Oil Companies Fined for Not Buying Nonexistent Cellulosic Ethanol

Discussion in 'Energy' started by Intense, Jan 11, 2012.

  1. Intense
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    Intense Senior Member

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    In 2007, Congress passed and President George W. Bush signed the Energy Independence and Security Act (EISA). In keeping with Bush’s 2006 State of the Union pledge to make ethanol “not just from corn but from wood chips and stalks of switch grass … practical and competitive within six years,” the law included subsidies for ethanol production and mandates for its use. By 2011, oil companies were required to blend 250 million gallons of this cellulosic ethanol into their gasoline. The mandate doubled for 2012, and by 2022 it will be 16 billion gallons.

    There’s just one problem: “Outside a handful of laboratories and workshops,” the New York Times reports, cellulosic ethanol “does not exist.”

    This has not, however, prevented the Environmental Protection Agency from levying penalties on petroleum companies for failing to purchase this nonexistent fuel. The EPA engages in verbal sleight of hand. Instead of being fined for failing to make the agency’s pipe dreams come true, “refiners are required to purchase ‘credits’ from the EPA,” explains Brian McGraw of the Competitive Enterprise Institute. “Essentially, the EPA is requiring them to send them money in lieu of meeting the cellulosic ethanol mandate. The product they are required to use does not exist, and rather than giving them a pass, the EPA requires that they pay for phantom credits, despite not getting anything out of it.”

    These fines — er, credit purchases — are, of course, passed on to consumers in the form of higher gas prices; and when gas prices go up, so do the prices of most other products.

    The Times argues that the EPA “is being lenient by the standards of the law,” and there is some truth to that. The agency has vastly reduced the original ethanol targets; the 2011 target was dropped to just 6.6 million gallons, and for 2012, it is 8.65 million. As “lenient” as this may appear, critics say it is still too harsh in light of the fact that, as McGraw writes, “no companies have to this date been able to produce cellulosic ethanol that qualifies by EPA’s definition.” “Yet, presumably to save face,” he adds, “the EPA has not lowered the cellulosic ethanol ‘mandate’ to zero gallons.”

    Oil Companies Fined for Not Buying Nonexistent Cellulosic Ethanol

    I always get a kick out of Catch-22 Logic. :D
     
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  2. Intense
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    Intense Senior Member

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    WASHINGTON — When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law.

    But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

    In 2012, the oil companies expect to pay even higher penalties for failing to blend in the fuel, which is made from wood chips or the inedible parts of plants like corncobs. Refiners were required to blend 6.6 million gallons into gasoline and diesel in 2011 and face a quota of 8.65 million gallons this year.

    “It belies logic,” Charles T. Drevna, the president of the National Petrochemicals and Refiners Association, said of the 2011 quota. And raising the quota for 2012 when there is no production makes even less sense, he said.

    Penalizing the fuel suppliers demonstrates what happens when the federal government really, really wants something that technology is not ready to provide. In fact, while it may seem harsh that the Environmental Protection Agency is penalizing them for failing to do the impossible, the agency is being lenient by the standards of the law, the 2007 Energy Independence and Security Act.

    The law, aimed at reducing the nation’s greenhouse gas emissions, its reliance on oil imported from hostile places and the export of dollars to pay for it, includes provisions to increase the efficiency of vehicles as well as incorporate renewable energy sources into gasoline and diesel.

    It requires the use of three alternative fuels: car and truck fuel made from cellulose, diesel fuel made from biomass and fuel made from biological materials but with a 50 percent reduction in greenhouse gases. Only the cellulosic fuel is commercially unavailable. As for meeting the quotas in the other categories, the refiners will not close their books until February and are not sure what will happen.

    The goal set by the law for vehicle fuel from cellulose was 250 million gallons for 2011 and 500 million gallons for 2012. (These are small numbers relative to the American fuel market; the E.P.A. estimates that gasoline sales in 2012 will amount to about 135 billion gallons, and highway diesel, about 51 billion gallons.)

    Even advocates of renewable fuel acknowledge that the refiners are at least partly correct in complaining about the penalties.

    http://www.nytimes.com/2012/01/10/b...-fines-for-not-using-unavailable-biofuel.html
     
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  3. uscitizen
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    uscitizen Senior Member

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    Don't we just have a truely brilliant and insightful government?
     
  4. Intense
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    Intense Senior Member

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    If I only had my wish... Less is More. :lol: ;)
     
  5. Katzndogz
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    Katzndogz Diamond Member

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    This is why the EPA has to go.
     
  6. editec
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    editec Mr. Forgot-it-All

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    Yup!

    That is ridiculous.

    I wonder who is making money off this scam?

    Unions, do we suppose? Welfare mothers? the unemployed?
     
  7. Intense
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    Intense Senior Member

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    We know that we are paying at the pump.
     
  8. Katzndogz
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    Katzndogz Diamond Member

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    Getting fines from companies who do not use technology that does not exist has a purpose. In order to avoid the fines, they will be forced to invent these technologies so that they do exist. The concept runs off the rails when the fines deprive the company of funds it could use to invent the technologies that do not exist. Thereafter, the fines can be doubled or tripled as necessary to ensure that the technology never exists and the government can continue to make money off of it.

    The government has spent the revenue from fines for the foreseeable future. The fine revenue is budgeted in. If the technology were invented, that revenue stream would dry up. The incentive is to increase fines so that the technology is never invented or already have a plan in place for additional areas to be fined.

    California went through this already. They promoted hybrid and fuel efficiency as a way to clean the environment and reduce the financial costs of pollution. But, they had already budgeted in taxes from gasoline sales. Because of fuel efficiency there wasn't enough coming in from gas taxes to support the programs earmarked. Now they want to restructure the taxing authority so that people will not only be paying gas taxes, but will be taxed per mile driven to make up for the shortfall caused by fuel efficiency.
     
  9. Intense
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    Intense Senior Member

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    You do know that this ... I am hesitant to call it Reason or Logic, .... Tact, being applied to Anything other than Government, would result in Indictments and very long Jail Sentences.

    It is Shameful.
     
  10. freedombecki
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    freedombecki Let's go swimmin'! Supporting Member

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    I think it's sad Obama has sicked the dogs on the petroleum industry every which way he can.

    He's teaching concerned Americans to not trust his leadership in any way, shape, or form.

    I keep hoping someday he'll wake up and decide to be a real leader here. But I keep waking up to him following his samo-samo anti-business bent.

    And while I'm on the topic, I keep pulling up this <you have given out too much reputation in the last 24 hours.> Intense, would you please use your good influence to tell the powers that be how difficult it is for some of us to get in all 20 reps every day? Sometimes my fibro makes it hard to concentrate (fibrofog) so I have to leave. The longer it takes me to recoop, the later my reps get. A couple of days later, I can't stay up till 11 o'clock anymore to rep people who deserve it because they called an important issue to the attention of the board. I know that takes a lot of outside reading and checking here first to see if anyone else has broached the topic. Thanks. You did good, but I can't stay up to midnight tonight because I didn't get much sleep last night, either, same problem. Please tell them it would be helpful if some of us could just know we could rep till our 20 votes were gone better if we had more freedom to use the 24 hours the best way our schedules dictate. I'm sorry I have this fibro problem, but I've had it for going on 15 years, and I know I'm lucky just to be sitting up at 9 pm. Thanks, Intense, for all you do.
     
    Last edited: Jan 12, 2012

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