Yo Scott: Whats up with the Energy Bill?

[MannyIsGod]

Ok. I'm kind of annoyed (read: pissed) about certain aspects of the energy bill, but because Scott is much better at analyzing the energy industry as a whole I'll wait for his input before posting my thoughts.

Shoot, Scooter.

[Spam]

I think mine went up due to my running the A/C non-stop.

[scott]

Disappointed at the lack of MTBE Liability protection.

More to come.

[scott]

All I've read is this hellabalou (read: political nonsense) about how the bill does nothing to "reduce our reliance on foreign oil." Of course, none of the politicians (mostly Democrats, but a good deal of Republicans too) who go on spouting off about reducing this reliance on foreign oil ever lay out exactly how that is supposed to be done.

Here is what is included in the energy bill on this topic:



SEC. 151. REDUCTION OF DEPENDENCE ON IMPORTED PETROLEUM.

(a) REPORT-

(1) IN GENERAL- Not later than February 1, 2006, and annually thereafter, the President shall submit to Congress a report, based on the most recent edition of the Annual Energy Outlook published by the Energy Information Administration, assessing the progress made by the United States toward the goal of reducing dependence on imported petroleum sources by 2015.

(2) CONTENTS- The report under paragraph (1) shall--

(A) include a description of the implementation, during the previous fiscal year, of provisions under this Act relating to domestic crude petroleum production;

(B) assess the effectiveness of those provisions in meeting the goal described in paragraph (1); and

(C) describe the progress in developing and implementing measures under subsection (b).

(b) MEASURES TO REDUCE IMPORT DEPENDENCE THROUGH INCREASED DOMESTIC PETROLEUM CONSERVATION-

(1) IN GENERAL- Not later than 1 year after the date of enactment of this Act, the President shall develop and implement measures to conserve petroleum in end-uses throughout the economy of the United States sufficient to reduce total demand for petroleum in the United States by 1,000,000 barrels per day from the amount projected for calendar year 2015 in the reference case contained in the report of the Energy Information Administration entitled `Annual Energy Outlook 2005'.

(2) CONTENTS- The measures under paragraph (1) shall be designed to ensure continued reliable and affordable energy for consumers.

(3) IMPLEMENTATION- The measures under paragraph (1) shall be implemented under existing authorities of appropriate Federal executive agencies identified by the President.


A couple of things bother me about this section:

The heading of the section is "Reduction of Reliance on Imported Petroleum" and then it implies than the focus is (part b) "Reduce foreign dependence through increased domestic petroleum conservation.

Part b can mean one of two things:

1) Increase domestic petroleum conservation in terms of crude oil, which would do the exact opposite of reducing our reliance on foreign oil. If we use less of the domestic stuff, then we will have to import more. Fairly simple.

2) Maybe they meant conservation as in reduced domestic use of petroleum products. Despite that this wouldn't be the way *I* would read it, I will assume that was the intention.

My question then, just how does Congress propose we do that? There are a few options:

a) We drive less/rely more on mass transit. I'm going to go out on a limb and say... not going to happen. It's a cultural thing. Americans like their cars and their suburban homes. The oil boom sure hasn't had a slowing affect on the housing boom - sprawl just keeps on coming.

b) We develop alternative sources of energy. Obviously a long term solution, and one that is already in affect without the aid of an energy bill. The problem, however, is that we haven't yet been able to find an energy source more efficient than oil. We have alternative energy today, but at a higher cost. Ethanol (which gets another ill-advised boost from the energy bill) takes as much if not more energy to produce than it creates, hyrogen is the same, hybrids are still aren't power efficient for the tastes of the American consumer and so on. And to make matters worse, congressmen immediately proceeded to bitch and moan about the tax breaks they included, saying that $60 oil should be enough to encourage alternative fuel research. Well, geniuses... IT IS! Just not on your preferred time table. Anyway, alternative energy research will happen as a natural part of the free market system, but the tax incentives included in the bill will help speed things up. It's still a long process though.

c) We use our current resources more efficiently. Now, the easiest way to reduce consumption is to make a gallon go further. Pretty simple. Yet the bill includes no CAFE milage standards increases. I'll let everyone figure out how who talked their way through Washington to ensure that.

What I find laughable is that the section calls for a reduction of consumption of 1,000,000 bbls by 2025. Since we (the US) consume about 21 million barrels a day as it is (that's 7.7 billion barrels a year for those of you counting at home), I'm wondering what smart guy came up with 1,000,000 (1 million out of 7.7 billion is 0.0001 percent). Of course, it isn't the decrease that is important, but the implication that we should be using no more oil in 20 years than we are today. I just find humor in the fact that they chose to stick 1 million barrels in there, I presume to trick people who don't know the oil market into thinking that is some kind of significant number.

I don't know the bill inside and out, so what are your concerns Manny? We can chat about them...

[ClintSquint]

http://www.allhatnocattle.net/bennett7385.jpg

The fact that America consumes about 25% of world oil and imports roughly 60% of it this is one tough cookie to crumble.

[MannyIsGod]

Scott, I'll post on this tomorrow morning at work. I haven't read the actual bill since its been passed, just what was agreed upon. Let me read the real one tonight and I'll comment on it tomorrow morning. But, a lot of things don't add up for me on what I've seen so far.

Oh, and I agree that as much ast the government pushed MTBE they shouldn't let companies hang out to dry.

[Guru of Nothing]

http://www.allhatnocattle.net/bennett7385.jpg

The fact that America consumes about 25% of world oil and imports roughly 60% of it this is one tough cookie to crumble.


Oh come on, don't ignore the fact that there are approximately 300,000,000 Americans.

Thassalotta people.

[MannyIsGod]

I haven't forgotten, just haven't had time.

[SWC Bonfire]

Disappointed at the lack of MTBE Liability protection.


Oh, and I agree that as much as the government pushed MTBE they shouldn't let companies hang out to dry.

So, having not read the bill personally, they are going to hold private companies liable for a fuel additive required by the federal government? Reformulated gasoline is a big enough headache already from a distribution standpoint, raising prices for everyone.

MTBE in groundwater is the sole responsibility of the EPA, in my opinion. They are the ones that require reformulated and oxygenated fuels in certain markets. The one who spec's it gets it.

[scott]

So, having not read the bill personally, they are going to hold private companies liable for a fuel additive required by the federal government? Reformulated gasoline is a big enough headache already from a distribution standpoint, raising prices for everyone.

MTBE in groundwater is the sole responsibility of the EPA, in my opinion. They are the ones that require reformulated and oxygenated fuels in certain markets. The one who spec's it gets it.

Essentially, SWC. At the time that oxygenates were required into reformulated gasoline, the 2 available options (and they still are the only 2 options) were MTBE and Ethanol. MTBE is a far more economic and effecient oxygenate than ethanol, so naturally it was what was used.

There is study out suggesting that eliminating MTBE use will reduce gasoline supply by 250 mbpd (meaning higher prices), approximately the output of 4 major refineries. It just takes more gasoline when you blend Ethanol.

The fact is, MTBE isn't the problem with contaminated groundwater... it's leaky tanks. I don't care what you put in gasoline, as long as it is in a leaking tank, you are going to have a contamination issue.

I have a feeling the Ethanol lobby got its way on this one, along with politicians who were trying to take the "tough stance" against big business, when in reality it is their fault.

A good aspect of the bill is that the number of different blends will be reduced, thus having a downward pressure on regional prices.