Energy

Before I head back to the “perfect storm” of quarter-end work, the processing of 7/1 business, and other “fun”, I can’t help but pass along the following quote:

We demand more energy and complain about high prices, but we restrict energy exploration and production. We embrace the promise of energy efficiency, but we are slow to make adjustments in our energy-intensive lifestyles.

That comes from an open letter that the AP reports has been sent to various leaders and political candidates by a group of “elder statesmen” including Henry Kissinger and Colin Powell, calling for something to actually be done about the emerging energy crunch, rather than the impotent energy-themed bickering currently taking place in political circles.

I like the statement I’ve quoted above.  The “energy problem” isn’t one that can be solved just by tracking down new sources of existing forms of energy, or developing new “alternative”  energy sources and infrastructure.  At some point, Americans will be obliged – by fiscal realities at least, if not by prudent foresight – to realize that the lifestyle some (many?) feel entitled to is unsustainable.

Political grandstanding isn’t going to fix the problem.  People resisting being inconvenienced while publicly wishing that others would change their behavior also isn’t going to change anything.

The answer is going to involve reaching a public consensus on what should be done, and then acting upon that consensus.  Part of what’s involved in that consensus will not please some groups, while other parts of that consensus will displease others.  But at least corrective action would be taken, which is appreciably better than the status quo of talking about the problem without making changes until those changes are forced upon us.

The article mentions that the open letter includes about a dozen recommendations of action that should be taken sooner rather than later.  Unfortunately, a quick bit of googling didn’t turn up an actual copy of the letter.  I’d be interested in seeing what those recommendations actually are.

Of course, my quick web-search did turn up a web forum where a couple of posters quickly alleged bias in the letter due to the political affiliations of the sponsoring group and some of the elder statesmen…and where others quickly responded with vehemently opposing political thoughts.

Typical.

Maybe I should dust off an old Thomas Jefferson quote:

I tremble for my country when I reflect that God is just.

I think having record-high fuel prices at a traditional vacation week has really focused the media attention on national energy policy (or the lack thereof).   Many of the interesting articles I

have encountered in the past few days have been energy-themed.   Consider:

WSJ.com’s Deal Journal:

[JP Morgan CEO Jamie Dimon] On oil, which recently hit a record $143 a barrel: We almost deserve $4 gas. We knew in 1974 that we had a serious issue but we don’t have the political fortitude to do anything about it. That’s the issue, not Russia.

New York Times article, “Asleep at the Spigot”:

Over the last 25 years, opportunities to head off the current crisis were ignored, missed or deliberately blocked, according to analysts, politicians and veterans of the oil and automobile industries. What’s more, for all the surprise at just how high oil prices have climbed, and fears for the future, this is one crisis we were warned about. Ever since the oil shortages of the 1970s, one report after another has cautioned against America’s oil addiction. […]

“Much of what we’re seeing today could have been prevented or ameliorated had we chosen to act differently,” says Pete V. Domenici, the ranking Republican member of the Senate Energy and Natural Resources Committee and a 36-year veteran of the Senate. “It was a bipartisan failure to act.”

CNN:

Sen. John Warner, R-Virginia, asked Energy Secretary Samuel Bodman to look into what speed limit would provide optimum gasoline efficiency given current technology. He said he wants to know if the administration might support efforts in Congress to require a lower speed limit.

(Haven’t we tried the national speed limit before?  And, wasn’t it so poorly enforced and blind to local circumstances as to foster an entire culture of disregarding traffic laws?  You’d think that improving enforcement of existing traffic laws and improving education on optimal speed:efficiency ratios would be more effective.)

Wall Street Journal on GM’s plans to bring a mini-car intended for foreign markets to the U.S. (subscriber link):

General Motors Corp. said it is giving a higher priority to deciding whether it will bring the next-generation Chevrolet Beat mini car — a vehicle it sells overseas — to the U.S. market in the 2012 timeframe.[…]

GM is conducting major surgery on the product plans it had set for the next decade, scrambling to react to falling demand for vehicles that consume a relatively large amount of gasoline. The next generation of GM mini cars, on which the Beat is based, is slated to debut in several global markets in coming years and should be capable of at least 40 miles per gallon.

And meanwhile, regarding the ethanol kool-aid, from The Guardian:

Biofuels have forced global food prices up by 75% - far more than previously estimated - according to a confidential World Bank report obtained by the Guardian. […]

The figure emphatically contradicts the US government’s claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

OK, now that the media…and presumably the American public… is aware of some of the issues of our addiction to petroleum, one wonders if political leaders and the public have the stomach to make some of the more difficult changes that will be called for.

This should be interesting to witness.

And now, I’ll go back to my weekend project of improving my “summer office” (the basement) for telecommuting.

I wrote earlier about the need to get the public involved in meaningful discussions on the direction of energy policy.  Well, it seems that Reuters carried a story a few days ago on British fears of where the U.K.’s and Europe’s policies seem to be headed:

First there were the thought police, then the surveillance society, now Britons fear the carbon cops are coming to ensure compliance with climate change legislation, a survey showed on Wednesday.

And with warnings of global catastrophe ringing in their ears some people fear that failure to cut personal carbon emissions will eventually result in enforced carbon behaviour re-education, the Energy Saving Trust said.

It said 41 percent of Britons think the country will need its own Carbon Police Force by mid-century and one quarter believe repeat offenders will have to go into carbon rehab and take carbon addiction classes.

You’d think that in a country that has 1 police surveillance camera per 14 inhabitants, the citizens would display a sheep-like trust in the protection of the State.   Maybe that’s not actually the case in Britain.

An article at CNN reminds me just how annoyed I can get over the use of polls to mislead or provide incomplete conclusions.

The article deals with Americans’ attitudes towards energy:

According to a Consumer Reports Auto Pulse Survey released Thursday, 77% of consumers said the root of high gas prices lies with the government’s failure to implement an effective energy policy. That compares with 75% of drivers who blamed oil companies, 70% who said foreign oil producers were at fault and 68% who thought the Middle East conflict was a leading cause for record fuel costs.[…]

90% of those surveyed support an increase in alternative energy development, and 81% want the U.S. government to allow more drilling on and off our nation’s shores. Americans also favored conservation measures, with 83% saying they supported tax incentives for alternate transportation.

The story seems innocuous enough, right?

However, there are a few additional questions I’d be hearing the polling results to:

• Would you support gas prices of $6 or $7/gallon if that was required to make the mass-marketing of alternative fuel and energy sources economically feasible?
   
• Would you accept a regulatory requirement to own only one car, to carpool or use mass transit, or to set thermostats at/above 78° F in the summer, and at/below 64° F in the winter, if experts deemed such measures necessary to extend the availability of our energy resources?
   
• Would you support new energy drilling (or a new refinery, or a new nuclear power plant) within 10 miles of your home, or 4 miles off your favorite beach, if it were required to maintain energy supplies near their current levels?

I suspect that responses to those questions would be somewhat different than the poll results summarized above.

I think it’s wonderful that more Americans have (finally) started thinking about their energy consumption and are toying around with conservation…and how the public debate is starting to consider the longer-term picture when it comes to energy.

However, so far, the main focus seems to have been largely abstract, or focused on the current pain in the pocketbook.  I hope that a few more folks start thinking about the practical concerns over the long-term.

The folks over at RedState have been having a grand old time Dem-bashing through use of this graphic from the House Minority Whip’s office:

Now, I think the GOP does have a point by pointing out a lack of action being proposed by the congressional majority which would have a material impact on the price of gas at the pumps.

However, the GOP, I think, is more interested in playing politics than in seriously advocating real action, or real remedies (if there were any).

For example, I note that all of the high-value options in the GOP agenda slide above are not ones that will deliver overnight.  They all require exploration and investment, and presumably will require years before supply is impacted.

However, more seriously, the tapping of nontraditional domestic oil reserves seems to be the only solution being advocated by the GOP and its minions through the above slide.  Yes, it’s probably reasonable to assume that an optimal, long-term strategy will require adopting many, if not most, of the items highlighted in the graphic above.  But they will/should be only some of the tactics pursued.

If Republican politicians were serious about at least stabilizing, if not reducing, Americans’ energy costs over the short-term, offshore drilling and tapping oil shale would be accompanied by more aggressive pushes for other, more sustainable technology.  

Where are the calls for nuclear power plants?  What about accelerating the viability of switchgrass or algae-based biofuel?   How come there are no calls for financing assistance for lower-income homeowners to update home heating systems…especially those which are oil-based?

I’m not a fan of either major party, and I am really looking forward to the change in administrations in January.  However, if the GOP was seriously looking to stake a claim on the high ground on the energy issue, the party would push a well-rounded energy program.  Oil can be a part of it, but it should be presented as only one part of  a larger plan, lest the public dismiss the plan as being the utterance of the old oil lobby, seeking to protect its franchise.

It’s a shame that this election cycle is probably headed towards an outcome which will be interpreted by pols and pundits alike as “Americans’  rejection of Republican policies”…when a correct interpretation should be “Americans’ exhaustion with political gaming”.

Q&O passed along an interesting tidbit from a recent Rasmussen survey:

A Rasmussen Reports national telephone survey found that 29% of voters favor nationalizing the oil industry. Just 47% are opposed and 24% are not sure.

Death of the free market predicted.  Film at 11.

Seriously, 29% of Americans want to nationalize the oil industry?   29% of Americans want the oil industry to be run by the same folks who bring you the Department of Motor Vehicles, Social Security, and Homeland Security?

Are we that dumb or blind?!

Folks, the free market is a good thing.  In theory, a true free market should lead to maximum efficiency, minimum wastage, and generally optimal conditions for everyone.

Yes, the government has a place, providing necessary services, maintaining the level playing field,  ensuring that participants are playing fair, and perhaps stimulating movement to “more optimal” solutions when the market (through structural inefficiencies or incomplete/inaccurate information) gets stuck on a “false optimal” peak in the market plane.

I can only imagine that Big Oil being moved into the federal bureaucracy would lead to inefficiencies and corruption that would only exacerbate existing problems.

If We The People want to collectively own Big Oil, we already have the right to do so, by buying shares, either as individuals or as pooled entities, on the open market.

Isn’t such nationalization at the core of our official beefs with Cuba and Venezuela?

In a couple of different venues, I’ve seen a desire expressed that “something” be done to rein in oil speculation, which is believed by some to be playing a non trivial role (in addition to demand/supply issues, and the weak dollar) in the high price of oil.

I’ll admit, there is something appealing to the notion of restricting participation in the oil futures markets to those who can actually take delivery of the product.

Unfortunately, there are two big problems with that desire.

First, we have a little matter of the market being international.  Getting all the global commodities exchanges to cooperate is likely to be almost as challenging as herding cats.

Second…well, I’ll just point to an article in Friday’s Wall Street Journal (subscriber link):

While Nymex operates as a U.S.-regulated market, ICE Europe operates as a foreign exchange with trading terminals in the U.S. and is exempt from U.S. rules on reporting and speculation limits.

One person close to the matter was unsure if an actual agreement on setting levels had been set. Another said that even if the FSA and ICE Europe had agreed to the setting of limits on the front-month contracts, the FSA still isn’t sure who is doing the trading.

It’s kind of hard to regulate the speculators if you don’t know who they are, don’tcha think?

I’ve commented previously about a lack of boating sounds coming from a nearby reservoir, as an ominous sign of just how expensive gas has become.  (And, FWIW, I did hear a little bit of boat noise…for a little while…on Sunday and Monday.)

It seems that the price of marine fuel has become worthy of an article in Sunday’s Courant:

But there’s a major cost issue during this year of ascending gasoline prices and growing concern about global oil supplies. Marine gas generally sells at 50 to 75 cents a gallon over auto fuel, and last week, as the Memorial Day weekend approached, fuel was already selling at $4.66 a gallon on the East Lyme docks. By the height of the power boating season in July, the Pratts and their marina friends expect to pay $5 or more a gallon for fuel.

Nobody’s pretending that 33-footers like the Wenweken III — there are dozens of them along the neighboring slips — are anything but gas-aholics. The Pratts’ boat, powered by twin, 250-horsepower Yamaha outboards, burns 30 gallons an hour — and that’s just, as Ken says, “loafing along at 30 mph.” Their fuel tab this summer will come to $150 an hour, but the Pratts have few worries about running low. The Wenweken III’s tanks can hold 350 gallons.

“We’re looking this summer at our first $1,700 fill-up, but you have to remember that it’s just as much fun sitting here at the marina enjoying the boat and our friends,” said Wendy Pratt. “When I saw these fuel prices beginning to climb this spring, I said to Ken, ‘Honey, no more running over to Greenport for lunch, OK?’ We’ll just use our plastic spatula [credit card] for takeout food right here on the dock.”

Ugh; a $1700 tank of gas?

Meanwhile, just to add to that happy news — when I went out last night to get enough gas to tide me over until my next trip to the cheap gas stations on the Berlin Turnpike, I happened to notice the neighborhood price for diesel was up to $4.899/gallon.

The high price of diesel troubles me, since so many homes around here are heated by oil.  Maybe it’s time to get over my pyrophobia, and start getting the fireplace ready for next winter.

Friday, I was very disturbed to encounter gas at a neighborhood station priced at $4.259/gallon.  It was only a couple of weeks ago that we were bracing for $4/gallon, after all.

However, today on a border-hunting mailing list, a link was posted to a photo gallery of one member’s recent trip to Baarle.  Included in the gallery is this picture:

Seeing gas priced at 1.513 is refreshing (other than that anomalous 3/10ths of a cent)…until you consider that price is stated as Euros per liter.

Doing the conversions…folks, that there is some $9/gallon gas.

Maybe my local $4.259 doesn’t seem quite as painful now.

This article at Bloomberg caught my eye:

China is pushing the price of diesel fuel higher by stockpiling it ahead of both the Summer Olympics and the need to rebuild Sichuan province after last week’s earthquake, the Wall Street Journal reported.

The country is hoarding the fuel in the event that its power grid fails and it needs to use backup generators, the Journal said.

Now, I don’t think anyone could fault a country for stepping up fuel acquisition in the wake of a disaster.  However, the article makes it sound like Chinese authorities are uncertain of their power grid’s ability to support the demands that the Olympics will make on local power resources.

Shouldn’t availability of power, preferably without need of falling back to more-polluting, backup sources, be a key criterion in site selection?

Also, aren’t the Olympics supposed to be a celebration of peaceful competition and cooperation, rather than a drag on the rest of the world?