I am deviating somewhat from my weekend think pieces on sectors of the economy and returning to my past life in global infrastructure development. I am at a convention of sorts of energy industry professionals who are at the front lines of implementation of energy processes - not the fat cats viewing the world from the 40th floor.
The consensus is that the world is far from peak energy if cost is ignored. The difference between professionals and politicians is that professionals explore all options - and are only removed from the table for technical issues (such as process reliability, costs). Environmental issues play second fiddle to professionals - not because environmental issues are not important - but because environmental issues are solved through the design and process improvement cycle. Even after processes come on line, they are constantly reformed for a variety of issues - including cost and environmental.
This natural flow is called continuous improvement. No successful organizations limit development of options or block continuous improvement cycles.
I listened to field tests being done in oil / gas extraction, nuclear and renewables. No one believed any one form of energy had the potential to dominate based on cutting edge technologies on the drawing boards. However, as a group - we believed when viewed as whole, there is no reason for a net importation of energy into the USA. Instead of forcing stricter regulations (such as done with auto industry fuel consumption) - government policies literally have removed coal and nuclear from the table, while significantly restricting expansion of gas and oil "mining" and pipelines.
- I am not a big fan of coal, especially the big lignite fueled power stations in the West based on current methodology. Wasting 1/3 of the potential energy output on environmental systems (bag-houses and precipitators) means we are wasting much of this resource ahead of its time when technology could prevent this waste.
- The current crop of nukes had a 40 year design basis - and they need to be replaced with the new "fail safe" technologies. To most of us building this past generation of nukes, the concept of suppression pools to contain a loss-of-coolant (LOC) accident was viewed as peeing on a forest fire. Current state-of-the-art plants are exponentially safer as LOC situations are theoretically prevented.
Based on current technology and price structures - the reason the USA is not energy independent is only political. The USA could not be energy independent at spot oil prices of $38 per barrel. At $100, massive hydrocarbon reserves which are now commercially extractable within USA property lines. Combine this with "fail safe" nuke power generation, natural gas, renewables, and continued emphasis on conservation.
Interesting on the above graphic that the EIA sees a falling share of GDP consumed by energy.
Back in August of 2008, I posted a piece at Seeking Alpha arguing $200 oil may be a good thing for the USA. Long term, high energy costs favor local made products. No question high energy prices are disruptive, but over long spans so are trade imbalances.
Politicos criticize China for developing an export centric economy, yet roughly half of the current USA trade deficit is oil. It seems politicians not only do not explore options, but are good at transferring blame of conditions they cause to others.
My weekly economic summary and scorecard is located here.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.