Five years ago I started writing this blog site because I figured energy dependence on fossil fuels would destroy America.  Nothing I’ve seen since then has changed my attitude in this regard, although initially I didn’t figure in the problems associated with climate change, nor did I fully appreciate the national security implications identified by the Joint Chiefs of Staff in 2012.  The Joint Chiefs basically said relying on fossil fuels is the greatest threat to our national security, and they also said ‘climate change’ essentially changes everything.

And national politics, particularly those surrounding our first President of color, Barack Obama, overwhelmed my desire to explore the energy issues.

As it turns out, now that President Obama has been re-elected, the energy issues are resurfacing as important despite Republican obsessions over dismantling the social safety nets, including Social Security and Medicare that have been major distractions.

Most recently the President has proposed using $2 billion in gas and oil lease revenues to fund basic research and development to find ways to replace hydrocarbons as our primary transportation fuel.   In the larger scheme of things energy, according to a New York Times article, the President is striving to “to build as broad an energy portfolio as possible for the country, with expanded oil and gas development; favorable tax treatment for nonpolluting sources like wind, solar and geothermal energy; loan guarantees for new nuclear plants; increased emphasis on energy efficiency; and research into long-term alternatives to fossil fuels.”

OK fine.  I don’t think nuclear is going anywhere anytime soon, especially since the Japanese tsunami wiped out the Fukushima nuclear power plant in 2011.  And clean coal is a non starter too, although Texas has begun a $2.5 billion ‘test’ project for sequestering carbon dioxide gas from the use of coal for energy by burying it underground.    In both cases, the ideas are non-economic.  They are the most expensive ideas in the portfolio and they need the government to insure unintended consequences because the private markets simply won’t.

The simple fact is that the rest of the world, to the degree it can afford to right now, is moving away from fossil fuel dependence as  fast as it can.   From the Rocky Mountain Institute book “Reinventing Fire,” in 2010 four German states, totaling 10 million people, relied on windpower for 43-52% of their annual electricity needs.  Denmark gets on average 26% of its energy from windpower.  The Extramadura region of Spain gets 25% of its power from solar, while the entire country has 16% of its energy supplied  by windpower.  In the US, the Minnkota Power Cooperative supplied 38% of its retail sales from wind.  Texas, yes that Texas, generated 8% of its electricity from wind in 2010, making it sixth in the world among countries, after China, the entire rest of the US, Germany, Spain and India.

While a lot of public discussion has involved solar, wind, hydro, thermal–the clean sustainable energy sources–the reality is that innovations that create efficiencies will drive most of the movement away from using fossil fuels.   We’ll simply be using less energy to do more work by being efficient, not necessarily by building new power plants, whether they are sustainable and clean or not.  Carbon fiber plane and auto frames will drop airplane and ground transportation weights by as much as 35%, and would raise car MPG ratings well into the 80MPG or greater ranges just by weight reduction.  The newest airplanes are using 20% less fuel because they contain carbon fiber frames instead of steel or aluminum.  This trend is still in its infancy, but will no doubt reduce annual transportation costs by billions of dollars within the next 10 years.

A national direct current grid, capable of transporting energy much longer distances more efficiently, would produce a national marketplace where producers of sustainable and clean energy supplies, most of which are situated in rural areas, can competitively price their energy into urban markets where most energy is used.   And a movement towards energy ‘islands’ where neighborhoods or city districts contain smaller energy plants that can supply their customers even if the larger grid cannot for some reason, can raise energy security by several magnitudes.   These types of modernizations work no matter what the energy source, but they definitely do make sustainable energy cheaper upfront where the initial resistance lies, because once built sustainable energy plants are far less expensive than fossil fueled plants.

The real impediment to all this is political.  Fossil fuel incumbents are some of the most profitable and therefore politically powerful, corporations in the world.  So far they’ve been able to successfully mute the publicity surrounding alternative energy sources, to divert everyone’s attention away from the real, substantive progress that’s been already made in sustainable sources and in energy efficiencies.  Republicans will, no doubt, fight the President’s efforts to earmark $2 billion in gas and oil revenues (that’s over 10 years, so it’s very modest in the scheme of things) to support energy research and development.

But times are changing.  Inevitably the price of gas and diesel fuels, and oil for heating, will rise simply because the rest of the planet is growing and as a result demanding larger and larger shares of these energy sources.  These developing countries understand that the US model of fossil fuel dependent economic growth can no longer be duplicated, so they are aggressively building sustainable supplies.  Nevertheless, in the meantime they will use fossil fuels too, even if they think fossil is more of a transition fuel (which it will be shown to be) rather than the bedrock fuel of their economies.

It’s a global race, in other words, to see who will be the most efficient user of energy.   As the advertisement says, ‘the best way to save on gas is to buy gas less often.’   So it goes.  It’s not a matter of using less energy, because energy use is going to climb as the world demand for it climbs, it’s a matter of getting more work done per unit of energy.

Haven’t had the time to write posts about what I’ve been concentrating on recently:  Our national energy system and what we need to change as quickly as possible.

That said, the political scene out of Washington DC hasn’t really changed all that much.  Republicans, in their long running soap opera aimed at fooling the American voter Republicans still represent them, are now constructing the latest episode in that opera:  “Fire a million employees or we’ll shoot the American economy in the head,” otherwise knows as sequestration.  Sequestration is the child of another GOP soap opera installment called “If you don’t give us what we want we won’t raise the debt ceiling and we’ll shoot the economy in the head.”   In case you haven’t noticed all of these opera segments  end with the threat “we’ll shoot the economy in the head.”

Sequestration came about as a result of the first debt ceiling threat.  It refers to the $1.4 trillion in government spending the Democrats gave to Republicans as a sop to keep Republicans from ‘shooting the economy in the head,” by refusing the raise the debt ceiling in order to pay bills Congress already agreed to pay.    Well, those sequestration cuts come due March 1 and now Republicans are threatening, once again, “to shoot the economy in the head” by allowing all the sequestration cuts to be implemented, as agreed upon, even though most Senate Republicans, and a near majority of House Republicans too, not to mention the Democrats and the President, think to do so is insane.

Sequestration will result in 1 million job losses in 2013 (Congressional Budget Office estimate) and no one believes the private economy will step up to replace those lost jobs any time soon.  So that’s how Republicans will “shoot the economy in the head,” this time.  In other words nothing has changed.  The Republicans really, really do want to “shoot the economy in the head.”  And that’s what a good portion of what passes for leadership in the not-so-modern Republican Party intend to do.

Some Republicans formerly known as Tea Party types (the shoot the economy in the head and ask questions later crew) are showing a little bit of anxiety in light of the shellacking they took at the ballot box in 2012.  House majority leader Eric Cantor, of Virginia (a state President Obama won in 2008 and in 2012), made a speech recently that could have passed as coming from a progressive Democrat.  Most notably he directly endorsed the ‘Dream Act’ for the children of illegal immigrants that the President essentially enforced via executive order.  And he described families of illegal immigrants (estimated at 11 million people) as ‘part of our national fabric.’   Nothing about a legal pathway to citizenship for these parts of our ‘national fabric,’ of course, in his speech.  One must not forget that this is a soap opera.  It’s fictional as far as the Republican Party is concerned.  This is hopeful, marketing ‘spin’ and nothing more.   The party that wanted all 11 million to ‘self deport’ as part of its official party platform in 2012 hasn’t changed that platform.

There’s no real mention of ‘jobs’ anywhere in Congress, although the White House keeps harping on that as an important policy.  So that’s not changed.  The White House puts up some legislation that’s far too small to have a great enough jobs impact, and Republicans refuse to pass it anyway.

Energy policy is stealth-like and not much mentioned.  Republicans, who represent oil and coal interests, keep trying to keep oil and coal subsidies and to eliminate subsidies to competing sustainable energy industries.  So far it’s a stalemate.  Both are keeping their subsidies.  Innovation favors sustainable, where technology improvements are cascading, bringing down costs annually.  Meanwhile basic oil and coal industries haven’t had a new technology in over a century.  Natural gas has had the development of new ‘fracking’ technology which frees up heretofore unreachable gas deposits, but true to form, Congress has done nothing to accelerate the increased use of natural gas.

Republicans still claim to be the defenders of America’s bill paying tradition, but the only technique they’ve actually offered is to ‘shoot the economy in the head.’  Republicans won’t raise sufficient revenues to help pay the bills and they won’t negotiate spending cuts unless Democrats abandon their loyalty to social contracts like Social Security and Medicare:  Ideas that have been roundly rejected by voters several times.   By wide margins.

So while the nation keeps struggling, it is left to its own devices because Republicans insist on trying to impose on American their wildly unpopular, and unnecessary as well, policies.

The National Resource Defense Council (NRDC) has published an innovative report that points out that using existing energy more efficiently has the greatest impact at the least cost.  Efficiency is so powerful a force the NRDC claims that even coal fired power plants can be kept on line, in many cases.

From the report:

An innovative feature of the proposal is the inclusion of
energy efficiency. State-regulated energy efficiency programs
could earn credits for avoided power generation, and avoided
pollution. Generators could purchase and use those credits
towards their emissions compliance obligations, effectively
lowering their calculated average emissions rate. Energy
efficiency is one of the lowest cost energy resources and
emission reduction options. States could use this provision
to slash emissions without costly and lengthy power plant
retrofits or new construction, reducing the overall cost of
the regulations……

Improving energy efficiency also cuts costs to consumers
and businesses. Switching to more efficient light bulbs,
adding weather-stripping or insulation in buildings, or
installing more efficient appliances and equipment, for
example, can save a typical household more than $700
per year—about one-third of the $2,200 average annual
utility bill….

The results from the model show that the proposed approach
would begin to modernize and clean up America’s electricity
sector while modestly reducing the nation’s electricity bill.
This is because energy efficiency programs adopted in
response to the incentives created by the approach would
cause overall demand to decline by 4 percent, rather

than increase by 7 percent. Meanwhile, coal-fired generation
would drop 21 percent from 2012 to 2020 instead of
increasing by 5 percent without the proposed carbon
standard. Natural gas generation would rise by 14 percent,
while renewables rise by about 30 percent (assuming no new
state or federal policies to expedite an increase in market
share for renewables)…

Investments in energy efficiency and demand response
are the lowest cost compliance pathway—much cheaper
than building new power plants or installing pollution
control equipment—so including this flexibility significantly
reduces overall costs. Energy efficiency consistently delivers
over three dollars in savings for every dollar invested,
which is one of the many reasons utilities have scaled up
annual investment from $2.7 billion in 2007 to nearly $7
billion in 2011, with a corresponding increase in energy
savings. See Figure 3: U.S. Electric Efficiency Program
Investments, 2007-2011. Efficiency investments reduce the
need to build additional power plants and infrastructure,
reduce wholesale power prices, and deliver significant bill
savings to individuals and businesses. Because substantial
reductions in CO2 can be achieved through energy efficiency
without building many new power plants or installing lots
of expensive pollution control equipment, the total costs of
compliance would be low—netting out at $4 billion in 2020.

Beezer here.  The report shows that enforcing the EPA clean air act need not be expensive.  It also says the program can be done without retiring coal plants and building brand new natural gas fired plants.  Basically the NRDC program is driven by the most efficient, least cost, techniques.  And  that technique is where efficiences come to the fore–irrespective of what fossil fuel is used.  The program provides a channel to substantial carbon dioxide reductions that doesn’t require, at least not initially, expensive replacement of coal fired power plants to gas fired ones.  The channel also allows for increased use of advanced systems like wind, solar and geothermal.

President Obama has put his weight behind the electric battery industry, figuring they’re critical to future productivity in many areas, not the least of which is in transportation.  There are skeptics, of course.  But that group may be dwindling fast as innovation looks to be gaining steam in this industry.

A recent example is a new company enviasystems.  They claim their batteries would power a $20,000 price tag car 300 miles between charges.  GM is already investing in their technology.

Don’t forget that electric vehicles can ‘gas up’ on the grid and won’t need much in the way of gasoline station infrastructure.  Proponents of using our newfound abundance in natural gas for transportation shouldn’t worry about this simply because more and more grid power is coming from natural gas fueled power plants.   Either way nat gas would be powering transportation.

Unfortunately, the enviasystems website points out the research is in the US, but manufacturing is in China.   The President should be making sweet deals here to grow manufacturing jobs here, not there.

Beezer here.  As for costs, they’re coming down.  One firm (I lost the link by I think it is McKinsey) predicts a 70% drop in prices over the next five years.  If this is accurate, and if enviasystems isn’t just blowing smoke, this is game changer stuff.

Technology is unleashing a flood of previously unavailable oil and gas deposits in North America.  An article in the New York Times suggests if the trends continue what was unthinkable four years ago, that the US would become a net exporter of oil and gas, could become reality.

But that is not at all how things are turning out. Technology made the difference. The natural gas market has been transformed by the rapid expansion of shale gas production. A dozen years ago, shale gas amounted to only about 2 percent of United States production. Today, it is 37 percent and rising. Natural gas is in such ample supply that its price has tanked. This unanticipated abundance has ignited a new political argument about liquefied natural gas — not about how much the United States will import but rather how much it should export.

The oil story is also being rewritten. Net petroleum imports have fallen from 60 percent of total consumption in 2005 to 42 percent today. Part of the reason is on the demand side. The improving gasoline efficiency of cars will eventually reduce oil demand by at least a couple of million barrels per day.

The other part is the supply side — the turnaround in United States oil production, which has risen 25 percent since 2008. It could increase by 600,000 barrels per day this year. The biggest part of the increase is coming from what has become the “new thing” in energy — tight oil. That is the term for oil produced from tight rock formations with the same technology used to produce shale gas.

Beezer here.  I’m still somewhat skeptical, but there’s no question the sheer volume of drilling–for both oil and gas–has exploded the past four years.  Reducing the current account deficit by reducing the energy import bill would be a tremendous boost to the economy.  The price for all this newfound oil and gas isn’t likely to much change the trajectory of increasing energy prices simply because the global demand for energy is growing exponentially.   China, for one example, is now the number one petrol customer of Saudia Arabia, not the US.

Beezer addendum:  However, this guy says ‘not so fast,’ arguing the financials don’t match the predictions above.

Posted by: Bob_in_MA  at June 10, 2012 07:07 AM

I am sorry to spoil the party but the math simply does not work.  Natural gas supplies are very high right now because shale producers have to keep producing.  If they stop many of the companies have to write down the lease values and would go into bankruptcy.  Obviously that is something that the producer management groups do not wish to have happen and are adding more and more debt even as the real production data is showing that EURs are too high and indicating that shale gas is not economic at under $7.50 even in the core areas of the good formations.

The solution may seen to be an increase in price but that kills the argument above.  And there is no way to take a very inefficient process like tight gas production in shale formations and try to develop an export market.  Once the costs of liquefaction are added the process is not competitive with alternatives.

A fifth column is a clandestine group of people who undermine a larger group, such as a nation, from within.  If the Republicans aren’t a true fifth column they’re doing a very good job of undermining America’s economic future nevertheless.

Take, for example, our energy policies.  The US Senate, in a procedural vote unique to the Senate that requires 60 votes to do just about anything, failed to gain the 60 vote majority needed to eliminate billions of annual subsidies to Big Oil.  Fifty one Senators voted to eliminate the subsidies, a majority, but only two Republicans voted with the majority.  This is ridiculous.  Big Oil needs subsidies like we need another hole in our heads.

From an article in the New York Times:

Despite pleading by Mr. Obama, the Senate on Thursday could not produce the 60 votes necessary to pass a bill eliminating $2.5 billion a year of these subsidies. This is a minuscule amount for an industry whose top three companies in the United States alone earned more than $80 billion in profits last year. Nevertheless, in the days leading up to the vote, the American Petroleum Institute spent several million dollars on an ad campaign calling the bill “another bad idea from Washington — higher taxes that could lead to higher prices.”

If you want a snapshot of what’s really wrong with our political system, the article points it out:

In the last year, the industry spent more than $146 million lobbying Congress. In Thursday’s vote, senators who voted to preserve the tax breaks received more than four times as much as those who voted against.

Apparently Big Oil is making good use of its taxpayer subsidies.  Nothing like funding a huge propaganda machine that can gear up on a moment’s notice to tell the American public what’s good for them.

Money has always talked in Congress. Now industry allies are aiming at voters. The American Energy Alliance, a Washington-based group that does not disclose its financial sources, on Thursday began an ad campaign in eight states with competitive Congressional races.

Voters in Michigan, Virginia, Florida, Ohio, Iowa, Nevada, New Mexico and Colorado will hear a 30-second spot peddling the industry’s misleading arguments against the Obama administration’s energy policies — including the fiction that those policies have led to higher gas prices: “Since Obama became president,” it says in part, “gas prices have nearly doubled. Obama opposed exploring for energy in Alaska. He gave millions of dollars to Solyndra, which then went bankrupt. And he blocked the Keystone pipeline, so we will all pay more at the pump.”

Four sentences, four misrepresentations. Gas prices, tied to the world market, would have gone up no matter who was president. Mr. Obama has not ruled out further leasing in Alaskan waters. Solyndra, a solar panel maker, is the only big failure in a broader program aimed at encouraging nascent energy technologies. The Keystone XL oil pipeline has nothing to do with gas prices now and, even if built, would have only a marginal effect.

All this comes as President Obama, working with countries around the world, ratchets up sanctions against Iran in a diplomatic effort to get that country to open up its nuclear power program to inspection.  Among the efforts is Obama’s influence to increase production in petroleum around the world while cutting Iran’s production out of the system.  The fact is, it’s working.   Another New York Times news article explains the effort and its risks.

Beezer here.  Face it folks, we’re going to be bought and sold as long as we continue to swallow this swill.  Big oil is once again successfully protecting its subsidies and fighting anything the government might do to encourage competition from nascent industries like solar, wind, geothermal, conservation etc. etc.  Even mature industries that could compete right now, such as natural gas, can’t get enough Republican votes to push pro-gas transportation now stalled in the House.