Government fuel choices costly in energy policy

Bob Tippee

The making of energy policy is at its worst when policy-makers assign themselves responsibility for decisions best left to markets.

Omnibus energy legislation is taking the US down that dangerous path.

The bill under discussion in the Senate has taken aboard a renewable-fuel mandate for generators of electricity. It already had an expanded mandate for renewable fuel, meaning ethanol, in gasoline.

And it's much more generous than the House bill with tax breaks for politically preferred energy consumption and production technologies that now don't pass economic muster.

The conference that eventually must try to reconcile the House bill with whatever the Senate passes will be messy. Under heavy pressure from the White House to pass a bill, lawmakers will compromise serious energy issues against parochial favors. The product, if any, could be ugly.

There's nothing wrong with the renewable fuels and other alternatives to conventional sources of energy upheld in the House and Senate bills and in the Bush administration's push for energy legislation.

What's wrong is fuel selection by government. If the market needs alternative fuels, as it does, it will have them in the quantities and according to the schedules that make economic sense. Government efforts to force choices and timing create only inefficiency and cost.

The administration's energy vision illustrates the point. President Bush, leveraging his arguments against exaggerated hope for reducing US reliance on foreign oil, trumpets ethanol and hydrogen as vehicle fuels.

The superficial appeal is great: home-grown energy with diminished carbon emissions. But the production of hydrogen and ethanol requires energy, the preponderance of which comes from fossil fuel, much of it imported.

Forcing ethanol and hydrogen into the market would substantially raise energy costs without delivering on domestic-supply promises fully if at all.

Historically, the US has tended to see its energy priorities most clearly when confronted with a crisis of supply.

Oil and gas prices now demonstrate the verge of such a crisis. They also signal opportunity for new sources of supply—including some, probably, of those that the politicians like and some, almost certainly, that the politicians have yet to imagine.

(Author's e-mail: bobt@ogjonline.com)

Related Articles

Senate, House bills introduced to block EPA ozone proposal

03/23/2015 US Senate and House members introduced bills to block the US Environmental Protection Agency's proposal to lower ground-level ozone limits as the p...

Native what?

03/23/2015 The term, "native advertising," has been buzzing around the commercial media world for the last couple of years or so, especially digital...

Supporters and critics alike call for RFS reforms

03/23/2015

Calls to reform the federal Renewable Fuels Standard increased as critics and supporters alike said it is not working as it was intended.

Two obsolete laws

03/23/2015 New tightening of a logistics squeeze on US oil producers gives Congress the chance to show bipartisan judgment by scuttling two obsolete laws.

US drilling slump a tough start to market correction

03/20/2015 Two changes essential to reversal of a sagging oil market are coming into view: Supply expectations are falling, while demand looks—well, at least ...

DOI issues final rule for fracing on public, tribal lands

03/20/2015 The US Department of the Interior issued a long-anticipated final rule to govern hydraulic fracturing of onshore oil and gas wells on public and tr...

Transco files FERC application for Dalton expansion project

03/20/2015 Transcontinental Gas Pipe Line Co. LLC (Transco), a wholly owned subsidiary of Williams Partners LP, has filed an application with the US Federal E...

Howard Energy to acquire Marcellus gathering assets for $500 million

03/20/2015 Howard Midstream Energy Partners LLC, San Antonio, has agreed to acquire gathering assets in Bradford and Lycoming counties in northeastern Pennsyl...

Counties, associations challenge DOI’s Greater Sage Grouse tactics

03/20/2015 A coalition of national and regional oil, gas, coal, and mining associations and county governments in four Rocky Mountain states charged three US ...
White Papers

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by

7 Steps to Improve Oil & Gas Asset Decommissioning

Global competition and volatile markets are creating a challenging business climate for project based ...
Sponsored by

The impact of aging infrastructure in process manufacturing industries

Process manufacturing companies in the oil and gas, utilities, chemicals and natural resource industri...
Sponsored by

What is System Level Thermo-Fluid Analysis?

This paper will explain some of the fundamentals of System Level Thermo-Fluid Analysis and demonstrate...
Available Webcasts


The Alternative Fuel Movement: Four Need-to-Know Excise Tax Complexities

When Thu, Jun 4, 2015

Discussion on how to approach, and ultimately embrace, the alternative fuel market by pulling back the veil on excise tax complexities. Taxes may be an aggravating part of daily operations, but their accuracy is crucial in your path towards business success.

register:WEBCAST



On Demand

Prevention, Detection and Mitigation of pipeline leaks in the modern world

Thu, Apr 30, 2015

Preventing, detecting and mitigating leaks or commodity releases from pipelines are a top priority for all pipeline companies. This presentation will look at various aspects related to preventing, detecting and mitigating pipeline commodity releases from a generic and conceptual point of view, while at the same time look at the variety of offerings available from Schneider Electric to meet some of the requirements associated with pipeline integrity management. 

register:WEBCAST


Global LNG: Adjusting to New Realities

Fri, Mar 20, 2015

Oil & Gas Journal’s March 20, 2015, webcast will look at how global LNG trade will be affected over the next 12-24 months by falling crude oil prices and changing patterns and pressures of demand. Will US LNG production play a role in balancing markets? Or will it add to a growing global oversupply of LNG for markets remote from easier natural gas supply? Will new buyers with marginal credit, smaller requirements, or great need for flexibility begin to look attractive to suppliers? How will high-cost, mega-projects in Australia respond to new construction cost trends?

register:WEBCAST


US Midstream at a Crossroads

Fri, Mar 6, 2015

Oil & Gas Journal’s Mar. 6, 2015, webcast will focus on US midstream companies at an inflection point in their development in response to more than 6 years shale oil and gas production growth. Major infrastructure—gas plants, gathering systems, and takeaway pipelines—have been built. Major fractionation hubs have expanded. Given the radically changed pricing environment since mid-2014, where do processors go from here? What is the fate of large projects caught in mid-development? How to producers and processors cooperate to ensure a sustainable and profitable future? This event will serve to set the discussion table for the annual GPA Convention in San Antonio, Apr. 13-16, 2015.

This event is sponsored by Leidos Engineering.

register:WEBCAST


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!

 

Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected