Tar Sands Oil

To our Political Advisers:

     One of our Political Associates sent me an apparently widely distributed article by the Sierra Club. In the article, the Sierra Club implies a requested boycott of Coca-Cola, Pepsi-Cola, and Dr Pepper by asking customers to write those companies asking that they cease use of DIRTY tar sands oil in their hundred thousand vehicles.
   
    I replied to our Associate as follows:

    This article by the Sierra Club is completely misleading.
    For a more complete understanding of what tar sands are, see http://en.wikipedia.org/wiki/Oil_sands.    However, I will give you a short description to put things into the proper perspective.
    We run our automotive fleets with gasoline and Diesel. The federal government has spent billions of taxpayer dollars on subsidies to convert the fleet to electric power, which would be generated by wind or solar source. The federal program has so far been ineffective, primarily because wind and solar power sources are considerably more expensive than the use of gasoline and Diesel.

    The cheapest source of petroleum is from extensive pools belowground. I'm sure you have seen some of the old movies showing oil drilling and subsequent gushers of oil. These gushers involved striking a pool. After the initial pressure is past and the well is no longer a gusher, oil still still can be pumped from the pool in significant quantities at low cost. This is happening with many wells in the US and most of the Middle East. New exploration and drilling techniques have also been developed to find and produce oil from new pools.
    However, pool oil is not the only available source. Oil is also mixed with shale and with sand and when the oil is extracted from the shale or sand, it is respectively called shale oil and sand tar. Petroleum oil from pools is not uniform. The chemical composition of the material varies from light hydrocarbons to heavy molecular weight hydrocarbons. Tar from sands is the high molecular weight type, which does not flow, and which is similar to tar which is used in roofing or mixed with crushed stone to form road asphalt.
    The separation of oil or tar from shale or sand is more expensive than merely pumping oil from an underground pool,, but under certain conditions it can be economical.
    Whether the hydrocarbons are from an oil pool, shale, or sand, they have no use in the crude form. They must be refined, for which reason we have oil refineries to produce usable products, such as gasoline, jet fuel, Diesel, lubricating oils, etc., from the crude. Refineries operate on the basis of distillation and cracking. Distillation is merely a separation technique to obtain the lighter fractions for direct use as fuels. The heavier components are changed chemically to a lighter fuel fraction by a cracking process. The heavier the hydrocarbon, such as in sand tar, the more cracking must be involved to obtain the fuel components. But, in the final analysis there is always a residue, which cannot be economically converted to fuel, and which is then used for road asphalt.
    With that description of materials and process, perhaps you can now tell me what is dirty about the automotive fuels made from sands, as claimed by the Sierra Club.
    Employees of the Sierra Club know well the information which I have given above. However, their intention is to develop within you an emotional reaction such that you and others will combine to boycott the identified soft drink companies to force a shut down of sand tar mining . This position is consistent with that already held by the Administration. The question is really why do they take this position? Do they want to preserve sand tar for possible future use? Are they concerned that the mining will disrupt the environment? Note that they do not say.
    My own opinion is that US environmental groups, including the Sierra Club, have been infiltrated by Communists, who have the intention of destroying capitalism in the US and reducing the US to the economic capacity of a third world power.

Eliminate Mandates and Subsidies for Ethanol & Biodiesel

Open email to Rep. Fred Upton (MI), Chairman of the Committee on Energy and Commerce:

Dear Rep. Upton,
    This concerns gasoline and ethanol.
    I emailed you yesterday on this subject and included a message concerning gasoline pricing from one of my Associates. That same associate has come back with additional information as follows:  

 

    "A couple of days ago, I commented on the perverse forces driving up the price of gasoline.  It turns out that these same misguided federal policies are significantly affecting food prices as well.  Phil Nye reports that the price of farm land in Illinois has reached $15,000 per tillable acre - an all time high.  At the same time, corn and soy bean prices are at all time highs. The relationship of crop prices to farm land prices should be obvious.  That  apparently is not the case with Obama and this Congress who continue the destructive renewable fuel policies - ethanol from corn and biodiesel from soy bean oil.  At the same time, we are watching crude oil and natural gas production continue to grow.  Simply ask yourself the question:  why do we need renewable fuels subsidized with tax dollars when crude oil and natural gas production is rising rapidly?  The only answer is wrongheaded energy policies.

     Of course, the other consequence is the escalation of food prices.  Food crop and energy prices are the foundation of food prices.  According to Obama and the Federal Reserve, price inflation is modest.  Anyone who shops for food knows that prices have risen substantially.  This morning I stopped at MacDonalds to buy breakfast.  Less than a year ago my usual breakfast cost about $6.  This morning it was about $10.  Whom do you believe: the Federal Government or your pocketbook? " 

 

    Rep. Upton, please eliminate mandates for use of ethanol and biodiesel and eliminate all subsidies for production and use of same. Those promotions are not needed with respect to the present automotive fuel supply, and they are doing damage to the general economy, particularly in higher food prices and exaggerated farmland prices.

High Motor Fuel Prices through Ethanoll

Open email to Rep. Fred Upton (MI), Chairman of the Committee on Energy and Commerce:

Dear Rep. Upton,    The following concerning gasoline is from one of my Associates:
" You may or may not have noticed that gasoline prices are going up.  Normally, gasoline prices follow the price of crude oil because of the accounting rules that refiners use for valuing inventory. (That's another story)  However, the price of crude oil has been fairly stable.  What's going on?

    It turns out we are being victimized by the federal government. Are you surprised? The problem is the federal mandate for ethanol in gasoline. The Congress in its wisdom has decreed increased volume of ethanol for motor fuel at a time that the volume of gasoline is fairly stable.  That means that the percentage of ethanol in gasoline would have to increase beyond the current levels of about 10%. However, automotive automobile companies have warned that such a move might damage some engines and refiners are reluctant to expose themselves to lawsuits for engine damage.

    Therefore, they use another provision of the mandate to buy an exemption from the EPA rule.  But the price of those exemptions keeps rising because the demand exceeds the supply. (Econ 101).  Therefore, the refiners simply pass that increasing cost along to their customers.

    The use of ethanol in gasoline back in the 1980s had a marginal positive effect on unburned hydrocarbons from gasoline engines.  That problem was eliminated when catalytic converters were added to engine exhausts.  At this time there is absolutely no need for ethanol, and the price of gasoline would fall if its use were eliminated.

    Unfortunately, the federal government under Obama is not driven by economics but by catering to the farm states; the ethanol lobby and the environmentalists.  There is some fantasy that ethanol reduces carbon dioxide emissions.  It is a total fantasy.            

    However, it fits their narrative that ethanol in gasoline reduces the rate of global warming.

    Would you like to buy a bridge in Brooklyn?"

    I say additionally:

    New oil discoveries in the US, improved drilling techniques, and the recently improved process of oil recovery from shale have contributed considerably to Continental US oil reserves. Those oil reserves can now be developed for public use to significantly decrease and perhaps eliminate importation of crude oil. Conservationists say that because the quantity of oil reserves has a reasonably definite life, it should be conserved. With your help, the Obama Administration seems to be following that philosophy by denying permits for drilling and even prohibiting construction of a pipeline from Canada for more than a year. This latter is not a US conservation matter, but rather a method to deny crude oil availability in order to promote wind and solar energy at great public expense, through subsidies.
    Some years ago, when we were especially vulnerable to the variability of Middle East oil imports, Congress established a program of mandating ethanol usage in gasoline in order to extend the automotive fuel supply. This was also associated with subsidies to producers of ethanol from corn and an anticipation that ethanol would ultimately be produced from cellulosic biomass.
    Representative Upton, the energy world has changed. Crude oil is now available on a worldwide basis at higher production than ever before, and as I said previously, US reserves have increased tremendously. We no longer need ethanol to augment our automotive fuel supply. We have the oil reserves and private industry only needs permission to drill and produce from the vast holdings of federal land. The mandate requiring any ethanol addition to build a fuels, either from corn or cellulosic biomass, should be eliminated and subsidies for production of ethanol by those roots should be immediately discontinued. If ethanol can compete cost-wise with gasoline, without its various subsidies and mandates, and private industry wishes to add it to gasoline, I have no objection.
    While we are on the general subject of energy, I again request that the Congress eliminate the Department of Energy, which has probably done more damage to the United States economy and its development than any other agency.

Carbon Dioxide Emissions Are Not a Danger

Open email to US Sec. of Energy Earnest Moniz:

Dear Dr. Moniz,
    I have previously recommended the elimination of the US Department of Energy, on the basis that it has done almost irreparable harm to the country and will continue to do so. While it may be political suicide to start a letter to a person recommending that his job be eliminated, that is the basic fact of the situation.. Meanwhile, as long as the Department of Energy exists, we the public need to deal with it.
    There is a one-page article in the June 24 issue of Chemical and Engineering News, which touts the advantages of natural gas over coal. You are quoted in the article as being appreciative of the boom in natural gas, which for an equivalent amount of energy produced has a lesser emission of carbon dioxide to the atmosphere. You go on to say that natural gas will serve as a bridge to the eventual use of what is called sustainable energy, meaning no diminution of supply. Those examples are wind and solar energy.
    I suppose, like a good soldier, you are required to continue to promote the program consistent with that of the Obama Administration. However, I feel it's my duty to bring forth the logic of the situation.
    The fact is that the use of carbon materials gives cheaper usable energy to the general public than does wind or solar. It is true that the carbon resources may eventually run out, but it is our duty to use those materials available, as long as they exist. When we have no more carbon materials as a source of energy, we can then concentrate on solar, wind, nuclear or other. However, we don't know when that will be or whether it ever will be.
    In addition, I must again point out that you and many others are on the wrong track with respect to your viewpoint on carbon dioxide emission from carbon sources. It may be nice to consider the fact that only half as much carbon dioxide is produced in the burning of natural gas as compared to coal, but that is completely irrelevant. That consideration is based on the feeling that carbon dioxide is a contaminant to our environment. Nothing could be further from the truth. Natural ecological processes have handled carbon dioxide in the atmosphere for many millennia to retain the balance between excessive amounts and the amount required for normal production of plant life.
    I strongly suggest that you and your administrative superiors in the Obama Administration eliminate from your consideration any attempts to reduce carbon dioxide emissions. You need to look at how we can get the cheapest energy to the American public, whether by coal, oil, natural gas or the so-called sustainable methods.

Sincerely,
Arthur C Sucsy, PhD

Natural Gas Fracking

Open email to Sen. Cornyn (Texas):

Dear Sen. Cornyn,
    Thank you for your form letter on natural gas and the fracking process by which it is now being produced.
    You are for the fracking process, for which I congratulate you. You also have environmental concerns regarding the toxicity of fracking chemicals, so that any accidental release of those materials to drinking water supplies would not be catastrophic.
    You are opposed to involving the EPA in any control of fracking, for which I again congratulate you, because the less government control we have, the more productive will be the operation.
    However the EPA does have a responsibility to control the environment, within reasonable limits, and someone needs to be checking the various drilling operations to see that toxic chemicals are not being used. It seems to me that this is an EPA function. There are various state environmental agencies, which also should be working with the EPA on this matter.
    With respect to total government control, everybody else should be "hands-off". We do not need further involvement of Congress, and various other agencies involvement should be eliminated. This would include the Department of Energy, the Department of Health and Human Services, and the Department of Commerce. Any involvement by Congress should be to eliminate the involvement of those agencies. We can make a partial exception to the Department of Interior, to the extent that they must be encouraged to allow permits for drilling/fracking on federal lands.

Energy Policy

Open email to Sen. Cornyn (Texas):

Dear Sen. Cornyn,
    Thank you for your form letter on energy. I'm pleased to see that you and I are on the same wavelength.
    I much appreciate the fact that you did not mention carbon dioxide emissions with respect to climate change. I hate to bring it up myself, because it is an unnecessary and confusing distraction.
    The only addition that I could make to your letter would be that you will need to continue to fight hard for appropriate legislation. The Communist//Socialist Environmental Groups are strongly opposed to your position, since it is contrary to their desire to reduce US power by a reduction in the US economy. With the availability of considerable funding, they have been able to buy Democratic support, which will make very difficult your efforts to garner the necessary votes. In addition, you will face the program of overriding Pres. Obama's veto. While this is a considerable challenge, it is not an impossible undertaking, and I strongly encourage you to use your best efforts for the benefit of the US and its people.

Congress on Shale Gas Exports

The relatively new process of fracking has given the US the possibility of being a low-cost world supplier of natural gas.
US producers of shale origin natural gas desire to export it in liquefied form. Chemical manufacturers are strongly opposed to exportation, which they say will increase the domestic price and increase their costs for production of petrochemicals. Both sides try to involve Congress in this dispute for a resolution favorable to its side.
I have said previously that the owners of the natural gas have the right to dispose of it in any manner they wish, including exports, and Congress should not be involved.
The original controversy was based on an assumption that with fracking only the US would be a possible supplier of low-cost gas. That seems to have changed. Chemical and Engineering News in its April 8 issue notes that there are other foreign countries which are significant producers or potential producers of natural gas. Saudi Arabia continues to be a significant supplier. Argentina has the third largest shale gas reserves and British Petroleum is already arranging production by the fracking process. In addition, China produces light olefins from coal and intends to add 20 million metric tons of capacity by 2020. 
All of these will obviously increase natural gas availability in foreign markets and reduce foreign prices. This automatically decreases the incentive to export from the US. Again, market forces are at work
Therefore, I again strongly suggest to Congress that it should have no part in controlling export of US produced shale gas.

Keystone Pipeline

Here is another quote from an associate:

" Surely you have read many reports about the Keystone pipeline - another of Obama's "windmills".  For reasons of their own and in most cases ignorance of the facts, many "environmentalists" continue to urge Obama not to approve the pipeline.  Consider a couple of facts:

1.  The heavy crude from the Canadian tar sands has been moving regularly to the refineries on the Gulf Coast by rail.  It turns out that Warren Buffet saw an investment opportunity and took a major interest in a railroad that moves the heavy crude into the United States.

2.  The refineries on the Gulf Coast are equipped to process the heavy crude.  They were originally fitted to handle the heavy crude from Venezuela which is similar to the Canadian source.

3. Is it not a smart move to displace crude from Venezuela, which is not friendly, with crude from our friends in Canada?

The best I can say of the so called "environmentalists" is: "Ignorance is bliss".

Pres. Obama's Green Energy

The following is from an associate:

"Perhaps you have noticed that one of Obama's Man of La Mancha's "windmills" is green energy.  Purportedly, he has convinced himself that we can support our economy without hydrocarbons.  Several things have gone wrong.

1.  Solar energy via solar panels has taken a major hit in spite of federal subsidies.  Most solar panels are made in China and imported. Solar panel companies in America have essentially gone out of business.  It is reported that Chinese manufacturers are doing poorly as well as demand in Europe and North America has dropped sharply.

2.  Fisker has just announced a major layoff.  This company produces expensive electric cars, and has a $190 million loan from the Department of Energy.  It has not built a car since last July.  Its principal supplier of batteries has gone bankrupt.  The Chevy Volt has disappeared.  All this in spite of federal subsidies to those who purchase electric cars.  The only companies that are benefiting are those that make golf carts.  One sees no golf carts on the highways.

3.  There are a few wind energy producers making money, and they are in remote areas with lots of wind and not many people."

Production Cost of Ethanol and Gasoline

    I had previously suspected that for motor fuel the cost of ethanol production might be higher than that for gasoline. However, I have now made some calculations on production costs of both ethanol from cellulosic materials and gasoline from crude oil.
    This quick analysis shows that production cost of ethanol is about $1 per gallon versus more than $2 per gallon for gasoline. Calculations are below. The ethanol was presumed to be produced from $30 per ton corn Stover, which is leaves and stalks of corn left in the field after corn harvest. Gasoline was presumed to be produced from crude oil at $90 per barrel.
    The cost of the factory for ethanol production is significantly higher than the cost of a refinery for gasoline production, which is reflected in the charge for amortization. However, the cost of crude oil is much higher than the cost of corn stover.
    This says nothing about whether there is sufficient availability of corn stover to satisfy motor fuel needs, even if the factories were built.
    The analysis also says that everything possible should be done to bring down the cost of crude oil.

RAW MATERIALS
For Ethanol:
    C&E News (1/28/13) says 285,000 tons of corn stover are required to produce 25,000,000 gallons of ethanol. That's 87.7 gallons of ethanol per ton of biomass. Corn Stover is all of the cellulosic material (biomass), such as leaves and stalks, left in the field after corn harvesting.
    A paper by Purdue (http://www.extension.purdue.edu/extmedia/ID/ID-404.pdf) assumes 60 gallons of ethanol per ton of biomass.
    The cost of dry corn stover is $30 a ton. Therefore, the RM cost to produce ethanol from corn stover is $0.342 per gallon (285,000 x $30 / 25,000,000)
For Gasoline:
    Crude oil price is $90 per 42-gallon barrel. We will assume that 42 gallons of crude oil is converted to 42 gallons of various products including gasoline, each of which has a different value. However, we will also assume that the average crude oil value for conversion to a gallon of gasoline is $2.143 per gallon ($90 / 42).

RM SHIPPING
For Ethanol:
    C&E News says the corn stover harvest area to produce 25,000,000 gallons of ethanol is 445 mi ². The radius for that circle is about 12 miles, with an average transport distance of half that. The Purdue paper indicates a transportation cost of $8 per ton, which would be $0.091 per gallon of ethanol (8 / 87.7).
For Gasoline:
    The average shipping price the imported petroleum is about $2 per barrel or $0.048 per gallon (2 / 42).

FACTORY AMORTIZATION
For Ethanol:    KiOR has projected a plant costing $222 million to produce 13,000,000 gallons per year of biocrude. The product is not chemically defined. It's probably better to take the figure of $10 per gallon of ethanol, from a Poet/DSM joint venture. Amortizing the plant costs over 20 years, gives an annual amortization cost of $0.50 per gallon.
For Gasoline:
    No new oil refineries at been built in the US for many years. However, a tribal cooperative in North Dakota is projecting a 20,000 barrel per day refinery at a cost of $400 million. A petroleum barrel is 42 gallons. If the plant operates at 85% efficiency for 365 days/year, annual production of refined products will be the equivalent of 261 million gallons of gasoline (20,000 x.85 x 365 x 42). Amortization over 20 years is $0.077 per gallon of gasoline equivalent ($400 million / 261,000,000 gallons / 20 years).
    A BP refinery expansion in Indiana has recently been announced at $4 billion to increase refinery production by 270,000 barrels per day. Amortization over 20 years is $0.057 per gallon of gasoline equivalent.

TOTALS

Item	Ethanol ($/gallon)	Gasoline ($/gallon)
Raw material	0.342	2.143
RM shipping	0.091	0.048
Factory amortization	0.500	0.077
Total	0.933	2.248

Understanding Cap & Trade

Cap & Trade is an outgrowth of the Carbon Dioxide/Global Warming Hoax. No logical scientific explanation has ever been made to correlate carbon dioxide with global warming. In spite of this, an arbitrary assumption has been made that carbon dioxide emissions from the burning of fossil fuels should be controlled.


The Cap & Trade program is an international governmental effort to control carbon dioxide emissions. For Western Europe, the intention of the European Union (EU) is to reduce carbon dioxide emissions by 20% from 1990 levels, in the next 30 years. The mandatory scheme applies to 11,000 industrial installations, including power plants and major chemical facilities across all 27 member states, plus others. For our explanation, A hypothetical example will be used to explain how Cap & Trade works. The example involves the EU, because more data is available from that region.

Assume that there is an electrolytic steel manufacturer in Belgium. Electrolytic steel is produced by melting recycle steel from automobiles and other sources. The melting uses electricity. To generate the required electricity, our example company uses a steam turbine powered by the burning of coal. The coal burning liberates carbon dioxide.

Our example company burns sufficient coal to generate 10,000 tons of carbon dioxide per year. The EU Commission has "capped" the plant to emit only 9000 tons of carbon dioxide per year. This means under normal operations our example company has three options. It could reduce production of steel to require only enough coal to emit 9000 tons of carbon dioxide, invest in alternate energy equipment to capture carbon dioxide or reduce coal use by substituting wind, solar, etc. to reduce carbon dioxide emission, or lastly purchase from the EU Commission a "right" to emit the extra 1000 tons of carbon dioxide. Of the three choices, the obvious best one is the cheapest, and assuming there is no intention to decrease production of steel, that depends on the comparative prices of installing new equipment or purchasing the "rights".

In addition to the arbitrary and mandatory cap of carbon dioxide emission on our example company, the EU also sells the additional "rights". It has been said that a "rights" price of between $68 and $135 would be required, if industry as a whole is forced to shift into a new low-carbon footing. However, the actual price per ton of carbon dioxide in 2011 was $23, and more recently down to a new low of $5.20. This means that our example company could buy a 1000 ton "right" for $5200 per year. This is obviously a cheaper way to go for our example company than to try to purchase new equipment. The EU still gets $5200, but nowhere near the $23,000 they obtained in 2010 or the desired $68,000 to $235,000.

Why has the carbon dioxide "right" price dropped so low? Two reasons. Industrial production is down in the EU, because of the recession. In addition, the EU has flooded the market with "rights" through many free offerings of a political nature. To increase the carbon dioxide "right" price, the EU is proposing to delay the sale of 900 million "rights" originally scheduled for sale in 2013 to 2015 for four years. In 2013 just over 50% of the 2.1 billion metric tons of "rights" provided by the EU will be sold, with the remainder allocated free of charge. Note that even at the low price, this is almost $5.5 billion going into the coffers of the EU commission.    

One might ask why the EU doesn't lower the cap levels of carbon dioxide emission for individual producers. This would automatically require more "rights" purchasing and simultaneously increase the "rights" price. The answer is political objection. There are a number of countries with significant coal production and coal usage, of which Poland is a prime example. In addition, the chemical company conglomerate strongly objects, because it would increase its energy cost.

In spite of these difficulties, the Cap & Trade scheme will likely continue to progress, because it is a sidestep to direct taxation and still accomplishes feeding large amounts of unjustifiable tax money into EU coffers. The UK, which is not part of the EU has ignored the Cap &Trade issue and applied a direct tax of $7.90 per ton of emitted carbon dioxide on the production of electricity consumed by certain industries, including chemicals.

Note again that all of the above is based on an unjustified theory that carbon dioxide emissions are responsible for global warming.

Natural Gas Exports

    With the introduction of new technology to release natural gas from shale, the US suddenly finds itself with a surplus of natural gas. As with any commodity, price has fallen with increased availability and natural gas has become a product of export interest. Is said that more than 20 natural gas export facilities are now being proposed in the US. This development has created some consternation, especially among basic chemical companies.
    Large chemical complexes, such as Dow and DuPont, manufacture many chemical products to be used by other industries, such as paint manufacturers. The chemical companies also manufacture various plastics themselves. One of the basic raw materials is ethylene. The traditional source has been from petroleum with steam cracking of light hydrocarbons and cracking of petroleum residues. However, some natural gas contains a significant concentration of ethane, which justifies its separation and dehydrogenation to ethylene. With cheap natural gas, this latter process is economically preferred.
    Dow Chemical and others are taking advantage of cheap US ethane by constructing US plants to dehydrogenate it to ethylene. However, development of a natural gas export business would decrease the availability of natural gas in the US and increase its price. This would obviously be a disadvantage to ethylene manufacturers, such as Dow. Because of this, Dow, Celanese, Eastman Chemical, and Huntsman have established a coalition named America's Energy Advantage, which will obviously lobby against export of natural gas. In effect, they want trade restriction.
    It is also interesting that prior to this development, chemical companies have been strong proponents of free trade and have profited there from. They have manufactured many of their basic products outside the United States and have imported them duty-free for further conversion to more complex materials. Therefore, these chemical companies are now speaking in contradiction. On the one hand, they want free trade in order to bring into the United States foreign produced materials duty-free. Simultaneously, they want to restrict natural gas exports.

    The National Association of Manufacturers (NAM) apparently sees the inconsistency of this position and comes down on the side of supporting natural gas exports. This has upset Dow, who then left the NAM. The American Chemistry Council (ACC) apparently has views similar to NAM, and said last year it would oppose any legislation that attempts to restrict export of natural gas. Dow is also threatening to leave the ACC.
    While I find the controversy interesting, I am much more concerned with its basis. That is, it is apparently assumed that the federal government has the right to restrict exports of natural gas. While the federal government may take that right, it would be completely inconsistent with the implication of the Constitution on private property. The production of natural gas is private property, and the government has no right to control it, unless it's a matter of national security, which it obviously is not.
    If the federal government involves itself in this controversy and comes down on the side of restricting exports, I strongly hope that those organizations who had intended to go into the natural gas export business will sue the federal government in federal court, and if necessary carry the case to the Supreme Court.

Chu Leaving Department Of Energy

     Hooray!
     Jeff Johnson reports in the February 11 issue of Chemical and Engineering News that Sec. Chu is resigning as Secretary of Energy in the Obama Administration. He is said to be returning to academia, where he belongs.
     I have previously called for Sec. Chu's resignation, in spite of the fact that he has been a "good soldier". He has been following to a T Obama's program on energy, which is to replace all fossil fuel use with sustainable forms, such as wind and solar. This is a ridiculous notion. God made fossil fuels for our appropriate use. Appropriate means common sense, which is to reduce any collateral damage as we gain.
     As human beings we were made to breathe air and take advantage of its oxygen content to sustain life. Simultaneously, we exhale carbon dioxide, which for some unaccountable reason has achieved a reputation of being bad. I have nothing against wind and solar energy, but oil, natural gas and coal are available for our use. To suddenly ignore their presence and go to less efficient sources of energy, which will convert the United States to a third world country, is mind-boggling. Enough said about the ridiculousness of the Chu/Obama energy program.
     The next question is why would Obama want to denigrate fossil fuels and go to the so-called sustainable forms? Who knows? We can't read the man's mind, and he has not revealed his reasons. However, the more obvious answer is that he is ignorant on the subject of technology and economics. His background is that of a community organizer. He has devoted his life to becoming a wonderful orator, and he has succeeded. That's where the danger lies. He doesn't know what is talking about, but his oratory skill allows him to sell anything, no matter how silly it may be in the true light of day.
     But we were really talking about Sec. Chu. C&E News says he came from a strong background in scientific research - he was the 1997 Nobel laureate in physics for his work on methods to cool and trap atoms with laser light. Does that qualify him to be Sec. of Energy? His background is research. A research scientist is supposed to find new materials or new production methods which could be of benefit to society. By himself, a research scientist can bring nothing to economic fruition. There must be engineering mockups to determine practicality of production, calculations of economics to determine whether the new material or process will be economically feasible in comparison with the existing materials or processes. It must involve funding and engineering for the building of manufacturing facilities, and it must involve marketing programs and logistics to get the materials or processes in the hands of users.
     Chu knew nothing of this. He knew nothing of these myriad details. He obviously had only the simple approach of agreeing with Obama that "wouldn't it be nice" and let's throw taxpayer money at it. In that program, Chu was remarkably successful. He made the obtaining of permits for extracting fossil fuels from federal lands significantly more difficult, so that the sustainables would have less competition, and he spent $36 billion of stimulus funds on sustainables. These two items are regarded as achievements? Look at it in fact. Reduction of availability of fossil fuels makes energy more expensive. This is one of the reasons why gasoline is $3.60 a gallon. Is it also an achievement to spend money? He hasn't gotten anything in that expenditure. The Natural Resources Defense Council, an environmental advocacy group lauds him for doubling US use of wind and solar energy. Is that really an advantage? Look at the cost.
     So Chu is going back to academia. That's where he belongs and should have stayed. He has aided Pres. Obama in doing irreparable damage to a practical US energy program.

Ethanol in Gasoline

     Jeff Johnson in the November 26 issue of Chemical Engineering News reported on continuing the Congressional mandate for ethanol to be added to gasoline.
     Congress originally set up a Fuel Standard requiring that 13.2 million gallons of corn-based ethanol be added to gasoline in 2012 and part of 2013.
     Ethanol production for use as a motor fuel uses about 45% of the US corn crop. Because of the drought in the US this past summer, corn yields plummeted to a 17-year low. The corn harvest was 13% below the previous year and over the past three years, the price of corn has nearly doubled.
     In view of the above, nine governors, 26 senators, and 50 members of the House of Representatives, as well as many livestock, poultry and other farmers who depend on corn for animal food, requested the EPA to waive the congressionally requirement.
     Apparently, the EPA has power to grant this waiver but has refused to do so. While the EPA has power to grant this waiver under the law, it says congressional requirements for the waiver have not been met, and waving the requirement will have little if any economic impact.
      Rather than to concentrate on the position of the EPA, it seems that Congress should be doing its job of recognizing that the original mandate was in error and should be corrected by either eliminating it or modifying the Renewable Fuel Standard.
      Notice that we are now in February and that the whole issue seems to be dropped, in spite of the fact that it is still completely relevant. Present consternation is on Congressional budget cuts, and subsidies for ethanol production are a significant portion thereof. We have ample energy sources in the US, without the use of ethanol. If the ethanol subsidy is eliminated, which it should be, then there is an obvious controversy in that the present Fuel Standard still requires 13.2 million gallons of ethanol being added to gasoline.

Export Natural Gas?

With the recent development of the shale fracking process, a tremendously large amount of natural gas has suddenly become available in the US. As with any commodity, price is related to availability, and there has been and will continue to be a sharp decline in natural gas price.

There are three major uses of natural gas in the US almost equally divided; 37% heating, 31% conversion to electricity, 28% conversion to chemical products.

With the increased availability of natural gas and a significant price reduction, these three uses will increase. However, the increase will be slow because of the need to change equipment. For example, home heating involving fuel oil, will require piping for the gas and a change of burner. Public utilities now generating electricity from coal and oil will require similar changes.

The situation with respect to conversion of natural gas to chemical products is somewhat more complex. Although present use of US natural gas by chemical companies is significant, the picture is not complete.

For many years, natural gas prices have been higher in many foreign countries than in the US. For this reason, and because foreign countries impose fewer restrictions on manufacturing, many large US chemical companies have built chemical conversion plants in foreign countries. An additional advantage is that the products of such foreign manufacture are allowed entry into the US duty-free, because of the US free-trade policy.

With a significant reduction in US natural gas prices, chemical companies would have an advantage to take up manufacturing in the US, but their fixed manufacturing equipment is abroad. New plants could be built in the US, but there are still the problem of a multitude of government regulations.

With the increased availability of natural gas, presumably above current needs, many companies are interested in exporting it to those areas, where prices were traditionally cheaper, but will now be more expensive. Shipment of natural gas requires refrigeration to liquefy it, various handling equipment, and tankers to move it. All of this is significant capital investment.

We now get into the politics of the situation regarding exports.

The US Department of Energy will decide if and how much natural gas can be exported. This is a ridiculous control. Natural gas is privately owned; not owned by the public or by the US Government. However, through the years, the US public has given up its rights to private property, allowed the development of a Department of Energy and has given it control over someone's property. You may not be concerned, because it's not your property, but some day it may very well be. However, we must deal with the situation as it exists.

The US Department of Energy will make its decision on natural gas exports based on the ideology of the President of the US and various pressures from lobbyists and government members, including those from the House and Senate. In other words, another political football. The only justification for involvement of the Department of Energy would be a matter of national security, and this is not the present case.

Another agency involved is the Federal Energy Regulatory Commission, which must also approve export terminal construction. This one at least makes a little sense, because we need organized export equipment at our various ports.

An interesting aspect is the position of the chemical industry. An example is Dow Chemical, which has various natural gas conversion plants abroad and imports finished chemical products to the US. Liveris is Dow's CEO. He was initially against exporting natural gas, apparently because it might negatively affect his overseas production. He later realized that being against natural gas export, he was speaking against free-trade, which is the lifeblood of his present importation of foreign converted chemical products.

Sooner or later we will see how this plays out, even though we are on the wrong track. Persons or organizations in the US owning natural gas should be allowed to sell it wherever they wish; internally, export, or both. Free market forces will usually develop the right outcome. Government should only be involved with substantial matters, such as physical protection of its citizens from foreign invasion.