Guest blogger Dennis Kornbluh continues his opinion piece on energy:
Our government has been hard at work trying to convince us that they are hard at work on the energy problem. If they spent as much time on substantive ideas as they do pandering to the public (who are presumably greedy and stupid), we might actually make some progress. The latest silly idea is the "summer gas tax holiday" proposed by John McCain and jumped on by Hillary Clinton. Thomas Friedman writes eloquently about the stupidity of this proposal in his recent opinion piece in the New York Times.
Consider for a moment what this tax holiday will be worth to the average driver. Most American's will drive about 5,000 miles between Memorial Day (May 26) and Labor Day (September 1), which is the period when the tax suspension is proposed. If your car gets 20 miles per gallon, you will enjoy an extra $46. Whoopee! Meanwhile, the government will be out $9 billion in tax revenue.
What could we do with $9 billion? We could fix our roads and bridges. We could improve our inadequate mass transit system. We could even give tax credits to the US auto makers if they'd get their heads out of the darkness and produce the high mileage vehicles that they've been capable of producing for decades (Check out the movie "Gashole", which documents how the oil companies bought and buried patents for inventions that enabled cars in the 1940's to get 100 mpg).
At a time when we should be preparing for the end of cheap oil by encouraging conservation and investment in alternative energy sources, we are, instead, encouraging consumption. A tax that makes it expensive to drive a land yacht across the country with a vehicle in tow is a good thing! The revenue raised from those taxes could displace tax credits for companies that are trying to ramp up advanced energy technologies. Instead, Congress is allowing tax credits for wind and solar to expire this December, while simultaneously giving billions of dollars in subsidies to the oil & gas companies.
Isn't our government doing something good by promoting biofuels? Unfortunately, biofuels are increasing CO2 emissions, and causing hardship around the world due to the impact on food prices. Now that so much land is being devoted to biofuel crops like corn, soybeans, and switchgrass, the remaining land for food crops has diminished, which drives up the cost. Good for farmers, bad for consumers, bad for the environment. Finally, the subsidies that our government gives to biofuel producers is the only way they are able to come close to making a profit. Farmers (who deserve a break) and biofuel producers should enjoy this phenomenon while it lasts.
Conclusion: Big changes lie ahead as oil prices continue to rise. Let's elect leaders who have a realistic energy strategy and kick the special interests out of Washington.
Dennis, The solution is very simple. Shoot all the caribou in ANWR and open it up for oil drilling. Take the caribou meat and feed the homeless. End our dependency on foreign oil. Game over!
Posted by
Anonymous
on
May 3, 2008 8:46 PM
Not sure about the caribou meat, but my guess is that we will eventually steamroller the conservationists and drill for oil in the Arctic National Wildlife Refuge. The problem, beyond the damage it will inevitably cause to the environment, is that there are, optimistically, 11 billion barrels of oil there, and typically only 70% of an oil field may be recovered. Assuming that we can have it all, that's 550 days of oil at our current rate of consumption (~20mm barrels per day). Of course, we'll still have other sources, but the point is, ANWR is no panacea. We're looking pretty hard for oil these days, and we're just not finding it. Time to try something new.
Posted by
Dennis
on
May 3, 2008 11:10 PM
Montville Township could save 28 percent on fuel costs for the Police Department by converting to E85 Ford Police Interceptor Crown Victoria cars. The fuel can be shipped directly to Montville's rail line in 28,000 gallon tank cars from Ethanol plants in Iowa. It appears that Dennis is not aware that less than 15 percent of the US corn crop is grown for human consumption.
Posted by
Anonymous
on
May 4, 2008 8:31 AM
The amount of corn grown for human consumption is irrelevant. The point is that corn-based ethanol producers are ramping up their consumption of corn, which increases demand. However, the supply has not grown in proportion to demand, so the price of corn has gone up.
According to a study by Dr. David Pimental of Cornell, powering a car for a single year using ethanol would require 11 acres of corn. There are 62 million registered vehicles in the USA, which will require 682 million acres of corn. In the year 2000, US farmers used 72.7 million acres to grow all corn (source: epa.gov).
Dr. Pimental's study also finds that it takes 131,000 BTUs of energy to produce 1 gallon of corn-based ethanol. That gallon of ethanol produces 77,000 BTUs of energy when burned.
If you still like corn-based ethanol, I've got a lovely bridge I'd like to sell you.
Posted by
Dennis
on
May 6, 2008 1:49 AM
Reference: Recent comments from Dennis on corn.
Farmers choose what crops to plant on their privately owned land. In 2008 and 2009 it may be that farmers take some of the land used for corn in 2007 and start growing soybeans on that land. The latest data from the Chicago futures exchanges seem to support this notion. The trends in futures prices for soybeans appear better than for corn. Corn prices may actually start declining as Conservation Reserve Program (CRP) land is restored to production during the next 4 years. It is important to note that CRP land is privately owned.
Posted by
Anonymous
on
May 6, 2008 7:59 AM
No dispute that farmers plant what they want. Corn is very profitable at the moment, so why wouldn't they want to get in on the action? I may be missing your point.
Your prediction is interesting. However, I'm commenting on what's actually happening, which is that corn and other grain prices are going up. Our government is calling for biofuel production to increase to 5x current output, so it will defy logic if corn prices drop.
Posted by
Dennis
on
May 7, 2008 12:20 AM
Dennis, the US has massive amounts of oil located right here at home. Drilling in the Bakken Formation in the Dakotas will likely provide 175 to 500 billion barrels of recoverable oil, to say nothing about our off shore and Alaskan reserves.
The US imported about 14 million barrels of oil per day in 2007, which means US consumers sent about $340 Billion Dollars overseas building palaces in unfriendly regimes around the world. If 200 billion barrels of oil at $90 a barrel are recovered in the Dakotas the added wealth to the US economy would be $18 Trillion Dollars which would go a long way in stabilizing the US trade deficit.
How do you feel about inconveniencing some caribou while we work on developing alternate sources of energy?
Massive amounts of oil, eh? Right here under our feet? I guess we've been saving it all for a rainy day. What a relief! Ladies & gentlemen, start your Hummers.
Posted by
Dennis
on
May 12, 2008 11:54 PM
I'll take that as your vote for Caribou over American consumers.
And just in case you weren't entirely sarcastic, the Bakken formation hasn't been a secret. It's expensive to do horizontal drilling, just as it's expensive to drill in water that's over a mile deep (as in new fields in the Gulf of Mexico) but with oil hitting $130 a barrel, it has become worth it.
The reason that oil is at $133+ / barrel (as of today, and likely to rise sharply), is because the world can't produce enough oil to meet demand. No credible source is holding up the Bakken Formation as the solution to that problem. In addition, it's not online today, so any benefit we may get is still speculative. See today's article in the NYT, "New Fears on Long-Term Global Oil Supplies", http://www.nytimes.com/2008/05/23/business/worldbusiness/23oilweb.html?ex=1212120000&en=f3713071c9283da7&ei=5070&emc=eta1
A major energy crisis is at our doorstep. The problem we must deal with is how to reduce oil consumption in this country and still be able to maintain a stable economy. This will require everyone to make sacrifices.
We don't have a plan at the moment, so we are facing the prospect of having lifestyle changes imposed on us. The lack of leadership on energy over the last 30 years has been terribly costly. As a consequence, our next leader must confront what I believe is the greatest challenge in this nation's history: how to wean ourselves from oil without causing the economy to collapse.
Posted by
Dennis
on
May 22, 2008 11:12 AM
Wake up and smell they hydrocarbons Dennis.
I never said that the Bakken formation is THE solution. But it is certainly part of the solution if we simply tapped a portion of the resources we have here in our country.
Face it, we're just not going to conserve our way out of the problem which I agree we have put ourselves into. It is going to take a Chinese menu of solutions - use of newer technologies like wind, solar, and hydrogen; increased use of existing technologies like nuclear (France gets half of their electricity that way); taking the shackles off of America's enormous oil, gas, and coal resources (offshore, in ANWR, in the northwest), as well as conservation.
Energy independence is a national security issue now, and those who refuse to allow us to use our own resources are on the side of the enemy.
I agree that there's no single energy source that can replace oil. Unfortunately, it takes years to ramp up nuclear power and to bring new oil fields online. As we struggle to fill the gap left by cheap oil with a variety of alternatives, conservation is the one thing we can do immediately. In the interim, the market will force conservation upon those who can't afford the high cost of energy.
Posted by
Dennis
on
May 27, 2008 12:31 AM
We'd have a million barrels a day flowing out of ANWR if Clinton hadn't vetoed it in 1995.
