A Tragic Scam

The Obama administration is moving aggressively on its stated plans to implement various forms of renewable energy, and there are indications that massive changes in energy policy are being made without carefully considering potential costs......such as the lives of 300 million or so American citizens.

The urgency is understandable. At this point in time, oil production has most likely peaked, at least according to prominent oil geologists Kenneth Deffeyes and Colin Campbell, and gas supplies on this continent will reach their production peak at some point in the future. It's hard to determine exactly when, but a major jump in demand for natural gas will surely cause that resource to deplete rapidly. Worse, U.S. has made almost no provisions for lower energy consumption or for alternatives to oil, gas, and coal.

Unfortunately, we are engaged in a frantic struggle to pretend that we can manage a steep reduction of consumption of fossil fuels with absolutely no alteration of our habits or living arrangement whatsoever, and this pretense is driving our policy decisions, with results that will echo and amplify down through decades. Whether or not we will even have reliable electric power will depend on policies implemented right now, given the power of the government to impose broad policies and fund them lavishly, at the expense of the taxpayers. It is unfortunate that this country tipped into to total statism and has erected massive barriers to the individual initiatives and adjustments that could produce appropriate adjustments on a small, local scale, but we have to deal with things as they are.

When the feds decide to implement a program, it is done decisively, and broadly. Unfortunately, it is also done without due consideration of the costs involved, and least of all to unintended consequences. Worse, once a particular policy is in place, we seem unable to reverse it, or correct its more pernicious effects. The disastrous unintended consequences of programs put into place 40, 50, 75 years ago are still cascading through the system, producing the same disastrous results, only vastly amplified, and foreclosing the very actions and adjustments that otherwise might correct the distortions and massive misallocations of resources resulting.

And, just as we have been unable to control or reverse the destruction of our cities, the metastatic spread of suburban sprawl, or the overpaving of our landscape and our inflexible demand for outrageous quantities of fossil fuels that are the end results of the well-intended programs of Roosevelt and Eisenhower, we will find it very difficult, if not impossible, to control or reverse the end results of the energy policies of the Obama administration.

Therefore, it is deeply unsettling to read the broadside statements of Jon Wellinghoff, Chief of the Federal Energy Regulatory Commission, in which he states that no new coal or nuclear plants may ever be needed in the U.S. and that "renewables" such as wind and solar will fill the gap. Wellinghoff's statement is stunningly irresponsible given the energy demands of our current systems and the realities of solar, wind, biomass, and other "renewable" forms of energy generation as they are currently known. Notice that he is not promoting the development of wind and solar alongside nuclear, but is suggesting that we abandon all research and development of nuclear and coal in favor of solar, wind, biomass, and other renewable energy sources. Given Mr. Wellinghoff's position, we can safely assume that he will be driving energy policy going forward and that his priorities will be translated into rigid policies that will drive all development of energy sources during this administration, which is a very chilling thought.

As of this date, there is only the remote possibility that solar and wind can even fractionally fill in the yawning gap between supply and demand that will be left when oil, and later, gas supplies go into terminal decline. While solar and wind technologies may have great potential for large-scale power generation, they are at this stage of development creaky, unreliable, and intermittent sources of power that are extremely reliant upon the local weather conditions, and bear hidden costs that haven't been discussed, such as the vast amounts of land necessary for a solar array or wind farm capable of generating even a significant fraction of the power of a typical coal or nuclear plant, or the amount of water a solar plant consumes, which is a major issue in the critically water-short desert states that are the most advantageous locations for a large solar array.

The ethanol bubble has already burst. "A tragic scam,"energy analyst Matthew Simmons called ethanol and biomass, for it has become painfully obvious that a diversion of our diminishing farmland from food production to fuel production, in the amounts needed to produce enough fuel to run even a substantial fraction of our fleet of 200 million autos and trucks, would collapse our food supply and subject us to critical shortages of food that are usually referred to as famines. Yet the current administration is still emphasizing biomass and ethanol development.

None of this is to say that development of renewables should be abandoned in favor of coal and nuclear. Wind, solar, and geothermal need to be aggressively explored and developed, for nuclear is not a one-size-fits-all solution, and every technology that could supply power needs to be developed.

However, to baldly state that renewable energy can completely replace fossil fuels flies in the face of everything we know to be the case concerning the necessities of power generation. We know, for example, that while demand has dropped somewhat due to the economic situation, that we still have an inflexible demand-demand built into the systems we need to run our economy and our lives for massive amounts of power, and that that demand is barely being met by our existing generating capacity. We also know that demand will surely increase, for our population is still unfortunately growing at the rate of 5% a year. We know also that we will need to electrify our transportation if we want to have any, and that alone will cause demand to ramp up steeply. We also know that our existing fleet of nuclear plants is aging rapidly and will need to be replaced very soon just to keep up with current demand, and we know that the cost of coal in air pollution can't be borne much longer.

Wellinghoff and his confreres in the Green movement are perpetrating a scam- a tragic scam-in their insistance that we can run our systems or any significant fraction thereof on "renewables" while still maintaining anything like current levels of consumption. These people have no excuse for not knowing that a major shift to renewable technologies will have to entail a major cut back in consumption, and that is not possible at this point, nor will it be possible at all if we continue to foster the delusion that we can maintain current levels of consumption, let alone increase them, strictly by means of renewable energy sources.

In coming years, as the oil supply problems setting up right now start to bite with a vengeance, we will need every alternative technology devised, including renewables, in addition to stringent conservation and the complete rearranging of our lives, to retain current levels of comfort and amenity. At this date, nuclear power offers our only hope of generating power sufficient for our current and future needs while reducing carbon emissions and toxic pollution. It would be criminal not to explore promising new nuclear technologies that offer much safer generation with new fuels whose supplies can be extended far past the time when Uranium 235 will be depleted, and failure to develop these technologies would be a tragic mistake that would almost surely result in the U.S. becoming another third-world country within 20 years.

Obama Energy Policy Fraught With Contradictions

The new administration's energy policy was released a couple of months before the election, and received very little attention, due to the nation's preoccupation with the financial collapse and economic morass, and the focus on the show-stealing Republican running mate.

The best that can be said for Obama's energy policy, is that his heart is in the right place, and that the new team's policies constitute a significant and positive departure from Republican policies that encouraged waste and promoted the disastrous transportation and land use policies of the past 60 years as "patriotic". At least Obama recognizes that we are on the eve of a massive shift in the conditions on which they're predicated, and that the energy regime that made them feasible is over.

However, many of the the new liberal policies will not only not mitigate the hardships of the new energy regime of scarcity and upward spiraling prices, but might well aggravate the waste and misallocation of finite resources. In short, the new administration's Energy Policy is a well-meaning disaster, and the policy statement is an essay in the power of denial and wishful thinking, in that its principal feature is the emphasis on symptomatic treatments and short-term "feel goods", at the expense of the complete overhaul of transportation, agricultural, and land use policies, which is what we really need in order to cope with shrinking fossil fuel supplies.

Mainly, the program is another attempt to repeal the law of supply and demand, and maintain fuel at artificially low prices while doing nothing to steer the country's population away from wasteful lifestyles Among the short-term measures outlined by the report are: 1) an Emergency Rebate of $500-$1000 for every American family, to mitigate the escalating costs of energy; 2) Crack down on energy speculation; and 3) Swap light and heavy crude, Release oil from the Strategic Petroleum Reserve in order to cut prices.

The futility and potential averse effects of the foregoing ought to be obvious. The "energy rebate" is merely another costly "stimulus package" and short-term salve that will add to the towering public debt load and further endanger savings and jobs, in addition to necessitating a tax increase, which is supposed to be paid for by a tax on the windfall profits enjoyed by oil companies.

Measures to "crack down on energy speculation" are worse. These are blatant scapegoating, and worse than useless. The only reason "speculators" buy any commodity or security in order to scalp profits from a move in prices is because they perceive a move in prices in the direction of their bet- if traders perceive a drop in demand, they can just as easily "short" the market. It's interesting that, just as our authorities made no attempt to cap the rampant inflation in house prices or run-up in stock prices unrelated to underlying fundamentals, or prevent "speculators" from profiting from it by "flipping" houses; it is also making no attempt to prevent "speculators" from profiting from fluctuations in oil prices by shorting oil as prices of crude dropped rapidly from last year's high of $149 a barrel.Speculators are no more responsible for the increase in global demand for petroleum and global depletion of supplies, than they are for the Fed's disastrous monetary policies and explicit support of the loose lending that created the financial debacle, and we aren't going to mitigate either condition by "cracking down" on attempts by market players to respond to whatever situation presents itself.

The third short-term palliative is to swap light for heavy crude and release oil from the Strategic Petroleum Reserve. May I ask: Are we insane? The policy paper explicitly states that "swapping light for crude" means that we will release the light, sweet crude from the Strategic Petroleum Reserve in an attempt to lower oil prices, to replace it later with sour, heavy crude, which is much more difficult and expensive to refine. The obvious implication is that we will be forced to replenish the Reserve with inferior oil at a time when doing so will be much more expensive, in attempt to maintain artificially cheap prices for petroleum products to placate American consumers and enable them in unsustainable lifestyles. This is sheer insanity, and it will only cause more pain and disruption down the road as it will only encourage more consumption of the very resources we need badly to conserve. Worse, we need badly to protect the Strategic Petroleum Reserve against a real emergency, such as critical spot shortages of fuel that could threaten our lifeline civil services such as police and fire protection, never mind the copious supplies needed by the military to ensure essential defense. Sorry, but $4 a gallon gasoline is not an emergency, and encouraging wasteful civilian consumption by maintaining artificially low prices will only increase the pain and disruption down the road, when the global drawdown in petroleum production becomes critical, and irreversible.

The policy's longer term solutions address Climate Change and the urgent need to develop sustainable alternative energy. Most of these measure are appropriate, as they go. Prominent among them are measures to increase fuel efficiency requirements, begin transitioning to a new digital electric grid, promote development of commercial scale renewable energy, invest $150 Million over the next 10 years to develop plug-in hybrid vehicles, invest in low emissions coal plants, and advance the next generation of biofuels and biofuel infrastructure.

I seriously have to question the emphasis on the development of hybrid vehicles, and even more, the promotion of biofuels, at the expense of the rebuilding of our rail system and intercity public transit. Our "green" liberals are almost as invested in the fantasy that we can continue to run 200 million cars and trucks and continue converting irreplaceable farmland into auto suburbs as any right-wing rube in his 3000 sq ft house on 2 acres in the far hinterlands. There is no recognition that even if we diverted every arable acre of land in this country, including that now used for food production, to production of biofuel feedstock, we could not even replace a fraction of the massive quantities of oil necessary to run our systems as they are currently structured. Increased production of biofuels will inevitably come at the expense of food production, and at a time when we will have less petroleum and natural gas, which is necessary to produce the cheap food that we now enjoy. Yet nowhere in the policy statement is it acknowledged that the mass diversion of land currently in food production, to fuel production, could trigger catastrophic food shortages, or famines.

Nowhere in this policy statement is the critical need for a complete rebuild of our decrepit rail and public transit even mentioned, and there is no mention of the need to curtail our massive over-investment in highway and airport infrastructure, if only to offset the massive amounts of public money that that are to be spent on the development and promotion of "green" jobs and industries. There is no discussion of reversing the disastrous transportation and development policies of the past 60 years that have created a geography of roads and housing development that render 90% of our population totally dependent upon autos for transportation, and that are still promoting urban sprawl and the destruction of some of the best farmland in the world in order to build auto suburbs.

Let's hope that Team Obama's misconceived Energy Policy is only a "feel good" aimed at the more "progressive" elements of the population in order to win the election, in recognition that the truth is too unpalatable to be presented to an already skittish and traumatized population at election time. Let's hope that after the new team is installed, they will Get Real and replace this stew of pandering "feel-goods", and costly diversions that will only set us up for more disaster and disruptions, with reality-based policies that will promote the complete restructuring of our systems to enable steeply reduced energy consumption in a very short time frame.