Forbes
Larry Bell
I find it somewhat comical when scientists and others who publicly express skepticism about a looming man-made global warming catastrophe are accused of being in the pocket of Big Oil. Here we are referring to oil and gas… master resource trade commodities that the entire world urgently depends upon. Can you imagine they are losing sleep over market competition from non-fossil “renewable alternatives” such as ethanol, windmills and sunbeams? Do you really think rampaging greenhouse gas regulatory attacks on coal-fired power are anything but a blessing?
First, regarding that “green” ethanol, consider that it really produces little or no net fuel gain at all…not after the diesel required to power the tractors needed to plant, fertilize and harvest all that corn, along with the energy needed to brew it into 180-proof grain alcohol, are factored in. Then, for those who care, after CO2 emissions released in producing it and burning it in vehicles are accounted for, there’s not much difference, if any, compared with petroleum there either. What should matter to everyone, however, is that ethanol has a much lower energy density than gasoline, meaning that it yields fewer miles per gallon.
And although ethanol has no rational connection with climate, it’s not like Big Oil has a problem hitching a ride on the green bandwagon. Koch Industries, through its subsidiaries Flint Hill Renewables and Koch Supply & Trading, for example, has purchased several ethanol plants in Iowa, and together with its Minnesota refinery, reportedly has the capacity to supply about one-tenth of the U.S. market.
As Flint Hills President Brad Razook told his employees in a company newsletter, “New or emerging markets, such as renewable fuels, are an opportunity for us to create value within rules the government sets.” He went on to say, “After all, ethanol production is heavily subsidized, mandated and protected”…then adding, “…while Koch companies openly oppose such government programs.”
Yes, and why blame them? Why pass up money that can be made blending sweet lemonade petroleum with grain alcohol to produce bitter lemon juice…at least so long as voters are gullible enough to tolerate such state and federal lunacy, and taxpayers and consumers can afford to cover the extra costs.
Then again, the EPA doesn’t want petroleum refiners to make too much money, and is doing a good job to prevent this from happening. Over the past six months three refineries supplying about half of all the East Coast’s gasoline, diesel and jet fuel have closed down in large part due to overly burdensome environmental compliance costs. Philadelphia-based Sunoco’s Northeast refinery business lost nearly $1 billion over the past three years after spending more than $1.3 billion to meet stricter rules.
Enormously abundant U.S. natural gas represents an increasingly attractive long-term automotive petroleum fuel alternative. Premised upon theoretical climate benefits, the EPA is actively pushing to leverage such a transition to this “cleaner” alternative. Asserting authorization under the Clean Air Act to issue greenhouse gas (GHG) standards for motor vehicles as a “regulated air pollutant”, they propose to impose CO2 restrictions upon model year 2017 and later light-duty trucks.
But wouldn’t you expect the EPA to be aware that expanded natural gas use will encourage more fracking in order to tap into our huge oil shale reserves? That’s something they apparently don’t like one bit. Their latest gambit is to try to link this safety-proven six- decade-old technology to drinking water pollution.
Wind power also provides a big growth opportunity for natural gas, a fact not lost on T. Boone Pickens who is, after all, a pretty smart guy. Remember when he made prime time news back in 2007 announcing plans to build the world’s largest wind farm on his land, a $10 billion, 2,700-turbine venture capable of producing enough electricity to support one million homes?
Perhaps you also remember that he is a serious player in the natural gas business. And since wind is highly intermittent, a “spinning reserve” of backup power capacity is needed to constantly balance fluctuations in the power grid. That typically involves using inefficiently applied natural gas-fueled turbines that are connected to the grid.
Achieving a balanced grid network requires that when the wind generation component increases, the temperatures of gas-fueled turbine boilers must be dropped to maintain demand-supply equality. This involves wasteful shedding of heat for cooling—then more wasting to add heat back into the system without accomplishing any additional work. And since the spinning reserves don’t stop consuming fuel when wind generation is occurring, any energy savings or CO2 emission reductions are largely mythological.
As for claims of powering those one million or gazillion homes, keep in mind that that there is carefully cultivated industry-promoted confusion which fails to differentiate between maximum total theoretical capacities (typically megawatts), and actual kilowatt hours based upon predicted annual average wind conditions at a particular site.
Wind is intermittent, and velocities constantly change. It often isn’t available when needed most…such as during hot summer days when demands for air-conditioning are highest. Output also varies greatly according to location, topographical features, and time of year. Although Texas is one of the most productive wind energy states, averaging about 16.8% of installed capacity, the Electric Reliability Council of Texas assigns a value of 10% due to unpredictability. Only about 20% of that capacity is generally available during peak load demand periods (about 5:00pm), while average generation during off-peak time averages about 40% of capacity.
Like wind, solar power is an unreliable, intermittent, location-dependent option which is fundamentally influenced by daily and seasonal weather and sky conditions. And don’t count on it to recharge your plug-in car or power your laptop at night. Also, since it is the most costly power source of all, currently providing only about 0.01% of U.S. electricity, don’t expect it to significantly change the U.S. energy picture any time soon.
And coal? Here’s where the global warming regulatory crowd at EPA are doing all they can to help the Big Oil and Gas guys, whether they asked for it or not. Then again, the EPA probably isn’t the coal industry’s biggest problem anyway, and is only hastening its inevitable decline. A greater adversary resides in the free market form of that cheaper, cleaner and abundant natural gas. As Jone-Lin Wang, head of global power research for HIS CERA told the Wall Street Journal, no other threat to coal “even comes close.”
Whereas in 2003 coal accounted for nearly 51% of all U.S. electricity, its market share had fallen to 43% during the first nine months of 2011. In contrast, natural gas’s share jumped from under 17% in 2003 to nearly 25% of U.S. power. With enthusiastic help from EPA, power sector coal consumption is expected to fall 2% this year, and 4% next year. Experts predict that 10%to 20% of coal-fired generating capacity will be retired by 2016.
EPA has actually been an ally of Big Oil and Gas against Big Coal for some time, originally with no better friend then Enron. Flash back to the 1990s, a period when Enron’s natural gas business was encountering difficult market competition with coal. The company was already heavily invested in the largest natural gas pipeline that existed outside of Russia, a colossal interstate network. They badly needed some weight in Washington to tip the playing field.
Some members of Congress were already aggressively pursuing development of green legislation models with interesting possibilities to advance Enron’s purposes. Senators John Heinz (R-PA) and Timothy Wirth (D-CO) had cosponsored “Project 88” to provide a pathway for converting environmental issues into business opportunities. Media-fueled alarm about acid rain provided a basis for legislation to create markets for buying and selling excess sulfur dioxide and nitrogen dioxide emission credits, and Project 88 became the Clean Air Act of 1990. Enron was a major SO2 cap-and-trade player.
So Enron and others wondered, why not do the same thing with CO2? Since natural gas is a lower CO2 emitter than coal, this would certainly be a profitability game changer. But there was a problem. Unlike SO2, CO2 wasn’t considered to be a pollutant, so the EPA had no authority to regulate it. But national hype about a global warming crisis advanced by then-Senator Gore’s highly publicized 1988 congressional hearings on the subject soon appeared to provide a dream opportunity to change that.
Enron’s CEO Kenneth Lay had reportedly already met with President Clinton and Vice President Gore on August 4, 1997 to prepare a U.S. strategy for an upcoming U.N.-sponsored, Kyoto Protocol-promoting, climate summit that December. Kyoto presented the first step toward creating a carbon market that Enron desperately wanted Congress to support. An internal Enron memorandum stated that Kyoto would “do more to promote Enron’s business than almost any other regulatory initiative outside the restructuring [of] the energy and natural gas industries in Europe and the United States”.
The rest is history. While the U.S. Congress voted unanimously to prevent U.S. participation in Kyoto, and the 2010 House mid-term elections killed cap-and-trade prospects, the war against global warming-fueled coal still lives on in the heart and hunger of an ever-expanding EPA regulatory bureaucracy.
So why shouldn’t Big Oil cheer?
Larry Bell
First, regarding that “green” ethanol, consider that it really produces little or no net fuel gain at all…not after the diesel required to power the tractors needed to plant, fertilize and harvest all that corn, along with the energy needed to brew it into 180-proof grain alcohol, are factored in. Then, for those who care, after CO2 emissions released in producing it and burning it in vehicles are accounted for, there’s not much difference, if any, compared with petroleum there either. What should matter to everyone, however, is that ethanol has a much lower energy density than gasoline, meaning that it yields fewer miles per gallon.
And although ethanol has no rational connection with climate, it’s not like Big Oil has a problem hitching a ride on the green bandwagon. Koch Industries, through its subsidiaries Flint Hill Renewables and Koch Supply & Trading, for example, has purchased several ethanol plants in Iowa, and together with its Minnesota refinery, reportedly has the capacity to supply about one-tenth of the U.S. market.
As Flint Hills President Brad Razook told his employees in a company newsletter, “New or emerging markets, such as renewable fuels, are an opportunity for us to create value within rules the government sets.” He went on to say, “After all, ethanol production is heavily subsidized, mandated and protected”…then adding, “…while Koch companies openly oppose such government programs.”
Yes, and why blame them? Why pass up money that can be made blending sweet lemonade petroleum with grain alcohol to produce bitter lemon juice…at least so long as voters are gullible enough to tolerate such state and federal lunacy, and taxpayers and consumers can afford to cover the extra costs.
Then again, the EPA doesn’t want petroleum refiners to make too much money, and is doing a good job to prevent this from happening. Over the past six months three refineries supplying about half of all the East Coast’s gasoline, diesel and jet fuel have closed down in large part due to overly burdensome environmental compliance costs. Philadelphia-based Sunoco’s Northeast refinery business lost nearly $1 billion over the past three years after spending more than $1.3 billion to meet stricter rules.
Enormously abundant U.S. natural gas represents an increasingly attractive long-term automotive petroleum fuel alternative. Premised upon theoretical climate benefits, the EPA is actively pushing to leverage such a transition to this “cleaner” alternative. Asserting authorization under the Clean Air Act to issue greenhouse gas (GHG) standards for motor vehicles as a “regulated air pollutant”, they propose to impose CO2 restrictions upon model year 2017 and later light-duty trucks.
But wouldn’t you expect the EPA to be aware that expanded natural gas use will encourage more fracking in order to tap into our huge oil shale reserves? That’s something they apparently don’t like one bit. Their latest gambit is to try to link this safety-proven six- decade-old technology to drinking water pollution.
Wind power also provides a big growth opportunity for natural gas, a fact not lost on T. Boone Pickens who is, after all, a pretty smart guy. Remember when he made prime time news back in 2007 announcing plans to build the world’s largest wind farm on his land, a $10 billion, 2,700-turbine venture capable of producing enough electricity to support one million homes?
Perhaps you also remember that he is a serious player in the natural gas business. And since wind is highly intermittent, a “spinning reserve” of backup power capacity is needed to constantly balance fluctuations in the power grid. That typically involves using inefficiently applied natural gas-fueled turbines that are connected to the grid.
Achieving a balanced grid network requires that when the wind generation component increases, the temperatures of gas-fueled turbine boilers must be dropped to maintain demand-supply equality. This involves wasteful shedding of heat for cooling—then more wasting to add heat back into the system without accomplishing any additional work. And since the spinning reserves don’t stop consuming fuel when wind generation is occurring, any energy savings or CO2 emission reductions are largely mythological.
As for claims of powering those one million or gazillion homes, keep in mind that that there is carefully cultivated industry-promoted confusion which fails to differentiate between maximum total theoretical capacities (typically megawatts), and actual kilowatt hours based upon predicted annual average wind conditions at a particular site.
Wind is intermittent, and velocities constantly change. It often isn’t available when needed most…such as during hot summer days when demands for air-conditioning are highest. Output also varies greatly according to location, topographical features, and time of year. Although Texas is one of the most productive wind energy states, averaging about 16.8% of installed capacity, the Electric Reliability Council of Texas assigns a value of 10% due to unpredictability. Only about 20% of that capacity is generally available during peak load demand periods (about 5:00pm), while average generation during off-peak time averages about 40% of capacity.
Like wind, solar power is an unreliable, intermittent, location-dependent option which is fundamentally influenced by daily and seasonal weather and sky conditions. And don’t count on it to recharge your plug-in car or power your laptop at night. Also, since it is the most costly power source of all, currently providing only about 0.01% of U.S. electricity, don’t expect it to significantly change the U.S. energy picture any time soon.
And coal? Here’s where the global warming regulatory crowd at EPA are doing all they can to help the Big Oil and Gas guys, whether they asked for it or not. Then again, the EPA probably isn’t the coal industry’s biggest problem anyway, and is only hastening its inevitable decline. A greater adversary resides in the free market form of that cheaper, cleaner and abundant natural gas. As Jone-Lin Wang, head of global power research for HIS CERA told the Wall Street Journal, no other threat to coal “even comes close.”
Whereas in 2003 coal accounted for nearly 51% of all U.S. electricity, its market share had fallen to 43% during the first nine months of 2011. In contrast, natural gas’s share jumped from under 17% in 2003 to nearly 25% of U.S. power. With enthusiastic help from EPA, power sector coal consumption is expected to fall 2% this year, and 4% next year. Experts predict that 10%to 20% of coal-fired generating capacity will be retired by 2016.
EPA has actually been an ally of Big Oil and Gas against Big Coal for some time, originally with no better friend then Enron. Flash back to the 1990s, a period when Enron’s natural gas business was encountering difficult market competition with coal. The company was already heavily invested in the largest natural gas pipeline that existed outside of Russia, a colossal interstate network. They badly needed some weight in Washington to tip the playing field.
Some members of Congress were already aggressively pursuing development of green legislation models with interesting possibilities to advance Enron’s purposes. Senators John Heinz (R-PA) and Timothy Wirth (D-CO) had cosponsored “Project 88” to provide a pathway for converting environmental issues into business opportunities. Media-fueled alarm about acid rain provided a basis for legislation to create markets for buying and selling excess sulfur dioxide and nitrogen dioxide emission credits, and Project 88 became the Clean Air Act of 1990. Enron was a major SO2 cap-and-trade player.
So Enron and others wondered, why not do the same thing with CO2? Since natural gas is a lower CO2 emitter than coal, this would certainly be a profitability game changer. But there was a problem. Unlike SO2, CO2 wasn’t considered to be a pollutant, so the EPA had no authority to regulate it. But national hype about a global warming crisis advanced by then-Senator Gore’s highly publicized 1988 congressional hearings on the subject soon appeared to provide a dream opportunity to change that.
Enron’s CEO Kenneth Lay had reportedly already met with President Clinton and Vice President Gore on August 4, 1997 to prepare a U.S. strategy for an upcoming U.N.-sponsored, Kyoto Protocol-promoting, climate summit that December. Kyoto presented the first step toward creating a carbon market that Enron desperately wanted Congress to support. An internal Enron memorandum stated that Kyoto would “do more to promote Enron’s business than almost any other regulatory initiative outside the restructuring [of] the energy and natural gas industries in Europe and the United States”.
The rest is history. While the U.S. Congress voted unanimously to prevent U.S. participation in Kyoto, and the 2010 House mid-term elections killed cap-and-trade prospects, the war against global warming-fueled coal still lives on in the heart and hunger of an ever-expanding EPA regulatory bureaucracy.
So why shouldn’t Big Oil cheer?
Posts
Interesting stuff about Enron's enthusiasm for Kyoto, but after watching "gasland" it seems like the author is letting natural gas off the hook while coming out hard against ethanol. AFAIK, the studies that found that ethanol is a net energy loser were from David Pimentel. He overestimated the oil input in ways like assuming you need a brand new super sized tractor for 40 acres of cultivation, chemical fertilizers etc. (see http://www.mail-archive.com/sustainablelorgbiofuel@sustainablelists.org/msg71532.html) There are several studies from South America that put large positive energy returns on ethanol versus oil inputs. Also, to say that ethanol has less energy than gas and therefore is less efficient in an engine I don't think is right. The heating value of gas is higher than ethanol yeah, but this actually makes alcohol more suitable for motor fuel, as it is better for the engine to run cooler. You might get less gas mileage (by 15% or so I've read) but far less if any soot gets into your oil so that a woman I've talked to who uses 85% ethanol hasn't had to change her oil in tens of thousands of miles and still going apparently. They taught us in auto mechanics 101 the three causes of engine wear: heat, vibration, and soot or exhaust residue in mechanicals, all three dramatically cut down or eliminated by ethanol. So you get less mileage (though one home-made ethanol expert gained mileage in his car) but save so much on your car by using ethanol. Sure, big agriculture does ethanol in a crappy way and the oil industry is all over big ethanol I think, but think of the possibilities for smaller-scale producers using more efficient methods and crops other than corn. Also, so many energy options: you can run engines on water! http://www.youtube.com/watch?v=4ljhGUia9Yk And how about batteries that collect ambient energy from the environment and convert it to electricity? http://www.youtube.com/watch?v=XK206oAmF_M
ReplyDeleteThanks for the contribution to help round this article out, Mike. Forbes should always be greeted with the suspicion it deserves. Notice how fracking is given a free pass! That said, the information refuting "big oil paradigm" was worth collecting.
ReplyDelete