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The Environmental Protection Agency (EPA) on Friday raised biofuels targets for 2013 despite an ongoing legal battle with the oil-and-gas industry on the issue.

Refiners will be required to blend 1.28 billion gallons of biodiesel — which EPA includes in its definition of “advanced” biofuels — into traditional transportation fuel in 2013, up from 1 billion gallons this year.

“This action, which meets goals designated by Congress, is another step that strengthens America’s energy security by reducing dependence on foreign oil,” EPA Administrator Lisa Jackson said Friday in a statement.

Agriculture Secretary Tom Vilsack lauded the increased mark as a way to promote rural jobs.

“Over the past three years, we have doubled generation from renewable energy and today’s announcement by EPA will ensure that we are continuing to utilize biodiesel to help meet our energy needs, create jobs and strengthen the rural economy,” Vilsack said.

Advanced biofuels are considered fuel sources made from non-edible food stocks. Currently, an overwhelming majority of the biofuels market is made up of corn-based ethanol.

The advanced biofuels quota is part of the renewable fuel standard (RFS). That rule, which was enacted by law in 2005 and updated to include advanced biofuels in 2007, is credited with jumpstarting the biofuels industry.

But advanced biofuels have struggled to reach commercial-scale production. That has led the American Petroleum Institute (API) to sue EPA over the RFS mandate, claiming the agency pinned advanced biofuels targets on unrealistic market conditions.

“EPA’s mandate will unnecessarily raise the cost of making diesel fuel. This is bad public policy that could burden consumers and businesses already pressed with higher energy costs,” Bob Greco, API’s downstream group director, said Friday in a statement. “By picking energy winners and losers, EPA takes away consumer choice and further threatens public acceptance of biofuels.”

Republicans have begun to criticize the RFS for similar reasons. They say the federal government is propping up a biofuels industry that could not survive on its own in the marketplace.

The RFS requires refiners to blend 36 billion gallons of biofuels into traditional transportation fuel by 2022. Of that total, 21 billion gallons must come from advanced biofuels.

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The Obama administration announced strict new vehicle fuel-efficiency standards Tuesday, requiring that the U.S. auto fleet average 54.5 miles per gallon by 2025, an uncontroversial move that, unlike other administration energy policies, was endorsed by industry and environmentalists alike.

The new rules, announced by Transportation Secretary Ray LaHood and Environmental Protection Agency administrator Lisa P. Jackson, expand on existing standards requiring American-made cars and light trucks to average 34.5 mpg by 2016. They will significantly cut U.S. oil consumption and greenhouse gas emissions by the time they are fully implemented, according to the EPA.

“These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” President Obama said in a statement.

This second phase of standards, which apply to model years 2017 to 2025, will double the efficiency of the U.S. fleet compared with vehicles manufactured in 2008.

Tuesday’s announcement marked the culmination of a compromise the White House forged between the auto industry, environmentalists, labor unions and the state of California.

California enacted its own greenhouse gas emissions standards several years ago, and it battled the auto industry in court until the administration brokered a deal between all the parties in May 2009.

“Customers want higher fuel efficiency in their cars and trucks, and GM is going to give it to them,” said Greg Martin, General Motors’ executive director for communications. “We expect the rules to be tough, but we have a strong history of innovation, and we’ll do our best to meet them.”

Phyllis Cuttino, director of the Pew Environment Group’s clean-energy program, said the fact that so many people now accept the idea of greater fuel efficiency does not lessen the rules’ “historic” importance.

“We’ve just come a long way in five years,” Cuttino said, noting that in 2007 lawmakers debated whether the U.S. fleet could average 30 mpg by 2025. “This gives me hope for energy policy in this country.”

Auto dealers warned Tuesday that making the technical changes required to achieve greater efficiency would increase the average price of a vehicle by $3,000 by the time the rules are fully implemented.

“This increase shuts almost 7 million people out of the new-car market entirely and prevents many millions more from being able to afford new vehicles that meet their needs,” Bill Underriner, who chairs the National Automobile Dealers Association, said in a statement.

While the sales of some electric cars have failed to meet industry expectations — GM initially predicted its electric Chevy Volt would sell 45,000 units in 2012, and it now projects it will reach sales of 20,000 Volts by the end of next month — the overall efficiency of the American auto fleet continues to rise.

Edmunds.com senior analyst Jessica Caldwell said buyers have begun to place fuel efficiency “at the top” of their shopping priorities, regardless of the size of the car they’re buying. But she cautioned that it remains to be seen whether sales of electric vehicles or hybrids — which make up just 3 percent of the U.S. auto market — will expand, or whether more-efficient internal-combustion engines will dominate a decade from now.

“The jury’s still out in terms of which technology is going to come out on top,” Caldwell said.

Some future changes may have less to do with the engine than what surrounds it. Alcoa’s chief sustainability officer, Kevin Anton, said that making a car body entirely out of lightweight aluminum rather than steel automatically boosts its fuel efficiency by 10 percent.

“We have a cost-effective way for them to meet the new fuel standards without compromising on safety, comfort or performance,” Anton said.

Caldwell also cautioned that the EPA uses a different method of calculating mileage for the window stickers that consumers see at an auto dealer, so the estimate consumers should expect to see on window stickers in 2025 will be closer to 36 mpg.

In addition to increasing fuel efficiency, the rules also establish an emissions standard of 144 grams of carbon dioxide per mile for passenger cars and 203 grams of CO₂ per mile for trucks.

Kevin Kennedy, who directs the U.S. climate initiative at the World Resources Institute, noted that light-duty vehicle emissions represent approximately 17 percent of the country’s total greenhouse gas emissions.

“These rules represent one of the best opportunities for the administration to take a bite out of emissions that are damaging the planet, and in a way that’s good for consumers and the auto industry,” Kennedy said.

According to EPA estimates, the proposed standards would reduce CO₂ emissions by 2 billion metric tons over the lifetimes of light-duty vehicles sold between model years 2017 and 2025. By 2025, the EPA said, the standards would cut U.S. oil consumption by 2.2 million barrels of oil per day compared with 2010 levels, save $1.7 trillion in fuel costs and result in an average fuel savings of more than $8,000 per vehicle.

“Vehicles that go much farther on a gallon of gasoline are the best weapon we have against rising gas prices,” said Daniel J. Weiss, senior fellow and director of climate strategy at the liberal think tank Center for American Progress.

Even as the administration moved to finalize the standards, GOP presidential nominee Mitt Romney has vowed to overturn them if elected. Last fall, Romney said he “would get the EPA out of its effort to manage carbon dioxide emissions from automobiles and trucks.”

In February, Romney reiterated his opposition during a speech in Detroit, saying the fuel-efficiency rules “hurt domestic automakers and provided a benefit to some of the foreign automakers.”

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The Environmental Protection Agency has revised new source performance standards for volatile organic compounds for some natural gas plants and has established standards for certain oil and gas operations not covered by existing standards.

The new standards are in response to a Feb. 5, 2010 consent decree resulting from an action in the U.S. District Court for the District of Columbia, according to the EPA in the preamble to the new rules. The complaint for that action, by WildEarth Guardians and the San Juan Citizens Alliance, alleged that the EPA had failed to meet its obligations under the Clean Air Act to review oil and gas emissions regulations. The successively modified consent decree required the EPA to sign proposed standards and/or determinations not to issue standards by July 28, 2011, and to take final action by April 17, 2012, according to the preamble.

The new source performance standards for crude oil and natural gas production plants regulate volatile organic compound emissions from gas wells, centrifugal compressors, reciprocating compressors, pneumatic controllers and storage vessels, while the revised standards address leaking components and sulfur dioxide emissions at onshore natural gas processing plants. The EPA also finalized revisions to the regulations for emissions during periods of startup, shutdown and malfunction.

The regulated emissions from natural gas and oil production plants are associated with substantial health and climate effects, according to the preamble to the rule. One of particular concern is benzene, a known carcinogen, which is associated with other health effects, such as premature death for adults and infants, heart attacks, and asthma attacks. Methane, another common emission from the oil and natural gas plants, is a greenhouse gas and a precursor to ozone formation.

The new and revised standards are effective for most facilities Oct. 15, and affected facilities must be in compliance at that time.

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An article of faith among many current environmentalists is that a particular method of extracting natural gas from the earth — hydraulic fracturing, or fracking – is dangerous.

The danger most often cited is groundwater contamination and the example always given is Dimock, PA where a few years ago a small group of residents claimed their groundwater had become a health hazard due to gas drilling by Cabot Oil & Gas.

The EPA got into the act by conducting it own sampling study of private drinking water.

The results were released today and could not be more clear: There was no groundwater poisoning.

“Based on the outcome of [its] sampling, EPA has determined that there are not levels of contaminants present that would require additional action by the Agency,” the EPA press release says.

The water does have contaminants (“during the sampling in Dimock, EPA found hazardous substances, specifically arsenic, barium or manganese”), but none that can conclusively be tied to gas drilling. Instead, all the chemicals found in these few samples of Dimock drinking water are present naturally.

“In all cases the residents have now or will have their own treatment systems that can reduce concentrations of those hazardous substances to acceptable levels at the tap. EPA has provided the residents with all of their sampling results and has no further plans to conduct additional drinking water sampling in Dimock,” the press release concludes.

The treatment systems, it is worth noting come from Cabot as did hundreds of thousands of dollars to settle a lawsuit that it now turns out wasn’t the company’s fault. But nevermind all of that.

As AEI’s Kenneth Green correctly notes this should put an end to the anti-fracking hysteria .

“In a sane world, this should end the crusade against hydraulic fracturing, and end the federal government’s pursuit of regulatory oversight of fracking as well.”

Neither seems likely.

The greatest purveyor of the groundwater contamination hoax is Josh Fox and it seems he’s moved on from defending his propaganda film “Gasland” to attacking fracking for causing breast cancer , and to lashing out at media outlets that dare to question his scientific credentials.

As for the federal government giving up its regulatory oversight, well, that will depend on who wins in November.

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The oil and gas industry continues to cast doubt on the validity of an ongoing Environmental Protection Agency effort to determine potential links between fracking and water contamination.

The international research firm Battelle on Tuesday released a major new report on the EPA’s study methods, which many critics think is meant solely to demonize fossil fuels and provide political justification for sweeping new federal regulations. The American Petroleum Institute and the America’s Natural Gas Alliance commissioned the Battelle report, though neither organization would reveal how much they paid to have it done.

Republicans quickly seized on the survey, which identifies several significant “deficiencies” in how the EPA is going about its investigation, the preliminary results of which are due in December.

“The Battelle report provides many constructive recommendations that EPA can undertake to improve the transparency, quality and ultimate value of its study,” said Rep. Andy Harris, Maryland Republican and chairman of the House science committee’s subcommittee on energy and the environment. “I hope and expect that EPA will work hard to address Battelle’s recommendations.”

One of the most troublesome portions of EPA’s effort, the study found, is its scope. While Congress directed the agency to look for any links between fracking – the use of water, sand and chemicals to break underground rock and release trapped fuel – and water pollution, EPA appears to be going further.

The report points out that the EPA inquiry is also “encompassing numerous peripheral elements,” such as fracking site preparation and development and the treatment of wastewater produced by the practice.

Battelle also charges that the EPA has remained ambiguous about the true goal of its study. While the agency has stated that the results of the survey “will inform the public,” it has not explicitly stated that its findings will become the basis for regulations, as is widely expected by industry analysts, insiders and many congressional Republicans.

The industry-funded review also found fault with EPA’s case studies, sites in Colorado, Pennsylvania, Texas and North Dakota where water supplies are being tested for pollution.

“Some of the data date back to 2005, 2006, 2007. When the final report will be delivered in 2014, those data will be close to 10 years old,” Battelle Vice President Bernhard Metzger told reporters Tuesday. “The changes occurring at these sites in the intervening years will likely render these data obsolete.”

Despite the criticism, the EPA is defending its study and assuring the oil and gas industry that its concerns will be taken into account.

“As the president has made clear, natural gas has a central role to play in our nation’s energy future,” says a statement from an agency spokesperson who asked not to be named. “EPA designed and is conducting the study to meet the highest standards of scientific rigor, data quality and peer review. … EPA will ensure that stakeholders, including industry, are actively involved at all stages of the study.”

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J. Winston Porter is trying to make the other side of the fracking argument known.

“I’m not trying to sell anything,” he said. “I’m just trying to give pros and cons.”

Porter, an independent environmental consultant and former Environmental Protection Agency assistant administrator, spoke Tuesday at Anniston’s Noon Rotary Club meeting.

The title of Porter’s talk was “America’s Energy Future,” but the discussion quickly turned to natural gas -– and the possibility of hydraulic fracturing, or fracking, in the Talladega National Forest.

Porter said that concerns over potential water contamination should be tempered with the knowledge that drilling for fracking operations occurs more than a mile below drinking water wells. Porter also said that the clean fuel natural gas provides is preferable to coal and has recently become more cost-effective.

“Once it gets going, it’s pretty benign,” Porter said of the environmental impact from fracking operations.

Earlier this spring, the Bureau of Land Management announced plans to auction leases to 43,000 acres for potential oil and gas drilling. The auction had been planned for June 14, but the federal agency put that on hold after outcry from residents and conservation groups concerned about the potential environmental impact, and after U.S. Rep. Mike Rogers, R-Saks, argued more time was needed for public input.

In his remarks, Porter added that natural gas can be used in cars with some changes to the traditional engine, providing a new energy option that may have even more potential than electric cars.

Porter also mentioned the tendency of presidential candidates to take on an “all of the above” strategy toward U.S. energy development.

“The question is ‘how much of the above?’” he said.

And although Porter believes in environmental regulations such as those from the EPA, he said that the government should not be in total control.

“I’m not much for governments picking winners and losers,” said Porter, referring to subsidies. “The companies need to learn to stand on their own.”

Porter describes himself as a “card-carrying Republican” and was appointed to the EPA under the second Reagan administration.

Porter said he recognizes the concern that environmentalists have, even if he doesn’t agree with all of their arguments.

“Everything has some sort of environmental impact,” he said. For example, Porter cited the small amount of space required for fracking operations, as opposed to renewable sources like wind or solar power.

“I encourage people to think what we do instead of fracking,” he said,

In talks with those involved in the fracking industry in states like Pennsylvania and West Virginia, Porter said he has urged companies to open up about the chemicals they use in getting the natural gas or oil.

“This is black magic to a lot of people,” he said. “You can’t solve a problem until you understand the problem.”

He added that many states have regulations in place where these companies must disclose the chemicals used during the fracking process. Porter said he was not familiar with Alabama regulations, though.

A representative from the Alabama Department of Environmental Management could not be immediately reached regarding the existence of such state fracking regulations.

Porter said he does believe in understanding the effects of these operations.

“I think you’ve got to be pretty careful. It’s pretty high-tech stuff,” Porter said. “But you’ve also got to be careful with a nuclear power plant. The point is nothing is perfect.”

Jerry Leake, president of the Anniston Noon Rotary Club, said he thought Porter’s presentation went well.

“He’s a well-qualified individual,” Leake said. “He’s very knowledgeable about what is going on around on the country, as well as around the world, where energy is concerned.”

However, not all members of the club agreed with Porter’s view.

Club member Lucile Bodenheimer said during the meeting that she was still concerned about methane contaminating the public water supply, especially after seeing documentaries that have been done in Pennsylvania towns near fracking operations. During the presentation, she asked Porter how he would respond to that issue.

Porter said he did not consider the issue to be an unconquerable one and did not immediately believe documentaries, such as “Gasland,” to be true. Porter said he still believes fracking is a viable energy option.

“Private industry brought forth this huge development in technology,” he said. “It’s been a huge game-changer in this country.”

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Last month, the Obama administration’s Environmental Protection Agency issued 588 pages of new regulations to control alleged “air pollution” from natural-gas wells. The anti-carbon crowd believes that adding another layer of regulatory “oversight,” with its attendant compliance costs, will somehow retard development of this abundant and versatile domestic energy resource.

EPA’s concern is that when fracking fluids are withdrawn from gas wells, some volatile organic compounds (VOCs) such as benzene rise to the surface. But a 2010 report from the Texas Commission on Environmental Quality found only two cases out of 94 monitoring sites where VOC and methane levels exceeded state guidelines.

Responsible drilling companies across the nation already use technologies developed in the North Texas Barnett Shale to capture the vast majority of these gases. EPA’s imposition of additional monitoring and reporting requirements will simply drive up the cost of gas production with no significant health or environmental benefits.

The EPA may have exceeded its mandate with these new directives. Under the Clean Air Act, the agency has authority to regulate emissions of volatile organic compounds. But the new rules are focused primarily on methane emissions, even though they’re not currently covered by the act. In any case, this new set of federal rules largely duplicates state regulations already in place.

Now the Interior Department is about to issue numerous new environmental and safety rules pursuant to hydraulic fracturing for natural gas on federal lands. Though only 25 to 30 percent of fracked wells are on federal lands, these rules also may become the template for fracking on private leases.

The underlying rationale for these new regulations is to ensure that fracking doesn’t contaminate groundwater or cause earthquakes. Specifically, Interior will require that drilling companies (a) disclose the names of all chemicals contained in fracking fluids, (b) set standards for well construction and wastewater treatment, and (c) request permission to frack with every permit application.

What we have here is another example of federal regulators arriving late to a party to which they weren’t invited. For more than 40 years, the individual states have had exclusive regulatory oversight of natural gas drilling, and hydraulic fracturing has been used in nearly 1 million wells across the U.S. Careful studies by the EPA and the Ground Water Protection Council haven’t revealed a single case of groundwater contamination from shale gas drilling. That’s because the fracturing occurs far below the location of drinking water, and the gas wells are encased in steel and concrete to ensure isolation from groundwater. All but 1 percent of the fracturing mixture is made up of water and sand, so the small amount of chemicals and additives is well diluted. And most states already require disclosure of chemicals used in drilling fluids.

As for earthquakes, the U.S. Geological Survey recently completed a study that concluded hydraulic fracturing does not cause them. The study did find an increase in “seismic activity” near some well sites but attributes these episodes to injections of well wastewater and not fracking. The study also notes there are more than 140,000 disposal wells in the U.S. with only a handful potentially linked to seismic activity. Importantly, the USGS found that the “earthquakes” were fairly small and rarely caused damage.

In practice, these new regulations may not be as draconian as they first appear, though they will impose unnecessary additional costs on drilling companies and likely slow the pace of permitting new wells. But the broader issue is whether public policies and regulations are encouraging or inhibiting greater use of America’s abundant domestic energy resources, especially natural gas.

Bernard L. Weinstein is associate director of the Maguire Energy Institute at Southern Methodist University’s Cox School of Business and a fellow with the George W. Bush Institute.

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The success of unconventional oil and gas production from shale formation is reshaping the US energy industry and may yet prove to be a major factor pulling US GDP growth up off the floor. Comparing the relative performance of the conventional and unconventional oil and gas sectors of the industry is a study in contrasts.

The conventional oil and gas sector was setback by the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Now two years later, Federal permitting of new drilling is returning to average pre-spill approval rates of six new permits per month.  There are new regulations in place to prevent a repeat of the accident and new safety regulations to protect crews, but reports from the New Orleans Economic Development Agency confirm the US Government’s newly organized Bureau of Safety and Environment Enforcement status reporting on permitting is returning to pre-spill average permit approval levels.

The reasons for this return to normal include the global demand for energy and worries over the potential for supply disruptions in the Middle East. High oil prices also stimulate drilling and E&P activities.  And reality is setting in here at home too as the combination of the looming 2012 election pressure to get things moving again to create jobs and progress in spill clean-up and settlement of litigation by BP.  But progress in the Gulf of Mexico was offset by disputes over approval of the Keystone XL pipeline and the relentless opposition to expanding use of fossil fuels by the environmental constituencies that make up the President’s Democratic base.

Compare the return to normal in the conventional sector to the boom taking place in the unconventional oil and gas sector.  CERA Chairman Dan Yergin recently told the Canadian Globe and Mail that “U.S. oil production is up 20 percent since 2008. If we hadn’t added 1 million barrels per day of supply in the U.S., we’d be looking at much higher oil prices,” he said. “You have a spare capacity of between 1 (million) and 2-million barrels per day in the world market. You take away 1 million (barrels), you don’t have much spare capacity at all.”

Think about that for a minute.  The growth in unconventional oil production in the US alone from horizontal drilling and hydraulic fracturing is increasing the global spare capacity as profoundly as the Saudi capacity to pump more oil.

Spare capacity is the single biggest factor in setting global oil prices.  So increasing US domestic energy production of oil is the fastest way to bring down high gasoline prices in an election year.  The fastest way to reduce imports of foreign oil thus improving US trade balances.  And expanding global oil production is the fastest way to create jobs.   Now you understand why the President is in favour of the Keystone XL pipeline segments from Cushing to the Gulf of Mexico even while he opposes the northern segment crossing the Canadian border bringing oil sands to market.

But it is not clear sailing for domestic energy production. The US EPA is working feverishly to pre-empt the states by issuing new environmental regulations controlling fracking practices.  This is setting off alarm bells among the states that see mischief in the EPA’s methods.  The growth of domestic energy production from shale oil and gas has happened because the states were willing and able to be more flexible than the EPA balancing environmental and economic development interests.  The fear is the light touch of EPA’s initial regulation of fracking will lead to “more flexibility” to crack down on the practice after the president is safely re-elected.

It is also not clear sailing for our economy either.  Slowdown in economic indicators suggest the risk of recession is real.  Europe has already slid back into recession according to economists and fears of “Greek contagion” still loom over Spain, Italy and other EU countries.  America’s persistently high unemployment rates remain the key problem.  Uncertainty about the economy, global competition, regulation and health care costs, the tax spikes schedules for January 2013 all conspire to keep business sitting on the sidelines with cash not invested.

Perhaps the 2012 election will bring more certainty no matter who wins—or not.  Perhaps the EU will get its fiscal and debt act together but the results of elections in France and Greece suggest austerity is not selling well with voters who want growth and a return to prosperity not more political posturing.  Even China is struggling with rising costs, slowing exports and thus growth, a real estate bubble of its own and the uncertainties of its ritual rotation of leaders.  Volatility is here to stay in our global and domestic economy.

One thing we do know.  Domestic energy production is real.  It is producing economic growth and energy security.  It produces jobs, increases tax revenue and raises public confidence.  Domestic oil production is raising global spare productive capacity and more oil productive growth can, in fact, bring down global oil prices.  And then there is this, American technology in horizontal drilling and hydraulic fracturing is the envy of the world.  It will likely dominate the world’s energy production spotlight and is already transforming the energy future.  The question is whether the US EPA will be permitted to extend its war on fossil fuels to limit the use of horizontal drilling and fracking in the US so that the only market for this innovative American technology is for export—along with US coal. By. Gary L. Hunt

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