The Real Solution to the Energy Problem

We have now spent over $1 trillion to get oil from the Middle East. We spend billions of dollars to maintain military bases in Saudi Arabia, Iraq and Kuwait. We've stirred up a hornet's nest in order to keep crude flowing out of the Middle East. Say what you will, but everyone knows that the only reason we are in the Middle East is because of the oil. We didn't get involved in Rwanda or Myanmar or Sudan because they didn't have massive reserves of oil.

Next, we decided on using our food supply as energy in the form of ethanol. That's benefitting companies such as Archer Daniels Midland (ADM) and other ethanol players, but how about the rest of us? We have skyrocketing corn prices. Along with that, other food prices dependent on corn are skyrocketing. Corn is used to feed cows, which provide us with milk and beef. It's used to feed chickens. Now the price of meat, milk and eggs are going up. The Law of Unintended Consequences strike again.

It's about time that we turn to the real solution - conservation. Some people say that the market will correct oil prices and the government should stay out of the market. As prices get too high, consumer pain and a recession will reduce demand. Should we wait and do nothing while tens of billions of our dollars are siphoned to other countries? It's about time that we leverage our technology to our advantage. We laid down billions of dollars worth of fiber prior to and even after the dotcom boom. Let's put that to use. Congress needs to pass a law that will give tax breaks or other incentives to companies that allow as many of their employees as possible to telecommute.

In today's global economy of laptops, broadband, Blackberries, wireless, email, instant messaging and other technologies, why are office workers being forced to drive to the office five days a week? Managers often have employees in several different cities, states or even countries. Does it make a difference if those employees are sitting in a cubicle or sitting in their home office or coffee table?

Imagine how many billions of gallons of gasoline will be saved with such an initiative. Think of the tens of billions of dollars saved on energy that could be spent or invested on other parts of the economy. Companies will benefit with reduced office space and the associated costs. Parents can still work when their children are sick so that projects don't falls behind schedule. Employees will benefit with a more flexible schedule and lower transportation costs. How many people are exhausted and stressed out after fighting through and hour of morning traffic? Then there are the side benefits to the rest of society. Think of the reduction in smog and traffic without cars idling on the highways. The reduced demand will even result in lower energy prices for everyone. Over 60% of our oil consumption is used in the transportation sector, which adds up to a staggering $453 billion dollars each year.

If we can cut transportation costs by just 20%, that would save this country over $90 billion per year, which could be used in other parts of the economy to create jobs and pay down debt. That's nearly as much as the entire $600 tax rebate program passed by the government this year. We could have that stimulus package every year! Along with that, there will be a significant reduction in CO2 emissions due to fewer cars, and fewer traffic jams every morning and evening. Whether you believe in man-made global warming or not, everyone believes in having cleaner air to breathe. As for those complaining of government interference in the free markets, what about the mandate that car companies install seatbelts in every car? Was that such a bad idea? In rare instances, government interference can be of benefit.

So let's look at the advantages of such an initiative: lower energy costs, cleaner air, lower costs for companies, more flexible hours for employees, lower food prices, less dependence on foreign oil, less traffic and wear and tear on our infrastructure, better economy

I realize that not everyone can work from home, but a far greater number should be able to than are currently allowed by their employers. We need to have a major paradigm shift so that we can remain competitive as a nation in this global economy.

Comments

[pistov3:]

Greed rules the world, suffocating common sense ....along with stupidity.

2008 Apr 07 08:56 AM

[rerun:]

Armed with every act at your disposal you arrive at the wrong conclusion.

We need to DRILL FOR MORE OIL.

Sure some of the technology you cite will help later down the road.

The "Next Generation."

What about the "Now Generation?"

We don't export anything anymore thanks to NAFTA, the WTO and the greenies.
Our balance of trade is how many billions per day?
How long can you go like that?
The left of this country would rather spill the blood of our soldiers in Iraq and the muddle east than spill a drop of oil on the shores of Florida, California, or in Alaska. There's shale in Colorado, Wyoming and untapped reserves in the Dakotas - we need to expand this - OR we'll be a third world country in a hurry.

ps, ever notice when folks talk about "conservation" - it always applies to someone else? Hello Algore, Shrillary, ad nauseum.

PPS Global warming is a total hoax, Henny Penny.
Coldest winter, most snow in years. Global Warming. Uh, huh. Wanna buy a bridge?

2008 Apr 07 10:35 AM

[jerry p:]

Folks, I'm calling for tax breaks, not bigger government. Nobody will be forced to do this, but they will be rewarded for good behavior. It's a kick-start to get the economy moving in the right direction. I agree that we also need to drill for more oil, but that alone will not solve our problems. We need a combination of approaches. Smart use of alternative energies, more drilling of oil, and conservation will be the best way to lower our energy costs. Think about this: $400 billion is leaving this country every year because we use more oil than we produce. Nearly 40% of our trade deficit is due to importing more oil than we produce.

Electric vehicles will be part of the solution, not the entire solution. How long will it take to put the infrastructure into place to support 100 million electric cars? Can our current infrastructure support it? Besides, electric isn't completely green when you have to burn coal and NG to produce it.

No, we are not running out of oil. Yes, we are running out of cheap oil and it is hurting our economy. What if we could keep that $400 billion in our economy each year instead of sending it overseas? The $600 tax rebate stimulus came at a $106 billion cost to the US Treasury (aka taxpayers). We could have 4 times that amount each and every year.

2008 Apr 07 11:25 AM

[kimc:]

We have over 1000 years of nuclear fuel, geothermal, wind, solar, and ocean power at our disposal. We have airplanes that can fly on hydrogen derived from electrolysis. Electric cars and trains are not rocket science folks! Nuclear waste can be safely stored or jettisoned out into space if needed. The technology needed for us to be weened off of fossil fuels has been around for decades.

We should be taking the lead on this initiative, instead of having Europe and other countries do it first. The rest of the world sees America as the land of greedy and wasteful pigs.

America's addiction to the fossil fuel fix is not much different from the crack addict that trades all his assets and eventually his life to feed his habit. America, it's population, and all its infrastructure and wealth, are being traded away to those countries rich in oil.

We are on ship with no rudder, powered at full speed by greedy fools and heading straight towards the iceberg. Does anyone remember the Titanic?

2008 Apr 07 02:32 PM

[apotheoun:]

Where do I even start? You people have been totally distracted and have no idea of what is really going on. First: we are not in the middle east for oil. Second: If the world lost its dependency on oil the American economy would come to a screeching hault. Third: There is plenty of oil reserves out there that would bring down the cost of oil. So now that those three things are exposed lets look at what the real problem is, its simple, the DOLLAR. The US has a world currency monopoly because you cannot buy oil in anything but dollars. We have the right to print as many dollars as we want without justifying it unlike other countries. We hated Sudam because he was trying to sell oil in NON-US dollars. So what would happen if the world came off the dependency for oil? There would very little demand for the dollar and more countries would start using the pound and the euro and our buying power would slide off extremely fast. So before you even start talking about getting rid of oil cosumption you need to first find a way for the US to keep power and control over the rest of the world. All-in-all, its about the dollar, but we use oil to keep our monopoly on the world with the dollar. Fix that and maybe the world would begin to start finding cheaper alternatives for energy. Oh and by the way, oil is very cost efficient which is another reason why, we as a planet, still heavily consume it. Please overlook the spelling errors as I had to write this in haste.

2008 Apr 07 03:01 PM

[User 174497:]

Something that has always amazed me is we are forced to purchase oil from a group of suppliers that get together and set production and prices. The same action by a group of American businesses is illegal. What needs to happen is for the wimp politicians in Washington to enact legislation that would allow (encourage) any companies doing business with OPEC countries to jointly establish price guidelines, read, gouge. This should apply to everything, up to and including food.

2008 Apr 07 03:09 PM

[apotheoun:]

That is the trade off, The US threw OPEC a bone so that they would not offer oil in anything but US dollars, no one does anything for nothing. Its an i'll scratch your back if you scratch mine type of thing.

2008 Apr 07 03:21 PM

[jerry p:]

We are not in the Middle East for oil? Do you really believe we went to war in 1991 to defend Kuwaiti freedom? Don't tell me you're that gullible. Why aren't there US troops in Myanmar or Sudan to defend their freedom and bring Democracy there? I've heard of the USD-Iraq theory before and it doesn't hold water. Besides, what does that have to do with conserving energy in order to redirect that money to other industries? If OPEC wants to get off the USD, then it will do so whether we conserve energy or not.

Yes, there are plenty of oil reserves out there. It's costing us $400 billion in net outflow each year to get that oil. Alaska would only be a drop in the bucket. Once we drill Alaska, and we still have a huge net outflow, where do we go next?

From what I am reading, there is strong resistance to voluntary conservation, even though it would save this country billions of dollars, reduce pollution, and produce no harmful effects on the economy. Is that right?

2008 Apr 07 03:57 PM

[jerry p:]

kimc, you are right. Alternatives are the future. However, we need to do something for today too.

If this technology has been around and is more efficient than fossil fuels, what is holding it back?

2008 Apr 07 03:59 PM

[Thomas Smic...:]

Conserving energy through personal and collective action is noble and just.

Not extracting oil because of a moose, caribou or polar bear is stupid.

Preventing research for cleaner burning coal and oil because it will impact the profits from the carbon credit scam and offend global warming zealots is criminal.

2008 Apr 07 04:20 PM

[apotheoun:]

Actually if you read my post correctly I never said we were there for the warm and fuzzies, I said we were there for the preservation of the Dollar.

This applies to saving the country billions of dollars each year because if our dollar losing the international reserve you could expect the worst recession to ever hit this country because it would become worthless.

You said that theory holds no water, how so? If you look at where the US gets its oil, you would find out that less than 20% of our oil comes from the Middle East.

2008 Apr 07 10:00 PM

[bunny boy:]

The Iraq-dollar theory doesn't hold up well at all. Oil is priced in dollars, but the seller is not required to hold the proceeds in dollar form. Those dollars can be converted into any other currency in an instant. Buyers can use Eurodollar accounts to buy oil with foreign currency denominated in dollars. Dollars are only the unit of account, and not the required holdings of the seller.

2008 Apr 08 01:14 PM

[James DePrisco:]

Oil is not expensive. Priced in gold, it is about the same cost. The problem is that the Federal Government, through the Federal Reserve, has devalued our dollar. A few years ago, 1 ounce of gold was less than $300. Now it's over $900. So oil today should be around $35/bbl. Keep that in mind.
We do have a problem. That problem is that we are sending a bunch of money to the mid-East to buy oil, and also using our military over there, which is expensive. What we need to do is covert to a coal based economy. We have to get over the Global Warming hoax and convert to coal. Since the Earth has been cooling off since 1998, (some say 2001), in a few more years global warming will be a bad memory. After that, the future will be in cheap solar. Forget about wind energy. The reason is because each wind mill is a generator, compared to a power plant which might have 10 total. So in order to match a power plant, you might need 500 wind mills, probaby more. That's 50 times the maintenance, 50 times the failures, etc... Plus you have to wire it all into the grid, so 50 times the amount of copper. The future will be in cheap solar, already approaching $1/watt. In 10-20 years, it will be here. Until then, coal.

2008 Apr 08 02:52 PM

[Sovereign s...:]

The solution is all around us but nobody is talking about it. How about a biodiesel from algae that consumes massive amounts of CO2, benefits the farm economy. Benefits US economy in several ways by empowering farmers, and small landowners across America, benefits American consumers everywhere by having ready supplies of biodiesel grown in US by US citzens at 100X the production rates of ethanol per acre currently for corn. The by product or end product is an animal feed. Sounds like a win-win-win to me. Incidently diesel has about 10% or more energy per gallon than gasoline and maybe 40% more energy per unit than corn based ethanol.
Then I would mandate all vehicles have super batteries and be plug in hybrids, technology is available to reduce gasoline/diesel consumption on the open road where it takes only a fraction of the energy to propel an automobile at 60 MPH like the Cadillac Northstar engine, put it in all makes and models. Then I'd take the exhaust emissions and run a heat exchange medium in the line to convert "waste" heat to hydraulic pressure to suppliment additional propulsion and install it in every auto sold in America. As for telecommuting great if the employers will agree. I would also invest heavily in the oil industry too as we'll need petroleum for decades to come and better having it come from our shores than despotic regimes across the globe, now just imagine what this could do for America's stability and quality of life?

2008 Apr 08 03:15 PM

[jerry p:]

The Iraq-USD theory holds no water because those countries can immediately trade out of the USD into another currency through the FX markets. They can use their USD holdings to buy American assets and dump those USD back on us. If we lost that 20% of oil from the Middle East, what happens to our economy?

Comparing oil and gold prices makes little sense. Once oil is taken out of the ground and refined/used, it is gone forever. Gold taken out of the ground is here forever. Expanding economies require more oil, not gold. If gold prices soared to $10,000/oz, it would not affect the economy. Rising oil prices hurt the economy.

Conservation can start immediately, costs no money, and keeps hundreds of billions of dollars in our economy. Is it realistic to mandate that every car has a super battery installed and be a hybrid? Maybe if you are a dictator. Even then, it would take at least a decade and cost over $1 trillion to have those 150 million super batteries produced and installed just for autos in the US alone. These super batteries use barium nitrate, NiMH or lithium, so wouldn't there be a huge shortage of those materials? Prices would be driven so high that it would no longer be practical.

Biodiesel is being studied by hundreds of scientists and institutions across the world. If it works, it will be part of the solution. If/when it gains widespread acceptance, it will still take a decade to produce/convert cars to use biodiesel.

2008 Apr 08 10:09 PM

[apotheoun:]

I think this quote sums it up:

"What do you think about portfolio balance effects here? the more commodities priced in dollars, the greater the likely stock of dollars the world is willing to hold for the network externality benefits. Reduce the number of commodities priced in dollars (really, total value of these)and the benefit of holding dollars for transaction purposes declines. Oil is a major commodity so end the pricing of this in dollars and move to say Euros and yen and you potentially generate portfolio effects that shift demand curves for dollars."

Its not that you can immediately dump the dollars, its the fact that you are more likely to hold more dollars thus driving demand up and the value up. Its almost artificial but the money system is not an exact science either. I am not saying that conservation would not help, but right now with the dollar becoming increasingly more devalued the powers that be will do everything they can to keep it up.

I think the other effect that is ignored here is derivatives. The American economy owns most of the derivative contracts around the world and when the bubble hits on this the dollar will plummet which causes the need for more countries to keep higher amounts of dollars. In case you want a number for how much there is out there there are 517,000,000,000,000 in derivative contracts that we are unsure of how much they are "really" worth. Thats 517 trillion FYI i did not mess up the zereos. That number is also 7 months old and the trend on derivatives is about 50% increase per 6 months. The amount in default is 42 trillion. Why does this matter at all? It means that the government wants you to keep spending your dollars on everything they can get you to buy which includes high consumptions of oil. So, if you do the whole cut back in cunsumption you will bring this about faster, which I am all for, but the government will never truly support this because of these figures. The majority of people in this world have no idea of what is going on and unfortunately believe that they can keep spending and then just declaring bankruptcy if they have to (which currently they can within reason). So all in all good luck convincing the uneducated American public to stop spending which has been a gross habit for decades. Face the facts, it will not happen without some form of major change.

2008 Apr 09 09:50 AM

[jerry p:]

People can still immediately trade into USD positions when needed. The FX markets are bigger than the bond and stock markets combined. They can always hold their currency in Euros and trade the required amount into USD when needed. There is no need for anyone to hold dollars if they don't want to. The issue of taking payment in USD, Yen, or Euros is all smoke and mirrors when the real-time currency translation is available 24x7.

If the Japanese want to buy $1M of oil from Iran, and the current rate is 100Y:1USD then what difference does it make what the currency for the transaction is? If the Iranians want Yen, then the Japanese transfer $100M Yen. If they want USD, then the Japanese trade $100M Yen for $1M USD and transfer $1M USD. The Iranians can take that $1M USD and trade into Yen or Euro in 5 seconds. If the Iranians want to use that money to buy an airplane from Brazil, they can immediately trade into USD or Brazilian Real in the FX markets. It's nothing more than a few keystrokes. That Iraq-USD theory would be more believable 50 years ago when crates of cash were being sent back and forth.

The 517 trillion in derivatives is a deceptive number. The true number is closer to $120 trillion in CDS, CDO, CLO etc. Many of the derivatives in that 517 number are futures contracts, options etc. It's still a huge number and they should have been regulated.

2008 Apr 09 03:12 PM

[PDK:]

Regarding electric cars, read up on "well-to-wheels" emissions. A very detailed summary can be found at www.sherryboschert.com...

The upshot is, electric vehicles coming from even dirty, dirty coal are cleaner and more efficient than their gas counterparts. And, emissions are centralized, making it a lot easier to clean up.

So no, electric vehicles aren't simply trading one fossil fuel for another.

2008 Apr 09 03:42 PM

[jerry p:]

Three questions:

What happens to the battery packs at end of life? What is the cost and effect on the environment to dispose or recycle them? There will be hundreds of millions of these batteries.

Wouldn't there be a massive shortage of raw materials needed to create hundreds of millions of those battery packs? Raw materials supply-demand problems could make widescale use of electric vehicles impractical.

Can the current infrastrucutre support adding tens of millions of cars to the power grid? How many decades will it take to upgrade the system? Power plants and nuclear reactors aren't put up overnight.

2008 Apr 11 02:49 PM

[Itsonlymoney:]

Doesn't it seem that the last 7 years have been a love fest for the oil industry. No surprise that Bush/Cheney are from the oil industry as well. Every action on their part has resulted in increases to the price of oil and thus oil profits. Ironically this does work to focus research on alternative sources of power as we react to higher costs. Saudi Arabia used to price oil at a sweet spot low enough to discourage users from considering alternatives. With the end of their resources in sight, they have no further incentive to keep prices low. Add the obvious manipulations of Ahmadinejad, Chavez, (and energy traders) as the bad boys of the oil patch and the price just continues up. Of course Cowboy George keeps taking the bait.

We will have to restructure our energy infastructure eventually, so why not now? All this domestic spending could replace housing as a driver for the economy and the increased efficiency will make us stronger and richer as a nation. Transport does seem like a good place to start.

2008 Apr 13 12:26 PM