Our Current Energy Policy

[Charon]

An interesting discussion started in the US vs Iraq thread that was certainly related but starting to get a bit off topic -- our current energy policy and its impact on international relations. Since I cover this issue for a living, I though I would post a few articles I have written on the subject to provide some background. A few points to ponder:

1. As Toad pointed out, it’s our demand for oil that places us in such a tough position. While I would disagree with the viability of fuel cells in the next 20 years or so (the distribution infrastructure issues more than the engine development issues), Toad was fully correct in that a good place to start is at the automobile. Gasoline/electric hybrids (and even better, diesel/electric hybrids) are an excellent solution to get significant efficiency gains (35% or better) in a shorter timetable with comparable automotive performance.  However, the consumption of oil for commercial power, petrochemicals and other non-highway uses will still be a significant factor in our dependence on foreign oil.

2. The Bush energy policy is disturbing unless you get a paycheck or dividend from big oil -- and I do mean big oil (once you get past the majors, who are into exploration and production, oil gets very small indeed even at the independent refiner level --  not to mention the marketer or retailer levels). I have read several hundred pages of actual Bush report, and the house bills etc. to base that statement on as well as interviewing various functionaries at the agency level. And for all the conservative knees that are jerking up into their computer desks, a Gore oil policy would likely be just as bad if not worse. He is big supporter of ethanol (see below). One oil policy joke is ANWAR drilling. Little real bang for the supply side (about the same for the recently shot-down higher gas mileage standards, which didn’t seem to be all that important to national security after the automotive lobbyists got their “face time”) but certainly enough bucks for the major oil companies to want the development rights.

A bigger, but sadder, joke is renewable fuels (sorry weazel). For all you rabid tax cutters losing sleep over inner city welfare moms, one of the biggest welfare nightmares involves ADM. Ethanol is not needed for clean air; has limited impact on our dependence on foreign oil; takes millions out of our highway funds in the form of a “hidden” 53-cent per gallon subsidy to support ethanol’s higher cost that comes out of those funds; and represents a distribution nightmare that promises to increase price volatility during the summer months. And, it’s not just my opinion, I know the lobbyist who started the marketing switch from “clean air” to “renewable” when since came out against the initial ethanol selling point ADM is incredible, and the power they have over the “ethanol” Senators of both parties in the corn belt is incredible, as is their lobbying war chest. Unfortunately, their gain is our loss in some very direct $$$ ways. They just got a 5-billion barrel a year “ethanol mandate” approved (remember the 53-cent subsidy, as well as the impact on feed crops and human consumption crops). Will the corn farmers benefit at least? Not as much as ADM, particularly if they move to local “biomass” technologies to solve ethanol’s many transportation and storage issues. Farmers may even be big losers when all is said and done because biomass is underdeveloped/researched and expensive today.

3. At some point we need to move significantly beyond petroleum, and not just on the highways. However, short term shareholder uncertainty and transitional losses in corporate profitability makes this an issue whose time will likely come way in the future, unless a very serious disruption forces the matter sooner.

Here are the articles I mentioned earlier:

Gas Prices

Oil Policy

Charon

[funkedup]

Seems like if oil were truly scarce, the price would go up, and there would be an economic incentive to pursue less expensive energy sources.  The problem will solve itself if Big Brother just stays out of it.

[Ripsnort]

Originally posted by funkedup
The problem will solve itself if Big Brother just stays out of it.

[Skuzzy]

On one hand, you are correct funked, but on the other,...if we wait until we are almost out of raw crude, will we have the time to move to another alternative source?
Panic is not pretty and mass panic is down right ugly.

We have more reasons today than ever to get away from our oil dependencies.  Yet,..we traditionally will wait until panic mode time to do anything about it.  Our history is repleat with this type of apathy.  

How many times do we wait for a major catastrophe to occur before we do anything about a problem?  Almost always.  We are a country that has to get kicked in the head before we do anything.  That is just the way it is and I do not see that changing anytime soon.

[funkedup]

Do people think that without government interference, oil prices would just stay flat and then suddenly spike as we hit the limit of oil reserves?  I don't see any evidence that there would be such a sudden increase.  Throughout the last century we've had alarmists warning of looming crises in the supplies of oil and food and time after time they have been shown to be "full of it".

Based on observed market behavior it seems more likely that prices will gradually escalate as more and more oil fields become depleted.  Increased scarcity will cause higher prices.  The higher the prices go, the more individuals and industries will be motivated to purchase alternative energy sources and products which use those sources, thereby increasing demand and price for those products and sources and spurring technological development.  This development will reduce the cost of the alternative sources and related products and the market will find an equilibrium with alternative sources making up a larger part of the pie.  The alternative slice of the pie will grow and grow as petroleum becomes more scarce.

However if the government forces a switch from petroleum to alternative energy sources while free-market prices do not support such a move, it will hurt the economy in the short term with questionable long term benefits.

It cracks me up how so many people are willing to accept the concept of self-organizing (and self-optimizing) systems in the context of evolutionary biology, yet those same people refuse to accept the same concepts in the context of economics.  Unfortunately many of these people vote and occupy important government offices.

[Dowding]

It cracks me up how so many people are willing to accept the concept of self-organizing (and self-optimizing) systems in the context of evolutionary biology, yet those same people refuse to accept the same concepts in the context of economics.

To even claim economics is as succinct as evolutionary biology is absurd.

Economics is a man-made process that is fully understood.

Evolutionary biology is so subtle only the effects are understood to any great depth. The mechanism behind it is the subject of spiritual/metaphysical debate. Can you say the same for economics?

Frankly, I'd rather trust the forces behind evolution than those Wall Street fat cats or the politician-buying heads of multinational companies.

[miko2d]

There are things that have nothing to do with the market. Military defence and dependency in strategic resources are among them. Even the most rabid free-marketeers (and you would be hard pressed to find more rabid one then me) would not suggest outsourcing our military needs to the lowest foreign bidder. Same with oil and food.
 If the stuff hits the fan, we want our military available and food and oil too.

 Forces hostile to us took power in Iran and Iraq. Who can guarantee that Saudi Arabia's oil will be available to us?
 Price of the gas only includes the cost of buying, transporting and processing the oil. It does not include the cost of maintaining the military required to secure our interests, the costs of being hit by terrorists, etc.

 miko

[Skuzzy]

Uhmmm.  MIssed my point funked.

One day the Earth will be out of crude oil.  No way mother nature can create it as fast as we can use it.  SImple, logical fact.  People that ignore that fact are living in a dream world.

But, putting that aside.  I maintain we will not do much of anything until we are actually out of crude.  History has proven that is how we are.  I see nothing in the immediate future that would indicate we will act any differently.

Now, being actually out of crude may mean, we have a one year supply for the planet.  That is panic mode time.  We do not have the means to convert the entire planet from crude oil to other means in a year.  It just cannot happen.

We do not know when Earth will stop providing crude and that is a serious problem.  Without knowing when, we are going to be in a worse position as we will wait until it is gone, which will be too late.

If you have insight as to why we would actually prepare for that day, I would really like to hear it, because from where I sit, I see us doing and acting no differently than we have for many, many other situations that we could have dealt with before being in panic mode.

[funkedup]

Skuzzy what I am saying is that we won't just suddenly run out.  Before it runs out it will become increasingly hard to find and prices will become prohibitive.  The high prices will cause people to develop other energy sources.  There will be plenty of time to convert to other sources.  The technology for most of these sources exists.  The problem is that these sources have higher economic (and in some cases environmental) costs than petroleum.  When petroleum becomes more expensive than these sources then people will convert en masse.

[midnight Target]

Not to change the subject too much, but I think you have pushed aside the possibility of Fuel Cells a little too hastily.
There is a big push on in my industry (RV's) to develop fuel cell electric generators. I think we will see the fuel cell creep into the market through these periferal uses, and become the eventual replacement for the combustion engine.
It may take 20 years, but I think it will be a steady change over those 20 years with more and more combustion engine uses being converted to fuel cell.

Then we can tell Saudi Arabia to pound sand.  

[funkedup]

What kinda fuel ya usin in them cells?

[midnight Target]

Not sure, but if your point is that its a petroleum product you may be right.

Here is the article:

Cummins Developing Fuel Cell Technology

Cummins Power Generation, manufacturer of Onan brand generators, has received a $74.2 million contract from the United States Department of Energy to develop fuel cell technology.

During the next 10 years, Cummins, along with subcontractor McDermott Technologies, will develop a compact, affordable 10-kilowatt fuel cell module. The product is expected to provide virtually silent power with significantly lower fuel consumption and exhaust emissions than from existing engine generator sets.

Paul Plahn, director of advanced product development with Cummins, said that solid oxide fuel cell technology "has tremendous potential as a clean, efficient, and silent auxiliary power source for RVs and other mobile or remote applications." He said that the goal is to reduce the manufacturing cost of these fuel cells and bring them into the same price range as current premium generator sets powered by diesel, gasoline, or LP fuel. The company also will work on making the fuel cell systems fit into the same space that current generators occupy.

[funkedup]

Yep.  
They are cool tech though.

[LtHans]

The problem with fuel cells is that you still need power to create the fuel in the fuel cell.

So you still need energy.

The upside is that you don't neccesarily need energy from oil.  Nuclear, coal or other sorces can be used.

Personally, right now the only thing you could do is Nuclear power, like France (90% of France is nuclear powered).

[miko2d]

Originally posted by LtHans
Personally, right now the only thing you could do is Nuclear power, like France (90% of France is nuclear powered).

 Actually, about 80% of the France's electricity needs are provided by nuclear power.

 Fuel cells work on hydrogen and since it is not readily abailable and bulky, it is produced on the spot from natural gas or like substances (can be synthesised from oil, coal, etc).
 Also natural gas requirements may probably be satisfied domestically to a greated degree then oil.

 Ideally hydrogen would be produced from water using nuclear energy, bonded into some kind of hydride to inclease energy density  and simplify storage/distribution.

 So in the end, fuel cells are cleaner running engines, not much more efficient engines then ICM.

 Fuell cells may be few more percent energy efficient, but they would require a huge infrastructure, so any gain will pay for itself only in many years.
 Increasing fuel efficiency of ICE and legally limiting the maximum horsepower of the passenger cars (fuel tax, engine power tax, legal limitations, etc.) is likely to be much easier to implement technically. Politically is another matter altogether.


 miko