R-Squared Energy Blog

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Our Tax Dollars at Work

First off, a couple of announcements. After being able to stay at home for the past two months, I have a very heavy travel schedule over the next two weeks. My participation here will probably be limited. I am off to Seattle tomorrow, on to the Netherlands from there, will visit Switzerland and Germany, back to the U.S. mainland, on to Canada, and then back to Hawaii. I have essentially piled up eight visits I need to make into one big, exhausting trip. My ability to post and respond to comments and e-mails will be spotty at best.

Second, my first essay went up yesterday at Forbes: The Price of Energy. My intention is to put something up there every week or two, and my primary goal is to be educational with the essays. I don’t plan to do any major debunking of company claims there, although I will still do that here occasionally. I will generally first post the stories targeted for Forbes on my blog, modify as appropriate based on the comments (in the case that something is incorrect or unclear), and then post it at Forbes.

Now, on to today’s story. Yesterday I saw a story on what is one of the silliest ideas I have ever heard from a politician. It isn’t the first time I have heard it mentioned, but I believe it is the first time one of our legislators actually announced they were going to take action on it:

Braley Announces Legislation to Require Country of Origin Labeling for Fuels

Washington, DC – In an address to the Iowa Renewable Fuels Association today, Rep. Bruce Braley (D-Iowa) announced he will introduce legislation to require country of origin labeling for fuels. Braley will introduce the bill, Country of Origin Labeling (COOL) for Fuels, tomorrow when he returns to Washington, DC.

The bill will require the Department of Energy to conduct a study and implement its recommendations to ensure American consumers have the ability to decide at the gas pump whether they want to purchase domestic fuel products, such as biofuels produced in Iowa, or gasoline produced in hostile nations that many terrorists call home.

“When we fill up our vehicles, there’s no existing method for us to know where the fuel we’re purchasing comes from and which nations are deriving the economic benefit from that purchase,” Braley said. “When we put food in our bodies or clothes on our backs, we know exactly where those products come from. Americans should have the same opportunity to vote with their wallets at the gas pump.

The intent of the bill is not the reason this is a dumb idea. I think most people would appreciate a choice of the country of origin for their fuel. We would ideally prefer that fuel to be sourced domestically (unless of course we have to pay a premium for it), and beyond that many would prefer to buy fuel from Mexico over Venezuela. So to be clear, I understand the spirit of the bill.

The silly part comes about in the attempted execution. The petroleum supply chain does not segregate products by country. Sure, a supertanker may leave Saudi Arabia with 100% Saudi crude, but once it arrives it gets mixed with whatever else may be left in the pipelines and crude tanks. Then, as it goes through the refinery, there are streams from many different sources. Finally, when it goes into the pipeline and on to the retailer it gets mixed with products from many different locations. In fact, in many places the fuel you put in your car has portions from many locations.

There are exceptions; the Billings Refinery I used to work at only got crude domestically or from Canada because no supertankers have access to the refinery. But then once product ships to Denver or toward the West Coast, it will inevitably mix with product derived from elsewhere (e.g., product coming up from Texas to Denver will probably contain some Venezuelan crude).

I wonder if one of our government leaders will figure out that essentially all of the corn ethanol produced in the U.S. today is enabled by petroleum, and that petroleum is inevitably sourced from imports. So I suppose the corn ethanol should be labeled as well: “This ethanol was enabled by Saudi/Venezuelan/Russian crude.” No, I suppose we will keep that skeleton in the closet.

The purpose of this bill from the Congressman from Iowa is of course to try to tilt the playing field in the direction of corn ethanol. That’s understandable, as that is his job. But the idea is either very poorly thought out, or it is just an example of him posturing for his constituents.

I don’t believe this bill has any chance of passing, but presuming for a moment that it did, the labels would all have to look like those food labels that say something like “This food was processed in a facility that also processed peanuts. It may have in fact touched peanuts at some point.”

Our product label would read like “This crude may have been sourced from the U.S. and/or one or more of the following 30 countries…” This would appear on every gasoline and diesel pump in the U.S., and would therefore be ignored by everyone. In other words, trying to pass such a bill is simply a waste of time and taxpayer money.

Note: This story was also characterized very well at Bnet by Kirsten Korosec:

Label My Crude: Iowa Congressman Wants Americans to Know Where Their Fuel Was Born

In that essay, Kirsten pointed out the impracticality of implementing such a plan, and also linked back to my essay on the Top 10 suppliers of crude to the U.S. to show readers where U.S. crude imports actually do come from.

January 27, 2010 Posted by | energy policy, ethanol, farm policy, Iowa, politics | Comments Off on Our Tax Dollars at Work

John McCain’s Ethanol Flip-Flop

I knew that McCain had flip-flopped on this issue. The upcoming issue of Fortune tells the tale:

McCain’s farm flip

It’s a pretty good lesson on how tough it is to oppose ethanol and get yourself elected president, since Iowa has one of the first presidential caucus. So, despite McCain’s long track record of criticizing ethanol, suddenly it’s the thing to do.

Some excerpts from the article that I found interesting:

John McCain has a problem with alcohol – ethyl alcohol, to be precise.

Ethyl alcohol is the fuel better known as ethanol, and over the years, the Arizona senator has made a habit of ripping ethanol subsidies as corporate pork for agribusinesses like Archer Daniels
Midland
.

McCain has argued that government support for ethanol actually raises gasoline prices. He has claimed ethanol does nothing to make the U.S. more energy independent. He has even questioned the science behind making fuel from corn – contending that ethanol provides less energy than the fossil fuels consumed to produce it.

But for a front-runner – one presumably interested in getting his as-yet-undeclared 2008 Republican presidential campaign off to a winning start – opposing ethanol is political lunacy.

Iowa, home to the first-in-the-nation presidential caucus, is the biggest corn-growing state in the country, and in Iowa ethanol isn’t just another campaign issue. It’s the cash cow, the golden goose and the fountain of economic youth all wrapped up in one.

This is how something that is good for Iowa, but not necessarily for the rest of us, can become national policy.

More:

Against this backdrop, it’s obvious why McCain’s past ethanol opposition is such an albatross. Fact is, criticizing ethanol is hard even for scientists these days.

At a recent BP-sponsored ethanol roundtable, University of California at Berkeley engineering professor Tad Patzek – whose anti-ethanol research McCain has invoked – so riled Roger Conway, the director of energy policy for the very pro-ethanol U.S. Department of Agriculture, that Conway told the foreign-born Patzek to “go back to Poland.” (Conway denies making the remark, but four other participants confirm he did, including pro-ethanol scientist Michael Wang of the Argonne National Laboratory.)

Here’s the before and after. The before:

For a politician like McCain, the stakes go far beyond a little name-calling. When McCain ran for president in 1999 and 2000, he barely campaigned in Iowa, knowing that his anti-ethanol stance wouldn’t cut it in corn country.

Four years later, McCain hadn’t changed his tune. “Ethanol is a product that would not exist if Congress didn’t create an artificial market for it. No one would be willing to buy it,” McCain said in November 2003. “Yet thanks to agricultural subsidies and ethanol producer subsidies, it is now a very big business – tens of billions of dollars that have enriched a handful of corporate interests – primarily one big corporation, ADM. Ethanol does nothing to reduce fuel consumption, nothing to increase our energy independence, nothing to improve air quality.”

Even the most slippery politician would have a tough time wriggling away from a statement as unequivocal as that one, yet McCain’s Straight Talk Express has been taking some audacious detours during recent trips to Iowa.

The after:

“I support ethanol and I think it is a vital, a vital alternative energy source not only because of our dependency on foreign oil but its greenhouse gas reduction effects,” he said in an August speech in Grinnell, Iowa, as reported by the Associated Press.

“Well, at least now we know he’s serious about running for president,” quips Brown University presidential politics expert Darrell West, upon being told of McCain’s ethanol about-face.

And the money quote:

“You can’t trash ethanol and expect to win in Iowa,” says Schmidt. “You can’t continue to say the same things McCain said – even if you believe they’re true.”

What to do? Maybe some other states need to move their primaries ahead of Iowa’s to stop them from having a disproportionate impact on national politics.

November 1, 2006 Posted by | ethanol, Iowa, John McCain | 27 Comments

John McCain’s Ethanol Flip-Flop

I knew that McCain had flip-flopped on this issue. The upcoming issue of Fortune tells the tale:

McCain’s farm flip

It’s a pretty good lesson on how tough it is to oppose ethanol and get yourself elected president, since Iowa has one of the first presidential caucus. So, despite McCain’s long track record of criticizing ethanol, suddenly it’s the thing to do.

Some excerpts from the article that I found interesting:

John McCain has a problem with alcohol – ethyl alcohol, to be precise.

Ethyl alcohol is the fuel better known as ethanol, and over the years, the Arizona senator has made a habit of ripping ethanol subsidies as corporate pork for agribusinesses like Archer Daniels
Midland
.

McCain has argued that government support for ethanol actually raises gasoline prices. He has claimed ethanol does nothing to make the U.S. more energy independent. He has even questioned the science behind making fuel from corn – contending that ethanol provides less energy than the fossil fuels consumed to produce it.

But for a front-runner – one presumably interested in getting his as-yet-undeclared 2008 Republican presidential campaign off to a winning start – opposing ethanol is political lunacy.

Iowa, home to the first-in-the-nation presidential caucus, is the biggest corn-growing state in the country, and in Iowa ethanol isn’t just another campaign issue. It’s the cash cow, the golden goose and the fountain of economic youth all wrapped up in one.

This is how something that is good for Iowa, but not necessarily for the rest of us, can become national policy.

More:

Against this backdrop, it’s obvious why McCain’s past ethanol opposition is such an albatross. Fact is, criticizing ethanol is hard even for scientists these days.

At a recent BP-sponsored ethanol roundtable, University of California at Berkeley engineering professor Tad Patzek – whose anti-ethanol research McCain has invoked – so riled Roger Conway, the director of energy policy for the very pro-ethanol U.S. Department of Agriculture, that Conway told the foreign-born Patzek to “go back to Poland.” (Conway denies making the remark, but four other participants confirm he did, including pro-ethanol scientist Michael Wang of the Argonne National Laboratory.)

Here’s the before and after. The before:

For a politician like McCain, the stakes go far beyond a little name-calling. When McCain ran for president in 1999 and 2000, he barely campaigned in Iowa, knowing that his anti-ethanol stance wouldn’t cut it in corn country.

Four years later, McCain hadn’t changed his tune. “Ethanol is a product that would not exist if Congress didn’t create an artificial market for it. No one would be willing to buy it,” McCain said in November 2003. “Yet thanks to agricultural subsidies and ethanol producer subsidies, it is now a very big business – tens of billions of dollars that have enriched a handful of corporate interests – primarily one big corporation, ADM. Ethanol does nothing to reduce fuel consumption, nothing to increase our energy independence, nothing to improve air quality.”

Even the most slippery politician would have a tough time wriggling away from a statement as unequivocal as that one, yet McCain’s Straight Talk Express has been taking some audacious detours during recent trips to Iowa.

The after:

“I support ethanol and I think it is a vital, a vital alternative energy source not only because of our dependency on foreign oil but its greenhouse gas reduction effects,” he said in an August speech in Grinnell, Iowa, as reported by the Associated Press.

“Well, at least now we know he’s serious about running for president,” quips Brown University presidential politics expert Darrell West, upon being told of McCain’s ethanol about-face.

And the money quote:

“You can’t trash ethanol and expect to win in Iowa,” says Schmidt. “You can’t continue to say the same things McCain said – even if you believe they’re true.”

What to do? Maybe some other states need to move their primaries ahead of Iowa’s to stop them from having a disproportionate impact on national politics.

November 1, 2006 Posted by | ethanol, Iowa, John McCain | 13 Comments