Friday, June 20, 2008

Inhofe: Dems Running on Empty - Oped in Human Events

Posted 6/16/2008

The Trouble With Markets for Carbon

 

June 20, 2008

BRUSSELS — As the United States moves toward taking action on global warming, practical experience with carbon markets in the European Union raises a critical question: Will such systems ever work?

Backers of these markets, which involve setting limits on greenhouse gases and then allowing companies to buy and sell emission permits, see the approach as one of the cheapest and most effective ways to control the gases in advanced economies. The presidential candidates Barack Obama and John McCain have both endorsed the idea.

Yet in Europe, which created the world’s largest greenhouse gas market three years ago, early evidence suggests the whole approach could fail. Carbon dioxide emissions are still rising in many industries, not falling.

“We currently are in danger of losing yet another decade in the fight against global warming,” said Hugo Robinson of Open Europe, a research group in London.

This week, the European Environment Agency reported that emissions from factories and plants that trade pollution permits rose 0.4 percent in 2006 over the previous year, and 0.7 percent in 2007, the first two years of the system’s operations.

Europeans took an early lead in efforts to curb global warming, championing the Kyoto Protocol and imposing a market-based system in 2005 to cap emissions from about 12,000 factories producing electricity, glass, steel, cement, pulp and paper. Companies buy or sell permits based on whether they overshoot or come in beneath their pollution goals.

European Union officials acknowledge that establishing such a vast market has been more complicated than they expected.

“Of course it was ambitious to set up a market for something you can’t see and to expect to see immediate changes in behavior,” said Jacqueline McGlade, the executive director of the European Environment Agency. “It’s easy, with hindsight, to say we could have been tougher.”

A major stumbling block arose at the outset, when some participating governments allocated too many trading permits to polluters when the market was created. That led to a near-market failure after the value of the permits fell by half, and called into question the validity of the system.

Since then, officials have promised changes, and the price of carbon permits has largely recovered. Yet a ferocious lobbying battle is under way as European Union regulators seek to overhaul dysfunctional parts of the market by charging polluting companies more and reducing the supply of permits. Brussels is also seeking to consolidate its oversight of the market, rather than leave it partly in the hands of national governments that have proved susceptible to corporate lobbying.

“The politics you’re seeing in Europe now are the real politics of carbon,” said David Victor, the director of the Program on Energy and Sustainable Development at Stanford.

Energy-intensive industries, like power, steel and aluminum, have challenged proposals that would force them to buy many more permits than in the past. During the three years in which they participated in the first phase of the market, carbon emissions in the iron and steel sector in Britain alone rose more than 10 percent while emissions in the cement industry rose more than 50 percent, according to transcripts from the British Parliament.

Electricity producers, oil companies, steel companies and airlines are among those fighting to protect their interests, with some threatening to freeze investments in Europe unless the system is tweaked to suit them.

Meanwhile, poorer countries in the union, led by Hungary, are clamoring to overturn emissions allowances that they say are too stingy and risk undermining their economic growth.

The proposals are also under attack from environmentalists, who want to restrict polluters from using large numbers of permits from an offsetting program run by the United Nations. It funnels money to poor countries for investments that purportedly reduce carbon emissions, but the effectiveness of the program has been questioned.

“The sheer amount of lobbying creates so much uncertainty about the way these markets operate that nobody really is investing in cleaner technologies in Europe,” said Mr. Robinson of Open Europe.

Carbon markets, also known as cap-and-trade systems, have come into vogue because they are more politically palatable than imposing carbon taxes.

Americans pioneered pollution markets in the 1970s and used them on a broader scale with some success during the 1990s to control emissions from power plants that contributed to acid rain. American officials also pushed hard for emissions trading to be included in the Kyoto climate treaty on the grounds that markets are the most effective way of encouraging innovative emission-reducing technologies.

But the momentum in the United States to create a nationwide carbon market ground to a halt in 2001, when President Bush withdrew support for the Kyoto Protocol. Mr. Bush said carbon controls would put an undue burden on the American economy unless fast-growing countries like China and India also made commitments to cut emissions.

Now the tide is turning again in favor of carbon markets in the United States. Although the Senate this month blocked a bill that would have imposed a cap-and-trade system to slash greenhouse gases by 2050, the issue is expected to come up again after the elections. Both Mr. McCain and Mr. Obama have pledged support for market-based systems like the one in Europe.

Mr. Obama has said he supports the use of a market to reduce carbon emissions by 80 percent below 1990 levels by 2050. His proposal would require pollution credits to be auctioned rather than given away to big industries, including coal and oil companies.

Mr. McCain favors giving permits away to big polluters before moving to an “eventual” auctioning of permits to reduce emission levels 60 percent below 1990 levels by 2050.

Americans were likely to experience many of the same problems already playing out in Europe, said Mr. Victor, the Stanford expert. “The challenge for the United States now will be to have enough pork to get people to the meal, but not to give away so much that we end up squandering public resources,” he said.

The biggest question hanging over the European system — and that is likely to be of major concern to American policy makers — is whether the rules can be tightened enough that they achieve the social goal of reducing the emissions that are warming the planet.

Henrik Hasselknippe, the director of emissions trading analysis at Point Carbon, a consultancy in Oslo, said the European system was beginning to show signs of success. He said the price of carbon had been rising, and that would prompt factories and installations covered by the system to move toward cleaner power generation, such as burning natural gas instead of coal.

Mr. Hasselknippe said efforts to overhaul the European system by reducing corporate influence and government largess would mean greater certainty about price of carbon permits during the next decade. And he predicted that emissions from industries covered by the European system would finally decline this year, by 2 percent.

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Fuel Protests "Spread Across the World"

The "Idle" Oil Field Fallacy

Posted 6/20/2008 

House Democrats have been touting a "use it or lose it" theme, implying that oil and gas should be drilled on current leases before any other areas are opened. Four House Democrats authored a "Dear Colleague" letter with the following plea: "At a time when our constituents are paying $4 per gallon at the pump, the answer is to make sure that oil companies are producing on the land they currently own," they wrote. "They need to either use it or lose it."

Fact: Democrats’ assertions are based on naive assumptions. Sometimes at the end of the day there is no oil or gas found on a lease. Oil companies may hold a number of leases for drilling, but those lands are leased in a speculative environment without knowledge if commercial quantities of resources exist. The Energy Information Administration reports that between 2002 and 2007, 52% of all exploration wells were dry holes. Companies cannot be expected to produce oil from land that doesn’t contain any. According to the June 16, 2008 Wall Street Journal, "Companies don’t know how much oil is under the lands they lease, so they buy up large swaths in hope that a fraction will work out. Much of the area that isn’t producing, they say, doesn’t have oil or gas in commercially viable quantities. Moreover, bringing a new field into production can require years of mapping, testing, drilling and construction – during which time the land would show up in statistics as being ‘not in production,’ even as companies spend millions or even billions of dollars to bring it on line."

David Curtiss, director of the Washington office the Association for American Geologists, explains: "There’s the misconception that every lease has oil [. . .] A lease is a line on a map. It has nothing to do with the geology of where oil is." (LINK)

See Also: Wall Street Journal: The 'Idle' Oil Field Fallacy – June 20, 2008

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Fact Check: Oil Company Investments- Fact of the Day

Posted 6/19/2008

In a Fox News Channel interview on June 19, 2008, Senator Bernie Sanders (I-VT) debated Senator James Inhofe (R-OK) about energy issues. Senator Sanders echoed Democratic talking points demonizing oil companies for making a profit. According to Senator Sanders, “Since Bush has been President, the oil companies have made over $600 billion in profits. Most of that will buy back stocks and raise dividends, not use that money for oil exploration.”

Fact: According to a report by analysts at Ernst & Young, North America’s 20 largest oil companies have invested 50 percent more into exploration and production than they earned in net profit over the past 10 years. Additionally, data from the U.S. Census Bureau and Oil Daily shows that profit margins of oil and natural gas companies are ranked #7 among industries. Above them, at the top of the corporate profit list are beverages and tobacco, pharmaceuticals, electrical equipment and appliances, and computer and computer accessories.

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Inhofe Applauds President's Solutions to Bring Down Gas Prices

WASHINGTON, DC – Sen. James Inhofe (R-Okla.), Ranking Member of the Environment and Public Works Committee, commented on President Bush’s call for increasing America’s oil and gas production. President Bush outlined a four-point plan focusing on expanding exploration of the Outer Continental Shelf (OCS), developing oil shales, opening ANWR, and expanding refining capacity. 

“As American’s are facing $4.00 gas at the pump, now is the time for common sense energy solutions,” Senator Inhofe said. “I applaud President Bush’s call to increase American energy production. While Congress has been slow to respond, I am delighted to see more and more voices joining in support of increasing domestic energy.  

“I certainly welcome the President’s appeal for increased refinery capacity which follows my own introduction of the Gas PRICE Act, designed to increase domestic fuel supplies, streamline the permitting process for refineries, and lower the price of gas at the pump. Yet each time I have called for a vote, Democrats were there to block it. Unfortunately, the Democrats and their liberal special interest groups have successfully blocked nearly every effort to increase domestic energy production or refining capacity in the last twenty years. If Democrats had supported my Gas Price Act in 2005, we might already be on our way to increased refining capacity.

“Until we explore and develop domestic energy resources and increase domestic refining capacity, the cost of gas at the pump will increase. As America faces mounting energy challenges, now is not the time for politics as usual -- now is the time for common sense solutions. Congress needs to wake up and realize the American people are demanding affordable energy.  

“America’s quest to bring down the cost at the pump and increase energy security must include the lifting of the ban on drilling in the Outer Continental Shelf (OCS) and in ANWR. It’s long past time America utilizes its resources using environmentally sound technology. A growing number of leaders who had previously opposed more drilling and expanding domestic energy are now reconsidering.”

 

Background:  

 

Senator Inhofe recently joined in cosponsoring the American Energy Production Act of 2008.  This legislation will increase access to domestic supplies, expand the nation's refinery capacity, and promote market-based alternatives for our energy future. The bill includes key provisions of Senator Inhofe’s Gas Petroleum Refiner Improvement & Community Empowerment Act of 2007, legislation designed to improve the permitting process for the expansion of existing and construction of new refineries. The bill also includes the repeal of Section 526 of the Energy Independence and Security Act of 2007. Earlier this year, Senator Inhofe introduced legislation repealing Section 526, which prohibits federal agencies from contracting to procure nonconventional, or alternative, fuels that emit higher levels of greenhouse gas emissions than conventional petroleum sources.

 

Senator Inhofe is being recognized for his role in promoting America’s energy independence. A June 18, 2008, editorial in The Oklahoman stated, "Credit Sen. Jim Inhofe, R-Tulsa, for leading the opposition effort [against the failed Climate Tax Bill]. During a similar debate a few years ago, Inhofe had trouble getting much help from his friends. More than 20 Republicans joined the debate to underscore Lieberman-Warner's folly — owing to the current energy picture and Inhofe's personal tenacity. […] Better late than never in joining Inhofe and others in getting America's energy resources on line — as every other nation on the planet already is doing."

 

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Timely Death: Climate Bill's Demise Opens Next Energy Debate

The Oklahoman Editorial
June 18, 2008

Timing is everything. Democrats in the U.S. Senate couldn't have picked a worse time for the recent debate on a global warming bill that would've raised prices on gasoline and other energy sources while lopping billions off America's economic output for decades to come. 

Americans might not understand the intricacies of the proposed cap-and-trade system to reduce greenhouse gas emissions, but they know $4-a-gallon gas and no doubt felt that those in Washington proposing legislation to kick those prices even higher had lost their minds.

When the key vote arrived on the so-called Lieberman-Warner bill, the floor manager, Sen. Barbara Boxer of California, couldn't scare up 50 votes. Members of the Senate are political creatures first, and they know how to duck and cover when there's a roll-call tally on bad legislation.

Credit Sen. Jim Inhofe, R-Tulsa, for leading the opposition effort. During a similar debate a few years ago, Inhofe had trouble getting much help from his friends. More than 20 Republicans joined the debate to underscore Lieberman-Warner's folly — owing to the current energy picture and Inhofe's personal tenacity.

While we celebrate Lieberman-Warner's timely death, let's hope it catalyzes efforts to change foolish policies that are keeping billions of barrels of U.S. oil unavailable to mitigate the current situation. If anyone is responsible for America's inability to buffer itself against oil price shocks, it's those who have blocked drilling in remote Alaska and offshore for the past two decades.

The United States is late, very late, in using its own resources — but not too late. At a House energy hearing last week Adam Sieminski, Deutsche Bank's chief energy economist, said the mere announcement that Alaska and the outer continental shelf would be tapped in the near future would have a profound effect on current oil prices.

There's no excuse for not acting. Sen. John McCain, the presumptive Republican presidential nominee, has been wrong on this issue, but this week said he now favors opening the outer continental shelf for drilling. Better late than never in joining Inhofe and others in getting America's energy resources on line — as every other nation on the planet already is doing.

Democrats will be hard-pressed to keep saying no to more supply, as they have for years. Gasoline prices have risen from $2.33 a gallon to more than $4 a gallon on their congressional watch.

We sense they will be held accountable. As The Wall Street Journal's Daniel Henninger wrote in a column last week, "someone needs to explain to them (Americans) why we — and we alone — are sitting on an ocean of energy but won't drill for it.”

The argument is about as compelling as it gets.

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Energy and Gas Talking Points

Posted 6/18/2008 

President Bush's four point plan:

  • Expanding exploration of the Outer Continental Shelf
  • Develop oil shales
  • Open ANWR, and
  • Expand refining capacity. 

Polling data: New Rasmussen Poll released this week shows that 67% support offshore drilling – only 18% oppose.

Why do we need to drill on ANWR? The footprint of ANWR drilling would be the size of a postage stamp on a football field. If Clinton had not vetoed in 1995, we would already be producing one million barrels a day.

Why not nationalize refineries? The surest way to cripple our economy is to put the government in charge of refining petroleum. We shouldn’t be looking to Hugo Chavez of Venezuela to determine energy policy.

If Democrats claim the importance of refineries mandates they be nationalized, then why not nationalize grocery stores? Isn’t food more important? Or nationalize the internet? In 2005 Obama voted in the EPW Committee for the EPA to design, build and operate refineries – not a recommended idea.

Why can’t we drill for more Oil and Gas? Democrats in Congress and environmentalists have blocked ANWR, blocked 85% of offshore, and they are blocking access to the oil shales. They’ve been blocking access for more than two decades.

Is offshore drilling environmentally safe? Offshore drilling is environmentally safe. Major spills from platforms are nearly non-existent. Hurricanes Katrina and Rita proved that drilling for oil in gulf is safe. NO major oil spills, despite plowing through nearly 3000 oil and gas platforms. The U.S. is doing it safely now.

Democrats and environmentalists don’t want Americans to have energy choices. They instead want to shift the focus from the real issue of increasing domestic supply to nationalizing refineries, suing OPEC, price gouging, windfall profits taxes, and speculators.

Why not drilling with our current leases on 68 million acres? Democrats assertion is horribly na ve. Not all leases contain oil and you can’t produce it if it’s not there. 52% of all exploration wells are dry. Companies don’t know how much oil under the land they lease, so they buy up large swaths in hopes that a fraction will work out. Years of mapping, testing, drilling, permitting and construction are required before production actually begins.

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SELECTED ENERGY VOTES 2003 to Present - Republican vs. Democrat Breakdown

Posted 6/17/2008 

ANWR Votes

10/27/95 – The Senate voted on a bill to implement a competitive leasing program for oil and gas exploration, development and production within the coastal plain of ANWR.  The bill passed 52-47.  Of that, 52 Republicans voted for and 46 Democrats voted against.    

11/17/95 – The Senate voted on a motion to adopt a conference report on a bill to implement a competitive leasing program for oil and gas exploration, development and production within the coastal plain of ANWR.  The motion passed 52-47.  Of that, 52 Republicans voted for and 46 Democrats voted against. 

12/6/95 – President Clinton vetoed the Balanced Budget Act which included a provision to open ANWR. 

4/6/00 – The Senate voted on a motion to table an amendment to the budget resolution to remove funding from the 2001 Budget Resolution to expand exploration in ANWR. The tabling motion passed 51-49. Of that, 43 Republicans voted to table and 41 Democrats voted against tabling.   

4/18/02 – The Senate voted on a cloture motion on an amendment to expand exploration in ANWR. The cloture motion failed 46-54. Of that, 41 Republicans voted for and 46 Democrats voted against. 

3/19/03 – The Senate voted on an amendment to prevent consideration of drilling in ANWR during a fast-track budget reconciliation.  The amendment passed 52-48.  Of that, 42 Republicans voted against and 43 Democrats voted for.  

3/16/05 – The Senate voted on an amendment to strike language to expand exploration in ANWR.  The amendment failed 49-51.  Of that, 48 Republicans voted against and 41 Democrats voted for.  

11/3/05 – The Senate voted on an amendment to strike language establishing an oil and gas leasing program for ANWR.  The amendment failed 48-51.  Of that, 48 Republicans voted against and 41 Democrats voted for.  

3/16/06 - The Senate voted on an amendment to increase energy spending by drilling in ANWR. The amendment passed 51-49. Of that, 48 Republicans voted for and 41 Democrats voted against. 

Offshore & Other Energy Votes

2008

3/13/08 – The Senate voted on a motion to create a point of order against bills that would raise gasoline prices.  The motion failed 39-59.  Of that, 37 Republicans voted for and 59 voted against.  

3/13/08 – The Senate voted on an amendment to encourage development of oil and gas resources beneath the Outer Continental Shelf and the development of oil shale resources on public lands.  The amendment failed 47-51.  Of that, 43 Republicans voted for and 44 Democrats voted against.  

5/13/08 – The Senate voted on an amendment to allow states to authorize drilling in offshore coastal waters currently subject to a federal moratorium.  The amendment was rejected 42-56.  Of that, 41 Republicans voted for and 48 Democrats voted against.   

5/15/08 – The Senate voted on a motion to fund increased energy exploration on the Outer Continental Shelf should the average price of regular gas in the U.S. reach $5 per gallon.   The motion was rejected 44-51.  Of that, 41 Republicans voted for and 44 Democrats voted against. 

2007

6/13/07 – The Senate voted on the GAS PRICE ACT, as an amendment, to encourage increased domestic refinery capacity.  The amendment failed 43-52.  Of that, 43 Republicans voted for and 52 Democrats voted against.   

6/14/07 – The Senate voted on an amendment to drill for oil off the Virginia coast.  The amendment failed 43-44.  Of that, 37 Republicans voted for and 37 Democrats voted against.  

6/19/07 – The Senate voted on an amendment to increase the production of coal-to-liquid fuel.  The amendment failed 39-55.  Of that, 39 Republicans voted for and 47 Democrats voted against.  

6/19/07 – The Senate voted on an amendment to provide for the expansion of liquefied natural gas terminals.  The amendment failed 37-56.  Of that, 37 Republicans voted for and 56 Democrats voted against.  

6/20/07 – The Senate voted on a motion to create a point of order against bills that would raise gasoline prices.  The motion failed 37-55.  Of that, 36 Republicans voted for and 44 Democrats voted against.  

6/21/07 – The Senate voted on a motion to delay energy tax increases until the Energy secretary can certify that they would not cause increases in the price of gasoline.  The motion failed 38-55.  Of that, 37 Republicans voted for and 46 Democrat voted against.  

12/7/07 – The Senate voted on a cloture motion to consider the Housed-passed comprehensive energy bill containing $21 billion in tax increases - including $13.5 billion on oil and gas firms.  The motion failed 53-42.  Of that 39 Republicans voted against and 47 Democrats voted for.

2006

8/1/06 – The Senate voted on a bill that would open more than 8.3 million acres in the Gulf of Mexico for oil and gas leasing.  The bill passed 71-25.  24 Democrats and 1 Republican opposed the measure. 

2005

11/17/05 – The Senate voted on a motion to impose a temporary windfall profit tax on crude oil and to use the proceeds to provide taxpayers with a $100 tax credit for every person in a their household.  The motion failed 33-65.  Of that, 54 Republicans voted against and 33 Democrats voted for.  

11/17/05 – The Senate voted on a motion to impose a temporary windfall profit tax on crude oil and to use the proceeds to fund LIHEAP.  The motion failed 50-48.  Of that, 45 Republicans voted against and 41 Democrats voted for. 

11/17/05 – The Senate voted on a motion to impose a temporary windfall profit tax on crude oil  sold above $40 per barrel and to use the proceeds to provide tax rebates to consumers.  The motion failed 35-64.  Of that, 55 Republicans voted against and 35 Democrats voted for.    

11/17/05 – The Senate voted on a motion to prohibit expensing of intangible drilling costs for integrated oil companies – raising taxes by $2.4 billion.  The motion failed 48-51.  Of that, 48 Republicans voted against and 36 Democrats voted for.   

2004

4/29/04 – The Senate voted on a motion to invoke cloture on an amendment to increase domestic oil production.  The motion to invoke cloture failed 55-43.  Of that, 39 Republicans voted for and 31 Democrats voted against. 

2003

6/12/03 – The Senate voted on an amendment to prevent off shore drilling.  The amendment failed 45-53.  Of that, 41 Republicans voted against and 36 Democrats voted for.                                                       

 Recent Polling Data

Recent polling data from Gallup show the percentage of voters blaming oil companies for skyrocketing gasoline prices has dropped from 34 percent to 20 percent over the past year. At the same time, support for more drilling in U.S. coastal and wilderness areas has increased to 57 percent from 41 percent.  

Another recent poll from the Polling Company, Inc. found that 81 percent of Americans support greater use of domestic energy resources.  By a margin of more than four-to-one, Americans surveyed supported the US tapping into its “own domestic energy reserves, including the oil and coal it already has here in the United States” in order to “combat the rising cost of energy and reduce dependence on foreign energy sources” (81%:16%). 

Consumer First Energy Act vs. American Energy Production Act 

The Democrats' Consumer First Energy Act does nothing to increase access to America’s extensive oil and natural gas reserves, does nothing for the promotion of nuclear energy, does nothing to increase refinery capacity, does nothing for electricity generation or transmission, and does nothing for the utilization of clean coal.  Instead, the Consumer First Energy Act increases taxes by $17 billion on America’s oil and gas producers and increases government bureaucracy. 

The Republicans' American Energy Production Act will produce up to 24 billion barrels of oil.  And that doesn’t include billions more barrels of potential fuel from oil shale and coal-to-liquids in the bill.  It would open exploration and production activities currently prohibited in the Pacific and Atlantic regions of the Outer Continental Shelf which hold an estimated 14 billion barrels of oil and 55 trillion cubic feet of gas.  This is equivalent to more than 25 years worth of imports from Saudi Arabia.  Looking to Alaska, the bill allows limited and responsible access to ANWR which is estimated to contain 10 billion barrels of oil – about 15 years worth of imports from Saudi Arabia.   

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