Energy Politics & Science

[Crafty_Dog]

A fair question and one I am unable to answer.  I have no idea what % of oil futures trading is done on margin or how large a % is necessary for it to affect volatility. 

Anyone?

[G M]

Well, this is way outside my lane but to me, investing on margin sure seems to make gambling at a casino seem safe and prudent in comparison.

[DougMacG]

For stocks the margin limit is now 50% I believe.  For oil I do not know.  Even at 50%, the volatility is doubled. Margin, which is borrowing, is no free lunch.  If your gains are double, so are your losses. Like gold, the people betting against the economy and the currency happen to be right.  These bets need to be flushed out with a strategy change - something like this: Monday open up drilling on the east coast. Tuesday, open the gulf.  Wednesday, open up west coast drilling and one new nuclear site, Thursday open ANWR.  Friday open up the Rocky Mountain region for wide expansion of natural gas production and announce 2 new pipelines.  Then see what the speculators are speculating on. 

[Crafty_Dog]

I think you are correct about 50% for stocks, but IIRC, oil futures are 5%. 

The mathematical implications need no expounding here from me.

This is why I keep raising this point in wonderment at its lack of mention elsewhere , , ,

[Body-by-Guinness]

The Left Hates Oil Companies
That’s really what all this is about.

When oil prices blew sky high in 2008, ExxonMobil paid $36.5 billion in income taxes, $34.5 billion in sales taxes, and $45 billion in other taxes, for a total of $116.2 billion in taxes paid and collected in 2008. That’s according to Mark Perry at the Carpe Diem blog.

Exxon will report earnings later this week. And while oil prices aren’t quite as high today as they were three years ago, it’s all a bit like 2008.

I read somewhere that either Exxon or the whole oil industry pays more in taxes than the bottom 50 percent of the whole income-tax system. So while president Obama is out there ragging on oil companies to remove so-called tax subsidies, it’s odd that he doesn’t mention how much in taxes the energy firms actually pay to Uncle Sam.

There’s a laundry list of tax credits that go to oil, both large and small firms. Basically, these tax credits allow for the expensing of high-risk investment. That’s what this is about.

Of course, if you really wanted to stop expensive subsidies, you’d kill the ethanol subsidies that have a big carbon footprint and drive corn and wheat prices sky high. But the liberal-left progressives hate oil and gas companies, period. That’s really what all this is about.

Ironically, besides the usual plea for wind, solar, and biofuels — which amount to virtually nothing in terms of our energy use — the president does include natural gas. But natural gas is produced by oil and gas companies. And you have to drill for it. Therefore, oil expenses in the whole drilling process — including leases, permits, geology research, and dry holes, and then drilling, producing, lifting, and ultimately refining for sale — should be 100 percent expensed.

So it would be great if the president understood that you have to drill for natural gas. It also would be great if the president and his pals, instead of harping on a measly $4 billion a year in so-called subsidies (compare that with a $1.5 trillion deficit), focused on real pro-growth corporate-tax reform that drops the rates and includes permanent 100 percent expensing.

That’s pro growth. That’s tax reform. That will create more oil, more natural gas, and more gasoline. That would probably stabilize prices, assuming the Fed doesn’t totally destroy the dollar. That would generate millions of new jobs and lower unemployment. And that would be a good policy.

– Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s The Kudlow Report and author of the daily web blog, Kudlow’s Money Politic$.

http://www.nationalreview.com/articles/265688/left-hates-oil-companies-larry-kudlow

[Body-by-Guinness]

Are high gas prices a good thing?

That is not as dumb a question as it sounds. Examine a few revealing past remarks from President Obama and the cabinet officials who are now in charge of the nation’s energy use and oil leases on federal lands. Then decide whether the current soaring gas prices are supposed to be good or bad.

In 2008, Sen. Ken Salazar (D., Colo.) — now secretary of the interior, in charge of the leasing of federal oil lands — refused to vote for any new offshore drilling. In a Senate exchange with minority leader Mitch McConnell (R., Ky.), Salazar objected to allowing any drilling on America’s outer continental shelf — even if gas prices reached $10 a gallon. We can now see why the president appointed Salazar, inasmuch as Obama recently promised the Brazilians that he would be eager to buy their newfound offshore oil — while prohibiting similar exploration here at home.

From 2007 to 2008, Steven Chu, now secretary of energy, weighed in frequently on global warming and the desirable price of traditional energy. At one point Chu asserted, “Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.” Chu also lamented, “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 other words, $10 a gallon for gas would be desirable, while an enormous amount of recoverable American oil, gas, coal, tar sands, and oil shale should be left untapped.

During the 2008 campaign, Obama himself had strange ideas about the prospect of expensive prices for fossil-fuel-generated energy: “Under my plan of a cap-and-trade system, electricity rates would necessarily skyrocket.” Candidate Obama also elaborated on the envisioned role of his administration in ensuring such high prices: “So if somebody wants to build a coal-powered plant, they can. It’s just that it will bankrupt them.”

As for consumers’ plight in paying skyrocketing gas prices, the president, now and in the past, has sounded ambivalent. He recently told a questioner, “If you’re complaining about the price of gas and you’re only getting eight miles a gallon, you know, you might want to think about a trade-in.” Few large passenger vehicles today get only eight miles a gallon, and many squeezed Americans in recessionary times cannot so breezily think of “a trade-in.”

In 2008, Obama addressed consumer fears about climbing gas prices: “But we could save all the oil that they’re talking about getting off drilling, if everybody was just inflating their tires and getting regular tune-ups. You could actually save just as much.”

Note again the fantasy. Few of today’s cars have distributor points. New-generation spark plugs and computerized ignition usually ensure 75,000–100,000 miles without a so-called “tune-up.” There is no evidence that Americans’ tires are chronically underinflated, or if they were, that such negligence would waste more gasoline than all that could be recovered from new offshore oil drilling.

What explains the weird rhetoric from Obama and his administration? First, not long ago they considered high energy prices as not that bad. Government-sponsored mass transit and alternative-energy projects — from wind and solar to the federally subsidized Chevy Volt — pencil out only when gas gets expensive. And if you believe in man-made global warming, then the less coal, gas, or oil that Americans use, the better for the planet.

Second, a president who believes that modern cars get eight miles per gallon or need frequent tune-ups, and that proper tire inflation can substitute for drilling oil, has never run a business that hinged on having moderately priced gas to power a truck, tractor, or car fleet. In fact, most in the Obama administration came to Washington from either academia or prior state- and federal-government employment, where policy is theoretical, without grounding in real experience.

So much of this administration’s talk about energy sounds similar to a bull session in the faculty lounge, or what we would expect from lifelong bureaucrats and public functionaries who have never experienced long commutes or struggles in the harsher, profit-driven private workplace.

Now the global economy is recovering and energy use is climbing, as the U.S. dollar sinks. The oil-rich Middle East is in chaos. And more than 2 billion people in India and China are desperate for imported oil. The result is that American gas prices are astronomical, and the public is furious and starting to demand relief from the administration.

Its answer? Simple: Since reelection looms, the administration now insists that high energy prices are no longer good, but suddenly bad. And the evil oil companies are mostly to blame!

— Victor Davis Hanson is a classicist and historian at the Hoover Institution, Stanford University, and the author, most recently, of The Father of Us All: War and History, Ancient and Modern. You can reach him by e-mailing author@victorhanson.com.

http://www.nationalreview.com/articles/265809/are-sky-high-gas-prices-good-victor-davis-hanson

[G M]

http://directorblue.blogspot.com/2011/04/gas-pump-sticky-note-campaign-makes-its.html

The Sticky Note Campaign

I'll be doing this.

[JDN]

Looks no different than graffiti to me.

[Crafty_Dog]

GM:

I like it 

[G M]

"Looks no different than graffiti to me."

This from the same guy that thinks that removing products from grocery store shelves is a lawful form of non-violent protest.

Sticky notes can be removed and easily thrown away (Or recycled, if you wish), as opposed to paint/markers or etching tools doing damage to surfaces.

[JDN]

Surely you jest; you are pulling my leg.   

Do you, does anyone want to go grocery shopping everyday and have to fight through competing political stickies up and down the aisle?

[G M]

I'm sure store employees and/or angry Obamabots will quickly remove the stickies before the shelves/gas pumps collapse under their weight. It's just a small bit of guerilla marketing.

[G M]

http://www.pjtv.com/?cmd=mpg&mpid=174&load=5344

Don't make me get my sticky pad and sharpie out....   

[JDN]

I'm sure store employees and/or angry Obamabots will quickly remove the stickies before the shelves/gas pumps collapse under their weight. It's just a small bit of guerilla marketing.

And maybe they will leave up the thousands of stickies mocking the Republicans?   

I'm neutral here; I don't want to read stickies from the right, the left, or anybody's stickies when I do my grocery shopping. 

Anyway, enough on stickies! 

[G M]

http://stopshouting.blogspot.com/2011/04/ten-rules-for-liberty-guerillas.html

Thursday, April 28, 2011
TEN RULES FOR LIBERTY GUERRILLAS



The "Post-it" Note campaign is going viral!

Facebook Campaign
Sticky Campaign Goes Viral



Part of the charade employed by the existing Regime is to continue to make people believe that they are alone in their dissent and/or dissatisfaction with the ruling class. They need to isolate you and make you feel YOU are the outlier. A recent example is the derision lobbed at those who questioned Obama's background and credentials.

This has been written about extensively in various professional military training manuals. It has also been the subject of many papers, dissecting the evolution of an underground movement that overthrew an entrenched Regime, where to outsiders, the “sudden collapse” of an oppressive regime catches them by surprise, when in fact, it was predictable all along.

The reason for the “sudden collapse” is that the group knowledge finally reached a tipping point, where the “dissenters” realize that they are the MAJORITY, not the minority as the Regime would have them believe.

Sticky notes, as advocated at gas pumps and on stores shelves, represent what is known as “Counter propaganda”.


TEN RULES FOR LIBERTY GUERRILLAS:

1. It is important to maintain a belief in final victory. Morale is everything.

2. Large numbers of [counter propaganda] appearing day after day, night after night, everywhere, will make the Regime nervous and raise the self-confidence of the population since such activities demonstrate the inefficiency of the existing Regime and the power and strength of the resistance movement.

3. Whenever practical, successful guerrilla forces use non-electronic means to communicate.

4. It is a principle of political science that it is easier to persuade people to vote against something or someone than to persuade them to vote in favor of something.

5. Liberty guerrillas form centers of resistance EVERYWHERE and they are always in action. Thus, when the Regime attempts to confront/solve one "media" crisis of anti-Regime opinion, another flares up. This serves to also drain the Regime's manpower and resources.

6. Always, always, ALWAYS be on the offensive.

7. Short, snappy slogans spread the message. Advertising/marketing gurus know that to gain traction, a slogan must be 7 words or less.

"BE ALL THAT YOU CAN BE".

Turn the tables on the opposition: Palin's "Obama: WTF indeed" is classic.

8. Mix it up. Never be predictable. But always be lawful.

9. Undermine the Regime's morale and their propaganda by exposing their methods and by constant emphasis on the unjustness of their cause and effects on the population.
(Higher prices? Thanks, Obama).

10. Exploit the alternative media to communicate the ideas of the Liberty movement and resistance to the Regime. Be everywhere; be informed; make it known you are aware of the lies disseminated by the Regime and aren't falling for them.

THE MOMENTUM IS ON OUR SIDE. Do not be deterred!

[Crafty_Dog]

My wife gave me a post-it sticky pad   Lets post future comments about this campaign on The Way forward for the American Creed thread.

[G M]

http://abcnews.go.com/Business/wireStory?id=13491739

Pump Prices Jump to $3.91 on Tightening Supplies

By SANDY SHORE AP Business Writer
April 29, 2011 (AP)

Gas pump prices across the country rose to within a dime of $4 a gallon Friday, as weather-related refinery outages tightened supplies and pushed prices up.

The national average increased 2 cents to nearly $3.91 a gallon for regular gasoline. It's the highest level since July 31, 2008, when pump prices were falling from a record $4.11 a gallon on July 17 of that year.

Drivers in nine states and the District of Columbia already pay $4 a gallon or more for gas. At the current rate of increase, the national average could reach $4 by May 8, Analysts expect it to start falling later in the month, as refineries return to full production and more gas becomes available.

[Body-by-Guinness]

Obama’s Muddled Energy Policy
High prices are good! No, wait, they’re bad!

If the Obama administration’s energy policy were the script for an old Keystone Kops silent movie, it would be comical. But since energy policy is, in fact, a crucial component of righting this nation’s economic ship, it is anything but funny.

Consider: President Obama entered office with a plan for an “economy-wide” cap-and-trade system that was expressly intended to make conventional fossil fuels more expensive, in order to encourage greater use of less efficient alternative sources of energy. By encouraging alternative sources of energy, the administration reckoned, America would gain energy independence. The outcome would be a new, robust “clean-energy economy.” Cap-and-trade was his cornerstone policy initiative.

That was two years ago. Cap-and-trade, however, proved to be politically unpopular. Moreover, inflationary monetary policy, a devalued U.S. dollar, and global economic growth outside the U.S. have pushed up the prices of energy. So the president is now campaigning against high energy prices. High energy prices “hobble our economy,” he’s argued, and he recently averred that the administration “is in conversations with the major oil producers like Saudi Arabia” to encourage them to produce more oil. Moreover, in early April he traveled to Brazil to congratulate that nation on its expanded offshore oil drilling and pledged that the U.S. would import more Brazilian oil.

In sum, in the first half of Obama’s term, we were told that high energy prices would be good, and thus America ought to adopt a policy to push up the costs of using oil and gas to lessen our reliance on imports. Now, in the second half of his term, we’re being told that high energy prices are bad, so we need to encourage more foreign oil production for the U.S. to import.

Recently, however, things have gotten even more confusing. President Obama has renewed his call to end tax incentives for U.S. oil exploration and production. He wants to end the oil depletion allowance, which lets U.S. oil producers cover the cost of capital expenditures. It is a standard deduction for the cost of doing business, like allowing depreciation for machinery in a manufacturing company. What is most mind-boggling, however, is that this proposal comes on the heels of his Brazil trip, which was tied in to the approval of a subsidized loan from the U.S. Export-Import Bank to help Petrobras, the Brazilian national oil company, expand its oil production. In short, he’s proposing to increase the cost of oil production in the U.S. while approving subsidies for foreign oil production.

The one constant in Obama’s energy policy, though, is his commitment to renewable energy. That hasn’t changed since his cap-and-trade proposal. In fact, the $4 billion saved from the proposed end to the depletion allowance on U.S.-production oil would go to fund even more subsidies for renewable energy.

To put such a swap in context, consider that the U.S. produces more than 2 billion barrels of oil a year. The depletion allowance equates to about five cents per gallon of crude (there are 42 gallons in a barrel). Ethanol, by comparison, receives a subsidy of 45 cents per gallon in the form of a credit on excise taxes that are levied on motor fuel. In short, gasoline is taxed, ethanol is not. Additionally, so-called cellulosic ethanol (made from things like wood, grasses, and plant waste) receives what the Congressional Budget Office calculates as a $3.00-per-gallon subsidy. These subsidies are on top of a federal mandate that ethanol must be used in the fuel supply.

Subsidies aside, President Obama’s plans to revolutionize the economy and gain American energy independence through renewable sources are mislaid. First, ethanol is less efficient than gasoline: Cars get lower mileage on ethanol. Second, supplies are limited. Despite the subsidies and the mandate, there is still not a commercial supply of cellulosic ethanol. Federal law requires the use of 250 million gallons of cellulosic ethanol in 2011, yet according to the Environmental Protection Agency, which administers the mandate, only 6 million gallons will be produced this year in the U.S. This is the second year in a row in which cellulosic production has not met the mandated federal minimum.

The case of corn ethanol has farther-reaching implications. This year ethanol will account for approximately 40 percent of the U.S. corn supply. This has added to food-price inflation, not only domestically but globally. The U.S. is the largest supplier of corn in the world — approximately 70 percent of the world’s tradable corn supply is from the U.S. — so American ethanol policy has serious repercussions for global food stability. Consider this in the context of President Obama’s admonitions to Saudi Arabia about their oil output — they’re a country that is food-deficient and relies on food imports, and our energy policy is helping to destabilize the world food trade.

Moreover, recent history shows that there are reliability issues in using crops as feedstocks for energy. Drought in the U.S. heartland last summer caused corn yields to fall short, leading to the critical supply-and-demand situation we now face. Corn prices in April 2010, before the drought, averaged $3.54 per bushel. Corn prices this April are near $7.50 per bushel. And a wet spring has significantly delayed plantings so far in 2011, raising the possibility of further low yields and even higher prices to come.

Finally, because of the Rube Goldberg nature of our renewable-energy policies, with their subsidies, regulations, and mandates, taxpayer-subsidized U.S. corn ethanol is being exported, while mandates to use non-corn ethanol are — because of the shortfall of cellulosic — being filled by imported sugar ethanol from Brazil, to which a 54-cent-per-gallon tariff is applied. Ironically, with its expanded oil production, Brazil has announced that it will lower its ethanol mandate in order to lower fuel prices domestically. Currently, there is a 25 percent ethanol requirement in Brazil; it will be dropped to 18–20 percent this spring, according to government officials there.

U.S. energy policy needs to encourage domestic oil production, find a realistic and viable role for renewable and alternative sources of energy, and recognize natural-resource and economic realities, domestically and globally. A comprehensive approach based on these principles would be the most productive path toward U.S. energy security and economic stability in the energy sector.

— Dave Juday is an adjunct fellow of the Center for Global Food Issues.

http://www.nationalreview.com/articles/266131/obamas-muddled-energy-policy-dave-juday

[Body-by-Guinness]

Amtrak: 40 Years, $40 Billion
For National Train Day, let’s look at the company’s financial failures.

There is a special event coming down the tracks tomorrow — National Train Day. It’s likely few Americans, other than Amtrak enthusiast Vice President Joe Biden, put this date on their calendars. Amtrak, which created the holiday in 2008, will be using this day to kick off its year-long 40th-anniversary celebration. Supporters of Amtrak’s sister endeavor, high-speed rail, will also use the day to push for more funding.

Given America’s soft spot for trains — Thomas the Tank Engine and The Little Engine That Could are still popular among children — lawmakers are likely to be running to the nearest station for a photo op with those shiny engine cars. But instead of celebrating Amtrak’s anniversary, they should shine a light on the company’s financial failures and take its difficulties under advisement when considering costly new investments in high-speed rail.

When Congress created it in 1970, Amtrak was intended to be a profitable enterprise; instead, it has cost taxpayers a total of $40 billion. According to a 2009 study by the Pew Charitable Trust, 41 of Amtrak’s 44 lines lost money in 2008. Per-passenger losses ranged from $5 per passenger on the Northeast Regional to $462 on the Sunset Limited line, which runs all the way from New Orleans to Los Angeles. According to the Amtrak inspector general’s September 2010 semiannual report, the rail service covered only about 84 percent of its operating costs in fiscal year 2010.

Of course, Amtrak could save tax dollars by cutting its less profitable lines, but the anniversary-celebration lineup makes it clear that this engine of wasteful spending is accelerating. According to Amtrak’s Facebook page, the rail service will introduce four new P-42 diesel-electric trains, each with a “historic paint scheme,” and a separate “exhibit train” that will travel through the country for a year carrying educational exhibits; publish a book called “Amtrak: An American Story”; release a DVD on its history; and launch an anniversary website. In addition, Gladys Knight is acting as National Train Day spokesperson.

Defenders of Amtrak — and of high-speed rail — argue that most of the nation’s transportation industry is subsidized. Amtrak’s subsidy, however, is by far the most generous. According to a 2009 study by the Heritage Foundation, Amtrak subsidies totaled $237.53 per 1,000 passenger-miles. In contrast, the subsidy for commercial aviation was $4.23. These subsidies don’t make train travel more affordable. Randal O’Toole of the Cato Institute notes a one-way ticket between Washington, D.C., and New York City on Amtrak’s high-speed Acela costs $139, while bus service costs less than $15.

Taxpayers understand that if the government can’t turn a profit on lower-cost, low-speed rail (Amtrak), it will never earn a dime on higher-cost, high-speed rail. That’s why some governors, including Florida’s Rick Scott (R) and Ohio’s John Kasich (R), have said “No, thank you” to high-speed-rail funding that would put state taxpayers on the hook for years to come.

In preparation for a possible government shutdown in April, Amtrak president Joe Boardman instructed workers not to worry, because the company could still rely on ticket revenues to operate. That is, if Amtrak had to live without taxpayer subsidies, it would remain in business. The only difference is that it would be forced — like any other business — to cut unprofitable ventures and to meet its bottom line. Since, according to the Heritage Foundation, Amtrak accounts for 0.5 percent of all interstate passenger travel, and 40 percent of that travel occurs in the Northeast Corridor, it is unlikely most Americans would even notice such a change in service.

Across the country, many businesses, including other transportation services, have found ways to improve their bottom lines. Amtrak won’t be forced to make those types of decisions until taxpayer support is derailed. It is time for Congress to end Amtrak subsidies, consider the costly lessons learned, and apply them to the debate over high-speed rail.”

— Tom Schatz is president of Citizens Against Government Waste, a national nonprofit devoted to eliminating waste, mismanagement, and inefficiency in the federal government.

http://www.nationalreview.com/articles/266575/amtrak-40-years-40-billion-tom-schatz

[Body-by-Guinness]

http://reason.com/archives/2011/05/10/environmentalists-were-for-fr
Reason Magazine


Environmentalists Were For Fracking Before They Were Against It

Shale gas is still the bridge fuel to a low-carbon energy future.

Ronald Bailey | May 10, 2011

The world’s projected natural gas supplies jumped 40 percent last year. How is such a thing possible? Until a decade ago, experts believed that it would be technically infeasible to exploit the potential resource base of natural gas locked in 48 shale basins in 32 countries around the world. Then horizontal drilling combined with hydraulic fracturing, also known as fracking, was perfected. The shale gas rush was on, and last year the U.S. Energy Information Administration (EIA) issued an analysis revising its estimates of available natural gas dramatically upward.

The ability to produce clean burning natural gas from shale could transform the global energy economy. Right now we burn about 7 trillion cubic feet (tcf) of natural gas to generate about 24 percent of the electricity used in the United States. The U.S. burns a total of 23 tcf annually to heat homes and to supply industrial processes as well produce electricity. Burning coal produces about 45 percent of U.S. electricity.

A rough calculation suggests that 100 percent of coal-powered electricity generation could be replaced by burning an additional 14 tcf of natural gas, boosting overall consumption to 37 tcf per year. The EIA estimates total U.S. natural gas reserves at 2,543 tcf. This suggests that the U.S. has enough natural gas to last about 70 years if it entirely replaced the current level of coal-powered electricity generation.

Similarly, it would be notionally possible to replace the entire current U.S. gasoline consumption with about 17 tcf of natural gas per year. So replacing coal and gasoline immediately would require burning 54 tcf annually, implying a nearly 50 year supply of natural gas.

What about the greenhouse gas implications? The EIA estimates that the U.S. emitted 5.2 billion tons of carbon dioxide in 2009 (the last year for which figures are available). Burning coal emitted 1.75 billion metric tons of carbon dioxide into the atmosphere. Similarly, burning petroleum in the transportation sector emitted 1.7 billion metric tons of CO2, of which about two-thirds came from consuming gasoline. By comparison, the natural gas burned to generate electricity emitted 373 million metric tons of CO2. A rough calculation suggests that replacing coal and gasoline with natural gas would reduce overall U.S. carbon dioxide emissions by about 25 percent.

Given its greenhouse gas benefits, environmental activists initially welcomed shale gas. For example, in August 2009 prominent liberals Timothy Wirth and John Podesta, writing on behalf of the Energy Future Coalition, hailed shale gas as “a bridge fuel to a 21st-century energy economy that relies on efficiency, renewable sources, and low-carbon fossil fuels such as natural gas.” The same year, environmentalist Robert Kennedy, Jr., head of the Waterkeeper Alliance, declared in the Financial Times, “In the short term, natural gas is an obvious bridge fuel to the ‘new’ energy economy.”

That was then, but this is now. Practically en masse, the herd of independent minds that constitutes the environmentalist community has now collectively decided that natural gas is a “bridge to nowhere.” Why? In his excellent overview, The Shale Gas Shock [download], published last week by the London-based Global Warming Policy Foundation, journalist Matt Ridley explains: “As it became apparent that shale gas was a competitive threat to renewable energy as well as to coal, the green movement has turned against shale.”

And indeed natural gas is cheaper than renewable sources of energy even if one includes the costs of carbon capture and sequestration. The EIA’s Annual Energy Outlook for 2011 calculates the levelized costs of electric power generation for various fuel sources. Levelized costs include all capital, operating and maintenance, fuel, and transmission costs for building plants now that would switch on by 2016.

In cost terms, natural gas is the clear winner. Electricity produced using natural gas in a combined cycle generating plant comes in at $66 per megawatt-hour. If one includes carbon capture and sequestration, basically burying carbon dioxide underground, the cost rises to $89 per megawatt-hour. In contrast conventional coal costs $95 per megawatt-hour rising to $136 using carbon capture and sequestration.

How does natural gas compare with various carbon-free and renewable energy sources? Nuclear clocks in at $104 per Mwh, offshore wind at $243 per Mwh, photovoltaic at $211 per Mwh, solar thermal at $312 per Mwh, geothermal at $102 per Mwh, and biomass at $113 per Mwh. The only renewable sources that are close to competitive with natural gas are onshore wind at $97 per Mwh and hydroelectric at $86 per Mwh. With regard to transportation, the price of compressed natural gas currently hovers around the equivalent of $2 per gallon of gasoline.

Keep in mind that the above is just a thought experiment. Junking coal-fired plants and dramatically expanding natural gas production as well as the infrastructure to burn it to generate electricity and dispense it as transport fuel would be costly. Increased demand for natural gas would also tend to boost its price.

Since renewables come off so badly in comparison with natural gas and offer energy independence as well, once-enthusiastic activists evidently began to search for other reasons for opposing it. Ridley cites five claims: fracking fluids contain dangerous chemicals that might contaminate groundwater; wells allow gas to escape into aquifers; well waste water is contaminated with salt and radioactive elements that pollute streams; it uses too much freshwater; and drilling damages landscapes.

First, the shale that contains natural gas lies below thousands of feet of impermeable rock so that the fracking process itself will not contaminate drinking water aquifers that are generally only a few hundred feet below the surface at most. A 2010 Pennsylvania Department of Environmental Protection report “concluded that no groundwater pollution or disruption of underground sources of drinking water have been attributed to hydraulic fracturing of deep gas formations.”

On the other hand, the drilling companies did their industry no favors by keeping their proprietary fracking fluid formulas secret. The cloak-and-dagger approach alarmed the sorts of folks who are easily alarmed. But as Ridley points out, the fracking fluids are actually 99.9 percent water and sand. The small amounts of added chemicals reduce friction, fight microbes, and prevent scaling. In any case, many states are now requiring companies to reveal their formulas. The U.S. Environmental Protection Agency is expected to issue a report on the safety of fracking in 2012. In the meantime, the Obama administration appointed a new panel last week to look into fracking and make recommendations in 90 days on how to improve on the safety of the technique. It is unlikely that whatever new regulations that emanate from these bureaucracies will derail the shale gas industry.

Just as for conventional wells, it is possible that natural gas can escape into aquifers if the wells are not properly sealed using steel and cement casings. A new study in the Proceedings of the National Academy of Sciences published today finds elevated levels of natural gas in groundwater wells within 3,000 feet of active gas well sites. The researchers conclude that the source is likely leaky casings.

However, the study more reassuringly “found no evidence for contamination of the shallow wells near active drilling sites from deep brines and/or fracturing fluids.” In any case, should their findings stand up to subsequent research, the problem is not fracking, but improperly sealed well-casings. It should be noted that the wells were not tested for methane before gas drilling began. It would be interesting to repeat the study looking at conventional gas wells.

But what about radioactive contamination of streams by well waste water? The Pennsylvania Department of Environmental Protection announced that after checking samples from waste water plants that had treated gas well water, it found that “all samples were at or below background levels of radioactivity; and all samples showed levels below the federal drinking water standard for Radium 226 and 228.”

With regard to using too much fresh water, Ridley points out that gas drilling in Pennsylvania uses about 60 million gallons per day, which compares to 1,550 million gallons used by public water systems. Ridley also notes that each well site takes up about six acres to extract gas beneath 1,000 acres which is largely left alone once a well begins producing. Ridley notes that “each wellhead capable of producing gas from up to 12 wells, or about 50 billion cubic feet over 25 years, the output of one drilling pad is equivalent to the average output of about 47 giant 2.5 megawatt wind turbines.” Speaking of intrusions into the landscape, that many turbines would typically take up 188 acres of land.

Finally, an April study in the journal Climatic Change by a team of researchers led by ecologist Robert Howarth from Cornell University suggested that the greenhouse gas emissions released by natural gas production are worse than coal when it comes to man-made global warming. Natural gas is methane, and methane, on a molecule per molecule basis, has a much greater ability to trap heat from the sun than does carbon dioxide. Howarth claims that methane leaking from natural gas wells contributes so much to global warming that the benefits of substituting it for coal are overwhelmed.

Critics have pointed to a number of problems with this study including the fact that it uses a global warming potential factor of 105 over 20 years compared to carbon dioxide. In contrast, the United Nations Intergovernmental Panel on Climate Change generally prefers using a factor of 25 over a 100-year period. In addition, Howarth bases his leakage data on long distance Russian gas pipelines and by assuming that “lost and unaccounted for gas” is not mostly an accounting measure. Lost and unaccounted for gas includes the gas burned to run the turbines to keep pipelines pressurized. It is early days, but my bet is that further research will find that Howarth’s claims are considerably exaggerated.

No industrial process is completely benign and all have environmental consequences. The relevant question is: Do the benefits outweigh the costs? Are people better off using the resource than they would otherwise be? If one is worried about man-made global warming, natural gas remains the affordable way to supply lower carbon energy to the world as technologists work to bring renewable energy costs down. Let's hope that environmentalists will recognize the current faults of wind and solar and fall in love with natural gas all over again.

Science Correspondent Ronald Bailey is author of Liberation Biology: The Scientific and Moral Case for the Biotech Revolution (Prometheus Books).

[Crafty_Dog]

After oil prices surged past $100 a barrel in 2008, suspicions that traders had manipulated the market led to Congressional hearings and regulatory investigations. But they produced no solid cases in the record run-up in gasoline prices.

Related
Ahmadinejad Backs Out of Key Role at OPEC (May 25, 2011) But on Tuesday, federal commodities regulators filed a civil lawsuit against two obscure traders in Australia and California and three American and international firms.

The suit says that in early 2008 they tried to hoard nearly two-thirds of the available supply of a crucial American market for crude oil, then abruptly dumped it and improperly pocketed $50 million.

The regulators from the Commodity Futures Trading Commission would not say whether the agency was conducting any other investigations into oil speculation. With oil prices climbing again this year, President Obama has asked Attorney General Eric H. Holder Jr. to set up a working group to look into fraud in oil and gas markets and “safeguard against unlawful consumer harm.”

In the case filed Tuesday, the defendants — James T. Dyer of Australia, Nicholas J. Wildgoose of Rancho Santa Fe, Calif., and three related companies, Parnon Energy of California, Arcadia Petroleum of Britain and Arcadia Energy, a Swiss company — have told regulators they deny they manipulated the market.

If the United States proves the claims, the defendants may give up $50 million in profits that were believed to be made as a result of the manipulation and also pay a penalty of up to $150 million.

The commodities agency says the case involves a complex scheme that relied on the close relationship between physical oil prices and the prices of financial futures, which move in parallel.

In a matter of a few weeks in January 2008, the defendants built up large positions in the oil futures market on exchanges in New York and London, according to the suit, filed in the Federal Court in the Southern District of New York.

At the same time, they bought millions of barrels of physical crude oil at Cushing, Okla., one of the main delivery sites for West Texas Intermediate, the benchmark for American oil, the suit says. They bought the oil even though they had no commercial need for it, giving the market the impression of a shortage, the complaint says.

At one point they had such a dominant position that they owned about 4.6 million barrels of crude oil, estimating that this represented two-thirds of the seven million barrels of excess oil then available at Cushing, according to lawsuits.

This type of oil is also the main driver of prices of the futures contracts, and their actions caused futures prices to rise, the authorities say. “They wanted to lull market participants into believing that supply would remain tight,” the agency said. “They knew that as long as the market believed that supply was tight and getting even tighter, there would be upward pressure on the prices of W.T.I. for February delivery relative to March delivery, which was their goal.”

The traders in mid-January cashed out their futures position, and then a few days later began to bet on a decline in oil futures, with Mr. Wildgoose remarking in an e-mail about the “inevitable puking” of their position on an unsuspecting market, the federal lawsuit says.

In one day, Jan. 25, they then dumped most of their holdings of West Texas Intermediate oil, and profited by the drop in futures.

The traders repeated the buying and selling in March 2008, and were preparing to do it again in April but stopped when investigators contacted them for information, the suit says.

Between January and April, average gas prices rose roughly to $3.50 a gallon, from $3. It was not until later in 2008, after the defendants had ceased their reported actions, that oil prices soared higher — reaching $145 that July. By the end of the year, prices had fallen to about $44. The Texas oil is now around $100.

Many other factors were at work, including tight oil supplies in the Middle East and fears that a growing global economy would consume more oil. Yet the enforcement action by the commodities regulator was the first credible evidence that a small group of traders also played a role in manipulating prices.

“This will  help to satisfy the desire to find a culprit and throw them under the wheels of justice,” said Michael Lynch, an oil market specialist at Strategic Energy and Economic Research, a consulting firm.

Calls to Arcadia Petroleum in London were not immediately returned. A person who answered the phone at Arcadia Energy in Switzerland said that he was unaware of the complaints and that Mr. Dyer and Mr. Wildgoose were on vacation and unavailable for comment.

In the last few years, the commission has settled a handful of cases of manipulation in the natural gas market.

In 2007, it settled charges for $1 million against the Marathon Petroleum Company for trying to manipulate West Texas Intermediate crude oil in 2003.

The agency brought an action similar to its latest case in 2008, asserting that Optiver Holding, a proprietary trading fund based in the Netherlands with a Chicago affiliate, used a trading program in 2007 to issue orders to manipulate the crude oil market. The case is pending. It involved claims of manipulation of futures contracts for light sweet crude, New York Harbor heating oil and New York Harbor gasoline.

Clifford Krauss contributed reporting.

[DougMacG]

"Oil Traders sued by Feds"
  - That should help the supply of oil... (sarc.)
------------------------------------------------
I wonder if Michelle Obama again has never before been this proud to see our country ranked 44th freest in the world for oil production, unable to keep up with freedom bastions like Angola ranked 18th:

"It is almost as if the United States deliberately wanted to be more dependent on foreign oil. Consider that while the World Economic Forum rates the U.S. 4th in its ranking of the world's most competitive economies, it would rank far down the list if the WEF were to look at the competitiveness of the oil and gas industry in isolation. A proprietary ranking of political and investment risk for oil and gas by IHS's Petroleum Economics and Policy Solutions unit places the U.S. 44th, below several African nations such as Angola, which is ranked 18th. As an IHS analyst observes, in the U.S. "there is the constant threat of adverse contract or fiscal regime changes at both the state and federal levels of government. None of these threats or business risks is present in Angola." "
http://www.powerlineblog.com/archives/2011/05/029102.php
-----------------
What kind of economic OR security strategy involves decades of blocking the energy production needed to power our economy.  It isn't just taxes and debt that are killing us, and these are self-inflicted wounds.

[ccp]

Germany does about face on nuclear energy post Japan.

****German energy
Nuclear? Nein, danke
A nuclear phase-out leaves German energy policy in a muddle
Jun 2nd 2011 | BERLIN | from the print edition Economist
 
EVERYONE was horrified by the earthquake and tsunami that killed 24,000 Japanese and caused three nuclear meltdowns. But in Germany the feeling was laced with terror. Suspicion of nuclear power became mass revulsion. At a recent race in Berlin sponsored by Vattenfall, which generates nuclear power, many runners carried no-nuke flags.

The response of Chancellor Angela Merkel has been called the swiftest change of political course since unification. Only last year her government overturned a decade-old decision to phase out nuclear power by 2022. After Japan she suspended that policy and yanked seven of Germany’s 17 reactors off the electricity grid. On May 30th she completed her U-turn. The plan to keep nuclear plants operating for 12 more years was scrapped; the seven reactors will be shut for good. Germany will be “the first big industrial country to shift to highly efficient and renewable energy, with all the opportunities that offers,” Mrs Merkel promised. Industry is less thrilled about losing nuclear, which provides 23% of Germany’s electricity reliably and cheaply. It “fills me with worry,” said Hans-Peter Keitel, president of the Federation of German Industries.

The “energy transformation” is neither as revolutionary as Mrs Merkel suggests nor as hazardous as industry fears. Germany is returning to its policy of seven months ago. It has surplus generating capacity and low prices that are unlikely to rise much in the next few years, notes Mark Lewis of Deutsche Bank. Mrs Merkel’s shift was already under way. In 2000 30% of electricity came from nuclear. Since then, renewables like solar and wind have expanded their share from 6.6% to 16.5%.
 
The new plan is meant to make it easier to raise this share. But Mrs Merkel is also using Germans’ nuclear fears to smash their aversion to new infrastructure. The Bundestag is due to approve eight laws by the end of June to facilitate this. Yet the task depends also on citizens’ participation. “What is your contribution?” Mrs Merkel asks people. She hopes for political revival. Her Christian Democratic Union (CDU) was pushed into third place behind the Social Democrats and the Greens in Bremen in May for the first time at state level. While slowing the Greens’ rise, she also wants the CDU to seem a possible coalition partner after the federal election in 2013.

The nuclear reversal burnishes her credentials as a moderniser. Whether it will help Europe’s strongest economy is less clear. The rise in fickle solar and wind power increases the risk of instability in electricity supplies; with the closure of seven reactors, “we are really going to the limits,” says Christian Schneller of TenneT, a Dutch-German transmission company. Congestion on lines carrying power from north to south raises the risk of blackouts.

Germany promises neither to increase imports from nuclear neighbours nor to emit more greenhouse gases than planned. That will be hard. “You can’t have a liberalised energy market and close the border,” says Manuel Frondel of RWI, a research institute. Germany will emit an extra 370m tonnes of CO2 as it replaces nuclear with gas- and coal-fired plants. Europe’s emissions are capped by an emission-trading scheme, but the costs will now rise for everybody. Germany’s own goal is more ambitious: a 40% reduction from 1990 by 2020. This will not be met, says Mr Frondel.

Mr Schneller says the pace of progress on infrastructure must dictate the energy mix, not the other way around. Of the 3,500km (2,175 miles) of transmission lines that are needed to carry renewable power from (largely northern) sources to southern and western consumers, just 90km have been built. “Monster masts” provoke almost as much opposition as nuclear reactors. To shift fully to renewables, Germany needs to boost storage capacity by a factor of 500.

The government plans to speed up planning and licensing, as it did after unification. Progress is to be monitored, perhaps by a new parliamentary watchdog. The government may set up a “national energy transformation forum” to enlist citizens. If greenhouse-gas emissions rise faster than planned, says Mrs Merkel, conservation will have to improve.

Germany cannot do all this on its own, argues Ottmar Edenhofer of the Potsdam Institute for Climate Impact Research. Big efficiency gains will come only if Europe’s carbon cap includes housing and transport. Ramping up renewables would make more sense if Germany tapped into sunnier and windier parts of Europe, which requires a pan-European electricity grid. “Scaling up can only be done on a European level,” says Mr Edenhofer.

Germany did not become a role model by being hard-headed. Its subsidies for renewable energy are wasteful and its nuclear pull-out looks panicky. In short, the post-nuclear recoil carries risks of its own. Yet if anyone can make it all work, says Mr Lewis, the Germans can.

from the print edition | Europe ****

[DougMacG]

Not admitted in the piece is that one of Germany's ideas for replacing nuclear, is to ... but nuclear power from France.  That shifts all this do-goodery over to simply not-in-my-backyard politics.

BTW, what the hell does abandoning nuclear have to do with helping Europe meet its carbon cap.  Nuclear was the most carbon free of any source mentioned!

[G M]

French land always has the potential of becoming German land.


Just saying......

[DougMacG]

I hadn't thought of that - the new, west Germany.

Perhaps that is why France is so helpful in Libya.  Obama threatened going back to historic (1943) borders; Sarchozy believes those to be indefensible.

[G M]

I hadn't thought of that - the new, west Germany.

Perhaps that is why France is so helpful in Libya.  Obama threatened going back to historic (1943) borders; Sarchozy believes those to be indefensible.

Bwahahahahaha! Well done, sir!

[DougMacG]

Moving along to a story about energy prices hitting the pocketbook.  I believe this to be more a part of energy policy than monetary inflation, which may also be true.

Update: I must add that our energy policies are also driving up food costs and shortages.  Who could have seen this coming??

Gas tanks are draining family budgets
AP  http://news.yahoo.com/s/ap/20110527/ap_on_bi_ge/us_gasoline_summer_squeeze

By JONATHAN FAHEY, AP Energy Writer May 27, 6:01 pm ET

NEW YORK – There's less money this summer for hotel rooms, surfboards and bathing suits. It's all going into the gas tank.

High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal.

Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things.

"We used to do it a lot more, but not as much now," ... "You have to cut back when you have a $480 gas bill a month."

As Memorial Day weekend opens, the nationwide average for a gallon of unleaded is $3.81. Though prices have drifted lower in recent days, analysts expect average price for 2011 to come in higher than the previous record, $3.25 in 2008. A year ago, gas cost $2.76.

The squeeze is happening at a time when most people aren't getting raises, even as the economy recovers.

[ccp]

"Perhaps that is why France is so helpful in Libya"

I think the reason they are so "helpful" in N. Africa is they don't want anymore Muslim refugess flooding their country.

They and Italy (and I guess all of Europe) are getting swamped with Muslims.

Their version of the Mexican, C. and S. American  invasions here.

[Crafty_Dog]

I have no opinion over the validity of the expressed concerns over contamination of the water table.  We certainly would not want the equivalent of a BP Gulf blow out!
==============================================


By ROBERT BRYCE
The U.S. is on the verge of an industrial renaissance if—and it's a big if—policy makers don't foul it up by restricting the ability of drillers to use the technology that's making a renaissance possible: hydraulic fracturing.

The shale drilling boom now underway in Texas, Louisiana, Pennsylvania, Oklahoma and other states is already creating jobs, slashing natural-gas prices, and spurring billions of dollars of investment in new production capacity for critical commodities like steel and petrochemicals. Better yet, it's spurring a huge increase in domestic oil production, which has been falling steadily since the 1970s.

Despite the myriad benefits of the low-cost hydrocarbons that are now being produced thanks to hydraulic fracturing, the media, environmental groups and politicians are hyping the possible dangers of the process, which uses high-pressure pumps to force water, sand and chemicals into shale formations. Doing so fractures the formation and allows the extraction of natural gas or petroleum.

Although hydraulic fracturing has been used more than one million times in the U.S. over the past 60 years, environmental activists are hoping to ban the process or have it regulated by the Environmental Protection Agency (EPA). Opponents claim the process can harm groundwater even though drinking-water aquifers are separated by as much as two miles of impermeable rock from the shales that are being targeted by the fracturing process.

New York currently has a moratorium on hydraulic fracturing. On May 31, New York Attorney General Eric Schneiderman sued several federal agencies, claiming they had not done a proper environmental assessment on the possible effects of drilling in the New York City watershed. On June 6, the New York Assembly passed a bill that will ban all forms of hydraulic fracturing in the state until mid-2012. And the EPA has launched "a comprehensive research study" on the possible "adverse impact that hydraulic fracturing may have on water quality and public health" nationwide.

View Full Image

David Klein
 .Despite the opposition, some of America's biggest industrial companies are evangelizing about the merits of natural gas. Among the most fervent advocates are John Surma, the CEO of U.S. Steel, and Dan DiMicco, the CEO of Nucor. Mr. Surma told me in an interview that the shale revolution is "the first bit of good news in U.S. manufacturing in two decades." Mr. DiMicco went further, telling me that "we could change the entire manufacturing base in the U.S. if we just embrace what's happening in natural gas."

In March, Nucor, America's biggest steel producer, broke ground on a new $750 million direct-reduced-iron (DRI) plant in Louisiana. The plant's key commodity is low-cost natural gas, which will be superheated and then mixed with iron ore pellets and scrap in a furnace. The DRI process allows companies to produce about the same amount of steel with about a quarter of the capital they'd need to build a conventional integrated steel plant. And they can produce that steel with lower carbon-dioxide emissions because they are replacing metallurgical coal with methane.

Nucor may ultimately invest $3 billion in Louisiana on plants that could create as many as 1,000 permanent, high-paying jobs. Meanwhile, U.S. Steel may soon build a DRI plant of its own.

Thanks to hydraulic fracturing, U.S. drillers are producing lots of ethane and propane, which are key feedstocks for the petrochemical sector. Last October, Chevron Phillips Chemical Company announced plans to build a new plant in Baytown, Texas that will provide components for the production of polyethylene, a plastic resin used to make milk jugs and beverage containers. A few months later, the company said it was examining the feasibility of building a major petrochemical plant on the Gulf Coast.

In April, Dow Chemical announced plant expansions at several facilities in Louisiana and Texas, including construction of a new ethylene plant on the Gulf Coast that will begin operating in 2017 and a new propylene production facility that will begin operating by 2015. Dow's reason for the expansions: "competitively priced ethane and propane feedstocks." And last week Shell announced that it is developing plans to build a large ethylene plant in the Appalachian region. Ethylene and propylene are building blocks for a wide variety of consumer products including plastics, fibers and lubricants.


The drilling industry itself is creating jobs. Over the past 12 months, some 48,000 people were hired in Pennsylvania by companies working in the Marcellus Shale, a massive deposit that underlies several Eastern states, including Pennsylvania and New York.

While the Pennsylvania economy is getting a much-needed lift from drilling, opposition in New York may mean that the state loses out on jobs and investment. A new study by Tim Considine, an energy economist at the University of Wyoming, estimates that drilling in the Marcellus Shale could add as many as 15,000 new jobs to the New York economy by 2015. The study, conducted for the Manhattan Institute (a think tank where I am a senior fellow), estimated that shale drilling in New York could add some $1.7 billion to the state's economy by 2015 and increase the state's tax revenue by more than $200 million.

Regardless of what happens in New York, hydraulic fracturing is unlocking huge quantities of oil from shale. In March, domestic crude production was 5.63 million barrels per day, the highest level since 2003. Amazingly, production is rising despite the Obama administration's de facto moratorium on drilling in the Gulf of Mexico. And shale oil production will likely continue rising from deposits like the Bakken Shale in North Dakota, where state officials are predicting output will hit 700,000 barrels per day by 2018, double the state's current production.

A vibrant industrial base requires cheap, abundant and reliable sources of energy. The shale revolution now underway is the best news for North American energy since the discovery of the East Texas Field in 1930. We can't afford to let fear of a proven technology stop the much-needed resurgence of American industry.

Mr. Bryce is a senior fellow at the Manhattan Institute. His fourth book, "Power Hungry: The Myths of 'Green' Energy and the Real Fuels of the Future" (PublicAffairs), was recently published in paperback.

[Body-by-Guinness]

Electric cars may not be so green after all, says British study
Ben Webster From: The Times June 10, 2011 3:23PM 15 comments

A Jaguar electric car goes on show at a preview event for the 2010 Los Angeles Auto Show. Picture: AFP Source: AFP

ELECTRIC cars could produce higher emissions over their lifetimes than petrol equivalents because of the energy consumed in making their batteries, a study has found.

An electric car owner would have to drive at least 129,000km before producing a net saving in CO2. Many electric cars will not travel that far in their lifetime because they typically have a range of less than 145km on a single charge and are unsuitable for long trips. Even those driven 160,000km would save only about a tonne of CO2 over their lifetimes.

The British study, which is the first analysis of the full lifetime emissions of electric cars covering manufacturing, driving and disposal, undermines the case for tackling climate change by the rapid introduction of electric cars.

The Committee on Climate Change, the UK government watchdog, has called for the number of electric cars on Britain's roads to increase from a few hundred now to 1.7 million by 2020.

Britain's Department for Transport is spending $66 million over the next year giving up to 8,600 buyers of electric cars a grant of $7700 towards the purchase price. Ministers are considering extending the scheme.

The study was commissioned by the Low Carbon Vehicle Partnership, which is jointly funded by the British government and the car industry. It found that a mid-size electric car would produce 23.1 tonnes of CO2 over its lifetime, compared with 24 tonnes for a similar petrol car. Emissions from manufacturing electric cars are at least 50 per cent higher because batteries are made from materials such as lithium, copper and refined silicon, which require much energy to be processed.

Many electric cars are expected to need a replacement battery after a few years. Once the emissions from producing the second battery are added in, the total CO2 from producing an electric car rises to 12.6 tonnes, compared with 5.6 tonnes for a petrol car. Disposal also produces double the emissions because of the energy consumed in recovering and recycling metals in the battery. The study also took into account carbon emitted to generate the grid electricity consumed.

Greg Archer, director of Low CVP, said the industry should state the full lifecycle emissions of cars rather than just tailpipe emissions, to avoid misleading consumers. He said that drivers wanting to minimise emissions could be better off buying a small, efficient petrol or diesel car. “People have to match the technology to their particular needs,” he said.

The Times

http://www.theaustralian.com.au/news/health-science/electric-cars-may-not-be-so-green-after-all-says-british-study/story-e6frg8y6-1226073103576

[Crafty_Dog]

Woof All:

Given the game-changing potential of US natural gas reserves for energy independence AND the serious questions presented concerning allegations of risk of pollution of the water table, this seems to me to be an important development.

=====================

By BEN CASSELMAN

The natural-gas industry, bowing to longtime pressure, will disclose more information about the chemicals it uses in the controversial process of hydraulic fracturing.

View Full Image

Associated Press
Opponents of hydraulic fracturing at an April protest in New York.

On Friday, Texas Gov. Rick Perry signed into law a bill that will require companies to make public the chemicals they use on every hydraulic fracturing job in the state. While a handful of other states have passed similar measures, Texas's law is significant because oil and gas drilling is a key industry in the state and the industry vocally supported the measure.

Environmental groups said the law doesn't go far enough, but they agreed it was an important step.

Until recently, much of the industry opposed providing detailed information about its chemicals, arguing that they are trade secrets. But in recent months, as drilling opponents have accused companies of secrecy, many industry leaders have come to view that position as untenable.

"We have seen the light," Aubrey McClendon, chief executive of gas producer Chesapeake Energy Corp., told investors when asked about chemical disclosure at the company's annual meeting earlier this month.

Hydraulic fracturing, sometimes called "fracking," involves blasting millions of gallons of water, sand and chemicals into the ground to break up oil and gas-bearing rocks. The process has been used for decades, but it has become far more common in recent years as it has been used to open up huge new gas fields in Texas, Louisiana, Pennsylvania and other states.

Environmental groups and some residents in drilling areas fear chemicals from the hydraulic fracturing process are seeping into drinking water supplies. They say companies should be forced to disclose information about the chemicals they use, in part so homeowners can test their water for contamination.

The industry says such contamination is impossible when wells are constructed properly, adding that tens of thousands of wells have been drilled and fractured with relatively few problems. There have been cases of problems with wells that were improperly constructed, but the industry says such cases are rare and many specific incidents are in dispute. Companies say chemicals make up less than 1% of the volume of most fracturing jobs and are mostly benign.

For drillers, though, making that argument was difficult when they were refusing to say what chemicals were being used. Information on chemicals was available at drilling sites, but environmental groups have criticized that information as incomplete and inaccessible to the general public.

"I think the one thing hopefully that we all learned is you can't just say, 'Take our word for it,'"said Matt Pitzarella, a spokesman for gas producer Range Resources Corp.

Last year, Range Resources said it would begin voluntarily disclosing the chemicals used in all its wells in Pennsylvania, where the debate has raged. The company said at the time it hoped others would follow suit.

Earlier this year, many big gas producers, including Chesapeake, Chevron Corp. and BP PLC, said they would begin voluntarily publicizing the chemicals online at FracFocus.org. Several states, including Wyoming and Arkansas, have recently passed mandatory disclosure rules with at least tacit industry support.

Environmental groups, saying neither FracFocus nor the state laws go far enough, have called for a mandatory, national chemical database.

"Regardless of what state you live in, we think you deserve to know," said Amy Mall, a senior policy analyst with the Natural Resources Defense Council, an environmental group.

The Texas law will require companies to post information on FracFocus.org starting next year and also to disclose chemicals not included in the site's database through a separate process. Companies can request that information on certain chemicals be withheld from the public as trade secrets.

The Texas bill drew strong support from much of the industry. In May, a group of 12 big gas producers, including Range, Anadarko Petroleum Corp. and Apache Corp., wrote to Texas legislators urging them to pass the bill.

Jim Keffer, a Republican state representative who co-authored the Texas bill, said he believes the law will help the industry. "We're trying to alleviate the concerns," he said. "We're trying to show people that the industry does know how to do this."

The Texas bill has drawn mixed reviews from environmental groups. The Environmental Defense Fund, which initially helped promote the bill, ultimately withdrew its support after various changes were made, including the provision to list some chemicals separately from others.

But Matt Watson, a senior energy policy manager for the group, said that while the bill "is not the national model we'd hoped for," it is nonetheless a significant step.

Write to Ben Casselman at ben.casselman@wsj.com

[Crafty_Dog]

Yet another contemptible action by our Commander in Chief, who, for purely political and economically illiterate reasons is releasing 30 million barrels of oil from our Strategic Oil Reserve.      By the way, an additional detail, not widely known:  The salt caverns in which the oil is stored, deteriorate somewhat every time oil is taken out and then replaced.

[G M]

Yet another contemptible action by our Commander in Chief, who, for purely political and economically illiterate reasons is releasing 30 million barrels of oil from our Strategic Oil Reserve.      By the way, an additional detail, not widely known:  The salt caverns in which the oil is stored, deteriorate somewhat every time oil is taken out and then replaced.

Another brilliant move. I guess anything is better than domestic oil production.

[JDN]

By the way, an additional detail, not widely known:  The salt caverns in which the oil is stored, deteriorate somewhat every time oil is taken out and then replaced.

In 2009, the federal government found that Bayou Choctaw Cavern 20 near Baton Rouge, Louisiana had “structural problems that pose an environmental risk.” On February 16, 2011, Energy Secretary Steven Chu testified before Congress that: “We have an issue with one of our reservoirs. And there's one cavern that has some integrity issues. And we're draining that and backfilling other storage locations. But we're concerned of an overfill in those stores' locations. And so… we don't want to lose this crude.”

The senators say that tapping this oil now will help consumers, prevent a major oil leak, and ensure that hundreds of millions of dollars of crude oil is not wasted.

“Selling this oil now makes sense from both an economic and an environmental standpoint. The cavern has structural integrity issues and we need to move the oil to avoid losing it. Selling it now will prevent a potential environmental hazard, reduce prices at the pump in the short term, and create additional revenue to pay for restoring the reserve in a new, safer location. Letting this oil just seep into salt caverns would be both fiscally and strategically irresponsible,” said Reed, the Chairman of the Appropriations Subcommittee on the Interior and Environment.

[G M]

Remember the flap over foreign ships and the Deepwater Horizon cleanup?
 

By:Mark Tapscott | Editorial Page Editor Follow Him @mtapscott | 06/24/11 7:12 AM.
 

Soon after the Deepwater Horizon disaster began, with raw crude pumping out of the seabed into the Gulf of Mexico in the worst oil spill in American history, foreign nations began offering help with the clean up.
 
Especially notable was the Belgian firm DEME, which specializes in ocean-going clean-up work and which offered to bring the best equipment in the world for the operation to the Gulf.
 
But it didn't happen because President Obama refused to waive the Jones Act, a protectionist law sought by the maritime unions to keep foreign-crewed vessels out of U.S. waters.
 
The Jones Act has a national-emergency provision that allows the president to waive its requirement of American crews, as President George W. Bush did during the Hurricane Katrina disaster that nearly destroyed New Orleans.
 
But Obama resolutely refused last year to waive the Jones Act in order to allow the DEME and other equipment offered by foreign nations to be brought to the Deepwater Horizon cleanup. An operation that could have been completed in four months instead stretched into nearly a year.
 
But this week we have learned that under certain well-defined conditions Obama is more than willing to set aside his reservations about waiving the Jones Act. And those conditions have mainly to do with the fact Obama wants to be re-elected in 2012.
 
Among the biggest obstacles to Obama's re-election effort is the prospect that gas will still be around $4 a gallon next year. So what does Obama do? Not only does he authorize using 30 million barrels of oil from the U.S. Strategic Petroleum Reserve,  he waives the Jones Act to allow foreign crewed ships to deliver the SPR oil to U.S. ports.
 
That decision left Jim Adam, president and CEO of the Offshore Marine Service Association, bewildered and angry. He issued this statement:
 
"It is mind-boggling that the president would jeopardize national security by letting foreign owned and operated ships transport oil from our Strategic Petroleum Reserve to and from American ports. (Ironically, the President had earlier cited Libyan unrest as a national security emergency in order to tap those reserves.)
 
"For more than a year, the Obama Administration has had a stranglehold on energy development in the Gulf of Mexico, which has put tens of thousands of Americans out of work.
 
"The administration talks incessantly about the importance of safety and environmental compliance by industry, but when those regulations stand in the way of the President’s agenda, he doesn’t hesitate to do the opposite.
 
"Foreign-flagged vessels do not have to comply with U.S. safety and environmental standards. They do not pay U.S. taxes. And most certain, they do not employ U.S. workers."
 
Obviously, Adams simply fails to understand the fact that millions of barrels of raw crude was gushing into the deep waters of the Gulf of Mexico was not nearly enough of a national emergency to justify waiving the Jones Act compared to the extreme urgency of getting those gas prices down so voters won't take it out on Obama at polls in November 2012.
 
Now there's a real national emergency!
 
For more from Adams, go here. And a hearty Friday morning HT to Dan Kish, senior vice president of the Institute for Energy Research, for pointing out this latest fascinating insight into Obama's thinking on energy issues.


Read more at the Washington Examiner: http://washingtonexaminer.com/blogs/beltway-confidential/2011/06/remember-flap-over-foreign-ships-and-deepwater-horizon-cleanup

[G M]

So, the Deepwater Horizon spill isn't an emergency worth waiving the Jones Act over, but the alleged problems at the Choctaw cavern is?

[G M]

http://www.chron.com/disp/story.mpl/business/7430875.html

WASHINGTON — The government is preparing to sell $500 million worth of crude oil the U.S. has stockpiled for emergencies because of problems with the integrity of one of the underground caverns where it is stored.

Energy Secretary Steven Chu defended the plan Wednesday amid concerns the sale of crude from the Strategic Petroleum Reserve would leave the U.S. more vulnerable to disruptions in the supply of Mideast oil.
 
Chu said it was better for the government to cash in on the crude rather than risk it seeping out of a salt dome cavern in southeast Louisiana or chance an overflow of oil as it is moved to other brimming storage sites.

The U.S. already is draining the cavern and putting some of the oil in other storage locations, Chu told the Senate Energy and Natural Resources Committee.
 
"But we're concerned with overfilling those storage locations, and we don't want to lose this crude, so we are trying to manage that," he said.
 
The cavern in question - Bayou Choctaw Cavern 20 near Baton Rouge - now sits within 60 feet from the edge of a salt dome, defying federal requirements for a salt barrier of at least 300 feet to contain stored material. Seismic research in 2009 detected the problem and showed that the cavern had leached toward the edge of the salt dome.

Although Cavern 20 initially had a usable capacity of 7.5 million barrels, government geologists say it now can safely hold only 3.2 million barrels.
 
Spending on replacement
 
Congress has authorized the Energy Department to spend $33.5 million for a replacement, and officials are buying a privately owned cavern - also in the Bayou Choctaw salt dome - with a 10-million-barrel capacity.
 
The government's plan to sell the oil from the strategic reserve was part of President Barack Obama's budget plan for the 2012 fiscal year that begins in October. Obama delivered that budget blueprint to Congress on Monday, and the Senate energy panel was studying it Wednesday.
 
The Strategic Petroleum Reserve, established in the 1970s to protect the U.S. economy from price spikes caused by oil supply disruptions, is meant to fulfill federal requirements that the U.S. government and private sector stockpile about 90 days' worth of oil.
 
The reserve contains 726.5 million barrels of crude - just shy of its 727 million-barrel capacity - stored in 62 underground salt caverns at four sites in Texas and Louisiana. That represents a 75-day supply, based on government estimates that the U.S. imported 9.7 million barrels of oil daily in 2009.
 
Chu said the U.S. will put one day's supply on the market, and that the reduction will be temporary until new storage is available.


Read more: http://www.chron.com/disp/story.mpl/business/7430875.html

**So, where does the rest of the 30 million barrels come from, JDN?

[JDN]

GM - typical; a proliferation of posts aimed at me, yet none address the issue.  When you don't have facts....   

I don't know or care where the 30 million barrels come from.

Or Deepwater Horizon.

Nor am I particularly concerned with the Jones Act although I find it interesting.
http://www.gulfcoastmaritime.com/maritime-legal-news/deepwater-horizon-disaster-provokes-continued-jones-act-debate/912/

I merely pointed out that the information Crafty posted, "By the way, an additional detail, not widely known:  The salt caverns in which the oil is stored, deteriorate somewhat every time oil is taken out and then replaced." was incorrect information.  In fact, the oil needed to be taken out.  Whether it is transferred to another facility, sold on the open market, or given away has nothing
to do with further damaging these particular salt caverns.  As a matter of fact the caverns are in disrepair and the oil needs to be taken out.
 

[G M]

http://www.usembassy.it/pdf/other/RL33341.pdf

The program is managed by the Department of Energy (DOE). Physically, the
SPR comprises five underground storage facilities, hollowed out from naturally
occurring salt domes, located in Texas and Louisiana. The caverns were finished by
injecting water and removing the brine. Similarly, oil is removed by displacing it
with water injection. For this reason, crude stored in the SPR remains undisturbed,
except in the event of a sale or exchange. Multiple injections of water, over time, will
compromise the structural integrity of the caverns.2 By 2005, the capacity of the SPR
reached 727 million barrels.

[JDN]

Thank you.  That post at least addresses the issue.

However, this particular facility already had been noted to be at it's end of it's operational life.   Obama's decision, wrong or right, to take this oil out and put it on
the market will have no impact on this already spent cavern.  The oil needed to be removed regardless.

[DougMacG]

And strangely, it was against our national security interest to release the oil in March, April and May, but necessary now because of whatever the latest reason is that people with no integrity put out.

Gasoline is like milk, needs freshness dating breaks down over time.  This I assume is unrefined oil.  Needs to go to the refinery which takes time and takes up refining capacity which we also haven't added to in a very long time.

Right or wrong with this decision, it is a band-aid on a central and major government caused problem, crucial to our security both economically and strategically.  We are not low on energy; we just keep tying ourselves up in laws and red tape.

One good part is I understand this was coordinated with other countries releasing reserves to make an impact.  But then when they re-fill the reserves they are taking the exact same of oil off the market at a slightly different time - or leaving the free world without strategic reserves.

It should have been combined with a comprehensive action to drill more, refine more, sell more and yes, consume more oil.  Our national policy is still the opposite.  Stay home. Destroy tourism and fun.  Take government transit.  We will tell you where you can go and we will control your thermostats as well.  Government knows best.

An expansive plan to flood the market for a hundred years with natural gas and make it widely available for transportation uses would take the pressure off of oil as well.

The last comprehensive energy plan died with the personal attacks on Dick Cheney's committee.  Imagine that, he turned to people who know how to produce energy to get advice on ... how to produce more energy.  And people like Colin Powell, Chistie Todd Whitman, Mitch Daniels, etc.  But we didn't implement the plan. Now we are here facing constant scarcity, unreliable supplies and reliant way too much - still - on enemies of the United States for crucial resources.  http://wtrg.com/EnergyReport/National-Energy-Policy.pdf  We could be 10 years into this plan right now and more than 10 into into ANWR by now.  The Alaskan pipeline flow is so slow right now the continuing use of the line is now in question. 

Meanwhile I need a G*d D*mned government license to go sailing.

Decline was a choice, and we made it.  This does NOTHING to change that.

[G M]

Thank you.  That post at least addresses the issue.

However, this particular facility already had been noted to be at it's end of it's operational life.   Obama's decision, wrong or right, to take this oil out and put it on
the market will have no impact on this already spent cavern.  The oil needed to be removed regardless.

http://www.statesman.com/news/nation/u-s-to-sell-500-million-in-oil-1259883.html?cxtype=rss_news

The cavern in question — Bayou Choctaw Cavern 20 near Baton Rouge, La. — is inside the hollowed-out salt dome, but the oil is within 60 feet of the edge of the dome, defying federal requirements for a 300-foot barrier.

Although Cavern 20 initially had a usable capacity of 7.5 million barrels, government geologists say it can now safely hold only 3.2 million barrels of oil to limit the risk of breaching the side of the salt dome.

To make up for the now-unusable capacity in Cavern 20, federal officials have been preparing to purchase a privately owned existing cavern — with a 10-million-barrel capacity.

The government's plan to sell oil from the strategic reserve was included in President Barack Obama's budget plan for the 2012 fiscal year that begins in October. Obama delivered that budget blueprint to Congress on Monday, and the Senate energy panel was studying it on Wednesday.

[G M]

The Strategic Petroleum Reserve, established in the 1970s to protect the U.S. economy from price spikes caused by oil supply disruptions, is meant to fulfill federal requirements that the U.S. government and private sector stockpile about 90 days' worth of oil.

The reserve contains 726.5 million barrels of crude - just shy of its 727 million-barrel capacity - stored in 62 underground salt caverns at four sites in Texas and Louisiana. That represents a 75-day supply, based on government estimates that the U.S. imported 9.7 million barrels of oil daily in 2009.

Chu said the U.S. will put one day's supply on the market, and that the reduction will be temporary until new storage is available.

Lots of questions

Before Chu's explanation, some senators questioned the plan to sell oil while unrest in the Middle East underscores the risks of U.S. reliance on foreign oil. They also wondered if the sale was really aimed at raising money for the cash-starved federal government.

Sen. Jeff Bingaman, D-N.M., the energy committee chairman, noted that the administration's budget proposal contains "very little in the way of justification."

The top Republican on the committee, Sen. Lisa Murkowski of Alaska, questioned the wisdom of a non-emergency sale. She said the U.S. is more than 50 percent dependent on foreign oil sources, and that permitting for domestic production has been slowed by new rules in response to last year's Gulf of Mexico oil spill.

"Why is it appropriate at this particular juncture for the United States to reduce our stocks of emergency crude?" Murkowski asked.

She also asked Chu for more information about long-term integrity issues with other underground salt caverns that hold the emergency oil stockpile.

Other caverns abandoned

The government previously has abandoned at least two other storage caverns, said Bruce Beaubouef, the author of a book on the Strategic Petroleum Reserve. Both initially were chosen during the government's mid-1970s scramble to stash oil away - mostly because they were readily available and not necessarily because they were the best long-term sites.

The government used previously created salt caverns along the Gulf Coast to store the first 250 million barrels of oil in the reserve.

Later, it began using a process called "solution mining" to carve additional caverns out of underground salt domes. The process involves injecting water deep underground to dissolve salt and create the pockets, some of which are as big as skyscrapers.

The same process that is used to create the caverns can make them bigger over time as water is injected to force oil from the domes, Beaubouef said.

"That essentially leaches out the cavern further," he said. "That's planned for. It's in the design. But every time there's a drawdown order, the cavern gets bigger."

It appears that may have happened at Bayou Choctaw Cavern 20, which the government tapped for oil after Hurricane Katrina in 2005 and Hurricane Gustav in 2008. Seismic analysis a year later showed the cavern had leached to within 60 feet of the edge of the salt dome.

 jennifer.dlouhy@chron.com

**So, we must sell all the oil in the Bayou Choctaw Cavern 20 (7.5 million barrels) because it's structural integrity was damaged by previous drawdowns, and in addition, we are going to damage other caverns to sell another 22.5 million gallons of oil. Sounds like something a community organizer would come up with.

[Crafty_Dog]

"**So, we must sell all the oil in the Bayou Choctaw Cavern 20 (7.5 million barrels) because it's structural integrity was damaged by previous drawdowns, and in addition, we are going to damage other caverns to sell another 22.5 million gallons of oil. Sounds like something a community organizer would come up with."

That 'bout gets it-- sorry JDN, but it looks like I remembered correctly

[JDN]

"**So, we must sell all the oil in the Bayou Choctaw Cavern 20 (7.5 million barrels) because it's structural integrity was damaged by previous drawdowns, and in addition, we are going to damage other caverns to sell another 22.5 million gallons of oil. Sounds like something a community organizer would come up with."

That 'bout gets it-- sorry JDN, but it looks like I remembered correctly

The "community organizer" didn't nor is he going to "damage" the Bayou Choctaw; Bush did.  Maybe for good reason; maybe not.  That is not my point.

Now, present day, Obama has no choice.  You implication that Obama's decision will deteriorate the Choctaw cavern is wrong.  Rather, the structural integrity is already damaged, therefore his decision to sell, or transfer or give away this oil is necessary due to the structure already being damaged.  That about sums it up.

[G M]

"**So, we must sell all the oil in the Bayou Choctaw Cavern 20 (7.5 million barrels) because it's structural integrity was damaged by previous drawdowns, and in addition, we are going to damage other caverns to sell another 22.5 million gallons of oil. Sounds like something a community organizer would come up with."

That 'bout gets it-- sorry JDN, but it looks like I remembered correctly

The "community organizer" didn't nor is he going to "damage" the Bayou Choctaw; Bush did.  Maybe for good reason; maybe not.  That is not my point.

Now, present day, Obama has no choice.  You implication that Obama's decision will deteriorate the Choctaw cavern is wrong.  Rather, the structural integrity is already damaged, therefore his decision to sell, or transfer or give away this oil is necessary due to the structure already being damaged.  That about sums it up.

Well, according to the articles "Cavern 20 initially had a usable capacity of 7.5 million barrels, government geologists say it can now safely hold only 3.2 million barrels of oil to limit the risk of breaching the side of the salt dome.". Now, I don't have a problem with selling all 7.5 million barrels just to be safe. My question is, where does the rest of the oil he's selling come from? Won't that damage those salt caverns? Does that mean we'll have to sell that oil in the future and buy/mine more salt caverns?

[G M]

http://www.cbsnews.com/8301-503544_162-20073794-503544.html

August 16, 2005:

"I know that everybody's getting killed by these higher gas prices, but we need to hold on to that reserve," he said. "If the Saudi Arabian monarchy was overthrown and our imports were cut off, you'd be looking at $8- to $9-a-gallon gasoline." (From an Aug. 17, 2005 article in the St. Louis Post-Dispatch)

August 31, 2005:

"The reserve should only be used in the event of an emergency, and that we shouldn't be tapping the reserve to provide a small, short-term decrease in gas prices."

July 7, 2008:

"You have a situation let's say where there was a major oil facility in Saudi Arabia that was destroyed as a consequence of terrorist acts and you suddenly had huge amounts of oil taken off...taken out of the world market. We wouldn't just be seeing $4/gallon oil [sic], we could see a situation where entire sectors of country had no oil to function at all and that's what the strategic oil reserve has to be for."

August 4, 2008:

"We should sell 70 million barrels of oil from our Strategic Petroleum Reserve for less expensive crude, which in the past has lowered gas prices within two weeks."

Later in the day, on his campaign plane, on August 4, 2008:

"I historically have been very hesitant about that but the idea of a swap actually I think has merit in terms of just short-term effect on prices. I offer no sort of suggestion that in any way that it's going to make a long term impact on the fact that demand worldwide is going up and supply is flat lined at best. And we're going to have to make some enormous adjustments, so the question is, if we're replacing some light crude coming out with some heavier crude going in, is that going to have some effect on short-term supplies to provide people some relief? I think that that's very different from saying we're going to raid the highway trust fund and there's no prospects of immediate relief and if there was then at most it's 30 cents a day."

March 11, 2011:

"So we're going to try to do everything we can not only to stabilize the market, as I said, to the extent that we see any efforts to take advantage of these price spikes through price gouging, we're going to go after that. If we see significant disruptions or, you know, shifts in the market that are -- are so disconcerting to people that we think a Strategic Petroleum Reserve release might be appropriate, then we'll take that step. And we're going to monitor very closely."



Read more: http://www.cbsnews.com/8301-503544_162-20073794-503544.html

[DougMacG]

How about we switch to an American made natural gas strategic reserve.  Legalize safe clean production, produce it in high quantities, make it affordable and hook it up to every home and business with a pipeline and a meter.

http://www.naturalgas.org/environment/naturalgas.asp
"The combustion of natural gas emits almost 30 percent less carbon dioxide than oil, and just under 45 percent less carbon dioxide than coal."

[Crafty_Dog]

By DEVLIN BARRETT and JACOB GERSHMAN
A proposal by state regulators to allow hydraulic fracturing drilling for gas will likely fuel a new burst of lobbying on the polarizing issue.

The New York Department of Environmental Conservation said a draft report to be released Friday will recommend barring the process called fracking in areas that provide drinking water.

The DEC recommendations will ultimately land on the desk of Gov. Andrew Cuomo, a Democrat who has tried to carefully navigate the issue. The dispute often splits rural communities in which fracking is alternately seen as an economic windfall or an environmental hazard. Public opinion on drilling also tends to fall along geographic lines, with much of the opposition centered around New York City and downstate, with the biggest supporters tending to be upstate.

The document is seen as a key starting point for months of debate over fracking in the state. New Jersey's Legislature decided to ban the practice.

The Manhattan Institute, a conservative think tank, has estimated that ending New York's moratorium on fracking would mean a $11.4 billion boost in economic output, though that calculation did not assume the limitations in the new proposal.

New York City officials had sought to protect their expansive watershed, and were pleased by the proposal announced Thursday in Albany.

Mayor Michael Bloomberg called the proposal "the right decision'' because it would ban fracking in major watersheds and create a system of regulations to "allow drilling in a rigorously protective and environmentally responsible way....These new recommendations appear to adopt the restrictions we sought.''

Assembly Speaker Sheldon Silver said in a statement that he was happy aquifers and drinking water supplies would be protected.

Roger Downs, legislative director for the Atlantic chapter of the Sierra Club, said he had not expected a complete statewide ban on the practice, but said the DEC's proposal is still weak on allowing for future analysis and data.

The DEC would bar hydrofracking in the aquifers for New York City and the upstate Syracuse area, and would create a series of restrictions aimed at keeping the practice—which involves pumping a mixture of water, sand and chemicals deep underground to free reserves of natural gas—away from drinking water.

Under the proposal, no permits would be issued for sites within 500 feet of a private water well or domestic-use spring. Nor would permits be issued for a site within 2,000 feet of a public drinking water supply well or reservoir until three years or more of further data collection. And no permits would be issued for well sites within a 100-year floodplain.

The governor may not necessarily have the last word on the issue. The Legislature, which previously passed its own moratorium on drilling, could decide to revisit fracking. And the state attorney general, Eric Schneiderman, is also active on the issue, having filed a lawsuit accusing federal agencies of not conducting necessary study of the issue before allowing drilling in the Delaware River basin.

While the proposal announced Thursday echoes many of the points Mr. Schneiderman made, the entire issue of fracking has elicited significant differences in federal and state approaches to the burgeoning industry.