Fuel Freedom Staff

BusinessWeek: Ethanol just avoided a death blow

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BusinessWeek’s Matthew Phillips reflects on the EPA’s decision to delay proposed changes to the renewable fuel standard, a revision that was expected to reduce the amount of corn-based ethanol to be blended into the nation’s gasoline supply.

Now that the new RFS standards have been put off until sometime in 2015, ethanol producers have the chance to regroup and fight another day, Phillips writes.

The ethanol industry just avoided a death blow. Rather than deciding to permanently lower the amount of renewable fuels that have to be blended into the U.S. gasoline supply, as it first proposed a year ago, the Environmental Protection Agency last week opted to wait until next year to decide. The delay (official notice here) means this year’s ethanol quotas won’t be set until 2015 and ensures they will be lower than the original mandate envisioned. That’s not great news for ethanol producers, but it gives them more time to fight and avoids an outcome that could have been far worse.

…

Ethanol industry leaders pretended to be angry at the EPA’s decision to delay on Friday: “Deciding not to decide is not a decision,” Bob Dinneen, chief executive of the Renewable Fuels Association, said in a written statement. But the reality is that they’re relieved the White House didn’t choose a more aggressive plan pushed by refining and oil companies.

Fuel Freedom Staff

Whatever OPEC does, U.S. oil companies will keep drilling

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Bloomberg has a story about what U.S. drillers will do in response to whatever OPEC does this week at its regular meeting.

OPEC, led by its top producer, Saudi Arabia, will do one of two things: Nothing, which means the cartel’s output will remain unchanged, and crude prices will say flat (or keep sliding). Or it could cut production, which “would lift prices and profits across the board and help finance further U.S. energy innovation,” the Bloomberg story says.

Either way, U.S. producers will have the same response: Drill on.

“The industry is very resilient, as strong as ever in recent history,” Tony Sanchez III, chief executive of Texas producer Sanchez Energy Corp. (SN), said in an interview. “The technological advances we’ve made underpin virtually everything right now.”

A continued price plunge would put more pressure on U.S. companies, but they’re increasingly insulated by OPEC’s actions, the story says.

The swagger of U.S. producers in the face of plunging oil prices shows the confidence they’ve gained from upending OPEC’s six decades of market dominance with technology that wrings oil from dense rock for prices as low as $40 a barrel. The shale boom has placed the U.S. oil industry in its strongest position since OPEC began flexing its pricing power in the early 1970s.

Arctic Leaf

Can alternative vehicles still play a role?

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A couple of Google engineers shocked the world last week by announcing that after working on the RE<C (Renewable Energy Cheaper Than Coal) Initiative for four years, they had concluded that renewable energy is never going to solve our carbon emissions problem.

In a widely read article in IEEE Spectrum, the prestigious journal published by the Institute of Electrical and Electronics Engineers, Ross Koningstein and David Fork announced that after working at improving renewables on the Google project, they had decided that it wasn’t worth pursuing. Google actually closed down RE<C in 2011, but the authors are just getting around to explaining why.

At the start of RE<C, we had shared the attitude of many stalwart environmentalists: We felt that with steady improvements to today’s renewable energy technologies, our society could stave off catastrophic climate change. We now know that to be a false hope.

Google’s abandonment of renewable energy raises the immediate question: What about the effort to reduce carbon emissions from vehicles? And here the news is much better.

Although everyone concentrates on coal and power plants, they regularly forget that half our carbon emissions come from vehicles. It’s typical that Google’s RE<C effort didn’t address what to do about our cars. It’s too complicated to try to control the emissions from 200 million point sources.

But what’s never discussed is the fuel that goes into these vehicles. It’s well known that ethanol and methanol cut carbon emissions compared with gasoline. That’s a good chunk of the battle right there. But it doesn’t even take into account the possibility of making both fuels from non-fossil-fuel resources, so that both would be all pluses on our carbon budget.

Ethanol, as currently produced in this country, is synthesized entirely from corn, so there is no fossil-fuel element involved. Ethanol currently takes up 10 percent of all the gasoline sold is this country, but it is currently marketed at 85 percent ethanol in the Midwest, with only a 15 percent element to guarantee starting on cold days.

Methanol is generally synthesized from natural gas, so there is still a fossil-fuel element there, but there is always the possibility of making methanol from non-fossil sources. Municipal waste could easily be converted directly to methanol.

And of course there is always the possibility of synthesizing ethanol and methanol using renewable energy. People always talk about storing wind or solar energy as hydrogen, but methanol would be easier to store than hydrogen since it is a liquid to begin with and not subject to leakage and escape. Methanol can be easily stored in our current infrastructure.

The Chinese are currently building six methanol plants in Texas and Louisiana to take advantage of all the natural gas being produced there. All this methanol is slated to be shipped by tankers back to China, where it will be used to boost China’s own methanol industry — and to run some of the 1 million methanol cars the Chinese have on the road.

Yes, the Chinese are far ahead of us when it comes to using methanol a substitute for oil. But there’s a scenario that will introduce methanol in the American auto industry. With all this methanol on hand in Texas and Louisiana, someone will install a pump on one of the premises for dispensing methanol. Cars at the site will use it. Then someone will say, “Hey, why don’t I use this in my car at home? It’s cheaper.” Before you know it, there will be a contingency to have the EPA decide that methanol can be used in automobile engines the same as ethanol is currently used. And in the end, we will have large quantities of methanol substituting for foreign oil.

Is it a dream? No more unrealistic than the dreams that kept the Google scientists occupied for four years.

Fuel Freedom Staff

New York Times launches series looking at N.D. oil industry

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You won’t be fully up to speed on how oil production, and hydraulic fracturing, has transformed the rural communities of North Dakota unless you read Deborah Sontag’s exhaustive piece in The New York Times.

Sunday’s Part I of a series, “The Downside of the Boom,” includes video, satellite maps and other visuals to complement its reporting.

At the heart of Part I is the way land has been “sliced and diced” in North Dakota for years, and rights to the surface don’t necessarily mean the landowner has control over the resources that lie beneath.

Given that mineral rights trump surface rights, this made many residents of western North Dakota feel trampled once the boom began.

In 2006, a land man for Marathon Oil offered to lease the Schwalbe siblings’ 480 acres of minerals for $100 an acre plus royalties on every sixth barrel of oil.

“Within a few years, people were getting 20, 30 times that and every fifth barrel,” Mr. Schwalbe said. But the Schwalbes did not expect “to see any oil come up out of that ground in our lifetime.”

Oil companies were just starting to combine horizontal drilling with hydraulic fracturing to tap into the mother lode of Bakken oil. “We didn’t really know yet about fracking,” he said.

The Schwalbes’ first well was drilled in 2008, their second the next year. Powerless to block the development, Mr. Schwalbe and his wife, nearing retirement, took some comfort in the extra income, the few thousand dollars a month.

Then that was threatened, too.

Fuel Freedom Staff

EPA delays decision on whether to reduce ethanol in gas

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The federal government’s new threshold for the amount of ethanol blended into America’s gasoline supply was already 10 months overdue. So officials have gone ahead and delayed the decision further, into 2015.

The Environmental Protection Agency announced Friday that it would defer an announcement on the renewable fuel standard (RFS), which stipulates that ethanol should make up 10 percent of gasoline.

(The Des Moines Register has some of the day’s best reporting on this issue. Agriculture.com also has a good explanation of the granular details.)

The standard, first established under a 2005 law, calls for the amount of renewable fuels in gasoline to progressively increase each year. But the law was written at a time when demand for gasoline was expected to keep going up. Slackened demand around the world, combined with stepped-up U.S. production, has dropped domestic prices below $3 a gallon.

Based on that reality, the EPA recommended, in November 2013, that the amount of corn ethanol in the should be reduced, from 14.4 billion gallons a year to 13.01 billion gallons.

This upset the corn growers and ethanol producers, most of them clustered in the Midwest and Great Plains. They said the delays deterred investment in biofuels, and even the oil companies complained that the regulatory vacuum created too much uncertainty in the fuels market.

The EPA’s recommendations had not been finalized. They had been sent to the White House Office of Budget and Management for review, but that office “ran out the 90-day clock to review the agency’s proposed standards, which for the first time signaled a retreat by the EPA on the percentage of biofuels that must be blended,” The Hill reported.

Since the EPA was already so late in setting the 2014 guidelines, the agency “intends to get back on track next year, though details on how it would do that weren’t available Friday,” The Wall Street Journal wrote. The EPA statement said: “Looking forward, one of EPA’s objectives is to get back on the annual statutory timeline by addressing 2014, 2015, and 2016 standards in the next calendar year.”

The reaction among the affected parties was mixed Friday. The WSJ tries to untangle the various interests:

The debate over the biofuels mandate triggers strange bedfellows, with trade groups representing the oil and refining companies, car manufacturers, livestock and even some environmental interests all opposed to the policy for different reasons. Proponents of the standard include the corn industry, which is the most common way ethanol is produced, and producers of ethanol.

The EPA’s announcement gave cautious hope to ethanol-industry leaders that the agency will fundamentally rethink how it proposes the annual biofuels levels. The draft 2014 biofuels levels, which the agency proposed almost a year ago, were much lower than the ethanol industry lobbied for.

“I am truly pleased that they’re pulling away from a rule that was so bad,” said Bob Dinneen, president and CEO of the Renewable Fuels Association, a trade group representing biofuels companies. “But I recognize as well we have to work with the agency to try to figure out a path forward that everybody can live with.”

Executives in the oil-refining industry criticized the delay, and said it was evidence the renewable-fuel standard was itself inherently flawed and should be repealed.

“Each year is dependent upon the previous year, and to some extent dependent upon the following year,” said Charlie Drevna, president of the American Fuel & Petrochemical Manufacturers, a trade association representing the nation’s refining industry. “The problem is, every year EPA is late in getting this out, it exacerbates it. They’re never going to be able to catch up.”

 

Fuel Freedom Staff

Are the United States and Saudi Arabia conspiring to keep oil prices down?

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As my colleague Jordan Weissmann wrote Tuesday, there are a number of factors behind the continuing global slide in oil prices, including North American production, increased energy efficiency, Europe’s economic stagnation, and China’s slowing growth. But a big one is Saudi Arabia, which, to the dismay of fellow oil -producing nations, has resisted pressure to cut production in order to stabilize prices.

Ahead of an OPEC meeting in Vienna next week, there are some contradictory theories about why Saudi Arabia is content to keep oil cheap for the time being. One is that the Saudis want to nip the U.S. oil boom in the bud. American shale oil is more expensive to produce and needs high prices to remain competitive. As one analyst put it when the kingdom cut prices for U.S. customers earlier this month, “the Saudis have basically declared war on the U.S. oil producers.”

Read more at: Slate

Fuel Freedom Staff

Oil, ethanol groups say EPA delay hurting their industries

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U.S. ethanol producers and the oil industry responsible for mixing the renewable fuel into the gasoline supply rarely agree on anything.

But the two foes say the failure of the Environmental Protection Agency to finalize how much ethanol should be mixed into the country’s motor fuel supply in 2014, more than a year after the regulator first issued its proposal, has created uncertainty and hindered the ability of the free market to work.

“The market is kind of frozen right now because the EPA hasn’t responded,” said Bob Greco, downstream director with the American Petroleum Institute, a trade group representing more than 550 oil and natural gas companies. “The EPA, because of the way (the Renewable Fuel Standard) is structured, moves markets by making these decisions. You’ve got billions of dollars of investments threatened.”

In November 2013, the EPA proposed reducing ethanol produced from corn in 2014 to 13.01 billion gallons from 14.4 billion gallons initially required by Congress in the 2007 Renewable Fuel Standard, a law that requires refiners to buy alternative fuels made from corn, soybeans and other products to reduce the country’s dependence on foreign energy.

Read more at: Des Moines Register

Fuel Freedom Staff

NYT: Keystone vote solved nothing, provided no new insights

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The U.S. Senate failed, by one vote (as some observers predicted), to advance legislation demanding that President Obama approve the Keystone XL pipeline.

New York Times opinion-page writer David Firestone says the debate surrounding the vote — 59 senators approved, including 14 Democrats, leaving the measure shy of the 60 “yeas” needed to avoid a filibuster threat — was a “pointless” one that played into Republican hands:

The bill to approve the pipeline failed by one vote, and even if had passed, it would almost certainly have been vetoed by President Obama. The debate provided no new insights into the value of the pipeline, or its liabilities, and it changed no one’s mind.

As for why Democrats sought to push their own pro-Keystone bill during a lame-duck session before Republicans take over as the majority in the Senate in January, The Times opines that it amounted to a last-ditch and probably futile effort to save Sen. Mary Landrieu’s job. The Louisiana Democrat is competing against Congressman Bill Cassidy, who got his own pro-Keystone bill approved in the House, for Landrieu’s seat in a runoff election next month.

The Times’ coverage of Tuesday’s approval of the Senate measure includes a section on the lengths Landrieu went to convince colleagues to pass the measure:

At the lunch, Ms. Landrieu made an “impassioned plea” that at moments verged on tears, according to a Democrat. Ms. Landrieu, according to the Democrat, focused part of her pitch on how the legislation would help her back home, though at one point she argued that Democrats should send the bill to Mr. Obama’s desk because it would help him politically by giving him something to veto.

So what happens next? The president has the final say on whether the 1,179-mile pipeline extension gets built, regardless of what happens in Congress. But the next Congress could force him to either approve the bill (possibly after trading for something from Republican leadership) or veto it.

A Q&A in Wednesday’s NYT hints that the new, more heavily Republican Senate that convenes in January “may be able to muster a nearly veto-proof majority,” considering their ranks will swell from 45 to 54 (assuming Landrieu loses). But they need 67 votes to override a presidential veto.

Fuel Freedom Staff

Redlands to offer CNG /LNG fueling stations in town

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Residents and businesses in need of Compressed Natural Gas (CNG) for their vehicles will have an increased ability to fill up in town.

The city has added new Compressed Natural Gas fuel dispensers at its corporate yard to allow up to four alternative fuel vehicles to fill up at the same time.

“There’s not a whole lot of stations around that you can get that fuel source,” said Councilwoman Pat Gilbreath, adding that the availability of the fuel stations give residents more options for the types of vehicles they can purchase.

Compressed Natural Gas is a clean burning alternative fuel that helps reduce carbon emissions and costs less than fossil fuels, according to a city news release.

Read more at: Redlands Daily Facts