Energy independence is a disaster in the making.

Discussion in 'In the News' started by Valleyforge, Mar 1, 2006.

  1. Valleyforge

    Valleyforge *****istrator Staff Member

    Energy independence is a disaster in the making

    By Justin Fox, FORTUNE editor-at-large
    March 1, 2006: 11:24 AM EST


    NEW YORK (FORTUNE) - It may be one of the most dangerous phrases in the English language. It certainly is one of the most expensive.

    I speak of "energy independence," a rallying cry since the oil crisis of the 1970s and one that has been getting a ton of ink (and pixels) lately, especially since President Bush brought up the subject in his State of the Union address.

    The president didn't actually utter those words, saying instead that he wanted to "make our dependence on Middle Eastern oil a thing of the past." But lots of other people have, most notably Tom Friedman of The New York Times, who has been arguing for a while now that the president should make energy independence our generation's Sputnik -- an excuse to spend tons of money on scientific research and education.

    Investing in R&D and handing out scholarships for science and engineering students are good things, mind you, and many of those calling for energy independence are driven by similarly wholesome motives. But I'm a big believer that words count, and the words "energy independence" are potentially disastrous ones.

    To put it most starkly: We could have energy independence tomorrow if Congress simply slapped a huge tariff on energy imports (would $250 per barrel of oil do it?). Meanwhile, skyrocketing fuel prices would shift the economy into reverse, throw tens of millions of Americans out of work, and what oil and natural gas we have left under our territory would be rapidly depleted.

    Yes, homegrown energy alternatives like wind, solar and ethanol would get a big boost. But the biggest boom would probably be in mining and burning coal -- the dirtiest and least efficient of the fossil fuels, but one the United States possesses in abundance. Meanwhile, the other energy-importing countries of the world would go their merry way, paying vastly lower prices for oil and natural gas and gaining a huge competitive advantage as a result.

    Nobody's seriously proposing such drastic action, of course. But the scenario above ought to make clear that energy independence isn't really what we want. What we want is the most possible economic bang for our energy buck, plus freedom from the feeling that a handful of oil exporting countries hold our national interest in their hands.

    It also would be nice if our energy sources polluted as little as possible -- although you can include that under getting economic bang for the buck, since pollution clearly has a long-run economic cost.

    Why sentence ourselves to more expensive energy?

    The simplest way to get the most out of what we spend on energy is to keep energy costs cheap, and the best way to do that is to take full advantage of global energy markets. Right now it costs less to pump oil from the sands of the Arabian peninsula than from pretty much anywhere else on earth. Why exactly would we want to punish ourselves by cutting ourselves off from the cheapest oil?

    Especially since, as University of Chicago economist Austan Goolsbee pointed out in FORTUNE in August, efforts to conserve oil will, by driving prices down, increase our dependence on Middle East oil in particular at the same time that they're decreasing our dependence on oil in general.

    Of course, using energy more efficiently is another way to get more economic value out of it. And if we really want to feel less dependent on Middle East oil, we need to develop cost-effective alternatives to oil. This is presumably where the government should come in. But government programs to reduce dependence on foreign oil tend to devolve into boondoggles only a lobbyist could love. (See this week's issue of Time for a particularly scary example.)

    Taxes -- on gasoline, or on the carbon-content of fuels if it's global warming you're most concerned about -- are a much less messy and market-friendly means of achieving the same goals. By making energy more expensive, of course, they do cut into economic activity.

    But there is surely a happy mean: In an article in the September 2005 American Economic Review titled "Does Britain or the United States Have the Right Gasoline Tax?" economists Ian Parry and Kenneth Small calculated that the economically optimal gas tax for the U.S. would be about $1.01 a gallon, up from 40 cents now, while for Britain (where roads are more congested, and the economic value of getting people out of their cars is thus greater) it would be $1.34, down from $2.80.

    Of course, achieving an economically optimal result doesn't sound nearly as exciting as achieving "energy independence." But it would be a lot less of a pain.
    Last edited: Mar 2, 2006
  2. Chuck

    Chuck just the messenger

    I read that artice, Wayne and while there are excellent points, energy independence is better than OPEC dependence.

    America has the means to develop alternative energy and conservation plans that won't drive the price of energy well over what we pay now. Just get a serious plan and make steday headway. Don't suddenly make business pay double for their fuel.

    We can comfortably reduce our energy consumption before considering Dracoian measures....
  3. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi Delta_Flyer:

    ___This article was so filled with non-sense that I felt compelled to post what others may think ... It was more of a thought provoking "News" item vs. what really matters to a CleanMPG and/or hybrid community member.

    ___Good Luck

  4. Chuck

    Chuck just the messenger

    The point in that article was America can't just ban Middle East Oil, send our pump prices at least a couple of dolars overnight. I do think we can steadly wean ourselfs from ME oil over time in a manner that make economic sense - in fact more economic sense that the present course.
  5. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi Delta_Flyer:

    ___This is the kind of shoddy reporting I was talking about …
    ___Yes, that is the way the US will become Energy independent … Not a chance.

    ___ Coal is cleaner then gas/diesel emissions from well to wheel as well as far less expensive. What was this guy talking about?

    ___Then why did he just sensationalize this exact scenario above? A few $’s at the pump with a rebate in taxes is revenue neutral but will bring the US to its senses about consuming the stuff from our friends and neighbors all over the world … Especially our really friendly neighbors in Iran, Saudi, and Iraq …

    ___Ahhh, does this guy know how Petrol $’s are recycled? Maybe he must have forgotten about 9/11?
    ___Where does this guy get this stuff? Yes, Peak Oil is sure to drive prices down if we conserve enough …

    ___I just thought it was a good article from a NeoCon like writer in some respects and how some of these guys actually think? I personally believe they have their heads in the sands counting the oil revenue rolling in but that is for another discussion :(

    ___Good Luck

  6. cleverlever

    cleverlever Active Member


    I have always been curious how you came up with your handle. Affilation with the utility of same name?

    There are two sides to every story and I would again highly recommend reading A THOUSAND BARRELS A SECOND to anybody interested in energy independence.

    The author is a realist and while he exclaims the virtues of hybrids he acknowledges that every single car in America would have to become a hybrid just to stop the increase in gasoline useage. I assume thats based on the fact the population continues to increase and people drive more miles.

    Energy indepedence isn't going to come from technology alone. Its going to require a MAJOR change in America attitude about energy entitlements and I don't see that happening until oil gets real expensive

    Just my thoughts

  7. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi Cob:

    ___The real answer will be PHEV’s in the short term as that can reduce oil use to 0 for more then ½ the driving public’s daily fuel consumption. Except for overloading the grid in 5 to 10 years ...

    ___I will have to read that book sometime … when I have the time??? Have you read “Twilight in the Desert” by Matthew Simmon’s? It isn’t all about being a realist, it is about Peak Oil and how unreal it’s going to get no matter how real or not most tend to think about their fuel consumption day in and day out :( Just my humble opinion anyway?


    ___Good Luck

  8. Chuck

    Chuck just the messenger


    I agree that some of the points in that article could make some wonder if the writer works for the PR of Exxon/Mobil.
  9. cleverlever

    cleverlever Active Member

  10. cleverlever

    cleverlever Active Member


    You know I respect your opinions. However we have huge problems with the electrical supply right now. How can we justify throwing more load on the grid for transportation especially if it wasn't timed to keep it off the grid during peak demand?

    One of my unrealistic fantasies is that we would charge up hybrid batteries at night and drive them to work and plug them in backwards so they could provide peak demand to the grid. The utilities would pay serious money for those kwhr's.

    Not going to help your mileage but sure would help the economics of owning a hybrid.

    Please remember I said it was a FANTASY
  11. xcel

    xcel PZEV, there's nothing like it :) Staff Member

    Hi Cleverlever:

    ___I also work in the electrical utility industry. Notice I said above that the PHEV is the answer for dependency and even Peak Oil in some regards but it is also a huge problem because of “ overloading the grid in 5 to 10 years ...”. That 5 - 10 year time is when the PHEV’s hit the grid in force … V2G (Vehicle to Grid) is an excellent proposition to handle load balance but there is this small problem with supply no matter how many ways we slice it :( If you do a google on V2G, you will find hundreds of tech papers and studies on the subject. I see some saying we can balance load with off-peak PHEV charging but the utility industry takes the most expensive production off first when a particular area’s grid load sags during the late evening into early morning. If we have to run the more expensive peaking plants around the clock, our rates will rise just when we were all jumping on the extremely cheap - EV based transportation. In other words, as pack prices come down, look out …

    Average hybrid car under pure EV uses ~ 200 Wh/mile
    Average cost of Electricity in the US = ~ $0.085/kWh

    200 Wh/Mile * $0.085/kWh = $0.017/mile. To travel 100 miles, it costs you $1.70. That is the equivalent of gasoline costing ~ $0.80 - $1.00/gallon while driving a Fuel miser like the Prius II or HCH-I/II! The savings are huge but the packs are to expensive right now as well as our grid is already pushed on the worst of days.

    ___The following is one way but its not going to be cheap let alone we would run into a Uranium shortage by that time too. Just another fantasy ;)

    How To Build 6,000 Nuclear Plants by 2050

    ___Good Luck

  12. Chuck

    Chuck just the messenger

    This is a good point - did not think about the grid bottleneck with plug-in hybrids.
  13. cleverlever

    cleverlever Active Member

    Hi Wayne

    I would like to respectfully ask if you could share with me the reference citing the low cost of 200 Wh/mile.

    I have zip expertise in hybrid technology. My focus has always been to make the engine more efficient which detracts from the economic vaiability of regen.

    So I don't understand why if its cheaper to run on straight elec then why was the electric vehicle such a failure?

    I suspect the factor that skews the electric cost per mile is range of operation. The greater the range the greater the vehicle weight and things just start going downhill from there.

    Now as I understand it the range of the typical hybrid on the straight electric mode is very short.

    In other words I am asking if the 200Wh/mile figure applies to electric propulsion in vehicles that longer range of electric operation than the standard Hybrid?

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