beyond petroleum

Blowout Prevention Act – Will Rs Get Buyer’s Remorse? (Modified July 18, 2010)

by Marlo Lewis on July 16, 2010

in Ethanol, Global Warming

Last week, the House Energy and Commerce Committee unanimously approved H.R. 5626, Chairman Henry Waxman’s Blowout Prevention Act. Here’s the version of the bill as marked up and approved by the Committee. Here’s the earlier discussion draft on which the Energy and Environment Subcommittee held a hearing on June 30.

Like the discussion draft, the marked-up version of the bill is a Trojan Horse for restricting and, ultimately, shutting down deepwater oil production.

The most mischievous language is in the first substantive provision, Sec. (2).

Sec. (2)(a)(3) requires each applicant for a drilling permit to have an oil spill response plan ensuring “the applicant has the capacity to promptly control and stop a blowout in the event the blowout preventer and other well control measures fail” (p. 2). If the ongoing disaster in the Gulf has taught us anything, it is that once the blowout preventer and other well control measures fail, there may be no way “to promptly control and stop a blowout.” H.R. 5626 would establish a test no oil company can pass, a standard none can meet.

Nobody had the capacity to “promptly control and stop” the Macondo well blowout after the preventer and other well control measures failed — not BP, not the oil industry working as a team, not the federal and state governments working with the oil industry.

The sponsors had to know they were demanding the impossible when they drafted the bill. Consider these excerpts from a colloquy between Oversight and Investigation Subcommittee Chairman Bart Stupak (D-Mich.) and ExxonMobil CEO Rex Tillerson at the June 15 Energy and Environment Subcommittee hearing:

Stupak: “So when these things happen, these worst-case scenarios, we can’t handle them, correct?”
Tillerson: “We are not well equipped to handle them. There will be impacts as we are seeing. . . .That’s why the emphasis is always on preventing these things from occurring, because when they happen, we’re not very well equipped to deal with them.”
Stupak: “. . . so no matter which one of the oil companies here before us had the blowout, the resources are not enough to prevent what we’re seeing day after day in the gulf, not only the loss of 11 people, but we’re on, what, day 56 or 57 of oil washing up on shores. There is no other plan. There is no way to stop what’s happening until we finally cap this well, correct?”
Tillerson: “That is correct. . . . There is no response capability that will guarantee you will never have an impact. It does not exist and it will probably never exist.”

The discussion draft’s permitting requirements apply to all “high risk” wells, defined expansively as any offshore well plus any onshore well having the potential to cause serious environmental harm in the event of a blowout. The marked-up version targets “covered wells” rather than “high risk” wells, but this is largely a distinction without a difference. Covered wells include all wells located on the Outer Continental Shelf (OCS), plus any other well that, “based on criteria established by rule … could, in the event of a blowout, lead to extensive and widespread harm to public health, safety, and the environment” (pp. 41-42).

The OCS is defined (by reference to Sec. 1301 of the Submerged Lands Act) as waters lying seaward of three geographic miles from the coastline (p. 43). So H.R. 5626 would cover any deepwater well plus any shallow-water and onshore well where a blowout could lead to widespread environmental harm. Very few large wells would be exempt.

Presumably, operators could “promptly control and stop” a blowout at any onshore well and most shallow-water wells. Nonetheless, H.R. 5626 could effectively ban new wells in deep water, and deep water is the future of offshore oil and gas production. As the Department of Interior notes in its May 27 report, Increased Safety Measures for Energy Development on the Outer Continental Shelf, U.S. deepwater offshore oil production surpassed shallow water oil production in 2001, and in 2009, 80% of offshore oil production and 45% of offshore gas production “occurred in water depths in excess of 1,000 feet.” 

The bill does not clearly state how its requirements would apply to existing wells. Would an operator’s permit be revoked if he cannot demonstrate the capacity to “promptly control and stop” a blowout after the preventer and other well-control measures fail? If so, then the bill would not only block new deepwater drilling, it would also create a vehicle for shutting down existing wells. 

Sec. (2)(c) requires the operator to obtain a revised permit if he makes a “material modification” in well design, the blowout preventer, his plan to promptly stop a blowout, or his capability to begin or compete drilling of a relief well for a covered well. Apparently, then, an existing well would be subject to the new permitting requirements if it undertakes a “material modification.” In that case, however, the bill could discourage operators from making material improvements in well safety. Some might avoid or delay making safety improvements in order to avoid or delay becoming subject to an impossible standard. If I am reading these provisions correctly, H.R. 5626 could actually make offshore drilling less safe!  

Federal officials may not be able to finesse Sec. (2)(a)(3), even if they want to, because H.R. 5626 would empower “citizens” to enforce its provisions and associated regulations via litigation:

Any person having a valid legal interest which is or may be adversely affected may commence a civil action in Federal district court of appropriate jurisdiction on such person’s own behalf to compel compliance with this Act, or any regulation or order issued under this Act, or any regulation or order issued under this Act, against any person, including the United States, and any other government instrumentality or agency (to the extent permitted by the eleventh amendment to the Constitution) for any alleged violation of any provision of this Act or any regulation or order issued under this Act. [p. 28]

The discussion draft did not include the qualifier “valid legal interest.” But how difficult is it for an environmental group to demonstrate a “valid legal interest” in enforcing environmental laws and regulations? Enact the Blowout Prevention Act, and environmental groups will be able to sue any agency that fails to hold an oil company to an unattainable standard.

A few concluding thoughts. The security risks of dependence on petroleum imports are often hugely exaggerated, as the Cato Institute’s Jerry Taylor and Peter van Doren explain. Nonetheless, the sponsors of H.R. 5626 view petroleum imports with alarm. If the bill kills the future of U.S. offshore production, our dependence on Saudi Arabia and OPEC will increase. Is that what the sponsors want?

Perhaps their core premise is that oil is so evil that any restriction on oil production is good, because it will hasten the arrival of a “beyond petroleum” future. Such thinking is dangerous folly.

Although oil spills are bad, oil is good. Without oil, there would be no modern commerce and no mechanized agriculture. Life for most of humanity, including most Americans, would be poor, nasty, and short. Indeed, many of us would not even be alive.

Killing the future of offshore production would increase consumers’ pain at the pump, destroy tens of thousands of high-paying jobs, and undermine the economy of the Gulf Coast region. A “beyond petroleum” future would likely be just as distant — or even more so, because a poorer America would have fewer resources to invest in technological innovation.

Petrophobes overestimate their ability to predict and control the future. Consider these examples. 

  • In 1990, the California Air Resources Board (CARB) adopted a zero emission vehicle (ZEV) mandate requiring 10% of all new cars sold in California be electric vehicles by 2003. Ten percent of the California new-car market is about 150,000 vehicles. CARB had to backpeddle several times as it became apparent that consumers were not buying these costly, limited-range vehicles. In 2008, CARB reduced the mandate to 2,500 all-electric vehicles – a rollback of about 98%.
  • Congress in 2007 enacted a Renewable Fuel Standard (RFS) requiring refiners to sell 250 million gallons of cellulosic ethanol in 2011. Earlier this week, EPA announced it would reduce the 2011 target to 5 – 17 million gallons per year –  a 94-98% rollback.

It is not surprising that veteran petrophobes like Reps. Waxman and Markey (D-Mass.) drafted H.R. 5626. It is surprising that every Republican member voted for it too. Do any of them have buyer’s remorse? If not now, when?

New Federal Interference With Oil-Spill Clean-Up: Feds Stop Louisiana From Dredging Needed to Create Protective Sand Berms

by Hans Bader on June 23, 2010 · 2 comments

in Agriculture, Economy, Employment, Energy, Environment, Ethanol, Global Warming, International, Labor, Legal, Mobility, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

A TV station in New Orleans reports that “the federal government is shutting down the dredging that was being done to create protective sand berms in the Gulf of Mexico.”   Louisiana planned to create the sand berms to prevent the massive BP oil spill from polluting its coastline.

Earlier, a federal judge blocked Obama’s drilling ban on offshore drilling, citing deception by Obama administration officials.  The ban applied mostly to oil companies with radically better safety records than BP.  (BP’s executives gave lots of money to Obama and lobbied for his legislation.)

Obama delayed the clean-up of the Gulf of Mexico by blocking foreign crews from operating sophisticated clean-up vessels.  The Jones Act bans foreign vessels and crews from working in U.S. waters, but it gives the President the authority to completely waive that ban if he wishes.  Obama refused to lift the ban, even though American shippers who generally support the ban said they wouldn’t object to lifting it to fight the spill.  As a result of the ban, the U.S. rejected a lot of foreign aid from counties with expertise in fighting oil spills, and accepted only a small amount of foreign equipment to fight the spill.

The federal government has routinely been a thorn in the side of Louisiana as it seeks to fight the huge oil spill.  It recently used red tape to force Louisiana to stop using 16 barges that were cleaning up the Gulf of Mexico by sucking thousands of gallons of oil out of Louisiana’s oil-soaked waters.  Earlier, four oil skimmers needed to clean the Gulf were blocked by EPA officials.

The oil spill has been called “Obama’s Katrina,” but Gulf Coast resident Paul Rubin says this is unfair to George Bush, who was not nearly as incompetent as Obama has been in dealing with the spill at BP’s Deepwater Horizon.  In the Wall Street Journal, Rubin notes that the oil spill occurred in federal waters and thus was a federal responsibility, while Hurricane Katrina occurred mostly on state land and thus was largely a state, not federal, responsibility, enabling incompetent local officials in cities like New Orleans to “interfere” with federal relief efforts:

In many respects, the Deepwater Horizon disaster and Katrina are mirror images of each other. The harm from Katrina was on state land—mainly Louisiana, but also Florida, Alabama and Mississippi. As a result, President George W. Bush and the federal government were limited in what they could do. For example, Homeland Security Secretary Michael Chertoff wanted to take command of disaster relief on the day before landfall, but Louisiana Gov. Kathleen Blanco refused. Federal response was hindered because the law gave first authority to state and local authorities.  State and local efforts—particularly in New Orleans, and Louisiana more broadly—interfered with what actions the federal government could actually take. New Orleans Mayor Ray Nagin was late in ordering an evacuation and did not allow the use of school buses for evacuation, which could have saved hundreds of lives. President Bush had no power to change that decision.  The Deepwater Horizon oil spill is on federal offshore territory. The federal government has primary responsibility for handling the situation, while state and local governments remain limited in what they can do. For example, the Environmental Protection Agency has repeatedly changed its mind regarding the chemical dispersants that Louisiana is allowed to use. . . .As opposed to Katrina, state and local attempts to address the oil spill have been hindered by an ineffectual and chaotic federal response.

Obama is now using the BP oil spill to push a corporate-welfare-filled global-warming bill crafted partly by BP’s lobbyists.  Obama’s global warming legislation expands ethanol subsidies, which cause famine, starvation, and food riots in poor countries by shrinking the food supply, and also result in deforestation, soil erosion, and water pollution. Subsidies for biofuels like ethanol are a big source of corporate welfare: “BP has lobbied for and profited from subsidies for biofuels . . . that cannot break even without government support.”

The $800 billion stimulus package is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. It is also destroying jobs in America’s export sector.

BP Supported Obama Stimulus Package, Global Warming Bill, and Corporate Welfare; BP Bankrolled Obama Campaign

by Hans Bader on June 9, 2010

in Agriculture, Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Ethanol, Global Warming, Health and Illness, International, Natural Resources, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

Columnist Tim Carney notes that BP, responsible for the massive oil spill, is “a close friend of big government whenever it serves the company’s bottom line.” It lobbied for President Obama’s $800 billion stimulus package, the “cap-and-trade” global-warming bills backed by Obama, and “the Wall Street bailout” that Obama voted for.  “BP has more Democratic lobbyists than Republicans.”  Obama is the biggest recipient of campaign cash from BP executives.

Obama’s global warming legislation expands ethanol subsidies, which cause famine, starvation, and food riots in poor countries by shrinking the food supply, and also result in deforestation, soil erosion, and water pollution. Subsidies for biofuels like ethanol are a big source of corporate welfare: “BP has lobbied for and profited from subsidies for biofuels . . . that cannot break even without government support.”

The $800 billion stimulus package is using taxpayer subsidies to replace U.S. jobs with foreign green jobs. It is also destroying jobs in America’s export sector.

Obama falsely claimed that the stimulus package was needed to prevent “irreversible decline,” but the Congressional Budget Office admitted that it would actually shrink the economy “in the long run.”  Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent . . . The reality is that it passed 10.3 percent.”  In 2008, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Obama’s global warming legislation would also drive jobs overseas, since it would impose a costly cap-and-trade carbon rationing scheme on American industry, while leaving foreign plants operated by multinational corporations unregulated.  That’s one reason why many big companies with plants overseas are lobbying for the global-warming legislation, which would give them an advantage over competitors that make their products largely in America.  The legislation would result in a tax increase for American consumers of up to $200 billion a year or $1,761 per household.

Unlike other oil companies, which have good records of safety and avoiding spills when it comes to oil drilling, BP has a bad record, earning it the label of “serial environmental criminal” from critics.  The Obama administration granted BP a waiver of environmental regulations in April 2009, yet it blocked Louisiana from protecting its coastline against the oil spill by delaying rather than expediting regulatory approval of essential protective measures.  It has also chosen not to use what has been described as “the most effective method” of fighting the spill, a method successfully used in other oil spills.  Democratic strategist James Carville called Obama’s handling of the oil spill “lackadaisical” and “unbelievable” in its “stupidity.”

Obama is now using BP’s oil spill to push the global-warming legislation that BP had lobbied for.

GM Volt may not be cost-effective for consumers, study says

by Marlo Lewis on March 2, 2009

in Energy, Global Warming, Mobility

A study by Carnegie Mellon finds that the Chevy Volt, GM’s rechargeable battery-driven car designed to go 40 miles on electricity,  is “not cost effective in any scenario,” Bloomberg reports.  

There appear to be two main problems, cost and durability. Says Bloomberg:

A battery big enough to propel a car for 40 miles, such as the 400-pound pack for Volt, may cost $16,000, based on current industry and academic estimates. The price of the car isn’t set, though GM backed off last year from an initial goal of less than $30,000 when the Volt reaches the U.S. market in late 2010.

$16K for a battery is a huge expense, especially if the battery has to be replaced. K.G. Duleep, a researcher on plug-ins, told Bloomberg he is “very skeptical” about the near-term durability of the batteries.  “Even in the lab they aren’t lasting more than 7 years,” Dunleep said.

I’ll be sorry for GM if the Volt proves to be the next Edsel or EV-1. But the Carnegie Mellon study, as summarized by Bloomberg, is a sobering reminder that a “beyond petroleum” transport system will arrive when and as economic and technological reality permits, not when green political agendas or CO2-suppression mandates dictate.