The United States imports about 10 million barrels of oil a day, out of the 19 million barrels we consume. Thirty-seven percent of imported oil comes from our pal Canada, but 35 percent comes from not-quite-as-cuddly OPEC nations.
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Sometimes we get so wrapped up in the fight to bring alternative fuels to our cars and trucks that we forget about another mainstream vehicle that is trapped by dependence on oil — planes.
John Hofmeister went on CNBC on Thursday to talk about the current and future price of oil, and he gave viewers more to think about when he elevated the discussion to include the need for alternatives to meet the world’s growing appetite for transportation fuel.
United Airlines took a giant step toward cutting its reliance on foreign fuels last week when it made $30 million investment in Fulcrum BioEnergy, one of the leading manufacturers of aviation biofuels made from municipal waste.
The move is being touted as a step toward reducing carbon emissions, although there are some doubts about its impact in that respect. But reducing consumption of jet fuel certainly will have a significant effect in reducing our dependence on foreign oil.
Last year, United’s fleet of aircraft consumed 3.9 billion gallons of jet fuel, at a cost of $11.6 billion. Fuel costs represent 40 percent of any airline’s total expenses, and any move that cuts into that expense would be huge. Jet fuel currently sells for $2.11 a gallon, whereas Fulcrum says it can provide biofuel for less than $1 per gallon. More than 12 percent of our oil goes to making jet fuel.
Fulcrum has developed and certified a technology that can turn municipal waste, like household trash, into a sustainable aviation fuel that can be blended with existing jet fuel. The company is currently building a refinery called the Sierra BioFuels Plant near Reno that is scheduled to begin operation during the third quarter of 2017. The company also has plans for five more refineries around the country.
Biofuels are having some difficulty penetrating the automobile market, for a variety of reasons. But they’re perfectly suited for airlines. For one, they are a “drop-in” fuel that can be substituted for jet fuel without any changes. It will not require a whole new national infrastructure.
Second, airlines do most of their fueling at centralized locations. This eliminates a lot of difficulty in transporting and distributing the fuel. United, for instance, can fuel a very high percentage of its flights from its hub in Los Angeles.
Third, with jet biofuel there’s no risk of hitting the “blend wall” that supposedly limits ethanol to 10 percent of the gasoline mix. United says it will begin using Fulcrum’s fuel in 30 percent of its fuel mix for the first two weeks of flights between Los Angeles and San Francisco this summer. After that, the biofuels will be mixed in with its entire fuel stock.
United’s deal with Fulcrum is just one of several recent efforts by airlines to get into the biofuels business. Alaska Airlines aims to use biofuels at one of its airports by 2020. Southwest Airlines announced last year it would purchase 3 million gallons of jet fuel made from wood residues and produced by Red Rock Biofuels. And last year British Airways joined with Solena Fuels to build a biofuel refinery near London’s Heathrow Airport for completion by 2017.
United is on its third venture into the field. In 2009 the company made an unsuccessful attempt to introduce jet fuel manufactured from algae. Then in 2013 it agreed to buy 15 million gallons over three years from California-based AltAir Fuels, which makes biofuels out of inedible natural oils and agricultural waste. United is expecting the first 5 million gallons of Fulcrum fuel to be delivered to its LAX hub this summer.
The decision comes at a good time for the airlines, because the Environmental Protection Agency is starting to make noise about regulating the emissions of jet planes. Jet planes account for only 3 percent of our carbon emissions, but the number is growing rapidly. The Obama administration is proposing to set limits for airliner emissions. The International Civil Aviation Organization, a United Nations agency, is also expected to complete its own deliberations on setting standards to limit airline emissions by next February.
Fulcrum claims its technology will reduce the airlines’ carbon emissions by 80 percent, but this is based on dubious math that says carbon emissions count for zero if they do not come from fossil fuels. This premise has been challenged by a growing number of scientists who say that the whole logic of biofuels is flawed. Professor Timothy Searchinger of Princeton University has become a gadfly to the industry, arguing that if a forest is cut for biofuels consumption, it will be 90 years before this carbon can be replaced by new growth. A group of 78 scientists recently sent a letter to EPA Administrator Gina McCarthy warning against the new EPA policy of encouraging the substitution of wood for coal. They said there would be no savings in carbon emissions.
The same logic applies, to some degree, to the use of municipal waste for biofuels. If the waste remained in landfills, it would be stored and not feeding its carbon content to the atmosphere. Therefore, it doesn’t make much difference if they are substituted for fossil fuels – the carbon output is the same. There is some benefit to using it, however, since some carbon from municipal waste ends up escaping from landfills as methane, and many facilities are required to capture it.
As far as gaining an advantage in cutting the level of foreign fuel imports, however, there is no question that biofuels can substitute for jet fuel on a 1-to-1 basis. Airlines are at a disadvantage in that they cannot be powered by electrification or natural gas, as is starting to occur in the automotive sector. Therefore, the amount of municipal waste-based fuel that can be substituted for oil-based jet fuel will be significant. And after all, the nation is certainly not going to run out of household trash.
(Photo from Hub.United.com)
Tesla is trying to convert the world to the electric car. The Japanese are pushing hydrogen. But Audi, the German carmaker, has a different idea. It’s trying to synthesize fuel from the simplest of elements – water, carbon dioxide and solar energy.
Audi’s research facility in Dresden has produced what the company calls an e-diesel – a net-zero-carbon-footprint fuel made from carbon dioxide and water. The company announced the project to great fanfare on April 21. In May, it unveiled another advance – e-benzine, a fuel that acts just like gasoline.
The two are the latest of a suite of six fuels developed by Audi that behave just like traditional gasoline or diesel, but burn without releasing any sulfur or aromatic hydrocarbons, the stuff that produce air pollution. The fuels also can be labeled as carbon-neutral, since the carbon dioxide they’re removing from the atmosphere perfectly matches the CO2 they put back in when they burn. E-benzine currently derives its carbon from organic material – biofuels made from rapeseed, sunflower oil or corn. But Audi officials say they soon hope to switch to atmospheric carbon dioxide.
“To me, this is a historic moment,” said Marc Delcourt, CEO of Global Bioenergies, the French company that is partnering with Audi on the e-benzine project. “It is the first time that we have produced real gasoline from plants.”
The e-diesel process works like this: Audi begins by splitting water by electrolysis into hydrogen and oxygen. The electricity is provided by wind or solar energy, which makes it completely fossil-fuel free. The oxygen is released into the atmosphere. Meanwhile, Audi filters carbon dioxide out of the atmosphere. The C02 is stripped down to carbon monoxide, and the CO and hydrogen are then mixed together under high pressure to produce a long-chained hydrocarbon that Audi calls “blue crude.” It has all the properties of crude oil and can be refined down to commercial fuels like e-diesel. “We’re thinking we’re bringing green-ness to a field that desperately needs green-ness,” said Rick Bockrath, vice president for chemical engineering at Global Bioenergies. “It’s basically how we’re moving away from an oil-based economy towards something that has a renewable, sustainable future to it.”
Johanna Wanka, Germany’s Minister of Education and Research, attended the ceremony at which the first batch of Audi e-diesel, five liters’ worth, was put into her official car, an Audi A8 3.0 TDI clean diesel Quattro (that’s her in the photo above). “This synthetic diesel, made using CO2, is a huge success for our sustainability research,” she said. “If we can make widespread use of CO2 as a raw material, we will make a crucial contribution to climate protection and the efficient use of resources, and put the fundamentals of the ‘green economy’ in place.”
The product has a 100 octane rating and can be used either as an additive or as a stand-alone fuel. Audi says cars run much smoother on the product because of the lack of aromatic compounds, sulfur and other impurities. It also converts to energy at 70 percent efficiency, which is much better than regular diesels.
Audi’s pilot project in Dresden is currently producing 160 liters of e-diesel per day. Obviously, that isn’t enough to shake the world. But the long-term plan is to scale up to a level that will make the product available to the public. The estimated price will be 1 to 1.5 euros per liter, which comes to about $3.75 per gallon. This would not offer any price advantage in the United States, where diesel is selling at $2.88 per gallon, but it would be competitive in Europe, where diesel currently sells for about 1.4 euros per liter.
The problem with all such inventions, of course, is whether they can scale up at a price that remains competitive. Robert Rapier, the highly respected energy analyst, is skeptical. In a lengthy piece in GreentechMedia, Rapier did a step-by-step analysis, including all the chemical reactions. He concluded that the price is going to be $3.76 per gallon, which would put it above the current price of diesel in the United States, but perhaps not in Europe. But that doesn’t include any price increases that may come with scaling up the process. In addition, several critics have wondered whether solar and wind electricity will be available on a scale capable of supporting such a commercial operation.
“To sum up, can Audi produce fuel from thin air? Sure. There is no question about technical viability,” Rapier wrote. But “The question boils down to economic viability, which appears to be challenging given what has been released about the process.”
All this doesn’t mean Audi shouldn’t continue experimenting. There’s always room for improvement, and there may be other breakthroughs down the road. A carbon tax would also benefit the process, particularly if Audi could be given credit for the carbon it takes out of the atmosphere. There is also the possibility of combining the procedure with a carbon-capture and storage operation at a fossil-fuel plant, where carbon dioxide is currently regarded as a noxious waste material.
A system that would manufacture automotive fuel out of carbon dioxide in the atmosphere would be like the philosopher’s stone of the transport sector. Audi should keep trying.
(Photo credit: Audi)
Biofuels have been taking their lumps lately. After almost seven years of controversy, the European Parliament has acted to limit the amount of biofuels that can be garnered from land that could be used to grow food.
The EU has set itself a goal of getting 10 percent of its transport fuel from biofuels by 2020. Last week the Parliament voted to reduce this to 7 percent. The concern is that biofuels are taking food out of people’s mouths. Biofuels are also accused of leading to deforestation, both in Europe and in countries such as Brazil and Argentina, where Amazon rainforest and Argentinian pampas are being put under cultivation for growing biofuels for export.
“Let no one be in doubt, the biofuels bubble has burst,” Robbie Blake of Friends of the Earth Europe said in a statement. “These fuels do more harm than good for people, the environment and the climate. The EU’s long-awaited move to put the brakes on biofuels is a clear signal to the rest of the world that this is a false solution to the climate crisis. This must spark the end of burning food for fuel.”
Ironically, it was soft-energy guru Amory Lovins, who at the time was British representative of Friends of the Earth, who originally suggested the biofuels idea in his 1976 book, Soft Energy Paths. Lovins used an elaborate comparison with the beer and wine industry to show that it would be possible to produce a good one-third of the United States’ gasoline requirements through biofuels. Unfortunately, Lovins did not take account of the amount of land that would be required to grow these crops. This oversight has dogged the biofuels effort ever since.
In the U.S., criticism is mounting as well. A study published last month by researchers at the University of Wisconsin-Madison shows that corn and soy crops for biofuels are expanding into previously un-farmed prairie land in the Midwest. Using high-resolution satellite photographs, the authors identified the expansion of cropland from 2008 to 2012, the four years following the passage of the Renewable Fuels Act that mandated the use of biofuels. The authors estimate that 40 percent of the corn crop grown in the U.S. is now used to make ethanol for use in vehicles. Ironically, environmentalists who originally celebrated ethanol are among its biggest detractors.
So does this mean that American biofuels will soon be facing the same limitations they’ve encountered in Europe? Probably not. The reason, once again, is technology.
From the beginning, the dream of biofuels enthusiasts has been that ways could be found for breaking down the refractory cellulose molecule and turning it into basic sugars that can be synthesized into ethanol. This is a very difficult task. It can only be accomplished in two ways: 1) heating corn stover and other cellulosic materials to a very high temperature, which consumes more energy than is produced; and 2) taking advantage of bacteria in the guts of cows and termites that can break down cellulose. These bacteria are highly temperamental, however, and have proved to be extremely difficult to cultivate on a commercial scale.
Nevertheless, progress has been made, and there are several commercial operations now approaching successful operations. Among them are:
• Abengoa Bioenergy (Hugoton, Kansas). This Spanish company’s cellulosic-ethanol facility came online in 2014 and is expected to produce 25 million gallons per year from corn stover, wheat straw, milo stubble and switchgrass.
• DuPont (Nevada, Iowa). Its 30 million-gallon-per-year cellulosic plant is scheduled to begin production this year. The plant will get corn stover from 500 farmers who are participating in the company’s Feedstock Harvest Program.
• Poet-DSM Advanced Biofuels (Emmetsburg, Iowa). Co-funded by a Dutch company, Project Liberty opened in September 2014 and is producing ethanol from corn cobs, leaves, husk and stalk. It is shooting for 25 MMGY.
• Quad County Corn Processors (Galva, Iowa) started production last year. Its Quad County facility can produce 2MMGY. The company says its patented technology has the ability to generate 1 billion gallons per year, without consuming any more corn, by adding bolt-on technology to existing corn-ethanol refineries.
So ethanol is not standing still. The EPA is expected to issue its renewable fuel standard sometime next month, after dodging the issue for two years. The threshold likely will be below the 14 billion gallons that was originally scheduled for 2014. But the law’s requirement for Gen-2 biofuels has barely been scratched, since these cellulose efforts have not borne fruit to date. With cellulosic operations now gearing up, it appears that ethanol may be ready to take on a second life.
(Photo: Corn-stover harvest. Posted to Flickr by Idaho National Laboratory)
Jim Lane, editor and publisher of Biofuels Digest, is one person who thinks alternative fuels aren’t necessarily going to be hurt by the huge drop in the price of crude oil.
In a post on the Digest Jan. 6, Lane lays out the rather complicated case of why it doesn’t pay right now to be dumping your alternate-energy stocks. That’s been the reaction so far to anything related to the price of oil. But Lane says there are special aspects of alternatives like ethanol that will be affected in a different way.
In the first place, Lane notes that while crude oil prices have been falling, ethanol prices have been falling, too. Since last June, crude oil has fallen from $115 a barrel to under $50, a remarkable 60 percent drop. Yet ethanol has fallen as well, from $2.13 a gallon to $1.55 a gallon, a formidable 27 percent drop. This is due mainly to the falling price of corn, which has been at its lowest level in recent years. A bushel of corn fell over the same period from $4.19 a bushel to $3.78, a 10 percent drop. In this way, ethanol is only marginally dependent on the price of oil and can show its own price pattern.
One thing worth noting is that there is a certain amount of elasticity in American driving. People tend to increase their driving range when the price of gasoline goes down. This is particularly true when it comes to taking vacations, which tend to be a long-term planning effort. If the price of gasoline stays down through next summer, people are more likely to increase gas consumption. The fact is that gasoline demand has actually reached its highest point in the last few months since the price of oil began to fall, as the following graph indicates:
Now drivers are required to include 10 percent ethanol in each gallon of gas. Therefore, ethanol has a fixed market. Driving has been declining in recent years, which is one reason that the Renewable Fuel Standard has been under fire – because the absolute amount of ethanol required has exceeded the 10 percent requirement in relation to the amount of gasoline consumed. Refiners and oil companies must buy this amount of ethanol. This is the reason the Environmental Protection Agency has been holding back on setting an RFS for 2014 — because the original amount prescribed was going to exceed the 10 percent figure. If people start taking advantage of lower gas prices and start consuming more gasoline, the amount of ethanol required will grow. “(W)e should be seeing a 2+% increase in gasoline demand, and that will take some pressure off the ethanol blend wall,” Lane writes. It might make EPA’s decision easier, if it ever gets around to setting a number.
Just to emphasize this point, an RIN — Renewable Index Number — is required by the EPA to prove that a refinery has been adding ethanol up to the 10 percent mark. The price of RINs has actually been rising as gas prices have fallen. As Lane writes: “Part of the reason that the ethanol market is holding up relatively well in tough times is the impact of the Renewable Fuel Standard, and its traded RIN system. RIN prices have jumped as oil prices have slumped — and a $0.76 increase in the RIN value of a gallon of fuel is a striking increase in value.”
So all is not dark for the future of alternatives. Ethanol’s place is secure, despite the fall in gasoline prices. Remember, it’s not that demand for gas is falling, but people are spending less for what they get. If methanol is given a chance, it might turn out to be more invulnerable, since it’s not tied to corn prices but to natural gas, which we seem to have in even greater abundance than oil. Electric cars also don’t lose their appeal, since much of their appeal is getting off gas entirely and unbuckling from the oil companies. It may not be time to abandon your stock in alternative energies quite yet.
T’was the week before Christmas, a night during Chanukah and a couple of weeks before Kwanzaa, when, all through the nation, many readers more interested in America’s energy supply than in the fate of Sony’s “The Interview,” were stirring before their non-polluting fireplaces (I wish). They were trying to grasp and relish the unique rhetorical battle between The University of Texas (UT), the EIA and the recent December article in Nature, titled “Natural Gas: The Fracking Fallacy,” by Mason Inman.
Let me summarize the written charges and counter charges between a respected journal, university and government agency concerning the article. It was unusual, at times personal and often seemingly impolite.
Unusual, since a high-ranking federal official in the EIA responded directly to the article in Nature, a well-thought of journal with an important audience, but relatively minimal circulation. His response was, assumedly, based on a still-unfinished study by a group of UT scholars going through an academic peer review process. The response was not genteel; indeed, it was quite rough and tough.
Clearly, the stakes were high, both in terms of ego and substance. As described in Nature, the emerging study was very critical of EIA forecasts of natural gas reserves. Assumedly EIA officials were afraid the article, which they believed contained multiple errors and could sully the agency’s reputation. On the other hand, if it was correct, the UT authors would be converted into courageous, 21st century versions of Diogenes, searching for energy truths. The article would win something like The Pulitzer, EIA would be reprimanded by Congress and the UT folks would secure a raise and become big money consultants to a scared oil and gas industry.
Just what did the Nature article say? Succinctly: The EIA has screwed up. Its forecasts over-estimate America’s natural gas reserves by a significant amount. It granted too much weight to the impact of fracking and not enough precision to its analysis of shale play areas as well as provide in-depth resolution and examination of the sub areas in major shale plays. Further, in a coup de grace, the author of the Nature piece apparently, based on his read of the UT study, faults the EIA for “requiring” or generally placing more wells in non-sweet-spot areas, therefore calculating more wells than will be developed by producers in light of high costs and relatively low yields. Succinctly, the EIA is much too optimistic about natural gas production through 2040. UT, according to Nature, suggests that growth will rise slowly until early in the next decade and then begin to decline afterwards through at least 2030 and probably beyond.
Neither Wall Street nor producers have reacted in a major way to the Nature article and the still (apparently) incomplete UT analysis. No jumping out of windows! No pulling out hairs! Whatever contraction is now being considered by the industry results from consideration of natural gas prices, the value of the dollar, consumer demand, the slow growth of the economy and surpluses.
Several so-called experts have responded to the study in the Journal piece. Tad Patzek, head of the UT Austin department of petroleum and geosystems, engineers and “a member of the team,” according to the Journal, indicated that the results are “bad news.” The push to extract shale gas quickly and export, given UT’s numbers, suggests that “we are setting ourselves up for a major fiasco.” Economist and Professor Paul Stevens from Chatham House, an international think tank, opines “if it begins to look as if it’s going to end in tears in the U.S., that would certainly have an impact on the enthusiasm (for exports) in different parts of the word.”
Now, generally, a bit over the top, provocative article in a journal like Nature commending someone else’s work would have the author of the article and UT principal investigators jumping with joy. The UT researchers would have visions of more grants and, if relevant, tenure at the University. The author would ask for possible long-term or permanent employment at Nature or, gosh, maybe even the NY Times. Alas, not to happen! The UT investigators joined with the EIA in rather angry, institutional and personal responses to the Journal. Both the EIA and UT accused Nature of intentionally “misconstruing data and “inaccurate…distorted reporting.”
Clearly, from the non-scholarly language, both institutions and their very senior involved personnel didn’t like the article or accompanying editorial in Nature. EIA’s Deputy Administrator said that the battle of forecasts between the EIA and UT, pictured in the Journal, was imagined and took both EIA’s and UT’s initiatives out of context. He went on to indicate that both EIA’s and UT efforts are complementary, and faulted Nature for not realizing that EIA’s work reflected national projections and UT’s only four plays. Importantly, the Deputy suggested that beyond area size and method of counting productivity, lots of other factors like well spacing, drilling costs, prices and shared infrastructure effect production. They were not mentioned as context or variables in the article.
The principal investigators from UT indicated that positing a conflict between the EIA and themselves was just wrong. “The EIA result is, in fact, one possible outcome of our model,” they said. The Journal author “misleads readers by suggesting faults in the EIA results without providing discussion on the importance of input assumptions and output scenarios. “Further, the EIA results were not forecasts but reference case projections. The author used the Texas study, knowing it was not yet finished, both as to design and peer review. Adding assumed insult to injury, it quoted a person from UT, Professor Patzek, more times than any other. Yet, he was only involved minimally in the study and he, according to the EIA, has been and is a supporter of peak oil concepts, thus subject to intellectual conflict of interests.
Nature, after receiving the criticism from UT and EIA, stood its ground. It asserted that it combined data and commentary from the study with interviews of UT personal associated with the study. It asked for but only received one scenario on gas plays by EIA — the reference case. It was not the sinner but the sinned against.
Wow! The public dialogue between UT, the EIA and Nature related to the article was intense and, as noted earlier, unusual in the rarefied academically and politically correct atmosphere of a university, a federal agency and a “scientific” journal. But, to the participants’ credit, their willingness to tough it out served to highlight the difficulty in making forecasts of shale gas reserves, in light of the multitude of land use, geotechnical, economic, environmental, community and market variables involved. While it is not necessary or easy to choose winners or losers in the dialogue, because of its “mince no words” character, it, hopefully, will permit the country, as a whole, to ultimately win and develop a methodology to estimate reserves in a strategic manner. This would be in the public interest as the nation and its private sector considers expanding the use of natural gas in transportation, converting remaining coal-fired utilities to environmentally more friendly gas-powered ones and relaxing rules regulating natural gas exports. We remain relying on guesstimates concerning both supply and demand projections. Not a good place to be in when the stakes are relatively high with respect to the health and well-being of the nation.
On a personal note, the author of the article in Nature blamed, in part, the EIA’s inadequate budget for what he suggested were the inadequacies of the EIA’s analysis. Surprise, given what the media has often reported as the budget imperialism of senior federal officials, the Deputy Administrator of EIA, in effect, said hell no, we had and have the funds needed to produce a solid set of analyses and numbers, and we did. Whether we agree with his judgments or not, I found his stance on his budget refreshing and counterintuitive.
I bet only those on Medicare, like me, remember the old Abbott and Costello joke, “Who’s on first, What’s on second, I Don’t Know is on third”… or something like that.
The dialogue was funny at the time. But the joke, in some respects, tracks the current, very serious situation in the Middle East: Who’s on first, a very militant Sunni group called ISIS; What’s on second, well maybe Iraq (if it can get its act together, which is increasingly unlikely); and, I Don’t Know exactly who’s on third, maybe the Peshmerga from among the Kurdish Regional State in Iraq and, perhaps soon, a surprise addition from the Kurdish PKK military group living among Kurds in Turkey. Who are the umpires? Perhaps Israel. Maybe OPEC. How about the world’s respected ethicists — if they can ever agree.
Isn’t this fun? Let’s try it again, for there are several possible lineups. Let’s try this one: Who’s on first, how about the Assad-related Shiites in Syria. What’s on second, the new caliphate in Iraq and Syria. I Don’t Know exactly who’s on third, maybe, but unlikely, in light of its numerous conflicting interests (e.g., NATO, Islam, etc.), Turkey. Who’s the hapless lonely umpire or umpires at home plate? Perhaps, the U.N. — the so-called moderate rebels. Perhaps the USA, England or France, or perhaps all three. After all, each Western country has had, at best, a difficult, morally ambiguous historical record in the area, and faces a tough, complex future. Justice and fairness have not always guided their respective objectives and actions. If you believe they have, step up to the plate and you can buy the Brooklyn Bridge for a dollar.
It’s a crazy baseball game! I know the Israelis are in the stands but they have found it tough to get emotional. In their view, at least, both of the team’s captains are Iranian. Since it’s not in the official lineup, the game has little meaning to the Israelis.
We are not sure that all the batters, base runners and umpires are on the same team or in the same game. At times, some players appear to run right and some left. Some run into each other. Others don’t run at all. Most appear to be playing by Middle Eastern norms, which mean they frequently change uniforms, roles, rules and alliances. The umpires seem to be confused and frustrated. They may be ready soon to go for a higher legal or spiritual reviewer but they cannot agree on which one (e.g., the International Court of Justice, God or his or her surrogate).
I yearn for the simplicity of just a year or two ago — before ISIS. Many of our leaders and media types referred to America’s role then in terms of seeking stability in the Middle East. Some even suggested, often knowing better, that it was based on a commitment to establishing western-style democracy. Very few played Don Quixote, or even a good forensic economist searching for the truth. U.S. and Western involvement in the Middle East for a long time has been, to a large degree, premised on dependency on oil. As dependency on oil imports was recently reduced significantly to about 30-35 percent of total oil use because of tight oil development, increased fuel standards, and a slow growth economy, the U.S. has agreed to defend our allies’ right to unfettered international oil transportation from wellhead to refinery.
Democracy and oil proved to be an uneasy mix. Secular animosity and intense internal as well as external competition for oil revenue and market share seemed much more difficult than the naive assertion made after 9/11 that the Iraq citizenry would welcome U.S. military with cheering crowds — shades of WWII after U.S. troupes retook Paris. If only it could have been!
What has occurred in the past year or so has once again shifted the game players, the rules and roles (the ecology of Middle Eastern games). The rise of ISIS and its quick absorption of land in both Syria and Iraq combined with its brutality toward the vanquished in captured territories as well as detained westerners has shifted U.S. and its new coalition’s (e.g., England, France, Saudi Arabia, Qatar, Iraq, Kurds, etc.) attention away from getting rid of Assad to stopping establishment of the caliphate. No longer is democracy a major goal. How could it be with such tested democratic states as Saudi Arabia and Qatar front and center? I shouldn’t be cynical…or should I? Now the focus is on stability — translated: salvage what can salvaged from what is left of Iraq and assumedly prevention of what appears to be an increasing sectarianism from disintegrating into wars fought over God and Mammon or maybe my God and your Mammon or vice versa. The new coalition led by the U.S., apart from the British and French includes:
The new coalition has shaken up the Middle East and suggests the old adage that, “The enemy of my enemy is my friend.” Endorsement of the present nation states in the Middle East, as well as opposition to territorial aggrandizement and religious extremism, provides the rationale for U.S. and Western involvement in the current war.
But, irrespective of the coalition’s normative marching orders about stopping extremism and a big land grasp, I suspect that oil or trafficking in oil remains a key factor, indirectly or directly, in back-room decisions to push back ISIS boundaries. Let’s see: the Saudis must soon consider increasing the price of a barrel of oil if it is to avoid the need to cut back on services to its citizens and risk tension. It also must soon consider an increase in oil prices if it is to sustain its defense budget in terms of the present conflict with ISIS. While the U.S. has surpassed the Saudis in oil production, Saudi oil is needed by the West and Asia to avoid significant future price rises premised on future growth. As a result, the U.S. will remain a protector of oil transit. Apart from fearing the collapse of Iraq for political, economic and moral reasons, the U.S. is still committed to safeguarding Iraq’s oil and the oil from one of its regions, the Kurdish Regional Government, for its allies and also for the revenue needed by both. Qatar is a conundrum. Today, it’s a western ally against ISIS; yesterday, reports indicated it supported militants in the Gaza. Which twin has the Tony? Where will it be tomorrow? Finally, remember ISIS needs oil for revenues to function as a government.
If only! If only we could find home-grown, market-acceptable substitutes for oil and its derivative gasoline that would relieve any hint or suspicion that oil or gasoline would be even an indirect consideration in a U.S. or Western nation decisions to go to war. We are not there yet, in terms of the majority of the vehicle owners. But we are getting close with alcohol-based fuels, biofuels, and hydrogen and electric cars.
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.”
