China Repeats U.S. Energy Policy Mistakes

When Y.E. Yang beat Tiger Woods in a head-to-head battle to win the 91^st PGA Golf Tournament last Sunday, it was the first major golf tournament won by an Asian. As golf pundits began to talk about the celebrations that will take place in Yang’s home country of Korea, I began to think about just how many golfers the Asian countries would field in 10 years simply as a result of Yang beating Woods. As someone obsessed with energy issues, I then started thinking about how many Asians may be driving a car to golf courses.

In June of this year China’s auto sales increased by 36.5% over the prior year to 1.14 million units. In the first half of 2009, total auto sales rose 17.7 from a year earlier to 6.1 million units. At this rate, China will overtake the U.S. as the world’s largest auto market this year.

The vast majority of these vehicles are powered by gasoline. One might expect a car like the Toyota Prius (TM) to be selling like gangbusters in China. This is not the case. Various Chinese policies have pushed up the price of a Prius to $36,500 in that country and Toyota now expects to sell only 1,000 to 1,500 of the cars in China this year.

By comparison, the cost of a Prius in the U.S. is around $23,500. In the first half of 2009, over half of Toyota’s 1.2 million Prius sales worldwide were sold in the U.S.

The point here is that China appears headed to duplicate America’s love affair with the gasoline powered automobile and its addiction to foreign oil. For a country with 1.3 billion people (1 billion more than the U.S.) the worldwide impact of Chinese automobile use is not hard to predict: Chinese oil imports will continue to surge and oil supplies around the world will tighten in the very near future.

The Chinese authorities have responded by securing oil deliveries from Brazil, Russia, Venezuela, and other oil exporting nations around the globe. They certainly have the financial wherewithal to do so.

However, surely the Chinese must realize American economic, environmental, and national security vulnerabilities to foreign oil addiction. Why would they set the stage in China to repeat glaring U.S. energy policy mistakes? What is China doing to combat foreign oil addiction? In particular, what is the status of natural gas transportation and policy in China?

Here are some bullets from a 2006 article by Guan Saw, of Cummins Westport, Inc:

• China has more than 240,000 NGVs (U.S. has 120,000)
• Over 720 CNG refueling stations (U.S has 1,100 – half are public)
• Comparatively low conversion costs (U.S. has high conversion costs)
• Government initiated training programs and subsidies
• Natural gas is only 2% of China’s total energy consumption
• China has abundant natural gas reserves
• Beijing Public Transit owns a CNG fleet exceeding 2700 units
• Xi’an had 27 CNG stations in 2004; with government support, Xi’an had 50 stations by 2005
• The Chinese National Clean Auto Leading Group is setting standards and regulations for NGVs, refueling stations, and leading research.

So, it looks like the Chinese government is supportive of natural gas transportation, but China’s big problem is lack of natural gas infrastructure. That is, the lack of pipelines to distribute natural gas to and throughout its populous eastern cities. The U.S. on the other hand has the most distributed natural gas pipeline grid of any country on Earth: its 2.2 million miles of pipe connecting every major metropolitan city and 60,000,000 American homes. Let there be no doubt:

The natural gas pipeline grid in the United States combined with abundant natural gas supply is the most strategic energy, economic, and industrial advantage the U.S. holds over every other country on Earth – including and especially China.

Now if we would only leverage this huge advantage! Does anyone really believe the Chinese would not take advantage of this strategic advantage were the roles reversed? Of course they would! If the Chinese had the natural gas pipeline grid and supply the US has, they’d have a Phill in every garage, 10,000 CNG stations, and they’d be making NGVs by the hundreds of thousands.

Yet despite this huge strategic advantage:

• U.S. Energy Secretary Chu is “agnostic” about natural gas transportation(!)
• President Obama has not embraced natural gas transportation and is completely silent
• The EPA, which should be pounding the table for natural gas transportation, has instead been the biggest constructor of NGV roadblocks
• You cannot purchase a Phill or a Honda Civic GX in most states

So, although the Chinese are following the wrong-headed footsteps of the U.S. when it comes to gasoline powered automobiles and foreign oil addiction – at least they have an excuse (the lack of robust natural gas pipeline grid). They give an eye-tooth for the natural gas pipeline grid the U.S. has.

Things aren’t much better on the coal front. China is now the world’s leading producer and consumer of coal:

These charts are based on 2005 data. For a more current and in-depth report on worldwide coal consumption, please read this report by the EIA (pdf warning).

Again, I doubt the Chinese would be planning to build all the coal fired plants they have on the table now if they had the natural gas supplies and distribution system that exists in the U.S. But they don’t, and they need power, and they are going to again follow wrong-headed U.S. energy policy.

But what is the excuse in the U.S. to keep burning coal? I sent a letter to the Knoxville, TN newspaper recently (it was printed in Sunday’s edition) and said that all the investigations and of how and why the TVA’s toxic fly-ash spill at Kingston happened and what they can do to prevent future releases of toxic coal remnants is missing the point.

The real question is: why are we still burning coal when we have a fuel that emits 50% less CO2, has none of the toxic particulates that were released into the Emory River during the disaster (and then the TN river, and then…etc. etc.), is cheaper, and abundant? After all, we know how the disaster happened: the TVA wants to generate electricity as cheaply as possible and the EPA doesn’t protect the environment.

It’s as simple as that. Making matters worse is an administration headed by Obama and Chu both of whom repeat the myth of “clean coal” as often as humanely possible and are going to spend billions of tax-payer dollars to prove that “clean coal” is indeed a myth and an oxymoron. I guess some folks think if they repeat something enough times it will make it so.

So how should an American investor invest given these realities? Well, first off, it is my feeling that:

1. Oil will be in more-or-less a permanent contango situation for the rest of history. That is, in general the price of future oil deliveries will be higher than current spot prices from here on out.
2. The historical oil to natural gas price ratio is no longer valid. Natural gas is abundant and cheap, and the opposite is true of oil

You can blame these trends on peak oil, but the term peak oil usually brings on partisan debates I’d rather not get into here. The reality is simply that worldwide oil supply will not keep up with worldwide oil demand in the very near future (and I haven’t even mentioned India or the rest of Asia in this article).

People are wondering now, how in the world can oil be at $70/barrel when U.S. inventories are near 20 year highs? It must be speculation (wrong!). It’s simply because traders:

1. Remember the supply/demand fundamentals of 2007/2008
2. Realize big oil companies are for the most part scaling back E&P expenditures
3. Realize the long-term oil consumption trends of China and India
4. Realize the U.S. is doing nothing to get off foreign oil
5. Realize oil is the one strategic commodity without which there can be no economic growth or even a functioning world economy.
6. Oil is prices in U.S. dollars and the future trend for that currency is arguably down
7. Realize oil wars and geopolitical risks must be factored into current and future prices

Now, the assumption behind points 1) and 2) listed above is that we have a functioning world economy, and this is quite a bold assumption. Obama appears more than happy to continue (and expand) the ruinous policies of the previous Bush administration:

a) Terrible energy policy

b) Huge deficit spending

c) Government takeover and ownership of many economic sectors

d) And print as much of the U.S. currency as possible to pay for a) through c) above

Given these ridiculous policies, it is quite possible the U.S. economy, and the world economy for that matter, will struggle along for some years to come. In the long run, however, the extremely bullish fundamentals for oil prices will not be impacted even by slow economic growth. The only way to significantly change oil supply/demand fundamentals is for both the U.S. and China to embrace natural gas transportation.

However, I have just explained that China cannot do so (at least in the short term) and the U.S. simply refuses to do so (even though it could very easily make the transition).

So, it’s no surprise that I would suggest investors own a company that produces around 4 million barrels of oil a day (XOM), or around 3 million barrels a day (CVX), or nearly 2 million barrels a day (COP). How can an investor not own oil companies like BP and PBR that are increasing oil production while others can barely keep production from falling?

All these oil companies pay decent dividends – although XOM is very stingy considering their excellent balance sheet, efficiencies of scale, and humongous cash flow.

U.S. companies like Fuel Systems Solutions (FSYS) and Westport Innovations (WPRT) have their most robust growth perspectives outside the U.S. Perhaps if HR1835 get passed by Congress (I’d be shocked given the “leadership” in DC these days) the market for natural gas transportation in the U.S. will be bursting at the seams soon.

That said, the future for both these companies is bright as many countries around the globe apparently understand that reliance on foreign oil imports is a recipe for economic disaster even if the US does not.

Disclosure: the author owns COP and PBR.

Comments

[Michael Fit...:]

fran: i totally agree with your comments. i tried to give a feel in the article that while the chinese are following U.S. energy policy mistakes of the past (and the present...), in large part it is not their fault as they don't have the main option the U.S. does (i.e. natural gas via our second-to-none natural gas pipeline grid and supply. and yeah, chinese officials must try to keep the population happy (can you imagine living in a country with a billion more people than in the U.S.?) and a big part of that is supplying them with cheap energy and economic growth. all that said, they still have more robust support for natural gas transportation from the gov than does the U.S. and are moving heavily into solar and wind. what i was trying to convey in the article is, despite these attempts to move away from oil, the facts remain (as they do in the U.S.) that china will rely on oil based personal transportation (i.e. gasoline powered autos) for some time to come and this is extremely bullish for oil prices in the very near future.

Aug 20 10:33 AM

[Michael Fit...:]

freya: i don't like being called a liar. i want you to show me where i ever said that NGV's reduce CO2 emission by 50%. even in the comment you post to prove your point, i said, correctly, that NGV's reduce CO2 emission by 25-30% over automobiles. i simply ask you to stop your personal attacks on me and debate the *actual* things i write, not what you have misinterpreted me to say. if i ever wrote, anywhere, that NGVs reduce CO2 emissions by 50% *over gasoline powered autos* i will be the first one to apologize and retract that statement. please try to be more constructive with your comments, push your dislike for me aside, and debate the facts.

Aug 20 10:38 AM

[Michael Fit...:]

freya: by the way, if you cannot find an example where i said (incorrectly) that NGVs reduce CO2 emission by 50% over gasoline powered automobiles, i expect an apology. i am sure i won't get one, but i wanted to let you know most decent people would not call people a liar unless they produced the facts and gave them the benefit of the doubt that it was not intentional. most decent people would also apologize for doing so. thanks for polluting yet another comment section of my articles with your false assertions.

Aug 20 10:45 AM

[Jiang Nan:]

I stick by my comment that EV is the future not wanting to go into a lengthy discussion about where the electricity is coming from.

Just tell me, how long are all those fossil fuels (oils, gasoline, natural gas, coal) going to last?

Putting in place a infrastructure require precious resources, capital and time, with wind and sun, at least we know for certain a reliable source of electricity generation.

I agreed with the comment on the need for efficiency and high gasoline tax to discourage wastage (driving 1 km down the road to pickup a 1L milk from the store) with the proceed going toward public transportation.

Between 2009 - 2011, China will spend some RMB2 trillion on its railway, I think that count for something.

Aug 20 11:38 AM

[Ben Gee:]

China has a choice of employment vs the enironment.

Aug 20 11:57 AM

[john s. gordon:]

part of china's NG resource base is coalbed methane.
many of china's seams are gassy and are not (safely) mineable prior to CH4 drainage,
> jack

Aug 20 12:54 PM

[Old Wizard:]

Fitz, I believe I have read just about all of your posts and it is obvious that you have clearly made the distinction between less co2 emmissions between natural gas and coal and natural gas and gasoline as you have stated above. Any one who really looks at the total problem of the country's increasingly negative operating cash flow, the need to create real and lasting jobs, the strategic shortcomings created by our dependency on imported oil and our desire to decrease air pollutants couldn't help but want to create a solution that materially solves each of the above with a comprehensive energy policy that led to significant and measurable results, simultaneously, to all of the above in the near future. A sense of urgency borne of our economic dependency on China and other friendly? country's requires such results to occur in 5 years and each year thereafter. Rather than argue about specific technologies and alternate energy approaches, I challenge all of those descenters to your articles to put forth an energy plan that produces significant progress in 5 years which does not include natural-gas deriven transportation. As I have commented in the past, realistically, ev's won't do it, alternate energy sources per the president's own stated goals will provide 15% of current electric generation by 2020 and that assumes a doubling of such sources every 3 years and given what is happening in nuclear power plants, we will be fortunate to maintain the capacity we have now in 5 years. By the way,Fitz, just to reinforce your thinking, the administration just authorized a 2b+ investment in Petrobas to drill off the Brazilian coast for OIL! Of course, I won't read too much into this with regard to policy, but it is roughly the equivalent to the announced battery investment. As another aside the US Naval research center unveiled a new unmanned aerial vehicle[UAV] that is powered by a fuel cell made by an american company in Ma.. The announcement stated that battery power was discarded because it did not afford suffient pay load. Keep up the fight for natural gas-driven transportation, because it's the right near and intermediate term solution for our country's well being. By the way if you want an investment tip invest in Petrobas. George Soros invested over 8oom in it just before our Government made its investment.

Aug 20 03:02 PM

[bcc:]

"In the first half of 2009, over half of Toyota’s 1.2 million Prius sales worldwide were sold in the U.S."

When you make such a glaringly incorrect statement such as this early in your article, why should I be encouraged to believe any of your other statistics or indeed, commentary in general?

Aug 20 03:13 PM

[Michael Fit...:]

jiang nan: you are making the same mistake the environmental "purists" (as i like to call them) are making by lumping the "good" fossil fuel (natural gas, which may have non biological origins) with the "bad" fossil fuels (oil and coal). as far as how long natural gas will last, please read my article:
seekingalpha.com/artic...
which addresses your question. better yet, read robert hefner's book "the grand energy transition". btw, note nat gas fell below $3 today for the first time since 2002. also, please note that my energy policy (refer to my website) supports wind, solar, and EVs. however, what i don't support is a plant to build EVs before we have the wind, solar and/or nuclear infrastructure to recharge them. that means ****burning more coal****. and that is the mistake most environmental "purists" are making - they are dissing the only fuel capable of reducing foreign oil imports and coal combustion while at the same time reducing CO2 and particulate omissions and bridge us to a solar, wind, and hydrogen future. that fuel is natural gas.

freya: clean coal is simply a myth and an oxymoron. there is no way to burn coal and not be left with a cocktail of heavy metal wastes. you'll do and say anything to support a ridiculous assertion, and you never follow up your falsehoods with documentation - you simply move the discussion to some other irrelevant issues. you're a waste of time and i wish you would go pollute someone else's articles as you never add anything constructive to the conversation. so we get it freya: you hate natural gas transportion. so, what do you support freya? foreign oil addiction? apparently so. coal consumption? apparently so. why don't you just come out and say what you are for instead of your ridiculous and non-substantiated falsehoods on the truth about natural gas transportation? it's impossible to debate you on facts because you never stay with them. you call me a liar about CO2 emissions, then cannot substantiate, then won't apologize and move to some other irrelevant issue. please just go away.

ben gee: with a population of 1.3 billion, i would tend to agree with you. one of the main points of the article was that china doesn't have the option to use more natural gas for transportation and electical generation (in the short term), while the U.S. does have that option and simply choses not to do so (at least the policymakers and obama and chu chose not to). HR1835 will be the true test. if that doesnt pass congress, i am leaving the country.

old wizard: thanks for the comments, and yeah, i saw that about PBR. the US has also taken an aircraft carrier out of the mothballs and is now cruising south america again (the US stopped this years ago because there was "no strategic need"). wrt freya, her comments roll off me like rain on a duck. she makes nasty assertions (i am a liar, i am a terrorist because i want to get the US off foreign oil etc, etc) really looney tunes stuff and never contributes anything constructive. her attempt today was that "clean coal" is here today and commerically available. what a joke. and yeah, PBR is a great stock to own because they are increasing production while other oil companies are either standing still or declining. not to mention that china is also sending money to brazil for oil production and supplies (they were first, the US came after). interesting how the US "capitalist system" figured out how to send brazil $2 billion....

bcc: en.wikipedia.org/wiki/...
i will accept your apology at once, but i am sure like freya it won't be coming. SA used to be a forum for intelligent conversation and debate. people like you and freya are really lowering the bar by making negative assertions without facts to back them up. fortunately, your own posts will document your falsehoods forever in print.

freya: the heads in the sand are those believing that there is such a thing as clean coal. i'm glad you continue to document your views in print as they are a testament to your true character and intelligence. i cannot wait to see what your next post says as you just keep diggin yourself a deeper hole. oh, and thanks for the apology you didnt send, nice touch.

Aug 20 08:03 PM

[PVizzle:]

I would like to point out that the PRC currently subsidizes the price of gasoline to an artificially low level. This means that the Chinese are incentivized by their own government to destroy a non-renewable and vital resource at a rate FASTER than it is currently being depleted in the U.S.

I agree that natural gas is a viable alternative to oil. However, horizontal drilling for nat gas is environmentally hazardous, pollutes thousands of gallons of water and relies upon other types of carbon based fuels for the actual drilling process. Basically, the process is not CHEAP, it is relatively cheap compared to say mining shale or deepwater drilling.

Aug 20 08:43 PM

[Michael Fit...:]

PVizzle: your comment about china subsidizing gasoline supports my position that their oil consumption will grow, much as US subsidization of gasoline through oil wars and military spending on securing oil transport does. as far as natural gas drilling goes, i disagree on the economics - it is bringing on huge supplies at cheaper costs and this is one big reason nat gas is now below $3. as far as the environment, we have our choice: we can keep burning ever more coal and oil, which we know are the more destructive of the fossil fuels, or, we can decide to use more natural gas, which significantly reduces both CO2 and particulate emissions, and use it as a cleaner bridge fuel to a future of wind, solar, hydrogen, and nuclear. for those people who say, in the vein of environmental concerns, that we should keep burning coal and oil at the expense of natural gas, they simply lack the pragmatic ability to logically address the problem in realistic terms.

freya: i was going to write articles on nuclear, and i am still researching the subject. unlike you, i like to know what i am talking about before i write about something. however, when i discovered the idiotic responses and arguments you always make due to your illogical hatred of natural gas transportation, i found that i got more enjoyment hammering away on support of it.

Aug 21 08:33 AM

[Michael Fit...:]

freya: with respect to coal emissions, there is no such thing as clean coal because even if CO2 emissions are sequestered, what are they doing with the toxic byproducts? lead, mercury, thorium and more - a toxic cocktail of heavy metals that are now in every body of water in the US. an article yesterday in the media said that tests on fish in 200 streams and lakes in the US detected mercury in every sample. this is the result of the coal burning you support. clean coal IS a myth. i don't need to read any articles you point me to to understand this simple basic fact. it is you, obama, and chu that have your heads in the sands because you simply don't understand basic chemistry and physics.

Aug 21 08:37 AM

[bcc:]

Either you are very careless, or you don't understand the difference between "In the first half of 2009" and "Through the first half of 2009."

Either way, why should anyone bother reading past that glaring error?


On Aug 20 08:03 PM Michael Fitzsimmons wrote:

> jiang nan: you are making the same mistake the environmental "purists"
> (as i like to call them) are making by lumping the "good" fossil
> fuel (natural gas, which may have non biological origins) with the
> "bad" fossil fuels (oil and coal). as far as how long natural gas
> will last, please read my article:
> seekingalpha.com/artic...
>
> which addresses your question. better yet, read robert hefner's book
> "the grand energy transition". btw, note nat gas fell below $3 today
> for the first time since 2002. also, please note that my energy policy
> (refer to my website) supports wind, solar, and EVs. however, what
> i don't support is a plant to build EVs before we have the wind,
> solar and/or nuclear infrastructure to recharge them. that means
> ****burning more coal****. and that is the mistake most environmental
> "purists" are making - they are dissing the only fuel capable of
> reducing foreign oil imports and coal combustion while at the same
> time reducing CO2 and particulate omissions and bridge us to a solar,
> wind, and hydrogen future. that fuel is natural gas.
>
> freya: clean coal is simply a myth and an oxymoron. there is no way
> to burn coal and not be left with a cocktail of heavy metal wastes.
> you'll do and say anything to support a ridiculous assertion, and
> you never follow up your falsehoods with documentation - you simply
> move the discussion to some other irrelevant issues. you're a waste
> of time and i wish you would go pollute someone else's articles as
> you never add anything constructive to the conversation. so we get
> it freya: you hate natural gas transportion. so, what do you support
> freya? foreign oil addiction? apparently so. coal consumption? apparently
> so. why don't you just come out and say what you are for instead
> of your ridiculous and non-substantiated falsehoods on the truth
> about natural gas transportation? it's impossible to debate you on
> facts because you never stay with them. you call me a liar about
> CO2 emissions, then cannot substantiate, then won't apologize and
> move to some other irrelevant issue. please just go away.
>
> ben gee: with a population of 1.3 billion, i would tend to agree
> with you. one of the main points of the article was that china doesn't
> have the option to use more natural gas for transportation and electical
> generation (in the short term), while the U.S. does have that option
> and simply choses not to do so (at least the policymakers and obama
> and chu chose not to). HR1835 will be the true test. if that doesnt
> pass congress, i am leaving the country.
>
> old wizard: thanks for the comments, and yeah, i saw that about PBR.
> the US has also taken an aircraft carrier out of the mothballs and
> is now cruising south america again (the US stopped this years ago
> because there was "no strategic need"). wrt freya, her comments roll
> off me like rain on a duck. she makes nasty assertions (i am a liar,
> i am a terrorist because i want to get the US off foreign oil etc,
> etc) really looney tunes stuff and never contributes anything constructive.
> her attempt today was that "clean coal" is here today and commerically
> available. what a joke. and yeah, PBR is a great stock to own because
> they are increasing production while other oil companies are either
> standing still or declining. not to mention that china is also sending
> money to brazil for oil production and supplies (they were first,
> the US came after). interesting how the US "capitalist system" figured
> out how to send brazil $2 billion....
>
> bcc: en.wikipedia.org/wiki/...
> i will accept your apology at once, but i am sure like freya it won't
> be coming. SA used to be a forum for intelligent conversation and
> debate. people like you and freya are really lowering the bar by
> making negative assertions without facts to back them up. fortunately,
> your own posts will document your falsehoods forever in print.<br/>
>
> freya: the heads in the sand are those believing that there is such
> a thing as clean coal. i'm glad you continue to document your views
> in print as they are a testament to your true character and intelligence.
> i cannot wait to see what your next post says as you just keep diggin
> yourself a deeper hole. oh, and thanks for the apology you didnt
> send, nice touch.

Aug 21 08:38 AM

[Old Wizard:]

Freya, The investment in the Brazilian Oil Company was discussed in the Wall Street Journal,this week. I don't remember which day and was carried by some of the media yesterday. The administration is the current one, since it was just announced. Technically, I believe it is through the import export bank and is money the US government guarantees, when it is borrowed or provided by that agency, which is an agency of the federal GOV. The Soros investment is also discussed in the same article and has been covered by some media channels. The press secretary was apparently asked about the gov. investment at a press conference this week and the official response is that the gov. is looking into it. The UAV announcement is contained in excerpts from the submarine league's newsletter and probably can be found by googling NRL. If not,if you give me an address,I will forward the newsletter to you. I still would like you to respond to the challenge of delineating a comprehensive energy plan, that achieves measureable and significant results in 5 years and provides positive progress on all four problems, I discussed, simultaneously. Some of us have tried to put forth such a plan and have inevitably been led to the natural gas-driven option as the most viable for the next 5 to 10 years, while the more promising other techniques mature and are implemented. I, personally believe that the switch to wind and solar is underwhelmed by the stated investment and the drive to force electric car production so quickly will only increase the trade imbalance with China. The investment strategy we are following as a nation seems not to be coherent as the investment in Brazil implies and since it comes by borrowing massive amounts of money from folks who don't necessarily like us, is a dangerous situation for our country's future well being. A constructive discussion where we attempt to be as objectively analytical as possible should be not only our aim on seeking alpha, but what we should demand from our Government decision makers. I'd like to see the coherent plan with actual milestones as a function of time and with the measures of performance being less imported oil, less co2, and the number of US jobs created. My suggestion is 5million barrels of oil less imports in 5 years and 10 less in ten years, 10% less co2 emissions in 5 years and 25% less in 10 years, 1 million new american jobs in 5 years and 3 million in 10 due to our energy plan. Anyone who says they have a solution should put it up for discussion in these terms so that we can carry on a meaningful and constructive dialougue.

Aug 21 11:48 AM

[TeresaE:]

China is encouraging gas-driven for a multitude of reasons, at the top is (and this is just my speculation) the FACT that they are out BUYING influence with their cash in some of the biggest haters of America (and the Western society) in the world.

Russia, Iran, Venezuela, and the like. China's $$$$ is fueling these countries like mad.

So, since China also is VERY protectionist with their citizens, and most cars the Chinese buy are made in good ole mother China, it only makes sense to push for more and more gas-powered vehicles.

A couple years ago I compared the current status of China's manufacturing and standard of living to the US in the early stages of the industrial revolution. What most of us forget is how filthy this country was pre-70s environmental push. Anyone else remember the crying Native American commercials?

Anyway, China has a (reported -more likely than not, understated) population of 1.3 billion to feed. They could not care a whit about our environment as evidenced by their own food fields covered in ash and growing pollution-related illnesses. What is a few million deaths in a country stressed to its breaking points with population?

Yet we in America continue down the path of forcing more of our businesses to give up "competing" and just close (bow) to China. This time based on Global Warming instead of cheap socks and high tech.

As to natural gas, Michigan is sitting on some of the largest deposits in the country. And over EIGHT years into our "recession" we still have NO programs to build the cars or outfit a delivery system even with leadership that touts nothing but green energy and saving jobs.

As usual, the real politics have NOTHING to do with viable solutions and everything to do with getting re-elected with corporate money.

Thanks for the interesting article.

Aug 21 12:16 PM

[Old Wizard:]

Freya, The local paper carried a letter from an ex-im bank official, yesterday, that stated it was an investment in Ameican jobs because Petrobras would buy American equipment and services. He also asserted that it would cost the taxpayer nothing, since the investment would be covered with interest. I have a problem with the logic of our making an investment in a very profitable company to help them do deep drilling in the ocean for oil, while our government continues to have a stated policy not to do so here for environmental reasons. The simple fact is that more oil from Brazil will only provide more oil for everyone including China which has also invested in this company and to the extent the US imports it, will contribute negatively to our operating cash flow when compared to our drilling for oil off our own coasts. Relative to the use of natural gas, We certainly could start converting all bus,truck and pooled vehicles and providing natural gas drops to their home garages and terminals, followed by gas stations in major cities, etc. An assertion that we can solve the electrical refueling and the electric grid control problem faster needs some facts to back it up. Natural gas buses are already in operation in some of our cities and companies like AT@T have announced plans to convert their fleet to natural gas. The solution to reducing our negative current account has to include reducing our importation of oil. Electric cars do this but unfortunately the countries with the leading battery candidates and lower labor rates do not include the US. It would be refreshing to embark on an energy solution that uses our resources, our labor force and our brain power and know how to solve our economic problems. What ever happened to enlighted self interest?

Aug 22 02:01 PM

[Old Wizard:]

Freya, I don't know enough about what Brazil is doing with flex fuel other than they use sugar cane derived ethenol. It is curious, however, that their state-owned oil company wants to deep drill for oil. If they are that successful with alternate fuels and if the USA's energy policy will materially impact oil usage, why are they doing so. Could it be that 1] our energy policy won't materially impact oil usage here and 2] the Brazilian government understands that having their country's operating cash flow be 0 or greater is in the best interests of the country's well being? In a previous comment you said that the ex-im bank's investment in Petrobras was misunderstood. You didn't respond to my reference to the ex-im bank official's statement. Can you elaborate? A short term energy plan that drives our current account toward 0 is ,I believe, sorely required if the USA is going to solve our economic problem. It should be addressed with a sense of urgency and can't wait to 2020 or2030. If flex fueled cars can solve the problem, I'm all for it. I only require that we make significant progress in 5 years and constrain the solution to reducing the current account balance at least 220b in 5 years and approach a current account yearly balance of 0 or greater in ten.

Aug 23 03:29 PM

[one eye:]

Given this statement from Mr. Fitzsimmons: " i expect an apology. i am sure i won't get one, but i wanted to let you know most decent people would not call people a liar unless they produced the facts and gave them the benefit of the doubt that it was not intentional. most decent people would also apologize for doing so. thanks for polluting yet another comment section".

I'm surprised that Freya apologized at all. "Polluting" yet another comment section?

But you won't apologize for 16 months worth of incorrect(False) statements regarding the USD. Which, BTW, really only rose and Briefly because of the Asian Currency Crisis and the Creation of the Euro which promptly dropped like a Rock (as a part of the USD Index) Risk Aversion existed then too.

You are an Unemployed Electrician looking for work but aspiring to be An Economist, An Environmentalist, A Mechanical Engineer, and a General Know-it-All.

You believe in the Right of a Terrorist Nation to build Nuclear Weapons, Iran.

Am I polluting your Comment Section too? I read Freya's Insta. You Back Palestine's Government (Led by a Terrorist Organization) and You Back Iran.

Do you want me to quote Back Your Comments to you?

You are "Polluting" SeekingAlpha with your Presence.

Aug 23 04:24 PM

[harammph:]

Old Wizard: Brazil recognized their dependence on Oil early and embarked on a Mission to become Oil independant. It is a relatively small country(in terms of Population). It took decades. Ethanol played a small part in the beginning, Flex-fuel cars played a big part. As the Ethanol aspect expanded, the did not have to retool, the engines could use whatever was cheapest, if need be.

Its a Natural Resource Rich Country: Agriculture, Iron ore, base metals, etc. They are doing what any sensible country is want to do, they are preparing for the Future. Their Oil Program is ambitious but they apparently know well enough to expand the Base of the Commodities they will be able to offer. Just because they do not need it for themselves Now, doesn't mean expansion stops.

Aug 23 04:52 PM

[Swashbuckler:]

I am inclined to agree with one-eye. Iran is arguably the largest state-sponsor of terrorism in the world and proud of it. They are public and vocal in their hatred for Israel and the USA. Rationalizing the nuclear arming of Iran may be the single stupidest thing I've ever read on an SA blog. The quoted remarks on Freya's Instablog do not reflect well on the author.

Aug 23 08:58 PM