CEABlog
A pattern of delays
Tuesday, February 2nd, 2010
Is the Interior Department really giving a fair and balanced review of the properties up for consideration for oil and gas leasing? Or, as the data we posted earlier this week suggest, is it engaged in a pattern of blocking any progress with repeated delays and endless red tape?
In support of the second theory, you might want to submit the recent delays to allow drilling off the coast of Virginia as Exhibit A. Except that there have been so many other instances of stalling tactics all around the country, that it’s getting hard to count them all. Far from an isolated example of the country’s Interior Department blocking responsible development of natural resources, this latest delay — in what would have been the first Atlantic coast drilling project to get underway since the ban ended in 1998 – suggests more of the same. Ban or no ban, lots of projects are still being blocked.
You don’t necessarily think Big Oil when you think of the state of Virginia. But like so many states all around the country, Virginia’s estimated reserves are substantial. The three million acre swath located 50 miles offshore that was to have been leased next year, holds an estimated 130 million barrels of oil and 1.14 trillion cubic feet of natural gas.
Now, the Interior Department says any lease sales will be delayed until at least 2012, and may not go forward at all.
Tags: American energy, domestic production, Interior Department, Obama, offshore resources, offshore Virginia, oil and gas, virginia
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One year later, actions speak louder than words
Tuesday, January 26th, 2010
A few weeks ago, when we were basking in a festive holiday spirit, we made a long list of all the things CEA and its supporters had achieved in 2009. But holiday cheer inevitably gives way to the reality of the cold dark winter months, when optimism is replaced by a pressing sense of all the work yet to be done.
This year, mid-January has also brought the anniversary of President Obama’s first year in office, and as the Institute for Energy Research recently concluded, the new policies set over the past 365 days have clearly not supported a strong domestic energy industry.
For instance:
–In 2009, the Interior Department collected only a very small fraction of oil and gas lease sales it had completed in 2008.
–Less than 3% of the available public lands are leased for oil and gas development. Under Obama’s Interior Department fewer acres – both onshore and off – were leased in 2009 than in any previous year.
One story that covered these new findings quoted CEA’s David Holt blaming excessive red tape. “No administration in history has done more to ensure producers do less,” Holt said.
Meanwhile, Thomas Pyle, who heads the Institute for Energy Research, stresses that energy policy cannot be viewed in a vacuum. In this review of Obama’s first year in office, Pyle notes that the President’s efforts to create jobs have suffered from a focus on “unproven technology that is not economically viable.” Such investments have created only a small number of jobs, compared to what could be created by loosening the restrictions on oil and gas exploration and production, he said.
Just how many jobs can a strong domestic energy industry support? As American Petroleum Institute President Jack Gerard outlined in a recent speech, the U.S. oil industry directly supports 9.2 million American jobs and created millions of new jobs over the past decade.
As Obama enters his second year with unemployment higher than it has been in a generation and growing cries for aggressive job creation efforts, let’s hope that his administration starts to see the devastating economic impact of its energy policy and works to help ensure that Americans can have both jobs and affordable energy.
Tags: Barack Obama, David Holt, domestict energy, Institute for Energy Research, Interior Department, Jack Gerard, oil & gas, oil and gas, oil leases, public lands, Thomas Pyle
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Marcellus bids underscore growing interest in shale
Tuesday, January 19th, 2010
Last month, Exxon Mobil made a major investment in XTO, one of the largest shale gas producers in the U.S., and the in the weeks since then, a number of other major oil companies have moved aggressively to establish or expand their presence in the shale sector.
Earlier this week, five companies submitted bids totaling $129 million — twice as much as the amount forecasted — for the rights to drill in the Marcellus Shale natural gas formation in northern Pennsylvania. This growing interest comes amid mounting evidence of the vast volumes of shale gas, which by some estimates, on a global basis, exceed the world’s oil reserves.
Other shale areas, such as the Haynesville Shale in Texas and Louisiana, are also seeing strong interest from energy producers.
The last time we wrote about shale, we noted that improved production technologies would be key to generating a steady supply of shale gas, and helping to ensure mass production. Of course, this path to mass production is never a smooth one, even for the most promising and abundant energy resources. In addition to the technology challenges associated with production challenges, regulatory challenges are also likely. Already, shale producers in New York say that onerous regulations are driving them out of the state.
We’re not sure what the coming year has in store for the shale gas industry, but we do know that it’s an area we all must watch closely. We’re encouraged by the growing interest in these sites and we need to make sure that the projects, which could contribute significantly to our domestic natural gas supply, are allowed to proceed.
Tags: domestic energy, exxon mobil, marcellus shale natural gas, oil and gas, pennsylvania, shale gas
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In California, progress is … complicated
Thursday, January 14th, 2010
Last year, a severe budget crisis in the country’s most populous state made California the site of a lively – and unexpected — debate over reviving offshore drilling.
Now Governor Schwarzenegger has drafted a new budget, which does indeed include proposals to revive drilling in a large and controversial site, known as the Tranquillon Ridge, off the coast of Santa Barbara. It’s a site that by some estimates could generate $4 billion in revenue for the California. It seems a budget crisis is just what was needed to trigger serious policy discussions about offshore drilling as a source of new revenue.
Of course, as we’ve said again and again, we’re all for healthy debates that might lead to more coastal waters being opened to responsible exploration and production. Still, it is difficult to watch this particular debate unfold without being reminded of how far we still need to go, at least in some parts of the country.
Out west, the prospect of additional drilling is too often regarded as a move of last resort rather than a logical energy and economic policy. Schwarzenegger says that revenue from the Tranquillon site will go directly toward the state’s parks, sparing them additional cutbacks. In addition, it appears broad support for the project hinges on an agreement from the project’s developer to stop oil production there after 14 years.
If you think this all sounds a little funny — dangling the future of the state’s parks systems in order to win approval for the project, while exchanging oil now for no more oil in the future — you’re probably right. Some critics have equated the terms of this proposed project to blackmail.
This is not to say that a happy conclusion is out of the question. If it takes state budget crises to get states interested in their offshore resources, that’s a good thing. Even opponents of the project may come to support it once they see the economic upside.
But it shouldn’t have to be so complicated. Hopefully, when other offshore projects come up for review around the country, it won’t be.
Tags: budget crisis, California, domestic energy, drilling, offshore drilling, oil and gas, santa barbara, tranquillon ridge
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While you were toasting…
Wednesday, January 13th, 2010
CEA’s recent year in review offered a long list of achievements in public policy, technology and public opinion that all helped advance our goals of fostering a strong domestic energy industry and economy.
We also noted that there was a lot more work to be done.
Indeed, word came down on New Year’s Eve that 11 states had committed to following California’s lead in adopting a Low Carbon Fuel Standard, essentially a wildly inaccurate measure of the carbon footprint left by various fuels. We’ve noted before that such standards are less likely to reduce emissions and more likely to increase imports of Middle East crude oil. Yet, because the standard has a nice ring to it and may appear to offer the sort of simple solutions people crave, it is catching on quite quickly.
It is heartening to see pockets of opposition, such as this one out of Pennsylvania that notes that the premise of carbon accounting on which the policy is based is, at best, challenging to calculate, and at worst, just like we said, inaccurate.
But from where we stand now, too many lawmakers are taking the sound byte over the hard science and signing on to what could be a devastating policy for the future of domestic energy and our dependence on foreign resources.
As we outline our goals for the New Year, educating lawmakers, businesses and the general public about this not-so-low carbon standard must be a top priority. The future of many domestic energy suppliers and refiners will be riding on the outcome.
Tags: California, carbon footprint, crude oil, domestic energy, emissions, Low-Carbon Fuel Standard, Middle East
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Frozen Out of the Trans-Alaska Pipeline
Thursday, January 7th, 2010
Permafrost, as everyone who has worked in the oil sector in Alaska knows, describes soil that remains frozen year round. Back in the 1970s, when a group of oil companies collaborated on the groundbreaking (no pun intended) project of building the 800-mile-long Trans-Alaska-Pipeline, permafrost was just one of a multitude of daunting challenges engineers faced. They also had to transport large numbers of workers to highly remote regions, and find a way to secure the pipeline from everything from temperature swings to gunshots. (Because of the permafrost, long stretches of the pipeline were built above ground.)
It was a project on a scale that had never been attempted and the reason so many people saw it through to a successful completion in 1977 is that they knew it was worth the effort. Establishing a reliable means for transporting crude from Alaska’s oil-rich North Slope to points south was a sort of insurance policy for companies that explored in the region that their oil would find a way to market.
Interestingly, the pipeline project was born at a time of severe recession for the country and drew support both for the well-paying jobs it created and the promise of more reliable oil prices from home-grown sources.
It is ironic, then, that today the pipeline is facing an early demise even though estimates of proven oil reserves in Alaska continue to grow. The Anchorage Daily News recently published an extensive analysis of the massive investments that are already required to sustain the pipeline in the face of diminished shipments, and the growing concerns that it will soon not be economically feasible to operate the pipeline at all.
We’ve noted this problem in the past: how the health of Alaska’s oil industry impacts the health of all sorts of other industries on which the state’s economy depends. But as concerns mount about the future of the key vehicle for moving oil through the state, you also have to wonder how a weakened or entirely shut pipeline would affect production and exploration.
It’s a chicken-and-egg argument. The Trans-Alaska Pipeline was built because the demand existed to transport large volumes of oil. But if the pipeline were to go away, would producers have any incentive to stay, let alone, expand in Alaska? Political climates, of course, change with the seasons, but you can’t always patiently wait for a new, more welcoming climate, to blow in. As the saying goes, you must use it or lose it.
There have been some recent victories allowing responsible drilling in Alaska, but there are many more unresolved disputes that are critical to maintaining throughput on the pipeline, and in turn ensuring that Alaska’s oil infrastructure that was installed with great effort just a generation ago, remains intact.
Tags: Alaska, alaska pipeline, Anchorage, domestic energy, oil and gas, trans-alaska pipeline
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The consumer energy year in review
Monday, January 4th, 2010
New Year’s brings a time for all of us to review what we’ve accomplished over the past 12 months and chart a course for the future. It may sound cliché, but with such an eventful year behind us, and so many momentous challenges ahead, those of us here at Consumer Energy Alliance couldn’t resist the urge to compile our own Best of 2009 list. What follows are some of the milestone moments of the past year, in which our strong network of supporters significantly advanced our goal of making our country more energy secure and economically sustainable.
- New respect for Offshore Drilling. Yes, many key offshore sites remain off limits to exploration and production but 2009 was a year that policymakers from California to Florida revisited longstanding bans on offshore drilling. They recognized the advances in technology that are making it possible to conduct major projects with minimal footprint and conducted level-headed debates about reversing longstanding bans. Stay tuned – and stay engaged — for more in 2010.
- The sun rises over the Gulf of Mexico. From the appeals court ruling over the summer allowing drilling to go forward in a vast swath of the Gulf, to new data showing strong yields from some of the older properties in the Gulf, to BP’s massive discovery in that same region, you could say that everything old became new again in the Gulf.
- Silent majority finds its voice. It’s not easy competing against protestors who play fast and loose with the facts and even resort to donning furry animal costumes to get attention. Nonetheless, when the Interior Department solicited feedback on some contested offshore drilling sites, the supporters of responsible drilling significantly outnumbered those who cried “not in my backyard.” This letter writing campaign to Interior Secretary Ken Salazar was a major CEA initiative throughout much of the year, and turned out to be a major success. Thank you!
- Alaska’s oil industry gets some needed relief. Speaking of Ken Salazar, the Interior Department’s recent decision allowing Shell Oil to drill three exploratory wells in the contested Chukchi Sea was a significant milestone in efforts to tap the state’s vast oil and gas reserves.
- Renewable energy tapped for practical purposes. Renewable energy has always been a topic of interest to consumers but in 2009 the country made great strides in incorporating renewable power sources into our overall power supply, while recognizing both the limits of these sources as well as some niche applications ideally suited for renewables. Consider the solar powered trash can and some of the new uses for cow manure.
- The argument against exporting emissions gains traction. Politics might all be local, but emissions can travel halfway around the world in no time. Those of us who support a strong domestic oil industry have always understood the folly of exporting oil production, particularly to distant destinations that lack the environmental standards we have here at home. It’s one of the reasons, we’re so opposed to low carbon fuel standards. We clearly haven’t won this argument yet, but thanks to some of our vocal supporters – and some advanced science that can actually track the movement of things like toxic clouds from coal burning power plants in China – the not-in-my-backyard line of thinking is losing some power.
- Ocean Policy Task Force faces tough questions. If the Administration thought that while no one was looking, it could just impose a new layer of regulations on all of the industries that conduct business along the country’s waterways, it was mistaken. Shortly after the Ocean Policy Task Force was convened, lawmakers began raising questions about who would be setting the new rules and whether they could cost the country jobs.
Of course, we are a long way from winning the battle to prevent regulators from taking control of our oceans. Likewise the effort continues to bring responsible drilling and production to more of our coastal waters and ultimately produce more of the oil we consume in the U.S. In the coming weeks, we’ll outline some of the challenges for the New Year.
But for now, we leave you on an optimistic note. We thank you as always for your support.
Tags: 2009, 2010, Alaska, domestic energy, emissions, five year program, Gulf of Mexico, LCFS, new year, ocean policy, ocean policy task force, oceans, ocs, offshore drilling, renewable energy, year in review
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Our robots chime in on energy policy
Monday, January 4th, 2010
Please listen to this message regarding important energy issues from our CEA robots!
Tags: LCFS, Low-Carbon Fuel Standard
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A season of paradox
Tuesday, December 22nd, 2009
Folks living within a vast swath of the eastern United States had their festive plans for caroling and last-minute holiday shopping disrupted over the weekend by the biggest snow storm in years. In many regions like the greater Washington D.C. area, the storm shattered old records for December snowfall … and winter hadn’t even officially begun yet.
The blizzard, combined with the sub-freezing temperatures, all but promises a white Christmas in regions hit by the storm.
Of course, snow days and sledding and cozy times together by an indoor fireplace come along with treacherous roads and driveways that need to be shoveled and the high heating bills required to keep everyone warm inside.
And this year, as people brace for those wintertime heating bills, they’ll be chagrined to discover that the soft economy has done little to lower the cost of keeping their homes warm. It’s an ongoing paradox we’ve discussed here before: how the normal rules of supply and demand don’t really apply when the product in question comes from overseas sources that have their own way of artificially controlling pricing.
Last summer, we discussed how oil prices were rising despite soft demand and swelling inventories. This winter, prepare for more of the same. We’re approaching our third straight year of economic downturn, and supplies of heating oil are overflowing, so much so that the early snowy cold spell isn’t expected to make much of a dent. Still, many forecasts show consumers paying more for their heating oil this year than they did in 2008 – when, by the way, it was hardly cheap.
Low demand and high prices: It’s a paradox indeed, but it’s not a mystery. Heating oil prices rise when crude oil prices rise. And here in the U.S., crude prices rise for all sorts of reasons, usually reasons that have little to do with supply or demand, or even the weather. Like so much of the oil we consume, the explanation for those persistently high winter heating prices is located far from home.
Wishing you a warm holiday.
Tags: CEA, Consumer Energy Alliance, domestic energy, energy prices, energy security, energy supply, natural gas, oil
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Getting serious about shale
Thursday, December 17th, 2009
Exxon Mobil this week announced plans to buy the independent gas producer XTO Energy for $41 billion – by far the largest deal for the company since the merger between Exxon and Mobil a decade ago.
Clearly this purchase signals a deeper commitment to developing natural gas: XTO has about 14 trillion cubic feet of proven gas reserves. But it also shows a clear focus on producing gas from shale. A large portion of XTO’s reserves are located in so-called unconventional sources, such as shale rock. Shale has long been recognized as a major source of oil and natural gas, but the technological challenges of getting to it have left much of that fuel untapped.
The New York Times offers a good overview of the Exxon Mobil’s systematic strategy in recent years to accumulate unconventional natural gas sources including shale. By adding XTO to its mix of existing properties, the company shifts shale gas production from a niche business to a core one.
In all likelihood, the acquisition will probably set off a race among many oil producers to develop natural gas and oil from shale on a much larger scale. Already, there are many sizable shale development projects underway, such as Range Resources’ Marcellus Shale project in Pennsylvania that produces 100 million cubic feet of natural gas per day – enough to power about 500,000 homes. Chevron has hinted that it is interested in making an acquisition that would give it a base of shale gas reserves large enough to make development economically feasible.
The importance of shale to the global energy industry and to domestic energy independence can hardly be overstated. Recent estimates suggest the world’s supply of shale oil resources exceeds its supply of conventional oil reserves. And the largest deposits are right here in the U.S. Of course, accessing more of that oil, and natural gas, will depend on finding technologically and economically feasible ways to do so.
As more money is committed to this promising source of domestic fuel, the technology used to develop it will inevitably improve, putting more volumes of shale oil and gas on the market. This steady supply tends to lead to greater price stability and that, in turn, increases demand. It’s a cycle by which a commodity comes to be mass produced and all signs suggest that for shale rock, that moment has come.
Tags: domestic energy, exxon mobil, oil and gas, oil shale, XTO Energy
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What research says about Low Carbon Fuel standards (and low chocolate standards)
Friday, December 11th, 2009
The Low Carbon Fuel Standard is making the rounds again in news reports about national and global energy policies. And why not? What’s not to like about low carbon fuels? With such an innocuous name, this looming legislation is bound to resurface every time people talk about policies for reducing emissions.
But you know what they say about things that seem to be true.
As we’ve said before, low carbon fuel standards just don’t make a lot of sense. There’s no evidence that such a law would actually reduce emissions, and many reasons to conclude it would actually result in the U.S. increasing its dependence on Mideast Oil.
But since we’re all likely to be hearing more about the Low Carbon Fuel Standard in the months ahead, it’s worth broadening the argument beyond what those of us here at CEA have to say about it and showing what the science says.
Earlier this year the American Economics Journal published a paper which concluded that a low carbon standard does not decrease overall emissions. Rather, it simply changes the mix of fuels consumed in a manner that might actually have the completely unintended consequence of increasing overall consumption and emissions.
That’s essentially because this fuel standard does not seek to limit actual emissions. Rather it would try to limit production and consumption of certain carbon-intensive fuels, while inadvertently promoting the carbon-light ones. It sounds confusing and it is. Attempting to judge different types of oil or natural gas on the basis of their carbon content – with no regard for shipping costs and multiple other factors – is in the end a dangerous guessing game.
The authors of the study, Greenhouse Gas Emissions Reductions under Low Carbon Fuel Standard? argue that energy consumers told to low-carbon fuels are likely to respond the same way as a child who eats a lot of chocolate and is told to eat more bananas. Rather than replacing the chocolate with a banana, the child would most likely eat the chocolate and the banana, increasing his overall calories.
It’s a useful analogy to remember when trying to make sense of the Low Carbon Fuel Standard … one that gives new meaning to the idea of a kid in a candy store.
Tags: American energy, chocolate, energy policies, LCFS, low carbon, Low-Carbon Fuel Standard
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Alaska in balance
Wednesday, December 9th, 2009
To fully appreciate the significance of the Interior Department’s long-awaited decision earlier this week to allow Shell Oil to drill three exploratory wells in the contested Chukchi Sea, you need to keep in mind the recent struggles and uncertainties that the oil industry in the state of Alaska has faced.
Last month, ConocoPhillips announced that for the first time in 40 years, it had no plans to drill new exploratory wells in Alaska. BP, meanwhile, reportedly cut its 2010 development budget for Alaska by 15%. Volume on the trans-Alaska pipeline is way down from its 1988 peak, reflecting a failure of newer fields to offset the decline from Prudhoe Bay. And as capacity approaches the point at which operating the pipeline would no longer be feasible, thousands of jobs, as well as the future of the state’s main industry hang in the balance.
All of these developments are part of a general uncertainty over the future of the Alaskan oil production. The uncertainty comes not from any doubts about large volumes of untapped reserves in the state: By conservative estimates, Alaska’s coastal waters hold 27 billion barrels of oil and 132 trillion cubic feet of natural gas. Rather, questions persist over our ability to access those reserves.
The December 7 Interior Department ruling allowing Shell to drill in Chukchi resolves a longstanding dispute in one of the state’s most oil rich regions. An appeals court ruling earlier this year had allowed some other oil and gas projects in Alaska that had been initiated during the Bush Administration, but then held up under Obama, to go forward.
The Chukchi Sea is considered one of the most underdeveloped sources of oil in the U.S. Shell is eager to begin drilling. Alaska Governor Sean Parnell is also looking forward to the project getting underway. “Alaskans need these jobs and Shell is well prepared to explore for and develop oil and gas basins critical to our nation’s security,” he said in a statement.
However, it is worth stressing, as we’ve said before on this blog, that oil majors in no way regard this, or any other favorable ruling, as a license to drill with abandon. In fact, Shell won approval to drill in Chukchi only after it presented a proposal that addressed environmental concerns, in part by tightening the pollution controls on its drill ship. It was a costly and time consuming investment that should underscore the industry’s interest in Alaskan oil and gas, but its desire to do right by the state over the long haul.
Tags: Alaska, CEA, Consumer Energy Alliance, domestic energy, drilling, Interior Department, oil and gas, Shell Oil
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Green energy jobs: Gone abroad with the wind
Thursday, December 3rd, 2009
Oil isn’t the only domestic industry at risk of losing out to overseas competitors: It seems that a lot of federal government money allocated for renewable energy sources, like wind, has blown over to China, Spain and other foreign shores.
Of course, wind cannot be imported and exported like oil. It just blows where it will. But that has not stopped the U.S. from giving substantial funds for wind power plant projects to foreign businesses. A group of enterprising journalism students recently followed the money and found that the majority of clean energy grants the U.S. has issued in recent months have gone to companies in Spain, China and elsewhere that manufacture wind turbines or are building power plants in the U.S. What’s worse, many of these funds were U.S. stimulus dollars, allocated under the American Recovery and Reinvestment Act, and intended specifically to revive the American economy and create more jobs.
How does U.S. money allocated for American industry drift offshore so quickly? The short answer is that some other countries are further along in the development of wind power and the like. When the U.S. got serious about building up this new power industry, it partnered with foreign businesses that had the expertise it needed.
It sounds logical, to a point. The problem is, it’s the same sort of logic that is often offered to explain the country’s growing dependence on foreign oil. We’d prefer to tap existing fields far from home, rather than drill our own and invest in our future here at home. It comes down to a failure to adequately use our own natural resources, including not just what comes out of the ground, but all of the people who work to produce it. Whether you’re talking about oil or wind, the labor needed to develop all this power is a vital natural resource. At a time when so many American jobs are needed, this astonishing spending of U.S. stimulus funds to foreign wind power companies has struck a nerve.
Some lawmakers are now trying to block a major wind power project in Texas that is a joint venture between a U.S. company and a Chinese company, out of fears the investment will create more jobs in China than the U.S. “The project should not receive a dime of stimulus funds unless it relies on U.S.-manufactured products,” Senator Charles Schumer said recently, in calling on the government to block funds for the Texas project. That should go without saying. Hopefully this wind scandal will serve to remind us all of the folly of overlooking our own resources.
Tags: CEA, China, Consumer Energy Alliance, domestic energy, green jobs, scandal, U.S. resources, wind
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Cow power
Tuesday, December 1st, 2009
There’s something, well, powerful, about any creature that produces 120 pounds of waste every day. That’s the amount of manure that dairy farmers must clean up every day, from every single cow on the farm. That’s right: 120 pounds of manure. Every day. Every cow.
It’s a lot of waste going to waste, so to speak. Farmers have long joked about turning all that waste, which happens to be rich in methane gas, into real energy. And now that vision is starting to become a reality in California, thanks to a serious push to use more renewable power, and improved technology for breaking down the manure in a way that captures the methane.
Call it Cow Power. Bioenergy Solutions is a company based in Bakersfield, California, that has developed a system to make this conversion from waste to energy more cost effective for farmers. In fact, the company was founded by a group of dairy farmers who became inspired after spending so many days knee deep in you know what.
The company says the technology is still being perfected, but that biomethane plants in general have become more economically feasible now that utilities are working to derive more power from renewable sources. Cow manure may not conjure up the same romantic image as a windmill churning on the horizon or a sleek solar panel basking on the roof of a house. But you can’t get more renewable than a cow that generates that volume of waste, day in and day out.
Bioenergy Solutions says it is currently producing enough power for 1,000 homes, from 2,400 cows. The company has contracts with 40 dairy farms and many more have expressed interest.
These optimistic estimates are derived from limited, small scale production, and offer no guarantee that they could be replicated on a grand scale. Still, the numbers are so encouraging, that it can get you thinking about what could be accomplished with twice, or three times the number of cows.
Before you travel too far down that line of reasoning, remember the 120 pounds of manure that every single cow produces every single day, and ask yourself if we really need more of that.
Perhaps Cow Power is best positioned as a niche industry.
Tags: bioenergy solutions, CEA, Consumer Energy Alliance, cow power, cows, dairy farmers, domestic energy
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Happy Thanksgiving, Happy Travels
Tuesday, November 24th, 2009
In what has become something of an annual pre-Thanksgiving tradition, the latest survey of people’s travel plans this year shows a slight increase in the number of people who plan to travel by car, along with a rather sharp decline in those traveling to their turkey dinner by plane.
These surveys can offer a useful picture of the health of the economy, the affordability of gasoline, and maybe even the state of the American family. But it is also possible that we get carried away interpreting the annual data and overlook the larger point: Travel is something we’ve all come to take for granted.
Some might call it a right. Others see it as a privilege, or even a luxury. Some will scrape together the spare change around the house to pay for a 200-mile drive. Others won’t think twice about flying their entire family across the country.
And yes, some people have decided that they cannot afford to travel this year. It’s a sign of the tough economy we are all still struggling under, as well as a reminder that reasonably affordable travel is not a guarantee, even here in America where families scattered around the country tend to trust that they can all come together during the holidays.
In many ways, whether we stick with familiar territory or seek to discover new places, we live the way we travel: some on a small scale, others with grand plans.
But for the most part, even those of more modest means do travel a fair amount. Just the fact that we seriously review the shifting trends in travel by plane, train and automobile, show how fortunate we are to have so many options for getting around.
Whether you’re braving the crowds and the traffic this Thanksgiving, or staying close to home, we hope you enjoy a happy holiday with family, friends and food. As we give thanks for all these big things that make our lives rich and meaningful, remember too that the convenience of affordable travel makes all of our days run more smoothly.
Tags: CEA, Consumer Energy Alliance, consumers, costs, family and friends, holidays, saving money, Thanksgiving
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Old, but not over the hill
Thursday, November 19th, 2009
Here’s an important detail about the strength of our domestic oil industry that is often lost in the larger debate over opening more of the country to drilling and exploration: Yields are up at many existing oil fields.
The American Petroleum Institute reported this week that U.S. crude oil production reached a four-year high in October, due largely to the success of advanced drilling technologies that have helped improve yields in deep waters in the Gulf of Mexico and elsewhere.
It’s a milestone that is important for a number of reasons. It shows that the oil sector is inventive and enterprising, constantly adopting new techniques that will improve on the existing way of doing business.
These high yields, mind you, are coming from some not-so-young properties, at a time when critics maintain that oil is past its prime, and past its peak. And they beg the question, if oil producers can increase yields from existing properties, what might they be able to achieve on a spanking new field in one of the disputed sites around the country?
The 5.36 million barrels of crude oil per day that were produced during the month of October offer strong evidence in favor of additional drilling around the country. It’s a strong level of production that suggests that additional exploration has a high likelihood of success, and also that the producers overseeing the drilling would make the most of each project, just like they are doing at older fields. It flies in the face of the notion that the oil industry favors drilling with abandon, or only wants to break ground on new sites because all of the older ones have dried up. Rather, it reflects a long-term commitment to each and every project.
The debates over new drilling around the country may take a long time to resolve. But it’s nice to know that oil producers are keeping busy while they wait.
Tags: CEA, Consumer Energy Alliance, domestic energy, drilling, energy policy, energy prices, energy supply, natural gas, offshore, oil
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Truckers’ long haul, Part Two
Tuesday, November 17th, 2009
You may recall what we said last spring about the tough times in the trucking industry: a business which really cannot seem to get a break, between the high fuel prices in good times and the dramatic slowdown in demand during tough times (when, by the way, fuel prices often remain pretty high).
Now truckers have something else to keep them awake at night. Investor Warren Buffett’s recent $34 billion purchase of Burlington Northern Santa Fe, the nation’s second biggest railroad, has — at least for the moment — helped to christen railroads the freight transport vehicle of the future, threatening to marginalize trucks.
Now, first of all, let’s be clear that railroads will never eliminate the need for trucks. Take the most extensive rail network conceivable, and it will still come up short delivering goods from the source to the final destination. Of course, it’s possible to see ways that shipping by train is superior to trucking, and vice versa. But for the most part, it’s an apples-to-oranges comparison. Trying to compare the two industries would be like comparing an aircraft to a cruise ship.
Still, the fact that the country’s most prominent investor has put a lot of money behind rail lines doesn’t help raise the public’s appreciation of trucks and the necessary function they provide. And, at a time when so many truckers are going out of business or struggling to make any money at all, it seems fair to ask how the industry might improve its competitive position.
We know there are many variables, such as fuel prices and the volume of goods being transported, that truckers really can’t control. Every industry, however, must do what it can to be as efficient as possible.
This news story about the newly-formed North American Council for Freight Efficiency (NACFE) argues that the fragmented nature of the trucking industry has made it difficult for small operators to identify and adopt the best products to assist with route planning and minimize the hauling of empty containers.
How can this be so hard when there is so much GPS and supply chain technology out there? Consider this video of truckers at NACFE’s inaugural meeting, discussing how there is just not a lot of money available to risk experimenting with a technology that may or may not pay off. The typical independent trucker has a mountain of expenses, including health insurance, that leaves little or nothing left for discretionary spending.
Still, truckers have made progress. Consider Exhibit C, which offers some examples of the proactive steps truckers are already taking today to improve fuel efficiency.
It certainly is not easy being a trucker. But truckers provide an essential service and are working hard to address the challenges their business faces today and tomorrow. A domestic energy policy that would help them control costs would certainly provide some badly needed relief.
Tags: CEA, CEA Blog, Consumer Energy Alliance, diesel, gasoline, haul, high fuel prices, oil, trucking, trucking industry
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High unemployment and low carbon fuel standards: Two not-so-great things that are even worse together
Friday, November 13th, 2009
What could possibly be worse than the 10.2% nationwide unemployment we recently highlighted? How about the jobless rates of 11% in Florida, 12.2% in California, and a staggering 15.3% in Michigan?
If you didn’t think Michigan had a big part in the debate over domestic fuel production, think again. The state, which has been bleeding jobs, faces even more economic devastation if a low carbon fuel standard is adopted.
As we’ve outlined previously on this blog, a low carbon fuel standard ostensibly designed to reduce emissions, would actually play out with many unintended consequences. They would favor many types of foreign oil over those located in the U.S. and the Canada – not because Saudi fuel is cleaner fuel, but because it takes less energy to get out of the ground. Factor in the cost of transporting all that light, sweet crude oil halfway around the world, and you have a low carbon fuel standard in name only.
Now, back to Michigan. One of the industries that hasn’t fled the state is an oil refinery in Detroit, which refines fuel from nearby Canada. Heavy fuel, that is, which would not pass muster under new low carbon fuel standards.
This recent editorial in the Detroit News outlined the problem:
“In Detroit, the Marathon refinery produces nearly 100,000 barrels of affordable, reliable fuel a day, and provides thousands of jobs that support families, pay pensions, and provide good-quality health care…. As complex and convoluted a plan as a low-carbon fuel system is, the negative impact it would have on our country’s economic and strategic well-being is simple to understand. The low-carbon fuel proposal is engineered to produce higher prices at the pump, higher unemployment … and expanded dependence on foreign, unstable regimes.”
And further south, residents in Tennessee are also concerned, not just by what a low-carbon fuel standard will mean for their local economy, but by the seemingly arbitrary standards by which fuels would be in or out.
“Fuels are assigned a carbon energy ‘score,’ based on the energy required to bring them to market,” explains this editorial. “The U.S. would be forced to rely on lighter crude from the Middle East.”
“A low carbon fuel standard will also result in volatile gas and commodity prices, the loss of U.S. refinery and pipeline jobs, and an increase in global greenhouse gas emissions.”
That’s right. As we’ve also pointed out here, emissions know no borders. Nor does a balanced energy policy. We’re working on behalf not just of the oil rich states but of the country as a whole, and we’re happy to see that our message resonates widely.
Tags: CEA, Consumer Energy Alliance, fuel, LCFS, low carbon, Low-Carbon Fuel Standard, unemployment
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1983 all over again
Tuesday, November 10th, 2009
Twenty-six years ago, the video of Michael Jackson’s Thriller was broadcast for the first time. The Soviet Union invaded Afghanistan. And here in the United States, unemployment peaked above 10%. That was in 1983.
Sound familiar? Twenty-six years later, Michael Jackson and Afghanistan are still making news. And last week, we learned that the nationwide jobless rate rose to 10.2%, the first time since 1983 that the country has seen double-digit unemployment.
It’s a sobering benchmark that highlights just how serious the country’s jobs crisis remains, and begs a closer consideration of the policies that got us here. At CEA, we talk often about balanced energy policy and the broad economic benefits of a steady supply of homegrown oil. We’ve talked less about specific jobs, but it’s worth emphasizing that expanded oil operations bring with them new jobs, many of them the kind of well-paying jobs that the country has lost as its manufacturing base has eroded.
In Florida, one of the many states now debating opening more offshore waters to oil exploration and development, it is estimated an expanded oil presence could create more than 13,000 jobs.
Have we mentioned North Carolina? Earlier this fall, that state’s governor set up a Scientific Advisory Panel on Offshore Energy that is reviewing the impact of new drilling projects along with offshore wind farms. You don’t hear a lot about North Carolina as a drilling destination, but advocates of expanded oil activity there estimate that more offshore exploration alone could bring in 6,700 new jobs.
It’s worth noting here that we’re all too familiar with the unfortunate term “drill baby drill,” which suggests a preference for drilling anytime, anywhere. That’s not something we’ve ever advocated. We support responsible drilling in regions that are deemed suitable for oil projects. But we also recognize that politics and special interests have too often gotten in the way of fair reviews into what constitutes suitable drilling destinations.
Now that the country is suffering the worst jobs crisis since the last days of disco and Soviet aggression, it appears people are taking a more reasonable look at domestic oil production and all the economic benefits it brings.
Tags: 1983, Afghanistan, CEA, Consumer Energy Alliance, Drill, drill baby drill, Michael Jackson, offshore resources
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Taking the drilling debate south for the winter
Sunday, November 8th, 2009
Texas. California. Alaska. And now, Florida. That’s the latest site of what has become a series of heated debates over offshore drilling. All around the country, lawmakers overseeing diminished state and local coffers are proposing opening up some regions that are now off limits for offshore drilling, and longtime opponents are clinging to outdated arguments.
This kneejerk sort of reaction of turning to oil in the most desperate of economic circumstances is in many ways regrettable. A robust domestic energy industry, after all, has a lot more to offer us all than some emergency funds. But it’s also an opportunity for which many of us have waited a long time and for that reason, we all need to become active participants in these debates and do what we can to educate policy makers and the general public.
Based on what we’ve seen coming out of Florida so far, this is not a battle that will be easily resolved. But there does appear to be a fair amount of genuine interest in hearing what the oil industry has to say. Consider some of the arguments that were made – and covered in the press – during a series of symposiums like this one recently held in Tallahassee:
–The majority of oil released into the ocean has been shown to come from natural seeps from the ocean floor.
–Transporting oil long distances in tankers poses a greater environmental hazard than producing it close to home and transporting it on pipelines.
–Offshore drilling and coastal tourism have a strong track record of coexisting well together, even before the introduction of directional drilling technologies, which minimize the surface disturbance.
As these debates gain momentum around the country, we are struck by how people everywhere have such similar concerns. They want economic stability for the country and a sustained or improved quality of life for themselves.
But as we shift our focus from California to Alaska to Florida, we’re also reminded that while the domestic drilling debate is in many ways a no-brainer, it does take on a different tone in different locales. If we really want to make progress nationwide, we must understand the specific concerns of all different communities, from the tundra to the tropics.
Finally, we cannot forget what is at stake: What is quite likely the world’s largest supply of oil and oil equivalents. As this advocate recently argued, “Leading the world in resource reserves would be something of a prize, if Washington would permit our corporations and entrepreneurs to actually access it.”
Tags: CEA, Consumer Energy Alliance, drilling, Florida
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