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America’s oil bust

Steve Hargreaves, CNNMoney
Falling oil prices and frozen credit are slowing production and piling up equipment. Now some worry we’re setting ourselves up for another price spike.

… The pullback isn’t limited to Pennsylvania. From Texas to Wyoming to California, places once considered boomtowns are now going bust as energy prices drop and access to credit dries up.

Nationwide, the number of drill rigs fell almost 50% since October, the steepest decline since the energy bust of the mid-1980s. Worldwide production numbers have been continuously revised down nearly every month since late last year.

“It’s like things fell off a cliff,” said Richard Mason, publisher of the Land Rig Newsletter, an industry paper that tracks oil and gas rigs in the U.S. If it continues, Mason said production could be hurt permanently.
(3 April 2009)

Wind turbines could more than meet U.S. electricity needs, report says

Jim Tankersley, Los Angeles Times
The Interior Department report, which looks at the potential of wind turbines off the U.S. coast, is part of the government’s process to chart a course for offshore energy development.

Wind turbines off U.S. coastlines could potentially supply more than enough electricity to meet the nation’s current demand, the Interior Department reported Thursday.

Simply harnessing the wind in relatively shallow waters — the most accessible and technically feasible sites for offshore turbines — could produce at least 20% of the power demand for most coastal states, Interior Secretary Ken Salazar said, unveiling a report by the Minerals Management Service that details the potential for oil, gas and renewable development on the outer continental shelf.

The biggest wind potential lies off the nation’s Atlantic coast, which the Interior report estimates could produce 1,000 gigawatts of electricity — enough to meet a quarter of the national demand.

The report also notes large potential in the Pacific, including off the California coast, but said the area presented technical challenges.

The Interior Department released an executive summary of the report on Thursday.
(3 April 2009)

New Climate Bill Proof of Misplaced Priorities

Jesse Jenkins,
The draft Markey-Waxman climate bill is proof that the green groups leading the climate charge won’t fight for investments in clean energy technologies and a new energy economy. Instead, they’ll throw these critical investments overboard to preserve precious regulations and an increasingly compromised “cap” on carbon.

Marking the starting bell in the long-promised fight over the nation’s energy future, Congressmen Henry Waxman (D-CA) and Ed Markey (D-MA) introduced a climate and energy legislation “discussion draft” yesterday.

As Beltway insiders have repeatedly “reminded” me, this is “just a discussion draft,” and its final form may be much different. But just looking at what’s in this bill so far — and just as important, what’s not — paints a clear picture of misplaced priorities and a bill in critical need of some “course correction.”

Even a cursory read of this “American Clean Energy and Security Act” (ACES) — and I’ve read far more of this 648 page bill than I’d like! — speaks volumes to the priorities of the various parties driving this debate so far – namely the green groups and big industry players already cutting deals as part of the U.S. Climate Action Partnership. This bill should be proof, once and for all, these leading greens will throw clean energy investments overboard to preserve precious regulations and an increasingly compromised “cap” on carbon.
(2 April 2009)
Also at Common Dreams.

Waxman-Markey American Clean Energy and Security Act of 2009

Gail Tverberg, The Oil Drum
How does one address energy issues and climate change? Last week, the Democrats unveiled a draft version of proposed legislation, called the “American Clean Energy and Security Act of 2009” (ACES), sponsored by presentatives Henry Waxman (D-CA) and Ed Markey (D-MA) (download here). This legislation is praised by environmental groups, but is of major concern to conservative Republican groups.

The legislation has four titles:

Title 1: Clean Energy – Includes a Renewable Energy Standard that would require 6% of electricity come from renewable fuels by 2012, and 25% by 2025, but this obligation can be met by buying Renewable Energy Credits. Also includes Carbon Capture and Storage incentives, carbon standard on liquid fuel (encouraging cellulosic ethanol), assessments on electricity generated from fossil fuels, and requirements that utilities plan for smart grid and electrical vehicle recharging.

Title 2: Energy Efficiency – Sets higher energy efficiency standards for buildings, lighting, and appliances. Also encourages efficiency by utilities and by industry.

Title 3: Reducing Global Warming Polution – Sets goals of reducing global warming gases by 20% below 2005 in 2020; 40% below 2005 in 2030; and 83% below 2005 in 2050. Also includes Cap and Trade program, with parameters not yet specified.

Title 4: Transitioning to a Clean Energy Economy – Authorizes programs that may later be funded, including rebates to energy intensive industries (like cement and steel) which are essential but would suffer from competition under this legislation.

… What is Ahead?

The release of this draft legislation is just the beginning of a long process. Hearings will be held in the House Energy and Commerce Committee starting immediately after Congress gets back from its two-week Easter break. The plan is to have a final version of the bill voted on by the committee by Memorial Day, so that it can go to the House of Representative for discussion. According to Markey, this is “the beginning of an incredibly intense period of political debate in our country.”

… My Views on Where the Legislation Is Headed

As I see it, there are two main groups who will support the legislation in its strongest form:

(1) Those who are very concerned about climate change

(2) Those who feel that they can make money from some aspect of the legislation (cap and trade; renewable energy, energy efficiency, carbon capture and storage, cellulosic ethanol, etc.)

In order to get support of the general population, it seems to me that costs paid by the consumer (electricity, gasoline) are going to have to be kept close to their current level. This means that if a cap and trade mandate is passed, the cost of carbon emissions in the cap and trade program will need to be kept low, perhaps with the idea of raising them in the future. This is likely to greatly reduce the effectiveness of the cap and trade program.

I think that there will also be a temptation to fill the bill to with lots of subsidies, but not much of a way to pay for them. This will ensure support from the groups who might get the benefit of the subsidies, with few concerning themselves about the ballooning deficit. (Perhaps I am too cynical.)
(4 April 2009)
Gail Tverberg is an editor/writer a The Oil Drum and a contributor to Energy Bulletin. By profession she is an actuaty. -BA