Jason Barton

Professional Information and Energy News

Archive for the ‘The Economy’ Category

Fracking in Colorado

with 2 comments

Ugh, this is such a tough issue.

On one hand, there are substantial benefits from the oil and gas brought out by this process, as well as the jobs and revenues that come with them. On the other, we need the long term vision that will protect human and environmental health and the discipline to ensure both of them.

Particularly in places like Weld County, which is Colorado’s biggest agricultural producer and home to many proposed and existing fracking sites, we see the tangible positives and negatives of fracking, and are hearing from citizens who fall on both the pro- and anti-fracking sides of the debate. In agricultural communities the health of soil and water is important not just for the immediate implications to human health, but also for the long term implications for the health and safety of the food we grow, and the livelihoods of the people who depend on selling that food.

I’ve said on this site before that it is the job of government to internalize the externalities, to create a regulatory framework that ensures industry activities do not have negative impacts on the communities where they operate. This framework must include proactive measures motivating companies to guard against problems, as well as reactive measures that force organizations to pay those external costs of clean up and damages if there are  problems.

The important issue raised in the article below is that companies have worked to avoid making the payments even when they are found to be at fault, causing local citizens to question the statewide framework and seek to implement policies on local levels.

The upsides are that Colorado citizens are learning the details of these issues, making our voices heard from different perspectives, and forcing government and corporations to listen and take action. Keep at it, y’all.

By Bruce Finley
The Denver Post

Denver metro cities digging in before oil and gas drills do

COMMERCE CITY — Even in this bastion of industry that hosts a refinery, residents are imploring their elected leaders to protect them from oil and gas drilling planned within city limits.

“This is where we live, where we made our investments of our lives. It’s not about money,” Kristi Douglas said Thursday during a working-group forum, the latest of dozens of city and county meetings in Front Range communities.

[…]

Colorado’s State Land Board hit the brakes on a controversial metro-Denver drilling project after learning that ConocoPhillips is embroiled in a lawsuit for failing to pay the state $152 million for cleanup of leaky underground gas tanks.

[…]

“The state has the experience and the infrastructure to effectively and responsibly regulate oil and gas development,” Colorado Department of Natural Resources spokesman Todd Hartman said. “A healthy industry is important to our state’s economy, and a mosaic of regulatory approaches across cities and counties is not conducive to clear and predictable rules that mark efficient and effective government.”

[…]

But the board delayed a decision after it learned another state agency is suing Conoco in a dispute over past cleanups of contamination at 354 sites of leaking underground gas tanks.
[…]
“We need to get the state General Assembly involved. We need to get some things, like setbacks, addressed,” Benson said. “Yes, we welcome industry here. But you’ve got to protect the health and safety of your people.”
Read the complete article here.

US Ends Tariff on Imported Ethanol

without comments

With surprisingly little fanfare, the US has ended the $0.54 per gallon tariff on imported ethanol. This comes at the same time that Congress also allowed the $0.45 per gallon of ethanol tax credit for blenders to expire, potentially opening the door to much more US importation of Brazilian ethanol, as well as cooperation between the two countries on more advanced biofuels. Brazil was the leading producer of renewable fuel until 2005 when US production of ethanol from corn surpassed production of Brazil’s sugarcane ethanol.

The article below is clearly biased, quoting two top officials from UNICA, Brazil’s powerful sugarcane industry association, without presenting views from American officials who have been opposing these measures as they work to protect domestic energy production and agricultural markets.

That said, decreasing government intervention has always been favored by this humble author, and the elimination of these barriers to trade should make for the more efficient functioning of energy and agricultural markets.

Cooperation between the two largest producers of renewable fuels could also lead to faster development of fuels from non-food crop residues such as corn stover, sugarcane bagasse, and other cellulosic feedstocks.

Congressional Recess Means the End of Three Decades of US Tariffs on Imported Ethanol

Time for the world’s top two ethanol producers, the United States and Brazil, to lead a global effort for increased production and free, unobstructed trade for biofuels, says Brazilian Sugarcane Industry Association.

SAO PAULO, Dec. 23, 2011 /PRNewswire/ — For the first time in more than three decades of generous US government subsidies for the domestic ethanol industry, coupled with a steep tariff on imports, the United States market will be open to imported ethanol as of January 1st, 2012, without protectionist measures. The adjournment of the 112th Congress means both the US$0,54 per gallon tax on imported ethanol and a corresponding tax credit of US$0,45 per gallon for blenders, the VEETC (Volumetric Ethanol Excise Tax Credit), will expire as expected on December 31st.

Continue reading this story here.

Obama and the New Brazil

without comments

After a first visit to Brazil earlier in the 20th Century, a foreign diplomat boldly stated that “Brazil is the country of the future!” Self-deprecating Brazilians quickly added, “And it always will be.”

Based on my four years of living in Brazil and many return visits in the four years since, I don’t think Brazilians are saying this any longer, nor are the popular media or President Obama.

It has been fascinating to watch the changes in Brazil since my first arrival shortly before Lula’s election in 2002. I feel very fortunate to have earned the job that first brought me there, and to have stayed in close contact with the amazing colleagues and friends with whom I worked and laughed during the past decade.

Mr. Obama, Meet the New Brazil

By JULIA SWEIG and MATIAS SPEKTOR
Published: March 18, 2011

When Barack Obama lands in Brazil this weekend, he will find a country transformed. In little more than a decade, some 30 million people have been lifted out of poverty and the country has risen to seventh place in the world economy.

Change at home has revolutionized policies abroad. Brazil has woken up to the 10 states along its borders, becoming the eminent power and driver of regional integration in South America. It has set out to develop closer ties simultaneously with Israel, Syria and Iran.

[…]

With most of the Amazon within its borders, the world’s 10th largest oil stores, and nearly a fifth of the world’s fresh water, Brazil is an environmental power, an energy power, and guarantor of global food security.

Read the entire article here.

More Advancements in Cellulosic Biofuels

without comments

Government investments in cellulosic biofuels may be paying off.

Not only do these advances move us closer to using grasses and other crops that require less water and fertilizer and compete less with food, it also moves us closer to the advanced biofuels that, unlike ethanol, can be used as drop in replacements for gasoline (read more here).

We need to combine these advancements with further efforts in conservation and efficiency, or we risk converting so much of the Earth’s biomass to serving human uses that we will decrease biodiversity to the extent that we risk further ecological collapse.

This doesn’t just diminish our ability to go camping in pretty places, it also threatens our supply of essential resources such as clean, healthy water and soil.  I like to go camping, but I like eating and drinking healthy food and water even more. They’re really important, and clearing diverse forests and prairies so we can plant crops such as grasses, whether for fuel, food, fiber, or feed, poses risks to water and soil.

Energy Department Announces New Advance in Biofuel Technology

Highlights Opportunity to Reduce America’s Oil Dependence and Create Jobs in Rural America

March 07, 2011

U.S. Energy Secretary Steven Chu today congratulated a team of researchers at the Department’s BioEnergy Science Center who have achieved yet another advance in the drive toward next generation biofuels: using bacteria to convert plant matter directly into isobutanol, which can be burned in regular car engines with a heat value higher than ethanol and similar to gasoline. This research is part of a broad portfolio of work the Department is doing to reduce America’s dependence on foreign oil and create new economic opportunities for rural America.

[…]

Secretary Chu added that: “America’s oil dependence—which leaves hardworking families at the mercy of global oil markets—won’t be solved overnight. But the remarkable advance of science and biotechnology in the past decade puts us on the precipice of a revolution in biofuels. In fact, biotechnologies, and the biological sciences that provide the underlying foundation, are some of the most rapidly developing areas in science and technology today – and the United States is leading the way. In the coming years, we can expect dramatic breakthroughs that will allow us to produce the clean energy we need right here at home. We need to act aggressively to seize this opportunity and win the future.”

Read the entire article here.

Obama Pursues a Moderate, Pragmatic Approach During Energy Woes

without comments

Of course times are tough. I tend to drive my car until the gas light comes on so I have to fill up less often, but then kick myself for driving so much as I watch the cost climb past $40 a tank. These are minor pains compared to the ones some folks are feeling, but even this light irritation is enough to make me want a fast change to whatever it is we’re doing, or not doing, in terms of making energy more affordable.

Patience is key. Jumping in to more drilling without taking the time to make sure it’s safe and efficient could cause as many problems, and increase total costs, as much as launching scads of new and often inefficient wind or solar projects.

Energy is expensive. Our government has helped it to be artificially cheap since early in the last century. This has lead to great advantages in our country, such as the great access most people in the U.S. have to everyday conveniences such as lights, heat, cars, buses, and airplanes. In most countries these aren’t nearly as accessible to people on, say, the bottom half of the socio-economic strata.

As Obama weathers the criticism from the right that we need to expand our use of fossil fuels, and from the left that more needs to be done to move us to alternative forms of energy, I hope that he and Secretary Chu continue their pragmatic approach, leaving the door open to more fossil fuels so long as they are safe, while also encouraging innovation and investment in alternatives.

More fence sitting, I know, but I believe this middle path is the best one.*

Obama Faces Bipartisan Criticism on Energy Policies

By Jim Angle

Published March 05, 2011

Sen. Mary Landrieu, D-La. and Senate Republican leader Mitch McConnell are questioning the Obama administration's energy policies and arguing more should be done to develop domestic sources of energy. (AP)

Sen. Mary Landrieu, D-La. and Senate Republican leader Mitch McConnell are questioning the Obama administration’s energy policies and arguing more should be done to develop domestic sources of energy. (AP)

With energy prices rising in part because of turmoil in the Middle East, lawmakers from both parties are questioning the Obama administration’s energy policies and arguing more should be done to develop domestic sources of energy.

“I don’t think the president’s position on oil and gas is as strong as it should be,” said Democratic Sen. Mary Landrieu of Louisiana, where the oil industry plays a large role in the local economy. “Oil and gas is an important industry in the United States today and it will be in the next decades.”

Many in the administration emphasize alternative forms of energy and some, including the president, have openly talked of the need for higher prices on oil and coal to make alternatives such as wind and solar more price-competitive.

Read the entire article here.

* I hope my post is fair and balanced. Not like the Fox version, but truly fair and truly balanced.

Petroleum’s Centrality, Volatility, Damage World Economies

without comments

Processes such as innovation and competition are vital to enhancing world economies, but both of these are stifled in the world of petroleum. Either a place has oil, or it doesn’t, so there’s little place for either one.

True, there can be innovation in terms of the technology used to extract oil from hard to reach places such as the tar sands of Alberta or the floor of the Gulf of Mexico. But this is nothing like the innovation that is taking place in the competition to produce technologies that provide domestic, renewable, cost effective energy.

The article below highlights the pitfalls of our economies’ current dependence on an energy resource that is so subject to the swings we saw in 2008, when oil went from over $140 per barrel in August to only $40 in December. Petroleum’s centrality, its concentration in few places, such as North Africa and the Middle East, are further problems that should continue motivating us to find ways to reduce this reliance on a non-renewable resource.

Oil and the economy

The 2011 oil shock

More of a threat to the world economy than investors seem to think

Mar 3rd 2011 | From The Economist print edition

THE price of oil has had an unnerving ability to blow up the world economy, and the Middle East has often provided the spark. The Arab oil embargo of 1973, the Iranian revolution in 1978-79 and Saddam Hussein’s invasion of Kuwait in 1990 are all painful reminders of how the region’s combustible mix of geopolitics and geology can wreak havoc. With protests cascading across Arabia, is the world in for another oil shock?

[…]

Even without a disruption to supply, prices are under pressure from a second source: the gradual dwindling of spare capacity. With the world economy growing strongly, oil demand is far outpacing increases in readily available supply. So any jitters from the Middle East will accelerate and exaggerate a price rise that was already on the way.

[…]

By contrast, the biggest risk in the emerging world is inaction. Dearer oil will stoke inflation, especially through higher food prices—and food still accounts for a large part of people’s spending in countries like China, Brazil and India. True, central banks have been raising interest rates, but they have tended to be tardy. Monetary conditions are still too loose, and inflation expectations have risen.

Read the entire article here.

A Gradual Shift to Renewable Energy is the Best Path

with 3 comments

Lomborg is hitting the nail on the head in this article, as is Gürcan Gülen, the very intelligent researcher with a hilarious name.

Most renewable energy technologies are more expensive and less efficient than traditional fossil fuels. Attempting to roll out vast amounts of solar and wind power before they are competitive will increase costs to users, which will hurt our economy.

In the final paragraph he also makes a point that should have come much earlier: the best way to increase jobs and make these renewable technologies competitive is to invest in research and development.

Clean, domestic, renewable energy is the goal towards which we should strive, but jumping in with both feet before that technology is ready would be foolish. Those early adopters are helping to make these resources and technologies for affordable for all, so they should be applauded. But they are the people and the firms such as Google that can afford to make these investments even if they are not entirely economically efficient. Forcing everyday people across the country in to those forms of energy will cost taxpayer dollars and will increase utility bills. These are not good for America.

Patience and prudence are essential as we strive towards this important goal.

Green Smoke Screen

Supporters of “green energy” like to say it will create more jobs. They’re wrong.

By Bjørn LomborgPosted Sunday, Feb. 13, 2011, at 6:46 AM ET

Phil Tussing installing  Phil Tussing installs photovoltaic solar panels. Click image to epxand.Political rhetoric has shifted away from the need to respond to the “generational challenge” of climate change. Investment in alternative energy technologies like solar and wind is no longer peddled on environmental grounds. Instead, we are being told of the purported economic payoffs—above all, the promise of so-called “green jobs.” Unfortunately, that does not measure up to economic reality.

The Copenhagen Consensus Center asked Gürcan Gülen, a senior energy economist at the Bureau for Economic Geology at the University of Texas at Austin, to assess the state of the science in defining, measuring, and predicting the creation of green jobs. Gülen concluded that job creation “cannot be defended as another benefit” of well-meaning green policies. In fact, the number of jobs that these policies create is likely to be offset—or worse—by the number of jobs that they destroy.

Read the entire article here.

Sec Chu Slashes Budget, Increases Energy Tech Investments

without comments

Obama’s efforts to appease Republican calls for decreased government spending are reaching in to the Department of Energy. That’s a good thing. Apparently Secretary Chu is striving towards all sorts of increased efficiency.

In addition to the $600M in cuts, however, he’s also seeking $8B in clean energy technology research. As I pointed out in an earlier post, as long as those investments are structured to provide returns to taxpayers and to the country in general, that’s positive. If those benefits are only extended to government or firms that do not pass them along to tax payers and energy users, then they are just another boondoggle.

Energy Department to seek $600 million in budget cuts

By Steven Mufson

Washington Post Staff Writer
Friday, February 11, 2011; 11:37 PM

The Obama administration will call for deep cuts in the headquarters staff of the Energy Department next week but will seek $8 billion in investments in the research, development and deployment of what it calls “clean energy technology programs.”

Energy Secretary Steven Chu posted a note to “colleagues” on the department’s blog site Friday listing about $600 million in cuts, saying that the department will take “responsible steps to cut wasteful spending and reduce expenses.”

Read the entire article here.

Written by Jason

February 12th, 2011 at 11:44 am

Congressional Republicans Move in Two Directions at Once

without comments

Neither of these effort is close to certain, but we are seeing one prominent Senator, Dick Lugar (R-IN), possibly moving towards federal renewable energy standards, while another group is seeking to gut the President’s ability to implement the same.

These aren’t necessarily contradictory, as the efforts could lead to similar results with less power held in the White House.

Sen. Lugar is drafting a bill that could include standards increasing vehicle efficiency, renewable electricity, waste-to-energy, and other measures throughout our energy matrix.

Meanwhile, in the article from Politico below, congressional Republicans would greatly reduce the President’s ability to mandate clean energy or climate change measures through the White House or the EPA. I like the decentralization of power they are working towards, but do see some value in letting the President use those tools that have traditionally been at his disposal.

It will be interesting to see if either or both efforts is successful, and if Obama attempts to fight it by replacing Carol Browner, or concedes the point and dissolves her office.

It’s still a fascinating time to be alive.

Sen. Lugar Prepping Bill That Could Include ‘Clean Energy’ Standard

By KATIE HOWELL AND JEAN CHEMNICK of Greenwire
Published: February 11, 2011

Republican Sen. Richard Lugar is crafting broad energy legislation that could include a “clean energy” mandate similar to the one President Obama called for in his State of the Union address.

The Indiana Republican this week said his bill, which is still “weeks away,” could include a clean energy standard as well as “energy efficiency in many, many facets.”

Read this entire article here.

CR would slash EPA, White House energy office

By ROBIN BRAVENDER & PATRICK REIS & DAN BERMAN | 2/11/11 8:46 PM EST

House Republicans threw down the gauntlet at the Obama administration’s energy and environmental agenda Friday night, proposing to defund the White House energy adviser’s office and block EPA from regulating greenhouse gas emissions.

In addition to slashing the Environmental Protection Agency’s budget by $3 billion – nearly twice as much as they originally proposed – GOP lawmakers included language in the continuing resolution to strip the agency of its ability to implement climate change rules.

Read this entire article here.

Energy and Climate Change Discussions in Congress

without comments

As Obama said during his campaign, and as this article reiterates, it’s preferable for Congress to take some sort of stand on a comprehensive energy policy. But if they’re not going to do it, the White House should use it’s tools to make something happen.

A buddy and I were just talking about this same set of policy decisions, drawing a parallel with how the last few weeks have impacted doing business in Egypt. Stick with me for a minute.

Corporate leaders around the world are eager to see who’s going to be in charge of Egypt, Africa’s largest economy, and an important leader in the Arab world. Of course this transition can’t be rushed, but investment will be withheld until there’s some certainty.

Good, bad, or indifferent, businesses will formulate their strategy based in large part on the policy environment in this important country.

Similarly, companies in the U.S. will make decisions regarding manufacturing practices, their vehicle fleets and transportation, and other, energy-intensive aspects of their business based in part on the policies about which our Congress continues to debate, without substantive action. Another article from the recent issue of The Economist discusses the influence of policy on energy prices as well as the trouble with policy uncertainty.

How many U.S. presidents, of both parties, have discussed the need for a comprehensive federal energy policy? I’m too tired to find the exact number, but it’s at least two. Thankfully, the article below is well researched and clearly delineates the desire on the part of several levels of government, including the present administration and the last one, as well as the call from business leaders to provide a decision on energy policy.

Plenty has already been written on this site about the need for balancing the objective of domestic, renewable energy, with economic realities, so rather than than pontificate about what SHOULD be done, I’ll just say that SOMETHING has to be done.

Congress, I know you’re busy, but this is important. If it’s only votes you’re after, figure out a way to win votes by making a decision. Dithering rarely wins the hearts and minds of voters.

Good, bad, or indifferent, whether you’re going to continue with the status quo by favoring imported fossil fuels; decide this is not a matter for the federal government and tell states they should formulate their policies independently; forge ahead with a more progressive policy that encourages research, development, and gradual implementation of domestic energy resources; or do something entirely different, please, just do something.

Grilling Lisa Jackson is a very small step. Take more steps. Soon.

Heated but hollow

Congress embarks on a rhetorical debate about greenhouse gases

Feb 10th 2011 | WASHINGTON, DC | From The Economist print edition

 Grilling Ms Jackson

WHILE campaigning to become chairman of the Energy and Commerce Committee of the House of Representatives, Fred Upton, a Republican from Michigan, vowed that he would grill Lisa Jackson, the head of the Environmental Protection Agency (EPA), in front of his committee so often that she would need her own parking space on Capitol Hill. On February 9th Ms Jackson submitted to her first interrogation, about one of the Republican Party’s pet peeves: the EPA’s plan to restrict emissions of greenhouse gases from cars and factories by decree.

That plan has been a long time in the making. During the administration of George Bush junior several states, frustrated by the administration’s refusal to address global warming, sued the EPA. They argued that it was required to use its powers under the Clean Air Act, a law from the 1960s aimed first at smog and later acid rain, to declare carbon dioxide a threat to the environment and public health and regulate it accordingly. The case eventually made its way to the Supreme Court, which decided in 2007 that the EPA did indeed have the authority to do this. But the Bush administration, which maintained that restrictions on emissions would raise the price of energy and so hurt the economy while doing little to help the climate, managed to prevaricate for almost two years before passing the buck to Barack Obama and Ms Jackson.

Read the entire article here.