In this week’s episode of R-Squared Energy TV, I answer questions about butanol and natural reserves. I had intended to discuss the Open Fuel Standard when talking about butanol, but ultimately did not. I will get to that in an upcoming episode.

Some of the topics discussed are:

• Why butanol is not widely available as an alternative fuel
• How butanol is made
• Whether $100/bbl oil signals peak oil
• What I think $2.50/MMBTU natural gas signifies

Readers who have specific questions can send them to ask [at] consumerenergyreport [dot] com or leave the question after this post (at the original source). Consider subscribing to our YouTube channel where you’ll be able to view past and future videos.

Link to Original Article: Butanol & Natural Gas Reserves — R-Squared Energy TV Ep. 12

By Robert Rapier

Land Usage and Wildlife vs. Carbon Emissions

If I had to describe the theme of my upcoming book with just one phrase, it would be “There is no free lunch in our energy options.” Sometimes the costs are obvious, as when an oil spill occurs or a nuclear accident happens. Other times, the costs are not so obvious, but the trade-offs are always there.

Some people have insisted to me that there really aren’t too many trade-offs with solar power, but a new story in the Los Angeles Times highlights a few of them:

Sacrificing the desert to save the Earth

BrightSource Energy’s Ivanpah solar power project will soon be a humming city with 24-hour lighting, a wastewater processing facility and a gas-fired power plant. To make room, BrightSource has mowed down a swath of desert plants, displaced dozens of animal species and relocated scores of imperiled desert tortoises, a move that some experts say could kill up to a third of them.

Despite its behemoth footprint, the Ivanpah project has slipped easily into place, unencumbered by lasting legal opposition or public outcry from California’s boisterous environmental community.

The Natural Resources Defense Council (NRDC) has vehemently opposed the Keystone XL pipeline. In fact, on the home page of the NRDC site is a plea to “Help Us Kill the Keystone XL.” But in this case, the NRDC was cited as one of the environmental organizations that lined up behind the BrightSource project:

“I have spent my entire career thinking of myself as an advocate on behalf of public lands and acting for their protection,” said Johanna Wald, a veteran environmental attorney with the Natural Resources Defense Council. “I am now helping facilitate an activity on public lands that will have very significant environmental impacts. We are doing it because of the threat of climate change. It’s not an accommodation; it’s a change I had to make to respond to climate.”

So what kind of trade-0ff are they making here? They are using a tremendous amount of land to produce electricity that could have been produced on a tiny fraction of that footprint with nuclear power or fossil fuels. So they traded lower carbon emissions for a large area of destroyed wildlife habitat.

Now don’t get me wrong. I am strongly in favor of solar power (and even of this particular project). I have said many times that I believe that it is the long-term best option for our energy needs. But I want to use this post to emphasize the trade-offs that we will be making regardless of which energy options we choose.

Crunching the Numbers

The BrightSource project will reportedly supply electricity to 140,000 homes at peak power (i.e., during the period of brightest sunlight). The reflectors will take up six square miles, and the enclosed acreage of the facility is “more than 3,500 acres of public land.” Peak power for the Brightsource plant is reportedly about 370 megawatts. They don’t give an annual capacity factor, but let’s make the very generous assumption that the plant can produce 370 megawatts for 10 hours a day. That would mean 3,700 MWh of electricity per day.

I thought it might be interesting to relate this project to the energy flowing each day through the proposed Keystone XL pipeline. While very little of U.S. oil production goes toward producing electricity, I am going to convert to electricity for an apples to apples comparison to the Brightsource plant. The U.S. EPA has estimated that 1672 lbs of carbon dioxide are emitted per MWh of electricity production when oil is the fuel source to make electricity. Oil emits about 3.15 times its weight in carbon dioxide when burned, so that means about (1672/3.15) lbs of oil was consumed per MWh of electricity production. This is 531 lbs of oil, and a barrel of oil weighs about 300 lbs. So this means about 1.8 barrels of oil per MWh of electricity.

The Keystone Pipeline would have brought 700,000 barrels per day of oil into the U.S., and if this was turned into electricity it would make 390,000 MWh of firm power each day — more than 100 times the power output of the Brightsource plant. So, one way of looking at this tradeoff is that to give up the Keystone Pipeline and replace that power with solar thermal power would require over 100 of these 3,500 acre plants. Or, to think of it another way, 3.5 days of flow through Keystone XL would provide the annual energy equivalent of the BrightSource project.

One other note about this particular project. The NRDC has spent a lot of time downplaying the number of jobs that would be created by the Keystone XL pipeline. There have certainly been exaggerated reports of the number of jobs that would be created, but the U.S. State Department estimated 5,000 to 6,000 construction jobs and then 20 or so permanent jobs would be created for the Keystone XL pipeline. Of course, as I recently pointed out, one of the things the Keystone might do is keep U.S. refineries on the Gulf Coast in business instead of shutting them down as has been the case with many refineries on the East Coast. By contrast, the BrightSource plant will create a reported 1,400 jobs during construction, and 86 permanent operations and maintenance jobs. I have not yet heard the NRDC complain that this isn’t enough jobs created for the money spent and the habitat that was destroyed.

Powering a City

The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) put together a short presentation called How Many Does it Take? in which they looked at the required footprint of different facilities to power a city of 100,000 people for a year. The conclusion was 1/30th of a nuclear power plant with a footprint of 12 acres, 3/7th of a hydroelectric dam on 73 acres, 7/8ths of an offshore gas platform on 2/5ths of an acre, 20 onshore gas wells on 8 acres, 724 wind turbines on 1615 acres, or 241,000 solar panels on 2907 acres.

The BrightSource project is a utility scale solar thermal plant. That is necessarily going to take up a very large area. But there is numerous space already available on existing roofs that could be exploited to a large degree. The cost of this plant was reportedly $2 billion. For that price, you could put rooftop solar photovoltaic systems on 100,000 homes without the land usage issues involved in this project.

Ultimately, what needs to be done for our energy choices is a full-accounting of all the trade-offs, and then we should make decisions based on the greatest benefit and least downside to society. Too often, people are driven by agendas, and they are therefore not interested in looking at trade-offs. These are the sorts of people who will look at a project and only see benefit or only see downside, and they therefore resort to one-sided and misleading arguments in pursuit of their agenda.

On a final note, nuclear power has a small footprint and no carbon dioxide emissions, but many environmentalists remain steadfastly opposed to nuclear power due to the perceived risks. Maybe some of these environmental organizations should be spending more time figuring out how to improve the safety of nuclear power. They have demonstrated that they are willing to make environmental sacrifices as shown by their support of BrightSource, so perhaps they may want to revisit some of the sources that they have opposed in the past.

Link to Original Article: No Free Lunch in Our Energy Options

By Robert Rapier

In this week’s episode of R-Squared Energy TV, I answer questions about peak oil and carbon trading markets.

Some of the topics discussed are:

• Whether peak oil has been discredited
• Recent media headlines on peak oil (or lack thereof)
• Why I think peak oil “debunkers” miss the point
• Why I believe carbon emissions will continue to climb
• Why the successful sulfur trading markets are not analogous to carbon trading markets
• Why I am skeptical that a global carbon trading scheme will work

Readers who have specific questions can send them to ask [at] consumerenergyreport [dot] com or leave the question after this post (at the original source). Consider subscribing to our YouTube channel where you’ll be able to view past and future videos.

Link to Original Article: Peak Oil & Carbon Emissions — R-Squared Energy TV Ep. 11

By Robert Rapier

When I recently solicited feedback for topics to cover for my upcoming book, several people requested that I discuss the difference between energy and power. Just two weeks ago Congressman Dana Rohrabacher, R-Calif., who is on the House Committee on Science, Space, and Technology, admitted that he’s “not educated enough to know the difference between the terms … energy and power.” You would certainly expect that someone who influences legislation over science and technology would know the difference, but it is true that people commonly get confused between the two.

So this weekend I wrote up a sidebar for Power Plays discussing the differences, which I share below. If you believe that a point could be clearer, or if anything about my explanation is confusing, I would be happy to hear reader feedback.

Energy, Power, and Units of Measurement

There are a number of potentially confusing units of measurement for energy and power. The first thing to understand, however, is the difference between energy and power. Technically speaking, energy refers to the capacity of a system to do work. In this definition, “a system” could be a gallon of gasoline that contains 115,000 British Thermal Units (BTUs) – a unit of energy. In addition to the BTU, some other units of energy are the joule (J), the calorie (cal), and the watt hour (Wh). Multiples of these units have abbreviations like kilo (one thousand) or mega (one million), so one kilowatt hour (kWh) is one thousand watt hours. Each of these units can be converted into the other. One BTU is equal to 1,055 joules, 252 calories, or 0.29 watt hours.

Power is the rate at which energy is consumed or generated. One BTU of gasoline refers to the energy content, but gasoline consumption over time could be measured in BTUs/hour, a unit of power. Other units of power are joules/second, calories/day, or watts.

A 100 megawatt (MW) power plant is capable of generating energy at the rate of 100 megawatt hours (MWh) per hour. People frequently confuse the energy unit of watt hours with the power unit of watts. This is probably because other measures of power are defined per unit of time (e.g., calories/hr), and therefore it would seem logical that a kilowatt hour would be a unit of power. Alas, it is not. However, it should be clear that a joule/second is a unit of power (energy consumed over time), and that’s what a watt actually is: 1 watt = 1 joule/s. Someone thought it would be a good idea to call it a watt instead of a joule/s, and many people have been confused ever since.

Link to Original Article: Confused about Energy and Power?

By Robert Rapier

In this week’s episode of R-Squared Energy TV, I answer questions on the future of electric cars, and the global population, which many feel is the root of so many problems.

Some of the topics discussed are:

• When electric cars might be expected to make significant inroads in the auto market
• Why some people will continue to be tentative about electric cars
• Why I never cover the topic of overpopulation
• My bewilderment at people who can casually talk about a massive population die-off

Readers who have specific questions can send them to ask [at] consumerenergyreport [dot] com or leave the question after this post (at the original source). Consider subscribing to our YouTube channel where you’ll be able to view past and future videos.

Link to Original Article: Electric Cars & Overpopulation — R-Squared Energy TV Ep. 10

By Robert Rapier

Refinery Closures and the Keystone Pipeline

There have been several announcements in recent months of refinery closures that will likely impact gasoline supplies (and prices) on the East Coast. Some of those closures have been on the East Coast. Others — such as the Hovensa refinery in the Virgin Islands and some European refineries — supply product to the East Coast.

So why are these refineries closing?

Basically, despite the very popular image of perpetually fat profits for the oil companies, the refining business has been historically poor. If a refinery often operates in the low single digit rates of return — or as has frequently been the case, loses money — oil companies will eventually shut them down. Even if other parts of the business are making money, they won’t keep funding a money loser.

But why do refineries struggle with profitability?

In recent years, demand for gasoline has been down due to high prices in the U.S. As oil prices have climbed, refiners have struggled to pass on all of the increased costs of those higher oil prices to consumers. They would like to sell gasoline for a bit more, but the reduced demand keeps their margins low for the most part. Ultimately some are forced to shut down. That will also mean higher gasoline prices for consumers:

No relief in rising gasoline prices as refineries shut down

“On January 18, Hess announced the closure of its HOVENSA joint venture refinery in the U.S. Virgin Islands, a major source of product supply to the East Coast,” the Energy Department said. “That planned closure follows on the heels of the idling of two refineries in the Delaware Valley by Sunoco and ConocoPhillips and announced plans by Sunoco to idle another refinery in the region by mid-2012.” The Energy Department added, “The complete idling of the three refineries would collectively cut as much as 50% of current East Coast refining capacity.”

Operating a Refinery Requires Manpower and Creates Jobs

In addition to higher prices, the closures mean loss of jobs in a very tough economy. As I pointed out recently in What’s So Bad About Exporting Gasoline?, one way to keep those refineries going is something that some have complained about, and that is for refiners to export finished products. It should be clear by now that these refiners must find additional markets (or cheaper oil) if they are to survive.

These thoughts were rattling around in my head the past few days, and just today crystallized into this post. One of the things I have been thinking about are the implications if the Keystone Pipeline is or isn’t built. I have explained my views on the pipeline in a series of recent posts, so I won’t rehash them here. But basically, I have tried to sort out the most likely implications in either case. If the pipeline isn’t built, will it slow down the development of the oil sands in Canada? Will that oil continue to get to market, but in environmentally riskier ways (like trucking or rail). Will it cause Canada to more aggressively seek other markets for their oil? Probably:

With oil pipeline to US on hold, Canada eyes China

Prime Minister Stephen Harper says Canada’s national interest makes the $5.5 billion pipeline essential. He was “profoundly disappointed” that U.S. President Barack Obama rejected the Texas Keystone XL option but also spoke of the need to diversify Canada’s oil industry. Ninety-seven percent of Canadian oil exports now go to the U.S. “I think what’s happened around the Keystone is a wake-up call, the degree to which we are dependent or possibly held hostage to decisions in the United States, and especially decisions that may be made for very bad political reasons,” he told Canadian TV.

The article notes that pipelines are rarely rejected in Canada, but Keystone opponents are counting on that oil not being able to reach the Pacific Coast for export to China. After all, if it does then they will have made matters worse by blocking the route into the U.S. and forcing the oil to travel a further distance to market.

The Keystone Pipeline is of course really about climate change. Opponents want to stop the expansion of the oil sands, and so they have thrown several wedge arguments out there in order to reach their ultimate goal.

Conclusion: Exporting a Product is Good for Business*

One of the wedge arguments is about job creation. Proponents have made certain claims (in many cases inflated) about the number of jobs that will be created. Opponents counter that there won’t be that many jobs created, and besides some of the oil is going to be exported.

That may be the wrong way to look at it. If you see what is happening with the refinery closures, what a pipeline to the U.S. Gulf Coast may do is keep some of the refineries there in business. Imagine if these East Coast refineries — which don’t have easy access to affordable oil — were at the end of the Keystone Pipeline. They might have managed to stay in business. Sure, they might export some of the gasoline and jet fuel. So what? Will the product simply not exist on the open market if those refineries didn’t make it? Not likely; it would just be refined by someone else.

So we may look back in a few years — as we are closing down Gulf Coast refineries because their major source of oil is ever more expensive crude from the Middle East and Venezuela — and realize that those jobs could have been saved if only they had better access to a friendly, stable supply of oil. So what if we import Canadian oil and export gasoline? In an oil crisis, we won’t export the gasoline. We will use it right here at home. That is, if the refineries actually have access to the crude.

* Incidentally, now that the ethanol subsidy has expired, I feel the same way about exporting ethanol. If that’s what it takes for them to stay in business, as long as they aren’t exporting taxpayer subsidized product then more power to them.

Link to Original Article: Refinery Closures Lead to Rising Gas Prices and Job Losses

By Robert Rapier

In this week’s episode of R-Squared Energy TV, I answer questions on palm oil and hydraulic fracturing (fracking).

Some of the topics discussed are:

• The EPA decision to exclude palm oil from qualifying as renewable biomass under RFS2
• The Chinese influence over the palm oil trade
• The issue of trade-offs in our energy choices
• Agendas in the fracking debate

After I recorded the clip, I did some research on exactly how the EPA treats palm oil (I should have done it before recording the clip), and they say that “oil palm plantations would have to meet the criteria for existing agricultural land in order for their fruit and crop residue to qualify as renewable biomass under RFS2.” I am not sure about the requirements for qualifying as existing agricultural land, but that was my point in the video: There needs to be a mechanism to allow palm oil from previously existing plantations to qualify. And it sounds like there is such a mechanism.

Readers who have specific questions can send them to ask [at] consumerenergyreport [dot] com or leave the question after this post (at the original source). Consider subscribing to our YouTube channel where you’ll be able to view past and future videos.

Link to Original Article: R-Squared Energy TV: Episode 9 – Energy Tradeoffs with Palm Oil & Fracking

By Robert Rapier

Question: What do President Barack Obama and ex-President Jimmy Carter have in common?

Answer: Both presided over strong increases in domestic oil production that were a result of decisions made before they took office, as I explain in this post.

In my recent post The Oilman in the White House, I posted the following graphic:

Is There More to this Graphic than Meets the Eye?

The purpose of the graphic was to get people to think about why oil production had behaved in this manner over the past decade. A lot of people took the bait, and asked how I could possibly believe that President Obama was responsible for this rise in production given his apparent hostility toward the oil industry. Some people on the other hand offered up the real reason for the production increases. One pointed out that the above graph could really be broken into three parts: Falling production until 2005, flat production from 2005 until 2009 as some new projects began to come online, and an increase from 2009.

This was one of the themes I was working on for my upcoming book, and I felt like it was worth discussing. I was looking back over the past eight presidential administrations, and it was pretty clear that what happens today in the energy markets is a result of decisions that were made 4-8 years in the past. For instance, the ethanol production gains in 2010 were not a function of Barack Obama’s energy policies; they were a result of energy legislation passed in 2005 and expanded in 2007.

When Jimmy Carter was in office, U.S. oil production rose for the first time in 7 years. The graphic below tells the tale, and is a pretty good analog for the behavior of U.S. oil production since President Obama has been in office.

The reason oil production rose under Jimmy Carter was because in 1973 President Nixon pushed through the Trans-Alaska Pipeline Authorization Act which cleared away legal challenges from environmentalists seeking to stop construction of the Trans-Alaska Pipeline. That pipeline started production in 1977, during President Carter’s first year in office, and as a result oil production rose for the first 2 years of his term.

Likewise, the reason that oil production has risen under President Obama is due to events that happened years earlier. In this case, it wasn’t some grand initiative that President Bush passed, rather it was years of steadily increasing oil prices that caused oil companies to approve a number of new projects that had marginal economics at lower oil prices. But these projects take some years to build, and as in the case of the Alaska Pipeline, decisions that were made 4-6 years earlier benefited President Obama with increased domestic oil production.

The reason I wanted to call attention to this is that I knew it would be an campaign issue in this election year, and indeed stories are beginning to surface in which President Obama touts his record on oil production:

Obama touts record U.S. oil and gas production in wake of pipeline rejection

Rejecting both the Republican push for an accelerated Keystone XL oil pipeline and the GOP argument that he doesn’t care about jobs, President Barack Obama Wednesday touted his record of increased domestic oil and gas production.

“Under my administration, domestic oil and natural gas production is up, while imports of foreign oil are down,” Obama said, adding that trend will continue “in a way that benefits American workers and businesses without risking the health and safety of the American people and the environment.”

Of course this situation isn’t unique to energy policy; one president’s policies often benefit or handicap the following administration. My intention is to raise awareness on this issue, so people understand the big picture as the energy policy debates play out this year. The current increases in oil production have little to do with Obama or Bush policies, but are simply a response to years of climbing oil prices.

But that cuts both ways. This is also the reason I have defended President Obama against criticisms that his decisions have caused gasoline prices to rise. The decisions he makes in this administration may ultimately impact gas prices, but due to the lag time they won’t impact gasoline prices for years. If President Obama is elected to a second term — as I expect that he will be — then he may begin to reap the outcome of his decisions by the middle of his second term. So his decisions today are certainly relevant for the future, and in 4 years he will deserve his share of the credit or blame for the status of the energy markets in the U.S.

Link to Original Article: Is Rising Oil Production a Result of President Obama’s Policies?

By Robert Rapier

In this week’s episode of R-Squared Energy TV, I give a short presentation on the pros and cons of using biomass for energy. People tend to have strong feelings on this topic in one way or another, and I will explore a bit of the reason for the controversy.

Some of the topics discussed are:

• Can energy from biomass replace oil?
• Can energy from biomass be sustainable?
• What are the risks of using biomass for energy?

Readers who have specific questions can send them to ask [at] consumerenergyreport [dot] com or leave the question after this post (at the original source). Consider subscribing to our YouTube channel where you’ll be able to view past and future videos.

Link to Original Article: R-Squared Energy TV: Episode 8 – Biomass Pros and Cons

By Robert Rapier

With the recently announced foreclosure of Vinod Khosla venture Range Fuels, followed by the fire sale of Range Fuels’ assets to Vinod Khosla venture LanzaTech, I have been getting a lot of calls from reporters wanting to discuss exactly what happened here. After all, well over $300 million was invested into Range Fuels — including tens of millions of taxpayer dollars — and what resulted were assets that were ultimately bought by LanzaTech for about $5 million.

Two articles were published over the weekend by journalists I spoke with last week:

Georgia failure not the only ethanol misadventure

Range Fuels fiasco: Finding renewal energy in Georgia forests didn’t work out

This quote caught my eye from one of the articles:

“These, quote, venture capitalists are basically venture socialists,” said Kenneth Green, a resident scholar at the American Enterprise Institute, a conservative think tank in Washington. “They’re getting large amounts of research money and loan guarantees to build pilot plants and other projects. They’re looking to socialize the costs of their efforts, but keep private the profits.”

I suppose that is an apt way to put it. These venture capitalists have found that they can defray their risks with tax dollars — and thus subject taxpayers to the risks from their projects — while they reap any potential rewards. As Vinod Khosla recently boasted, he has made a billion dollars by taking some of his ventures public, and the valuations of these companies are at least in part based on the government grants and loans they have received. But as I noted in one of the articles, none of the companies are actually producing fuel commercially. That is the true test of success from my perspective. Ten years from now it won’t matter to very many people if Khosla made a billion dollars for his investors if none of the companies were successful at producing fuel that is competitive with oil.

Khosla believes he should be applauded for what he is doing:

“Range’s original formulation may not have been successful, but such risk-taking deserves applause, not derision,” Khosla, who helped start Sun Microsystems, wrote. “In the end, success is never assured.”

I would say that sort of depends on the nature of the risks, don’t you think? In this case, the risks were substantial from my point of view, and poorly understood (and not at all articulated) by many who pushed this project. Add the fact that you risked my money and damaged the credibility of the renewable fuels industry, and I believe I will withhold my applause. Personally, I think taxpayers deserve to be paid back before any project associated with any of the Range Fuels backers is eligible for any more federal funds.

Of course as I have argued before, I would change this system up anyway so the risks from these projects are pushed back to the private sector — where they belong. If we started providing rewards for those who deliver on their promises instead of those who generate the most publicity in making them, these sorts of fiascoes wouldn’t be a big deal. Businesses fail all the time. But if they are being funded by private investors, then that’s just business.

Link to Original Article: Venture Socialism?

By Robert Rapier