Iowa State University’s Center for Agricultural and Rural Development (CARD) has just updated its 2009 and 2011 studies of ethanol’s impact on gasoline prices. CARD claims that from January 2000 to December 2011, “the growth in ethanol production reduced wholesale gasoline prices by $0.29 per gallon on average across all regions,” and that in 2011 ethanol lowered gasoline prices by a whopping $1.09 per gallon.

I’m no econometrician, but this study does not pass the laugh test. We’re supposed to believe that ethanol has conferred a giant boon on consumers even though gasoline prices have increased as ethanol production has increased, and even though gas prices hit their all-time high when ethanol production hit its all-time high. If that is success, what would failure look like?

CARD’s argument boils down to this. The gasoline sold at the pump today is E-10 — motor fuel blended with 10% ethanol. Ethanol thus makes up 10% of the motor fuel supply for passenger cars. If there were no ethanol, the motor fuel supply would be 10% smaller, and gas prices would be $1.09 per gallon higher (p. 6).

Well, sure, if we assume a drop in supply and no change in demand, prices will rise. But this scenario tells us nothing about what really matters — whether ethanol’s policy privileges, especially the Renewable Fuel Standard (RFS), a.k.a., the ethanol mandate, benefits or harms consumers.*

Note first that even in the absence of government support, billions of gallons of ethanol would be sold each year anyway as an octane booster. So a scenario in which 10% of the motor fuel supply simply disappears does not correspond to any policy choice Congress is actually debating or considering.

More importantly, CARD assumes that if the motor fuel supply were 10% smaller, refiners would not increase output to sell more of their product at higher prices. In other words, refiners would not engage in the economically-rational, profit-maximizing behavior that would bring supply back into balance with demand, thereby moderating the initial price increase.

Why wouldn’t they? There are only two possible explanations. One is that refiners don’t want to get rich, which is absurd. The other is that refiners operate like a cartel, colluding to restrict output in order to charge monopoly rents. CARD gives no sign of endorsing this view, and repeated investigations of the U.S. refining industry by the Federal Trade Commission repeatedly fail to find evidence of such anti-competitive scheming.

CARD’s analysis also ignores the opportunity costs of ethanol’s policy props. Capital is a finite resource. Every dollar refiners are forced or bribed to spend on ethanol is a dollar they cannot spend to produce gasoline. Government cannot rig the market in favor of ethanol without discouraging gasoline production. It is ridiculous to assume that all of the resources (e.g., refining capacity) commandeered by federal policy over the past decade to boost ethanol’s market share would have been left idle and not used to make gasoline in a free market.

In short, CARD’s analysis abstracts from the most basic economic realities we were all supposed to learn in Econ 101: finite resources, opportunity costs, and the incentives created by rising prices.

I leave it to econometricians to quantify the repercussions, but this much is clear. In a free market, refiners would have blended less ethanol and produced more gasoline than they did in the market rigged by the RFS and other pro-ethanol policies. CARD — or, more precisely, CARD’s sponsors, the Renewable Fuel Association (RFA) — would have us believe that refiners would produce no more gasoline in a free market than they would in a market politicized by mandates and subsidies. That assumption is so unrealistic that any analysis based upon it is inappropriate and even fraudulent if used as a justification for maintaining or expanding government support for ethanol.

* Ethanol has about one-third less energy than an equal volume of gasoline. Consequently, even today, when the per-gallon price of ethanol is lower than gasoline, it still costs more to drive one mile on ethanol than it does on gasoline. But don’t take my word for it. According to the AAA’s Daily Fuel Gauge for May 16, 2012, the mile-adjusted price of E-85 (motor fuel blended with 85% ethanol) is $4.261 per gallon — pricier than regular gas ($3.728/g), premium ($4.026/g), and diesel ($4.032/g).

Or check out EPA and the Department of Energy’s joint Web site, www.fueleconomy.gov. The relevant information is not easy to find. Once you get to the landing page, click on Advanced Vehicles and Fuels, then on Flex-Fuel Vehicles, then on Fuel Economy Information for Flexible-Fueled Vehicles, and then again on Flex-Fuel Vehicles. For each of 25 models, EPA and DOE estimate how much the typical owner of a flex-fuel vehicle spends per year to fill up with either regular gasoline or E-85. The estimates fluctuate as gasoline and ethanol prices fluctuate. As of today (May 16, 2012), the average flex-fuel vehicle owner spends about $350 more per year to run the vehicle on E-85.

The wind energy industry has been having a hard time. The taxpayer funding that has kept it alive for the last twenty years is coming to an end, and those promoting the industry are panicking.

Perhaps this current wave started when one of wind energy’s most noted supporters, T. Boone Pickens, “Mr. Wind,” in an April 12 interview on MSNBC said, “I’m in the wind business…I lost my ass in the business.”

The industry’s fortunes didn’t get any better when on May 4, the Wall Street Journal (WSJ) wrote an editorial titled, “Gouged by the wind,” in which they stated: “With natural gases not far from $2 per million BTU, the competitiveness of wind power is highly suspect.” Citing a study on renewable energy mandates, the WSJ says: “The states with mandates paid 31.9% more for electricity than states without them.”

Then, last week the Financial Times did a comprehensive story: “US Renewables boom could turn into a bust” in which they predict the “enthusiasm for renewables” … “could fizzle out.” The article says: “US industry is stalling and may be about to go into reverse. …Governments all over the world have been curbing support for renewable energy.”

Michael Liebreich of the research firm Bloomberg New Energy Finance says: “With a financially stressed electorate, it’s really hard to go to them and say: ‘Gas is cheap, but we’ve decided to build wind farms for no good reason that we can articulate.’” Christopher Blansett, who is a top analyst in the alternative-energy sector in the Best on the Street survey, says, “People want cheap energy. They don’t necessarily want clean energy.”

It all boils down to a production tax credit (PTC) that is set to expire at the end 2012. Four attempts to get it extended have already been beaten back so far this year—and we are only in the fifth month. The Financial Times reports: “Time-limited subsidy programmes…face an uphill battle. The biggest to expire this year is the production tax credit for onshore wind power, the most important factor behind the fourfold expansion of US wind generation since 2006. Recent attempts in Congress to extend it have failed.”

According to the WSJ, “The industry is launching into a lobbying blitz.” The “2012 Strategy” from the American Wind Energy Association includes:

• “To maximize WindPAC’s influence, WindPAC will increase the number of fundraisers we hold for Members of Congress.”
• “Continue the Iowa caucus program to ensure the successful implanting of a pro-wind message into the Republican presidential primary campaign.”
• “Respond quickly to unfavorable articles by posting comments online, using the AWEA blog and twitter, and putting out press releases.”
• “Continue to advocate for long term extension of PTC and ITC option for offshore wind.”
• “AWEA requested a funding level of $144.2 million for FY 2012 for the Department of Energy (DOE) Wind Energy Program, an increase of $17.3 million above the President’s Congressional budget request.”

A wind turbine manufacturer quoted in the Financial Times article says, “If the PTC just disappears, then the industry will collapse.” Regarding United Technologies plans to sell its wind turbine business, chief financial officer Greg Hayes admitted: “We all make mistakes.”

Despite twenty years of taxpayer funding, according to the Financial Times, “Most of these technologies are unable to stand on their own commercially, particularly in competition with a resurgent natural gas industry that has created a supply glut and driven prices to 10-year lows.” The WSJ opines: “the tax subsidy has sustained the industry on a scale that wouldn’t have been possible if they had to follow the same rules as everyone else.” A level playing field would mean that wind developers would lose the exemptions from environmental and economic laws.

It is the fear of having to play by “the same rules as everyone else”—like the free market does— that must have propelled the anti-fossil fuel Checks and Balances Project to dig deep to unearth a “confidential” document. The brainstorming document was designed to trigger conversation during an initial meeting of grassroots folks with a common goal—the document’s author didn’t even join us and his ideas received little attention. The meeting was February 1 and 2. I was there. But suddenly, on May 8, our little meeting is in the news.

Many of us who were at the meeting received calls from a variety of publications including The National Journal, The Washington Times and Bloomberg News—none of whom ran with the story (after talking to a number of us, the Bloomberg reporter concluded “I don’t think we’re writing a story about this”)—and The Guardian who did. The Guardian story was picked up and expanded on in Environment & Energy (the reporter did talk to several of us), HuffPost, Tree Hugger, Think Progress’ Climate Progress, and others. (Note: Climate Progress and Tree Hugger remove any comment in opposition to wind energy as soon as it is posted.) High Country News has apparently done an original story trigged by the Checks and Balances press release. From these sources, some form of the story is all over the Internet.

The wind energy industry panic explains the sudden interest, but why our little group?

Washington Examiner columnist, Timothy Carney, provides the answer: “AWEA plans ‘continued deployment of opposition research through third parties to cause critics to have to respond,’ the battle plan states. In other words: When people attack AWEA’s subsidies, AWEA might feed an unflattering story on that person to some ideological or partisan media outlet or activist group.” We are the people who have attacked the subsidies and AWEA has, through a “third party” fed “an unflattering story” to a “partisan media outlet.” Our collaborative actions have helped block the PTC extension efforts.

A common thread in the news stories is that we are really an oil-and-gas funded entity. They’ve tied us to the Koch Brothers. We all wish. Apparently they can’t believe that individuals and local groups can think for themselves and impact public policy without a puppet master telling us what to do and say.

In fact, the group has no funding. As we began to email back and forth over the sudden reporter interest, one meeting attendee quipped: “My trip was funded, in part, by MY brother, Paul, who donated frequent flyer miles for my trip. I can assure you that my brother is not part of the Koch family. I paid for the rest of the trip out of my own pocket.” Yet, the reporters seemed determined to find a funding link. I told the Bloomberg reporter that we each paid our own way, that the meeting was held in a budget hotel outside of DC (unlike the AWEA meeting held at the prestigious La Costa Resort & Spa in Carlsbad, CA), and that we each had to pay for our own transportation, food, and lodging. My comments never made it into print. In the spirit of full disclosure, I am the executive director of companion organizations that do receive funding from oil and gas companies and individual donors. But I, like the others, was invited as an individual, not as a member of any organization.

Additionally, we are not even a formal group. We met to consider forming a group. The “leaked” memo, addresses finding a group that might absorb us, affiliate with us, or align with us.

Attendees brought their individual issues, observations, and successes. Each had valid insights to contribute. Some viewed health impacts as the most important ammunition. Others, economics. Some, setbacks or bird deaths or land use. Others, including the meeting’s organizer, John Droz, believe that the science—or lack thereof, is the best weapon. There are so many reasons to oppose wind that come down to government use of taxpayer money to support something that raises electricity prices based on the failed concept of man-made global warming. As a result of the meeting, we now know we are not alone, and we can call on one another for insight and advice.

We owe a debt of gratitude to Gabe Elsner, a co-director of the Checks and Balances Project. Without his discovery and subsequent exposure of the “document,” we’d still be just loosely affiliated individuals and small citizens’ groups. The attack has emboldened us and helped others find us! A representative from the Blue Mountain Alliance sent Droz an email stating: “I probably need to send them a thank you note for leading me to you and your efforts.”

After the murmurings became known, one of the meeting attendees, Paul Driessen, wrote a detailed and data-filled column, “Why we need to terminate Big Wind subsidies,” which has garnered more than 700 Facebook “likes” on Townhall.com. (To give perspective, I am pleased if I get 50 “likes.” Each “like” generally represents thousands of readers.) In just a few days, his column is all over the Internet.

Wind energy has more opposition than most people realize, and Elsner, who has served as the “third party” in the AWEA strategy, has allowed us to find one another. While a few attendees at the DC meeting were concerned about all the publicity, attorney Brad Tupi, who has represented citizens victimized by wind energy projects, responded: “I would plead guilty to participating in a meeting of concerned citizens opposed to wasteful, unproven, inefficient wind energy. I would agree that we are interested in coordinating with other reputable organizations, and I personally would be honored to work with Heartland Institute and others.”

If you do not support industrial, tax-payer-funded, wind-energy projects that are promoted based on ideology and emotion rather than facts and sound science, you can benefit from our affiliation. Droz has a wonderful presentation full of helpful information. A few of the websites from the meeting attendees include: Illinois Wind Watch, Whitley County Concerned Citizens, Coalition for Sensible Siting, Energy Integrity Project, and Citizen Power Alliance.

The lesson to be learned from the attack on these hard-working citizens is that the little people can make a difference! We’ve got the subsidy-seeking, wind-energy supporters running scared—along with the crony capitalism that accompanies them. Remember, “If the PTC just disappears”—meaning if we do not keep giving them taxpayer dollars—“then the industry will collapse.”

It is time for the AWEA and the politicians who support the PTC to explain why higher electricity costs, human health impacts, substantial loss of property values in rural communities, dead bats and birds, and increased national debt are good for America and her taxpayers!

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.

About a year ago on this blog, I offered some skeptical commentary about the gloomy testimony of Dr. Christopher Field of the Carnegie Institution for Science, who warned the House Energy & Commerce Committee that global warming would inflict major losses on U.S. corn crop production unless scientists develop varieties with improved heat resistence.

I noted that long-term U.S. corn production was increasing, including in areas where average summer temperatures exceed 84°F, the threshold beyond which corn yields fall, according to Field.

Well, this just in, courtesy of the Renewable Fuels Association (RFA): USDA projects the U.S. corn crop for 2012 to reach 14.79 billion bushels, the biggest ever. RFA’s objective, of course, is not to debunk climate alarm, but to assure us that we can have our corn (ethanol) and eat it too. Nonetheless, the numbers are mighty impressive and indicate that, in this decade at least, U.S. corn farmers are more than a match for climate change. From RFA’s briefing memo:

At 14.79 billion bushels, the 2012 corn crop would:

• be a record crop by far, beating the 2009 crop of 13.09 billion bushels by 11%.
• be 65% larger than the crop from 10 years ago (8.97 billion bushels in 2002).
• be more than twice as large as the average-sized annual corn crop in the decade of the 1980s (7.15 billion bushels on average).

The 2012 projected yield of 166 bushels per acre would:

• be a record yield, beating out the 2009 average yield of 164.7 bushels per acre.
• be only the third time in history yields have topped 160 bu/acre, the others being 2009 (164.7) and 2004 (160.4).
• be 35% higher than the average yield from the 1990s and 12% higher than the average yield since 2000.

The House and Senate conference committee on re-authorizing the highway bill met for the first time on Tuesday, 8th May.  One of the most contentious issues is House language that would require permitting of the 1700-mile Keystone XL pipeline from Alberta’s oil sands to Gulf refineries. Initial reactions were that the Keystone provision has little chance of being included in the final conference report.  However, there are signs that the ground is shifting.

Representative John Mica (R-Fla.), Chairman of the House Transportation and Infrastructure Committee, said last Thursday that he thought the Keystone provision was making great progress toward being included in the final bill. Mica noted that eleven Democratic Senators and 69 Democratic House members (out of 190) have recently voted for permitting the pipeline.

Perhaps more importantly, billionaire investor Warren Buffett told Fox Business News last week that he supports building the Keystone XL Pipeline. Buffett is a close supporter of President Barack Obama.  It has been speculated that Buffett was one of those advising Obama to deny the Keystone permit last fall out of self interest.  Buffett’s Berkshire Hathaway owns the Burlington Northern Santa Fe Railroad, which because of the lack of pipeline capacity has become a major shipper of crude oil from the Bakken Formation in North Dakota and Montana to refineries.  The Keystone XL would transport oil from the Bakken Formation as well as from Alberta’s oil sands.

Buffett may well have been offering his own opinion without consulting the White House first.  On the other hand, his comments may be a sign that the White House is maneuvering to save face and let the Keystone permit go through.  President Obama’s political advisers clearly understand that the President is on the wrong side of public opinion on Keystone.  Letting the Congress overrule the President this summer would largely take away a campaign issue in the fall.

In the new movie The Avengers (which is excellent: see my review for National Review Online here), Iron man’s alter-ego Tony Stark (Robert Downey, Jr.) perfects a renewable, clean energy source, and uses it to light up his company’s new Manhattan skyscraper.

In spite of this green street-cred, Stark is a hero designed—literally—to drive liberals crazy.  Stan Lee, who co-created Iron Man in the 1960′s, has often reminisced to interviewers about his motives for creating Stark.  After helping to create a string of popular heroes for Marvel Comics, including Spider-Man and the Fantastic Four, Lee had decided to give himself a challenge, and asked himself:  Who do young people (read: liberals) hate?  The military, Lee thought right away (it was the 60′s, after all), and the wealthy.  So for his next hero, Lee decided to create a millionaire industrialist who made weapons for the army, and then make him likable.  Iron Man was born.

Now, Filmmakers who have brought Tony Stark to the big screen in a string of recent blockbusters—Iron Man (2008), Iron Man 2 (2010), The Avengers (2012)—have made him even more unpalatable to liberals.  After all, what other super-hero is regularly shown blasting terrorists out of their caves in Afghanistan, or working side-by-side with the United States Military?

Imagine how queasy greens must feel to see that this arch-capitalist be the one to invent renewable energy in the Marvel universe.  And worse, he didn’t do it for the good of Mankind.  He did for entirely selfish reasons, indeed, the most selfish reason:  He built the first, miniature version of his energy source in the first Iron Man film in order to power his wounded heart, which had been shredded by enemy shrapnel.
More unforgivable from the environmentalists’ perspective, however, is that Stark did all of this without a Department of Energy grant.  Unlike Solyndra, he needed no government incentives or funding.  Unlike Solyndra, he succeeded.   Now, in The Avengers, Stark uses this technology to power a gigantic monument to himself, a gleaming tower with “Stark” emblazoned in bright letters at its apex.

True, Stark and his exploits are fiction.  But can there be any doubt that, if and when an actual, viable green tech is invented, that it will be by someone like Stark, a self-reliant, independent genius, as opposed to a pasty-faced D.O.E. bureaucrat?  Can there be any doubt that it will be a capitalist, working for his or her own selfish ends, that will provide the breakthroughs that environmentalists insist the government must provide and/or subsidize?

And won’t that drive them crazy?

National Journal’s Amy Harder reported last week that the Sierra Club is re-branding its anti-natural gas efforts as “Beyond Natural Gas.”  Beyond Natural Gas joins the Sierra Club’s other two anti-energy campaigns, Beyond Coal and Beyond Oil (Beyond Nuclear is a separate organization founded in 2007 and headquartered in Takoma Park, Maryland, which has been an official nuclear-free zone since 1983).

Here’s how the Sierra Club introduces its Beyond Natural Gas web page: “The natural gas industry is dirty, dangerous, and running amok. Government loopholes exempt natural gas drillers from the Clean Air Act, the Clean Water Act, and the Safe Drinking Water Act — and at the same time, don’t require them to disclose the frequently toxic chemicals they use in hydraulic fracturing, or “fracking,” the violent process they employ to dislodge gas deposits from shalerock formations. The closer we look at natural gas, the dirtier it appears; and the less of it we burn, the better off we will be.”

The Sierra Club’s timing, whether intentionally or not, kicks Aubrey McClendon, their former patron, when he is down.  Time Magazine reported earlier this year that McClendon gave the Sierra Club $26 million between 2007 and 2010 for their Beyond Coal campaign.  This week McClendon was relieved of his duties as chairman of one of the U. S.’s largest natural gas producers, Chesapeake Energy, although he remains CEO.  It also became public knowledge last week that the Securities and Exchange Commission has launched an investigation into McClendon and Chesapeake.

The SEC investigation and the decision by Chesapeake’s board to replace McClendon as chairman are the result of revelations by Reuters on 18th April that McClendon, the founder of Chesapeake, had a sweetheart deal with the company to borrow over $1 billion and use it to buy personal shares in Chesapeake gas wells.

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?

The desperation the eco-crowd feels is driven by a simple fact—the Earth is not melting. The disastrous consequences of carbon emissions we were warned about have simply not come to pass, as even some environmentalists are at last admitting.  James Lovelock, for example, influential author of the “Gaia” theory that the whole planet is a single, living organism, has recently recanted some of his most egregious climate doomsaying. Lovelock, who once claimed that, “before this century is over billions of us will die and the few breeding pairs of people that survive will be in the Arctic where the climate remains tolerable,” now concedes that things may be OK after all.

“[W] don’t know what the climate is doing,” Lovelock recently told MSNBC. “We thought we knew 20 years ago. That led to some alarmist books—mine included—because it looked clear-cut, but it hasn’t happened.” Specifically, the warming Lovelock and others warned about hasn’t happened.  “The world has not warmed up very much since the millennium. Twelve years is a reasonable time,” he admitted, though the global temperature “has stayed almost constant, whereas it should have been rising—carbon dioxide is rising, no question about that.”

Kudos to Lovelock for having the guts to admit the truth, and for changing his mind in the face of new facts. It is an admirable quality so little found on the political Left, a cesspool of hate and ignorance where hack journalists and bureaucrats can openly fantasize about violently punishing their political and intellectual adversaries.

Since the collapse of the Soviet Union, global warming was the Left’s last, best chance to institute a world-wide redistributive regime.  What happens when global warming, too, collapses?

I fear they will not go gently into that good night.

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:

It’s all about the drop in demand caused by increased fuel economy running up against inflexible volumetric mandates and an infrastructure that can’t meet those targets.

In a 140 billion gallon gasoline market, the ”blend wall” (how much ethanol may be blended annually into the nation’s motor fuel supply) is 14 billion gallons (full market penetration of E10 — motor fuel made with 10% ethanol).

If CAFE drops demand to 100 billion gallons, the blend wall drops to 10 billion gallons of ethanol. But the RFS requires the sale of 36 billion gallons by 2022. To sell 36 billion gallons of ethanol and meet and the proposed CAFE standards, E-10 must be replaced with E-40 nationwide. However, pumps and storage tanks at most convenience stores, most cars, and nearly all outboard motors, lawn mowers, and other small engines can’t handle E-40.

The goals of the two programs — cut fuel consumption, expand ethanol consumption — conflict with each other.

Folks, your government’s left hand does not seem to know what its other left hand is doing. Honk if you think central planners can’t plan!

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.

The goal of a utility is not to create jobs but to create wealth in the form of electricity. Even if more jobs are created in the coal industry from this regulation, this is bad for all coal workers because the profits from each megawatt of production are divided among around 50,000 more workers. (according to EPA’s RIA). This makes each worker’s labor less valuable and therefore, causes wages to decline. Under all economic models, environmental regulations harm workers.

EPA’s focus on industry-level employment ignores downstream costs to consumers from increased electricity costs. These adverse impacts will fall disproportionately on industries like manufacturing that rely heavily on electricity. Darren MacDonald, Director of Energy at Gerdau Long Steel North America, recently testified, for example, that “the steel sector is concerned about increased electricity costs and reliability issues that may result from [the Utility MACT]. This is for the simple fact that all of the compliance costs and reliability risks will ultimately be passed on to us, the consumers.”

Economic research supports this position. American University professor Michael Hazilla and RFF’s Raymond Kopp note “a point often made by economists but largely ignored by regulators:  regulations affecting production sectors that supply important intermediate products can have significant secondary impacts.” They write that “while pollution control investments were required in only 13 sectors, the cost of production increased, and output and labor productivity fell, in all production sectors.” Lower labor productivity means lower wages for workers, which again means that by ignoring downstream costs, the EPA is really ignoring the welfare of the majority of workers in the economy.

EPA wants Americans to believe something we all intuitively know is false: that higher costs create jobs, that higher electricity prices are economic stimulus, that with a wave of hand, a regulator can create tens of thousands of more jobs than an entrepreneur. In a way, these claims are true. The Utility MACT will stimulate the phony, government-created markets, and it will create jobs for engineers, but they will be making useless equipment for illusory benefits rather than in productive but unfavored industries like manufacturing, and if this type of regulation continues, it will certainly create more jobs than entrepreneurs who will abandon the U.S. for freer-markets abroad. If Congress wants to create productive jobs and build this economy, it must stop EPA.

Read my analysis of EPA’s argument that coal regulations create coal jobs here.

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.”

To date, there is no detailed plan or application submitted for a mine. The companies involved have already invested more than $400 million in research, studies, and field work but have not yet applied for federal approval. Pebble Limited Partnership’s CEO John Shively said, “I think in terms of the environmental side, I am relatively convinced that the technology is there for us to do what we need to do. Combining the technology with the economics, we have not gotten that far, and we have not finished designing.”

There are more than 65 different types of state and federal permits, certifications, and reviews that must take place before the Pebble project can move forward. Yet, the EPA is entertaining a “preemptive veto petition” which would prevent “due process,” deprive America of much needed resources and Alaskans of the economic security the project could bring to the remote region.

Test drilling for core samples at the mine site have been found to be nontoxic and up to municipal standards. The actual location of the mineral resource is farther away from the waters of Bristol Bay than Los Angeles is from San Diego. The EPA is currently conducting a watershed assessment on the potential impact of a large development project on the region that could easily have the effect of blocking any and all future development proposal, including construction of a community airport. The EPA’s assessment is expected to be released in a matter of weeks.

The EPA study, that pales in comparison to a multiyear $120 million environmental baseline review conducted by Pebble, is being used as a precursor for the agency to skip the established environmental review process and preemptively deny a 404 C Clean Water Act permit before the Pebble project has even applied for a permit. EPA preemptive action would be a first of its kind and would constitute a massive and devastating expansion of the administration’s environmental power.

In an April 18 letter to EPA Administrator Lisa Jackson, Senator Lisa Murkowski said, “I have encouraged all stakeholders to withhold judgment until 1) a detailed development plan is released for review and 2) all relevant analyses of that plan are completed. A preemptive veto, just like a preemptive approval, would be based purely upon speculation and conjecture. It would deprive relevant government agencies and all stakeholders of the specifics needed to take an informed position.” She concludes: “As the people of my state work to attract investment and create jobs, regulatory uncertainty is hampering those efforts and they need answers to questions about actions the EPA is considering.”

Opponents of the Pebble Mine project have asked, “Can science and engineering eliminate the risks posed by the Pebble Mine to Alaska’s economy? If the answer is yes, the backers should show how in a clear and unquestionable manner.” Yet, before the designs and plans are even complete, environmental groups like the NRDC have called for the project to be rejected—not based on science, but on emotional hyperbole and an anti-development agenda. Would the Pebble Partnership have invested more than $400 million if they didn’t think the technology was there to do what they need to do to meet the state and federal requirements?

The EPA’s preemptive actions in Alaska are just one example of the Obama administration’s attempts to prove to the greens that he is on their side. Another is the National Ocean Policy created through an executive order.

The order was signed nearly two years ago, but is only coming to light now because of the “potential this far-reaching policy has to hinder job creation because of the uncertainty it creates due to increased regulation.” Lawmakers, in an April 2 letter, are asking “to put the brakes on the Obama administration’s National Ocean Policy.” The letter, to House Appropriations Committee Chairman Harold Rogers (R-KY), asks the committee to “specifically prohibit the use of funds for the implementation of the National Ocean Policy.”

On April 3, Rep. Don Young (R-AK) explained the new policy as “a complicated bureaucratic scheme which includes a 27-member national ocean council; an 18-member governance coordinating committee; 10 national policies; nine regional planning bodies—each involving as many as 27 federal agencies as well as states and tribes; nine national priority objectives; nine strategic action plans; seven national goals for coastal marine spatial planning; and 12 guiding principles for coastal marine spatial planning. The administration claims that this whole National Ocean Policy is nothing more than an attempt to coordinate federal agencies and make better permitting decisions. Forgive me if I am a little suspicious when the federal government—through an executive order—decides to create a new bureaucracy that will ‘help’ us plan where activities can or cannot take place in our waters and inland.”

In an April 17 article written by award-winning investigative journalist Audrey Hudson and published in Human Events, Hudson opens: “President Barack Obama has an ambitious plan for Washington bureaucrats to take command of the oceans—and with it control over much of the nation’s energy, fisheries, even recreation in a move described by lawmakers as the ultimate power grab to zone the seas.” She continues, “The ocean policy has already impacted oil and gas development in the Mid and South Atlantic, where more environmental analysis is now required to determine whether new studies must also be conducted to determine its safety, according to Interior Department Secretary Ken Salazar.”

Not surprisingly, environmental groups support the policy. The Sierra Club hosts an “Activist Network” that includes the National Ocean Policy: “This project is to promote implementation of the National Ocean Policy through recruitment, education and engagement of Sierra Club Activists throughout the nation.” The NRDC “Switchboard” blog states: “The National Ocean Policy is a landmark policy that calls on us to evaluate all of the uses of the ocean—fishing, tourism, industry, military, energy—and identify how to manage these uses more sustainably.”

Rep. Bill Flores (R-TX) comments: “If you look at the catalyst for the entire initiative, it comes from the playbook of environmental groups that think the ocean ought to be controlled by the federal government.” Senator David Vitter (R-LA) adds, “This has largely been completely under the radar. And that is exactly the way the administration and their environmental allies want to do it—announce the administrative fiat is complete and that we have this new way of life that nobody knew was coming.”

Pebble Mine and the National Ocean Policy are just two of myriad possible examples of how the environmental organizations and the Obama administration are working together to change America. When you think of the environmental movement, realize they have gone way beyond hugging trees. They now want to bring America to its knees.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). Together they work to educate the public and influence policy makers regarding energy, its role in freedom, and the American way of life. Combining energy, news, politics, and, the environment through public events, speaking engagements, and media, the organizations’ combined efforts serve as America’s voice for energy.