Tuesday, November 20, 2007

Putting Environmentalist’s Claims to the Test

When you hear claims made by the media’s darling enviro-zealots, don’t you wonder if they are true or not? Do you question whether nor not anyone has put them to the test? Here, the Energy Tribune’s Robert Bryce does just that! Filled with facts, you’ll wan to study this piece. Print it out so you can read it at your leisure. Then come back and add your comments. By then, there will be some new interesting item here on CARE’s Blog where you find Comments About Responsible Energy.

This is a long posting. It was virtually impossible to edit for brevity as it was all so good. And there’s more! The author did a Q & A with “America’s favorite advocate of ‘green’ energy” but it, too, is long. However, if you are truly interested in staying on top of energy news, you’ll want to check it out as well.

Green Energy Advocate Amory Lovins: Guru or Fakir?
In early August, it was announced that Amory Lovins had won the Volvo Environment Prize. Regarding Lovins’s selection, Volvo officials said, “He has developed a number of path-breaking technical, economic and policy concepts and succeeded in merging theory with a wide range of practical applications. His work is transforming the way we use energy worldwide.”

The Volvo Prize is just the latest in a string of high-profile awards garnered by Lovins, co-founder of the Rocky Mountain Institute, an energy think-tank in Colorado. He’s also received a “genius” grant from the MacArthur Foundation as well as numerous honorary degrees.

The mainstream media adores him. In a January profile, Elizabeth Kolbert of the New Yorker magazine wrote that Lovins “is routinely described, even by people who don’t particularly like or admire him, as a ‘genius.’” In 2004, the Associated Press called him “one of the nation’s most influential energy thinkers.” And in 1986, the Washington Post said Lovins has “the heart of an insurgent, but he has the mind of a scientist.”

Lovins is America’s most famous advocate of “green” energy. Over the past three decades, he has tirelessly advocated a “soft path” on energy – one that relies mainly on energy efficiency, small, decentralized power plants, and renewable energy. In doing so, Lovins has won widespread acclaim from environmentalists and the Left, and as one critic put it, is “a rock star.” His rock stardom is understandable: Lovins is a good public speaker who provides snappy sound-bites and appealing solutions. He’s personally engaging (I met him in the early 1990s in Minneapolis), and given his small stature, has a sort of Pillsbury Doughboy appeal. Aside from his low-key personality, all of his recommendations sound eminently doable. The only thing required, Lovins repeatedly declares, is society’s will to follow his energy solutions, which invariably include efficiency and still more efficiency. A classic example is in a short article he wrote in June, “Saving the climate for fun and profit,” in which he presented a variation on his efficiency-will-save-us mantra. Stopping the global-warming problem, he wrote, “will not cost you extra, it will save you money, because saving fuel costs less than buying fuel.” Or look at his 2004 book, Winning the Oil Endgame, written with several co-authors, in which the word “efficiency” appears 549 times.

What could be better than stopping climate change for fun and profit? As for efficiency, who could possibly be opposed? Doing more with less makes sense for a whole lot of reasons. As Lovins once put it, his efficiency prescriptions are “better than a free lunch, it’s a lunch you get paid to eat.” But amid all the sound-bites, prizes, speeches, and laudatory news articles, a few key questions are seldom posed: is he the real deal? Or put another way, how much of Lovins’s theology is rhetoric and how much is based in reality?

The facts plainly show that Lovins has been consistently wrong about the ability of renewables to take large amounts of market-share from fossil fuels. He’s been proven wrong about the long-term ability of efficiency to reduce overall energy consumption. And yet, despite being so wrong for so long, he keeps getting awards and prizes by the forklift-load. And the fact that the Lovins love-fest continues unabated causes no small bit of antipathy among some long-time energy watchers. One of them is Vaclav Smil, the polymath and distinguished professor of geography at the University of Manitoba who has written numerous books on energy. “Inexplicably,” Smil wrote recently, Lovins “retains his guru aura no matter how wrong he is.”

Smil and others point out that Lovins has been wrong on numerous fronts. Four of Lovins’s claims are worth investigation.
1. Renewables will take huge swaths of the overall energy market. (1976)
2. Electricity consumption will fall. (1984)
3. Cellulosic ethanol will solve our oil import needs. (repeatedly)
4. Efficiency will lower consumption. (repeatedly)

Before delving into those issues, let’s take a quick look at Lovins’s history. He grew up in the East, moving among towns in Maryland, New York, New Jersey, and Massachusetts. His father was a designer of optical equipment. Lovins went to Harvard, where he studied physics and several other subjects. He dropped out of Harvard, moved to England, and attended Oxford, but quit before finishing his degree. In the early 1970s, he met David Brower, the famed environmentalist and founder of the Friends of the Earth. Lovins became a leading opponent of nuclear energy, arguing that the spread of nuclear power would inevitably result in proliferation.

Lovins’s anti-nuclear stance was one of his early claims to fame. And this was a key element of the article that catapulted him to fame: his 1976 piece for Foreign Affairs, published when he was just 28, called “Energy Strategy: The Road Not Taken?” In it Lovins argued that American energy policy was all wrong. What America needed was “soft” energy resources to replace the “hard” ones (namely fossil fuels and nuclear power plants), ones that are decentralized, small, and renewable.

In 1979, Lovins married L. Hunter Sheldon, a lawyer and social scientist. In 1982, the couple (who later divorced) founded the Rocky Mountain Institute, a think-tank focused on efficient resource and policy development. Today, Lovins is chairman and chief scientist at the Rocky Mountain Institute, which employs some 50 people and is based in Snowmass, just outside of Aspen, Colorado. The buildings that house the institute are reportedly so efficient that they need no outside heating, even during the winter, thanks to their passive solar design and the body heat of those who work inside them. Lovins himself lives in a super-efficient “bio-shelter” that uses some of the same passive solar techniques as the institute’s office space. His salary for running the think-tank, according to 2005 Internal Revenue Service filings, is $160,833.

The biography Lovins sent to me via e-mail from Tokyo says he has worked in over 50 countries, has been awarded the “Blue Planet, Volvo, Onassis, Nissan, Shingo, and Mitchell Prizes, the Benjamin Franklin and Happold Medals, nine honorary doctorates, honorary membership of the American Institute of Architects, Life Fellowship of the Royal Society of Arts, and the Heinz, Lindbergh, Time Hero for the Planet, and World Technology Awards.” He has written 28 books. His bio also states that he “advises industries and governments worldwide, and has briefed 19 heads of state,” and that the Rocky Mountain Institute has “served or been invited by more than 80 Fortune 500 firms and has included the recent energy-efficient redesign of $30 billion worth of facilities in 29 sectors.”

By any measure, his resume is impressive. But what about his record? That’s where things get hazy. Lovins has a number of critics, and among the most prominent is Paul Joskow, a professor at the Massachusetts Institute of Technology. “My rule of thumb,” Joskow wrote me in an e-mail, “is to double his cost estimate and divide his energy saving estimate in half to get something closer to reality.”

Indeed, a close look at the Foreign Affairs article points up the difference between Lovins’s rhetoric and reality. The piece predicted that if the U.S. were to embrace Lovins’s vision, by around 2005 more than a third of the country’s energy would be coming from “soft technologies,” which Lovins defined in part as relying “on renewable energy flows that are always there….such as sun and wind and vegetation.” Fossil fuels were not mentioned in any of his definitions of “soft” technologies.

So how did Lovins’s prediction turn out? This graphic from the Government Accountability Office provides a useful comparison, covering the period just before Lovins’s piece in Foreign Affairs, to 2004.

As shown, the only energy source that has displaced any fossil fuel is nuclear power. And yet, Lovins still claims that nuclear power “continues to die of an incurable attack of market forces.”

Electricity Demand “Ratcheting Downward”?
It’s clear that Lovins was wrong about renewable energy’s ability to displace fossil fuels. So let’s look at electricity demand. In 1984, Lovins told Business Week that “we see electricity demand ratcheting downward over the medium and long term. The long-term prospects for selling more electricity are dismal.” During the same interview he said, “We will never get, we suspect, to a high enough price to justify building centralized thermal power plants again. That era is over.” Except that it isn’t.

America’s electricity production has jumped by about 66 percent since Lovins made his declaration, rising from 2,400 billion kilowatt-hours in 1984 to just over 4,000 billion kilowatt-hours in 2005. And to meet that demand, utilities have built dozens of centralized thermal power plants.

Lovins refuses to admit that his forecast was flat wrong. In an e-mail, Lovins said he couldn’t verify the quote and that the Business Week piece was “widely misquoted.” In his initial response to the question, he said that “the general sentiment is correct in its historical context.” What that means, I have no idea. A few days later, after I sent him the full text of the Business Week story, Lovins sent another response, in which he again declared that the magazine had misquoted him and that “Cost and climate pressures and revolutionary efficiency techniques will ultimately make electricity demand stabilize and then decline in most states as it has begun to do in some. Most electricity is now wasted, and eventually economics wins. New central plants are uncompetitive and getting more so.”

Despite Lovins’s insistence that efficiency will lessen demand, electric consumption continues to rise. Between 1994 and 2005, according to the Energy Information Administration, electricity generation in the U.S. grew by an average of 2 percent per year. And in the hot summer of 2005, generation jumped by 6 percent compared to the year-earlier period. If electricity consumption rates continue growing at 2 percent per year, in about 35 years electricity consumption in the U.S. will have doubled. Electricity demand is growing so rapidly that in late 2006 the North American Electric Reliability Council warned that the U.S. could face a shortfall of 81,000 megawatts of generating capacity by 2015.

Cellulosic Ethanol And Biofuels
Lovins has consistently hyped the potential for biofuels to replace oil. And once again, he’s been proven wrong. Lovins has been advocating biofuels since his 1976 Foreign Affairs piece, in which he wrote that there are “exciting developments in the conversion of agricultural, forestry and urban wastes to methanol and other liquid and gaseous fuels.” He went on, saying that those fuels “now offer practical, economically interesting technologies sufficient to run an efficient U.S. transport sector.” Except that they don’t.

Some 31 years after Lovins said that biofuels “now offer” the ability to run the entire transport sector, corn ethanol provides just 1 percent of America’s oil needs. And that ethanol production requires the consumption of some 14 percent of America’s corn crop.

Those facts have not prevented Lovins from continuing his hype.

In his 2004 book Winning the Oil Endgame, Lovins declared that advances in biotechnology will make cellulosic ethanol viable and that replacing hydrocarbons with carbohydrates “will strengthen rural America, boost net farm income by tens of billions of dollars a year, and create more than 750,000 new jobs.” In his 2006 testimony before the U.S. Senate, Lovins declared that the U.S. could dramatically cut its oil consumption by using more natural gas “and advanced biofuels (chiefly cellulosic ethanol) for the remaining oil at an average cost of $18 per barrel.”

By nearly any measure, Lovins’s estimate is absurdly low. Producing ethanol for $18 per barrel implies production costs of just $0.43 per gallon. That’s about one-fourth the cost of producing gasoline in mid-2007 at a major oil refinery on the Houston Ship Channel.

Of course, plenty of other people are hyping the potential for cellulosic ethanol to make a major breakthrough.

After his 2006 movie An Inconvenient Truth was released, former vice president Al Gore promised that cellulosic ethanol would “be a huge new source of energy, particularly for the transportation sector. You’re going to see it all over the place. You’re going to see a lot more flex-fuel vehicles. You’re going to see new processes that utilize waste as the source of energy, so there’s no petroleum consumed in the process.” Gore’s former boss, Bill Clinton, loves cellulosic ethanol, too. While promoting Proposition 87 in California in 2006, he declared, “These things are not expensive. We have this kind of biomass to make cellulosic ethanol all over America. It would increase income in rural America. It would increase income in rural California. It would stabilize the environment and improve our national security.”

Despite the hype, the commercial viability of cellulosic ethanol remains remarkably similar to the Tooth Fairy: it’s an entity that many people believe in but no one ever actually sees. And according to a recent report from the U.S. Department of Agriculture, cellulosic ethanol remains years away from viability. In September, the agency’s Economic Research Service reported that while cellulose-based fuels hold “some longer-term promise, much research is needed to make it commercially economical and expand beyond the 250-million-gallon minimum specified for 2013 in the Energy Policy Act of 2005.”

Just for the sake of argument, let’s assume the USDA is wrong. And let’s further assume that given enough federal subsidies, cellulosic ethanol has a big technical breakthrough and expands at the same rate as what we’ve seen with corn-based ethanol. It took more than two decades of fat subsidies before the corn ethanol sector was able to produce 5 billion gallons of ethanol per year, equivalent to 1 percent of America’s oil needs. If cellulosic ethanol follows that same trajectory, it will be 2030 or so before it too will be able to supply just 1 percent of America’s oil needs.

So, just to recap, Lovins insisted back in 1976 that biofuels were capable of powering the entire transport sector. Three decades have passed. And it may be another two decades (or more) before biofuels can provide more than a small percentage of America’s oil needs.

The Jevons Paradox (for more information on this topic see CARE's Blog posting The Evolution of Fuel)
The final – and most important – area in which Lovins has been consistently wrong is his claim that efficiency lowers energy consumption. And when it comes to arguing the merits of energy efficiency, Lovins’s prime nemesis is a dead guy – William Stanley Jevons – a British economist who in 1865 determined that increased efficiency won’t cut energy use, it will raise it. “It is wholly a confusion of ideas to suppose that the economical use of fuels is equivalent to a diminished consumption. The very contrary is the truth.” And in the 142 years since Jevons put forth that thesis, now commonly known as the Jevons Paradox, he’s yet to be proven wrong.
While it’s true that improvements in energy efficiency on a microeconomic level – like replacing an old inefficient air conditioner with a newer high efficiency one – will cut consumption for that one location, when that same effort is spread over a macro scale the overall energy savings are usually swamped by overall increases in consumption. Thus the installation of more efficient air conditioners across an entire city or state, or country, allows people to use their air conditioners more and, since the cost of cooling suddenly becomes more affordable, more people install air conditioning.

In 1865 Jevons published what would become his most famous work, The Coal Question. Jevons’s book was the beginning of what is now known as the field of energy economics. After studying coal consumption patterns in Britain, he assumed that his country’s coal deposits would soon be exhausted. (He was wrong, of course.) And looking forward, he wondered what Britain would do to replace coal. He considered renewable energy.

“The wind,” he wrote, “is wholly inapplicable to a system of machine labour, for during a calm season the whole business of the country would be thrown out of gear.” He looked at water power, but concluded, “In very few places do we find water power free from occasional failure by drought.” As for biomass, he wrote, “We cannot revert to timber fuel…for nearly the entire surface of our island would be required to grow timber sufficient for the consumption of the iron manufacture alone.” He similarly dismissed geothermal, saying that the “heat of the earth…presents an immense store of force, but, being manifested only in the hot-spring, the volcano, or the warm mine, it is evidently not available.”

Over the past few years, numerous energy economists have looked at the Jevons Paradox. Among the best studies is a 1998 analysis by Horace Herring from Britain’s Open University. Herring surveyed numerous studies and reports, including a book by British economic historian B.W. Clapp, who in 1994 wrote that “it is a regrettable fact that efficiency is never so complete as to lessen consumption. Economists from Jevons onwards have noted with perverse satisfaction that as economy cheapens, that cheapness extends the market, and that measures of conservation or economy therefore increase, or at least do not diminish, the consumption of energy.”

(The line on the top left shows that the amount of energyneeded to produce goods and services has been on asteady downward trend. In 1950, it took about 19,000 Btusto produce one dollar of gross domestic product. By 2010or so, the U.S. will only need about 9,000 Btus to producea similar amount of output. Also, note that a “quad” isa common energy measurement. One quadrillion Btus isequal to about 172 million barrels of crude oil. This graphicis courtesy of Huber and Mills, The Bottomless Well, Basic Books, and www.digitalpowergroup.com.)

Herring, after providing a survey of the literature on the matter, concluded that “economists of all persuasions, whether pro environmentalist or otherwise, seem united in their conviction that improving energy efficiency through technological means, will by lowering the implicit price, result in increased, not decreased, energy use.”

Numerous other analysts have come to the same conclusion. In their provocative 2005 book, The Bottomless Well, Peter Huber and Mark Mills wrote that “efficiency doesn’t lower demand, it raises it.” They explain that the pursuit of energy efficiency has been the “one completely consistent and bipartisan cornerstone of national energy policy since the 1970s.” And yet, even though overall energy efficiency has increased dramatically since that time, “demand has risen apace.” This passage explains why energy demand will almost surely continue rising:
Efficiency may curtail demand in the short term, for the specific task at hand. But its long-term impact is just the opposite. When steam-powered plants, jet turbines, car engines, light bulbs, electric motors, air conditioners, and computers were much less efficient than today, they also consumed much less energy. The more efficient they grew, the more of them we built, and the more we used them – and the more energy they consumed overall. Per unit of energy used, the United States produces more than twice as much GDP today as it did in 1950 – and total energy consumption in the United States has also risen three-fold….Efficiency fails to curb demand because it lets more people do more, and do it faster – and more/more/faster invariably swamps all the efficiency gains.

In 2003, Vaclav Smil published an excellent book, Energy at the Crossroads, which provides readers with a comprehensive understanding of the history of energy consumption, the problems with forecasting energy use, and the challenges facing any transition away from fossil fuels. When it comes to energy efficiency, Smil – like Huber, Mills, and Jevons – concludes that Lovins’s arguments about efficiency are simply wrong. In his book Smil writes that history is “replete with examples demonstrating that substantial gains in conversion (or material use) efficiencies stimulated increases of fuel and electricity (or additional material) use that were far higher than the savings brought by these innovations.”

Despite the evidence stacked against him, Lovins insists that Jevons – and Smil, and especially Mills – are wrong. In an e-mail response to my question of whether Jevons was wrong, Lovins replied, “Broadly, yes.” He goes on to try to turn the point into a non sequitur by saying, that if his thesis were true, if we wanted to save energy, “we should mandate inefficient equipment.”

Of course, that’s not going to happen. Engineers are always seeking more efficient methods and machinery. That’s their job. But by throwing out a remark that reduces the issue to absurdity, Lovins avoids answering the critical, big-picture question about the ultimate effects of increasing energy efficiency.

One of the main problems with efficiency arguments like those put forward by Lovins is that engineering efficiency doesn’t necessarily equal economic efficiency. That is, while it might save lots of energy if everyone in the U.S. purchased a slick new super-efficient refrigerator, many people have no incentive – in fact they have a financial disincentive – to discard their existing refrigerator and replace it with a new one, particularly if the payback (in the form of avoided energy costs) takes several years. Many of Lovins’s arguments assume consumers will act with efficiency as their foremost consideration. They don’t. Jesse Ausubel, the director of the Program for the Human Environment at Rockefeller University, says that while he admires Lovins, “his ideas fail to diffuse in practice because people are not rational in ways he hopes. People make choices based on basic instincts about time budgets and social status, for example. And efficiency is not a goal in general for individuals and households. People do not acquire the efficient amount of shoes or soda or shrubbery.”

Ausubel’s point is demonstrably true. While many consumers pay homage to the Toyota Prius and other super-efficient hybrid cars, they are still buying SUVs and pickups that use lots of fuel. In 2005, the number of hybrid vehicles sold in America doubled to about 200,000. That same year, hybrids were outsold by SUVs by a ratio of 23 to 1. In 2006, hybrid sales continued their upward trend, with sales increasing by 28 percent over the year-earlier numbers. But even with that increase, hybrids still only accounted for about 1.5 percent of all the cars sold in America. Those sales numbers show that American drivers love the concept of energy independence and hate the fact that the U.S. buys foreign oil. But when it comes time to strap on their seatbelts, they aren’t as interested in efficiency as they are in the comfort, size, and convenience offered by larger vehicles.

Americans just like big. They like big vehicles, big houses, and Big Macs. And those big appetites have resulted in increased per-capita energy use even while the amount of energy used per dollar of GDP has fallen. Since the early 1980s, the amount of energy used per capita in the U.S. has risen. And the Energy Information Administration expects per capita consumption to continue rising, albeit slowly, through 2030.

None of this is offered to imply that efficiency is bad. Efficiency is a wonderful by-product of human ingenuity. It is an essential part of America’s ever-evolving economy. It is part and parcel of the free-market economy working independently of government-mandated efficiency programs. It makes sense to wring more work out of each unit of energy. Energy efficiency conserves capital. It is good for the environment. It is good for rich and poor alike. Efficiency helps reduce the impact of energy price volatility and possible oil price hikes.

But when it comes down to brass tacks, energy efficiency doesn’t necessarily mean less energy use, it usually means more energy use. And that usually means more carbon dioxide emissions. Thus, the idea of “saving the climate for fun and profit” may be just a bit more complicated than Lovins claims.

But those complications – and Lovins’s faulty predictions – don’t seem to count for too much. On November 1, Lovins was in Stockholm to collect the Volvo Prize. With it came a cash award of 1.5 million Swedish kroner – about $234,000.

Monday, November 19, 2007

Politicians Promote Policies That Increase Dependence

At CARE we believe that all (well, almost all) energy sources will need to be part of the mix for America’s future energy needs—but we also believe they need to work economically. With the current high energy prices, previously unaffordable supplies become almost doable—which could increase the inventory and therefore lower the prices. Long-term, this is good. Short-term, however, no one wants to pay more than three dollars a gallon to drive to grandma’s for Thanksgiving. Angered over the high prices, we look for someone to blame. With such a high percentage of America’s oil coming from overseas, the falling value of the dollar certainly has a part in the pricing, as does the reduced inventory and the pending conversion to the winter fuel mix. But Congress needs to take a big portion of the blame as well. If they wanted to, they could make going to grandma’s more cost effective. Read on and add this information to your energy arsenal. Next time you hear the cost of gasoline being bantered back and forth, throw this into the mix.

With the futures price for a barrel of oil hovering around $100 and the price of gasoline averaging $3 a gallon, people are panicking and looking for answers. While Politicians complain about the U.S.'s increasing dependence on foreign oil, they continue to promote policies that increase that dependence. While they talk, we've nearly doubled our dependence on gasoline refined and imported from other nations.

Gasoline demand has increasingly outstripped domestic supply:

  • In 1981, the 18.6 million barrels per day (b/d) capacity of U.S. refineries exceeded the nation's daily consumption of slightly more than 16 million barrels.
  • Between 1981 and 2005, U.S. oil consumption grew 29.7 percent to nearly 21 million b/d.
  • But refinery capacity in 2005 was 17.1 million b/d - 8.1 percent less than in 1981.

There are only two ways to reduce high oil and gas prices: a reduction in demand or an increase in supply. Since world demand is increasing, we cannot appreciably affect demand in the short or mid-term without the technology to separate economic growth from fossil fuel energy growth—something we just don’t have yet.

By reducing refining capacity Government policies have contributed to high gas prices and created a smaller inventory. National policy should focus on increasing supply. Yet instead of seeking to alleviate the problem, Congress is debating ways to make matters even worse—missing opportunities to utilize the billions of barrels of oil locked off-shore in Alaska.

Building new oil refineries or expanding existing ones is among the most affordable, effective and reliable ways to increase supplies and lower prices. However, no new refineries have been built in the U.S. in almost 30 years due to clean air regulations, boutique fuel mandates and mandates for ethanol that have raised the cost of building new refineries.

  • Amendments to the Clean Air Act in 1990 and 1997 required refineries to limit emissions of air pollutants and to make cleaner reformulated fuel. This forced refiners to install expensive pollution-control technology. This high price tag led to the closure of additional refineries.
  • Gasoline sold in the US has been fractionated into about 17 different boutique fuels in order to fulfill various air pollution reduction plans. With three grades of gasoline per fuel, refiners are producing over 50 separate blends. The Government Accountability Office notes that producing these gasoline blends requires the installation of expensive equipment and the different blends must be transported separately. As a result, refinery capacity becomes severely constrained seasonally, resulting in gas price spikes.
  • The 2005 energy bill mandated the annual use of 8 billion gallons of ethanol in gasoline blends, and an energy bill recently passed by the U.S. Senate would increase the mandate to 36 billion gallons. Petroleum refiners have responded to existing and proposed expanded ethanol mandates by canceling 40 percent of planned expansions in capacity, reducing potential new output from 1.6 million b/d to less than 1 million b/d.

“Absent government intervention in the market, refinery capacity would be expected to expand, reducing consumer prices,” said D. Sean Shurtleff, an NCPA graduate fellow. “More economical and secure energy supplies are available if government will get out of the way.”

For example, if Congress had:

  • opened the Artic National Wildlife Refuge (ANWR) to oil exploration back in 1990, when the issue was first debated, we would have that oil today.
  • opened ANWR and allowed off-shore drilling as part of the energy legislation debated at the start of the Bush presidency, at least some new production would be coming online now.
  • acted in 2005, when the supply issues were again debated, we would be at least a few years down the road toward lessening energy dependence.

Under the crust of the Outer Continental Shelf (OCS) and the coastal plain of the Arctic National Wildlife Refuge (ANWR) are vast untapped conventional oil reserves. There is 4 times as much oil under the OCS as all other current U.S. oil reserves. And the ANWR coast contains 6 billion to 16 billion barrels of economically recoverable oil at $20 a barrel—up to double that at $40 a barrel.

Tapping new oil in the U.S. would reduce prices because it would increase supply to world markets, and the location of new oil would reduce uncertainty and price instability. Instead, Congress is pushing ethanol, which is renewable and homegrown. Midwestern farmers, producers and farm state legislators argue increasing U.S. biofuel production and building new bio-refineries could reduce America's dependence on fossil fuel imports while diversifying our fuel supply. Accordingly, the 2005 energy bill mandated use of 8 billion gallons of ethanol in gasoline blends, and an energy bill recently passed by the U.S. Senate would increase the mandate to 36 billion gallons.

In addition to ethanol, though rarely discussed, the United States has abundant reserves of coal, shale oil and conventional oil.

There is a well-developed process to turn coal into oil. South Africa's Sasol Company. produces 150,000 barrels of oil from coal per day. China is also bringing coal-to-oil plants online, with plans to produce as much as a million barrels of oil a day from coal by 2020.

Commercial coal-to-oil plants have not been built in the United States because they require more long-term capital investment than conventional oil. Conventional oil has been relatively abundant and therefore, historically, prices have been far below what would be needed to make synthetic oil competitive. This has changed.

The Energy Department has estimated that coal-to-liquids can compete if the price of conventional oil is above $30 per barrel.

Based on predictions that the era of cheap oil is over, a consortium of companies including General Electric, Rentech and Arch Coal plans to produce low-sulfur diesel from coal mined in Wyoming, and a company in Illinois expects to bring a commercial plant on line by 2010. The potential is substantial. The federal government estimates that production of oil from coal could reach 1.7 million barrels per day by 2030, while the coal industry estimates future production of 2.6 million barrels per day.

Turning coal to oil also has ancillary benefits: It produces natural gas that can be used for heating or electric power generation and it removes more than 30 percent of the pollutants (mercury, sulfur dioxide and heavy metals) released when coal is burned to produce electricity.

Another potentially huge supply of oil and natural gas is trapped in oil shale, largely in the Western states. Geologist David Deming estimates that rocks in Colorado, Utah and Wyoming alone contain 1,500 billion barrels of oil, and worldwide oil-shale could equal more than 500 years of oil.

Previous government efforts to extract oil from shale were very expensive, used a lot of energy and labor and produced relatively little oil. However, research at private companies has produced a technological revolution—a process to heat the rocks in the ground, trap the oil and profitably extract it as long as the price of conventional oil is above $30 per barrel. Based on successful tests, Shell Oil Company estimates it could produce more than 1 million barrels of oil per acre or a billion barrels per square mile. In the Green River Basin of Colorado alone, there are more than 1,000 square miles of oil shale. (Read CARE's special report on Shell's Mahogany Research Project.)

Each of these options has environmental benefits and drawbacks that should be analyzed and debated before ramping up production. However, compared to the net amount of ethanol that can be produced, coal, shale or conventional oil from ANWR and the OCS hold greater promise of reducing America's dependence on foreign oil.

Whether for nontraditional sources of oil or for ethanol, subsidies distort energy prices and investment decisions—reducing the efficiency of supply and production, and therefore the security of America's energy future. Thus, before Congress mandates any expensive program to replace a small portion of the nation's gasoline with ethanol, or lavishes subsidies on the coal and oil industries to produce oil from either coal or shale, it should first allow the market to work.

Both increasing traditional and non traditional supplies are mid-term solutions. In the short-term, if Congress really cared, rather than simply shedding crocodile tears for the plight of the poorest consumers, they could make some changes now. Refineries are about to have to close down to change over to winter fuels—which will reduce inventory and increase the price at the pump. Congress could suspend the Federal gas tax of about $.20 a gallon and remove the regulations demanding boutique fuels. Then costs would go down and production would go up. That would be something to be thankful for!

Sterling Burnett, Senior Fellow for the National Center for Policy Analysis based on the following report: Increasing America’s Domestic Fuel Supply by Building New Oil Refineries

Friday, November 9, 2007

Who Gets Hurt with High Energy Prices? Who Creates Them?

When you spend all day, every day, focused on energy, it is easy to think you have the bases pretty well covered. Therefore, when something new comes along, it catches your attention. Such was the case when the following posting landed in CARE’s in-box. It is easy to get so consumed looking at energy sources, alternative options, and possible climate change mandates that you overlook the immediate impact on society—today. This report looks at the Congressional Black Caucus and the effect rising energy prices have on the poor and minority families in America. Even if you can afford to heat your home this winter and fill your tank at the current prices, think about the cumulative results decades of legislators, regulators, judges and pressure groups have heaped on those who are less fortunate. Remember them when you encourage your lawmakers in one direction or another. Think of America’s poor and minority families when you cast your vote for president in the upcoming primary elections.

For a side-by-side comparison of the leading candidates’ positions on energy, please check out CARE’s November e-newsletter.

An Opportunity Squandered
The Congressional Black Caucus is shortchanging poor and minority energy consumers
A recent Congressional Black Caucus Foundation conference in Washington featured an “energy braintrust.” It promised a lively three-hour discussion by oil company, association, government agency and university executives, to “transform dialogue into action” and “bolster the relationships between the energy industry and African-American community.”

Sadly, the session moderator squandered the opportunity. Rep. Sheila Jackson Lee of Texas knows the oil business and recognized that “energy is the foundation of our economy, the engine that drives the world.” But she arrived 40 minutes late, then posed for photos and bemoaned oil industry shortcomings. By the time she introduced the speakers, the session was half over.

The first panelist noted that many “public policy barriers” restrict exploration, production and delivery of needed energy. Several said more minorities and minority businesses must be involved in the energy industry, while others noted that US laws and policies raise energy prices, make excellent prospects off limits to drilling, and reduce opportunities for businesses and employment.

Rep. Lee did not pick up on any of these critical issues. Instead, she nodded as her “good friend,” the CEO of CITGO Petroleum, extolled Hugo Chavez and offered platitudes about “building bridges” between Venezuela and poor US communities.

After each talk, Mrs. Lee introduced other “good friends” in the audience – and her son, who “needs a job” – frittering away more time. The session ended with virtually no attempt (or time) to analyze the shortcomings of current US energy policies.

An hour later, presidential aspirant Senator Barack Obama declaimed that climate change is the most serious threat facing African-American families, and “environmental justice” demands that factories not be built in minority communities, because they might pollute.

The message was a politically correct regurgitation of Democratic Party and Sierra Club talking points. It was the same deficient analysis that brought us child welfare mothers “raising” children in fatherless families, schools ruled by incivility and violence, and uneducated youths suited for gangs but not jobs.

African America cries out for thoughtful leadership. Our country hungers to embrace a strong black candidate for national public office. Instead, our Black Caucus marches in lockstep with activists and legislators whose policies are disastrous for low income and minority families.

Energy is the “master resource,” on which everything else depends. Abundant, reliable, affordable electricity, natural gas and transportation fuels make our jobs, health and living standards possible. They are the great equalizer, the creator of economic opportunities and true environmental justice.

Lock those resources up--cripple our energy sector with taxes, over-regulation, and ill-advised laws that make heating, driving and manufacturing more costly--and the poor suffer most. Destroy jobs, or make poor families pay an ever larger portion of their meager incomes for energy, food and clothing--and the hard-won victories for civil rights are quickly reversed.

Keep businesses out of neighborhoods blighted by slum dwellings and brownfields, and you take away jobs, health insurance, a stronger tax base for schools, environmental cleanups and a chance for the American dream. Lock up oil, gas and coal prospects, and there will be fewer job opportunities even in companies that are committed to diversity.

The Kyoto Protocol would reduce average global temperatures by 0.2 degrees by 2050. Pending congressional bills might achieve a 0.05 degree reduction – assuming CO2 drives climate change, which numerous scientists doubt. These symbolic gestures would raise energy prices for no environmental benefit.

America could get 20 billion gallons of gasoline a year from an area 1/20 the size of Washington, DC, in Alaska’s Arctic National Wildlife Refuge. Instead, lawmakers exult over getting 5 billion gallons of ethanol from an area the size of Indiana, and using some 4 billion gallons of fossil fuel to grow, harvest, process and transport the corn. Some want 15 billion barrels of corn-ethanol by 2022.

Legislators, regulators, judges and pressure groups have made a decade’s worth of oil and natural gas off limits. They’ve helped drive up energy costs more than $1000 per family since 2000, and caused every barrel saved through efficiency and conservation to be offset by oil locked up on questionable ecological grounds.

These energy deniers want to shackle the fossil fuel system we have, and replace it with a utopian system that isn’t even on the drawing boards.

This isn’t energy policy or environmental justice. It’s feel-good grandstanding. It would replace our free enterprise system with one based on government dictates, mandates, subsidies, and decisions about which companies, technologies and lobbyists win … and how much more consumers must pay.

These issues demand serious, robust debate. But the CBC isn’t even asking the right questions – much less providing leadership and challenging dominant liberal dogmas. The path it is taking betrays the gains that generations of civil rights champions fought so hard to achieve.
Let us hope this election season generates the healthy debate we so sorely need.

Roy Innis is national chairman of the Congress of Racial Equality, one of America’s oldest and most respected civil rights groups.

Sunday, November 4, 2007

Is the Nobel Peace Prize Even Noble Anymore?

In 1895 when Alfred Nobel first conceived his award for peace, he had noble causes in mind: “the person who shall have done the most or the best work for fraternity between the nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses." Surely someone who has met this noble goal is worthy of laud. In this posting, CARE’s Energy Counsel Member Dennis Avery looks at the diminished importance of today’s Nobel Peace Prize when compared with recipients of the past. Sure the cash reward would be nice, but most of today’s recipients don’t even need it. Other than the receipt of the dollars, would you want to be in the current company of Nobel Peace Prize winners?

Diminishing The Nobel Peace Prize
In 1964, Martin Luther King won the Nobel Peace Prize for leading the non-violent crusade against racism and slavery—bettering not only America but the entire world.

In 1971, Willi Brandt won the Peace Prize for leading Germany’s peaceful reintegration back into the “world family of nations,” healing the destruction caused by Kaiser Wilhelm and Adolph Hitler with two World Wars that caused at least 70 million deaths.

In 1970, it went to my friend Norman Borlaug, the Green Revolution plant-breeder who: 1) saved 1 billion people from almost-immediate starvation, 2) prevented the plowdown of 16 million square miles of wildlands for more low-yield crops; and 3) just incidentally laid the foundation for the material abundance now spreading around the planet.

Now fast forward to look at recent Peace Prize winners:

In 1994, Yasser Arafat, the thuggish Islamic zealot who was lavishly paid to perpetuate Moslem/Jewish conflict in the Middle East. Arafat helped lay the groundwork for today’s round-the-world suicide bombings.

In 2001, The UN’s Kofi Annan: Did he end the genocide in Darfur? Stop the war in Kosovo? How about the billion-dollar UN corruption of Saddam Hussein’s “oil for food” program—assisted informally by his son?

Now we get Al Gore, a ho-hum U.S. politician catapulted to rock-star status by a moderate and natural global warming cycle, which has been hysterically inflated by the Green movement, willing media collaborators, and massive government funding for unproven computerized climate “models.” (Note: Mr. Gore’s movie has just been found guilty in a British court of 11 serious untruths and/or unsubstantiated claims.)

Gore says:
Ice core evidence shows rising CO2 levels raise earth’s temperatures. In fact, ice cores show the temperatures rising about 800 years before the CO2 levels go up.

Mt. Kilimanjaro’s melting glacier is proof of man-made warming. In fact, the melting is due largely to local deforestation.

The Antarctic ice is melting. Most studies say it’s stable or adding ice.

Hurricane Katrina was caused by global warming. Historic records show far more major, landfalling Caribbean hurricanes per decade from 1700–1850, during the Little Ice Age, than now.

Global warming could stop the Gulf Stream, and cause an Ice Age in Europe. Recent studies offer no support to help Mr. Gore on this one.

Global warming is causing species extinctions and coral reef bleaching. In fact, not one species has gone extinct due to warming. Coral reefs adjust to new temperatures—by bleaching.

A study shows polar bears drowning due to vanishing ice. In fact, four polar bears drowned in a bad storm.

Greenland’s ice could melt suddenly, causing a dangerous rise in sea levels. In fact, it will take thousands of warming years to melt Greenland’s ice cap.

Global warming is drying up Africa’s Lake Chad. The UK government agrees this is not true.

Gore’s scary graphics show cities drowning in a 7-meter sea level rise, creating millions of refugees. In fact, the 20th century increase was 6 inches and we’ve seen no acceleration. Even the UN climate change panel doesn’t agree with Mr. Gore’s scenario.

Rising seas have forced people to flee Pacific islands to New Zealand. There is no record of any evacuation triggered by sea level rise.

Just one last question for our new Nobel Peace laureate: Why did most of our moderate modern warming take place before 1940 (with 1934 being the warmest year) and why haven’t we had any warming over the last nine years? Could it possibly be the moderate natural 1,500-year cycle revealed in the ice cores and seabed sediments?

DENNIS T. AVERY was a senior policy analyst for the U.S. State Department, where he won the National Intelligence Medal of Achievement. He is the co-author, with atmospheric physicist Fred Singer, of the book, Unstoppable Global Warming—Every 1500 Years, available from Rowman & Littlefield. Readers may write him at the Center for Global Food Issues (http://www.cgfi.org/) Post Office Box 202, Churchville, VA 24421.