Energy In The Executive Branch

Anyone who's been to a gas station recently knows the feeling. There you are, about to refuel, when you see the price of regular gasoline: about $3.52 per gallon, up 77 cents since 2010. Your pulse quickens. Your stomach sinks. Because this is not a dream. The days of $4.00-a-gallon gas are about to return.

How we got here is no mystery. The turmoil in the Middle East, including a supply disruption in war-torn Libya, raises market anxiety. The flood of money coming from the Federal Reserve contributes to commodity price inflation from food to precious metals to oil. Increased demand, in emerging markets in particular, translates into more expensive fuel at home.

The appropriate policy responses are also unmysterious: The sooner Moammar Gadhafi is overthrown, the faster supplies can be restored. Ending the Fed's program of monetary stimulus would reduce the amount of dollars inflating the commodities bubble. And the best way to compensate for rising demand is to increase supply.

We wish we could say that President Obama is pursuing such a course. But the five people who managed to stay awake during his soporific press conference last week know that Obama's lassitude is boundless. He says he wants Gadhafi out, but doesn't appear interested in doing much to make it happen. He's given Fed chairman Ben Bernanke free rein to accelerate the recovery, but doesn't seem worried about the long-term consequences of inflationary policies. He proudly (and correctly) touts the fact that in 2010 domestic oil production reached its highest level in seven years. But he doesn't grasp that supply must increase by a lot more, and a lot more quickly, if Americans are to enjoy affordable fuel.

"We need to continue to boost domestic production of oil and gas," Obama said last week. How? The president wants to know if the oil companies are sitting on any untapped reserves. He'd like to see further research and exploration and "information gathering." He said that "We're looking at potential new development in Alaska." Someone should put the president's portrait next to the dictionary definition of "passing the buck." There are plenty of ways to encourage production right now. Moping that it takes time for new fields to come online is no excuse. If the government had responded to the widespread outcry to drill three years ago, we'd be that much closer to having additional supplies of energy today.

All President Obama needs to do is to have Reggie Love print him out a copy of the Roadmap for America's Energy Future. Authored by Republican Devin Nunes of California, the energy roadmap is a comprehensive strategy to increase production in a responsible way. Nunes would open the Outer Continental Shelf to oil and gas exploration, allow drilling in the Arctic National Wildlife Refuge after years of delay, restore oil shale leases that the Obama administration canceled in 2009, and repeal the prohibition on government purchases of "coal-to-liquid" synthetic fuel. He'd forbid the Environmental Protection Agency from regulating carbon dioxide as a pollutant. He'd mandate permits for 200 additional nuclear plants over the next 30 years.

Better yet, Nunes would do all this while establishing a "Renewable Energy Trust Fund." Government revenue from carbon-based energy would be dedicated to research into alternatives like wind, solar, biomass, and more. The money would be disbursed through a reverse auction in which projects with the greatest potential energy efficiency win contracts. Once they enter into the contract, recipients would forgo all other tax credits and would place a deposit in the Treasury. If the project fails, the recipients lose funding — and the deposit.

The energy roadmap is another example of the GOP House setting the agenda for the eventual Republican presidential nominee. It's a safe bet that demand for Nunes's program will rise in direct proportion to gasoline prices. Nor will that demand be partisan. There are plenty of Democrats, many of them senators from red states, who are interested in reducing the de facto tax that voters pay whenever energy prices rise. We're sure that Nunes would be happy to discuss his ideas with them, and with President Obama, at their convenience. If the meeting doesn't take place, well, we'll all be hearing from the American people — on energy, on health care, on the economy, on the budget, and much else — in November 2012.

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Battle of the bulbs

With apologies to Thomas Edison, the light bulb he made famous in 1879, the one that turns 90 percent of its electricity into heat rather than light, soon will be a relic of history.

That is, if a Republican-led effort fails to save the traditional incandescent bulb from planned obsolescence.

The Senate Energy Committee heard Republican arguments at a hearing Thursday to overturn the federal Energy Independence and Security Act of 2007, which would ban production of energy-wasting incandescent bulbs beginning in 2012 with the 100 watt. This would be followed by a ban on the 75-watt bulb in 2013, and ending in 2014 with a ban on 60- and 40-watt incandescent bulbs.

The lighting industry notes that the act only sets energy-use rules that traditional incandescents cannot meet, prompting the ban. But halogen incandescents do meet the standard.

California's ban on the 100-watt incandescent began already, Jan. 1.

Republicans in Congress are upset that the government, rather than market forces, is deciding the fate of the incandescent.

"Thomas Edison wouldn't be happy if he knew that Congress was essentially banning his invention," said U.S. Sen. Mike Enzi, R-Wyo., who has introduced the Better Use of Light Bulbs Act to repeal the section of the 2007 act that would ban incandescents save for low-wattage bulbs used in niche or specialty devices.

"I think it's fine if someone wants to fill their home or business with the light from the new bulbs," Mr. Enzi said in a news release. "I also think it's fine if someone wants to buy an old-fashioned bulb because it works better for them. If left alone, the best bulb will win its rightful standing in the marketplace. Government doesn't need to be in the business of telling people what light bulb they have to use."

Mr. Enzi said compact fluorescent lamps, one of the more energy-efficient options available to consumers, contain mercury that could pose health problems if the bulbs break indoors. For that reason, proposed legislation also would exclude schools, day-care centers and nursing homes from federal light-bulb requirements if the alternative lighting contains mercury.

Other alternatives on the market -- halogen incandescent, light-emitting diode and even Electron-Stimulated Luminescence -- contain no mercury.

The Senate version of the Bulb Act has a companion version in the House that was introduced by U.S. Rep. Joe Barton, R-Texas.

"This is about more than just energy consumption; it is about personal freedom," Mr. Barton stated in his own news release.

Mr. Barton said 12 other Republicans co-signed his House bill to lift the ban.

At least one major environmental group has mounted countering action to preserve the ban.

The Natural Resources Defense Council, a nonprofit environmental group with 1.2 million members, is hoping the Republicans' high-watt action to save the incandescent will burn out once reason is applied.

Saving the incandescent is akin to surrendering the refrigerator for an ice box, it said.

The council also notes that the 2007 act was signed by President George W. Bush, a Republican, with previous Republican presidents having signed energy standards into law for appliances and automobiles.

The bills from Mr. Enzi and Mr. Barton, with the support of U.S. Rep. Michele Bachmann, R-Minn., "would push aside innovation, derail plans for new job-creating lighting factories and eliminate an estimated $10 billion in annual energy costs savings -- taking as much as $200 a year out of the checkbooks of every U.S. household," an NRDC release stated.

New standards, it said, give consumers "more choice, not less," and will inspire light-bulb manufacturers to continue making innovations.

Jim Presswood, the council's federal energy policy director, said new light bulbs reduce energy usage without affecting light quality or output. Cutting demand for electricity also reduces pollution and improves health.

"We expect the standards to reduce carbon-dioxide pollution by 100 million tons per year, which is the equivalent of the emissions of 17 million cars," Mr. Presswood said. "The best way to reduce pollution is to reduce the need to run power plants."

Mr. Presswood said he's heard no notable complaints resulting from the ban under way in California. Yet, he said, the repeal action must be taken seriously.

"This is an excellent market rule spurring innovation, reducing pollution and saving people money," he said. "The only freedom it prevents is the use of an old light bulb. But what a difference there is between the old bulb and the new, with the advantages all on one side."

The only reason to buy an incandescent nowadays, he said, is as a collectible in hopes of having it appraised someday on the television show, "Antique Roadshow."

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Greengate gets approval to build 300MW wind farm in Canada

Renewable energy project developer Greengate Power has received approval from the Alberta Utilities Commission to construct and operate a 300MW wind farm in southern Alberta, Canada.


The power project, called Blackspring Ridge I, will be built near the village of Carmangay in Vulcan County, approximately 165 kms southeast of Calgary.

Construction on the project is expected to begin in 2012 with commercial operation in 2013.
The wind farm will generate enough clean energy to power approximately 100,000 homes and reduce greenhouse gas emissions by 600,000 tonnes per year.

Greengate said that the project will provide substantial economic benefits to rural Alberta in the form of new jobs, increased tax revenues and royalties for landowners.
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Advantages of Renewable Energy at Macro and Micro Level

City Power and Gas
It is now certain that the current energy systems and technological advancements available in the world are not sufficient to make the planet free from the carbon dioxide that is emitted from those resources. To solve this problem, there is a scope to build new technologies and to bring the existing technologies together to get maximum benefit from the entire energy system including energy production, transformation, to energy transportation and distribution. Work in this direction will have to be taken at both macro and micro level.

Need for renewable energy resources
The world will have to switch to renewable energy resources very fast, because despite the availability of renewable energy resources, a large part of the world is still dependent on traditional energy sources such as coal and gas. This over-dependence of these traditional resources will lead to a situation where by the end of 21st century, resources like coal and gas will become extinct from the world. Thus, continuous efforts need to be made to switch over to renewable energy resources. This switch can help many countries make a successful environment policy and reduce the consumption of imported oil and gas.

Use of energy resources with low carbon at macro level
If Risø National Laboratory for Sustainable Energy is to be believed, by the year 2050, the world will be in a position to use sources of energy with very low or no carbon emissions. The global energy system with low emissions will now have to use this new energy system in such a way that the cost of using these resources is also reduced.

The Risø energy report 9 gives a list of a number of energy technologies that will be commercially available for use in times to come. These technologies with no emission of greenhouse gases will help in reducing pollution.

The Risø energy reports, which have been prepared by the joint efforts of Danish and international experts look at energy issues of today and tomorrow from the perspective of the needs of Danish people, the region and the world. These reports are monitored by an independent panel of international experts and are based on scientific material that is internationally recognized.

Use of energy resources with low carbon at micro level
The new technologies in energy sources have to reach the end user. The producer should keep in mind what the users want at the local level and make technological advancements in the goods being used by the common person on a more regular basis. New technologies are being used in items like electronic equipment, heat pumps, local energy supplies such as solar cells and energy storage that people use on a daily basis.

Use of renewable energy resources in Denmark
In countries like Denmark, there is a strong need to start encouraging renewable energy systems right away. This will have several advantages like,

• It will help to eliminate traditional fuel like gas and oil at a very fast pace
• It will reduce the emission of greenhouse gases
• It will help to stop the use of traditional fuel in generating power and heat production by the year 2040.
• It will help to eliminate the use of gas and oil in the transport sector in Denmark by 2050.

There is a need to invest and take maximum advantage of the developments taking place in renewable energy sector. If we do not invest in this sector and make use of the opportunities given to us, it is likely that the scarcity of traditional resources will put so much pressure on the generations to come that they will never be able to bear.
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Price of crude oil is surging - City Power and Gas

The price of crude oil is surging and becoming, once again, a national preoccupation. Crude oil price neared $107 today, reported several outlets including MarketWatch and ABC News. Oil prices have the attention of President Barack Obama, who is reportedly considering tapping into an emergency store of oil.

But guess what? The price of oil is even higher than they’re saying.
The usually-reported benchmark is the price of West Texas Intermediate (WTI) crude oil. That’s traded by futures contract on CME Group’s New York Mercantile Exchange. And that contract refers specifically to the oil traveling through various pipelines that converge in Cushing, Oklahoma. The West Texas oil contract was the original futures market for oil and remains the biggest oil market in the world, on paper. (If you want to know more about how it came about, check out my book, “The Futures” – or for a different perspective, “The Asylum.”)

But there are other futures markets in crude oil, the second best-known being the market for Brent crude oil. That refers to oil coming out of the North Sea, and that contract is in Europe, traded (mostly electronically, as is the other) on the IntercontinentalExchange.

Usually it doesn’t matter which price you use because the different oil markets have for years moved in lockstep. People in the oil industry generally buy and sell at or around the price reflected in those futures markets. But recently the prices on those markets have grown apart. The Brent oil price is now about $10 higher than the West Texas price.

Reporters continue to give the price of West Texas oil, but some say the more pertinent figure is the Brent price. “There is no such thing as a homogenous price out there,” says Tom Kloza, chief oil analyst at the Oil Price Information Service, and in the oil industry for 35 years. “The thing that people don’t realize is that you wake up this morning and hear the price of sweet crude went to $105. But the more relevant world price is really about $116 or $117.”

The reason is that the West Texas oil is essentially trapped or bottlenecked in the middle of North America. Shipping it anywhere, even to the coasts of the U.S., is expensive. So some refiners on the coasts buy oil in tankers from offshore, just like Europe does. A refiner – say, a Marathon refinery in Garyville, Louisiana  – might be able to get some cheaper crude from western Canada with a price tied to the West Texas price. But another refinery, say Sunoco’s in Philadelphia, might have to pay more to ship in oil from Angola, Libya, or Nigeria, oil whose price is tied to the Brent. These days, the most commonly quoted price refiners use is the Brent.

This has implications for people pumping gas. Already it’s cheaper to buy gas in the Plains and Rocky Mountain states than it is on the coasts. There’s a map of the U.S. at fuelgaugereport.com showing the average costs of fuel in each state. On March 7, the price of regular gas in Montana averaged $3.186 per gallon, while the price in New York was $3.702. Kloza says that if current trends continue, gas prices in the heartland versus the coasts will be “substantially lower” in the future.

The shift toward the Brent has happened over the past few years. “The changes in time have rendered the actual contract a little bit irrelevant to the global market,” he says of the West Texas futures contract. Two directors at Credit Suisse seconded that in a recent report entitled, “What’s the real price of oil?”  In it, they say the West Texas benchmark is broken, although they say the Brent isn’t a perfect replacement.
CME Group “has long objected to the view that WTI is a broken benchmark,” the Credit Suisse authors write and link to this study and this slide presentation from CME. But let the pump be the judge. If you’ve been to the gas station recently, you’ve paid the “real” price. And it hurt – probably more than you expected.
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Peabody Energy Chief: ‘Coal Is The Fastest Growing Fuel In The World’

Greg Boyce, chief executive of Peabody Energy, America’s largest coal producer, gave a refreshing speech at CERAweek in Houston Thursday. No apologies, no excuses, no pandering to the greenies. His pronoucement: “coal is the fastest growing fuel in the world.”

Analysts at IHS-CERA say that the amount of coal being consumed today (roughly 6.5 billion tons a year) is double what it was a decade ago. Its use is expanding at twice the rate of natural gas, four times nuclear. What’s more, over the next 10 years coal use is set to double again.

The U.S. gets nearly 50% of its power generation from coal, while China is at 75%. In short: coal remains the fuel of today and the fuel of the future.
You can hear the hand-wringing and blood rising among the anti-coal crowd. Boyce says coal’s growth is not something to get upset about because more than anything else in the world, coal is “a catalyst for growth,” which is bringing electricity and longer life to impoverished people around the world.
“Energy access is a human right,” said Boyce (a questionable concept for sure, but one that helps his cause). Yet 3.6 billion people lack adequate energy access and 1.5 billion have no electricity at all.

It’s absurd for people in the developed world to try to deny those in the emerging markets the opportunity to use coal to power their growth–because no other energy source is cheap enough or sufficiently scalable to compete. If China and India were to grow to match the per capita energy use of Europe, the worldwide demand for coal will double, he said. That would be very good for Peabody, which currently sells 240 million tons a year for revenues of $7 billion.

The average megawatt from coal will become cleaner and cleaner, said Boyce. Worldwide there are 430 critical or supercritical coal burning powerplants under construction, with many of them in China and India. Boyce insists that the U.S. too needs to engage in a clean coal building boom if only to replace old dirty powerplants. Doing so, he said, could generate 6 million U.S. jobs and avoid the emission of 440 million tons of carbon dioxide.

Unfortunately, and shortsightedly, the Bush administration abandoned its government-sponsored clean coal project called Powergen, in which Peabody was a partner. But the Chinese picked up the slack. Led by the world’s biggest coal utility Huaneng Power have built the first iteration of a clean coal plant called Greengen near Beijing. Peabody is the only non-Chinese partner in Greengen.

By the end of the decade they hope to take all the carbon dioxide emissions from the plant and inject in deep under China’s Bohai Bay to assist in enhanced recovery of oil and gas.

Peabody is working on a deal with Huaneng to build an almost zero-emissions plant at the mouth of a new 12 million tons per year mine in Mongolia that will capture carbon dioxide and transform it into solid blocks used for construction. That technique has been developed by California-based Calera.

You can better understand the technology here, but in short the idea is to turn the carbon dioxide into calcium carbonate and magnesium carbonate, which would be mixed into concrete. This is a fascinating technology that I will come back to with some more reporting in the near future, but it seems clear that if the Mongolia plant is effective it could pave the way for effective carbon capture worldwide.

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Obama prepared to tap petroleum reserve if needed

WASHINGTON – President Barack Obama said Friday he's prepared to tap the country's emergency oil reserve should the situation demand it. But as gas prices climbed toward $4 a gallon, the president said the U.S. must adopt a long-term strategy of conservation and domestic production to wean itself off foreign oil.
"We've been having this conversation for nearly four decades now. Every few years gas prices go up, politicians pull out the same political playbook, and then nothing changes," Obama said at a White House news conference. "And when prices go back down, we slip back into a trance."
"I don't want to leave this to the next president," he said. "And none of us should want to leave it for our kids."

Some in Congress have been calling on Obama to tap the Strategic Petroleum Reserve. And the president made clear Friday that that was an option, although he indicated he wasn't yet prepared to exercise it. He declined to specify the conditions that would trigger the step, but said it was teed up and could happen quickly if he chooses to call for it.

The government is cautious about going to the petroleum reserve, typically holding off except in very extreme cases such as hurricanes. The reserves — 727 million barrels stored in salt caverns along the Texas and Louisiana coasts — were created in response to the Arab oil embargo in the 1970s and last tapped in 2008 after hurricanes Gustav and Ike hit.
"If we see significant disruptions or shifts in the market that are so disconcerting to people that we think a Strategic Petroleum Reserve release might be appropriate, we'll take that step," Obama said. Gas prices in the U.S. now average $3.54 per gallon. Obama said he'd asked administration officials to look out for signs of price-gouging.

Oil prices have surged 24 percent since the middle of February as unrest in the Middle East rattled world markets, although prices slid Friday on the possibility of reduced demand because of the devastating tsunami that hit Japan.

Republicans have sought to blame Obama's policies for the high gas prices, saying he should be allowing more offshore drilling, though experts say more domestic production wouldn't immediately impact prices. Obama rejected that criticism Friday.

Obama said domestic oil production rose to a seven-year high last year. "Any notion that my administration has shut down oil production might make for a good political sound bite, but it doesn't match up with reality," said the president, noting that the country was still not far removed from the disastrous BP oil spill in the Gulf of Mexico that temporarily stopped much production in the Gulf.

Obama said that to boost production more, he's directed the Interior Department to assess how many onshore and offshore oil leases already held by industry are going undeveloped so that companies can be encouraged to produce from those lease. He also said the administration was looking at the potential for new production in Alaska and elsewhere. He said these steps and others could increase domestic production in the short- to medium term, but were not a long-term solution, considering the U.S. has 2 percent of the world's oil reserves but accounts for over a quarter of worldwide consumption.
"The hard truth is, is that as long as our economy depends on foreign oil, we'll always be subject to price spikes. So we've got to get moving on a comprehensive energy strategy that pursues both more energy production and more energy conservation," the president said. He called for greater investments in clean energy sources like wind turbines and solar panels, and for strategies like more fuel-efficient cars.
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