Home > Federal, National, State > Recent Energy news: On our real resources; (bad) policy; Radical eco-agenda; EPA scandals/Green scandals; Resignations(too few); Gas prices and taxes (NY and CA the worst); Global warming fraud; and more…

Recent Energy news: On our real resources; (bad) policy; Radical eco-agenda; EPA scandals/Green scandals; Resignations(too few); Gas prices and taxes (NY and CA the worst); Global warming fraud; and more…

May 3, 2012

oil_drilling2-340x16110 Mind Blowing Facts about America’s Energy Resources

The United States is not running out of oil. In fact, nobody on the entire globe has more energy resources than the United States does. The truth is that we are absolutely swimming in oil and…

May022012pm / Read More »

Energy Expert Drevna: Obama Uses ‘Jekyll & Hyde Approach’ to Oil Policy

President Barack Obama is taking a Jekyll & Hyde approach to energy, often contradicting himself to avoid mustering the political will to drill more at home and ease the country’s dependence on foreign oil, says Charlie Drevna, president of the American Fuel & Petrochemical Manufacturers. [Full Story]

Obama_CopenhagenObama’s Eco-Lies

Environmentalism is the mask of communism, concentrating ownership of all property and productivity in the hands of government. Is it time to expose environmentalism as the totalitarian ideology it has always been? As the nation and…

Apr192012pm / Read More »

Lisa Jackson Must GoJeffrey Folks Al Armendariz, crucifier-wannabe, has resigned his post as regional director of the Environmental Protection Agency.  Now it’s time for his boss, EPA Administrator Lisa Jackson, to accept responsibility as well. More

EPA official resigns after ‘crucify’ comment furor

If You Can’t Beat ‘Em, ‘Crucify’ ‘Em? – EPA official’s remark sparks investigation

Obama EPA Official on American Energy Companies: “Crucify them!”

Energy Committee Warns EPA Official He’ll be Hauled in to Testify

biggovt: EPA Has a Long History of ‘Crucifying’ Businesses: A video from 2010 recently surfaced, showing EPA Region VI Ad… http://t.co/Ft3fZwVV

Team Obama’s Latest Kick in the Gut – Apr 27, 2012 David Limbaugh – Every day, we get a new kick in the gut from the Obama administration. Most recently, Environmental Protection Agency Region 6 Administrator Al Armendariz was caught on video articulating his view of the agency’s role in enforcing its regulations.

Who Is EPA Crucifixion Chief Al Armendariz?

by Bryan Preston – Experience. Updated: Armendariz motivated by revenge?

Al-ArmendarizEPA Official on Non-Compliant Companies: ‘Hit Them as Hard as You Can’ & ‘Make Examples Out of Them,’ Cites Crucifixion

Are you familiar with a certain Environmental Protection Agency (EPA) official named Al Armendariz? Chances are you’ve never heard of him. We suspect most Americans haven’t. However, with the recent unearthing of the video below, that…

Apr252012pm / Read More »

obama-bankrupts-coal-industryPresident Obama Keeps Promise to Bankrupt Coal Industry

The coal industry is on the verge of extinction. Coal’s precipitous fall from providing almost half of our electricity is not a result of free-market forces but from government regulation driven by President Obama with aggressive…

Apr232012pm / Read More »

Shafted: even unions upset over Obama’s war on coal

Shafted: even unions upset over Obama’s war on coal

Mar 14, 2012 by-  Check out the letter from the unions who are upset over Obama’s War on Coal.

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Fox News Poll: Voters say gas prices pose serious threat to economic recovery

Young voters facing unemployment, high gas prices, student loans could dump Obama for Romney

WATCH THIS VIDEO: Bush vs. Obama Gas Price Hypocrisy

Canadian PM Blasts Obama on Keystone: The U.S. Is an Unreliable Energy Partner

President Barack Obama’s rejection of the Keystone XL pipeline taught Canadian Prime Minister Stephen Harper one thing: it’s time Canada expand its list of oil buyers. In an interview with the Canadian Wilson Centre think tank,…

Apr042012pm / Read More »

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Obama and the Oil Speculators May  2, 2012 The president doesn’t know his onions…

Three Cheers for Oil Speculators!

Howard Becker Oil speculators are benefactors of humanity.  We should be very grateful to all of them.  Next time you see an oil speculator, thank him for what he is doing…

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What am I paying for in the price of a gallon of gasoline?

January 27, 2012 | Posted by Ken Cohen

I’m asked this question a lot. And I know a lot of drivers ask themselves this question when they pull up to the pump.

The answer is based on the economics of supply and demand and how products are manufactured and sold – along with what the government takes in taxes. Let’s take a look, based on the U.S. Energy Information Administration’s breakdown of the estimated average price of a gallon of gas in December 2011, which was $3.27.

Raw materials = $2.62

The cost of the raw materials used to make a product has a major impact on the final product price. The raw material for gasoline is crude oil. The price of crude oil is set by global markets, where buyers and sellers constantly react to supply and demand factors. Oil is just one of many commodities traded every day in the global market. Others are the corn that affects the price of food and the cotton that affects the price of clothing.

Crude oil is by far the largest factor in the price of a gallon of gasoline – accounting for 80 percent of the $3.27 average retail price per gallon in December, according to the EIA.

To put that in another way – about $2.62 of the average gallon of gas in this example is set before a refiner even touches the raw material.

Where I find many people get confused is that they assume oil companies are producing all the oil that goes into their own refineries – and therefore can control gas prices by controlling the supply chain. That’s not the case.

U.S. crude oil production in 2010 was 5.5 million barrels per day. But U.S. refineries processed 15.2 million barrels of oil per day – almost three times more oil than was produced in the U.S. That means U.S. refiners, like ExxonMobil, have to purchase millions of barrels of crude oil – at market prices – to produce gasoline and other products for American consumers. For example, in 2010, ExxonMobil spent $198 billion purchasing oil around the world for its refining operations.

Manufacturing the product

Like any product, there are costs to manufacture it – so the manufacturer tries to recover those costs, plus make a profit, when it goes to sell the product.

The refining portion of a gallon of gasoline has, on average, accounted for about 11 percent of the price in 2011, according to the EIA data through December. That means a little less than 40 cents per gallon would be due to refiners’ costs – wages, equipment, financing and others – plus their profits.

As the EIA figures show, however, refining doesn’t always produce a profit. In December, the data indicate that the U.S. market price for gasoline coming out of refineries was on average about 7 cents per gallon (-2 percent) below the refiners’ cost of crude oil alone, and before accounting for their costs of upgrading the crude into gasoline. In other words, refineries faced a market where domestic gasoline prices were very weak relative to global crude prices.

How does that happen? Refiners are “price takers” that operate on relatively low profit margins that are highly dependent on the market demand for petroleum products. That means at times, the value of a petroleum product coming out of the refinery isn’t enough to cover the costs of obtaining and refining the crude oil.

Distributing and marketing the product = $0.33

Products then have to get from the manufacturing site to the retail site. When gasoline leaves the refinery, it is shipped largely via pipelines to local terminals. There, distributors load their trucks and transport the gasoline to a service station. Naturally, each step in the distribution chain includes labor, capital equipment and other expenses that must be recovered by operators. Of course, these operators must also compete to sustain their profitability while also paying taxes.

Retailers then set the price at the pump, based on recovering these costs of getting gasoline to the service station and the costs of marketing it to consumers. They also have to generate enough money to pay their taxes and make a profit to keep their business running. And on top of that, they have to collect mandatory state and federal gasoline taxes from the consumer (which we’ll break down in the next section).

So who are the retailers setting the prices? When consumers pull into an Exxon or Mobil station, they assume it’s ExxonMobil. But we own only about 5 percent of the stations with our name on them. About 95 percent of the stations carrying the Exxon or Mobil brand are actually owned by network retailers or local business owners – not ExxonMobil.

Taxes = $0.39 (average)

So how much does the government make on a gallon of gas?

In this example, retailers collected state and federal gasoline taxes of 39 cents per gallon on average. Total gas taxes per gallon range by state – from lows of less than 30 cents per gallon to highs of more than 60 cents per gallon in places like New York and California.

How does this compare to what a company like ExxonMobil makes on a gallon of gasoline? As we saw earlier, sometimes a company or an operation may lose money. Other times, it may make money. A competitive market just provides an opportunity, not a guaranteed profit. In the first two quarters of 2011, for example, ExxonMobil made 7 cents and 8 cents a gallon , respectively, on the gasoline, diesel and other petroleum products it refined and sold in the United States.

What actions could help lower gas prices?

Again, let’s go back to the economics of supply and demand that govern the crude oil market, since it’s the largest determinant of the price at the pump.

There are many global factors that affect the crude oil market. But adding more supplies of crude oil to the global marketplace can help put downward pressure on the price of a barrel of oil. The United States has abundant supplies of oil, from the deep-water regions of the Gulf of Mexico to the tight oil resources throughout North Dakota and Montana. Combined with Canada’s oil resources (one of the largest in the world), North America has enormous potential to add new reliable supplies to the market. And, the U.S. has one of the largest and most advanced refinery systems in the world.

But first, the oil needs to get to market. There, we’ve often seen economics trumped by politics – even as the U.S. economy remains weak. The recent moratorium in the Gulf of Mexico, as well as the decision to deny the permit for the Keystone XL pipeline from Canada to U.S. refineries, are just two examples of U.S. political decisions that serve to keep supplies out of the market.

The economics behind a gallon of gas are pretty straightforward. It’s the policies behind access to U.S. energy resources that are less certain – but critical to our energy future.

Gas: price per gallon, cost per gallon, tax per gallon, and profit per gallon of gas

As of May 2011 *Based on US Energy Information Administration data assuming: $4.00 for a gallon of gas and $110 for a barrel of crude oil… $2.760 per gallon of gas for the finding and extraction of crude oil $0.320 per gallon of gas for refining the crude oil into liquefied petroleum $0.347 per gallon of gas for transportation and storage $0.133 per gallon of gas for the gas station (equals and balances operating costs) $0.184 per gallon of gas for the Federal Gas Tax $0.220 per gallon of gas for the national average of State Gas Taxes [in New York State the tax per gallon of gas is $0.319: $0.080 excise tax $0.152 Petroleum Business Tax $0.083 Sales Tax $0.003 Spill Tax $0.005 Petroleum Testing Fee $0.079 County Sales Tax average] $0.030 to 0.020 per gallon of gas is Profit Margin

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GoreMeteorologist: Gore profiteering on fear

Challenges ex-vice president to debate on facts WASHINGTON – Radio host and author of “Eco-Tyranny: How the Left’s Green Agenda will Dismantle America” Brian Sussman is firing back at Al Gore, repeating his challenge to the…

May012012am / Read More »

James LovelockGlobal Warming Leader: I Was ‘Alarmist’

James Lovelock, the famed 92-year-old British scientist who pioneered the so-called “Gaia theory” of the environment, has walked back his strident global warming rhetoric over the past few decades today. Lovelock’s “Gaia theory” suggested that the…

Apr252012pm / Read More »

nasa-logo-earth-340x241Rebellion at NASA against ‘global warming’

Letter warns ‘green’ position endangering ‘reputation of science itself’ Forty-nine highly respected former NASA astronauts, engineers and scientists are fighting back against efforts by top executives to use the federal agency to promote global warming alarmism.…

Apr162012pm / Read More »

Proof global warming isn’t making weather wackier?

Is Global Warming Responsible for the ‘Arab Spring’? – by Robert Zubrin Sure it is. Just ask Thomas Friedman and the three experts PJ Media interviewed about the issue.

Study: ‘Green Energy’ Wind Farms May Cause Global Warming

Large wind farms might have a warming effect on the local climate, research in the United States showed on Sunday, casting a shadow over the long-term sustainability of wind power. Carbon dioxide and other greenhouse gases from burning fossil fuels contribute to global… [Full Story]

Irony alert: Solyndra abandoning its toxic waste April 30, 2012 – What’s a green company to do?

After Massive Losses, Stimulus-Backed Company Asks for More Taxpayer Cash

Heritage Foundry:  April 27, 2012 at 11:15 am

A financially troubled green energy company has seen its stock prices plummet to below a dollar per share (UPDATE: see below) since receiving a nearly $250 million federal grant in 2009. The company lost $257.7 million last year. Two of its clients make up half of its business, and one is also struggling financially. But none of that has stopped A123 Systems, which manufactures batteries for electric vehicles, from applying for another $233 million in federal backing through the Energy Department’s Advanced Technology Vehicle Manufacturing program, according to its latest filing … More

Obama administration corruption In Solyndra deal confirmed

“The Treasury report echoes what our investigation has shown over and over; Solyndrawas a bad bet from the beginning that was rushed out the door while every red flag was ignored. Treasury’s report confirms the agency…

Apr102012pm / Read More »

pic_giant_041612_CThe Next ‘Next Solyndra’: Another electric-car disaster looms.

Get ready for the next Solyndra. Sure, you’ve heard those words before. Over the past few months, several companies that had federal backing — Beacon Power, Range Fuels, and Ener1 — all failed. And another one…

Apr162012pm / Read More »

Hold the Oil, Pass the Algae William  Tucker | 4.27.12

solar-panel_2110259bSolar Flare-out: As companies go bust, Europe rethinks solar power subsidies.

The green economy strikes again, or shall we say strikes out. Oakland-based Solar Trust of America filed for bankruptcy this week, leaving its planned multibillion-dollar plant in California on ice. The company declared itself insolvent after…

Apr042012pm / Read More »

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Energy in America: The fight over fracking reveals facts and some fiction

By John Roberts Published April 11, 2012 FoxNews.com

It is the process behind a new boom in domestic supplies of natural gas. Hydraulic fracturing — when thousands of gallons of water, chemicals and sand are pumped into a deep well at extremely high pressure, creating cracks in methane-bearing shale, allowing the gas to flow to the surface.

It is also a rallying point for opponents of the method, who charge that cracking rock under that kind of pressure creates fissures that pollute underground drinking water with everything from methane to toxic chemicals.

So, what is fact? What is fiction?

Scott Anderson is the Environmental Defense Fund’s point man on gas exploration. He told Fox News, “If we’re talking about whether or not the fractures that have been created by ‘frack’ jobs have been known to intersect drinking water aquifers, the fact is there have been no confirmed cases of that happening.”

In states like Pennsylvania, the gas rich Marcellus shale lies about 6,000 feet deep. That’s where the hydraulic fracturing takes place. The deepest aquifers run to about 1,000 feet below ground. That’s 5,000 feet of separation, much of it impermeable rock.

Ray Walker is the COO of Range Resources. Range has drilled some 350 wells in Pennsylvania.“Any way you look at it,” Walker told Fox News, “it is hard to imagine that anything we can do at 6,500 feet would ever approach the surface.”

But there is a risk to water wells from gas drilling. Gas companies say it is in those first few hundred feet where the borehole penetrates water-bearing rock. According to Walker, “This is a critical, critical time when you are drilling the well to actually get that isolated correctly.”

To isolate the well from the aquifer, drilling companies line the borehole with steel casing, then pump in cement to seal the space between the casing and rock. By the time the well is fully drilled, there is a “layer cake” of nested casing and cement as much as 2 feet in diameter going through the aquifer. It should provide an impermeable barrier between the flowing gas and drinking water.

However, things don’t always go according to plan. In Bainbridge, Ohio, in 2008, a drilling company failed to properly cement its well. Gas escaped into groundwater, contaminating several wells. One home with a well in the basement blew up when it filled with methane.

A year later, in Dimock, Pa., the wells of more than a dozen homes were contaminated by methane. The state Department of Environmental Protection blamed a faulty cement job on a nearby Cabot well. The well was sealed and abandoned. The EPA tested the residents’ water earlier this year and just pronounced it safe to drink. But Craig and Julie Sautner, who have been living on water trucked in for two years aren’t buying it. Julie Sautner doesn’t trust the EPA. “Well, first of all,” she told Fox News, “it’s a political year and I think they are going to say what they need to say to make everyone happy.” Despite the EPA seal of approval, the Sautners can still collect enough methane from their well in a plastic gallon jug to light it on fire.

Fifteen miles up the road in Franklin Forks, Pa., Matt and Tammy Manning have a similar problem. In December, their well water turned gray. Then the well started erupting. The DEP measured extremely high methane levels in the well. Just a few thousand feet away, two new gas wells had just been drilled.

Matt Manning told Fox News, “When we took a shower in the bathroom, we were supposed to leave the door open, the window open, fan going, to make it as quick as possible because of the small space and methane can just build.”

The Mannings suspect the gas came from wells drilled by WPX Energy. WPX told Fox News its wells are too far away, and insists they were properly cemented. “We actually drilled a monitoring well next to our well,” says WPX’s Susan Oliver, “and we got no methane back, so our cement job was done completely.”

The DEP is investigating where the gas originated, by “fingerprinting” the methane through isotope tests. They want do know– is it from WPX’s well? — or did it migrate from nearby Salt Springs State Park, where shallow pockets of methane bubble to the surface. The test results are beginning to come back, but at this point are incomplete. Another theory being explored — the first few thousand feet of drilling use compressed air to run the bit and clear drill cuttings. Could high air pressure in the well bore have stirred up an aquifer and pushed a shallow pocket of gas toward the water wells? The DEP should soon know.

So how frequently do poorly constructed wells leak? A study by MIT looked at thousands of wells drilled across the country and documented 20 cases where methane had contaminated ground water. The EDF’s Scott Anderson quotes statistics that 10 to 15 percent of cement jobs are at risk of leaking if remedial cementing is not done. Range Resources COO Ray Walker disputes that number, saying less than 1 percent of wells need corrective action.

“There is nothing that is 100 percent perfect in life,” says Walker. “But we do know — through years and years and millions of wells — what it takes to prevent gas migration.”

The key is doing it right. Range Resources takes extra steps to insure its wells don’t leak. And, says Walker, if it looks like the cementing job isn’t taking correctly, they’ll plug that well and drill another.

The shale gas boom holds the promise of inexpensive natural gas — potentially for decades. It may even help fuel an economic recovery based on cheap energy. As more wells are drilled, they will come ever closer to homes and humans. So it will be incumbent on the industry to use the best practices to insure that gas and water don’t mix.

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