April 2012

Post image for Eco Crowd Growing Desperate—and Dangerous

The climate scaremongers are losing the public relations battle on global warming—and it’s driving them absolutely batty.

Take eco-warrior Steve Zwick. Writing for FORBES Zwick calls on so-called “climate deniers” to be treated like war criminals:

Let’s take a page from those Tennessee firemen we heard about a few times last year—the ones who stood idly by as houses burned to the ground because their owners had refused to pay a measly $75 fee. We can apply this same logic to climate change.

We know who the active denialists are—not the people who buy the lies, mind you, but the people who create the lies. Let’s start keeping track of them now, and when the famines come, let’s make them pay.  Let’s let their houses burn until the innocent are rescued. Let’s swap their safe land for submerged islands.  Let’s force them to bear the cost of rising food prices.  They broke the climate.  Why should the rest of us have to pay for it?

Notice that arguments contrary to what Zwick believes are not honest differences of opinion—they are “lies.” Those who disagree with him are not merely mistaken, they are malevolent. They are not worthy of being converted to his point of view via honest debate; they deserve only to have their homes razed.

This is fascism, pure and simple, and it is more and more a feature of environmentalist rhetoric.

The violent imagery has even seeped into the pronouncements of the eco-priests at the Environmental Protection Agency. Recently a video surfaced of EPA Region VI Administrator Al Armendariz admitting that his agency’s philosophy is to “crucify” oil a gas companies:

I was in a meeting once and I gave an analogy to my staff about my philosophy of enforcement, and I think it was probably a little crude and maybe not appropriate for the meeting, but I’ll go ahead and tell you what I said:

It was kind of like how the Romans used to, you know, conquer villages in the Mediterranean.  They’d go in to a little Turkish town somewhere, they’d find the first five guys they saw and they’d crucify them. Then, you know, that town was really easy to manage for the next few years.

How can anyone, whether on the Left or the Right, not be chilled to the bone to hear a government official talk in such a manner about private companies and individuals?

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Post image for CAFE, RFS Endanger Convenience Stores, Study Cautions

Today, the National Association of Convenience Stores (NACS) published a study on the challenges facing the more than 120,000 U.S. convenience stores that sell motor fuel in a market increasingly shaped by the competing requirements of two federal programs: renewable fuel standard (RFS, a.k.a. the ethanol mandate) and corporate average fuel economy (CAFE).

I may have more to say about the study in a later post, but the skinny is that RFS and CAFE may whipsaw the retail fuel outlets upon which most of us depend to fill our tanks. CAFE will decrease the amount of fuel purchased and the frequency of consumer transactions at convenience stores, while the RFS will force convenience stores to make costly investments in storage tanks and blender pumps to sell increasing amounts and percentages of high-ethanol blends.

The excerpts below from NACS’s press release paint a disturbing picture on an industry caught in the regulatory cross hairs:

“RFS and CAFE policies cannot coexist without substantial changes in the retail and vehicle markets to accommodate significantly higher concentrations of renewable fuels, an unlikely scenario given that we may not even meet current requirements as they stand in 2012,” said John Eichberger, NACS vice president of government relations and the author of the new NACS whitepaper, The Future of Fuels: An Analysis of Future Energy Trends and Potential Retail Market Opportunities.

The Renewable Fuels Standard, revised by Congress as part of the Energy Independence and Security Act of 2007 (EISA), requires that increasing amounts of qualified renewable fuels be integrated into the motor fuels supply, culminating at a minimum of 36 billion gallons in 2022. This mandate was expected to increase renewables to approximately 20% to 25% of the overall gasoline market in 2022, about double the rate of 10.4% last year.

Meanwhile, in 2011 the Obama administration proposed new CAFE standards, which are expected to be finalized this summer, that seek to increase the average fleet fuel efficiency to an equivalent of 54.5 miles per gallon by 2025. The cumulative effect of the two mandates is that renewable fuels will be required to represent a significantly greater share of the market than originally anticipated — perhaps as much as 40%, or four times higher than today.

“This level of renewable fuels penetration in the market will impose significant economic burdens on the retail fuels market and consumers,” said Eichberger. “To meet such a high renewable fuels concentration, it is likely that most retailers in the country will have to replace their underground storage tank systems and fuel dispensers. For the convenience industry alone, this will require a minimum infrastructure investment that will add nearly $22 billion to the cost of retailing fuels.” [And where will they get the scratch, I wonder, with CAFE depressing motor fuel demand and sales?]

Even after this enormous infrastructure investment, it still may be impossible to satisfy the RFS, considering that only one in six consumers will drive vehicles capable of running on the mandated fuels. The U.S. Energy Information Administration (EIA) projects only 16% of on-road vehicles in 2022 will be flexible fuel vehicles.

“Unless something dramatic happens, we will hit the ‘blend wall’ within the next two years and will not be able to meet RFS requirements. This will trigger massive fines throughout the petroleum distribution system that will increase the cost to sell motor fuels,” said Eichberger.

An industry expert explains the problem to me as follows: [click to continue…]

Post image for EPA’s MATS Economic Analysis Omits Economy from Analysis

The Environmental Protection Agency concedes that its recently finalized Mercury and Air Toxics Standards rule, also known as the Utility MACT, would cost $10 billion annually. Industry estimates are much, much higher. Even EPA’s (likely lowball) figure makes the MATS rule one of the most expensive direct regulations ever.

Despite these evident costs, EPA claims that the regulation will not only save the environment, but also benefit the economy. EPA Deputy Administrator Robert Perciasepe testified, for example, “Our analysis shows, particularly on these utility rules, that it will create jobs.” Head Administrator Lisa Jackson has repeated the same claim. “Every model that we run,” she said last year, “shows… that it would actually create jobs.”

But these claims are entirely disingenuous. EPA analysis does not show that the Utility MACT will result in net job creation, only that it will create jobs in the coal industry and those industries that produce pollution abatement equipment. The wider economic implications are ignored. As EPA’s Regulatory Impacts Assessment (RIA) states, “the Agency has not quantified the rule’s effects on all labor in other sectors not regulated by the [mercury standard].” In other words, “every model” Jackson ran cooked the books in favor of EPA’s conclusion.

In economics, such analysis is known as a “broken-window fallacy,” which views only a narrow range of effects of a particular action. “There is only one difference between a bad economist and a good one,” wrote 19th century economist Frederic Bastiat. “The bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” EPA focuses on the “seen”—the workers required to install pollution controls—while it ignores the unseen—the workers who lose their jobs or are forced to take pay cuts due to higher electricity prices.

Nevertheless, EPA continues to promulgate this myth that the Utility MACT will benefit the economy. But consider what it means to benefit the economy. As Bastiat writes, economic development “diminishes the ratio of effort to result… that is, [it] lessens the effort needed to have a given quantity.” EPA regulations do the opposite. The agency’s RIA notes, “regulation leads to more labor being used to produce a given amount of output.” In other words, it increases the ratio of effort to result—it increases the effort needed to have a given quality. In sum, unnecessary regulations do not develop an economy—they impoverish it.

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Post image for Institutional Environmentalism: Less about Hugging Trees, More about Bringing America to Her Knees

Despite his speechmaking touting an “all of the above” energy strategy, President Obama’s reelection could depend his willingness to stand in the way of developing America’s resources.

Back in November, at the time of the original Keystone XL pipeline decision, environmental groups threatened to pull their backing for Obama if he approved the pipeline. Michael Brune, executive director of America’s largest environmental group, the Sierra Club, is on record as saying that the President’s decision on Keystone would have “a very big impact” on how they funnel their resources—with the obvious implication being that they would not support the President if he didn’t do their bidding.

Other environmental groups such as the Natural Resources Defense Council (NRDC) and the Environmental Defense Fund took a different tack but with the same goal. A press release from the Rainforest Action Network promised the President that if he denied Keystone, he would see a “surge of enthusiasm from the green base that supported you so strongly in the last election.”

Environmental groups clearly understand they have the ability to influence the President’s decisions based on their claims to support—or not support—his bid for a second term. So far, they must be pleased with his administration’s efforts. On Wednesday, April 18, leading environmental groups came out with their official endorsement of President Obama—“the earliest” the groups “have ever endorsed in a presidential election cycle.” According to The Hill, “The groups are planning a mix of advertising and on-the-ground work on Obama’s behalf.” However, Glenn Hurowitz, a senior fellow at the Center for International Policy, thinks the groups should have waited longer before endorsing the President. He believes the early endorsement removes the “greens’ leverage.”

Most pundits agree that the 2012 presidential election will be a hard fought, close race. In order to win, President Obama needs the four million votes from “greens” the groups represent—and they do not want increased domestic resource extraction.  According to BusinessWeek, funding from environmental groups is currently less than 50% of what it was through the same period in the 2008 campaign—one of the reasons cited: “renewing offshore drilling in the Gulf of Mexico.”

Though receiving little press, the Obama administration is working hard to convince the “greens” that he is one of them.

The NRDC (one of the groups promising support if Obama does the right thing) has launched a major fundraising effort—aided by the actor Robert Redford, to block a proposed mine that would provide America with access to one of the largest known deposits of copper in the world. Copper is essential for electric transmission and America’s industrial future—and highly sought after by developing economies such as China. The land—already designated for mineral exploration and development—also contains gold, silver and molybdenum. Despite the fact that the Native Alaskans living near the proposed Pebble Mine site want the infrastructure and jobs the mine would provide, rich sport-fishermen and out of state environmental groups (NRDC is based in New York City) are claiming to “pressure the Obama administration to reject any permits that could allow Pebble Mine to move forward. And if necessary, we will challenge this disastrous project in federal court.” The fund raising letter states: “Only NRDC combines grassroots power with the legal clout of more than 400 attorneys.”

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Post image for White House Press Secretary Makes Bizarre, Jingoistic Comments about Keystone XL

The House of Representatives voted overwhelmingly this week for a bill, H. R. 4348, to extend the highway bill for another ninety days after the current extension expires at the end of June.  The final vote was 293 to 127, with 69 Democrats voting for passage.  The extension includes three energy and environmental riders, including Rep. Lee Terry’s (R-Neb.) provision to require permitting the Keystone XL pipeline.  Also included are Rep. David McKinley’s (R-WV) amendment to prevent EPA from regulating coal ash as a hazardous waste and Rep. Reid Ribble’s (R-Wisc.) amendment that would expedite environmental reviews of highway construction projects.

The House bill will now be conferenced with the highway bill passed earlier by the Senate.  White House press secretary Jay Carney made some extraordinary statements about the Keystone provision on Friday. According to the Hill, Carney said that permitting the 1700-mile pipeline from Alberta’s oil sands to refineries on the Gulf coast would be “preemptively sacrificing American sovereignty” and that it would be “a foreign pipeline built by a foreign company emanating from foreign territory to cross U. S. borders.”

Carney also said that Rep. Terry’s amendment had been added to the highway bill in a “highly politicized, highly partisan way.” That is odd, considering that increasing numbers of Democrats in the House support overriding President Obama’s opposition to permitting the pipeline.  One supporter is Rep. Steny Hoyer (D-Md.), the Democratic Whip.  The Senate narrowly defeated an amendment to permit the pipeline last month on a 56 to 42 vote (with 60 required for passage).  Eleven Democrats voted for the amendment.  That’s about as bi-partisan as the Senate gets these days.

Senate Majority Leader Harry Reid (D-Nev.) reacted to the House vote by saying that the Senate had clearly rejected permitting the Keystone pipeline and would not agree to the House language in conference committee.  But the New York Times noticed in a news article that Democratic support for President Obama’s obstructionism was clearly crumbling in the face of public support for the pipeline and the November elections.

By a 293-127 vote, the House of Representatives yesterday adopted a short-term extension of the federal highway bill. Fourteen Republicans voted against it, while sixty-nine Democrats voted for passage. The original highway bill, known as the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, was enacted in 2005. Yesterday’s action was the 10th extension passed by the House since the original SAFETEA-LU surface transportation law expired in 2009.

The House’s bill would extend highway funding for 90 days. In March, the Senate passed a bill that would extend it for 2 years. Next, House and Senate leaders from both parties will convene a conference committee, through which they’ll try to hammer out compromise language acceptable to both Congressional chambers.

Alas, it is extremely likely that little good will come of the Conference, at least with regards to transportation policy. The House bill only perpetuates a broken system. For more on the ills of the status quo, read these articles by my colleague Marcus Scribner. To be fair to the House, the Senate bill is much more terrible. It includes all sorts of special favors and gives-aways to special interests. Thus, the negotiating positions in the Congressional Conference are bad and worse!

The only language in either chamber’s bill that warrants ultimate passage is that pertaining to energy policy, and it comes exclusively from the version approved yesterday by the House. Indeed, these energy policy provisions are excellent.

For starters, the legislation included language that would fast-track the Keystone XL Pipeline, the $7 billion, shovel-ready project to deliver up to 830,000 barrels a day of tar sands oil from Canada to U.S. Gulf Coast refineries. Specifically, the legislation would give the Federal Energy Regulatory Commission thirty days to approve the project. This provision, if enacted, would effectively override the President’s self-serving decision* to veto the project.

The House’s bill also included an amendment that would block EPA from subjecting coal combustion byproducts, known as coal ash, to ultra-stringent regulations meant for hazardous wastes. Such a designation flies in the face of reason, given that almost 50 percent of coal ash is used to supplement cement in the production of concrete. The amendment would protect the coal ash recycling industry from becoming collateral damage in EPA’s war on coal.

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Post image for Six Reasons Not To Ban Energy Exports*

[* This column is a lightly edited version of my post earlier this week on National Journal’s Energy Experts Blog.]

You know we’re deep into the silly season when ‘progressives’ champion reverse protectionism – banning exports – as a solution to America’s economic woes. Congress should reject proposals to ban exports of petroleum products and natural gas for at least six reasons.

(1) Export bans are confiscatory, a form of legal plunder.

As economist Richard Stroup has often pointed out, property rights achieve their full value only when they are “3-D”: defined, defendable, and divestible (transferable). A total ban on the sale (transfer) of property rights in petroleum products or natural gas would reduce the asset’s value to zero (assuming no black market and no prospect of the ban’s repeal). To the owner, the injury would be the same as outright confiscation. A ban on sales to foreign customers would be similarly injurious, albeit to a lesser degree.

The foregoing is so obvious one is entitled to assume that harming oil and gas companies is the point. I would simply remind ‘progressives’ that the politics of plunder endangers the social compact on which civil government depends. Why should others respect your rights when you seek to deprive them of theirs? Every act of legal pillage is precedent for further abuses of power. Do you really think your team will always hold the reins of power in Washington, DC? [click to continue…]

Post image for Oil Speculators Are the New Boogeymen

President Obama and his obedient lap dogs are out in full force this week attempting to convince voters that those evil guys on Wall Street have moved on from destroying the value of their homes to artificially raising the price of gasoline. Soon they are coming for your first born. From one of Obama’s speeches this week:

So today, we’re announcing new steps to strengthen oversight of energy markets.  Things that we can do administratively, we are doing.  And I call on Congress to pass a package of measures to crack down on illegal activity and hold accountable those who manipulate the market for private gain at the expense of millions of working families.  And be specific.

First, Congress should provide immediate funding to put more cops on the beat to monitor activity in energy markets.  This funding would also upgrade technology so that our surveillance and enforcement officers aren’t hamstrung by older and less sophisticated tools than the ones that traders are using.  We should strengthen protections for American consumers, not gut them.  And these markets have expanded significantly.

Now the ability to place blame for rising gasoline prices on Wall Street (or Republicans) is good politics, but its not true. The Center for American Progress report linked to above, chillingly titled “Is Big Oil Rigging Gasoline Prices?” begins by alerting the reader to the fact that the American people, having been polled, believe that Wall Street must be behind the recent rise in gasoline prices. Apparently the average American’s opinion on financial speculation, oligopoly pricing, and their link to gasoline prices is sufficiently meaningful to include in an article not accusing Big Oil of manipulating oil prices, but just putting the question out there. I hastily blogged about that report here, as did the editors of RealClearEnergy.

Obama pulled the exact same stunt last year. He set up some sort of task force/executive agency/working group/etc. to make sure that there isn’t any illegal price manipulation going on. The agency never found anything, and its unclear if they even really did any investigating:

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Post image for Despite Kyoto, UK Carbon Footprint Bigger than Ever

The European Union (EU) preens itself on being the global leader in the fight against climate change. EU politicians scold the USA for ‘failing’ to ratify Kyoto Protocol and enact cap-and-trade. Within the EU, the UK champions the most aggressive climate policies. So the UK’s carbon footprint must be shrinking, right?

Not according to a new report by the UK’s Department for Environment, Food, and Rural Affairs (Defra). The UK’s total net carbon dioxide (CO2) emissions rose 35% between 1990 (the Kyoto Protocol baseline year) and 2005. Emissions declined by 9% from 2008 to 2009 due to the worldwide recession. Nonetheless, the country’s carbon footprint was 20% bigger in 2009 than in 1990. How can this be?

Defra used a life cycle analysis (LCA) to estimate the UK economy’s net emissions. The agency examined not only the CO2 emitted by households and firms within the UK but also the emissions induced by the UK’s demand for imported goods. Carbon dioxide is emitted when goods are manufactured for export in, say, China, and then again when those goods are transported to the UK.

Emissions “embedded” in UK imports are increasing much faster than emissions from domestic production are declining. From 1990 to 2009, CO2 emitted by UK households and firms decreased by 14%. During the same period, emissions from imports directly used by UK consumers increased by 79% and emissions from imports used by UK businesses increased by 128%.

The Kyoto Protocol does not “cover” (regulate) import-induced emissions. So under Kyoto’s accounting rules, UK emissions are down. In reality, the UK has outsourced a sizeable chunk of its emissions along with its heavy industry. As one blogger commented, “The UK’s outsourced emissions almost double its carbon footprint.”

Source: Defra, UK’s Carbon Footprint 1990-2009

Post image for EPA’s ‘Carbon Pollution Standard’: Bait-and-Fuel-Switch

Bait-and-switch is one of the oldest tricks of deceptive advertising. The used-car dealer “baits” you onto the lot with an ad promising low interest payments on the car of your dreams. When you get there, the dealer regretfully informs you the car has already been sold. But, no, you haven’t wasted your time, because he’s got this other great car — the “switch” — which has so many superior features and it will only cost you a little more per month.

An even less ethical variant of this tactic is employed in politics. Party A in a negotiation gives an assurance or promise to obtain Party B’s support for a law or regulation. Party A then reneges on the deal once the policy is on the books. EPA’s recently proposed “Carbon Pollution Standard” Rule is a posterchild for this tactic. [click to continue…]