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Posts Tagged ‘Canadian crude’

Help Secure America’s Energy Future! The U.S. Department of State Needs to Hear from You!

Tuesday, June 8th, 2010

As issues related to energy and climate continue to be debated in the nation’s capital, policymakers would do well to keep top-of-mind the importance of reliable, affordable resources from Canada Given the 2.5 million barrels of petroleum that Canada sends our way each and every day, our neighbors to the north clearly play a unique role for the U.S. as our closest, strategic trading partner in the world.  In fact, every barrel of crude oil the United States imports from Canada is one less barrel being purchased from people and places in the world whose interests don’t align with ours.

Since IHS Cambridge Energy Research Associates (CERA) recently released a report highlighting that Canadian oil sands production is expected to grow from 1.34 million barrels a day to between 3.1 million and 5.7 million barrels a day by 2030  (which could make up as much as 36 percent of United States oil imports by 2030), it is essential that we have the infrastructure in place to handle those volumes.

To build this needed expansion, Consumer Energy Alliance supports the proposed TransCanada Keystone XL pipeline project and the recently released U.S. State Department’s  Draft Environmental Impact Statement (DEIS) – a statement that confirms the delivery of secure, affordable supplies of Canadian energy to American consumers can be done without bringing harm to our environment. But wait: Don’t tell us you missed your chance to weigh-in on the proposed Keystone pipeline with Secretary Clinton? The deadline, after all, was June 1. Or at least it was. Good news is, this week it was announced the deadline will be extended to June 16, 2010 – and CEA is asking for your help to communicate your support for the project to the U.S. State Department.

Securing stable and affordable energy from our North Aerican allies through projects such as the Keystone Pipeline is in our national interest. While a final decision by the State Department has not been made on the Keystone Pipeline, what we’ve seen so far portends positive news for American consumers. And here’s why:

The project will consist of three new pipelines – one from Morgan, Montana to Steele City, Nebraska; another from Cushing, Oklahoma to Nederland, Texas; and the final one, from Liberty County, Texas to Moore Junction, Texas. The Keystone will initially carry 700,000 barrels of crude per day, eventually increasing to 900,000 barrels — significantly strengthening America’s energy and economic security, as well as creating thousands of family supporting jobs along the way. In fact, it is projected that during construction, Keystone XL will create more than 13,000 jobs funded with private investment, as well as additional revenue for local governments from the economic activity associated with construction and from pipeline property taxes.

Considering the economic and energy security benefits of Canada’s vital resources, policymakers should continue to expand America’s access to safe, affordable energy supplies to help ensure improved energy security and stable prices for consumers.

However, as CEA’s Michael Whatley recently mentioned at the Center for North American Energy Security’s energy summit, under a Low-Carbon Fuel Standard (LCFS), Canada would intentionally be singled out for exclusion. As a result, a nationwide LCFS would shut down projects like the Keystone XL and Alberta Clipper altogether – jeopardizing thousands of jobs and billions in economic activity.

Despite the State Department’s positive draft decision on the proposed Keystone XL pipeline, CEA’s grassroots supporters and affiliates will continue to be active contributors to the ongoing debate about commonsense energy legislation can create jobs and help drive down prices at the pump, and how misguided LCFS proposals threaten our nation’s energy security.

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CEA: Energy Not Merely “Incidental” to U.S. Relationship with Canada, But “Fundamental”

Friday, May 7th, 2010

CEA joins State Department, Premier of Alberta, Top U.S. and Canadian Energy Experts for North American Energy Security Summit at Canadian Embassy


WASHINGTON – America’s historic and ongoing partnership with Canada on issues related to energy security, affordability, and reliability is a “model” for other nations to follow, a senior advisor from the U.S. State Department said today at the Canadian Embassy – and according to Alberta premier Ed Stelmach, Canada stands ready, willing and eager to build upon that existing relationship and leverage those resources into jobs, security and opportunity on both sides of the border.

“Canada is our closest trading partner in the world, and our most important strategic ally in the hemisphere,” said Michael Whatley, vice president of Consumer Energy Alliance and a panelist at today’s summit. “Energy isn’t merely incidental to that relationship; it’s fundamental to it. No nation in the world sends more energy to the United States each day than Canada. And if we expect to have even a fighting chance at reducing our nation’s dangerous dependence on far-away, unstable energy in the future, Canadian energy will have to play an even more active role in helping us get there.”

This morning’s summit, hosted by the Center for North American Energy Security (CNAES) and held at the Canadian Embassy in Washington, D.C., drew the participation of a number of U.S. and Canadian experts on energy, the economy and the environment – addressing issues ranging from the capacity and permitting of local pipelines, to federal procurement rules for accessing oil sands-derived energy, all the way through to the political debate surrounding the Low-Carbon Fuel Standard (LCFS), a policy that would severely restrict American access to secure and affordable sources of energy from Canada.

Addressing the summit earlier today, both Stelmach and senior U.S. State Department official David Goldwyn agreed that the energy resources made available to U.S. consumers today by way of the oil sands have strengthened our nations’ existing strategic partnership and contributed to robust economic development both in Canada and here in the United States. Stelmach additionally provided summit-goers with an update on the latest technological advances being deployed to develop the oil sands in an environmentally sensitive way, technology that has helped producers reduce the sands’ carbon emissions by nearly 40 percent over the past two decades.

Added Tom Corcoran, executive director of CNAES and a former member of Congress from Illinois: “As the energy and climate change debate continues to take shape in the U.S., policymakers should remember the 2.5 million barrels of petroleum Canada sends the United States each and every day — and the unique role that Canada plays both as America’s largest fuel supplier and its closest friend.”

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State LCFS Profile: Vermont

Thursday, March 18th, 2010

State of Play: LCFS in Vermont

In December, Vermont governor Jim Douglas joined several other states in signing a Memorandum of Understanding laying out a timetable for the future implementation of an LCFS. In committing Vermont to the agreement, Gov. Douglas declared his state “a leader in limiting greenhouse gas emissions,” and suggested the imposition of an LCFS would help both “meet our environmental challenges and encourage the creation of green jobs.”

Unfortunately, the only way an LCFS can “work” as engineered is by rendering secure, affordable sources of energy off limits – thereby having the effect of significantly expanding our nation’s dependence on foreign, LCFS-favored energy to meet its daily needs and costing thousands of jobs in the process. Ironically, studies show that an LCFS may actually contribute to an increase in the concentration of carbon dioxide in the atmosphere – bringing into question the governor’s notion of using an LCFS as a means to “meet our environmental challenges.”

Production and Distribution: How/Where Does Vermont Get Its Energy?

Vermont produces no petroleum of its own, refines none, and remarkably receives none via petroleum pipelines – rendering it completely dependent on others (and their trucks) for the energy resources necessary to fuel and heat the state.

While Vermont does receive occasional fuel imports from neighboring states, the vast majority of its refined petroleum comes directly from Canada – and nowhere else. Unfortunately, under the bizarre accounting methodology of the LCFS, secure and affordable energy resources from Canada could be denied entry into U.S. markets, creating serious doubt as to where the energy resources essential to Vermont residents would come from.

Every month, nearly 150,000 barrels of heating oil cross the border from Canada into Vermont – a number that shoots past 200,000 barrels a day during the winter months. As the graph below demonstrates, home heating oil isn’t the only refined product that Vermonters receive from their northern neighbors – they also rely on Canada for diesel fuel, propane, kerosene and even asphalt.

LCFS Impact on Vermont

Vermont, according to the federal Energy Information Administration, is “vulnerable to distillate fuel oil shortages and price spikes during the winter months” in particular – a function of the fact that more than 60 percent (three-fifths) of households in the state rely on fuel oil for space heating.

Regrettably, under a system envisioned by supporters of the LCFS, home heating oil – especially supplies from Canada, from where all Vermont heating oil originates – will be rendered more expensive to purchase and more difficult to access. In Vermont’s case, it’s not entirely clear where substitute supplies could even possibly come from, given the lack of ports and pipeline infrastructure.

In 2009, Vermont secured over $36.2 million from the federal Low-Income Home Energy Assistance Program (LIHEAP) to help subsidize the purchase of these fuel resources for those in need – nearly 30 percent of that sum in the form of an emergency “contingency” payment above and beyond the original budget request. Unfortunately, under the LCFS, a large portion of this fuel oil may be targeted for elimination, adding additional strain to an already over-extended LIHEAP budget.

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CEA Comes Out Swinging in Debate Over Secure, Canadian Energy

Tuesday, February 16th, 2010

Last week, Whole Foods Market Inc. and Bed, Bath and Beyond Inc. announced plans to eliminate Canadian oil sands from its supply chain companies — in partnership with the environmental pressure group ForestEthics. The Globe and Mail reports that this action by Whole Foods is “part of its ecostrategy to cut energy costs, appeal to its environmentally aware customers, and raise the pressure on oil companies operating in northern Alberta to find cleaner ways of producing fuel.”

However, the Toronto Star reports on the reality of Whole Foods’ commitment:

The policy change is more easily said than done, given the complexities of the fuel supply chain. Whole Foods officials told the Toronto Star the company will continue to use fuels derived from Alberta tar sands “in the Rocky Mountain region because as of now there is no alternative source.

According to the Canadian Press, Whole Foods’ master plan to purge its transportation fleet of energy derived from the oil-sands appears to be focused on a single refinery in a single state – begging the question of how the company intends to apply this new policy to its remaining 288 locations spread across three countries. Also left unaddressed is how Whole Foods locations in states such as Montana, Wisconsin, Minnesota, Michigan and Illinois can possibly expect to comply with this structure – given that more than 50 percent of petroleum supplies available in these states come from Canada.

On the heels of this announcement, Michael Whatley, vice-president of Consumer Energy Alliance and a leading American expert on the oil-sands, released this statement:

“The anti-oil sands position taken by these companies fails to take into account that GHG emissions from oil sands are comparable to other U.S. crude oil imports – and continue to go lower every year,” said Whatley. “More than that, it fails to recognize that turning our backs on this secure, affordable, North American energy resource will simply allow our competitors in China and elsewhere to claim energy that would’ve otherwise come to us — rendering our country even more dependent on the Middle East for its energy.”

“These announcements send a troubling message to our closest strategic and trading ally,” Whatley added, citing our nation’s long-time partnership with Canada. “One can only assume these companies will also boycott heavy oil produced in places like California, Mexico and Venezuela – as well as crude produced in the Middle East, and then shipped over 10,000 miles to get here. Otherwise, this exercise seems fairly hypocritical in the best case, and downright disingenuous in the worst.”

Don Martin with the National Post captured the relevance of this announcement in regards to Low-Carbon Fuel Standard (LCFS) in the U.S. through his article “Alberta’s economy doesn’t fit Whole Foods ‘values,’ ” where he writes:

Now, this is not going to raise any risk to oilsand exports bound for a nation with an insatiable thirst for fossil fuels, particularly with new pipelines snaking south from northern Alberta to underutilized American refineries. South of the border, a dozen states are in the process of drafting bitumen blockades called LCFSs, low-carbon fuel standards which Gary Mar, Alberta’s man in Washington, says actually means ‘Less Competition for Saudi’ if they block the Fort McMurray motherlode.

As this announcement was made, the Wisconsin state senate conducted a hearing on Governor Doyle’s climate change legislation, where two key committee members spoke out against the inclusion of an LCFS provision in the bill. According to Wisconsin Public Radio (WPR), both Senators Jeff Plale of South Milwaukee and Bob Jauch of Poplar say they’re concerned about how an LCFS would determine what kind of oil gets used in Wisconsin.

The WPR segment reports the following:

Sen. Plale says that bothers him because it would mean the state would have to buy more oil from places like Venezuela and Saudi Arabia. And he says it would cost his district jobs. If the state goes with oil sands, the $40 million shovels that help process the sand are built in his district at either Bucyrus or Harnischfeger.

Sen. Jauch’s concerns are also local. His district includes Murphy Oil, which refines and sells the crude it buys from across the border in Canada. Jauch told members of Gov. Jim Doyle’s administration that they need to drop this plan to focus on the rest of the renewable energy bill.

Senators Jauch and Plale have been paying attention to their constituents and listening to small businesses across Wisconsin, such as the Wisconsin Manufacturers and Commerce, who recently wrote a column on the negative consequences of an LCFS.

While the fight in Wisconsin is far from over, it is clear that the threat of an LCFS still exists in the Badger State, as well as in many other states and regions, including the Mid-West, the Northeast and the Mid-Atlantic. Hopefully more state and national policymakers will take notice of Wisconsin’s debate and follow Sens. Jauch and Plale’s lead by exposing the dangerous reality of adopting LCFS proposals.

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State LCFS Profile: Washington State

Monday, February 1st, 2010

What Is a Low-Carbon Fuel Standard (LCFS)?

Sold to the public as a way to clean up our transportation fuels while cutting down on the amount of carbon dioxide emitted into the atmosphere, in reality the Low-Carbon Fuel Standard (LCFS) isn’t about making the fuels in your car any better, cleaner or more affordable than it already is – it simply seeks to render those fuels more difficult to find and even more expensive to purchase.

State of Play: LCFS in Washington State

Late last year, the Washington Policy Center made public the contents of a classified memo from Gov. Chris Gregoire’s chief of staff laying out a sophisticated plan for implementing the California LCFS model in Washington. The memo reveals that the ultimate objective of the Washington LCFS is to force regulators in Washington, D.C. to impose a similarly destructive mandate nationwide.

Two weeks after receiving that document, Gov. Gregoire issued Executive Order 09-05 – directing her cabinet to “assess whether the California low-carbon fuel standards … would best meet Washington’s greenhouse gas emissions reduction targets.” Consultants were hired and public workshops were scheduled. And even though serious questions remained unanswered (“Is the policy ahead of the science?” asks one agency PowerPoint), Washington regulators commenced with their work. The governor is expected to announce what comes next in July.

Production and Distribution: How/Where Does Washington Get Its Energy?

Washington has few fossil fuel resources, but with five refineries, the state is a principal refining hub for the Pacific Northwest. In fact, according to the Energy Information Administration, the refining capacity in Washington is about 627,850 barrels/day. While these refineries receive most of their oil each day via tanker from Alaska, declining production there means that Washington’s refineries will soon become increasingly dependent on crude imports from Canada and elsewhere. Additionally, the Trans Mountain Pipeline from Alberta supplies more than one-tenth of Washington’s crude oil.

Washington gets some of its oil from Saudi Arabia, Angola and Argentina as well, but more than 25 percent of its total haul comes from Canada – supplies that would be targeted for elimination under an LCFS. The chart below captures the relevant percentages.


LCFS Impact on Washington State

Since Washington receives more than 25 percent of its crude from Canada, a quarter of the state’s secure, affordable oil supply would be threatened under an LCFS. Also, about 10 percent of the state’s gasoline – refined in Montana, but derived from Canada’s oil sands – would also be prevented from crossing the eastern border.

How would Washingtonians make up the difference? Increasing imports from the Middle East, currently residing at nine percent of the state’s energy consumption or relying on the use of hydrogen and electric plug-in cars that will not be commercially viable for decades.

And what about jobs? Refiners in Washington directly employed 2,003 workers in 2007 (latest numbers), and indirectly supported another 20,000. They paid out more than $400 million in wages. And they sent nearly that same amount to Olympia in the form of sales, excise, occupation and sundry other taxes.

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Affordable Energy Supplies In Gov. Doyle’s Crosshairs

Friday, January 8th, 2010

Yesterday, Wisconsin Governor Jim Doyle announced a new climate change bill for the Badger state. According to the Milwauke Journal-Sentinel, Doyle’s proposal aims to “expand renewable energy, energy efficiency and open the door to new nuclear reactors.” However, Doyle neglected to mention that his climate change bill – Assembly Bill 649 – also contains a job-killing Low-Carbon Fuel Standard.

Fortunately, business groups is the state are standing up for jobs, consumers and Wisconsin families by fighting this proposal that would increase prices at the pump across the board. In fact, the state’s largest business lobbying group, the Wisconsin Manufacturers and Commerce (WMC), said that these new mandates will “increase energy costs and hurt businesses.” The Associated Press quotes Scott Manley, WMC environmental policy director:

“With 9 percent unemployment, we should be focusing on ideas to create jobs like cutting taxes, controlling spending, controlling red-tape, and clamping down on frivolous lawsuits,” said Scott Manley, director of environmental policy for WMC.

Last month, the WMC and twenty-three of the state’s largest business groups, representing contractors, home builders and retailers, sent Gov. Doyle and lawmakers a letter detailing their concerns about this proposal, including the LCFS provision. They even cited a study that found the proposal could cost more than 43,000 jobs and billions of dollars.

The groups also highlighted the negative economic impacts associated with an LCFS, which is also being considered in Congress. As you may know, an LCFS would effectively ban affordable and secure Canadian energy reserves – which currently meets nearly 50 percent of the Badger state’s energy needs. And the group lays this out to the task force in their letter:

The proposed Low Carbon Fuel Standard would increase costs to Wisconsin motorists by an additional $3.279 billion by 2020.”

Low Carbon Fuel Standard (LCFS). Another California idea that makes little sense for Wisconsin is adopting a California-type LCFS aimed at restricting our use of Canadian oil. Unlike California, Wisconsin relies on Canadian crude oil to produce the majority of our transportation fuel. By raising costs an estimated $3.3 billion for motorists, a LCFS will hit Wisconsin consumers at a time when we can least afford it.

In addition to this letter, James A. Buchen, WMC vice president, writes this in a recent Milwaukee Journal Sentinel op-ed entitled ‘Low carbon fuel tax is lose-lose’:

A Low Carbon Fuel Standard sounds harmless enough, but this misguided policy would penalize Wisconsin’s dominant source of motor fuel: Canadian crude oil. Studies have shown that such a standard will raise gas prices … an LCFS would also threaten many of our state’s family-supporting manufacturing jobs that supply the Canadian oil industry.

Because Canadian oil is located on our own continent and comes from one of our closest allies, it represents a stable and secure source of energy for Wisconsin.

Unfortunately, an LCFS would punish Canadian oil because it requires more energy to produce, refine and bring to market than “lighter” forms of crude oil. Worse yet, an LCFS would not even reduce Wisconsin greenhouse gas emissions because gasoline refined from Canadian crude oil burns just the same as other conventional sources of gasoline.

Lawmakers must consider whether it makes sense to enact an LCFS and trade friendly Canadian oil for a greater reliance on OPEC and Middle East oil.

Wisconsin consumers, their pocket books and the state’s energy security are all under attack by this LCFS scheme. That’s why it is so critical that consumers continue to send Congress and Gov. Doyle the message that an LCFS will kill American jobs, increase greenhouse gas emissions, deepen our dependence on unstable regions of the world to keep our economy moving and lead to even higher prices at the pump.

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China Says Yes, 11 NE Guvs Say No … To Secure North American Energy Supplies

Wednesday, December 30th, 2009

“Hello, Goodbye” is one of the Beatles most popular and widely recognizable songs of all time. The song begins: “You say yes, I say no. You say stop and I say go, go, go. Oh, no.”

While is this at all relevant? Well, today 11 northeastern governors signed an economically-devastating memorandum of understanding (MOU) that paves the way for a job-killing regional Low-Carbon Fuel Standard (LCFS).

The Hill’s Ben Geman reports this under the headline “Governors sign low-carbon accord”:

The governors of 11 states in the Northeast said Wednesday they would work to develop a low-carbon fuel standard to reduce greenhouse gas emissions from cars and trucks despite objections from the oil industry.

The memorandum of understanding sets an early 2011 deadline for a proposed framework to be completed, and piggybacks on California’s controversial effort to reduce the carbon footprint of transportation fuels. The governors of Connecticut, Maine, Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont signed the MOU.

As we know, however, LCFS proposals – like California’s – aims to ban our most affordable and secure fuel supplies. Today, nearly 20 percent of nation’s fuel comes from Canada, our closest and most strategic trading partner and ally. Under an LCFS, Canadian fuel supplies – because they are more energy-intensive to produce – would be effectively banned from reaching US consumers, families, seniors, manufacturers and small businesses.

The winners under an LCFS? Are you sitting down? Some of the most unstable and unfriendly regions of the world who produce oil that is lighter, and therefore favored under an LCFS.

Oh, and China — our chief competitor in the global marketplace.

Talk about irony. On the same day that 11 US governors gave their blessings to block Canadian energy from reaching consumers in their states, China and Canada formally announced an agreement to increase Canadian oil sands production and exports to China.

In a statement entitled “Industry Minister Clement Approves the Petrochina-Athabasca Oil Sands Corporation Transaction”, Tony Clement, Canada’s Minister of Industry, says this after officially inking the deal with China’s state-owned energy company, PetroChina:

“To successfully compete in a globalized economy, we need to attract international investment, which can create jobs, raise our level of competition, and develop Canada’s long-term economic prospects. Our future prosperity relies on open markets and two-way trade and investment flows that will benefit Canada and Canadians. After a thorough review of the individual merits of this transaction, I have concluded that it will benefit Canada.”

At least an LCFS would reduce greenhouse gas emissions, right? Nada. We know gas prices for consumers would spike under this scheme, and studies also find that overall global greenhouse gas emissions would increase too. Heck, even one of President Obama’s top energy gurus has said as much.

So as China says yes to secure, affordable, North American energy reserves, nearly a dozen US governors join California in saying no.

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Too Spendy: Low-Carbon Fuel Standard a Bad Deal for Wisconsin

Wednesday, December 9th, 2009

Draft LCFS bill making the rounds in Madison would cut-off majority of state’s oil supply, cost consumers $3.3 billion in higher prices at the pump

Residents of Wisconsin woke up this morning to find themselves in a government-declared state of emergency, the product of a massive storm front that continues to pound the state with a treacherous mix of snow, wind and freezing rain. But although folks might not have known it, they were in a state of emergency even before the weather came; this one, a function of that fact their treasury is slated to send out $5.7 billion more than it brings in.

But at least you can’t accuse Madison of not trying to make up the difference. Later this month, state lawmakers will reportedly introduce a Low-Carbon Fuel Standard (LCFS) plan that seeks to reduce “the carbon intensity of transportation fuels” – and make the state some money in the process.

How such a program would be administered, who would be affected, what the actual restrictions would be – the draft bill does not say. The only thing it does say? Those who violate the heretofore unspoken rule “shall forfeit not more than $5,000 for each violation.” Never mind that the “violation” isn’t actually defined – five-grand here, five-grand there, and all of a sudden that budget deficit doesn’t look so daunting after all.

So an LCFS is just another tax, right? Wisconsinites would be so lucky. In reality, it’s an indirect prohibition on accessing some of the most secure, affordable, and proximate energy resources in the hemisphere – those from Canada. Maybe that’s no big deal for folks who live in Kentucky. But for residents of the Badger State, who rely on Canada for nearly 50 percent of the oil the state consumes each day, the consequences would be profound.

A recent analysis compiled by the Wisconsin Policy Research Institute sheds some light on exactly how severe those consequences would be. According to the report:

[An LCFS] would … increases costs in Wisconsin an additional $3.279 billion by 2020.  More important, Wisconsin drivers would need to cut transportation fuel consumption by the equivalent of 227.10 million gallons of gasoline.  In other words, [an LCFS] is unattainable without contracting the use of motor vehicle transportation in Wisconsin.

For a state with a total GDP of less than $200 billion, $3.3 billion in lost output and higher energy prices isn’t something to sneeze at. But what exactly should Wisconsin residents expect to receive in return for this staggering outlay in funds? More jobs? Less dependence on foreign energy? Lower greenhouse emissions?

None of the above, we’re afraid. According to one study published this year in the American Economic Journal, global carbon emissions might actually increase under an LCFS. That’s because the energy resources Wisconsin would effectively be turning away under a state LCFS would just end up being sent to China instead – and it takes an awful lot more energy (and carbon) to ship that oil half-a-world away than it does to slide it down a pipeline to America.

Unfortunately for Wisconsin, the imposition an economy-killing LCFS might already be a fait accompli. Earlier this year, a group assembled by the Midwestern Governors Association (MGA) – to which Wisconsin is member – approved a resolution to “create a uniform, regional low-carbon fuels policy.” And although no such policy presently exists, the legislation expected to be offered in Madison this month mandates the state’s Department of Natural Resources impose a plan “consistent with the advisory group’s recommendations.” So much for leadership.

Thankfully, not everyone in Wisconsin is ready to cede key decisions regarding the state’s economic future to nameless staff from MGA. Last week, a coalition of Wisconsin manufacturers, home builders, paper producers, and retailers sent a letter to Gov. Jim Doyle’s environmental task force imploring it to take another look at LCFS ahead of a scheduled meeting on December 15. In part, the letter states:

Another California idea that makes little sense for Wisconsin is adopting a California-type LCFS aimed at restricting our use of Canadian oil. Unlike California, Wisconsin relies on Canadian crude oil to produce the majority of our transportation fuel. By raising costs an estimated $3.3 billion for motorists, a LCFS will hit Wisconsin consumers at a time when we can least afford it.We couldn’t have said it better ourselves. Unfortunately, the state of Wisconsin appears willing to forfeit its spot at the FRONT of the energy supply chain for a position squarely at the back of it – the precise effect of a policy that bans Canadian energy from crossing Wisconsin’s border.

The real question is: How does Wisconsin intend to make up the difference? In California, the solution is simple: import more oil from the Middle East. The funny thing about Middle East oil tankers, though, is that you don’t often find them sailing in Lake Winnebago. Which means Wisconsites will simply have to make do with less – all in support of a policy that won’t do a thing to reduce emissions.

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Wisconsin Consumers Soundly Reject Job-Killing LCFS Proposal

Monday, September 28th, 2009

WVU Prof. Warns an LCFS Would “Jeopardize National Security”

Wisconsin Manufacturers & Commerce (WMC), an association with “nearly 4,000 members that include both large and small manufacturers, service companies, local chambers of commerce and specialized trade associations,” released scientific public opinion research data on several energy proposals today, including a low carbon fuel standard (LCFS). Because an LCFS would increase our dependence on unstable regions of the world to fuel our economy, while also increasing prices at the pump, Badger state consumers have overwhelmingly rejected this job-killing proposal.

This from a WMC-commissioned poll released today of 500 Wisconsin voters conducted earlier this month:

A Low Carbon Fuel Standard (LCFS) is a bias against using Canadian crude oil – the dominant source of gasoline and diesel fuel for Midwest states like Wisconsin. Penalizing Canadian oil with a LCFS would likely result in fuel supply shortages and higher prices at the pump. The U.S. Congress rejected this flawed policy in the federal cap and trade legislation, as did the Minnesota Legislature. (72 percent voter opposition)

The business group has also weighed in on LCFS proposals, and the economic damage that such a regime would present. In June, the WMC wrote this about an LCFS:

Myth #3: A Low Carbon Fuel Standard Will Secure Our Energy Independence

Reality: A Low Carbon Fuel Standard Will Raise Gas Prices In Wisconsin

While many of us think of the Middle East oil sheiks when we consider crude oil production, you may be surprised to learn that the majority of crude oil entering the Wisconsin marketplace comes from Canada. Canada has the second-largest crude oil reserve in the world, and because it is located on our own continent with one of our closest allies and trading partners, it represents a stable and secure source of motor fuel in our state. We refine it right here at a facility in Superior, Wisconsin, as do our neighbors in Minnesota, Illinois and Indiana.

Unfortunately, a Low Carbon Fuel Standard (LCFS) would punish Canadian crude oil because it takes more energy to extract it from the ground. The financial penalties assessed against Canadian crude would result in significantly higher pump prices for Wisconsin motorists, as well as the possibility of supply disruptions. If that occurs, we may be forced to rely upon oil from hostile regimes and members of the OPEC cartel to replace the loss of Canadian crude oil.

If you think a LCFS will benefit ethanol production, think again. Regulators in California and the U.S. Environmental Protection Agency (EPA) have studied the lifecycle greenhouse gas emissions of crop-based ethanol, and found it to be worse than conventional gasoline from a global warming standpoint. Any way you cut it, a LCFS is a lose-lose proposition for Wisconsin because it punishes our dominant fuel source, and punishes an alternative fuel produced here in our own state.

It’s no wonder that consumers in states like Wisconsin – which receives 47 percent of its oil from Canada – squarely reject LCFS proposals.

And public opinion appears to be right in line with what academics well-versed in energy issue are saying, too. West Virginia University professor Syd S. Peng, who holds the university’s Charles E. Lawall Chair of Mining Engineering, wrote a column chock full of facts regarding LCFS proposals in Washington over the weekend. Under the headline “Energy proposal offers problems for W.Va., nation,” Peng wrote this in the Charleston Gazette:

A proposed national low-carbon fuel standard would severely restrict and possibly prevent access to these critically important resources.

Although a provision for a national low-carbon fuel standard was pulled from proposed climate legislation before the House approved the measure in June, it could pop up again. A similar measure is awaiting action in the Senate. Two states, California and Oregon, have adopted a low-carbon fuel standard, and other states might do the same. But restricting the use of some fuels and not others will require the United States to use more expensive oil, and it would jeopardize national security.

A national low-carbon fuel standard could leave the United States vulnerable to a sharp rise in oil prices resulting from an extended drop in world oil supplies.

Prof. Peng’s comments on how an LCFS would threaten our national security comes just days after Consumer Energy Alliance wrote the president’s national security advisor, Gen. James L. Jones, asking his National Security Council to take closer look at the security consequences underlying an LCFS.

If you agree with nearly 3 in 4 Wisconsin consumers and Prof. Peng that American consumers cannot afford higher prices at the pump or deeper dependence on unstable regions of the world for our energy, then send Congress a message to oppose an LCFS.

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Dispatches from the Heartland

Friday, September 4th, 2009

Sure, a nationwide Low-Carbon Fuel Standard (LCFS) imposed on high from Washington would be bad news for the entire nation – at least for the parts of the country where people heat their homes, drive to work, and, as of today, have the luxury of having a place at which to work.

But for some parts of the country, the impact could be even more severe. We’re talking in particular about regions that rely on secure, affordable supplies of Canadian crude to power their local economy. Places like Montana, for instance – where Canadian energy accounts for 93 percent of the oil Montanans use, oil that would be banned under an LCFS. Minnesota (83 percent) and Illinois (53 percent) are a few other prime examples.

Given all that, it’s nice to see media outlets in the area getting up to speed on CEA’s Secure Our Fuels campaign, and apprising their readers of the serious consequences for them and their families if a federally-imposed LCFS scheme is attached to the climate bill moving through Congress. This piece, filed by reporter Leslie Brooks Suzukamo, appeared this morning in the St. Paul Pioneer Press in Minnesota:

This week, Consumer Energy Alliance launched an ad campaign in the Dakotas, Montana and Tennessee opposing low carbon fuel standards. The group says a national low carbon fuel standard would raise the cost of gasoline by 60 cents a gallon and make Canadian [oil] sands oil so expensive that U.S. refiners would switch to lighter oil from the Middle East.

David Holt, the group’s president, said more states are talking about low carbon fuel standards. “It does nothing for the environment, and it restricts North American energy supplies and leaves us more dependent upon (overseas) imports.”

Minnesota refiners support the alliance’s campaign. “Minnesota’s access to Canada is an advantage,” said Jake Reint, spokesman for Flint Hills Refinery in Rosemount. A low carbon fuel standard “would turn that on its head, and instead of being on the front end of the pipeline, we’d be on the back end.”

Few states stand to lose more of their current energy supply under an LCFS than Minnesota. But no state stands to lose more of its future supply than South Dakota. Indeed, in the extreme southeast corner of the state, an extraordinary project is underway that will deliver the United States its first new refinery built from the ground up since the Garyville, La. facility in 1976. It’s called the Hyperion project, and estimates suggest it will generate 1,800 new (and permanent) jobs, $13.7 billion in local economic activity, and $50 million in annual state tax receipts. That is, as they say, some serious cheese.

Hyperion is scheduled to open its doors in 2014, and when it does, it’s expected to receive and process more than 400,000 barrels of secure Canadian crude a day. Naturally, a nationwide LCFS would shut that proposition down cold – in one fell swoop, canceling thousands of high-wage jobs and zeroing out billions in area economic development.

News and views related to the Hyperion project have been closely followed by the state’s largest newspaper, the Argus Leader. But no paper has covered this issue closer, better, and with more staff resources than the Sioux City Journal – whose newsroom, although based in neighboring Iowa, is only about a 20 minute drive from downtown Elk Point, S.D., home of the Hyperion project.

We’re talking about a paper that live-blogged a Hyperion-related air permit hearing from the steps of the South Dakota capitol – a six-hour drive from Sioux City. (Actually, the hearing was held in a nearby hotel conference room [capitol wasn’t big enough], but you catch what we’re saying here).

Late last night, Sioux City Journal business editor Dave Dreeszen posted CEA’s South Dakota TV ad on his website, and followed it up with this dispatch:

New environmental regulations for transportation fuels being considered in Congress would deal a “devastating” blow to U.S. projects like the proposed Hyperion Energy Center in Union County, according to a coalition of business groups.

Some majority Democrats back legislation that would lower carbon emissions in U.S. vehicles. The so-called Low-Carbon Fuel Standards, or LCFS, would unfairly penalize heavier … oil such as the crude from the Alberta, Canadian oil sands that Hyperion plans to process.

Last month, Hyperion secured a state air quality permit for its $10 billion refinery, which would process of 400,000 barrels per day.

“No permit in the world is going to save this project if LCFS is put in place,” said Chris Tucker, a spokesman for the Consumer Energy Alliance, a 125-member group that includes oil companies, retailers, trucking and transportation groups and business organizations like the U.S. Chamber of Commerce.

Sad, but true. Air, water and land permits aside, the success of the Hyperion project – and the continued health and well being of the South Dakota economy – depends on the LCFS threat being neutralized in Washington. That’s what this campaign is all about. Won’t you join us?

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