TCS Daily

Addicted to What?

By James K. Glassman - February 2, 2006 12:00 AM

The first part of Tuesday's State of the Union -- on national security -- was tough, clear, principled, well reasoned. The second part was a laundry list, reminiscent of the worst of Bill Clinton. I was nodding off when I heard the President Bush say, "America is addicted to oil."

Addicted to oil! That woke me up.

America is no more addicted to oil than it is addicted to bread, to milk, to paper, to water, to computers or, in the immortal words of the late Robert Palmer, to love.

We use oil -- and other unmentioned but implied addictions like coal and natural gas -- to generate energy that powers our cars, heats our homes, lights our cities, runs our factories. By the standard of what they do for us, fossil fuels are pretty cheap. They provide enormous industrial leverage. But, at least in the short term, they are getting more expensive -- in part because demand is rising (mainly in other nations, like China and India, that want to have standards of living like ours) and in part because supply isn't keeping up.

Rather than concentrating on what the U.S. can do now to increase supply, the President instead decided to use a word that is straight out of the radical environmentalists' dictionary: "addicted." The implication is that our desire to use oil is something that is not just uncontrollable but also shameful. The message is that we must kick this disgusting habit.

Coming from President Bush, who spent most of his non-political adult career in the oil business -- Arbusto, Spectrum 7, Harken -- the word "addicted" is baffling. If Americans are addicts, then, to follow the metaphor, Bush himself was a drug dealer, a pusher, a kingpin.

But maybe I should cut Bush a break. It's just rhetoric, right?

In this case, no. The use of the word "addicted" is dangerous. It could end up hiking prices by reducing supply.

How? Bush has signaled a new attitude from the White House. If this president can't defend the working of our almost-free market, then who will? If I were in the oil business myself, I would be extremely worried by this speech. One of my responses would be to hold back on planned research and development and capital spending. The three largest U.S. energy companies alone are projected to make capital expenditures of $43 billion this year, up from $33 billion in 2005. But does that make sense if Washington is considering windfall profits taxes, subsidies to alternative fuels and regulatory policies whose guiding principle is that fossil fuels are evil?

Instead of concentrating on increasing fossil-fuel supplies at home, the President used all of the energy section of his speech -- four paragraphs -- talking about such exotica as "revolutionary solar and wind technologies," "producing ethanol, not just from corn, but from wood chips and stalks, or switch grass," and "pollution-free cars that run on hydrogen." Of course, since these alternatives have no commercial viability, the government will have to subsidize them. The latest Carteresque concoction, announced in the speech: the "Advanced Energy Initiative."

Don't get me wrong. Alternatives are fine. No doubt they will substitute for current energy sources some day, when they become competitive on price -- without subsidies. But, as of 2004, wind, solar and geothermal accounted for less than one percent of energy consumption. Add hydroelectric and biomass (including ethanol) and you pick up another five or six percentage points. That's all. For there here and now, the best way to battle higher prices is to promote policies to boost supply.

There was no mention by the President, for example, of the importance of building new LNG terminals, which will allow the U.S. to import natural gas. This lack of terminals would have almost certainly been the source of blackouts if the winter had not been so mild. Bush might have talked about supporting legislation -- tied up by his former HUD secretary, Sen. Mel Martinez (R-Fla) -- that would share oil-leasing revenues with states, thus discouraging them from blocking offshore drilling. He could have talked about making it easier to explore at home, in Alaska, the Rocky Mountains and vast federal lands now off limits. He could have supported less burdensome regulations on building or expanding refineries.

And the President might have been straight with his audience instead of pandering with terms like "our dependence on Middle Eastern oil." The truth is that the United States will never become energy independent. Even if we were, disruptions in the Middle East (or Venezuela or Nigeria) would still boost the price of oil -- which is a global price since energy is a global commodity.

Also, it may surprise Americans to learn that, according to the most recent import statistics from the Department of Energy, the biggest petroleum exporter to the United States is Canada (at 70 million barrels in November 2005 vs. 41 million for Saudi Arabia, in a distant third place). Second is Mexico. Persian Gulf (including Saudi) oil amounted to about one-sixth of our imports and one-tenth of our total petroleum use last November.

The sad truth is that some of the big oil companies are themselves responsible for creating an environment where an oilman president can call the use of oil an addiction. In their advertising, they talk high-mindedly about "alternatives" to fossil fuels, as if they were on a moral crusade to replace the nasty stuff they make now. Why aren't they proud to say that, more and more efficiently, they are producing energy that makes people's lives better?

I suspect that some of these companies are simply being disingenuous. They're paying lip service to the chattering classes. So now is the President of the United States. The consequences could be dire.



Thank you for point out where we get most of our oil. But you still miss the biggest reason for inc
We are not addicted to oil, especially Arabian oil. We get very little of this stuff from there and if the folks up north can extract oil from the sand deposits cheaper than the market price then we will get even less.

Even if you keep it to just oil in total. The US is one of the most efficient countries in its generation of dollars of GDP per unit energy. The somewhat free market, always alert to costs, has optimized itself given the price of oil.

You, and the president for that matter, failed to mention the most significant force in increasing oil prices. That is the Federal Reserve reducing the value of money. The owners of the oil want the same amount of wealth for the oil but the dollars are worth less so guess what they want more dollars.

You make a great point that a huge increas in money by the Federal Reserve preceeded the rise in fuel prices. It is plain old inflation.

Choosing our Future
“The implication is that our desire to use oil is something that is not just uncontrollable but also shameful. The message is that we must kick this disgusting habit.”

US consumers mostly use oil as if it was an inexhaustible resource. In addition, when the price spikes, many clamor for Government to do “something” about the greedy oil companies. It is as if cheap oil is a “right”. Mr. Bush apparently recognizes the risks on this mindset. There are two problems:
1) Long term Oil supply is finite.
2) The US economy can be severely damaged by an oil disruption…a conflict with Iran comes to mind.

Most managers of critical systems recognize and plan for redundancy…for being able to continue operations given various levels of interruptions. The reason it is reasonable to say the US is “addicted” to oil, is because we do NOT have a viable alternative in the case of a short term disruption or the eventual instance of oil depletion. It will take several decades to develop the technologies necessary to migrate the American economy to more sustainable fuel sources. Mr. Bush rightfully believes that we need to increase our efforts at this point in time in planning for our future. He did not propose a tax solution and/or raising the CAFÉ limits as others have. He proposed the beginnings of a technological solution…a mildly accelerated research program. More importantly, he advised Americans that the days of the oil based economy are numbered, and by implication that the wise should plan accordingly.

“The truth is that the United States will never become energy independent.”
Bet me! Within 100 years, and possibly much sooner, nearly all energy generation will be from fusion, solar and hydrogen based technologies. The major energy companies could and hopefully will be part of this future. But in the end, it is the American consumer that will save himself and American prosperity…by demanding and buying the products that will begin and sustain the transition to an oil-free economy. Of course, if Americans choose to ignore the advice of Mr. Bush and others, then they will get the future of their choice. I believe that in the end, Americans will choose wisely.

Hydrogen is NOT an Energy Source
"Within 100 years, and possibly much sooner, nearly all energy generation will be from fusion, solar and hydrogen based technologies."

Hydrogen is a medium for transferring and storing energy. It must be generated using a primary source. Worse, it's a lot less convenient than the transfer medium we use now, electricity. A hydrogen fueled car is not pollution free. Best current available technology for producing hydrogen is reforming of natural gas. That produces approximately one molecule CO2 for every four molecules of hydrogen. The chemistry says exactly four to one, but you have to add some excess oxygen to the mix for the heat needed to force the reaction to maximum conversion. That means some of the hydrogen ends up as water. On a weight basis, that's over 44 pounds of CO2 for every 8 pounds of hydrogen. Hydrogen is hard to store and has a much wider explosive range than gasoline. Fusion is not a guaranteed success either, but that's another story.

are you guys high?
hey, i'm all for the free market dealing w/ our energy needs, but come on. the fed caused high oil prices??? i don't recall any huge increase in the money supply, somehow engineered by the sinister greenspan, right before oil started shooting up. and why does this strange fed-created inflation only affect oil? i'm paying almost 4x as much for gas right now as i did in 1998. are we paying 4x as much for bread or milk or DVDs? i think you guys have been having too many gold standard fantasies or something.

High on M1 and M2

Not sinister if read his own word Greenspan was concerned with effects of the increase in money supply on stock prices in 1996 but was afraid to act due to the Asian financial crisis. Then in 1998 and 199 he did not act because of fear of Y2K. In 1998 and 1999 money was starting to seep out of the stock market and started to drive commodity prices, like oil prices higher, China coming on line helped keep a keep a general inflation from happening, so Greenspan finally moved in 2000 to stave off a general price rise. That made the recession of 2000 which he moved against with more money creation (lower interest rates) this continued the rise in oil and sparked the real-estate price rise.

As proof of my hypothesis look at petroleum production it continued to rise even as the price rose but you would say China was the cause, as they are buying more petroleum but where did they get the money. They got the money from the US where it was created by the Federal Reserve. Absent that increase in money China coming online (with all those people becoming hugely more productive) would have caused more reduction in prices.

Now one can argue that Greenspan did the right thing blunting the Asian financial crisis lessoning the domestic unemployment effects of China driving down prices. But inflation of the money supply preceded the rise in petroleum prices.

taBonfils do you have an energy plan
taBonfils do you have an energy plan. You could buy ahead and fill a big tank (do not forget the stablizer). You could buy oil futures. Do you own a diesel (it is easier to make diesel fuel from a variety of feed stocks including coal).

Or is it easier to spend other people's money.

Agree... but...
I agree addiction is a poor choice of words.
I also agree that while alternative fuels must be utilized at some point, the government can do little to out-martket the market in their development and usage.
However, the author states that domestic alternative energy sources would not shield us from high price of oil. Essentially because the price is set on a global basis. This isn't exactly true. With the amount of oil the U.S. consumes, if we consumed even a percentage point less oil--through conservation, utilizing domestic oil sources, or finding alternatives to oil, the effect on the global market would be a corresponding lower prices. The effect might be quite severe, I might add. Just look at the oil glut right after the oil crisis (due to under consumption and over-production.)
While the rest of the world could make up for this and still cause higher prices, I think this qualification needs to stand.

bad glassman, bad
Did it occur to you that transportation costs account for the fact that so much of our imports come from neighboring countries? Oil is a global commodity in rapidly increasing demand. The fact that the US imports predominantly come from Canada and Mexico is irrelevant. It is getting bad, fast. Political instability, environmental catastrophe, etc. These things cause a jump in oil prices all over the World. If your point had any validity, than instability in the Middle East would have less effect on the price of oil we import from Canada, or Mexico. But it doesn't. The President had it right. You can take his expressed concerns out of context if you want, but it hardly changes the truth of it all. Actually, it is worse than he puts it.
Frankly, you seem bent on merely tempering any alarmist talk at all. If anyone is ever seriously concerned about anything, you immediately rush to counter it. I used to work with a pathalogically argumentative guy like that.

Glassman addicted to ideology
Bush's talk about oil in the SOTU address was one of the few things he said that was worthy of applause. (It was a non-event.) I also agree stating it as an addiction was a poor choice of words. But you know, it was meant to catch attention, a lovely little soundbite to gain favor. Its what he does.

It signaled a shift in focus. You never previously heard Bush frame the energy issue as a problem with "oil", it was always a problem with "foreign oil". Finally, in this speech he recognizes our need to get off an oil economy in general, never mind where it comes from. We're not going to drill our way out of it. It is long overdue that we focus resources to discovering and implementing alternative ways to fuel our lifestyle. Even if it means subsidies to get it going. Bush should've gone further and talked about CAFE standards.

Glassman's ideology is shown bare in this article. He is fearful for the free market because of words used in a speech. He thinks we can never be energy independent. Refers to alternatives as "exotica". And likens oil companies to "moral crusaders" for marketing their new "focus" on alternatives. I'm sorry, but this is so narrow minded its almost childish. James Grinch "nothing matters but markets" Glassman. I get the feeling Glassman is being disingenuous, its seems like he must have a stake in oil so he wrote an article to help boost the price and make himself some money. He wants us to stay addicted to oil because it makes him rich.

"But maybe I should cut Bush a break. It's just rhetoric, right?"

No, Bush does not deserve a break. And yes, it is just rhetoric, and we get a lot of that from Bush. His speech changes nothing, its his action that will tell us the truth. He doesn't have a good track record in doing what he says hes going to do, but its a pleasant change to hear him at least say some good things.

Even if we get only 11% of our total oil use from the Middle East, they still have our economy by the balls because of it. Just imagine if we could invade a Middle Eastern country without the yoke of oil heavy on our backs. Wait a second, would we invade a Middle Eastern country if we didn't have the yoke of oil on us? Hmmmm...

great hypothesis but…
Oil prices stayed relatively stable until late 2004. How does that figure in? Then, I don't see how oil companies made such huge profits if they had to pay more for the base commody.
Energy prices in the U.S. (and in most of the industralized world) are not just a slave to OPEC and base global markets. Is their price gouging and collusion? Yes! Is there a lack of deisre to put their windfall profits into more drilling and refining? Yes! Are the taxes on energy prices too high? Yes! Is their a conserted effort to stiffle alternative energy technologies and production? Yes! Are consumers who are too arrogant or stupid to conserve a part of the problem? Yes!
In short, energy prices are where they are for several reasons that involve the industry, government and people in general (especially in the U.S.). The answers are simple; limit production and importation of SUVs and other energy guzzling technologies, quit taxing energy production at every stage; open all areas to exploration and encourage (even subsidize) new drilling and exploration; create incentitives for alternative energy research; threaten all energy producers in the U.S. with maximum anti-trust penalties if the collusion and price gouging doesn't end.
But all of this involves government intervention, which will usually create more of a problem than anything it fixes.
Asking an industry to police itself never works well, so that is out. Asking the consumer to do their part will only be successful for those who can't afford it, not a good answer either.

I don't know the answer but, if the price continues to climb, a lot of people could find themselves in deep trouble the next time we have a real cold winter. (Maybe global warming will solve all our heating needs, then gas prices will dictate what and how much we drive.)

bad glassman, bad
Objectoriented, you seem a little angry as you overhype most everything you say. Oil demand is not climbing "rapidly"--1-1.5% annually is rapid only to a turtle. Environmental catastrophe? You tip your hand with this one (and exactly how does this cause prices to rise in any meaningful way?). And he's pathologically argumentative?

Someone needs to temper your alarmist talk, so I applaud any effort to do so. We're witnessing the gradual (multiple decade) transition to something else. So? It happened with whale oil and horses. The facts are that the price of oil is still only 2/3 of the 1980 price on an inflation-adjusted basis and Bush's rhetoric was pandering to you. Unfortunately, rather than sooth your ego, its stoking your moonbat tendencies.

Fuel addiction considerations
I don’t think that “addiction” was such a bad analogy in reference to fuel consumption. Money that should be spent at the grocer's is instead being spent on our addiction. Motorists have been “hooked” on gasoline for more than 100 years. That addiction was fed by reasonable “street prices,” until about 1973. Subsequently, the “pushers’” greed has fueled the multiplication of their products’ prices. The pushers are primarily the oil industry and American auto manufacturers. Evidence? Well, the oil industry’s profit from increased usage is obvious. But, other than the statistics which reveal that the greatest profit area of auto manufacturing has been in SUV sales, what other reason can one find to explain that the manufacturers’ exaggerated emphasis in advertising has consistently promoted SUV’s and other thirsty vehicles – even when prices hit $3.00 per gallon? Why?

American manufacturers’ “efforts” toward economy vehicles are present, in my view, only due to government pressure and requirements. I do not believe that those efforts have been honest; instead they are tokenism. We have skilled engineers equal to matching or exceeding those in Japan’s economy, and yet American economy products are pitiful in comparison with the quality and success of Japanese-engineered autos. How can that be?

I’m afraid that the American economy cars have been engineered for failure – to prevent their successfully competing with the higher profit vehicles of their manufacturers. Call it a “conspiracy theory” if you wish, but how do you explain our lack of success in the “economy” sector? And why are manufacturers opting to send so many thousands of workers to the unemployment lines, rather than choosing to produce competitive products?

Why are Toyota and Honda shaming us in the economy/quality market sales? It’s illogical.

- A concerned junky.

I just don't buy it. If I could provide a way to cart people's asses around on a fuel that was cheaper than gas, the gas pumps would be empty. So is that addiction?
You could argue that Americans are addicted to freedom of movement and mobility, but not oil. Possibly even addicted to the status an automobile provides... but not oil.

The simplest explanation is the best explanation--since SUVs were in high demand and made a lot of money, as an auto maker, you invest time and money (and advertising) there. Short sighted, I agree, but quite natural. No need for pushers. If you examine your own behaviors you'll find yourself spending time and money on things that, in the long run, are not wise.

I think that you underestimate the power of high prices in the creation of the economy class of vehicles in the late 70s and early 80s. I'd also like to point out that the SUV came in response to the very regulations that tried to quash big cars. It's called the law of unexpected returns. Which is precisely why it's wise to let the market decide.


Finite supplies
Trained in physics and mathematice I tend to first seek some bound for any problem encountered. That is, put the puzzle into some context so as to better evaluate any answers one comes up with.

Back in the Carter administration we had the first awakening as to how important energy supplies are to us at this time in history.
At that time the Dallas Morning News ran a series of excellent articles on the history of the petroleum industry. Taking data from this source I plotted a curve of world oil production vs. time. This rate of production seemed to 'behave' well enough to fit an exponential curve to it. Integrating under this (extrapolated) curve I found that a spherical 'drop' of oil equal in volume to that of the earth would be 'produced' in around 450 years.
So, this gives one some idea of where the bounds of petroleum production are.
Admittedly a lot will change in the next 450 years; we might even be back to using sails to traverse the oceans as Columbus did about 450 years ago.

Some years ago Scientific American published an article on mineral production. The rates of production followed, roughly, a log-normal curve. Production started slowly at first. Later the price of minerals dropped as production increased, then prices rose as the demand grew and production of the minerals became more expensive as the mineral content of the ores depleted.

A recent "debate" between several people who have been in the oil business for years was interesting. (The only participitant I recall at the moment was T. Boon Pickens.) It came as a surprise to me that the core of the debate centered around WHEN the peak of world oil production will occur. The estimates given by these experts ranged in time from NOW (!!) to 40 years from now as to when the maximum rate of oil production would be reached. (And, then the rate of production would begin to decline . . . meaning that the price of the mineral would greatly increase.)

So, if I 'owned' an undrilled pool of oil somewhere I would be inclined to save it for later. Buy oil from others while oil is cheap, then drill into my little pool when the commercial value of oil is much higher.

I would also look for renewable means of providing the energy needed to support my way of life.

So long as we import Arab oil we will be tempted to spill blood for it.
Sure, Glassman liked the first part of the Bush speech, he likes the war. He doesn't mind sending the kid down the street to his death to obtain "cheap" Arab oil. So it is no surprise he didn't like Bush's lip service to ending dependence on Arab oil.

I agree with Glassman that we need to substantially deregulate the energy business. Hopefully, Bush will work for it.

But we also need to do something more substantial to lessen our dependence on Arab oil, even if it means we also have to lessen our use of all foreign oil. The only really effective way to do it is to inpose stiff tariffs on the import of foreign oil, say 300%. It may be helpful to negotiate treaties with Canada and Mexico to form an "Organization of Energy Consuming Nations (OECN)" such that all trade in energy products within the organization (OECN) is tariff-free, but trade outside of OECN is subject to a stiff tariff, say 300%.

This is the only way to become independent of Arab oil and lessen the tendency of the American people to spill the blood of the kid next door for cheap gas.

No Subject
It would have been a better metaphor if he had said that the country is addicted to pork. Consider the five characteristics of addiction – increased tolerance, withdrawal symptoms, self-deception, loss of will, and distortion of attention. Our political system displays all five when it comes to federal funding.

Orgainization of Energy Consuming Nations (OECN)
I agree with Glassman that we need to substantially deregulate the energy business. Hopefully, Bush will work for it.

But we also need to do something more substantial to lessen our dependence on Arab oil, even if it means we also have to lessen our use of all foreign oil. The only really effective way to do it is to impose stiff tariffs on the import of foreign oil, say 300%. It may be helpful to negotiate treaties with Canada and Mexico to form an "Organization of Energy Consuming Nations (OECN)" such that all trade in energy products within the organization (OECN) is tariff-free, but trade outside of OECN is subject to a stiff tariff, say 300%.

Coupled with this should be corresponding decreases in the income tax, so that the whole package would be tax neutral or represent a net tax decrease. The income tax could be indexed to the revenues generated by the tariff, so that it is automatically adjusted in relation to a base year, and income tax decreases offset any increase in oil tariff revenues.

This is the only way to become independent of Arab oil and lessen the tendency of the American people to spill the blood of the kid next door for cheap gas.

That has to be the dumbest thing I ever heard

Obviously at some point the availability of economically recoverable oil products will diminish.

That said Americans should know that Canada has enough oil to supply North America entirely for the next one hundred years at current _and_ projected rates of increase in consumption. There is no mystery about it. The oil sands are exactly that, sand and oil mixed together lying on or more accurately forming the surface of the ground. They extend for hundreds of miles and go down three or four hundred feet. More, probably, but the proven reserves are already so extensive no one has done a serious exploration of more inaccessible deposits.

Anyone can see it. Just drive to the area about five hundred miles north of the American border and pick up some with your hands. It's sticky just like you would expect oil and sand mixed would be. To achieve a usable product you simply extract the sand from the oil, inject the result with natural gas byproduct to upgrade the value, transport it to refineries for further processing, store and transport the end product to retail markets.

The Canadian preference is that the bulk of it go to American markets. To that end investment into the region which has a population of about a million is currently planned at about one hundred _billion_ dollars over the next ten years. Add another thirty of forty billion dollars for pipeline transport to the American storage and refineries and there you have it.

All the oil you can eat as reliable as it is possible to make it. All America has to do is continue to allow the markets to allocate the neccessary capital and receive the associated return on investment and without any effort on the part of the American government the problem of oil supply will take care of itself.

Canada is also building pipelines out to the west coast so as to transport oil to ports for shipment to the U.S. west coast or customers such as China and India.

All of this is being done by private investment. If Americans want the oil they will have to allow the oil companies to get a return on investment commensurate with operating in a capital intensive, high cyclical risk, high liability, politically sensitive environment.

While Canada is placing every legal and political obstacle possible to prevent China and India from capturing the oil fields for their use the Americans are talking about restricting oil consumption through governmental policy.

Believe me when I tell you that the Chinese are more than happy to pay world price and provide healthy profits to Canadian businesses just so they can achieve a reliable endless supply of oil. If Americans don't want it lots of others do.

America already has the lowest energy costs of any industrialised nation. (Canada places higher taxes on petro because Canadians like paying taxes) America is less dependant on any one source than any other oil importing country in the world. America is the most efficient energy user country in the world which means it is less dependant on oil to run its economy than any other country. America has the largest emergency stock of oil salted away (no pun intended) of any industrialised country. This means that with its large emergency stocks, tremedous energy efficiency, multiple sources including a large proportion of domestic supply, multiple points of entry from every direction for those amounts that it does import there is no country that is less vulnerable to whatever oil shocks that one can imagine.

As for alternative fuels I'm never sure if people are joking, ignorant fools or willful liars when they suggest replacing petro with anything else. Hydrogen is more toxic than petro so requires completely new processing plants and pipelines. It also requires a completely new and complex retail structure in addition to cars with completely different drive trains. And, of course, it's extremely dangerous much more so than gasoline or diesel. It is both more volatile and would need to be stored under pressure. All distribution systems would need to be built out of currently exotic materials to withstand the toxicity.

Weather dependant systems such as solar and wind are useful to supplement existing energy structures but thinking that they can replace petro is delusional. Petro delivers large amounts of energy where and when you want it. Weather dependant systems are the exact opposite except they return proportionately smaller amounts of energy.

Fission and fusion are nice but truly expensive and liability ridden. Rapidly building at least fifty or more massive nuclear plants around North America would require a sea change in the cultural, social, political, economic and legal environment to even imagine such an event.

I have already gone on way too long so I will finish by saying that America is dependant on energy but is part of modern civilisation. No other country is so fortunate with regard to its energy security, price point, infrastructure and flexibility. No other large country's energy prospects are so rosy. No other country's chattering classes are so intent on fomenting needless panic with so little justification.

We use so much petroleum because it is so cheap.
We use so much petroleum because it is so cheap. This is not addiction.

The Peanut Oil Gallery
Carteresque ?

It is deeply shocking that you should elide the taste in alternative energy of an F-4 pilot from the Texas Oil Patch with a groundnut farming Annapolis man who never sortied anything more demanding than a hundred megawatt nuclear submarine. Carter should have no place in the present debate until crude rises to the price of Planters Peanut Oil, and Billy Beer becomes a competitive ethanol source. Which is to say october at the earliest.

I look forward to reviewing " Brent 36,000 "

The Peanut Oil Gallery
Carteresque ?

It is deeply shocking that you should elide the taste in alternative energy of an F-4 pilot from the Texas Oil Patch with a groundnut farming Annapolis man who never sortied anything more demanding than a hundred megawatt nuclear submarine. Carter should have no place in the present debate until crude rises to the price of Planters Peanut Oil, and Billy Beer becomes a competitive ethanol source. Which is to say october at the earliest.

I look forward to reviewing " Brent 36,000 "

I'm not sure I have any use for the psycho nonsense.

You obviously presumed upon the context of my comments regarding an environmental catastrophe. Substantial costs are built into the price of gasoline before it reaches your tank, that directly correspond to risks incurred during transportation. How much do you think a tanker disaster costs, and do you think insurance against such a thing is free? And a tanker disaster is just a trivial example that an average American can relate to.

My comments about being argumentative are reflective of a lot of writing, not this one article. I don't make a living by writing. It COSTS me to write.

By the way, the figures you spit out are totally ridiculous. I'm trying to think of the name given to this type of rhetoric. It basically amounts to off-relating statistics.

Suppose someone raises the point that China is being permitted unfairly to dump a million tons of heavy pollutants into the air because they are considered a developing nation. American manufacturers would go to jail if they tried to pull the stuff they do. Not to mention the filth they pour into the sea. The same person might well make the point that this same pollution has become so bad, that it is skewing the measurements made by California officials of air quality there. Then you would come along and say "Oh, it's not really a problem, since the mass of all those pollutants is a tiny fraction of the mass of the Earth's entire atmosphere.

Give me a break with the inflation-adjusted horse manure.

I support the President's push and reject any high-school Pollyanna attitude that everything will work out, somehow. I'm not crying that the sky is falling, but I'm not stupid either.

If you are so concerned, buy a Toyota Prius. eom

Not quite right
Hydrogen is more convenient for storage than electricity. If you want to double hydrogen storage, you can double the volume of a storage tank for a lot less material and manufacturing cost than it would take to double battery storage.

Hydrogen can be created using a number of methods, currently the most economic is gas reformation. As NG prices rise and other technologies develop further, that's likely to change.

It's much more accurate to say that hydrogen cars might not be pollution free. You can get hydrogen from tweaking the mix of bacteria you use in sewage treatment plants, create it from cracking water, harvest it from special bacteria, the full list is quite long. It's such a common element that you can get it from a dozen different micro sources besides using it as an intermediate from large scale production. Some do produce CO2. Other methods do not.

It's somewhat worse than that
Oil is not only subject to increased demand but the supply is unreliable in a way that hasn't been considered. The majority of the supply numbers in use out there are provided by national oil companies, many of which haven't been independently verified for decades. OPEC quotas are calculated as a percentage of reserves so there is a great incentive for these government controlled companies to simply cheat and claim higher reserves than they actually have.

There is also the problem that mismanaging oil pumping can ruin a field. If you try to pull too much out of a field too fast, the field will collapse after a short time, actually reducing the total amount of oil extracted. Supply, therefore, is subject to a number of uncertainties that make it less reliable even absent the political risk.

several problems with this article
1. Coal is not something that President Bush is pitching that we switch out of. The article says otherwise "We use oil -- and other unmentioned but implied addictions like coal and natural gas". "Clean coal technology" is a Bush staple and he hasn't pulled back from that.

2. The term addicted is being pushed to its most extreme meaning in the article. You can be addicted to chocolate but the addiction is not quite the same as an addiction to heroin. Bush's oil industry experience means that he has a great deal of credibility. He used the term for a reason and it's likely to create movement in the energy field. He sees something coming and he has the personal history that demands that we listen.

3. The advanced energy initiative is not a synfuel subsidy but an enhanced R&D fund. Some alternative energy sources are nearing commercial viability and it's a reasonable expense to get government infrastructure ready for that commercial viability.

4. President Bush has pushed for better regulation of refineries so we actually build new ones et al but that's moved nowhere. He's trying new approaches because the old chestnuts aren't working and aren't likely to work during the rest of his presidency absent external crises.

5. There are no major international oil companies. Every one of them is rebranding themselves as energy companies because they see that the end of the age of oil is at hand and they're preparing to survive and thrive in the new heterogeneous energy picture to come. The recent public reduction of Kuwaiti reserves is likely to be only the first in a series. OPEC rules encourage exaggerations of those reserves but if you pump like your fictitious reserves are real, you'll damage the field and extract less oil, net, than you would otherwise. With the Kuwaiti announcement and President Bush's SOTU speech, the big boys are quietly letting those who have ears to hear and eyes to see that we're hitting the end game. We're likely going to have a few rough years and then a graduated switchover. How many rough years depends on how fast new technologies can be rushed into production. The extra R&D money that President Bush is proposing is helpful for shrinking the rough patch.

This will lower gas prices
Many say we will see $3.50/gal this summer. If you factor in Iran, who knows how high it could go. Everyone knows America MUST get off the oil. After September 11, 2001 I expected our President to call on Americans to GET OFF THE OIL. I was expecting a speech like the one JFK gave that motivated us to reach for the moon. As you know, this never happened. Eventually I realized that the only way this is going to happen is for us to do it ourselves. To that end I created this idea and have been trying to make it a reality..

The EPA is offering a research grant opportunity that I believe is a perfect fit for this idea. I have sent an e-mail to a hand picked list of university professors who have experience with government research projects. I’m looking to form a research team to apply for the EPA grant, conduct a social-economic experiment and surveys to determine to what extent the American public will support it, project the economic potential of WPH, and identify logistical, social and political obstacles as well as opportunities.

All government grants are awarded based on merit of the proposed research. I believe WPH has merit but your help is needed to verify it. You can help by posting your feedback. Let the professors and the EPA know what you think about WPH. Do you think this idea is worth pursuing? We need to know if Americans will support a plan like this.

Do you have any ideas to improve the plan?

Share any and all of your thoughts.

Tell your friends and family about this Blog post and ask them to post their thoughts on WPH

Thank you


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