Sunday, August 30, 2009

Oil Industry Saved the Planet from Pollution

An affirmed, and confirmed, AGW believer who runs his own blog wrote a piece recently vilifying the oil industry, and ExxonMobil in particular. I attempted to leave a comment, along with a few others who had left their comments, but my comment was edited heavily (snipped, in the blog jargon). Here is my comment, as best I can reconstruct it as I did not save it before it was snipped:

Such drivel, Mr. Romm. Petroleum has brought the world un-ending prosperity, health, wealth, medicines and materials undreamed of, and saved the planet by cleaning the air we breathe from coal-based and animal dung-based odors and particles.

Petroleum is the only resource that provides heating, electric power, transportation fuels, lubricants, chemical precursors, waxes, and many others. No other resource can do what petroleum does, not coal, not nuclear, not wind, not wave, not solar, not geothermal, and at such a low cost.

Rather than vilifying the petroleum industry, you should be praising it – and by extension, the natural gas industry - for all the good that it has brought mankind.

[ end of my comment]

This is not surprising, actually, and is perfectly within his rights as the blogger to allow whatever comments he likes. Still, it is quite informative when a blogger snips comments. In this case, it is very likely a case that The Truth Hurts. It is quite impossible to deny the facts that I wrote, but allowing such facts on his blog would not support Romm's agenda to drum up animosity against oil companies.

UPDATE September 1, 2009: What Romm allowed, after snipping, was "Such drivel, Mr. Romm. Petroleum has brought the world un-ending prosperity" then wrote that I did not understand the point of his posting. Such is life in the blogosphere, but unlike the mass-media of print, radio, and tv, where only the privileged few can own and operate their own press, the blogosphere is free (almost), and readily available to millions to write and publish their own thoughts.

The fact is that, in London for example, air pollution was extremely bad due to burning coal, at least through the 1950's before oil and gas were widely used. Several articles(here and here) exist on the internet that describe the smog of death in December, 1952, attributed to burning coal.

Natural gas, while for many years was not as widely available as crude oil, has played an increasing role in cleaning the atmosphere as stranded gas is now liquefied in LNG plants and sent by cryogenic tanker ship to various ports around the world. Stranded gas is the term used to describe a known deposit of natural gas, drilled into and capable of production, but so far from any market that it was un-economic to build a pipeline. Some of the stranded gas was burned in a flare in order to produce the oil from the same well. Such flares burned for decades.

Natural gas also is a key precursor to ammonia-based fertilizers, as the molecule CH4 is broken and reacted into CO2 plus H2, hydrogen. The hydrogen is then reacted with nitrogen produced from air separation plants to make ammonia, NH3. The entire plant can be run using natural gas, as both feedstock for the synthesis plant and as fuel to produce steam. It is this synthetic fertilizer that enables farmers to grow consistent and high-yielding crops year after year on the same soil. Before such fertilizer was available, farmers had to rotate their fields to allow a fallow field to replenish its nutrients.

It is of course true that modern coal-burning power plants and industrial users of coal have installed clean-up equipment to prevent many of the coal smoke and pollutants from entering the atmosphere. However, much of the smog in London, and many other cities in that same era, was from homes that burned coal in fireplaces for warmth. It was not economic to install the millions upon millions of clean-up devices in those fireplaces, instead, it was cheaper to install heating oil systems, or natural gas systems. Again, oil and natural gas are to thank for allowing affordable heating in millions of homes around the world, without producing unhealthy and deadly air pollutants from coal.

Hurricanes in Los Angeles

A hurricane hitting Los Angeles. No, it hasn't happened yet, but it could. I am using the same reasoning as the Carbon Is Going to Kill Us crowd, where it is deemed prudent and even mandatory that we take action now to prevent a future catastrophe. AGW believers insist that all mankind (well, except for developing countries, of course!) curtail or stop altogether emitting carbon dioxide, as that may cause ice caps to melt and oceans to rise and population disruption.

There is a hurricane in the Pacific Ocean, headed directly toward Los Angeles. It's name is Jimena (pronounced him -ay - nuh, accent on the ay). Jimema currently has winds of 135 miles per hour, and is just south of the tip of Baja, California. Its course is to the northwest, up the Baja peninsula.

Judging from the mass confusion a couple of years ago when Houston evacuated ahead of hurricane Rita, Los Angeles might want to start packing and driving today. Houston only had around 1 million people exiting the city, and had at least five freeways on which to do it. Los Angeles has approximately 3 million people, probably closer to 4 million, but the metropolitan area has 18 million, and only three ways out. There is the Interstate 10, going due East; Interstate 5 going North; and highway 101, also going north. I-5 also goes south, but little good that will do since one runs into San Diego and the hurricane.

A hurricane hitting Los Angeles. We must take prudent steps to avoid the certain disaster and destruction from a hurricane. We will not be required to wait 100 years for the results to be in. This hurricane will be here in less than 10 days. We must act today, while there is still time. The science is settled. Hurricanes hitting major population centers are a serious threat. Remember New Orleans and Hurricane Katrina. Houston and Hurricane Rita. We must mobilize FEMA so they can get their red tape all in order, ready to send trailers and water and food packs to Los Angeles.

The low-lying areas of Southern California are at risk of inundation from the storm surge. Ports and river basins will be swamped with seawater, causing un-told devastation to precious seashore that is a national treasure, as the California Coastal Commission regularly reminds us. A storm surge from a hurricane can be several feet. The California Coastal Commission was in a tizzy recently over the prospect of the ocean rising just one foot, in the next century. Where is the alarm, the hysterical and frantic activity, over a storm surge of 5 to 10 feet in the space of 24 hours?

Where is the clarion call to action from our state and city leaders? Governor Schwarzenegger, Mayor Villaraigosa, are you watching this hurricane? Have you prepared the state and city and county to deal with this?

Or, are you hoping the hurricane does arrive, and right away, so that the wildfires will finally be put out and the firefighters get some much-needed rest?

Stay tuned, sports fans. This is about to get interesting.

Update: August 31, 2009, 10:00 p.m. PDT, Jimena strengthened to a CAT 5 hurricane, with 155 mph sustained winds, and is on course to hit the tip of Baja sometime in the next 24 hours. The 5 day forecast has it moving due north and a bit east, into Mexico and then into Arizona. Looks like Los Angeles is not going to receive much wind or rain. But, hurricanes are not totally predictable. The rain would do much good in putting out the fires.

Thursday, August 27, 2009

Speaker on AB 32

I speak professionally on AB 32 and its effect on Californians, and invite offers to speak to various groups. I have spoken on AB 32 in June 2009 in Los Angeles to the American Institute of Chemical Engineers, will speak on the same topic in September to the Northern California section of AIChE, also to the annual meeting of AIChE in November in Nashville, Tennessee, and again in November in Ventura, California to the American Council of Engineering Companies.

AB 32 is a wrongly guided law, based on junk science that does not pass even the basic scientific tests. It is premised on the proposition that Carbon Dioxide, CO2, in the atmosphere will lead to massive and unstoppable global warming, polar ice melting, sea levels rising, and heat waves causing death and disease. In my speech, I discuss how AB 32 was passed, what the scientists should have told the California legislators but did not, and how it will adversely impact all sectors of the economy. Companies will close their doors, jobs will be lost, tax revenues will drop, people will leave the state to find jobs elsewhere, and California will grind to a miserable halt.

My speech aims to let people know why AB 32 will be known as the Bill that Killed California, and must be repealed now.

Roger E. Sowell, Esq.

contact me by email at

Last Auto Plant in California is Closing

Toyota announced that they will close the sole remaining automobile assembly plant in California - the NUMMI plant in Fremont, near San Francisco. Toyota had been in a partnership with GM at the plant, and GM ceased making cars there just a few weeks ago.

This closing has lessons for California, as the state's new law AB 32 will bring ever more such closings. It is quite instructive that Toyota also announced they will increase production at their assembly plant in San Antonio, Texas when NUMMI closes. It is no secret that Texas is a much more business-friendly state than California, it has better educated workers based on high school performance tests, has lower taxes, lower utility costs, cheaper real estate, all of which have led many other companies to depart from California and relocate there.

AB 32 will bring further increases to California's electric prices, and notwithstanding the California Air Resources Board's claims, businesses will have a very difficult time in reducing power consumption more than the price increase. The bottom line for a business is all that matters in the profit-and-loss world, but not in the government tax and spend world. Increased utility costs make a company's products less competitive in a world market, or even when other states can make the same product more profitably.

AB 32 will also increase the cost of vehicle ownership by forcing large increases in ethanol in gasoline, and bio-diesel in diesel fuel. As all goods move in the state by the use of diesel fuel either by train or by truck, all goods will be higher priced. Further, all services will have higher costs since electric power price increases, and cost of supplies increases. The reduced business income in the state will decrease the tax revenues, as there is zero tax revenue from a business that closes its doors.

The state must then either increase tax rates on the remaining few businesses that cling to a false hope that the economy will increase, or cut services, or cut the state payroll, or borrow ever more money to keep the state running. We have seen this game played out several times now, and it does not get any better.

ARB insists that the green economy will save the state, creating thousands of good jobs and restoring the tax revenues. This is a false, false hope. By closing the NUMMI plant, approximately 30,000 jobs are lost, counting direct and indirect jobs related to the plant. With ARB's claims of small businesses with green roots growing the economy, and using an average of 5 employees per small business, there must be 6,000 new small businesses created just to equal the loss of that one factory.

The unemployment rate in California, as of latest figures for July 2009, was 11.9 percent, an all-time record. The rate continues to increase as the economy worsens.

AB 32 must be repealed, and repealed now.

I speak professionally on AB 32 and its effect on Californians, and invite offers to speak to various groups. I have spoken on AB 32 in June 2009 in Los Angeles to the American Institute of Chemical Engineers, will speak on the same topic in September to the Northern California section of AIChE, also to the annual meeting of AIChE in November in Nashville, Tennessee, and again in November in Ventura, California to the American Council of Engineering Companies.

Roger E. Sowell, Esq.

Refinery Closure - Aruba

Advisory: this may be a communication under the laws that regulate attorneys, and a solicitation for legal services.

Valero announced the permanent closure of their refinery on the island of Aruba, near Venezuela in the Caribbean. Only a few years ago, that refinery along with all the others in the U.S. and Caribbean were running full out. Meanwhile, more cars are on the roads, which should have increased gasoline and diesel demand. But, apparently not enough to keep the refinery running.
Other U.S. refineries are running at greatly reduced rates, with the latest overall number from the EIA showing 84 percent of capacity. Also, the Marathon refinery expansion in Louisiana is on schedule for startup in 4Q 2009, which will add about 1 percent to the U.S. total refining capacity. If it is started up, others much reduce their rates to maintain supply and demand in balance.

My estimation is for refining rates to reduce to the low 80's, perhaps 81 or 82 percent. School starting and vacations ending have historically resulted in less gasoline sales after Labor Day, which is the first weekend in September.

This presents another opportunity for bargain-hunters to acquire a refinery at far less than the cost of building one. Such buyers will need a full appraisal of the refinery, including its capacity for crude supply and offtake of products, manufacturing capability of products, and operating costs. These are tasks I have performed previously, and am prepared to do so again should a buyer request.

Roger E. Sowell, Esq.

Friday, August 21, 2009

Grand Game Plays On

The Grand Game, the supply and consumption of world-wide energy, had some interesting developments this week. In natural gas, prices in the U.S. dropped below $3 per million Btu, at approximately $2.90. Gas price has been dropping all summer, as more and more shale gas is brought up out of the ground, and more and more LNG is arriving on U.S. shores. Even with a very cold winter, supplies will be more than adequate to keep the cost of heating homes much lower than in previous winters. The price of crude oil, meanwhile, continues at around $70 per barrel, continuing the complete break with natural gas.

Crude oil prices will drop as the northern hemisphere fall and winter begins, with summer vacations over and school in session. OPEC's main move is to reduce supply, hoping to prop up the price of oil. Maintaining production discipline is more and more difficult for OPEC.

Gasoline demand in the U.S. has already begun its drop, at least two weeks earlier than usual. We should also see fewer gas guzzler cars on the road as some hybrid cars are reaching the trade-in point. Those who buy used cars are finally able to purchase a high miles-per-gallon car, thus further depressing gasoline demand.

An interesting development this week was the announcement by Rentech that their trash-to-diesel process is ready to roll. Rentech signed contracts for 1.5 million gallons per year of their synthetic diesel. This is, to be sure, not much in the vast market for diesel fuel in the U.S., but it is a start. Nation-wide, diesel fuel production is approximately 4 million barrels per day, or roughly 165 million gallons per day. Rentech's production is roughly one-three hundredth of one percent of the total diesel consumed.

Refineries in the U.S. continue to struggle to keep production sufficient to cover their operating costs. With present operating rates at just 84 percent, look for operating rates to drop to 82 or 81 percent. Historically, refining operating rates drop roughly 5 percent during the fall and winter months. They peaked at 87.9 this summer. Some refineries will undoubtedly shut down in these conditions. The economy is not turning around, instead, more banks are failing, more mortgages are underwater, unemployment is still high and growing in many key states, especially California, none of which bodes well for gasoline demand.

Wednesday, August 19, 2009

California Is Cooling - No Global Warming Here

UPDATE 3 (Oct 24, 2009): The state's average temperature continues at approximately 4 degrees F below average, as the map below shows. And this, even after a couple of heat waves. CO2 continues to rise not only in California but globally as well. The complete disconnect between CO2 and temperature is evident. If the Carbon is Killing Us crowd were correct, we should see warmer temperatures due to increased humidity triggered by CO2 absorbing heat and re-radiating the heat back onto the oceans. The oceans would then warm, evaporate more, thus creating the additional humidity. The oceans are instead cooling, the humidity is not rising, and temperatures are cooler than normal. Yet, CO2 continues to rise. As stated elsewhere on this blog, process control fundamentals dictate that CO2 cannot have any role in the global temperature. Therefore, I am not surprised at this result.

UPDATE 2 (Oct 10, 2009): And now, it is really getting colder. The map below shows the colder zones in blue and purple. The blue zone is approximately 10 deg F below the normal for this time of year. The purple zones are approximately 14 degrees F colder. Early snow hit the Sierras this week, with at least two inches in Yosemite. None of this is predicted by the global warming, Carbon is Killing us Crowd.

UPDATE 1 (Oct 7, 2009): The map shown below shows that October 2009 is starting off much colder than normal in California. The blue shaded areas are about 10 deg F below average, the dark green is about 6 deg F below average, and the light green is about 2 deg F below average. If this continues, we shall soon see glaciers again scouring the Yosemite valley.

(Original Post): The state of California is cooler than average in August of 2009, as shown below in the shaded map below from NOAA. Where I live in Los Angeles, the area is shaded light blue, indicating between 2 and 3 degrees F below normal. (see the coastline directly above the number '1' on the legend bar, and above the two small islands). An even colder area is the purple on the coast surrounding Santa Barbara, indicated as between 4 and 5 degrees below normal.

Most of the state is below average, as only the yellow and tan portions are above average.

(Click on map to enlarge)

Once again, the actual data from NOAA, an official government agency, shows the lie that California is heating up due to too much CO2 in the atmosphere. There is no global warming, and there is no need for global warming solution laws, especially AB 32.

Roger E. Sowell, Esq.

Monday, August 17, 2009

False Global Warming from Thermometers

The blog-meister at has a fascinating result from analyzing the temperature record, i.e. the input data, for GISS-temp. What E.M. Smith found, and shows in great detail on his blog, is that long-term thermometers show essentially no warming of the climate since 1879. But, as more thermometers (or temperature measuring stations) were added over time, the warmer locations of the additions caused the average temperature to increase.

His point is that even if GISS-temp accounts plausibly for location factors, e.g. clumps of thermometers, and weights the results accordingly, the addition of measurements from hot locations completely biases the results. There is no CO2-induced global warming, indeed, there is no warming. There may be cycles of warmer years and cooler years, but any overall warming is due to thermometer placement, nothing more.

This is a most important outcome, and should be spread far and wide via the internet, for criticism and verification.

I invite all who read this to visit chiefio's blog, and help spread the word.

Sunday, August 16, 2009

Signs of Early Winter 2009-2010

Here we go.

The AP reports from Fairbanks, Alaska, that "cold air from the northwest Arctic combined with clear skies and calm winds to bring an early frost to Interior Alaska." This on August 13, 2009. The early frost caused farmers to set out freeze protectors over the crops. A record low was set at a local airport, breaking the previous low temperature for that date that was set in 1969.

An early winter snow event occurred in Wyoming on Saturday, August 15, at a relatively low altitude of 9000 feet.

If this continues, there will be a shortage of crops this year, especially corn that is used to make ethanol, and soybeans that is used to make biodiesel. The U.S. may try to imitate Brazil's success at producing bio-ethanol, but there are certain geographic facts that favor Brazil and disfavor the U.S. The main fact is that Brazil is much closer to the equator and thus much hotter so sugar cane grows easily. The U.S. cannot hope to grow enough sugar cane so corn is the next target. Killing frosts and shorter growing seasons do not favor growing corn. The U.S. will learn a lesson that farmers have known for centuries: don't rely on the weather.

And this, from the NWS for a frost warning near Pueblo, Colorado for early a.m. Monday Aug 17: ...FROST ADVISORY IN EFFECT FROM 4 AM TO 8 AM MDT MONDAY...

Thursday, August 13, 2009

No Warming in Los Angeles

The chart below shows that there is no warming occurring in Los Angeles. Yet, one of the foundational arguments for California's AB 32, The Global Warming Solutions Act of 2006 is that temperatures in the state will climb as CO2 increases in our skies. More particularly, the Air Resources Board (ARB) points to warmer night-time temperatures in winter months as somehow insidious and harmful. They also mention heat waves that are longer and hotter, causing great misery and health problems for people, plus more problems for agriculture.

Below is a chart from the National Weather Service, part of NOAA, showing some interesting information. The band of pink shows the temperatures above normal, the light green shows the normal temperature range, and the blue band shows the temperatures below normal, all during the 30-year base period of 1971 through 2000. This type of chart is very instructive because the colors and layout show very clearly if the present year's temperatures are hotter or cooler than the average. Although not a part of this discussion, there is a rainfall chart in olive green below the temperature chart. The rainfall for 2009 is a bit behind the average. More comments below the chart.

Minimum Temperatures are Below Average

The band of dark blue vertical lines represent the maximum and minimum temperature for each day, or the temperature range. What is instructive is that night-time temperatures, the bottom part of the heavy blue vertical lines, are not warmer than usual, as ARB states they are. If anything, the night-time low temperatures are below normal, because there is precious little of the light green band showing below the dark blue lines.

Maximum Temperatures are Below Average

The ARB's insistence that the daily high temperatures are growing greater and longer, with more pronounced heat waves, also is not true from this graph. What we do see is more of the light green band peeking through just above the daily high temperatures, especially during February, June and the first two weeks of August.

This is the type of factual evidence that can be brought to bear on repealing climate change laws such as AB 32, or at the minimum, softening their impact before they can do any real harm to citizens of this state and the economy.

By the way. That short-lived temperature spike around April 18, where the temperature spiked to 100 briefly, was a function of a high-pressure system over Southern California that caused the wind to drop to zero that day. Nothing more. Nothing less. Just no wind. Not excess CO2, not a lack of aerosols, not too much coal-fired power plants in China blowing their CO2 across the Pacific Ocean, just a normal weather event where the wind does not blow.

Ms. Mary Nichols, Chair of the ARB, I stand ready to explain these and many other things that will show that the entire foundation for AB 32 has no merit.

Roger E. Sowell, Esq.

Tuesday, August 11, 2009

Falling Electricity Prices

The WSJ reports that wholesale electric power prices nation-wide (U.S.) have fallen dramatically in 2009, with recession and lower natural gas prices as the primary causes. They use the units of $ per MW-hr, a bit confusing for the consumer who is accustomed to seeing prices in cents per kWhr.

The article states that "in the Houston pricing zone, which has many power-gobbling refineries and chemical plants, the spot-market price was $61.82 in June, versus $129.48 a megawatt hour a year earlier." In cents per kWhr, that is 6.182 cents in June 2009, compared to 12.948 cents in 2008, for just over a 50 percent decline.

Retail customers pay a higher price than wholesale, largely because there is more capital equipment required to step down the voltage in substations, there are more distribution lines to businesses and residences, and many more meters to measure power consumption. The reduction in wholesale prices will eventually also be seen in retail prices, but perhaps not by the same amount.

With the certainty of abundant natural gas and low prices, currently below $4 per million Btu compared to $12 in 2008, low electric power prices will be assured for a long time. This has several ramifications.

First, if electric cars, or plug-in hybrid cars, are mass-produced and purchased, the incentive to buy such a car becomes much better. Gasoline at $3 or even $4 per gallon cannot begin to compete with the cost of recharging a car's battery when power price, even at retail levels, is around 10 to 12 cents per kWhr. Power companies are likely to offer a special low prices for recharging the car battery, by putting in place a time-of-service contract in which off-peak power (at night) costs less than on-peak power (during the day). This will reduce the cost of charging the car even more.

Second, lower utility bills puts more money in the consumer's pocket, and that will be spent which will increase the sagging economy. Businesses will find a good use for the increase in cash flow, too.

Third, the endless droning from nuclear power advocates that nuclear power is the cheapest power available will be seen even more clearly for what it is, a desperate attempt by a dying industry to fool the public one more time, just like last time in the 1970s and 80s. With a new nuclear power plant of 2200 MW cost upwards of $20 billion, and requiring a decade or more to complete, no utility will build such a power plant when their competition is selling wholesale power at 6 cents power at kWhr. Nuclear plant owners must receive 30 to 40 cents for every kWhr in order to pay off the cost of construction for the plant.

There are not many bright spots in a deep recession such as the one we are presently experiencing. Perhaps lower power prices are one. Also, tough times require consumers to take tough measures, including finding ways to cut their power bills. Such lessons will be applied long after the recession ends.

Monday, August 10, 2009

Windmills Make Cheap Natural Gas

The Grand Game has many twists and turns, some are quite fascinating. One key aspect of the Grand Game (supplying the world's energy requirements), is the role played by natural gas. Natural gas does not exist alone, but interacts with other fuels and technologies that are part of the Grand Game.

Recently, as I have written (but so have many others), natural gas has become more abundant than ever, and therefore lower in price. Some politicians are even saying that burning natural gas to produce electric power releases half the CO2 into the atmosphere compared to burning coal. Well, that is just not true. The number is closer to one-third, and in some cases is closer to one-fourth. Any chemical engineer can tell the politicians this. The reasons this is true have to do with the chemical composition of methane (one Carbon atom with four hydrogen atoms attached) versus coal (three Carbon atoms with, on average, two hydrogen atoms attached). Another reason this is true is that a combined cycle gas turbine power plant converts more of the fuel to power than does a coal power plant (57 percent compared to approximately 35 percent). Politicians should really talk to chemical engineers someday, and stop saying embarrassingly wrong things.

Some critics of renewable energy, in particular wind energy, whine and moan that wind power is not reliable, and we must build natural gas fired power plants as full backup for when the wind dies down. That is only partly true, and is disappearing as an issue as large-scale power storage becomes more economic. Yet, and this is to the topic of this article, windmills that generate power decrease the need to burn natural gas, thus decreasing the demand for natural gas, and therefore reducing the price of natural gas. Since natural gas is the preferred fuel for peaking power plants, and many electric power price rate structures have as a key component the highest cost of power (peaking power), the lower the peaking power price, the lower the average power price to the consumer. Wind power is growing very rapidly in the U.S., particularly in Texas and a few other states in the windy Great Plains area.

As always, some ill-informed pundits who blindly back outrageously expensive and toxic nuclear power dream up phantom conspiracies where none exist, such conspiracies involving supplying natural gas world-wide from places where vast deposits exist, via LNG plants and LNG tanker ships, then re-gasification plants at the destination. Some even wonder, in print, how LNG plants can be justified with their billion dollar price tags, if there is no secure market for their product. Ignorance shows in these comments, as LNG supply contracts have, until recently, been locked in for 20 years or longer. A 20 year contract is a very secure market. A spot market for LNG has recently developed. Low prices are a good way to ensure a market exists, which is why a spot market is nothing but good for the world.

None of this is mysterious, nor do conspiracies exist to explain this part of the Grand Game. Oil men have known for many decades where natural gas fields lie, mostly because they found them while drilling for oil. The gas fields were not developed unless a market was fairly close by due to the expense of shipping natural gas across great distances on land via pipeline, or across oceans. At one point in the 1970's the best thinking was to chemically convert natural gas to methanol, which is liquid at normal temperature and pressure, which then could be shipped by tanker across the oceans, reconverted to natural gas at the destination, then injected into existing natural gas pipelines. (as a personal note, that was the senior design project my graduating class was assigned in chemical engineering undergraduate study in 1977). At that time, LNG plants were known but were very expensive. The methanol process was hoped to provide a way to bring the stranded natural gas to market. LNG plants won the day, as history has shown.

LNG plants became economic due to economies of scale, that is, the larger the plant, the lower the operating costs per unit of product. Exxon was one of the first to discover how to make an LNG plant that was much bigger, and built just such a plant in Qatar. Their large-scale design was such a success that Exxon duplicated that design over and over in the same facility. Furthermore, Exxon developed a large-scale LNG tanker ship, again reducing unit costs by economies of scale. No one any longer considers converting natural gas to methanol for large scale transport around the world. There is no need. Exxon and others, through their ongoing efforts by engineers, have brought the previously stranded natural gas to the world's doorstep.

Now that windmills for power are being built by the hundreds around the world, natural gas prices will be lower and lower, as long as the wind blows. That seems like a safe bet.

Sunday, August 9, 2009

ARB Delays Offroad Diesel Implementation

California's Air Resources Board, ARB, has delayed slightly the implementation deadlines for reduced air emissions from certain segments of large diesel engines used in off-road applications such as construction. The reason offered was financial hardship to owners of off-road fleets, created by the economic crisis, or recession.

One can only hope that the same rationale will be applied to the AB 32 regulations, once they are finalized. The present schedule calls for ARB to finalize the regulations by 2011, and implementation for most regulations begins in 2012. A few are already being implemented.

The successful lobbying by the off-road fleet industry can be emulated and applied for other areas where AB 32 will impact the greatest.

AB 32 will, among other things, increase the price of new cars by requiring very high miles per gallon, which virtually dictates many hybrids which are expensive and beyond the reach of a vast segment of the population. AB 32 also has bio-fuel mandates that increase the price of gasoline and diesel, further impacting all who purchase those fuels. AB 32 also mandates 33 percent renewable energy by 2020, and 20 percent by the end of December, 2010. More renewable energy increases the price to consumers of electric power. AB 32 also mandates additional costs for new home construction, some estimates state by $50,000 or more.

But perhaps the greatest impact of AB 32 is the inevitable loss of jobs, the economic disruption caused by reduced tax revenue, reduced consumer spending, and population migration to other states. Will ARB soften the draconian impacts of AB 32 in the face of such hardship?

The precedent has now been set.