Oil Dependence and the Energy Crisis
October 23, 2008 by Will Marre
Oil. Oil. Oil. According to Oil Industry Profit Review 2007, “in 2007 the oil industry recorded revenues of approximately $1.9 trillion, of which 78% was accounted for by the five major integrated oil companies. Profits for the industry totaled over $155 billion, 75% of which were earned by the five major oil companies, with the largest, ExxonMobil, earning over 25% of the total profit.” Isn’t it outrageous that they’re making billions – record profits – while our monthly gasoline bill has doubled? You’ll be comforted to know that a spokesman for the American Petroleum Institute has stated that the oil companies have a fiduciary responsibility to make as much money as possible. And they take that responsibility very seriously. Nearly five hundred billion oil soaked profit dollars over the past five years. Wow, I feel better already.
Why are we dependent on foreign oil when we had a major energy crisis in 1973? Why does our economy still run on oil? How could we allow ourselves to be so dependent on Middle Eastern oil when we have to worry about who is running those countries?
Because there is money to be made. Our continued dependence on fossil fuel is the single greatest leadership failure of the past three decades. Almost no progress has been made in our country. And yet, wind energy supplies nearly a quarter of many European countries’ energy and within a decade will supply half. There is enough wind blowing in Texas and South Dakota to supply all U.S. energy needs at a current cost of 4 cents per Kilowatt-hour.
Why don’t we change? Are we really afraid the short-term costs of change are greater than the long-term benefits of fossil fuel free renewable energy? Is our current stumbling and bumbling really the best we can do?
How can such leadership blunders happen? Are we really too stupid to see that a reliance on oil and building bad cars is going to hurt all of us? No. Corporate and government leaders are smart people. But we can never underestimate the capacity of smart people to act stupidly if money is to be made.
Who’s really crazy? We are. We created this poison and continue to drink it. We all know the answer and have for a long time. Some of us are taking matters into our own hands. A friend of mine, just a regular guy with a small chemical business, just started Pirate Oil. It is a bio-fuels company supplied with used vegetable oil by In-and-Out Burger and Taco Bell. It gives a whole new meaning to “trans-fats.” He already has contacts with local truck fleets for thousands of gallons a week.
But we need more than just wringing oil out of french fries to solve our problems. We need a full-tilt, no-holds barred national commitment to convert our civilization to renewable energy. Our current effort is a joke. Small window dressing. All we really have are PR announcements and pleas for conservation. In reality, we have done nothing in decades. It is time for bold, big action.
So what do the presidential candidates propose? Here is a brief overview of Obama’s plan.
- Enact a windfall tax on Big Oil, and use money to provide an Energy Rebate to Americans
- Get 1 million plug-in hybrids on the road by 2015, and provide a tax credit for buying these cars
- Ensure 25% of our energy comes from clean, renewable sources by 2025
- Implement cap programs aimed at reducing greenhouse emissions 80% by 2050
Here is a brief overview of McCain’s energy plan.
- Expand domestic oil and natural gas exploration and production
- Focus on wholesale reform of the transportation sector, and enforce current CAFE standards
- Expand “clean coal” programs, and build 45 new nuclear power plants by 2030
- Implement programs aimed at reducing greenhouse emissions by 66% by 2050
So what do you think? Is it enough? Can it be implemented? The imperative for this commitment is beyond question. Anyone with children knows this. Of course there are a million “hows” to be answered. But the “what,” the conversion of our civilization from bad energy to good, is an outrageous emergency. The only thing at stake is everything we value.
What’s the Greatest Thing We Can Do? Yes, we must conserve, but also we must make noise. We must demand our leaders do something real, do something big. Now. It’s time to end the energy crisis.
Great Post, timely and of great importance. I have posted the link to it over on the Pickens Plan site.
There is a great book called Earth The Sequel: The Race To Reinvent Energy And Stop Global Warming, by Fred Krupp and Miriam Horn which details many of the incredible inovations that are occuring in this field. After reading that book I am completely convinced that the technologies we need are here. Unfortunately they suffer from an ironic catch 22. They are not widely utilized because they can’t quite compete with the market in terms of price. They can’t compete with the market in terms of price because they can’t reach the market in any kind of meaningful way.
To begin with, the energy grid, and fuel distribution chain need to be updated to interface and market these technologies, and people need to be provided with incentives to use them. This will make them competitive and the price for these technologies will then begin to fall naturaly, and will likely provide a more economic source of energy once prices have normalized.
As a result:
- we will keep over 700 Billion dollars a year from leaving the country
- Jobs will be created at home
- Our dependence on oil will not pose a risk to national security or influence our foreign policy decisions
- And we could potentialy wrest control away from the oil conglomerates
Off course the incentives will need to be paid for. The easiest way to do that would probably be to impose a fee on low milage vehicles, and excessive energy use (all of which should go to paying for incentives, and not to government coffers). In this way we discourage detrimental use of fuel and energy while encouraging wise use.
“Why are we dependent on foreign oil when we had a major energy crisis in 1973″? I worked for natural gas utilities in the Northeast from ’71 to ’84. It is amazing to me that here we sit, some 35 years later, still talking about alternative energy and conservation.
The energy crisis to which you refer was not a crisis of oil production shortage, so much as a delivery issue as a result of the Arab oil embargo following the Arab Israeli war.
In response to rising prices and long lines at the pump (people waited all day to get a few gallons), the National Energy Act was passed in 1978. Included were requirements for conservation (conservation act) and displacement of oil usage by alternative sources.
Believe it or not, wind, solar, fuel cell, geothermal, and cogeneration technologies became popular solutions. I remember full well discussions of CNG (compressed natural gas) vehicles as being the next great answer to gasoline. Yup, the very same idea being promoted today by such notables as T. Boone Pickens. Oh, some vehicles (mainly fleets, municipal vehicles and buses were equipped with CNG. But after 35 years of cheap gasoline, very little was done. It only took 10 years to get to the moon. By now, gasoline should have become obsolete.
I marvel that it took 35 years before a passenger car became available (this year Honda civic came out with a CNG vehicle). It still isn’t “economically viable” since it requires the installation of a delivery pump at your home (around $3,000 premium).
LNG (Liquefied Natural Gas) also became a promising technology for increasing delivery efficiency. If memory serves me right, if you cool natural gas enough (-260F) you can liquefy it thus increasing storage/shipping volume by 600x.
There were only a few ports in the US that were approved for such deliveries (Boston, Baltimore, and LA, I believe).
I toured a new LNG facility in Staten Island, NY built to withstand a crash of a 747 with walls 9 feet thick made of pre-stressed concrete and steel. Due to an explosion elsewhere in Staten Island however (a welder working on an empty LNG tank ignited gas that had permeated the structure itself) that facility never did hold one therm of gas. It stands there today still, empty, a monument to fear.
As for being “too stupid”, well yes, we as a nation are. Somehow, in a million ways, short term thinking has taken over. Instant gratification overtook saving, investment, patience.
We call it progress when the US Mail (“snail mail” I think it’s called now) was replaced by overnight mail (thanks to Fedex), which wasn’t enough either. We then had the early “fax” cylinders that looked more like Edison’s phonograph than the sleek machines today. (It took half an hour to fax one page). That wasn’t fast enough either being replaced by email, first offered by third party vendors like Fedex. With the internet, we now can receive documents instantly, so it can sit in a computer for days, before someone can get to it or delete it. Reminds me of the army…hurry up and wait. People today complain of literally hundreds of emails daily. Progress, huh??
But I digress. I managed conservation programs mandated by the 1978 ACT. The Federal Law required each state to enact a conservation plan to reduce oil and energy usage. Each state chose Utilities as the delivery system for the various programs, since they were regulated by the state. Millions and billions were spent to measure energy usage via “energy audits” – the idea being that smart Americans would actually “DO” something to save energy once the audit showed them how much was being used and how much could be saved. All that information, all that effort, all that money, accomplished little. Oh, and by the way, the costs of these programs were recoverable in rate increases. So, utilities, in the ultimate irony, were being reimbursed for their efforts to have their customers use LESS of their product. Huh???
Finally, as to “Why don’t we change?”. In working as a consultant with owners of underperforming businesses, I have observed that UNLESS the pain of today is greater than their fear of change, they will never really change.
I really believed that gas would hit $5 by now, but the short term pain of $4.75 gasoline was enough. The hue and cry has been sufficient such that Americans literally drove millions of miles LESS than the month before. Demand went down, and today I saw gasoline here in San Diego at a Costco at $3.99.
Politicians are falling all over themselves pushing conservation and alternative fuels. Bills are actually being written to promote efficiency. The short term pain caused movement. Make no mistake, most people aren’t driving less or taking the bus out of long term thinking. When / if gas goes down enough, all the impetus will erode and SUV’s will be revived.
After the Three Mile Island incident (a popular bumper sticker of the time noted that “more people have died in Ted Kennedy’s car than at Three Mile Island”) nuclear power became the unspeakable option. We came up with all kinds of reasons: where do we put the waste?. Where do we build the plants? (NIMBY!) How can we guarantee safety forever? Now however, McCain wants to build 40 of them. Even Obama sees nuclear as important.
Where does France put its nuclear waste? They have so much nuclear power, they export it!
I often commented then, that if you were a young 40 something CEO of an electric utility, you could not possibly get a nuclear plant on-line before you retired. So why bother? You will only be crucified by the environmentalists and press. Would YOU do it?
Yes short term and fast food is our creed. Look at the water situation in the southwest. Yet we keep building and the area keeps growing. I recently moved from the East Bay (SF area) which is growing so fast. Where’s the water going to come from? Do you think for one minute there is the public will to spend one dime now. Our infrastructure is falling down around our ears. It won’t be until shortages are mandatory and water is rationed. Together with the climate change, the pain today is still not enough to get us to act in long term interests.
Bleak, huh? We get what we deserve. We elect the people who promise the most. We vilify the people who tell us the hard truth or even suggest sacrifice for some future benefit. We consume and borrow so much that this generation will be the first who will have it harder than the preceding generation.
I have no idea for whom I should vote. I would consider it a victory if the winner accomplished even ONE of the promises made. Not all, mind you, just ONE. Fix social security, cure education, health care……etc. etc. The people better wake up from the American Dream before it becomes a nightmare.
Wener
What seems obviously apparent is that we need to step back, take a good long look at the whole picture (not just “fixiing” specific problems) and then come up with a radical plan (“radical” in the true and best sense of the word). We have know about issues concerning the enfironment for over 65 years. Yes, I said 65/ {Philip Wylie was writing about it in 1943 (Generation of Vipers).
We need our best minds. DOing their best work. Then we need the committment to put the best ideas to work.
What was the reason given for developing the Department of Energy during the Carter administration? We have spent multi billions of dollars in support of this agency and I am willing to bet not one person who reads this will remember the reason given. It was very simple.
THE DEPARTMENT OF ENERGY WAS INSTITUTED TO LESSEN OUR DEPENDENCE ON FOREIGN OIL. NOTE: IN 2008 THE BUDGET FOR THIS DEPARTMENT IS NOW AT $24.2 BILLION A YEAR. THEY HAVE 16,000 FEDERAL EMPLOYEES AND APPROXIMATELY 100,000 CONTRACT EMPLOYEES.
I am reminded of the old Yiddish expression, “When you take shekels, you get shekled.” And shekled we have become. We need leadership at the highest level that can do for our addiction to oil what President Kennedy did for the space program, Lets set a national goal to independet from oil by (10 years?). We must wage war on this demon and end our war on people.
Only one thing, in my opinion, can create the political will to lead us away from oil and that is the continuous and merciless insistence by the majority of our people that this must end.
Every politician at the local , state, and federal level must know that he or she will never gain re-election unless they end our addiction to oil. But we must keep in mind that we will be asking these pliticos to end their access to oil money. So, lets offer them a more meaningful raison d’etre… their job.
[...] An aggressive national energy policy would be the keystone to my administration. Americans believe in and want clean renewable sources of energy that can be produced here in the United States, but the government needs to create an environment that is friendly to innovation and provides incentives to buyers and producers to make this happen. Up to $700 Billion dollars a year would be brought back in the U.S. economy (potentially more with the sale of clean energy technology overseas), jobs would be created, the environment would be cleaner, and we would eliminate the threats to national security that are inherent to depending on foreign nations for a vital resource. Perhaps, most importantly of all however is that this is really something we could use to energize the country to work towards a common goal. For more information about the need for a vital new energy policy consider Will’s post Oil Dependence and the Energy Crisis (http://www.thoughtrocket.com/blog/oil-dependence/2008/10/23/) [...]
The Government is planning to introduce new technologies which will control the Global Warming caused by Clean Coal Technology.