Domestic Fuel

The beginning of October has brought at least 10 Pakistani attacks on oil tankers carrying fuel for NATO vehicles in Afghanistan. The NY Times reported today that fuel convoys are “sitting ducks” and as a result, have come under increasing attack. In response, U.S. Rep. Gabrielle Giffords came out in support of bipartisan leaders of the House Armed Services Committee for urging Secretary of Defense Robert M. Gates to study new ways of reducing energy use.

The U.S. government is the largest user of fuel in the country and has publicly committed to adopting the use of renewable fuels. Just this year, several test flights have already taken place using “bio” jet fuel. In addition, the military has acknowledged the vulnerability of its troops due to their dependence on fossil fuels, and last month, Biodiesel Industries announced the next phase in development of its system to create biodiesel right on military bases. This system could be built in military camps around the globe lessening the danger of U.S. troops who would no longer have to transport huge amounts of fossil fuels to and from its camps on a daily basis.

“Transporting fuel for operational use is one of the most dangerous assignments for our men and women serving in Afghanistan,” said Giffords, a member of the Armed Services Committee. “We must take immediate steps to find ways of reducing fuel use as a way of safeguarding our troops.”

“Our enemies know of our reliance on oil and they are using it to their advantage, and as a result, thousands of service members are dedicated to securing vulnerable supply lines instead of fighting the terrorists who threaten our way of life,” continued Giffords who has introduced legislation to address the issue.

Giffords’ bill, the Department of Defense Energy Security Act, would help reduce the Pentagon’s $20 billion annual fuel bill through a number of specific steps. Among them is accelerating the production of biofuels for aviation and promoting large-scale renewable energy projects at defense facilities. These steps would help make it safer for our troops.
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The Center for American Progress Action Fund (CAPAF) has released a new analysis that concludes that Big Oil and other special interests have spent millions of dollars in lobbying and campaign contributions to defeat clean energy legislation. The study, “Dirty Money” found that the top 35 spending companies and trade associations, including oil, mining and electric utility,  invested more than $500 million in lobbying and campaign contributions from January 2009-June 2010 to crush clean energy and clean tech legislation. Besides the federal level, one of the states Big Oil has been most active in is California. When analyzed the groups spent $1,800 in lobby expenditures a day for every senator and representative during the time of the study.

According to CAPAF this high dollar spending and political pressure has convinced enough legislators to oppose clean energy measures that would have created jobs, reduced oil use and cut pollution caused by global warming. To date, no comprehensive environmental policy has been passed, the renewable electricity industry is struggling for a federal renewable energy mandate, the biodiesel industry has lost its tax credits, and rumors coming out of DC this week are that the ethanol tax credit will not be extended either.

“This year had many extreme weather disasters and fossil fuel catastrophes. Yet too many senators ignored these events and instead heeded the extreme views of big oil, dirty coal, and their allies rather than those of the American people,” said Daniel J. Weiss, Senior Fellow and Director of Climate Strategy for the Center for American Progress Action Fund. “America suffered from its hottest temperatures and worst offshore oil blowout, yet enough senators opposed clean energy reforms that made change impossible so far.”

Six of the seven companies with the largest lobbying expenditures are Big Oil companies*ExxonMobil (1), ConocoPhillips (2), Chevron (3), BP (5), Koch Industries (6), and Shell (7). According to “Dirty Money,” their 18-month lobbying expenditures total $143 million. In addition, the study reports that the American Petroleum Institute, a Big Oil front group, spent $11 million to lobby Congress to defeat pollution reductions and maintain their tax loopholes, along with another $126 million on television ads just this year alone.

“While big oil, dirty coal, and other special interests profit from inaction, everyday Americans will pay the price of doing nothing. Clean energy investments and pollution reductions would create jobs, protect public health, and reduce our oil dependence,” noted Weiss. But because enough senators caved to special interests, China will get our clean energy jobs while we are stuck with the dirty energy pollution.”

Ironically, this past July, China became the world’s largest user of energy, surpassing America and according to analysts polled by Bloomberg, China will become the largest importer of oil within the next 1o years.

The Truman National Security Project has released its 2010 Fuel Scorecard and ethanol scores near the top of the list as viable fuel options for the future. Based on several factors that affect America’s security including instability of supplier country, opposition to American values, climate disruption, possibility of threat to supply chain, and cost spike volatility, ethanol scores as the second best fuel for our future.

The authors of the report write, “Across each of our national security metrics, oil ranks in a league of its own. It is high time American consumers and policymakers recalculate their routines, and begin to move America towards an energy posture that does not undermine our nation’s security. Ethanol—particularly second generation ethanol – electricity, and natural gas can all play roles in a more secure America.”

The Truman Project focuses, in part, on bringing attention to the security and climate problems that come from a dependence on fossil fuels – especially those purchased from countries that do not hold the same values as Americans. They note in the report that America purchases 50 percent of its oil from OPEC, who controls 70 percent of the world’s global oil reserves and 40 percent of daily oil supplies. Last week, OPEC celebrated its 50th anniversary.

The report notes that America’s energy supply is a weakness and a prime target for attack – an issue which has been known by oil countries for many years. At one time, Osama bin Laden was quoted as saying, “We bled [Russia] to the point of bankruptcy. So if we were able to do it to the Russians, we can now do it to the Americans, and the best way to do it is to go after their Achilles heel and attack oil.”

The report concludes that American power in the world would be severely compromised by sharp cuts to its fuel supply at home. “Therefore, smart decisions about fuel sources need to be made now to ensure the safest, strongest America over the long term. Our current reliance on oil—the worst performer in this report—is leaving our country more vulnerable to shock while shoring up the capacity of regimes intent on endangering America’s interests, values, and leadership in the world.”

While the report acknowledges that no current fuel source is perfect, we must “devote our national resources to power sources that will sustain America’s strength while causing the least harm.”

The American Petroleum Institute (API) is using findings of a new report to try and dissuade the Environmental Protection Agency (EPA) from making a decision on the use of increased levels of ethanol in gasoline anytime in the near future.

The Sierra Research report commissioned by the national trade association that represents the oil industry found that “multiple regulatory and legal requirements remain and must be met before higher ethanol blends can be legally marketed for commercial introduction.” The report lists nine different requirements that must be met before the ethanol blend level can be increased from the current 10 to 15 percent. Those requirements include such things as a Clean Air Act waiver; registration of the fuel with EPA; changes to EPA Reformulated Gasoline regulations; and changes to EPA Gasoline Detergent Additive regulations.

Matt Hartwig with the Renewable Fuels Association agrees that those actions need to be taken before the fuel can be marketed, but disagrees that EPA should wait until they are all complete before it can approve the use of increased ethanol blends. “Those things need to be done and we’re already working on them” said Hartwig. “They can attempt to drag their feet until the cows come home but it won’t change the fact that E15 is a safe and effective fuel for vehicle use. Instead of constantly referring to the few challenges that can easily be overcome, it would be far more effective for Big Oil to work with ethanol producers to address them in a timely fashion – that is assuming they truly want to act in the best interests of American consumers.”

Growth Energy CEO Tom Buis says approval by EPA is the first step needed for the process to move forward. “In order for state laws and regulations regarding fuel specifications to be updated, the fuel must first be approved by the EPA,” said Buis. “We are not surprised that the people profiting from the status quo want to keep it that way. We have been dependent on foreign oil for 40 years- sending $300 billion a year overseas to other countries’ economies – and these delays will only perpetuate our addiction. The Growth Energy Green Jobs Waiver was accompanied by a sound body of science that overwhelmingly supports the use of E15 in existing vehicles. In fact, there has been more testing of E15 than there has been of any other fuel additive in the history of the EPA waiver process.”

API says some of the necessary requirements must occur prior to the initial sale of a new transportation fuel but some can be subsequently addressed. The period of time they estimate to be required for the completion of all of the above changes is “on the order of several years.”

Read API’s report here.

Gas prices have hit an eight-month low and an analysis in the Washington Post today gives part of the credit to ethanol.

The main reason they say gas prices have declined is weak demand due to the economy and continued high unemployment. That comes from an American Petroleum Institute (API) news release last week, which reported gasoline demand for July, as measured by deliveries, was down .03 percent compared to the same time last year. “With unemployment high and July regular gasoline prices more than 20 cents a gallon above those a year ago, consumers likely have been shopping and vacationing less and trimmed their gasoline purchases accordingly,” said API Chief Economist John Felmy.

But, the Washington Post article notes that fuel efficiency improvements and more ethanol have also helped to moderate gas prices. “A steady increase in the biofuels component of U.S. motor fuel is another reason; the four week average for ethanol production ending Aug. 13 was 854,000 barrels a day, up nearly 18 percent from a year ago and now more than 9 percent of the volume of motor fuel, according to the Renewable Fuels Association.”

Gasoline prices have dropped a little more this month, according to the American Automobile Association, which reports this week that average retail price for regular gasoline is less than $2.71 a gallon, now just eight cents higher than a year ago.

As the ethanol industry continues to fight for its subsidies before they expire at the end of the year, and the biodiesel industry has been fighting to survive without the $1 tax credit, the U.S. Senate did not even hesitate to preserve the oil industry’s subsidies. In addition, the Senate has yet to pass any comprehensive energy policy that would ensure our country achieves energy independence goals and reduces its greenhouse gas emissions.

In response to these issues as well as in frustration over the fact the U.S. Senate has not passed any climate change or oil spill response legislation, Oil Change International, a non-profit organization that specializes in campaign to expose the true cost of fossil fuels, has launched a new campaign to “Clean Up the Senate“.  The new campaign details 46 U.S. Republican and Democratic Senators who are “aligned” with the oil industry and portrays them bobbing in a sea of petroleum. You can view information about these senators including political campaign contributions and voting history on key legislation.

“We hope Americans are motivated to clean up the gusher of oil money that is currently covering these Senators,” said Steve Kretzmann, Oil Change Executive Director. “This campaign exposes these Senators and lets people send them a message that it’s time they clean up their act. It’s time for a Separation of Oil and State.”

In addition to the Clean Up the Senate Campaign and its corresponding website, last week Oil Change International also launched an additional website called DirtyEnergyMoney. This site was developed to support the organization’s campaign to end oil and coal company campaign contributions. The site is supported by more than a dozen organizations including Greenpeace, Public Citizen, MoveOn, 350.org and True Majority.

“The United States is paying a heavy price for its dangerous dependence on fossil fuels,” said John Sellers, a Director of Oil Change International.  “The Gulf Coast disaster is but the latest wake-up call. It’s time the Senate moved us forward instead of backwards on energy, to a clean, renewable future that boosts jobs, protects the planet and secures America.”

Foreign oil imports are up for the first time in 18 months according to the latest figures from the Energy Information Administration (EIA). The U.S. imported 65 percent of its oil, or 388 million barrels in July 2010, sending nearly $29.6 billion or $663,231 per minute to foreign countries. This is the highest number of barrels of oil imported in one month since January 2009.

T. Boone Pickens responded to the increase in oil imports in his monthly update and stated,” President Obama has pledged to eliminate Middle East oil dependence in 10 years, but the latest oil imports statistics show we’re not making much progress.  In July we imported 388 million barrels of oil, which is the highest total since President Obama took office in January 2009.”

He continued, It’s not hard to see that spending approximately $30 billion on oil month after month is hurting the economy. In fact, oil imports continue to make up more than half of the United States’ growing trade deficit.”

Pickens has repeatedly called for a comprehensive energy plan where natural gas plays a starring role, and is urging Congress to put energy back on the front burner when they return to D.C. in September.

Pickens is just one of dozens of organizations that have called for more effective energy policy but he is only one of few that focuses so heavily on natural gas as a replacement for liquid transportation fuels. Depending on what energy expert you believe, the country has either enough to last for hundreds of years, or for less than 20 years, if it is used as a primary fuel in the transportation sector.

Biodiesel producers could be utilized to help clean up oil the coastline after the disaster in the Gulf of Mexico.

According to the National Biodiesel Board, methyl esters – a chemical yielded in biodiesel production – can be formulated into a biobased solvent that is federally listed as a shoreline washing agent for oil spill clean-up. An effort is underway to encourage the use of this product to remediate oiled shorelines, particularly the more sensitive marsh habitats.

“The chemical dispersants used in the Gulf have been criticized because all they do is dissolve the oil back into the water, which actually makes it more toxic to sea life,” said Randall Von Wedel, founder and principal biochemist of CytoCulture International, a company that pioneered the method in the 1990s. “A biobased solvent does the opposite of a dispersant. It removes the oil from impacted vegetation and shoreline and floats it into the water for easy recovery.”

The process involves crews spraying the methyl esters from shallow draft boats onto oil-covered marsh vegetation or small beaches normally unreachable by land. After the biobased solvent is applied, a gentle “rain” of seawater rinses the dissolved petroleum mixture off the plants and shoreline for recovery, using small mechanical skimmers. The mixture can be recycled.

Von Wedel recently visited the Gulf of Mexico, where his team submitted documentation on his product, branded “CytoSol Biosolvent.” He says a BP contractor and the U.S. Coast Guard have submitted a proposal to use the process to enhance a mechanical beach cleaning technology. The methyl ester product was licensed by the State of California in 1997 and used to clean oiled ships and response vessels during the San Francisco Bay oil spill of 2007.

See a demonstration of how it works here:

I’m calling the environmental movement out for supporting nothing and opposing everything.

Not too long ago, I was proud to call myself an environmentalist. Today, I’m bordering on embarrassed to admit that I support sustainability programs. The cause of my distress is what is happening under the carpet among environmental groups. On the surface, they look squeaky clean, but when you pull back the carpet you find years of dust and dirt.

The result is crippling the system so that the status quo remains unchanged.

Are they doing this unknowingly? It’s hard to imagine a community founded on integrity and steeped in the honorable tradition of academia could blatantly miss the truth on the intellectually definable myths about renewable energy.

For example, for more than 30 years, environmental organizations have attacked the oil and gas industry in the name of environmental integrity. During this same time, these same groups have aided Big Oil in its attack of the biofuels industry in the name of subsidies. The irony is that ethanol subsidies such as the ethanol tax credit (VEETC) and the ethanol tariff are subsidies that actually go to the oil industry – not the ethanol producer.

Until recently, the oil industry was not attacked for the hundreds of billions of subsidies they receive nor were they held accountable for their greenhouse gas emissions until the University of Nebraska conducted an indirect land use emissions study from petroleum transportation and protection – mainly war.

How did everyone miss this?
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At the helm of Friends of the Earth, a new report was released today highlighting government programs and subsidies that are wasteful to taxpayers, harmful to the environment and bad for consumers. The Green Scissors 2010 report targeted four major areas for budget cuts including energy, agriculture and biofuels, infrastructure, and public lands.

Many of the recommendations of this report come as no surprise to the agricultural and biofuels industry, as over the past two weeks, members of Friends of the Earth surreptitiously called agricultural organizations across the country, questioning them about their methods of production.

According to an industry insider whose company received multiple calls from various people in the employ of Friends of the Earth, the organization was asking questions about ground water quality (ag production, mainly corn and soybeans have been linked to the Gulf of Mexico Dead Zone) and hypoxia; two issues that have made national headlines in recent weeks. It is also no secret that Friends of the Earth has engaged in an active anti-agribusiness and biofuels campaign over the past few years, and the environmental organization has been tied to Big Oil through contribution monies.

It should be known that, Friends of the Earth, along with the Natural Resources Defense Council, the Union of Concerned Scientists, and the Clean Air Task Force are currently engaged in a campaign to end the ethanol tax credit (VEETC) as well as the ethanol tariff. They have specifically attacked Growth Energy’s corn-ethanol advertising campaign in the Beltway.

They write on their website, “Tens of billions of dollars of taxpayer money has already been wasted under the credit [VEETC]. And these funds do little more than to further line the coffers of the oil industry. This coalition is working to prevent an additional 30 billion plus dollars from being lavished on the industry to fulfill a legally mandated requirement to blend an environmentally harmful fuel into another environmentally harmful one.”
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Environment Magazine has published new research today that finds that the greenhouse gas emissions derived from military use of oil is worse than previously thought. University of Nebraska professors, Adam Liska and Richard Perrin write in the article, Securing Foreign Oil: A Case for Including Military Operations in the Climate Change Impact of Fuels, “we assert that military activity to protect international oil trade is a direct production component for importing foreign oil—as necessary for imports as are pipelines and supertankers—and therefore the greenhouse gas (GHG) emissions from that military activity are relevant to U.S. fuel policies related to climate change.”

Other areas that may be considered tied to military production of GHG emissions are the global protection of oil reserves and Middle Eastern wars.

The authors note that as part of the Energy Independence and Security Act of 2007, specific GHG emission reductions must be met by biofuels including direct life cycle emissions as well as indirect emissions; however, in current legislation, only the direct GHG emissions are accounted for when calculating life cycle emissions of gasoline production. Therefore, the authors wanted to understand how military emissions affect the total amount of GHG emissions of gasoline. What they discovered is that direct spending on military activity and military acquisition of oil results in the release of nearly 289,000 tons of carbon dioxide per billion dollars spent.

To get a handle on the billions of dollars spent just on the Iraq War, the U.S. Congressional Research Service report estimated that the average annual cost of the Iraq War has been $93.5 billion.

Ultimately, the authors conclude, “In order to have a balanced assessment of the climate change impacts of substituting biofuels for gasoline, a comparison of all direct and indirect emissions from both types of fuel is required.”

Several ethanol organizations came out in support of the report today including Growth Energy who reiterated the environmental costs associated with our dependence on foreign oil and the Renewable Fuels Association who heralded the study as “groundbreaking”.

As BP struggles to stop the oil gushing out into the Gulf of Mexico, an announcement comes today that the company is making a major investment in cellulosic ethanol, as BP Biofuels North America is acquiring Verenium’s cellulosic biofuels business – which includes facilities in Jennings, LA and San Diego, CA – for $98.3 million.

BP and Verenium have been working together to accelerate the development and commercialization of cellulosic ethanol since August of 2008, in a partnership that has been extended on a month-to-month basis several times this year. Under the agreements, BP was funding Verenium’s cellulosic ethanol program as they continued negotiations for a longer-term collaboration.

Under the new agreement, Verenium will retain its commercial enzyme business, including its biofuels enzymes products, and have the right to develop its own lignocellulosic enzyme program. Verenium will also retain select R&D capabilities, as well as rights to access select biofuels technology developed by BP using the technology it is acquiring from Verenium through this agreement.

Verenium President and CEO Carlos A. Riva says the agreement “should give both companies the flexibility to pursue the growth opportunities in the respective businesses and achieve goals in the near-term. As a result of this transaction, Verenium will have the resources to grow our commercial enzyme business while maintaining strategic access to the emerging cellulosic ethanol market in a manner that better fits our resources.”

“This acquisition demonstrates BP’s intent to be a leader in the cellulosic biofuels industry in the U.S. and positions us as one of the few global companies with an integrated end-to-end capability, from R&D through commercialization to distribution and blending,” said Philip New, CEO of BP Biofuels. “Our partnership with Verenium has been very fruitful, enabling the companies to develop a leading cellulosic ethanol technology package, driven forward by the skills and expertise of people from both companies. By acquiring Verenium’s cellulosic biofuels technologies, BP Biofuels should be well placed to accelerate the delivery of low cost, low carbon, sustainable biofuels, at scale.”

BP will become the sole investor in Vercipia Biofuels, a 50-50 joint venture formed by BP and Verenium in February 2009, and will independently manage all of Vercipia’s activities going forward. Similarly, Galaxy Biofuels, a 50-50 joint development company owned by BP and Verenium, will be owned 100% by BP. This transaction is expected to close in the third quarter of 2010.

Verenium is hosting a press conference on the agreement this morning.

Earlier today, the Global Renewable Fuels Alliance (GRFA) issued its top 10 list of offshore oils sites that they consider “at risk.” The list is an attempt to highlight the world’s choice between moving forward with the addition of more offshore oil rigs or building more sustainable biofuels plants.

“The choice is clear,” said Global Renewable Fuels Alliance spokesperson, Bliss Baker. “We can continue to put our precious resources at risk by drilling deeper and further out to sea or we can build new biofuels plants that can reduce the need for this dangerous practice. We can choose clean-ups or clean fuel.”

Worldwide ethanol production is estimated to exceed 22.6 billion gallons by the end of of 2010. This is nearly 1 million barrels per day (equal to about two days worth of oil leaching into the Gulf of Mexico) and will displace the need for more than 370 million barrels of oil. This is equivalent to replacing 100 offshore rigs that produce 10,000 barrels per day.

It is estimated that the current oil leak will be the largest oil disaster in American history and one of the worst global disasters once capped. Experts are predicting that the clean-up bill will exceed $1.43 billion not including lawsuits, fines, etc. While BP is said to have $80 billion is cash, many are anticipating that BP will go bankrupt compelling some legislators and environmental groups to call for a separate fund to use to pay out damages.
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The pressure continues to mount as BP attempts to ebb the flow of oil in the Gulf of Mexico. As of today, oil has reached Florida and now four states have been affected: Louisiana, Alabama, Florida and Mississippi. BP has responded in part by offering $70 million to the four states to help promote tourism – an effort to offset the loss of dollars in other industries. One of the industries most affected is the fishing industry that has been all but shut down. And while fisherman are out of work, seafood prices have already risen more than 20 percent. But, don't worry, according to Tony Hayward, BP Group Chief Executive, in the overall scheme of things, this oil spill isn't that bad. Interesting since most are predicting that this will be the worst oil spill in US history.

So, who exactly isn't this oil spill bad for? Marine life? The fishing industry? Consumers? It appears that the only organization it's not so bad for is BP who makes $93 million in profits every day.

I keep seeing this obscene number, $93 million everywhere and it led me to ask the question, what would you do with 3.8 days of BP's profits, or $300 million to develop our country's alternative energy program? I used this number because this is how much money BP had spent on clean-up efforts one week after the spill – less than 4 days of their profits. I reached out to nearly a dozen associations asking them the question but only a few responded. Here are a few of respondents answers.

"Many people have asked me what I'd do with the same amount of money BP will have to spend to clean up this mess. My answer is quite simple: Invest in Algae technologies. Algae for wastewater treatment, Algae for CO2 capture, Algae for Pharmaceuticals, Algae for high grade animal feed for livestock, Algae for fertilizer, Algae for biobased polymers, and finally: Algae technologies to produce an entire suite of advanced biofuels. The time has come to enact a serious and aggressive energy policy that will not only free us from our addiction to oil but will provide us with a new and long term prosperity for decades to come." –Sean O'Hanlon, Executive Director, American Biofuels Council

"A 2009 study by Sandia National Laboratory, 'The 90-Billion Gallon Biofuel Deployment Study,' shows that the capital investment needed for biorefinery construction and biofuel infrastructure to meet 30 percent of our transportation fuel needs is around $250 billion. However, that amount is “actually of similar magnitude to petroleum-related investments required to establish and maintain 40 billion gallons per year of domestic oil production,” according to the study. $350 million could fund construction of one or two commercial-scale advanced biofuel biorefineries. This may sound like a large investment for little return, but those first plants could assure institutional investors and commercial lenders that putting their money behind new advanced biofuel technology is worth the risk." –Brent Erickson, executive vice president of the Biotechnology Industry Organization's Industrial & Environmental Section

Erickson also noted that in 2007 BP announced a $500 million investment over 10 years to create the Energy Biosciences Institute for research into advanced biofuel technology. He stressed that additional investments in advanced biofuel deployment are now needed to move the industry forward.
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As Congress holds hearings on the oil spill, a new study finds most Americans are ready to do what it takes to reduce dependence on oil.

The Consumer Federation of America (CFA) report shows that, “even before the Gulf oil spill and Congressional hearings, Americans strongly supported reduced oil consumption and tougher fuel economy standards. In a late March survey commissioned by CFA and undertaken by Opinion Research Corp. (ORC), 87% of respondents said it is “important that the country reduce its consumption of oil,” while more than half (54%) said this was very important.”

“Our survey data strongly suggest that the American public is getting very close to the point, if they’re not already there, where they are prepared to support radical measures to break our nation’s dependence on oil and oil imports,” said Jack Gillis, CFA Director of Public Affairs.

However, the report only appears to focus on increasing fuel economy for vehicles as the answer to lowering dependence on oil, specifically that the federal government “should increase its fuel economy standard to 50 miles per gallon by 2025.” Increasing the number of flex-fuel vehicles on the road and availability of ethanol as an alternative fuel were not addressed.