Book Review: The Power Surge

As I write about energy each day, I often wonder what the trade-offs or consequences will be if a technology takes off, or even if it fails. How will it, if at all, alter America’s energy landscape? From my point of view, we are a country in fear of change and in fear of taking The Power Surgeaction. We are a country that spends more time worrying about what celebrities wore to an award show and when the next iPhone will be hit the streets, then worrying about the underlying causes of recessions (many economists blame oil prices) and what the consequences are of the decisions made, or more often than not, not made, by our elected officials.

So I was very excited when I read, “The Power Surge: Energy, Opportunity, and the Battle for America’s Future,” by Michael Levi who is the Senior Fellow for Energy and Environment and Director, Center for Geoeconomic Studies and Council on Foreign Relations. I have never read a book that does a better job of presenting various energy scenarios and the intended and unintended consequences of them and written and presented in a way based on research, economics and trends and not based on emotions.

There is no argument that there is a battle afoot over America’s, and quite frankly, the world’s energy future.

Our entire life is dependent on energy. We as a society can not function in our current “lifestyle” without energy. Period.

And despite what you personally believe, there are economic, security and environmental consequences and/or benefits to all decisions made and not made as eloquently demonstrated by Levi (and this includes those who believe climate change is a hoax). Levi begins the book with a three very probative and questions and one that he uses against all scenarios he presents in the book. In other words, how does the technology, legislation, or action fare against these three pillars?

  1. Does each energy source that has recently thrived offer important opportunities to improve the U.S. economy, strengthen national security or mitigate climate change while not causing intolerable damages on any of those fronts?
  2. Is is possible to seize those opportunities simultaneously- or would pursuing some of them severely undermine others?
  3. And can the United States take advantage of these opportunities without fundamentally altering the role of government in America?

The book begins with an in-depth discussion of all things oil and touches upon renewable energy sources such as biofuels. He also covers electricity and the role of natural gas in our current and energy future as well as technologies like wind and solar. He also points out that all sides of the issue overstate some of their claims and it was refreshing to see someone who doesn’t only call out claims on the side he/she is against. He writes, Continue reading

Editorial from Orrie Swayze

orrie-headshotPioneer ethanol advocate Orrie Swayze of South Dakota had the following op-ed published last week in the Sioux Falls Argus Leader:

Like with lead, petroleum’s web of lies continues gaining permission from the masses to poison their children. Author Dresden James explains why: “When a well-packaged web of lies has been sold gradually to the masses … the truth will seem utterly preposterous and its speaker, a raving lunatic.”

Too many Americans passively accepted oil industry lies like “lead octane is a gift from God.” And “E30’s octane ruins engines” These lies blocked ethanol’s octane market participation guaranteeing gasoline distributed lead poisoned our children and annually increased our medical costs plus oil industry profits many billions of dollars.

Oil’s lies again block ethanol octane’s meaningful market participation — guaranteeing gasoline distributed benzene octanes’ known human carcinogenic emissions (identical to those in cigarette smoke) daily poison our children: The annual associated billions of dollars in medical costs still make gasoline planet earth’s most subsidized commodity.

Do you own your thoughts or automatically think these truths are preposterous?
1. “Standard autos are flex fuel to auto manufactures’ endorsed premium E30.”
2. “Like E85 marketers historically, E30 marketers can safely use standard gasoline pumps.”
3. “Thousands of standard auto owners daily use blender pump’s cheaper, premium E30 to travel millions of trouble free miles annually without any legitimate warrantee denials.”
4. “They typically report “more power “and “can’t tell any mileage difference.”
5. “Increasing corn ethanol production sequesters carbon, lowers soybean prices, and enables E30’s market penetration to reduce benzene related octane emissions plus billions of dollars of medical costs 50 to 80 percent.”
6. Remarkably, corn/acre produces 450 gallons of ethanol plus the protein/meal/oil food equivalents (pounds) soybeans produce/acre.

Utterly preposterous, shout too many whose intellectual curiosity surrendered to oil’s propaganda long ago: Including too many corn and ethanol advocates, nearly all Americans, EPA officials, politicians, news media wise talking heads, etc. Little wonder oil’s basically gasoline monopoly poisons our children and destroys free enterprise’s role in liquid fuels markets.

Book Review: Flight Behavior

I recently read the novel Flight Behavior by Barbara Kingsolver, a book about climate change. When I first began reading the book I had no intentions of doing a review, but as I got deeper into the book, and the characters voiced their opinions, about media in general, my intentions changed.

The premise of the book is that millions of monarch butterflies migrate to a rural area in Tennessee for the winter instead of going to their usual location in Mexico. After they are Flight Behaviordiscovered by Dellarobia on her family’s land, and the media gets involved with a news story, people from around the world begin showing up including a scientist. The next several months the scientist, Dr. Ovid Byron, and his team attempt to ascertain why the monarch butterflies wintered in Tennessee.

There have been discussions in the media and scientific journals about how monarchs are decreasing in population. While some believe the cause is climate change, others believe it is the use of pesticides and some believe it is a combination of both. For example, Andre Leu, IFOAM President and author of The Myths of Safe Pesticides, quotes in his book, “Herbicide-resistant plants….have increased the use of glyphosate, which kills all other plants including milkweed, the only type of plant that monarch butterflies use for laying their eggs.” The author cites that milkweed has declined by 60 percent and monarchs in the U.S. that winter in the forests of Mexico has dropped from 1 billion in 1997 to 33.5 million. The milkweed fact above was mentioned in Flight Behavior.

I”m not going to use this space to debate climate change; rather, I’m going to use this space to discuss the role of media in the conversation. Today, media is quoting “experts” about climate change (and other issues) that are in fact not experts at all. Where are the credible scientists and researchers who are doing the work around climate change in this conversation?

Many scientists do not like how they are portrayed in and by the media. Reporters often spend more time being skeptical about the facts being delivered by a respected scientist then they do when speaking to a person who uses social media to get his/her word out effectively but has no basis in training or education to be discussing the scientific merits of an issue. (In other words, scientists don’t speak sexy talk).

Dellarobia and her husband Cub, give us an example: “Here’s the thing,” she said. “Why would we believe Johnny Midgeon about something scientific, and not the scientists?” Continue reading

Wind Energy Faces Challenges

According to a new paper, “Challenges for Wind Energy’s Future,” although a negligible player in electricity generation, wind energy comes at an exorbitant taxpayer expense. In addition, the report finds that the wind industry faces several likely “insurmountable” challenges to becoming a dependable part of America’s energy portfolio.

Author Merrill Matthews, Ph.D., discusses in the paper that while wind itself may be free, the IPI Ideas Challenges for Wind Energyprice to harness it as a source of renewable energy is not. Matthews reports that wind energy accounted for only 4 percent of total U.S. electricity generation in 2013, but cost taxpayers a what he calls a staggering $2 billion—a vastly disproportionate tax subsidy as compared to other energy producing industries.

Matthews says it was admitted even by investor Warren Buffett that the wind energy industry would not exist without tax breaks, and the market for it has only been sustained because of government mandates.

  • In addition to its expense, writes Matthews, wind energy’s other key challenges include:
  • It’s unreliable and may not be available during peak usage;
  • It’s shown to be environmentally harmful, for example causing half a million annual bird deaths; and
  • It’s losing favor as a priority with the public.

“The quest for an economy driven by a clean, abundant and affordable renewable energy remains an unfulfilled dream—though not for a lack of lobbying, a supportive media, and lots of government money,” writes Matthews. “Wind energy’s marginal success has come at a huge taxpayer and ratepayer cost. The public’s willingness to continue to pour billions of dollars into wind energy, through higher taxes or rates, appears to be coming to a close.”

Oklahoma Institutes “Sun” Tariff

The Oklahoma legislature has passed a bill that institutes a tax on the sun and wind (distributed generation). Beginning November 1, 2014, residents who use solar or wind energy and want to connect their renewable energy to the grid, must begin paying a “solar surcharge” to utilities for the privilege. The bill was signed into law on April 21 (notably one day before Earth Day and during Earth Week) by Governor Mary Fallin. Existing solar arrays and wind turbines and any projected commissioned by October 31, 2014 will be grandfathered in at existing connection charges.home-solar-panel-install-dallas-north-carolina-solar-energy-usa

The bill was passed with virtually no opposition and was supported by the state’s major electric utilities who said they need the surcharge to recover some of the infrastructure costs to send excess electricity safely from distributed generation back to the grid, especially for those customers who don’t have the money to do this safely. The bill drew opposition from solar and wind advocates as well as environmentalists.

The Oklahoma Corporation Commission is now tasked with establishing a separate customer class and monthly surcharge, or tariff for distributed generation customers. The new tariffs would start by the end of 2015.

So in other words, complements of the “sun tax” customers now have to pay extra to generate their own electricity from renewable resources – the exact opposite of what adding solar or wind to your home is supposed to do. In keeping with the theme of the sun and wind, this is not a bright idea but rather a blustery idea.

Editorial from Father of Ethanol

merle-andersonThe man who is known as the “Father of Ethanol” in the United States is still busy advocating for the industry at the well-seasoned age of 93.

Merle Anderson, one of the founding members of the American Coalition for Ethanol (ACE), just recently penned an excellent editorial for the Grand Forks Herald about his favorite subject and his observations are just as sharp as ever when it comes to the fuel he has been promoting for decades. Here’s some excerpts his letter entitled “Government ‘myths’ limit ethanol’s full use” that he wrote with input from his friend and fellow ethanol advocate Orrie Swayze from Watertown, S.D.:

First, we must remember that Henry Ford favored E30 for his Model T. After that, what could go wrong, did go wrong as government teamed with oil, and — in a joint effort to keep ethanol out of gasoline markets — created misleading myths that E30 was illegal and would ruin engines…

Merle debunks several of those myths, including that higher ethanol blends void car warranties and that gas station pumps are unable to handle higher blends such as E30. “I really chuckle at that one, because standard gas station pumps were the only pumps available when E85 was introduced nearly 20 years ago, and they still are safely pumping E85.”

Merle concludes – My dream is every American and all of agriculture — including our sugar beet industry — would have access to an ethanol market that is not limited by EPA and big oil’s nonsense or the ethanol blend wall that has been in place since the first Model T was built.

Read Merle Anderson’s entire editorial here
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Keep Our Tax Breaks: We Only Make $93B in Profit

Dear Congress,

Please keep our millions of dollars in tax breaks in place. We only make $93 billion in collective profit per year. This is not enough money to operate our businesses and overcharge our customers. We’re sure you will make the right decision.

Yours truly,

Big Oil

This is what a letter to Congress might look like from Big Oil who according to a report from the Center for American Progress, made a combined profit of $93 billion in 2013. The total is for five big oil companies: BP, Chevron, ConocoPhillips, Exxon Mobil and Shell. Despite this ridiculous amount of revenue (these companies made $177,000 per minute), they are fighting to keep their tax breaks in addition to lobbying to lift the crude oil export ban.

The five Big Oil Brothers actually increased total production in 2013 most due to BP and ConocoPhillips in essence single handedly doubling production. Although production went up, profits went down because it is becoming more expensive to extract oil. It is this change that is causing the oil industry to argue they need their tax breaks to continue.

What is staggering is that the $93 billion profit is down nearly 27 percent from 2012. In addition to higher cost of production, the average price of gasoline in 2012 was 16 cents less per gallon than the previous year.

It would not be surprising, write Daniel Weiss and Miranda Peterson, both with Center for American Progress, “if the big five oil companies use their 2013 decline in profits as another excuse to pressure Congress to retain their $2.4 billion-per-year tax breaks. The largest of these special provisions, they write, allows these companies to qualify for the “limitation on section 199 deduction attributable to oil, natural gas, or primary products, which will cost taxpayers $14.4 billion over 10 years. This according to the Congressional Joint Committee on Taxation. This particular tax break was enacted in 2004 and was designed to encourage manufacturing to remain in the United States rather than move overseas. It was not meant to apply to oil and natural gas production since the oil and gas fields cannot be moved to another nation. Continue reading

Opinion: EPA Putting Carrot Behind Biodiesel’s Back

KotrbaAs the Environmental Protection Agency (EPA) considers its proposal to cut down on the amount of biofuels to be blended into the Nation’s fuel supply, biodiesel makers are still scratching their heads trying to figure out why their green fuel is even being considered. In this piece in Biodiesel Magazine, Ron Kotrba makes the case that when it comes to trying to entice renewable energy production, it seems the EPA has moved the carrot from in front to behind biodiesel… making it move backwards.

[W]hen EPA proposed stalling biodiesel growth and slashing advanced biofuel targets under this year’s [Renewable Fuel Standard (RFS)] volume requirements—remember biodiesel is the only commercially available U.S. advanced biofuel to break the billion-gallon mark, and it has done so three years in a row now—investors and producers alike wondered how could they do this, and why?

Opponents to RFS and biodiesel often use the argument, “If biodiesel is such a great fuel, then why must the government require its use?” I believe the answer to this is quite obvious. Without government intervention in the form of gradually increasing mandates, biodiesel would remain locked out of the mainstream petroleum transportation fuels market because every percent of fossil diesel fuel that biodiesel displaces is lost profit for the wealthiest, most powerful corporations in the world.

For those who oppose RFS, for whatever reason, put the shoe on the other foot for a moment. You own a small business. Times are tough, particularly when competing with the local Big Box store with discount prices. The local government commits to its hometown small businesses by providing welcomed tax relief and special deductions that foster small business growth, keeping the mom-and-pop stores competitive in pricing and market opportunity. You, as a small business owner, invest in growing your business, as a result of these long-term commitments from your local government. Then, one day, without good reason, long before the tax breaks were targeted for sunset but just as their legislative intents were beginning to be realized, the council rescinds the tax breaks and you, as a small business owner, are left high and dry with your funds tied up in future growth based on a long-term commitment from your local government. Now what?

Kotrba goes on to counter the argument that if biodiesel was so good, it wouldn’t need government support. He points out that petroleum companies receive more than a half a trillion dollars in government subsidies. Plus, he says that while Big Oil might argue that the energy environment has changed since the RFS was enacted in 2007, one thing has not changed: oil is a finite resource, and one day we are going to run out.

Wind Tax Credit Set to Expire

The wind energy tax credit is set to expire tomorrow and unlike last year, there has been virtually no noise from the wind energy industry on the need to save the Production Tax Credit (PTC). In January 2013 Congress extended the tax credit for one year but single wind turbine Photo Joanna Schroederstructured the credit different in the past. Could this be the reason there has been all but silence from the industry on its expiration?

Heading in the the third and fourth quarters of 2012 wind supporters claimed that if the tax credit expired, the industry would all but halt. However this argument has not been heard this year.

While speculation, it could be because when the tax credit was restructured for 2013, it said that a project only has to be in construction by the end of 2013, not completed to qualify for the PTC. But it wasn’t until September of 2013 that the IRS (Internal Revenue Service) released rules that defined a project “in construction” if the project developer has incurred 5 percent of the total capital costs. In addition, the IRS guidelines also stipulate that all the wind turbines for a project must be delivered to the project site by April 15, 2014 and the wind farm must be in operation by December 31, 2015.

Under this structure, the wind industry should remain strong through 2015 and this past month, many companies have announced their wind farm projects have entered the “construction phase”.

According to the American Wind Energy Association (AWEA), during the forth quarter at least 27 requests for proposals were issued with an estimated 4,175 MW of new wind energy to be generation upon completed. Looking further ahead, reports AWEA, 5,600 MW of new wind projects have secured long-term contracts, and another 1,900 MW have received state regulatory approval.

Screen Shot 2013-12-30 at 12.33.55 PMSo how is 2013 shaping up for the wind industry? AWEA reports that American wind energy will finish 2013 with strong momentum for installations in the new year according to the U.S. Wind Industry Third Quarter 2013 Market Report. The industry experienced a painful slowdown at the beginning of 2013 as result of the scheduled expiration of the federal wind energy PTC at the end of 2012, but has now rebounded. However, says AWEA, lack of certainty over federal tax policies continues to keep wind energy from reaching its full potential in the United States. Continue reading

Book Review – Ruminations on the Distortion of Oil

I recently finished reading the book, “Ruminations on the Distortion of Oil Prices & Crony Capitalism,” by Raymond J. Learsy. The book was a historical review of his writings dealing with Big Oil and why oil prices are so high. In other words, “an overview of…our enslavement to oil and the money inextricably tied to it.”

Ruminations-Book-CoverA former commodity trader, Learsy noted that oil prices are gamed and have little to do with market discipline of supply and demand. He explains in the book how commodity markets work (you really have no idea until you read the book and listen to his interview). In fact, Learsy writes that “This administration [Obama administration] has a profound lack of understanding of how oil markets function.” He also says there is no real oversight by our government over the oil industry or over the workings of the OPEC Cartel (Organization of the Petroleum Exporting Countries).

He notes that no global industry is wealthier than the oil industry and the countries that produce the oil. He explains that the oil industry and traders play the commodity market in a way that maximizes the price for oil. He said that a barrel of oil should not be hovering around $100. Rather, according to the CEO of Exxon/Mobil Rex Tillerson who stated during Congressional testimony in 2011, speculation was adding $30 to $40 to the price of each barrel.

“Six hundred million dollars a day is going from consumers to oil interests each day. This is money that is being stolen out of consumers’ pockets everyday,” said Learsy.

He also points out that in President Obama’s diversified energy strategy, natural gas is not included. Today he explains the U.S. has an abundance of affordable natural gas that is being burned off because there are not enough pipelines to transport it.

This book specifically focuses and on uncovering who is responsible for soaring gas prices. If you want to know as well, then read this book. It is available on Amazon.

Listen to my in-depth interview with Raymond Learsy. BTW – You will enjoy what Learsy would do if he were president for a day to fix the oil price situation. Interview with Author Raymond Learsy

Win a copy of Ruminations on the Distortions of Oil Prices & Crony Capitalism. Email me with the subject line “Ruminations Book Giveaway” by Tuesday, December 10, 2013. The winner will be announced in the DF newsletter on December 11th.