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House to Vote on “Natural Gas Pipeline Permitting Reform Act”
Posted By: Nan Swift - 11/20/13

The House of Representatives plans to take up H.R. 1900, the “Natural Gas Pipeline Permitting Reform Act” tomorrow. Authored by Rep. Mike Pompeo (R-KS), the bipartisan legislation “aims to expedite the federal review process for natural gas pipeline permit applications.” Like the “North American Energy Infrastructure Act,” a bill that targeted cross-border pipelines and transmission lines, H.R. 1900 would streamline the permitting process for natural gas pipelines, putting in place commonsense deadlines and guidelines to remove the regulatory limbo where many projects find themselves.

A Government Accountability Office (GAO) report from February 2013, found that the many stages and steps of the permitting process, that often vary from state to state, can quickly bog down projects. The GAO explains that “for those projects that were approved from January 2010 to January 2012, the average time from pre-filing to certification was 558 days…” As natural gas exploration booms around the country, moving that natural resource from one point to another is a crucial component to the growth and sustainability of the industry.

From a consumer perspective, expediting the pipeline approval process means greater availability of an increasingly abundant and relatively low-cost energy source. To understand what greater pipeline capacity could mean for consumers, look no further than New England, where many suffer from high energy prices, especially in the winter, as the Boston Globe reports:

The projects come as New England struggles to address growing demand for natural gas and supply constraints created by tight pipeline capacity. Those constraints have led to shortages and price spikes during the peak demand periods, such as extended winter cold snaps, helping to drive the region’s already high energy costs even higher.

Over the last decade, the amount of electricity in the region produced by natural gas has risen from about 15 percent to more than 50 percent, said Gordon van Welie, head of ISO New England, the region’s grid operator. In Massachusetts, natural gas accounts for 67 percent of the state’s electricity generation, and is also used to heat half the state’s homes.

“Some days there just isn’t spare gas to be sold,” van Welie said.

Additional pipeline capacity, van Welie added, would help alleviate the issue and could also lead to lower energy costs in New England …

As NTU wrote regarding the aforementioned “North American Energy Infrastructure Act,” when it comes to giant infrastructure projects such as natural gas pipelines, “the planning, personnel, and capital all depend on a transparent, predictable, and consistent regulatory environment.” By smoothing the regulatory hurdles and creating an environment of certainty for investors, H.R. 1900 would give consumers increased access to low-cost energy options and spur job-growth in an essential sector of our economy. NTU urges all Representatives to vote “Yes” on H.R. 1900.

 

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Keystone Pipeline Keeps Hitting White House Roadblocks
Posted By: Sharon Koss - 08/08/13

The public and many in Congress continue to support construction of the Keystone XL Pipeline despite President Obama’s unrealistically low job creation projections. The administration has impeded construction of the pipeline for five years while it has called for multiple environmental impact assessments. Each time a result falls in favor of TransCanada, the company requesting the construction permit, the administration asks for another report or for an additional application, effectively preventing construction.

First, the administration requested a study by the State Department, under the direction of Hillary Clinton, on the environmental impacts of the Pipeline. When the report detailed that no substantial impact would occur, the President rejected the permit and asked TransCanada to reapply. When they did so, Obama announced that he would delay the decision until after the 2012 election. Now, a year and a half later, although TransCanada has completed two legs of the pipeline, it has no more certainty as to whether it will be allowed to build the section which extends over the northern border of the United States.

On July 24th, in an interview with The New York Times, The President belittled the potential economic benefits of the Pipeline, contending that it will only create 2,000 jobs during construction and 50 to 100 permanent jobs. The Washington Post’s “Fact Checker” responded to the President’s statement by recalling the job estimates released by TransCanada and the State Department, his executive agency. They called into question his calculations and stated that the figure was more accurately anywhere from 5,000 to 6,000 jobs. Other projections put the job count at 20,000. While these numbers vary, there is consensus that it would create a substantial number of jobs in a still-struggling economy.

On a more fundamental level, the Administration is unnecessarily preventing a private company from materializing a project which would provide the United States access to 500,000 barrels of oil per day from a stable ally. Privately created jobs, however many, will benefit the economy. Regardless, a company should not have to prove that it would create a minimum number of jobs to qualify for the presidential approval.

At the same time, environmental concerns should be assuaged by the extremely rigorous safety guidelines and consideration of risk at every step in the process. In Canada a combination of monitoring and new technologies have helped to both reduce environmental impact and spur development.. Heading south via the Pipeline, The New York Times reports that a recent study by the National Academy of Sciences found that the tar sands derived oil, also called diluted bitumen, is “no riskier to transport than other types of crude oil.” And TransCanada has even agreed to comply with 57 additional construction conditions demanded by the U.S. government:

TransCanada maintains its commitment to build Keystone XL as safely and reliably as possible. To that end, the company will adopt and comply with 57 special conditions developed by the U.S. federal pipeline regulator PHMSA (Pipeline and Hazardous Materials Safety Administration) that provide an even greater confidence in the operation and monitoring of the pipeline, including: a higher number of remotely controlled shut-off valves, increased pipeline inspections and pipe that is buried deeper in the ground. The Final Environmental Impact Statement for the project issued in August 2011 concluded the incorporation of the 57 special conditions 'would result in a project that would have a degree of safety over any other typically constructed domestic oil pipeline system under current code.'

The House recently passed the Northern Route Approval Act to bypass the presidential approval process for the Pipeline. The Senate is proceeding with plans of its own to allow construction. It is time for a nation with access to great energy resources to allow the implementation of policy to progress. With no legitimate legal issues and no identified significant environmental impacts, people must ask, “Why does the President keep adding hoops for this project to jump through?”

 

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EPA's Latest Ruling Ignores RFS Reality
Posted By: Nan Swift - 08/06/13

Today the Environmental Protection Agency (EPA) released its final rule for 2013 renewable fuel percentage standards. That’s an awkward way of saying that under the Renewable Fuel Standard (RFS), enacted in 2007, the EPA sets annual amounts for how many gallons of biofuel refiners are required to blend with our gasoline. While the law sets out ever-increasing amounts each year, the EPA does have discretionary authority to reduce these levels. Different levels are set for various kinds of biofuels including corn ethanol, cellulosic, and biomass.

The ruling today underscored two things:

  1. There would be no change in the total number of gallons of biofuel, pegged at 16.55 billion gallons, refiners expected to add in 2013 (up from 15.2 billion in 2012).
  2.  But due to the fact that there is still so little cellulosic ethanol available commercially, the EPA has reduced the mandate of 14 million to 6 million gallons.

Despite the drop in one form of biofuel, the overall mandate is still far higher than consumers and affected businesses would like to see.  By not lowering the overall mandate in tandem with the cellulosic reduction, refiners will have to either blend even higher amounts of imported sugarcane ethanol or more expensive biodiesel into the fuel supply, or purchase increasingly pricey biofuel credits called Renewable Identification Numbers or RINs to fill the gap.

The fact that the EPA didn’t see fit to rein in the RFS mandate, even though it is within its power to do so, means that the threat of the dreaded “blend wall” is closer than ever. When first instituted, the RFS mandated that obligated parties blend ever increasing volumes of biofuels into gasoline and diesel. The RFS also assumed that fuel demand would continue to grow over the coming decades.

 Since 2007, however, a number of things have thrown a wrench into that plan. The economy has tanked, purchasing power has dropped, and fuel efficiency has increased – just to name a few variables.  The bottom line is that Americans are consuming less gasoline than anticipated. The latest numbers indicate a practically flat line in gasoline consumption from last year to this, yet the EPA is insisting we somehow burn through about 1.3 BILLION more gallons of ethanol than the year prior.   The divide between growing volumetric mandates and shrinking gasoline demand will continue to grow in the coming years, forcing the onset of the blend wall, or the practical limit on the amount of ethanol that can be safely used in current vehicles and infrastructure.

The blend wall is one reason why some have been pushing for E15 – gasoline with a 15 percent ethanol content, not 10 - in order to make room in the gasoline supply for more and more government-mandated ethanol. This is a terrible idea for a number of reasons. The higher ethanol content is bad for older cars and small engines.  Gas pumps aren’t designed to dispense it.   Ethanol costs consumers more to go the same distance as gasoline.  And it means diverting even more of already tight corn supply from the food chain to the gas tank.

While today’s ruling didn’t bring any relief to consumers, the EPA did acknowledge:

EPA does not currently foresee a scenario in which the market could consume enough ethanol sold in blends greater than E10, and/or produce sufficient volumes of non-ethanol biofuels to meet the volumes of total renewable fuel and advanced biofuel as required by statute for 2014.

Therefore, EPA anticipates that in the 2014 proposed rule we will propose adjustments to the 2014 volume requirements, including the advanced biofuel and total renewable fuel categories

The fact that the EPA is beginning to understand the problem that people have been predicting for years is cold comfort for the consumers, livestock producers, and many others who have been decrying the damaging effects of the RFS for years. 

Taxpayers can’t wait for the EPA to “propose adjustments.” Today’s ruling, so out of touch with the market realities of the RFS, is one more indicator that the RFS is broken. Instead of hoping the bureaucrats at the EPA do the right thing, we need to urge our legislators to move forward with real reforms like S. 1195 in the Senate and H.R. 1462 in the House – both are robust bipartisan plans that would level the playing field and inject some much-needed commonsense to an out-of-control mandate.

In the long run, the EPA’s repeated energy fumbles only underscore the need for Washington to stop picking winners and losers and get out of the energy market. Until then, as the biofuel mandate keeps going up, perhaps we should just be happy the EPA has not set a minimum gas consumption standard … yet.

To learn more about the pernicious RFS and NTU’s ongoing efforts to thwart EPA overreach, go here, here, and here.

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Ac-“customed” to Waste?
Posted By: Pete Sepp - 08/05/13

All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.

Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.

Now for the not-so-good:

  • According to Airlines for America statistics, Abu Dhabi airport accounted for less than 600 passenger arrivals per day to the U.S. in 2012, ranking it #80 on the list of top origin points to our country.
  • Right now, no U.S.-based carriers even fly from the Abu Dhabi International Airport back to here.  All other CBP pre-clearance zones in Canada, Ireland, and the Caribbean serve many airlines, including U.S.-flagged ones.
  • The primary beneficiary of the deal would be Etihad Airways, the state-owned airline of UAE. Thanks to this status Etihad enjoys an advantage over private airlines around the world that are subject to corporate profit taxes of their home countries. Which brings us to …
  • Another advantage conferred by the United States under the auspices of the Export-Import Bank (Ex-Im), whose risk-taking and subsidization have long been a concern for taxpayer advocates such as NTU. Etihad snagged $593 million in loan guarantees from Ex-Im last year for aircraft purchases, and could qualify for preferential financing that our own airlines (by definition) can’t get through Ex-Im.
  • Meanwhile, The Wall Street Journal is reporting that over the preceding year (before overblown sequester scare tactics), the wait times for getting through customs at stateside airports have “increased dramatically.”

All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?

And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.

Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?

Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”

Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.

Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.

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Expanding RFS to Natural Gas: Typically Terrible DC Idea
Posted By: Nan Swift - 06/27/13

Sadly for taxpayers, it’s no longer surprising when, as the market economy evolves, Washington is called in to try and “rebalance” things – with predictably disastrous results.  So it is with a recently introduced bill, H.R. 1959, which would expand the terrible Renewable Fuels Standard (RFS) to include natural gas derived ethanol. 

NTU has weighed in extensively on the damaging ethanol mandate enshrined in the RFS.  Pouring ever-increasing gallons corn ethanol into our fuel tanks has led to higher food and fuel prices, environmental and economic damage, and has even exacerbated hunger problems in developing nations. An urgent reform, or better yet, repeal of the RFS is long overdue.

Lumping bad policy on top of bad policy is far from a good fix. Despite strong pushes for reform from dairy and livestock producers, anti-hunger groups, taxpayer groups, engine manufacturers, and environmentalists, the powerful corn lobby ensures that corn ethanol remains entrenched in our public policy, even in the face of damning evidence of its harm. Though supporters of H.R. 1959 say the bill will help to cut Big Corn’s influence in Washington, this noble goal will almost certainly backfire. Extending the same guaranteed market to another energy source will only further cement the feds in the energy sector and create another rent seeker at the government trough.

As the incredible natural gas boom drives prices down, relying on the market, not federal favors, is the best response. That means pursuing free market solutions to boost profitability such as exports and technology that will help consumers use more affordable natural gas as an energy source.  And in turn, Congress should make sure that big government isn’t standing in the way. Getting government out of the energy industry by leveling the playing field and not picking winners and losers be they renewable or otherwise, is a far better path for consumers and the natural gas industry than tweaking current bad laws.

 If H.R. 1959 goes forward, it might help to ease the pressure on feed stocks, but consumers will still be facing many of the same problems the RFS presents today. Even worse, when tomorrow comes, the natural gas industry will have an incentive for urging the EPA to push for E-15 and higher blends of ethanol regardless of the cost or damage to many engines, in order to use increasing volumes of their products as refineries inch closer to the dreaded “blend wall.”

That’s why NTU lent its principled opposition to H.R. 1959 by joining a CEI-led coalition letter that explains:

By artificially increasing the demand for natural gas, H.R. 1959 would spawn its own wealth transfers and market distortions. For example, higher gas prices would inflate household utility bills and could erode the competitiveness of U.S. manufacturers.

Natural gas has no need of special privileges to flourish in the motor fuel market, as two articles in the June 20, 2013 Wall Street Journal clearly show. Worldwide, gas demand in road transport increased tenfold from 2000 to 2010. The International Energy Agency expects gas in road and maritime transport to “do more to reduce the medium-term growth in oil demand than both biofuels and electric cars combined.” This spring Cummins released two new long-haul truck engines that run on gas rather than diesel. The company developed the engines “without a penny of government support.”

Rather than attempt “fixes” that create new carve-outs (and encourage more lobbying to retain them), NTU urges Congress to consider bills that will help truly reform or repeal the RFS.  Several good bi-partisan reforms are currently on the table in both chambers including the “Renewable Fuel Standard Reform Act” in the House led by Congressmen Goodlatte (R-VA), Costa (D-CA), Womack (R-AR), and Welch (D-VT) and the “Renewable Fuel Standard Repeal Act” in the Senate led by Senators Barrasso (R-WY), Pryor (D-AR), and Toomey (R-PA).

 

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Lower Taxes + More Oil = North Slope Economic Growth
Posted By: Sharon Koss - 06/13/13

Oil companies are now committing massive investments to Alaska’s economy in response to reduced taxes. Conservatives have long claimed that reductions in taxes help to encourage market investment and prosperity. Without business, there are no jobs, without jobs there cannot be economic growth.  The situation concerning the Oil and Gas Production Tax (SB 21) in the North Slope of Alaska is a prime example of this truism. The Tax Foundation ranked Alaska as the fourth-best state tax climate for business for 2013, and the prospects keep improving as this new law begins to take effect. The long-standing fact that Alaska is one of only two states without an individual income tax or state-level sales tax (the other being New Hampshire) greatly contributes to its favorable business climate.

Before SB 21, the task of funding state services and government fell mainly to the oil companies, which paid a progressive tax on net profit with a maximum of 75 percent being collected by the state as part of the 2007 Alaska’s Clear and Equitable Share (ACES) Act. This staggering burden upon oil producers, who bring so much investment to the state, was advocated and pushed through by then Governor Sarah Palin. It is ironic that this national icon for lower taxes touts ACES as one of her major accomplishments in office.

For the past three years, Governor Sean Parnell has pushed for the rollback of this tax and finally succeeded with the passage of SB 21 this past April. In response to this reversal, which now sets a flat 35 percent tax on profits, BP has announced plans to invest $1 billion in further investment into Prudhoe Bay in Alaska, which BP lists as the largest oilfield in the United States. BP’s promise to create two new drill rigs by 2016 will add 200 new jobs to the already 2,300 that they support in Alaska. Exxon and ConocoPhillips, which each own 36 percent of the Prudhoe Bay oilfield, are looking into plans to team up with BP to commit $3 billion to add 110 more wells to their portfolios.

A look at the past shows that while some may criticize this tax reduction as a “giveaway” to big oil, it is far from that. Alaska is able to enjoy low taxes due to the finances that BP, ConocoPhillips, and Exxon invest in the state. Too often the oil industry is seen as easy plunder for tax hiking politicians, however, the tax reductions were essential for the industry and economic prosperity in the state. Currently, the oil flow from existing rigs is waning and low capacity is threatening to render the pipeline inoperable. The miles of pipeline were built to transport 2 million barrels of crude oil a day—the amount that was being transported at the height of production. A severe cut to the oil flow could cause remaining oil to freeze. Without oil companies’ additional and substantial investment it is likely that the Alaskan economy would fail to thrive. Rather than push policies which would make exploration in Alaska less lucrative than pursuing oil elsewhere, the latest actions from Governor Parnell have already been shown to foster continued economic development. So while the rest of the nation remains confounded on how to resurrect the economy, let them look to the North as lowered taxes spur investment and growth.

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Satirical Video of ActionAid Canvassers Promoting “Drive Aid”
Posted By:  - 04/30/13

Check out this satirical video created by ActionAid to highlight the need for reforms like those in the “Renewable Fuel Standard (RFS) Reform Act", which NTU supported

The reforms would prioritize food for families over fuel for cars.

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Bipartisan House Foursome Reveal Bill to Fix Costly Ethanol Mandates
Posted By:  - 04/11/13

Yesterday, NTU announced its support for the bipartisan Renewable Fuel Standards (RFS) Reform Act, which will reduce ethanol mandates that drive up food and fuel costs. In addition to our letter to Capitol Hill, NTU staff joined a wide range of the bill’s supporters at a press conference to push for this needed relaxation of federal regulation.

This public unveiling of the bill took place on the House Triangle and featured the bill’s four sponsors: Reps. Bob Goodlatte (R-VA), Jim Costa (D-CA), Steve Womack (R-AR), and Peter Welch (D-VT). Industry leaders, and anti-hunger activists also spoke.

In a prior statement discussing the problems with RFS mandates and their motivation to work together, the four aptly said:

“The RFS debate is no longer just a debate about fuel or food. It is also a debate about jobs, small business, and economic growth. The federal government’s creation of an artificial market for the ethanol industry has quite frankly triggered a domino effect that is hurting American consumers, energy producers, livestock producers, food manufacturers, and retailers. The broad coalition of organizations supporting this legislation echo the same sentiment: the RFS is not working.”

Mike Brown, president of the National Chicken Council, explained how the mandate adversely affects the food industry, raising the costs of poultry feed, and subsequently, the prices consumers pay at the grocery store:

“What we are against is a government mandate that artificially inflates the price of corn, picks winners, and punishes losers among those who depend on it,” Brown said. “Taking half of the corn crop from the food chain hurts consumers.”

Demonstrating how broad the unintended consequences of the RFS mandates have been, Actionaid USA’s Kristin Sundell explained how the RFS Reform Act would help to alleviate hunger by lowering food prices, and set a global example that puts human wellbeing above fuel:

“The Renewable Fuel Standard Reform Act will alleviate some of the pressure that US biofuel mandates are putting on food prices and agricultural land around the world. We urgently need to rebalance our food and energy policies to make sure that people eat before cars." 

As taxpayers and consumers know, it is high time for this government burden to be removed. The RFS Reform Act offers common sense solutions that remove market distortions, help lower food costs and alleviate hunger, and minimize the harm of ineffective fuel mandates that are out of touch with reality. Here’s to hoping Representatives on both sides of the isle join their colleagues and vote for reform.

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The Late Edition: April 10, 2013
Posted By:  - 04/10/13

Today’s Taxpayer News!

Reason takes a walk down memory lane to honor the late Margaret Thatcher and the limited government efforts she inspired. These included opening up local services to competition to save taxpayers money, something NTU commissioned an influential study on.

NTU recently urged the House to support H.R. 3, the Northern Route Approval Act, which would begin clearing way for the Keystone XL pipeline.

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The Late Edition: February 6, 2013
Posted By:  - 02/06/13

Today’s Taxpayer News!

NTU’s Pete Sepp weighs in on the economic harm of bad energy policy in this US News op-ed. 

Forty states have declared today ‘Ronald Reagan Day’ in honor of what would be the former President’s 102nd birthday.

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