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Russia Could Push U.S. Toward An Energy Policy
I recently had lunch with a top U.S Department of Energy executive. He’s “in charge” of half the world - mostly the half that exports oil. This very charming individual was unable to define what the present U.S. energy policy is.
I suppose he understands, but cannot admit publicly, that our policy under the present nitwit administration is to give oil companies and oil supply companies, e.g. Halliburton, everything they want - tax breaks, drilling rights, lack of oversight - and to give the 44 farm-state senators a mandate for turning corn into ethanol, which produces little if any net new energy. In other words, our policy is to maintain our dependence on the internal combustion engine.
Voters - as we know because all the candidates are talking energy- clearly see the cost of oil dependence and want a new direction and a truly useful energy policy. But it’s been hard to be optimistic that we will get one because the executive branch is controlled by the oil industry and the legislative branch is so gridlocked and clueless that they have so far only come up with such harebrained schemes as suing OPEC or drilling for oil off the OCS or in ANWR or providing huge mandates and subsidies for ethanol. These may be “get re-elected” policies, but they do not solve our oil dependency.
But now the Russian invasion of Georgia gives me a new sense of optimism. It makes crystal clear the fact that the control of vast amounts of oil by dangerous governments means that OECD societies which must have that oil are powerless to resolve potentially war-and-peace sorts of international disputes - other than to give up. We’ve heard it said before in respect of Middle Eastern countries and Venezuela that our oil policies are only empowering our enemies. But Russia’s aggression in Georgia creates a new and much more tangible danger that could motivate us to move toward the security that energy independence offers.
The Russians are making it clear even to the average American that oil is putting us at great risk. We cannot envision NATO coming to the military aid of Georgia against a continuing Russian invasion and potentially a take-over of Georgia. Similarly we cannot envision NATO taking action against a Russian takeover of Ukraine or the Baltics or any other target the Russians may find attractive down the road.
The reason NATO is feckless, obviously, is that most if not all NATO countries must have Russia’s oil and gas exports. How can you go to war against a country you depend upon to supply you with the energy life support system you require? It is a contradiction in terms - sort of like going to war against your own body. This is such a clearly unacceptable global posture for the OECD that it must be changed. To do so will require a real energy policy.
The policy the U.S. - and our OECD allies - must adopt is very simple. We must free our transportation system from its use of oil.
In the U.S. we have enormous quantities of unconventional domestic natural gas that can help us transition our transportation system from oil. Compressed natural gas, CNG, can substitute for gasoline more quickly than electricity can, especially for truck fleets. The trucking industry should have tax incentives to switch to natural gas. We should require that over time gas stations in urban areas also offer CNG. We should also encourage cars to be “flex fuel” so they can use “CNG,” as Brazil has been doing for years thanks to a government mandate. (And which cars are built in Brazil by U.S. car companies.)
But electricity, not CNG , is the longer term solution. We must mandate that by a certain date all new cars be plug-in hybrid electrics “PHEV’s.” In the interim we must offer tax rebates for PHEV purchase and tax the purchase of non-PHEV’s. Those tax incentives should increase over time. Right now the battery costs of PHEV’s is excessive. That is why tax policies are needed to make them our standard.
If the U.S. moves aggressively toward PHEV’s such cars will become a global standard. Other OECD countries and even developing countries will see PHEV’s as the future and will move toward them as well. A PHEV still uses some gasoline - but the amount can be minimal. A car that is only driven locally - which is a huge percent of U.S. cars and an even larger percent in more densely populated countries - may use only electricity, depending on the size of the battery and the distance driven. With cars using PHEV’s and trucks using natural gas, there is enough fossil fuels to eliminate any energy emergency.
A transition away from gasoline will virtually bankrupt our Highway Trust Fund which gets its money from gasoline taxes. Therefore we must tax freight that moves by truck to fund highways. That tax will also make it clear that over time we are going to transition to electric powered trains for freight and as much as possible away from trucks - even ones that run on natural gas. To that end we should also offer incentives to electrify our railroads and to build more rail transport in our densely populated areas.
Such policies don’t offer an immediate fix. It will take at least a decade to achieve a significant reduction in oil use by cars and trucks and then another decade to virtually eliminate it. But the adoption of such policies will tell the Russians that their game is only temporary. When they see that the West is starting to move away from oil with a serious determination, they will not want to make oil even more expensive. Oil is the basis of their wealth and they will try to make it more attractive. They will become more cooperative.
The vision of an oil-free future will also let the U.S. go forward with optimism, which makes all the difference to economic vitality. Optimism is essential for growth.
The policies I am suggesting will create losers so they present steep political costs. But the fear that otherwise we are committing ourselves to a national defense nightmare vis-a-vis Russia - in addition to the other very substantial balance of trade risks and costs of oil dependency - could give our government the backbone it needs to finally move us forward away from oil.
We’ll never get there by yelling “climate change.” But we can possibly get there by yelling “The Russians Are Coming.” In fact the reality is that the Russians may very well be coming, as we now see in Georgia, if we don’t cut off our dependence on oil and therefore on Russia.
Will there be enough electricity? I think so. For one thing, most electrical “re-fueling” will take place at night when there are huge existing surpluses of electrical supply right now. For another, we’ll be transitioning to LED lighting which will save about 15% of our electrical use. Yes, we will need some additional capacity over time and will probably need policies to promote renewable solar, wind, local geothermal, and wave. Such technologies are available now. They will become much less expensive over the next five years.
A major side benefit of this new energy/national defense policy would be a renaissance for the U.S. economy. We would produce so many new jobs in the battery and automotive and rail transport and renewable electricity generation industries that we would see another American economic miracle. That is one of the benefits that would motivate other countries to join with us and adopt similar policies.
Interestingly, in the process of moving deliberately away from oil we would also solve the climate change problem. Without even trying.
Will it happen? With the right new leadership and a continuation of Russia overplaying its hand…there is hope now. But I still wouldn’t bet money on it yet.
Tags: peak oil energy investments
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43 responses so far ↓
1 KV // Aug 16, 2008 at 10:58 am
Wow, Jim!
But, please understand nothing about oil can be uttered by anybody in this admin. unless it is cleared by the real pres Cheney. Of course, Halliburton et. al. will get priority over everything else as they have put this joker in nominal charge so they can do what they want through the constitutional office of vice pres that is unaccountable to anybody, including the follower of the higher father in the sky, the super dumb nut. By the way, most pres aspirers come from the same political system so you should not expect any major change.
Now about Georgia: Poor Saaskaveli! The biggest dumb got screwed for the hidden objective of placing missiles in Poland while everybody is afraid of the bear. If you observe him on TV, the guy is so shell-shocked that he does not know which way to turn or which eye to wipe first. There is no love lost for him anywhere in the world.
Oh yes, you can attack an oil rich country as long as they do not have nukes and missiles to deliver them. Can’t do that to Russia. Besides, last winter they did cut the gas supply to Ukraine to keep them in line, and NATO just sat there. Germany knows this, so it is not going to mess with the bear, and France has much bigger fish to fry then mess around with bear. Nobody is listening to the old Queen which is by the way speaks the same language except with different accent. They really should go to Texas and learn the proper way to speak!
What you are asking for is National Energy Policy which is anathema for Republicans, the folks who believe in mine is mine and yours is mine. Why should they change when the scheme they have works. It keeps us all bleeding just the right amount of dollars before we start thinking different stuff, like alternate energy, or smaller cars, more efficient way of living, etc. Heck, we will be called Un-Americans if we speak too much this stuff. This time, they misjudged by about 30 dollars, if they had kept the oil below $115, nobody would care, especially, if the housing bubble were not to burst, or only if the HLOCs were at fixed rate, and we would not have to give out $600 tax rebate. Damn! Most of that money went to poor bastards who barely filed a tax return!
2 Chris // Aug 16, 2008 at 11:02 am
Jim, I think we will always have a “nitwit administration” and maybe that’s not so bad considering the damage they can do when they put their mind to it. To me, there’s nothing scarier than more government intervention; everything the government touches malfunctions. If anything, what we need is less government intervention - less regulation of domestic energy production, less environmental obstruction of nuclear powerplant construction and coal-to-liquids production, less ethanol and solar mandates, less subsidies to all industries, less “endangered species” protection,etc. We also need to reign in our supremely expensive legal system which makes building anything new hideously expensive. After all, what wonderful energy policies did we have under all of Bush’s predecessors? And why do you think the next president (and Congress - the real scoundrels) will be any better?
3 chip // Aug 16, 2008 at 11:06 am
We should platform on electrical grid first not NG.Although super abundant,eventually,we will suck all that gas from the earth and then we will have to change once again our infrastructure.I assume NG is delivered differently than electricity at pump.I dont know who wrote this article but the author is somewhat dim-witted in suggesting NG while admitting electricity is the long way to go.Get our politicians off big oil pay-rolls and start using renewable platforms from wind,sun,water,algae etc.Stop all the dim wit plans and get courageous,bold and flat out sensible in our short,mid and long term US energy policy
4 KV // Aug 16, 2008 at 11:07 am
Orwellian Speak:
Less is More!
5 Barry // Aug 16, 2008 at 11:51 am
the world has changed with the invasion of georgia.we are back in the cold war,but this war is centered on oil.russia has most of the cards and there is little we can do but yell and scream.Once investors realize the implications of what russia is doing,oil prices will rise.the world is becomming more unstable everyday and other then canada we have no safe country to depend on for oil.I am bullish on oil and will remain so.
6 Kolfer // Aug 16, 2008 at 12:06 pm
If that is correct then it seems like a good longterm investment will be in utilities and the companies that provide the infrastructure to build it and to enable the substantial increase in electricity consumption.
From an investment point of view, which will be th companies most likely to benefit?
7 KV // Aug 16, 2008 at 12:06 pm
Barry: Fearing Russia is pointless, and also creating Russia as an enemy is waste of time. It is a power game, we gave up Georgia for missiles in Poland. Whether it is pawn exchange or some thing more serious only time will tell. Russia is so vast and now so rich, and believe it or not, both China and India want them to be counter balance to the West. Look up the trade among these three countries.
With our Patriot act, there is no difference between the US and the USSR, oops, forgit, Russia.
8 Barry // Aug 16, 2008 at 12:28 pm
Kv if we put missiles in poland,russia will retaliate.We are just provoking them for no reason,since the misseles won’t work.With a broken economy and fighting two wars,russia will win this round of the new cold war.we will do nothing to free ourselves from foreign oil .we are broke and floundering.the russions will drive up the price of oil to cripple us.
9 wynn // Aug 16, 2008 at 1:10 pm
Boone Pickens with out the wind!!
10 Robert Essian // Aug 16, 2008 at 3:03 pm
Jim, thank you.
This article fired me up. Hell I’m proud of you, on message and covered (logically)
Jim Klingsdale: Energy Szar?
This should be the only message on your site, every day until this gets through to every body. All the other stuff (while informative) is fluff.
I’m going to go cut the lawn (push mower) to get rid of some of this adrenelin…
11 Robert Essian // Aug 16, 2008 at 3:15 pm
Jim, I commented in a similar manner on one of your earlier posts today so you will know that I’m sincere about this praise. Frankly, I’m fed up and only want to read what you just posted today. I’m truly impressed. Grandpa Picken’s would be proud of you today…
I’m done.
12 KV // Aug 16, 2008 at 4:06 pm
Our missiles in Poland is done deal, and Russians are pissed and they already stated that by doing this, Poland has become target, go figure.
You see the nit-wits’ plan is to leave the world in flames as much as possible, so we continue to build th military hardware, and keep the diplomacy simple: we right, you all wrong! We chosen by god, the rest chosen by the 666 guy.
Would we reverse the course after the end of nit-wits? Would there be end of nit-wits? I wait and see.
13 Robert Essian // Aug 16, 2008 at 5:13 pm
Not done yet Jim, I will state again this very article is the most important message that needs to be listened to and read by all our citizens.
I can only imagine where you could have gone with this article if you really would have let your message be heard. I’ve been waiting for you to let loose and you didn’t disappoint when you did.
You are precisely on message. Respectfully…
14 Electron John // Aug 16, 2008 at 9:13 pm
I don’t understand.
Apparently, it’s not enough to just replace a few hundred million cars and trucks with new models based on new technology that’s unproven at scale and the Europeans can’t make economical when gas costs $8/gallon.
No, it’s ALSO imperative that when we build out our generating capacity to compensate for the MASSIVE and unpredictable new stress on our already under-maintained power grid, that we bet the farm on unproven feel-good energy sources like “tide power.”
I mean, with all these new and awesome possibilities floating around, one of them is BOUND to work. Then we won’t have to deploy some icky old technology that everybody hates — like nuclear power — just because we already know how to make it do what we need it to.
15 rbblum // Aug 16, 2008 at 10:13 pm
Fascinating times.
Not only is man undergoing energy transition, the US is truly at the crossroads with having to choose between two drastically different paths being offered - by Oama and McCain.
16 paultaut // Aug 17, 2008 at 1:47 am
Wondered why Russia would oppose military bases in new europe? Now you know, but the Bear couldn’t wait because oil prices were dropping so it tried to prop them up with this incursion. Works for Iran, why not Russia? It would have worked if they had blown up a pipeline or more, but they decided to preserve the infrastructure. Wrong move. Now Poland which was wavering is firmly in line with the west. And the new president, you know the one with the White hat, will pull out Russian Troops, maybe.
The Cold War was mostly rhetoric some less vehement some more, but the gist was the same. It has returned and no Peace Treaty will resubmerge it. The Russian Bear has a new weapon in its aresenal, Oil.
There is nothing that can be done in the USA, that will change the current status quo over the next 3 years. The Russians are helping Iran Build a Nuclear Power Plant. During the Cold War, there was no love lost on either side. If say, Iran had a nuclear accident, the Israelis would be blamed. With the MidEast possibly crippled, what would Russian gas and oil be worth? Iran’s Oil is the least desired by the world but its elimination from the supply chain????? A Dark Scenario, Yup but not probable.
What can be done over the next 3 years?
The only program which would give us a fighting chance would be the Consumption Tax of the Chinese, greater demand destruction than ever envisioned, export controls over all products considered vital to the infrastructure build up, steel, electronics, copper, whatever. Suspension of Environmental Regs for the Duration and a Law providing legal exemption until the infrastructure is in place. Even if all of this was done it would not be in place for another 5 to 10 years simply because too many of the needed materials are no longer available in the USA.
We Can Do This And We Can Do That.
No, we can’t. Not in time to matter, not in time to prevent either a Depression, Stagflation or Hyperinflation.
I was a troubleshooter for many years with a small property and casualty insurer, I was trained in envisioning worst case scenarios. My day began with “whats the worst that can happen” because I could be pleasantly surprised for the rest of the day.
Currently, I have Dark Clouds overhead with Squall Lines in all directions. I see no way out. I am not fully prepared yet. For instance, I haven’t purchased enough MREs. Have not bought an electric car or eliminated all of my American Assets. But I am working on it.
The Russian move has has shortened my time horizon. I did not expect this to happen until 2009 at the Earliest.
So, come on Guys, Cheer me up.
17 Robert // Aug 17, 2008 at 3:23 am
There is no question that Russia is willing to share its oil and natural gas with the rest of the world. The real question is the price at which Russian oil and gas is being sold on world markets. Gazprom for instance is selling its natural gas on average for much less than half the price prevailing in the US. BP and other western oil companies were pushed out of Russia for a very simple reason. They thought the Russian were stupid and would give away their oil for pennies on the Dollar. Yukos was forcefully renationalized by Putin for the same simple reason: Chodorovsky planned to sell the largest Russian oil company to Exxon in effect robbing the Russians of one of their largest oil treasures. Putin did the right thing by masterfully incarcarating Khodorovsky using bogus charges of tax evasion (figuring that nobody would object against a government enforcing its tax laws).
The real question not addressed in any of the previous comments is: Do the Russians have the right to sell their mineral wealth at the highest possible price? Judging by Jim’s writing, appearently they do not have that right.
Finally, let’s not forget that the invasion of Georgia happened after we invaded Iraq illegally more that five year ago. Not only did we invade and occupy Iraq illegally, but today, five years after the invasion, we still do not have any plans to withdraw from that country. Why should other countries be forbidden to do what we proclaim is the right thing for us to do ?
One should also not forget that Georgia is applying to become a member of Nato. What was our reaction when Cuba intended to become member of the Eastern block in the 1960’s? Nobody will criticize Kennedy for the actions he took. I think Putin made the right decision as a good patriot thinking about the long term interest of his country just as Kennedy made the right decision in the 1960’s.
Investing will show poor results if it is corrupted by political ideology.
18 Robert // Aug 17, 2008 at 3:58 am
Jim is right about his prediction that the future of road transportation is electric. The reason is the high efficiency of electric engines (over 90%) in comparison the combustion engines (20%). The unsolved problem is the amount of primary energy required to produce the huge amount of electricity needed. The second issue is an affordable battery which can be produced in quantity. I am optimistic that the battery problem will be solved long term. I am less optimistic regarding the amount of electricity required.
Much energy could be saved by drastically reducing the top speed of cars to let’s say 40 miles per hour. This would allow us to reduce the weight of the average car by more than 50% in effect saving something like 50% of the oil consumed today in transportation.
I recently took a trip to the countryside visiting a friend in his summer house. The speed limit on the highway was 65 mph. I was driving at 70 mph (5 miles about the speed limit), yet almost everybody else was overtaking me at speeds of 80 mph or more. Being on the the highway, there is no sign that high gas prices are hurting people. They drive as fast as ever if not faster.
19 Robert Essian // Aug 17, 2008 at 4:03 am
Jim, really set us back on track with this article.
After reading (again) all the comments it really became clear that everything happening in the World today would have been easily predicted because of the onset of Peak Oil.
This is what it’s all about, what the Theory anticipated once the Peak arrived.
There is no place to hide so it’s time to saddle up and do our part and be leaders ourselves in this fight to turn the World around and do our part.
I’m personally pumped at the prospect because we have major problems but once we work to correct them the Sun will literally shine brighter on the other end.
Again, Jim nailed this and for me I see only positives as we lead the World towards change…Respectfully
20 paultaut // Aug 17, 2008 at 8:11 am
What positives? Obama? Congress? Denial by the Media? T.B.’s manipulation of the truth to get Funding from Congress?
The rest of the world is securing whats left of the World’s resources.
Meanwhile, “Rome burns while Nero fiddles”.
21 Drexel Agner // Aug 17, 2008 at 9:14 am
not sure why Venezuela is “an enemy”. Yeah, Chavez is left of center which means he hasn’t destroyed all his Countries social safety nets. I have to admire him for calling G.W. out and telling the world exactly what G.W. is. Me think the U.S. had best shut the rhetoric about Chavez as he might be one of the last people to sell us oil after Russia cuts us off. That is of course unless Chavez has WMDs (thats a joke for you Bush apologist).
22 Jim Kingsdale // Aug 17, 2008 at 10:43 am
Drexel - I can’t prove it but I think Chavez is a potential madman and dictator with the potential to become very dangerous to the health of society - his and others. While he swings left now, I think he’d go in any direction that assures his own power indefinitely - which ultimately turns out to be to the right. For the public fascism and communism turn out to be pretty much the same thing. I’m a big believer in democracy and freedom with a safety net and I don’t think Chavez comes anywhere close to that profile.
23 Robert Essian // Aug 17, 2008 at 12:52 pm
Chavez, to say the least is certainly mad. This man must see his last days very soon.
Paul, the positive in all of this will be that Congress will eventually have to move on the wishes of the American people.
Regarding natural resources to get the job done. Brazil, Canada and a host of other countries as well as our own will be enough. Not everyone hates us and with a new leader coming in January we will get this done.
It is my thought that Peak Oil will cause the Nations of the World to choose sides, then cause us to work together for the betterment of mankind and the US is still the best thing going.
Jim is right when he says we could lead the rest of the OECD to action (in so many words). All of our economies would be on fire and national pride would be through the roof. Honestly it is the best way to go.
What’s important I think is that we are talking about this energy issue everywhere in America. It is main stream. I read an article by Attorney General Brown from California this morning in the “Legal Newsline.com” and was happy that the 7th largest economy in the World is set on leading us to change. Wind power, solar, natural gas and no net increase in electricity in 25 years. This State will lead the way. It doesn’t hurt that they have all those electorial votes either.
My generation was so hell bent on changing the world. We learned how to protest peacefully and get things done. We lost our way. I only hope the fires are still burning in some of them because it was really something to behold.
I have hope…
Finally, if I understand it correctly Grandpa Picken’s is asking that Congress helps clear the way to move the electrical power from East to West and with easement rights. I believe he’s on record that private industry will pay for the cost and fare value to place the equipment on your property. I’ll research it and get back to you… Respectfully
G.W. will go down as the baffoone (sp?) he needs to be remembered by.
24 Robert Essian // Aug 17, 2008 at 1:34 pm
Jim, I didn’t know what to do with this information and I’m sure I read it somewhere but for some reason it really hit me today.
1. Every gallon of gas represents 6 weeks manual labor (per)!
2. We are using roughly 5 barrels oil for every one we find!
Humbling/Terrifying to say the least.
25 paultaut // Aug 17, 2008 at 2:47 pm
Bob, there was an article earlier about the lack of expertise in the Oil Rig labor force. There are no go to sources to increase the number of rigs dramatically because of the labor shortage.
About 5 years ago, the Saudi’s offered to build Two 1 million brl/day refineries here in the US. Total cost was estimated at $10 Billion. All we had to do was provide the permits. It never proceeded beyond the Offer.
Instead of ads about Wind Farms, that will provide something far into the future, edifying ads about what a Few Dozen state-of-the-art refineries could do within 3 years should be shown.
They will not even be produced, let alone shown.
The question is when “will Wind, Solar, NG cars,etc.” be able to make a meaningful impact in the US?
This “corridor” won’t have a snowballs chance in hell unless the Environmentalists are removed from the picture. Ditto on massive Solar panel farms.
They are the cleanest renewables on the Planet but with the Regulations and the Environmentals in the way, we won’t get the benefit for a decade or two.
Its just talk, something to be hopeful about. Congress should be acting for the good of the Nation not lobbying interests and re-election prospects.
26 Robert Essian // Aug 17, 2008 at 4:22 pm
It is an unbelievable challenge Paul to that there is no doubt.
Do we have any choice though?
No.
Clearer heads will prevail and as a Nation we can get this done. If our next leader spells it out in black and white our generation will have to be the one that secures the future of so many people here and abroad.
Whatever the cost it must get done because the alternative will be hell on earth.
As T.Boone Picken’s said when asked do we have a choice “Hell no”.
Again, many thanks to Jim for running this on message (the only message) article. I’ve sent the entire article to a community newspaper requesting it get published.
27 Burt Jaffe // Aug 17, 2008 at 5:21 pm
We should go directly to electric cars, with or without a small conventional ICE for recharging the battery. It is the most direct way to reduce our independence on foreign oil and reduce CO2. Act now…put your name on the list for an electric car, like the Chevy Volt to be mass produced and on the market by Nov 2010. I am number 25,411 on the list. Go to “www.gm-volt.com/join-us” for information.
I don’t agree with T. Boone Pickens that we should use NG for cars. Hydrogen cars require too much energy and too costly an infrastructure.
28 Burt Jaffe // Aug 17, 2008 at 5:22 pm
Oops Line 2…I obviously meant “dependence” not independence.
29 paultaut // Aug 17, 2008 at 10:21 pm
Different parts of our country are suitable for different types of renewables.
Take T. Boone’s corridor, no matter how it gets done, the result would be worth the effort a decade from now. But instead of Wind only, why not combine Solar in the arrid part of that corridor? Surely, if wind permits are allowed, solar panels inbetween would enhance the projects and also the funds available. The electricity stream provided by the combined entity could avoid most of the pitfalls associated with either tech. on a standalone basis.
Or am I missing something? The thing about troubleshooters is that they have to come up with solutions as well. My problem is the time horizon, Short term versus Long term.
Long term, everything will be hunkydory and I am Hopeful ala Bob. But short term scares me. You cannot produce enough Hybrids, Hydrogen, Nat. gas, propane, all electrics to make a dent in overall transportation utilization over the next 3 years. Reconfiguration of our Car facilities doesn’t allow for multiple types of renewable energy cars. Our infrastructure doesn’t allow for all of them either. It is just not possible to accomodate all of the various Techs available.
The Demand Destruction ongoing in the developed world will continue, possibly accelerate. Lower inventories will be the result and Oil Swings will be more pronounced.
30 Robert Essian // Aug 18, 2008 at 3:14 am
Paul, I know the Picken’s plan calls for the use of Solar in Arizona, New Mexico and probably California as well. “Let’s use everything” is part of his message. Picken’s also thinks that ten years is the time table with a military type effort. It won’t be easy but 10 years is not that long and it will provide HOPE and a DIRECTION not to mention factory orders, construction jobs, jobs everywhere and more tax revenues for the Government to pay down some serious debt. Oh! I forgot we won’t have to IMPORT so much OIL!!!
In addition and for those who can afford it the spin off into the residential use of Solar and Wind will be huge too. It will be a source of pride to see them all around town instead of being looked at as an eye sore. I really visualize that happening. We already see those massive electrical towers now why not wind turbines.
Can you imagine how we will feel 10 years from now when all this is completed or near completion to know that as a Nation we did this.
It’s going to happen and our Citizens would have been directly responsible for moving away from the combustion engine, better conservation, more R&D for the use of other energy sources and the best part we would have lessoned our:
1. National Security crisis
2. CO2 crisis
3. Food crisis
4. Energy crisis
There are a lot of people in control that are smarter than I am, I’m just a foot soldier and this makes perfect sense to me.
From an investment point of view we will need to exhaust a lot of energy, copper, steel, etc…Those will be my focus…Respectfully
How can we not suck it up and get this done…
31 Robert Essian // Aug 18, 2008 at 3:32 am
PS: I forgot another benefit: Wouldn’t it be nice to have just a casual interests in what happens in the Middle East or that entire region. Let China and Russia have that headache I want out of there!!! We’ve spent ONE TRILLION dollars (or close to it) already fighting terrorist about what it would cost to rebuild our electrical system.
The best part is we can bring our son’s, daughters, Mom’s and Dad’s, Grandpa’s home to a GRAND parade for a job well done.
32 KV // Aug 18, 2008 at 5:32 am
Some random thoughts:
1. Yesterday’s road trip was fun as most drove below 80 mph! My average speed was 65 mph. Except for toll gates and construction sites, there were no traffic jams. We really should eliminate toll gates as each car basically idles through fro 15 minutes wasting gas and time.
2. Before fabricated(?) oil crisis, there never was any discussions on storms and oil. Now, even a tropical storm gets more headline than Chavez.
3. Speaking of Chavez – a potential madman! By that standard, where do you put our current president? Would we care if Venezuela were not to have any oil or other natural resources we want?
4. Natural gas at $8, in energy equivalence computation, oil would not be more than $48. With 20% premium for transportation costs, and another 20% for speculation, oil should be about $70 or less. We are paying $40 more, must be due to madmen of the world.
33 Robert Essian // Aug 18, 2008 at 7:39 am
More random thoughts:
1. KSA floods world market with oil: Cheaper for us to reconstruct our economy. If they don’t or can’t flood the market then we started on a plan that must get done regardless.
2. They would subsidize us for a change.
3. We wouldn’t have to worry about mad men other than for our amusement.
4. Oil would come down in cost and stay there relatively speaking.
I have more but I think we get the point.
It’s all good if we commit ourselves.
34 paultaut // Aug 18, 2008 at 7:40 am
Suggest you revisit your math. and work backwards like the rest of the world does. European Nat. gas is in the $14 range, Asia is higher. Nat gas is deeply undervalued. Why? How many homes are sitting idle? 90% were built useing nat. gas as their heat/cool energy source. A housing recovery will put an added strain on our “abundant” nat. gas situation.
35 Robert Essian // Aug 18, 2008 at 7:57 am
Paul, I agree Natural Gas is undervalued.
I also believe it will be more expensive in the future but our money is staying home. That is a huge factor for our economy.
We might not be a debtor Nation if this thing takes off.
One can dream.
Imagine lending money to the OPEC country’s to build a manufacturing complex making glass (they have a lot of sand)…One can dream can’t we…
That’s Jim’s point as I read it (not speaking for Jim) when he speaks of hope.
36 KV // Aug 18, 2008 at 7:59 am
I am not familiar with Europe tax structure on oil and gas, but, from domestic considerations my computation does provide overvalued oil scenario. I don’t know how to factor reduction in gas consumption due to vacated houses but we are in summer, and heating is atleast couple of months away. You do bring up a good point: if the US economy were to be slowing, natural gas consumption will be reduced and similarly vacated houses.
In any case, we need gasoline, hence, oil for transportion at minimum, so oil may have an overriding support than energy equivalence I tried to draw in the previous post.
37 Stuart Arthur // Aug 18, 2008 at 8:42 am
what about Iraq oil? will production levels there allow European customers to breathe a little easier re’ Russian oil dependence?
sort of a two for one- the US government ( perhaps) gets to generate some income to help defray expenses of ongoing military committment in Iraq and the Russian energy threat is muted
38 KV // Aug 18, 2008 at 9:50 am
Stuart Arthur: Sorry, but dream on! There will not be any significant Iraq oil production as Iraqi factions have many scores to settle.
Oil is commodity, whoever can pay can get it from whereever they want from.
39 Robert Essian // Aug 18, 2008 at 10:11 am
KV does indeed make his point.
It is why Jim’s article must become a sort of doctrine. Again as I see it we have no choice. There is no negative in Jim’s article only positives. It will play out as stated and then some (to the positive).
40 paultaut // Aug 18, 2008 at 11:04 am
To my very limited knowledge, Nat. gas is not subject to the surcharge you refer to in Europe. They have it on cars not homes.
Take a look at Cheniere energy(LNG), not a pretty picture.
41 KV // Aug 18, 2008 at 12:31 pm
LNG is in tough pickle. domenstic natural gas supply is increasing and if the demand is decreasing due to economy slowdown, prices paid by others for LNG is much higher that what LNG can afford to pay. I had looked at their pipeline partnership but for some reason did not invest. I hope they survive, but per Yahoo! their revenues are minescule and debt is near $3B in an industry where demand may be shrinking.
42 hugh owens // Aug 20, 2008 at 3:23 pm
Another excellent article Jim. You get it my friend. The only weak point in your thesis is the condition of our electrical grid. What grid? you say. Yes that is indeed the problem. WE have areas of the country with good transmission and switching technology and areas with dated, obsolete and inadequate components.For example I have read that a large percentage of our transformers have reached the end of their service life which is about 40 years. We have no true national grid such as other countries eg Switzerland
possess and the other important thing to consider is that a lot of the input into the grid is dependent upon petroleum to feed and maintain the electrical energy going into the grid. Time to appoint another commission I guess but it will have to wait for the next administration and god help the country if we elect yet another dimwit. But I digress. I especially liked your suggestion to tax over the road freight. We will need trucks but we should use them in a “last mile” configuration. If we could get them off our highways, we could squeeze some more life out of that petroleum based asphalt and extend the life of our bridges. It has been written that highway damage is a 4th power exponential function of axle weight which means that a Peterbuilt is about 1000 times as destructive to a highway and a bridge as a Corolla.Ninety percent of our freight was transported by rail during WW2 and we can do that again.One of the other commentators called you an energy tsar. Do you have an interest in becoming a member of the next administration working in such an energy capacity? Please reply to me privately.
43 LEH // Aug 21, 2008 at 6:56 pm
HEVS are the (short-term) golden goose, and we should be doing everything possible to encourage them, including subsidizing the battery industry here to make them competitive with the Asians.
WE have the tech (witness UTexas/MIT/John Goodenough/A123) but what we need is govt incentive to becoe the production leaders before the Chinese (see ABAT/CBAK) eat our proverbial lunch). Let’s hope whomever we elect in NOV gets it.
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