Stay Away from U.S. Treasuries - Invest in Energy Stocks 60 comments
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Recently there have been a plethora of articles delving into all the complexities of the US bond market. For this reason, I am going to keep this article short and simple.
US deficit spending ensures future Treasury bond issuance in the weeks, months, and years ahead as far as the eye can see (and then some). The US will depend on foreigners to purchase the debt. However, foreigners are becoming fully aware that the US economy is built on a foundation dependent on a commodity (oil) which will become increasingly expensive and which the US not only uses 25% of the world's output, but imports 65% of it. At current prices, the US is spending $840,000,000 a day for foreign petroleum imports. This works out to $306,600,000,000 a year. That's a lot of zeros isn't it? Double that number when oil goes back to $140/barrel.
What does this have to do with US Treasury bonds? Well, I ask the simple question: why would the governments of China, Russia, Saudi Arabia, and Brazil want to be holding US debt when there is such an obvious economic weakness as the US's dependence on foreign oil imports? Further, why would these countries continue to do so in the future when the see no strategic long-term comprehensive energy policy from the US government to solve the oil problem?
This past week, US equity markets breathed a heavy sigh of relief when 30 year treasury issuance was well received by foreigners. However, as the price of oil rises in the future, will foreigners become increasingly wary of investing in long term US bonds? If so, bond interest rates will have to rise to entice them to purchase. At the same time, an increase in oil prices will cause US economic weakness which will be reflected in further US currency depreciation. Since oil is priced in US dollars the world over (at least for now...), this will be a tailwind for even higher oil prices and we reach a condition that electrical engineers refer to as thermal runaway: resistance in a circuit normally increases as the circuit gets hotter. As the circuit gets hotter still, the resistance of the circuit increases further leading to more heat and we have a self-reinforcing mechanism that eventually can lead to a serious malfunction if prudent design principals are not followed. The analogy is the exactly the same for US debt, oil prices, and energy policy with the result that it is the US economy which is likely to malfunction.
It is no surprise that China has been slowly exchanging long-term US Treasuries for shorter term debt. It is also no surprise that other countries holding US Treasuries have been unusually vocal about US financial policies. When the BRIC countries hold their first summit Tuesday in the Ural mountains of Russia, expect the leaders of Brazil, Russia, India, and China to continue to propose moving away from the US dollar as the world's reserve currency. These countries realize the danger of a world economy based on the currency of a single nation that has such a large economic dependence on foreign oil imports.
The US cannot solve a commodity problem (oil) with financial trickery such as the Federal Reserve stepping in to buy long term treasury notes. The only solution to US economic problems is a long-term energy policy of which the central theme should be to significantly reduce foreign oil imports by transitioning to natural gas transportation fueled by US produced natural gas. Please read some of my articles explaining why this is possible and why the US should do it:
The US has the natural gas reserves. We have the NGV technology. All that we need to do is replace wrong-headed energy policy like "cash for clunkers" with sound long-term energy initiatives to move away from gasoline derived from foreign oil.
US investors should be aware of the link between oil and US Treasuries and stay away from them unless buying something like the TBT (Proshares UltraShort 20+ Year US Treasuries ETF).
Instead, US investors should protect themselves from higher oil prices, a falling US dollar, and coming high inflation by buying energy and energy service stocks like XOM, CVX, COP, PBR, BP, STO, and RIG. Also, every American should own some gold in an environment as risky as the one we are in today. Some like GLD, but that is a paper asset and you might want some gold coins to bury out in the back yard. Of course, if the US economy completely implodes I doubt any investment will protect Americans from what could happen. The best protection from this happening is for Americans to support natural gas transportation and push your elected officials to support initiatives like HR 1835 and to be more proactive in crafting prudent long-term comprehensive energy policies.
Disclosure: The author owns COP, PBR, STO and is long gold.
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This article has 60 comments:
So is it ideal to own equities like COP/STO/BP when there stock price will get dragged lower because it will follow the trend of the stock market ? Would it be better to own an ETF the tracks crude contracts (USO/ DXO) that "generally" follows the price of crude, whereby it would be immune to stock prices tanking secondary to high energy costs? Should you own both?
We are on the verge of an energy cliff, and our prosperity and lifestyle will be severely challenged. No one knows the timing, but the only two things could derail this impeding massive shortfall in a meaningful way (sorry Mike, but I fear its too late for a comprehensive energy policy to be implimented in time).
One possibility would be a recurrent and increasingly severe global economic downturn that would massively depress oil demand.
The second factor would be an energy breakthrough the likes we haven't seen since oil was first discovered. Don't hold your breathe- this latter possibility will be along time in coming even if we're very lucky.
So unless you subscribe to the severe prolonged depression scenario, then Mikes energy suggestions make perfect sense.
There are other good proxies- OIH, ECA, SU, among many others. Pick your own
By the way, I'm an electrical engineer and I wanted to make one correction. When an electrical circuit gets hot and the resistance goes up the circuit will typically draw less current and stabilize. Thermal runaway occurs when a circuit draws more power when it heats up. If things were only so well defined in the investment world. ha.
Phil
sabre_jenn: good action.
freya: i must say i resent your insinuation that my outlook on investments is merely to "line my Pockets" with money. i am a *small* investor. my opinions about american addiction to foreign oil is because i am a true american patriot deeply concerned about the country we live in and where we are going - not the kind of "patriot" in washington DC or on TV that wave the flag while selling the country down the river. my investments in energy and gold are made out of necessity. why is it that in your eyes i must only be in this for myself? can you not see the danger posed by american addiction to foreign oil imports? can you not see the S&P500 is negative over the past 10 years? that the US dollar has been in decline? that it cost more and more every day to purchase the things we used to take for granted? have you read my energy policy that has been developed over the last 3-4 years and that will *reduce* the amount of oil sold by the companie i currently am invested in? i think you owe me an apology freya. most every writer on SA writes about investments they own (i.e. eats their own cooking) and i have never read a comment toward a writer like the one you just left me. i want an apology. your insinuation that CNG isn't any good because it is "old tech" is ridiculous. running cars and trucks on dirty liquid fuels is what is old tech. running cars on gases and electricity is what we should be doing. you criticize me for "lining my Pockets" with energy dollars while i am the one trying to get us off foreign oil, and you appear to be very comfortable filling your car up with gasoline derived from foreign oil. not sure the exact definition of a hypocrit....but that comes pretty close does it not?
jimp: i don't know about those ETFs. i remember reading an article about USO where the way they played the contract rollovers, and the street knowing when they had to do it, was a negative (i am pretty sure it was USO). if oil goes to $200/barrel, any company that produces 4 million barrels a day (XOM), or 3 million (CVX) or 2 million (COP) should do pretty well, right? throw in some foreign based oil companies like BP, PBR and STO for higher dividend yields and some US dollar depreciation protection and that is a fairly decent portfolio of energy. that said, you are probably right that a straight bet on the price of oil itself deserves a role. i have been criticized for not suggesting that before. i like dividends - and these were paid every quarter even when oil went from $145 to $40.
isaac the terrible: i don't want to put words in your mouth, but it sounds like you are saying not even energy stocks can protect a US investor from the impending doom? if the economy does implode, of course you are correct. my thought process is to be ahead of the curve a bit and sell the energy, and buy gold and food when that times comes (plus make a garden, rain barrel, etc.) perhaps i will resurrect my faith as i have been a retired catholic for decades now...
bondo: if interest rates go much higher, wouldn't that mean the value of the US dollar goes lower? and if that is the case, since most commodities are priced in US dollars, doesn't that mean they go up? regardless, we do seem to agree on TBT. if i implied every circuit can result in thermal runaway, i was incorrect. most cannot. however, many circuits with feedback gain can.
i'm poor: me too.
Larry House: you have to be in "something". if you're in all "cash", you're in US dollars and that could be risky as well, right?
As the American public begins to better understand what these energy policies will result in in cost and control of their lives I think we will see many changes in future elections. We will elect politicians who will truly support and push for use of all of our countries natural resources especially tight NG and offshore oil. As oil price increases oil shale and coal conversion and NG conversion to liquids will increase. Use of nuclear energy will be expanded and permitting will be simplified and the permitting timeframe will be shortened.
All the while alternative energy systems / types will be supported and developed and become a more significant part of our total energy supply as they become cost competitive (without subsidies) with the proven technologies.
Also, there will always be room to improve efficiency. But again, cost should be the determining factor. Small efficiency gains at great expense don't always lead to a lower total cost.
All of this just seems like common sense most people would agree to if given the opportunity to set energy policy. Unfortunately there are so many associated issues that aren't presented honestly such as global warming and foreign mid-east oil (really most of it is Canadian oil) that leave voters wondering what is best for them and our country. I think it will become more apparent and our energy policies will swing to more support for use of our own resources.
Anyways, in my personal opinion I tend to agree with MF that Nat gas is a great alternative to oil (super abundant as well) and ANYTHING you can do to tell the oil rich countries to shove their heads in a gushing well is fine by me. Sure it will take large investments by gov to make this conversion happen, along with foreign car makers (and Ford) buying in and a general change in the publics mind set. Hell, Its a better investment than the Gov's AIG or Citigroup money pit..at least theres a return on NG down the road!
So what if MF, myself or anyone makes a buck touting this viable alternative...the Government would LOVE for you to make money trading anyways, so they can tax the profits...hello!
Disclosure: long XLE and TBT....and lovin it!
Remember...we are the reserve currency. We set the price of oil in all reality with how much money is in circulation......and that gets bounced off how much is produced.
We went from 800 billion in circulation to something like 3-3.5 trillion dollars in circulation in a short time period. I don't even know what this is going to look like for interest rates on bonds and inflation rates for the future....but I am willing to bet it will be very high.
I am just saying that the government ultimately controls the price of oil through monetary measures......Price oil in terms of barrels per once of gold....and thats the true measure of how expensive or cheap oil or gold is. You cannot use the price in dollars since the currency is backed by nothing and the supply of that currency goes up and down very quickly.
If everyone spent 10% of their money on energy (oil) lets say...and they all made $10K/yr, they would spend $1K on energy.....if everyone made $100K a year, then everyone would spend $10K on energy. Nothing changed for demand or supply....only the money supply has increased.
Especially since those investments have already rallied 30-50%.
the politicians have avoided having a comprehensive national energy policy for the last 28 yrs so what else is new.
> jack
c300man: you say "This administration and the democratic party are leading our country down this dangerous path with their costly and hopelessly idealistic energy policies". while it is true obama and chu have not implemented any policy yet to significantly reduce foreign oil imports, we just lived through 8 years of bush/cheney policy that saw oil go to $145/barrel, the deepest economic contraction since the great depression, and the fascist gov takeover of the national mortgage, financial, banking, and insurance sectors. so BOTH parties have screwed up energy policies keeping us addicted to foreign oil.
freya: why can't debate the issues and the points i bring up in the article? do you support the buying of US treasuries? what is your program to reduce foreign oil imports? if you don't lay out such a program in your next comment, i will just continue to assume you are happy watching the country go down the drain by watching its addiction to foreign oil completely destroy us as a nation. so, step up, tell me YOUR plan freya.
harammph: great, i see freya has converted you into thinking i am "god". wonderful. i issue the same challenge to you that i did freya: tell me YOUR solution. my natural gas transportation program, just like the man-on-the-moon, interstate hwy system, cross country telephone and telegraph projects, will completely pay for itself in a very short time frame and pay dividends to ALL americans for decades into the future by keeping all the money we spend on foreign oil ($840,000,000 just *today*) inside the country instead of sending it OUT of the country. what is so difficult to understand here? so, good luck to you and freya for ignoring my advice and buying US treasuries...
mind_geek: finally a supporter!
freya: you really are losing it aren't you? what i have called for is sound energy policy. i have called for secretary chu to be fired and for obama to make energy policy to reduce foreign oil imports. this is america. if you cannot take people expressing views contrary to yours, you need to relocate. now i want to "overthrow" the government? your reading comprehension and deduction skills amaze me. the article isn't about investment themes?? did you even READ the article?
Andy1234: i am so glad someone actually read the article! however, i don't agree that the US can control oil prices. if so, they'd be $10/barrel and our economy would be flourshing. the US simply doesn't have the oil supply to control a worldwide traded commodity. china has more control over things than the US does. china could sink the US dollar tomorrow just by putting all the US debt they hold on the market at once. of course, doing so would sink themselves (at least today), but the point is we hold no chinese debt., they hold ours. so, they are going around the world locking up oil supply and delivery while the US bails out its banks, mortgage, and insurance sectors. looks to me like they are much better off than we are...
prariedog555: i am curious, what do you think are good investments right now? all cash? like i said before, that is basically a bet that the US dollar will hold its value. i find that hard to rationalize, but i am quite surprised the US dollar has held up as well as it had. so, maybe you're right. i dunno. i think in the worldwide environment today, with BRIC country demand, a US investment must have some exposure to commodities, energy, and gold. especially since all these are priced in US dollars and the gov is printing them as fast as they can.
johnsgordon: you are right on energy, but what has changed is the humungous amount of debt the US is issuing to make up for all the energy dollars that left the country over the past few years as oil prices went from $40/barrel to $145/barrel. we are entering a new era of american indebtness and borrowing never before seen in the history of the country. as oil prices increase in the future, so too will the amount of debt needed to finance government expenditures. it is a runaway debt scenario imho.
Substituting NG for some of our oil use as advocated by Mike is one of the most obvious and easy solutions, but resisted by all the well known and entrenched interests as it will affect their financial positions. The public/consumer interests are always second to these and therefore will only be considered by expressing their concerns through our political system. Write and call your representatives to act in the public interest in this matter.
We have wasted decades by not addressing this problem and the time left to correct it is very short if it is already not too late. Brazil is an example of one country that heeded the messages of the 1970's and 1980's and achieved self sufficiency in energy production. Our standard of living as measured by energy consumption is sure to decline as others rise. Alternative energy sources must be developed and that includes advanced nuclear reactors such as the IFR concept.
www.ourenergyworld.com...
Investments to respond to this situation should include oil and gas producers along with alternative energy and energy service companies. Drillers such as RIG, NE and ATW who specialize in deep water production will prosper as oil prices increase. Oil producers leveraged to production as opposed to refining and marketing such as HES and OXY should be good choices. Alternative energy companies such as WPRT ORA and AMSC are worthy of consideration.
Besides, I Reread your "Replacing" above. I see nothing in that paragraph that contradicts what Freya said.
Is That what you Call Giving the Public a "choice"?
Cheney did have an energy strategy. Conquer, pillage, plunder. We can see that we didn't get far with that approach.
As intelligent as Obama is, I don' t see how anyone can get excited about his goals for our nation's automobile fleet. We have 150 million passenger cars on the road. Obama's goal is to have 1 million hybrids on the road by 2015. One million out of 150 million? Less than trivial.
With our growing budget deficits, congress should pass a nationwide gas tax now of 2 to 3 dollars per gallon. With prices of 5 to 6 dollars per gallon, the market will start to work toward solutions to gasoline consumption. The money raised on the great gas tax can go to reducing our dependence on foreign oil with subsidies for electric cars.
We now own General Motors. Let's force them to start building cars that support our national strategic defense policies rather than weaken them.
Our goal should be 50 million electric/hybrid/alternate fuel cars by 2015.
one eye: we are going to spend the trillions one way or another - either on foreign oil, or, as i propose, transitioning to natural gas transportation infrastructure. it will pay for itself very quickly (less than a decade), and then pay dividends for *decades* to ALL americans (instead of foreigners). just like those against the man-on-the-moon project, the interestate hwy system, the trans-continental telegraph and telephone system - all these governmental projects requiring governmental funding had opponents which did not have the vision to see the long-term economic benefits. so too it is true with natural gas transportation: many people cannot fathom the benefits of refueling their vehicles at home, of buying domestic energy fuel instead of foreign, of creating jobs in the energy, auto, and infrastructure sectors to revitalize and reindustrialize the US. just because people exist without this vision doesn't mean the initiatives don't make sense, can't be done, or won't provide benefits to americans for generations. one thing i guarantee you is not up for debate: if the US continues to rely on foreign oil as apparently you and freya propose, we are doomed as a democratic country and we'll end up with the government controlling gasoline rationing and therefore control your ability to move, your food supply, and your freedom. good luck with that strategy.
harammph: what i am saying is that with the right political and energy policy leadership to articulate the problem to the american people, show them the evidence for what is at risk, and show them a strategic and comprehensive energy plan that would galvanize the american spirit, put people to work to reindustrialize this nation, cut our foreign oil imports, strengthen the US dollar and equity markets, and advance the US into an era of prosperity that apparently alot of folks on here cannot even visualize. so yes, america certainly has a choice: we can continue down the path to ultimate chaos, or, we can chose to take hold of our destiny, get to work, and solve the most serious problem facing the US: foreign oil addiction.
mr freddo: agreed! with the exceptions that i believe we ultimately need to get off hybrids based on gasoline. for example - a prius with a nat gas internal combustion engine is a much better than the current gasoline based prius:
www.autoblog.com/2008/...
anyhow, thanks for the support!
freya: i am still waiting for your energy policy and your solution to foreign oil imports...
The fact of the matter is.....the price of oil at $35/barrel this past year was one of the cheapest prices its been in its history of the past 50 years when compared to gold and was an excellent buying opportunity.
I think we have larger problems then energy......its the mindset of our people and government.
That needs to change first before we can work any problem anywhere.
The problem lies in how money is issued, government spending/budget, taxes, etc.
A large problem with the price of oil is money printing....NOT SCARCITY.
If scarcity was a true problem....the price of oil would GAIN in real terms against gold and other commodities in REAL TERMS.
You are looking at the price in dollars...and saying something is scarce because the price is going up. The fact is....scarcity never changed...the money supply did.
I agree peak oil exists.....it has to at some point.....but I would see substitution occuring or energy efficiency increasing if oil increased in real terms.
www.zealllc.com/2005/g...
In an inflationary fiat-paper regime such as the ones that exist in every country on the planet today, money supplies are guaranteed to grow faster than commodities supplies. As relatively more money bids for relatively less commodities, higher commodities prices are the inevitable result. To bet that the GOR is going to suddenly fail is not only to bet against six decades of history, but to somehow assert that fiat-paper inflation will miraculously cease so monetary pressures don’t push up gold and oil simultaneously.
First, natural gas and gasoline (as motor fuels) are not mutually exclusive. Bankrupt American automaker General Motors manufactured bifuel vehicles for years. See, www.fueleconomy.gov/fe.... Ford did too. But the cars were manufactured mainly for the Brazilian market. Brazil now has over one and a half million NGV's, many of which are GM/Ford NGV bifuel vehicles.
Second, Amoco Oil Company (now BP) built a number of natural gas fuel stations at select "gasoline filling stations" locations in the Chicago area during the 1980's. The stations were only phased out in the late 1990's as crude oil prices sank. The argument that a backbone infrastructure of natural gas fuel stations could not be built across the country (say at 1 of every 25 stations) to support an NGV fleet is without merit.
Third, it is hard to deny that Brazil has had much better political leadership with respect to energy issues over the past 30 years than any US administration, Republican or Democrat. Brazil is now reaping the benefit of that 30 year investment in energy independence with high rates of economic growth that the US can only envy.
Fourth, the dollars that US consumers spend on fuel can either be (i) spent on building up the economies and infrastructure of OPEC or (ii) building up the economy and infrastructure of the US. Take your pick.
Fifth, the US currently imports 65% of its petroleum. According to the Government Accountability Office, the US light duty vehicle fleet accounts for 65% of total petroleum usage. In effect, the ENTIRE US light duty fleet can be viewed as running on imported petroleum.
Fitz-- Great article as usual.
If however, we have moved towards NGV's which run on American NG, at least we will be paying ourselves for our transportation fuels.
Mike, I am completing agast at your opposition, clueless, senseless, are as mild as I can get. Having said that, if this is your strongest opposition, then stay at it, you are a hands down winner in this contest.
The government continues to grow government....and create money. The value of the dollar becomes worthless.
Why wouldn't these NG companies ship their NG overseas in the form of LNG if the dollar isn't worth anything?
We still need to import other commodities and items.....if the dollar plunges.....this will push up the cost to manufacture NG in the USA...still raising the price of NG.
You guys have it wrong.....its the policies that the government has..fiscal/monetary etc that are killing us.....not necessarily the free market.
We need to export more useful things....and honestly....how sustaining is it for China to lend us money to buy Chinese made products?
At some point we will need to export our products/services in a greater amount then what we are consuming/using today....otherwise we just pay our creditors back with useless dollars which are redeemable in less products and services....and as any investor knows.....thats not investing if you are losing purchasing power over time.
They will stop investing in the US....or we will need to make drastic changes. The money will flow to the creditor nations.....not the nations that have no money and are in major debt. Thats called BROKE.
Why not cut this extrodinary explosion in gov spending, infact, if the economy seems to be getting on track, why not cancel the "Stimulus", that would cut the deficit a cool Trillion over the next year or so.
Then, with NGV's and a strengthen dollar, at least relative to a collaspe, America's cost of energy will be lower, AND we will be buying our energy from ourselves, paying American salary's instead of OPEC's bank accounts,
And please dont forget where much of the $$ that funds ME terrorist organizations, PS, from American car drivers.
So, lets buy an American fuel, NG.
We should have a recession...let credit contract and build a solid foundation.
Once we do these steps.....businesses will come back...taxes will be low.....and people will need to work again. Borrowing will decrease...home prices will probably continue to fall to affordable levels....the price of education will fall.....the dollar with strengthen...commodities will cheapen.....and savers will not get killed through decreased purchasing power.
On Jun 15 04:50 PM jack kreg wrote:
> A1234, you are right about the coming collapse of the Obama dollar,
> with Trillion $$/year borrowing, and FED buying up 30yr treasury's,
> sure the US dollar is expected to weaken alot in coming years. <br/>Why
> not cut this extrodinary explosion in gov spending, infact, if the
> economy seems to be getting on track, why not cancel the "Stimulus",
> that would cut the deficit a cool Trillion over the next year or
> so.
> Then, with NGV's and a strengthen dollar, at least relative to a
> collaspe, America's cost of energy will be lower, AND we will be
> buying our energy from ourselves, paying American salary's instead
> of OPEC's bank accounts,
> And please dont forget where much of the $$ that funds ME terrorist
> organizations, PS, from American car drivers.
> So, lets buy an American fuel, NG.
George Marc: another beacon of light illuminates the comment section. well said and thank you! i appreciate you bringing up bi-fuel vehicles (as in gasoline, nat gas). for those with a Phill at home, and with intermittent CNG refueling capability, a bi-fuel vehicle of this nature is a great segway into NGVs.
jack kreg: another ray of light! thank goodness...this comment section is beginning to turn! thank you.
Andy: reducing the foreign oil import bill, investing in US nat gas refueling infrastructure and NGVs, and putting people to work instead of on the dole will *strengthen the US dollar* and raise the reputation of the US in the world's eye as we prove we can solve our own energy problems without fighting oil wars. it is not too late to do this, but the clock is definitely ticking and obama is not, currently, on the correct path.
kertch: please read my energy policy. i am for EVs, but we need time to build out the wind and solar and grid infrastructures else we burn more coal (bad). also, if we are smart, much of the nat gas infrastructure will be reuseable for the future hydrogen economy. the point is, we need to get off dirty and expensive liquid fuels and onto cleaner, cheaper, gaseous fuels. nat gas transportation is the first step. i am not saying we should be 100% nat gas, what i AM saying is that natural gas is the only *domestic* fuel that can be scaled up over the next 5 years to cut foreign oil imports by 5-7 million barrels a day. once this is done, we have breathing room to do alot of good things. if we DON'T do it, we're sunk. simple as that. i do agree that we need to start *now*.
AndyMan: we could do all the things you suggest, but if we don't reduce foreign oil imports we'll never fix the problem. the US cannot have a strong fiscal foundation when our economic foundation is built on the quicksand of foreign oil dependence. it's that simple. you cannot solve a commodity problem (oil) with financial tom-foolery like the fed's incestual buying of long term treasuries. it's like kissing your sister - you're getting nowhere.
freya: i have addressed the canadian and LNG import issues before. the canadian nat gas import infrastructure is decades old and *cheap* nat gas. that is why it's there. it's NOT because the US doesn't have the natural gas, we obviously do. i have addressed that issue quite extensively in this article:
seekingalpha.com/artic...
as far as your hangup on "replacement", when people don't do their job they should be fired and "replaced". that is capitalism and that is natural selection and competency. so, when you have a US energy secretary who is "agnostic" about america's greatest energy asset (its natural gas reserves and its 2.2 million mile natural pipeline grid connecting every major metropolitan area and 60 million US homes) and at the same time he believes in the myth of "clean coal" and continues to support such idiotic policy as "cash for clunkers", well, he should be FIRED and replaced. what is your problem with that? you like chu? you like his energy policies? if so, then i really wish i could "replace" your comments with the comments of someone who is "thinking" instead of simply making pedantic personal attacks without debating the issues rationally. by the way, i am *still* waiting for you to either:
a) admit you like being reliant on foreign oil imports and don't think it is a problem or
b) submit your comprehensive energy policy for review.
still waiting...waiting...it's easy to criticize...i do it all the time. however, to be constructive, you need to present solutions. i have done so, it's your turn. let me see your plan! put it out there for SA scrutiny like i have. defend it. rationalize it. if it's better than mine, i'll be the very first one to embrace it and support it.
www.sustainablenuclear...
Wind and solar energy are excellent sources of renewable power, but they are such a small part of our total energy production (<3%) there is no way they can fill our needs even with monumental increases. Plus they cannot fulfill our base load needs due to their variability in production.
On Jun 15 07:25 PM kertch wrote:
> MF, the problem I have with the entire energy policy argument is:
> the energy policy! In your plan, and in the plans of most others,
> someone is always picking winners or losers. Didn't we learn our
> lesson from the corn ethanol fiasco? And by the way, I'm STILL waiting
> for my hydrogen-powered fuel cell vehicle. Everyone keeps saying
> "when we build out wind and solar...". Well everyone is making the
> same assumption about those 2 technologies as they made about ethanol.
> Wind is NOT, I repeat NOT a new technology. It's been around asa
> sounce of power for hundreds (if not thousands) of years. It's expensive
> and unreliable requiring conventionally powered backup generators
> for large istallations. The industrial revolution needed a better
> power source, and they found it in coal and hydro, not wind. Solar
> is increadably expensive and the infrastructure required to produce
> it in sufficient volume would require an investment of trillions
> of dollars. Not to mention all the nasty byproducts of semiconductor
> manufacturing. And what is to stop the Chinese from being the low
> cost producers and thus provider of choice for wind and solar power
> systems? The point is you and others are making predictions about
> a future that may never arrive (where's my flying car and my free
> nuclear power?). The free market doesn't need central planning. We
> made the choice long ago to subsidize oil and the oil based transportation
> infrastructure and look what that got us. Why make the same mistake
> again? If you build out an NG transportation infrastructure what
> is to prevent that from becomming obsolete as well? We don't know
> for certain if a hydrogen economy will ever exist within our lifetimes,
> so how can we "reuse" the NG infrastructure? When I say start now,
> I mean open the energy market to all competition and end all subsidies.
> That will mean a higher tax on oil to "recover" a century of subsidies.
> We really have to stop subsidizing other people's pipe dreams. Is
> "clean coal" a lie? Who cares! If it can't compete in the energy
> market it doesn't matter. If it really is the most economical solution
> then the market will bear this out. Is solar part of the solution?
> Perhaps, but not at 22 cents per KWh. Should we have the option run
> our cars on NG? Sure, but not if costs more than oil once the required
> infrstructure is built out. Should we import Brazilian ethanol? Sure,
> why not if it meets our requirements. The best energy policy is this:
> Let the market sort out the best combination of cleanliness (greeness?),
> infrastructure requirements, and cost.
I also try to look on the bright side, vehicles are more efficient and run cleaner than they use to. Citizens conserve more than they use to. Corporations are investing in new technologies to reduce energy use. We are making progress, maybe not as fast as would like, but progress none the less.
I do agree that "Cash for Clunkers" is a dumb idea, if for no other reason than the Government needs to stop spending money.
Michael - You and I traded a few posts previously discussing one of your articles, at that time you suggested I read Steven Leeb's book Game Over, just wanted you to know I am currently reading it. just wondering if you have ever read Gusher of Lies by Robert Bryce.
How about a global Kyoto-type policy on population control and then get it going with actual and specific goals with economic and social penalties for non-compliance? Every one of the above discussed problems would be helped immensely or even solved completely by that solution more than all of the posted solutions here added together. Probably by a factor of millions.
Don't want to consider or discuss population control? Then you deserve the world you are getting so stop complaining.
freya: no, not "as usual", i answered your post. you remark that gasoline isn't the only fuel used today is a joke. gasoline *dominates* US car and truck transportation. to believe otherwise is, well, pick a word. and, if CNG "sure as hell" isn't going to replace gasoline, then you tell me what domestic fuel can do so over the next 5 years. please, tell me. and i am still waiting for your energy policy.
freya: haha, now you say "Gasoline/diesel are expensive oil derived products, but there are inexpensive ones and this Tech is available now." which is all i have been trying to convince you of all along! :)
LoveShorting: cool. glad to have you aboard.
bobbobwhite: please read my energy policy and the words in it regarding population control.
one eye: waiting? waiing for what? freya's comprehensive energy policy? me too!
harammph: you called me a liar. so, specifically, what did i lie about?
harammph2: yes, you called me a "god". sounded just like freya to me. you talk about terrorists, and then you support policies that fund them through buying their oil. you and freya should hook up. now i am "inciting violence"??? you really have lost it.
freya: www.eia.doe.gov/
it's all there - all the data and reasons why would should go to natural gas transportation is all right there.
now, where is your energy policy freya?
www.eia.doe.gov/basics...
which is bookmarked on my blog, you'll see that we use 390,000,000 gallons of gasoline every day, each gallon putting out 19lbs of CO2 and enriching the governments that support terrorist, which harrammph does every time he fills up his car with gas and accuses me of doing even though i want to change his fuel from gasoline produced by foreigners to natural gas produced by americans. so, although efficiencies have been improving, it is not reducing our dependence on foreign oil and in fact that dependence is growing and the money we send out of the country is growing. i therefore conclude that efficiency gains in gasoline powered internal combustion engines are actually a bad thing as they give americans the impression that things are improving when, in fact, things are getting worse. we need to *switch* to a new fuel and get *off* of gasoline. as i have said until i am blue in the face, te only domestic fuel that can signficantly reduce the 390,000,000 gallons of gas we burn every day (that is *alot* of BTU's!!) is natural gas. anyhow, let me know about the book. thanks.
She spelled it out for you. Are you that full of yourself?
I'll narrow it down again as I have read it and How the Brazilians did it: Multi-fuel engines. They will give the People "choices" on the Fuels to use. ( My Inclusion, Hybrid-Multi-fuel engines)
EVs thereafter.
Even a dullard should understand that this is an Energy policy in Keeping with an already announced Obama Auto Plan.
Uses for oil other than Gasoline: Diesel, jet fuel, heating oil, asphalt, Cosmetics, plastics, chemicals, etc.
How will CNG's use reduce Foreign Oil imports when it can't replace any of the above uses?
Your Previous Article went into great detail using a CNG vehicle with a tank capable of traveling 200 Miles.
Ladies and Gentlemen: I ask you, who amongst all of you would buy such a car knowing that "You could not get a Refill"?
MF: Answer the question. Don't continue posturing and attacking. How many barrels of Oil will be needed for everything Other Than Gasoline?
I'm waiting, I'm waiting, I'm waiting.
When someone asks a question which derails your vision, Instead of answering, you regurgitate the same data over and over and over and Then ask for a Better Solution.
I've got news for you, "You wrote the Article, You Answer the questions".
Let the Pope Pontificate.
That of Taxing the hell out of their energy inefficient cars, trucks, SUVs or whatever to help pay for your vision.
"The nation’s estimated gas reserves have surged by 35 percent, according to a study due for release on Thursday (6/17). The report by the Potential Gas Committee, the authority on gas supplies, shows the United States holds far larger reserves than previously thought. The jump is the largest increase in the 44-year history of reports from the committee. The finding raises the possibility that natural gas could emerge as a critical transition fuel that could help to battle global warming. For a given amount of heat energy, burning gas produces about half as much carbon dioxide, the main cause of global warming, as burning coal. Estimated natural gas reserves rose to 2,074 trillion cubic feet in 2008, from 1,532 trillion cubic feet in 2006."
Full article:
www.nytimes.com/2009/0...
--R
20% of nations CO2 output was from NG.
Read the full article, you pull out what is favorable, I can pull out what is not.
I read MF's Energy Policy, you should too. He admits to every posited contrary opinion from lack of Industry to lack of infrastructure for it.
That's where I found the Facts about his view on Taxes and the Fact that he boasts about being an Environmentalist.
Your link points out that He is not as good an Environmentalist as he pretends to be since has apparently decided that Polluting the Water Table is Okay.
Three weeks later...oooops.
On Jun 14 11:04 PM c300man wrote:
> This administration and the democratic party are leading our country
> down this dangerous path with their costly and hopelessly idealistic
> energy policies.
>
> As the American public begins to better understand what these energy
> policies will result in in cost and control of their lives I think
> we will see many changes in future elections. We will elect politicians
> who will truly support and push for use of all of our countries natural
> resources especially tight NG and offshore oil. As oil price increases
> oil shale and coal conversion and NG conversion to liquids will increase.
> Use of nuclear energy will be expanded and permitting will be simplified
> and the permitting timeframe will be shortened.
>
> All the while alternative energy systems / types will be supported
> and developed and become a more significant part of our total energy
> supply as they become cost competitive (without subsidies) with the
> proven technologies.
>
> Also, there will always be room to improve efficiency. But again,
> cost should be the determining factor. Small efficiency gains at
> great expense don't always lead to a lower total cost.
>
> All of this just seems like common sense most people would agree
> to if given the opportunity to set energy policy. Unfortunately there
> are so many associated issues that aren't presented honestly such
> as global warming and foreign mid-east oil (really most of it is
> Canadian oil) that leave voters wondering what is best for them and
> our country. I think it will become more apparent and our energy
> policies will swing to more support for use of our own resources.
>
On Jul 15 02:31 PM Michael Fitzsimmons wrote:
> one-eye: your comment re me not being a very good environmentalist.
> let me ask you this: would you rather coal or natural gas? you're
> gonna have one or the other. since you apparently believe i am not
> a very good environmentalist since i support natural gas over coal,
> then i would contend your conclusion is absolutely wrong. coal is
> *destroying* the water table you mentioned with particulate emissions
> and the well documented dangers of fly-ash coal remnants as exemplified
> by the spill in kingston, tn. so, it's a case of pick your poision,
> and in this case, i stand strongly behind my recommendation to switch
> to natural gas: half of the CO2 emissions of coal, and NONE of the
> particulate emissions that are destroying the US water table, our
> lakes, streams, and rivers. does drilling for natural gas have water
> table issues? sure they do. however, compare these issues, objectively,
> to the coal alternative. i *am* an environmentalist. we need to view
> energy with a certain amount of pragmatism or else the facts quickly
> get lost in the emotion.
On Jun 18 07:50 AM Respirate wrote:
> I have no interest in the pointless tit-for-tat above, but there
> is a positive article related to the discussion re: NG supplies that
> supports the notion of NGVs for transportation among other uses:
>
>
> "The nation’s estimated gas reserves have surged by 35 percent, according
> to a study due for release on Thursday (6/17). The report by the
> Potential Gas Committee, the authority on gas supplies, shows the
> United States holds far larger reserves than previously thought.
> The jump is the largest increase in the 44-year history of reports
> from the committee. The finding raises the possibility that natural
> gas could emerge as a critical transition fuel that could help to
> battle global warming. For a given amount of heat energy, burning
> gas produces about half as much carbon dioxide, the main cause of
> global warming, as burning coal. Estimated natural gas reserves rose
> to 2,074 trillion cubic feet in 2008, from 1,532 trillion cubic feet
> in 2006."
>
> Full article:
> www.nytimes.com/2009/0...;emc=th
>
>
> --R
On Jun 16 09:40 PM Michael Fitzsimmons wrote:
> SSALarry: i haven't read "gusher of lies" - did you like it and are
> you suggesting that i should? wrt your comments on cars being more
> efficient and cleaner than they used to - while true, it is somewhat
> a matter of whistling past the graveyard to get comfort from this
> fact. despite the gains in automotive efficiency, the US still uses
> 70% of its oil consumption for transporation and imports 65% of its
> oil (was over 70% back in late 2007 early 2008). in fact, if you
> go to one of my favorite websites (EIA energy "basics"):
> www.eia.doe.gov/basics...
> which is bookmarked on my blog, you'll see that we use 390,000,000
> gallons of gasoline every day, each gallon putting out 19lbs of CO2
> and enriching the governments that support terrorist, which harrammph
> does every time he fills up his car with gas and accuses me of doing
> even though i want to change his fuel from gasoline produced by foreigners
> to natural gas produced by americans. so, although efficiencies have
> been improving, it is not reducing our dependence on foreign oil
> and in fact that dependence is growing and the money we send out
> of the country is growing. i therefore conclude that efficiency gains
> in gasoline powered internal combustion engines are actually a bad
> thing as they give americans the impression that things are improving
> when, in fact, things are getting worse. we need to *switch* to a
> new fuel and get *off* of gasoline. as i have said until i am blue
> in the face, te only domestic fuel that can signficantly reduce the
> 390,000,000 gallons of gas we burn every day (that is *alot* of BTU's!!)
> is natural gas. anyhow, let me know about the book. thanks.
Population decline is already happening bub, but perhaps just not fast enough for you. Lots of articles available on the internet.
On Jun 16 12:42 PM bobbobwhite wrote:
> People think they are doing such good when they discuss alleviating
> the symptoms of a disease instead of the curing the disease itself.
> All of the above comments talk of alleviating the symptoms of the
> world having way too many people. If world population were much less,
> all the above problems would be less. Funny thing how that goes together,
> but no one wants to talk about it formally. World renowned scientists
> say the optimum earth population should be no more than one billion.
> It has over six billion now.
>
> How about a global Kyoto-type policy on population control and then
> get it going with actual and specific goals with economic and social
> penalties for non-compliance? Every one of the above discussed problems
> would be helped immensely or even solved completely by that solution
> more than all of the posted solutions here added together. Probably
> by a factor of millions.
>
> Don't want to consider or discuss population control? Then you deserve
> the world you are getting so stop complaining.
On Jun 15 07:25 PM kertch wrote:
> MF, the problem I have with the entire energy policy argument is:
> the energy policy! In your plan, and in the plans of most others,
> someone is always picking winners or losers. Didn't we learn our
> lesson from the corn ethanol fiasco? And by the way, I'm STILL waiting
> for my hydrogen-powered fuel cell vehicle. Everyone keeps saying
> "when we build out wind and solar...". Well everyone is making the
> same assumption about those 2 technologies as they made about ethanol.
> Wind is NOT, I repeat NOT a new technology. It's been around asa
> sounce of power for hundreds (if not thousands) of years. It's expensive
> and unreliable requiring conventionally powered backup generators
> for large istallations. The industrial revolution needed a better
> power source, and they found it in coal and hydro, not wind. Solar
> is increadably expensive and the infrastructure required to produce
> it in sufficient volume would require an investment of trillions
> of dollars. Not to mention all the nasty byproducts of semiconductor
> manufacturing. And what is to stop the Chinese from being the low
> cost producers and thus provider of choice for wind and solar power
> systems? The point is you and others are making predictions about
> a future that may never arrive (where's my flying car and my free
> nuclear power?). The free market doesn't need central planning. We
> made the choice long ago to subsidize oil and the oil based transportation
> infrastructure and look what that got us. Why make the same mistake
> again? If you build out an NG transportation infrastructure what
> is to prevent that from becomming obsolete as well? We don't know
> for certain if a hydrogen economy will ever exist within our lifetimes,
> so how can we "reuse" the NG infrastructure? When I say start now,
> I mean open the energy market to all competition and end all subsidies.
> That will mean a higher tax on oil to "recover" a century of subsidies.
> We really have to stop subsidizing other people's pipe dreams. Is
> "clean coal" a lie? Who cares! If it can't compete in the energy
> market it doesn't matter. If it really is the most economical solution
> then the market will bear this out. Is solar part of the solution?
> Perhaps, but not at 22 cents per KWh. Should we have the option run
> our cars on NG? Sure, but not if costs more than oil once the required
> infrstructure is built out. Should we import Brazilian ethanol? Sure,
> why not if it meets our requirements. The best energy policy is this:
> Let the market sort out the best combination of cleanliness (greeness?),
> infrastructure requirements, and cost.
On Jun 15 05:32 PM AndyMan wrote:
> We first need to cut spending like no other....abolish the fed reserve,
> get rid of departments on the federal level...shrink government everywhere
> we can....let the market control interest rates, etc.
>
> We should have a recession...let credit contract and build a solid
> foundation.
>
> Once we do these steps.....businesses will come back...taxes will
> be low.....and people will need to work again. Borrowing will decrease...home
> prices will probably continue to fall to affordable levels....the
> price of education will fall.....the dollar with strengthen...commodities
> will cheapen.....and savers will not get killed through decreased
> purchasing power.
>
>
Quote: Bankrupt American automaker General Motors manufactured bifuel vehicles for years
Comment: Yes, probably that was one of their many bad decisions that go GM where it is today. They were out of touch with their potential market.
Quote: Ford did too. But the cars were manufactured mainly for the Brazilian market. Brazil now has over one and a half million NGV's, many of which are GM/Ford NGV bifuel vehicles
Comment: Brazil is manufacturing fuel out of crops (grown on former rain forest?).. With a booming population of poor people who need to eat, perhaps that isn't the best use of farmland, but hey, that's only my observation from having visited San Paulo. So the rich get richer, and the poor get nothing except more babies.
Also Brazil has plenty of oil to sell, along with its plethora of other natural resources. Their population is interested in creating manufacturing jobs and businesses, unlike the US since the beginning of the "environmental age". Mostly Brazil doesn't worry about environmentalism. Same in China.
Quote: Second, Amoco Oil Company (now BP) built a number of natural gas fuel stations at select "gasoline filling stations" locations in the Chicago area during the 1980's. The stations were only phased out in the late 1990's as crude oil prices sank. The argument that a backbone infrastructure of natural gas fuel stations could not be built across the country (say at 1 of every 25 stations) to support an NGV fleet is without merit.
Comment: Since Amoco found that consumers were not interested in n.g. pumps, thus n.g. was not commercially viable for them, Amaco's officers would have been tarred and feathered by stockholders if they had built n.g. stations through the US. Do you live in the US? Do you have any idea of how large the US is and how many millions of wasted dollars that would have been? And by the way, there are no natural gas lines through much of this country. Who's going to pay for those to be laid? Taxpayers? Or will you volunteer?
Quote: Third, it is hard to deny that Brazil has had much better political leadership with respect to energy issues over the past 30 years than any US administration, Republican or Democrat. Brazil is now reaping the benefit of that 30 year investment in energy independence with high rates of economic growth that the US can only envy.
Comment: Oh, I think you live in Brazil! Yes, I'm sure that for the upper classes, of which yu may be a membert, life is good, but for the gigantic underclass, that's not true, no matter how many crops are grown for car fuels that could be utilized to feed the masses.
On Jun 15 02:24 PM George Marchetti wrote:
> A couple of observations.
> First, natural gas and gasoline (as motor fuels) are not mutually
> exclusive. Bankrupt American automaker General Motors manufactured
> bifuel vehicles for years. See, www.fueleconomy.gov/fe....
> Ford did too. But the cars were manufactured mainly for the Brazilian
> market. Brazil now has over one and a half million NGV's, many of
> which are GM/Ford NGV bifuel vehicles.
> Second, Amoco Oil Company (now BP) built a number of natural gas
> fuel stations at select "gasoline filling stations" locations in
> the Chicago area during the 1980's. The stations were only phased
> out in the late 1990's as crude oil prices sank. The argument that
> a backbone infrastructure of natural gas fuel stations could not
> be built across the country (say at 1 of every 25 stations) to support
> an NGV fleet is without merit.
> Third, it is hard to deny that Brazil has had much better political
> leadership with respect to energy issues over the past 30 years than
> any US administration, Republican or Democrat. Brazil is now reaping
> the benefit of that 30 year investment in energy independence with
> high rates of economic growth that the US can only envy.
> Fourth, the dollars that US consumers spend on fuel can either be
> (i) spent on building up the economies and infrastructure of OPEC
> or (ii) building up the economy and infrastructure of the US. Take
> your pick.
> Fifth, the US currently imports 65% of its petroleum. According to
> the Government Accountability Office, the US light duty vehicle fleet
> accounts for 65% of total petroleum usage. In effect, the ENTIRE
> US light duty fleet can be viewed as running on imported petroleum.
>
>
> Fitz-- Great article as usual.