Morning Energy News – May 31, 2011

You smell that?  Oil son, nothing else in the world smells like that.  The smell, you know that gasoline smell.  Smells like…victory.  Someday this war (on affordable energy) is gonna end Anchorage Daily News (5/29/11) reports: Robert Duvall won’t be on board the ship that offloads Escopeta Oil’s jack-up rig this week but he will be making a trip north once the company starts drilling for oil and natural gas in Alaska’s Cook Inlet… A long-time friend of Houston-based Escopeta President Danny Davis, the well-known actor and director is a staunch supporter of domestic oil and gas drilling…”Alaska’s got plenty of oil and gas that we need down here,” Duvall said in an interview Thursday with Petroleum News. “It’s preferable to importing energy from foreign sources, such as the Middle East.”…Duvall would have been on board the vessel that is bringing the Spartan 151 jack-up rig into Cook Inlet, but he’s about to start work on an independent film, “Jayne Mansfield’s Car,” directed by Billy Bob Thornton…However, Duvall plans to visit the offshore rig once it starts drilling.

Game changer: new oil shale deposit in Texas could be large enough to power Al Gore’s homes, jets, and the rest of America for over 100 years New York Times (5/27/11) reports: Until last year, the 17-mile stretch of road between this forsaken South Texas village and the county seat of Carrizo Springs was a patchwork of derelict gasoline stations and rusting warehouses… Now the region is in the hottest new oil play in the country, with giant oil terminals and sprawling RV parks replacing fields of mesquite. More than a dozen companies plan to drill up to 3,000 wells around here in the next 12 months…The Texas field, known as the Eagle Ford, is just one of about 20 new onshore oil fields that advocates say could collectively increase the nation’s oil output by 25 percent within a decade — without the dangers of drilling in the deep waters of the Gulf of Mexico or the delicate coastal areas off Alaska… There is only one catch: the oil from the Eagle Ford and similar fields of tightly packed rock can be extracted only by using hydraulic fracturing, a method that uses a high-pressure mix of water, sand and hazardous chemicals to blast through the rocks to release the oil inside.
 
Can’t stop, won’t stop — Gov. Chris Christie continues to save his state by removing taxpayer funded green energy rabbit holes New York Times (5/30/11) reports: Running for governor in 2009, Chris Christie vowed to become “New Jersey’s No. 1 clean-energy advocate.” That was a hollow promise. As governor, Mr. Christie proceeded to cut all the money for the Office of Climate and Energy. He raided $158 million from the clean energy fund, meant for alternative energy investments, and spent it on general programs. He withdrew the state from an important lawsuit against electric utilities to reduce emissions… On Thursday, he took the worst step of all: He abandoned the 10-state initiative in the Northeast that uses a cap-and-trade system to lower carbon-dioxide emissions from power plants. The program has been remarkably successful, a model of vision and fortitude. Lacking that, Mr. Christie has given in to the corporate and Tea Party interests that revile all forms of cap and trade, letting down the other nine states trying to fight climate change…The system works by requiring utilities to either lower their emissions or buy allowances to pollute. Money from the allowances goes to states for clean-energy programs. Since it began in 2008, the system has created more than $700 million for these programs; New Jersey has spent some of its share on helping cities become more energy-efficient. Greenhouse emissions from power plants in the region went down about 12 percent from 2008 to 2010 for many reasons, including lower natural gas prices. Programs like the regional initiative are estimated to have produced more than 10 percent of that decline.
 
Sooner or later these cities are going to run out of other people’s money for their green dreams Bloomberg (5/31/11) reports: Cities from Los Angeles to Johannesburg are changing street lights, insulating buildings and promoting cycling to slash carbon emissions as envoys at United Nations talks bicker about binding greenhouse-gas goals…“While national governments continue their excruciatingly frustrating dialog on climate change, we in the cities are acting,” Portland Mayor Sam Adams said in an interview. “It’s sheer common sense. Becoming more efficient with your city’s energy needs means you’re also more economically secure.”…Wracked with budget deficits and economies recovering from recession, municipal leaders are looking for cheap ways to curb energy consumption and help governments meet pollution targets. General Electric Co. (GE) and Siemens AG (SIE), which make power generation equipment, and energy management tool-makers Johnson Controls Inc. and Honeywell International Inc. (HON) are winning contracts from cities to work on efficiency projects.

One two punch: first, Chrysler makes a come back with SUV’s and now a revolutionary gas powered engine with better gas mileage than Chevy Volt at a third of the price Forbes (5/27/11) reports: Everybody wants to talk about what kind of alternative vehicle we’ll be driving next, but I’ve got news for you: the traditional internal combustion gasoline engine isn’t going anywhere. In fact, this 125-year-old invention is getting more efficient all the time, which means we might not have to seriously contemplate those other possibilities any time soon…Automakers have been achieving incremental improvements in the efficiency of their conventional engines with new technologies like direct-injection, six-speed transmissions, turbo-chargers and start-stop systems. With the government breathing down their neck, you can bet they’ll continue to do so. As the U.S. Department of Energy’s fuel economy website shows, each one of these technologies can improve your fuel economy by 5% to 13%. Put them together in a vehicle like the 2011 Ford Explorer and you’re talking about some meaningful improvements…And then there are promising innovations like the gasoline-powered Scuderi engine, whose developer is reporting some massive leaps in fuel economy, at least in laboratory tests. A recent computer simulation conducted by the Southwest Research Institute found that a turbocharged version of the Scuderi split-cycle, air hybrid engine boosted the fuel economy of a 2011 Nissan Sentra by 54%, to about 50 miles per gallon.

Morning Energy News – May 24, 2011

AEA’s Tom Pyle sends a clear message to those who have lost their way — no new subsidies E&E News (5/24/11) reports: The political battle over legislation that would offer tax incentives to promote natural gas vehicles is heating up, as supporters launch an ad campaign and conservative critics of the bill in a public letter yesterday chided co-sponsors for backing the “misguided” plan…The new jockeying over the “NAT GAS Act” suggests that its 186 House supporters in both parties could struggle to win a vote on the bill during the pre-August window that sponsors once eyed. What’s more, the emergence among the bill’s foes of the American Energy Alliance — a pro-drilling nonprofit with ties to the oil industry — signals the potential for stronger pushback in the future from oil companies…AEA President Thomas Pyle, previously a lobbyist for Koch Industries and aide to ex-House Majority Leader Tom DeLay (R-Texas), joined 16 other groups yesterday on a letter to lawmakers that blasted the natural gas bill as a wasteful subsidy…The letter’s signatories, including the Club for Growth, the Heritage Foundation’s separate political arm, and the tea party group Americans for Prosperity, warned that backing the bill would amount to shrugging off voter opposition to subsidies that became clear in the midterm elections…”Co-sponsoring this misguided legislation is a sign that you have not heard the message [of 2010] and are not serious about eliminating expensive, counter-productive energy subsidies,” the groups wrote.

Morning Energy News – May 23, 2011

Now let’s see if we can use the tax code to remove Secretary Salazar’s tax deductions and revoke his license to drive The Hill (5/23/11) reports: “Every day, Interior’s policies are costing more Gulf energy workers their jobs. But the Interior secretary needs a raise? That’s ridiculous – it’s offensive,” Mr. Vitter said in a statement to The Washington Times. “I’ll do everything I can to block his raise until Gulf energy workers are at least where they were in terms of work and job security pre-BP. I really want to see new deepwater exploratory permits being issued at pre-BP levels over a three-month period.”… hanks to a constitutional quirk, Interior Secretary Kenneth L. Salazar makes less than most of his colleagues in President Obama’s Cabinet, and a Republican senator says he’ll keep it that way, blocking a nearly $20,000 raise for the high-level appointee until the administration approves more deep-water oil drilling…Mr. Salazar’s salary is set at $180,100, which is $19,600 less than most other Cabinet secretaries. The Constitution prohibits legislators from taking positions in the executive branch for which they voted to raise the salaries, and since Mr. Salazar approved secretaries’ pay levels when he was in the Senate, he would have been barred from taking the Interior job unless the salary was reduced to its earlier level…His Senate term would have expired in January, though which means he’s once again eligible for the higher pay rate…Senate Majority Leader Harry Reid, Nevada Democrat, tried to get consent this week to pass the change in the Senate but was blocked by Sen. David Vitter, a Louisiana Republican who said he won’t yield until Mr. Salazar approves more oil and gas exploration in the Gulf of Mexico. 

You know your state has problems when a San Francisco judge is the voice of economic reason Bloomberg (5/23/11) reports: A California judge’s ruling is unlikely to mean a long delay in starting the state’s cap-and- trade program for greenhouse gases next year, according to Bloomberg New Energy Finance…The decision will require California’s Air Resources Board to resubmit its analysis of alternative policies, which will take “a couple of months,” Tom Marcello, an analyst for New Energy Finance in New York, said yesterday by e-mail. Another ruling might have slowed the launch of what is forecast to be the largest U.S. carbon market by six months, he said…Superior Court Judge Ernest Goldsmith in San Francisco ordered the board on May 20 to stop making rules for cap and trade until the state reviews other ways to limit greenhouse gases, such as a carbon tax. While President Barack Obama failed to win Congressional approval for a national emissions trading program, California is pressing ahead with plans to issue pollution allowances that may be valued at $19 billion by 2020, according to New Energy Finance…The board in California will appeal the ruling today, said Stanley Young, a spokesman for the agency.
 
The NYT editorial board doesn’t understand economics or history. Oil prices fell $9 as President Bush announced the end of the moratorium on the OCS New York Times (5/20/11) reports: The closer one looks at what passes for serious debate in Washington over energy, the more depressing it gets. The Republicans have nothing to offer but drill, baby, drill. The Democrats are rightly trying to end industry’s cushy tax breaks, but that’s not an energy strategy… And everyone, including President Obama, seems more interested in scoring political points over rising gas prices than in confronting complex matters like energy security and climate change…In the Senate, the two parties spent this week beating each other up without advancing the discussion. The Republicans and three oil-state Democrats blocked a worthy Democratic attempt to strip the five biggest oil companies of $2 billion in tax breaks they do not need. The Democrats then crushed an effort by Mitch McConnell, the Republican leader, to match two outrageous measures passed by the House that would expedite lease sales in protected coastal waters while undermining safety reforms adopted after the oil spill in the Gulf of Mexico…Mr. McConnell said his bill would bring relief at the pump by raising domestic output. That is fiction. Production will take years to come online and even then would have a tiny impact on prices set on the world market.
 
The next time someone says that central banking and inflation do not impact the price of crude oil, send them this article Reuters (5/23/11) reports: North Sea Brent crude futures led the oil complex lower, trading down $2.91 at $109.48 a barrel by 1029 GMT, having dropped by $3.26 earlier…U.S. crude was trading $2.63 lower at $97.46…”The ratings cut for Italy and concern over Greek restructuring and the subsequent euro weakness appear to have prompted the price fall in crude this morning,” Mark Thomas, head of energy Europe with brokerage Marex Financial, said…The dollar rose against the euro as a block of bad news about the euro zone crisis hit the single currency…Fitch Ratings cut Greece’s debt rating by three notches on Friday, pushing the country’s debt deeper into junk status, and rival Standard & Poor’s cut its outlook for Italy to “negative” from “stable” on Saturday….The euro fell below $1.40 briefly, the level which had been seen as an important support…Olivier Jakob with Petromatrix said the euro would remain the key focus for global investors…”Crude oil has not been able to find any follow-through buying over the last ten days and without new fundamental developments it is likely to be harder to find strong fresh buying into crude oil if the Euro weakens further,” Jakob said.
 
And next time President Obama tells you that increasing supply does not affect prices, send him this article Wall Street Journal (5/23/11) reports: The natural-gas industry touts its fuel as an attractive alternative to coal and oil, saying it’s comparably clean, domestically abundant and cheap…But that final selling point might not last if the industry succeeds in stirring demand even as it cuts back on drilling…In the past few years, a glut of natural gas has driven down the price to half the 2008 average—a level where it costs a U.S. consumer $2.75 a day to meet a home’s natural-gas needs, according to the American Gas Association. That’s good news for consumers, but a recent study by consultancy Wood Mackenzie found that 40% of U.S. natural gas produced last year didn’t meet break-even prices for producers…Natural gas now costs roughly the same as its energy equivalent in coal and a quarter of its energy equivalent in oil. The gas industry is making some headway in capitalizing on its relative cheapness: President Barack Obama has endorsed incentives for trucks powered by natural gas, and power companies are considering replacing coal-fired plants with gas-burning ones…Those steps would increase natural-gas consumption just as production growth is likely to slow. That’s because companies now can make more money drilling for oil, whose price has soared last year and in recent months on unrest in Northern Africa and the Middle East.
 
Too little too late Senator Hutchison, but I guess I do appreciate the tough talk as you head for the exit The Hill (5/23/11) reports: A week after President Obama laid out a plan designed to show his administration is serious about expanding domestic drilling, a top Senate Republican said the administration is not doing enough to encourage production…“It is not enough for the president to talk about producing energy in America,” Sen. Kay Bailey Hutchison (Texas) said in the Republican weekly address. “We call on him to put policies in place that cut the bureaucratic red tape and put Americans to work doing it.”…Hutchison’s comments underscore the bitter partisan divides between Democrats and Republicans on drilling and the major hurdles policymakers face in coming to a compromise on the issue.
 
We remind people that, as Hunter Thompson once wrote, only the doomed argue with Chris Tucker E&E News (5/20/11) reports: “If the story here is that EPA didn’t like that decision, that it wasn’t supportive of Congress clearly delineating where its authority ended and the states’ authority began, then here’s another story for you: The sun rose today,” said Chris Tucker, spokesman for Energy in Depth, which was created by the Independent Petroleum…Association of America to fend off federal regulation of fracturing. The U.S. EPA official who oversaw the George W. Bush administration’s 2004 study of hydraulic fracturing says its conclusions about safety have been exaggerated for years….The study found that in certain circumstances, fracturing presented “little or no threat” to drinking water. But Ben Grumbles, who ran EPA’s Office of Water, says the study didn’t deem all “fracking” to be safe, and it didn’t justify exempting all forms of it from drinking water protections….”EPA, however never intended for the report to be interpreted as a perpetual clean bill of health for fracking or to justify a broad statutory exemption from any future regulation under the Safe Drinking Water Act,” Grumbles wrote in an article this week for the nonprofit he now runs, the Clean Water America Alliance…The former assistant EPA administrator also says that after five years and a nationwide surge in drilling, it might be time to take another look at the exemption, which was included in a 2005 energy bill…”A lot has happened since 2005 and, in my view, it makes sense to review the Safe Drinking Water Act landscape as well as the relevance of Clean Water Act programs,” he said

Morning Energy News – May 18, 2011

The UK didn’t meet their CO2 reduction target for 2010, even with the recession. So what’s their response? Double down New York Times (5/16/11) reports: Britain is poised to announce some of the world’s most ambitious goals for reducing greenhouse gas emissions — a striking example of a government committing to big environmental initiatives while also pursuing austerity measures… Chris Huhne, the secretary of state for energy and climate change, is expected to release a statement on Tuesday that the British government will set in law a goal to cut its greenhouse gas emissions about 50 percent by 2025…That reduction, based on 1990 levels, would be far deeper than the European Union’s goal of cutting emissions 20 percent by 2020, and it would mean that Britain would make faster emissions cuts than other similar size countries, including Germany. The goal could require households to spend on new energy-saving devices for the home. It could also revive stalled government support for large projects, like those that capture power from tides and that bury carbon dioxide emissions…A spokesman for the Department of Energy and Climate Change declined to comment before a formal announcement….Governments in Britain and North America have broadly retreated from far-reaching pledges since the financial crisis began two years ago.

We can’t tell if Reilly is grasping at the lime light or really cares about his job New York Times (5/17/11) reports: The Obama administration is pushing back against plans by its oil spill commission co-chairman to spread his message about offshore drilling reforms to Cuba, the panel leader said today… William Reilly, the co-chairman of the presidential panel that made a series of recommendations earlier this year to improve offshore drilling safety and regulation after the BP PLC oil spill in the Gulf of Mexico last summer, has already helped convinced Mexican drilling regulators to adopt U.S. regulatory structures…But he said he has had his “wrist slapped” by the Obama administration for his plans to discuss reform with Cuba, with which the United States has had no diplomatic relations since 1961…”I have been causing grief to the State Department,” Reilly, a former U.S. EPA chief under President George H.W. Bush, said during an event hosted by Resources for the Future in Washington, D.C…Cuba is developing plans to drill 16 oil and gas wells in waters 50 miles from Key West, Fla., using Spanish oil and gas giant Repsol YPF and Russian natural gas producer Gazprom.
 
The plan worked: Obama was able to talk a tough game knowing the Senate wouldn’t actively make gas prices higher by increasing taxes The Hill (5/17/11) reports: The White House is vowing a continued campaign to repeal billions of dollars worth of oil industry tax breaks after a Democratic bill to nix several incentives sputtered on the Senate floor Tuesday…White House Press Secretary Jay Carney, in a statement Tuesday night, called the 52-48 Senate vote that blocked the bill progress even though 60 supporters were needed to advance the measure….“The vote today – with support from over half the U.S. Senate – is an important step towards repealing these unwarranted subsidies for the oil and gas industry. The Administration will continue to pursue this important reform,” he said…Senate Democratic leadership is vowing to keep the issue alive in wider talks with Republicans and the White House on deficit reduction…Carney also took a shot at Republicans in his statement on the procedural vote, which saw two Republicans vote to advance the bill while three Democrats joined 45 Republicans in voting against it.
 
If you think Bromwich is losing it now, just wait until the Senate discovers he’s behind skyrocketing gas prices! The Hill (5/17/11) reports: Four Senate Democrats this week asked the Federal Trade Commission (FTC) to investigate whether U.S. oil refineries are purposefully cutting back capacity levels in order to keep gasoline prices high…Sens. Claire McCaskill (D-Mo.), Charles Schumer (D-N.Y.), Dick Durbin (D-Ill.) and Patty Murray (D-Wash.) cited press reports that this may be happening and told FTC Chairman Jon Leibowitz that this would be a “direct affront” to American consumers… “At a time when major refiners and oil companies are making record profits and American families continue to struggle with gasoline at record prices, the idea that refiners may be manipulating the market to keep prices artificially high is offensive,” they wrote…”It is incumbent upon the Commission to ensure that the American people are protected from this type of manipulation,” the letter continued. “Accordingly, we request that the Commission open a full investigation into these allegations of wrongdoing and to determine the impact this behavior, if confirmed, has on regional and national gasoline prices.”

Morning Energy News – May 17, 2011

Governor Mitch Daniels puts Indiana on the road to serfdom Renewable Energy World (5/11/11) reports: AWEA applauded Indiana Gov. Mitch Daniels for signing into law a voluntary Clean Energy Portfolio Standard (CPS), which sets a goal of 10 percent of the state’s electric generation to come from clean energy sources by 2025 and incentivizes utilities to participate in the CPS…“I applaud the Indiana Legislature and Governor Daniels for setting a course toward more affordable, homegrown Hoosier energy,” said Denise Bode, CEO of the American Wind Energy Association (AWEA). “In particular, I would like to thank the bill’s author, State Sen. Bev Gard, as well as Speaker of the House Brian Bosma for his guidance, Sen. Brandt Hershman, the Senate leadership, and Rep. David Frizzell, for supporting the economic development that this bill will foster in Indiana.”…The bill, SB 251, encourages investment in the state’s growing wind industry as well as other forms of lower-emission energy, including solar, nuclear, clean coal, and hydro. It reflects an amendment offered in the Indiana House by Frizzell (R-Indianapolis) that calls for at least 50 percent of the qualifying energy obtained by Indiana utilities participating in the CPS to come from within the state. The House passed the amended bill on a bipartisan vote of 62-34 on April 21, and the Senate passed the bill by a 31-19 bipartisan vote on April 26. 

Fracking Lies — new study out reports that drinking water is safe in Marcellus Shale region Fuel Fix (5/16/11) reports: Several tests of western Pennsylvania river water prompted by fears of contamination from the state’s rapidly growing natural gas drilling industry didn’t turn up elevated or harmful levels of radioactivity or other pollutants not routinely monitored, a private water utility said Monday…The Pennsylvania American Water Co. said its tests showed that its water quality complies with federal and states standards…Water for one set of tests was drawn from Pennsylvania American’s intakes along the Allegheny, Clarion and Monongahela rivers and Two Lick Creek, which serve the cities of Pittsburgh, Clarion, Kittanning and Indiana. In addition, Pennsylvania American said it found the same result after testing treated drinking water at three plants in late March. Two of the plants serve Pittsburgh, while the third serves Clarion…State regulators have previously said that tests from samples they collected in November through February of water downriver from western Pennsylvania treatment plants raised no red flags for radioactivity. The treatment plants have been handling wastewater from drilling in the vast Marcellus Shale natural gas reservoir – a practice that is scheduled to end this week because of concerns over how it could affect drinking water.
 
Americans are demanding more energy and the U.S. Government is helping Brazil and India U.S. Department of Energy (5/16/11) reports: As part of the Partnership to Advance Clean Energy announced by President Obama and Prime Minister Singh of India last November, the Department of Energy has committed $25 million over the next five years to support the U.S.-India Joint Clean Energy Research and Development Center (JCERDC)…This first-of-a-kind effort is a key component of the U.S. and India’s commitment to improve energy access and promote low-carbon growth by facilitating joint research and development of clean energy technologies. Teams of scientists and engineers from the U.S. and India will initially focus on research in three priority areas – building energy efficiency, second-generation biofuels and solar energy…”Developing and investing in new technologies is a key component to meeting the goals of a clean energy future,” said Secretary of Energy Steven Chu. “This innovative approach to collaborative research is a testament to the special relationship shared by the two countries. By working with our partners in India and sharing a strong commitment to building a clean energy economy, we can get further, faster, than by working alone.”
 
This is almost poetic justice — solar farm can’t pay property taxes even with a 45 cent kilowatt hour tax payer subsidy Michigan Live (5/16/11) reports: Producing 225,592 kilowatt hours of electricity in its first year of operation, a solar farm in eastern Kalamazoo Coun­ty that went online in early 2010 has exceeded expectations…Also exceeding expecta­tions is the property tax, said Sam Field, a Kalamazoo attor­ney and one of the owners of Kalamazoo Solar…The $27,689 tax bill for the Charleston Township prop­erty means that the owners are losing money, even when being paid a premium price of 45 cents a kilowatt hour by Consumers Energy, he said…“That Michigan property tax burden works out to a cost of 12.3 cents per kilowatt hour,” Field said. “That amount is more than the retail value of the electricity.”…For comparison, Field re­searched the property tax for the Palisades Nuclear Plant in Covert Township along Lake Michigan. He found that the annual real and personal property taxes for Palisades are just over $12 million or .2 cents per kilowatt hour.
 
This article is for those who doubt the Federal Reserve play a role in oil markets Fuel Fix (5/16/11) reports: Attempts by the Federal Reserve Board and the Obama administration to head off an economic collapse in 2008 have resulted in a jump in gasoline pump prices of 56 cents per gallon, Rep. Kevin Brady, R-The Woodlands, said today…Brady, the top House Republican on the congressional Joint Economic Committee, released a study that looked at the economic costs to average Americans of the massive infusion of dollars into the U.S. economy by the Fed designed to stimulate the economy and stave of a national economic catastrophe as the U.S. financial system teetered on the brink of collapse…“Americans are paying a steep price at the pump as a result of the weak dollar policies pursued by this administration and the Federal Reserve”, said Brady…The study, entitled The Price of Oil and the Value of the Dollar, states that the value of the U.S. dollar has declined by 14 percent since the Fed began its program formally known as “quantitative easing” (also called “QE1″) in November of 2008, as the financial system neared meltdown.