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Oil associations respond to new Renewable Fuels Standard

The National Petrochemical & Refiners Association (NPRA) responded to the Environmental Protection Agency’s announcement of regulations for implementing the national Renewable Fuels Standard (RFS) Program in 2010 and the future.

“NPRA has consistently supported the integration of biofuels into the nation’s fuel mix provided that sound science prevails in the process and the letter of the law is followed,” said NPRA President Charles T. Drevna. “While we welcome the 2010 guidelines for RFS2 implementation today, our member businesses would have been better served in terms of investment and regulatory certainty to have known these rules months ago as prescribed in the Energy Independence and Security Act of 2007.”

“While we are still in the process of reviewing these lengthy and complex regulations, we are concerned that a few key provisions evade sound science and may even be unlawful. We are concerned, for example, that politics may have trumped science with regard to the revisions to the greenhouse gas emissions from the production of soy-based biodiesel. We also believe that combining biomass-based diesel volumes from 2009 with 2010 and making portions of the final rule retroactive to January 1, 2010 is unfair and likely unlawful.”

The American Petroleum Institute (API) issued the following statement:

"While the U.S. oil and natural gas industry recognizes and appreciates the role of ethanol and other biofuels in the fuel marketplace, we are deeply concerned that the announcement today could result in higher consumer costs. By setting retroactive requirements, refiners, and ultimately consumers, will be penalized for EPA's inability to get this rule out on time as directed by Congress.”

"The U.S. oil and natural gas industry are the biggest consumers of ethanol and other biofuels. Almost 80 percent of all gasoline now produced in the U.S. contains ethanol. API supports a realistic and workable renewable fuels standard. Given the complexity of this new regulation, we question how realistic and workable it will be."

IEA raises demand expectations for 2010

In its latest Monthly Oil Report, the International Energy Agency revised its 2009 demand numbers down by 1.5 percent, or 1.3 million barrels per day at 84.9 million bpd. For 2010, the agency said demand would increase by 1.7 percent, or up by 1.4 million barrels per day versus the previous year at 86.3 million bpd.

The IEA pointed out that crude oil prices surged to 15-month highs in early January on “very cold winter weather in much of the northern hemisphere and escalating geopolitical tensions in key oil producing countries. At their peak, prices had jumped by around $10-12/bbl from December lows. Prices have since eased, last trading in a $78-80/bbl range.”

The agency pointed out that global supply rose 270,000 barrels per day in December to 86.2 million barrels per day, on both higher OPEC and non-OPEC output. A reappraisal of Azerbaijan’s crude production outlook leads to a 150,000 barrels per day revision for 2010 non-OPEC supply, to 51.5 million barrels per day. Non-OPEC output this year will grow 0.2 million barrels per day from a modestly-revised 51.3 million barrels per day in 2009, driven by biofuels and rising crude supply in Brazil, the FSU, Australia, Colombia, and India.

Energy budget invests in innovation, clean energy, and national security priorities

U.S. Energy Secretary Steven Chu detailed President Barack Obama’s $28.4 billion Fiscal Year 2011 budget request for the Department of Energy, highlighting the Administration’s commitment to create jobs with the development of a clean energy economy, invest in advanced science, research and innovation, maintain a strong nuclear deterrent and secure nuclear materials both at home and abroad, and improve energy efficiency to help curb greenhouse gas emissions that contribute to climate change.

"The President's budget cuts wasteful spending while making wise investments in innovation and clean energy that will put Americans back to work, save families money and keep our nation competitive in the global marketplace," said Secretary Chu. "This budget supports new approaches to energy research and invests in the next generation of scientists and engineers, and it will spark new clean energy projects nationwide, including restarting the American nuclear power industry."

Specifically the President’s FY 2011 budget request for the Department of Energy:

  • Positions the United States to be the global leader in the new energy economy by developing new ways to produce and use clean and renewable energy.
  • Maintains effective nuclear deterrence while working to secure all vulnerable nuclear materials around the world within four years.
  • Engages in cross-disciplinary scientific approaches to our energy and national priorities – including innovative and transformative research at DOE’s National Laboratories.
  • Expands the use of clean, renewable energy sources such as solar, wind, and geothermal while supporting the Administration’s goal to develop a smart, strong, and secure electricity grid.
  • Promotes innovation in the renewable and nuclear energy sectors through the use of expanded loan guarantee authority.
  • Advances responsible environmental management by cleaning up hazardous, radioactive legacy waste from the Manhattan Project and the Cold War.

In developing this budget, several program reductions and terminations are proposed, further demonstrating the Obama Administration’s commitment to fiscal responsibility. They include:

  • Eliminating more than $2.7 billion in tax subsidies for oil, coal, and gas industries. This step is estimated to generate more than $38.8 billion dollars in revenue for the federal government over the course of the next 10 years.
  • Terminating Ultra-Deepwater exploration program, saving $50 million.
  • Canceling planned expansion of the Strategic Petroleum Reserve, saving $71 million.

December petroleum demand ticks up with economic recovery

Total petroleum deliveries (a measure of demand) for December inched up 0.6 percent from December 2008, reflecting an improved economy and possibly increased demand from colder weather. December deliveries, which averaged 19.3 million barrels per day, outpaced both four-quarter average deliveries of 19.0 million barrels per day and full-year average deliveries of 18.7 million barrels per day.

Gasoline deliveries followed a similar pattern, with December deliveries, at an average 9.1 million barrels per day, rising 2.3 percent from December 2008. Gasoline deliveries also were up 1.1 percent for the fourth quarter, and up 0.3 percent for full-year 2009.

“Clearly, petroleum demand is mirroring the economic recovery,” said API (American Petroleum Institute) Chief Economist John Felmy. “We are seeing December demand figures stronger than fourth quarter figures and fourth quarter figures stronger than full-year figures. But the data also indicates that the recovery still has a distance to go, particularly if you look at ultra-low sulfur diesel,” he said, explaining that deliveries of ultra-low sulfur diesel, the type required for on-highway use, were down 11 percent in December 2009 compared with December 2008.

Import levels of crude and products in 2009 lagged prior year levels, with December’s imports of 10.7 million barrels per day, down 15 percent, fourth quarter imports of 10.9 million barrels per day, down 15.4 percent, and full-year 2009 imports of 11.7 million barrels per day, down 9.2 percent. For full-year 2009, crude oil production was up 7 percent over the prior year, averaging 5.3 million barrels per day.

 
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The American Coalition for Ethanol publishes Ethanol Today magazine each month to cover the biofuels industry’s hot topics, including cellulosic ethanol, E85, corn ethanol, food versus fuel, ethanol’s carbon footprint, E10, E15, and mid-range ethanol blends.
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