EPA crackdown on mountaintop coal mining criticized as contradictory

Coal industry supporters protest Robert F. Kennedy Jr.’s call for an end to mountaintop mining at a rally in Charleston, W.Va. (Bob Bird/associated Press)

In most cases, the law requires that companies rebuild the mountain to its original shape. But leftover rubble is usually left in nearby valleys. There, scientists say, rainwater seeps over rocks that had previously been far underground. That can release trace amounts of salt and toxic metals, which can kill life in streams and cause health problems for people who drink the water.

This practice was deemed legal: From 2000 to 2008, federal and state authorities gave permission for 511 valley fills in West Virginia, according to the Government Accountability Office. Put back to back, the GAO estimated, it was the equivalent of filling a single valley at least 176 miles long.

But Obama’s EPA signaled a new attitude early on by notifying the U.S. Army Corps of Engineers — which issues permits to these mines — of its concerns about a mine in West Virginia. The 175 similar sites it has since scrutinized, including new applications, are spread across West Virginia, Kentucky, Tennessee, Virginia, Pennsylvania and Ohio.

Clarity debated

At the EPA, officials say they’re not out to stamp out mountaintop mining altogether — this month they approved a West Virginia mine permit after the company promised changes to reduce its effect on streams by nearly 50 percent.

But to many environmentalists and coal-industry leaders, the EPA’s actions have seemed erratic and uncertain. It has criticized some mines and approved others, both sides say, without drawing a clear line between good and bad. Activists on both sides say the agency hasn’t always been clear about what criteria it is using to make the distinction — making it hard to guess what mines will make the cut in the future.

 EPA official Peter Silva said there was no problem with the clarity of the EPA’s message.

“The notion of ‘clarity’ invoked by some West Virginia officials and industry representatives has too often meant letting coal companies do as they please, with little or no consideration for the harmful impacts on Americans living in coal country,” Silva said. EPA officials declined to comment on the record beyond this statement.

Adding to the confusion: The Interior Department rejected a Bush-era rule considered friendly to mines, then said it wouldn’t have a replacement ready for more than a year. And a Corps of Engineers official rejected an EPA request to revisit a permit given to a particularly large mine, leading the EPA to threaten a first-of-its-kind environmental veto.

“We really don’t know where this is going,” said Jason Bostic of the West Virginia Coal Association. He said his organization has passed the message to miners that the agency might hamstring an industry that is still crucial here, though mountaintop mining only accounts for about 10 percent of U.S. coal production. “If there’s going to be a change to EPA’s attitude, everybody’s got to work together.”

On the other side, environmentalist Mike Roselle said the EPA’s actions were reason to redouble a campaign of civil disobedience. Roselle, a veteran of campaigns against logging in the Northwest, has imported the same tactics and even some of the same people here. In the past year, he said, members of his Climate Ground Zero group have been arrested 150 times after sitting in trees on mine sites or chaining themselves to company equipment.

“We know for a fact that, when we shut down a mine, that somebody in the White House is aware of it,” he said. Mine companies have said the practice is dangerous for both workers and protesters.

What’s passed between the two sides has been mild, at least in a state where miners and mine companies used to shoot it out with rifles. But there have been flash points: At a public hearing in the fall, environmentalists say they were shouted down. At a march last year, a woman in a reflective-tape shirt stepped past the troopers standing guard and slapped local activist Julia Bonds. “They don’t seem to understand the difference between nonviolence and violence,” Bonds said.

At the debate last Thursday, with an unusually high police presence, neither side did anything worse than laugh at the other’s speaker. But about an hour away, at a Massey Energy mine, sirens were in the woods.

Three activists had climbed into trees, Roselle said, and Massey security guards were using loud noises to stop them from sleeping and get them to come down.

On Wednesday, Roselle said a tree-sitter had descended because of gear that had become wet. The other two remained. He said he was pleased that the protest had caused headaches for Massey and the West Virginia government. “It absolutely worked,” he said.

DAVOS-Shale gas is U.S. energy “game changer” -BP CEO

By Gerard Wynn and Ben Hirschler

DAVOS, Switzerland, Jan 28 (Reuters) – New technologies to extract gas from shale rock have altered the U.S. energy outlook for the next 100 years, Tony Hayward, chief executive of BP (BP.L), said on Thursday.

Energy chiefs speaking at the World Economic Forum differed about the prospects for future oil supplies — with Iraq placed to account for up to 10 percent of that — but agreed new “unconventional gas” would be a huge fillip.

Unconventional gas includes natural gas extracted from shale and methane reserves in coal mines, which together are set to play a huge role in satisfying rising global energy demand.

“(It’s) a complete game-changer in the U.S. It probably transforms the U.S. energy outlook for the next 100 years,” said Hayward.

Peter Voser, chief executive of Royal Dutch Shell (RDSa.L), said such new reserves were “global and necessary”.

IRAQ OIL

BP’s Hayward also expected Iraq to play a major role in filling energy demand.

“We are cautiously optimistic about the potential that Iraq can play in providing a new source of supply to global oil markets,” he said.

“The reality is, absent any unforeseen political events … the resources there are relatively easy to bring on-stream and there is no reason to believe that Iraq can’t be producing 10 million barrels per day by 2020 or so.”

That would require massive investment, however, Voser cautioned.

“According to official estimates, we will need $27 trillion to get to the point Tony described,” he said. “This money needs to be earned … Iraq can bring some stability (to markets) but it needs to be developed and the money needs to be earned, so we can actually finance these $27 trillion over the next 20 years.”

Thierry Desmarest, chief executive of French group Total (TOTF.PA), agreed Iraq would play a key role but he too said investments in the country needed to deliver an adequate return.

“We have seen a lot of excitement in the industry on these projects. We are a bit less enthusiastic — our priority is to bring returns to shareholders in line with their expectations,” Desmarest said.

Hayward told Reuters he expected oil to trade within a range of $60 to $80 per barrel through the remainder of 2010.

“I think that OPEC have done a very good job in balancing the market — demand for oil has fallen 2 million barrels per day since 2007, they’ve taken around 3 million bpd off the market, they’ve brought supply and demand back into balance,” he said.

Hayward felt that long-term declining oil product demand in developed countries would be offset by emerging economies.

“None of us will sell more gasoline than we sold in 2007 (to developed markets). That’s, however, being offset by very strong … markets of the East and particularly China (where) last year 13 million cars were sold.”

American Energy Alliance Newsletter

Dorgan Convinces Reporter that “Most Areas of the OCS” Were Open to Exploration “A Year Ago” – Notwithstanding the De Facto Ban that Remains Thanks to Mustang Sally. NY Times/E&E News (1/22) reports, “Energy and Natural Resources Chairman Jeff Bingaman (D-N.M.) still wants his committee’s bill to be paired with a cap-and-trade system. But Dorgan has pushed for that legislation to be passed on its own, without the cap-and-trade plans being written in other committees. “It will move us in the direction of a lower-carbon future, ” Dorgan said. He added that most areas of the outer continental shelf were opened to drilling a year ago. His bill would open one of the last places that is still off limits. “Offshore drilling is a carrot, ” Dorgan said. “It’s a carrot that’s already been consumed.” But Sen. Bill Nelson (D-Fla.) is likely to filibuster any effort to expand drilling off the shores of his home state. Without an emissions cap, liberal Democrats are even less likely to try to help override his objections. “Enviros would revolt and could easily peel off enough liberal senators to keep them from getting 60 votes,” said a House Democratic leadership aide, “at least in the short term.”

Speaking of King Bolo: Denver Post Looks Back over “Controversial” Year of Service for Salazar; Sally Remains Defiant, Though: “I Have No Apologies.” Denver Post (1/24) reports, “Salazar’s fight with oil and gas drillers has been both open and angry. A recent editorial in the Oil and Gas Journal charged Salazar “I only half-heartedly joke with those in industry that, during the prior administration, their names were chiseled above the chairs outside the office of the Assistant Secretary for Lands and Minerals,” wrote Wyoming Gov. Dave Freudenthal, a Democrat, to Salazar this month, criticizing recent changes to oil and gas leasing policy. “I fear that we are merely swapping the names above those same chairs to environmental interests, giving them a stranglehold on an already cumbersome process,” Freudenthal wrote. In his spacious Washington, D.C., office, a bust of Teddy Roosevelt on a table, Salazar said “I have no apologies to anybody.

Coalition of Multinational Companies, Who Do Their Work in the Third-World, and Thus Stand to Benefit Handsomely From U.S. Cap-and-Raid, Dump Millions Into New TV Ads. E&E News (1/22, subs. req’d) reports, “A coalition of about 150 companies today announced the second phase of a $1 million ad campaign to push for congressional passage of a climate and energy bill. The 30-second television spot will start running this weekend in Washington and will continue through President Obama’s State of the Union address Wednesday. We Can Lead, the group behind the ad, includes companies such as Exelon Corp., Entergy Corp., Constellation Energy Group Inc. and eBay Inc. “We need to pass comprehensive energy and climate legislation this year,” states the ad before showing business officials calling for the creation of clean energy jobs in their states. The ad closes with, “We need to make America more energy independent and put America back in control. The U.S. House has acted. Now, it ‘s the Senate’s turn. The Senate needs to act. To create 1.7 million new jobs. It just makes sense.”

Like Peas and Carrots: Kerfuffle Between Coal Guys and Gas Guys Obscures A Couple Simple Facts: Gas Can Be Produced from Coalbeds, and Coal Can Be Used to Make Gas. Reuters (1/22) reports, “With the advent of shale plays in gas, a lot of property these coal companies own could all of a sudden be potential sites for gas wells,” said Matt Preston, coal analyst for Wood Mackenzie. The hot new Marcellus shale play in West Virginia, Pennsylvania and New York spans the heart of historic coal country and is one target of coal company interest. “We have had conversations with three significantly sized companies,” said Bobby Tudor, CEO of energy investment bank Tudor, Pickering, Holt & Co. Other coal companies view gas as a future asset, but not gas produced from wells. Peabody Energy, the biggest U.S. coal company, has invested in two high technology projects aimed at converting coal into gas. “Coal to gas remains a long-term strategic focus,” Peabody spokesman Vic Svec said.

California Might Not Get Much of Its Oil from Canada, But Analysts Starting to Wake Up to the Fact that California’s LCFS Is a Howitzer Pointed Directly At Alberta. Calgary Herald (1/23) reports, “Arnold and governors in 11 other states are bent on bringing in a low-carbon fuel standard (LCFS) for vehicles — a solution more simplistic than the script for Commando. Low-carbon fuel legislation will do nothing to prevent global warming and will only jeopardize America’s fuel security, according to Shantel Beach, a researcher with the Washington, D.C.,-based Council on Hemispheric Affairs (COHA). In a North American media conference call this week, the former University of Calgary undergraduate explained that if Alberta can’t sell its oil to the U.S., it has a willing market in China, which has a 60 per cent stake in Athabasca Oil Sands Corp.’s MacKay and Dover oilsands deposits. Regulatory approval for the Northern Gateway Pipeline to the West Coast would be a spigot the Chinese would welcome. “If we are talking about policies that are going to take (18 per cent of U.S.) imports off the table, you’re talking about major, major ramifications in terms of U.S. fuels policy,” said Michael Whatley of Consumer Energy Alliance.

Senate Hearing Slated for Thursday Sold as an Event “To Highlight Solar Energy and Clean Energy Jobs” – Get There Early; Hearing Should Last About 11 Seconds. E&E News (1/25, subs. req’d) reports, “A Senate Environment and Public Works subcommittee this week will highlight solar energy and clean energy job opportunities as President Obama and Democrats continue to work on economic recovery and job creation. Obama appeared at Lorain County Community College in Ohio on Friday to urge Congress to pass legislation that includes incentives for training in clean energy such as making solar panels and windmill blades. Obama watched formerly laid-off workers weld and shape components for wind turbines as they work toward a certificate or associate’s degree. “I’m calling on Congress to pass a jobs bill to put more Americans to work building off our Recovery Act; put more Americans back to work rebuilding roads and railways; provide tax breaks to small businesses for hiring people; offer families incentives to make their homes more energy-efficient, saving them money while creating jobs,” Obama said.

You Know It’s Bad When: “Definitive” Climate Report from IPCC – the One Used by EPA to Legally Justify Endangerment – Is Rendered a Laughingstock Even Among Those Who Helped Write It. Wall Street Journal (1/23) editorializes, “It turns out that this widely publicized prediction was taken from a 2005 report from the World Wildlife Fund, which based it on a comment by Indian glacier expert Syed Hasnain from 1999. “This number is not just a little bit wrong, but far out of any order of magnitude,” Mr. Kaser told the Agence France-Presse. “It is so wrong that it is not even worth discussing.” On Wednesday, the IPCC got around to acknowledging that the claim was “poorly substantiated,” though Mr. Pachauri also suggested it amounted to little more than a scientific typo. Yet the error is of a piece with other glib, and now debunked, global warming alarms. Among them: that 1998 was the warmest year on record in the United States (it was 1934); that sea levels could soon rise by up to 20 feet and put Florida underwater (an 18-inch rise by the year 2100 is the more authoritative estimate); that polar bears are critically endangered by global warming (most polar bear populations appear to be stable or increasing)

Meanwhile, Reeling from a Bad Three Months (ClimateGate, Copenhagen Burlesque, Cap-and-Raid Requiem), National Enviro Groups Not Entirely Sure What to Do Next. Houston Chronicle (1/24) reports, “The climate surrounding climate change has changed, and not for the better for those seeking to reduce carbon dioxide emissions. First there’s public perception. Hurricane activity in every ocean last year was below normal. Global temperatures remain no warmer now than a decade ago. The Arctic Sea ice, at least temporarily, has modestly recovered. And the United States is having one of its coldest winters in a long time. Then, in November, a slew of e-mails from a British climate center were released that appear to show, at the very best, unseemly behavior by top climate scientists. Branded Climategate, it only resulted in accusations that researchers are willing to cook the books and further eroded public trust in climate science. “Climategate showed us what was behind the curtain,” said Robert Bradley, founder of the Institute for Energy Research in Houston. “There’s a whole lot of alarmism and a whole lot of scientific intolerance toward other views.”

Got to Tip Your Cap to RFK Jr. for Having the Stones to Come Out to W.Va. to Defame Miners to Their Face – But That Doesn’t Mean He Did All the Well In His Debate. Beckley (W.Va.) Register-Herald (1/23) editorializes, “So, the Great Debate on Coal is history. What did we learn? Not much. We expected Massey Energy CEO Don Blankenship and environmental lawyer Robert F. Kennedy Jr. to stick to their guns, their long-held views on coal, and they did. Will the debate lead to changes or compromise? Not in the short term. The divide between the pro-coal and anti-coal forces is still wide, and the polarization will not ease any time soon. We can appreciate the passion of the environmentalists in their quest to end mountaintop mining, to halt the burning of coal, and to switch to other forms of energy. But passion can’t change the fact that: Without coal, West Virginia’s economy would be crippled because thousands would be thrown out of work and tax revenues would plummet; the cost of electricity would soar beyond many people’s means to pay the bills; and America would have to place a greater reliance on foreign sources of energy.

Taxing Our Way to Prosperity: In Just a Couple Weeks, Obama Will Unveil 2011 Budget Blueprint; If It’s Anything Like 2010’s, US Dependence on Foreign Oil Is About to Unravel Entirely. Amarillo Globe-News (1/23) editorializes, “President Obama would do well to listen carefully to the experts on energy exploration and development – many of whom live right here in Texas. He is proposing a new national energy policy that gives short shrift to the fuel that has driven the American industrial machine for more than a century. Oil and natural gas need to remain part of the energy strategy, even as the president’s team pursues alternative energy sources. Obama has proposed a 13-percent excise tax on offshore drilling. His cap-and-trade costs, along with consumption taxes could reduce U.S. refining capacity by 2 million barrels daily, according to Bud Weinstein, associated director of the Maguire Energy Institute at Southern Methodist University in Dallas. Punitive tax policies don’t provide energy independence for a nation that still relies too heavily on foreign sources of fossil fuel.

White House Needs New Look At Energy

By Michael J. Economides

It was a rubbing-the-eyes-in-disbelief headline even from an administration whose energy secretary, Steven Chu, suggested that America’s energy dilemma could be solved by painting roofs white, and whose interior secretary, Ken Salazar, talked of garnering 3,000 megawatts of wind-power capacity off the East Coast. (The current total electricity capacity from all U.S. energy sources is about 1,000 megawatts.)

Under the title “U.S. raises concern over China oil policy,” David Shear, deputy assistant secretary of state for East Asian and Pacific Affairs, told the House Armed Services Committee on Jan. 13:

“We are pursuing intensive dialogue with the Chinese on the subject of energy security, in which we have raised our concerns about Chinese efforts to lock up oil reserves with long-term contracts.”

Shear was responding to Republican Rep. Roscoe Bartlett of Maryland, who said he was “worried that the Chinese were aggressively buying up oil all over the world and might not share it with other countries in the future.”

Well, what do you know? The Obama administration, whose entire energy posture going back into the presidential campaign has been both ideologically and practically stridently anti-oil, both as an industry and as a form of energy, has suddenly become “concerned” about China’s oil grab.

This is, to say the least, disingenuous.

The U.S. government under Barack Obama has yet to acknowledge once, in spite of widely held estimates, that oil will continue to account for 40% of world energy demand 25 years from now — this while total world energy demand will increase by 50%, at least.

Nor has the administration, mired in Kyoto and Copenhagen global climate rhetoric, acknowledged that fossil fuels, oil, gas and coal will still account by then for over 85% of world energy demand, a largely unchanged contribution from what it is today.

Instead there is constant rhetoric about solar (the president’s favorite during the campaign), wind and “advanced biofuels” which, when combined, are not likely to account for more than 1% or 2% of the world energy demand over the next several decades.

In a Newsweek editorial last April 4, Chu expressed the administration’s energy philosophy and policy: “We must move beyond oil because the science on global warming is clear and compelling: Greenhouse-gas emissions, primarily from fossil fuels, have started to change our climate. We have a responsibility to future generations to reduce those emissions to spare our planet the worst of the possible effects.”  See post here.

Energy Measures May Go to Jobs Bill as Brown Win Saps Cap-Trade

By Jim Efstathiou Jr. and Kim Chipman

Jan. 21 (Bloomberg) — Measures to spur green-energy jobs may end up in a new economic-stimulus bill after Republican Scott Brown’s Senate victory in Massachusetts dimmed prospects for legislation to curb carbon-dioxide emissions.

Provisions to help homeowners reduce power use and make industry more energy-efficient may be shifted out of cap-and- trade legislation that’s stalled in the Senate, said Robert Stavins, director of the Harvard Environmental Economics Program in Cambridge, Massachusetts.

“Those Democrats who may have already been nervous about a vote on climate policy are even more nervous now,” he said.

Brown, who on Jan. 19 won the Senate seat held by the late Senator Edward M. Kennedy for almost 50 years, opposes the emissions-trading program that President Barack Obama says is needed to fight global climate change. Opponents say the cap- and-trade legislation would boost costs and cut jobs in an economy that already has a 10 percent unemployment rate.

Putting energy provisions into a bill to stimulate job creation instead “makes sense” because that’s the Senate’s next priority after health-care legislation, Senator Sherrod Brown, a Democrat from Ohio, said before Brown’s win.

“Everybody who’s got a job-creation idea is going to try to get on this train,” Brown said in a Jan. 15 interview, referring to a new jobs bill. “Anything that we’re thinking of doing in any energy related area that can produce jobs short- term, mid-term, long-term will be considered in this.”

House Jobs Bill

The House passed a $154 billion jobs bill before the Christmas break. The Senate was planning to take up a bigger package this year.

“A large cap-and-trade bill isn’t going to go ahead at this time,” Senator Dianne Feinstein, a California Democrat, told reporters in Washington yesterday.

Some Republicans may support moves to help manufacturers make the transition to clean-energy production if the provisions aren’t too costly, said John Feehery, a Republican strategist who advised former House Speaker Dennis Hastert. The loss in Massachusetts should prompt Democrats to seek smaller-scale legislative victories.

“What Democrats are going to want to do more is get some discrete, easily understandable accomplishments that they can take back to the voters,” Feehery said in an interview. “They’re going to have to ditch climate change and push on more targeted agenda items, like energy independence and green jobs.”

The U.S. lost 85,000 jobs in December, and unemployment remains close to a 26-year high. Republicans have successfully cast the cap-and-trade bill as “as a job-killer and a tax- raiser,” Feehery said.

‘Cash for Caulkers’

The new Senate version of the jobs bill may include funding for a “cash for caulkers” program providing grants to make homes more energy efficient, said Lowell Ungar, policy director for the Washington-based Alliance to Save Energy.

“The money will run out from the recovery act and if there’s not further legislation to push these retrofits, there’s a real risk that the infrastructure we’re creating right now will wither,” Ungar said in an interview. “The people who are being trained right now to do these retrofits will no longer have jobs.”

The Obama administration credits last year’s economic stimulus bill with helping to stabilize the economy and creating 640,000 jobs, including 52,000 in clean energy.

The cap-and-trade measure that the House of Representatives passed in June would limit emissions and establish a market in pollution allowances. Senate Majority Leader Harry Reid, a Nevada Democrat, said yesterday that Democrats “will tackle our daunting energy and climate challenges” with legislation that creates “good-paying, clean-energy jobs.” He provided no specifics.

‘Feeling Very Cautious’

“The election itself means the loss of one vote,” Nikki Roy, who monitors Congress for the Pew Center on Global Climate Change in Arlington, Virginia, said of Brown’s victory. “Obviously the bigger unknown is how it affects thinking by moderates. Most moderate members of the Senate were already feeling very cautious on this issue.”

Some lawmakers were describing passage of the cap-and-trade measure as unlikely this year even before Brown’s win, which gave Republicans 41 votes in the Senate and deprived Democrats of the 60-vote supermajority generally needed to pass legislation.

There won’t be enough political will left to undertake such a disputed measure after the fight over health-care legislation, Senator Byron Dorgan, a Democrat from North Dakota who recently announced his retirement, said Jan. 19 on a conference call with reporters.

‘Climate-Friendly’ Measure

“It’s my assessment that we will not do a climate bill, but that we will do an energy bill instead.” Dorgan said. “The energy bill will be climate-friendly.”

The Senate Energy Committee approved a measure last year that would require utilities to get as much as 15 percent of their power from renewable sources. That bill, which wouldn’t place a cap on greenhouse-gas emissions, hasn’t been taken up by the full Senate.

Carol Browner, Obama’s top adviser on energy and the environment, said last week that an energy and climate bill limiting emissions from power plants, factories and refineries remains a priority of the White House.

Kerry, Graham, Lieberman

Senator John Kerry, a Massachusetts Democrat who co- sponsored a climate-change bill last year, said he is beginning daily meetings with colleagues Lindsey Graham, a South Carolina Republican, and Joseph Lieberman, a Connecticut independent, to draft a compromise bill.

“The political atmosphere doesn’t reduce the urgency of dealing with pollution and energy,” Kerry said in an e-mail. “This is the single best opportunity to create jobs, reduce pollution, and stop sending billions overseas for foreign oil from countries that would do us harm.”

The strongest message to date from the Senate on global climate policy remains a 1998 resolution rejecting the existing Kyoto Protocol because it requires industrialized nations to cut emissions, not developing countries such as China and India. Last month, China and India, the largest and fourth-largest producer of emissions from burning fossil fuels, promised to curb the growth of greenhouse gases in a political accord that includes the U.S., the European Union and 26 other countries.

Last Updated: January 21, 2010 00:00 EST

GM’s Lutz: Higher gas tax would help

DETROIT (CNNMoney.com) — Bob Lutz is generally not a close ally of environmentalists.

The vice chairman of General Motors is a frequent critic of fuel economy rules and once declared that global warming was a “total crock” of excrement, although he used a more common and colorful word in that description.

GM Vice Chairman Bob Lutz with Chevrolet’s electric hybrid Volt.

Lutz also declared in 2004 that hybrid cars didn’t make sense to sell or buy. And just this week, as he and GM were hyping the new electric Chevrolet Volt, at Detroit’s North American International Auto Show, he declared that internal combustion engines would dominate the auto industry for the next 20 years, no matter what advances were made in electric vehicles.

So Bob Lutz wouldn’t seem a likely candidate to argue for significantly higher gasoline taxes, or to suggest that such taxes would be a good thing for the auto industry. But in a meeting with journalists at the auto show Monday, he did just that.

“If the rise in gasoline prices is gradual, I think that all of us in the industry would frankly welcome that, because there is nothing more illogical than forcing fuel-saving technology when gasoline is extremely cheap,” he said when asked about any concerns about oil again rising above $80 a barrel.

Lutz was asked if that means he would favor higher gasoline taxes, as in Europe where taxes drive fuel to more than $5 a gallon. He said he couldn’t speak for GM, but he said he saw a lot of value in a steady tax rise to much higher levels.

Driving the Volt when the juice runs dry

“You either continue with inexpensive motor fuels and have to find other ways to incent the customer to buy hybrids and electric vehicles, such as the government credits,” he said. “Or the other alternative is a gradual increase in the federal fuel tax of 25 cents a year, which in my estimation would have the benefit of giving automobile companies a planning base, and giving families that own vehicles a planning base.”

Lutz said if a car buyer knew that gas that costs $2.75 a gallon today would likely go to $3 next year and $3.25 the year after that, it would prompt some buyers to say: “You know sweetheart — this time we should go one size down because we know what fuel is going to do.”

The biggest problem hitting automakers from rising gas prices, Lutz said, is the fact that consumer preferences change suddenly when gas prices rise and fall, which makes it impossible to match supply of vehicles to demand.

“Every time gas prices go back down, everybody starts buying big stuff again. Gas prices go up a buck, the big stuff is unsellable and everyone wants small cars. Go figure,” he said. “It’s like the collective memory is about three weeks long. We can’t run a business that way.”

But the chances of Washington following Lutz’s recommendation are slim to none, let alone his finding support for his argument elsewhere in Detroit.

Transportation Secretary Ray LaHood, who spoke at the auto show Monday morning, said that the Obama administration was not considering any rise in gasoline taxes. And House Speaker Nancy Pelosi also dismissed the idea at a press conference at the show Monday afternoon, saying there was no support in Congress for an increase gas tax.

Lutz said he’s not surprised the idea isn’t likely to go anywhere.

“Fuel taxation is the third rail of politics,” he said. Read more here.

New Obama ‘green jobs’ to cost $135,295 each

By Mark Tapscott

President Obama’s announcement earlier today of an additional $2.3 billion in federal tax credits for  creating approximately 17,000 subsidized temporary jobs in the green energy industry is drawing a less than enthusiastic response from Thomas J. Pyle, president of the Institute for Energy Research:

“Show me one other industry that requests and receives a nearly 30 percent taxpayer subsidy. That’s what the wind and solar industries require – at a minimum – to exist. All the president did today is throw more money at an unproven technology that is not economically viable in the marketplace. Unfortunately, the only winners in this latest taxpayer giveaway will be Wall Street money managers and corporate interests in the wind and solar industry.

“If the president really wants to create an environment that will foster economic growth and job creation, he need not look any further than the domestic oil, gas and coal industries. These three industries and energy sources built this nation. For the administration to continue to ignore this fact and to keep the vast resources that taxpayers own under lock and key at the Department of Interior is irresponsible and a disservice to the American people.

“The Outer Continental Shelf (OCS), if opened for business, would create over 1 million high-wage jobs. It would reduce our dangerous dependence on hostile nations for their energy resources and spur economic growth across all 50 states. Development of these energy resources will create sustainable employment, not taxpayer dependent make-work jobs.”

The White House said the tax credits will go to 183 projects in 43 states under the $787 billion economic recovery stimulus program approved last year by Congress. The announcement came the same day as the Bureau of Labor Statistics announed that the unemployment rate remained at 10 percent, and that approximately 85,000 jobs had been lost in December. 

Read more here.

A Rhode Island power deal points to higher rates, but advocates say deepwater wind farms will pay off

By Tux Turkel, Staff Writer January 3, 2010

Electricity from wind farms off the Maine coast is likely to cost more than what customers now pay, experts say, and a power purchase deal for a proposed offshore wind project in Rhode Island is raising questions about how much.

New Jersey-based developer Deepwater Wind LLC last month signed a 20-year agreement with National Grid, which serves Rhode Island, to buy power from a 30-megawatt wind farm three miles off Block Island. The Block Island Wind Farm is the first offshore power purchase deal in New England, so it offers some indication of what ocean wind power could cost in the region.

The rate is 24.4 cents per kilowatt hour, escalating 3.5 cents per year. That starting rate is roughly 60 percent more than what home customers in Maine and Rhode Island now pay on their total bill for energy and distribution. In Maine, home customers on average pay 15.4 cents per kilowatt hour. Roughly 9 cents of that is for energy.

But it’s inaccurate to compare the Block Island Wind Farm to the large-scale wind projects Maine wants to attract to deep water off its coast, according to Habib Dagher, the University of Maine professor spearheading the state’s effort.

Rhode Island’s eight-turbine wind farm is a demonstration project in shallow water, he said, too small to take advantage of the economies of scale needed to reduce costs. Any comparison also ignores the fact that fossil fuel prices are low today, but likely will rise when the economy recovers. Read more here.

Britain facing gas shortages as freezing weather continues

By Murray Wardrop

For the second time ever, the National Grid yesterday issued a warning to energy providers that demand for gas is threatening to outstrip supply.

The ultimatum comes after a 30 per cent rise on normal seasonal demand as snow and freezing conditions continued their stranglehold on Britain.

The concerns caused natural gas prices to jump to their highest level in 10 months yesterday, touching 45p a therm.

While it is unlikely that households will find their supplies restricted, a shortage could lead to higher bills.

The National Grid, responsible for meeting the country’s energy requirements, issued a gas balancing alert (GBA) yesterday to give warning that any further falls in supply could force big users like power plants to cut their consumption.

Extra gas supplies were rushed out to the liquefied natural gas importation terminal in Kent through pipelines in Belgium and Norway following the alert.

The National Grid said the risk of shortages had been temporarily averted by the influx.

“Supplies of gas to the UK have increased following the issuing of a gas balancing alert today,” a spokesman said.

He added: “The big generators like E. ON have gas-fired power stations and coal-fired power stations. They can choose to switch from gas to coal.

“(Yesterday) we thought there was going to be a certain amount of gas going into the country and then a few suppliers, their supplies dropped off.

“They weren’t going to be able to provide the amount that we thought, so we issued a GBA so hopefully that’s going to bring it back to where it should be.”

The first time the alert was used was in March 2006.

The alerts are a way of warning customers to ease off on the fuel as well as encouraging suppliers to bring in more gas, which Britain relies on imports for.

The fuel is used to heat about two thirds of Britain’s homes.

Freezing weather is set to stay in the coming weeks, and the National Grid has not ruled out sending out further supply warnings.

In the event of a serious shortage, big industrial consumers are expected to bear the brunt of gas consumption cuts to shield residential users who rely on the fuel to keep warm. Read more here.

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Hard-up pensioners have resorted to buying books from charity shops and burning them to keep warm.

By Miles Erwin, Metro.co.uk

Volunteers have reported that ‘a large number’ of elderly customers are snapping up hardbacks as cheap fuel for their fires and stoves.
Temperatures this week are forecast to plummet as low as -13C in the Scottish Highlands, with the mercury falling to -6C in London, -5C in Birmingham and -7C in Manchester as one of the coldest winters in years continues to bite.

Workers at one charity shop in Swansea, in south Wales, described how the most vulnerable shoppers were seeking out thick books such as encyclopaedias for a few pence because they were cheaper than coal. One assistant said:  “Book burning seems terribly wrong but we have to get rid of unsold stock for pennies and some of the pensioners say the books make ideal slow-burning fuel for fires and stoves. A lot of them buy up large hardback volumes so they can stick them in the fire to last all night.  A 500g book can sell for as little as 5 pence, while a 20kg bag of coal costs 5 pounds sterling.” Read more here.

Don’t demonize oil

by Michelle Hu, Energy Institute Writer

In a highly publicized lecture, Alex Epstein made a strong statement defending oil use and describing how it is underappreciated in society. Students flocked to listen to the presentation intriguingly titled, “In Defense of Oil.” As a commentator on oil from the Ayn Rand Center in Washington D.C., Epstein lauded the many multifunctional uses that oil and oil byproducts provide for the world.

Today’s society demonizes oil and the oil industry, he says. When we talk about oil, we often talk about global warming or how America’s dependency on oil funds terrorism. “We never hear the positives,” says Epstein. “To be an informed citizen, you need to know the positives of oil.” Epstein espoused cheap and reliable transportation as one of the many underappreciated benefits of oil.

Despite much enthusiasm for alternatives to oil, Epstein believes that no green replacement for oil truly exists. When measured by reliability, energy density (the amount of energy per unit volume) and cost, only coal and natural gas stand as contenders to replace oil, he asserts. Epstein even goes as far as to claim that it is “dangerous to advocate solar and wind as a substitute” for oil based on cost, reliability and energy density.

Oil is indeed an integral part of everyday life. Regardless of which alternatives will considered as substitutions, innovation and creativity will be in high order to form the solutions for our energy and material future.  See post here.