Tag: "federal regulations"

Economic Repercussions of the Renewable Fuel Standard

American Petroleum Institute’s Renewable Fuel Standard Facts:

The Energy Independence and Security Act of 2007 included an expanded Renewable Fuel Standard (RFS), which the EPA used to develop a final rule effective July 1, 2010. To comply with the Standard, biofuel producers and importers must blend increasing amounts of biofuels into gasoline and diesel.

However, there have been problems with the government’s original predictions regarding the supply and demand of gasoline; U.S. gasoline demand has dropped while supply has increased due to the shale and natural gas revolution in North America. Also, cellulosic technologies have not developed as quickly as expected and there are no commercial plants to date. The EPA rushed through approval of an up to 15 percent ethanol blend (E15) without adequate testing, leading to compatibility problems with E15, poor consumer acceptance and significant infrastructure and cost challenges. EPA proposed to address the problem, but has been incapable of finalizing its rule.

A study by NERA Economic Consulting (NERA) buttresses the argument that the RFS is irretrievably broken saying that, RFS ethanol mandates could:

  • Lead to fuel supply disruptions that ripple adversely through the economy.
  • Cause the cost of diesel to rise 300 percent and the cost of gasoline to rise 30 percent.
  • Decrease U.S. GDP by $770 billion.
  • Reduce worker pay $580 billion.
Jul 08, 2015 | Leave a Comment | by

Raise Airport Facility Charges and Give Up Improvement Program Funding

Currently, U.S. airports and airlines are fighting a public battle over Passenger Facility Charges (PFCs). PFCs are one of the main mechanisms to fund capital projects such as baggage systems, gates and international arrival facilities. Airports want to increase the fee, and argue that the current $4.50 passenger facility charge, which has not been increased/adjusted since 2000 and equates to $2.45 today, is insufficient. Airlines argues that the PFCs should be kept at $4.50 since over the past 25 years the number of taxes airlines pay has increased from six to 17 and the amount paid has increased from $3.7 billion to $20 billion.

While both sides raise some valid points, airports make the better argument and should be allowed to increase PFCs to whatever level they deem necessary.

First, our aviation system follows the same users-pay/users-benefit principle as our surface transportation system. And PFCs are the purest users-pay/users-benefit funding mechanism. A users pay system is fair since those who pay are the ones who benefit. A users-pay system is proportional since those who fly more pay more and vice versa. A users-pay system is self-limiting since the taxes will be used only on needed infrastructure. A users-pay system is predictable, since such a system, unlike airport improvement funds, will not disappear at Congress’ whim. Finally, a users-pay system provides guidance on the correct amount of investment to make.

Second, airports need continual improvement. With growing passenger traffic many airports need additional gates. Others need to modernize their badly aging security areas and baggage systems. While airports have other tools, principally bonding and airport improvement program (AIP) funds, both these tools are limited. PFCs are more versatile and can be used for a variety of projects including landside (terminal) projects, road access, noise-remediation projects, bond-interest and airside projects.

Third, airports as quasi-independent agencies should be able to raise their own funds. Airlines have added a bevy of tax-exempt fees, which incur no taxes because they are special services and not a part of standard fares. Passengers now pay to check bags, use internet service, reserve seats, purchase food, and purchase priority boarding services. Just as it is the airlines’ right to charge passengers for these optional services, it is the airport’s right to charge passengers for a better baggage system.

Fourth, just as passengers have some choice of airlines they also have some choice of airports. In most of the 20 largest aviation markets there are two or more airports. If an airport goes on a drunken spending spree as Miami International Airport did, airlines and passengers can choose the cheaper alternative of Fort Lauderdale International. Price is a powerful motivator that should keep airports from unreasonable PFC increases.

However, I understand the airline’s concerns of overcharging. And while the cheaper Fort Lauderdale provides an option to overpriced Miami, it would be preferable if such exorbitant costs were prevented in the first place. So in exchange for removing the limit on PFCs, large hub airports should give up AIP funds. Large hub airports rely less on AIP funds than other airports and with PFC funds uncapped, AIP funds become a nice-to-have product not a requirement.

 

Jul 06, 2015 | Leave a Comment | by

EPA Regulations Overruled by Supreme Court

In a 5-4 ruling, the Supreme Court ruled that the Environmental Protection Agency (EPA) had not adequately considered the costs of its regulations before enacting them. Limits finalized in 2012 as part of the Clean Air Act on toxic air pollutants proved to be a prohibitive cost on coal utility plants. They were also a main feature in the Obama administration’s environmental policies.

The case, Michigan v. EPA, centered on the first ever limits on mercury, arsenic, and acid gases emitted by coal-fired power plants. While the EPA had estimated the new rules would cost $9.6 billion, placing it among the costliest regulations ever instated.

Prior to the ruling, the head of the EPA Gina McCarthy had said she felt confident the Supreme Court would rule in their favor. However, were that not to be the case, she said:

But even if we don’t [win], it was three years ago, most of them are already in compliance, investments have been made, and we’ll catch up. And we’re still going to get at the toxic pollution from their facilities.

With most coal plants already in compliance, the ruling does little to slow emission curbs in the coal industry. Regulations on interstate air pollution were already upheld last year by the Supreme Court, ensuring that most utilities will need to control future pollution regardless of the new ruling. Furthermore, in the majority opinion, written by Justice Scalia, the Court ruled that the EPA could reconsider the regulations with better cost assessments before reinstating such rules.

 

Jun 29, 2015 | 5 comments | by

Obama Takes Aim at Big Trucks

On Friday, the Obama administration officially announced plans to further lower carbon emissions in the United States. This new rule, issued by the Environmental Protection Agency (EPA) and the Transportation Department, aims to increase the fuel efficiency of the large trucks crossing the country everyday. New regulations will also affect other trucks, such as delivery vehicles, dump trucks and buses.

Two categories of standards were created, one for the front part of big trucks, called tractors, and one for trailers that trucks haul. The tractor standard will be implemented for those built in 2021 and require efficiency increases of up to 24 percent. This will be the first time, however, that regulations extend to trailers. The first federal standards for big trucks were announced in 2011 for any truck models built between 2014 and 2018.

The rules threaten to impose undue burdens on the trucking industry — an industry responsible for the transportation of food, raw goods, and most freight in the country. Adjusting to these new rules will require improvements in aerodynamics and the use of lighter materials as well as tweaks in current engine and transmission technology. The EPA stated the industry would be able to recoup their costs within two years for trucks with trailers. For smaller trucks and buses, the recoup time may be as long as three to six years.

These new regulations are just the next step in a long line of new rules implemented under the Obama administration. In his first term, President Obama discussed limitations on automobile emissions. These were followed by new rules set by the EPA for power plants and more recently potential regulations on airplane engine emissions.

 

Jun 22, 2015 | 2 comments | by

More Tax Money for Obama’s Green Dreams

From Merrill Matthews at the Institute for Policy Innovation:

President Obama reportedly will announce on Friday that he will waste another $100 million taxpayer dollars in his never-ending quest to push consumers to embrace his green dreams.

Though he won’t actually put it quite like that, that’s the upshot of his message.

The $100 million is to expand special fuel pumps, called “blender pumps,” that allow drivers to choose how much ethanol they want in their gas tanks. If consumers could choose zero, at least it would represent a real choice, but don’t bet on that.

Consumer Reports says that about 70 percent of gasoline has a 10/90 blend, that is, 90 percent gasoline and 10 percent ethanol, known as E10.

Ethanol advocates — primarily the farmers who grow the corn and the processers that turn it into ethanol, both of whom profit greatly from the product — claim that newer cars can take a blend ratio of E15. And some flex-fuel cars can go significantly higher.

But why would most people do that, since the higher blends of ethanol appear to reduce miles per gallon?

When Consumer Reports compared the gas mileage of E10 to what the ethanol industry is really pushing, E85 (85 percent ethanol), it found a significant reduction in miles per gallon. “When running on E85 there was no significant change in acceleration. Fuel economy, however, dropped across the board. In highway driving, gas mileage decreased from 21 to 15 mpg; in city driving, it dropped from 9 to 7 mpg.”

In addition, many environmentalists who once encouraged ethanol expansion have begun to back off that support.

Obama’s predictions about the adoption and benefits of his environmental policies have been every bit as bad, if not worse, than his predictions about his health care law. He predicted there would be a million electric vehicles on the road by 2015; there’s actually about 286,000. His efforts to push high-blend ethanol are likely to be no better.

There is nothing wrong with a transition to higher-blend vehicles — if that’s what consumers want. But that is not this administration’s approach. What matters is what the president thinks is good for you, whether he would ever use it or not, and to back his vision with your taxes.

 

Jun 08, 2015 | 2 comments | by

The Real Cost of Clean Power Plan

The Environmental Protection Agency’s Clean Power Plan Proposed Rule to cut carbon emissions from power plants, specifically targets coal power plants. Not only would this hurt United States energy supplies, but also greatly increase energy costs that would hit consumers by raising their electricity bill.

The following shows the difference between the analysis of the costs of the National Economic Research Associates and the Environmental Protection Agency (EPA).

The EPA estimates:

Annual cost estimates for complying with the Clean Power Plan range from $5.4 billion to $7.4 billion in 2020, to $7.3 billion to $8.8 billion in 2030. These annual cost estimates factor in both the costs of investments in transitioning to lower-carbon electricity options and the savings that result from investments in energy efficiency.

NERA estimates:

EPA’s Clean Power Plan could cost consumers and businesses a staggering $41 billion or more per year, far outpacing the costs of compliance for all EPA rules for power plants in 2010 ($7 billion) and the annual cost of the Mercury and Air Toxics Standards rule ($10 billion). The analysis also finds that additional coal retirements would total 45,000 megawatts or more of coal-based electricity, posing a major threat to electric reliability in many parts of the country.

Jun 01, 2015 | Leave a Comment | by

Offshore Access Critical to U.S. Energy Security

The Department of the Interior granted conditional approval to a plan by Shell Gulf of Mexico to begin exploratory drilling in the Chukchi Sea in the Arctic Ocean. Federally owned offshore oil and natural gas reserves of the United States are estimated to hold over 50 billion barrels of crude oil 200 trillion cubic feet of natural gas. However, close to 87 percent of federal offshore acreage is off limits to energy exploration and development. Without energy exploration to give a more accurate estimation of energy reserves, the closed off area could hold far more oil and natural gas reserves.

The Bureau of Ocean Energy Management’s offshore oil and natural gas leasing plan for 2017-2022 excludes promising areas in the Atlantic, Pacific, and Arctic and in the Gulf of Mexico.

Expanding offshore access would:

  • Create nearly 840,000 new American jobs.
  • Increase oil production by 3.5 million barrels per day.
  • Generate $200 billion cumulative revenue for the U.S. government.
  • Add $450 billion in private sector spending.
  • Add $70 billion per year to the U.S. economy.

The United States is now producing the most oil in the world and can continue to do so if more pro-energy policies, such as opening all federally owned offshore areas, are adopted by the federal government.

May 13, 2015 | Leave a Comment | by

Anti-fossil Energy Groups Lobby Students

Universities and other public institutions throughout America are being targeted in an aggressive climate crisis-premised campaign demanding that they divest themselves of all fossil energy investments and influences. In the process, legitimate funding sources are being sacrificed, objective education and science programs are being compromised, and careers of non-conforming researchers are under assault.

As reported by Kimberley Strassel in The Wall Street Journal, one such sponsoring organization, “UnKochMyCampus,” provides a “campus organization guide” on how to “expose and undermine” any college that works against “progressive values.”

Spearheaded by Greenpeace, Forecast the Facts, and the American Federation of Teachers, its website directs students to a list of universities which have received money from Koch foundations. It also offers step-by-step instructions on how “trusted allies and informants” (including other liberal students, faculty and alumni) can be recruited to demand Freedom of Information legislation record disclosures from offending programs and professors.

The Federation of Teachers and National Education Association even sponsored a day-long March conference devoted to training students on “necessary skill to investigate and expose” any Koch influence. Funding influences of left wing contributors, however, are quite a different matter.

It seems quite okay that billionaire environmentalist Tom Steyer and his wife pledged $40 million to create the TomKat Center for Sustainable Energy at Stanford. Steyer, a prominent climate alarmist, anti-Keystone Pipeline lobbyist and carbon tax proponent, also spent $74 million supporting 2014 congressional candidates who would advance his uber-liberal agendas.

A recent National Association of Scholars report titled “Sustainability: Higher Education’s New Fundamentalism” discusses how universities continue to be co-opted as bastions of progressive ideology. Excerpted by Rachelle Peterson and Peter Wood of the Intercollegiate Studies Institute, the movement can be heavily credited to the former senator, now the secretary of state, John Kerry and his wife Teresa Heinz following her previous husband’s fatal 1991 helicopter crash.

Upon meeting at the 1992 Rio de Janeiro U.N. Earth Climate Summit the two recognized colleges and universities as important seedbeds for a new “sustainable development” initiative. This mantra was hatched by the U.N. under its Agenda 21 doctrine and became smuggled into unwitting American townships and counties through its International Council for Local Environmental Initiatives (ICLEI).

In 1992 Kerry and later-to-become wife Heinz launched the nonprofit “Second Nature” with the mission to “create a sustainable society by transforming higher education.” The organization began soliciting professors including ecologists, scientists, philosophers, and poets who were willing to introduce sustainability content into their courses along with encouraging the creation of new centers of sustainability study.

Second Nature’s primary and most successful targets proved to be college presidents who possess an unparalleled ability to shepherd the movement to adulthood along with financial flexibility to experiment with new technologies and programs. A group of 12 institutional heads initially came onboard, including Arizona State University President Michael Crow, and University of Florida President Bernard Machen.

The group pledged to “recognize the scientific consensus that global warming is real and is largely caused by humans” and to set an example by going “carbon-neutral.” Among other things, they also committed to engage in shareholder activism to pressure the corporations in which the college owned stock to move towards climate neutrality. As of last January, 685 colleges and universities have signed on.

Joined by mega-funded green groups, friendly media and government politicos the movement continues to gain fast-paced momentum. A recent Greenpeace-sponsored New York Times attack on Dr. Willie Soon of the Harvard-Smithsonian Center for Astrophysics accused him of personally failing to disclose research funding, even though those monies were properly processed through official institutional agreements.

Two days after the Times article appeared, ranking Democrat on the Natural Resources Committee Rep. Raul Grijalva, D-Ariz., sent letters to university employers of seven researchers identified as climate crisis skeptics. All were asked to provide details about their outside funding sources.

In addition, Senators Barbara Boxer, D-Calif.; Ed Markey, D-Mass.; and Sheldon Whitehouse, D-R.I., attempted to intimidate climate apostates by sending 107 letters to think tanks, trade associations and companies demanding that they provide the same information.

By extension, this presumably suggests that no scientist who ever accepts research funding from any special interest-linked sponsors should be trusted. Let’s remember, however, that government politicians and bureaucrats wishing to expand authority and budgets are as self-interested as anyone, and that nearly all university-based climate research depends upon federal grants they provide.

Those research conclusions, in turn, influence billions of dollars in regulatory and consumer energy costs. There’s little wonder then about the need for alarmist witch-hunting activists following 18 years and counting of flat global temperatures despite rising atmospheric CO2 levels. When the climate scare goes away, so does that power and money.

Another version of this post appeared in Newsmax.

 

May 11, 2015 | 2 comments | by

Energy Security Must Include Reliable Power

A similar version of this blog post appeared in Newsmax:

Unlike populations in most other parts of the world we Americans take vital benefits of dependable electricity for granted. We simply plug into an outlet or flip on a switch and fully expect that our lights will go on, our computers will charge, our coffee will heat up, our air conditioners will function, and yes, our generous taxpayer subsidized plug-in vehicles will run again until tomorrow.

This wonderful, finely balanced round-the-clock empowerment required planning and development which didn’t occur overnight. The same will be true of future efforts to restore adequate capabilities after the Obama EPA’s Clean Power Plan takes an estimated one-third of all U.S. coal-fired plants off the grid over the next five years. This amounts to a loss of generating capacity sufficient to supply residential electricity for about 57 million people.

The North American Electric Reliability Corp, a nonprofit oversight group, emphasizes that the plan constitutes “a significant reliability challenge, given the time required for implementation.” The timeline to convert or replace a coal-fired power plant with natural gas requires years, whereby siting, permitting and development to meet EPA’s interim target would need to be completed by 2017.

Even if a state were able to submit a compliance plan by 2017 or 2018, EPA has admitted that it may take up to another year to approve it. New and upgraded natural gas plants will require additional pipeline infrastructure which may take five years or longer. More expansive transmission lines will also be required to connect that capacity to the grid, with full implementation potentially taking up to 15 years.

EPA’s latest climate alarm-premised war on coal assault calls for states to cut CO2 emissions by 30 percent from 2005 levels by 2030 despite satellite-recorded flat mean global temperatures over the past 18 years and counting. This federal usurpation of state responsibility dating back to the invention of the modern steam engine in the 1880s is unprecedented.

A “finishing rule” expected to be issued in June or July will require states to meet agency carbon-reduction targets by reorganizing their “production, distribution, and use of electricity.” In complying, 39 states must achieve more than 50 percent of EPA’s reduction targets by 2020.

Not only are EPA’s mandates unfeasible, they also demand that states operate “outside the fence line” to force shut-downs of coal (and eventually natural gas), establish minimum quotas for renewables (wind and solar), and impose energy conservation mandates. Never mind here that last year the D.C. Court of Appeals ruled against the Federal Energy Regulatory Commission’s claim of authority over “demand response” of the national energy grid.

Even liberal Harvard constitutional authority Larry Tribe has observed being stunned at this effort to nationalize U.S. electricity generation by coercing states to pass new laws or rush through new compliance rules that exceed EPA’s legal jurisdiction. President Obama is clearly eager for such policy changes to be quickly put into effect which a future Republican president can’t reverse. This will also provide bragging rights for a climate initiative he can announce at the Paris climate conference later this year.

Fortunately, while states are invited to draw up implementation plans for EPA approval, they really have no legal obligation to do so. And while EPA can attempt to commandeer a federal plan if states resist, there are good incentives for them to band together in calling EPA’s bluff — reasons which can otherwise bear dangerous and costly consequences.

An April 7 Washington, D.C., power outage caused by a mechanical failure and fire at a transfer station temporarily disrupted electricity to the White house, Capitol, government agencies (yes, including the Energy Department), businesses/residents, and street lights. While relatively minor, it most likely could have been avoided if a 60-year-old coal-fired plant called the Potomac River Generating Station in Alexandria, Va., which provided backup capacity to balance the grid, hadn’t been shuttered.

It was one of 188 plant closures credited to former New York City Mayor Bloomberg’s activist “Beyond Coal” campaign which he has supported with $80 million in donations to the anti-fossil Sierra Club.

A far more damaging 2003 Northeast blackout resulted in costs of about $13 billion. Referring to the Clean Power Plan, the New York Independent Systems Operator (NYISO) now reports that EPA’s “inherently unreasonable” reductions “cannot be sustained while maintaining reliable electric service to New York City.” NYISO further projects unacceptable plan consequences which “no amount of flexibility can fix.”

States should collectively heed this reality. Rather than accept EPA’s dirty work, it’s imperative that federal hijacking of state sovereignty be resoundingly rejected.

Apr 29, 2015 | 2 comments | by

White House Releases Quadrennial Energy Review for Earth Day

Yesterday, the Obama administration released the first installment of the new Quadrennial Energy Review (QER), a four-year cycle of assessments deigned to provide a roadmap for U.S. energy policy. This first installment focuses on the needs and opportunities for modernizing the nationwide infrastructure for transmitting, storing, and distributing energy. Dr. John Holdren and Dan Utech said:

Today, America has the most advanced energy system in the world. A steady supply of reliable, affordable, and increasingly clean power and fuels underpins every facet of our nation’s economy. But the U.S. energy landscape is changing dramatically, with important implications for the vast networks of pipelines, wires, waterways, railroads, storage systems, and other facilities that form the backbone of America’s energy system.

The administration hopes that careful analysis and modernization of energy infrastructure will promote economic competitiveness, energy security, and environmental responsibility.

This first QER installment comes just in time for Earth Day, which has spurred many sectors of the government into action. Over the past two days, the House of Representatives sent an energy efficiency bill to the president’s desk, the Department of Justice and the EPA levied $5 million in penalties against ExxonMobil for a 2013 oil spill, Democratic House members introduced the “strongest anti-fracking” bill yet brought to the House, which would ban fracking on all federal lands. The president is also doing his part, touting his plans to impact climate change at debates in Florida.

Though Earth Day has a tendency to bring out people’s far-fetched energy plans, it does do some good as well. According to the Annual Energy Outlook, improvements in energy efficiency, increases in energy demand, and the stabilization of energy-related carbon dioxide emissions have all benefited since the first Earth Day 45 years ago.

 

Apr 22, 2015 | Leave a Comment | by
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