America’s Energy and Economic Policies Go Hand in Hand

Using History as a Portal to Our Future

Over two centuries of America’s  formal existence provides much perspective from which to view today’s world. The picture below just hints at a few of  these. Looking at the left portion of the picture,  in the late  1700’s,  life  looked  good even as we recognize  differences in  housing, which were much smaller and without many of the indoor, life-quality-enhancing features we enjoy today.  Much  of the energy it used came directly from human toil.  Nevertheless, the air of freedom was healthy to breathe and invigorating.

Source: Mark Sussman

Over the years, America’s freedoms, including the efforts of private businesses, helped build a nation that indisputably distinguished itself from all others. On the right side of the picture, we see a modern city, such as we might visualize when contemplating travel  to New York, Los Angeles, Chicago, or many others. But this isn’t an American city. It’s one in Malaysia. What’s the point here? Just this: around the world, people have aspirations to be like us, both in civic and material things. That is to say, our success (and our generosity) have wakened.  Citizens of other nations try to emulate us. That’s all to the good, but it also means we cannot rest on our laurels if we are to maintain the global leadership and prosperity of our past.

Today, we use much more energy per person than we did in the 1700’s.  This usage exacts a price on both our existing, natural fuels and our environment.  It also gives us:  freedom from much more burdensome toil; added light and warmth; longevity; easy transportation, communication and entertainment; and others. In a nutshell, our access to energy brings a much  higher quality of life.  Nevertheless, it also makes us aware that providing for our future energy needs is critical to our health, our travel, and our leisure time. So history urges us to look both backward and forward in time, and that’s the purpose of this article.

The Issues

America’s energy resources are as fundamental to our well-being and survival as the oxygen we breathe. Our energy path is closely tied to our economic decisions, which comprise a second critical ingredient. The linkage between these two policy areas exerts a lot of leverage on our future. Unfortunately, except in the more specialized media for political analysis,  the level of  public political  debate on this linkage is fairly limited.  So the purpose of this post is to focus more attention on several aspects of this subject and perhaps stir things up a bit.

It would be, in my opinion, helpful to the nation, if we could  stop the extreme negativity of political discourse and the pitting citizen against citizen. Our energy and our economic futures  should be an area, with sufficient education, where all citizens could coalesce  behind a rational plan. Our economic policy needs a strong component  devoted to a forward look at our energy future. Our energy policy, which today is pretty much absent from open political discourse, needs the benefit of a strong tie to economic reality. We need an alliance of creative and forceful leaders coupled with activist citizens who can help  integrate these two critical foundations of our future prosperity. Below are my thoughts about what I believe constitute a rational energy policy for the nation. I look forward to hearing thoughts from ROARR’s audience about this plan.

There are some encouraging facts and actions that support a rational plan which exploits  synergies between energy solutions and economic solutions. Here are a few:

  • America is an energy-rich nation
  • Intelligent energy solutions can actually help add jobs and help free up needed funds  to meet other future needs
  • A well-crafted policy can exploit these strengths and assure American prosperity and security for our children and grandchildren.

As the picture below illustrates, America is rich in recoverable fossil fuels. Much of these resources have become potentially available through very recent extraction technologies. This is good news for today, for next year and for several decades. But it is not a long-range plan for the future. The future inevitably must open a path to more renewable and potentially less polluting supplies including nuclear, solar, wind, and biomass among others.

Source: CRS

However, these renewable supplies are not available today without incurring a significant  cost penalty. This penalty, in a competitive world, is like entering a long-distance race while being the sole volunteer to carry a two hundred pound backpack filled with lead. It may be a grand gesture, but as a strategy for winning, it leaves much to be desired. So in the meantime, we must build a bridge to the future fuels, using those we rely on today.  Am I saying, we should just relax and  be happy in our use of domestic oil, gas and coal? No. That would be irresponsible. What I’m saying is that an energy policy worthy of it’s name must deal now with both existing and future fuels by laying out a plan that provides a reasonable “bridge” between the two.

Should the government just mandate to which fuels and at what times this bridging should take place?  No. I don’t think the government is smart enough to do that. And that’s not because I think all government employees are incompetent. Rather, it’s because the problem is complex and private enterprise plus citizens voting with their wallets provide many more resources to get to the right answer.  That said, the government should undertake a limited role that incentivizes the broad research and development that can open pathways to lower the costs of renewable fuels. An example to follow might be some adaptation of the NACA/NASA Agencies role in research regarding aircraft development. This research helped Boeing, McDonnell, Northrop, Pratt & Whitney, GE and many others to make a great success of America’s aviation efforts. There should be some excellent “lessons learned” available.

In the meantime, we are fortunate to be developing our own domestic resources, such as recently exhibited in North Dakota associated with the Bakken fields of oil shale (see picture below). Production there has created several boom towns and significantly increased America’s oil and gas output in just the last few years. Kudos to those associated with this effort. Our children and grandchildren will be beholden to you!

Source: Mark Sussman

But there are many further facts and examples to build upon. To cite just a few:

  • Resumption of deepwater drilling in the Gulf of Mexico
  • Exploring and exploiting oil and gas potential in the Outer Continental Shelf
  • Opening up ANWR for production in Alaska
  • Planning for the Keystone XL pipeline to help move our fuel dependency from remote foreign sources to a North American neighbor with longstanding good relations

Of course, there are those who see things very differently. Unfortunately, the airwaves and streets are often filled with demands for action that are largely supportive of  narrow, special interest groups. Such groups have a right to speak for their beliefs. However, those who support a more pragmatic policy as outlined above, have an equal right and must make more time to speak on its behalf.

Source: U.S. Energy Information Administration

Nevertheless,  the overall direction in which we must travel is clear. Granted, the details remain to be resolved through technological gains, the efforts of intelligent government incentives, and development by private enterprise. The chart below, from the U.S.  Energy Information Agency,  makes a rational projection of what the future might look like under  some reasonable assumptions. Whether this is an optimum assumption or even the initial basis for a final plan is anyone’s guess.  But it does illustrate a continuous bridge from our past energy use to a future that incorporates more renewable fuel sources. What is needed is  a citizen-government-industry consensus on how to get from today to the future based on evolving technology,  citizen choice, and market–driven offerings.

Concluding Thoughts

We must not succumb to those who see only government-dictated energy choices and highly exaggerated forecasts of environmental doom lest precipitous choices be made to jump prematurely to new technologies. With such a jump, costs will boomerang and handicap America’s economic competitiveness.

In summary, known challenges exist and there are likely many others yet to be uncovered.  However, that is  a situation America has faced before. We have the talent, the ideals and the freedom to solve these problems as Americans before us have done. Nevertheless, it will take broad citizen action to surmount the narrow interests that have been gaining undeserved  influence in America. Now is a critical and timely opportunity to assemble  a coalition of citizens behind a balanced plan for success in our economic and energy activities. An adjunct to this effort should be a series of debates involving citizens, business and government. Topics would include: America’s energy policy; environmental issues; and, the tie-in with America’s economic policy.

I look forward to hearing comments on possible solutions to this quandary from ROARR readers.

Further materials regarding this blog subject can be found in this expanded presentation and its bibliography.

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About mbsbvu

EDUCATION: BAE, MAE, Aero. Eng'g - Rensselaer Poly Inst; Ph.D. Aero. Eng'g - M.I.T. CAREER: Engineer & Program Mgr. - The Boeing Co. 1966-2000. Retired 2000. Founder of Political Discussion Group: Conservative Enthusiasts Greater Seattle Area - -2006
This entry was posted in Clean Energy, Clean Tech, Energy Security, Finance and Economics, Nuclear Power, Policy, Politics, Solar, Technology, Wind and tagged , , , , , . Bookmark the permalink.

22 Responses to America’s Energy and Economic Policies Go Hand in Hand

  1. I really appreciate your wide perspective in this post. Unfortunately, though, any discussion of burning & recovering more fossil fuels is incomplete without considering externalities– pollution & climate change. This is Econ 101, which can’t be dismissed by 1970s talking points about “government-dictated choices”.

    Unfortunately, ANWR and expanded coastal drilling don’t get us that much. See: http://www.poisonyourmind.com/2011/05/polling-vs-reality/ Doesn’t mean we can’t/shouldn’t do either, but we have to be clear-eyed and realistic about costs and benefits of such decisions.

    • marksbvue says:

      ReflectionEphemeral:
      I agree 100% that “we have to be clear-eyed and realistic about costs and benefits of such decisions”. That is the whole point of my note and the further details I cite in the linked powerpoint analysis.

      Speaking of Econ 101 – – may I suggest the rather shallow analyses that have led the Nation to believe in the “Global Warming catastrophe” is a truly fundamental place to start. And I will add some specific references to this matter quite soon. But in the interim, I just wish to point to the data cited in the Blog regarding why the current irrational ‘bottling up’ of our domestic fossil fuels is such a mindless action. Most economists and energy analysts agree that the renewable fuels, about which the environmentalists are so giddy, will not be ready in quantity or cost-competitiveness for many years. The “Feed-in Tariff”, discussed in the above-noted powerpoint, illustrate the distortion of simple-minded economics (dare I say Econ 101) that some in government view as constructive. But, simply, it is an extra fee on all citizens in the tariff region, for the privilege of a few souls powering up with costly wind or solar. No thank you. Were no lessons learned from this type of tortuous economic sleight-of-hand which brought us the mortgage disaster? Until, some better science can be put on the table regarding the great AGW claim, I see no reason to carry an extra albatross around the neck of our Nation as it competes in the now global economy.

      As i note in the blog, ultimately we must bridge into a renewable energy strategy. But there are smart strategies and foolish ones. In the interim, I believe we must rely on fossil fuels – – or else in the limit (mathematically speaking), retreat to cold, dark caves. The powerpoint data cite a gain of 1.4M jobs and a cum increase to government revenues of $800B over the next 2 decades for more prudent utilization of our current oil, gas, and coal sources. This may not reverse the total debt calamity which the Nation has had thrust upon it, but at least it’s a sensible step in the right direction. Moreover, you cite domestic fuels as not “getting us that much”. But the data clearly show that our domestic recoverable sources are huge. Quite enough to allow a prudent transition. So the fossil reserves are plentiful. unfortunately, the prudence is less so.

      I realize that if you’re a true believer in AGW, none of the above will yet make much headway. So my Blog conclusion stands: let’s get some truly honest debates going, which bring some data that all analysts can agree on. We’ll hopefully leave the discredited “hockey stick” and other manipulated data aside. In the end, the truth, comprised of good data and analysis, shall set us free. And then, we can develop more unity in a rational path forward. That day can’t come too soon for me.

  2. efgd says:

    “…it will take broad citizen action to surmount the narrow interests that have been gaining undeserved influence in America.” Indeed it will. That applies to most countries of the world of course. If we start off from the wrong starting point then all our actions will be less efficient if not useless in the long term. We do need to be both prudent and innovation minded, that means opening up debate and not allowing overt interest groups, of both sides of the energy debate, control the agenda. That would be akin to the behaviour of the protagonist and finance only minded senator as portrayed in the file “Day After Tomorrow”. One side dashing around in manic excitement and the other side sticking their heads in wads of cash (head in sand scenario). We all have to be a bit more open minded than that.

  3. marksbvue says:

    As I indicated earlier in my response to ReflectionEphemreral, I would post a little more factual material supporting my thoughts there. Below is a short, but well-stated, little discussion regarding similar points as made in my blog. A pretty accomplished group of American CEO’s, comprising the leadership of the website: “Job Creators Alliance”, have this to say regarding America’s energy policy and our economic situation:

    ENERGY POLICY
    • America’s current energy policy seems to be – “Don’t look for it, Don’t find it, and Don’t use it.”
    • Washington seems determined to block or delay access to domestic energy sources. This sends jobs overseas, increases energy costs for U.S. consumers, and empowers autocrats like Hugo Chavez and the Supreme Leader of Iran.
    • America needs an “all of the above” energy strategy. We need to open up more domestic resources to development, and we need to end bureaucratic barriers to clean nuclear energy and clean coal technology.

    FACTS
    • The U.S. currently imports 11.1 million barrels of foreign oil per day according to the U.S. Energy Information Administration. This means that at current prices of around $100 per barrel, we are sending over $1 billion oversees each and every day.
    • Expanding domestic oil and gas production by opening new areas for exploration would generate as much as 160,000 new jobs and will generate $1.7 trillion in new revenue for federal, state, and local governments according to a study commissioned by the American Petroleum Institute.
    • For each coal-mining job, an additional 3.5 jobs are created elsewhere in the economy.

    Ref: http://jobcreatorsalliance.org/EnergyPolicy.aspx

  4. Alan Scott says:

    Green energy simply does not work on a large scale, period . It cannot replace carbon emitting sources . It wastes massive amounts of money and causes nothing but economic damage .

    Any evidence refuting Global Warming is ridiculed . Global Warming is just the latest salvo from the anarchist element .

  5. Alan Scott says:

    Sean ,

    Sometime in the recent past I know I went through this argument . Let me define green the way a left wing marxist would. Nuclear cannot be green because there is the danger of a meltdown and release of radiation . Then you have the waste disposal problem . Nuclear only qualifies as green because it does not emit greenhouse gases . That might make it green except for the fact that it actually works

    Now we have hydro. Technically speaking it seems to fit the criteria . And from a cost benefit analysis it does work . There are no emissions and it runs forever on a renewable platform. But hydro is not practical everywhere. Most of the practical sites are already built on . Then you have the environmental impact . You have to dam up a river and flood a large land area . You totally change the ecology of the region . People and wildlife are displaced, and fish migrations destroyed . The giant dam in China and the proposed Myitsone dam in Myanmar are examples .

    So yes from a common usage perspective green is mostly wind and solar . Geothermal and some others qualify too, but they are limited .

    • Fair enough. I did forget geothermal. Your points on hydro are fair as well in that most of the nation’s hydro resources have already been fully exploited.

      The left’s stance on nuclear has aggravated me tremendously for several years. It is the solution to their problems, yet they block it with fiendish zest.

  6. Alan Scott says:

    Sean ,

    I have been on their sites. The left are irrational in their belief in solar and wind . It is the only answer they have . It doesn’t matter how many facts you throw at them . They tell you that green is cost effective . I had one swear to me that wind power pulled Texas through a power shortage last winter.

    They want unlimited government handouts for solar and wind, want everyone who emits any carbon dioxide molecules at all to pay through the nose, and want coal, oil, and natural gas to be priced as high as possible . All of the economic damages this will cause is of no concern at all . They seem to have positioned themselves to either not be personally affected by these damages or delude themselves into believing the benefits will compensate them .

    • Some of them (Nancy Pelosi) think natural gas is also green because it is “not a fossil fuel.”

    • Ed Darrell says:

      Conservation. You keep forgetting that “the left” leads in advocating conservation. Conservatives — true conservatives — wouldn’t forget that, over and over.

      Solar, wind, conservation; geothermal. Ocean thermal gradients, tides and other moving water. Pollution controls on coal. Pollution controls on oil and gas.

      At some point, we run out of oil and gas, if we do nothing but promote the use of oil and gas. Why not keep looking for alternatives? Who could get hurt if any of these alternative paths is successful? No one.

      Who gets hurt at the crash if we have too many eggs in the oil and gas basket? Everyone.

      Forget economics 101 — we need basic math here.

  7. Ed Darrell says:

    • America’s current energy policy seems to be – “Don’t look for it, Don’t find it, and Don’t use it.”

    Bullfeathers. The U.S. became an oil exporting nation again in February 2011. We’re looking for plenty of energy, and finding it.

    There are serious difficulties with negative externalities with the search for and development of fossil fuels, however, which suggest we should invest more in looking and finding alternatives to non-renewable fuel sources.

    Conservation provides the double benefit of reducing our dependence on foreign oil, and reducing dependence on oil at all. It also provides jobs that can’t be exported — the guy insulating homes in the Northeast is not going to be outsourced to Mexico, or China, nor anywhere else.

    But let’s at least start with an understanding of reality: The U.S. is probing under virtually every rock to find oil or gas, and finding a lot of it. Oil rig count rose twice as fast in the first three years of the Obama administration as the Bush administration — oil and gas exploration rigs equalled Bush’s 8 year total, in 3 years.

    We can’t drill our way out of this one. We have to be smarter than that.

    • Ed,

      I think we need to do both. The right’s energy policy will keep energy prices cheaper for the next twenty years, after which our economic system could fall off a cliff as oil production peaks. The left’s energy policy will keep energy prices high now, thereby crowding out investment dollars for non-fossil fuel technologies.

      The policy the country needs is a mixture of both that balances the negative externalities against the cost to develop non-fossil fuels. Wind and solar power are fine for peaking power sources, but can’t be used for baseload power because they are intermittent and nondispatchable. The left must get over its fear of nuclear power if it wants to ever reduce the country’s dependence on coal. Similarly, finding alternatives to gasoline like electric vehicles cause an added strain on the electric grid. In fact, in certain areas of the country, electricity is more expensive per mile than gasoline (where I live at least). Adding more power plants is a requirement to alleviate this problem.

      Approving Keystone XL should have been a layup for the president, especially with oil at over $110 a barrel. The Canadians are going to produce oil from tar sands whether we pay for it or not. Also, a point of clarification is in order: the US is not exporting more oil than it is taking in. It is exporting more gasoline, a refined petroleum product. That said, oil is indeed becoming scarcer. Despite a 30% increase in US domestic oil production primarily due to fracking, the US reached peak oil production in 1972 or thereabouts. As such, we are running out of time and resources.

      Either way, neither the right nor the left seem to be thinking about the energy problem intelligently. The country should be using the fossil fuels it has as a bridge to the non-fossil fuel technologies it needs.

    • marksbvue says:

      Ed,
      There are 3 small points I agree with in your note, but several which seem to result from too much Kool Aid drinking – – to wit:
      (#1)“We’re looking for plenty of energy” – – partly true: but we’re not looking very hard where Mr. O’s Administration has inserted roadblocks.
      (#2)”Conservation provides double benefits” – – very true. I agree as noted in my blog article.
      (#3)”We have to be smarter than that” – – I agree with the first part: “we have to be smarter”.

      Pls permit me a few counter thoughts, starting with #3:

      (#3) re being smarter: A first step might be to get the facts complete and not nuanced into misleading info, from which flows foolish policy. Let’s start with your first sentence: “US became an OIL exporting Nation again in Feb 2011”. Not by my facts (courtesy of the US Energy information Agency)! What is true is that the U.S. became a FUEL exporting Nation again in Feb 2011. But FUEL is not OIL. (Granted the terminology is a little “slippery”, so to speak.) But the mathematics is:
      CRUDE OIL + REFINING = FUEL.
      However, my point is not a simple terminology issue. Our FUEL exports, which have been rising, are quite small compared to our CRUDE OIL imports. Let’s compare exports for start of year 2007 with end of year 2011 for both CRUDE OIL and FUEL, in millions of barrels per day.

      EXPORTS OF FUEL: -2. mbpd 2007 (minus means “IMPORT”); +.7 mbpd 2011
      EXPORTS OF CRUDE OIL: -9.8 mbpd 2007 ; -8.5 mbpd 2011

      Pls keep track of the decimal points in the mbpd data. Note 2 points: (i)we continue to import nearly as much CRUDE OIL as we did 5 years ago; some analysts credit the small drop with increasing efficiency in our refining and use of the end product. (ii) The amount of FUEL we export has indeed recently crossed over from import to export – – but it is less than 10% of our current import of CRUDE OIL, to which we are still greatly addicted, much to both our economic and security detriment. So, Ed, your statement is true for FUEL but not for CRUDE OIL, the latter being the usual terminology for most public discussion.

      So why do our CRUDE OIL imports continue apace, when we have some small progress in our exports of FUEL ? This brings us back to your point (1). But the reason is not due to some diffuse “negative externalities” – – but to our specific Government policies/actions and the rational market reaction to them. We’re benefitting from new oil available from Canada and N. Dakota, as cited in my article. Unfortunately, we can’t get the oil to critical regions of our Nation and associated domestic refineries at a competitive price. This is due significantly to pipeline and refinery construction being stymied by mindless environmental radicalism. So, in accord with our National wisdom, as verified by history, we take the economic path. Of course a better overall plan, leading to reduced government meddling, would straighten out the current issue. And simultaneously, based on general thoughts expressed in my article, we need to develop a real Energy Policy that will serve us well as we head into the future. And if that means: more rigs on shore or offshore; more advanced drilling technology; more nuclear plants; more pipelines and refineries; more R&D to drive downthe cost of renewables; and of course, smart conservation;
      – – then so be it.

      • Ed Darrell says:

        Marksbvue — Yes, OIL exporting:

        Just as the average price for gas is set to hit $4 a gallon this week, the U.S. Energy Information Administration reports February was the third month out of four that the U.S. — the world’s most energy-hungry nation — actually exported more oil that it imported.

        Look at the EIA charts on exports cited at that site:

        http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTPNTUS2&f=M

        The U.S. is an oil exporting nation again.

        The foreign oil planned to be carried by the XL pipeline is for export, too, as best I understand the plans. We can use it in a pinch, but the Canadians’ problem is getting their stuff out to markets.

      • Ed Darrell says:

        Two links, so in two parts — Part I

        Marksbvue — Yes, OIL exporting:

        Just as the average price for gas is set to hit $4 a gallon this week, the U.S. Energy Information Administration reports February was the third month out of four that the U.S. — the world’s most energy-hungry nation — actually exported more oil that it imported.

        • Ed,

          This is the problem with the US media. They frequently report on things they don’t understand.

          They are confusing “fuel” and “petroleum products” for “crude oil.” We still import far more crude oil than we export, but since we have a large refining infrastructure, we export more refined products like gasoline than we import. For instance, last week the United States imported an average of 8.3 million barrels per day of crude oil vs. exports of 37,000 barrels per day. (See the crude oil line here: http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm).

          “The foreign oil planned to be carried by the XL pipeline is for export, too, as best I understand the plans. We can use it in a pinch, but the Canadians’ problem is getting their stuff out to markets.”

          This is partly true. US refiners will make money converting this oil to higher-value, refined petroleum products like gasoline. Therefore, while much of this oil will ultimately be exported, it will allow US companies to profit from refining it into gasoline before it is exported to foreign markets. Therefore, it won’t technically be exported as crude oil, but as gasoline and other refined petroleum products.

          It is unfortunate that the press has been so sloppy with its terminology.

      • Ed Darrell says:

        Part II:

        Look at the EIA charts on exports cited at that site:

        http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTPNTUS2&f=M

        The U.S. is an oil exporting nation again.

        The foreign oil planned to be carried by the XL pipeline is for export, too, as best I understand the plans. We can use it in a pinch, but the Canadians’ problem is getting their stuff out to markets.

  8. Alan Scott says:

    Sean ,

    The US is producing more oil in spite of the President . Most of the new on shore oil production is on private land because the President keeps blocking energy leases on Federal land . Every thing that has gone right in the last three years on the energy front has been in spite of the Democrats, yet they take credit for it .

    I have friends who are big Obama voting global warmers and even they are considering voting against the President, at least if Romney is the nominee. Mostly over the Keystone pipeline. Everyone sees it for what it is, a purely political decision . Far too many of this President’s major decisions have been based on pure politics . That laser like focus on jobs, is always scattered through the prism of pleasing the Carbon Bolsheviks .

  9. Ed Darrell says:

    The US is producing more oil in spite of the President . Most of the new on shore oil production is on private land because the President keeps blocking energy leases on Federal land .

    To the contrary, Obama prosecuted a guy who leased lands planning NOT to drill.

    Where has Obama blocked any federal lease on shore? Be specific. Give us the facts so we can verify.

    Yes, private land drilling is way up. Of course, the oil formations being probed are in states where private ownership is the norm. That was determined 200 years ago, and Obama had nothing to do with it.

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