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.

Tomorrow’s vote is first about an immediate threat to our democracy.  This threat comes primarily from the domination of large, mostly multi-national, corporations who wish to lock in their dominance by using government to limit competition.  The US Supreme Court’s Citizens United decision accelerated this effort because it unleashed a flood of corporate cash, much of it provided in secret, into our political campaign system.

This multi-billion dollar effort is causing another, longer term problem:  We as a nation are not addressing our real needs and this means we are innocently taking massive and unnecessary risks.   What are those risks?

•  We are running larger deficits and debt than is necessary.  Yet we are being pandered to, again, with more tax cuts that are guaranteed to further increase deficits and debt.
•  We are much too dependent on fossil fuel energy.  Billions of people are climbing out of poverty worldwide and demanding a larger share of fossil fuel energy, which guarantees the price of these fuels will climb.  Yet we have no national program to install sustainable, clean energy systems which would insulate our country from the increasing cost of fossil fuels.   Importantly, this dependence threatens our national security as we are in danger of being in continual wars overseas protecting our fossil fuel sources.
• We are over using chemicals and hormones in our food industry.  This is not only degrading our environment but is also creating an epidemic of ill health outcomes, like diabetes, that are taxing our health care system and costing us hundreds of billions of dollars in unnecessary spending annually.
• Our weather is very likely to become increasingly more severe due to global warming.  Yet we have not begun national programs, such as those for sustainable energy or more robust infrastructures, to prepare for dealing with these probable weather challenges.
• Our financial system is lopsided, favoring very large banking conglomerates that are shielded from competition and the dangers of their risk taking.    We have, so far, continued to socialize their losses which has removed their caution to risk taking.
• Our tax structure too much favors the incomes of the wealthy over the incomes of a majority of Americans.  Privileged rates are applied to wealthy incomes from dividends, capital gains and carried interest.  The tax laws are shot full of tax avoidance schemes designed for the wealthy like unified charitable trusts, irrevocable trusts, offshore accounts and trusts and estate taxes that avoid capital gains taxes altogether.   Combined with broad based tax cuts, these schemes guarantee high deficits and debt and the underfunding of necessary government programs like social security, medicare and medicaid.
• Our regulatory structures are too weak.  From bank risk taking, to environmental abuse, to a medical system focused on the more profitable business of treating symptoms rather than creating cures, regulators all too often look the other way or become enablers of corporations only concerned with the most profitable activity irrespective of the activity’s bad outcomes for individuals and the nation.

Beezer here.  Unfortunately one of our two political parties, the Republican party, is ‘all in’ supporting the efforts of multi-nationals.  They enable all these bad outcomes.  They support unlimited corporate campaign spending that dominates our national discussions and hides the real risks we are taking.  They favor a tax system tilted heavily in favor wealthy incomes, which in turn aggravates income inequality and suppresses both job creation and income gains for the majority of working Americans.   They pander to our want of lower taxes while endangering our needs for a safer, healthier and more competitive economy.   This is the precipice we face in tomorrow’s national elections.  If Republicans win tomorrow, then our needs will never be addressed without encountering some massive disaster of epic scale.  It’s that important.  We need to regain our ability to self-govern. 

Mitt Romney is proposing a 20% across the board tax cut for American taxpayers.  And we all know Americans love tax cuts.  But the biggest, most positive tax cut in the nation’s history would be the one we’d all enjoy if we de-carbonized our nation.  And this tax cut would be permanent.

Robert F. Kennedy Jr., is one of the most successful venture capitalists in America, in any discipline.  He’s investing in clean, non carbon power.  For $3 trillion, or about what we spent on the Iraq War, Kennedy says we could basically supplant all the carbon power plants in America with clean solar, wind and geothermal power.  And once we’ve done that our power supply would be essentially free going forward.  We could tie all these new power sources together nationally by installing a smart power grid, the one we now have is a dumb one, for about what we spent in one year on the Iraq War.  Basically free and clean energy that doesn’t pollute our air and water and thus frees up all the billions we spend each year fighting, or trying to clean up, pollution.  Free domestic energy that cuts our trade deficit by more than half because we now have to import more than 8 billion barrels of foreign oil annually.  Here’s the video of JFK Jr., explaining all this before the Commonwealth Club in San Francisco.
 

Beezer here.  The reason we haven’t already started these types of projects is because the fossil fuel corporations control our national energy discussions.  They have spent literally billions of dollars funding their surrogates in Congress, and on K St. lobbyists.  They do this because clean energy is continuing to experience a technology revolution that is quickly reducing the cost to the point where, despite the billions of taxpayer dollars spent subsidizing fossil fuels annually, clean energy is becoming more competitive.  Without those subsidies, it would become very apparent to the average American that fossil energy is too expensive and not competitive with the cleaner, safer, healthier, sustainable energy power plants we could be building right now in size.  We really need to toss these vampires off our necks and get on with building a cleaner, healthier, safer and more competitive America.

Ever the iconoclast, Dean Baker over at the Center for Economic and Policy Research uses some data that shows consumers are on a tear right now, and that what’s really holding our economy back is our chronic trade deficit, much of which comes  from our need to import hundreds of billions of dollars in petroleum.

On the arithmetic front, the piece comes up with a story where consumption of durables is $267 billion below the long-term average, while consumption of non-durables are $127 billion below their long-term average. While it has consumption of services somewhat about the long-term average, the next effect is that weak consumption is a big drag on the economy and accounts for a large share of the shortfall. It tells us:

“Consumers are holding onto their wallets — a continuing burden for the weak economy.”

Wow, that isn’t what the Commerce Department is telling my spreadsheet. I get that the average share of consumption (all categories together) in GDP was 67.3 percent in the years from 1985 to 2005. I get that it was 70.8 percent in the most recent quarter. This means that consumption was 3.5 percent higher than its longer period average as a share of GDP. This means that consumers are not hanging onto their wallets at all. In fact, they are spending at very ambitious rate. (Boys and girls, you can check this one for yourself by going to the National Income and Product Accounts and clicking up Table 1.1.5.)

This is consistent with the data showing that consumption is higher than normal relative to disposable income. (The adjusted consumption line has to do with the treatment of the statistical discrepancy in the national income accounts.) This means that consumption is not holding back the economy, it is actually unusually high.

Source: Bureau of Economic Analysis.

The amount of excess consumption is even more than this comparison suggests, since one reason that consumption is high relative to GDP is that tax revenue is low relative to GDP (i.e. we are running large budget deficits). If the deficit starts to come down, then disposable income will fall relative to GDP, which means that consumption will fall relative to GDP, even if the saving rate stays constant.

The other error along these lines is that imports should be expected to rise relative to GDP as the economy moves back toward its potential. If GDP were to rise by 6 percent to bring it back in line with its potential then imports would rise by roughly 20 percent as much or 1.2 percentage points of GDP. This would make it more clear that the biggest factor that is out of line with our historical experience is the trade deficit. That would be even more clear if we took a longer period as the basis of comparison that was not so distorted by asset bubbles.

Of course given the Washington Post’s unabashed celebration of recent trade agreements its reporters are probably not allowed to call attention to such facts.

Beezer here.  I pass this article along because it might challenge our belief that household savings is the biggest drag on our economy.  Can households be spending this much AND saving too?  Or is the consumption figure really one of spending on petroleum, which is sucking money away from other productive enterprises?  If that is the case, then a push to boost our own resource use could mitigate that drag a lot.  Of course I would prefer we use sustainable energy rather than fossil energy, which imposes very expensive costs on society that never appear on those companies’ bottom lines because these costs happen after they’ve sold their product.  Which means we pay the costs in other ways, to other vendors, like health care providers who make money treating chronic problems like asthma.  Robert F. Kennedy gives a good explanation below as to why we might be a lot better off using alternative energy resources.

Not going into all the parts, but the Oil Drum blogsite has a new post with a series of observations about energy related events across the globe.  It’s a good snapshot.  One take away is that we’re probably going to have to put infrastructure in place to use our natural gas for transportation, at minimum.  Can Democrats and Republicans get together on this?  Probably not because Republicans are only about trimming New Deal and Great Society safety nets in order to satisfy their ideological goals of shrinking government and giving their masters, the already wealthy, even more tax breaks.

From an article at Yale’s environmental blogsite ‘e360′ , NRG CEO David Crane explains what he thinks is on the verge of happening to utilities across the United States.

David Crane, president and CEO of NRG Energy, is not your typical power company executive, as becomes clear when he calls climate change a “slow-moving catastrophe” and “the fundamental issue of our day.” As head of a Fortune 500 company that produces electricity for up to 20 million U.S. households, he is still neck-deep in hydrocarbons, with more than 90 percent of NRG’s electricity production coming from natural gas, coal, and oil. But the future, vows Crane, will look radically different.

NRG Energy

David Crane

In an interview with Yale Environment 360 senior editor Fen Montaigne, Crane said he believes the U.S. electricity-generating market is on the verge of a profound transformation, not unlike the era two decades ago when the antiquated world of land-line telephones and “Ma Bell” companies was about to give way to cell phones and mobile communications. The electricity future, says Crane, will be transformed by the widespread adoption of three innovations: solar panels on residential and commercial roofs, electric cars in garages, and truly “smart meters” that will seamlessly transfer power to and from homes, electric vehicles, and the grid.

Beezer here.  Don’t know if Crane is early, or even right, but his reasoning certainly appears sound, and as the CEO of one of the nation’s largest utilities one can’t say he doesn’t have real world experience backing up his opinions.   Later on in the article he breaks down the process he anticipates will happen.

e360: Can you explain your three-pronged approach to transforming the country’s electricity system.

Crane: Democratization of customer choice in our sector begins with two things. One is the electric car and the other is the solar panel on the roof. I think it actually starts with the electric car. You put the electric car in your garage and you really have a mini power plant because these batteries that drive electric cars are quite substantial pieces of equipment. The average car in the United States is sitting still about 22 hours a day. Those are hours where the car can either be accepting power from the grid or selling power through the grid in a phenomenon we refer to as V2G, vehicle-to-grid. That leads to the third leg of the trilogy, which is the smart meter, because between a smart meter in your house, combined with time and use pricing, you essentially want that electric car to be charging between midnight and four in the morning. And you want to have it available to basically drain itself a little between 2 and 6 o’clock in the afternoon. But someone has to tell it what’s going on with the grid at that point. And that’s what the smart meter does.

Right now around the country people are trying to introduce smart meters as just another information device. In our view, no one wants to pay for another information device, particularly when the information being given is about something that people don’t care about, which is their electricity use. So smart meters will only be accepted by the American

Smart meters will only be accepted by the American public when they do something of value.”

public when they do something of value. And the first thing that they’ll do of value is they will sense when it’s expensive to run electricity and they’ll turn appliances off around the house. But the next thing they’ll do, which is the most valuable thing that will actually put dollars in your pocketbook, is that when the smart meter recognizes that the wholesale system is getting tight and there is good pricing, it will actually sell into the grid from the car battery. Or if power from the grid is getting really expensive, the smart meter might just turn the house off from the grid and then run the key appliances in the house off the electric car in the garage.

Then you have the solar panels on the roof. If you tie in a rooftop solar panel with a smart meter, then it’s exactly analogous to the electric car battery. The smart meter could turn off the house from the grid at 3 in the afternoon and rely exclusively on the power that’s coming from the solar panels on the roof, saving the customer a lot of money on their bill from the grid. And if the person puts a big solar panel on their roof, they could sell power from that.

Beezer again.   Crane acknowledges that a smart government can help all this along, and he’s discouraged by the partisanship in Congress and elsewhere that’s not allowing that to happen.  Nevertheless he sees that transformation as inevitable even without government support–it will just take longer.   Oh well.