October 13, 2010

Let the “Permitorium”Commence: Statutory Ban on Responsible Development in the Gulf May Be Gone– But No One Actually Believes Anything’s Really Going to Change.Politico (10/12) reports, “The Obama administration Tuesday lifted itsban on deepwater oil and gas drilling a month ahead of schedule, but it isn’tenough to get its top budget nominee past Sen. Mary Landrieu, a LouisianaDemocrat who said the move doesn’t go far enough. Interior Secretary KenSalazar removed the moratorium imposed after the BP oil disaster in April, buthe said it could take months before the rigs off the Louisiana coast and theGulf of Mexico are back to work. But Landrieu said the announcement wasunsatisfactory. As a result, she said, she will not remove her hold on theconfirmation of Jack Lew, President Obama’s nominee to head the White HouseOffice of Management and Budget. “What they’ve done is they’ve gotten rid of thepolitical problem,” of the deepwater drilling ban, said Dan Kish, senior vicepresident at the Institute for EnergyResearch. Since the April 20 explosion, Kish said, Interior has issuedshallow water permits at a 10 percent clip of its previous rate over the pasttwo years. “I don’t know what business can run at 10 percent of what itnormally does,” he said. Rep. Doc Hastings (R-Wash.), the ranking member of theHouse Natural Resources Committee, said “today’s announcement is so difficultto fully trust.”

Give Her Credit: Sen.Landrieu Sees Right Through the WH Smokescreen on “Lifting” of Gulf Energy Ban– Refuses to Budge on OMB Hold.Washington Times (10/13) reports, “Mrs. Landrieu said theannouncement does not go far enough for her to release her legislative hold onJacob Lew, President Obama’s nominee to be the new White House budget director.Likewise, Gulf State Republicans warned the new rules could create abureaucratic bottleneck by being too onerous for drilling operators to complywith, saying it could be several months before their new applications areapproved. "It’s clear that President Obama is going to preside over acontinuing de facto moratorium for months or years, with new drilling held backto a fraction of previous levels," Louisiana’s other senator, DavidVitter, said. The Institute for EnergyResearch said the move amounted to a "permitorium" on deep-waterdrilling. "Today’s announcement is about politics and headlines, notgetting folks back to work and increasing domestic energy exploration andproduction in the United States," IER President Thomas J. Pyle said."What was announced today will result in no change in domestic energyproduction in the Gulf of Mexico until Interior Secretary Salazar begins toissue permits once again. In the meantime, thousands of Gulf Coast familieswill continue to be out of work. It can’t be explained any other way."

Dept. of the Interior’s Got73,000 Employees – But According to Bromwich, Not Enough Staff to Beginthe Process of Issuing New Permits in the Gulf.EnergyGuardian (10/13, subs.req’d) reports, “The Interior Department may have lifted the deepwater oil andgas drilling ban this week but officials acknowledge that a lack of staffingmay create a choke point for approving new permits. The Bureau of Ocean EnergyManagement recently reallocated 20 staffers from Alaska and California topermit offices in the Gulf of Mexico to address the shortfall and saw somesuccess. At least 12 shallow water permits were approved recently under thegovernment’s new, stricter drilling rule. Seven applications are pending. Butthe lifting of the moratorium on deepwater drilling is expected to generate acrush of new applications. “I think we are in a better place than we werebefore because we’ve reallocated 20 people. I would love to be able toreallocate more. I don’t have any more people,” said Michael Bromwich, thedirector of Bureau of Ocean Energy Management. Industry officials fear theagency’s lack of resources for reviewing applications will slow approves andcreate a de facto moratorium. If Congress fails to approve the supplementalrequest, the bureau will “do the best that we can, and if we can get someadditional staff allocations we’ll try to do that, but we’re going to be severelyhamstrung at carrying out the agency’s other tasks,” Bromwich added.

With an Eye on BoostingFarm State Dems 3 Weeks Ahead of Election, EPA Set to Announce Today thatEthanol Will Soon Be Junking Up Our Engines to the Tune of 15%. The Hill (10/12) reports, “EPA is expected to announce Wednesday that ahigher blend of ethanol in gasoline is safe to use in newer vehicles, but notsafe for engines in cars a decade or older, sources said. EPA will grant awaiver allowing E-15 — consisting of 15 percent ethanol and 85 percentgasoline — to be used in cars and light trucks for model years 2007 andnewer. Currently, there is a 10 percent ethanol limit in gasoline for cars andlight trucks. The agency will also say that it is not safe to use E-15 in modelyears 2000 and older, or in motorcycles, heavy-duty vehicles, non-road enginesor offroad vehicles, sources following the issue said. The agency is notexpected to make a decision on whether a higher ethanol blend is safe for modelyears 2001 through 2006 until later this year, sources said. The expectation isfor an early afternoon announcement, though EPA has not yet posted any notice.“Stay tuned,” an EPA official told The Hill. The official did not offer anyspecifics about an upcoming announcement.

Here’s How Bad 15% EthanolIs: Cars Made Prior to 2000 Can’t Even Use the Stuff; But Guess Who’s Gonna GetSued If Someone Mistakenly Pumps It? Not the Ethanol Lobby. The Hill (10/5) reports, “The Texas lawmakers fear the higher ethanolblend could lead to a host of lawsuits against the fuel industry, reminiscentof when the additive methyl tertiary butyl ether (MTBE) was found tocontaminate groundwater. And with the help of petroleum refiners, the lawmakershave drafted bills that would protect not just that industry but others downthe production and supply chain. In one of several unveiled last week beforelawmakers left town, Texas Democratic Reps. Charlie Gonzalez, Ciro Rodriguezand Gene Green say that only the federal government is liable for any lawsuitsresulting from the higher ethanol blend. That would, in turn, protect refiners,ethanol producers, retail manufacturers, auto companies and others in theprivate sector from damage claims from use of an E-15 blend. Another bill fromTexas Republican Reps. Lamar Smith and Joe Barton, ranking members of the HouseJudiciary and Energy and Commerce panels, would treat the liability issue underthe precedent established in 2005 regarding flu vaccines on the market. Itshields manufacturers and distributors that strictly adhere to federalspecifications, allowing them to offer E-15 fuel without fear of reprisal.

Former MMS Chief PortraysHerself as Lone Voice Trying to Prevent Americans from Accessing More EnergyAlong OCS – Asks Enviros for “Some Ammo” to Make Her Case. Washington Post (10/13) reports, “On Oct. 20, 2009, she metwith nine representatives from environmental groups at Interior headquarters.She knew some of them personally from her years at American Rivers, which worksto protect the country’s waterways. The activists had come prepared to argueagainst an expansion of offshore drilling and were looking forward to awide-ranging discussion. Their optimism faded quickly. Flanked by aides and MMSlawyers at the head of a long, rectangular table, Birnbaum made it clear thatshe would not be able to discuss the five-year plan, because the comment periodhad already closed. As the meeting brokeup, Birnbaum spoke privately to a few advocates. Her demeanor changed."You need to give me more ammo," she said quietly. "These guysare here to lease, and you’ve got to give me information to push back." The environmentalist groups didn’thave that ammunition. They didn’t have petroleum engineers on staff, orindependent studies of the MMS’s inspection practices, or the resources totrack changes in drilling technology. Besides, they had given up on the MMSyears before. "The environmental groups working in D.C. never had thetechnical expertise to determine if MMS’s regulations were as tough as theycould be, or should be," said Environment America’s Michael Gravitz, whoattended the meeting.

This Is a Third Way? AEI, Brookings Unveil Grand Strategy forPursuing “Middle Ground” on Energy: More Taxes, More Fees, More Hand-Outs forSolar and Wind – Isn’t This Already Happening? Politico (10/13) reports, “With energy legislation left in tatters thisyear, experts from both sides of the climate debate have some advice forlawmakers: ditch cap and trade. Instead, they’re proposing a middle ground. Andthey think the country might have a bigger appetite for compromise after thedemise of energy and climate legislation this year. Their vision: toaccelerate energy innovation by investing $25 billion per year in clean energytechnologies. The proposal advocates funneling cash into the EnergyDepartment’s science funding, energy education, and the Defense Department’senergy innovation efforts. The authors also advocate a new generation of smallnuclear reactors as part of a larger clean energy portfolio. To ensure that theinvestments don’t add to the deficit, the authors propose a range of financingoptions, including cutting existing energy subsidies, new royalties for oildrilling, small surcharges on oil imports and a low carbon price. The authorssee politics turning in their favor after election season winds down andlawmakers begin to look for policies that can win bipartisan support. “I thinkthat forward looking Republicans and Democrats will see this as a top contenderfor an economic growth strategy,” Shellenberger said.