How Big Oil Benefits From Global Warming Alarmism
Ethanol / B5 Biodiesel (Photo credit: Spencer T.)
I find it somewhat comical when scientists and others who publicly express skepticism about a looming man-made global warming catastrophe are accused of being in the pocket of Big Oil. Here we are referring to oil and gas… master resource trade commodities that the entire world urgently depends upon. Can you imagine they are losing sleep over market competition from non-fossil “renewable alternatives” such as ethanol, windmills and sunbeams? Do you really think rampaging greenhouse gas regulatory attacks on coal-fired power are anything but a blessing?
First, regarding that “green” ethanol, consider that it really produces little or no net fuel gain at all…not after the diesel required to power the tractors needed to plant, fertilize and harvest all that corn, along with the energy needed to brew it into 180-proof grain alcohol, are factored in. Then, for those who care, after CO2 emissions released in producing it and burning it in vehicles are accounted for, there’s not much difference, if any, compared with petroleum there either. What should matter to everyone, however, is that ethanol has a much lower energy density than gasoline, meaning that it yields fewer miles per gallon.
And although ethanol has no rational connection with climate, it’s not like Big Oil has a problem hitching a ride on the green bandwagon. Koch Industries, through its subsidiaries Flint Hill Renewables and Koch Supply & Trading, for example, has purchased several ethanol plants in Iowa, and together with its Minnesota refinery, reportedly has the capacity to supply about one-tenth of the U.S. market.
As Flint Hills President Brad Razook told his employees in a company newsletter, “New or emerging markets, such as renewable fuels, are an opportunity for us to create value within rules the government sets.” He went on to say, “After all, ethanol production is heavily subsidized, mandated and protected”…then adding, “…while Koch companies openly oppose such government programs.”
Yes, and why blame them? Why pass up money that can be made blending sweet lemonade petroleum with grain alcohol to produce bitter lemon juice…at least so long as voters are gullible enough to tolerate such state and federal lunacy, and taxpayers and consumers can afford to cover the extra costs.
Then again, the EPA doesn’t want petroleum refiners to make too much money, and is doing a good job to prevent this from happening. Over the past six months three refineries supplying about half of all the East Coast’s gasoline, diesel and jet fuel have closed down in large part due to overly burdensome environmental compliance costs. Philadelphia-based Sunoco’s Northeast refinery business lost nearly $1 billion over the past three years after spending more than $1.3 billion to meet stricter rules.
Enormously abundant U.S. natural gas represents an increasingly attractive long-term automotive petroleum fuel alternative. Premised upon theoretical climate benefits, the EPA is actively pushing to leverage such a transition to this “cleaner” alternative. Asserting authorization under the Clean Air Act to issue greenhouse gas (GHG) standards for motor vehicles as a “regulated air pollutant”, they propose to impose CO2 restrictions upon model year 2017 and later light-duty trucks.
But wouldn’t you expect the EPA to be aware that expanded natural gas use will encourage more fracking in order to tap into our huge oil shale reserves? That’s something they apparently don’t like one bit. Their latest gambit is to try to link this safety-proven six- decade-old technology to drinking water pollution.
Wind power also provides a big growth opportunity for natural gas, a fact not lost on T. Boone Pickens who is, after all, a pretty smart guy. Remember when he made prime time news back in 2007 announcing plans to build the world’s largest wind farm on his land, a $10 billion, 2,700-turbine venture capable of producing enough electricity to support one million homes?
Perhaps you also remember that he is a serious player in the natural gas business. And since wind is highly intermittent, a “spinning reserve” of backup power capacity is needed to constantly balance fluctuations in the power grid. That typically involves using inefficiently applied natural gas-fueled turbines that are connected to the grid.