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GreenWire Reports: IHS CERA calls NESCAUM’s economic analysis of an LCFS “flawed” and “unrealistic”

Thursday, October 20th, 2011

NESCAUM’s economic analysis of a Low Carbon Fuel Standard is “flawed” and “unrealistic”, according to a new study from IHS CERA. According to IHS, the NESCAUM study uses “unreasonable, unsupportable and unattainable” assumptions to reach its conclusions regarding the availability of low carbon fuels.  Jason Plautz reported on  IHS CERA’s findings on GreenWire (subscription only). A few highlights:

“The assessment from consulting firm IHS Cambridge Energy Research Associates (CERA) calls an August analysis from the nonprofit Northeast States for Coordinated Air Use Management (NESCAUM) “flawed” and based on “unrealistic” assumptions. {The} report obtained by Greenwire says that the eventual NESCAUM conclusions about economic and environmental gain are without merit because of the original assumptions.”

“Michael Whatley, the Consumer Energy Alliance vice president, said the IHS CERA report shows that stakeholders should not take the sunny NESCAUM analysis at face value. “When it comes to economic modeling there’s an old saying: garbage in, garbage out,” Whatley said. “We hope that the policymakers in the Northeast and mid-Atlantic regions will take the time to fully evaluate NESCAUM’s assumptions before accepting the conclusions in NESCAUM’s economic analysis and jumping on the LCFS bandwagon.”

“For example, the IHS CERA study says that NESCAUM overstated the availability of cellulosic and next generation biofuels in the year 2022, citing an EPA study that cast doubt on the availability of biofuels. The study also says the NESCAUM overstated the potential price of alternative fuels and fueling infrastructure, as well as the viability of mainstream electric and natural gas vehicles.”

Read the entire article from Greenwire (subscription required) here.

 

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The Great Oil Shuffle: study says LCFS actually raises emissions

Monday, August 16th, 2010

A study shows that LCFS implementation in the United States would create more carbon emissions.  The study— conducted by the Barr Engineering Company for NPRA— directly contradicts the argument of LCFS advocates, who claim LCFS fuels are “cleaner” and emit lower quantities of greenhouse gases than Canadian crude oil.

So how many more tons of carbon emissions could be thrown into the atmosphere at the behest of LCFS advocates?  The answer:  up to 19.1 metric tons per year!

LCFS would stop American refiners from importing Canadian oil— and the U.S. would be forced to purchase petroleum from the Middle East and other crisis-ridden areas.  Our friends to the north—the Canadians— would switch and sell oil to China.  Tankers— instead of pipelines—would then be used as the primary conveyance mechanism for petroleum.

In the ensuing “great oil shuffle”— the heavy usage of tankers would create a higher amount of greenhouse gas emissions than conventional pipeline usage. Good Canadian oil formerly consumed in U.S. markets would be shipped to non-LCFS nations.  In the process, we fall on the losing end of a strategic North American energy partnership.

It’s a game of “bait and switch” and LCFS advocates need to understand one thing:  let’s keep petroleum flowing into America from our Canadian friends.  The last thing America needs is more oil from some of the world’s most unstable regions.

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Nationwide Low-Carbon Fuel Standard (LCFS) Would Send Gasoline and Diesel Prices Skyrocketing, Wipe Out Millions of American Jobs

Thursday, June 17th, 2010

Charles River report quantifies real-world impacts on U.S. consumers and workers

WASHINGTON — The imposition of a nationwide Low-Carbon Fuel Standard (LCFS) would boost average U.S. gasoline and diesel prices by as much as 80 percent within five years of the start of the program and up to 170 percent within 10 years, according to a study issued today by Charles River Associates.

Assuming a nationwide LCFS program is implemented in 2015 with gasoline prices at today’s level, this would result in an average national price for gasoline of nearly $5 per gallon in 2020 and close to $7.50 a gallon by 2025.

The study also projected that a nationwide LCFS program starting in 2015 would:

• Cause an estimated net loss of 2.3 million to 4.5 million American jobs by 2025 from baseline levels. As many as 1.5 million of these jobs would be in the manufacturing sector, while as many as 3 million would be in the service sector. These job cuts reflect the cumulative impact businesses would face from reduced consumer demand and higher costs for goods and services caused by an LCFS.

• Drive down household annual purchasing power by between $1,400 and $2,400 by 2025.

• Cause the U.S. Gross Domestic Product to decline by approximately 2 to 3 percent, or $410 billion to $750 billion, by 2025.

Charles River Associates, a Boston-based global research firm that specializes in economic modeling and analysis, conducted the study for Consumer Energy Alliance (CEA).

“Any way you slice the data, the future projected by this study is a frightening one – higher fuel prices, fewer jobs, and lower consumer purchasing power,” said Michael Whatley, vice president of CEA and a leading policy expert on the LCFS. “This nightmare scenario is clearly one that policymakers in the United States should avoid at all costs.”

Added Whatley: “Intuitively, it’s always made sense that policies such as the Low-Carbon Fuel Standard, which seeks to restrict Americans’ access to secure and affordable sources of energy, would result in higher fuel costs and fewer jobs. But with the release of this study, we can now quantify those impacts under several different scenarios, and understand how they apply to different regions across the United States.”

The LCFS would prevent certain sources of reliable, affordable petroleum from being converted into fuels such as gasoline, diesel fuel, kerosene and heating oil. The theory justifying the LCFS says that if the supply of these resources is cut, enough lower-carbon alternatives will arrive on the market to replace them – even if sufficient amounts are currently considered decades away from commercial realization.

“The stated purpose of the Low-Carbon Fuel Standard is to be technology forcing, and to bring new fuels into the market,” the report’s authors write. “But the LCFS becomes a policy that drives large changes in consumer behavior and in new vehicle fuel economy because the targets are beyond reach with foreseeable fuel technology. … Thus the LCFS is turned into a policy that in effect rations gasoline until the required improvement in emissions per gallon is met.”

A federal LCFS was added to the Lieberman-Warner climate change bill in 2008 and proposed as part of the Waxman-Markey climate change bill in 2009 (although the LCFS provision was removed before the bill was passed by the House). Supporters of a national LCFS continue to work for its enactment, even as proposed programs are being developed in several states and regions.

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As California Goes, So Goes the Rest of the Country (for Worse)

Wednesday, May 19th, 2010

Following the recent introduction of climate legislation in the U.S. Senate that did not contain provisions to enact a Low-Carbon Fuel Standard (LCFS), former U.S. Rep. and President of the Center for North American Energy Security (CNAES), Thomas Corcoran, penned a column in The Daily Caller titled, “Low-carbon fuel standards may be closer than you think” about the numerous state efforts that are under way to pass harmful LCFS policies across the U.S. Here are key excerpts:

While they may not know it yet, the decision to leave the LCFS on the cutting room floor is a rare spot of good news for a broke and broken American public. After all, ever since the governor of California signed an executive order in 2007 setting his state down the LCFS path, those of us who have seen this movie before began to brace for the inevitable national standard from Washington—part of the less-than-implicit pact we have with the world’s eighth largest economy to bail it out anytime it bites off a mandate too big for it to chew.

But given a second glance at the legislative movement taking place throughout the country, perhaps we’ve been duped. True, it’s unlikely that an LCFS will be resurrected as part of the Kerry-Lieberman bill. But that doesn’t mean it’s prepared to stay in the grave forever. Right now, in more than 20 states across the country, efforts are under way to copy the California model and paste it into statute—with or without the consent of the legislature. And while you may think you’d be safe if you happen to live in one of the remaining 30 states, it’s time to think again.

Corcoran continues with a summary of current state LCFS efforts:

The rest of the West Coast has caught on as well. In Washington, final recommendations on the provisions of the state’s LCFS are due to the Department of Ecology by November. And in Oregon, proposed changes to House Bill 2186, which would enact an LCFS there, are due by year’s end. So if all goes as planned, the entire western coast could be under an LCFS regime before the ball drops on 2011.

One state, however, has recently bucked the trend. In reviewing the Clean Energy Jobs Act brought before the state legislature, Wisconsin lawmakers moved to drop the LCFS provisions originally included in the bill, citing concerns over costs, particularly to the manufacturing sector that is essential to the state’s economic livelihood.

In the case of an LCFS, which effectively bans stable and reliable forms of North American energy,  American consumers can only hope that these states don’t continue to take their cues from the Golden State. In fact, before moving any further in their LCFS process, states may want to pay attention to a recent article from Environment and Energy News, titled “Calif. will suffer if it acts alone on GHGs — state auditor.”

In this article, E&E Reporter, Colin Sullivan, reports that California’s legislative auditor recently found in an analysis that “if California proceeds on greenhouse gas curbs without regional involvement, the state’s economy is likely to suffer short-term harm as electricity prices rise and business flees to neighboring states.”

Sullivan also reports:

“These adverse effects will occur in large part through economic leakage, as certain economic activity locates or relocates outside of California where regulatory-related costs are lower,” analyst Mac Taylor wrote in a letter to a California lawmaker dated May 13.

The nonpartisan legislative auditor specifically examined the effects of A.B. 32 if the Western Climate Initiative, or WCI, fails to coalesce when California launches its cap-and-trade program in 2012. WCI had been on track to move forward with California but lately has suffered defections. Recent reports indicate only New Mexico and a few Canadian provinces will be prepared to implement the law’s far-reaching emissions cuts.

Nonetheless, Taylor in his letter to Logue said the climate law would cause the price of goods and services to rise; lower business profits; and reduce production, income and jobs. Taylor said A.B. 32 would likely create green jobs but not enough to offset the economic losses.

After seeing the potential economic harm that California may suffer through if they continue on their path implementing A.B. 32 and the law’s LCFS provisions, states would clearly be wiser to say no to the prescription laid out by an LCFS—higher fuel costs and increased imports from unstable regions of the world.

States should instead follow the lead of the Badger State by rejecting harmful LCFS schemes due to concerns about the extreme economic hardship that such policies could bring upon its citizens. With the economy still rebounding and national unemployment stuck around almost 10%, now may not be the best time for states to follow California’s lead off of an economic cliff.

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Message From the Husky State: Low-Carbon Fuel Standard Will Hurt Washingtonians

Monday, May 17th, 2010

The topic of a Low-Carbon Fuel Standard (LCFS) is heading up across Washington state. At the beginning of April, Consumer Energy Alliance (CEA) president David Holt sent a letter to the state’s governor, Christine Gregoire, urging her to fully consider the harmful effects that an LCFS could have on the state. And on the heels of CEA’s call for commonsense energy policies, a major organization from the Husky state recently emerged to voice its opposition to the implementation of a California-style LCFS which would effectively ban stable forms of Canadian energy from reaching Washington consumers.

Lea N. Wilson – executive director of the Washington Oil Marketers Association – recently penned a Bellingham Herald column entitled “Low-carbon fuel standard would hurt Washingtonians.” Here are key excerpts:

There’s a lot more than weather and wine that makes Washington different from California. But judging by Gov. Chris Gregoire’s recent legislative intentions, Washington may start to look a lot more like our coastal neighbor – and not to our benefit.

In short, an LCFS will only make the fuels in our tank harder to find and more expensive to purchase. And supporters of the initiative admit that if successful, an LCFS will make traditional energy sources so expensive that we Washingtonians will learn to favor those alternative sources that have yet to reach maturation and availability. Does your car run on hydropower? Mine doesn’t, and probably won’t for a long time.

Wilson continues:

And this will only hurt what has become a healthy and burgeoning trade relationship between Washington and our border neighbors to the north. Canada imports almost $6.6 billion worth of goods from Washington, including refined oil products. But with the burden of increased transportation costs lingering under LCFS provisions, we stand to lose much of that revenue.

Certainly our governor must know that Washington derives its energy from different places than California does – and further, that an LCFS scheme conjured up by consultants in Sacramento might not achieve its desired effect here in the Evergreen State. Unfortunately, it doesn’t appear as if that knowledge is making a shred of difference.

Gov. Gregoire’s administration is charging toward its July deadline, when it is set to fully assess what an LCFS would bring to Washington. But what we outlined here leaves little to assess: an LCFS will increase the cost of fuel during an economically challenging time, and make us ever more energy dependent.


Wilson is correct in voicing concerns about Governor Gregoire’s fast approaching July deadline and the fact that Washington’s fuel supply would be threatened under an LCFS policy. While Washington’s economy, and its consumers and small businesses, does rely on oil from Saudi Arabia, Angola and Argentina, more than 25 percent of its crude comes from Canada. Therefore, over a quarter of the state’s secure, affordable oil supply would be threatened under an LCFS.

Additionally, about 10 percent of the state’s gasoline – refined in Montana, but derived from Canada’s oil sands – could be prevented from crossing its eastern border. The consequences are far greater and more profound for the state’s workforce. Discrimination called for under an LCFS against Canada’s energy could also impact many jobs in the state, since refiners in Washington directly employed more than 2,000 workers in 2007 (latest numbers), and indirectly supported another 20,000 – paying out more than $400 million in wages.

Regrettably, Washington isn’t the only state in the nation that is currently considering adopting a California-style LCFS – which would effectively ban stable and reliable forms of North American energy from reaching U.S. consumers. The American people oppose higher fuel costs and increased imports from unstable regions of the world. Unfortunately, the real-life outcome of an LCFS will lead to higher prices at the pump and a deeper and more dangerous dependence on unstable regions of the world to ensure that our economy continues to move and grow.

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CEA at North American Energy Security Summit: Energy Not “Incidental” to U.S.-Canadian Partnership, But “Fundamental”

Tuesday, May 11th, 2010

Last week Consumer Energy Alliance (CEA) vice president Michael Whatley joined the U.S. State Department, Alberta’s premier, and top U.S. and Canadian energy experts for a North American Energy Security Summit hosted at the Canadian Embassy in Washington, DC.

Alberta premier Ed Stelmach reinforced the fact that Canada stands ready, willing and eager to build upon the unique and valuable relationship that exists with the United States to leverage energy resources into jobs, security and opportunity on both sides of the border. And following his remarks, David Goldwyn – a senior State Dept. advisor – weighed in regarding America’s historic partnership with Canada on issues related to energy security, affordability, and reliability, describing this strong and strategic relationship as a “model” for others to follow.

ClimateWire highlights Mr. Goldwyn’s remarks in story entitled “With offshore oil spilling, Alberta pushes its inland”:

“Having technically recoverable petroleum reserves that are on our border, and they’re delivered by pipelines that are controlled by a stable democracy and an ally and a friend in an open and transparent regulatory regime enhances … global energy security today and into the future,” David Goldwyn, who oversees international energy issues at the U.S. State Department, told an audience at the Canadian Embassy yesterday.

Following remarks from Stelmach and Goldwyn, CEA’s Michael Whatley added this about the importance of North American energy security:

Canada is our closest trading partner in the world and our most important strategic ally in the hemisphere. 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.

Nick Snow of the Oil & Gas Journal reports this under the headline “Forum showcases benefits of Alberta oil sands development”:

The US Environmental Protection Agency’s effort to limit GHG emissions under the Clean Air Act poses the biggest threat, added Michael Whatley, vice-president of the Consumer Energy Alliance. “Demand has rebounded since the economy hit bottom in 2008 and 2009. China and India are trying to get more supplies than ever out of world markets,” Whatley observed. North America has sufficient energy supplies to meet growing demand, but US policies restricting access and mandating low-carbon fuels restrict their development, he said. “Let’s be clear: Demand is going to increase,” Whatley said. “Taking North American energy resources off the table will affect consumer prices and hurt the economy.”

Hosted by the Center for North American Energy Security (CNAES), the day’s event drew broad participation, including a number of U.S. and Canadian energy, economic and environmental experts. The discussion and debate throughout the day ranged 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 Low-Carbon Fuel Standard (LCFS) proposals, a policy that would severely restrict American access to secure and affordable sources of energy from Canada.

Canwest News Service’s Sheldon Alberts captured the possible threat of an LCFS in an article under the headline “Gulf spill makes oilsands more appealing”:

Still, oil sands supporters remain suspicious of the Obama administration and fear it will seek a low carbon fuel standard (LCFS) targeted at carbon-intensive energy sources like the oil sands. Michael Whatley, vice-president of … Consumer Energy Alliance, said it was ‘no coincidence’ that an early version of U.S. climate change legislation from the House of Representatives included plans for a low carbon fuel standard. Whatley said there’s also concern the Obama administration could target the oilsands through the Environmental Protection Agency … ‘The LCFS is a high priority for this administration,’ Whatley said at the Canadian Embassy. ‘They can move down that road. We are very concerned that they will.’

And under the headline “After spill, Stelmach touts oil,” the Globe and Mail reports this:

Mr. Stelmach said he’s only trying to ensure the oil sands gets fair treatment in the face of a wave of federal and state efforts that threaten to penalize Alberta’s heavy crude and other high-carbon fuels. Pending regulations from the U.S. Environmental Protection Agency – which is poised to cap greenhouse gases since Congress won’t – threaten to cut off the sale of oil sands crude from Alberta to refineries south of the border. And dozens of states are moving ahead with regulations that would penalize carbon-intensive fuels and spur use of greener alternatives. Major U.S. energy consumers, meanwhile, worry that a low-carbon fuel standard may be inevitable in the United States. “We’re very concerned,” said Michael Whatley, vice-president of the Consumer Energy Alliance, a broad coalition of major U.S. energy consumers.

Given the recent announcement that climate change legislation may be introduced very soon in the U.S. Senate, CEA will continue to remind policymakers about the dangerous consequences of imposing an LCFS in the U.S., as well as the importance of our closest trading partner and the barrels of secure and reliable fuel Canada sends the United States each day.

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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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CEA to State, National Policymakers: Follow Wisconsin, Reject LCFS Proposals

Friday, April 23rd, 2010

Last week Wisconsin media reported that a Low-Carbon Fuel Standard (LCFS) provision was dropped from a comprehensive energy and environment bill being considered in the legislature. In a statement following this victory for Wisconsin consumers, David Holt, Consumer Energy Alliance (CEA) president, says this:

“The removal of the economy-killing LCFS is good news for consumers in the Badger State and we are pleased that Wisconsin’s legislators have woken up to the harsh realities associated with this dangerous proposal. By discriminating against Canadian fuels, an LCFS would restrict Wisconsin fuel supplies, raise gas and diesel prices at the pump and expand our dependence on energy from some of the most unfriendly regions of the world.

 “Unfortunately, the threat of an LCFS still exists in many other parts of the country, including those states that comprise the Midwestern Governors Association (MGA), of which Wisconsin’s governor is a member. CEA encourages the members of the MGA to understand that discriminating against Canadian fuel supplies is bad energy policy.”

However, Wisconsin consumers are not out of the woods yet. The Badger State remains an active member of the MGA, which is currently engaged in promoting an LCFS. In fact, MGA is expected to issue comments on its draft LCFS framework soon — releasing its final draft recommendations by June, and rendering its final recommendations to MGA member states by the end of 2010.

This issue is crucial to the Badger State since nearly half of Wisconsin’s oil comes from Canada, some through the Lakehead Pipeline System, and some via Illinois and Minnesota – two other mid-western states that rely heavily on secure, Canadian energy to keep their economies running. You see, under an LCFS regime, these stable supplies of Canadian crude would find themselves on the chopping block in the Midwest, casting serious doubt as to how states like Wisconsin would make up the difference in displaced supply.

Worse yet, Wisconsin isn’t the only state that is currently considering an LCFS. There are also efforts in the Northeast and Mid-Atlantic to pass a one-size-fits-all LCFS.

In Pennsylvania, former Illinois congressman Thomas Corcoran of the Center for North American Energy Security recently took to the pages of the Wilkes-Barre Times Leader to highlight the devastating effects that an LCFS could have on the Keystone State. In a column entitled, “Low-carbon pact will only lead to higher energy prices,” Corcoran writes:

 It’s ironic that LCFS advocates cite the imperative of combating greenhouse gases and curbing energy costs as reasons to support such a program. Not only are both assertions untrue, but they represent the direct inverse of what the program will actually achieve. Independent studies have determined that gas and diesel prices would increase, as would overall global greenhouse gas emissions because nations like China – our chief competitor in the global economy – are already working to secure Canadian supplies in the event that we block imports to the United States.

The former U.S. congressman and energy experts adds this in this column:

Pennsylvanians cannot afford higher energy prices. With gas prices steadily climbing toward $3 a gallon and home-heating costs on the rise, Gov. Rendell and leaders in Harrisburg should be working day and night to develop policies that will reduce energy prices rather than supporting an LCFS that will prohibit imports of abundant and secure North American energy resources, drive fuel prices even higher and increase worldwide carbon emissions.

CEA is encouraged by the decision in Wisconsin to drop the LCFS provisions and hopes that more state and national policymakers will take notice and follow Wisconsin’s lead by rejecting these misguided proposals. CEA will continue to educate the public about the dangers of an LCFS, and tirelessly advocate for commonsense policies that aim to keep energy prices stable and affordable by promoting more energy of all forms, and using what we have more wisely at the same time.

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State LCFS Profile: Michigan

Wednesday, April 21st, 2010

State of Play: LCFS in Michigan

Few states stand to lose out more under the imposition of an LCFS scheme than Michigan – but that reality didn’t stop state Rep. Lee Gonzales (D-Flint) from introducing LCFS legislation in the Michigan House last September. If passed, the bill would mandate the state Departments of Agriculture, Energy, Natural Resources, and Environmental Quality to come up with an LCFS plan in consultation with activists from the “land conservation,” “wildlife conservation,” and “environmental” organizations – all part of a strategy that somehow equates to “more jobs for our workers,” Gonzales said in a press statement announcing the bill.

Although that legislation has yet to see significant action in the House, Michigan remains an active member of the Midwestern Governors Association (MGA), which is currently engaged in promoting the LCFS. Over the next three months, the MGA is expected to first release comments on the draft LCFS framework it is presently working to construct, releasing its final draft recommendations by June, and rendering its final recommendations to MGA member states by the end of 2010.

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

Thanks to recent innovations in horizontal drilling and hydraulic fracturing technology, Michigan has recently become a significant producer of natural gas from the Antrim Shale – but it remains a state with relatively few petroleum resources on hand.

Because of that, Michigan has come to depend on its neighbors in Canada for the fuel it needs to run its commercial sector; today, more than 63 percent of the oil consumed in the state comes from Canada.  In fact, these imports come from nowhere else — a full 100 percent of Michigan’s “foreign” energy is supplied each day by Canada, taking the form of crude oil, as well as refined products such as propane, gasoline, diesel fuel, kerosene, and waxes and lubricants.

In large part a function of its close relationship with Canada, and consistent with its position at the “front of the line” in receiving Canadian imports, energy prices in Michigan tend to be lower than the national average in several key categories. The chart below, derived from data supplied by the Energy Information Administration (EIA), tells that story in greater detail:

LCFS Impact on Michigan

As mentioned, more than 63 percent of Michigan oil’s comes from Canada – sources that an LCFS is engineered to disadvantage relative to other imports (and even many U.S. sources). But whereas it may be possible for other states, most notably on the West Coast and throughout the mid-Atlantic, to substitute out Canadian energy imports for energy supplies from other countries, that option is simply not available to Michigan. Again, because of the geography of the state, 100 percent of Michigan’s imports come from Canada.

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On a Roll: State Dept. One Step Closer to Expanding US-Canadian Energy Partnership

Monday, April 19th, 2010

Just as Reuters reported that China is snapping up resources assets across the globe — including a recent deal to buy ConocoPhillips’ stake in the huge Syncrude project in Canada’s oil sands for $4.65 billion – the U.S. State Department released a Draft Environmental Impact Statement (DEIS) on the proposed TransCanada Keystone XL pipeline project. The State Department’s report concludes that the delivery of secure, affordable supplies of Canadian energy to American consumers would have minimal impacts on the environment.

While a final decision by the State Department has not been made on the Keystone Pipeline, this is 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 hundreds of high-paying, family supporting jobs along the way.

Last year, the U.S. imported 1.5 million barrels of oil a day derived from the Canadian oil sands. Projects like the Keystone XL present the potential to increase North American energy access for U.S. consumers to 4.3 million barrels a day over the next two decades – additional energy that we will no longer be forced to buy from far unstable, unfriendly OPEC nations.

Considering the economic and energy security benefits of Canada’s vital resources, state and national policymakers should work to expand America’s access to secure and affordable energy supplies to help ensure improved stabilize prices for consumers.

Unfortunately, under a Low-Carbon Fuel Standard (LCFS), Canada would intentionally be singled out for exclusion. In fact, a nationwide LCFS could shut down the Keystone XL and Alberta Clipper projects altogether – jeopardizing countless high-wage jobs and billions in economic activity. An LCFS would also be a major blow to U.S. energy security.

Despite the State Department’s positive draft decision on the proposed Keystone XL pipeline, CEA’s nearly 260,000 grassroots supporters and 130 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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