Is Renewable Better?

Majoring in environmental science I have been presented with concepts that always have two different views, especially dealing with the topic of renewable energy. Most of the world sees these issues in two lenses. One side, is the environmental, anti-business, tree-hugging world. The other side is the “burn baby burn,” anti-climate change, and long-live the coal empire world. However, it’s always important to step back and try to find the middle ground in these cases. I have tried to do this with a less popular renewable energy source: Biofuel. Biofuel is a renewable energy, but it’s not all that environmentally friendly and might be more harmful than the some of the fossil-fuels we are trying to eliminate.

The Basics

           Bioenergy is a renewable energy source, it is more commonly known as biofuel because it is derived from organic material. Although the most well known form of biofuel is in liquid form it is also extracted and can be used in a solid and gas forms.[1] Bioenergy makes up about 10% of the worlds energy demand.[2] In less developed countries the main bioenergy source comes from animal feces and wood, used mainly for cooking and heat.[3] However, burning these solids creates some of the same problems as those associated with burning fossil fuels.[4] The soot particles that come from burning these fuels are harmful to human health.[5] Heart disease, respiratory symptoms, asthma, chronic bronchitis or premature death are just some of the health problems that come from biofuels and gasoline.[6]


        According to Alena Buyx, a senior research associate at the School of Public Policy at University College London and head of the Emmy Noether Group in Bioethics at the University of Muenster biofuels have a sundry of issues that effect more than the environment.[7] In the United States, the most commonly used biofuel is corn ethanol, and its effect on food prices and food security is a serious problem.[8] As a result of designating crops to be used for biofuel, food prices have gone up.[9] The price change is devastating to the lower class who rely on cheap foods with high levels of corn product. The United States’ decision to use crops as biofuel and change commodity prices also lead to the “Tortilla Riots” in 2007 in Mexico and shortages in other vulnerable countries[10].

Another issue Buyx researched was centered around biofuel use and its affect on Brazil.[11] Brazil has a well-developed industry for producing ethanol from sugarcane and in turn is destroying the country’s forest.[12] Deforestation is a major problem that arises with the ethanol production from sugarcane.[13] Additionally, Brazilian sugar cane farmers are enduring some of the worst working conditions and lowest paid wages to keep up with the biofuel demand.[14] According to Mari Aperecido de Morẵes Silva at the State University of Sao Paulo, Brazil depends on labor exploitation and slave labor in addition to lax environmental regulations and therefore has the lowest cost of production in the world.[15]

Environmental Concerns

            Lastly, it’s ironic that renewable energy is often the preferred energy source when it comes to combating climate change and reducing greenhouse gases. However, Ed Gallager, the head of the government’s Renewable Fuels Agency, advised the UK to slow the introduction of biofuels until more controls were in place because the process of clearing forests to make the production of biofuel would create large levels of greenhouse gas emissions.[16] Other environmental hazards occur with biofuels in terms of water pollution.

Large amounts of water is needed in order to cultivate crops used for biofuel and the runoff of pesticides used on the crops are contaminating water supplies.[17] Additionally, the water that is needed in the production is causing depletion in areas that have scarce supplies. In areas that convert the biofuel ethanol spills are also a major water contaminator and end up harming humans and animals that use the contaminated water.[18] Fish in these areas are rapidly dying off due to the contamination and have a domino effect on less developed countries that depend on fish as their staple food supply.[19]

Although biofuel is a renewable energy, it doesn’t come with the same benefits as other renewable energies. It is more harmful then some of the fossil fuels that we rely on and Its important to research the whole process of how we use new renewables and ask if they are really solving the problem we think they are.




[2] Id.

[3] Id.


[5] Id.

[6] Id.


[8] Id.

[9] Id.



[12] Id.

[13] Id.


[15] Id.




[19] Id.




Wind Power on the Rise in the United States

There is much controversy over whether as a nation we can completely rely on renewable energy. We have begun to get an answer. Places all over the country have in fact began to attempt to heavily rely on renewable energy, more specifically, wind power, and are seeing far better results than one could have imagined. When many people think of wind energy they see it as a more clean, green, and friendly alternative to other forms of energy such as oil fracking or coal mining, due in large part to its low impact of the emission of greenhouse gas and other pollutants. Wind power works by capturing the natural wind in our atmosphere and converting it into mechanical energy, followed by then electricity. [1] People began to use wind power centuries ago, beginning with windmills, and for smaller jobs in their societies such as watering crops. Today, wind turbines have replaced the more traditional windmills, and have been placed all over the country to generate power and electricity. The growing desire for renewable energy has led to the building of wind farms on an unprecedented scale, leading to huge investments all over the United States. [2] Modern day wind turbines “harness wind’s kinetic energy and convert it into electricity”. [3] Most wind turbines have three blades and the wind turns the blades which then spin a shaft, which connects to a generator and electricity is created. [Id.] Larger-scale wind turbines range in size from about 100 kilowatts to several megawatts. These larger turbines are seen to be more cost effective and are usually seen in wind farms which provide large amounts of power to the electrical grid; what we are seeing more and more of all over the country. [Id.]


Since 2008, the United States wind industry has generated more than $100 billion in private investment. [Id.] A dramatic increase in the usage of wind turbines and wind power has been seen across the country in recent years. However, due to the fact that wind flow patters and speeds vary greatly across the country, different parts of the country are able to use this form of energy easier than others. [Id.] For instance, offshore wind installations harness huge potential for wind energy off the coasts of the United States. According to the U.S. Energy Information Administration reports, in 2015, wind power made up approximately 4.7% of the electricity generated in the nation. [Id.] Within the last decade, there have been over $128 billion in new wind project investment in the Country, many states making strides toward become completely wind energy dependent. One reason for the rise of wind generation is that the costs are coming down. It is becoming cheaper, therefore leading states and countries to use it not only because it is clean but because of its economical attributes. [Id.]

Just this week, Iowa has entered into what is being called “the largest economical development investment” in the state’s history– a $3.6 billion plan to increase it’s wind turbine output to cover more than 40% of the state’s economy from wind. [4] This being enough to power over 800,000 homes in the state, will make Iowa the nationwide leader in wind energy. [Id.] In Maryland, lawmakers sent a bill to the governor calling for the state to get 25% of its electricity from renewable energy within four years, therefore also making strides to becoming cleaner users of energy. [Id.] The American Wind Energy Association shows that Texas leads the nation having 24,000 jobs bundled with the wind energy business; Iowa and Oklahoma in a close tie for second. [5] Iowa claims that wind energy can bring in about $12.5 million per year in property tax payments, while also supporting up to 7,000 jobs. [Id.] FirstEnergy in Ohio has begun offering a “100% wind energy supply package” to residential customers, that comes completely free when purchasing green energy from them.[6] They are trying to demonstrate their commitment to cleaner energy, hoping to ensure that more renewable energy is being created and delivered to the power grid. [Id.] These being the most recent of many examples of how wind energy is growing, changing, and most importantly, enhancing the lives of people, families, and economies all over the country. If these states can provide not only cleaner, renewable energy for themselves, and a plethora of jobs to its people, there is little room to argue about the benefits that have come from wind energy.

Although, there is of course still speculation as to how and if these states will succeed in their very aspirational goals in the growth of wind energy, only time will tell. Like all areas of energy, there are downfalls, unexpected surprises, and doubts. However, I feel that as long as strides are being made in the parts of the country that can really benefit from this renewable energy, it will have a positive impact on the nation as a whole not only economically but also in the entire energy field as a whole and for the future of the country.







The Smart Grid: Are We Ready?

Since the invention of electricity in the late 1800’s, the electricity market has employed extensive regulation and deregulation tactics in an attempt to realize economies of scale and provide consumers with uninterrupted access to electricity. Beginning in the 1890’s, the electricity transmission infrastructure known as “the grid” has been built and updated as technology has advanced. However, the grid in the United States has almost reached the saturation point for modernization. The Federal Energy Regulatory Commission (FERC) has suggested a revolutionary, albeit costly, systemic renovation of the current grid called the Smart Grid.

The Smart Grid is essentially a digitally automated response platform, similar to the Internet, which is able to quantify and react to changes in consumer demand and emergency situations. A quicker restoration of electricity after power disturbances via a more efficient transmission infrastructure will allot regions more time to remedy damage caused by an emergency situation or natural disaster. Furthermore, The Smart Grid implements new measurements and techniques to increase monitoring power within operation centers in order to prevent systemic blackouts. [1] These innovative ideas represent the intermixture of technological advances in both software and hardware components, necessitating the complete replacement of the existing platform. This proposed digital platform allows “two-way communication” between the utility company and its consumers. [1] The consumer will be able to regulate the amount of energy consumed by monitoring real time energy consumption on digital devices via a Smart Meter. FERC also hopes the technology will permeate into other markets resulting in “Smart Homes” and eventually, the seamless integration with electric cars.

The pros of such an initiative are plentiful. The smart grid will provide a more efficient method for the transmission of electricity, ultimately leading to the quicker restoration of electricity after power disruptions. The automated nature of the system will reduce operation and management costs for utilities, in turn leading to lower consumer costs. Perhaps most importantly, the updated technology will allow easier integration of renewable energy systems, and customer owned power generation systems. [1]

What does this mean to the average consumer? By implementing a Smart Meter in place of the existing meter, communication between the Utility and the consumer will provide real time information regarding energy prices and consumption. On a fundamental level, the Smart Grid will give each consumer more control over his or her consumption. Imagine being able to speculate on energy prices without utilizing a broker. In the palm of your hand, you will be able to purchase electricity at a point in time that is monetarily advantageous and store it on a Tesla home power cell. Or perhaps you may have taken advantage of the numerous tax benefits offered for incorporating renewable energy generators into the construction of a home. The power you produce will be directly wheeled into the grid and your energy expenses will reflect a net sum, or in other words, the overall consumption of energy less the output produced by the solar panels.

In the midst of a foolproof solution, there is an inevitable downside that looms overhead. The drawback of this miracle solution is the overwhelming cost of implementation. Some estimates place the overall nationwide cost of implementation around 1.5 to 2 trillion dollars. [2] FERC has had difficulty passing equitable cost allocation policies through judicial scrutiny. “In response to this challenge, FERC adopted a policy allowing for the recovery of Smart Grid costs if the applicant can show: (1) the smart grid facilities will advance the goal of EISA Section 1301; (2) the reliability and cyber security of the bulk-power system will not be adversely affected; (3) the applicant has minimized the possibility of stranded investments; and (4) the applicant agrees to provide feedback to the Smart Grid Clearinghouse.” [2] It is almost inevitable that some, or all, of the cost of conversion will be passed to the consumer in an effort to sustain normal business operations. However, FERC has offered new incentives in recent policy additions in an attempt to lessen the burden on the consumer.

In 2011, the Illinois General Assembly passed the Smart Grid Law, which allowed ComEd to impose rate hikes in Edison Commonwealth to finance Smart Grid renovations. This efficacy of this law was to be reviewed in 2017. In April 2015, the Chicago Tribune reported the passage of a Bill that would allow certain commonwealths in Illinois to avoid legislative review of the Smart Grid program until 2019 instead of 2017. [3] In the article, Citizens Utility Board Executive Director, David Kolata, expressed his doubts as to whether the full value of the Smart Meters is being maximized for the consumers or the Utility companies due to the preferential treatment the delay allotted the utility. This uncertainty stemmed from ComEd’s initial argument that the mandated $2.6 billion investment in the Smart Grid project couldn’t be justified unless the state could guarantee the rate hike formula would lead to a timely recovery of their investment. [3]

Despite pushback from Illinois Governor Pat Quinn, noticeable early success has been seen in the private sector. Since the adoption of the Smart Grid Law in 2011, Illinois based energy provider ComEd (EXC) has reported tangible benefits to its customers. ComEd president and CEO, Anne Pramaggiore, has stated that the Smart Grid program has exceeded expectations in system reliability, customer satisfaction, job creation and economic development. [4] The law, a 10-year grid strengthening and modernization initiative, has thus far led to approximately 2 million customers utilizing the Smart Meter and an estimated $1.1 billion in societal savings. [4] In 2015 alone, ComEd reported that its customers have experienced a 12% reduction in the frequency of outages, and the 10,000 customers who participated in ComEd’s hourly pricing program have saved over $1.3 million. [4]

This begs the question, are we ready for this expensive change? The answer is two fold. Yes we are ready for the influx of technology. However, it is hard to agree with the time frame in which FERC suggests the costs of implementation be recovered by the Utility Companies. A gradual implementation of the necessary infrastructure may be beneficial in the long run, but not until the equitable cost distribution structure maximizes the utility of both the consumer and the producer. The structure of the Smart Grid Law forces consumers to rely heavily on the economic benefit of in-house renewable energy production to offset the current rate hikes. With crude and natural gas prices at an all time low following the recent advances in fracking  and other technologies, it may be some time before renewable energy is cost efficient without government tax incentives or subsidization.

Ultimately, only time will tell if the negative monetary impact of the Utility rate hikes will be offset by the increases in grid efficiency, digital energy saving programs and consumer owned energy production. Thus far, the Smart Grid Law has shown signs of benefiting the consumer, but the question remains as to whether the equitable cost allocation formula adopted is too ambitious to be beneficial in the short 10-year program period.



  1. “What Is the Smart Grid?” Web. 09 Apr. 2016.
  2. Tomain, Joseph P., and Richard D. Cudahy. Energy Law in A Nutshell. St. Paul: West Publishing Co. 2011.
  3. Long, Ray, and Lauren Zumbach. “ComEd Smart Grid Bill Signed into Law by Rauner.” 3 Apr. 2015. Web. 11 Apr. 2016.
  4. ComEd Media Relations. “Smart Grid Progress Report Demonstrates Benefits to ComEd Customers.” BusinessWire, 11 Apr. 2016. Web. 11 Apr. 2016.

Oakland’s Coal Controversy

When one thinks of the Bay Area in Northern California, it seems fair to say that coal is not the first image that comes to mind. However, a plan to redevelop the former site of an army base in Oakland has become a major battle involving state and local politicians in California and Utah, environmental groups, and concerned residents. These developments serve to demonstrate the uncertainty and controversy regarding the future viability of coal as an energy resource.

This issue centers around 360 acres of land in West Oakland, which was the location of a United States Army base from 1941 until its closure in 1999. In 2012, the city announced it had awarded the right to develop the site to California Capital and Investment Group, a company led by real estate developer and Oakland native Phil Tagamai. CCIG would be responsible for developing part of the site into a commodity export terminal. Tagamai in turn issued a lease to Terminal Logistics Solutions, which would operate the facility once completed.

When Oakland proposed the development of an export terminal, it did not intend for coal to pass through the facility, although it also never explicitly stated coal was off the table. Tagamai, for his part, issued a categorical denial that coal was involved in December 2013. The developer addressed rumors of coal being involved as “simply untrue” and added those who made such accusations were “misinformed.”

However, in April 2015, four coal-rich counties in Utah proposed a loan of $53 million in taxpayer dollars to help fund the Oakland terminal. In return, the counties would split access to 49% of the terminal’s capacity (approximately 5 million tons). Utah views the project as an excellent opportunity to connect its mineral resources with international markets hungry for them, at a time when the domestic appetite for coal continues to decline. This was immediately controversial, and when news of the deal broke, Tagamai seemed to suddenly change his stance, informing the Oakland city government that they were powerless to control what commodities were to pass through the terminal, and that he would explore all options, including coal, to ensure the financial viability of the project.

Recently, more details of the Utah deal have come to light, revealing that when the idea was pitched to Utah lawmakers, coal’s importance was downplayed; the financier who lobbied Utah for funds apparently never mentioned coal, instead emphasizing the terminal as a gateway for other resources to reach foreign markets. Also unmentioned was Bowie Resource Management, a Kentucky corporation that controls major coal mining operations in Utah. Bowie is nonetheless set to become a significant shareholder in the terminal. The company is adamant that this deal is not just about coal, although it seems likely that Utah’s 49% stake in the terminal will be used exclusively to transport Bowie coal.

Those living in West Oakland are understandably concerned about potential environmental and health effects of the terminal. This part of the city is home to rail and sea shipping operations, as well as major highways and other industrial activity. Residents report the highest rate of asthma in Northern California. Additionally, the EPA designated a Superfund site in this area, after industrial waste resulted in soil and groundwater contamination. The primary concern of residents and environmental activists is the impact of coal dust pollution, specifically “fugitive coal dust,” which escapes while the coal is being transported by rail. It is estimated that the terminal could see as many as twelve 100-car long trains pass through the city every week. Terminal Logistics has stated it will take voluntary steps to avoid pollution, including covering rail cars, and spraying down the coal to prevent dust from escaping, although some are skeptical of these promises. Union workers in West Oakland’s shipping industry have also stated their opposition to coal shipments, citing health concerns.

Another worry is the ability of the California government to mitigate environmental effects of these coal shipments, should the project proceed. Ordinarily, under the California Environmental Quality Act, the state and local governments are required to evaluate the potential environmental impact of project proposals like the Oakland terminal, and take measures to mitigate or eliminate those impacts. However, the possibility of coal shipments through the Oakland terminal was never evaluated, leaving the city and state with no enforceable measures to protect its citizens or the environment.

Construction of the Oakland terminal is not yet a done deal; no money has changed hands as of yet. However, the fight over its construction and shipments of coal serve to illustrate the controversial nature and uncertain future of this energy resource. Oakland is not the only area on the west coast that has objected to coal shipments. Similar depots in California have faced criticism, and Oregon and Washington have recently blocked construction of export terminals that would handle coal. Backroom dealings and politics aside, states like Utah and corporations that conduct mining operations have an interest in profiting from the resources and operations they control. Although domestic consumption of coal is decreasing, foreign markets represent viable business opportunities, and export terminals like the one proposed for Oakland provide ready access to those markets.

Utah feels its coal, which it claims burns cleaner than coal from other sources, would have an advantage as Asia tightens environmental standards, and would give energy companies some security and time to transition to more viable, sustainable activities. The Oakland terminal would also bring thousands of jobs to an impoverished neighborhood. However, there is an obvious tension between proponents of coal exports and communities whose health and environment may be affected by shipping and storage. Indeed, it would be harm to blame the already suffering residents of West Oakland and the city government for expressing concern. The suspicious and dishonest nature, of this deal, both in California and Utah is also troubling. On a broader level, Opponents of coal argue that the industry is dead or at least dying and may point to stagnation even in traditionally strong Asian markets as evidence of this. Opponents feel that now is the time to turn away from coal, and that governments and communities (especially in California), should make efforts to curtail environmental and health dangers posed by coal on all levels, from a local to global scale.


Alejandro Lazo, Oakland Coal Terminal Becomes a Political Flash Point, The Wall Street Journal (October 18,2015),

Amy Joi O’donoghue, Controversy fires up over Utah push for coal terminal, Deseret News, (March 5, 2016)

Amy Joi O’Donoghue, Coal story: It’s about Utah, California, and what lies ahead, Deseret News, (March 26, 2016),

Brian Maffly, Proponents buried coal’s role in Oakland export terminal; now questions remain, The Salt Lake Tribune, (March 27, 2016),

Brittany Patterson, How a major terminal to ship Utah coal to the Far East sneaked into Oakland, (September 22, 2015),

Irene Gutierrez, Keeping Coal out of Oakland, (October 13, 2015),

Rachel Swan, Developer planning Oakland coal shipment an ally of governor, San Francisco Chronicle (March 25, 2016),

Zoe Loftus-Farren, A Coal Terminal in Oakland?,, (December 16, 2015)

HERE WE GO AGAIN. . . Standard Oil, OPEC and the upshot to today’s slumping oil prices.

What does an oil company that divested in 1911 and today’s most powerful international oil cartel have in common? The answer comes in the form of a surprisingly simple observation that, all too often, policy makers and investors, overlook. Both realized that petroleum business operates under a deceptively humble premise: The world’s economy needs oil to run, and as long as oil makes it run best, any amount of oil pumped out of the earth will be consumed.

John D. Rockefeller, Standard Oil’s boss from nearly a century ago, realized this when the industry was in its infancy, and this principle motivated him to invest in the industry in order to control oil refining, perhaps the most important phase in the petroleum supply chain. Mr. Rockefeller viewed oil drilling as not only a messy and risky business , but also as an extremely wasteful process. He ventured to master refining because that stage is where the supply of usable (as opposed to crude) petroleum could be controlled. In the first decade of the 20th century, he revolutionized the industry and catapulted Standard Oil to near monopoly power.

OPEC, on the other hand, sits “upstream” of the refineries in the petroleum supply chain. The cartel controls almost 80% of the world’s oil reserves (that is, oil in the ground that we know about), and about 40% of the world’s oil production . Since the cartel’s inception in the 1960’s, it has been vehemently trying to wield its cartel power to vertically integrate in order to obtain the holy grail of the oil industry, i.e. control of the refining stage.

Mr. Rockefeller was my kind of oil man. His process was innovative, his business dealings were shrewd and efficient, and he let other people focus on the “messy” work. It all started out simply enough, in the middle of the 19th century, tremendous advancements in industry and manufacturing gave rise to demand for petroleum. An enterprising dry goods clerk turned oil-driller, Edwin Laurentine Drake, decided to meet this increased demand by tapping the first oil well in Titusville, Pennsylvania in 1859 . Within months of Drake’s discovery, “boom-towns” began to spring up in search of crude in Pennsylvania and Ohio. By 1865, only six years later, Mr. Rockefeller and his partners founded the largest refinery in Cleveland to process the newly harvested crude .

There are two important things to observe at this point. First, Mr. Rockefeller concentrated initial activity on refining, the hidden bottleneck in the petroleum industry, specifically combining refineries, making the process more efficient . Second, he realized that an integral part to successful refining was to control key inputs, namely, transportation and transportation rates on the Atlantic and Great Western railroads . There was no significant market for oil in the US at this time, Pittsburgh’s steel industry was just getting on its feet, and decades away from Ford’s Model T in the 1920s. The real demand for Oil in the 1850s was in the United Kingdom and Europe. Mr. Rockefeller needed to get his oil to port, and the best way to do that was by rail.

Thus, in 1868, Mr. Rockefeller struck a major deal with the railroads, guaranteeing a certain volume of shipments in exchange for rebates . The story goes that he negotiated a price that was above his current shipping rates, effectively cannibalizing his own revenue. Was he crazy? No, of course not, he negotiated this deal on the condition that the railroads raise rates for all petroleum shippers. He knew, because of the advantageous geographical location and scale of his refinery, that increased transport costs would hurt his competitors more than his own refineries. So, after weakening his competitors, he swooped in and purchased them at huge discount. The more refineries he combined, the more efficient and formidable he became. By 1882, he established the Standard Oil trust.

Despite Standard Oil’s murky legal existence, it was highly centralized, and enormously powerful . Mr. Rockefeller continued his dominance through the 1890’s and 1900’s, to such an extent that the Sherman Anti-Trust legislation was passed to protect against his monopoly power. Ultimately, the U.S. Supreme Court announced its decision to dismantle Standard Oil in 1911, and the company was ordered to divest itself of its subsidiaries within six months . By 1920 the judicially “created” companies had begun to compete with each other making Rockefeller even wealthier because he owned substantial portions of stock in each of them .

Fast forward 50 years, and the United States’ era of being an independent oil nation came to a screeching halt with the Arab oil embargo of 1973. During this period, OPEC, which was formed in 1960 (founding members Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), significantly cut production, effectively increasing domestic oil prices almost fourfold, and sparking an economic recession in the 1970s .

The word ‘cartel’ can have a bad connotation, it may invoke unsavory images of the drug and weapons trade. OPEC, however, is more of a highly organized strategic alliance. Oil exporting nations evaluate global demand through scientific means, and adjust output (through quotas) to match forecasts. OPEC gained power early on by co-opting rivals. OPEC invited countries with “any with a substantial net export of crude petroleum” to join , eventually expanding its membership to 13 countries on four continents .

OPEC operates on the premise, much like Rockefeller, the supply side of the oil business is largely determined by refinery capacity. As of 2012 OPEC held only about 10% of the world’s refining capacity . Thus, the cartel has employed market preemption of competitive industries in order to indirectly increase demand. Most recently, “there has been suspicion that [OPEC] has been reducing production in order to drive out higher cost producers from the industry, including some of the fracking firms that boosted oil output in the United States from 5 million barrels a day in 2008 to over 9 million barrels a day now.”

As OPEC strives to meet is objective of ensuring a steady income to producers , we will likely see more international joint ventures, including OPEC entities, operating on U.S. soil. For example, the top producing U.S. based refinery (603,000 barrels per day ) is Motiva Enterprises, LLC based in Port Authur, Texas, and is a 50/50 refining and marketing joint venture between Saudi Aramco and Royal Dutch Petroleum .

The upshot of this analysis is to demonstrate that true demand really has not had a chance to adjust to the market. As I have stated before, the true measure of oil supply is constrained by refining capacity. In other words, the key indicator when evaluating oil “price” in the market does not hinge on classical economic models of supply and demand. The oil exporters and producers have infrastructure built out that generates crude at a relatively constant rate.

Demand in the short run (anywhere from 6 months – five years, what all of today’s hype is about) is relatively inelastic. It takes large cumulative shifts in the economy to effect true demand of crude (the output of which has been somewhat constant). If long-term demand does, indeed, increase then only way for any player in the industry to truly increase supply to meet that demand at a constant rate is to increase refining capacity. This has yet to be achieved.

[1] Tomain, Joseph P., and Richard D. Cudahy. Energy Law in a Nutshell. St. Paul, MN: West, 2011. at .227.
[5] Tomain, Joseph P., and Richard D. Cudahy. Energy Law in a Nutshell. St. Paul, MN: West, 2011. at .227.
[7] Ibid.
[8] Ibid.
[9] Ibid.
[10] Tomain, Joseph P., and Richard D. Cudahy. Energy Law in a Nutshell. St. Paul, MN: West, 2011. Print. p.228.
[15] “Who’s Afraid of Cheap Oil? the World Economy.” Economist (US) 23 Jan. 2016

Is Hydroelectricity Really Renewable In Droughts?

To a person from the Northeastern United States, I think it’s safe to say that when we think of hydropower or hydroelectricity, we think of an unlimited power source. Personally, my thoughts go to Niagara Falls, which produces most of the electricity for the entire state of New York.[1] For Pennsylvanians, another natural resource may come to mind. What does not come to mind, however, is the fact that weather plays a large part in the effectiveness of hydroelectricity. The Northeast and the Pacific Northwest rarely ever face a drought. In fact, we probably complain that there is too much rain and too much flooding. So hydroelectricity seems like the perfect choice. Worldwide however, there is an abundance of droughts, from California, to Brazil, to Australia, and their reliance on hydroelectricity has actually backfired. Now facing very dry conditions, these places have all had to revert back to fossil fuels in order to power themselves.

While Niagara Falls provides energy savings for New Yorkers, hydroelectricity has actually cost Californians around $2 billion.[2] The rivers, reservoirs, and other water sources have been greatly diminished over the past five years because of the drought conditions.[3] From 1983 to 2013, California used hydroelectric power for 18% of its total production.[4] Once the drought conditions came and stayed, from 2011 to 2015, that number dropped to 10.5% of total production, and in 2015, the number dropped again to less than 7%.[5] To make up for this lack of energy overall, California reverted to using natural gas, a fossil fuel, which cost more for electricity users.[6]

When I think of Brazil, I think of the rainforest and the Amazon River. How could there possibly be a drought in an environment that literally has the word “rain” in it? Somehow, there is. Droughts have occurred for months now, covering nearly the entire country of Brazil, from Rio de Janiero and Porto Alegre in the south of the country, all the way up to Belem in the north of the country, and into other northern South American countries like Suriname and French Guiana.[7] Rain is predicted in certain areas, and this will help fill reservoirs, but it is not enough to end the drought.[8] Brazilian hydroelectricity was almost 65.2% of total production in 2014, so loss of any part of that electricity needs to be recovered by other means.[9] Brazil, like California, also reverted to natural gas to pick up the energy slack, and had those plants running at high-capacity.[10] Some of these natural gas plants were shut off on March 1st, but full hydroelectricity power has not yet been restored because there has not yet been enough rain.[11]

This is also happening in the Australian state of Tasmania, but the difference is that the state was nearly 100% powered by renewable sources because of its almost perfect water, wind and sun resources.[12] Droughts caught the state in a bad place between poor planning and poor weather conditions because there was virtually no water to make any hydroelectricity, and almost nothing to make up for that loss.[13] There was a cable between Tasmania and Victoria that could transfer electricity between the states, but that suddenly went offline last December, with no date for ultimate repair.[14] Instead, Tasmania has had to revert to fossil fuels, using gas-fired power stations and diesel generators, costing millions of dollars and almost doubling, and then quadrupling the total cost for energy.[15]

Without some form of backup energy, how can we call hydroelectricity renewable if a drought can dry up all the moisture in the air and literally make it impossible? Droughts may not seem an issue in the Pacific Northwest and the Northeastern United States, but climates and environments can change, and someday it could become a problem here. Droughts are a very real issue for most of the United States, now. Perhaps some form of reliable backup, like  batteries charged by solar panels to run electricity at night, needs to be developed.  If it is already developed, the technology needs to be largely implemented. Until then, if countries have to keep reverting back to fossil fuels, it could end up more costly for both the energy consumers and the environment.

[1] Niagara Power Plant – About Us – New York Power Authority,, (last visited March 7, 2016).

[2] Laura Bliss, One Way The California Drought Is Contributing To Climate Change, (February 16, 2016),

[3] Id.

[4] Id.

[5] Id.

[6] Id.

[7] Gregory B. Poindexter, 2016 Drought Eases And Continues In Brazil, Affecting Hydroelectric Power Generation, (March 1, 2016),

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Giles Parkinson, Tasmania’s Crazy Lurch Back Into The (Expensive) Fossil Fuel Era, (March 7, 2016),

[13] Id.

[14] Id.

[15] Id.

Pooling–the New Default in West Virginia?

Forced pooling—or compulsory pooling—is common practice in states with significant oil and gas development.  Forced pooling allows for adjacent parcels of land to be developed as one large unit so long as a majority of the lessors and surface owners agree to such development. Generally, pooling or unitization grants an operator access to hundreds of acres of oil and gas from one surface site.  From a production standpoint, this approach is considered efficient and practical; instead of drilling multiple wells, operators can take advantage of the latest technology and stretch long “laterals” underneath adjacent parcels of varying acreage.  The accounting is fairly simple—royalties are usually divided among the lessors according to their share in the acreage of the entire unit or provided for in an agreement between the owners.

Usually, pooling is provided for in a modern oil and gas lease. The pooling and unitization clause will either expressly grant or deny this method of development. In West Virginia, older leases that are currently held by traditional production or leases from forms that simply omitted the relevant language must be individually amended to expressly allow for pooling before the lease can be included in a unit.

On January 25, 2016, Senators Boso, Ferns and Maynard introduced Senate Bill 383 to the West Virginia Legislature. The stated purpose of the bill is to “promote efficient extraction of oil and gas resources and to prevent waste by authorizing the development of horizontal drilling of multiple adjacent leases held by the same operator.” The operative language to be added to §22-6-31 of the Code of West Virginia is as follows: “Where an operator has the right to develop multiple contiguous oil and gas leases separately, the operator may develop these leases jointly by horizontal drilling unless the development is expressly prohibited by the terms of the lease.” While this language is not representative of forced pooling in the classic sense, it creates a new default rule for oil and gas leases in the state: absent an express prohibition of pooling, an operator may pool contiguous properties so long as it holds leases to those properties.

The argument over the proposed language rests almost entirely on mineral interest owners’ negotiating power. There are thousands of acres’ worth of leases that are held by production from as early as the turn of the twentieth century. The clause “so long as [oil or gas] is produced in paying quantities” can actually stretch that many decades. When the Marcellus boom hit, these mineral owners’ only advantage in negotiation was granting permission for pooling and unitization. Otherwise, they received no bonuses and had no other terms re-worked from centuries-old leases while their neighbors received payments for as much as $5,000/acre up-front and up to 18% royalty interest.

From the industry perspective, pooling as the default rule would remove virtually all legal barriers between holding a group of leases and production. Other proponents of forced pooling involve the fugacious nature of natural gas and the rule of capture. If a mineral owner refuses to consent to unitization, and the operator forms a unit clear up to and surrounding that non-consenting owner’s property lines, the developer is likely extracting oil and gas from underneath the non-consenting owner’s land, but that mineral owner receives no royalties for it. While precaution may be taken to avoid such unauthorized extraction, natural gas does not respect property lines and will flow from wherever it rests towards the path of least resistance.

It is important to note that a default pooling rule is not the only way developers and lessors can achieve a unit, but it would be a far simpler one than what currently exists on the books. W.Va. Code § 22C-9-7(b) provides that in the event a cotenant refuses to consent to pooling, the consenting interest owners can appeal to the Oil and Gas Conservation Commission and request a pooling order. Such an order, if issued, provides the non-consenting owners the option to be bought out by the other interest owners or to participate in the drilling on a limited basis.

SOURCE: Andrew Brown, “Without forced-pooling law, WV gas industry sues landowners to gain access,” Charleston Gazette-Mail, June 21, 2015.

SOURCE: Andrew Brown, “Without forced-pooling law, WV gas industry sues landowners to gain access,” Charleston Gazette-Mail, June 21, 2015.


How Clean are Wind Turbines?

When it comes to renewable energy, I’m a big fan. But implementing a workable, and efficient system is no breeze. I’m running against the wind when I say turbines are harmful, but I’m not blowing smoke when I say that there are environmental dangers. We just have to keep in mind, that you can’t just throw caution to the wind.

Anyways, wind is the solution to all of our problems; those majestic turbines that dress our hillsides that produce electricity by harnessing the power of something as pure as the wind. We have come to know wind as a clean solution to fossil fuel energy, but how accurate is it? Carbon dioxide emissions are the specter that looms over the production of all electricity. With all of us thinking about our carbon footprint, it is easy to turn to a solution like giant fans making our lights turn on. But is it clean?

On April 6, 2015, ABC news ran a story about a toxic lake in Inner Mongolia, China. This lake, 5.5 miles in diameter is made up entirely of black sludge. This toxic concoction is the byproduct of rare earth mining. Rare earth minerals have one of their highest concentrations in this region, and the mining for these minerals has never been more lucrative. There has been a recent boom in the mining for these rare earth minerals, causing the drainage hoses to pump more and more of this toxic sludge into the water table. This recent boom is the production of wind turbines.

From miles away, wind turbines look like nothing more than big fans that spin at slow speeds. But when you look under the hood into the housing behind the router, you’ll find a magnet. This magnet is the catalyst for electricity production and it is made from a mineral called neodymium, a rare earth mineral that is mined in Inner Mongolia. “But magnets are everywhere . . .” you may say. And you would be correct. However, with the recent push for wind farming, turbines have become one of the largest uses for these magnets in the world. According to the Bulletin of Atomic Sciences, a 2 megawatt wind turbine contains about 800 pounds of neodymium.   By the Institute for the Analysis of Global Security’s count, the United States added a record of 13,131 megawatts of generating capacity in 2012, putting the neodymium count up to 6.1 million pounds.   Mining one ton of this rare earth mineral produces about one ton of hazardous, toxic waste.

For those unfortunate enough to live close enough to this 5.5 mile wide lake, the outlook is bleak. The rates of cancer, osteoporosis, skin and respiratory diseases are abnormally high for the region. Residents recall losing hair at abnormally young ages, their teeth beginning to fall out. The lake’s radiation levels are ten times higher than the countryside surrounding it. Ironically, America’s nuclear industry only produces between 4.4 and 5 million pounds of spent nuclear fuel each year. Nuclear energy has fallen to disfavor because of its potential for cataclysmic disasters. With wind energy, are we systematically endorsing another?





Wind Energy Lease Basics: A Comparison Between Wind and Natural Gas Leases

Understandably, renewable energy sources have become a point of emphasis in our modern world.  Several renewables, in particular wind and solar, have been at the heart of the evolving discussion on replacing oil dependence in the coming decades.  Natural Gas has also emerged as a much cleaner burning, somewhat abundant alternative to petroleum.   Several of our law school classes focus on the oil and gas legal field, and they are often honed in on the legal aspects involved in the leasing transaction.   All of this got me thinking, what about wind farm leasing?  So many of us know the general terms involved in an oil and gas lease, but very few of us know what a wind farm lease entails.  In short, I thought a discussion comparing the two types of leases in some fashion would be an informative and interesting way to use my blog post and subsequent presentation.

When we are discussing oil and gas leases, we often begin with the primary and secondary term clauses.  They tend to be somewhere between five and ten years.  In the sphere of wind energy, this is nowhere near the case.  A lease for a wind farm tends to be much, much longer.  Most of the literature tends to agree that lease terms are between twenty and forty years.  Also, the wind energy lease examples obtainable on the net usually do not mention any kind of secondary term which would be comparable to a natural gas lease.  Instead, wind energy leases, if they include anything about a subsequent term, tend to contain a discretionary renewal provision in favor of the lessee.  Often, these provisions simply extend the lease for a term identical to the initial life of the lease in favor of the lessee.  So, in theory, a wind energy company could hold their lease for up to eighty years if their lease provided for such.

Natural gas and wind leases also require descriptions of the land to be used.  The natural gas companies often try to lease the entirety of a landowner’s land.  However, in the wind energy industry, the companies only require a certain amount of land to build a wind farm.  While the leases still tend to cover large swaths of land, landowners seldom wish to lease their entire property for wind energy development.  This landowner interest competes with the wind energy corporation’s interest in obtaining as much land as possible.  Wind farms must be large to generate enough power to be economically feasible.  So, as you can imagine, companies often try to tie up as much land as possible and tend to use much less land than they lease.  So, in summation, wind companies will typically lease as substantial a portion of the landowner’s acreage as they can in furtherance of wind energy development without leasing the entire property .

Finally, the payment clauses in natural gas and wind energy leases, although using similar general terms, tend to differ substantially.  Natural gas leases usually give initial bonus payments to landowners on a per acre basis.  Those same leases often involve rental payments and royalty payments.  Wind energy leases actually involve many of the same elements operating in substantially different ways.  They tend to pay landowners on a per acre basis at a substantially lower rate than do natural gas leases.  While natural gas leases can pay anywhere between $2,500 and $7,500 an acre and beyond, wind energy leases can be as low as two dollars an acre.  However, in regard to wind energy leases, the payment per acre can fluctuate.  Typically, companies will compensate for the increases and decreases by paying landowners in phases instead of a steady rate.  The example lease I observed used five year increments and the price fluctuated according to the consumer price index.  Thus, although the payment provisions share similar qualities, they also differ in many regards.

To briefly conclude, the two types of leases have similar general provisions.  However, the operational specifics of the provisions were quite dissimilar, showing that wind energy leases, although seldom considered, have their own important and unique quarks.






Rudolf Diesel

Rudolf Diesel ran his first engine, a single 10 foot cylinder with a flywheel at its base, for the first time in 1893.  The engine was fueled by peanut oil.  “The use of vegetable oils for engine fuels may seem insignificant today,” said Diesel, “but such oils may become, in the course of time, as important as petroleum and the coal-tar products of the present time.”


Design of Diesel’s first engine

Today, biodiesel can refer to a fuel product created from any number of diverse “feed stocks.”  It is produced through a process called transesterification in which glycerin is separated from the fat or vegetable “feed stock” leaving behind glycerin and methyl esters-otherwise known as biodiesel.  Common “feedstocks” are rapeseed and soybean oil, waste vegetable oil, animal fats, algae, and even sewage sludge.  Because biodiesel can be born from a multitude of sources, the exact specifications of the fuel have been defined by the ASTM.

ASTM International is one of the largest voluntary standards development organizations and sets technical standards for materials, products, systems, and services.  Using the standard set by the organization, biodiesel can be specifically defined as a fuel comprised on mono-alkyl esters of long chain fatty acids derived from vegetable oils or animal fats, designated B100, and meeting the requirements of ASTM D6751.  When a biodiesel blend meets these standards it is able to be run in unmodified diesel engines in the USA and Canada.

Although many believe that an engine conversion of some kind is necessary to run an existing diesel engine on biodiesel fuel, biodiesel that conforms to the ASTM D6751 requirements is meant to be used in standard diesel engines.  Additionally, biodiesel can be blended with traditional diesel fuel, these blends are designated by Bxx where xx becomes the percentage of biodiesel used in the blend (B100, B20, etc.).

Being derived from plant and animal sources makes biodiesel a renewable fuel, but it also makes it a cleaner-burning diesel replacement.  A standard diesel engine running on biodiesel emits 67% less unburned hydro carbons than the same engine running on traditional diesel fuel.  Additionally, biodiesel reduces Carbon Monoxide emissions by 48% and reduces particulate matter emissions by 47%.  Biodiesel is the only alternative fuel to have fully completed the health effects testing requirements of the Clean Air Act.

Biodiesel Cycle

Biodiesel operates in what is called a “closed carbon cycle” because the carbon dioxide released into the atmosphere by burning biodiesel is recycled by growing plants which can later be used to produce the fuel.

Biodiesel is cleaner than traditional diesel, renewable, and able to be used in existing diesel engines, yet, although its production is growing, remains a far less popular alternative to petroleum based diesel.  With current technology and “feedstock” options, producing enough biodiesel to meet traditional diesel demands is not possible.  Already as production of biodiesel has increased, new environmental concerns, like deforestation to create fields to grow “feedstock” have arisen.  Still, even used in smaller percentages, biodiesel offers many benefits over traditional diesel fuel as it is clean, renewable and domestic.


Sources and Additional Reading:

ASTM International

Environmental Protection Agency

National Biodiesel Board

Sustainable Biodiesel Alliance