We’re Losing Our Freedoms

Omigosh! You have got to love this guy—and none of us have ever met him. He does not take himself too seriously, yet he makes keen points. If you enjoy his style, we encourage you to go to the Whiskey and Gunpowder website and check out the entertaining opening to this posting that we trimmed to get right to the meat of the matter. It is worth a good laugh and with the writers still on strike, we need more good laughs.

At least we still have freedom of speech!

Carbo-geddon, Part 1.5
Every time I write about energy or/and the environment, I get letters from people wanting to argue one side or the other of the global warming issue. The first part of this series was no exception. Some actually complained that I’d taken a neutral stance on whether mankind is causing global warming or not. In a way, this is why I wrote this interim essay — to explain my point of view more fully, even though it’s completely irrelevant whether man is causing global warming or not, or whether you or I believe it (I’ll explain why in a minute)…

Once more for the record, I’ve stated that I don’t pretend to be certain of whether or not man-caused CO2 and other so-called “greenhouse gases” are actually responsible for the modern up-trend in global temperatures. I’m not a climate scientist. Further, I make no attempt to minimize the fact that overwhelming evidence does indeed suggest that a slight increase in temperatures is happening on a global scale — or that coincidentally, levels of atmospheric carbon dioxide have increased measurably since the dawn of the industrial revolution.

However, within the framework of these actualities, I am certain of four things:

1) Planet Earth has experienced a huge number of climatic change periods in its history, both warming and cooling — all except the current one having occurred long before humans could ever have influenced the environment with their evil internal combustion engines or coal-fired power plants.

2) The “scientific community” (a term which has grown to include a lot of people whose credentials as climate specialists are questionable) is far from united in agreement that man-generated GHGs are the cause of the modern global warming trend. As an example, one of today’s most credible climate scientists, Carleton University paleo-climatologist and Professor of Geology Tim Patterson, testified in 2005 before Canada’s Commons Committee on Environment and Sustainable Development that:

“There is no meaningful correlation between CO2 levels and Earth's temperature… In fact, when CO2 levels were over ten times higher than they are now, about 450 million years ago, the planet was in the depths of the absolute coldest period in the last half billion years. On the basis of this evidence, how could anyone still believe that the recent relatively small increase in CO2 levels would be the major cause of the past century's modest warming?”

3) Lots of people — few, if any, of them scientists — are making lots of money and garnering lots of power and attention from the promotion of global warming hysteria. Conversely, those who challenge this mania (again, there are hundreds of credible examples of these) are mercilessly painted by the media and other global warming profiteers as “flat-Earthers.” They increasingly stand to gain nothing for their courage except ridicule, the ruination of their reputations, swift marginalization in polite circles and quite possibly a pink slip. To me, this gives their words a far greater weight than those on the other side of the argument.

4) The major media is not reporting on ANY of these three aspects to any significant degree — despite the somewhat inconvenient truth that credible backup for all of these facts can be found with just a few minutes of online research. (I did, and you can, too.)

Again, these are the only four truths of which I’m certain with regard to the entire climate change debate — except for one more thing: That even to a barely literate, synaptically challenged rube like me, it should be perfectly clear that the Earth’s climate should NOT stay static, but periodically change, sometimes radically.

Why does this come as a surprise to anyone? The simple fact that there are ocean-like deposits of oil — which is nothing more than the remains of eons worth of ancient plant matter subjected to huge amounts of pressure and time —under what’s now desert sand and arctic tundra should tell anyone with more than two brain cells that climatic change is the ONLY constant on planet Earth…

The Great Green Guilt-Trip
Before I elaborate on why U.S. energy policy is what it is, why it’s headed where it’s headed, and what it should be, I want to talk a bit about one of my biggest ongoing questions during the escalation of man-caused global warming theory:

If it’s not proven incontrovertibly by science, why do Americans seem to buy en masse into the idea that abundant-in-nature greenhouse gases are killing the planet simply because they come from their vehicle tailpipes and not solely the asses of buffalo and other natural sources?

The answer: Ignorance and guilt, both fostered by a corrupt politico-media spin machine.

Think about it objectively for a minute. It’s obvious that the media, our cultural icons and our elected leaders have been keeping us sheltered from the hard science or any real debate about man-caused global warming. These same people (especially the media) have also been making us Americans feel guilty for our success and the natural dominance of our less-flawed-than-everyone-else’s system for decades. Always do we hear about the strife in other countries and on other continents — and how it’s somehow our fault. Because we suck up too many resources. Because our trade practices are unfair. Because our foreign policy creates suffering and turmoil in nations that would ordinarily thrive. Because we aren’t doing enough to help…

And compassionate, feely saps that we Americans are, we buy it hook, line and sinker, whether it’s true or not. We feel bad about having it good — and for making it that way for ourselves. We never consider (because we never hear it) just how badly the Earth would have it if America did not exist. Who’d buy their bits of lead-painted junk? Who’d answer their call when they get unjustly invaded? Who’d send food and drugs and aid when they have an outbreak of disease or get washed out by a disaster? Where would they send their best and brightest to get educated? Where would throngs of their uneducated find gainful employment?

Worse than this, politicians exploit this guilt to tax us, regulate us, manipulate us, distract us, paralyze our thinking, stifle our tongues and seize ever more of our liberties. Nowhere is this more evident than in global warming policy. Based on nothing but faith in the correctness of a greenhouse gas THEORY promulgated by “objective” folks like movie stars, newscasters, politicians and the leaders of nations who benefit from our petro-strangulation, we’re losing our freedom to drive what we want (and what’s safest), consume as we desire and produce the things we need and that the rest of the world needs to buy — and used to buy from us…

This is the entire goal of the Kyoto Protocol, by the way — re-allocating the flow of world oil to favor underdeveloped nations and force the U.S. off the top of the heap in terms of economic and manufacturing supremacy (this is already happening, in large part out of concern for the environment). As I said in my first Whiskey & Gunpowder essay on this topic way back in March 2005:

“…the Kyoto Protocol was engineered to be extremely punitive to the U.S. — a nation which I’ve just proven burns its oil relatively cleanly and produces a comparatively large amount per unit consumed. Had the U.S. remained part of this farce, it would have been required to reduce its GHG emissions by an astounding 43% by 2012.

“The only way to do this would have been to radically curb oil consumption. This was likely the goal of the entire Treaty: Forcing the U.S. to use less oil, so that more would be available for the use of “developing” (read: major polluter) nations China, India, Brazil and about a zillion others in Africa — which are allowed under the Protocol to spew as much GHG into the atmosphere as is required to meet their needs. They are literally given the carte blanche right to pollute!

“When you really put it under a magnifying glass, the Kyoto Protocol appears to be nothing more than a UN-engineered scheme to siphon oil away from the U.S. and into the hands of pollution-exempt nations (many of them utterly corrupt) in UN President Kofi Annan’s native Africa and other zones — a disastrous move for the environment, from a Greenhouse Gas standpoint.”

As I’ve mentioned in previous essays, if Kyoto’s main thrust really was the reduction of greenhouse gasses, it would stipulate that a greater percentage of the world’s oil and fossil fuels be consumed by the nations with the technology and environmental conscience (read: democracies) to do it cleanest and extract the most wealth and prosperity out of it — countries like the U.S., not like China.

That’s how I know that Kyoto’s a bunch of Robin Hood-ish bunk — because it gives no weight to relative greenhouse gases per unit of fossil fuels consumed. If one believes that man-caused GHGs are ruining the Earth, then it makes no sense to restrict the fossil fuel consumption of nations that do it cleanly and facilitate the increased consumption of those that do it dirtily.

Bottom line: Literally, without anything resembling proof, and led by shameless profiteers globally and locally — some elected, some unelected and some previously elected — the United States teeters on the brink of energy policies which will accelerate our decline into dependency on other nations for not just energy, but all manner of manufactured goods…

And as I showed you in Part One of this series, this will do nothing but hasten the demise of planet Earth if the global warming alarmists do turn out to be right!

Anyway, thanks for bearing with me as I flesh out my own feelings on global warming a bit. I’m above all things objective, and like I’ve said all along: I’m not a climatologist, and not qualified to decide whether mankind is causing global warming.

However, I am qualified to expose corruption and self-interest, and the flawed policies that arise from them. And in Part Three of this series, I’ll show you the disillusioning truth behind what’s really driving U.S. energy policy — and what should be if we hope to survive in any form resembling the America we know and love.

Jim Amrhein
Freedoms Editor, Whiskey & Gunpowder

The New “Mandates” On Biofuels

Two postings ago, we presented Michael Economides’ quick retort—accompanied by graphics—in response to our question about the recently signed energy bill. With a bit more time and rumination, he offered us these thoughts on the biofuel mandates portion of the energy bill. Read it here first!

In this era of energy and environment polarization if most Democrats and Republicans in Congress agree and then the President signs, it must be a nothing bill. And so the recent Energy Bill came to pass, which will cost only money and will do nothing for either energy independence or green house gases or the environment. And, in the highly unlikely case that it may come close to fulfilling its provisions, it may do a lot more harm than good.

While there are many elements of the bill that could be discussed, here I will just write about the new “mandates” on biofuels.

First, Congress mandated that by 2022, biofuels will provide a total of 36 billion gallons per year. None of these fuels can ever make any market-based sense without government subsidies. Of the total, 15 billion will come from “conventional” biofuels, read corn-based ethanol, with all the often repeated impact on food prices, ground water and contamination of surface waters. The bill suggests that the share of these fuels of the total transportation fuels should increase from about 4% in 2008 (9 out of 220 billion gallons) to about 5.7% by 2022 (15 out of 260 billion gallons.)

I am not even going to apply the multiplier of 0.7 with which ethanol gallons must be multiplied to be compared with e.g., gasoline. What is actually astonishing is that most of the remaining 21 billion gallons will have to come from “cellulosic” biofuels and there is no technology in place or in the horizon to produce them. The mandate in the bill is no different than mandating that all children born in the United States from now on should grow to be 6 ft tall, because it would be better for them as adults. Some yet unknown technology may be able to do that.

Second, let’s address the “energy independence” issue. According to the Energy Information Administration forecast before this bill was signed, by 2022, the demand for conventional transportation fuels (gasoline, diesel and jet fuel) will increase by more than 40 billion gallons from today, about twice as much as the mirage of cellulosic biofuels. America will still need to find oil supplies and if no drilling in ANWAR or offshore is allowed, importing is the only answer. So it may be that instead of importing 256 billion gallons, we will be importing 250 because of all the extra corn-based ethanol.

But then there is a third important issue and as usual, few have thought about it, China. I can understand environmentalists and ideologues ignoring this but where are the pragmatic geopoliticians?

By amazing coincidence, as the Energy Bill was signed, China’s CNPC think tank released their forecast for that country’s demand in all things energy (only until 2015, but enough for our purpose) and from there I gleaned their transportation fuel demand. Extrapolating to 2022 here is how it looks:

China’s transportation fuel demand will grow from about 60 billion today to at least, 130 billion by 2022, a 70 billion gallon increase, almost twice the US increase.

Paying all that money to produce more corn-based ethanol and even more money to chase the elusive cellulosic biofuels is not just a subsidy to special agribusiness interests in the United States. It amounts to a subsidy for China, because it will allow that emerging superpower to seek oil resources unhindered and with diminished competition from the current reigning superpower.

Oil and energy resources in general have defined national power for more than a century with both World Wars and many regional conflicts having a direct link to them. The United States is poised to relinquish a large swath of power by giving China a buy-in the world of superpower competition. Such a voluntary giveaway is unprecedented in modern history.

And with all the above, consider this fact: 21 billion gallons of biofuels that are unlikely to ever materialize are equivalent to 1.4 million barrels of oil per day, well within the most conservative estimates that the US can produce from ANWAR and a very modest increase in offshore oil leases within its own waters.

There are solutions to America’s transportation predicament, such as long-term electrification, but biofuels are not even close to being the answer.

Prof. Michael J. Economides, University of Houston and also Editor-in-Chief Energy Tribune Houston, TX

The New US Energy Bill

We at CARE are honored that distinguished expert, Michael Economides, is willing to share his insights with us. Never at a loss for an opinion, the following is what he sent to us when we asked for his response to the energy bill that was signed last week:

“This is one of the silliest and most expensive, compared to the benefits, bills ever. The biofuels that they envisions do not even exist and will not amount to more than the expected INCREASE in conventional motor fuels. Biofuels do nothing for the environment, greenhouse gases or energy independence. Opening up ANWAR of just a little more offshore drilling would readily cover what they are supposed to do at no cost to the public.”

Potential Contributions from Renewables between 2007 and 2022

• Conventional Fuel Increase 18.6%
• Conventional Fuel Increase 15.7%
• Conventional Biofuels (2022) 5.0% – (e.g., corn-base ethanol)
• Total Biofuels (2022) 13.8% – Of which 21 billion gallons of unproven biofuels (1.37 million barrels per day)

Prof. Michael J. Economides, University of Houston and also Editor-in-Chief Energy Tribune Houston, TX

The Truth About “Alternative Energy”

With the passage of the new energy bill requiring increasing use of “alternative energy,” It seems appropriate to look into what all of this is going to cost and who it will impact—what is the energy reality? With that in mind, we at CARE are pleased to have received two specific postings from a couple members of our team of energy experts.

This first piece is from Roy Innis, national chairman of the Congress Of Racial Equality. You might wonder what a civil rights leader has to say about energy, or why he is even involved in this discussion. Think about it. As this posting and one we will post next indicate, there is no “free lunch.” All of this new technology—if it can even be developed—comes with a big price tag. While everyone wants abundant energy and a clean earth, no one wants to hurt the poor, elderly, or minority families. Yet, that is what we have just done with the newly-passed energy bill. Read Roy’s comments and tell us what you think? Does this change your viewpoint at all?

Why Coal-Generated Electricity is Vital to Our Energy Security
We often hear that “clean, free, inexhaustible” renewable energy can replace the “dirty” fossil fuels that sustain our economy. A healthy dose of energy reality is needed.

Fully 85% of America’s total energy comes from fossil fuels. Over half of its electricity comes from coal. Gas and nuclear generate 36% of its electricity.

Barely 1% comes from wind and solar. Coal-generated power typically costs less per kilowatt hour than alternatives–leaving families with more money for food, housing, transportation and healthcare.

By 2020, the United States will need 100,000 megawatts of new electricity, government, industry and utility company analysts forecast. Unreliable wind power simply cannot meet these demands.

Wind farms require big subsidies and vast stretches of land. To meet New York City’s electricity needs alone would require blanketing the entire state of Connecticut with towering turbines, says Rockefeller University Professor Jesse Ausubel. On a scale sufficient to meet the electricity needs of a modern society, wind power is not the silver bullet.

For three decades, US demand for natural gas has outpaced production. In fact, gas prices have tripled since 1998, to $13 per thousand cubic feet today, and every $1 increase costs US consumers an additional $22 billion a year.

With Congress and states making more gas prospects off limits every year, this trend is likely to continue—further driving up prices and forcing the US to import increasing amounts of even more expensive liquefied natural gas.

American consumers simply cannot afford to halt the construction of new coal-fired power plants, though some politicians, activists and even companies are trying to do exactly that.
As Kansas discovered after its environmental chief blocked a proposed new coal generator, coal projects also come with transmission lines to carry wind-generated electricity and more reliable coal-generated power. Wind farms typically do not. Now a dozen Kansas wind projects are also on hold.

Former Clinton Administration environment staffer Katy McGinty engineered the lockup of 7 billion tons of low sulfur Utah coal, worth $1 trillion. Current and proposed regulations would make it even more difficult and expensive to provide adequate coal-fired electricity.

But the facts support more coal use, not less.

Power plants fueled by coal are far less polluting than 30 years ago. Just since 1998, their annual sulfur dioxide and nitrogen oxide emissions have declined another 28% and 43% respectively, according to air quality expert Joel Schwartz.

Coal-fired power plants are now the primary source of US mercury emissions only because the major sources (incinerating wastes and processing ores containing mercury) have been eliminated. US mercury emissions are now down 82% since the early 1980s, and new rules will eliminate most remaining mercury and other emissions by 2015.

That leaves carbon dioxide and catastrophic climate change as rationales for opposing coal. However, the latest UN-IPCC report again reduces projections for future temperature increases, polar melting and sea level rise. Moreover, increasing scientific evidence suggests only slight warming, climate change controlled primarily by solar cycles, and storm, drought and sea level trends in line with historical experience.

Yet, claims about imminent catastrophes became borderline hysterical, as delegates and activists traveled to the island paradise of Bali to promote a successor to the Kyoto Protocol.
They and the news media ignored the inconvenient truth that climate chaos horror stories are based almost entirely on computer models and digital disaster scenarios. They likewise ignored the fact that their air travel generated nearly 100,000 tons of carbon dioxide.

Meanwhile, US politicians are promoting initiatives like the Lieberman-Warner bill and Midwestern Governors Association climate pact, which they say will prevent a cataclysm, by slashing CO2 emissions by 60-80% and generating “thousands of megawatts” from wind energy.

If these initiatives become law, Senator Lieberman himself admits, they would cost the American economy “hundreds of billions” of dollars. Electricity rates would soar another 50% by 2012. Millions of lost jobs will be lost, labor unions predict, as companies shift operations to foreign countries.

Preeminent alarmists Al Gore and Hillary Clinton emit more CO2 in a week from the private jets they take to campaign, lecture and fund-raising events, than the average American does in a year. And yet the two are demanding a wholesale “transformation” of the US economy and living standards.

Mrs. Clinton says she is switching to compact fluorescent lightbulbs (CFLs), to save a few kilowatts. But CFLs contain mercury, and a nationwide switch to these bulbs could make them a more significant source of mercury than power plants. Mr. Gore justifies his emissions by noting that he gets (free) “carbon offset” indulgences from his company. He’s not offering free indulgences to the rest of us.

China and other rapidly developing countries will build 1,000 new coal plants during the next five years—with few of the pollution controls required in the USA. That means even major sacrifices by American workers and families won’t affect global temperatures, even if CO2 is the primary cause of global warming—which many scientists say is not the case.

We need every energy resource: oil, gas, coal, hydroelectric, nuclear—and wind, solar, geothermal and biomass.

We cannot replace 52% of our electricity (the coal-based portion) with technologies that currently provide only 1% of that power (mainly wind). Wind is a supplement, not an alternative.

We cannot generate electricity with hot air from politicians eager to create tax breaks, subsidies and “renewable energy mandates” for companies that produce alternative energy technologies—in exchange for campaign contributions from those companies.

We cannot afford to trash the energy we have, and substitute energy that exists only in campaign speeches and legislative decrees.

Doing so would leave a huge energy gap between what we need and what we will have. Poor, elderly and minority families can least afford such “energy policies.”

Roy Innis is national chairman of the Congress of Racial Equality, one of America’s oldest and most respected civil rights groups. This article is based on his testimony before the U.S. House of Representatives in December 2007.

Pay at the Pump or Pay at the Dealer

We’ve said it before, “We do not need the government mandating fuel economy standards.” In a free market system, the public votes with their dollars. When gasoline prices go up, the public demands vehicles with better mileage. But by requiring certain efficiencies by specified dates, technology is pushed to the limit and prices reflect the accelerated R & D. The results may not be any better than the washing machine debacle resulting from government regulations for higher efficiency. The result is a washing machine that costs twice as much but works half as well—according to Consumer Reports.

Yet, Washington forges ahead with plans for increased MPG regulation—what is called CAFÉ (Corporate Average Fuel Economy) Standards. (See previous postings on CAFÉ Standards.)

Here Forbes Auto offers insight on what the consumer cost will be for these more strict standards. You’ll either pay at the pump or pay at the dealership. Why not at least give consumers a choice? Isn’t this the land of the free—as in free choice?

Better Fuel Economy Could Be Costly for Car Buyers
The government has yet to require higher fuel efficiency from the auto industry, but some manufacturers are already bracing for much stricter standards. Chrysler Group even went so far as to scrap plans for a new luxury vehicle that had been in the works.

Industry insiders insist consumers should be bracing too—for significantly higher prices and far fewer choices.

In July the Senate passed a bill that would increase the Corporate Average Fuel Economy (CAFE) standards for all passenger cars and trucks by about 40 percent. That would require automakers to raise the average gas mileage of their vehicles to 35 mpg by 2020. A proposal in the House would hold manufacturers to those standards as early as 2018.

The legislature is far from putting such changes into law. But observers say stricter standards—in some form—appear to be inevitable.

And buyers, beware. The impact on consumers is likely to be more than just the ability to get farther on a gallon of gas.

Consumers will end up paying for the more expensive technology that makes achieving the standards possible, said David Alexander, principal analyst for automotive systems at ABI Research in New York.

Dave Elshoff, a senior manager at Chrysler, said some cars could end up costing as much as 50 percent more. "Bringing our most fuel-efficient vehicle into the standards being proposed would add $5,000 to $7,000 to its price. And this is a $14,000 car," Elshoff said. "Consumers are gonna think twice about buying cars that expensive, which will hurt us."

Choice is also going to dwindle, both Alexander and Elshoff predicted.

Just the threat of stricter standards is already having an impact on production—at least for Chrysler.

The company is the first to order a change in its production schedule because of the possibility that stricter standards are on the way. It recently scrapped plans to build the Imperial, a large, luxury sedan that had been introduced as a concept vehicle at the 2006 Detroit auto show.

Elshoff gave two reasons for the decision: "One, volatile gas prices consistently well above $3 a gallon. Two, pending legislation in Washington."

Given those issues, Imperial's size made its demise inevitable, he said. "Any way you look at it, the concept car was based on our largest sedan. It was considerably big. Chrysler felt that there was no justifiable business case for a car like that with those two issues looming."

Ford spokesman Mike Moran said he thinks that car buyers are already making smarter, more informed decisions and are more willing to consider smaller, more fuel-efficient vehicles.

"Addressing this issue is kind of like a three-legged stool. It's the vehicles, the fuels and the consumers. With the consumers it's more about what they are looking for or willing to purchase," Moran said.

His company's statistics show a shift in consumer spending toward more fuel-efficient vehicles. "There's been movement from the SUV area to crossover vehicles," he said.

Traditional SUVs employ truck architecture, while so-called crossovers employ car architecture. The crossovers can be more fuel efficient, in cases where they are lighter than the truck-like SUVs. "Consumers are making better choices [with regard to fuel economy]," Moran said. "I think we've seen a shift ever since [Hurricane] Katrina and with gas prices spiking."

Crossovers on the Upswing
Ford's statistics show that crossover vehicles have been the fastest growing category in the U.S. Industry-wide sales are up 18 percent in the first half of 2007. Annual sales have grown from about 500,000 in 2000 to 2.4 million in 2006. This year, sales will reach about 2.8 million and may go past the 3 million mark in 2008, the company said. At the same time, traditional SUV sales have been declining. Ford said that industry-wide sales of traditional SUVs likely will fall below 2 million units for 2007. The last time sales were that low was in 1995.

George Pipas, Ford's U.S. sales analysis manager, attributed this shift in consumer spending to various factors. It's part demographics and lifestyle needs, and part fuel prices, he said. Pipas said that baby boomers, who popularized SUVs in the '90s, are becoming empty-nesters. The utility of crossovers is what they prefer now, he said.

"This trend started long before Congress started to talk about new regulations, and even before gas prices began to increase," Pipas said. "I think higher gas prices encouraged people to think about what they really need a particular type of vehicle for, and in doing so probably accelerated a trend that was already underway."

"One thing that's possible for the future, which they've already done in Europe, is to switch from, say, a V6 gasoline engine to a four-cylinder with a turbocharger," Mike Omotoso, a senior manager at the market research firm J.D. Power and Associates says. "So you have better fuel economy but you still have the power with the turbo."

E85: Loophole or Credit System?
American manufacturers and the government have been touting E85, a fuel that is 15 percent gasoline and 85 percent ethanol, as a way to decrease dependence on fossil fuels and, specifically, foreign oil. Ethanol is made from organic material like corn or sugar cane.

Omotoso said some manufacturers are using E85 as a loophole to CAFE standards. "Manufacturers get extra credit for flex-fuel vehicles—ones that run on 85 percent ethanol, 15 percent gasoline," he said. "There's a formula where they average out the gasoline and ethanol fuel economy, so the CAFE miles-per-gallon number is actually higher than the real number. That helps offset the gas-guzzling SUV figures. Even though they make a large number of trucks, they have the flex-fuel vehicles to offset those numbers." This is how certain manufacturers get around having to pay penalties for not meeting current CAFE standards, Omotoso said.

Max Gates, regulatory affairs communications manager at Chrysler Group, said that manufacturers do accrue special credit toward CAFE standards through certain calculations of fuel consumption by flex-fuel vehicles. He argued that it's not a loophole but a credit system. "The government does a lot of incentives. A lot of times they just give cash to people, like they give to farmers to grow corn, which is made into ethanol," Gates said. "We don't get cash for building flexible-fuel vehicles. The incentive for us is a capped system of getting some credits under the CAFE rules. And frankly, we think that cap might be a little low. So we couldn't build a million flex-fuel vehicles."

Gates pointed to the fuel industry dragging its heels as one issue that is keeping E85 and flex-fuel vehicles from truly helping offset oil consumption. "There are 170,000 retail outlets for fuel in this country, and there are about 1,000 that dispense ethanol," he said. "Because the fuel is not available in this country, it isn't running on E85 anywhere near as much as it should be."

by Heather Ignall ForbesAutos.com

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Renewable Fuels Will Increase Prices to Consumers

Doesn’t the idea of renewable fuels sound great? After all, we all want to release our dependence on oil controlled by governments who are unfriendly to the civilized world. Growing it sounds like such a good idea. However before we totally buy into the renewable fuel plan, all sides need to be considered. Yes, environmental impact is important—who doesn’t want clean air and water? But cost needs to be a factor as well.

The House and Senate (at the time of this writing) have still not gotten together in committee to discuss a merging of the two different bills each passed earlier this year. So it is not too late for consumers/voters to express opinions

This posting comes to us from the Institute for Energy Research where Robert Bradley (one of our Energy Counsel Members) is President. Due to editing for brevity, please visit the Institute for Energy Research for the complete article.

In an attempt to alleviate concerns regarding energy independence, climate change, and high gasoline prices, Congress is expected to consider legislation this fall that would mandate the use of renewable fuels in the transportation and electric generating sectors. The Energy Information Administration (EIA), an independent and statistical agency in the U.S. Department of Energy, released a study in September, requested by Senator Inhofe, that analyzes both a renewable fuels standard (RFS) in the transportation sector and a renewable portfolio standard (RPS) in the electric generating sector. According to the EIA, these mandates would raise energy prices and reduce American economic output by $296 billion over two decades.

The mandates would establish a market for renewable energy credits. Companies would be required to hold credits in proportion to the amount of electricity they sell or the amount of motor transportation fuels they sell, by either producing the required level of renewable fuel or purchasing credits from other companies that generate a larger than required share. (See CARE’s September Newsletter for additional insight on the credits.)

According to the EIA, “achieving 25-percent penetration of renewable fuels in both electricity generation and motor transportation leads to higher energy prices as consumers substitute more expensive renewable fuels for less expensive fossil fuels.” Consumer energy prices rise steadily for the first 10 years of the projection, to 13 percent above expected prices. Higher delivered energy prices reduce real output for the economy, energy consumption, and, indirectly, real consumer spending for other goods and services due to lower purchasing power.

Gasoline and other petroleum products would cost more as oil refiners, blenders, and ethanol producers comply with the mandates, by producing almost 25 billion gallons of corn-based ethanol, 31 billion gallons of cellulosic ethanol, and importing 9 billion gallons of ethanol from foreign markets in 2030, 5 years after the mandates must be reached. Gasoline prices are forecast to have a 61 percent increase (in 2005 dollars).

“Higher prices contribute to a reduction in transportation demand for liquid motor fuels on an energy basis” the EIA said. According to the EIA, “increasing the use of renewable motor fuels leads to higher overall consumption of primary energy, in part because of the significant use of energy in the conversion of biomass to ethanol.” Total energy consumption is up almost 4 percent relative to the baseline in 2025, while biomass consumption is up 192 percent. As a result, the cost of biomass rises from about $30 a ton in 2005 to over $88 a ton in 2030. Approximately 9.2 bushels of the total U.S. corn production in 2025 is used to make ethanol. “As a result, less corn is available for food and feed,” according to the EIA. Corn prices increase to $6.50 per bushel in 2025, compared to an average of about $2.50 over the prior two decades before the ethanol mandates began with the Energy Policy Act of 2005.In the generation sector, electricity prices are 6 percent higher than the baseline in 2030. About 70 percent of all new generating capacity built over the next 2 decades is renewable. The mandates reduce carbon dioxide emissions. They are 14 percent lower than the baseline in 2030, but still remain higher than 2005 levels, by 14 percent.

The EIA cautions, “This analysis suggests that, to comply with mandates, it will be necessary for electricity and motor fuel producers to dramatically increase their use of technologies that play a relatively small role in today’s energy markets. …Big changes in the energy system, especially when implemented quickly, come with numerous uncertainties, the impacts of which may not be fully captured in this study. For example, compliance with the mandates would require successful development and rapid deployment of new technologies, such as biomass gasification power plants and cellulosic ethanol plants, that are not commercially available.” The EIA analysis evaluates the impact of the mandates through 2030, the current time horizon of projections in EIA’s Annual Energy Outlook. The report can be found through the EIA .

IER Distinguished Fellow Mary Hutzler provided this summary

The Biofuel Backlash

A plethora of possible postings has arrived in CARE’s in box in the last couple of weeks. Regrettably, other projects and deadlines have prevented us from making the blog a priority. Today, faced with a window of time to get to reviewing, editing, writing an opening, and posting these delicious new tidbits, we are presented with a different predicament: “Do we post them all now? Do we post one or two today and a couple more tomorrow or later in the week? Which ones should we select first? Should we arrange the postings thematically, or vary the topics?” What to do, what to do?

Because we have a couple items on biofuels are in our collection of articles awaiting posting—and the last posting was on biofuel, today, we offer you fodder for this ongoing discussion. The first has been edited for brevity—though it is still long. We have cut some of the text that we perceive will be less relevant to our audience. If you have an interest in biofuels in Europe, we encourage you to check out the full article at: Stratfor.com.

If you have wondered why biofuels have taken such prominent position in the energy security debate—especially when they seem to have such negative baggage, you will find this report looking at the agriculture sector to be insightful.

The Organization for Economic Cooperation and Development (OECD) released a scathing report Sept. 11 calling for a dramatic drawdown in the subsidies and preferential trade laws granted to biofuel producers in OECD countries. Libertarian groups on both sides of the Atlantic applauded its call for a reduction in subsidies.

The report is one of a number of efforts designed to deflate support for biofuels in the United States and Europe. Increasing numbers of groups, especially in Europe, are beginning to question the wisdom of the current move toward biofuels as a replacement, at least in part, for gasoline and diesel in vehicles.

The critics, however, are running head on into the powerful agricultural lobbies in the United States and Europe that so successfully championed the issue in the first place. These advocates say that ethanol, biodiesel and other nonpetroleum-based transportation fuels reduce pollution, help fight climate change and improve national security by reducing dependence on foreign oil. Though many policymakers find these arguments compelling, the biofuels issue would not have achieved the political momentum it has without the intense lobbying by the agricultural sector.

In fact, the fate of the current wave of biofuel mandates and the pace at which industrialized countries offer biofuels at the pumps will largely be determined by agriculture interests. The implications are as strong and lasting for developing countries as for the industrialized countries involved.

Plant-based Fuels
The term "biofuels" refers to any number of combustible liquids derived from plants that can be used to create energy. Most biofuel development is directed at use in transportation, where biofuels are envisioned as a replacement for gasoline or diesel fuel. The most prevalent sources of biofuel now are corn ethanol (predominantly in the United States), sugar ethanol (mostly from Brazil) and rapeseed oil for biodiesel in Europe. Among the other current sources are palm and soy oil and various waste products (such as cooking waste) for diesel. In the future, researchers hope to make ethanol from unused portions of agriculture produce--cellulosic ethanol from corn stalks and waste from wood processing.

The creation of biofuels produces dramatically different levels of pollution, depending on the plant used. Ethanol is the same and burns similarly regardless of its source, but the pollution and emissions associated with the specific plant's production cycle vary widely. Corn ethanol, for instance, produces 0 percent to 3 percent less greenhouse gas emissions than gasoline when the factors of planting, fertilizing and harvesting the corn are taken into consideration along with the processing and transportation of the fuel, which in the best case requires dedicated pipelines and currently requires overland transportation.

In the United States and Europe, corn currently provides the bulk of ethanol. Europe has recently adopted a stringent biofuel mandate that calls for an escalating percentage of biofuel in its transportation fuel mix.

Politics of Ethanol
The energy bill that passed the U.S. House of Representatives in August includes a call for more than 7.5 billion gallons of biofuels to be sold in the United States by 2009 and for the amount to escalate to 36 billion gallons by 2022. The catch is that most of the ethanol in 2022 will have to be from "advanced" sources, which is to say from next-generation cellulosic processes. (Europe's emerging policy has a similar clause.) The U.S. numbers will likely be scaled back in the conference committee, but some requirement to increase the use of biofuels will go forward. Once passed and signed, biofuels will be cemented in the national energy mix.

Environmentalists' support for biofuels is tied directly to their support for action on climate change. For environmentalists, imposing a cap on greenhouse gas emissions on the United States is their primary objective. They see a carbon cap as the prize, and they figure that anything done in the process of achieving that goal can be fixed later.

To achieve a carbon cap, supporters recognized that they needed not just the political backing of lawmakers from the West Coast and Northeast, but that they also needed a certain amount of political support from the middle of the country. Policymakers in Michigan, West Virginia and Colorado seemed unlikely to come on board because of the stake their states have in the automobile and coal industries. States such as Iowa, Nebraska and South Dakota, however, have no clear stake in the climate issue so those battling for a carbon cap offered billions of dollars in subsidies and a guaranteed market for corn ethanol. That was something a farm-state senator could support.

The political support for biofuels already is paying dividends in both Europe and the United States. Corn prices are now more than 40 percent higher than they were a year ago, despite a 15 percent increase in planting. The rising price of corn meant reduced acreage of wheat planting, and this has coincided with a terrible drought in Australia and a falling dollar. As a result, wheat prices have doubled in the past year, to $9 per bushel for the first time ever (more than $10 in France). These are good times for farmers, and ethanol is playing a role in it.

Brazil's Challenge
For Brazil, the existing or proposed barriers to the importation of its biofuels present a severe challenge. It invested heavily in research and development of biofuels and has perfected a system that provides a replacement for gasoline at a competitive price and with a significant reduction in greenhouse gas emissions (corn-based ethanol offers little to no greenhouse gas benefits). Brazil is moving its vehicle fleet to ethanol, which will take most of the country's output, but it has developed capacity to export ethanol as well.

Seeing its ethanol exports blocked by the United States and Europe, Brazil is learning that energy security and climate change were only a part of the reason countries looked to biofuels. Certainly, these arguments were important, but biofuel mandates would not have happened if not for the power of agriculture in both the United States and Europe.

Brazil's problem, then, is that it merely solved the problem politicians talked about--it has developed a fuel that reduces greenhouse gas emissions and comes from a place that is politically stable and friendly to both the European Union and United States. In solving the rhetorical problem without offering a political fix, it has placed U.S. environmental activists and EU politicians in a difficult position, and has not necessarily won markets. The larger problem, a problem that the OECD suggests but does not explicitly state, is that there is little interest in either the United States or Europe in staring down the agricultural interests.

Bart Mongoven is Vice President, Public Policy for Stratfor

The 2007 Energy Bill: Significance, Symbolism and Cost

After receiving the opinions of Paul Dreissen, we asked other member’s of our Energy Counsel for their thoughts. The following is what we received from Michael Economides (previously published with Human Events). What are the Senators thinking? Or, are they thinking?

On June 21 the US Senate passed an energy bill that if it becomes law it would set in motion one of the most economically destructive paths in memory. Thrown together is an unsavory mix of little impact but enormously expensive, complete with delusions of energy independence, biofuels, global warming and all the other slogans du jour of environmentalism. More to the point, and not surprising, the bill does not address at all the fundamental issue: In a modern world run on energy, with galloping China and India, with ever-controlling producing nations, where will America’s energy supply come from? The country imports now almost 70 percent of its oil and the rest of it is under constant assault.

A sample:

An increase in automobile fuel economy requirements (the Corporate Average Fuel
Economy, CAFE standard) to a fleetwide average of 35 mpg by 2020 from the
current requirements of 27.5 mpg for cars and 22.2 mpg for SUVs and small
trucks.

There is nothing wrong with better efficiency, but we went through this before. The American public voted with bigger cars, driving more and asking for more services. For example, FedEx and DHL have created a new era of deliveries and expectations. One of the things that the social engineers forget is that the personal car is a symbol of American personal freedom, what makes this country what it is. And yet they constantly want to harp on forcing us back to a European mold, forgetting that Holland can be driven across in two hours. Gasoline demand constantly increases because we drive more, and we do more with our driving. In 2004, the National Commission on Energy Policy determined that even if Congress mandated that the domestic auto fleet increase its average to the much larger fuel economy of 44 miles per gallon America’s motor fuel consumption will still increase by 3.7 million barrels per day by 2025. Even the apologists of the bill, in very flawed calculations, suggest that the bill will save 1.3 million barrels per day (about 6% of current consumption) by 2025 and manipulatively “slightly less than what we import from Saudi Arabia.” (echoes of Al-Queda?) The new CAFE standards will put an economic straightjacket on already battered US automobile manufacturers but are unlikely to change the American public’s tastes and preferences.

Requires that half of the new cars manufactured by 2015 be capable of running on
85 percent ethanol or biodiesel fuels

A requirement to produce 36 billion gallons a year of ethanol, as a substitute for gasoline, by 2022, a sevenfold increase over production in 2006. Ethanol would be made from corn and cellulosic sources such as prairie grass and wood chips.

Corn ethanol is a scam with a negative energy balance. It takes about 1.8 gallons of gasoline to produce one gallon of ethanol. More important is that corn ethanol cannot provide enough fuel to displace imported oil. In 2005, U.S. farmers produced about 11.1 billion bushels of corn. If the U.S. turned all of that corn into ethanol, it would only supply about 6 percent of America’s total annual oil needs or about 20 percent of our gasoline needs. If all 3.2 billion bushels of soybeans produced by American farmers in 2006 were converted into biodiesel, they would only yield about 4.8 billion gallons of diesel fuel, about 1.5 percent of America’s oil needs. The talk about cellulosic ethanol is tantamount to legislating that all new American children grow to be 6-ft tall. The enzyme that would convert biomass into cellulosic ethanol does not exist and nothing is expected any time soon.

Supports large-scale demonstrations that capture carbon dioxide from
coal-burning power plants and injects it into the ground.

Carbon dioxide sequestration is what the bill advocates imply. But again reality raises its ugly head. Taking just the portion of oil and gas used in combustion for transportation and power generation (the rest is used as source of materials) and adding the combustion of coal, according to EIA calculations, world carbon dioxide emissions are slated to increase from 25.55 billion metric tons in 2004 to 43.68 billion metric tons per year in 2030, a 71 percent increase. If just the incremental carbon dioxide is injected at a very good rate per well of 10,000 tons per year, there is a need for 1.8 million new wells, about the same number of wells in current operation worldwide, still active and drilled in the entire history of production of all oil and gas. At an average cost of just drilling of $2 million per well, there will be a need for $3.6 trillion, not counting infrastructure which could easily double the figure. This is about 60 times the current annual budget for well construction in the industry, estimated at $120 billion.

This is why anthropogenic global warming is not a trivial issue for the world in either the cost of energy transition to something else or in sequestering emissions. In going from idea to reality the path is lined with staggering costs.

But none of this bothers the architects of this bill, whose real significance is at best symbolic and very costly but smacks with social engineering, a yet another failed attempt throughout the last 150 years in Europe and the United States. We should all be stewards of the environment (the US is one of the cleanest nations on earth), but radical environmentalism, even when it wears a tie, has replaced older–isms. It is more of a nuisance, intended by mostly upper middle class and wealthy westerners to shock and be relevant, a more veiled attempt than Paris Hilton’s antics. Of course, try as they may, the US economy is enormously resilient and will likely shrug this nonsense off.

Although it may have been attributed to others, the recent bill has about the same depth as what Georges Clemenceau, France’s World War I prime minister said: “If my son is not a communist by the age of 20, I will disown him and if by the time he is 40 he is still a communist I will disown him.” Many environmentalists are way past 40.

Prof. Michael J. Economides, University of Houston and also Editor-in-Chief Energy TribuneHouston, TX

What will the new Energy Bill Really Cost?

Would you like to know the truth about climate change consensus, prevention and price tags? Read on! Paul Driessen, a member of CARE’s Energy Counsel, share’s his insights here. Agree? Disagree? Give us your thoughts!

The Sarbanes-Oxley corporate ethics law and 2006 elections supposedly inaugurated a new congressional commitment to ethics, transparency, accountability and consumer protection. Something has been lost in translation.

The “energy” bill now wending its way through the legislative labyrinth dedicates $6 billion to goodies like more energy-efficient snowmobiles for ski resorts, outlaws “price gouging” at the gas pump, and sets new mileage standards that will likely make cars and light trucks less safe and cost more lives (Check out CARE's July Newsletter for more information on this item). It also provides subsidies and mandates for politically correct “alternative” energy projects that probably wouldn’t survive without such aid.

But the bill doesn’t increase the nation’s energy supply by one drop of gasoline or one watt of electricity, says Congressman Jim McCrery (R-LA). It lifts no bans on oil and gas drilling, and does nothing to ease regulatory impediments to pipelines, transmission lines, refineries, or coal and nuclear generating plants. The only power it generates is expanded bureaucratic power over energy and economic decisions.

Its ethanol mandates will result in more land converted from wildlife habitat to corn fields, and in greater use of water, fertilizer, pesticides, and tractor and truck fuel. Corn prices will continue to rise, along with the cost of meat, candy, soft drinks and other products that use corn for feed or corn syrup as a sweetener. The biofuel itself will cost more, but provide noticeably less mileage per tank.

Even more problematic, is the rush to “do something” about global warming. Assorted climate change bills propose to slash US carbon dioxide emissions by varying amounts, under different timetables, to prevent speculative disasters conjured up by computer models that do not reflect complex atmospheric processes and cannot predict temperature or rainfall one year in the future, much less 40 or 90.

The worst of the lot (the Sanders-Boxer bills) would compel the United States to cut CO2 emissions to 15% below 2006 levels by 2020, and 83% below 2006 levels by 2050. That’s far more than even the Kyoto Protocol contemplates.

Such mandates might help special interests – which are lining up to proclaim “consensus” on climate change and claim a share of any taxpayer-funded entitlements. But they would severely impact US energy production, transportation, agriculture, manufacturing, employment and families.

An MIT analysis concludes that Sanders-Boxer would cost the US up to $403 billion in foregone Gross Domestic Product, corresponding to a loss of some 4.5 million jobs and an impact of $5370 per family of four. The Sanders-Boxer, Feinstein and Waxman bills would result in carbon offset allowances priced at $210 per ton of CO2, adding a truly price-gouging $95 to the cost of a barrel of oil, $2 to a gallon of gasoline, $143 to a ton of coal, and 50% to the price of electricity, by 2020.

Domestic production of goods and services would plummet, and families with low incomes or living in regions with high heating or air-conditioning needs would be disproportionately affected, as they would have to spend a growing portion of their incomes on energy, food and consumer products.

MIT’s evaluation presumes developing countries would match our emission cutbacks. It’s more likely that they would prefer to reap the benefits of more energy at lower prices, to fuel economies, create jobs and improve living standards that lag far behind those of wealthy Western countries. That means the impacts on US workers and consumers could be much worse than MIT anticipates.

The US Energy Information Administration calculated that Kyoto mandates (CO2 emission reductions to 5% below 1990 levels) could cost up to 2.5 million jobs and reduce our GDP by up to $525 billion annually – equivalent to a tax of $7,000 on every family of four.

Wharton’s Business School of Economics determined that Kyoto would cost 2.3% of America’s GDP. With a $12 trillion GDP in 2006, that translates into $275 billion a year or $3700 per family.

Management Information Services concluded that Kyoto could eliminate 1.3 million black and Hispanic jobs, force nearly 100,000 minority businesses to close, and cause average minority family incomes to plunge by more than $2,000 a year. States with large minority populations would lose $10-40 billion a year in economic output, and over $2 billion annually in tax revenues.

At these prices, Congress should be 100% certain about alleged climate change cataclysms, before enacting any such laws. But the case for immediate drastic action is getting progressively weaker, and none of these measures would bring any detectable environmental benefits.

In fact, Congress is telling American families it is prepared to impose enormous costs to achieve minuscule reductions in global CO2 emissions and avert speculative impacts 90 years from now – on the assumption that carbon dioxide causes climate change, and any change will be disastrous.

The Kyoto Protocol, if adhered to by every signatory nation, would prevent a mere 0.2 degrees F of warming by 2050. To stabilize atmospheric CO2 and prevent theoretical climate catastrophe, we would need 30 such treaties, each one more restrictive and expensive than the last. The various congressional bills would accomplish far less than that.

Moreover, increasing numbers of scientists doubt that carbon dioxide is the culprit. New studies suggest that there has been no rise in average global atmospheric temperatures since 1998, despite a 4% increase in CO2. Ice core and other data indicate that, over the past 650,000 years, temperatures usually rose first and CO2 levels increased several centuries later.

Timothy Patterson, Henrik Svensmark and other climate scientists have found growing evidence that our sun is the dominant cause of climate change. As its energy output varies, so does the solar wind that determines how many galactic cosmic rays reach the Earth.

More solar energy warms Earth directly and generates stronger solar winds, deflecting cosmic rays, reducing cloud cover and warming us still more. Less solar energy results in reduced solar wind, more cosmic rays and thus more clouds – further cooling the planet.

Solar scientists now predict that, by 2020, the sun will begin its weakest cycle in two centuries. That could bring on global cooling that would harm agriculture in northern latitudes, raise heating bills, and make the clamor about manmade global warming look like so much wasted hot air.

Will Rogers once said, every time Congress makes a joke it’s a law, and every time it makes a law it’s a joke. The energy and climate bills are perfect examples.

Congress often exempts itself from ethics, accountability and price-gouging laws. The citizens are rarely so fortunate.



Paul Driessen, Senior Policy Advisor for the Committee For A Constructive Tomorrow and Center for the Defense of Free Enterprise, and author of Eco-Imperialism: Green power ∙ Black death.