One environmental concern about piping Canada’s oil sands to U.S. refineries is all the petroleum coke that will be left over from the refining process. The Environmental Protection Agency no longer allows new licensing permits for burning the high-sulfur, high-carbon waste product, the New York Times reported. As a result, most petroleum coke is sold to Mexico and China, which don’t have as many pollution rules. Companies associated with Koch Industries and Bill Koch are leading exporters of the product. Another concern is where to store the petroleum coke before it is exported. The Times reported on a three-story pile of petroleum coke that covers an entire city block in Windsor, Ontario, across the river from Detroit.
Praise is due Sens. Pat Roberts (left) and Jerry Moran (right), R-Kan., for trying again to do something about the 11 natural-gas storage fields in the state that have gone without government inspection since a 2009 court ruling. Like their similar 2011 bill, the latest legislation should be a no-brainer – “allowing states to step in when the federal government fails to monitor natural-gas storage sites,” as Moran said in a statement. Anyone wondering why this matters should check with residents in Hutchinson, the site of a 2001 tragedy in which migrating gas underground caused explosions that killed one couple and destroyed a block of downtown businesses. The longer Congress waits to respond to the federal government’s inaction and to restore the state’s authority to regulate interstate gas storage, the greater the risk of more explosions.
Can increasing American energy exploration improve our economy? Yes, but more to the point, it’s already happening. Energy – and the jobs and growth it will drive – is the foundation for our economic recovery. Our nation is blessed with some of the most abundant energy resources on Earth. Thanks in large part to the technology-driven shale boom, we have enough natural gas to power America for 120 years. We also have at least 200 years of oil under our lands and off our shores and more than 250 years of coal. And that’s just what we can recover with today’s technology. With continued advancements, we will be able to access even greater domestic supplies in the future. Energy presents the biggest opportunity to build a stronger foundation and a brighter future for our country. The 21st century has brought America an era of energy abundance. Let’s make the most of it for the sake of our economy, competitiveness and national security. – Karen A. Harbert, U.S. Chamber of Commerce
Abandoning fossil-fuel exploration altogether is not feasible for America. But significant further government support of oil and gas drilling in places like the Alaskan wilderness or the American heartland in the name of economic growth would be a huge mistake. Instead, for our national security, economic growth and a sound energy policy, what we need is to shift to promoting industries and technologies that focus on clean, renewable and alternative sources of energy. Clean-tech is a fast-growing global industry that holds the potential to fix our current climate and other environmental challenges and build the jobs of tomorrow. The 2010 BP oil catastrophe in the Gulf of Mexico, the 1989 Exxon Valdez oil spill and the serious concerns raised about hydraulic fracturing have not merely been the results of chance. Nor are the extreme storms, droughts and heat waves, which are expected to rise in frequency and severity with fossil fuel use-linked climate change. The U.S. cannot afford to invest and lock itself into many more decades of reliance on the dirty and unsustainable sources of energy of the past. – Tseming Yang, Santa Clara University
It was a bit of a surprise last week when neither the Kansas House nor Senate approved a measure that would weaken the state’s renewable-energy standard. Good for both chambers. Anti-tax crusader Grover Norquist had lobbied lawmakers to make the change, and Koch Industries worked behind the scenes for the bill. But some lawmakers were concerned that changing the rules would create “regulatory uncertainty.” And an official with Westar Energy said the renewable standard was good public policy that had only a “relatively small” influence on the energy costs paid by consumers, the Topeka Capital-Journal reported.
In a commentary in Politico, Rep. Mike Pompeo, R-Wichita, warns against letting politicians and bureaucrats derail the “staggeringly enormous opportunity for wealth creation” offered by hydrocarbon production and pushes back against business and environmental interests that would stall expansion of U.S. energy exports. “Federal policy should not block those who are prepared to risk their own wealth to create an enormous energy export industry here in America,” Pompeo. “The argument here is more than ‘Drill, Baby, Drill’ – it is ‘produce wealth, produce wealth, produce wealth’ – and all the jobs that come with it.”
Gov. Sam Brownback was pleased that Congress included an extension of the production tax credit for wind-energy products in the fiscal-cliff deal. Brownback had joined 27 other governors to advocate for the PTC, which has been key to the $3 billion investment in wind power that Kansas saw in 2011 and 2012. One study also found that Kansas landowners had received $273 million in income by leasing land for the wind turbines. Sens. Pat Roberts and Jerry Moran also supported the extension, but it was opposed by all of Kansas’ House delegation, with Rep. Mike Pompeo, R-Wichita, leading the criticism that the wind industry needed to move off the taxpayer dole.
An area of Arctic sea ice bigger than the United States melted this year, and ice cover reached “a new record low” in the area around the North Pole, according to a report released this week by the United Nations’ World Meteorological Organization. Droughts covered nearly two-thirds of the United States this year, as well as western Russia and southern Europe. The Arkansas River in Wichita (in photo) is at its second-lowest level in the 78 years the United States Geological Survey has been keeping records, and the Mississippi River is so low that it is halting some barge traffic. Climate scientists are predicting more devastating storms like Hurricane Sandy due to shifting weather and air patterns caused by global warming. Meanwhile, the Heartland Institute, a libertarian think tank funded heavily by oil companies, is working with the American Legislative Exchange Council to write model legislation for states such as Kansas to repeal renewable-energy mandates.
“We believe the White House will reverse course and approve the Keystone XL pipeline, which would ship crude from Canada’s western oil sands to the Gulf Coast,” ratings agency Moody’s predicted Monday. Jack Gerard, president of the American Petroleum Institute, told the Financial Times that the pipeline “will be a threshold test as to how serious the president is about producing America’s oil and natural gas.” But environmentalists want President Obama to make permanent his delay of the permit for the northern section of the pipeline, as a way to show he intends to tackle climate change. Noting that Obama’s victory speech mentioned an “America not threatened by the destructive power of a warming planet,” Bill McKibben wrote in the Washington Post that “if he really gets that this is the legacy issue of all legacy issues, one that stretches out into geologic time, then he’ll listen to the scientists and not the lobbyists. Keystone is his first best chance to help keep serious quantities of carbon out of the atmosphere.” Moody’s report on Obama’s second term also cautioned that regulatory scrutiny may increase for hydraulic fracturing and remain strict over deepwater exploration.
Though natural-gas bills still would go up – an average of about $2 a month – at least they won’t increase as much as Kansas Gas Service wanted. KGS had requested a rate increase of $32 million a year, which included $8 million to pay for bonuses to utility executives. The new agreement reached by KGS, staff of the Kansas Corporation Commission and a consumer watchdog agency would reduce the rate increase to $10 million a year. The three-member commission has yet to approve the settlement.
Natural-gas customers shouldn’t have their rates go up to pay for bonuses to utility executives for making more money for stockholders. But $8 million of the $32 million-a-year rate increase requested by Kansas Gas Service would do that. The utility argues that the bonuses help attract top-quality executives, who are then better able to run the company efficiently. But if those executives are making money for stockholders, the stockholders should be the ones paying for the bonuses.
“If you need a tax credit to compete, you are probably not that competitive,” wrote U.S. Rep. Mike Pompeo, R-Wichita, in a Politico commentary calling for the end of the wind-energy production tax credit. Pompeo also lashed out at the administration’s loan to solar-panel manufacturer Solyndra and President Obama’s record of “a jobless and exceedingly shallow recovery.” Pompeo concluded that GOP presidential nominee Mitt “Romney’s opposition to continuing the wind subsidy is absolutely correct. At some point, an industry has to either succeed or fail on its own merits. For wind companies, we are at that point now.”
Kansas Gas Service’s latest plan to raise rates $32.7 million is raising the ire of many ratepayers. Residential customers are irked at the idea of paying about 9.1 percent more as large commercial users pay an average of 8.2 percent less and some unnamed users pay 20 percent less. Small businesses would pay 2.5 percent more. KGS is also seeking a 10.75 percent rate of return for its investors, which strikes many people as excessive in this down economy.
It had to be painful for residents of six Kansas counties to read last week about how the Keystone oil pipeline is boosting property tax revenue in Nebraska. Butler, Clay, Cowley, Dickinson, Marion and Washington counties – which the pipeline crosses – are receiving no property taxes thanks to a boneheaded move by Kansas lawmakers in 2006 to grant a 10-year property tax exemption. The counties expect to lose between $75 million and $100 million in tax revenue over the exemption period. Kansas is the only state along the pipeline route with such an exemption. A county clerk in Nebraska said last week that his county might lower its tax levy because of the extra revenue. Meanwhile, county officials in Kansas are struggling to pay their bills.
Rep. Mike Pompeo, R-Wichita, applauded GOP presidential candidate Mitt Romney’s announcement last week that he wants wind-energy tax credits to expire at the end of this year. “For the better part of my first term in Congress, I have been working to halt the practice of using taxpayer dollars to pick winners and losers in our energy markets,” Pompeo said. “I’m thankful for Gov. Romney’s strong stance in favor of ending the 20-year-old wind-production tax credit this year.” Gov. Sam Brownback and Kansas Sens. Jerry Moran and Pat Roberts support extending the tax credit and have noted how the credits have helped spur wind-energy production in Kansas. A bill extending the credit cleared the Senate Finance Committee last week, with Roberts voting for the extension.
The proposed expansion of the Holcomb coal-fired power plant still faces some high hurdles, the Garden City Telegram reported. In addition to a legal challenge to its air-quality permit (which the Kansas Supreme Court is scheduled to hear late next month), the plant also must meet a deadline and new regulations from the Environmental Protection Agency. “One of the specific challenges we have right now is that under the proposed greenhouse-gas rule, the Holcomb expansion project and 11 others in the country are given one year to begin substantial construction – they avoid the effect of the greenhouse-gas rule if they do that,” Stuart Lowry, CEO of Sunflower Electric Power Corp., told Garden City leaders. “But the other EPA regulation – the (Mercury and Air Toxics Standards) rule – is effective immediately. And we’re being told that’s not achievable. So we’re sort of being twisted into knots. We could build under the greenhouse-gas rule and not have any negative effect. But if we can’t meet the (MATS) standard, we can’t operate.”
During a House hearing last week, a sarcastic Rep. Mike Pompeo, R-Wichita, focused his signature dislike of energy subsidies and incentives on the renewable fuel standard, which mandates that 36 billion gallons of renewable fuel be blended into transportation fuel by 2022. “Why do I not hear from my constituents screaming for E15 and E85 if it’s such a good thing to lower consumer prices?… I was in four parades this week, and not a soul asked me about, ‘Sir, please, bring me E85,’” Pompeo pressed Bob Dinneen, president of the Renewable Fuels Association. Dinneen said many consumers around the country want the option to use E15 (gasoline blended with 15 percent ethanol) if it’s less affordable and appropriate for their vehicles, and that the RFS gives them that. Pompeo countered: “You’re looking for a government mandate for your product.”
The state’s big tax cut also repeals a 24-month severance-tax exemption for gas wells and oil wells that produce more than 50 barrels of oil per day. The change is expected to generate $18 million in tax revenue this fiscal year and $45 million in the next, the Lawrence Journal-World reported. The oil and gas industry was divided on the measure, with large companies opposed to it while small, independent producers (most of which would not be affected by the change) were OK with the tax increase.
Credit is due Gov. Sam Brownback for continuing to call for extension of the federal tax break for wind energy – a position that puts him at odds with many fellow conservatives. Wearing a tie depicting wind turbines, Brownback delivered that and other messages in a Monday address at the American Wind Energy Association’s convention in Atlanta. “Kansas understands the positive impact that wind energy can make,” Brownback said. “More than 1,200 new, high-paying manufacturing jobs have been announced in Kansas in the last two years directly related to renewable energy. Kansas also has more wind-energy construction projects under way than any other state, with at least 663 new turbines set to be installed and nearly $3 billion of new investment from 2011 to the end of 2012. To harness the potential of this industry, we have made the tax code fairer and flatter for small business, as well as allowing businesses to expense investments in the year that they make them. People want to use clean energy – we have to make it feasible for them to do so.” An extension of the production tax credit – the 2.2-cent-a-kilowatt-hour credit for electricity from wind turbines, biomass, geothermal and landfill-gas plants – is stuck in Congress. Unlike some extension proponents, Brownback advocates a four-year phase-out to let the wind industry prepare to operate without it.
Ford is introducing an electric version of its Focus. Mitsubishi, BMW, Tesla and other carmakers are also introducing new electric vehicles. And after a slow start, GM is on track to sell between 15,000 and 20,000 of its award-winning Volts this year. But this technology, like any infant industry, needs our support. Given this, it would be folly for Congress to slash the existing tax credit. If we cast a cold eye on the economics of electric vehicles, the credit is a bargain. Research shows that air pollution causes asthma, heart attacks, strokes and lung cancer – and costs taxpayers billions. A 2009 study by the Center for Entrepreneurship and Technology at the University of California at Berkeley estimates that over 20 years, electric vehicles and plug-in hybrids could reduce health costs by $4.5 billion to $11.2 billion. On top of money and lives saved, we have another clear reason to support electric vehicles: energy security. Yes, gas prices have fallen a bit in the U.S., but many independent researchers believe this is just a temporary reprieve. Electric cars not only save consumers money at the pump, they make our economy more resilient to price shocks and reduce the money flowing to hostile nations. – Nicholas L. Cain, Claremont Graduate University
It’s obvious now that electric vehicles can’t compete with gasoline-powered cars, even with generous government subsidies. And for years automotive engineers have documented that the performance of electric vehicles falls short in virtually every aspect. What’s truly shameful is that such disparities have done nothing to change policy. Subsidizing electric vehicles has been a devil’s bargain, making the development of other alternative technologies like conventional hybrids and advanced gasoline engines more difficult. Since 2008, taxpayers have spent or provided loan guarantees of $6.5 billion for electric vehicles. That includes $2.4 billion for battery and electric drive component manufacturing, $3.1 billion in loan guarantees for electric vehicle projects, and $1 billion in tax credits for the vehicles. Using taxpayer dollars to favor one automotive technology over another is contrary to the free-market principles that undergird our economy. Simply put, subsidizing electric vehicles doesn’t make economic sense. – Mark J. Perry, American Enterprise Institute
Rep. Mike Pompeo, R-Wichita, and Kansas’ three other representatives sent a letter to Environmental Protection Agency Administrator Lisa Jackson requesting that Kansas be allowed additional time to comply with the Cross State Air Pollution Rule. The new rule is designed to reduce pollution that drifts across state borders. It requires Westar Energy to reduce emissions of smog- and soot-producing pollutants or face large fines. Westar doesn’t oppose the new rule but wants more time to implement pollution controls. “Because Kansas started behind the eight ball, it has been virtually impossible for the utilities in our state to comply in time,” said Pompeo, who also has introduced legislation on this issue. “Political parties can have legitimate policy disagreements on how to best protect the environment, but I cannot sit back and watch while Kansas is forced to play on an uneven playing field when complying with EPA regulations.”
Let it be said that Westar Energy has done an outstanding job getting the Wichita area back on line (in photo) after last weekend’s tornado damage. But it was disappointing Wednesday to see the Kansas Corporation Commission approve a settlement deal, which had been worked out by Westar and KCC staff and blessed by big industrial users, allowing the company a $50 million rate increase. Though the hike is less than the $90.8 million Westar had wanted, the deal is Westar’s 13th rate increase from the KCC since January 2009, it disproportionately burdens residential and small-business customers, and its 10 percent shareholder profit is too rich in a time of job loss and rising living costs across the board.
Sam Brownback made an odd choice for his first bill to veto as governor – one that the Legislature approved unanimously. After using only his line-item veto last year to nix some expenditures including state arts funding, Brownback blocked a bill last week that would give individual counties control of the $20.2 million tied to the Kansas Oil and Gas Valuation Depletion Trust Fund. The House had passed the bill 124-0, and the Senate had approved it 40-0. Brownback doesn’t necessarily disagree with the bill but thinks it “needs to be considered in the context of a comprehensive pro-growth tax and budget package.” In other words, the Legislature seems to be passing bills and cutting taxes willy-nilly without a plan for how it all fits together. The next question: Will the Legislature override the veto?
“Drill, baby, drill” makes a nice chant, but it doesn’t make much of a difference on gas prices. As an Associated Press analysis of 36 years worth of data showed, and as economists have been saying for years, oil prices are based on a world market, and the United States doesn’t have enough oil to significantly influence that market. That’s why gas prices are climbing even though oil production in the United States is at an 8 year high and the percentage of oil that we are importing has been declining. Likewise, the Keystone pipeline, if it is approved, wouldn’t lower gas prices, according to analysts. That said, there are other economic benefits to domestic energy production, including jobs and tax revenue.
The economy and jobs numbers have been steadily improving, and oil imports are down while domestic energy production is up. Nonetheless, rising gasoline prices are helping sour the public’s opinion of President Obama. A new Washington Post/ABC News poll found that 65 percent of Americans disapproved of Obama’s handling of the situation with gas prices, and 59 percent disapproved of his handling of the economy. Obama’s overall job approval rating dropped to 46 percent from 50 percent last month.
A Wall Street Journal editorial Wednesday mocked a bipartisan coalition of lawmakers, including Sen. Jerry Moran, R-Kan., for backing the extension of the production tax credit for wind energy – referring to the lawmakers as the “wind pork caucus.” Gov. Sam Brownback also supports extending the tax credit, arguing correctly that it is crucial to Kansas’ ability to continue to harness and export wind energy. The editorial contended that a bill by Rep. Mike Pompeo, R-Wichita, to kill all energy subsidies would “do more to create jobs than attempting to pick energy winners and losers.”
One environmental concern about piping Canada’s oil sands to U.S. refineries is all the petroleum coke that will be left over from the refining process. The Environmental Protection Agency no longer allows new licensing permits for burning the high-sulfur, high-carbon waste product, the New York Times reported. As a result, most petroleum coke is sold to Mexico and China, which don’t have as many pollution rules. Companies associated with Koch Industries and Bill Koch are leading exporters of the product. Another concern is where to store the petroleum coke before it is exported. The Times reported on a three-story pile of petroleum coke that covers an entire city block in Windsor, Ontario, across the river from Detroit.
