I am hope you heard the following statement several times during the 2008 presidential campaign.
America has always risen to great challenges, and our dependence on oil is one of the greatest we have ever faced. It’s a threat to our national security, our planet and our economy. For decades, Washington has failed to solve this problem because of partisanship, the undue influence of special interests, and politicians who would rather propose gimmicks to get them through an election instead of long‐term solutions that will get America closer to energy independence -- Barack Obama and Joe Biden: New Energy for America
This campaign was the first time Economic, Environmental, and Energy/national security (the three EEE’s) were connected as one issue -- and the connection was continued to make clean energy and alternative transportation fuels real solutions. I believe voters were able to make this connection and vocalize that these issues were on the top of their agenda too.
This evolution was also a first for environmentalists. This was the first time environmental organizations were officially embracing clean energy and alternative transportation fuels as solutions and publically recognizing that lowering fossil fuel use was the way they could achieve their air pollution and climate change goals. People in the environmental community even started having the word “energy” included in new titles on their business cards. But, in just seven short months the honeymoon was over as -- Disillusioned Environmentalists Turn on Obama as Compromiser. So I started to keep track of headlines so after the environmentalist honeymoon I could see where the Administration stood on connecting the dots on the three EEE’s -- Economic, Environmental and Energy/national security. Are the dots still being connected? Is the Obama Administration on the right path? The compilation of headlines and stories below are from July 2009 to January 20, 2010.
Economic security is one of the E’s that was often missed by the environmental community – but that may be changing. Without economic stimulation attached to environmental security, national surveys show fewer consumers will care, and fewer policy makers will vote with only their environmental heart in hand. We are somewhat lucky that it is highly unlikely that aside from clean energy and renewable alternative transportation fuel technologies – there are very few other choices that can generate the magnitude of wealth our economy needs to sustain its quest for environmental protection, economic stimulation – and defeat our reliance on foreign sources of oil, which is holding our international diplomacy hostage.
New Report Shows Recovery Act Supported 63,000 Clean Energy Jobs Last Quarter:
Sierra Club, January 13, 2010
The White House Council of Economic Advisers has released a new quarterly report highlighting the success of the American Recovery & Reinvestment Act at creating jobs and fueling economic growth. The report, which includes analysis from outside economists, shows that the Recovery Act has saved or created 1.5 to 2 million jobs through last quarter. 63,000 clean energy jobs were created by the $5 billion (out of approximately $90 billion total) in clean energy investments spent under the Recovery Act so far. The report estimates that, in total, the Recovery Act's clean energy investments will create 719,600 job-years (one person employed for one year) through 2012.
In an effort to move 31 renewable energy and transmission projects into high gear, the Obama administration has put them on a fast track permitting process. But such deals, which would take place on federal lands, have some opposition -- and it's coming from those in green corners, who say that certain ones should be relocated.
Everyone still needs to work on connecting the energy security dot to national security. If the goals for energy security do not become as important and reverent as the goals for national security, the environmental effects from the 3rd Persian Gulf War and resulting scale up of nuclear weapons in the Middle East may make the effects from Climate Change appear distant and miniscule.
Now it's time for President Obama’s first year progress report. The parade of positive headlines say – nice first year – keep up the good work! The President should get three E’s for helping the United States get closer to achieving Economic, Environmental, and Energy Security and an A for effort. And ethanol and next generation biofuels should get an A too for the sum of their parts E+E+E.
Survey Finds That Support for Cap-and-Trade Hinges on Economy
Investors Representing $13 Trillion Call for Climate Action Now
Obama Administration Awards $2.3 Billion for New Clean Technology Manufacturing JobsLabor Department Awards $155 Million to Support Green Jobs
Treasury, Energy Announce More Than $2 Billion in Recovery Act Tax Credits for Energy Manufacturers, Tax Credit Program Will Increase Economic Development, Promote Manufacturing of Clean Energy Equipment
U.S. Department of Labor Announces $100 Million in Green Jobs Training Grants Through Recovery Act
Michigan's climate action plan could result in 129,000 jobs
U.S. Labor Secretary Expects More Green Job Hiring
"Cash for Clunkers" Program Will Create or Save 42,000 Jobs in Second Half of Year
Obama Wants Worldwide End of Fossil Fuel Subsidies
Agriculture Secretary Vilsack Announces $62.5 Million for Renewable Energy and Energy Efficiency Loans and Grants
Obama Administration Delivers More than $106 Million for Energy Efficiency and Conservation Projects in Nine States
Obama implores Senate to pass climate bill
And the seven month accomplishment list goes on and on below, but in the end...by other standards....
League of Conservation Voters Awards President Obama a B+ for First Year in Office
The House narrowly passed a major climate bill
Biofuels Could Cut Global Emissions by 80%:
New Study Shows Cars Running on Cellulosic E85 Have Lowest Carbon Emissions
President Obama Establishes Biofuels Interagency Working Group
U.S. Departments of Energy and Treasury Now Accepting Applications for Funding For Renewable Energy Projects
USDA's Farm Service Agency to Begin Accepting Applications for New Biomass Crop Assistance Program
Federal Funds for Energy Efficiency Set to Rise!
Obama Administration Announces Billions in Lending Authority for Renewable Energy Projects and to Modernize the Grid
U.S. Department of Energy Announces Awards for Up to $11 Million for New Solar Energy Grid Integration Systems
President Obama Declares October National Energy Awareness Month
Funding Up 3 Percent to $2.24 Billion for Renewables & Energy Efficiency in Fiscal Year 2010
Obama Presses Case for Renewable Energy
Novozymes Receives $28.4 Million Advanced Energy Tax Credit to Advance Biofuels Production and Create Jobs Read more
DOE Awards Nearly $80 Million for Advanced Biofuels Research and Fueling Infrastructure Read more
DOE Grants Donald Danforth Plant Science Center and Partners $44 Million to Develop Algal Biofuels Read more
Army Corps of Engineers Grants Coventa Energy Corp. $1.5 Million to Develop Technology for Conversion of MSW to Diesel Fuel for Military Use Read more
USDA Undersecretary Tonsager to Address 4th Annual Iowa Renewable Fuels Summit on Biofuels Interagency Working Group
DOE to Award $187 Million to Improve Car and Truck Fuel Efficiency
DOE to Award $47 Million to Boost IT and Telecom Energy Efficiency
DOE Announces Additional Energy Efficiency Enforcement Action to Protect Consumers
DOE to Support Clean Energy Projects in Costa Rica and the Caribbean
President Obama Says 'Insulation Is Sexy'
EIA Energy Outlook Projects Moderate Growth in U.S. Energy Consumption, Greater Use of Renewables, and Reduced Oil and Natural Gas Imports
Energy Secretary Chu Pledges $350 Million Clean Technology Fund to Sweeten Deal at Copenhagen
Energy Secretary Chu Announces $100 Million for Advanced Research Projects:
Nine Swing Senate Democrats Lay Out Climate Goals for Obama
Obama Administration Announces More Than $600 Million Investment in 19 Advanced Biorefinery Projects - Private Company Investment Brings Total to Nearly $1.3 Billion:
Energy Secretary Chu Announces $620 Million for Smart Grid Demonstration and Energy Storage Projects
U.S. Department of Energy to Invest $18 Million in Small Business Clean Energy Innovation Projects
U.S. Department of Energy Signs Agreement for New Hydrogen Power Plant
Remarks by President Obama New National Fuel Efficiency Standards
Obama Administration Announces More than $38 Million for Energy Efficiency and Conservation Projects in Alaska, Kansas, Utah and West Virginia
National Outdoor Lighting Improvements Would Save $5.1 Billion Annually
New Economic Data Released on Clean Energy Legislation
Treasury, Energy Surpass $1 Billion Milestone in Recovery Act Awards for Clean Energy Projects
U.S. Energy Secretary Chu Announces $528 Million Loan for Advanced Vehicle Technology for Fisker Automotive
Secretary Chu Announces $144 Million in Recovery Act Funding to Transition to the Smart Grid
White House Clears Greenhouse Gas Reporting Rule
House OKs Green Vehicle Research Bill
$100 Million in Recovery Act Funds Go to 43 Transit Projects Chosen to Reduce Energy Consumption and Greenhouse Gas Emissions
DOE Awards Up to $14.6 Million to Support Development of Advanced Water Power Technologies
DOE Launches New "H-Prize" Offers $1 Million for Improved Hydrogen Storage
Report Says Strong Copenhagen Deal Means Jobs, Jobs, Jobs
Interior Department Launches Response Strategy to Addresses Climate Change Impacts on U.S. Lands and Oceans:
DOE to Fund up to $454 Million for Retrofit Ramp-Ups in Energy Efficiency Projects for Businesses and Homeowners
White House, Oil, Gas Industry Spar Over Taxes
On Energy, Obama Finds Broad Support - Poll Shows Backing for Reform Efforts, But Cap-and-Trade Bill Is Harder Sell
U.S. Department of Energy Selects Biofuels Projects to Receive up to $21 Million in Funding
Agriculture Secretary Vilsack Announces Missouri Conversion Facility First with Biomass Crop Assistance Program Producer Payments
EPA to Declare CO2 a Dangerous Pollutant
U.S. Department of Transportation Awards Contract to Prototype Solar Road Panels
Energy Secretary Chu Announces Completion of Critical Energy Conservation Appliance Standards
Agriculture Secretary Vilsack Announces More Than $13 Million to Help Meet Country's Renewable Energy Needs
EPA Raises the Bar for Energy Star Televisions
Poll Shows Support for Energy Bill
Vice President Biden Announces Finalized $535 Million Loan Guarantee for Solar
Secretary Chu Announces Nearly $300 Million in Clean Cities Grants to Support Clean Fuels, Vehicles, and Infrastructure Development
U.S. Department of Energy Announces $6.4 Million for Solid-State Lighting Research
Agriculture Secretary Vilsack Awards More Than $4.2 Million for Woody Biomass Utilization Projects
U.S. Department of Energy Sets Awards To Evaluate CO2 Storage Technology While U.S. EPA Seeks Comments on New Information About Sequestration
Obama Administration Delivers More than $101 Million for Weatherization Programs in Guam and Pennsylvania
Obama Administration Awards More than $51 Million for State Energy Programs in Alaska, Guam and New Jersey
U.S. Government Seeks to Limit Federal Energy Use
President Barack Obama's Grandmother Joins the 'Solar Generation' in Kenya
U.S. Department of Energy Announces $37 Million for Small Business Clean Energy Research and Technology
Clean Energy Patent Growth Reaches Record High
Companies Secure Nearly $200 Million for Projects in Advanced Clean Transportation Technologies
President Obama Announces $2.4 Billion in Grants to Accelerate the Manufacturing and Deployment of the Next Generation of U.S. Batteries and Electric Vehicles
U.S. Department of Energy Announces Recovery Act Funding of up to $5.5 million for Ethanol Blends Infrastructure and Outreach
DOE Secretary Chu Announces Up to $30 Billion in Loan Guarantees for Renewable Energy, Transmission Grid, and Advanced Biofuels Projects
Obama Administration Awards More than $162 Million for State Energy Programs in Colorado, Delaware, Indiana, Louisiana, Massachusetts, Pennsylvania, and Puerto Rico
Agriculture Secretary Vilsack Announces Funding Available For Bioenergy Development And Production:
Energy Secretary Chu Announces More Than $47 Million in Recovery Act Funding to Advance Smart Grid Development
Federal Energy Regulatory Commission Policy Statement Seeks to Accelerate Deployment of Smart Grid Technology
U.S. Department of Energy Announces up to $52.5 Million for Concentrating Solar Power Research and Development
Geothermal Lease Sale Generates More Than $9 Million
U.S. Department of Energy Secretary Announces Nearly $300 Million Rebate Program to Encourage Purchases of Energy Efficient Appliances
U.S. Department of Energy Announces Nearly $14 Million to Go to 28 New Wind Energy Projects - New DOE Study Shows U.S. Leads the World in Wind Energy Capacity
States Awash in Stimulus Money to Weatherize Homes
Recovery Act Announcement: Secretary Chu Announces More than $37 Million for Next Generation Lighting
Freedom is not free: The price may be energy security.
I first learned about energy security, using oil as a diplomacy weapon, and alternative fuels from my father. My father was a prisoner of war in a Japanese prison camp for the last 3 1/2 years of World War II. He rarely talked about his experience as a POW, but one day he did take a moment to answer my juvenile and naïve question “Did you have any fun in prison camp, was it like Hogan’s Heroes?” His response changed my life. “We siphoned the fuel out of the Japanese trucks and drank it.”
My father went on to explain how the U.S. threatened Japan with an oil embargo in an effort to get them to side with us in World War II. At that time the U.S. was the world’s largest oil producer. Their answer to our threat was to bomb Pearl Harbor – which was the first oil related attack on U.S. soil. Because the Japanese no longer had oil supplies from the U.S., and their allies did not have any either, they had to convert their Saki industry to fuel their domestic military fleet. They had to save whatever oil they could buy to fuel their planes and other military equipment that could not be replaced with ethanol (Germany used methanol).
My high school class was the first not to face a mandatory draft for military service in a generation or two. The visions of the Vietnam War on TV were still fresh in my mind, the price of gasoline doubled the year I got my drivers license, and being from a military family I had a sinking feeling that the Arab Oil Embargo of 1973 was the prelude to the next military mission. With a dreadful fear of boot camp, some family photos, and very selfsih desire to stay out of the next war, necessity drove me to search for the mother of all un-petroleum inventions. I started researching alternatives to oil with father’s conversation in mind. In 1977 I presented my father with my future plan based on his POW story. At first he did not share my optimism about alcohol fuels and my American [day] Dream. He said “The United States Congress does not have the optical will and private industry does not have a genuine interest in changing status quo. 99% of the people don’t care – because they don’t know – and there are few leaders with the courage or enough money to tell them different.” I spent the next 30 years proving him right.
I sincerely believe we are in a longer term war over oil. It is becoming increasing clear every day since we did not find weapons of mass destruction and Sadam Hussein’s trail ended that our involvement in the Middle East may be less complex than it appears on the surface. Some may disagree with my view that that Persian Gulf Wars I, II and II, and the Global War on Terror have everything to do with oil, but most may agree oil accounts for at least 50% of our mission and can be rated as one of the top two reasons.
But the next 30 years are going to be different! Times are changing and political will is growing stronger. We have a renewable fuel standard and there are more democratic and republican leaders everyday that have the courage to tell Americans they are addicted to oil and it’s time for intervention. The internet and blogs, in combination with the growing number of countries that respect democracy, education, and the freedom of speech will help people find the truth about oil. In the meantime, our military fights every hour of every day to selflessly protect democracy, capitalism, the world economy and the pursuit of liberty for all – even if one of the root causes is oil. The next time you fill up with gasoline, even if it is only 10% ethanol, stand tall and know that Americans have been heard, the challenge is being met, and our true national leaders are rising to the occasion.
The next time you feel like you need a good God Bless America find some E85 and put it in your FFV as your personal effort to acknowledge our energy security mission and hopefully bring the troops home one day -- and God bless you if one of them is yours. The people who think “business isn’t personal” obviously don’t know anything about the energy business and energy security.
On Veterans Day I went to Arlington Cemetery to place a flag on my father’s grave. I could not help but notice the rows in Section 60 were growing with Persian Gulf War veterans. As the rows move east the birthdates change from the 1920’s to the 1980’s. World War II, Vietnam, and Korea are replaced with Operation Desert Storm (Second Persian Gulf War), Operation Iraq Freedom (Third Persian Gulf War) Operation Enduring Freedom (War in Afghanistan). The memorial for Operation Ultimate Justice (Global War on Terror) is across the street at the Pentagon.
Veterans Day 2009 lead me down a path that filled with three generations of conflicts over oil and back to that conversation that changed my life. Take a moment to talk to a veteran about war and oil – it might just change your life too – and maybe even change your mind about the next type of car you buy.
God Bless America and our troops that protect her.
Some recommended reading to learn more about Energy Security.
1. Winning the Oil Endgame, by Amory B. Lovins, published by the Rocky Mountain Institute in cooperation with the Department of Defense.
2. Freedom from Oil, David Sandalow, published by McGraw Hill.
3. Blood and Oil: The Dangers and Consequences of America’s Growing Dependence on Imported Petroleum, by Michael Klare, published by Henry Holt and Company (an Owl Book)
4. Energy Security Challenges for the 21st Century, by Gal Luft and Anne Korin, published by Praeger Security International.
5. Beyond Oil: The View from Hubbert's Peak, by Kenneth S. Deffeyes, published by Hill and Wang (a division of Farrar, Straus and Giroux)
6. Turning Oil Into Salt: Energy Independence Through Fuel Choice, Anne Korin, Gal Luft, published by BookSurge Publishing
7. Energy Victory, by Robert Zubrin, published by Prometheus Books
8. Over a Barrel: Breaking the Middle East Oil Cartel, by Raymond J. Learsy, published by Nelson Current
9. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy by Matthew R. Simmons, published by John Wiley & Sons, Inc.
10. The End of Oil: On the Edge of a Perilous New World, by Paul Roberts, published by Houghton Mifflin Company (A Mariner Book).
11. The Empty Tank: Oil, Gas, Hot Air, and The Coming Global Financial Catastrophe, by Jeremy Leggett, published by Random House
12. The Plan: How To Rescue Society When The Oil Stops – Or The Day Before, by Edwin Black, published by Dialog Press
13. Crude World: The Violent Twilight of Oil, by Peter Maass, published by Alfred A. Knoff (Random House)
There are three elements to consider when you assess your environmental security. Consider yourself and the air you breathe the bull’s-eye (Code Blue), your immediate surroundings as the next outer circle (Code Orange), and from there to the ozone as the last circle of your personal environmental perimeter, or biosphere (Code Red).
Every Breath You Take… Every Move You Make…
Code Blue (Risk to Your Health)
The air you breathe has an immediate and long term impact on your personal health. The known carcinogens in gasoline and the emissions from burning them have been proven to cause cancer (according to the sign on the gasoline pump), respiratory problems like asthma, and even heart attacks. In the days of carbon monoxide alerts in 39 of the nation’s largest cities – the number of heart attacks increased on days with the safe level was exceeded. The good news -- the Clean Air Act Amendments of 1990 required gasoline retailers to add clean burning oxygenated fuels (like ethanol) to gasoline. That move alone has almost eliminated this particular air quality problem. Ozone and smog are also attributed to gasoline emissions and the reformulated gasoline program also required gasoline retailers to include oxygenated fuels (like ethanol) to reduce the level of toxics in gasoline. Today, the renewable fuel standard is making us all safer at many levels, not only our immediate air quality.
Ethanol: On Target to Improve Your Environmental Security
The Coming of Biofuels: Study Shows Reducing Gasoline Emissions Will Benefit Human Health
A “Life Cycle Impact Assessment” has shown that a biofuel eliminating even 10-percent of current gasoline pollutant emissions would have a substantial impact on human health in this country, especially in urban areas.
Code Orange (Risk to Your Immediate Surroundings)
Many of us have become jaded from hearing “code orange” every time we enter or leave an airport. However, this announcement is a constant reminder of a real and imminent danger and security threat to the lives of a large majority of Americans. Code orange is a real and present danger to those that frequently travel or live in large metropolitan areas -- such as Manhattan. The differences between the U.S. culture and many countries in the Middle East, where 88% of the world’s proven oil reserves are located, are not going to be resolved soon. The U.S. is in a long-term war over these cultural differences. As a result, military service is becoming more of an everyday family or neighborhood occurrence. Over 5,000 American soldiers have died and over 30,000 have been wounded in Afghanistan and Iraq protecting our economic, environmental, energy, political, and religious freedoms. Protecting the free flow of the world’s oil has been part of our national security strategy since 1945. This “oil protectionist” strategy, and our nation’s addiction to imported oil, have a direct impact our geopolitical strategies and our ability to interact with many nations.
Code Red (Risk to Your Biosphere and Planet)
I grew up in an era of code red days. I was not allowed to go outside and play because of bad air quality – unless I had baseball or football practice. I was not told why. When I found out why, it was one of the reasons I dedicated my career to advocating alternative fuels for cars and wound up writing this blog with my Oreck air filter running in the background -- and two FFVs and a hybrid in the driveway. Holes in the ozone and climate change where lessons soon to follow on my selfish journey to protect myself. It took many years and many millions of dollars, but over time the consensus and conclusion was that man made emission were the culprit -- imagine that. The majority of emissions causing the pollution that were threatening my life, and the planet that I had become dependent on, were coming from jobs or the cars people used to get to their jobs. From my viewpoint, as a capitalist and patriot, I realized then that our country was not going to give up either of those freedoms without a fight. The risk is as "easy as pie" to understand.
The Majority of GHG Comes From Burning Fossil Fuels: A Large Portion is From Transportation.
The weapon I choose to enhance my environmental security is consumer choice. I choose to put higher blends of ethanol, like E85, in my FlexFuel Vehicle (FFV). In my immediate environment, I am doing something right now to impact my economic, environmental, energy, and national security.
I have compiled several articles and studies below that will help you understand the real and immediate threats to your environmental security – resulting from our nation’s addiction to oil, and more importantly, gasoline. How you choose to protect yourself is always your choice – and for the first time in 100 years, FFVs and E85 give you one.
First and foremost, we are not going to achieve environmental security without economic security being placed first – or the majority of businesses and consumers (i.e., democracy) just won’t care or be able to afford to act responsibly.
More Information and Research:
Connecting Economic and Environmental Security: Survey Finds That Support for Cap-and-Trade Hinges on Economy: Reuters, Nick Zieminski, July 12, 2009
U.S. manufacturers would be much more likely to support cap-and-trade legislation to limit pollution if they believed the industrial economy was about to improve, according to a survey commissioned by accounting and consulting firm Baker Tilly Virchow Krause, which represents many Midwestern manufacturers.
Is gasoline toxic or carcinogenic?
There are several known toxins in gasoline, some of which are confirmed human carcinogens. The most famous of these toxins are lead and benzene, and both are regulated. The other aromatics and some toxic olefins are also controlled. Lead alkyls also require ethylene dibromide and/or ethylene dichloride scavengers to be added to the gasoline, both of which are suspected human carcinogens. In 1993 an International Symposium on the Health Effects of Gasoline was held. Major review papers on the carcinogenic, neurotoxic, reproductive and developmental toxicity of gasoline, additives, and oxygenates were presented, and interested readers should obtain the proceedings, or just look at some of the papers will put a chill down your spine…
Is unleaded gasoline more toxic than leaded?
The short answer is no. However that answer is not global, as some countries have replaced the lead compound octane-improvers with aromatic or olefin octane-improvers without introducing exhaust catalysts. The aromatics
contents may increase to around 40%, with high octane unleaded fuels reaching 50% in countries where oxygenates are not being used, and the producers have not reconfigured refineries to produce high octane paraffins.
The Real Reason Your Kids Should Not Play in Traffic...
Hodgkin’s lymphoma in children increased 25% and 51% per doubling g of traffic associated benzene and NO2 levels, respectively, during pregnancy (Raaschou Nielsen 2001) doubling traffic-Raaschou-Childhood cancer (OR 5.90), especially leukemia, increased within 750 ft of roadway with > 20,000 VPD (Pearson 2000) within
HAPs Approx. 280 379/1,000,000 new cases cancer per yr in LA due to ambient levels of benzene, formaldehyde and 1,3 butadiene (MATES II 1999) 280-1,3-MATES-
Approx. 980/1,000,000 new cases cancer per yr in LA County due to diesel particulate emissions (MATES II 1999) to MATES…Environmental & Energy Systems Institute and Shell Center for Sustainability Rice University. Wednesday, November 19, 2003.
...And Why You Should Roll Up Your Windows on the Way to Work
Abstract Benzene is an established cause of leukemia in adults, especially acute non-lymphocytic leukemia (ANLL). A few studies have indicated that exposure to gasoline is a cause of childhood leukemia. The purpose of this study was to investigate if environmental exposure to benzene from gasoline and car exhaust was associated with leukemia in children and young adults. The exposure to gasoline and car exhaust was estimated by the number of cars per area. In this ecology study, data on the incidence of cancer in each municipality of Sweden during an 11-year period (1975–1985) were compared with the number of cars per area. For more information: The Mickey Leland National Urban Air Toxics Research Center (NUATRC).
More About Code Orange (Personal Risk: A Real and Imminent Danger):
Absent increased ethanol production figures, it’s all bad news. The Congressional testimony by Jim Woolsey, former director of Central Intelligence, says it all and connects the dots of national security, terrorism and provides a complete and simple explanation of how crude oil/gasoline use are fueling both sides of the Wars we are fighting in the Middle East. War has placed the Department of Defense as the world’s largest petroleum user and created an immediate threat to the personal surrounding environment of those in battle and at home.
For a number of reasons we must strive for a similar path of decline in influence for oil – away from being a strategic commodity and toward being simply a commodity. Oil will still be useful and valued for its high energy content and its relative ease of shipment for a long time…But in the interests of our national security, our climate, and our pocketbooks we should now move together as a nation – indeed as a community of oil importer nations – to destroy, not oil of course, but oil’s strategic role in transportation as quickly and as thoroughly as possible.
The national security reasons to destroy oil’s strategic role are substantial. Over two-thirds of the world’s proven reserves of conventional oil lie in the turbulent states of the Persian Gulf, as does much of oil’s international infrastructure. Increasing dependence on this part of the world for our transportation needs is subject to a wide range of perils.
Just over a year ago, in response to bin Laden’s many calls for attack on such infrastructure, al Qaeda attacked Abcaiq, the world’s largest oil production facility, in northeastern Saudi Arabia. Had it succeeded in destroying the sulfur-clearing towers there through which about two-thirds of Saudi crude passes -- say with a simple mortar attack -- it would have succeeded in driving the price of oil over a hundred dollars a barrel for many months, perhaps close to bin Laden’s goal of $200 a barrel.” April 18, 2007, Testimony of R. James Woolsey, U.S. House of Representatives Select Committee on Energy Independence and Global Warming Hearings on Geopolitical Implications of Rising Oil Dependence and Global Warming,
Code Red (Risk to Your Planet): Easy as Pie
The possible personal effects of climate change include severe weather damage to property and body, job loss, productive land loss, insurance rate increases, health risks from insect migration and disease, and even national security. Is climate change real? Who am I to totally disagree and dismiss the findings of scientists from over 130 countries that contributed to the International Panel on Climate Change (IPCC) Fourth Assessment Report? The report included more than 2,500 scientific expert reviewers, more than 800 contributing authors, and more than 450 lead authors. They have reached a consensus that the impacts from climate change in just 20 short years away.
Believing climate change is happening and its possible risk and impact is an individual choice. However, the source of the man made emissions (e.g., our role vs. the planet) is as easy as pie to understand. Over half of the greenhouse gas emissions come from burning fossil fuels, and the majority of that fossil fuel is used to fuel our cars, homes and jobs.
For more information and reports go to IPCC website. Selected presentations collected on the IPPC link were given by prime IPCC representatives on various occasions. The preparation of each presentation is under the responsibility of the presenter.Original figures from the IPCC reports can be found here.
You can also find information on Wikipedia.
While a growing number of people are becoming clean energy advocates and many more would consider themselves an environmentalist, every person is concerned about the economic well being of their family and loved ones. Going Green? Here are your research links to help you understand how you can make more green with ethanol and enhance your economic security.
What’s in your wallet? Consumer power! For the first time in over 100 years consumers have vehicle and fuel choice – if they own and FFV and use higher than 10% blends of ethanol. Federal and state policy makers have read the national surveys and consumers/voters have been heard. The gasoline-only mandate is over – at least for the 8 million owners of FlexFuel Vehicles (FFVs). Most drivers have no choice but to support the nation’s billion dollar a day oil addiction – but FFV owners can buy higher blends of domestically produced, clean, renewable ethanol. Our economy can now be truly be consumer driven and ethanol powered!
What is economic security in an area of economic stimulus? In my humble opinion, it is simply the ability to save existing jobs and create new ones. There are many added bonuses included with job creation:
Job creation reduces unemployment and therefore taxes
Job creation provides family health care without increasing taxes or federal programs,
Job creation improves personal savings and reduces consumer debt, all while
Improving the quality of family life and the environment.
Doesn’t job creation and economic stimulation make reducing our oil consumption a little more exciting and worthwhile?
Does ethanol create jobs and will increasing the production and use of other renewable fuels create new jobs? Yes. The data is overwhelming. Even more overwhelming is the top 50 reasons to reduce our dependence on foreign oil. Flexible Fuel Vehicle Club of America -- The Truth About Oil
New York Times: The instability of oil and gas prices is puzzling government officials and policy analysts, who fear it could jeopardize a global recovery. It is also hobbling businesses and consumers, who are already facing the effects of a stinging recession, as they try in vain to guess where prices will be a year from now — or even next month.
Are Your Savings Connected to Oil Prices? You Decide.
As Gasoline Prices Creep up, Ethanol Saves Consumers Money
Environmental & Energy Study Institute: Funding for Clean Energy Projects Can Provide Immediate Stimulus and Long-Term Economic Benefits:
CONSUMER FEDERATION OF AMERICA: ENHANCED ENERGY EFFICIENCY AND RENEWABLE ENERGY STANDARDS CAN SAVE CONSUMERS $200 BILLION PER YEAR BY 2030
Deutsche Bank Says Global "Green" Energy Stimulus Hits $200 Billion: Governments around the world have committed more than $200 billion toward technologies to cut dependence on fossil fuels, which should help keep green development moving despite the global economic crunch, according to Mark Fulton, Deutsche Bank's global head of climate change investment research.
Apollo Alliance Launches 'Make It in America' Clean Energy Campaign:
Shoppingblog.com: Refinery problems are producing especially high prices in the Midwest, a region that was already reeling from the economic crisis. Michigan, the state with highest unemployment rate, at 12.9 percent, is now paying the highest gasoline prices, averaging $2.93 a gallon. The national jump in prices, far larger than the normal seasonal increase, is pulling billions of dollars from the pockets of drivers. It threatens to curtail a modest recovery in consumer spending on items like apparel and electronics.
Planet Ark:Since March, clean energy stocks have put together a mighty rally, outpacing the U.S. equities market as a whole. Three major indexes tracking green energy companies have risen sharply of late. The U.S.-only Wilderhill Clean Energy Index, comprising 51 companies, is up 72 percent since a March 9 low.
New Analyses Demonstrate How America Can Create 1.7 Million Green Jobs and Opportunities for Low-Income Families:
The Economic Benefits of Investing in Clean Energy: How the Economic Stimulus Program and New Legislation Can Boost U.S. Economic Growth and Employment
ABC NEWS: The fledgling renewable energy industry has grown steadily over much of the past decade, adding jobs at more than twice the national rate, according to a Pew Charitable Trust study…..Pew counted 22,674 clean energy jobs in Michigan in 2007. To put that into perspective, Michigan lost 38,400 jobs in April alone.
Can you believe forty years after our nation landed on the moon, critics are still debating the technological merits of producing renewable ethanol to enhance our national economic, environmental, and energy security?
What’s in your wallet? Choice. Put some higher blends of ethanol your FFV and celebrate your economic freedom.
Happy Anniversary? There is Some Good News...
Today is the 35th anniversary of the 1973 Arab oil embargo. The United States uses 15% more oil today as net imports have increased from 35% to 57%. Our oil addicted nation now imports three times as much oil from Persian Gulf nations and oil imports account for almost half of the U.S. trade deficit in 2008. According to the U.S. Bureau of Economic Analysis, for the first eight months of 2008, net petroleum imports totaled $281.14 billion dollars (or $421.71 billion/year if that level is maintained over a 12-month period).
OPEC Net Oil Export Revenues Exceed $1 Trillion in 2008
Thirty five years later we have finally witnessed the convergence of energy, economic, environmental, national security at the top of the national political agenda. These issues have always been intricately linked and connected to your personal security and economic freedom. So what is energy security worth? Unlike greenhouse gas caps, credits, and trading which spur environmental security gains, energy security gains still do not translate into dollars per gallon at the pump for domestically produced alternative fuels.
We insure our bodies, cars, houses, boats, motorcycles, and even our pets against possible harm and misfortune. We pay extra for quality products that we see as improved or that exceed our minimum expectations (e.g., cars, TVs, Starbucks, vodka, spring water, organic food, and premium gasoline). When will you demand and pay for energy security? Never, if you think you it’s not a problem. What do you think? Not sure? Please read on and let me know what you think.
Since Sept 11, 2001 it appears oil prices just kept rising. Until our recent economic woes set in.
What is Energy Security?
"American energy policy has been focused on a narrow definition of energy security that strived to ensure sufficient supplies at affordable prices. This has translated into policies promoting diversification in supplies of oil and natural gas, with little emphasis on energy alternatives. A policy that relies on a finite resource concentrated in a few countries is doomed to failure. Our long-term security and prosperity require sufficient, affordable, clean, reliable, and sustainable energy.” U.S. Energy Security – A New Realism, Senator Richard Lugar (R-IN) speech to the Brookings Institution on March 13, 2006
Energy Security is National Security
"Energy security impacts every aspect of life in the United States, from the cars we drive and how much we pay at the gas pump to our vulnerability to foreign terrorism and our relationships with other countries. Many of the countries that export oil have unstable or hostile governments that threaten American national security. By buying oil from these countries instead of developing domestic fuels, we support governments that are repressive to their own citizens and potentially dangerous to the American people." -- Energy Security IS National Security, Senator Richard Lugar (R-IN)
"The national security risk posed by our oil dependence requires fundamental change and a long-term serious commitment. You just can't call 1-800-dial-the-military." General Charles F. Wald, USAF (Ret.) Former Deputy Commander, U.S. European Command
"America's dependence on oil makes vulnerable the country's economic and military security and our nation must finally address this fundamental risk. As co-Chair of the Energy Security Leadership Council, I am completely committed to actively working with this diverse group of fellow business leaders to make the case for an aggressive, comprehensive policy to improve energy security." --
Frederick W. Smith, Chairman, President and CEO, FedEx Corp. (co-Chair) Energy Security Council
But in the interests of our national security, our climate, and our pocketbooks we should now move together as a nation – indeed as a community of oil importer nations – to destroy, not oil of course, but oil’s strategic role in transportation as quickly and as thoroughly as possible. April 18, 2007, Testimony of R. James Woolsey (former Director of the CIA) U.S. House of Representatives Select Committee on Energy Independence and Global Warming Hearings on Geopolitical Implications of Rising Oil Dependence and Global Warming
What are we paying for not having energy security?
How much do we really pay for oil and gasoline? - Institute for the Analysis of Global Security (IAGS)
Energy Security is about Terrorism and Geopolitical Stability: "Since the industrial revolution the geopolitics of energy – who supplies it, and securing reliable access to those supplies – have been a driving factor in global prosperity and security. Over the coming decades, energy politics will determine the survival of the planet." -- January 2008 Carlos Pascual, Vice President and Director, Foreign Policy , The Brookings Institution
"The wealth produced by oil underlies the power of the three totalitarian movements in the Middle East that have chosen to make war on us: the ruling Iraqi Baathists and Iranian mullahs, and al Qaeda, which was spawned by Saudi money. [..] We are at war. We should start by asking what we can do, as soon as possible, to undercut our enemies' power. Other considerations should now follow, not lead. [..] If we do not act now, we will leave major levers over our fate in the hands of regimes that have attacked us or have fallen under the sway of fanatics who spread hatred of the U.S., and indeed of freedom itself. [..] For all of them, their power derives from their oil. It is time to break their sword." - R. James Woolsey, CIA Director, 1993-95, Wall Street Journal, September 18, 2002
Energy Security: What is the Problem?
The Truth About Oil: Supply, Demand, Alternatives, Proven Reserves, and Geopolitics
The United States has 3% of the world’s oil. 14 of the top 20 oil companies in the world are government-owned. 90% of the world’s known oil reserves are controlled by those government owned oil companies. 50% of the oil reserves are owned by countries without democracies or free market economies. Oil demand is expected to increase by 50% by 2030. We need to find two new friendly democratic Saudi Arabia’s to make up for that new demand - Flexible Fuel Vehicle Club of America
Energy Security Is Peak Oil
M. King Hubbert conceived of Peak Oil in 1938. In 1956, he predicted that U.S. production would peak and begin declining in 1969. It actually occurred in 1970. – Association for the Study of Peak Oil & Gas
All the easy oil and gas in the world has pretty much been found. Now comes the harder work in finding and producing oil from more challenging environments and work areas.
— William J. Cummings, Exxon-Mobil company spokesman, December 2005
"U.S. oil production peaked in 1970 and has been in decline ever since. The same happened in the U.K., Norway, Indonesia and Mexico, to name a few. In 2005 the Swedish Royal Academy noted that 54 out of 65 of the largest oil producing countries were in decline, so it is not difficult to comprehend that world oil production will decline before long." -- Dr. Robert L. Hirsh, past chairman of the Board on Energy and Environmental Systems at The National Academies and lead author of the “The Hirsch Report” — formally known as Peaking of World Oil Production: Impacts, Mitigation and Risk Management — sponsored by the Department of Energy.
Let’s stop the attacks on ethanol. Ethanol production today is on par with imports from three OPEC nation’s -- Joe Petrowski – Gulf Oil CEO, July 11, 2008
"With the embargo now a distant memory for many, we are still learning more about its lessons for America’s current dependence on foreign oil." -- Jay Hakes A Declaration of Energy Independence: How Freedom from Foreign Oil Can Improve National Security, Our Economy, and the Environment
That was then is now?
Are We Ready for the Next Oil Shock? The Washington Post, August 11, 2006, Frederick W. Smith and P.X. Kelley Energy Security Leadership Council Co-Chairs
July 23, 2008 -- The House voted 414-0 Wednesday to require the intelligence community to study the links between high energy prices and national security. Under the legislation (HR 6545), the director of national intelligence would write a national intelligence assessment on topics such as the national security ramifications of Venezuela, Iran, or other oil-rich countries using their resources to put pressure on U.S. policy. House Calls for Intelligence Study of How Energy Prices Affect Security. -- Tim Starks, Congressional Quarterly
September 9, 2008 -- Crude oil prices fell below the critical $100 a barrel level on Tuesday for the first time since April as hurricane Ike shifted its course away from the Gulf of Mexico and traders bet OPEC would leave production unchanged.Since jumping to an all-time high of $147.27 last July, the combination of the slowdown in the global economy, which is damping oil demand, and higher production from the OPEC oil cartel have brought down oil prices 30 per cent. Crude prices fall below $100 mark
Sept 10, 2008 -- OPEC has surprised the markets by agreeing to abide by the production limit it had set for its members in September 2007. The cartel views the market as oversupplied. Carola Hoyos in Vienna and Javier Blas in London, Financial Times
September 11, 2008 – 85 Percent of July Trade Deficit Caused by Imported Oil U.S. Department of Commerce, Bureau of Economic Analysis, reported that Americans spent $52.8 billion on imported petroleum in July, twice the amount from a year earlier, and representing 85 percent of the month’s $62.2 billion trade deficit. During the period January–July, 2008, the United States has imported petroleum products valued at $276,905,841,000.
Where is the Oil and Who Owns it?\
The world's oil wealth is concentrated in a relatively few countries. 4 of the 5 nations with the largest oil reserves are in the Middle East -- Saudi Arabia at 267 billion barrels (1973) -- Iran at 133 billion barrels (1979) -- Iraq at 115 billion barrels (today) -- Kuwait at 104 billion barrels (1990). Canada is 4th because of oil shale reserves. Oil reserves are also large in the United Arab Emirates, Venezuela, Russia, Libya and Nigeria. Adding Canda to these countries to the big five producers raises the total to 86 percent of world reserves.
Do the countries above look familiar?
Major Disruptions of World Oil Supply
Source U.S. Department of Energy
Are the World's Oil Reserves in the Hands of Democracy?
Nearly 50% of the worlds oil supplies are in countries categorized as “mostly unfree or Repressed” Just 3 of the 30 countries that control nearly all of the world's oil wealth score highly enough on The Heritage Foundation, 2006 Index of Economic Freedom to be categorized as free—the United Kingdom, the United States and Canada. These countries rely on private companies to run their energy industries, but they have only 16 percent of world reserves, almost 90 percent of it in Canada. The United States passed its production peak in the 1970s, and the United Kingdom may have done so recently. Neither is likely to add much to conventional world oil supplies. -- Vol. 1, No. 4, April 2006, Federal Reserve Bank of Dallas, Running on Empty? How Economic Freedom Affects Oil Supplies, by Stephen P. A. Brown and Richard Alm.
Energy Security Risks are not Restricted to our Borders
In the aftermath of Russia’s incursion into Georgia, U.S. Sen. Dick Lugar is embarking on a two-week, nine-nation mission that focuses on the trans-Atlantic alliance’s energy security. Lugar will meet with officials in France, Georgia, Azerbaijan, Turkey, Romania, Hungary, Ukraine, Germany, and at NATO and EU headquarters in Brussels.
It is time for the trans-Atlantic community to establish a credible energy security strategy that diversifies energy sources for all Europe, establishes a collective framework to work with Russia, and refuses to tolerate the use of energy as an instrument of coercion,”
“The absence of a collective energy security strategy will lead to greater fragmentation among European nations and across the Atlantic. This fragmentation will not be exclusive to energy policy; it may also detrimentally impact our ability to act upon shared security and economic issues,” – Senator Richard Lugar (R-IN) April 15, 2008
"The recent conflict taking place in Georgia, however, is prompting fear among some. While Georgia is not a significant oil and gas producer, it is centrally located and has become a launching pad to transport those commodities to Europe. Indeed, the 1,100 mile Baku-Tbilisi-Ceyhan pipeline circumvents both Russia and Iran and is used to supply about 1 percent of the world's daily oil needs. The line, long a contention between Russia and Georgia, has not been damaged during the battle. But Russian-led Georgian separatists have threatened to sabotage it. For Russia, control of Georgia and the pipeline would restore much of its influence over many of the former satellites of the U.S.S.R.," says James Williams, publisher of the Energy Economist newsletter, in an interview with the Los Angeles Times. "It would have the clear benefit of increasing Russia's energy chokehold on Europe." -- Russia's Rise, Ken Silverstein, August 20, 2008, EnergyBiz Insider
Your Energy Security is Blowing in the Wind
"The storm slammed into Galveston, Texas, early Saturday and plowed across much of U.S. oil producing country in the process. Initial reports from oil refiners in Texas and Louisiana were encouraging. Most of the 14 refineries shut down in advance of Hurricane Ike — nearly 20 percent of U.S. oil refining capacity — could reopen by week’s end, several firms said. The Louisiana Department of Natural Resources reported that the basic infrastructure of that state’s oil and gas industry appears to have weathered the storm “with almost no damage.” Preliminary surveys suggested that a number of production platforms in the Gulf of Mexico may have been destroyed, however. The Department of Energy said Sunday it released a 309,000 barrels of crude oil from its Strategic Petroleum Reserve (SPR) to stave off any shortages at refineries caused by Ike or the earlier Hurricane Gustav. Gasoline prices spiked nevertheless, climbing over $4 per gallon in several states Monday. President Bush said over the weekend that the Federal Trade Commission and Energy Department will keep close watch to ensure that consumers are not being gouged at the pump in the wake of the hurricane. -- Energy Picture Grows More Complex In Wake Of Ike, Sept. 15, 2008 Adrianne Kroepsch
Americans Spent Ten Times as Much on Oil Imports in June Than Was Invested in All New U.S. Ethanol Producing Capacity Last Year: U.S. Senator Richard Lugar, (R-IN), August 12, 2008
In 2007, the Air Force spent $8 billion on fuel. For every $10 increase on a barrel of oil, U.S. taxpayers must pay an additional $600 million.
Which Energy Security Weapons of Mass Construction do we Have to Fight Back With?
There are no magic beans. Will we drill more oil (with 3% of the world’s oil?), use more coal, use more nuclear, use less, tax more, or wait for people to buy smaller cars and ride their bikes or take metro to newly designed cities – or continue down the path of improving biofuel production? Right now, considering our drive don’t drive options, and for the immediate future it appears ethanol is the only significant weapon we have to fight oil imports. We simply do not have the cars or the refueling infrastructure to make a significant difference with any of the other options (hybrid, plug-in, natural gas, electric, hydrogen) because it takes 17 years to turn the fleet over and possible longer considering the economy. But we are making progress on both fronts.
U.S. Gasoline Demand Drops for 23rd Week, MasterCard Says
U.S. Ethanol Production To Surpass Middle East Oil Imports
The net imports of the world’s biggest consumer are expected to fall between now and 2030, ending what has been an almost relentless 30-year climb in the use of foreign oil and a fall in domestic production. In 2006, George W. Bush said in his State of the Union speech that America was “addicted to oil” – often imported from unstable parts of the world – and said he would work to address. Guy Caruso, head of the US Energy Information Administration, said that that trend was set to continue as people adjusted to high oil prices and the impact of the Energy Independence and Security Act, which became law in December 2007, was felt. “The 1970s is the last time we saw any significant decline in net import dependency in the US. It shows that markets do work, policy changes do work, technology does work,” Mr Caruso said.
Are Alternative Fuels Like E85 Working? In some places E85 is Outselling Premium.
"For the month of August 2008, E85 sales in Minnesota were estimated at 2.1 million gallons - approximately 7% more than was sold a year prior in August 2007. At an average price of $2.95 per gallon, E85 was 67 cents less than the average price of 87 octane gasoline in the state during the month of August. For the period of January through August 2008, E85 sales were up more than 14% over the same period in 2007. For the fourth month in a row gasoline sales in Minnesota fell - more than 11 million gallons or 4% in August, compared with August 2007 sales." -- Kelly Marczak, Director, Minnesota Clean Air Choice Team, Clean Fuel & Vehicle Technologies, American Lung Association of Minnesota CleanAirChoice.org
After hurricanes Gustav and Ike, E85 was available to gasoline marketers and consumers in Atlanta after gasoline pipelines started to run dry. (PDF)Download e85_atlanta_biofuels_market_alert_100108.pdf
E85 Stations Exceed 1,800: Up 28% in One Year. "Only 7 states do not offer E85: Maine, New Hampshire, Vermont, Rhode Island, New Jersey, Alaska and Hawaii." - National Ethanol Vehicle Coalition, October 13, 2008
Poll Says 74% of Americans Think T. Boone Pickens' Energy Plan Can Work:
RenewableEnergyWorld.com, August 18, 2008
In a new national Sacred Heart University Poll, 74.0% of Americans said it was very or somewhat possible that the 10-year energy independence plan proposed by Texas oilman, T. Boone Pickens, could be accomplished. Pickens is running advertising touting his plan to use American ingenuity along with solar and wind energy as well as bio-fuels to cut dependence on foreign oil in 10 years. Only 14.4% of those surveyed indicated the plan was somewhat impossible or not at all possible to accomplish and 11.6% were unsure.
What happens if we don’t improve energy security?
Its getting worse and there is a tremendous economic opportunity left on the table of chance. It's not about what we have, it is about what we could have had, and what we might just get.
"Shock Wave" brings together a distinguished group of experts in energy, economics, the military, intelligence, politics, and foreign relations to explore the delicate balance between the supply of oil, increasing international demand, and the global political situation. At the center of the documentary is the ground-breaking war game "Oil ShockWave," a crisis simulation developed by Securing America's Future Energy and the National Commission on Energy Policy that asks the question: What would happen if events around the world stopped the flow of even a small amount of oil? The stimulation is led by Secretary of Defense Robert Gates, with a group including former Senator Don Nickles; James Woolsey, former CIA director; Richard Haas president of the Council on Foreign Relations; and others.
Where Can you Learn More About Energy Security?
Clean Fuels Development Coalition Energy Security Issue Brief
2007 National Summit on Energy Security with Senator Richard G. Lugar
Energy Independence and Security Act of 2007
United States Senate Committee on Energy and Natural Resources
U.S. Department of Energy/Energy Security
Congressional Record Search "Energy Security" and HR 3416 — America's Energy Security Trust Fund Act of 2007
The Institute for the Analysis of Global Security (IAGS) Journal of Energy Security
Association for the Study of Peak Oil & Gas
The Energy Security for American Families Initiative
Securing America's Future Energy (SAFE) and its Energy Security Leadership Council (ESLC) hold a news conference to release "A National Strategy for Energy Security, an innovative, comprehensive set of solutions to the myriad problems posed by America's dependence on oil."
Google “Energy Security”
Your Energy and Economic Independence: What You Really Pay for Oil.
The cost to the U.S. economy over the past 25 years of over reliance on OPEC oil, including the cost of price shocks, is estimated at $4 trillion, and a price shock in 2005 would cost the U.S. economy half a trillion dollars. Oak Ridge National Laboratory, October 2, 1996
Labor Day 2008 gave me some time to reflect on our country's economic independence. On July 4th we had just celebrated how our country won its quest for economic independence and personal freedoms. Do we really have economic independence today and what freedoms are we losing in trade for our dependence on oil? Should we change the message in the quest for energy independence back to our original capitalist and free market war for economic security? It appears everyone clearly understood what that battle was about.
Ethanol critics often say (as they appear to be speaking on behalf of everyone) consumers are not willing to pay more for alternative fuels through government tax incentives or directly at the pump. Somehow those critics forget to include all the external costs of gasoline and do not address the real economic impacts that increasing crude oil imports have on our economy -- as if the trillions of dollars escaping our economy for oil related costs came from 3 magic beans.
The price shock modeled by the Oak Ridge National Laboratory (ORNL) report, "The Outlook for U.S. Oil Dependence," simulated the impact of a two-year supply shock similar to those that occurred in 1973-74 and 1979-80, but starting in 2005 and ending in 2006. The model predicted that the shock would cause oil prices to jump from $20/bbl in 2004 to $50/bbl in 2005, costing the U.S. economy an estimated half a trillion dollars.
According to my calculations (from $50 to $150 per barrel) the actual rise in crude oil prices were three times the ORNL estimate, or add another $1.5 trillion log to the fire.
Americans Spent Ten Times as Much on Oil Imports in June Than Was Invested in All New U.S. Ethanol Producing Capacity Last Year. U.S. Senator Richard Lugar, August 12, 2008
Economic Security: Did Anyone Order Dominoes?
A quick spin on the radio dial this summer sounded something like this "oil prices hit another historic high... gasoline prices are up and the stock market is down...General Motors stocks hit a historic low... Circuit City stock loses 85% of its value since January... consumers are driving less and paying more... American Airlines lays off more workers due to flights restrictions because of higher fuel prices... and one Chrysler working being interviewed after a plant closing said he is heading directly from the unemployment line to the mortgage crisis line... Did any order dominoes? You are paying a lot more for gasoline than you see on the pump.
One out of ten jobs in the United States is auto manufacturing related -- Alliance of Automobile Manufacturers.
Sky-High Oil Will Make U.S. Go Broke: Stratospheric crude oil prices precipitated by speculation are wreaking havoc on the U.S. economy. The U.S. consumes 21 million barrels of per day. For every $60 per barrel increase in the price of oil, the U.S. spends an additional $450 billion annually, or $38 billion per month, on oil. At $135 per barrel, the U.S. spends $1.0 trillion per year on oil, which is equal to 15% of the $6.8 trillion in take-home pay of everyone who pays taxes. Charles Biderman, Forbes, June 23, 2008
Oil Imports Account for Over Half of the Nation's Trade Deficit
In the last 10 years, the total of U.S. trade deficits has exceeded $1 trillion. This persistent pattern has contributed significantly to declining real wages and to increasing job insecurity. Most of its victims are middle-income working people. It is estimated that the manufactured goods trade deficit represents a loss of some three million American jobs. AFL-CIO Executive Council.
Why high oil prices make it hurt so bad: As for the price of oil, when it goes up and stays up, it has a negative effect on the entire economy because oil goes into making virtually everything, including steel, aluminum, plastics, rubber, fabrics, transportation … and food. People don't generally associate food and petroleum, but petroleum is used to make fertilizers and run the vehicles used for planting and harvesting, storage and processing, and the trip to market and for the final sale from the freezer in the store to the freezer in a home. And food prices affect everyone around the world. Bob Lutz, General Motors' vice chairman, global product development, Newsweek
The Perfect Crude Oil Import Storm: Your 401K and Savings Account, Your House Value, The War Tax, Deficits, Trade, the Economy, and Your Job!
Your Oil Tax is On the Rise
All of the pollsters this election season are pointing to the economy and all of the economists and economic indicators are pointing to crude oil prices and imports. The interconnection of energy oil dependent polices and the negative impacts they have on the economy intersect at your wallet. Rising oil prices act like a tax on consumers. Money spent by consumers on higher oil prices is not spent on other goods and services. So, profits and sales in many other businesses are squeezed. The lack of competition in the fuel market is taxing the taxpayer and the economy.
America is in a hole and it's getting deeper every day. We import 70% of our oil at a cost of $700 billion a year - four times the annual cost of the Iraq war. I've been an oil man all my life, but this is one emergency we can't drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil. It is the biggest transfer of wealth in history; Americans alone import 3.6 billion barrels of oil a year. In 2003, the tab for all that goo was only about $70 billion. At today's oil price, it is pushing half a trillion. Boone Pickens. The Pickens Plan (it will cost you your email address).
The price of oil rising from $80 to $100 a barrel is like adding $150 billion in taxes - Kenneth Rogoff, Harvard economist.
Meanwhile, the surging oil prices are acting like a tax increase—except the proceeds don't go to our friendly governments but to big energy companies and overseas producers. And there is lots of money involved. When gasoline was selling for closer to $1 at the start of the decade, American households were spending some $300 billion each year to drive their cars and heat and cool their homes. They are now spending some $700 billion a year on energy. Household gasoline bills in the coming year will rise about $100 billion—even if national gas prices stay near $4 a gallon through 2008. Mark Zandi, chief economist of Moody's Economy.com
Households will spend about $90 billion more this year on gasoline if fuel prices remain at current levels, according to a forecast by economists at Credit Suisse Holdings in New York. That will consume about 80 percent of the more than $110 billion in rebate checks the government is sending out.
Your Cost of the Iraq War: How Much Do you Attribute to Oil?
This is blog entry is not intended to question the value of or need for the war in Iraq. This is simply information about the cost of the war. Most analysts agree the War in Iraq has cost the United States somewhere between one to three trillion dollars. While some people will not agree the war is all about oil, the vast majority of Americans would now agree this war has something to do with oil. Therefore, consumers should attribute some portion of their tax bill and their gasoline bill to paying for the free flow of the world's oil. Protecting oil supplies is critically important, but ignoring the cost of that protection and not attributing some portion to the price of gasoline is misleading.
Considering an estimate of $500 billion for the War in Iraq, here is your personal economic impact: $4,681 per household, or $1,721 per person, or a cost to the U.S. of $341.4 million per day.
The flow of blood may be ebbing, but the flood of money into the Iraq war is steadily rising, new analysis show. In 2008, its sixth year, the war will cost approximately $12 billion a month, triple the "burn" rate of its earliest years, Nobel Prize-winning economist Joseph E. Stiglitz and co-author Linda J. Bilmes report in a new book. Beyond 2008, working with "best-case" and "realistic-moderate" scenarios, they project the Iraq and Afghan wars, including long-term U.S. military occupations of those countries, will cost the U.S. budget between $1.7 trillion and $2.7 trillion or more by 2017. Associated Press Sunday March 9, 2008.
A Liberal Cost Estimate of the Taxpayer's Bill for the Iraq War
Enroll 58,000 children in Head Start.
Put 8,900 police officers on the street.
Provide health insurance to 329,200 low-income children.
Hire 10,700 Border Patrol agents.
Give Pell Grants to 163,700 college students.
Provide foreclosure prevention counseling to 260,000 families.
"Another worry: This war has been particularly hard on the economy because it led to a spike in oil prices. Before the 2003 invasion, oil cost less than $25 a barrel and futures markets expected it to remain around there. (Yes, China and India were growing by leaps and bounds, but cheap supplies from the Middle East were expected to meet their demands.) The war changed that equation, and oil prices recently topped $100 per barrel.-- The Iraq War Will Cost Us $3 Trillion, and Much More, Linda J. Bilmes and Joseph E. Stiglitz, Washington Post Sunday, March 9, 2008; Page B01
The Cost of Oil & Your 401K and Savings Plan
Impact of Oil Prices on the Stock Market, By Omar L. Caban
Impact of oil prices on the stock market is inversely proportional. A shoot in oil prices leads to a nose dive in the stock market. And a decrease in oil price on an average leads to a higher stock market return. So, the effect of oil prices becomes predictable in the stock market. The effect is profound when the oil prices increase in the magnitude of 50% to 100% annually. The reasons being:
1. Any movement in the oil prices results in uncertainty in the stock market.
2. Higher the oil prices, higher the transportation, production and heating costs.
Say, a decrease in the oil prices by 10% in US will result in the expected return to double up on the stock market in the following month. The waves of the impact on the world market index will make its presence felt significantly. Though the stock market moves in the opposite direction with respect to oil prices, it is basically a one way traffic. The stock market returns has no impact on the crude oil prices. The entire stock market does not get equally or at the same time affected by the fluctuation in the oil prices. It is rather subtle.
The US industrial sectors that get most affected with rise in oil prices are:
1. The cyclical Services sector gets most negatively influenced. They constitute the general retailers, support services, media, entertainment, leisure, hotels and transport.
2. The sector which follows next in order is Cyclical Consumer goods. These include household goods, textiles, automobiles and parts.
3. The next negatively influenced sector is the Financials. They comprise of investment companies, banks, life, assurance, insurance, real estate, specialty and other finance.
Oil up, stocks down. Oil down, stocks up...
Oil and the Stock Markets, by John Brasher, CallWriter Publisher
As mentioned earlier, the general rule has been that increased oil prices drive the stock markets down. This is the conventional wisdom. But is it true? (Yes...) I want to point out a very interesting paper entitled Striking Oil: Another Puzzle, issued in November of 2003 by the Rotterdam School of Economics. The Striking Oil paper set out to address the question whether oil prices might forecast future stock market returns. Basing their conclusions on stock market data of 48 countries, a world market index and price series of several types of oil, the authors concluded that oil prices do indeed forecast stock market returns, stating that,
"We find that changes in oil prices strongly predict future stock market returns in many countries in the world... The impact of this predictability on stock returns tends to be large." The authors also noted that "Stock returns tend to be lower after oil price increases and higher if the oil price falls in the previous month." For the developed markets the study found that the change in oil price significantly predicts future market returns in 12 of the 18 developed markets. In all countries the effect is negative.
In other words, the stock market tends to move in the opposite direction to oil prices. Oil up, stocks down. Oil down, stocks up. This is a one-way street, however; stock market returns do not drive crude oil prices. So you can expect oil to be the primary force driving the stock markets until further notice. But the effects of oil prices are more subtle than that. All sectors are not affected equally, or at the same time. Here is what the authors found as to U.S. sectors when oil prices rise:
Most negatively influenced: Cyclical Services.
Next most negatively influenced: Cyclical Consumer Goods.
Third most negatively influenced: Financials.
Which sector is your job in?
Roughly $7 trillion has been wiped from world stock markets since the beginning of the year amid fears of a severe US economic recession and financial institutions reporting more mega losses. The market crisis will preoccupy us well into 2008. German Finance Minister Peer Steinbrueck on February 15, 2008.
Your House, Mortgage and the Cost of Oil: Some saw it coming
The price of imported oil in the US doubled between summer 2003 and summer 2005, reducing consumer's purchasing power by more than 1 per cent of gross domestic product. Nevertheless, the economic slowdown that was widely expected never occurred. Consumers kept spending and businesses kept investing. ... The continued strong growth contrasts sharply with the economic weakness that occurred after almost every previous significant rise in the oil price. How do we explain this remarkable difference?
The key to the economy's strength in 2004 and 2005 was that household saving declined dramatically while the price of oil rose....The primary cause of this dramatic shift was the fall in interest rates and the resulting rise in mortgage refinancing. Homeowners who refinanced their mortgages took out cash and reduced their monthly payments at the same time. Much of the cash obtained by refinancing was spent on consumer durables, home improvements and the like.
The powerful effect of mortgage refinancing on consumer spending was a very happy coincidence for the American economy at a time when oil prices were depressing consumer's real incomes. If oil prices were to rise again in 2006 or 2007, the adverse effect on consumer's real incomes would not be offset by increased mortgage refinancing. Mortgage refinancing has now peaked and is declining. The Federal Reserve is raising interest rates again to counter the inflationary pressures that remain from the rise in energy costs. And individuals no longer have the large amounts of household equity against which to borrow. Harvard professor Martin Feldstein
The Lost Economic Opportunity is Even Worse
The Energy Independence and Security Act of 2007 and the renewable fuel standard set the foundation in place to reverse this national and personal economic security threat. If the goals of this legislation are accomplished we can begin to return to our roots of economic freedom and choice in a free marketplace. Think of your economic security and marketplace freedoms when considering purchasing an FFV and using E85. There is a lot more value than just the price you see on the pump.
Iowa's ethanol and biodiesel industries pump $12.7 billion a year into the state's economy
What would you have done with the few trillion dollars lost to our reliance on crude oil and gasoline and the other few trillions of dollars the nation lost that could have been realized by economic stimulation generated from the production of new domestic renewable transportation fuels like ethanol and biofuels?
Please Note: We could never agree with everything in it's entirety in the research we provide through the information and links provided in the Clean Fuels Blog. Our goal is to find information that provides you with some new context and perspectives with regard to the nation's energy situation and it's impact on you. Our intent is to help your research efforts so you can make a more informed decision about your vehicle and fuel choices.
The Key to Cheaper Gasoline and Renewable Fuels May be in Your Driveway
- Flexible Fuel Vehicle Club of America sets out to organize and encourage drivers of ethanol fueled cars -
Washington DC, July 31, 2008: The Clean Fuels Foundation, through its Ethanol Across America education campaign helped launch the Flexible Fuel Vehicle Club of America today at the 11th Annual Renewable Energy and Energy Efficiency Expo and Forum on Capitol Hill.
The following is my speech at the Sustainable Energy Coalition Expo. I would appreciate your comments.
This is a sign of things to come.
I can not count how many times in the past 30 years I have heard some people say consumers are not willing to do anything or pay anymore to help develop alternative fuels. On the other hand, I have had thousands of conversations with other people that have said give me a choice and I can not image I would not be willing to help myself.
So, I got tired of hearing myself complain that some were wrong and others were right, so I helped start the Flexible Fuel Vehicle Club of America.
This opportunity to rally flexible fuel vehicle (FFV) owners would not have been possible without the tireless work of many national renewable energy organizations and hundreds of industry and government leaders (link) that made the national renewable fuel standard (RFS) a reality and the Energy Independence and Security Act of 2007 a law. I am just lucky enough to be able to serve as the Club President and help myself get some more E85 stations for my FFV Club minivan. When using E85, I get about 100 miles per gallon of gasoline (MPGG), and that is what the Flexible Fuel Vehicle Club of America is all about.
The Flexible Fuel Vehicle Club has already received support and encouragement from some of the FFV makers, policy makers, our Congressional board of advisors, and other industry and government leaders interested in developing ethanol to its fullest potential. Today a bipartisan effort led by Congressman Lee Terry (R-NE) and Jay Inslee (D-WA) helped introduce a Resolution in Congress that recognizes the importance of FFVs and the role FFV owners can play in helping reduce oil imports and reduce the price of gasoline.
While the new energy bill and ethanol are not perfect today, I believe the majority of Americans have had their fill and reached their tipping point with status quo. Even in its current development stage -- more ethanol is better than more crude oil imports and the -- gasoline only -- choice at the pump. Now is the time to put the baton into the hands of the concerned citizen in this marathon race toward domestically produced renewable fuels. They deserve vehicle and fuel choice.
The Flexible Fuel Vehicle Club of America (FFV Club or Flex Fuel Club) is a web-based, membership driven, new community-of-interest. It is a consumer group. The Flexible Fuel Vehicle Club of America mission is very focused -- FFV owner awareness and increased E85 utilization. The objective is to locate and educate the existing and new FFV owners and then motivate them to use higher blends of ethanol. Using higher blends of ethanol allows FFV owners to play a direct role in protecting the progress the nation has achieved by developing a renewable fuel standard (RFS). Demand from this growing group will help the nation jump the E10 blend wall. This will make room for new ethanol production technologies like cellulosic ethanol, and more efficient FFVs that will include hybrid and plug-in technologies. Then we can fight over getting 500 MPGG.
One objective of the FFV Club is to transform the traditional one way flow of clean energy education and outreach and instead corral, nurture, harness, and activate the power of millions of existing and future FFV owners. The FFV Club will help FFV owners understand their Flex Fuel option will empower them to have a direct impact on improving the environment plus enhancing energy and national security plus protecting their personal health and economic well being. I believe these core values are much more powerful, popular, and just as noble a cause as being an environmentalist. This is a very distinct objective that is unique and different from other ethanol stakeholder organizations â yet it will also compliment and support many of their goals.
The Flexible Fuel Vehicle Club of America message will help move the ethanol/FFV/high blend debate from one of special interest politics and market protection to one of self-interest and preservation of our quality of life. The opportunity at hand is focused, exciting, and hopeful. The FFV Club will empower and deputize its members to carry positive messages to other consumers by providing them with public recognition, acknowledgement of their role-model example of active citizenship, useful and repeatable knowledge, and a pride of purpose that one can possess by simply owning an FFV -- and knowing why. Capturing just a small percentage of FFV owners and other biofuel enthusiasts will create a group that will be heard and respected, just like other environmental and consumer groups with similar missions.
Similar to environmental and consumer groups, benefits of an FFV Club membership include getting new knowledge about issues, the use of the information/research on the website, a newsletter, blog commentaries about current events, vehicle decals, the opportunity to purchase or receive promotional and/or reward items, and to be eligible for discounts on products and services that are energy and environmentally friendly. The enrollment and continuing activist plan is to have members be involved with the FFV Club E3powerment program. This program focuses on empowering consumers, with the use of their FFVs and E85 purchases, to immediately and directly do something about the three critical E's facing them, their families, and their country: Economic development, Energy security, and Environmental improvement.
So what's in it for you?
According to Merrill Lynch the use of ethanol has already lowered the price of gasoline and crude oil by 15%. That means consumers are empowered today to:
- Lower the price of their gasoline by 50 cents per gallon and that is saving the world $619 billion on their crude oil bill, and therefore
- Lower the price of food and everything else with lower oil prices, and therefore
- Continue to lower the price of gasoline and crude oil imports simply by using more domestic renewable fuels, and therefore
- Help support our troops by lowering the strategic value of crude oil imports, and therefore
- Helping to create over 200,000 jobs to help sustain families, and therefore
- Help lower greenhouse gases, and then...wait there's more...
- Stimulate the economy with billions of dollars in investment in new technologies like cellulose, and then help to
- Lower taxes that would have been used to pay farmers not to be productive, and then help to
- Protect the value of farm land so famers can increase the amount of food and feed to support the world's growing population.
It's time for consumers to help themselves to what they asked for, and what our forefathers fought for -- independence.
True independence is not just about energy, it is about the freedom of choice and economic freedom. FFVs, ethanol, E85, and the national renewable fuel standard have put consumers back in the drivers seat. There are proven benefits to ethanol production and the increased E85 utilization in FFVs. The information can be validated with third party data sources that include Merrill Lynch, DOE, USDA, National Labs and other studies. If the nation is going to continue to move forward in the direction of biofuels and receive more public and policy benefits FFV owners need to step forward and be acknowledged for their existing and future contribution to the country and show the FFV automakers makers that their billions of dollars invested into the production of their vehicle was worth it.
Why are FFV Club Members so important?
Why do FFVs owners and new FFV buyers hold the key to your energy future?
The national renewable fuel standard (RFS) was expanded in the Energy Independence and Security Act of 2007 to require gasoline refiners/blenders to use 36 billion gallons of renewable fuels by 2022.
By the end of 2008 United States will be able to produce and use about 10 billion gallons of ethanol. It is unlikely gasoline refiners can blend ethanol at a 10% level into every gallon of the 150 billion gallons of gasoline sold in the United States. Therefore only 12-13 billion gallons of ethanol can be consumed each year at a 10% volume level. That means FFVs owners will soon play a critical role in the growth and continued success of the national renewable fuel standard and the federal ethanol program. The continued success of this law and standard is critical to the continued evolution of new and advanced vehicle and fuel technologies. If we do not get this one right, it may take a long time to prove again that Americans care enough to do something.
Why do you and Flex Fuel Club members want the U.S. to get past 15 billion gallons of ethanol production?
The first 8 billion gallons of ethanol blended into gasoline already saved you 50 cents per gallon on gasoline and saved the world $619 billion on crude oil just this year.
The Energy Independence and Security Act of 2007 is not perfect, but it does capitalize on the ability of renewable fuels to reduce foreign oil dependence and greenhouse gas emissions and provide meaningful economic opportunity across the country. This places America firmly on a path towards even greater energy stability and sustainability and the freedom of vehicle and fuel choice.
According to a January 2008 study, the economic impact of a 36 billion gallon RFS will:
- Add more than $1.7 trillion to the Gross Domestic Product between 2008 and 2022;
- Generate an additional $436 billion of household income for all Americans during the same time period;
- Support the creation of as many as 1.1 million new jobs in all sectors of the economy; and,
- Generate $209 billion in new Federal tax receipts.
You could hold the FFV key to your economic, environmental and energy security treasure chest. Someone needs to use more ethanol in their car to protect this landmark opportunity and historic legislation. Is it going to be you? Are you going to change the world or continue hoping someone else will? Are you tired of just complaining? JOIN THE CLUB! The Flexible Fuel Vehicle Club of America.
Do you have an FFV? You may hold the key to the answer in your driveway.
Fair and Balanced: Ethanol/biofuels production has a small impact on food prices and lowers gasoline prices
“The answers that I have received from the Departments of Agriculture and Energy indicate that U.S. biofuels policy explains between 4 and 5 percent of the 45 percent global increase in food prices in the last year. At the same time, biofuels have increased the U.S. fuel supply and are reducing the prices that Americans pay at the gas pump by between 20 and 35 cents per gallon." -- Opening statement of Senate Committee on Energy and Natural Resources Committee Chairman Senator Jeff Bingaman, Hearing on the Relationship Between U.S. Renewable Fuels Policy, Food Prices, June 12, 2008
"It is clear, however, that biofuels are already moderating gasoline prices. That impact is likely to grow substantially as more biofuels come to market. Our preliminary analysis further suggests that current biofuels-related feedstock demand plays only a small role in global food supply and pricing. Moreover, the impact of biofuels on U.S. consumers is even smaller since the farm price of commodities accounts for less than twenty percent of U.S. consumers' food costs." – In response to information requests from Senate Committee on Energy and Natural Resources from Secretary of Energy Samuel W. Bodman and Secretary of Agriculture Edward T. Schafer, June 11, 2008.
The Senate Committee on Energy and Natural Resources held a Full Committee Hearing to receive testimony on the relationship between US renewable fuels policy and food prices (SD-366) Thursday, June 12, 2008. You can View Archive Webcast or get copies of the testimony at the end of this commentary.
The hearing was in response to a letter from the Committee (Download letter_to_bodman_and_shafer_re_biofuels_05_12_08.pdf) to the Secretaries of Agriculture and Energy asking them to quantity the impacts of the federal biofuels (biodiesel and ethanol) program on consumer food prices. The complete response from DOE Secretary Bodman and USDA Secretary Schafer can be downloaded in a PDF here (Download Chairman_Bingaman_Signed_w_Enclosure.pdf) and they are summarized in Chairman Bingaman’s opening statement below.
However, there was one missing piece to yesterday’s effort to investigate the price increase in food puzzle – what is the impact of oil price increases on food prices and the profitability of grocery manufacturers? Round II -- Food vs. Fuel vs. Oil?
Relationship Between U.S. Renewable Fuels Policy, Food Prices
“Thank you all for coming today to discuss our nation’s biofuels policy, and how that policy is affecting domestic and global food prices. The recent increase in commodity prices, with food and fuel prices at historic highs, highlights the importance of getting our policies right. I called today’s hearing in an effort to help us do just that: to make sure we are getting our biofuels policy right.
Last month, I asked the Secretaries of Agriculture and Energy a series of questions about the impact of the Renewable Fuel Standard on domestic and international food and fuel prices. Those questions were intended to establish some of the facts on this issue, so that we could base today’s discussion on facts, rather than the agenda-driven calculations that we see more often than not.
The answers that I have received from the Departments of Agriculture and Energy indicate that U.S. biofuels policy explains between 4 and 5 percent of the 45 percent global increase in food prices in the last year. At the same time, biofuels have increased the U.S. fuel supply and are reducing the prices that Americans pay at the gas pump by between 20 and 35 cents per gallon.
As we continue on this path toward expanding our alternatives to gasoline and reducing its cost, we obviously need to find a way to eliminate any impact on the global food prices. The intent of the Renewable Fuel Standard that was enacted in December 2007 is to move beyond our current technologies, to technologies that have no implications for our food supply.
I think the critics of our current biofuels policy do not question the validity of our end goal of a healthy second-generation biofuels industry, but rather question our path for arriving at that end goal. Our current path does require increased use of existing biofuels, including corn ethanol and soy-based biodiesel.
I am concerned that altering that path now would not only be unfair to the industry that is responding to the government policies that have already been put in place, but also would have negative implications for second-generation fuels. It is a fact that many of the companies that are expected to be next-generation biofuel industry leaders, especially for cellulosic ethanol, are current industry leaders in corn ethanol production. To hurt those companies’ bottom lines now would endanger their investments in expanding their business to include next-generation production.
I also suspect that investment in other kinds of next-generation technology would suffer, as investors would feel less confident of Congress’s commitment to its biofuels policies. I believe that many next-generation fuels hold great promise for further diversifying our fuel supply. As we diversify away from biofuel feedstocks that compete with our grain supply, we also diversify the geographic production areas beyond the current base in the Midwest.
In my home state of New Mexico, which has no corn ethanol production, limited sorghum-ethanol production, and very small amounts of biodiesel production, is an example of how the geography of biofuels production can change. We are hopeful that we will be home to the country’s first biobutanol plant, which could be located near Portales, New Mexico, and could use sweet sorghum as a feedstock. We also understand that New Mexico is one of the most promising states in the U.S. for large-scale algae production, which we will hear more about in today’s hearing. We need the market certainty that comes with the existing renewable fuels mandate in order to realize the benefits of this next-generation industry.
At the same time, I do think we need to be mindful of any unintended consequences of our biofuels policy. No one wants our biofuels policy to increase the prices that Americans are paying at the grocery store – although I think we can agree that this domestic price increase is to some degree offset by the savings we’re seeing at the fuel pump. But we must also ensure that our policies, including but not limited to our biofuels policies, are not negatively impacting the world’s poor, who are most vulnerable to food price increases. I take seriously the United Nations call for further study on the topic of biofuels, and look forward to constructive thoughts on how we can create a more sustainable global biofuels industry." – Opening statement of Senate Committee on Energy and Natural Resources Committee Chairman Senator Jeff Bingaman, June 12, 2008.
Response from Secretary of Energy Samuel W. Bodman and Secretary of Agriculture Edward T. Schafer (excerpts from the letter are below).
"The food and fuel pricing issues about which you have raised questions are complex. We would again caution, therefore, against hasty judgments driven by highly questionable, agenda-driven calculations, some of which have been featured prominently in the popular press. Many analysts both within and outside of government are currently working to model these questions, and the one certainty is that our data will improve substantially in the months ahead.
Our shared vision is a sustainable domestic biofuels industry centered in rural America. To that end, both our agencies as well as the Federal Biomass Research and Development Board, co-chaired by the Department of Agriculture's Under Secretary for Rural Development Tom Dorr and the Department of Energy's Assistant Secretary of Energy Efficiency and Renewable Energy Andy Karsner, are collaborating to build an integrated biofuels action plan. In order to achieve these goals, continued private sector investment is needed. Creating a stable, predictable policy environment for investors, as Congress did with the expanded Renewable Fuels Standard, is essential to scaling our biofuels use and deploying next-generation biofuels. Efforts to repeal that mandate would hinder progress toward reducing our dependence on imported oil and reducing greenhouse gas emissions.
At the same time, our agencies are committed to collecting and presenting accurate data, projecting potential impacts, and initiating the necessary and appropriate actions to ensure the sustainable growth of biofuels. To that end, both of our agencies have significantly ramped up our analytical efforts to ensure that we proceed with caution but also determination. Our agencies will continue to work closely with the Environmental Protection Agency as we undertake our respective responsibilities under Title II of the Energy Independence and Security Act of 2007."
The complete answers to the six questions below are contained in the full DOE/USDA response which is available in PDF download here Download answers_from_doe_and_usda.pdf .
Question 1: How has increased U.S. ethanol and biodiesel consumption affected domestic agriculture, and domestic food prices?
Question 2: Has increased ethanol and biodiesel consumption in the United States contributed to increased global prices for agricultural goods? And if so, to what extent?
Question 3: How might increased biodiesel consumption, as required by EISA beginning in 2009, affect domestic and international food prices?
Question 4: How has increased ethanol and biodiesel consumption affected gasoline and diesel prices?
Question 5: What prices levels for gasoline and diesel fuel would be expected if biofuels were removed from the market, both in the short-and long-term?
Question 6: What effects are biofuels expected to have on gasoline and diesel markets as consumption increases to meet the targets laid out in EISA?
Testimony of Witnesses
The Honorable Alexander Karsner - Assistant Secretary for Energy Efficiency and Renewable Energy, U.S. Department of Energy --- Dr. Joseph Glauber - Chief Economist, U.S. Department of Agriculture --- Dr. Joe Outlaw - Co-Director of the Agricultural and Food Policy Center, Texas A&M University (not provided) --- Dr. Joachim von Braun - Director General, International Food Policy Research Institute --- Dr. Jason Pyle - Chief Executive Office, Sapphire Energy --- Mr. Jack Huttner - Vice President of Biorefinery Business Development, Genencor.
The addition of ethanol into the U.S. gasoline pool lowers gasoline and crude oil prices by 15% -- therefore -- ethanol is actually lowering the price of food too.
“…the billions of gallons of ethanol are moderating oil prices by "easing energy bottlenecks, Oil prices would be at least 15% higher than they are, if not for today's output of ethanol.” -- Francisco Blanch, head of global commodity research at Merrill Lynch.
For decades proponents of alternative fuels and ethanol have claimed “in a free market adding an additional supply of finished product should lower gasoline prices.” In addition, the federal government tax incentive (i.e., a lower tax on cleaner domestic fuels) should also insure ethanol could be sold to oil companies that claim the tax incentive at a lower price than gasoline – and possibly pass it along to the consumers. One out of two is not bad.
Based on the Merrill Lynch analysis, lowering the price of world crude oil by 15% is worth $19.50 per barrel when the record was $130 per barrel. With world oil demand estimated at 87 million barrels per day – that is a savings to world oil users of $619 billion. That’s a lot of bread in any currency!
This Memorial Day 2008, after thirty years of debate, we have 33 multi-million dollar IndyCars fueled with 100% ethanol racing around the track, and private and government analysts are validating and accepting the fact that ethanol supplies are helping to lower gasoline and crude oil prices, and reduce crude oil imports.
Do you want to help lower gasoline and food prices?
Ladies and gentlemen -- Start Your Flexible Fuel Vehicle Engines!!
Biofuels are playing "a critical role" in satisfying world demand. Without them, "it would be much more difficult to balance global oil markets," -- Fatih Birol, chief economist of the Paris-based International Energy Agency.
Ethanol Lowers Gasoline and Crude Oil Prices
Lowering your $4.00 per gallon gasoline price by 15% (Merrill Lynch) is worth 60 cents per gallon. Iowa State says in some regions its 40 cents per gallon lower and some others estimate the savings to be about 10 cents per gallon. You pick, you do the math, you save money. If you estimate that the average motorist drives 12,000 miles per year, and gets 22 miles per gallon, the savings is times 500 gallons per year -- and if you (and your family) drive a little more, you can use 1,000 gallons times the savings. Any way you calculate it -- ethanol saves you dough.
Using pooled regional time-series data and panel data estimation, we quantify the impact of monthly ethanol production on monthly retail regular gasoline prices. This analysis suggests that the growth in ethanol production has caused retail gasoline prices to be $0.29 to $0.40 per gallon lower than would otherwise have been the case. The analysis shows that the negative impact of ethanol on gasoline prices varies considerably across regions. The Midwest region has the biggest impact, at $0.39/gallon, while the Rocky Mountain region had the smallest impact, at $0.17/gallon. The results also indicate that ethanol production has significantly reduced the profit margin of the oil refinery industry. The results are robust with respect to alternative model specifications. Iowa State University
A study released this month confirms Missouri drivers are saving money at the pump thanks to ethanol. Research by John Urbanchuk, of the economic consulting service LECG, concludes that drivers in Missouri are expected to save nearly 10 cents per gallon due to the 10 percent ethanol standard that went into effect this year in the state. Extrapolated to reflect that Missouri drivers used over 2.9 billion gallons of gasoline in 2007, the research means statewide savings to consumers of more than $285 million in 2008.
American Farm Bureau Federation Economist: Without Ethanol Blending, Fuel Could Cost Ten Cents More Per Gallon
The high price of oil and gas is driving up the cost of nearly all consumer products, but the ethanol industry helps keep the Nebraska economy strong amidst nationwide inflation. A recent study by Creighton University economist Ernie Goss found that the ethanol industry and higher ag commodity prices have boosted the Midwest economy while much of the country faces an impending recession. The production and use of ethanol strengthens Nebraska’s economy while lowering fuel costs. Ethanol blended fuels saved Nebraska consumers more than $70 million during 2007.
Ethanol Lowers Crude Oil Imports
The trend [in lower crude oil imports] was set to continue as people adjusted to high oil prices and the impact of the Energy Independence and Security Act, which became law in December 2007. The 1970s is the last time we saw any significant decline in net import dependency in the US. It shows that markets do work, policy changes do work, technology does work. The EIA expects the energy act to help boost biofuel production from 8bn gallons this year to at least 32bn by 2030, while prompting a 40 per cent efficiency improvement in new cars from 2020. -- Guy Caruso, head of the US Energy Information Administration
Therefore…Ethanol Lowers Food Prices
As detailed in an earlier Clean Fuels Blog April 21, 2008 The Missing Link in the Food vs. Fuel Fight
If ethanol is lowering the price of gasoline consumers use to get to the store, and it is reducing the price of petroleum products farmers use to produce food, and it is reducing the cost of diesel that distributors rely on to get food to market, and it is reducing the cost of energy in the store -- then ethanol has to be lowering food prices. So why are food prices increasing?
Has ethanol contributed to the surge in food prices? Not very much, concludes a group of agricultural economists at Texas A&M University in an April 10, 2008 report from the school's Agricultural & Food Policy Center. "The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs," the researchers conclude, not biofuels.
Food vs. fuel a global myth, chicagotribune.com, By Robert Zubrin and Gal Luft, May 6, 2008
In recent weeks, a flood of reports and statements has claimed that the world's biofuel programs—in particular the U.S. corn ethanol effort—is starving poor people around the globe. Even the UN's special reporter for the Right to Food decried biofuel production as "a crime against humanity." It seems so obvious: With so much corn being turned into fuel, food shortages must inevitably result, and biofuel programs must be the cause. However, that's completely untrue.
Here are the facts. In the last five years, despite the nearly threefold growth of the corn ethanol industry (or actually because of it), the U.S. corn crop grew by 35 percent, the production of distillers grain (a high-value animal feed made from the protein saved from the corn used for ethanol) quadrupled and the net corn food and feed product of the U.S. increased 26 percent. Contrary to claims that farmers have cut other crops to grow more corn, U.S. soybean plantings this year are expected to be up 18 percent and wheat plantings up 6 percent. U.S. farm exports are up 23 percent. America is clearly doing its share in feeding the world.
Agriculture is not a zero-sum game. There are 800 million acres of farmland in the U.S., and only about 30 percent of it is actually being used to grow anything. As a result of the ethanol program, the corn price received by farmers doubled over the last five years, causing a huge increase in the amount grown in terms of acreage and yield.
The increased demand for food from the hundreds of millions of people in China and India rising out of poverty and moving to a more calorie-rich diet affects the price of food the most. Second is the price of fuel. Higher fuel prices increase the cost of production, transport, wages and packaging, the main cost of retail food. For example, a $3 box of cornflakes contains 15 ounces of corn that cost 8 cents when bought from the farmer. So, farm commodity prices have almost no effect on retail prices. But the effect of oil price increases can be huge.
Which brings us to the real culprit: the Organization of the Petroleum Exporting Countries. This year, with OPEC-rigged oil prices exceeding $100 a barrel, the U.S. will pay $800 billion for its oil supply and the world as a whole will pay $3.2 trillion. These figures are both up a factor of 10 from what they were in 1999 and represent a huge regressive tax on the world economy.
Maybe by Memorial Day 2008 ethanol critics will accept and validate the fact the American capitalistic spirit and can do ingenuity can provide food, fiber, fuel and healthier economy.
Food or Fuel? Maybe We Can Have Both - Washington Post, By Warren Brown, Sunday, May 25, 2008; Page G02
Too many people are "flat out wrong" about blaming ethanol for all of the increases in food prices...and then there are others like Senator Dick Lugar (R-IN) that have a deep understanding of the multiplicity of the issues and also cares enough to share his knowledge and insights with others that are less fortunate.
Opening Statement for Hearing on Global Food Crisis
U.S. Senate Foreign Relations Committee Republican leader Dick Lugar made the following statement at today’s hearing on global food supply shortages:
I join in welcoming our witnesses to this hearing examining global food supply shortages and the U.S. response. I applaud the Administration for its announcement on May 1 that it intends to increase food and development assistance by $770 million in addition to a pending supplemental request of $350 million, and the release of $200 million from the Bill Emerson Humanitarian Trust.
The U.S. Agency for International Development, the World Food Program, and the Food and Agriculture Organization estimate that people in nearly 40 countries are now facing food shortages and potential social unrest because of the increase in food prices and the decrease in the global availability of some cereal grains.
The current crisis has developed from a complex web of factors. Expanding affluence in emerging economies like China and India has improved diets for hundreds of millions of people and led to increased global demand for food. Simultaneously, the highest oil prices on record have driven up food costs all along the farm-to-market chain. The surge in oil prices has increased transportation, packaging, and fertilizer costs; and provided the impetus for developing alternative fuels, such as ethanol. We have also experienced droughts in some food exporting countries, expanded trade barriers, a weakening of the U.S. dollar, increased commodities speculation, and market-distorting subsidies.
These factors have come together to make the current food problem particularly acute. But we should be clear that food shortages are likely to recur frequently if the United States and the global community fail to open agricultural trade and invest in agricultural productivity in the developing world.
Unfortunately, the United States and other international donors have de-emphasized assistance for rural development and agricultural productivity. In 1980, agricultural projects accounted for 30 percent of the World Bank’s lending. By 2007, they represented less than 13 percent. U.S. foreign assistance for agriculture has declined from an average of a little over $1 billion annually in the 1980s to an average of $328 million since 2000. Globally, only 4 percent of official development assistance from all donors in 2007 was allocated for agriculture. This amounts to neglect of what should be considered one of the most vital sectors in the alleviation of poverty. In fact, two new studies from the U.N. Department of Economic and Social Affairs show that funds spent in agriculture are more beneficial to economic growth than spending in other sectors. The effects of the current food situation likely would have been ameliorated if more of the world’s poor farmers had access to better technology, titled land, small loans, extension support, and accessible markets.
Beyond resources, we need a more constructive debate about biotechnology and agricultural trade. World leaders must understand that over the long term, satisfying global demand for more and better food can be achieved only by increasing yields per acre. In the 1930s, my father, Marvin Lugar, produced corn yields of approximately 40 to 50 bushels per acre. Today, the Lugar farm yields about 150 bushels per acre on the same land in Marion County, Indiana. The Green Revolution, from 1965 to 1985, saw the introduction of high yield seeds and improved agricultural techniques that resulted in a near doubling of cereal grain production per acre over 20 years. But yields may have to be doubled or tripled again.
Increasing acreage under production or ending the use of biofuels will not satisfy the growth in food demand, and these steps come with serious environmental and national security costs. We need a second green revolution that will benefit developed and developing nations alike. In the context of global food shortages, Europe has to reexamine its opposition to genetically modified seeds that have the potential to dramatically increase yields.
Global food shortages also should prompt reconsideration of the protectionist world agricultural trade system and the harmful farm subsidies of Europe and the United States. Even as we increase yields, we must scale back agriculture subsidies and trade barriers that raise prices and undercut many farmers in the developing world. These policies are distorting agricultural trade and decision-making on a global scale and preventing many potentially productive farmers in the developing world from accessing markets. In most cases, agricultural subsidies and trade barriers have no rational basis other than the protection of politically powerful constituencies.
The United States should seek commitments to double the percentage of agricultural assistance and to remove export barriers and import tariffs. We should also enhance our leadership on agriculture research by maintaining support for a U.S. created network of global research centers.
Some critics have singled out corn ethanol as the primary culprit in the food crisis. They have called on Congress to scale back, or even halt, corn ethanol production. In effect, they ask us to choose between feeding the hungry or producing biofuels. But increased demand for corn-based biofuels is just one of numerous factors that have contributed to higher food prices. Compared to last year’s 146 percent price increase for wheat and 70 percent increase for rice – neither of which is used for biofuels -- the 46 percent increase in corn was relatively modest.
While we should understand the impact of biofuels on food supplies, we must not lose sight of why our government is attempting to stimulate biofuel use. Chairman Biden and I have held at least a dozen hearings in the last few years that have highlighted the extreme national security and environmental risks of our dependence on imported oil. The United States deliberately undertook a program to develop biofuels because it is one of the best immediate responses to our acute energy vulnerability and to the problem of climate change. Cutting ethanol production now would leave us even more vulnerable to the political whims of governments that control 80 percent of world oil reserves. The enrichment of these governments obstructs many of our major foreign policy objectives, including our efforts to end the genocide in Darfur, stop Iran’s nuclear program, combat terrorism, and bring peace to the Middle East. Rather than cutting production of ethanol, we should replace the current ethanol subsidy system with an oil-price floor that will provide assurances to long-term investors in all renewables. And we should eliminate the import tariff on ethanol to admit supplies from Brazil made from sugarcane.
If corn biofuel production is curtailed, we will see additional pressure on global oil prices and a withering of the nascent biofuel distribution infrastructure. This infrastructure is essential if we are to hasten the commercialization of cellulosic technology, which promises abundant ethanol from non-food sources like switchgrass and forest wastes. Cellulosic technology has the potential to far outrun corn in the volume of ethanol produced, and it can do so at a lower cost. Wide commercialization of cellulosic ethanol would radically improve the energy outlook for rural areas all over the world.
We should remember that the world’s poor are suffering not just from high food prices, but also from the staggering effects of $120-per-barrel oil. Developing countries are more dependent on imported oil, their industries are more energy intensive, and they use energy less efficiently. Fertilizer and fuel for agriculture machinery are dramatically more expensive. Without a diversification of energy supplies that emphasizes environmentally friendly options, the national incomes of energy poor nations will remain depressed, with negative consequences for stability, development, disease eradication, and nutrition.
Senator Lugar is also the Co-chairman of the Clean Fuels Foundation's Ethanol Across America education campaign.