Environmental Outlook 2050 & Consequences of Inaction

Mar 15: The Organization for Economic Co-operation and Development (OECD) has issued its Environmental Outlook to 2050 report which warns that as countries struggle with the immediate challenges of stretched public finances and high unemployment, they must not neglect the longer term. Action needs to be taken now to prevent irreversible damage to the environment. OECD Secretary-General Angel Gurría said, "Greener sources of growth can help governments today as they tackle these pressing challenges. Greening agriculture, water and energy supply and manufacturing will be critical by 2050 to meet the needs of over 9 billion people." said

    The report, OECD Environmental Outlook to 2050: The Consequences of Inaction, presents the latest projections of socio-economic trends over the next four decades, and their implications for four key areas of concern: climate change, biodiversity, water and the health impacts of environmental pollution. Despite the recent recession, the global economy is projected to nearly quadruple to 2050. Rising living standards will be accompanied by ever growing demands for energy, food and natural resources - and more pollution. The report indicates that, "The costs of inaction could be colossal, both in economic and human terms." Without new policies:

• World energy demand in 2050 will be 80% higher, with most of the growth to come from emerging economies (for North America about +15%, for OECD Europe +28%, for Japan +2.5, for Mexico +112%) and still 85% reliant on fossil fuel-based energy. This could lead to a 50% increase in greenhouse gas (GHG) emissions globally and worsening air pollution.
• Urban air pollution is set to become the top environmental cause of mortality worldwide by 2050, ahead of dirty water and lack of sanitation. The number of premature deaths from exposure to particulate air pollutants leading to respiratory failure could double from current levels to 3.6 million every year globally, with most occurring in China and India. Because of their ageing and urbanized populations, OECD countries are likely to have one of the highest rate of premature death from ground-level ozone in 2050, second only to India.
• On land, global biodiversity is projected to decline by a further 10%, with significant losses in Asia, Europe and Southern Africa. Areas of mature forests are projected to shrink by 13%. About one-third of biodiversity in rivers and lakes worldwide has already been lost, and further losses are projected to 2050.
• Global water demand will increase by some 55%, due to growing demand from manufacturing (+400%), thermal power plants (+140%) and domestic use (+130%). These competing demands will put water use by farmers at risk. 2.3 billion more people than today -- over 40% of the global population -- will be living in river basins under severe water stress, especially in North and South Africa, and South and Central Asia.

    The projections highlight the urgent need for new thinking. Failing that, the erosion of our environmental capital will increase the risk of irreversible changes that could jeopardize two centuries of rising living standards. Gurría said, "We have already witnessed the collapse of some fisheries due to overfishing, with significant impacts on coastal communities, and severe water shortages are a looming threat to agriculture. These enormous environmental challenges cannot be addressed in isolation. They must be managed in the context of other global challenges, such as food and energy security, and poverty alleviation."

    According to a release, well-designed policies to tackle environmental problems can also help to address other environmental challenges, and contribute to growth and development. Tackling local air pollution contributes not only to cutting GHG emissions but also to reducing the economic burden of chronic and costly health problems. Moreover, climate policies help protect biodiversity, for example by reducing emissions from deforestation. 

    To avert the grim future painted by the Environmental Outlook to 2050, the report recommends "a cocktail of policy solutions:" using environmental taxes and emissions trading schemes to make pollution more costly than greener alternatives; valuing and pricing natural assets and ecosystem services like clean air, water and biodiversity for their true worth; removing environmentally harmful subsidies to fossil fuels or wasteful irrigation schemes; and encouraging green innovation by making polluting production and consumption modes more expensive while providing public support for basic R&D.

    Green growth policies are already in place in many countries. OECD cites for example, Mexico's new pilot programme gives direct cash transfers to farmers instead of subsidizing the electricity they use to pump irrigation water, thus removing the price distortion that encouraged over-use of groundwater. The UK government has earmarked 3 billion British Pound (GBP 3 billion) for the new UK Green Investment Bank; this should leverage an additional GBP 15 billion of private investment in green energy and recycling by 2015. The US government has been working to phase out preferential tax provisions worth about USD 4 billion per annum that continue to support the production of fossil energy. Capitalizing on its knowledge-base and environmental technologies, city of Kitakyushu in Japan is working with businesses to enhance its competitiveness as a "green city" for low-carbon growth. Governments, businesses, consumers all have a part to play to move towards greener growth.

 

    Access a release from OECD and link to related information (click here). Access the complete report, executive summary and related documents (click here). Access the OECD website (click here). [#Sustain]

 

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U.S. Challenges China's Unfair Export Restraints On Rare Earths

Mar 13: U.S. Trade Representative Ron Kirk announced that the United States has requested consultations with the People's Republic of China at the World Trade Organization (WTO) concerning China's unfair export restraints on rare earths, as well as tungsten and molybdenum. These materials are key inputs in a multitude of U.S made-products and American manufacturing sectors, including hybrid car batteries, wind turbines, energy-efficient lighting, steel, advanced electronics, automobiles, petroleum, and chemicals.

    Consultations are the first step in the WTO dispute settlement process, and parties are encouraged to agree to a solution at this stage. Under WTO rules, if the matter is not resolved through consultations within 60 days, the United States may request the establishment of a WTO dispute settlement panel. The European Union and Japan also requested WTO consultations with China on this matter also.

    Ambassador Kirk said, "America's workers and manufacturers are being hurt in both established and budding industrial sectors by these policies. China continues to make its export restraints more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these materials throughout the global marketplace. The launch of this case against China today, along with the President's creation of the Interagency Trade Enforcement Center, reflects the Obama Administration's commitment to make all of our trading partners play by the rules. We will continue fighting for a level playing field for American workers and manufacturers in order to grow our economy, and ensure open markets for products made in America."

    The United States recently won a WTO challenge against China's export restraints on nine other industrial inputs. China's export restraint measures on rare earths, tungsten, and molybdenum appear to be part of the same troubling industrial policy aimed at providing substantial competitive advantages for Chinese manufacturers.

    China imposes several different types of unfair export restraints on the materials at issue in the consultations request, including export duties, export quotas, export pricing requirements as well as related export procedures and requirements. Because China is a top global producer for these key inputs, its harmful policies artificially increase prices for the inputs outside of China while lowering prices in China. This price dynamic creates significant advantages for China's producers when competing against U.S. producers – both in China's market and in other markets around the world. The improper export restraints also contribute to creating substantial pressure on U.S. and other non-Chinese downstream producers to move their operations, jobs, and technologies to China.

    U.S. Senator Debbie Stabenow (D-MI) applauded the action and said, "I have been calling for strong action to address China's illegal actions and am glad that action is now being taken. Michigan's economic turnaround depends on innovative businesses being able to manufacture the products of the future. We cannot let China's unfair trade practices stop job growth." She indicated that China is currently hoarding rare earth elements critical to a wide range of industries -- from hi-tech batteries for advanced technology vehicles, to smart phone batteries to important military technologies. She said China now controls production of more than 95% percent of the world's supply -- and has increasingly been using export controls to reduce the amount available on the world market.

 

    U.S. Senator Lisa Murkowski (R-AK) took the opportunity to criticize the President and said, "The president wants to sue the Chinese for something that we could -- and should -- be producing for ourselves. Instead of settling for Chinese imports, the president should be taking steps to jumpstart development of our own supplies of rare earth elements and other critical minerals. All he has to do is look north to Alaska, which has already identified roughly 70 rare earth elements sites. We have some of the strictest environmental standards in the world, but the president prefers to import minerals critical to our competitiveness and security from a country that has some of the lowest. If the president wants to address China's dominance in critical minerals production, he should support changes to U.S. federal minerals policy to allow domestic mining."

 

    Senator Murkowski said, "The United States is 100 percent dependent on foreign sources for 17 critical minerals." She has been calling for reforming Federal minerals policy for the past two years. Murkowski introduced the Critical Minerals Policy Act (S. 1113) last year, with 19 bipartisan cosponsors, to update Federal mining policy, but the legislation has languished in the committee waiting for the Majority to schedule a markup.

    Access a release from the U.S. Trade Representative with additional information and background (click here). Access a release from Sen. Stabenow (click here). Access a release from Sen. Murkowski and link to related information (click here). Access legislative details for S.1113 (click here). [#Land]

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Senate Approves Transportation Reauthorization Bill 74-22

Mar 14: With the current transportation authorization set to expire on March 31, 2012, the full Senate has now approved S.1813, the Moving Ahead for Progress in the 21st Century (MAP-21), a two-year $109 billion surface transportation bill, which maintains funding at current levels. The bipartisan bill, sponsored by Senator Barbara Boxer (D-CA), Chairman of the Environment and Public Works (EPW) Committee, and Senator James Inhofe (R-OK), Ranking Member of the Committee, was approved unanimously in Committee last November  [See WIMS 11/10/11] and was approved for consideration on the Senate Floor on February 9 [See WIMS 2/8/12], and has been awaiting action until last week when it was agreed that only 30 amendments would be considered. A number of non-germane and controversial amendments have been considered over the last several days. After all of the amendment were considered, the main bill passed by a vote of 74-22. The bill now goes to the House for consideration where more non-germane amendments are likely to be proposed.

 

    The Senate Committee on Commerce, Science, and Transportation Chairman John (Jay) Rockefeller IV (D-WV) issued a statement after the Senate passed S.1813 and said, "We've seen a lot of good trends recently about the safety of our roads and highways as well as the growth of travel. Highway deaths are at their lowest since 1949. Deaths in crashes involving drunk drivers have dropped almost 5 percent. And American drivers traveled 46 billion more miles in 2010 than 2009. It's important that we keep fostering these trends with federal programs that keep the focus on making transportation safety and smart infrastructure growth top priorities.

    "This Senate surface transportation reauthorization will do just that.  It helps create a long-term roadmap for our surface transportation system. Among other things, it improves large truck and bus safety by making certain only the safest motor carriers and drivers are able to enter the industry. The bill tackles the distracted driving epidemic and modernizes the National Highway Traffic Safety Administration to meet the challenges of modern automobiles. It increases the maximum civil penalty for hazardous materials transportation violations. It further builds upon the foundation Congress laid for a robust passenger rail system and makes smart rail safety improvements. And it establishes a much-needed, long-term vision for our federal surface transportation and freight networks to keep the flow of commerce running smoothly.

    "Now that the Senate has acted and we are quickly approaching expiration of these programs, I urge the House to move on this bill. Without well-supported, effective federal surface transportation programs, jobs are on the line, the economy is on the line, and the public's continued safety is on the line."

    According to a summary provided by Senator Rockefeller, The major surface transportation, safety, and freight provisions of this legislation would:

• Improve and establish National Highway Traffic Safety Administration (NHTSA) grant programs to address long-standing and emerging driving issues, such as distracted and teenage driving; enhance NHTSA's enforcement authority and transparency; mandate lifesaving new child safety standards; and strengthen the agency's expertise in advanced technologies.
• Modernize the Federal Motor Carrier Safety Administration's (FMCSA) approach to truck and bus safety by increasing the use of technology and data to drive enforcement efforts; ensure that only the safest truck and bus drivers are authorized to drive on our highways; improve the safety laws and regulations that govern drivers and vehicles that operate in the industry; and enhance FMCSA's authority to oversee the truck, bus, and household goods movers industries.
• Establish a clear and unified mission for our federal surface transportation and freight networks, including a long-term vision for surface and freight transportation programs that the Secretary of Transportation will have to implement through a surface transportation and freight strategic plan; and provide more transparency and accountability to the federal surface transportation funding programs.
• Build on existing rail programs at Amtrak and at the Federal Railroad Administration to further refine and streamline development of a robust intercity passenger rail system and take steps to address key rail safety concerns.
• Enhance the Research and Innovative Technology Administration's (RITA) innovative planning and research capability; streamline RITA's current authority; improve RITA's ability to spur innovation in transportation research; and increase the safety and oversight of the hazardous materials being transported through our nation's transportation networks.

    House Democratic Leader Nancy Pelosi (D-CA) released a statement saying, "Today, Democratic and Republican Senators voted to create jobs, invest in road, rail, transit, and highway construction, rebuild our infrastructure, and strengthen our economy. Now, it is time for House Republicans to abandon their 'my way or the highway' agenda and send the bipartisan Senate bill to the President's desk before current law expires on March 31st. . . Put simply, the House Republican transportation bill is bad for jobs, bad for public safety, and bad for our economic growth. We must pursue a different path – the bipartisan path of enacting the Senate bill – to make the investments necessary to strengthen our economy and our middle class, create jobs, and rebuild America."

 

    Access a release from Senator Rockefeller (click here). Access the roll call vote on final passage (click here). Access a release from Rep. Pelosi (click here). Access a 4-page MAP-21 bill summary (click here). Access the complete 600-page draft MAP-21 bill (click here). Access legislative details for S.1813 (click here). [#Transport]

 

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Insurance Think Tank Report On Climate Risk & Other Extreme Events

Mar 8: The Geneva Association, which says it is the leading international insurance think tank for strategically important insurance and risk management issues, published the Geneva Report No 5: Extreme events and insurance: 2011 annus horribilis, a global and detailed picture of the major 2011 natural catastrophes and an analysis of the role and mechanisms of insurance in managing climate risk and other extreme events.

 

    The report comprises nine essays by leading insurance academics, economists and insurers that underline the significant importance of risk adaptation and management measures in developing physical and economic resilience to natural catastrophes, including the important role of insurance in such mechanisms. It also provides the implicit "lessons learned" from the catastrophes that will enable better risk assessment and adaptation to similar risks in future. The report indicates that 2011 was an unusual year with regards to the regional distribution of events and the proportion of geological activity in the total number of events but one consistent theme is the global need for adaptation and risk reduction measures. The report highlights how a clear and transparent allocation of risks and responsibilities among public authorities, private firms, including insurers, and individuals is a key component of any comprehensive disaster risk management strategy.

 

    The first section of the report, "Insurance and Extreme Events" provides a broad overview of both the economic and insured losses of the 2011 natural catastrophes and a description of the insurance role in managing extreme events. This is followed by an analysis of the potential of public-private initiatives to cover extreme events and the development of catastrophe bonds and other risk-linked securities as sources of capital to for insurance mechanisms. The second section, "2011 Events and National Studies", analyzes the five most significant natural catastrophes of 2011, namely the March 11, Japanese earthquake, the Australian and Thai floods, the New Zealand earthquakes, and the U.S. tornadoes. Each chapter provides a detailed description of the nature of the event, its impact on local insurance markets, and any lessons learned for the management of similar risks in future.

 

    Walter Stahel, Vice Secretary General and Head of the Risk Management Programme of The Geneva Association said, "Predictions suggest that by 2025 more than 5.5 billion people worldwide will live in cities and a large proportion of them close to regions prone to extreme events. It is also likely that powerful extreme events will affect several of these large urban areas in the coming decades. Governments and decision-makers should keep the dramatic events of 2011 in mind and recognize the potential seriousness of this situation. The insurance industry is one part of any solution for efficient catastrophe risk management. Without a real effort from all stakeholders, including governments, to develop and implement such programmes, it seems inevitable that the worst is yet to come."

 

    Michael Butt, Chairman of AXIS Capital Holdings and co-Chair of The Geneva Association's Climate Risk and Insurance Project said, "The nature and scale of the challenge of natural catastrophes is greater than can be covered by insurance alone. The principle reason for increasing damage and loss figures are more socio-economic changes rather than changes of natural variability. A closer cooperation and collaboration between governments, industry and insurers is needed to manage disaster risks and to reduce the financial impact of extreme events."

 

    Access a release from the Geneva Association (click here). Access the complete 147-page report (click here). [#Climate]

 

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Update On President's Blueprint For A Secure Energy Future

Mar 12: The President received a one-year progress report on his "Blueprint for a Secure Energy Future" [See WIMS 3/30/11]. A White House release indicates that the original Blueprint outlined the Administration's all-of-the-above approach to American energy -- a strategy aimed at reducing reliance on foreign oil, saving families and businesses money at the pump, and positioning the United States as the global leader in clean energy.

 

    In a statement from the President, he indicated, "The progress report I received today from members of my administration underscores the headway our nation has made towards reducing our reliance on foreign oil, while also expanding American made energy. As the report highlights, we have made progress, with imports of foreign oil decreasing by a million barrels a day in the last year alone. Our focus on increased domestic oil and gas production, currently at an eight year high, combined with the historic fuel economy standards we put in place, means that we will continue to reduce our nation's vulnerability to the ups and downs of the global oil market. We've also made progress in the expansion of clean energy, with renewable energy from sources like wind and solar on track to double, along with the construction of our first advanced biofuel refineries. And yet, despite the gains we've made, today's high gas prices are a painful reminder that there's much more work to do [to] free ourselves from our dependence on foreign oil and take control of our energy future. And that's exactly what our administration is committed to doing in the months ahead."

 

    The White House highlighted the following as the major accomplishments:

• "Increasing American Energy Independence: A year ago, the President set a bold but achievable goal of reducing oil imports by a third in a little over a decade, relative to where they were when he ran for office. Thanks to booming U.S. oil and gas production, more efficient cars and trucks, and a world-class refining sector that last year was a net exporter for the first time in sixty years, we have already cut net imports by ten percent – or a million barrels a day – in the last year alone. And with the new fuel economy standards the President announced last year, we are on pace to meet our goal by the end of the decade.
• "Expanding Domestic Oil and Gas Production: Domestic oil and natural gas production has increased every year President Obama has been in office. In 2011, American oil production reached the highest level in nearly a decade and natural gas production reached an all-time high.
• "Setting Historic New Fuel Economy Standards: The Obama Administration has put in place the first-ever fuel economy standards for heavy-duty trucks, and proposed the toughest fuel economy standards for passenger vehicles in U.S. history, requiring an average performance equivalent of 54.5 miles per gallon by 2025. Over time, these new standards will save consumers more than $8,000 in lower fuel costs.
• "Improving Energy Efficiency in 1 Million Homes: Since October 2009, the Department of Energy and the Department of Housing and Urban Development have completed energy upgrades in more than one million homes across the country. For many families, these upgrades save over $400 on their heating and cooling bills in the first year alone.
• Doubling Renewable Energy Generation: Thanks in part to the Obama Administration's investment in clean energy – the largest in American history – the United States has nearly doubled renewable energy generation from wind, solar, and geothermal sources since 2008.
• "Developing Advanced, Alternative Fuels: In 2010, President Obama set a goal of breaking ground on at least four commercial scale cellulosic or advanced biorefineries by 2013. That goal has been accomplished, one year ahead of schedule. Together, these projects, and associated demonstration and pilot projects will produce a combined total of nearly 100 million gallons per year of advanced biofuels capacity.
• "Supporting Cutting-Edge Research: The Department of Energy's Advanced Research Projects Agency – Energy (ARPA-E), which the Obama Administration funded for the first-time ever in 2009, has supported more than 120 individual projects aimed at achieving new and transformational energy breakthroughs."

    The White House indicated, "Today, we are experiencing yet another painful reminder of why developing new American energy is so critical to our future. Just like last year, gas prices are climbing across the country -- except this time, even earlier. While there are no silver bullets to solve these challenges, the Obama Administration will continue to build on the progress we've made over the past three years. Through a sustained, all-of-the-above approach to American energy we'll work to restore middle class security, reduce our dependence on foreign oil, and create an economy that's built to last."

    In response to the Blueprint update report, the office of House Speaker John Boehner (R-OH) indicated in a blog posting, "As is typically the case when its policies are under fire. . . the Obama White House is doubling down on its marketing efforts. Today the president will try 'selling his energy successes,' a head-scratcher of move that will certainly come as a surprise to families, nonprofit organizations, and small business owners struggling with the pain at the pump.

    "The White House is also releasing a new 'report' that 'doesn't offer much new,' just again attempts to take credit for increased domestic energy production, a claim that has been thoroughly debunked by independent voices. No amount of misleading talking points can hide the president's record of consistently blocking American energy production, including 'personally lobbying' members of Congress just days ago to block a Keystone XL pipeline jobs amendment in the Senate [See WIMS 3/9/12]. With the pain at the pump showing no sign of letup, Americans are looking for solutions -- not excuses -- and Republicans are delivering with a real 'all-of-the' above energy policy as part of a pro-growth jobs plan."

    Representative Ed Markey (D-MA), Ranking Member of the Natural Resources Committee and senior member of the Energy and Commerce Committee, issued a statement on the President's Blueprint saying, "Today's release by the Obama administration of its progress report for securing America's energy future shows that the President has put in place an 'All of the Above' American energy plan that has put us on a path to freeing our nation from the grip of the OPEC oil cartel. Increased domestic oil and gas production, historic new fuel economy standards, coupled with expanded renewable energy generation and improved energy efficiency represents a vision that strikes fear in hearts of the OPEC oil cartel and the Big Oil companies who want to keep us addicted to high-priced oil.
 
    "In contrast, Republican leaders in Washington are pursuing an 'Oil Above All' scheme that preserves $4 billion in annual tax breaks for the Big Oil companies, slashes funding for solar, wind and other renewable energy, and promotes exports of oil and natural gas from the U.S. to foreign countries -- all at the expense of higher prices for American consumers. The GOP energy strategy is to drill here in America, export our oil and gas abroad, and force Americans to pay more for gasoline, home heating oil, and natural gas."

    Access a release from the White House (click here). Access the President's statement (click here). Access the complete 20-page Blueprint update report (click here). Access the original Blueprint announcement and link to the President's speech and the 44-page report (click here). Access the blog posting from Speaker Boehner's office (click here). Access the statement from Rep. Markey (click here). [#Energy]

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Despite Excessive Rhetoric Keystone XL Pipeline Moves Forward

Mar 8: As politicians continue to beat the Keystone XL pipeline "horse" to death, the Administration and TransCanada Corporation are continuing to proceed with the ultimate development of the project. With encouragement from the White House, TransCanada, the project developer continues to say that it is, "fully committed to the Keystone XL project and expects to place the pipeline in service by early 2015." It is interesting to note that while all parties involved are aware of this, there is a continuing misrepresentation by the parties and the media that the project has been permanently halted and the developer and Canada are pursuing new alternatives that will eliminate any energy resource, economic or jobs benefit to the U.S. will result in selling tar sand oil to China [See WIMS 2/28/12].

 

    Despite this reality, the political rhetoric was thick following last evening's vote on an amendment to "approve the pipeline and move forward construction" on the project. The amendment which required 60 votes for passage failed by a vote of 56 - 42 -- 11 Democrats also voted for the amendment. Reportedly, two additional Republican senators unable to vote, would have also supported the measure. The amendment, along with many others, is being proposed to S.1813, the transportation funding reauthorization bill, Moving Ahead for Progress for the 21st Century Act (MAP-21) [See WIMS 3/8/12].

 

    The operative part of the Keystone XL amendment (SA 1537), offered by Senator John Hoeven (R-ND) indicates, "Notwithstanding any other provision of law, no permit pursuant to Executive Order 13337 (3 U.S.C. 301 note) or any other similar Executive Order regulating construction, connection, operation, or maintenance of facilities at the borders of the United States, and no additional environmental impact statement, shall be required for TransCanada Keystone Pipeline, L.P. to construct, connect, operate, and maintain the facilities described in paragraph (1). . ."

 

    Senator Hoeven said in a release, "In spite of congressional support, the Administration continues to block efforts to move forward on this project. It is disappointing that President Obama personally called senators to urge them to oppose this important amendment, which would enable the Keystone XL pipeline to move forward with all necessary environmental safeguards. This vote provides good momentum for our legislation. We'll continue working not only in the Senate, but also with our colleagues in the U.S House, where we have a good opportunity to include this amendment in their version of the Highway bill. With a majority of senators already voting in favor of our amendment, it would have strong support when the bill gets to conference committee." 

 

    U.S. Senate Republican Leader Mitch McConnell (R-KY) issued a statement on the amendment saying, "The Democrat-controlled Senate just turned its back on job creation and energy independence in a single vote by rejecting the bipartisan Hoeven-Lugar amendment. They rejected legislation that would have led to construction of the Keystone XL Pipeline and the thousands of private-sector jobs that come with it. At a moment when tensions are rising in the Middle East, millions of Americans are struggling to find work and millions more are struggling with the rising cost of gas, Democrat opposition to this legislation shows how deeply out of touch they are with the concerns of middle-class Americans. President Obama's personal pleas to wavering Senators may have tipped the balance against this legislation. When it comes to delays over Keystone, anyone looking for a culprit should now look no further than the Oval Office."

 

    At his weekly press briefing, House Speaker John Boehner (R-OH) said President Obama owes the American people an explanation for "'personally lobbying' against the Keystone XL pipeline, and the 20,000 new American jobs it would create, and lobbying for sending North American energy to China." The Speaker said, ". . .by 'personally lobbying' against the Keystone pipeline, it means the President of the United States is lobbying for sending North American energy to China, and lobbying against American jobs.  So the president told the nation he supports an 'all-of-the-above' energy strategy that Republicans have long supported.  But his actions don't match his words. . ."

 

    While the heated rhetoric continues in Congress, on February 27, 2012, TransCanada Corporation announced it has sent a letter to the U.S. Department of State (DOS) informing the Department the company plans to file a Presidential Permit application (cross border permit) in the near future for the Keystone XL Project from the U.S./Canada border in Montana to Steele City, Nebraska. TransCanada said it would supplement that application with an alternative route in Nebraska as soon as that route is selected. The company also informed the DOS that what had been the Cushing [Oklahoma] to U.S. Gulf Coast portion of the Keystone XL Project has its own independent value to the marketplace and will be constructed as a stand-alone Gulf Coast Project, not part of the Presidential Permit process. The approximate cost is US$2.3 billion and subject to regulatory approvals. The company said it anticipates the Gulf Coast Project to be in service in mid to late 2013 [See WIMS 2/28/12]. At the same time, the White House issued an statement saying:

"The President welcomes today's news that TransCanada plans to build a pipeline to bring crude oil from Cushing, Oklahoma, to the Gulf of Mexico. As the President made clear in January, we support the company's interest in proceeding with this project, which will help address the bottleneck of oil in Cushing that has resulted in large part from increased domestic oil production, currently at an eight year high. Moving oil from the Midwest to the world-class, state-of-the-art refineries on the Gulf Coast will modernize our infrastructure, create jobs, and encourage American energy production. We look forward to working with TransCanada to ensure that it is built in a safe, responsible and timely manner, and we commit to take every step possible to expedite the necessary Federal permits.

 

"Separately, TransCanada gave the State Department advance notice of its intention to submit a new application for the cross-border segment of the Keystone XL pipeline, from Canada to Steele City, Nebraska, once a route through Nebraska has been identified. House Republicans forced a rejection of the company's earlier application in January, by not allowing sufficient time for important review or even the identification of a complete pipeline route. But as we made clear, the President's decision in January in no way prejudged future applications. We will ensure any project receives the important assessment it deserves, and will base a decision to provide a permit on the completion of that review."

    Another amendment was proposed by Democrats related to the Keystone XL project and was also defeated. Amendment SA 1817 proposed by Senator Ron Wyden (D-OR) would, "ensure the expeditious processing of Keystone XL permit applications consistent with current law, prohibit the export of crude oil produced in Canada and transported by the Keystone XL pipeline and related facilities unless the prohibition is waived by the President, and require the use of United States iron, steel, and manufactured goods in the construction of the Keystone XL pipeline and related facilities with certain exceptions."

 

    Senator Hoeven issued a statement on the Democrats proposal saying, "The Democrats' amendment actually adds further impediments to the construction of the Keystone XL pipeline project. Not only does it require TransCanada to start over in the application process after more than three and half years -- just as the President's denial did -- but it also adds more restrictions which aren't workable. This makes it worse. . ." The amendment was defeated by a vote of 33-65.

 

    Access the Keystone XL pipeline amendment SA1537 (click here, scroll down). Access a release from Sen. Hoeven (click here). Access a release from Sen. McConnell (click here). Access a release from Speaker Boehner (click here). Access the TransCanada release (click here). Access the White House statement (click here). Access the White House press briefing transcript (click here). Access the TransCanada Keystone XL project website for additional information (click here). Access complete details and background from the DOS Keystone XL Pipeline Project website (click here). Access the Keystone XL pipeline amendment SA1817 (click here, scroll down). Access a release from Sen. Hoeven on SA1817 (click here). Access legislative details for S.1813 including links to amendments and roll call votes (click here). [#Energy/Pipeline, #Energy/KXL, #Energy/OilSands, #Energy/TarSands]

 

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Transportation Bill Exemplifies Broken Congressional System

Mar 8: In a classic example of why the Congressional approval rating is around 10%, the House and Senate have both demonstrated an inability to address the critical need of adopting a transportation funding reauthorization bill, despite bipartisan backing and support from over 1,000 diverse organizations that have come together despite their differences [See WIMS 2/15/12]. The current surface transportation bill expires on March 31, and the many groups, ranging from the U.S. Chamber of Commerce to the AFL-CIO, have called for immediate action to reauthorize the nation's transportation programs. Instead, the House and Senate have been bogged down for over a month debating non-germane related amendments and issues including even an amendment to a transportation bill by Senator Roy Blunt (R-MO) to allow employers to object to providing insurance coverage for birth control.

 

    Reportedly, the Senate leadership has now reached a "deal" to consider some 30 amendments to the bill. Senate Majority Leader Harry Reid (D-NV) indicated last evening that the Senate would consider the amendments today, but other reports indicate that only some will be dealt with today and the others will be addressed next week. The Hill publication reports that, "Among the amendments that will get a vote are ones from Sen. David Vitter (R-LA) to extend oil and gas drilling permits in the Outer Continental Shelf, one from Sen. Tom Coburn (R-OK) to eliminate duplicative federal programs and one from Sen. Bob Corker (R-TN) to reduce the 2013 discretionary spending cap. Another amendment authorizing the Keystone XL pipeline is also up for a vote."

 

    Senator Charles Schumer (D-NY) issued a statement on March 6 saying in response to House Speaker John Boehner's (R-OH) comments that he is open to bringing up the Senate's bipartisan highway bill (S.1813) saying, "Senate Republicans have been using amendments to delay this bipartisan highway bill until Speaker Boehner could figure out a path for dealing with it in the House. Now that the Speaker has publicly signaled he is willing to buck his conservative bloc and give the Senate bill a vote, momentum is on our side. Senate Republicans have no reason to drag this out any longer."

 

    On the House side, the path may not be so clear. An earlier attempt to pass a highly controversial bill failed and then Speaker Boehner indicated that the House might consider a Senate bill. However, on March 7, at a GOP Conference, House Transportation and Infrastructure Committee Chairman John Mica (R-FL) indicated that his long-term (5 years) transportation reform bill received the support of U.S. House leaders and will continue to be the focus of efforts to pass a major transportation and energy jobs initiative through the House.

 

    Rep. Mica said, "House leaders and I agree that the five-year transportation measure approved by the Committee in February is the best option for a job-creating bill to improve our infrastructure. During a meeting today with House Republicans, we had a productive discussion and outlined our hope to move forward with the Committee's five-year bill with a few changes, including the financing of transit from the Highway Trust Fund. The Committee crafted a responsible bill with much needed and long overdue reforms. Working with the Republican leadership and GOP Conference members, we hope to move forward with a bill in the coming weeks that will create jobs and lower energy costs for Americans."

 

    Access a Reuters article on Senate consideration of S.1813 (click here). Access The Hill article on Senate consideration of S.1813 (click here). Access the Sen. Schumer statement (click here). Access the statement from Rep. Mica (click here). Access a listing of the Senate amendments to be considered (click here); and (click here). Access legislative details for S.1813 (click here). Access the Senate roll call votes as they occur (click here). [#Transport]

 

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Hearing On Rising Gasoline Prices Indicates Political Energy Divide

Mar 7: As WIMS has previously reported the political parties and interest groups remain far apart on energy policy and solutions to stabilize gasoline prices [See WIMS 3/2/12]. Today, the House Energy and Commerce Committee, Subcommittee on Energy and Power Subcommittee Chaired by Representative Ed Whitfield (R-KY) held a hearing on Rising Gasoline Prices. Witnesses included representatives from: American Petroleum Institute; The Rapidan Group (energy market & policy research firm); American Fuel & Petrochemical Manufacturers; CarbM Trucking; Center for American Progress; Truman National Security Project; and National Association of Convenience Stores. The opening statements and witness testimony provide a clear outline of the issues and different positions.

 

    In an opening statement Chairman Whitfield said: "With every gas price spike comes some very familiar calls from policymakers. Some argue for increased domestic drilling, some say we should release oil from the Strategic Petroleum

Reserve. Others lay the blame for high prices on Wall Street and the oil companies. Before we discuss the merits of these causes and solutions, let's start with the facts.

 

    "First, Iran has threatened to block the Strait of Hormuz – a narrow channel in the Middle East through which a third of the world's waterborne crude oil passes every single day. As a result, a geopolitical risk premium is being priced into every barrel of oil. Until the situation with Iran is resolved, and hopefully that is soon, we will see above-average oil and gasoline prices.

 

    "Second, in addition to geopolitical tensions and their effect on oil prices, fundamental supply and demand is creating an environment of high prices. There is large demand growth from China, India, the Middle East, and Brazil. At the same time, current supplies are not growing at rate that can keep up with surging demand from these economies. That is why countries like Brazil and China are moving forward with aggressive oil production plans at home and abroad.

 

    "Third, North America's oil market has undergone a dramatic transformation over the past five years. We are now producing over 500,000 barrels per day in North Dakota. In 2005, that number was below 100,000. In Texas, oil production has increased 50 percent in just four years. Like the natural gas revolution, North America is now experiencing its own oil boom. Oil production is surging in this country in no thanks to the Obama administration. All the new volumes coming online are happening on private- and state-owned lands. Production is declining at an alarming rate on federal lands and waters. There is a lot more that can be

done if the federal government would simply get out of the way. . .

 

    "The president has proclaimed we have only two percent of the world's proven oil reserves and we can't drill our way to energy security. But if you know what a proven oil reserve is, you would realize America's energy potential is nearly unlimited. A proven oil reserve is a figure that is obtained by an oil producer once they have fully explored and developed an oil field. Using the president's definition, the U.S. has 28.4 billion barrels of oil. That equates to two percent of the world's oil. But if you look at all the untapped resources, the U.S. holds trillions of barrels of oil. The Obama administration says we have only two percent of the world's oil because that's all they will let us have. . ."

 

    Full Committee Chairman Fred Upton (R-MI) said, "The administration's hostility towards domestic drilling has not changed, only his rhetoric has. The president now boasts that domestic drilling is up - but he neglects to mention that the increase is due to production on private and state-owned lands where federal regulators have little to no power to block drilling. Production actually declined on federal lands from 2010 to 2011, and the administration has offered up no policy changes that would reverse this disturbing trend. Some in Washington claim that producing more domestic oil won't make any difference in prices, but the American people know better. The American people also know better when it comes to the Keystone XL pipeline expansion project that would allow more Canadian oil to reach American market. . ."

 

    In response, Ranking Member Henry Waxman (D-CA) said, "Gasoline prices go up; politicians make false promises about how they will bring prices down; and nothing gets accomplished. We've seen it with the push to open our coastlines to more drilling. We've seen it with enactment of legislation to promote refineries in 2005. Still, prices rise. Now, the Republican mantra is that we need to "drill, baby, drill." This slogan may sound good, but it's based on a complete fiction. We are drilling more, but prices are still going up. U.S. crude oil production is the highest it's been in eight years, and the U.S. has more oil and gas drilling rigs operating right now than the rest of the world combined. Net oil imports as a share of our total consumption declined from 57% in 2008 to 45% in 2011 -- the lowest level since 1995.

 

    "We need to face reality. And the reality is that oil prices are determined on a global market. No matter how much we drill, our gasoline prices are going to rise if there's a crisis in the Middle East, labor unrest in Nigeria, or any of a host of other factors we can do little about. There's only one way we can protect ourselves from the impacts of rising oil prices: we need to reduce our dependence on oil. There are no short-term solutions. There is no silver bullet. We need to invest in clean energy to diversify and reduce our energy use. The President has taken important steps. He has acted to cut the emissions of cars and trucks, doubling the fuel efficiency of our fleet. As a result, our dependence on oil has declined.

 

    "But he needs our help. Oil companies are making record profits, yet they are still getting $4 billion in subsidies from taxpayers each year. We can't afford to take money from taxpayers struggling to pay their mortgages and fill up their tanks and hand it to oil companies making billions in profits. That is why we need to repeal the oil subsidies and use the money to develop sources of clean energy that reduce our dependence on oil. Today, we are going to hear a lot of the same old unsupported claims. . .

 

    "My staff contacted some of the nation's leading energy economists, and they told us that the so-called solutions we'll hear today from the oil industry will not reduce our gasoline prices. John Parsons is an economist at MIT and one of the nation's leading experts on oil markets. He told us the industry claims are 'not remotely plausible' because drilling more will have 'at best a miniscule impact' on gasoline prices. Oil industry expert Phil Verleger told us that announcing more production would have: 'no impact – ZERO on the current price.' He predicted that the people who buy or sell oil would simply ridicule these recommendations as a plan for reducing gasoline prices. . . We should start by facing facts, listening to experts, and crafting policies that will reduce our dependence on oil."

   

    The Rapidan Group testified, "A crucial step is to increase oil supply everywhere: In a tight market and especially when spare capacity is otherwise low, every extra barrel of supply on the margin counts and can help reduce future price volatility. If North America succeeds at increasing oil supply by some 6 mb/d or more, then it would free up more Middle East oil to go to Asia or remain in spare capacity to offset a disruption."

 

    The Truman Project testified, "A $10 increase in the price of a barrel of oil costs the Department of Defense an estimated $1.3 billion. . . Reliance on this single source of fuel is a security risk we can no longer tolerate. . . America sends over $1 billion per day overseas for oil. iv It should not be a surprise, then, that oil is the single largest contributor to our foreign debt, outpacing even our trade deficit with China. . . research concluded that for every $5 rise in the price of a barrel of crude oil, Putin's Russia receives more than $18 billion annually, Chavez's Venezuela an additional $4.9 billion annually, and Ahmadinejad's Iran an additional $7.9 billion annually. . . a simple request: lead us in building an alternative energy economy that can break our dependence on oil, ensure our future prosperity and security, and finally put Americans in control of our own energy future."

 

    American Petroleum Institute (API) testified, "Gasoline prices are climbing primarily because the cost of crude oil -- which accounts for 76 percent of the price at the pump -- also has been rising, pushed higher by global demand and Middle East tensions. These market forces are challenging, but America doesn't have to be held captive by them. We have choices. By increasing access to North American energy, we will help put downward pressure on fuel prices."

 

    Access the Republican Committee website for background, statements and testimony (click here).  Access the Democratic Committee website for a webcast, statements and testimony (click here). [#Energy, #energy #gas #POTUS #DEMS #GOP]

 

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Worldwide Progress On Drinking Water & Sanitation 2012

Mar 6: According to a report issued by UNICEF and the World Health Organization (WHO) the world has met the Millennium Development Goal (MDG) target of halving the proportion of people without sustainable access to safe drinking water, well in advance of the MDG 2015 deadline. A release indicates that between 1990 and 2010, over two billion people gained access to improved drinking water sources, such as piped supplies and protected wells.

 

    United Nations Secretary-General Ban Ki-moon said, "Today we recognize a great achievement for the people of the world. This is one of the first MDG targets to be met. The successful efforts to provide greater access to drinking water are a testament to all who see the MDGs not as a dream, but as a vital tool for improving the lives of millions of the poorest people." UNICEF Executive Director Anthony Lake said, "For children this is especially good news. Every day more than 3,000 children die from diarrhoeal diseases. Achieving this target will go a long way to saving children's lives."

 

    The report, Progress on Drinking Water and Sanitation 2012, by the WHO/UNICEF Joint Monitoring Programme (JMP) for Water Supply and Sanitation, indicated that at the end of 2010, 89 per cent of the world's population, or 6.1 billion people, used improved drinking water sources. This is one per cent more than the 88 per cent MDG target. The report estimates that by 2015, 92 per cent of the global population will have access to improved drinking water.

 

    Lake warned that victory could not yet be declared as at least 11 per cent of the world's population -- 783 million people -- are still without access to safe drinking water, and billions without sanitation facilities. He said, "The numbers are still staggering. But the progress announced today is proof that MDG targets can be met with the will, the effort and the funds." The report highlights that the world is still far from meeting the part of the MDG target for sanitation, and is unlikely to do so by 2015. Only 63 per cent of the world now have improved sanitation access, a figure projected to increase only to 67 per cent by 2015, well below the 75 per cent aim in the MDGs. Currently 2.5 billion people still lack improved sanitation.

 

    Access a release from WHO/UNICEF (click here). Access the 2012 Update Report (click here). Access the JMP website (click here). [#Drink, #Water, #MDG, #WHO, #UNICEF, #JMP, #UN]

 

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Temporary Volt Suspension Shakes Up Electric Car Market

Mar 2: Despite U.S. auto sales accelerating to the fastest pace in four years and $4-$5 gasoline now a reality, General Motors announced a temporary Volt production suspension which will result in layoffs for 1,300 workers. The reason is an over supply and weak demand. According to a CBS news article and data from Edmunds.com, the company sold 7,671 Volts last year -- well short of its 10,000 target. And selling 1,626 in the first two months this year is far below the pace needed to hits its original 2012 sales goal of 45,000.

 

   An analysis by Edmunds seems to indicate that its simply a matter of price and economics. Edmunds points out that, "Even with gas prices rising and expected possibly to approach a national average $5 a gallon by summer, the Volt price level -- about $41,000 before a $7,500 federal tax credit -- remains a problem." Edmunds senior analyst Michelle Krebs points out that even at $5 a gallon, gas savings on the Volt (rated at the equivalent of 95 MPG in city driving and 93 on the highway) would take nine years to pay back the price differential over the similar-size Chevrolet Cruze. The Cruze is rated at 25 MPG city, 36 highway and has an average selling price of $19,656 according to Edmunds' data.

 

    Additionally, Volt sales stalled with news and Congressional investigations regarding Volt battery fires had broken out after the cars were crash tested. The National Highway Traffic Safety Administration pronounced the Volt as safe as gasoline cars, but CBS indicates that "the issue clearly put off some shoppers." In January, GM CEO Dan Akerson explained: "We did not design the Volt to become a political punching bag and that's what it's become." Akerson was referring to the widely publicized January 25, House Oversight & Government Reform Committee, Chaired by Representative Darrell Issa (R-CA), Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending, Chaired by Representative Jim Jordan (R-OH), hearing entitled, "Volt Vehicle Fire: What Did NHTSA Know and When Did They Know It?" [See WIMS 1/26/12]. 

 

    Oversight Chairman Issa released a statement on the GM announcement saying, "Even as gas prices continue to climb, President Obama's attempt to manipulate the free market and force consumers into purchasing electric vehicles like the GM Volt has failed despite the use of taxpayer dollars to prop up production. Now some 1,300 workers will pay the price for this misguided experiment. Domestic energy production remains underutilized because of President Obama's campaign to pursue 'green' energy and projects, and shift away from traditional energy sources. These decisions have hurt our economy and slowed our recovery."

 

    House Republicans have been critical of the auto company "bailout," the a federal tax credit of up to $7,500 per vehicle; and the Administration's emphasis on alternative energy vehicles. A Committee staff report indicated, "In the face of that political dependency, it is deeply troubling that public notification of the safety concerns related to the Volt was inexplicably delayed for six months – a period of time that also coincides with the negotiation over the 2017-2025 fuel economy standards. The necessity of a full explanation for NHTSA's silence concerning the Volt's safety risk has been compounded by its lack of cooperation with the Committee."

 

    NHTSA testified, ". . .we have concluded the agency's investigation and have found no discernible defect trend. The vehicle modifications recently developed by GM effectively address the issue of battery intrusion and they have included this modification as they manufacture new vehicles going forward. NHTSA continues to believe that electric vehicles show great promise as a safe and fuel-efficient option for American drivers."

 

    At that time, Akerson testified, "GM's Akerson testified, "We engineered the Volt to be among the safest vehicles on the road – earning an overall NHTSA 5 Stars for occupant safety and a Top Safety Pick from the Insurance Institute for Highway Safety. We engineered the Volt to be a technological wonder. . . In other words, we engineered the Volt to be the only current EV on the road that you can drive across town or across the country without fear of being stranded when the battery power is depleted. . ." He continued saying, "we will not change any part of the manufacturing process at our Brownstown, Michigan, battery pack assembly plant. We have tested the Volt's battery system for more than 285,000 hours, or 25 years, of operation. It's important to note, the battery cell design used in the Volt was not the cause of the incidents that prompted the investigation. . ."

 

    The CBS news article points out that, "The Volt's major competitor, the Nissan Leaf -- at $32,780 before the credit -- fares slightly better in this comparison with gas at $5 a gallon. The all-electric Leaf (the Volt has a back-up gasoline engine) would pay back the price differential over a Nissan Versa in five years, Krebs says. Leaf sold 9,674 in North America last year and 22,000 worldwide." Also, the 2012 Ford Focus Electric is the first five-passenger all-electric vehicle with a combined fuel efficiency rating of over 100 MPGe -- Just rated at rated at 110 miles per gallon equivalent (MPGe) in the city and 99 MPGe on the highway (105 MPGe combined). The Focus Electric has a base price of $39,995 before the $7,500 tax credit.

 

    The Pew Clean Energy Program's electric vehicle (EV) initiative which is working to identify and highlight state and local best practices that will help attract investment in clean transportation and promote smart EV policies said in a blog posting that its "clean energy economy research clearly demonstrates that policy matters: Where effective public policy exists, private investment and job growth will follow. Policies that lead to greater adoption of EVs can help drivers and businesses access low-cost domestic energy that is unaffected by the price volatility of the global petroleum market. By decreasing spending on foreign oil, consumers and businesses can choose to invest more money at home and help reduce the trade deficit. Domestic development and production of EV technologies also can ensure U.S. global leadership in a sector that will attract billions in private investment and create jobs."

 

    Access the CBS news article (click here). Access the Edmunds website for more information (click here). Access a release on U.S. record auto sales (click here). Access the statement from Rep. Issa and link to Committee background (click here). Access a Climate Progress posting and video on media and Republican criticisms of the Volt (click here). Access a DailyTech article on the Ford Focus Electric (click here). Access the Pew posting with links to related information (click here). Access the Republican hearing website for links to the testimony, staff report and video (click here). [#Transport/Electric, #Volt #EV #Energy #GOP]

 

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Parties Remain Far Apart On Energy Policy & Gas Prices

Mar 1: President Obama delivered another major energy speech at Nashua Community College and Nashua, New Hampshire. The speech was very similar to the one he delivered on February 23, at the University of Miami [See WIMS 2/24/12]. He reiterated, "You know that we can't just drill our way to lower gas prices. There are no quick fixes or silver bullets. If somebody tells you there are, they're not telling you the truth. 

    He said, ". . .we've got to have an all-of-the-above strategy that develops every single source of American energy.  Not just oil and gas, but also wind and solar and biofuels. We've got to keep developing the technology that allows us to use less oil in our cars and trucks, less oil in our buildings and our factories. And that's the strategy we've been pursuing for the last three years, and it's the only real solution to this challenge. . .

    "Since I took office, America's dependence on foreign oil has gone down every single year. Every single year. In fact, in 2010, it was under 50 percent for the first time in 13 years -- for the first time. . . one of the reasons our oil -- our dependence on foreign oil is down is because of policies put in place by our administration, but also our predecessor's administration. And whoever succeeds me is going to have to keep it up. This is not going to be solved by one party; it's not going to be solved by one administration; it's not going to be solved by slogans; it's not going to be solved by phony rhetoric. It's going to be solved by a sustained, all-of-the-above energy strategy. . .

    "So when you start hearing a bunch of folks saying somehow that there's some simple solution, you can turn a nozzle and suddenly we're going to be getting a lot more oil, that's not just how it works. Over the long term, the biggest reason oil prices will rise is because of growing demand in countries like China and India and Brazil. Just think about this. In five years, the number of cars on the road in China more than tripled. Over the last five years, the number of cars tripled. Nearly 10 million cars were added in China alone in 2010 -- 10 million cars just in one country in one year. So that's using up a lot of oil. And those numbers are only going to get bigger over time. As places like China and India get wealthier, they're going to want to buy cars like we do, and they're going to want to fill them up like we do, and that's going to drive up demand. . .

    "We have to keep developing new technology that helps us use less energy. . . Because of the investments we've made, the use of clean, renewable energy in this country has nearly doubled -- and thousands of Americans have jobs because of it. We're taking every possible action to develop a near 100-year supply of natural gas, which releases fewer carbons. Now that's something that experts believe will support more than 600,000 jobs by the end of the decade. Our cooperation with the private sector has positioned this country to be the world's leading manufacturer of high-tech batteries that will power the next generation of American cars. . .

    "But over the long term, an all-of-the-above strategy requires the right incentives.  And here's one of the best examples.  Right now, $4 billion of your tax dollars -- $4 billion -- subsidizes the oil industry every year. . . Now, these companies are making record profits right now -- tens of billions of dollars a year. . . It's outrageous. It's inexcusable. And I am asking Congress -- eliminate this oil industry giveaway right away. I want them to vote on this in the next few weeks.  (Applause.)  Let's put every single member of Congress on record:  You can stand with the oil companies, or you can stand up for the American people. . .

    "With or without this Congress, I'm going to continue to do whatever I can to develop every source of American energy -- to make sure that three years from now our dependence on foreign oil is even lower, to make sure that our future is not controlled by events on the other side of the world. . . The easiest thing in the world is to make phony election-year promises about lowering gas prices. But what's harder is to make a serious, sustained commitment to tackle a problem that we've been talking about for 30 years and has not been tackled, has not been solved. . ."

    The American Petroleum Institute (API) President and CEO Jack Gerard responded to the president's call for a vote to "raise taxes on the oil and natural gas industry." He said, "It is factually wrong for the president to say that the industry receives 'subsidies.' A subsidy is a direct payment of money to a person or business by American taxpayers. The president has it backwards, our industry pays the government nearly 90 million dollars a day -- the biggest contributor of government revenue than any other industry in the United States." API release a detailed explanation why oil and gas tax treatments are not unique or "subsidies." API indicates that, "Contrary to what some in politics and the media have said, the oil and natural gas industry currently enjoys no unique tax credits or deductions. Since its inception, the US tax code has allowed corporate tax payers the ability to recover costs and to be taxed only on net income. These cost recovery mechanisms, also known in policy circles as 'tax expenditures', should in no way be confused with 'subsidies', i.e., direct government spending."

    In a Senate Floor speech the day before, Senate Republican Leader Mitch McConnell (R-KY) said, "This President continues to limit offshore areas to energy production and is granting fewer leases on public land for oil drilling. At the same time, he has encouraged other countries, like Brazil, to move forward with their own offshore drilling projects. The Obama administration continues to impose burdensome regulations on the domestic energy sector that will further drive up the cost of gasoline for the consumer. He's proposed raising taxes on the energy sector, a move that the Congressional Research Service has said would drive up costs.

    "And, as we all know, he flatly rejected the Keystone XL Pipeline -- a potentially game-changing domestic energy project that promises not only greater independence from Middle Eastern oil, but tens of thousands of private sector jobs. All these policies help drive up the cost of gasoline and increase our dependence on foreign sources of oil. But perhaps none is as emblematic of the President's simplistic and punitive approach to energy policy as the last one. The President simply can't claim to support comprehensive approach to energy while at the same time standing in the way of the Keystone Pipeline. It's one or the other. Americans know that.

    "And that's why many of us were pleased when the company that's responsible for building Keystone said it plans to move forward with the southern portion of the pipeline, despite the administration's decision to block the northern portion, to alleviate a bottleneck in Cushing, Oklahoma. They're just not going to let this administration punish them or the rest of those who want to build this pipeline. Asked about the impact of delays, the company's President and CEO said they were partly to blame for the recent spike in gas prices, which is presumably why the White House came out in support of the move. But the hypocrisy here is stunning. . ."

    Karen Harbert, president and CEO of the U.S. Chamber's Institute for 21st Century Energy, issued a statement responding to comments from Senate Majority Leader Harry Reid (D-NV) that he would bring up legislation to address oil company tax treatment and subsidies in the near future [See WIMS 2/22/12]. She said, "It is time for responsible rhetoric from lawmakers and the president on oil and gas taxes. Raising taxes on oil and gas is good news for America's foreign competitors and bad news for America's families and businesses.

    "According to a Wood McKenzie study, tax increases of the magnitude proposed by the president will cost America 170,000 jobs and result in a 14% decrease in energy production. This should be no surprise, because our nation saw a sharp increase in imports and a downturn in our economy when Congress imposed a similar scheme in 1980. It is irresponsible to punitively single out the oil and gas industry. Punishing energy producers will do nothing to lower gas prices nor is it a substitute for a real energy policy. The administration and Congress would be much better served spending time on actual solutions to our energy problems, such as making some of the 95% of onshore and offshore lands that are currently blocked for exploration available for energy production and building the Keystone XL pipeline."

    Access the full text of the President's speech (click here). Access a release from API and link to the 2-page detail on oil and gas tax treatments (click here). Access the Floor speech of Senator McConnell (click here). Access the statement from the U.S. Chamber and link to the McKenzie study (click here). [#Energy]

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