>Sending An Energy Message

>I’m trying really hard to get upset about the Obama Administration’s announcement that it would open up coastal areas to oil exploration. Obviously I think it’s a terrible idea, for all of the usual reasons. But I just don’t think this plan is serious. Maybe I’m in denial.

Most media folks seem to have bought the “we need to drill here drill now pay less” line the Administration is selling. From the New York Times:

The proposal is intended to reduce dependence on oil imports, generate revenue from the sale of offshore leases and help win political support for comprehensive energy and climate legislation.

Let me be the first to call bullshit on that line of thinking. No, that’s not what the proposal is intended to do because it so clearly won’t do any of that. For one thing, oil companies are sitting on more offshore oil leases than they know what to do with. So don’t expect to see any oil platforms off the coast of Virginia any time soon; indeed, there will be windmills off the coast of Rhode Island long before Virginians need to worry about ExxonMobil drilling off their beaches. Aw heck, Virginians will see coastal wind farms long before they see oil platforms.

No one ever mentions this but that oil is too expensive to even think about pulling out of the ground until oil surpasses $100/barrel. That is, in fact, why it’s still there. For another, gas has been so cheap that the oil companies have been and continue to cut back on refinery production. I first wrote about the cut in refinery production to maximize profits last year; now, these cuts look to be permanent:

Energy companies are suffering huge losses from refining because of slumping gasoline use – a product of the economic downturn and changing consumer habits and preferences. Energy experts say refining cutbacks have already begun and will accelerate as corporations strive for profits.

Major refiners have been circumspect about their plans, saying they are considering options that could include closing refineries, selling parts of their operations, laying off workers or slashing spending.

“Refineries will have to be closed,” said Fadel Gheit, senior energy analyst with Oppenheimer & Co. “Unless this excess capacity is permanently shuttered, a recovery in refining margins is unsustainable.”

Apparently the nation’s appetite for gasoline and diesel have peaked. Cutting refinery capacity pretty much ensures that trend will continue, because it’s keeping prices high.

Meanwhile, gasoline is one of those commodities where what you pay at the pump is affected by more than just traditional supply-and-demand mechanisms. Speculation is rampant in the oil markets, unrest in the Middle East affects prices (though most of our oil imports come from Canada)–even hurricanes in the Gulf have caused gas prices to soar.

Opening up more offshore oil leases doesn’t change any of that, and everyone knows it. I happen to think it’s just more Kabuki Theater. While my in-box floods with alarming pleas for action (and donations) from MoveOn, Repower America, Firedog Lake, etc. about this oil drilling thing, I just can’t believe anyone thinks this is serious.

Most media outlets have suggested that the President’s drilling plan is also an effort to woo Republicans on cap-and-trade. Let me again call bullshit: Republicans have made clear they plan to sit on their hands until the midterm elections, and I don’t think Obama or his advisors are so dumb as to think opening the coast to oil platforms will change partisan politics in Washington.

No, I think this whole thing was planned to send a message to our “friends” in the Middle East, Venezuela, at OPEC, etc. I think we’re putting the world on notice that America won’t be pushed around from an energy perspective. It’s an energy declaration of independence, if you will.

Consider: while everyone was busy haranguing about the new healthcare law (heads up, folks! It’s not a bill anymore!) and its aftermath, the National Highway Traffic Safety Administration and EPA have quietly implemented new vehicle fuel and admissions standards.

Such a thing has been long, long overdue. The new standards, summarized here, take into account new technology, like electric vehicles:

The most intriguing part of the whole thing? Fuel efficiency isn’t king–it’s all about greenhouse gas reductions. This is probably the EPA’s attempt at preparing for a future where most vehicles aren’t just juiced up by gasoline. Carmakers shouldn’t necessarily get off scot-free if their EVs are ultimately powered by coal-fired electricity plants, after all.

That’s certainly ingenious, and casts a far wider net than previous government fuel efficiency standards ever did. Coupled with the offshore oil announcement, the message this sends is that a) we are serious about conservation, and b) we can, will and are finding our own oil supplies, which we will tap if needed.

Of course, all of this comes as oil prices are rising, but note:

So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from manufacturers using growing amounts of crude to restart the nation’s factories.

How cool would it be if our nation’s factories were able to reboot using energy-saving technologies and conservation mechanisms, enabling us to recover the billions of dollars we throw away each year on energy waste? Our manufacturing sector needs to get on board — and it is.

One of the hopiest-changeiest things I’ve seen in the past few years is the surge in renewable energy development. The economy is transitioning away from fossil fuels, not because the government is making us do it or because we’re facing an apocalyptic Mad-Max-style future without “the juice” or because people drank Al Gore’s Kool-Aid but because it makes economic sense. It’s where the money is. Eight years of Bush-Cheney and their oil minions couldn’t stop this train because the reality is that it is too expensive not to move away from the dead energy source that fueled our previous economic growth.

The future is green, not black. Everyone knows it, certainly our corporate overlords know it, and Newt Gingrich and Koch Industries stamping their widdew feet won’t change it. This is positive news, excellent news, because it means we aren’t doomed after all, and it means things like opening the Atlantic coast to offshore oil exploration when nobody seems to want or need the oil leases is just so much political theater.


Filed under energy conservation, energy production, gas prices

12 responses to “>Sending An Energy Message

  1. >I agree with you about the announcement being political Kabuki. I remember the statistics about the number of leases not being drilled and the number of refineries being closed. Ocean drilling is very expensive and it isn't make sense at the current prices of oil. And at the amount of time it takes to bring the oil on line, we wouldn't see it for years anyway.

  2. >I agree that this is more political than energy-related. The future is nuclear for the simple reason that it is the only viable option for the foreseeable future. The other alternatives are simply not viable in anything like the next 20 years. Most of the 'fixes' are too expensive to have a positive impact on the economy.But what I want to know is are you willing to support sending American sons and daughters to foreign lands to die for solar cells? The President and other 'environmentalism is the economic future' leaders seem to think that the US is going to develop all this grand and glorious technology that other nations will buy from us, which will redress our balance of trade and create millions of jobs. The one thing you never hear is that the only way to ensure that result is to be ready to enforce our intellectual and technology rights. Once other nations know that they can steal our patents and build their own, we will lose those economic benefits. So if you aren't ready to fight to defend our technology, forget the economic miracle.

  3. >If anybody thinks the power future is nuclear, you'd better start buying essentials right now. Or re-read the 3 Mile Island and Chernobyl stories. NOT the sanitized versions either. After you've changed your shorts, turn the computer off and switch the light out when you leave. A thousand rivers will whisper their thanks. 37North

  4. Jim

    >Anon – alot of Europe uses nuclear technology to provide a significant portion of their power now. Why can Europe successfully utilize this source of power safely but not America?The future of power production and distribution will be a mix of all sources. Wind and solar are good options for suplementing other base line and peak demand power systems. The problem with solar and wind is that they are not a guaranteed source of power whenever you may need them. If the wind happens to die down some, or the sun is blocked for a while, then you need another source of power that can be brought online rather quickly to make up any shortfalls in power supply.

  5. >Jim,Well said.Nuclear is available now. Large scale energy from these other alternatives is not proven to work. And Anonymous, are you willing to fight for American technology? If not, forget green jobs.

  6. >Mark –I don't know anything about the copyright/patent issues inolved with solar technology or why that has anything to do with sending our sons and daughters to foreign lands to fight for solar rights. However, this nation has shown it is willing to do just that for oil. If we don't change our ways, we will soon be doing that for water.My problem with nuclear is that it's not economically viable. Plants cost so much to build and take so long to build that they are no better than the alternatives they are meant to replace. Even worse is the waste issue, not just from spent uranium fuel rods but the actual mining of uranium itself, which is incredibly polluting and has poisoned vast reaches of the West. On top of it all there is the safety issue. If nuclear plants were as safe as the industry tries to claim, why does the government need to indemnify nuclear plants? Let's get the Tea Bag brigade on board with repealing the Price Anderson Act — free hand of the market and all. Once all of these true costs are factored in, nuclear isn't the deal proponents claim.

  7. >Jim –Europe has been moving away from nuclear energy for years for the same reasons I outlined above. They don't know what to do with their waste either — so far their biggest idea has been to send it to US.

  8. >SB,The patent issue is simple. If we let other nations steal our technology, we will not benefit from 'green jobs.' If we don't benefit from green jobs, the President's rosy economic ideals become doomed. So we are either going to have to use force to protect our technology or we are going to be in worse shape than now because we will have invested in technology that we won't profit from.As for nuclear energy, why don't you think we can make nuclear safer? Certainly we know that nuclear does produce endless energy so we can focus on safety. Since nuclear works, why not invest in safer plants and waste disposal rather than spending huge sums on sources that cannot be said to offer reliable sources of adequate energy?

  9. >I live in a city with three nukes within 10 miles of my house. I'm too old to worry about whether I'm going to contract some form of cancer from either the nukes, their waste or the EMP in the HV lines that snake all over the area. What I'm not too old to worry about is what they've done to the local economy. They were a great boon while they were being built. Thousands of people moved here, got high paying jobs, caused the towns to ramp up their budgets and then left town when the plants were finished. There are a number of very well paid folks working at the plants, a lot of them contractors who do not stay for more than six months or a year. Nuclear power is not a gift from the gods, it's a business. Like most businesses it will do what it can to maximize profits. Unlike most businesses when it pulls out or, worse, goes belly up it's "unfunded liabilities" have a half life of several thousand years.

  10. >Mark:How do we protect our technology now? This isn't a new issue with green technology. And anyway, is it "ours"? Seems like Spain, Japan and other countries are way ahead of us where green technology is concerned.As an environmental science major, I attended the University of Copenhagen way back in the 1980s. While Reagan was busy taking solar panels off the White House roof the Danes were busy figuring out how to maximize energy efficiency and tap wind, geothermal and other renewables. They learned the lessons from the 1973 Arab oil embargo that America never did.Sounds like you're talking about closing the barn door after the horses have been long gone.

  11. >SB,We don't protect our technology well currently. The ChiComs are busily stealing everything they can. The case for 'green jobs' is two fold. first, we invent new technologies that reduce our need for imported oil. Excellent. I am all for it. The economic benefit from fewer dollars leaving the country will be considerable. But the greater benefit is from selling that technology abroad. That brings dollars back home, reducing our trade deficit and making more money available here for higher wages and more economic growth. However, if we allow our competitor nations to steal our technology, we will lose that benefit. Think of how unable we are to protect movies and music now. Do you think the Chinese will work harder to stop piracy of really valuable technology? We cannot get our current President to commit to defend us against chemical and biological attacks so I doubt he would fight to protect our economy.

  12. >Mark Rogers:This:"We cannot get our current President to commit to defend us against chemical and biological attacks so I doubt he would fight to protect our economy."is either incredibly stupid or just another teabagger fantasy. Where the hell do you get this sort of information? The reason that people like you cannot be taken seriously by anyone with a functioning brain is idiotic bullshit like that.