Ethanol is the wrong solution

September 6, 2016 · Posted in Business and industry, Marita Noon, Radical Green · Comments Off on Ethanol is the wrong solution 

Commentary by Marita Noon

University of Michigan’s Energy Institute research professor John DeCicco, Ph.D., believes that rising carbon dioxide emissions are causing global warming and, therefore, humans must find a way to reduce its levels in the atmosphere – but ethanol is the wrong solution. According to his just-released study, political support for biofuels, particularly ethanol, has exacerbated the problem instead of being the cure it was advertised to be.

DeCicco and his co-authors assert: “Contrary to popular belief, the heat-trapping carbon dioxide gas emitted when biofuels are burned is not fully balanced by the CO2 uptake that occurs as the plants grow.” The presumption that biofuels emit significantly fewer greenhouse gases (GHG) than gasoline does is, according to DeCicco: “misguided.”

His research, three years in the making, including extensive peer-review, has upended the conventional wisdom and angered the alternative fuel lobbyists. The headline-grabbing claim is that biofuels are worse for the climate than gasoline.

Past bipartisan support for ethanol was based on two, now false, assumptions.

First, based on fears of waning oil supplies, alternative fuels were promoted to increase energy security. DeCicco points out: “Every U.S. president since Ronald Reagan has backed programs to develop alternative transportation fuels.” Now, in the midst of a global oil glut, we know that hydraulic fracturing has been the biggest factor in America’s new era of energy abundance – not biofuels. Additionally, ethanol has been championed for its perceived reduction in GHG. Using a new approach, DeCicco and his researchers, conclude: “rising U.S. biofuel use has been associated with a net increase rather than a net decrease in CO2 emissions.”

DeCicco has been focused on this topic for nearly a decade. In 2007, when the Energy Independence and Security Act (also known as the expanded ethanol mandate) was in the works, he told me: “I realized that something seemed horribly amiss with a law that established a sweeping mandate which rested on assumptions, not scientific fact, that were unverified and might be quite wrong, even though they were commonly accepted and politically correct (and politically convenient).” Having spent 20 years as a green group scientist, DeCicco has qualified green bona fides. From that perspective he saw that while biofuels sounded good, no one had checked the math.

Previously, based on life cycle analysis (LCA), it has been assumed that crop-based biofuels, were not just carbon neutral, but actually offered modest net GHG reductions. This, DeCicco says, is the “premise of most climate related fuel policies promulgated to date, including measures such as the LCFS [California’s Low Carbon Fuel Standard] and RFS [the federal Renewable Fuel Standard passed in 2005 and expanded in 2007].”

The DeCicco study differs from LCA – which assumes that any carbon dioxide released from a vehicle’s tailpipe as a result of burning biofuel is absorbed from the atmosphere by the growing of the crop. In LCA, biofuel use is modeled as a static system, one presumed to be in equilibrium with the atmosphere in terms of its material carbon flow. The Carbon balance effects of U.S. biofuel production and use study uses Annual Basis Carbon (ABC) accounting – which does not treat biofuels as inherently carbon neutral. Instead, it treats biofuels as “part of a dynamic stock-and-flow system.” Its methodology “tallies CO2 emissions based on the chemistry in the specific locations where they occur.” In May, on my radio program, DeCicco explained: “Life Cycle Analysis is wrong because it fails to actually look at what is going on at the farms.”

In short, DeCicco told me: “Biofuels get a credit they didn’t deserve; instead they leave a debit.”

The concept behind DeCicco’s premise is that the idea of ethanol being carbon neutral assumes that the ground where the corn is grown was barren dirt (without any plants removing carbon dioxide from the atmosphere) before the farmer decided to plant corn for ethanol. If that were the case, then, yes, planting corn on that land, converting that corn to ethanol that is then burned as a vehicle fuel, might come close to being carbon neutral. But the reality is that land already had corn, or some other crop, growing on it – so that land’s use was already absorbing CO2. You can’t count it twice.

DeCicco explains “Growing the corn that becomes ethanol absorbs no more carbon from the air than the corn that goes into cattle feed or corn flakes. Burning the ethanol releases essentially the same amount of CO2 as burning gasoline. No less CO2 went into the air from the tailpipe; no more CO2 was removed from the air at the cornfield. So where’s the climate benefit?”

Much of that farmland was growing corn to feed cattle and chickens – also known as feedstock. The RFS requires an ever-increasing amount of ethanol be blended into the nation’s fuel supply. Since the RFS became law in 2005, the amount of land dedicated to growing corn for ethanol has increased from 12.4 percent of the overall corn crop to 38.6 percent. While the annual supply of corn has increased by 17 percent, the amount going into feedstock has decreased from 57.5 percent to 37.98% – as a graphic from the Detroit Free Press illustrates.

The rub comes from the fact that we are not eating less. Globally, more food is required, not less. The livestock still needs to be fed. So while the percentage of corn going into feedstock in the U.S. has decreased because of the RFS, that corn is now grown somewhere else. DeCicco explained: “When you rob Peter to pay Paul, Peter has to get his resource from someplace else.” One such place is Brazil where previous pasture land, because it is already flat, has been converted to growing crops. Ranchers have been pushed out to what was forest and deforestation is taking place.

Adding to the biofuels-are-worse-than-gasoline accounting are the effects from producing ethanol. You have to cook it and ferment it – which requires energy. In the process, CO2 bubbles off. By expanding the quantity of corn grown, prairie land is busted up and stored CO2 is released.

DeCicco says: “it is this domino effect that makes ethanol worse.”

How much worse?

The study looks at the period with the highest increase in ethanol production due to the RFS: 2005-2013 (remember, the study took three years). The research provides an overview of eight years of overall climate impacts of America’s multibillion-dollar biofuel industry. It doesn’t address issues such as increased fertilizer use and the subsequent water pollution.

The conclusion is that the increased carbon dioxide uptake by the crops was only enough to offset 37 percent of the CO2 emissions due to biofuel combustion – meaning “rising U.S. biofuel use has been associated with a net increase rather than a net decrease in CO2 emissions.”

Instead of a “disco-era ‘anything but oil’ energy policy,” DeCicco’s research finds, that while further work is needed to examine the research and policy implications going forward, “it makes more sense to soak up CO2 through reforestation and redouble efforts to protect forests rather than producing biofuels, which puts carbon rich lands at risk.”

Regardless of differing views on climate change, we can generally agree that more trees are a good thing and that “using government mandates and subsidies to promote politically favored fuels de jour is a waste of taxpayers’ money.”

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy – which expands on the content of her weekly column. Follow her @EnergyRabbit.

The Renewable Fuel Standard: “set up for fraud”

August 2, 2016 · Posted in Business and industry, Marita Noon, National politics, Politics, Radical Green · Comments Off on The Renewable Fuel Standard: “set up for fraud” 

Commentary by Marita Noon

America’s rush to renewables has invited corruption and fraud.

Researcher Christine Lakatos and I, together, have produced the single largest body of work on green-energy crony-corruption. Our years of collaboration have revealed that those with special access and influence have cashed in on the various green-energy programs and benefitted from the mandates, rules, and regulations that accompany the huge scheme. Dozens of the projects, including biofuel, which required the unwitting investment of taxpayer dollars have failed – leaving employees without jobs, buildings without tenants, taxpayers without repayment, and cronies without pain (even snatching hefty bonuses on the way down). Most people know about Solyndra, the first bankruptcy, and some may know about Abengoa, the biggest bankruptcy, but there are many more.

These big projects allowed the politically connected to bilk taxpayers of billions and is the definition of corruption. But, there’s fraud in renewable energy, too – and, while it doesn’t hit us as hard as taxpayers, it does cost us as consumers.

Wednesday, July 20, representing the latest fraudster to be convicted – but not the first and surely not the last – “a jury found an Indiana man guilty of securities fraud and other crimes connected to a massive biodiesel fraud scheme,” reported Greenwire. It turns out, Jeffrey Wilson and his multistate cohorts pretended to manufacture biodiesel, which allowed them to claim renewable fuel credits – known as Renewable Identification Numbers or RINs. The Department of Justice said Wilson’s actions resulted in a $20 million loss to investors, $140 million in revenue, and $56 million in criminal profit.

I know more than most about the corruption surrounding green energy, but I hadn’t followed this. I dug further.

Just two weeks earlier, two men in Florida pled guilty to a “multistate biodiesel fraud scheme.” Biodiesel Magazine says Thomas Davanzo and Robert Fedyna operated several shell companies that were used to facilitate the “multistate scheme to defraud biodiesel buyers and U.S. taxpayers by fraudulently selling biodiesel credits and fraudulently claiming tax credits.”

Six months before, on December 21, 2015, two men were indicted on “101 charges alleging they abused incentives offered to companies that produced biodiesel fuels.” According to The Morning Call: “A federal prosecutor says they took subsidies for fuel they did not produce and sold renewable energy credits to unsuspecting buyers.” The charges include conspiracy, wire fraud, filing false tax documents, obstruction of the Internal Revenue Service, and obstructing a federal investigation. The indictment claims Dave Dunham and Ralph Tommaso used a complex scheme that reached from Lehigh Valley, PA, to Washington state and into Canada and allowed them to apply for and receive government subsidies for producing clean diesel.

Also in 2015, two Las Vegas men and an Australian man were sentenced to federal prison for schemes to generate and sell fraudulent biodiesel credits. In another case, Rodney Hailey, owner of Clean Green Fuels in Maryland, was convicted of selling $9 million in counterfeit RINs from his garage without even trying to make biodiesel. Hailey’s neighbors called authorities because they were alarmed by the “profusion of luxury cars” that showed up in his “suburban Baltimore neighborhood” – 22 in all, claims a report in Bioenergy Connection. Then there is Jeffrey David Gunselman, owner of Absolute Fuels in Lubbock, TX, who was indicted by a federal grand jury in Texas for lying about producing biodiesel fuel and selling the resulting renewable fuel credits. Reports indicate that he generated some 48 million RINs without actually producing any biodiesel fuel. He’s remembered for using his ill-gotten gain to purchase, among numerous luxury items, a demilitarized Patton tank.

The most interesting biodiesel fraud case may be that of Philip Rivkin, founder and chief executive of Houston-based Green Diesel who is now serving a 10-year sentence for selling fraudulent RINs. Over a seven-year period he concocted an elaborate scheme that included, according to Bloomberg: “a three-story steel skeleton crammed with pipes and valves” – some of which were not connected to anything. In late 2008, Green Diesel did reportedly produce a batch of about 130,000 gallons of biodiesel, but the quality was “too poor for commercial sale.”

Biodiesel RINs have become a valuable commodity because, as a result of the Renewable Fuel Standard (RFS), refiners are required to blend biofuels into the nation’s fuel supply and the RINs supposedly prove they’ve complied. Rivkin sold more than $78 million in sham RINs. He bragged about building a $500 million company without any debt. When he fled the U.S. in 2011, prior to his 2014 capture, he did so in his $3.4 million Canadair Challenger jet.

These cases of RIN fraud are just those who’ve been caught – but they all have a common thread. They aren’t the names we are used to in the green-energy corruption story like billionaires Warren Buffet and Tom Steyer or former politicos like Al Gore and Bill Richardson. They aren’t cronies who’ve used political connections to work the system. They are fraudsters who found a way to fortune through the flawed RFS – first enacted by Congress in 2005 and expanded in 2007 – which contains a credit-trading program.

In a July 25 report on the RFS, Marlo Lewis, Jr., a senior fellow at the Competitive Enterprise Institute, explains: “Each gallon of biofuel produced is assigned a unique 38-digit Renewable Identification Number (RIN). When a refiner sells a gallon of biofuel in the motor fuel market, it earns a RIN credit. A refiner that does not meet its annual obligation by actually blending and selling biofuel can comply by purchasing surplus RIN credits from another refiner that exceeded its obligation. A refiner can also bank surplus RIN credits to meet up to 20 percent of the following year’s obligation.”

Because the law requires ever-increasing quantities of biofuel be produced – even beyond what consumers want or most vehicles can handle – RINs offer refiners a way to presumably meet the mandates while providing the market with what it wants. But, according to Brendan E. Williams, American Fuel and Petrochemical Manufacturers executive vice president, biodiesel RINs are especially lucrative: “Ethanol RINs stay attached to physical gallons of ethanol until the ethanol gallon is blended with petroleum.  This separation usually occurs at terminals, which are rarely owned by ethanol producers. Once ethanol is blended, the RIN is detached and becomes a tradable commodity.  Therefore, rather than a refiner or ethanol producer, it is often the terminal operator who does the blending that controls ethanol RINs.  A refiner that has a terminal rack at the refinery for local gasoline distribution can also do this blending, but this is not the usual situation because refineries are not located everywhere.  Biodiesel RINs work differently. EPA allows biodiesel producers to detach the RIN as soon as the biodiesel is produced. There is no requirement for biodiesel to be blended to petroleum diesel before the RIN is detached. This difference highlights why there is more fraud in biodiesel. The biodiesel fraudsters lie about producing physical biodiesel just so they can generate RINs on paper to sell. This is made possible based on the previously mentioned fact that there is no requirement for biodiesel to be blended with petroleum diesel.” A graphic in the Bloomberg report adds: “Biodiesel RINs tend to cost more than ethanol RINs or other types because they are scarcer and can be used to satisfy multiple requirements under the Renewable Fuel Standard.”

“RIN swaps,” according to Bloomberg, “are usually agreed upon between companies, traders, and brokers via email, phone, texts, and chatroom messages.” The onus is on the buyers, “if the RINS are found to be fraudulent, the holder has to purchase new credits to replace the phony ones” – and the new credits must be purchased at the current price that may be higher than the original purchase.

Of course, the refiners’ purchase of RINs – and in the case of fraudulent RINs, the double purchase – is passed on to the consumer. We are stuck holding the bag for the fraudsters’ get-rich-quick scheme that is enabled by the RFS.

“Because refiners can buy them to satisfy their obligations to introduce renewable fuels into the national market,” Scott Irwin, an agriculture economic professor at the University of Illinois, according to The Morning Call, calls the RINs: “valuable.” He explains: “A combination of little regulation, the small-business nature of biodiesel producers and higher-than-expected prices for credits produced a rash of fraud. … It was kind of set up for fraud.”

Because the EPA, whose expertise is in things like oil spills and air pollution, isn’t equipped to handle these cases of sophisticated financial fraud, Bloomberg reports, it has reached out to the Commodity Futures Trading Commission – “which is itself stretched thin because of its responsibilities under Dodd-Frank.” The lack of oversight made the RFS biodiesel program a “government playground for con artists.”

The biofuel fraud is just one prong in the growing push for RFS reform. The economic and technical realities of the “blend wall,” as detailed in Lewis’ report, is another. On July 27, Bloomberg chronicled the history of the unlikely third prong: big green groups’ biofuel blunder. They’ve now turned against ethanol due to the agricultural runoff in waterways and conversion of prairies to cropland. Environmentalists, who once championed biofuels, are now seen as a factor in “improving the odds that lawmakers might seek changes to the program next year.”

Reforming the RFS is not a partisan issue. Free market advocates don’t like the mandates. Consumers resist been forced to purchase something they don’t want. Environmentalists don’t like the loss of prairie land and damage to the water supply. Rep. Peter Welch (D-VT) says the RFS has “truly been a flop. The environmental promise has been transformed into an environmental detriment.”

The only resistance to calls for RFS repeal or reform comes from the biofuel producers lobby – though as I’ve previously addressed, corn ethanol would likely still be blended into our fuel supply at about the current levels as it is a valuable oxygenate that increases octane.

Lewis concludes his report with this admonition: “Congress should repeal the RFS so that consumer preference and competition, rather than central planning policies, determine which fuels succeed or fail in the U.S. marketplace. Failing that, Congress should sunset the RFS so it ends after 2022. In the meantime, the EPA should cap mandatory biofuel sales at the E10 blend wall, while allowing biofuel producers to sell as much additional renewable fuel as consumers actually want to buy.”

Every politician in Washington talks about getting rid of waste, fraud, and abuse. Getting rid of the RFS would go a long way to achieving that goal.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energy – which expands on the content of her weekly column. Follow her @EnergyRabbit.

Fixing the folly of food for fuel?

May 24, 2016 · Posted in Business and industry, Marita Noon, National politics, Politics, Radical Green · Comments Off on Fixing the folly of food for fuel? 

Commentary by Marita Noon

(Editor’s note: since Marita was “not in love with” the original title and encouraged those who run her work to rename this piece, I changed it to what you see above.)

The Renewable Fuel Standard (RFS) – also known as the ethanol mandate – was passed by Congress in 2005 and expanded in 2007. Regardless of market conditions, it required ever-increasing quantities of biofuel be blended into the nation’s gasoline supply – though the Environmental Protection Agency (EPA) does have the flexibility to make some adjustments based on conditions, such as availability and infrastructure.

At the time of its passage, it was unfathomable that a decade later Americans would be consuming less gasoline, not more. Instead of requiring a set, or even growing, percentage of ethanol be used, the law called for an increasing amount of gallons – which has created unforeseen complications.

Since the law was passed, due to increased fuel efficiency and a generally sluggish economy (meaning fewer people are driving to and from work every day) we’ve been using less gasoline, not more. Requiring more and more ethanol in less and less gasoline is not what the original law intended.

It was believed that the RFS would help achieve energy independence and reduce CO2 emissions – both ideas from a different era.

The RFS was passed at the low point of a decades long decline in U.S. oil production. At the time, no one knew that the trend line would totally reverse due to American ingenuity and the innovations of horizontal drilling and hydraulic fracturing that have unleashed the new era of abundance. Additionally, it was believed that corn-based fuel (which is the primary source for ethanol in the U.S.) would reduce carbon dioxide emissions – though the results have been questionable at best.

Since the RFS became law, numerous studies have been done to determine the environmental benefit of ethanol over gasoline – many of which conclude that ethanol is actually more detrimental than gasoline. At a recent House Oversight Committee hearing, John DeCicco, a research professor at the University of Michigan’s Energy Institute, said, according to Morning Consult, “the studies assuming biofuels are carbon neutral are flawed.” Morning Consult reports: “he has found ethanol’s net emissions to be as much as 70 percent higher than traditional gasoline.”

Ethanol has an unlikely collection of opponents. Addressing ads put out by the ethanol lobby positing that only “big oil” wants to end the ethanol mandate, FactCheck.org disputes the claim: “Several environmental groups oppose it as well. So does a wide coalition that includes restaurant owners concerned about upward pressure on food prices and boat manufacturers upset at the problems that ethanol can cause in marine engines.”

Despite the controversy, the EPA claims the RFS is a “success.” Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation, says: it “has driven biofuel production and use in the U.S. to levels higher than any other nation. This administration is committed to keeping the RFS program on track, spurring continued growth in biofuel production and use, and achieving the climate and energy independence benefits that Congress envisioned from this program.”

With this in mind, it is no surprise that the biofuel industry – which wouldn’t exist without the ethanol mandate – was unhappy when, on May 18, the EPA released its biofuel blending requirements for 2017. Using its ability to make adjustments, the EPA announcement was less than the law required, but more than the market demands. The Wall Street Journal (WSJ) states; “EPA officials said they were seeking to strike a balance between Congress’s goal of using more ethanol and the realities of the current fuel market and infrastructure.” Instead, no one was happy.

In Biomass Magazine, McCabe defends the action: “The fact that Congress chose to mandate increasing and substantial amounts of renewable fuel clearly signals that it intended the RFS program to create incentives to increase renewable fuel supplies and overcome constraints in the market. The standards we are proposing would provide those incentives.”

Chet Thompson, president of American Fuel & Petrochemical Manufacturers, which represents refineries regulated under the standard, responded: “EPA’s proposal threatens to force consumers to use more biofuel than vehicles, engines and fueling infrastructure can handle.” He says: “the proposed volumes still go beyond marketplace realities.”

In contrast, a statement from Chip Bowling, president of the National Corn Growers Association said: “In the past, the EPA has cited a lack of fuel infrastructure as one reason for failing to follow statute. Our corn farmers and the ethanol industry have responded. Over the past year, we’ve invested millions of dollars along with the U.S. Department of Agriculture’s Biofuel Infrastructure Partnership to accelerate public and private investment in new ethanol pumps and fuel infrastructure. The fact is, today’s driver has more access than ever to renewable fuel choices.”

Regarding the EPA’s May 18 decision, DeCicco told me: “The EPA is trying to pick an economic middle road between the proponents and the opponents. But, through the RFS, the environment has been run off the road. Contrary to what has been promoted by the Department of Energy and some other government agencies, biofuels make CO2 emissions worse rather than better.”

At the aforementioned House hearing, Representative Jim Jordan’s (R-OH) opening statement called the RFS “a classic example of what happens when you get a bunch of politicians together who think they’re smarter than the marketplace.”

Frank Macchiarola, downstream director at the American Petroleum Institute, is calling on Congress to “repeal or significantly reform the RFS.” He asserts: “Members on both sides of the aisle agree this program is a failure, and we are stepping up our call for Congress to act.”

Proving Macchiarola’s point, before the 2017 requirements were released, on May 10, U.S. Representatives Bill Flores (R-TX), Peter Welch (D-VT), Bob Goodlatte (R-VA), Jim Costa (D-CA), Steve Womack (R-AR), and Cedric Richmond (D-LA) introduced bipartisan RFS reform legislation. The Food and Fuel Consumer Protection Act, H.R. 5180, limits the RFS mandate to levels that our nation’s cars, trucks, boats and other small engines can safely accommodate. The bill “directs EPA to consider current market realities and cap the maximum volume of ethanol blended into the transportation fuel supply at 9.7 percent of projected gasoline demand.” Following the news, the bill’s cosponsors issued a statement calling the RFS “unsustainable.”

It is time to get back to allowing the free market – not Congress, not unelected bureaucrats, not mandates, not artificially spurred growth in a chosen industry – to determine our fuel choices. Because ethanol is an effective octane-boosting additive, it will always have market demand. Farmers who’ve invested in it will not be driven out of business. The Food and Fuel Consumer Protection Act, while not repealing the RFS outright (which would be tough to pass), offers a reasonable fix to well-intended, but flawed legislation.

The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc., and the companion educational organization, the Citizens’ Alliance for Responsible Energy (CARE). She hosts a weekly radio program: America’s Voice for Energywhich expands on the content of her weekly column. Follow her @EnergyRabbit.

Odds and ends number 78

Here I go again, producing those little dribs and drabs of information that I need a sentence to a couple paragraphs to discuss.

For example, I don’t need to give much more than an “attaboy” to Ted Cruz for continuing to stand against ethanol subsidies yet succeed in Iowa, as Leon Wolf pointed out recently at RedState. Such a stance may not make me a lot of friends among the corn farmers locally, but I’ll bet the chicken producers would love to see a decrease in the price for a bushel and I suspect once the Renewable Fuel Standard is pulled it will give them a break. Let’s hope Cruz (or some other GOP candidate) follows through on this common sense. After all, according to my friend Rick Manning at Americans for Limited Government, the deficit last year was $677 billion so putting ethanol subsidies on the chopping block would make fiscal sense as well.

As Richard Falknor at Blue Ridge Forum points out, though, we have a large number of gutless wonders in our House of Representatives who don’t care that the latest omnibus was a budget-buster. Maybe they just need to read some advice from my Patriot Post cohort Mark Alexander, who reminded us of what our Founding Fathers said 240 years ago. We really do need a revival of the Spirit of ’76. (I’m old enough to remember the Bicentennial, by the way.) As Alexander writes about the current GOP crop:

Patriots, in this presidential election year, I invoke this timeless wisdom from George Washington’s farewell address (1796): “Guard against the impostures of pretended patriotism.” Indeed, there are among even the ranks of Republican presidential contenders some pretenders. Caveat Emptor! The future of Liberty hinges on the ability and willingness of grassroots Patriots to distinguish between the genuine article and the false prophets.

Yet while Ted Cruz seems to be one of the few who is standing up for conservative principles in Congress, as Erick Erickson adds at his new website, The Resurgent, the Establishment has decided to throw its lot in with Donald Trump to stop Cruz’s polling advances. Yes, politics makes strange bedfellows.

None may be stranger than those in the state of South Dakota where the drive for non-partisan elections I told you about a few weeks ago made the ballot. Local talk radio host Rick Knobe is spearheading the effort:

For too long, both political parties have been shouting over each other at the expense of the voters, and now have an opportunity to do something about it. Just look at the growing number of registered Independents, which now numbers over 100,000 in South Dakota. That number is growing here and across the country. When this measure passes, those 100,000 South Dakotans will have the opportunity to fully participate in the election process.

The state as a whole had 521,017 registered voters as of the 2014 elections so it appears about 20-25% are not affiliated. If it is adopted in this election, the state will move to a non-partisan primary for 2018. I suspect the two major parties will lose a significant amount of their support should this happen, so this is something to watch as it develops.

Immigration is one of the issues that has thoroughly disgusted a number of former Republicans who bolted the party when the elites adopted a pro-amnesty stance. Recently many Republicans (including the aforementioned Ted Cruz and our Congressman Andy Harris) supported a major expansion of H-1B visas despite a claim from the Center for Immigration Studies that found no evidence of a labor shortage in those occupations. One has to question how many semi-skilled workers are idle in this area due to the H-1B visa.

Finally, I’m going to circle back to Erick Erickson. I’ve been impressed with his new website, one which I can read without being overrun by annoying pop-up ads and false story breaks that only serve to increase page view count (in order to extort more money from would-be advertisers.) On Thursday he had a candid assessment of how his website was doing and so far he seems to be successful. Good news for those of us who value content over clickbait.

So ends another (hopefully) clickbait-free edition of odds and ends. Now my mailboxes are empty once again.

Jeb goes the wrong way on energy

The Washington Times headline said a lot: “Jeb Bush: Federal wind tax credit should be renewed for short period of time.” But there’s more to the story if you read between the lines Seth McLaughlin wrote.

Of course, I noticed this because I’ve written quite a bit about wind energy and its advocates the American Wind Energy Association of late. Fortunately, the weather has finally moderated so I’m not writing in the midst of a cold snap as I’d often done when writing about the AWEA and their single-minded approach to promoting wind energy with the federal Wind Production Tax Credit as a sweetener incentive.

In this instance, though, you need to know the situation: Jeb and others were speaking before the Iowa Agricultural Summit, which as the Times notes is “hosted by Bruce L. Rastetter, a major GOP donor.” And it can be argued that Iowa is to wind power what Texas, North Dakota, or Alaska are to oil: according to the AWEA, in 2013 Iowa ranked first in the nation in the amount of its electricity produced by wind power at 27.4%. It also has the third-most installed capacity in the country behind Texas and California, which are far larger states in both population and geography.

So you might get the idea that telling Rastetter and others that the Wind Production Tax Credit should be renewed is a way to meet with their approval, even though Jeb conceded it should only be a three- to five-year extension because wind is “now competitive.” Wait a minute – if it’s “now competitive” why is the tax incentive needed again?

Naturally, the bad news on energy didn’t stop there. Iowa is also ground zero for the Corn Belt, which means anyone who competes in that state either supports ethanol subsidies or risks the wrath of farmers who don’t care whether their crop goes in your gas tank or your stomach as long as the price stays profitable. And Jeb had good news for them too, noting, “So at some point we will see a reduction of the RFS need because ethanol will be such a valuable part of the energy feedstock for our country. Whether that is in 2022 or sometime in the future, I don’t know.”

Ethanol will be a valuable part of our energy feedstock? We are now the world’s top producer of oil and natural gas, and those who set ethanol policy based on a belief that we were past the point of “peak oil” have been thoroughly discredited. It’s a horrible case of pandering when the news to Rastetter and others should have been that it’s time for farmers to adjust to a post-ethanol world as that failed experiment of making food into fuel is coming to a close.

Fortunately, it’s possible to win the presidency without winning Iowa. But it’s a state with outsized importance in the electoral sweepstakes thanks to its early caucuses, so we have to pay attention to what they want. (To illustrate this point: if Maryland were first, people would be tripping all over themselves to make grandiose promises to clean up Chesapeake Bay whether they benefitted – or bankrupted – the rest of the country or not.)

For all the Left’s wailing about the Bushes being in the pocket of Big Oil, they certainly haven’t done any favors to our energy situation. Father George H.W. Bush increased the gas tax by a nickel a gallon (a healthy 56% increase) to balance the budget back in 1990 – breaking his “read my lips” vow – while George W. Bush signed the bill that put the Renewable Fuel Standard in place in 2005 and expanded it in 2007. It looks to me like Jeb is cut from the same cloth.

A lack of standards

December 3, 2014 · Posted in Business and industry, Delmarva items, Inside the Beltway, National politics, Politics, Radical Green, State of Conservatism · Comments Off on A lack of standards 

In 2007, Congress passed (and President Bush regrettably signed) a bill which was, at the time, a sweeping reform of energy policy. As part of the Energy Independence and Security Act of 2007, the EPA was supposed to regulate the Renewable Fuel Standard on an annual basis, with the eventual goal of supplying 36 billion gallons of renewable fuel by 2022 – the 2014 standard was set at 18.15 billion gallons (page 31 here.) By the way, this is the same bill that did away with incandescent light bulbs.

Unfortunately, for the second straight year the EPA is late with its update and last month they decided to take a pass altogether on 2014. Mark Green at the Energy Tomorrow blog writes on this from the petroleum industry perspective, while the ethanol industry took the decision as news that the EPA was staving off a possible reduction in the RFS.

We all know hindsight is 20/20 but it should be noted that, at the time the EISA was written, the conventional wisdom was in the “peak oil” camp, reckoning that American production was in a terminal decline. Yet we’ve seen a renaissance in the domestic energy industry over the last half-decade despite government’s best attempts at keeping the genie in the bottle. So the question really should be asked: is the Renewable Fuel Standard worth keeping in this new energy era, or should the market be allowed to function more freely?

It goes to show just how well the government predicts activity sometimes. They assumed that the technology behind creating biofuels from agricultural waste would supplant the need for corn-based ethanol in time to maintain the amount required and also figured on gasoline usage continuing to increase. Wrong on both counts; instead, we are perhaps in a better position to invest in natural gas technology for commercial trucks as some fleet owners already have – although long-haul truckers remain skeptical based on better diesel engine fuel economy, which ironically came from government fiat – than to continue down an ethanol-based path.

But the larger benefit from removing ethanol-based standards would accrue to consumers, as corn prices would decline to a more realistic value. Obviously the initial plummet in the corn futures market would lead to farmers planting more acreage for other crops such as soybeans or wheat as well as maintaining virgin prairie or placing marginal farmland, such as thousands of acres previously reserved for conservation easements, back out of service.

Poultry growers in this region would love to see a drop in the price of corn as well, as it would improve their bottom line and slowly work its way into the overall food market by decreasing the price consumers pay for chicken.

I believe it’s time for Congress to address this issue by repealing the RFS. Unfortunately, it would take a lot to prevail on many of the majority Republicans in the Senate because they come from the major corn-growing states in the Midwest and agricultural subsidies of any sort are portrayed as vital to maintain the health of rural America. Yet the corn market would only be destabilized for a short time; once the roughly 30% share of the crop used to create ethanol (over 4.6 billion bushels) is absorbed by the simple method of planting a different crop or leaving marginal land fallow, the prices will rise again.

Until the common sense of not processing a vital edible product into fuel for transport prevails, though, we will likely be stuck with this ridiculous standard. Corn is far better on the cob than in the tank, and it’s high time the EPA is stripped of this market-bending authority.

EPA slow-walks unpopular mandate – again

August 27, 2014 · Posted in All politics is local, Business and industry, Campaign 2014, Delmarva items, Maryland Politics, National politics, Politics, State of Conservatism · Comments Off on EPA slow-walks unpopular mandate – again 

It may not have been such a bad idea at the time, but the thought of adding corn-based ethanol to automotive fuel to stretch the oil supply seems rather silly in retrospect given our recent prowess in finding new supplies of black gold. In 2005, under the George W. Bush administration and a Republican Congress, the EPA was given the first Renewable Fuels Standard (RFS) mandate to include ethanol in motor fuel. It was at a time when many still believed in the theory of “peak oil” and determined we had to look past this resource in order to meet our growing needs.

Fast-forward to the present day and we find that, because of issues with decreased consumption of gasoline combined with increasing statutory requirements for the inclusion of ethanol in automotive fuel, the EPA took the unprecedented step of reducing its mandated amount of ethanol for this year; meanwhile, the RFS which was supposed to come out in November of last year is still on the EPA drawing board.

In reading a summary of energy news I receive daily from the American Petroleum Institute, it was revealed that retailers and other petroleum marketers have their own concerns about the prospect of E15 fuel being approved for use in order to achieve the mandated amount of ethanol required for these increasing RFS numbers.

Naturally, this is from the perspective of what’s derided as Big Oil – on the other side, you have officials in corn-producing states beseeching Barack Obama to stand firm on these standards, while desperately attempting to secure infrastructure to provide the even higher E85 blend for flexfuel vehicles, such as the “I-75 Green Corridor” which has a lot of gaps.

The whole flexfuel idea was popularized a few years ago by a group I gave some pixels to during the $4 a gallon price surge called NozzleRage, which was the brainchild of another group called the Center for Security Policy – their goal in creating yet a third group called Citizens for Energy Freedom was to mandate cars be equipped as flexfuel vehicles. Even though it’s essentially a free option, there are few takers for flexfuel cars as they occupy a tiny proportion of the market – about 1 in 20 cars sold are flexfuel cars (although that number is higher for government vehicles.)

Obviously the hope for ethanol proponents is to expand the number of facilities where E85 can be purchased in order to eliminate the need to go to an unpopular E15 blend while simultaneously being able to ratchet up the RFS figures. If even 15 percent of the cars can run on E85 and the price is competitive, then corn growers would be happy. (Never mind the folly of using food for fuel.)

Personally, though, I’m hoping they scrap the RFS altogether. It was an idea which may have had merit (and a lot of Congressional backing from farm states) a half-decade ago, but we can do better because our oil supplies are much more plentiful thanks to new technology. That’s not to say that technology can’t eventually be in place to use another source for ethanol (like the sugar cane Brazil uses for its much more prevalent ethanol market) but how about letting the market decide?

And while it’s unrelated to ethanol, I thought it was worth devoting a paragraph or two to note that North Carolina – hardly a conservative state – is getting closer to finishing the rulemaking process for fracking in the state. Most noteworthy to me in my cursory reading of the rules is that North Carolina is looking at a fairly sane setback distance from various impediments – nothing more than 650 feet. They also seem to lean heavily on industry standards.

On the other hand, Maryland was looking to set rules which would require a completely arbitrary 2,000 foot setback and require plans for all wells proposed by a drilling company, rather than single wells. In short, we would do to fracking in Maryland what Barack Obama is doing to the coal industry nationwide – strangle it with unneeded and capricious regulations. That should not stand in either case.

It’s been my philosophy that an area which doesn’t grow will die. It may take a while, but killing growth will sooner or later kill the economic viability of a city, county, region, state, or nation. Putting silly regulations in place because a minority believes the debunked hype about a safe process is a surefire way to kill a vital region in the state, not to mention impede the possibility of prosperity elsewhere. We can do much better when common sense prevails.

Reading my mind?

August 14, 2013 · Posted in Business and industry, Inside the Beltway, National politics, Politics, Radical Green, State of Conservatism · Comments Off on Reading my mind? 

Since I spoke about ethanol Sunday, I found it quite funny that a free-market coalition of groups put out a letter dated today regarding the repeal of the Renewable Fuel Standard. I’ll start by quoting their release under the moniker of the Competitive Enterprise Institute:

The RFS is frequently criticized for its adverse impacts on food prices, wildlife habitat, and hunger-stricken nations, and potentially devastating impact on fuel prices. “These criticisms are valid and important,” said CEI Senior Fellow Marlo Lewis. “But even apart from those concerns, Congress should repeal the RFS because it conflicts with basic tenets of a free society. In a free society, no company should be forced to execute and assure the success of another company’s business plan.”

It’s an angle I considered in a roundabout way when I wrote about the benefits of scrapping the RFS on Sunday, obviously not knowing this letter was in the works. Interestingly enough, a similar broad coalition of groups objected a few weeks back when the Domestic Alternative Fuels Act of 2013 was proposed, a proposal I also wrote on.

Of course, we can complain all we want now because no proposal to scuttle the RFS will be going anywhere, particularly when Democrats generally favor more expensive “alternative” energy and farm-state Republicans won’t cross their key constituency, which is being made fat and happy by artificially high corn prices. Worth pointing out is that, had the economy grown as it was during the pre-Speaker Pelosi Bush years, we may be using enough gasoline that we could accommodate increased ethanol supplies without bumping into the “blend wall” as we threaten to do now. Even environmentalists have a problem with ethanol, although their solution is accelerating standards in other areas instead of properly dismissing them entirely.

So perhaps this is a situation where great minds think alike, but in the grand scheme of things we’re not going to see real solutions until the political climate in Washington changes and a cool front of common sense blows in.

Ignoring the market

Gasoline. It’s something all of us need, and if you’re reading this in Maryland last month you began paying roughly 3.5 cents more per gallon at each fillup thanks to the state expanding the sales tax to gasoline as part of a multi-year process for full adoption of our 6% sales tax to that product.

While that bad news applies to Maryland consumers, all of us may soon be seeing less bang for the buck if the EPA gets its way. They’re edging us closer and closer to widespread usage of E15 fuel, which may be a necessary method to comply with short-sighted federal law. The problem: a “blend wall” where the amount of ethanol mandated for use runs up to the limits created by actual consumption, which is down significantly from that which was predicted when the regulations were written several years ago when the economy was humming along.

Many longtime followers of my site know I use the American Petroleum Institute as a go-to resource when it comes to energy issues. Yes, they are an advocacy group but they advocate the tried-and-true solutions for our energy problems, advocating for the least-costly alternative of petroleum which, as a beneficial byproduct, is a great job creator to boot. So while the EPA believes it’s “flexible” on renewable fuel standards enacted as part of a 2005 law, API believes they’re quite inflexible. The only real change was in the category of cellulosic biofuels, which saw its mandate cut by more than half – quite handy when there’s only a negligible amount currently in production. (API has a handy guide to the pitfalls of the RFS here.)

Meanwhile ethanol apologists – like the group which lobbied for E15 in the first place – claim their product will create jobs and reduce our dependence on foreign oil without making an impact on grocery prices, Yet their solution is more government mandates and subsidies. I find it quite telling that this group formed mere days after the election of Barack Obama, who was probably – and correctly – thought of as a person who would shower even more government largess onto the ethanol industry in his quest to wipe out the coal and oil industries.

Yet Congress can act, just as it did in making the mandates in the first place nearly a decade ago – a lifetime in the oil industry, given the boom in oil exploration and fracking over the last five years. So what would happen if the ethanol mandates were scrapped?

Obviously you would have a number of winners and losers. All those who invested in ethanol plants figuring that the government subsidies and mandates would have profit rolling their way – well, they would have the biggest “L” stamped on their forehead. Farmers may take a temporary hit as corn prices drop, but they would eventually stabilize; moreover, farmers who shunned soybeans or wheat for corn to be turned into fuel could go back to those other staple items.

Consumers would win in a number of ways. First of all, they’d get better quality gasoline that’s less expensive, which would both increase their mileage per gallon and amount of money remaining in their wallets. Secondly, the lowering of corn prices would benefit them at the grocery store, and not just in corn-based products because feed for poultry and livestock would be cheaper. And lastly, their small equipment would last longer because ethanol is poisonous to many small gasoline-powered motors.

And while the intention of these mandates was to reduce our dependence on foreign oil, new advances in exploration and extraction have placed the goal of North American energy self-sufficiency within reach. Nor is it necessarily in the form of gasoline, as companies with large automotive fleets are moving toward using natural gas as a motor fuel, building their own infrastructure along the way. (Yes, this can be done without a massive taxpayer subsidy or regulation.)

It just makes more sense to me to not grow our fuel, but our food. When you think of corn, you don’t think of a gas tank but instead think about that tasty ear cooked to perfection with some butter and pepper on it. Let’s get back to using corn for what the Good Lord meant it for, eating.

The wrong direction

June 30, 2013 · Posted in Business and industry, National politics, Politics, Radical Green · Comments Off on The wrong direction 

If it’s not bad enough that Maryland drivers will be suffering from the first of what now promises to be annual hikes in the state’s gasoline tax, due to a combination of adding gasoline to the palette of items subject to the state’s sales tax and eventual indexing of the existing gasoline tax to inflation, a pending federal bill may allow the addition of natural gas-based ethanol as an allowed blending agent, joining the corn-based ethanol that’s currently allowed to comprise up to 10% of most available gasoline.

H.R. 1959, the Domestic Alternative Fuels Act of 2013, was introduced as an effort to provide other options for attaining the renewable fuel standard already codified into law. But a coalition of groups, led by the Competitive Enterprise Institute, recently wrote a letter to Congress urging the bill be defeated, citing the idea that renewable fuel standards should be scrapped, not enhanced:

The undersigned organizations urge you to oppose H.R. 1959, the Domestic Alternative Fuels Act of 2013. The bill would allow ethanol derived from natural gas to count toward the mandatory blending targets established by the Renewable Fuel Standard (RFS) and the EPA’s implementing regulations.

We commend Rep. Pete Olson (R-TX) and his co-sponsors for seeking to break the corn lobby’s legal monopoly on a significant and growing share of the U.S. motor fuel market. However, the solution is not to make the RFS more inclusive, so that more special interests profit at consumer expense, but to dismantle the program.

The other eleven groups signing with CEI represent a broad spectrum of conservative and free market entities: 60 Plus, American Commitment, Americans for Prosperity, American Energy Alliance, Club for Growth, Commonwealth Foundation, Freedom Action, FreedomWorks, Frontiers of Freedom, Let Freedom Ring, and the National Taxpayers Union.

On balance, the groups are correct in wishing the ethanol mandate be eliminated. Even with the abundant supplies of natural gas which weren’t in play just a few short years ago when the original RFS was cast in place, there is no need to supplement the fuel we use in our vehicles; in fact, eliminating the mandate would probably make those who own watercraft or items with small gasoline engines ecstatic since they’ll no longer have to search for ethanol-free fuel to maintain their equipment.

The EPA’s push toward allowing E15 fuel stems from the increasing amount of ethanol required to satisfy these artificially-induced mandates for usage running into a “blend wall” where it becomes physically impossible to limit the amount of ethanol in a gallon of fuel to just 10 percent and comply with the law. Writers of the RFS miscalculated the future demand for fuel, which is increasing more slowly than predicted due to a number of factors: more fuel-efficient cars and a sputtering economy most prominent among them.

Interestingly enough, Rep. Olson is also in favor of eliminating the mandates, but he obviously feels that’s politically impossible at this time:

The RFS’ singular focus on corn ethanol translates into higher food costs for working families, as well as higher feed costs for livestock producers. To be clear, my primary goal will always be the full repeal of the market distorting RFS. However, until then, we can take care of immediate problems by providing greater participation and competition under the program. Expanding the sources for ethanol will only benefit all Americans. I’m pleased this measure enjoys bipartisan and widespread support.

But this bill promises to align two key constituencies which aren’t always in the same room. It’s a point made by CEI Senior Fellow Marlo Lewis:

Enacting this bill would align the natural gas lobby with the corn lobby. Their common interest would be to increase the overall RFS blending target beyond 36 billion gallons, mandate the sale of E20 or even higher ethanol blends, and relax environmental criteria so that corn- and gas-based ethanol can fill the void created by non-existent advanced biofuels.

All this would do is create yet another group of hogs lining up at the federal cronyism trough, trying to grow their business at the expense of competition despite having an inferior product. You may not remember the gasoline price shock of 2008, but one outgrowth of it that I noted at the time was a video campaign dubbed Nozzlerage and the formation of a group called Citizens for Energy Freedom, a subgroup of another entity called the Center for Security Policy (CSP). Their solution was to give ethanol a permanent market by mandating cars sold in the United States be flexfuel vehicles. As I said back then:

Regardless of how little it supposedly costs to convert cars to flexfuel, the truth is that the option has been available for some time and the market has proven it to be a slow seller. Thus, the soon-to-be-created CSP subgroup (Citizens for Energy Freedom – ed.) is looking to lobby for the bill’s passage and force automakers into another mandate, just like CAFE standards, air bags, catalytic converters, and many other features that were foisted upon automakers by big government. Certainly the idea has some merit but by placing the initial meeting in Des Moines, Iowa, it’s a safe bet that ethanol created from corn will take center stage and we’ve already seen the impact ethanol mandates and subsidies have had on our food prices.

Taking food out of our mouths and dumping it into our gas tanks has always been a bad idea, particularly when there is a cost-effective and inedible solution already in place. CEI and its allies make a sound point, but it will be up to someone in Congress to introduce the bill to eliminate RFS mandates. Of course, we need a President who would sign such a common sense bill and right now common sense is in short supply around the Oval Office and probably will be until at least January, 2017.

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