The beginning of the end for the oil age
In coming years, presuming no substantial geopolitical shocks, oil demand will struggle to keep pace with oil supply, keeping pressure on oil prices.
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Public comment period for EPA’s ethanol standards to begin Wednesday
The public comment period for the Environmental Protection Agency (EPA)’s proposed ethanol blending standard three years will formally begin Wednesday.
OPEC, keeping quotas intact, adjusts to oil’s new normal
The Organization of the Petroleum Exporting Countries agreed to keep the oil pumping, with no change in its production quotas, at the group’s meeting in Vienna on Friday.
Grassley: Same old story, biofuels under attack
Those of us from states that produce ethanol and biodiesel are used to the attacks. We always fight back, and producers continue to do their best to develop the next generation of clean biofuels. Consumers like biofuels. The idea of a homegrown product that reduces emissions harmful to the environment and brings the United States freedom from volatile oil-producing countries is appealing.The EPA should know this.
OPEC is winning the oil war
As OPEC ministers meet in Vienna this week they’ll be debating whether the strategy that’s upended oil markets is working.
EPA’s ethanol ruling pleases no one
Nobody is happy with the EPA’s ruling on ethanol’s Renewable Fuel Standard made last week. The agency finally published its numbers after dodging the issue for two years and falling far behind on its legal obligations.
“It’s Christmas in May for Big Oil,” said Republican Sen. Chuck Grassley of Iowa. “President Obama’s EPA continues to buy into Big Oil’s argument that the infrastructure isn’t in place to handle the fuel volume required by law. What happened to the president who claimed to support biofuels? He seems to have disappeared, to the detriment of consumers and our country’s fuel needs.”
Gov. Terry Branstad of Iowa, also a Republican, was not quite so negative. “We are disappointed that the EPA failed to follow the renewable volume levels set by Congress,” he said. “But we’re encouraged that the agency has provided some stability for producers by releasing a new RFS proposal, and made slight increases from their previous proposal.”
Even the question of whether the EPA’s new standard represents an increase or a decrease in the required amount of ethanol is under dispute. The original law, passed by Congress in 2007, specified that oil refiners were to absorb 14 billion gallons by 2013, 17 billion by 2014 and 19 billion this year. By 2013, however, it became obvious that the country would be unable to absorb 14 billion gallons without spilling over the “blend wall,” the standard of 10 percent ethanol that’s blended into virtually all gasoline in the U.S. There are concerns that some older vehicles can’t handle higher ethanol blends beyond E10 without sustaining damage to parts.
“By adopting the oil company narrative regarding the ability of the market to effectively distribute increasing volumes of renewable fuels, rather than putting the RFS back on track, the Agency has created its own slower, more costly, and ultimately diminished track for renewable fuels in this country,” Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a statement.
The critics seem to have a point. Blends of E15 (up to 15 percent ethanol) and E85 are being sold across the country without any difficulties. Cars built since model year 2001 are approved to run on E15, and about one-third of automobiles are now flex-fuel, meaning they can tolerate any ethanol blend, up to E85. But the EPA has stuck with the “blend wall” in order to accommodate the oil refiners and automakers, who say they will not honor warranties on engines that might be damaged by ethanol.
The EPA standards announced last week are: 15.93 billion gallons for 2014 (that approximates actual sales for that year), 16.3 billion for 2015 and 17.4 billion for 2017. All these figures are about 5 billion gallons below the original statutory requirements. The last two have caused the most controversy. Ethanol supporters say the EPA is bound by the number in the 2007 law — even though there is a waiver provision. But critics who want to cut back on ethanol use argue that the figure is actually increasing from year to year and is only considered a reduction because it doesn’t match the original projections if 2007.
Really, it’s kind of ridiculous to think that Congress could predict exactly how much ethanol could be sold eight years hence. Typically, they made straight-line projections and assumed that gasoline consumption would hit 160 billion gallons per year by this time and keep going up. In fact, gasoline consumption started to drop almost the minute Congress passed the law, resulting from both improved fleet mileage and the reduction in driving that came with the recession. It now stands at 140 billion gallons. Had the law simply specified that ethanol consumption should be 10 percent of all gasoline consumption, there would be nothing to argue about.
The other place where the law is completely out of whack is in the mandates for non-corn ethanol made from cellulosic materials. At the time it was anticipated that cellulosic ethanol was right around the corner, and Congress specified that consumption should be 3.75 billion gallons in 2014, 7.2 billion gallons by 2017 and 21 billion gallons by 2022. In fact, the cellulosic-ethanol industry produced only 1.9 billion gallons in 2014 and has not increased much since. At one point, the EPA was actually fining oil refiners for not using a fuel that didn’t exist.
There’s little reason for either Congress or the EPA to be meddling in the ethanol market. Ethanol has established itself as an oxygenator and high-octane additive since the banning of MTBE. It would probably be added at a rate of around 10 percent, even without the mandates. E85 has a big price advantage over gasoline and would sell more if it were available. Last week, on the same day that the EPA published its new proposed Renewable Fuel Standard benchmarks, the Department of Agriculture pledged to match state funds for $100 million for the construction of new fueling stations designed to dispense E85. The fuel is very popular in the Midwest and would probably attract customers in other areas if it were easily accessible.
Finally, an export market for American corn ethanol is starting to take shape. Brazil mandates 35 percent of its fuel must be ethanol, but it has had problems with its sugar harvest and has started to import from the U.S. Europe is also getting big on ethanol and is looking across the Atlantic for new supplies.
Ethanol has proved its worth as a fuel additive and possibly as a gasoline substitute as well. All the sturm and drang over the EPA mandates have very little to do with the future of the industry.
The U.S. oil fracker’s dilemma: crouch or pounce?
U.S. shale oil producers, having weathered the worst price plunge in their industry’s brief history, now face a dilemma: whether to stay in a defensive crouch after slashing their rig fleets, or start drilling more wells to capture a partial recovery in prices.
Propane gains as an alternative for vehicles
School bus drivers in Macon, Georgia, have noticed one advantage to their new propane-driven school buses. “The children are much quieter,” says bus driver Esther Muhammad. “That’s because the engines don’t make as much noise. The kids can actually hear themselves talk.”
Quieter engines are only one of the advantages school districts around the country are finding as they convert their fleets to propane. Lower fuel costs, lower maintenance charges and longer engine life are among the advantages. So are lower emissions and compliance with the 1995 Clean Air Act. A propane engine produces 25 percent less carbon emissions, 66,000 pounds less nitrous oxide and 2,700 pounds less particulate matter over the course of a year compared with petroleum. “Because of these new propane buses, children will no longer be exposed to diesel fumes when boarding or disembarking our buses,” says Peter Crossan, fleet and compliance manger of the Boston Public Schools, which just put in an order for 86 Blue Bird Propane Vision buses, manufactured in Georgia.
The move toward propane — which is also called “autogas” — is picking up steam. Propane buses now run in 19 of the top 25 school bus markets, including New York, Chicago, Houston, Philadelphia, Miami and Phoenix. In the Mesa County Valley district of Grand Junction, Colorado. Administrators recently signed a five-year, $30 million contract that includes 122 propane buses, according to The New York Times. Altogether there are now 143,000 propane vehicles on the road in the U.S.
Propane is a gas that is easily stored as a liquid under only 160 pounds of pressure. It is a by-product of both gas and oil production, with 65 percent of our propane coming from natural gas refining and the remaining 35 percent from oil. “We have enough natural gas to last us 200 years,” says Stuart Weidie, president of Alliance Autogas. “We’re not going to run out of propane.”
Propane has been used to run cars since 1912 and is still the third most used fuel, behind gasoline and diesel. Because it’s a little more difficult to handle than gasoline and has only 85 percent of the energy content, however, its use in standard automobiles has been limited. Instead, propane is employed mainly for home heating in rural areas where gas pipelines to not extend, and for laundry dryers, water heaters, backyard barbecues and portable stoves. There are about 10,000 filling stations around the country now. Propane sells for $1 per gallon less than gasoline, which gives it a price advantage.
Right now propane is starting to be used for medium-, heavy-duty and fleet vehicles such as garbage trucks, police cars, taxis, city buses and emergency vehicles. There are 450,000 forklifts running on propane, since their exhausts are easier to tolerate in enclosed spaces. The 2016 Ford F-150 light-duty truck will be suited for propane conversion, making it the eighth Ford model to be so outfitted. However, conversion of your automobile to propane can cost from $5,000 to 10,000 and is not for the faint of heart. A lot of computer adjustments are necessary on late-model cars, and they must be outfitted with an extra gas tank. Usually cars run on both gasoline and propane, since it isn’t always easy to find a propane filling station. The payoff is $1 per gallon saved on gasoline, but since most cars consume only about 500 gallons per year, that’s a long payback. Fleet vehicles like police cars that may log 50,000 miles a year, however, become economical. United Parcel Service has 750 vehicles running on propane.
Around the country, towns and cities are starting to buy into propane. The city council in Roanoke, Virginia, has just voted to convert part of the city’s police fleet to propane, as has Springfield, Illinois. ConocoPhillips will deploy more than 300 of its vehicles to “autogas” over the next five years. The Suburban Mobility Authority for Regional Transportation (SMART) in southeast Michigan is converting 61 “connector buses” that provide door-to-door service for the elderly and handicapped.
The movement has reached the point where STN Expo will sponsor a one-day “Green Bus Summit” in Reno on July 29th. The participants will discuss current and pending regulatory issues and funding opportunities for propane conversions.
In moving toward propane power, the United States is actually trailing several countries that have shifted to propane because of difficulties in acquiring imported oil. South Korea, Poland, Turkey and India all run more than 50 percent of their vehicles on propane. All these countries converted after being hit hard by the oil crisis of the 1970s. In the United States, however, the price of gasoline of diesel fuel remained low enough that we didn’t have to pursue alternatives. Now that is changing.
The propane industry foresees a strategy in which the increasing use of propane by fleet vehicles and light- and medium-duty delivery trucks will eventually lead to the construction of more propane filling stations. This will give motorists enough confidence to start buying propane-enabled vehicles or convert their cars from gasoline. “That’s the way it’s happened in Europe,” says Stuart Weidie of Autogas Alliance. “I think you’re going to see it happen here as well.”
(Photo credit: Roush Cleantech)
Renewable fuels, farm groups criticize EPA proposals
Renewable fuels and farm groups criticized the U.S. Environmental Protection Agency’s proposed rules setting how much ethanol and biodiesel should be blended into the nation’s fuel supply.
EPA got its renewable fuels program back on track, but nobody’s happy
After years of delay, the Environmental Protection Agency finally got its ethanol-mandate program back on track. And right on schedule, the outrage poured in from all sides.
