Tags: Oil

EPA Rule: All Pain, No Gain


In President Obama’s Year of Action, the EPA levied another unilateral tax on America’s struggling economy Monday with expensive new sulfur standards. The new mandates will cost the energy industry an estimated $10 billion, impact small refineries most, and goose gas prices by 6 to 9 cents per gallon.

And all for no benefit to human health.

“The benefits far outweigh the costs,” claimed EPA administrator Gina McCarthy. “These standards will reduce pollution, they’ll clean the air we breathe and protect the health of American families.” There’s no evidence to support that statement.

“It’s made up science,” says Steve Milloy, a regulatory scholar with the Competitive Enterprise Institute and publisher of, of the restriction on gasoline’s sulfur content — part of EPA’s so-called Tier 3 rules.

EPA administrators justify the reduction of smog-inducing PM2.5 particulates to 12 micrograms (from 15 mcg) because they say there is no safe level of PM2.5 exposure. That is absurd. In fact, the EPA routinely funds lab tests that expose humans to diesel fumes containing PM2.5 particulates. The air Americans breath today is clean. Our worst metropolitan areas rarely exceed 15 mcg a day — as compared with the estimated 10,000-40,000 mcg that a smoker inhales from a single cigarette, says Milloy.

“Saying that there is no safe exposure gives EPA carte blanche to regulate whatever they want,” says Milloy.

That regulation inflicts real pain. Higher gas prices hurt low-income Americans most. And EPA regs have made the U.S. refinery business a regulatory thicket — resulting in the closure  of over 100 refineries in the last 40 years — mostly small businesses that can’t afford the regulatory costs. So much for White House claims that it backs the little guy.

The EPA’s rule pitted refineries against Big Auto, which had lobbied hard for the costs to be borne by the energy sector to help autos meet their own stringent government mandates. “This rule’s biggest impact is to increase the cost of delivering energy to Americans,” protested Bob Greco of the American Petroleum Institute. “But it will provide negligible, if any, environmental benefits.”

“This rule is all pain and no gain,” says House Energy and Commerce Committee Chairman Fred Upton (R., Mich.). An apt summary of the Obama presidency.

Tags: Oil , auto , Tier 3 , EPA

Norway: ‘Our Energy Sector Rocks!’ With a Side of Green Guilt


I am back, and an all-new Morning Jolt will be hitting your e-mailboxes later this morning. (This assumes, of course, you subscribe.) As you might expect, I go over some of the highlights of the cruise, including this observation about how Norway handles the dissonence of thinking of themselves as good, environmentally-conscious green Europeans while simultaneously being a major oil and natural gas exporter and a much wealthier country because of it: 

  • Offhand comment from Jay Nordlinger, responding to [MEP Daniel] Hannan, paraphrased: This is the Golden Age for environmentalists,  at least in the United States: carbon emissions are down, economic production is down, commuting is down, we’re less materialistic because we can afford less… Hey, they’re getting what they’ve been demanding all these years.


  • One of our stops was the Oil Museum in Stavenger, Norway, a lot more fascinating than I expected. Drilling, pumping, and exporting oil has generated $1 trillion in revenue for the Norwegians since discovery in the 1970s, in a country of less than 6 million people.  One trillion! For perspective, that’s one-seventeenth of our national debt!) The museum has you go through it in a sequence, beginning with the discovery and then walking you through the exploration process, the equipment used, life for the deep-sea divers, and so on.  The first two-thirds or so showcase all this with great detail and great pride, showcasing their enormous difficulties of the North Sea and the amazing engineering and massive rigs – basically floating cities – built and maintained in extremely tough environments. The tone is, “We are the heirs of the Vikings! This is extremely hard to do, and we do it well! We rock! We are awesome!” … And then for the last third of  the museum the focus turns to…  global warming. We learn that everything you just saw described with great pride is terrible and destroying the planet. This portion of the exhibit begins with the definition of a dilemma and goes through all the alternatives – and how they have flaws as well – nuclear power generates nuclear waste, wind power can endanger wildlife, and so on. It almost came out and asserted that environmentalists can find problems in any energy option and are basically a bunch of whiners.
  • Halliburton is among those thanked by the door of the museum.

Considering how some continue to demonize the fracking revolution that is more or less the lone bright spot in our current economy, Norway’s contradictory attitudes seemed relevant… Perhaps someday the United States will have a Museum of Fracking, with its own separate wing of how terrible it all is…

Tags: Oil , Norway , NR Cruise

Obama Announces New ‘Oil-Market Manipulator’ Hunt Four Years Straight


President Obama’s big initiative for the day is yet another pledge to crack down on nefarious energy traders who are driving up prices of oil and gasoline.


Under pressure to take action on rising gasoline prices, President Barack Obama wants Congress to strengthen federal supervision of oil markets, increase penalties for market manipulation and empower regulators to increase the amount of money energy traders are required to put behind their transactions. The White House plan, which Obama was to unveil Tuesday, is more likely to draw sharp election-year distinctions with Republicans than have an immediate effect on prices at the pump. The measures seek to boost spending for Wall Street enforcement at a time when congressional Republicans are seeking to limit the reach of federal financial regulations.

If this pledge sounds familiar . . . it’s because Obama and his administration announce some new initiative to do this every year, usually as spring turns to summer and the price of gas increases as Americans drive more. It’s almost like the Cherry Blossom Festival.

Last June:

The Federal Trade Commission is investigating whether oil companies have engaged in anticompetitive practices or manipulated crude oil prices, the government’s latest salvo to rein in high energy prices. The commission said on Monday it was also looking into whether oil companies had provided false or misleading information to a federal agency related to the wholesale price of oil or petroleum products. “We remain committed to preventing and prosecuting any anticompetitive, fraudulent, or otherwise illegal activity which we identify through the foregoing investigation,” commission Chairman Jon Leibowitz said in a letter to Senator John Rockefeller, who called on the FTC in March to launch an investigation.

Just about one year ago today, April, 2011:

With U.S. gasoline pump prices soaring, the Obama administration on Thursday unveiled a working group of federal agencies to probe potential fraud in the energy markets. The White House is worried that if average gas prices rise above $4 a gallon, the economic and political fallout could dominate next year’s presidential campaign and drown out President Barack Obama’s message of economic recovery. Obama asked U.S. Attorney General Eric Holder to assemble a team of agency officials to “root out” cases of oil market fraud that affect pump prices, including actions by speculators.

March 2011:

Obama said he had ordered a review of why oil companies aren’t producing more petroleum on federal land, and said his administration would monitor “any possible manipulation in the oil markets” and work with state governments to monitor for potential price gouging at the gas pump.

July 2010:

Traders will face new rules aimed at making it easier for regulators to prove manipulation in markets for commodities such as oil, wheat and natural gas under the financial overhaul awaiting President Barack Obama’s signature.

And then in August 2009:

Energy traders and companies will face fines of up to $1 million a day if they manipulate oil markets, the Federal Trade Commission ruled on Thursday in a crackdown on fraud that they said causes widespread damage to the U.S. economy. The agency issued a rule, which takes effect November 4, to prohibit fraud or deceit both in the cash, or physical, energy markets and on the regulated futures exchanges.

Now . . . with gas averaging $3.89 per gallon nationally and much higher in many parts of the country, we can conclude that either every previous initiative announced by the administration was spectacularly ineffective at containing the nefarious menace of oil price speculators . . . or that oil-price speculators are not really the reason gas prices increase.

Tags: Barack Obama , Gas Prices , Oil

Salazar Lied About Oil Production on Federal Lands


Yesterday I pointed out that the production of fossil fuels on federal lands is down from fiscal 2010 to fiscal 2011 (October 1, 2009, to September 30, 2010, compared to October 1, 2010, to September 30, 2011).

This is significant because the administration is . . . well, lying. Not long ago, Interior Secretary Ken Salazar said, “The fact of the matter is we are producing more from public lands — both oil and gas, both onshore as well as offshore, than any time in recent memory.”

Not only is Salazar wrong, he’s wrong for every type of fossil fuel produced on federal lands.

Crude-oil production? Down from 739 million barrels to 646 million barrels in FY 2011.

Natural-gas production? Down from 5,415 billion cubic feet (Bcf) to 4,859 billion cubic feet (Bcf) in FY 2011.

Natural-gas plant liquids? Down from 115 million barrels to 111 million barrels in FY 2011

Coal production? Down from 478 million short tons to 470 million short tons in FY 2011.

Taken altogether, the total amount of fossil fuels produced from federal land hit 18.6 quadrillion British thermal units (Btu), lower than every year since 2003.

Senator Lisa Murkowski (R., Alaska) recently asked Bureau of Land Management director Bob Abbey about the discrepancy between administration claims and the most recent figures from the Energy Information Agency.

“The oil production from onshore federal minerals was down last year from previous years,” Abbey said. He pointed out that oil producers decide where to produce and develop and emphasized that there are many approved permits that are not being utilized right now.

Tags: Barack Obaam , Gas Prices , Ken Salazar , Lisa Murkowski , Oil

The Cost of Obama’s Gulf Oil Permit Slowdown


Yesterday, I reported on Louisiana Gov. Bobby Jindal pointing out that during a late winter of skyrocketing gasoline prices, the president who keeps taking credit for increased domestic oil production has actually slowed the approval of leases and permits in the Gulf of Mexico to a crawl.

A report by Greater New Orleans Inc., an organization of businesses large and small in Southeast Louisiana, lays out how the Obama administration is approving only a fraction of the new permits, significantly less than preceding administrations in both deepwater projects and shallow water projects, that getting approval from Obama’s Department of Interior takes much longer than before he took office, and how Obama’s administration rejects a much higher percentage of proposals for drilling than before he took office.

On October 12, 2010, the U.S. Department of Interior’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE, the renamed Minerals Management Service) announced  that the federal government would lift the drilling moratorium.

In addition to its Economic Impact Study, released after the Deepwater Drilling Moratorium was lifted, Greater New Orleans, Inc. continued  to monitor and report on deep and shallow water permit issuance through the Gulf Permit Index (GPI). GNO, Inc. researchers aggregate public data from BOEMRE into graphs.

The GPI documents that both deep-water and shallow-water permit issuance continue to lag the previous year’s average:

The three-year historical average had been seven deep-water permits issued per month; now the Obama administration has it down to two per month.

The three-year average for shallow-water drilling permits had been 14.7 per month; the Obama administration now has that down to 2.3 per month.

The average approval time has increased from an average of 60.6 days in the preceding five years to 109 days in 2011.

And more drilling plans are rejected than ever. The five-year average had been 73.4 percent approval; now it’s down to only 34 percent of drilling plans approved.

The economic impact of the permitting slowdown – what some call a “permit-atorium” – is not limited to the increase in prices from reduced production and supply. The study also found a direct economic impact in the Gulf region:

Despite the relatively limited employment losses reflected in public employment data, this study provides evidence that businesses are indeed laying off workers, reducing hours and salaries, and limiting new hires as a result of the permit slowdown and  insecurity about future markets in the Gulf of Mexico. Forty-nine (48% of all surveyed)  companies reported laying off workers. Sixty-five (65.6%) companies surveyed reported no hiring or only replacement of lost employees. Of the companies that did hire, numbers were generally low with only one company reporting hiring over 50 workers in the last year. Some businesses have been cutting costs by reducing employees’ hours and/or salaries. Thirty-eight companies reported reducing hours and salaries of employees, sometimes as much as 40% in order to avoid layoffs.

The current increase in domestic oil production is in spite of the Obama administration’s policies, not because of it. When the President and his appointees have the power to increase domestic production, they are dragging their heels and rejecting proposals when they can.

Tags: Barack Obama , Bobby Jindal , Oil

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