July 2010

A recent report by the National Oceanic and Atmospheric Administration, which has received wide media attention, has come to the conclusion that evidence for anthropogenic global warming is “undeniable.” This has, of course, been seized on by alarmists as confirming that all of their proposed solutions to future warming must therefore be undeniably correct as well. The conclusions of the report are also being used in attempts to try to bury the Climategate scandal of recent months.

Fiona Harvey of the Financial Times reported on this story (reg. req’d.) for the front page of today’s print edition and has the good sense to quote our very own Myron Ebell for a rebuttal:

Sceptics remain unconvinced. Myron Ebell, of the Competitive Enterprise Institute, said: “I think climategate is nowhere near done and people will become more sceptical as they find out more and more about how these conclusions were not based on science but were in fact based on political calculation.”

The repeated use of the term “undeniable”  by bloggers and activists commenting on the report is merely the latest attempt by the warmists to claim that there’s nothing more to be said about climate policy – that the debate is over. It’s like a boxer suddenly grabbing the announcer’s microphone after round three, announcing he has won, and telling everyone watching the match to go home. The only trouble with that strategy is that we’re still in the ring – and we’re not going anywhere.

Many have already written the obituary for the Kerry-Lieberman bill and other cap-and-trade legislation in the current Congress. In today’s Politico, however, columnist Darren Samuelsohn quotes Sen. John Kerry’s rejection of that assessment: ”No, it’s not dead because we’re going to have a lame duck session and we have weeks ahead of us.”

Re-read the first part of Kerry’s explanation. Kerry is saying that even if the Democratic leadership does not hold a vote on cap-and-trade before the November elections, fearing the wrath of the electorate, the greenhouse gang might still enact cap-and-trade after the elections, when voters could no longer hold them accountable.

How exactly would cap-and-traders pull it off? Samuelsohn summarizes the strategy as explained by an unnamed spokesman for a “major advocacy group”:

But one source from a major advocacy group said Wednesday that another option is for the Senate to pass a pared back energy measure now and then go to conference during a lame-duck session with the House-passed climate bill that includes greenhouse gas limits across multiple sectors of the economy. At that point, the source said, anything is possible.

Clever, but perhaps not clever enough. As Machievelli infamously advised princes long ago, one should not say to someone whom one wants to kill, “Give me your gun, I want to kill you with it,” but merely “Give me your gun,” for once you have the gun in hand, you can satisfy your desire.

Kerry, the unnamed advocacy group spokesman, and others have let the cat out of the bag. They are saying in effect, “Give us an energy bill, any energy bill, we want to snooker you with it to get cap-and-trade. We’ll conference any energy bill passed by the Senate with Waxman-Markey in a lame duck session, and neither you nor the American people will be able to stop us. Hah!”

Except that loose-lipped schemers are half-baked Machiavellians. The Party of No can and should have the last laugh. All Senate Rs have to do is resist the temptation to “do something.” They now have a compelling and easily explained reason to postpone further consideration of energy legislation until the next Congress. It is simply that the greenhouse gang, by its own admission, does not intend to play fair or respect the wishes of the electorate.

Rs who strongly feel the impulse to “do something” need merely wait until January 2011, when they are widely expected to hold more seats in both the House and Senate, and when Waxman-Markey will no longer be in play.

Last week, the House Energy and Commerce Committee unanimously approved H.R. 5626, Chairman Henry Waxman’s Blowout Prevention Act. Here’s the version of the bill as marked up and approved by the Committee. Here’s the earlier discussion draft on which the Energy and Environment Subcommittee held a hearing on June 30.

Like the discussion draft, the marked-up version of the bill is a Trojan Horse for restricting and, ultimately, shutting down deepwater oil production.

The most mischievous language is in the first substantive provision, Sec. (2).

Sec. (2)(a)(3) requires each applicant for a drilling permit to have an oil spill response plan ensuring “the applicant has the capacity to promptly control and stop a blowout in the event the blowout preventer and other well control measures fail” (p. 2). If the ongoing disaster in the Gulf has taught us anything, it is that once the blowout preventer and other well control measures fail, there may be no way “to promptly control and stop a blowout.” H.R. 5626 would establish a test no oil company can pass, a standard none can meet.

Nobody had the capacity to “promptly control and stop” the Macondo well blowout after the preventer and other well control measures failed — not BP, not the oil industry working as a team, not the federal and state governments working with the oil industry.

The sponsors had to know they were demanding the impossible when they drafted the bill. Consider these excerpts from a colloquy between Oversight and Investigation Subcommittee Chairman Bart Stupak (D-Mich.) and ExxonMobil CEO Rex Tillerson at the June 15 Energy and Environment Subcommittee hearing:

Stupak: “So when these things happen, these worst-case scenarios, we can’t handle them, correct?”
Tillerson: “We are not well equipped to handle them. There will be impacts as we are seeing. . . .That’s why the emphasis is always on preventing these things from occurring, because when they happen, we’re not very well equipped to deal with them.”
Stupak: “. . . so no matter which one of the oil companies here before us had the blowout, the resources are not enough to prevent what we’re seeing day after day in the gulf, not only the loss of 11 people, but we’re on, what, day 56 or 57 of oil washing up on shores. There is no other plan. There is no way to stop what’s happening until we finally cap this well, correct?”
Tillerson: “That is correct. . . . There is no response capability that will guarantee you will never have an impact. It does not exist and it will probably never exist.”

The discussion draft’s permitting requirements apply to all “high risk” wells, defined expansively as any offshore well plus any onshore well having the potential to cause serious environmental harm in the event of a blowout. The marked-up version targets “covered wells” rather than “high risk” wells, but this is largely a distinction without a difference. Covered wells include all wells located on the Outer Continental Shelf (OCS), plus any other well that, “based on criteria established by rule … could, in the event of a blowout, lead to extensive and widespread harm to public health, safety, and the environment” (pp. 41-42).

The OCS is defined (by reference to Sec. 1301 of the Submerged Lands Act) as waters lying seaward of three geographic miles from the coastline (p. 43). So H.R. 5626 would cover any deepwater well plus any shallow-water and onshore well where a blowout could lead to widespread environmental harm. Very few large wells would be exempt.

Presumably, operators could “promptly control and stop” a blowout at any onshore well and most shallow-water wells. Nonetheless, H.R. 5626 could effectively ban new wells in deep water, and deep water is the future of offshore oil and gas production. As the Department of Interior notes in its May 27 report, Increased Safety Measures for Energy Development on the Outer Continental Shelf, U.S. deepwater offshore oil production surpassed shallow water oil production in 2001, and in 2009, 80% of offshore oil production and 45% of offshore gas production “occurred in water depths in excess of 1,000 feet.” 

The bill does not clearly state how its requirements would apply to existing wells. Would an operator’s permit be revoked if he cannot demonstrate the capacity to “promptly control and stop” a blowout after the preventer and other well-control measures fail? If so, then the bill would not only block new deepwater drilling, it would also create a vehicle for shutting down existing wells. 

Sec. (2)(c) requires the operator to obtain a revised permit if he makes a “material modification” in well design, the blowout preventer, his plan to promptly stop a blowout, or his capability to begin or compete drilling of a relief well for a covered well. Apparently, then, an existing well would be subject to the new permitting requirements if it undertakes a “material modification.” In that case, however, the bill could discourage operators from making material improvements in well safety. Some might avoid or delay making safety improvements in order to avoid or delay becoming subject to an impossible standard. If I am reading these provisions correctly, H.R. 5626 could actually make offshore drilling less safe!  

Federal officials may not be able to finesse Sec. (2)(a)(3), even if they want to, because H.R. 5626 would empower “citizens” to enforce its provisions and associated regulations via litigation:

Any person having a valid legal interest which is or may be adversely affected may commence a civil action in Federal district court of appropriate jurisdiction on such person’s own behalf to compel compliance with this Act, or any regulation or order issued under this Act, or any regulation or order issued under this Act, against any person, including the United States, and any other government instrumentality or agency (to the extent permitted by the eleventh amendment to the Constitution) for any alleged violation of any provision of this Act or any regulation or order issued under this Act. [p. 28]

The discussion draft did not include the qualifier “valid legal interest.” But how difficult is it for an environmental group to demonstrate a “valid legal interest” in enforcing environmental laws and regulations? Enact the Blowout Prevention Act, and environmental groups will be able to sue any agency that fails to hold an oil company to an unattainable standard.

A few concluding thoughts. The security risks of dependence on petroleum imports are often hugely exaggerated, as the Cato Institute’s Jerry Taylor and Peter van Doren explain. Nonetheless, the sponsors of H.R. 5626 view petroleum imports with alarm. If the bill kills the future of U.S. offshore production, our dependence on Saudi Arabia and OPEC will increase. Is that what the sponsors want?

Perhaps their core premise is that oil is so evil that any restriction on oil production is good, because it will hasten the arrival of a “beyond petroleum” future. Such thinking is dangerous folly.

Although oil spills are bad, oil is good. Without oil, there would be no modern commerce and no mechanized agriculture. Life for most of humanity, including most Americans, would be poor, nasty, and short. Indeed, many of us would not even be alive.

Killing the future of offshore production would increase consumers’ pain at the pump, destroy tens of thousands of high-paying jobs, and undermine the economy of the Gulf Coast region. A “beyond petroleum” future would likely be just as distant — or even more so, because a poorer America would have fewer resources to invest in technological innovation.

Petrophobes overestimate their ability to predict and control the future. Consider these examples. 

• In 1990, the California Air Resources Board (CARB) adopted a zero emission vehicle (ZEV) mandate requiring 10% of all new cars sold in California be electric vehicles by 2003. Ten percent of the California new-car market is about 150,000 vehicles. CARB had to backpeddle several times as it became apparent that consumers were not buying these costly, limited-range vehicles. In 2008, CARB reduced the mandate to 2,500 all-electric vehicles – a rollback of about 98%.
• Congress in 2007 enacted a Renewable Fuel Standard (RFS) requiring refiners to sell 250 million gallons of cellulosic ethanol in 2011. Earlier this week, EPA announced it would reduce the 2011 target to 5 – 17 million gallons per year –  a 94-98% rollback.

It is not surprising that veteran petrophobes like Reps. Waxman and Markey (D-Mass.) drafted H.R. 5626. It is surprising that every Republican member voted for it too. Do any of them have buyer’s remorse? If not now, when?

“Senate Majority Leader Harry Reid will bring a sweeping energy and climate bill to the floor as early as the week of July 26, including a controversial cap on emissions from power plants,” environmental reporter Darren Samuelsohn writes today in Politico.

Except that Reid — like Sens. John Kerry (D.-Mass.), Joe Lieberman (I-Conn.), and Lindsey Graham (R-S.C.) – won’t call a spade a spade.

“I don’t use that,” Reid said, referring to the term cap-and-trade. “Those words are not in my vocabulary. We’re going to work on pollution.”

For years, so-called progressive politicians clamored for cap-and-trade — the Kyoto Protocol, the McCain-Lieberman bill, the Lieberman-Warner bill, the Waxman-Markey bill, etc.

No longer. Thanks to the educational efforts of the Competitive Enterprise Institute, Americans for Prosperity, Americans for Tax Reform, National Taxpayers Union, American Conservative Union, FreedomWorks, the Heritage Foundation, National Center for Public Policy Research, and other free-market/limited government organizations, the public came to understand that cap-and-trade is a hidden tax on energy. By the end of 2009, cap-and-”tax” had become a political liability, and this year proponents fear even to speak its name – especially as the November elections approach.

So what’s a poor progressive politician to do? Why, dissemble, obfuscate, and prevaricate to fool the voter. 

The problem with this strategy — beyond the sheer dishonesty of it — is that people aren’t as dim as progressive politicians assume. Most people do not spend their time monitoring Congress, but they don’t need to. Numerous watchdog groups are ready to pounce on every ploy to steal our liberty and prosperity, and in the Age of the Internet, information travels fast.

Reid and company are fooling themselves if they believe rebranding cap-and-trade as “pollution limits” will blunt public opposition to energy taxes.

No, Sylvester, not even close! As noted in a previous post, on Earth Day (April 22), a Navy F/A-18 Hornet fighter jet became the first aircraft to “demonstrate the performance of a 50-50 blend of camelina-based biojet fuel and traditional petroleum-based jet fuel at supersonic speeds.”  Camelina is a non-edible plant in the mustard family.

Navy Secy. Ray Mabus crowed that the biofueled fighter demonstrates “the Navy’s commitment to reducing dependence on foreign oil as well as safeguarding our environment” and to being “an early adopter of alternative energy sources.”

Secy. Mabus neglected to mention that camelina-based fuel costs $65 a gallon (ClimateWire, 6/28/10, subscription required) – about 30 times more than commercial jet fuel. Only an organization funded with your tax dollars could afford to ignore so much pain at the pump.

Plain and simple economics — not the alleged machinations of Big Oil or Congress’s unwillingness to put a price on carbon – explains why America remains dependent on petroleum.

More evidence (as if any were needed) that politicians cannot mandate and subsidize us into a beyond petroleum future comes from an unlikely source — EPA.

SugarcaneBlog.Com reported yesterday:

Once again, the U.S. Environmental Protection Agency (EPA) has had to rollback the ambitious nationwide mandate for cellulosic biofuels that Congress created in the 2007 energy bill. EPA announced today proposed regulations to implement the Renewable Fuel Standard (RFS2) for 2011 but said the goal of 250 million gallons of cellulosic biofuels cannot be met. EPA is proposing to set the standard in the range of 5 to 17 million gallons.

This means that next year, somewhere between 0.004% and 0.015% of our motor fuel will come from cellulosic ethanol. I feel more energy independent already, don’t you?

By way of background, in the 2007 Energy Independence and Security Act (EISA), Congress mandated that importers, blenders, and refiners sell 36 billion gallons of renewable motor fuel by 2022, with 16 billion gallons classified as cellulosic. As you may recall, President G.W. Bush touted ethanol made from plant cellulose such as switchgrass in his 2006 state of the union address.

Five to 17 million gallons is a very long way from 16 billion gallons.  Of course, some miracle may happen between now and 2022. But as for 2011, EPA is in wholesale retreat on cellulosic ethanol. If refiners actually sell 17 million gallons of cellulosic in 2011, the RFS program will fall short of EISA’s 250 million gallon target by 94%. If refiners sell only 5 million gallons, the program will fall short by 98%.

EPA says it “remains optimistic” about the commercial potential of cellulosic ethanol. Well, did you expect EPA to badmouth a mandate that expands its control over the  transport sector?

Bloomberg Businessweek explains more clearly than EPA does why the agency had to back-peddle so furiously: “The Environmental Protection Agency proposed requiring less cellulosic ethanol to be blended into gasoline next year than sought under U.S. law because production of the alternative fuel hasn’t reached commercial scale.”

The lesson should be obvious. It was well and memorably expressed by three MIT scholars in their retrospective on the Carter era energy programs:

The experience of the 1970s and 1980s taught us that if a technology is commercially viable, then government support is not needed and if a technology is not commercially viable, no amount of government support can make it so.