaks for those who ride bikes.

[Crafty_Dog]

POTH
Solar-Panel Maker to Close a Factory and Delay ExpansionBy TODD WOODY
Published: November 3, 2010
 
SAN FRANCISCO — Solyndra, a Silicon Valley solar-panel maker that won half a billion dollars in federal aid to build a state-of-the-art robotic factory, plans to announce on Wednesday that it will shut down an older plant and lay off workers.

Solyndra opened Fab 2, a $733 million factory to make its high-tech solar panels. It plans to close an older facility, shown here.

The cost-cutting move, which will reduce the company’s previously announced production capacity, is a sign of the notable shift in the prospects for cutting-edge American solar companies, which now face intense price competition from Chinese manufacturers that use more established photovoltaic technologies.

Just seven weeks ago, Solyndra opened Fab 2, a $733 million factory in Fremont, Calif., to make its high-tech solar panels. The new plant was supposed to be the first phase of a rapid expansion of the company.

Instead, Solyndra has decided to shutter the old plant and postpone plans to expand Fab 2, which was built with a $535 million federal loan guarantee.

“Fab 2 is much more efficient and cost-effective than our existing facility,” Brian Harrison, Solyndra’s chief executive, said in an interview. “We’re adjusting our plans to be more in line with where the market is and where our business is at the moment.”

When Solyndra filed for an initial public stock offering in December, it estimated it would have a total production capacity of 610 megawatts by 2013 if its two plants were fully built out. The company now expects it have capacity of 285 to 300 megawatts by 2013.

Solyndra abandoned plans for the stock offering in June, citing market conditions.

The company is the most prominent of a wave of Silicon Valley solar start-ups that hoped to transform the economics of the industry. Gov. Arnold Schwarzenegger of California and Energy Secretary Steven Chu helped break ground on Fab 2 last year, and President Obama made an appearance at the unfinished factory in May to extol Solyndra’s innovative technology.

Mr. Harrison noted that the market had undergone a significant shift since Solyndra filed for the stock offering, with solar module prices plummeting as low-cost Chinese manufacturers like Suntech and Yingli ramped up production.

That has put pressure on companies like Solyndra, which makes advanced thin-film solar modules that are less efficient than conventional photovoltaic modules but had been cheaper to install until prices began to fall sharply last year.

Solyndra said it would lay off around 40 employees and not renew contracts for about 150 temporary workers as a result of the consolidation. The closing of the old factory, called Fab 1, will save the company more than $60 million in capital expenditures, executives said.

Mr. Harrison, who became Solyndra’s chief executive in July, said that despite the cutbacks, the company’s production of solar panels for commercial rooftops would double in 2011 from the previous year. He said Solyndra continued to receive large orders from customers.

Depending on how the market evolves, Solyndra could reopen Fab 1 or expand its new factory, Mr. Harrison said.

[G M]

http://www.insidebayarea.com/ci_16517629?IADID

Solyndra Inc., the high-flying solar panel maker once touted by President Barack Obama as a model for a green energy future, said Wednesday it has scuttled its factory expansion in Fremont, a move that will stop the company's plans to hire 1,000 workers.

Solyndra said it will also close an existing factory in the East Bay. That will leave the company with one Fremont factory, a new plant visible from Interstate 880.

The moves mean that instead of having 2,000 workers in Fremont, Solyndra will cap its work force at 1,000, which is about the current level. Solyndra also will, over the next several weeks, eliminate 155 to 175 jobs in Fremont. That includes 135 contract employees and 20 to 40 full-time workers, said David Miller, a Solyndra spokesman.

The company seeks to slash production costs amid fierce competition from rival manufacturers in China and the United States.

"Solar has become incredibly competitive," Miller said.

The factory retrenchment adds to what has already been a tough year for Solyndra.

"Solyndra is facing the heat," said Shyam Mehta, an analyst with GTM Research, which tracks alternative-energy markets. "Many higher-cost solar manufacturers are doing well. It's alarming for Solyndra to be cutting back when others are expanding."

The company's fortunes sparkled in September 2009, when the Obama administration announced $535 million in taxpayer loans to finance construction of a new solar-equipment
Advertisement
factory.

In December 2009, the company filed for an initial public offering of its stock expected to raise $300 million. In May, Obama toured the Solyndra facilities in Fremont.

The company's fortunes dimmed soon after. In June, Solyndra canceled its IPO, and the following month its chief executive officer, Chris Gronet, quit. Brian Harrison, a former Intel executive, took over as CEO.

**Read it all.**

[Body-by-Guinness]

Long piece categorically demonstrating that public transit is about the most expensive form of transportation out there, with many of the costs directly associated with it's government run nature:

http://www.cato.org/pubs/pas/PA670.pdf

[Crafty_Dog]

STRATFOR cannot guarantee their complete accuracy.

Colin Chapman: After defending your patch and securing shelter, food and water, a reliable source of energy is the most important policy goal. The two most populous countries - China and India - compete with Japan and the United States for energy. China’s energy consumption has more than doubled in the last decade and is now more than that of the United States. So how are these Asian giants going to secure their future energy?

Welcome to Agenda and to discuss this, I’m joined by STRATFOR’s Rodger Baker. Rodger, let’s start with China.

Rodger Baker: China has been ramping up its energy consumption and we’ve seen that the rate of consumption increased quite a bit in the past few years. One of the things they’re doing to try to alleviate some of that is increasing natural gas imports. That’s by pipelines from Central Asia, it’s by pipelines from Russia that they’re working on, as well as building LNG import terminals. (Marc:  Readers of the Afghanistan-Pakistan thread may remember my outside the box proposal for the US to do this for central Asia.)

The Chinese are looking at additional nuclear power as well - trying to set up more nuclear power plants, trying to increase the electricity that comes from that. They’re looking at alternative sources for energy - trying to spread out where they can get oil, where they can get gas, where they can even get coal or uranium. But in general, it’s it’s a very difficult proposition for the Chinese because of the speed and the pace at which energy consumption continues to rise.

Chapman: There’s a world shortage of natural gas at the moment, so this is a good time to do deals.

Baker: It’s certainly good to try to lock in deals for the Chinese at this time. They are a major consumer, and one of the advantages that they have is that they’re fairly close to several of the suppliers in Southeast Asia, in Australia, in Central Asia.

Chapman: Despite the failure of the Copenhagen Summit, China now seems to be at least thinking about clean energy. How serious is it?

Baker: Well, China’s energy and electricity production is almost 3/4 based on coal and is very hard to break away from coal. They’ve got massive domestic supply’s, although in recent years we’ve seen them have to shift to supplement with imports, particularly at peak times or when there’s transportation disruptions within the country.

Their green energy push has a couple of different focuses behind it. One is, of course, the idea that they want to improve the quality of energy that they produce. The other though is an attempt to draw in additional technology and additional payment from other countries, and the Chinese have been strong promoters of green energy, green energy technology and development. But they’ve hoped that a lot of the technology is going to come from the United States, from the Germans, from maybe the Japanese and the Koreans, and on that side they’re starting to find problems, and as we saw at the latest round of global talks on green energy, the Chinese initiative that we saw a year ago that seemed very strong is starting to pull back, starting to fade back, and they’re not really able to push forward as fast as they thought they would.

Chapman: Now the country with the second largest population is India. And it’s growing fast too. How is it going about securing its future energy supplies?

Baker: Like the Chinese, the Indians are looking at natural gas and trying to find ways to bring that in. The domestic infrastructure makes it very difficult in India to move a certain product to different locations of the country. Another thing with India, though, is that they are a fairly high user of a biomass and waste to produce energy. That’s been good for them in some ways in that it gives them domestic sources of energy that perhaps China and other countries don’t seem to take advantage of. On the other hand, the the polluting problems of those sorts of energy are starting to cause a backlash in India and starting to cause them to readjust the way in which they use those sorts of technologies.

Chapman: And then there’s Japan, which is the world’s third-largest economy. And an island state totally dependent on imports.

Baker: Japan is certainly one of the world’s largest economies despite years of economic malaise, and their energy consumption remains very high. But if you look at the charts - in the past - the Japanese were very good at implementing early on energy efficiency measures, and so that the importation of oil, the importation of natural gas didn’t continue to grow apace - where we saw the Chinese starting to rise in their consumptions.

The Japanese maintain their security of their supply lines by maintaining a very strong defense relationship with the United States, but we’ve also seen Tokyo start to dabble in developing its own ways of of ensuring supply lines. So we see them working closer with India, now we see them working in the Middle East. The Japanese have been working on what effectively is a base for their operations out of Djibouti, and these are ways that Japan, both from a security perspective and kind of a long-term interest perspective, is trying to strengthen their supply lines, particularly in the face of a China that seems to be not only more active but a China that is sucking up more and more resources.

Chapman: Of course, on the Pacific is Russia, which is a big energy supplier. Are they preparing to cash in on the huge increase in energy demand in the Pacific?

Baker: One of the problems that Russia faces in really breaking into this large East Asia demand for energy is location. The Russian energy resources aren’t near the borders are, not near the the coastal facilities except for maybe Sakhalin, and are not even near the Chinese border. So they have to run very long pipelines, they have to run the energy by rail and draw it out from really hostile territory inside Russia - based on the weather, based on how far north some of the territory is.

Another issue the Russians have is that they continue to be a little cautious about just where and how they supply their energy. For the longest time you would hear ideas that Russia was concerned that the Chinese were going to rush across the border and hold Siberia because they have a big population, and the Russians have a small population. That’s not really a concern at the moment. There’s no infrastructure there really to absorb the Chinese population or for the Chinese to do that.

The question becomes if you build these pipelines, if you bring in the Chinese investment to develop these energy fields does that change the equation on the way in which China looks at this Russia. So there’s a little bit of caution there. The Russians really have been pushing through their relationships and Central Asia to be able to feed into this region, but we certainly saw Moscow looking at substantially increasing its flow of energy products to the Pacific, to Asia over the next say 10 years.

Chapman: Rodger Baker, thanks very much for those insights on the Asian giants and the future of their energy security. That’s Agenda for this week. I’m Colin Chapman. Thanks very much for joining me.

[Crafty_Dog]

Surprise, surprise!
============
POTH
BEIJING — Aided by at least $43 million in assistance from the government of Massachusetts and an innovative solar energy technology, Evergreen Solar emerged in the last three years as the third-largest maker of solar panels in the United States.

But now the company is closing its main American factory, laying off the 800 workers by the end of March and shifting production to a joint venture with a Chinese company in central China. Evergreen cited the much higher government support available in China.
The factory closing in Devens, Mass., which Evergreen announced earlier this week, has set off political recriminations and finger-pointing in Massachusetts. And it comes just as President Hu Jintao of China is scheduled for a state visit next week to Washington, where the agenda is likely to include tensions between the United States and China over trade and energy policy.

The Obama administration has been investigating whether China has violated the free trade rules of the World Trade Organization with its extensive subsidies to the manufacturers of solar panels and other clean energy products.

While a few types of government subsidies are permitted under international trade agreements, they are not supposed to give special advantages to exports — something that China’s critics accuse it of doing. The Chinese government has strongly denied that any of its clean energy policies have violated W.T.O. rules.

Although solar energy still accounts for only a tiny fraction of American power production, declining prices and concerns about global warming give solar power a prominent place in United States plans for a clean energy future — even if critics say the federal government is still not doing enough to foster its adoption.

Beyond the issues of trade and jobs, solar power experts see broader implications. They say that after many years of relying on unstable governments in the Middle East for oil, the United States now looks likely to rely on China to tap energy from the sun.

Evergreen, in announcing its move to China, was unusually candid about its motives. Michael El-Hillow, the chief executive, said in a statement that his company had decided to close the Massachusetts factory in response to plunging prices for solar panels. World prices have fallen as much as two-thirds in the last three years — including a drop of 10 percent during last year’s fourth quarter alone.

Chinese manufacturers, Mr. El-Hillow said in the statement, have been able to push prices down sharply because they receive considerable help from the Chinese government and state-owned banks, and because manufacturing costs are generally lower in China.

“While the United States and other Western industrial economies are beneficiaries of rapidly declining installation costs of solar energy, we expect the United States will continue to be at a disadvantage from a manufacturing standpoint,” he said.

Even though Evergreen opened its Devens plant, with all new equipment, only in 2008, it began talks with Chinese companies in early 2009. In September 2010, the company opened its factory in Wuhan, China, and will now rely on that operation.

An Evergreen spokesman said Mr. El-Hillow was not available to comment for this article.

Other solar panel manufacturers are also struggling in the United States. Solyndra, a Silicon Valley business, received a visit from President Obama in May and a $535 million federal loan guarantee, only to say in November that it was shutting one of its two American plants and would delay expansion of the other.

First Solar, an American company, is one of the world’s largest solar power vendors. But most of its products are made overseas.

Chinese solar panel manufacturers accounted for slightly over half the world’s production last year. Their share of the American market has grown nearly sixfold in the last two years, to 23 percent in 2010 and is still rising fast, according to GTM Research, a renewable energy market analysis firm in Cambridge, Mass.

In addition to solar energy, China just passed the United States as the world’s largest builder and installer of wind turbines.

The closing of the Evergreen factory has prompted finger-pointing in Massachusetts.

Ian A. Bowles, the former energy and environment chief for Gov. Deval L. Patrick, a Democrat who pushed for the solar panel factory to be located in Massachusetts, said the federal government had not helped the American industry enough or done enough to challenge Chinese government subsidies for its industry. Evergreen has received no federal money.

“The federal government has brought a knife to a gun fight,” Mr. Bowles said. “Its support is completely out of proportion to the support displayed by China — and even to that in Europe.”

Stephanie Mueller, the Energy Department press secretary, said the department was committed to supporting renewable energy. “Through our Loan Program Office we have offered conditional commitments for loan guarantees to 16 clean energy projects totaling nearly $16.5 billion,” she said. “We have finalized and closed half of those loan guarantees, and the program has ramped up significantly over the last year to move projects through the process quickly and efficiently while protecting taxpayer interests.”

======

Page 2 of 2)



Evergreen did not try to go through the long, costly process of obtaining a federal loan because of what it described last summer as signals from the department that its technology was too far along and not in need of research and development assistance. The Energy Department has a policy of not commenting on companies that do not apply.


Evergreen was selling solar panels made in Devens for $3.39 a watt at the end of 2008 and planned to cut its costs to $2 a watt by the end of last year — a target it met. But Evergreen found that by the end of the fourth quarter, it could fetch only $1.90 a watt for its Devens-made solar panels, while Chinese manufacturers were selling them for as little as $1 a watt.

Evergreen’s joint-venture factory in Wuhan occupies a long, warehouselike concrete building in an industrial park located in an inauspicious neighborhood. A local employee said the municipal police had used the site for mass executions into the 1980s.

When a reporter was given a rare tour inside the building just before it began mass production in September, the operation appeared as modern as any in the world. Row after row of highly automated equipment stretched toward the two-story-high ceiling in an immaculate, brightly lighted white hall. Chinese technicians closely watched the computer screens monitoring each step in the production processes.

In a telephone interview in August, Mr. El-Hillow said that he was desperate to avoid layoffs at the Devens factory. But he said Chinese state-owned banks and municipal governments were offering unbeatable assistance to Chinese solar panel companies.

Factory labor is cheap in China, where monthly wages average less than $300. That compares to a statewide average of more than $5,400 a month for Massachusetts factory workers. But labor is a tiny share of the cost of running a high-tech solar panel factory, Mr. El-Hillow said. China’s real advantage lies in the ability of solar panel companies to form partnerships with local governments and then obtain loans at very low interest rates from state-owned banks.

Evergreen, with help from its partners — the Wuhan municipal government and the Hubei provincial government — borrowed two-thirds of the cost of its Wuhan factory from two Chinese banks, at an interest rate that under certain conditions could go as low as 4.8 percent, Mr. El-Hillow said in August. Best of all, no principal payments or interest payments will be due until the end of the loan in 2015.

By contrast, a $21 million grant from Massachusetts covered 5 percent of the cost of the Devens factory, and the company had to borrow the rest from banks, Mr. El-Hillow said.

Banks in the United States were reluctant to provide the rest of the money even at double-digit interest rates, partly because of the financial crisis. “Therein lies the hidden advantage of being in China,” Mr. El-Hillow said.

Devens, as the site of a former military base, is a designated enterprise zone eligible for state financial support.

State Senator Jamie Eldridge, a Democrat whose district includes Devens, said he was initially excited for Evergreen to come to his district, but even before the announced loss of 800 jobs, he had come to oppose such large corporate assistance.

“I think there’s been a lot of hurt feelings over these subsidies to companies, while a lot of communities around the former base have not seen development money,” he said.

Michael McCarthy, a spokesman for Evergreen, said the company had already met 80 percent of the grant’s job creation target by employing up to 800 factory workers since 2008 and should owe little money to the state. Evergreen also retains about 100 research and administrative jobs in Massachusetts.

The company also received about $22 million in tax credits, and it will discuss those with Massachusetts, he said.

Evergreen has had two unique problems that made its Devens factory vulnerable to Chinese competition. It specializes in an unusual kind of wafer, making it hard to share research and development costs with other companies. And it was hurt when Lehman Brothers went bankrupt in 2008; Evergreen lost one-seventh of its outstanding shares in a complex transaction involving convertible notes. But many other Western solar power companies are also running into trouble, as competition from China coincides with uncertainty about the prices at which Western regulators will let solar farms sell electricity to national grids.

According to Bloomberg New Energy Finance, shares in solar companies fell an average of 26 percent last year. Evergreen’s stock, which traded above $100 in late 2007, closed Friday in New York at $3.03.

[G M]

http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices

US diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%

• Peak oil alarm revealed by secret official talks
• Datablog: Are we running out of oil?



    * John Vidal, environment editor
    * guardian.co.uk, Tuesday 8 February 2011 22.00 GMT
    * Article history

Aerial View of Oil Refinery Saudi oil refinery. WikiLeaks cables suggest the amount of oil that can be retrieved has been overestimated. Photograph: George Steinmetz/Corbis

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

[Crafty_Dog]

Canada PM Harper Urges U.S. to Approve Oil Pipeline

Published February 04, 2011

| Associated Press

WASHINGTON -- Canadian Prime Minister Stephen Harper on Friday urged U.S. officials to approve a proposed oil pipeline from Canada to the U.S. Gulf Coast, calling Canada a "secure, stable and friendly" neighbor that poses no threat to U.S. security.

By contrast, many other countries that supply oil are not stable, secure or friendly to U.S. interests, Harper said at a White House news conference following a meeting with President Barack Obama.

Harper did not name any other country, but pipeline supporters have singled out countries such as Venezuela, Nigeria, Saudi Arabia and Iran as places where the United States faces security threats and instability. Canada's environment minister has used the term "ethical oil" to describe his country's crude supplies, saying Canada respects human rights, workers' rights and environmental responsibility.

"The choice that the United States faces in all of these matters is whether to increase its capacity to accept such energy from the most secure, most stable and friendliest location it can possibly get that energy, which is Canada, or from other places that are not as secure, stable or friendly to the interests and values of the United States," Harper said.

Obama, standing next to Harper at a news conference, did not address the pipeline issue.

A Canadian company is pushing to build a 1,900-mile pipeline that would carry crude oil extracted from tar sands in Alberta, Canada, to refineries in Texas. The $7 billion pipeline could substantially reduce U.S. dependency on oil from the Middle East and other regions, according to a report commissioned by the Obama administration.
The study suggests that the proposed Keystone XL pipeline, coupled with a reduction in overall U.S. oil demand, "could essentially eliminate Middle East crude imports longer term." The pipeline would double the capacity of an existing pipeline from Canada, producing more than 500,000 barrels a day of crude oil derived from formations of sand, clay and water in western Canada.

A report prepared by a Massachusetts firm at the request of the U.S. Energy Department was completed in December, but made public this week in advance of Obama's meeting with Harper.

"This study supports what we have been saying for some time -- that Keystone XL will improve U.S. energy security and reduce dependence on foreign oil from the Middle East and Venezuela," said Russ Girling, CEO of Calgary-based TransCanada, the project's developer. "Keystone XL will also create 20,000 high-paying jobs for American families and inject $20 billion into the U.S. economy."

An environmental group that opposes the pipeline said Harper failed to acknowledge that tar sands oil is highly polluting.

"There are cleaner, safer ways to meet U.S. energy needs than to import this dirty oil from Canada via a dangerous pipeline through America's heartland," said Alex Moore of the environmental group Friends of the Earth.

Moore said he was glad that Obama did not express support for the pipeline, adding that if Obama is serious about making America a leader in clean energy, "he has no choice but to stop this project."

Environmental groups call the pipeline an ecological disaster waiting to happen and say the so-called tar sands produce "dirty" oil that requires huge amounts of energy to extract.

A coalition of 86 environmental and progressive groups sent a letter Friday urging Obama to reject the pipeline and "stop giving a free pass to oil companies to increase profits at the expense of Americans." Activists also gathered across from the White House on Friday to protest the project.

The American Petroleum Institute, meanwhile, sent a letter urging Obama to approve the project.

Secretary of State Hillary Rodham Clinton must grant a permit allowing the pipeline to cross the U.S-Canadian border before TransCanada can proceed. Clinton said in October she was "inclined" to approve the project but has since backed off those remarks.

Lawmakers from both parties have written to the State Department for and against the pipeline, which would travel through Montana, South Dakota, Nebraska, Kansas and Oklahoma before reaching Texas. Some of the strongest opposition is in Nebraska, where the state's two U.S. senators have raised sharp questions. The pipeline would travel over parts of the massive Ogallala aquifer, which supplies drinking water to about 2 million people in Nebraska and seven other states and supports irrigation.

The aquifer serves five of the states where the pipeline travels -- South Dakota, Nebraska, Kansas, Oklahoma and Texas -- as well as Wyoming, Colorado and New Mexico.

[G M]

Bad news: The birth of Sharia-PEC

So, let's just look at what some additional spikes in oil could mean:

http://money.cnn.com/2011/02/24/news/economy/economic_risks_oil_spike_spending_cuts_stocks/index.htm

Danger #1: Rising oil prices: The spike in oil prices has not only sparked a sell-off in stocks, it's made economists far less bullish about the strength of the recovery.

But most believe that oil prices at $100 a barrel isn't high enough to cause a problem.

"At $100, it's a significant problem, but it's not a killer," said Wyss.

Wyss said $150-a-barrel oil would be the problem level. Others put the tipping point closer to $120 or $125 a barrel. And uncertainty in the Middle East has many wondering how high it will go.

"The big geopolitical changes we've been seeing didn't stop with Tunisia, and didn't stop with Egypt. So maybe it's not a good idea to assume it's all going to stop with Libya, either," said James Hamilton, economics professor at the University of California-San Diego. "If there is a disruption for Saudi Arabia, it would be off the charts in its impact on the world economy."

But it is possible that oil is already at a level that will cause a new recession, although it could take months to know for sure, according to David Rosenberg, chief economist with Guskin Sheff. He believes the problem with this oil spike is that the economy, while growing, is still weak.

"When oil prices were ratcheting up to record levels a few years ago, unemployment was at 5%, not 9%," he said. "The Fed had ammunition left. There was still appetite for fiscal stimulus. There's nothing in the cookie jar today as an offset."

**Consider how the spike in oil price could effect stability within China, and the potential for very bad things to stem from that.

[Crafty_Dog]

My first reaction to that is that the Chinese have LOTS of money tucked away for a rainy day and they are far better suited to survive oil shocks than we are; cf the US as a creditor nation coming out of WW1

[G M]

I'd agree they are better positioned than we are, however they'd feel it, just as they are feeling the QE-2. As I've said before, China is forced to run as fast as it can just to stay in one place. A prolonged economic downturn in China will have godawful results, both internally and for places like Taiwan, maybe Japan as well.

[Crafty_Dog]

http://www.nytimes.com/2011/02/27/us/27gas.html?nl=todaysheadlines&emc=tha23
Regulation Lax as Gas Wells’ Tainted Water Hits Rivers
 
By IAN URBINA
Published: February 26, 2011
 
 
The American landscape is dotted with hundreds of thousands of new wells and drilling rigs, as the country scrambles to tap into this century’s gold rush — for natural gas.

Drilling Down


The gas has always been there, of course, trapped deep underground in countless tiny bubbles, like frozen spills of seltzer water between thin layers of shale rock. But drilling companies have only in recent years developed techniques to unlock the enormous reserves, thought to be enough to supply the country with gas for heating buildings, generating electricity and powering vehicles for up to a hundred years.
So energy companies are clamoring to drill. And they are getting rare support from their usual sparring partners. Environmentalists say using natural gas will help slow climate change because it burns more cleanly than coal and oil. Lawmakers hail the gas as a source of jobs. They also see it as a way to wean the United States from its dependency on other countries for oil.

But the relatively new drilling method — known as high-volume horizontal hydraulic fracturing, or hydrofracking — carries significant environmental risks. It involves injecting huge amounts of water, mixed with sand and chemicals, at high pressures to break up rock formations and release the gas.

With hydrofracking, a well can produce over a million gallons of wastewater that is often laced with highly corrosive salts, carcinogens like benzene and radioactive elements like radium, all of which can occur naturally thousands of feet underground. Other carcinogenic materials can be added to the wastewater by the chemicals used in the hydrofracking itself.

While the existence of the toxic wastes has been reported, thousands of internal documents obtained by The New York Times from the Environmental Protection Agency, state regulators and drillers show that the dangers to the environment and health are greater than previously understood.

The documents reveal that the wastewater, which is sometimes hauled to sewage plants not designed to treat it and then discharged into rivers that supply drinking water, contains radioactivity at levels higher than previously known, and far higher than the level that federal regulators say is safe for these treatment plants to handle.

Other documents and interviews show that many E.P.A. scientists are alarmed, warning that the drilling waste is a threat to drinking water in Pennsylvania. Their concern is based partly on a 2009 study, never made public, written by an E.P.A. consultant who concluded that some sewage treatment plants were incapable of removing certain drilling waste contaminants and were probably violating the law.

The Times also found never-reported studies by the E.P.A. and a confidential study by the drilling industry that all concluded that radioactivity in drilling waste cannot be fully diluted in rivers and other waterways.

But the E.P.A. has not intervened. In fact, federal and state regulators are allowing most sewage treatment plants that accept drilling waste not to test for radioactivity. And most drinking-water intake plants downstream from those sewage treatment plants in Pennsylvania, with the blessing of regulators, have not tested for radioactivity since before 2006, even though the drilling boom began in 2008.

In other words, there is no way of guaranteeing that the drinking water taken in by all these plants is safe.

That has experts worried.

“We’re burning the furniture to heat the house,” said John H. Quigley, who left last month as secretary of Pennsylvania’s Department of Conservation and Natural Resources. “In shifting away from coal and toward natural gas, we’re trying for cleaner air, but we’re producing massive amounts of toxic wastewater with salts and naturally occurring radioactive materials, and it’s not clear we have a plan for properly handling this waste.”

The risks are particularly severe in Pennsylvania, which has seen a sharp increase in drilling, with roughly 71,000 active gas wells, up from about 36,000 in 2000. The level of radioactivity in the wastewater has sometimes been hundreds or even thousands of times the maximum allowed by the federal standard for drinking water. While people clearly do not drink drilling wastewater, the reason to use the drinking-water standard for comparison is that there is no comprehensive federal standard for what constitutes safe levels of radioactivity in drilling wastewater.

Drillers trucked at least half of this waste to public sewage treatment plants in Pennsylvania in 2008 and 2009, according to state officials. Some of it has been sent to other states, including New York and West Virginia.

Yet sewage treatment plant operators say they are far less capable of removing radioactive contaminants than most other toxic substances. Indeed, most of these facilities cannot remove enough of the radioactive material to meet federal drinking-water standards before discharging the wastewater into rivers, sometimes just miles upstream from drinking-water intake plants.
=============
There are 4 more pages to the article

[G M]

BREAKING: Iranian Official Admits Aiding Hezbollah, Says All Middle East Oil Will Be Cut Off To the West

Sepah News (the house organ of the Iranian Revolutionary Guard) reports:

    On Wednesday, March 2nd, Commander of the Basij organization, Brigadier General Mohammad-Reza Naghdi spoke at a conference of specialist working groups of Basiji corps of engineers. “Seventy percent of the world’s fossil fuel reserve is under the feet of the soldiers of the Supreme Leadership and soon oil and gas fields belonging to Muslims, which is now in the hands of America will fall into the hands of the people; that will be the time when all those overlords will have sanctions put on them.” He added: “The enemy is heavily dependent on this energy and the events in the region has them quite agitated, this of course provides us with a hopeful future.”

    Naghdi added: “In combating the sanctions our engineers have achieved many impressive things which has clearly frustrated the enemy. And of course our engineers in the nuclear area were shining examples as they were faced with international powers which had colluded against us in preventing this project from going forward, but they did not succeed.”

    Naghdi admitted that the Basij militia was in fact instrumental in supporting Palestinians and the Hezbollah during the 22 day and 33 day wars and this has also sparked awareness among people around the world. He said: “Today Zionism is surrounded and it’s days are numbered. If we stay the course and carry out all plans as designed, the awareness that we have inspired will be the basis for the downfall of the overlords.’

    Underlining the importance of the changes taking place throughout the region and especially regarding Libya Naghdi claimed: “The Americans have installed their own agent there so that he resists; this then will be a reason for the U.S. to launch a military attack. They’ve always hated the idea of the oil being in control of Muslims, therefore they conspire against all those countries.” He added: “This military resistance in Libya resembles the atrocities committed by Saddam which in fact was America’s own set up as a part of creating the basis for total control over that country. Any action against Libya would be a stupider move than the stupidity of the invasion of Iraq. There are great men in that country and they will never allow their soil to be under American control for a single day. Should the U.S. attack any of the (liberated) countries, it will suffer a blow at the hand of all the nations of Islam.

    This decade is the decade of the people’s rule in our region, to push America out, destroy the Zionists; this of course adds to our responsibilities as we must protect and guarantee that all those people who have managed to free themselves, do not fall prey to the evil overlords.”

(Translation provided by “Reza Kahlili,” a pseudonym for an ex-CIA spy who requires anonymity for safety reasons. A Time to Betray, his book about his double life as a CIA agent in Iran’s Revolutionary Guards, was published by Simon & Schuster on April 6.)

[DougMacG]

(Long answer to a long post.  Read the state summarizes at the end if the rest gets too long.)

If true, the NY Times piece posted by Crafty 2/27/2011 is very significant because natural gas is the cleaner with substitute, has U.S. and North American origins, and solves a big part of the energy challenge.  If false the allegations are significant as well because it will still become talking points for anti-energy types, stall exploration and extraction back into a climate change style cultural conflict.

Plenty of sources are responding to the story, I'm sure each will be attacked for motives.  
--------
WSJ has a nice story on natural gas expansion yesterday: http://online.wsj.com/article/SB10001424052748703752404576178740650203046.html?KEYWORDS=ohio%20and%20gas
--------
API site: http://www.api.org/policy/exploration/hydraulicfracturing/
Hydraulic fracturing is a technology used in the United States to help produce more than 7 billion barrels of oil and 600 trillion cubic feet of natural gas. The technology has been used since the 1940s in more than 1 million wells in the United States.  Its continued use is critically important to producing at home more of the oil and natural gas the nation will be consuming in the decades ahead. Even though America has abundant natural gas resources, most cannot be produced without this technology. Studies estimate that up to 80 percent of natural gas wells drilled in the next decade will require hydraulic fracturing.

Groundwater Protection through Proper Well Construction
 
Hydraulic fracturing makes it possible to produce oil and natural gas in places where conventional technologies are ineffective. It uses water pressure, under tight controls, to create fractures in rock that allow the oil and natural gas it contains to escape and flow out of a well. Hydraulic fracturing is well-regulated and safe, and it has a proven track record.

In 2004, the U.S. Environmental Protection Agency concluded, “the injection of hydraulic fracturing fluids into coal-bed methane wells pose little or no threat to (underground drinking water).” The agency, in a review of incidents of drinking water well contamination, found “no confirmed cases linked to fracturing fluid injection of CBM (coalbed methane) wells or subsequent underground movement of fracturing fluid.”  See EPA's Evaluation of Impacts to Underground Sources of Drinking Water by Hydraulic Fracturing. http://www.epa.gov/safewater/uic/pdfs/cbmstudy_attach_uic_exec_summ.pdf  On average, 99.5% of the fluids used in hydraulic fracturing are a combination of freshwater and compounds, which are injected into deep shale gas formations and then confined by thousands of feet of rock.
---------
http://marcelluscoalition.org/2011/02/drilling-down-into-ny-times-story-on-wastewater/

Drilling Down into NY Times Story on Wastewater    February 28, 2011

Five areas report fails to provide proper context, information on Pa.’s regulatory oversight

Yesterday’s New York Times included a story highly critical of the regulatory framework governing waste water treatment and disposal from natural gas exploration in Pennsylvania. While raising some valid questions about water monitoring, this article – seven months in the making – lacks context, offers misleading comparisons and in some cases put forth information that is not supported by the facts.

NY Times Myth: “[Pennsylvania] is the only state that has allowed drillers to discharge much of their waste through sewage treatment plants into rivers.”

    * Pennsylvania leads the nation in waste water recycling; vast majority of produced water reused in drilling operations: “State environmental regulators say that nearly 70 percent of the wastewater produced by Marcellus Shale wells is being reused or recycled. The Marcellus Shale Coalition, an industry group, puts the number higher, saying that on average 90 percent of the water that returns to the surface is recycled.” (Scranton Times-Tribune, 2/27/11)

    * Industry moving towards 100 percent recycling, zero discharge: “It makes sense to reuse this water,” said Ron Schlicher, an engineer consulting for the treatment company. “The goal here is to strive for 100-percent reuse, so we don’t have to discharge.” (Wilkes-Barre Times Leader, 10/28/10)

    * Marcellus operators recycling majority of waste water: “…all of the state’s biggest drillers say they are now recycling a majority of the wastewater produced by their wells in new fracturing jobs, rather than sending it to treatment plants. Hanger said about 70 percent of the wastewater is now being recycled …” (Associated Press, 1/4/11)

    * Recycling of waste water to be norm for Marcellus Shale gas wells (Pittsburgh Tribune-Review, 10/20/09)

NY Times Myth: “Gas producers are generally left to police themselves when it comes to spills. In Pennsylvania, regulators do not perform unannounced inspections to check for signs of spills. Gas producers report their own spills, write their own spill response plans and lead their own cleanup efforts.”

    * Flashback — DEP Inspector visits drilling site, unannounced, finds leaky valve on storage tank: “A DEP inspector discovered the spill while inspecting the well pad. The inspector found that the bottom valve on a 21,000-gallon fracking fluid tank was open and discharging fluid off the well pad. No one else was present at the pad, which has one producing Marcellus well.” (DEP press release, 11/22/10)

    * In 2010 alone, DEP oversight staff performed nearly 5,000 inspections at Marcellus Shale drilling locations, a more than 100 percent increase over the previous year. (DEP Year End Workload Report, accessed 2/27/11)

    * Pennsylvania recognized for having “well managed” hydraulic fracturing regulatory program: “A targeted review of the Pennsylvania program regulating the hydraulic fracturing of oil and gas wells has been completed by a multi-stakeholder group, which has concluded that the program is, over all, well-managed, professional and meeting its program objectives.” (STRONGER press release, 9/24/10)

    * Pennsylvania hired more than 110 new inspectors, oversight personnel in last two years: “DEP was hit with layoffs after the overdue state budget was enacted in October, but the agency’s oil and gas division is considered exempt from layoffs or hiring freezes, added Mr. Hanger. All told, 193 agency employees work full time on oil and gas regulatory issues.” (Scranton Times-Tribune,1/29/11)

    * Former PA Sec. of Environmental Protection details strong regulatory oversight and enforcement: “[The DEP] hired in 2009 and twice in 2010. We opened a new drilling staff office in Williamsport in 2009 and another in Scranton during 2010. Pennsylvania is the only state that has hired substantial or any staff for its drilling operation. The NYT does not say that, because it does not fit its narrative of lax Pennsylvania regulation. Indeed, the reporter deliberately did not include a long list of actions by DEP that represented strong enforcement.” (John Hanger blog, 2/27/11)

NY Times Myth: “But the relatively new drilling method — known as high-volume horizontal hydraulic fracturing, or hydrofracking — carries significant environmental risks. It involves injecting huge amounts of water, mixed with sand and chemicals, at high pressures to break up rock formations and release the gas.

    * Does The Times Read The Times? According to an NY Times fact-check, from last week: “The method of drilling is not called ‘hydraulic fracturing.’ Fracturing, or ‘fracking’ is a process that is one part of drilling a well and producing oil or gas. Fracturing has been used by drillers for around 60 years.” (New York Times, 2/24/11)

NY Times fails to provide proper context: “Drilling companies were issued roughly 3,300 Marcellus gas-well permits in Pennsylvania last year, up from just 117 in 2007.”

    * Like most information, without context, readers can and will be lead to think something that is not entirely accurate. While the reporter is correct in stating 3,300 Marcellus permits were issued, he fails to state that less than half that number of wells were actually drilled. According to state data, between January 1 and December 31, 2010, 1,446 Marcellus wells were drilled. (DEP Year End Workload Report, accessed 2/27/11)

NY Times fails to provide proper context, again: “The risks are particularly severe in Pennsylvania, which has seen a sharp increase in drilling, with roughly 71,000 active gas wells, up from about 36,000 in 2000.”

    * Of those 71,000 active natural gas wells in Pennsylvania wells, only 2,498 are horizontal Marcellus wells – or 3.5 percent of all wells in Pennsylvania.  (DEP Year End Workload Report, accessed 2/27/11)

Bonus Fact Check

NY Times quotes former Pa. DEP secretary…

… But the reporter never actually interviewed top environmental regulator for story about environmental regulations in Pennsylvania: “[T]hough I am quoted in the piece, this reporter never interviewed me prior to the publication of the Sunday article… As Secretary, I was interviewed hundreds and probably thousands of times.  I made myself totally accessible to reporters.  My staff knew that I was available to reporters. This reporter today says he asked Governor Corbett’s administration at DEP on January 21st, three days after Governor Rendell and I left office, to confirm the quotation that the reporter strung together (sic) from some other source.” (John Hanger blog, 2/27/11)
----------
Hydraulic Fracturing –15 Statements from Regulatory Officials
http://www.hydraulicfracturing.com/Documents/Hydraulic_Fracturing_SGEIS_comments.pdf

"In recent months, the states have become aware of press reports and websites alleging
that six states have documented over one thousand incidents of ground water
contamination resulting from the practice of hydraulic fracturing. Such reports are not
accurate." - President of the Ground Water Protection Council

"After 25 years of investigating dtizen complainls of contamination, DMRM geologists
have not documented a single inddent involVing contamination of ground water
attributed to hydraulic fracturing."  - Ohio Department of Natural Resources

After review of DEP's complaint database and interviews with regional staff that
investigate groundwater contamination related to oil and gas activities, no groundwater pollution
or disruption of underground sources of drinking water has been attributed to hydraulic
fracturing of deep gas fonnations.  - Pennsylvania Department of Environmental Protection

"we have found no example of contamination of usable water where the cause was claimed to. be hydraUlic fracturing."  - New Mexico Energy, Minerals and Natural Resources Department

"I can state with authority that there have been no documented cases of drinking water
contamination caused by such hydraulic fracturing operations in our State."  - STATE OIL AND GAS BOARD OF ALABAMA

"Though hydraulic fracturing has becn
used for over 50 years in Texas, our records do not indicate a single documented contamination case
associated with hydraulic fracturing."  - chief regulatory agency over oil and gas activities in Texas

"There have been no verified cases of harm to ground water in the State of Alaska as a result of
hydraulic fracturing."  - Commissioner Alaska Oil and Gas Conservation Commission

"To the knowledge of the Colorado Oil and Gas Conservation Commission staff, there has been
no verified instance of harm to groundwater caused by hydraulic fracturing in Colorado."

"There have been no instances where the Division of Oil and Gas has verified that harm to
groundwater has ever been found to be the result of hydraulic fracturing in Indiana."  - Director
Indiana Department of Natural Resources

"The Louisiana Office of Conservation is unaware of any instance of harm to groundwater in the
State of Louisiana caused by the practice of hydraulic fracturing."

"My agency, the Office of Geological Survey (OGS) of the Department of Environmental
Quality, regulates oil and gas exploration and production in Michigan. Hydraulic fracturing has been utilized extensively for many years in Michigan, in both deep formations and in the relatively shallow Antrim Shale formation. There are about 9,900 Antrim wells in Michigan producing natural gas at depths of 500 to 2000 feet. Hydraulic fracturing has been used in virtually every Antrim well.
There is no indication that hydraulic fracturing has ever caused damage to ground water or other
resources in Michigan."

"No documented cases of groundwater contamination from fracture stimulations in
Wyoming."

Link again: Hydraulic Fracturing –15 Statements from Regulatory Officials
http://www.hydraulicfracturing.com/Documents/Hydraulic_Fracturing_SGEIS_comments.pdf

[G M]

http://news.yahoo.com/s/nm/20110309/lf_nm_life/us_usa_oil

MEXICO CITY (Reuters) – Americans worried about the pain of $100 U.S. oil should worry a lot more.

Although $100 oil is the headline in U.S. newspapers, most refineries that supply fuel to service stations are paying the equivalent of a much higher price -- and those costs are already being felt when consumers fill up their vehicles.

The cause is an unprecedented disconnect between the most visible price of oil -- crude oil futures contracts on the New York Mercantile Exchange (NYMEX) -- and the real cost of physical barrels pumped from the Gulf of Mexico, Saudi Arabia and elsewhere.

This gap is caused by oil traders' growing realization that inventories at the small Oklahoma town of Cushing -- the delivery point for the NYMEX contract -- will likely be awash with crude for months to come due to booming production from Canada and shale oil producing states such as North Dakota.

Because the U.S. pipeline system was designed to import oil from the coast to the interior, not vice versa, there's no way to move the extra northern crude to the southern refiners, in places such as Houston and Port Arthur, Texas, which are paying much higher rates for crude from far abroad.

Refiners on the West, Gulf and East coasts -- who produce or import nearly 85 percent of America's fuel -- are therefore forced to pay a premium of $15 to $20 relative to the current futures price of $100 a barrel to keep their plants fed, and pump prices are reflecting that premium.

U.S. oil futures, also called West Texas Intermediate (WTI) after a kind of oil produced in Texas, are no longer the reliable yardstick for the world price and a clear signal of demand for high quality oil from the world's biggest consumer that they once were. They have instead become more of an indicator of the degree of oversupply in the heart of the North American continent.

The most visible evidence of this disparity can be seen in the price of ICE Brent crude futures, the European benchmark; it has risen 21 percent this year, while WTI futures have gained only 15 percent. Normally trading at parity to WTI, Brent surged last week to a record premium of $17.

Although that spread has contracted sharply over the past few days, trading on Wednesday at about $10, the correction has brought its own set of problems. On Monday, for example, the two contracts moved sharply in opposite directions, sowing confusion about whether oil costs had gone up or down.

The result is that WTI, the light sweet crude that Americans have long associated with "the" price of oil, has become a dangerously inaccurate indicator.

And that has major implications for consumers and companies given that at $100 a barrel many economists see limited risk to the U.S. economy but at $120 serious headwinds become evident.

"The hike to something which is between $110 and $120 a barrel is something which may affect (growth) if it lasts too long," said International Monetary Fund chief Dominique Strauss-Kahn, during a visit to Panama last week.

[G M]

http://www.washingtontimes.com/news/2011/mar/17/rising-oil-prices-threaten-economic-crash/

ZUBRIN: Rising oil prices threaten economic crash
Unless we tap our domestic energy resources, we’ll pay in lost jobs

By Robert Zubrin

-

The Washington Times

6:18 p.m., Thursday, March 17, 2011
MugshotChart: Oil price vs. unemployment rate

   

In recent days, oil prices have climbed above $100 per barrel. As chaos spreads through the Arab world, we could soon see much worse.

According to recent testimony given to Congress by Federal Reserve Chairman Ben S. Bernanke, the current soaring oil prices are no reason for concern. According to the stock market, which has dropped hundreds of points each time oil prices have edged up another dollar or two, the situation is a five-alarm emergency. Who is right?

The likely impact of a new oil-price rise is shown in the graph below, which compares oil prices (adjusted for inflation to 2010 dollars) to the U.S. unemployment rate from 1970 to the present. It can be seen that every oil-price increase for the past four decades, including those in 1973, 1979, 1991, 2001 and 2008, was followed shortly afterward by a sharp rise in American unemployment.

The distress to American workers caused by such events is manifest, but the economic damage goes far beyond the impact on the unemployed. A sustained oil price of $100 per barrel will add $520 billion to the U.S. balance-of-trade deficit. Furthermore, there is a direct and well-established relationship between unemployment rates and the rates of mortgage defaults. Thus, the $130-per-barrel oil shock of 2008 didn’t just throw 5 million Americans out of work, it made many of them default on their home payments and thus destroyed the value of the mortgage-backed securities held by America’s banks. This, in turn, threatened a general collapse of the financial system, with a bailout bill for $800 billion sent to the taxpayers as a result. But that is not all. The destruction of spending power of the unemployed and the draining of funds from everyone else to meet the direct and indirect costs of high oil prices reduce consumer demand for products of every type, thereby wrecking retail sales and the industries that depend upon them.

Indeed, the world today is already in deep recession. Yet as a result of the systematic constriction of oil production by the Organization of Petroleum Exporting Countries (OPEC), which is limiting its production rate to 1973 levels of 30 million barrels per day, petroleum prices stand at more than four times what they were in 2003. This has imposed a tax increase on our economy of $500 billion per year, equal in economic burden to a 20 percent increase in income taxes, except that instead of the cash going to Uncle Sam, it will go to Uncle Saud and his lesser brethren.

These governments, however, are said to be our “friends.” As current events in the Middle East should make clear, there is every chance that someday - perhaps soon - we could wake up and find that the world’s oil is under new management, even less concerned with our well-being than the gang in charge today.

This is a fundamental threat to the American economy. We need to take action to protect ourselves from it now, before it is too late. How can we do this?

[Crafty_Dog]

Speaking of Brazil, I gather that George Soros has a big piece of the off-shore drilling deal that the US govt is helping finance at favorable rates, , , sorry no citation.
==========================================

Gas is well over $4 a gallon in most places in California -- and soaring elsewhere as well. But are such high energy prices good or bad?

That should be a stupid question. Yet it is not when the Obama administration has stopped new domestic offshore oil exploration in many American waters, curbed oil leases in the West, and keeps oil-rich areas of Alaska exempt from drilling. Last week, President Obama went to Brazil and declared of that country's new offshore finds: "With the new oil finds off Brazil, President (Dilma) Rousseff has said that Brazil wants to be a major supplier of new stable sources of energy, and I've told her that the United States wants to be a major customer, which would be a win-win for both our countries."

Consider the logic of the president's Orwellian declaration: The United States in the last two years has restricted oil exploration of the sort Brazil is now rushing to embrace. We have run up more than $4 trillion in consecutive budget deficits during the Obama administration and are near federal insolvency. Therefore, the United States should be happy to borrow more money to purchase the sort of "new stable sources of energy" from Brazil's offshore wells that we most certainly will not develop off our own coasts.

It seems as if paying lots more for electricity and gas, in European fashion, was originally part of the president's new green agenda. He helped push cap-and-trade legislation through the House of Representatives in 2009. Had such Byzantine regulations become law, a recessionary economy would have sunk into depression. Obama appointed the incompetent Van Jones as "green jobs czar" -- until Jones' wild rantings confirmed that he knew nothing about his job description "to advance the administration's climate and energy initiatives."

At a time of trillion-dollar deficits, the administration is borrowing billions to promote high-speed rail, and is heavily invested in the federally subsidized $42,000 Government Motors Chevy Volt. Apparently the common denominator here is a deductive view that high energy prices will force Americans to emulate European centrally planned and state-run transportation.

That conclusion is not wild conspiracy theory, but simply the logical manifestation of many of the Obama administration's earlier campaign promises. Secretary of Energy Steven Chu -- now responsible for the formulation of American energy policy -- summed up his visions to the Wall Street Journal in 2008: "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe." I think Chu is finally figuring out the "somehow."

A year earlier, Chu was more explicit in his general contempt for the sort of fuels that now keep Americans warm and on the road: "Coal is my worst nightmare. ... We have lots of fossil fuel. That's really both good and bad news. We won't run out of energy but there's enough carbon in the ground to really cook us."

In fairness to Chu, he was only amplifying what Obama himself outlined during the 2008 campaign. Today's soaring energy prices are exactly what candidate Obama once dreamed about: "Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket." Obama, like Chu, made that dream even more explicit in the case of coal "So, if somebody wants to build a coal plant, they can -- it's just that it will bankrupt them, because they are going to be charged a huge sum for all that greenhouse gas that's being emitted."

There are lots of ironies to these Alice-in-Wonderland energy fantasies. As the public become outraged over gas prices, a panicked Obama pivots to brag that we are pumping more oil than ever before -- but only for a time, and only because his predecessors approved the type of drilling he has stopped.

The entire climate-change movement, fairly or not, is now in shambles, thanks to serial scandals about faked research, consecutive record cold and wet winters in much of Europe and the United States, and the conflict-of-interest, get-rich schemes of prominent global-warming preachers such as Al Gore.

The administration's energy visions are formulated by academics and government bureaucrats who live mostly in cities with short commutes and have worked largely for public agencies. These utopians have no idea that without reasonably priced fuel and power, the self-employed farmer cannot produce food. The private plant operator cannot create plastics. And the trucker cannot bring goods to the consumer -- all the basics like lettuce, iPads and Levis that a highly educated, urbanized elite both enjoys and yet has no idea of how a distant someone else made their unbridled consumption possible.

[G M]

Can we post anything critical of Soros? I remember something about it being the peak of anti-semitism.....
http://hotair.com/archives/2009/08/18/good-news-obama-backs-off-shore-drilling/

Good news: Obama backs off-shore drilling! Update: A Soros connection?

Posted at 3:35 pm on August 18, 2009 by Ed Morrissey

This should be good news for the Drill Here, Drill Now contingent, right?  The Obama administration has committed $2 billion in loans to exploit offshore oil resources in hopes of extracting a major new source of petroleum.  Despite the White House pursuit of a cap-and-trade scheme to limit the use of fossil fuels, the new field could help bring lower energy prices, and their support of this exploration of American resources shows their flexibility on energy policy.
Wait — did I say American resources?  That’s true, but only in the South American sense (via Gateway Pundit):
The U.S. is going to lend billions of dollars to Brazil’s state-owned oil company, Petrobras, to finance exploration of the huge offshore discovery in Brazil’s Tupi oil field in the Santos Basin near Rio de Janeiro. Brazil’s planning minister confirmed that White House National Security Adviser James Jones met this month with Brazilian officials to talk about the loan.
The U.S. Export-Import Bank tells us it has issued a “preliminary commitment” letter to Petrobras in the amount of $2 billion and has discussed with Brazil the possibility of increasing that amount. Ex-Im Bank says it has not decided whether the money will come in the form of a direct loan or loan guarantees. Either way, this corporate foreign aid may strike some readers as odd, given that the U.S. Treasury seems desperate for cash and Petrobras is one of the largest corporations in the Americas. …
But it still doesn’t allow the U.S. to explore in Alaska or along the East and West Coasts, which could be our equivalent of the Tupi oil fields, which are set to make Brazil a leading oil exporter. Americans are right to wonder why Mr. Obama is underwriting in Brazil what he won’t allow at home.
This seems odd in several ways.  For this particular administration to offer billions in loans to a foreign oil company makes a mockery of a number of Obama talking points.  First, why does Petrobas need loan guarantees to pursue its exploration?  As the WSJ notes, it is a very large corporation, which should have the resources to get to the oil on its own.  Obama, who has ripped American corporations for their supposed subsidies in American tax policy, now wants to use an empty Treasury to give cash to a Brazilian oil company.
Next, Obama keeps insisting that we cut back on our use of fossil fuels.  He and his allies in Congress have blocked exploration of American oil fields off both shores for decades, and Obama insists that we would only keep enabling our oil addiction if we started drilling off of our own coasts.  Yet he has no trouble committing $2,000,000,000 of our money for Brazil to drill off its own coast.
Here’s a proposal: Let American companies do what Obama is paying Brazilian companies to do — drill offshore.  We won’t have to pay them money or float them any loans to do it, either.  In fact, we will make money off of the leases, while the effort creates hundreds of thousands of high-paying jobs in the US, creating more tax revenue rather than emptying out the Treasury.
Update: Who else besides Obama has taken an interest in Petrobras?  Hmmmmmm:
His New York-based hedge-fund firm, Soros Fund Management LLC, sold 22 million U.S.-listed common shares of Petrobras, as the Brazilian oil company is known, according to a filing today with the U.S. Securities and Exchange Commission. Soros bought 5.8 million of the company’s U.S.-traded preferred shares.
Soros is taking advantage of the spread between the two types of U.S.-listed Petrobras shares, said Luis Maizel, president of LM Capital Group LLC, which manages about $4 billion. The common shares were 21 percent more expensive than preferred today, according to data compiled by Bloomberg. …
Petrobras preferred shares have also a 10 percent additional dividend, said William Landers, a senior portfolio manager for Latin America at Blackrock Inc.
“Given that there will most likely never be a change in control in the company, I see no reason to pay a higher price for the common shares.” Brazil’s government controls Petrobras and has a majority stake of voting shares.
This story is from last Friday.  Is it a coincidence that Obama backer George Soros repositioned himself in Petrobras to get dividends just a few days before Obama committed $2 billion in loans and guarantees for Petrobras’ offshore operations?   Hmmmmmmmmmm.

[Body-by-Guinness]

Pretty self explanatory:



http://www.clusterflock.org/2011/03/info-graphic-out-of-context.html

[DougMacG]

BBG, Thanks for posting the graphic; that picture tells the story I was unsuccessfully trying to tell in words.  I just wasn't getting any traction with the comparison that the nuclear industry in America in all its history has fewer deaths than Ted Kennedy's car.

[Body-by-Guinness]

Amtrak CEO ditches broken train to travel by car to ribbon cutting of Wilmington’s Joe Biden station
By Steven Nelson - The Daily Caller | Published: 11:20 AM 03/19/2011    | Updated: 1:39 PM 03/20/2011


By Steven Nelson - The Daily Caller
Bio | Archive | Email Steven Nelson
 Get Steven Nelson Feed
 
Governor Edward G. Rendell (left) of Pennsylvania and Joseph Boardman, Amtrak president, unveiled their vision for high-speed East Coast service yesterday at a Philadelphia station. (Matt Rourke/ Associated Press)
55
Today’s the big day for Amtrak’s Wilmington train station. It is being renamed in honor of Vice President and former Delaware Senator Joe Biden following major renovations made possible with stimulus funds.

One problem: the CEO of Amtrak got stuck on the train.

ABC News Deputy Political Director & Political Reporter Michael Falcone tweeted at approximately 10 a.m. that the Acela train he was riding had been “delayed” in Baltimore and that he was sitting next to Amtrak CEO Joe Boardman.

Falcone tweeted, “Acela to NY delayed for ‘unknown period’ Should I feel better that the Amtrak CEO is sitting next to me?”

It quickly became apparent that the CEO’s presence wouldn’t fix the train. A subsequent tweet from Falcone noted, “BAD sign: Amtrak CEO Joe Boardman just got OFF the train to take a car to Wilmington.”

“Amtrak CEO abandoned his own train to make ribbon cutting ceremony for Joe Biden station in Wilmington,” Falcone reported. “When I told Amtrak CEO Joe Boardman it was a bad sign he was ditching the stranded Acela, he chuckled.”

An Amtrak spokesman offered “no comment” to ABC News on the incident.

The rechristening of the Wilmington station was scheduled to begin at noon, according to NBC Philadelphia.

TAGS: ACELA EXPRESS, AMTRAK, JOE BOARDMAN, MICHAEL FALCONE

http://dailycaller.com/2011/03/19/amtrak-ceo-ditches-broken-train-to-travel-by-car-to-ribbon-cutting-of-wilmingtons-joe-biden-station/

[Body-by-Guinness]

2nd Post.

Dark Days For Solar Power
Published on February 22, 2011 by Edwin Feulner, Ph.D.

Ever heard of the Solyndra solar-cell plant in Fremont, Calif.? Most people haven’t. That’s a shame, considering how much taxpayer money has been poured into it.
Solyndra is in serious financial trouble. Despite getting a $535 million bailout - part of the taxpayer-funded “stimulus” - the company subsequently announced it would lay off more than 17 percent of its work force. It also had to close one of its manufacturing plants about a year after it got the money. The House Energy and Commerce Committee is launching an investigation.
That’s understandable. After all, it wasn’t supposed to turn out this way for Solyndra and other solar-cell producers. President Obama and Sen. Barbara Boxer both campaigned at the plant, touting the “green jobs” that would flow from government investment in companies that produce renewable energy.
How that bit of economic magic was supposed to occur is a mystery. Solyndra’s production costs are more than six times those of other producers. Even with strong backing from Washington, the company had to cancel a $300 million initial public offering after a bad audit from PricewaterhouseCoopers. As the New York Times noted in an article on Solyndra, “the project spotlights the risks of government intervention in a dynamic market.”
No kidding. The main problem isn’t renewable energy per se; it’s the folly of having government pick winners and losers in the energy market - or any market, for that matter.
When politicians spend our money, they aren’t thinking about what makes sense from a business perspective. They’re engaging in wishful thinking. They want to be able to say things like “green jobs are the wave of the future,” so they go out and sink millions of our dollars into companies that may or may not be wise investments. They get a photo op, a sound bite, some votes - and we get stuck with the bill.
You can think solar panels are the most wonderful thing in the world, but that doesn’t necessarily mean you should fund them. Consider this November headline from the San Jose Business Journal: “Solar Panel Glut Projected in 2011.” Supplies of the panels, the article predicts, will be nearly three times higher than demand this year.
Faced with a forecast like that, nobody with any business sense would invest in solar panels. But government would - with our money.
The same thing happened with a previous energy boondoggle: ethanol. The Energy Independence and Security Act of 2007 poured taxpayer money into the corn-based alternative fuel. Production rose from 4.3 billion gallons annually in 2006 to 12.5 billion gallons in 2009. Unfortunately, demand for ethanol that year was just 8.4 billion. Oops.
Believe it or not, though, some in Washington still won’t relent even when faced with facts like these. Efficiency doesn’t matter, they claim - government spending helps stimulate the economy, regardless.
Those who make this argument prove only one thing: They don’t understand basic economics. Every single dollar government spends on anything came from somewhere else. It had to be taxed - taken away from some other use by private persons - before being redistributed to others. Money that likely would have been invested more productively is taken out of circulation before being reallocated.
You can call that a lot of things, but “stimulus” isn’t one of them.
So what made Solyndra an attractive choice for government largesse? As Heritage Foundation energy expert David Kreutzer points out, it has more to do with political rates of return than economic ones: The company spent $140,000 on lobbyists in the first quarter of 2010.
In the end, though, it didn’t help. Maybe the government should have invested its money in a viable source of energy.
The rest of us, however, would benefit from more sunshine - shined, preferably, on special interests that waste our tax dollars, and the politicians who play along.
Ed Feulner is president of the Heritage Foundation.

[Crafty_Dog]

By STEVEN F. HAYWARD
The Obama administration's energy policy is in the midst of transition from being stubbornly ideological to being wholly incoherent. That much was clear when President Obama unveiled his Blueprint for a Secure Energy Future this week.

With gasoline prices climbing above $4 a gallon, the administration is talking about tapping our Strategic Petroleum Reserve in a desperate attempt to hold down pump prices. It's also expanding subsidies and incentives for energy supplies that cost a lot more than oil, and it's aiming to reduce our dependency on foreign oil by one-third over the next 10 years.

Meanwhile, in a bizarre turn, Mr. Obama recently expressed enthusiasm for aggressive offshore drilling—in Brazil.

At least the president is practicing the green virtue of recycling. His energy address featured all the greatest hits of past presidential declarations of energy independence, including even George W. Bush's paean to switchgrass ethanol. Yet Mr. Obama's energy "blueprint" will get no further than all previous presidential schemes for the same reason: It is unserious at its core.

There are only two ways to reduce our foreign oil imports: a large oil tax to suppress consumption, or expanded production of domestic oil resources. All of the other bells and whistles—hybrid and flex-fuel cars, biofuels, etc.—will have only a marginal effect on overall oil demand. Higher energy taxes are not in the cards. What about expanded domestic oil production? Mr. Obama tried to thread the needle by claiming to be pro-domestic production, while at the same time embracing the tired talking point that because the U.S. has only 2% of the world's proven oil reserves—about 20 billion barrels—we can't hope to achieve independence from foreign oil from our own resources.

Yet a recent report from the Congressional Research Service that has received surprisingly little attention concludes that the U.S. probably has as much as 155 billion barrels of oil recoverable with existing technology that we simply haven't looked for or have closed off from exploration for political reasons. That's five times the outdated and misleading figure Mr. Obama cites. And there are an additional 700 billion barrels of oil shale and other unconventional hydrocarbons that could be developed here at home. That's more than the oil reserves of Saudi Arabia.

Mr. Obama ought to tell the whole story about Brazil, instead of just half of it. He touts the measures Brazil took to improve its energy independence, such as flex-fuel vehicles and biofuels. And yes, Brazil has gone from importing 77% of its oil from foreign sources in 1980 to importing no oil by 2009. A great success story in conservation and alternative energy? Not really. Total Brazilian oil consumption still more than doubled.

The biggest factor is that Brazil increased its domestic oil production over the last two decades by 876% (not a typo). Most of that production has come from offshore exploration.

Brazilians achieved independence from foreign oil the old-fashioned way—they drilled. Instead of tapping our Strategic Petroleum Reserve, how about tapping into our still-in-the-ground oil reserves?

Mr. Hayward is a resident scholar at the American Enterprise Institute and the author of the forthcoming "Almanac of Environmental Trends" (Pacific Research Institute).

[Body-by-Guinness]

The President’s New Energy Plan
What’s wrong with it? Just about everything.

If you want to lower the price of something, the best solution is to produce more of it. This is basic Econ 101 stuff. But nowhere in the administration’s new energy proposals, presented by the president this Wedesday in a speech at Georgetown University, is the idea of pumping more oil in the United States addressed, except to say it is impossible.

To reach this conclusion, the president had to speak a gross untruth, one he tells so often that he even felt a need to apologize before saying it again: that the United States sits on only 2 percent of the world’s oil supplies, while using 25 percent of the world’s oil. As I pointed out in an article recently, the Department of Energy, which most assuredly vetted this speech before it was released, has known for years this is wrong. In just one 35-miles-square area of the Midwest there is more recoverable oil than in the entire Middle East.

This may be just the tip of the iceberg. Oil shales throughout the region may hold trillions of barrels more. There may even be hundreds of billions more barrels off our coasts and in other areas from which they can be recovered relatively cheaply. We won’t know for a few years yet, as the administration will not let the oil companies look for it. Instead, the president presents the tired canard that 57 percent of onshore and 70 percent of offshore leases are not being developed — the implication being that since the companies are not fully exploiting their current resources, giving them access to more would not help.

Think about that. Oil companies can sell oil at over a $100 a barrel, and yet they are not developing these lands. Why would they do that? The simple answer is that the oil companies do not believe there is any oil in these areas. The argument Obama was pretending to refute is unaffected by this fact: Why not let the oil companies lease and develop the areas where we already know the oil is?

Rather than increasing the oil supply, Obama wants to invest (spend) money on all kinds of green initiatives. Of course, this comes with the promise of creating hundreds of thousands of “green jobs,” which is a reduction from the 5 million green jobs the president promised during his campaign. We should all be thankful the administration failed to keep that promise, as the Europeans already went down the green-jobs route, with devastating consequences. Independent studies in Britain and Spain show that every new green job cost 2.5 to 4 other wage earners their jobs.

Obama also placed a tremendous emphasis on increasing our production of biofuels. Never mind that we are already plowing-under a quarter of our corn supply, so as to turn it into an inefficient and costly fuel. Worse, this unprecedented destruction of food supplies is raising the price of food worldwide, sparking riots and upheavals on a global scale. In fact, rising food costs are the driving force sending many Arabs into the streets and adding a huge risk premium to the cost of oil. In no small measure, biofuels are the root cause of $4 gasoline — some irony.

The speech was not all bad, though. The president put his stamp of approval on natural-gas exploitation and reaffirmed his support for nuclear energy. It remains to be seen whether he will expend any political capital battling his environmental base on either issue. Still, he gave them lip-service, and one must sometimes be grateful for small mercies.

One might wonder if Obama understands how important oil is to maintaining a thriving economy, if it were not for the fact that he recognizes its importance to other nations. During his speech, he mentioned that one of the reasons he went to Brazil was to talk about how they could use American technology to develop recently discovered oil reserves off their coast. If only he was as keen to let American oil companies use their technology to search for and develop the fields off our own coasts.

Anyone who was expecting new ideas or directions for U.S. energy policies — so as to cope with $100 oil — must be chagrined. Instead, the president presented a litany of failed and failing policies that are already damaging the economy without solving our energy problems. The president went to Georgetown University to prove to Americans that he was taking the increasing price of energy seriously. It takes a true master to speak almost 6,000 words on the topic of reducing energy costs without ever addressing the one sure method of addressing those costs — drill, baby, drill.

What makes this speech truly special, though, is that every alternative Obama offered for expensive oil is more costly than oil itself.

We have to do better than this.

— Jim Lacey is the professor of strategic studies at the Marine War College and author of the forthcoming The First Clash. The views in this article are the author’s own and do not in any way represent the views or positions of the Department of Defense or any of its members.

http://www.nationalreview.com/articles/263568/president-s-new-energy-plan-jim-lacey

[Body-by-Guinness]

Well here's a surprise. Bold added.

http://reason.com/blog/2011/04/05/new-study-free-carbon-permits

Unintended Consequences of Free Carbon Permits -- Burning More Coal

Ronald Bailey | April 5, 2011

Proponents of cap-and-trade carbon rationing argue that it will encourage inventors to develop and companies to adopt low-carbon energy technologies. A new study, "How emission certificate allocations distort fossil investments: The German example," [download here] by the German Economic Research Institute in Berlin finds that allocating emissions permits at the beginning the European Trading Scheme for free actually encouraged the "dash for coal" in Germany. Below are some excerpts detailing relevant findings:

Despite political activities to foster a low-carbon energy transition, Germany currently sees a considerable number of new coal power plants being added to its power mix. There are several possible drivers for this “dash for coal”, but it is widely accepted that windfall profits gained through free allocation of ETS certificates play an important role....

We find that technology specific new entrant provisions have substantially increased incentives to invest in hard coal plants compared to natural gas at the time of the ETS onset. Expected windfall profits compensated more than half the total capital costs of a hard coal plant....

While German policy-makers intended not to hamper investments in the power sector by carbon regulation, they designed an allocation scheme which in the end created perverse incentives and massively promoted investments into emission-intensive hard coal plants. Obviously, policy makers failed to take the effects of free allocation-related windfall profits on coal profitability into account. We have thus shown that the details of implementing carbon regulation can be extremely important in a dynamic perspective. Different allocation regimes may not just have distributive effects, but also important consequences for investment choices.

Although the analysis has a retrospective focus, our findings are relevant in support for current policy-making. We conclude that by introducing full auctioning of emission permits from 2013 on [National Allocation Plan III] (NAP III) Germany is providing the right incentives from an environmental perspective. However, the new coal capacity brought on the way has created a heavy burden for ambitious future transition to lower carbon intensity.

Back in 2009, the House of Representatives passed the Waxman-Markey cap-and-trade scheme which shared many elements of the European Trading Scheme such as giving away most emissions permits for free. In a commentary on the study the Breakthrough Institute (which advocates as an alternative to cap-and-trade that governments spend tens of billions researching low-carbon energy technologies) notes:

Back in 2009, Breakthrough Institute analysis warned that "high levels of offsetting allowed in Waxman-Markey [a bill which proposed to introduce an US cap and trade regime based on the EU model] and the substantial allocation of emissions allowances to coal-burning utilities and energy companies may make it more cost-competitive to build new coal plants." ...

The findings of Pahle's study are the latest in a series of major setbacks for cap and trade supporters around the world, most importantly the European Commission. After five years of out-of-control price volatility and reckless rent-seeking, profiteering, theft, fraud and speculation, it's really high time for the Commission to start recognizing the critique of cap and trade made in the influential Hartwell paper [which critiqued cap-and-trade and proposed massive low-carbon energy R&D spending as an alternative]. Not only is the EU ETS structurally flawed to begin with, but the entire idea of cap and trade is bound to produce such failure systemically, by its very nature.

Economist Alex Tabarrok makes a nice and relevant observation about the law of unintended consequences:

The law of unintended consequences is what happens when a simple system tries to regulate a complex system.   The political system is simple, it operates with limited information (rational ignorance), short time horizons, low feedback, and poor and misaligned incentives.  Society in contrast is a complex, evolving, high-feedback, incentive-driven system.  When a simple system tries to regulate a complex system you often get unintended consequences.


Interestingly, the Breakthrough Institute analysts skip over the fact that the German study suggests that had the emissions permits been auctioned and the revenues recycled (in the manner of a carbon tax) by reducing income or other taxes, energy investments would have been more likely channeled toward lower carbon energy alternatives, e.g., natural gas. The folks over at the Breakthrough Institute clearly see some of the unintended consequences of cap-and-trade, are not so good at seeing what might go wrong with regard to the top-down centralized R&D spending policies they favor.

[G M]

Yes, but their intentions were good, and to liberals, that's all that matters.

[Body-by-Guinness]

By Any Other Name, Energy Cuts Still Stink
Published on April 7, 2011 by David Kreutzer, Ph.D. BACKGROUNDER #2542

Abstract: Eighty-five percent of the energy that fuels the American economy is from coal, petroleum, and natural gas. An unavoidable by-product of burning these fuels is carbon dioxide (CO2). Analyses of the Waxman–Markey cap-and-trade bill make clear that CO2-reduction targets will not be met through increases in renewable energy production. So, cutting CO2 means cutting energy use; and cutting energy use means throttling economic growth. The President’s recently proposed clean-energy standard (CES) seeks cuts that are just as severe as those under Waxman–Markey.

When cap-and-trade legislation died last year, President Barack Obama famously said, “There is more than one way to skin a cat.” This may well be true, but the cat gets the same bad deal either way. So it is with global-warming legislation and the economy. Government-forced cuts in energy use, whether by cap and trade or by a clean-energy standard, would cut incomes and destroy jobs.
Eighty-five percent of the energy that fuels the American economy is from coal, petroleum, and natural gas. An unavoidable by-product of burning these fuels is carbon dioxide (CO2). Analyses of the Waxman–Markey cap-and-trade bill make clear that CO2-reduction targets will not be met through increases in renewable energy production.[1] So, cutting CO2 means cutting energy use; and cutting energy use means throttling economic growth. The President’s recently proposed clean-energy standard (CES) seeks cuts that are just as severe as those under Waxman–Markey.
While some ways of cutting CO2 emissions can impose greater inefficiencies than other ways, forcing cuts in CO2 pushes the economy below its best growth path. There are no silver-bullet solutions that avoid this problem.
Under cap and trade, the government creates an artificial scarcity of fossil fuels by limiting the CO2 emissions that burning these fuels inevitably creates, with impacts very similar to an energy tax. A CES can mandate identical CO2 cuts but implement these restrictions via an awkward and even less efficient set of mandates and regulations. The CES approach is at least as costly as the cap-and-trade proposals that Congress repeatedly rejected because of their extraordinary costs.
Taxing Milk
A hypothetical illustration may help clarify the economy-crushing impacts that a CES shares with a carbon tax or cap and trade.
Suppose the federal government imposed a tax on milk of $3 million per gallon. Further suppose that this tax suppresses demand such that only one person (presumably a very rich person) buys milk, and he buys only one gallon each year. The tax revenue would be $3 million per year—very small by Washington’s standards. In fact, some would claim that if a penny were rebated to all 300 million Americans, there would be no net impact from the tax, since $3 million would be both collected and distributed.
However, the dairy industry would be devastated by this tax as milk production drops from billions of gallons per year to a single gallon. The facilities that process milk would be shut down and their employees laid off. Dairy farmers would have to slaughter their herds and scrap their dairy houses. Innumerable other activities related to the dairy industry would stop, along with the jobs and value they generate for the economy. This lost economic activity (in economics jargon, the “excess burden” of the tax) is measured by lost national income—e.g., gross domestic product (GDP). This lost GDP, and not the $3 million collected and distributed, is the net cost of the tax. In addition, people would not have the health benefits and enjoyment of consuming dairy products.
Capping Milk
Suppose that instead of a $3 million per gallon tax, the government created a cap-and-trade program requiring a permit for each gallon of dairy products that is consumed. Further suppose that the permits are auctioned by the government to the highest bidder(s) and that they auction only one permit each year.
In this case, bidding for the permit (by the same rich consumer as in the tax example) would push its price to $3 million, and the impact would be identical to the $3 million dairy tax. The $3 million does its round trip through the government (the money comes from the one consumer and goes to whomever the government chooses) and the dairy industry is still decimated along with its jobs and contribution to GDP.
A Non-Dairy Agriculture Standard
Instead of using a milk tax or a cap-and-trade plan for milk, the government could create a non-dairy standard that specifies the fraction of agricultural output that must come from sources other than milk.
One gallon of milk represents about 0.0000000008 percent of total farm income. So a 0.9999999992 percent non-dairy standard for U.S. agriculture could also limit milk production to one gallon per year—decimating the dairy industry and cutting GDP as effectively as a $3 million per gallon tax or a one-gallon production/consumption cap. The only difference is that the government, in this case, does not collect and spend the $3 million.
Depending on how the standard is implemented, the price of milk may not rise. For instance, if the standard were achieved by mandating the use of disposable diamond-encrusted drinking cups for milk, the cost of drinking milk could be $3 million per gallon even though the price of milk may remain at $3.50 per gallon. Here the costly purchase of equipment necessary for consuming milk—not the milk’s price—is what drives the consumption down.
Why Mandated Conservation Is Costly
The average person needs about 1.5 gallons of water per day in direct consumption just for survival. Fortunately, most of us have access to many more gallons than that, and we can use water for all sorts of other valuable uses.
However, suppose the government set a target of limiting consumption for each person to 1.5 gallons. This goal could be met with a tax or cap-and-trade program—each of which would need a mechanism for significant transfers of wealth—or a simple but onerous law directing that no one can consume more than 1.5 gallons per day.
Because all water would be used for drinking, there would need to be alternatives for doing all the other important things currently done with water. Waterless laundry technology, waterless bathing technology, waterless industrial processes, waterless carwashes, etc., would all have to be developed and implemented. All of them would be costly, many very costly. In addition, there are likely some things for which there is no waterless substitute.
A program analogous to a CES for the water example would be to set standards that require use of the waterless technologies and ban activities where there is no waterless substitute. It might then be argued that consumers are saving money on water even though the overall cost of the various processes can be much higher.
In Hot Water
Proponents of efficiency standards often argue that even including the costs of the new, more expensive technology, the overall cost of the activities will fall over time. The implication here is that consumers and producers are unwilling to save money. A more likely explanation is that those contending that markets do not take full advantage of efficiency have themselves ignored other factors that should be included.
The author’s 1993 Maytag dishwasher used nine gallons of hot water and took 84 minutes to clean a normal load of dishes.[2] The current model Maytag dishwasher uses seven gallons of hot water and takes 120 minutes to clean a normal load of dishes.[3] This increase to a two- to three-hour cycle is typical and is the result of efficiency mandates that are met by using fewer gallons of water with much longer cycle times.[4]
The cost of two gallons of hot water is less than a dime. For many people, the additional cycle time of an energy-efficient dishwasher will be an inconvenience greatly exceeding the 10-cent savings. Some people would alter their behavior (sometimes washing their dishes by hand, for example), which could entirely offset these gains. However, the regulator’s calculation of savings ignores these costs. Markets, on the other hand, do not.
A Clean Energy Standard
In his State of the Union address, President Obama set a clean-energy target of 80 percent. That means that 80 percent of electric power must be generated by energy that he defines as clean. If the energy source emits colorless, odorless, non-toxic, necessary-component-for-photosynthesis CO2, then it gets tripped up on the President’s definition of clean. Though he listed natural gas in his list of clean-energy sources, subsequent comments out of the White House suggest that natural gas will receive only partial credit. That is, a fraction of natural gas generation will count toward the “clean” 80 percent, while a fraction will go toward the catch-all 20 percent.
Since natural gas emits about 60 percent as much CO2 as coal on an equivalent energy basis, it may receive only a 40 percent clean credit. If so, then Obama’s CES starts to look more and more like cap-and-trade, especially given the intention of allowing producers to trade clean-energy credits.
Each unit of electricity from natural gas emits about 0.6 times as much CO2 as coal-fired electricity.[5] Counting about 40 percent of gas-generated electricity as “clean” puts the current overall power mix at about (coincidentally) 40 percent “clean” and 60 percent “dirty.” To meet the overall goal of 80 percent “clean” by 2035 means that two-thirds of this “dirty” power needs to be transformed to “clean.” In other words, the CO2 emissions from power generation need to be cut by two-thirds by 2035.[6]
Cap and Trade by Comparison
The Environmental Protection Agency’s (EPA) analysis of the Waxman–Markey cap-and-trade bill projected CO2 cuts from electricity generation of about 60 percent by 2035. These cuts in electricity generation comprise about 85 percent of the overall cuts in CO2 emissions for the whole economy.[7]
Since the proposed CES seeks to cut 66 percent of CO2 emissions by 2035, the cuts proposed in the CES are comparable to, if not greater than, the cuts targeted under Waxman–Markey.
Further, the EPA analysis of Waxman–Markey projected a near doubling of nuclear power generation over the next 25 years. Given the Administration’s attempts to block access to developing the Yucca Mountain repository for nuclear waste, the fact that not one new nuclear power plant has been licensed for over 30 years, and the lack of nuclear regulation reform in the Administration’s discussion, building 70–100 nuclear power plants in the next 20 years is a heroic assumption. The recent events in Japan hardly increase the odds. In the absence of a nuclear renaissance, meeting the CES targets would be even more costly.
Costs of Cap and Trade
The Heritage Foundation’s Center for Data Analysis analyzed the economic impact of the Waxman–Markey cap-and-trade legislation. The bill would have had the following effects:
Cumulative national income losses, as measured by GDP, of $9.4 trillion between 2012 and 2035;
Single-year GDP losses reaching $400 billion by 2025 and ultimately exceeding $700 billion (note that the total economic damage from the recent earthquake and tsunami in Japan is projected to be $200 billion to $300 billion)[8]; and
Net job losses of 2.5 million in 2035.
A Less-Flexible Waxman–Markey
Though a CES may sound innocuous, the CES proposed by President Obama has targets that are nearly identical to the Waxman–Markey cap-and-trade bill. Since it has less flexibility in meeting these targets, it can be expected to have economic impacts that are at least as great. In short, it seems that the President’s CES is not so much another way of skinning the cat as it is another way of saying it.
David W. Kreutzer, Ph.D., is Research Fellow in Energy Economics and Climate Change in the Center for Data Analysis at The Heritage Foundation.

http://www.heritage.org/Research/Reports/2011/04/By-Any-Other-Name-Energy-Cuts-Still-Stink

[Crafty_Dog]

IMHO the article fails to mention the exceedlingly low margin requirements and understates the role of massive money supply increases by the Fed and elsewhere, but points out an interesting variable:
==================
Oil prices are once again pushing the highs that they hit in mid-2008. There’s any number of factors behind it, from OPEC quota levels to constrictions in supply toward the problems with Iran or in Libya. What STRATFOR, however, sees as the single largest factor pushing oil prices higher is simply the fact that there are more players in the market now than were 10 years ago. Until the late 1990s, most participants in the oil future markets were what was called “commercial investors” — industrial is probably a better way to think of that — players who actually provide crude oil and take delivery of crude oil to the market. But in the late 1990s and early 2000s a new type of investor, noncommercial investors, was able to participate in the market in large volumes. This was made possible by changes in technology, the advent of Internet technology for example, that allowed investors at a retail level to participate in the market in a different sort of way — buying and trading crude oil futures without actually every intending on providing or taking delivery of the product. The advent of Internet technology took this to a completely new level, allowing a new magnitude of investors to participate.

These technological changes occurred at the same time that the Baby Boomers matured. Mature workers are preparing for retirement. The kids have gone; college is paid for; the house is probably paid for. And so they’re socking away their money for retirement. A lot of that money has made it into various energy funds, artificially increasing the demand for those products. The difference between the year 2000 and the year 2011 couldn’t be more stark. Right now noncommercial investors, or what we just think of as investors, now make up for 40 percent of long positions in the market. A 40 percent increase in participation in a market that’s as inelastic as crude oil is going to send prices higher. Now this isn’t the only factor and it doesn’t rule every day but it does provide a structural support for the market that didn’t exist there. Now what these people are not is speculators. Speculators are people who are specifically betting on the price of oil and perhaps even trying to force it in a particular direction. These are the people the Obama administration is not particularly fond of.

This is a completely different phenomena from what were seen as the secular shift in energy prices over the last decade. Now what this mass of new investors does is provide this huge amount of liquidity and income support for anyone who wants to invest in crude. They’re providing the basis actually for increasing supply in the long run. There is, however, several side effects. One of course is higher prices. Another one is that they are often betting in opposition to what fundamental trends are doing. So, for example, if you have a situation where prices are rising, industrial consumers of crude are doing everything they can to cut demand — they want to limit their price and exposure. Not so for investors. They see prices rising and want to jump on that bandwagon. And so you get these weird moves in the market often with prices swinging wildly from extreme to extreme.

The most dramatic impact, of course, is when the fundamentals ultimately do win at the end of the day. This happened in mid-2008 when prices were $140 a barrel. Industrial consumers simply couldn’t support that kind of price level in the world was tipping into recession on a global scale. But investors were still pushing the price up and when they realized the fundamentals were correcting everything sharply to the downside, their mass removal from the market led to a price collapse of roughly three quarters of value. But there’s an additional factor that is actually making all of the waters even murkier. Over the course of the last six years, global money supply has roughly doubled in size. When you have all four of the major currency blocs increasing their currency by such a huge volume, collectively, that money is going to go somewhere. So we’ve seen a huge amount of capital from this monetary expansion moving commodities of all sorts and first and foremost oil.

There’s no indication at present that authorities in any of the four major currency blocs are going to take appreciable moves to restrict investment into commodities in the near future. In fact, that would probably be detrimental to the efficient functioning of the markets. But the investors are having an impact. Prices are volatile. They do move sharply up as well as very sharply down and this is going to remain the state of affairs at least as long as this monetary expansion is in progress.

[G M]

http://www.baltimoresun.com/business/sns-rt-business-us-markets-tre72d01w-20110314,0,559931.story

WEAKER DOLLAR SPURS COMMODITY BUYING

Oil's rise on a weaker dollar was part of a commodities buying binge, with gold setting a record above $1,500 an ounce, as persistent worries about U.S. fiscal health drove investors to seek alternative assets.

"Oil is up there with gold as an inflation hedge for investors," said Mike Zarembski, senior commodities analyst at optionsXpresss in Chicago.

At the same time, "everyone is still afraid to be short with the situation in the Middle East," Zarembski said.

The dollar index , which measures the greenback against a basket of currencies, was down 0.85 percent. A weaker U.S. currency can support dollar-denominated commodities by making them cheaper for holds of other currencies.

"The dollar index has broken significantly below a long-term multi-year trendline, so we could see the selling accelerate," said GFT market strategist David Morrison.

HIGHER OPEC OUTPUT?

The International Energy Agency's executive director, Nobuo Tanaka, issued the latest warning that high oil prices could reduce demand in top consumers the United States and China.

OPEC needs to boost output in June or July to douse further price rises, Tanaka said, adding that if crude prices stayed at $100 a barrel or more for the rest of 2011, the market could see demand destruction similar to that of 2008.

But OPEC itself sees oil prices between $80 and $90 as "adequate" and has no plans for an emergency meeting because the market is well supplied, Ecuador's Oil Minister, Wilson Pastor, told Reuters in an interview.

[Body-by-Guinness]

http://reason.com/blog/2011/04/22/doj-forms-oil-and-gas-price-fr

DoJ Forms "Oil and Gas Price Fraud Working Group"

Matt Welch | April 22, 2011

Here's your federal energy policy: Do nothing significant to increase domestic supply, create mandates to have XX% of future supply come from magical green leprechauns, then when prices (surprise!) go up, you know what to do: Blame the "speculators":

Attorney General Eric Holder today announced the formation of a Financial Fraud Enforcement Task Force Working Group to focus specifically on fraud in the energy markets.   The Oil and Gas Price Fraud Working Group will monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm. [...]

"Rapidly rising gasoline prices are pinching the pockets of consumers across the country," said Attorney General Holder. "We will be vigilant in monitoring the oil and gas markets for any wrongdoing so that consumers can be confident they are not paying higher prices as a result of illegal activity. If illegal conduct is responsible for increasing gas prices, state and federal authorities should take swift action."

Holder's "how high?" memo here [PDF]. President Barack Obama's money quote:

"The attorney general's putting together a team whose job it will be to root out any cases of fraud or manipulation in the oil markets that might affect gas prices – and that includes the role of traders and speculators," President Obama said at a town hall meeting in Nevada on Thursday. "We are going to make sure that no one is taking advantage of American consumers for their own short-term gain."

It says a lot about how debased our politics have become that we could have expected this kind of aggressive economic ignorance had the other party won the presidency, too.

More on the latest push here. Reason on oil speculation here and here.

[G M]

Someone told Holder it was supply and demand that was responsible for the high prices. Holder is planning on indicting them, as soon as he figures out who "Supply" and "Demand" are.

[G M]

http://www.forbes.com/2011/04/19/oil-futures-prices.html

Are Speculators Gouging Us At The Pump?
Jerry Taylor and Peter Van Doren, 04.19.11, 11:40 AM EDT
They aren't, so put away the torches and pitchforks.
 


With gasoline selling at around $4 per gallon, the political hunt is on to track down the ne're-do-wells responsible. The primary suspects seem to be Wall Street speculators who, we're told, are gaming the crude oil futures market to create price increases out of thin air. It is a tale, however, told by an idiot, full of sound and fury, signifying ignorance.

The only way to intelligently navigate this discussion is to know a bit about how futures markets work. The least you need to know is that in futures markets one buys the right to purchase oil at a future date at a specific price from someone who is selling that guarantee. Most futures contracts are for one to three months in advance but are settled daily after purchase.

[Body-by-Guinness]

In Search of Petrovillains

The Delegator-in-Chief has announced the creation of yet another inert task force, this one forced upon the attorney general and tasked with examining the role of “traders and speculators” in skyrocketing gasoline prices. Technically this “working group,” as the administration is calling it, is a sub–task force of the extant Financial Fraud Enforcement Task Force, and will include representatives from the FTC, CFTC, FRB, SEC, USDA, etc. Presumably, when the group finishes its work at some indefinite point in the future, its findings will be carefully reviewed by a commission, which will then issue a handsomely bound report to a czar, who will finally inter it in a filing cabinet.

If the task force were merely impotent, it would silly enough. But it is also redundant. The Federal Trade Commission already covers this turf, having been equipped by several federal laws with the power to monitor and investigate instances of market manipulation at the pump. Its major work product, a congressionally mandated 2006 report on post-Katrina price spikes, failed to find a significant pattern of gouging. Moreover, the Dodd-Frank Wall Street–reform bill passed last July vested the Commodities Futures Trading Commission with sweeping new authority to combat speculation, requiring the commission to write new regulations within six months of passage — a deadline that body has, by the bye, blown by three months and counting. So it seems safe to conclude that gas prices are not rising because the organizational charts of our regulatory bureaucracies are insufficiently complex.

Nor are the putative “speculators” — “investors” is the right word — themselves half the problem they are made out to be. In fact, they play a critical role in the marketplace. Among other things, they help companies with serious financial exposure to fluctuating oil prices (such as airlines and trucking companies) hedge against rising fuel costs. Unlike the U.S. government, FedEx can’t just print money when its expenses go up. The futures market provides businesses — and governments — with critical intelligence about the state of supply and demand for petroleum. An intelligent administration, or one at least less hostile toward profit-making businesses, would be looking for a more robust market, with more market participants, rather than hunting for villains.

What is causing high gasoline prices? Increased demand associated with the global economic recovery and (greater than average) Mideast instability certainly play their part, as does the continued control of a major portion of proven petroleum reserves by OPEC, a paradigmatic cartel whose very raison d’être is market manipulation. But the operant cause here, the main event to which this speculator business is a sideshow, is the man himself: President Obama, and his say-one-thing-and-do-another energy policies. He demagogues on oil speculators because he can’t — he won’t — do anything else.

Explain away an economic calamity as the byproduct not of bad policies, but of evildoers gaming the system, and find a group rich and unpopular enough to fit the bill; the rhetoric comes from page one of the Obama playbook and recapitulates the sorry formula we saw at work in his deficit speech. (Thus the president sneaks into a weekly YouTube address on the topic of fuel prices a perfect non sequitur about government subsidies to rich oil companies. There are many good reasons to end this bit of corporatism, but it is exactly wrong to suggest it will redound to the benefit of consumers at the pump in the near term.)

Behind the doublespeak, the reality is that President Obama’s favored policies do nothing ease fuel prices, and more damning still, he doesn’t care. In 2008, when the national average was last peaking above $4 per gallon, candidate Obama made it clear that while he would have preferred a “gradual” increase, he saw ever-higher petroleum prices as a necessary antecedent and augur of our immaculate, green-energy future. And even now, as oil the Gulf of Mexico sits and waits for new permits and the EPA scuttles the latest effort to tap the estimated 27 billion barrels of crude sitting below Alaska’s north Arctic coast, the president assures us that “what’s driving oil prices up right now is not the lack of supply. There’s enough supply.” We agree, there is enough supply to meet current demand: at $4 dollars a gallon, and beyond.

http://www.nationalreview.com/articles/265582/search-petrovillains-editors

[Crafty_Dog]

A 5% margin rate (I believe I have this number correct) tends to magnify volatility too.  Why does it seem like I am the only one who notices this?

[G M]

"A 5% margin rate (I believe I have this number correct) tends to magnify volatility too.  Why does it seem like I am the only one who notices this?"

Because very few people invest on margins? I bet Obarry couldn't tell you what a margin rate is. He sure didn't understand P/E ratio.