Domestic Fuel

Wow Joanna – Excellent reporting and analysis.

This sheds new light on C-ARB rules, and why they want to exclude out of state ethanol in favor of their petroleum industry. That explains why all this BS coming out of California condemning biofuels is really a product of the oil industry.

They have a lot of tricks up their sleeve. It’s going to be interesting to see how CA petroleum claims reduced CO2 emissions for their fuels, that are far more polluting than biofuels.You still have the issue of newly mined carbon from crude oil – vs recycled carbon from biofuels. And the carcinogens, neurotoxins, and sulfurous black carbon soot emitted by petroleum fuels – vs much cleaner exhaust emissions for biofuels. Another issue: If the EPA approves E-15, will CA go to E-15 as well, or will they try to circumvent Federal RFS-2 Mandates also?

California’s most perverted “slight-of-hand” is the trick of using unproven indirect land use change theory to disqualify biofuels. Now we know – They are protecting their own oil industry against out of state biofuel competition, which is a violation of Interstate Commerce.

Maybe CA should just secede from the Union, and circumvent Federal Law altogether – before we have to bale them out. The State is over $35 billion in the hole, robbing money from Counties to keep things going, and paying bills with IOUs. Unemployment is over 12%, and the real estate market is a mess. Companies are leaving the state due to over-regulation. With their twisted economics, pseudo-environmentalists, who actually represent the interests of the oil industry, could be digging the state into a deeper hole than they’re already in. Eliminating the competition will restrict supply to certain types of fuel and cause higher prices, and that will increase the cost of living and decrease expendable income. More bad news for the CA economy.

C-ARB is going to have a pretty tough time proving indirect land use change theory in court. Next will come new Federal legislation that all rules regulating energy and biofuels will have to be based on fact and proven science, not false assumptions and theories.

If “Big Oil” truly can develop technology that permits the use of fossil fuels but still accomplishes the desired reduction in CO2 emissions, then policy makers well beyond California are likely to look favorably upon such a development. This is because, like it or not, we will continue to depend on fossil fuels for decades to come. Why not deploy such technology (if it becomes available) until alternatives to fossil fuels can be developed on a large scale?

There is no single answer to our energy challenges. We need greater energy efficiency, cleaner fossil fuels based product and to develop new technologies for alternative renewable fuels.

Tim, oil IS the problem. CO2 is just one factor–look at all the other pollutants (and CO2 is hotly debated as a pollutant). Look at all the oil we import. Look at the military protection, and the costs of that (about $7 on top of the per gallon price). Look at the immense health costs due to polluted air. Look at the huge economical negatives for CA, and the USA. Look at how we lose negotiating power with countries we import oil from. Look at the indigenous populations that are harmed, even murdered, due to multinational oil corporations wanting to get at oil under their villages. Look at the fact that we need the oil supplies to continue to grow, process, and transport food, as well as the millions of other products made out of oil and plastics. No, “lower CO2″ gasoline is not a problem solver. It’s just a fairy tale that Oil is spinning up with CARB to extend their control as long as possible.

I agree there is no single solution. But as tar sand extraction and fracking pick up in popularity, trying to improve oil is pie in the sky. It is a better use of time and resources to develop and bring to market the alternatives to oil–not to extend its use as a motor fuel.

Sciguy2:

You may describe oil as “the problem”, but I have not seen any credible analysis that forecasts the ability to eliminate the use of petroleum products any time soon. Like it or not, for decades into the future petroleum products and other fossil fuels (coal) will be used to meet our economic needs. That’s just reality.

So, whatever can be done to make fossil based fuels cleaner would be a welcome development.

As for tar sands, my understanding is that CARB regulations are likely to limit or prevent running it at California refineries. Personally, I doubt the Canadians will forego the development of tar sands. So, if U.S. environmental regulations keep it out, tar sands crude may be headed to places like China.

Getting back to California, I don’t see CARB as a friend of “Big Oil”, but, of course, they aren’t great friends of Mid West corn based ethanol either. Instead, they would like to see the development and production of 2nd generation alternative fuels in California. CARB wants to see the ethanol industry create a better, cleaner product and, recognizing the economic realities, would prefer to see production and the associated job creation take place at home – California not the Mid West.

Some lement that CARB regulations favor Brazilian sugar based ethanol over domestic corn based ethanol. They argue we shouldn’t substitute one import for another. But, CARB sees it differently, I believe. They don’t want the corn guys preventing a 2nd generation industry from developing in California.

The politics of oil and ethanol have always had a David and Goliath story – big bad oil and the poor little corn farmer. CARB doesn’t buy it. The 2nd generation industry is the new little guy in their minds.

Sciguy 2:

If you look at Big Oil’s real views on oil consumption and the development of 2nd generation biofuels, the picture looks less sinister. In 2006 ExxonMobil released a somewhat revolutionary view on gasoline consumption in the U.S., specifically they forecast a dramatic improvement in energy efficiency for light vehicles leading to a 1% per year decline over a twenty five year period. Even more impressive was ExxonMobil’s view that a similiar decline would occur in Europe, a market which has long employed far higher fuel taxes resulting in a far more fuel efficient fleet. Of course, at the same time, XOM also forecast substantial growth in demand (about 3% per year) in the two largest developing economies – China and India.

ExxonMobil was out in front on this issue, but now others are following, including DOE/EIA.

Energy efficiency, even more than petroleum products, is really the tough competitor that the corn based ethanol producers and 2nd generation ethanol developers face. From a public policy perspective, what’s not to like about efficiency? It means less imported oil and less GHGs. A decline in U.S. gasoline demand probably also means lower prices benefitting consumers but squeezing corn ethanol producer margins and pushing off 2nd gerneration development even further.

That probably means the Federal Renewable Fuel Standard will be modified in the next couple years reducing the requirement for 2nd generation fuels (because it really doesn’t yet exist) and increasing the requirement for corn based (from 15 billion gallons per year to 18-20 billion). But, regulators face a tricky problem: if they keep giving in to the corn guys by modifying the RFS, then 2nd generation development will keep moving back.

CARB wouldn’t like that, of course. They don’t like it from an environmental perspective and they don’t like for another reason: Mid West corn farmers don’t create jobs in California.