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CEA: LCFS a Road Map to Higher Fuel Costs, Expanded Foreign Energy Dependence, Loss of U.S. Jobs

Consumer Energy Alliance responds to ethanol coalition’s support for a Low-Carbon Fuel Standard

WASHINGTON – August 14, 2009   Earlier this week at an energy forum in Nevada, a national coalition representing ethanol producers unveiled a “road map for a greener America” founded on the adoption of a policy known as the Low-Carbon Fuel Standard (LCFS).

In response to that effort, and with an eye on separating fact from fiction on the economic and strategic consequences that such a proposal would create, Consumer Energy Alliance (CEA) vice president Michael Whatley released the following statement:

“A LCFS would have serious consequences on America’s economic and strategic position in the world. An LCFS isn’t about making our environment any better, but it would make fuels from existing and future sources — sources we need — so expensive and scarce that Americans will be forced to look elsewhere for the energy they need to drive their cars, heat their homes and live their lives.”

Added Whatley: “Worse than that, an LCFS would prevent America’s fuel producers from accepting oil supplies from our closest, most important allies in the hemisphere – especially Canadian oil, of which we import more than 2.5 million barrels a day. In fact, under an LCFS, even some of America’s own homegrown reserves of crude oil would be targeted for elimination – creating a dangerous vacuum that some of the most unstable regimes in the world will be happy to fill.

“That’s not an effort that American energy consumers can support – especially when all the facts are laid out on the table. And while CEA members continue to fight for an ‘all of the above’ approach to leveraging America’s homegrown energy potential, which includes finding ways to expand our use of advanced sources of biofuels, a nationwide LCFS falls squarely outside that mandate.”

NOTE: At its core, an LCFS is a mandate on our nation’s refiners to reduce the “lifecycle” carbon emissions of the fuels they produce. But since the actual carbon content of most fuels is constant, the only options available for refiners under an LCFS is to either stop accepting shipments of “heavy” crude from Canada, Mexico, and much of the American Intermountain West, or buy up government-issued credits for the right to remain in business.

Either way, American jobs will be put in danger, the price we pay for gasoline will go up, and the amount of oil we import from unstable regimes abroad will increase substantially.

And now, a common sense tip on saving energy

The challenge of helping the world consume fuel more efficiently is a highly complex business that owes a lot to cutting edge science and technology. But when U.S. Energy Secretary Steven Chu appeared on Comedy Central recently, he offered some decidedly low-tech advice: Make it White.

White, as in white roof, that is. Chu reminded his modern audience of a basic fact that dwellers of warm climates have understood for centuries: when you paint a roof, or even an entire house white, it absorbs less heat. Way back when, that simply meant that everyone was a little bit more comfortable. Today, it means less air conditioning, lower electricity bills and reduced emissions. By Chu’s own account, if the world could somehow manage to turn all its roofs white within 20 years, it would save about 24 billion metric tons of carbon dioxide emissions – the same amount the entire world emitted last year. “So, in a sense, it’s like turning off the world for a year.” It’s a rhetorical argument of course, but it does show that little changes can add up.

The New York Times cites studies showing that in hot, sunny climates, white roofs reduce air-conditioning costs by at least 20%. They are not much more expensive than standard darker roofs and the investment can pay for itself quickly.

One disclaimer: People who live in places that have cold winters should probably keep dark roofs, which during cold, sunny days help keep homes warmer and reduce heating costs. But if you hail from a place like Arizona or Florida or southern California, take Chu’s advice and go light. Saving energy doesn’t always have to be so complicated.

Green shoots emerge, but U.S. industry still needs a lot of support

Historically, one of the biggest impediments to true energy independence has been our country’s collective failure – and that means policy makers, business people and man on the street types alike – to stay focused on the goal through bad times and good.

Many people still associate the last big push to wean ourselves off foreign oil with the last really bad recession, during the Jimmy Carter Administration. When more prosperous times followed, many of those same people and a lot of others who weren’t even alive back then conveniently forgot what was so bad about dependence on foreign oil in the first place.

Fast forward to the current Great Recession, which folks are so eager to put behind them that they are focusing on the thinnest shreds of good news, such as last week’s report that July unemployment actually declined, to 9.4% from 9.5% in June.

But just as the positive ruling that will allow some drilling in the Gulf is no reason to abandon efforts to free up other coastal waters in dispute, a glimmer of an economic recovery — while certainly welcome — is no reason to forget about all the U.S. industries that are still struggling and could be hurt more by volatile oil prices.

A couple of reality checks: Unemployment is still very close to 10%, a level that just one year ago seemed unfathomable. Several industries such as retailing and construction continue to make deep cuts. Even as the unemployment rate fell in July, some 247,000 more jobs were lost, a paradox that reflects large numbers of workers exhausting unemployment benefits and no longer counted among the jobless.

By most accounts, the modest decline in July unemployment was a blip rather than the start of a new trend. Nationwide unemployment is still widely expected to move into the double digits before it improves significantly.

Many states are already there. California’s unemployment is 11.6% and Florida’s is 10.6%. It’s worth noting that these are both oil-rich states that could benefit from a loosening of drilling restrictions.

This story provides a good explanation of how the failure to commit to a strong domestic oil policy is a vicious cycle: Dependence on foreign oil leads to price volatility and uncertain oil industry profits, discouraging oil companies – restrictions notwithstanding – from spending on exploration and ultimately resulting in tight supplies and more need to import oil from abroad. And then the cycle starts over again.

Even as we all look forward to the end of this long and painful recession, we need to see the downturn as an opportunity to commit to doing things differently and breaking this decades-old cycle of oil dependence.

CEA Alaska Director in Richmond Paper: “Let Alaska Jumpstart Economy”

“We must unleash our world leadership in conservation and 21st century technology to develop our resources safely. We can stop the economic hemorrhaging caused by our dependence on foreign energy. To help do that, we must safely produce Alaska’s energy while protecting its environment.”

“Alaska‘s energy can help jumpstart our economy and provide resources to prevent future price spikes. Salazar, Congress, and the Obama administration should protect the United States and support American consumers by letting American workers produce America’s energy.”

Dave Harbour, Executive Director of Consumer Energy Alliance of Alaska, submitted the following Op-Ed to The Richmond Times-Dispatch on August 5, 2009. View by clicking here.

ANCHORAGE, Alaska Oil topped $145 a barrel last summer, and gasoline settled in uncomfortably above $4.25 per gallon. Compared to those historic prices, today’s $70 oil and $2.70 gasoline might seem like a bargain.

But if we want to avoid a replay of the past, we must act now to confront the conditions that created those volatile prices, starting with Alaska. Accounting for three quarters of our nation’s coastlines, Alaska’s offshore resources exceed those in the Gulf of Mexico. With the giant Prudhoe Bay oilfield and infrastructure, Alaska also has an expert work force needed to produce its abundant resources. But for that to happen, the federal government must take action.

We need a decisive approach to America’s energy needs. We must unleash our world leadership in conservation and 21st century technology to develop our resources safely. We can stop the economic hemorrhaging caused by our dependence on foreign energy. To help do that, we must safely produce Alaska’s energy while protecting its environment.

Alaska produces more than 13 percent of America’s domestic crude oil. But we rely on the Middle East and other countries for 70 percent of the oil we use. The sad story is that we could easily improve our national security and reduce our vulnerability to foreign oil by turning to Alaska and other offshore areas. The associated royalty and tax revenues and the thousands of jobs offshore production may well create would provide America with an economic stimulus that strengthens – not weakens – future generations.

Much of Alaska’s abundant energy resources lie offshore, in areas that for years were made off-limits by the federal government. When energy prices shattered record highs last summer, both the Democratic-led Congress and the Bush administration allowed their decades-old bans on outer continental shelf (OCS) development to lapse. But the Interior Department must first include areas of Alaska’s offshore region in its five-year plan for development before any exploration can take place.

This problem came to a head earlier this year, when a federal court nullified the Interior Department’s current five-year plan, a strategy that included energy in Alaska’s North Aleutian Basin and Beaufort and Chukchi Seas. Fortunately, all that’s needed to reinstate the five-year plan are a few technical changes. Interior Secretary Ken Salazar could quickly make those changes, and unleash a safe search for Alaska’s energy.

Claims that we have to sacrifice the environment to produce energy are untrue. Energy production is cleaner, more efficient, and more effective than ever. Billions have been invested to develop technologies that have revolutionized energy production. Footprints have been reduced, limiting environmental impact. 3-D seismic and 4-D time-imaging technologies have made finding resources easier. Equipment like storm chokes and blowout prevention devices are now standard.

We must produce more domestic energy and not fear the false arguments of those who would prefer we produce no energy at all. Alaska’s energy can help jumpstart our economy and provide resources to prevent future price spikes. Salazar, Congress, and the Obama administration should protect the United States and support American consumers by letting American workers produce America’s energy.

Good news for the Gulf

A federal appeals court ruled on July 29 that new oil and gas drilling in the Gulf of Mexico can go forward as planned; clarifying a decision it issued earlier this year to block some projects initiated during the Bush Administration. An August 19 lease sale is now set for some 18 million acres covering an area projected to yield up to 423 million barrels of oil and 2.64 trillion cubic feet of natural gas.

Needless to say, oil industry groups are applauding the ruling. So is Interior Secretary Ken Salazar, who stressed that any viable U.S. energy strategy must include some domestic production.

In a political climate where policy is so easily swayed by public opinion, CEA wants to thank all its supporters for helping to elevate our cause … and to remind them that much work remains to be done.

Oil producers are still waiting for clearance to explore Alaska’s offshore region, and the vast majority of the coastal waters in the lower 48 states remain off limits, even though a longstanding ban on offshore drilling in the country’s outer continental shelf was lifted more than a year ago.

Hopefully, the latest court ruling signals a growing commitment to end our dependence on foreign oil and create more jobs in the process.

Good for the economy, good for the environment (and not a bad deal for consumers, either)

The federal government kicked off its cash for clunkers program in July, offering some serious money to get old gas guzzlers off the road. If you were thinking a few hundred dollars to take some rusty lawn decorations off the hands of people who couldn’t be bothered to make a trip to the junk yard, think again: Under the now $3 billion Car Allowance Rebate System (CARS), owners of qualifying vehicles can get up to $4,500 to turn the vehicle in to a participating dealer who will destroy its engine to ensure it never sees asphalt again.

Clearly any program that will remove cars that fail to meet today’s strict vehicle emissions standards is good for the environment. But the timing of this program, in the midst of a historically deep recession that has devastated the U.S. auto industry, combined with the government’s commitment to invest a substantial amount, seem certain to make this program a winner on multiple fronts.

Some car makers are adding their own incentives on top of the government’s generous offer. Chrysler, for example, is matching the federal rebate dollar for dollar for any consumer shopping for a new car. How can it afford to? The answer, it seems, is that it can’t afford not to. This story reports that, in addition to slow sales, U.S. carmaker inventories are bloating as a result of lease turn-ins: More than half of those people who have turned in leased General Motors vehicles in recent months have not replaced them.

Now, it looks like that trend might finally start to reverse as the government rebates and added dealer incentives make spanking new cars affordable to many people who were previously priced out of the market by a long shot. PriceWaterhouseCoopers thinks the program could generate 200,000 new car sales in the U.S.

None of this means that the program is flawless. Critics have disputed everything from the amount being paid for those old clunkers to the qualifying criteria. Some 20-year-old cars don’t make the cut, while relatively new models do. The online car buying guide Edmunds.com calculates that the new car sales that are generated through the program will cost American taxpayers $20,000 apiece. Other forecasts that predict much broader participation calculate a much lower cost per car turned in.

More to the point, however, Cash for Clunkers, and all the consumers and car dealers lining up to participate, shows that it is possible to serve different causes at the same time.

Commuting to work in a comfortable car doesn’t have to be at odds with serving the planet.

CEA August 2009 Newsletter

CEA Newsletter
Issue 29
Message from CEA President David Holt
Last month marked the first anniversary of the withdrawal from the 18-year old presidential moratorium on domestic offshore energy production by President Bush. Though the lifting of the offshore oil & gas drilling ban was a momentous decision, we are still no closer to accessing our vital offshore energy reserves than we were last July. We must continue to work toward a national energy policy that fully leverages America’s abundant offshore energy resources into new jobs, revenue and security for American energy consumers.

As we have often said before – while expanding the use of alternative energy through greater development of wind, solar, nuclear and other energy sources is the ultimate goal, we need to ensure that access to our abundant oil and natural gas resources is achieved as we continue to build that bridge to the future. Further, we have to guarantee that these energy resources are secure and affordable if we have any hope of seeing the national economy rebound.

By curbing our demand, increasing our supplies, especially from conventional energy resources along our coasts, we can reduce our dependence on foreign and unstable regions of the world to keep our economy moving. American families and small businesses deserve policies from the federal government that will actually deliver affordable, efficient and reliable energy. Opening up our offshore areas for responsible energy development is a step in that direction, and Consumer Energy Alliance is proud to tell our federal government that we support offshore oil & gas drilling, as well as offshore alternative energy development.

Please join our efforts and tell the Administration that you support sensible energy production off of our coasts too (click here to send in a letter).

David Holt
President

Support U.S. Offshore Oil & Gas Development!
A significant domestic supply of energy can be safely and efficiently found right here off of America’s shores. The federal government currently administers the considerable energy resources contained in our offshore waters and wants to hear from you about offshore oil & gas and alternative energy development.

Opposition to offshore energy development is mounting. We need you to let Washington know you support reasonable access to America’s offshore energy resources. Send in your comments today!

Support Development of Alaska’s Offshore Oil & Gas Resources!
At a time when the American public is crying out for more domestic energy, Alaska has enormous untapped oil and gas potential, especially in its offshore areas. The waters off Alaska’s coasts hold about 27 billion barrels of oil and 132 trillion cubic feet of natural gas, estimates the federal government.

To begin producing energy from these resource basins, the federal government must take action. Join us in our effort as we build public support for offshore minerals exploration and development in Alaska. Send in your comments today!

CEA Blog: Good for the economy, good for the environment (and not a bad deal for consumers, either)
Check out CEA’s recent blog entry about the government’s cash for clunkers program. Join the conversation at CEA’s website. Read blog…

Consumer Corner: Standby Power
Did you know that many electrical products use energy when plugged in, even if turned off? As you read this, many of your own household appliances and conveniences are using “standby power” – the term for using energy when plugged in, yet not in use.

Standby Power is costly to consumers – about 10 percent of household electricity use is due to standby-powered electronics. At any time, the average home in the United States has 40 products constantly using power without the homeowner realizing it.

To save on home electricity bills and reduce wasteful standby power use, try these tips from the Lawrence Berkeley National Laboratory:

Unplug devices that aren’t being used
Use power strips to cut power to groups of electronics at one time
Purchase low-use standby products

Using tips such as these – and more found here – may save you up to 30 percent of the wasted energy being used in your home.

CEA being honored by Bering Omega Community Services
Consumer Energy Alliance is proud to act as the honorary chair for Bering Omega Community Services’ 15th annual SING FOR HOPE on September 19, 2009. The event will feature an intimate evening of classic opera arias and popular showstoppers from favorite musicals.

Proceeds raised by the event will help support Bering Omega’s efforts to provide compassionate healthcare and social services to people living with HIV/AIDS.

If you would like more information on Bering Omega and will be in the Houston area on September 19th, please visit Bering Omega’s website at www.beringomega.org.

Experts: Global Oil “Crunch” Possible Within Next Five Years
Chief Economist of the International Energy Agency Fatih Birol warned Monday that oil fields throughout the world have passed peak production and that an oil “crunch” could develop during upcoming years. Read article…

Asia Sets its Sights on Solar Power
India and China are pursuing aggressive plans to step up their solar energy programs. Read article…

Affiliate Spotlight: American Public Gas Association
Representing publicly- and community-owned gas utilities, the American Public Gas Association (APGA) has more than 700 members throughout 36 states.

“We advocate on issues that impact our members and the communities they serve. We also work across the nation to educate our members on best safety practices, legislative issues, effective business and operational strategies and host conferences promoting the benefits of natural gas as a responsible and efficient energy source,” says President and CEO Bert Kalisch.

APGA’s vision is to be the voice and choice of public gas. In conjunction, the non-profit’s mission is to be an advocate for publicly-owned natural gas systems and effectively educate and communicate with members to promote safety, awareness, performance and competitiveness.

“As an advocate for public natural gas systems we work on behalf of our members to fight for the issues that affect their businesses and customers. From, transparency issues to supply issues, from the affordability of natural gas to promoting its environmental benefits – energy affects all of us,” Kalisch maintains.

One energy issue that is currently top priority to APGA, according to Kalisch, is promoting immediate use and responsible development of renewable and clean burning fossil fuels such as natural gas.

“We have a plentiful supply of natural gas available in the U.S and it is our hope that future energy plans include this clean, responsible and comfortable choice of fuel.”

APGA’s number one goal is to bring natural gas prices back to a long-term affordable level, Kalisch emphasizes.

“Increasing supply is a critical component of the solution to obtaining this goal. The primary reason we have suffered the price increases we have experienced is a natural gas supply/demand imbalance, supply has not been able or allowed to keep pace with demand.”

The imbalance, in large part, is due to federal policies which restrict exploration and production of natural gas.

“This restriction is ironic in light of other federal policies which favor gas use because of its clean-burning properties,” Kalisch maintains, adding that APGA is extremely concerned that congressional efforts to enact climate change legislation will further exacerbate the demand/supply balance.

“Under climate change legislation, natural gas will most likely become the ‘fuel of choice’ for electricity generation and this will further drive up price unless there are equivalent increases in supply.”

As a member of Consumer Energy Alliance, APGA recognizes the need for a strong U.S. energy policy and responsible development of domestic energy.

“We believe in the power of strength in numbers. That belief is the heart of our association and we believe that being a part of a group like the CEA just strengthens our likeminded messages,” Kalisch notes. “All of the affiliates in CEA may not have identical agendas or platforms, but we all understand the country’s incredible need for a comprehensive energy solution. Together as a group we can work together to move our collective agendas forward and finally see a U.S. energy policy that works for America, its citizens, energy producers and our planet.”

For more information on the American Public Gas Association, visit www.apga.org.

CEA: Russian, Cuban Offshore Energy Production Agreement Must Send Strong Message to Washington

WASHINGTON – August 4, 2009  Reports have surfaced that Russia and Cuba have struck a multi-million dollar deal that will, in part, expand energy production in Cuban waters. According to Reuters, “Russia and Cuba have signed contracts that “set the bases” for Russian oil company Zarubezhneft to search for oil in Cuba’s part of the Gulf of Mexico.” Michael Whatley, Vice President of Consumer Energy Alliance (CEA), issued this statement:

“As officials in Moscow and Havana work to expand energy production just miles from the Florida Keys, vast amounts of American energy resources – both on and offshore – remain padlocked by the federal government.

“Actions are underway, though, in Washington that may affect what domestic resources American consumers can access. Ken Salazar, secretary of the Interior, is readying a proposal that could ultimately determine where offshore energy production could occur. It is vital that Secretary Salazar’s five-year outer continental shelf development plan opens our waters for responsible, 21st century energy development, especially in Alaska’s resource-rich seas.

“As small businesses continue to struggle to make payroll and keep their doors open, and as families are forced to make difficult decisions and tighten their belts, we must move forward with policies that reduce energy costs across the board. What our economy, and our nation, desperately need from Washington is commonsense, supply-focused energy plans that ensure environmental safety, and that American consumers have access to affordable, reliable, and efficient energy.”

Read More:

  • Under the headline “Global economy at risk from oil price rise,” the Financial Times report this yesterday: “The world economy cannot sustain any further rise in the oil price, the International Energy Agency’s chief economist warned as oil prices rose toward a record high for the year. Fatih Birol told the Financial Times that prices higher than about $70 could dampen a world economic recovery. “If we go one step further, if we see prices go much higher than that, we may see it slow down and strangle economic recovery,” he said of oil prices on Friday.”
  • The Southeast Energy Alliance, the southeastern chapter of CEA, released a study on the economic impact that responsible offshore energy development could have on the state of North Carolina. Among its key findings, the report found that offshore oil and gas exploration could create more than 6,700 new jobs in the state, increase North Carolina’s GDP by $659 million a year, and generate approximately $148 billion in federal, state and local revenues. Click HERE to view the report.

David Haugen – Pipeline Pioneers

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