Tag: "energy electricity coal natural gas petroleum oil renewable"

Economic Benefits of TransCanada Keystone Pipeline System

According to a study by Southern Methodist University’s Maguire Energy Institute, there are substantial economic benefits with the TransCanada Keystone Pipeline System.

Phase III of the Keystone Pipeline System, known as the Gulf Coast Project. The Gulf Coast Pipeline Project is a 485-mile (780-kilometre), 36-inch crude oil pipeline from Cushing, Oklahoma to Nederland, Texas.

An examination of per capita income growth in the Gulf Coast Project counties between 2000 and 2012:

  • Six of the eight affected counties in Oklahoma recorded faster per capita income growth than the state average of 65 percent.
  • 11 of the 16 counties in Texas posted per capita income growth higher than the state average.

State of Texas Pipeline Impacts

Total Economic Activity $3,638,561,905
Labor Income $1,696,054,834
Employment 26,924
Total Taxes $144,992,343
Indirect Business Taxes $112,533,584
Direct Business Taxes $32,458,759

 

State of Oklahoma Pipeline Impacts

Total Economic Activity $2,143,364,856
Labor Income $1,041,174,418
Employment 15,852
Total Taxes $72,384,852
Indirect Business Taxes $50,339,639
Direct Business Taxes $22,045,213

The Gulf Coast Project has the initial capacity to transport 700,000 barrels per day from storage tanks in Cushing to Gulf Coast refineries. With the expected completion of the Houston Lateral project in the fourth quarter of 2014, this number is expected to rise to 830,000 barrels per day adding $5.8 billion in new economic activity to Texas and Oklahoma.

The fourth and final phase of the Keystone pipeline system is known as Keystone XL. The Keystone XL Pipeline is a proposed 1,179-mile (1,897 km), 36-inch-diameter crude oil pipeline beginning in Hardisty, Alberta and extending south to Steele City, Nebraska. This pipeline is a critical infrastructure project for the energy security of the United States and for strengthening the American economy. The Keystone XL pipeline would have the capacity to transport 830,000 barrels of oil per day to Gulf Coast and Midwest refineries.

Approving the estimated $5.3 billion Keystone XL project would create approximately 9,000 construction jobs. When combined with the southern portion of the Keystone pipeline (the Gulf Coast Project), it is estimated that the total $7 billion pipeline would create:

  • 13,000 construction and 7,000 manufacturing jobs
  • Add $20 billion to U.S. GDP
  • Add $5 billion in taxes revenue to local counties
  • Create an additional 42,000 direct and indirect jobs
Jul 02, 2014 | 1 comment | by

A Government of Regulation-The EPA’s New Rules

On Thursday the EPA will question Janet McCabe, EPA’s Assistant Administrator for the Office of Air and Radiation. The hearing will seek to sort out several questions regarding Obama’s recent proposal on power plants, specifically coal. The rules set out to curb emissions, but its indirect harm will not only shut down coal plants but cut thousands of jobs. The EPA itself has said that;

The rules could cost close to 80,000 jobs by 2030 at power plants and fossil fuel companies, but could create about 111,000 jobs in energy efficiency.

To make the assumption that jobs will be picked up through renewable energy is not only unfair but wrong. The ability to operate a coal plant versus say, a wind farm is very different. The workers who are in the coal plants will not be able to find new and comparable jobs to what they already have. These policies come at a time when natural gas prices and coal use are at an all-time low.

Production of Coal and Nat. Gas

It is also interesting to point out that the market is naturally selecting natural gas in favor of coal for production. In fact, as seen by the graph, as natural gas has risen in recent years coal has been dropping off. This has allowed the market to gradually adjust, as well as allow states to use what is best for them. While the proposal details letting the states determine what is fit for them, some states are better off continuing to use coal. There are states like North Dakota where 80 percent of their electricity comes from coal. This will surely guarantee an increase in the price of electricity for the state, as well as a large job loss.

Share of US Energy

None of this is even necessary as since 2006 the U.S. share of energy production has been steadily shifting. In 2006, a staggering 49 percent of energy in the U.S. came from coal. At the time it was the cheapest energy source available, at least until now. Advancements in natural gas production and renewable energies such as solar and wind have come a long way in 6 years. In just 6 years the energy production from coal dropped 12 percent. If that much can happen in 6 years, trends can predict that similar drops will happen.

However, The EPA and President Obama want to force the markets hand, and introduce large market fluctuations that will only make life harder on Americans. The questioning of the Assistant Administrator will no doubt be harsh and rough but it needs to be. This administration must learn that the best involvement is no involvement.

Jun 18, 2014 | Leave a Comment | by

EPA Attacks Coal

Part of President Obama’s plan to fight climate change includes closing down 140 existing coal fueled power plants. The plan calls for a shift from carbon emitting sources of energy to more efficient renewable source that will do less to affect the climate.

Impact of government action:

  • 140 coal plants closed
  • Those plants account for only 4 percent of all CO2 emitted last year by U.S. coal plants
  • Coal facilities will provide 30 percent of the nations’ electricity
  • Down from 52 percent in 2000
  • 35,000 to 38,000 coal industry jobs lost

According to USA TODAY:

The electric power industry’s plan to retire more than 10 percent of its coal-fired generators within a decade will do almost nothing to reduce emissions of heat-trapping carbon dioxide.

Jun 09, 2014 | 3 comments | by

Profiling Environmentalism (Part 3)

In “Profiling Environmentalism,” Tanner Davis wrote in this blog that we should all support environmentalists that he labeled the Bright Greens: optimistic folks who exhibit a strong faith that technological innovations and entrepreneurship will help create prosperity with an ever cleaner ecological footprint.

In “Profiling Environmentalism 2,” I followed that these “Brights” understand how economic development is necessary for creating ecological innovations in technology. However, any virtuous cycles between economic progress and ecological innovations requires: 1) that demand for environmental quality increases with prosperity, and 2) that institutions in society must reward entrepreneurial activity that makes environmental quality effective and affordable.

I also noted that Bruce Yandle, et. al. reviewed the sizable literature relating a nation’s prosperity to its environmental quality. They state that while such a link has yet to be proven empirically, studies failed to control for how a nation’s political and economic institutions may affect the development of innovations that promote “green” productivity.

Could enviro-entrepreneurship and innovation be either encouraged or discouraged by a nation’s economic institutions? Would protecting private property rights, upholding the rule of law, and maintaining low levels of government intrusion by excessive regulations and taxation influence the pathway that a nation chooses to pursue its prosperity?

Fortunately, measures of these institutions are collected over 150 countries in the world, and then are aggregated into a country-specific metric called the Economic Freedom of the World (EFW) index. The EFW index, created by Jim Gwartney and Bob Lawson, is published annually by the Fraser Institute.

The freest countries in 2014 include Hong Kong, Singapore, New Zealand, and Switzerland. While Canada is #8 and Australia is #10, the U.S. is only #17. The least economically free countries include Venezuela, Myanmar, Republic of Congo and Zimbabwe.

When a nation’s economy works to feed, clothe, shelter and educate its citizens, this economic activity will impact the environment through air and water pollution, greenhouse gas emissions and depletion of its supplies of natural resources. We can track these measures for each country using the World Bank’s “World Development Indicators” dataset. But the question is: what economic institutions promote the “greenest” pursuit of prosperity and leave the smallest ecological footprint possible?

Figure 1 and Figure 2 represent data from all the nations for which EFW index values and the ecological variables were available. These countries are sorted into quartiles according to their EFW index value, from the least free to the freest countries. Clearly, the level of air and water pollution that is emitted per dollar of GDP produced is LOWER in those nations that pursue free enterprise prosperity with greater economic freedoms.

methane

organic

Likewise, Figure 3 shows that economically freer countries emit FEWER greenhouse gasses per dollar of GDP produced. Further, energy consumed by the vast majority of countries is produced by burning non-renewable resources like coal, natural gas and oil. This means those countries with a lower consumption rate per dollar GDP are practicing a more sustainable growth path towards prosperity. Figure 4 shows that the energy consumed to make a dollar of GDP is LOWER in nations with more economic freedom.

CO2 emitted

energy use

The smallest ecological impact per dollar of economic activity does not appear to arise from the planned economies of socialism or communism. Greater environmental quality and sustainable growth paths to prosperity appear to be more prevalent in countries where the invisible hand is free to “guide” individuals to produce and exchange their products and services in a decentralized market system — established and preserved with greater economic freedoms.

Let’s all be “Bright” about creating our future.

Jun 02, 2014 | Leave a Comment | by

Fracking Bans Continue to Proliferate

The city government of Denton, TX has recently voted to impose a temporary moratorium on any new fracking wells until September of this year, and it is looking to make it permanent. They would not be the first community to do so.

Food and Water Watch, a non-profit NGO, tracks the number of communities across the nation that ban fracking operations. Three states (New Jersey, New York and Vermont) and the District of Columbia have all banned fracking. Indeed, over 400 counties and municipalities across 21 states have also passed anti-fracking measures.

Such bans arise from safety concerns, including groundwater contamination. Yet, an Institute of Energy Resource report reveals that even though over 1 million fracking wells having been drilled in the U.S., the EPA has not found any confirmed incidents of groundwater contamination from fracking. Even Lisa Jackson, then head of the EPA, has stated, “In no case have we made a definitive determination that the fracking process has caused chemicals to enter groundwater.”

While the risks from fracking operations are often overblown, the benefits of fracking to the American economy and the environment are not:

  • A Penn State University study found that between 2007 to 2010, Pennsylvania state sales tax revenues declined by 3.8%. While state sales taxes increased by 11.4% on average among those counties with high numbers of fracking wells, it decreased by 6.6% on average in those counties without any fracking wells.
  • The Institute for Energy Research estimates that in the near-term, over half a million jobs and $32 billion in wages will be added to the nation’s payrolls annually, which is an average income level of nearly $60,000. State and local tax revenues would increase by more than $10 billion annually. Further, the federal government stands to add $24 billion dollars in tax revenues annually, which would help offset our persistent federal deficit spending problem.
  • A U.S. Energy Information Administration report reveals that oil and gas industry employment grew by 40% between 2007 and 2012, which far outpaced the 1% rate of employment growth in the U.S. economy during that same period.
  • An EPA report estimates that greenhouse gas production from power generation has fallen by 11%, due largely to energy companies switching to burning natural gas for power generation instead of burning coal and oil. Aggregate U.S. carbon dioxide emissions have fallen from a peak of 7.3 billion metric tons emitted in 2007 to 6.5 billion metric tons emitted in 2012. This is a market response to lower natural gas prices caused by increased gas production from fracking.

One can only hope that the remaining communities located over oil shale areas will weigh the benefits and costs more carefully before considering a local fracking ban.

May 19, 2014 | Leave a Comment | by

An All-of-the-Above* Energy Policy

Policymakers frequently tout their support for an all-of-the-above approach to energy generation, yet somehow nuclear energy largely seems to disappear from that conversation in any meaningful way. And many environmentalists — who castigate coal, insisting that we need clean, renewable energy — flatly ignore nuclear power, despite its zero carbon dioxide emissions. Instead, they hold up wind and solar and biofuels — none of which are ready for primetime — as the solution to our nation’s energy problems. Yet, nuclear power is one clean energy source that actually has the ability to provide affordable, reliable energy on a large-scale basis.

Knowing just how much sense nuclear energy makes, it is frustrating to listen to conversations and debates over energy generation that either flatly ignore nuclear power or dismiss it as unsafe. (For some articles that debunk some of the myths and fears surrounding nuclear power, see here and here.) Cutting down on carbon emissions is apparently the premier goal of many unless doing so would mean using nuclear power – something actually effective and affordable.

But last week, Forbes ran an interesting piece by former EPA Administrator Carol Browner. Browner was Administrator of the EPA under President Clinton and served as director of President Obama’s Office of Energy and Climate Change Policy.

Her commentary immediately addressed that frustrating contradiction that exists among many who oppose nuclear energy:

“I used to be anti-nuclear.  But, several years ago I had to reevaluate my thinking because if you agree with the world’s leading climate scientists that global warming is real and must be addressed immediately then you cannot simply oppose clean, low-carbon energy sources.”

Browner notes that “[e]xisting nuclear power plants…emit virtually no carbon pollution and are among the cleanest sources of electricity available.”

If climate change activists are serious in their belief that man is responsible for global warming, then you would expect more of them to rally behind nuclear as an energy source. Unfortunately, an “all-of-the-above” approach sounds nice, but it’s often just a catchphrase that doesn’t necessarily represent a comprehensive energy policy.

(And of course, nuclear power isn’t the only casualty of the “all-of-the-above” refrain: President Obama claims an all-of-the-above approach to energy, yet apparently that does not include support for coal power or the Keystone XL pipeline…)

May 14, 2014 | 1 comment | by

Power Grid Reliability as Coal Plants Retire

As the Obama administration’s EPA continues to promulgate regulations that will effectively close coal plants, or prevent the construction of new ones, much of the debate over these regulations, and coal in general, has centered on the appropriateness of coal as an energy source — is it too polluting? Will it hurt the environment? Is it worth the cheap cost? Are coal alternatives too expensive?

There has been less focus, however, on the ability of the power grid to meet U.S. demand if more coal plants continue to go offline. While industry groups, states and energy companies have raised these concerns, the American public remains largely unaware of the ramifications of dialing back coal-powered electricity generation.

To much of the general public, the EPA’s regulations are simply making for a safer, happier, cleaner world.

But on April 10, the Senate Energy and Natural Resources Committee held a hearing on the reliability of the electric grid. At the hearing, Senator Lisa Murkowski made a rather astonishing statement: “Eighty-nine percent of the coal electricity capacity that is due to go offline was utilized as that backup to meet the demand this winter.”

The New York Times reported on this issue back in March — noting that it was American Electric Power, a Midwest energy provider that was running 89 percent of its soon-to-be-retired coal plants. And PJM Interconnection, a power grid operator that serves Pennsylvania, Maryland, and Ohio, among other states, set a record for peak energy use this winter season.

Next year is an especially significant year for coal, as April 2015 is when coal plants are required to be in compliance with the EPA’s Mercury and Air Toxics Standards rule. Compliance with the rule effectively means shutting down operations or spending hundreds of millions of dollars to conform — spending that will, of course, find its way into consumers’ power bills. Some parts of the U.S. already saw electricity prices this winter that were a whopping 10 times higher than last year’s average.

If, in order to meet this winter’s energy demands, providers had to use almost all of their coal capacity that is actually scheduled to be retired next year, what is going to happen if we have a particularly hot summer this year? Or another round of Polar Vortexes this upcoming winter, when those plants we relied on are no longer operating?

Mike Duncan of the American Coalition for Clean Coal Electricity echoed Murkowski’s concerns when he spoke with Fox News two weeks ago: “Regulation from five years ago is closing about 20 percent of the coal plants. Regulations being proposed now could close an additional 20 percent of coal plants. And that creates huge stresses — we’re just not ready for anything like that in this country.”

The EPA, of course, insists that reliability is not an issue and that coal will remain viable. But anti-coal groups know better. As a recent FOIA request revealed, the Sierra Club’s John Coequyt (head of the group’s Beyond Coal Campaign) forwarded a news story in an email to the EPA’s own Michael Goo and Alex Barron. The news story carried the headline “Coal to Remain Viable, says EPA’s McCarthy at COAL-GEN Keynote.”

Coequyt wrote just three words above the news story to his EPA friends: “Pants on fire.”

Losing coal would not be as much of a problem if we had a cost-effective, large-scale energy alternative available. But the environmentalist left will not touch nuclear power (an energy source that produces no carbon emissions), and renewables are unreliable and expensive, hardly suited to replace coal. If any coal survives the EPA’s onslaught, electricity will be markedly more expensive, hurting American consumers, especially the poor.

President Obama bragged of his plans to drive out coal in 2008: “If somebody wants to build a coal-fired power plant, they can. It’s just that it will bankrupt them. Under my plan, electricity rates would necessarily skyrocket.”

Those who cheered this plan either failed to realize, or did not care, that it was average, ordinary Americans who would have to, quite literally, pay the price.

Apr 23, 2014 | Leave a Comment | by

Global “Clean” Energy Expenditures are Down (and Respect for Economic Realities are Up) in 2013

It is refreshing to see that environmentalists and liberal governments are beginning to recognize the economic realities they face when manipulating energy markets to promote clean, renewable energy sources. For example, a recent Time Magazine article investigates why total public and private funding of “clean power” from the global renewable energy industry fell 14% in 2013. This amounts to a decline of 23% since the peak of such spending occurred in 2011. The data cited came from a study from the Frankfurt School-UNEP and Bloomberg New Energy Finance.

This study points out that Europe decreased its spending on clean, renewable energy sources by 44% while the U.S. decreased it is spending by 10%. These reductions were found to largely arise from three economic realities:

  • The declining costs of producing “clean” energy.
  • The significant reduction in public subsidies.
  • Increased competition from renewable but “unclean” biofuels power sources.

Economic Reality #1: Subsidizing an activity can drive down the unit cost of production by creating economies of scale. For example, the average cost for installing a voltaic solar cell in the U.S. declined 60% in the last few years. Indeed, despite the reductions in total spending in 2013, global clean energy capacity in 2013 (from renewable energy sources other than existing hydroelectric power sources) had remained the same as it was in 2012. However…

Economic Reality #2: Public sector funding sources are scarce. As Europe is slowly recovering from the recent global recession, the central governments of these countries are finding it very difficult to justify costly public investments in clean energy subsidies when other popular social programs compete for survival in an environment of shrinking public sector budgets. In fact, Spain and Bulgaria made their subsidy cuts retroactive, shuttering their clean energy industries, despite the falling unit costs of providing clean energy. Further…

Economic Reality #3: Every choice has an opportunity cost that cannot be avoided.  Clean power is defined as coming from renewable, sustainable fuel sources that create very low or no pollution or greenhouse gas emissions. Environmental scientists are beginning to realize that subsidized biofuel production:

  • Pushes up global food prices, because the fuel is grown with water sources and lands that could be used for growing food, which increases food prices and makes biofuels less “sustainable”.
  • Increases water pollution levels from pesticides and insecticides, making biofuels “unclean.” Indeed, an article in the magazine Scientific American notes that, “U.N. Intergovernmental Panel on Climate Change has for the first time acknowledged the risks of uncontrolled biofuels development.”

We seem to be living in a world where national governments are intent on accelerating our adoption of clean energy sources along a time line not supported by private energy markets. At least it is refreshing to see that both governments and environmentalists are slowly (if only involuntarily) admitting to economic reality: the true scarcity of valuable resources in our world creates real and unavoidable influences on the efficacy of government policies designed to accelerate clean energy industry development. We cannot simply wave the magic wand of “hope” to force the hand of the market in a manner that ignores such economic realities.

Apr 14, 2014 | Leave a Comment | by

Hoard and Use Some Resources, Export the Rest

President Obama’s administration approved expanding natural gas exports back in 2011 and 2013. Cheniere Energy Inc’s Sabine Pass facility will begin exporting to countries in 2015, Freeport LNG in 2017 at up to 1.4 billion cubic feet a day of liquefied natural gas and Cameron LNG, LLC has been added this year to export up to 1.7 billion cubic feet a day.

The United States has an abundant amount of natural resources that we are not using and may never use if technology keeps improving our energy consumption. A recent technological advancement, fracking, increased the volume of a number of our energy sources such as natural gas and oil. In a recent NCPA issue brief, the clear advantage fracking is for America’s energy needs are explained:

Just 15 years ago, analysts predicted America had only 60 years of natural gas supplies available at then current rates of use. Today, natural gas consumption is much higher, and fracking has increased estimated reserves to 100 years or more.

The Strategic Petroleum Reserve (SPR) that can hold up to 727 million barrels of crude oil only. Refined oil reserves do not exist in the United States. If our existing refineries went offline, we would have to import refined petroleum products. This defeats the purpose of having an “emergency” stockpile of petroleum reserves. What good is the oil if you cannot use it? There should be a Strategic Refined Petroleum Reserve (SRPR) of at least equal in size for real emergencies.

We have an abundant amount of natural resources that we are not using and may never use. Resources like our natural gas and oil are very valuable and can be easily exported. We would then boost our nation’s economy and have the money needed to improve the technology at a faster rate making our energy use more efficient.

Mar 17, 2014 | 5 comments | by

The European Union Re-examines the Clean Energy/Economic Growth Tradeoff — So Should the Media

The progressive media often promote specious opinions on environmental policy that are in direct opposition to the very evidence they use to support their criticisms. Case in point is an article in The New York Times by Stephen Castle. He writes that, “Europe seems to be hitting its environmental limits,” as high energy costs and declining industrial competitiveness have sparked fears of faltering economic growth among the senior administrators of the European Commission (EC), which is the Brussels-based executive arm of the European Union (EU). As a result, the EC is proposing to reduce its national targets for renewable energy production after the year 2020, to promote cleaner energy production and conserve fossil fuels. The EC is also reversing its push for new laws on environmental damage stemming from fracking, the extraction of shale gas by a controversial new drilling technology.

Feb 19, 2014 | 2 comments | by
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