Light Crude Oil (CL, NYMEX)
Daily Commodity Futures Price Chart: July, 2007

Crud_oil

chart courtesy of TFC Commodity Charts

>

Crude closed at $68.86 (August 2007) today — down 68 cents — and the new futures contract starts tomorrow.

Since I have been ranting today — I remain firmly convinced that:

- Energy is not only a matter of economics, but a matter of National Security;
- Subsidies for Oil and Ethanol need to be replaced with subsidies for Solar;
- CAFE standards need to be raised;
- Expedited processing for Nuclear Power plant permits should be issued

I own a V8 (automatic), a straight 6 (6 speed), and a 4 cylinder (5 speed) — so I am the last person to preach we all need to shift to Vespas and biofuels. But its pretty apparent to even a gas hog like  me that we need to do something other than send billions of dollars to terrorist nations each and every single month.

V8

Source: Pat Oliphant via Yahoo!   

Category: Commodities, Energy, Index/ETFs, Psychology, War/Defense

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

71 Responses to “Crude Remains Strong Despite Inventory Build”

  1. dblwyo says:

    Good points. Unlike previous oil shocks which were politicaly induced we’re facing a long-term demand/supply imbalance with the preponderance of sources offshore and in increasingly unstable localities. It’ll take 20-30 years to migrate away from the current infrastructure (think $Ts of investment to changeover). Aside of national security and exponentially increasing exposure we could continue to reduce the costs and shock risks. In particular one thing left off is increased conservation – which could reduce energy/oil demand by 30% or better VERY quickly (cf SciAm or Amory Lovins work). Another s.t. ameliorative would be expedited processes for refinery development. But a concerted national effort (think Manhattan project jr.) to get clean-coal and nuclear would provide workable and affordable alternatives inside the 20 year horizon, lower total costs if done properly and reduce the security risks. If you wanted to look for a political cause to support an effort like the early space program for energy alternatives wouldn’t be out of place. And it could be made viable and workable via a carbon tax where the funds were ear-marked for R&D and infrastructure development.
    p.s. – a rapid increase in mileage would add another potential 20%+ to oil demand decreases.

  2. zack says:

    If you feel that sending money to terrorist nations is wrong, why do you continue to own your V8 and straight six cars?

  3. Aaron says:

    I don’t understand the fear of ethanol. Solar is great, but I don’t see solar powering 18 wheelers anytime soon.

    Couldn’t we be an energy exporter via ethanol?

  4. Estragon says:

    As long as we’re ranting…

    You call for subsidies etc., but nowhere in your rant to I see where YOU are going to pay. Put your money where your mouth is, and call for increased gas taxes.

    The entire problem is encompassed in the externalization of costs, and can be addressed through taxation.

    Nope. You’ll ask for (and get) your politicians to subsidize, regulate, and crank up the printing press to pay for it.

    In the end, it won’t only be oil that’s a security threat. But that’ll be the stupid politician’s fault. Not yours.

  5. alexd says:

    I live near the homr of the Big Three. The lack of ingenuity and the intertia I percieve is disapointing.

    Now Barry just can’t help himself for being a gas hog. It’s in his jeans!

    If Detroit was creating things like this little hybrid then I would have hope and BR would be tearing up the asphalt sans guilt!

    I want one too.

    http://www.treehugger.com/files/2006/08/the_hybrid_mini.php

  6. OkieLawyer says:

    Couldn’t we be an energy exporter via ethanol?

    I think the most recent studies have shown that ethanol costs as much to produce in terms of labor, fuel and transportation as it produces. Ethanol also produces less energy than regular gasoline.

    I still say we need to focus on technology in the short term to solve our energy problems.

  7. don says:

    A few facts: Who is the fourth largest producer of oil in the world? Why, the US. Who is the largest consumer? Well, naturally, the US (25% of total). Where do you US imports come from? Of the top fifteen, Canada is number one, followed by Mexico, Saudi Arabia, Venezuela. Of Mid-East countries aside from S. Arabia, Iraq is number seven and Kuwait is number 14. As one might expect, the largest percentage of what the US consumers is produced in the US. (Source: WSJ, January 25, 2007, ‘over a Barrel: the Global Scramble for Energy Security’.

    As for imports, US dependence on Mid-East oil has for several decades been overplayed, one might argue, since the percent imported from the M. East, while signficant, is a relatively speaking small amout compared to the total consumed by the US? So why the importance on ending US dependence on imports from those ‘terrorist’ countries? Why, price, of course.

    Controlling the spigot has a bearing on controlling the price. This might explain the US propensity to exercise military control over global sea lanes (something China is deeply concerned with), as well as give insight to why the US has three aircraft carriers and assorted battle and support ships patrolling waters just off Iran’s shores.

    Be alert to the facts, folks, and don’t fall to simplistic language that takes one down the trap of fear of terrorism.

  8. Estragon says:

    Aaron – In a very real sense, ethanol IS solar power captured and released in a carbon cycle.

  9. wally says:

    I agree with all your points. I also think that as the economic consequences of burning food in our cars start to become apparent there will be huge changes in a big hurry because suddenly the political pressure will get really intense.

  10. Estragon says:

    Don – it’s also worth keeping in mind that China has the means (USD reserves) to buy preferential access to Canadian and Mexican oil reserves. Barry got his “cheap” big screen TV though right?

  11. Red Ocean says:

    Ethanol is not viable. It makes a nice political sound bite but unfortunately it has a few problems.

    http://www1.umn.edu/umnnews/Feature_Stories/Ethanol_fuel_presents_a_cornundrum.html

    The first problem is that if we turned every single US bushel of corn into ethanol it would meet only about 12% of US gasoline demand and food price inflation would be rampant if we did that. Currently about 15% of corn is turned into ethanol and that replaces less than 2% of US gasoline consumption. This number alone is already a factor in food inflation. Corn is a major component of many foods and is by far the largest component in all beef, pork and chicken products. When the price of corn doubles (as it has) the costs buy the feed to raise cattle doubles. Anyone notice a big jump in beef prices on the shelves in the last few years. Ethanol is not a small contributor in that effect.

    Secondly is that the net gain in energy is debatable and negligible if it exists. Some claim a 25% boost in energy (not all agree with those numbers) over what is used to produce it (which is fossil fuel). So if that number is correct it takes 3/4 gallon of gas to produce 1 gallon of ethanol. But the catch is they count the by products of ethanol refinement in their calculations which are left over feed by products. So it may actually take closer to a gallon of gasoline to produce a gallon of ethanol but then you get left over feed by product which has an energy value that can be counted.

    Thus there is little chance that ethanol will result in any reasonable reduction of gasoline usage for both of these reasons.

    There may be alternatives that are viable via switch grass, etc, but it all is very theoretical right now as there is no real production of ethanol from that.

    Ethanol is only viable economically because the government promotes it and subsidizes it. If they did not use it as a political tool against global warming and pollution it would probably not get much market demand. And given all the gasoline it takes to produce it, its not clear it reduces CO2 emissions to any meaningful measure anyway. Solar and Nuclear are much more likely to have an impact if we could make them economically feasible.

  12. Kyle says:

    The government is not the place to go to look for answers to an energy “crisis”. Someone can and will come up with the solution and they will make a lot of money, also they will do a better and more effecient job of producing whatever the solution ends up being.
    Also this talk of “earmarking” money is ridiculous, that money never goes to what it is set aside for.

  13. UrbanDigs says:

    Isn’t it TRUE that ethanol production actually uses MORE oil to produce a LESS amount of usable ethanol product?

  14. A-Mack says:

    As a country, we can’t afford to re-invest in our schools and infrastructure, we sure can’t make progress on bio-fuels. I say we outsource it to the Chinese. They already are putting mandates on using non-food sources for ethanol.

    Solar, wind, tide, & ocean current turbines can help take demand from other energy sources. Of course nuclear too. The Chinese are already on that one too.

  15. Neal says:

    (quote)
    Crude oil stocks rose 6.9 mln barrels to 349.3 mln barrels in the week to June 15, said the US Energy Information Administration (EIA). Analysts had expected a rise of just 600,000 barrels.(end quote)

    Those darn analysts, off by a factor of 11. A convenient day for the big up-side surprise, esspecially as trouble rises in Nigeria.

  16. Neal says:

    “Energy is not only a matter of economics, but a matter of National Security”

    In more ways than most realize. The Pentagon uses 340,000 barrels a day, more than Sweden or Switzerland. A recent study conducted by a consultant to the Pentagon concluded that the present structure and force projection of the Pentagon will soon become unsustainable under increasing costs and shortages.

  17. Neal says:

    “Energy is not only a matter of economics, but a matter of National Security”

    In more ways than most realize. The Pentagon uses 340,000 barrels a day, more than Sweden or Switzerland. A recent study conducted by a consultant to the Pentagon concluded that the present structure and force projection of the Pentagon will soon become unsustainable under increasing costs and shortages.

  18. Brendan says:

    In the early 1900s many were saying why drive one of those smelly inconvenient automobiles when I have a perfectly good horse. Of course, America can thank it’s later prosperity (relative to other nations) partially on its decision to embrace the automobile. The same can be said about embracing renewables today. If we don’t hurry up, we’ll be playing catch-up like the second-world nations of today. Do we really want to be the “China/India” of 40 years from now?

    We need plug in hybrids now. We need to renew our rail infrastructure and get trucks off the roads. We need to invest in new rail instead of new roads. What few trucks remain should be powered by bio-diesel (along with airline travel). And we need to forget about increasing ethanol production beyond today’s level; it’s not going to solve our problems, it’s already starting to create more (see the price of corn). Trading food for fuel isn’t a good policy, nor is trying to embrace coal, which is just a way to trade one problem for another.

    We need to power our cars at night by charging the batteries with nuclear and wind, and out homes and businesses during the day with a combination of nuclear, wind and solar. We need to wean ourselves off of nuclear eventually, but I have to believe it’s a reasonable interim solution, so long as there is a lot more regulation on it than there is today, unlike the privately controlled accident-waiting-to-happen about 50 miles from my house… but I digress.

  19. brion says:

    Nuclear is a waste. A (very) long lived, super toxic, unstorable mess.

    Nuclear is like eating the perfect meal which then proceeds to give you gas for the rest of your life…
    it’s just not worth it.
    You get Billion$ worth of energy followed (swallowed?) by Billion$ worth of costs and NOBODY wants to be in that corner of the world written off as uninhabitable for ETERNITY.

    Barry. Read this…

    http://magma.nationalgeographic.com/ngm/0207/feature1/index.html

    it might amend your warm fuzzy’s for “Nukular” energy.

  20. lauteus says:

    The real future rests in capturing the immense energy nature produces everyday. Hydrogen, although it has supply issues (currently), will be the fuel of the future. This planet is made of at least 70% water… and when you’re done with it (hydrogen), you get water again…

    http://www.bmwworld.com/hydrogen/

    Hydrogen research has been up and coming and in need of some funding.

    National Security… I can only imagine what would happen here if the middle east and/or other US “friendly” nations decided to pull the plug on oil exports to this country.

  21. zell says:

    One day soon the Middle East is going to light up and alot of oil will go up in smoke. There will be a surge of patriotic screaming in Congress and bills for all of the above will be passed whether they work or not. Desperation will be the mother of invention and this will be the Mother of all desperations.

  22. VJ says:

    Some random thoughts:

    * “Clean coal” is only a theory for now and at least several more decades away, if at all

    * Nuclear is a nonstarter

    * Big Oil intentionally shut down more than 200 gasoline refineries in this country to intentionally drive up both prices and profits. In 2000, there were about 350 gasoline refineries, and as of 2003, there were only about 140 gasoline refineries.

    * Every couple of months, the Saudi Oil Minister holds a press conference and reports that they have HUGE inventories of crude oil and that there is a worldwide GLUT of crude oil.

    * Ethanol produces more energy than it takes to make (for every one unit of energy used to produce ethanol and its accompanying co-products, 1.67 units of energy results):

    http://tinyurl.com/295nnc – (Dept of Agriculture PDF)

    Gasoline takes more energy to make than it produces (for every unit of energy expended in gasoline production results in only 0.79 units of energy in the form of gasoline):

    http://tinyurl.com/2cg4go – (Dept of Energy PDF)

    Those that claim that we cannot grow enough crops to make ethanol viable overlook the fact that we are currently paying farmers NOT to grow crops on some 40 million acres, not to mention that we are exporting corn, wheat, soybeans and other crops that can be used to make ethanol.

    * And of course:

    Let us rid ourselves of the fiction that low oil prices are somehow good for the United States.

    Rep. Dick Cheney (R-Wyoming)
    October 1996
    .

  23. KP says:

    I recommend the oil drum for all the energy discussion and info-porn you can handle.

    I have been visiting it for a while now and it’s depressing but pertinent reading.

    Energy and more specifically our overgrown dependence on unsustainable sources of energy is without a doubt the biggest challenge mankind has/is/will ever face.

    Interesting times….they are-a-comin.

  24. anderl says:

    Of course its always the US’s is fault and its the fault of their congress for not doing anything about it. I drive a V12 big honking SUV that runs on endangered owls. Look at how ugly of an american I can be. It’s not my fault. Its my congress that is to blame for letting me do this.

    The reality of it is that even if the US cut its oil demand growth to zero. We don’t get demand any more than what we are currently using. Maybe we figure out how to conserve the energy, recycle it or get it from alternative means we amount ot 25% of the worlds demand but the world amounts to 75% of demand and their growth in demand is as veracious as the US and then some.

    http://www.theoildrum.com/uploads/244/annualworldoil_demand_growth.JPG

    No one bring up the point that the US population is still growing and technology is still advancing. Both put more pressure on growth of an economy. More people means more vehicles, more houses, more gadgets more jobs, more employers. We are still going to demand more energy. We don’t really care where the energy comes from. If its endanged owls in our gas tanks or a giant dung factory, as long as I can charge the battery on my iPod and it doesn’t cost me more than I am paying now.

    The sad fact is that we are going to pay more a lot more in oil before solar becomes feasible. It current prices you will pay out 2 to 3 times as much as coal to get energy from a solar plant. Which means that in order for it to be effective energy resource need to cost 2 to 3 times what they do now. If and when that happens you better believe that Exxon, BP and all the “terrorist” countries as you so eloquently put it are going to ramp up production. Exiting rigs and refineries will be highly profitable and drilling deeper and in more remote locations will be worth the cost with prices so high. Over production breeds price drops and will put alternatives further out of reach. We’ll have more alternative, they will be more efficient, and saturate more of the market but they will not be the main infrastructural source. There is far too much petroleum based product still in the crust of this rockball.

  25. Aaron says:

    Estragon – I hadn’t thought of it like that, very cool.

    As for ethanol being inefficient or too expensive; I though Brazil has already converted to an ethanol based economy?

  26. anderl says:

    VJ: two points you made are flawed. I don’t know about the rest but these two are crack pot BS.

    Big Oil intentionally shut down more than 200 gasoline refineries in this country to intentionally drive up both prices and profits. In 2000, there were about 350 gasoline refineries, and as of 2003, there were only about 140 gasoline refineries.

    First this is a twist on the facts. It is true that the number of gasoline refineries decreased. But the infoporn does not state the increase in size of the remaining refineries. Refinery corporations consolidated. They sold off some of their properties and instead expanded the size of their remaining ones. They were able to consolidate workers as thy didn’t need as many to run 1 larger facility than 2 smaller ones. Less administrative costs, less taxes. It was a task in efficiency and it was primarily due to low energy prices and a way of remaining solvent through the lean years.

    * Ethanol produces more energy than it takes to make (for every one unit of energy used to produce ethanol and its accompanying co-products, 1.67 units of energy results):
    Gasoline takes more energy to make than it produces (for every unit of energy expended in gasoline production results in only 0.79 units of energy in the form of gasoline):

    Your opinion about ethanol breaks the laws of thermodynamics. You don’t get free energy buddy. No where no how. The calculations you use are in the process that converts the cornmeal to ethanol, but you don’t factor in the cost of growing the corn, the cost of fertilizer (crude oil) to grow it, the water resources needed, the man hours, the energy used by the machinery to produce it. I’m not saying that crude oil is better only you can’t say that ethanol is a positive sum game.

    Even solar energy is not free as its only a fraction of a millionth of a percentage of the total energy the sun is using to produce the amount of light we capture in a solar voltaic cell. The energy the sun releases does have a cost. Even crude has a cost associated to it. There was a few million years of processing underground that had to happen, and the organism that are now oil had to absorb their energy from other sources. The cost of producing crude is merely extracting it and refining it. Ethenol’s cost come from not just extracting and refining it but having to produce it from scratch as there is not giant store of corn meal sitting around waiting for us to tap into it.

    Barry is right about solar for static power needs but it is about a decade or two away from being able to be a benefit. And at the rate that Earthshine is growing even solar might be useless in a matter of 50 years. lol!!!!

  27. rebound says:

    For better or worse, policy will have done almost zero in the end. The solution is pretty much here. There isn’t much waiting ahead, as the big three have messed around doing little to nothing … and now the end game has already occurred.

    Toyota will own the market as of next year. PHEV’s are already here with a few mods. They will at the dealerships in the very near future.

    http://www.csmonitor.com/2006/0720/p02s01-ussc.html

    Detroit has no one to blame but itself. The free market rules.

    And when people wake up to the torque and ease of all wheel drive implementation with electric motors, the high-end performance market + sex appeal will take care of the rest.

    http://www.caranddriver.com/carnews/11543/2008-tesla-roadster.html

    We should be charging up off the grid, be it via wind, hydro, coal, nuclear, etc. Anything to stop importing oil … so that we can have energy independence.

    I hope a new domestic automaker is born out of this mess.

  28. Brian in Seattle says:

    One suggestion to help alleviate the oil problem is to invest in mass transit/high speed rail on the scale of the interstate highway system back in the 1950′s and 1960′s. This one thing alone would do more to alleviate the nation’s dependence on cars/trucks(=oil consumption) than anything else. Make it so driving is not a must do thing to get everywhere. Of course, is this mentioned by any politician at all. NO!! Granted, in NYC and the NE this is not as much of a problem, but for most of the country it is.

    The other issue is just how people think in general. Working as a customer service rep for a utility company, you’d be amazed at the number of people who think that being able to sit in a house at 70-75 degrees 24 hours a day is a God-given right. Heck if everyone just turned down the T-stats or up if you live in a place that needs A/C than the amount of energy saved would be tremendous, but no one wants to actually make this point.

  29. VJ says:

    anderl,

    First this is a twist on the facts. It is true that the number of gasoline refineries decreased. But the infoporn does not state the increase in size of the remaining refineries. Refinery corporations consolidated. They sold off some of their properties and instead expanded the size of their remaining ones. They were able to consolidate workers as thy didn’t need as many to run 1 larger facility than 2 smaller ones. Less administrative costs, less taxes. It was a task in efficiency and it was primarily due to low energy prices and a way of remaining solvent through the lean years.

    That was a non-denial denial.

    The simple fact remains, they intentionally REDUCED total gasoline refinery capacity to drive up both prices and profits. PERIOD.

    Your opinion about ethanol breaks the laws of thermodynamics.

    I never presented my “opinion”.

    The calculations you use are in the process that converts the cornmeal to ethanol, but you don’t factor in the cost of growing the corn, the cost of fertilizer (crude oil) to grow it, the water resources needed, the man hours, the energy used by the machinery to produce it.

    I believe the Agriculture Dept took all the costs into consideration.
    .

  30. VJ says:

    rebound,

    Detroit has no one to blame but itself

    Boy do I agree with that. The Big Three were warned about the Japanese bringing out hybrid technology, and that they needed to quickly convert their fleets to hybrid, but they claimed it was “just a fad”.

    Idiots.
    .

  31. Bob A says:

    2008 VW Jetta SportWagen diesel available early 2008. Common rail diesel. 40mpg city. 60mpg highway. Nice car. Plenty of power. Plenty of Room. Great Handling. German quality. Quiet. Clean. Under $20k. Everybody buy one. Problem solved.

  32. Winston Munn says:

    Rutters

    June 20, 2007
    New York, New York

    Moody’s Downgrades Itself

    In a rare and daring move Moody’s Rating Service today announced it was downgrading itself. In a succinct statement, Moody’s spokeman Noah Bondzabad, said, “We totally missed the subprime meltdown, and now we’re sitting on our thumbs while the CDO market collapses. In light of this underperformance, Moody’s has downgraded itself from Ratings Agency to Unindicted Co-conspirator.”

    Bearn Sterns dropped 3% on the news in after hours electronic trading.

  33. VJ says:

    BTW, Vinod Khosla, the billionaire who was a co-founder of Sun Microsystems and former partner with Kleiner Perkins, the venture-capital firm that helped give rise to Google, AOL, Amazon, and Compaq, makes a very succinct case for crop-based ethanol and butanol:

    http://grist.org/news/maindish/2006/12/08/little/
    .

  34. Winston Munn says:

    The U.S. economy’s dependency on the petrodollar as the reserve currency of the world oil markets is as great of threat to national security as is the need for oil itself.

  35. rebound says:

    And the Lexus I want, the IS 250, is currently available in Europe as the 220d.

    http://uk.cars.yahoo.com/car-reviews/car-and-driving/lexus-is-220d-1004970.html

    44 MPG!!!! Diesel, at 160 + Horse Power. I would by this instead a Toyota Prius and run it on bio-diesel in a nano-second.

    http://uk.cars.yahoo.com/car-reviews/car-and-driving/lexus-is-220d-1004970.html

    And they don’t sell them over here because …?

  36. KirkH says:

    My understanding is that corn based ethanol is a waste of farmland with a great marketing department. Interesting stuff happening with algae and non-corn based ethanol though.

    Nuclear + plug in hybrids look like the best short term fix. The pebble bed reactors aren’t so terrible, we just need a way to send all of the radioactive waste on a one way trip to the sun.

  37. Estragon says:

    Aaron – “As for ethanol being inefficient or too expensive; I though Brazil has already converted to an ethanol based economy?”

    I believe there is no single simple answer. Ultimately, all costs are relative, and what works in one place may not work in another.

    Brazil happens to be in an area where the capture of carbon, hydrogen, and sunlight, for the purpose of creating motive fuel is done relatively efficiently by growing sugar cane. The same may not be true of more arid northern plains areas of the US.

    More importantly, there may be areas capable of becoming productive which aren’t productive currently. For example, ethanol and methane (natgas) can be produced from algae, which live in places most of us would rather not go.

    What’s really needed is a standard way to store and transport energy which is neutral to source and use, and let local market forces determine sources and uses based on local needs and local resources.

    Governments have a role to play in creating a sort of energy internet, but should get out of the way of determining the way people generate and use content on that infrastructure. Maybe an upgraded electricity grid is better than a new hydrogen based distribution system. I don’t know, but the fact is that there’s scant debate or research resources going into the topic at the moment.

    If our gracious host could let go of his notion that the government should solve the problem (but someone else should pay), even he might agree.

  38. grodge says:

    Estragon says: In a very real sense, ethanol IS solar power captured and released in a carbon cycle.

    In fact, fossil fuels and all carbon-based energy sources are examples of solar energy conversion. Petroleum is merely carbon that was “fixed” into living organisms eons ago, and is now being discovered and liberated. It was all living matter at one time.

    As such, all carbon-based fuels– oil, nat gas, corn, sugar ethanol, etc– will release CO2 into the atmosphere. To burn fossil fuels is to release all the fixed carbon from millions of years into the atmosphere in a very short period of time, which theoretically leads to rapid global warming.

    Nuclear energy, for all it’s potential problems, does not add CO2 into the atmosphere.

  39. grodge says:

    Estragon also says: If our gracious host could let go of his notion that the government should solve the problem (but someone else should pay), even he might agree.

    I usually agree with the venerable Estragon, but I do see the government as integral in potential solutions, as they have been responsible for much of our predicament.

    The external costs of bringing oil to market, such as war and security of volatile areas, should be reflected somehow in the cost of gasoline and other end-products.

    While US imports may not come directly from terrorist nations, our huge consumption leads to increased worldwide demand and thus to higher spot market oil prices which are enjoyed by all exporting nations, friendly or otherwise.

    So, yes, our oil use does add dollars to the coffers of bad actors: terrorists, perhaps, but more importantly, we indirectly support illiberal despotic regimes who do not have their citizens’ interests at heart.

    The Saudi family or Kuwaiti sheiks could have used the gobs of petrodollars over the last 50 years to build universities and hospitals. That region could have become the shining star of technological advancement and educational achievement in the world, but instead their corrupt and self-serving rulers have lined their own pockets and managed to radicalize the disenfranchised masses.

    Sorry for the rant, but libertarians must see that our federal government has a place in setting priorities. Taxes on fossil fuels could have a beneficial effect in pushing the market place toward more conservation and better technology and even development of new energy sources.

  40. Winston Munn says:

    Quote: “Controlling the spigot has a bearing on controlling the price. This might explain the US propensity to exercise military control over global sea lanes (something China is deeply concerned with), as well as give insight to why the US has three aircraft carriers and assorted battle and support ships patrolling waters just off Iran’s shores.

    Be alert to the facts, folks, and don’t fall to simplistic language that takes one down the trap of fear of terrorism.”

    Don – Iraq’s great sin was not in hording WMD but in abandoning the dollar as their oil currency. It is not the actual oil but the collapse of the artificially supported dollar that is the true threat to national security. Iran has threatened to do the same thing and what do you know – suddenly the are the big threat.

  41. V L says:

    Ethanol is the biggest joke (true reflection of our incompetent government and special interest groups bribing the imbeciles in Washington)

    Burning hydrogen fuel is the way to go (H2+O2=H2O+Energy)

    Fill your car with water, add aluminum/gallium pellets into the tank, and enjoy the ride (without paying to the jerks from Venezuela, Russia, and the Middle East)

    “Hydrogen is generated spontaneously when water is added to pellets of the alloy, which is made of aluminum and a metal called gallium. The researchers have shown how hydrogen is produced when water is added to a small tank containing the pellets. Hydrogen produced in such a system could be fed directly to an engine.”
    http://www.physorg.com/news98556080.html

    Alternatively, electricity generated from solar power is used to split water into hydrogen and oxygen. Oxygen is released into the atmosphere, while hydrogen is liquefied and stored at a very low temperature. (BMW idea)

    BMW has high performance cars that…

    * Run on water
    * Emit water vapor at the tailpipe
    * Fill automatically with robots
    * Use hydrogen made from sunlight

    http://www.bmwworld.com/models/750hl.htm

    Disclaimer: I am a proud holder of BMW shares.

  42. brion says:

    Estragon- Seeing how our current government
    believes in solving problems that DON’T exist.(i.e. being nuked by Iraq or Big Oils lack of operating capital or Big Pharmas lack of consumers/profits etc) i think funding promising solar research or touting higher CAFE standards is a CAPITAL idea. It would be nice to see the taxpayer get a rational return on “investment” for once instead of wating Billions of dollars for a few campaign contributions.

  43. Si says:

    Bob A, agreed but thats way too much common sense these days…be careful the thought police will be after you.
    I believe the high tech european diesels you are talking about were tested by the BBCs top gear against the Toyota hybrid and mass transport systems and came out as good as if not better in terms of environmental impact. Their performance was also pretty damn good.
    If it was up to me I’d just ban the further sale of gas guzzlers, simple as that.

  44. Raising CAFE isn’t the answer, gas taxes are ok but not really the best solution. The absolute best idea I’ve heard of from an energy expert is to create an artificial oil floor.

    Declare the U.S. will purchase every barrel of oil the world produces under $50 and stick it in the ground.

    The accomplishes several objectives

    1) lets the market work, at $50 alternatives are workable

    2) refills our domestic reserves, we pumped alot out over the years

    3) allows investment to come online and be certain what kind of return they will make as the cheaper alternative (oil) is fixed at $50 a barrel

    4) keeps prices high and naturally people will adjust over a long time period

    the next best solution is increasing the gas and creating an oil tax,

    after that the next best is raising CAFE

    there is a great CBO study on this subject that explains why CAFE is not as good as a tax

  45. Estragon says:

    Grodge – even nuclear power is, in a sense, a product of solar power. Fission is made possible in the fusion of a solar mass. I do agree that fission may be a better way to go, but only if we can figure out how to take out the garbage.

    As regards the carbon cycle, the critical element is when the carbon is sequestered versus when the carbon is released. We may be approaching a point where it isn’t truly cost effective to use carbon sequestered millions of years ago, for lots of reasons. If we can find ways of leaving carbon sequestered years ago where it is, and instead recycle carbon sequestered around the block and last week, we’ll enjoy a better and more efficient planet and a better and more efficient economy.

    I really don’t think governments are best suited to picking winners in the production or use of energy though. A truly neutral tax structure will encourage that result on its own.

    Where I do think governments can add value is in setting standards. For example (US) governments established 120VAC as a standard, and let private interests figure out how best to use it.

  46. Stuart says:

    Ethanol is dead on arrival as a substitute as it absorbs water. As a result it will rust out the inside of a pipeline. There isn’t a pipeline operator out there that will allow ethanol to flow. If you can’t transport it you can’t distribute it. DOA.

  47. Ethanol Debacle says:

    Ethanol….. creates more smog, less fuel efficient, increases global demand on food chain … food inflation, depletes water aquifers, weather dependant, can’t stand on its own without gov subsidies. Lets get this wasteful show off the road.,,,before we boil the impoverished nations to starvation.

  48. zero529 says:

    I agree that corn-based ethanol is a losing proposition, but cellulosic ethanol could really turn things around. And for the record, there’s a pilot plant being set up now for cellulosic ethanol production here in upstate NY. Granted, it will only be producing ~500,000 gallons/yr but it’s a big step forward.

    Even better than ethanol is butanol, which uses the same feedstock as ethanol but provides a better quality fuel that has a higher energy content, is way less corrosive, and is easier to transport. In fact, BP and DuPont are already moving on it.

  49. Ethanol Debacle says:

    500,000 gallons/year = approx 12,000 barrels per Year…. great idea in theory but needs to be economical viable for 10% of the gasoline pool which would be approx 900,000 barrels per DAY. Cellustic might be a great solution 20-30 years from now.

  50. Ethanol Debacle says:

    There are about 30 grades of gasoline across the US…… a lot could be achieved with the disposal of boutique fuels which would allow for much more substitution in fuel supplies to deal with never ending supply shocks. Common sense is lacking in our Energy policies.

  51. Ethanol Debacle says:

    Uniform Federal Gasoline standards…3 grades, 87 octane, 90 octane midgrade, and 93 octane premium. California Air Resources Board is antiquated. They don’t want a new refinery in their backyard, and yet they have the most stringent gasoline standards in the WORLD. No pipeline access for supplies so an Island separated by the Panama Canal in times of shortage/refinery outages. Again, some common sense would go a long ways folks.

  52. Tom B says:

    Red Ocean’s critique of ethanol is dead-on. Additional hidden costs to ethanol include pollution from run-off from the high-nitrogen fertilizers corn requires and the fact that growing corn just to burn it incurs opportunity costs with regards to arable land and potable water.

    Kyle MAY have a point about not looking to government for solutions, but I do believe in the Feds subsidizing private research. Certainly, The NIH and NSF have done a lot of good. I’d love to the government take the Hippocratic oath–first, do no harm. I’d love to see them start by killing corn subsidies. Unfortunately, they may well be moving in the opposite direction.

    Hybrids and plug-in hybrids are already technically and economically viable

    Prairie-state and off-shore wind could actually meet most of our needs, though maybe some nukes would be required. Other sources of energy might include– I kid you not– cattle poop. Cows and pigs generate lots of methane, which burns nicely and is a worse greenhouse gas, per molecule, than carbon dioxide.

    Oil is a huge problem for countries OTHER than the US as well. Oil from the Sudan, for example, flows to China; money flows to the Sudan, giving the government there the cash they need to oppress the Darfur-ians while they live like kings.

    “The Saudi family or Kuwaiti sheiks could have used the gobs of petrodollars over the last 50 years to build universities and hospitals. That region could have become the shining star of technological advancement and educational achievement in the world, but instead their corrupt and self-serving rulers have lined their own pockets and managed to radicalize the disenfranchised masses.”

    Yea, we overthrew the wrong country. Saddam was a jerk, but at least he and the Baathists were fairly secular.

    “Don – Iraq’s great sin was not in hording WMD but in abandoning the dollar as their oil currency.” Didn’t Qatar or somebody just do that?

    “Fill your car with water, add aluminum/gallium pellets into the tank, and enjoy the ride (without paying to the jerks from Venezuela, Russia, and the Middle East)” The chemistry sounds feasible (speaking as a chemist). I don’t know if the process is more efficient than batteries, though.

  53. Winston Munn says:

    Quote: “abandoning the dollar as their oil currency.” Didn’t Qatar or somebody just do that?”

    Kuwait dropped the dollar peg. UAE is supposedly next to do the same.

  54. VJ says:

    There are about 30 grades of gasoline across the US…… a lot could be achieved with the disposal of boutique fuels which would allow for much more substitution in fuel supplies to deal with never ending supply shocks. Common sense is lacking in our Energy policies.

    That’s a Big Oil myth. The gasoline refineries are NOT making “about 30 grades of gasoline“. Most of those “boutique fuels” are arrived at by the regional distributors simply opening the top of the tanker container and dumping in some additives.
    .

  55. Greg0658 says:

    With inventory of gasoline at 198.1 million gallons and USA usage at 385 million gallons a day, I can’t figure why 12 hours of gas inventory is such a big deal to plan the days trading around.

  56. Bad News Bear says:

    What gave today’s soccer moms and dads the notion to shuttle their kids to 10 extracurricular activities, travel to meaningless “regional competitions” (with overnite stays at a motel) for a hobby sport, drive their big-ass light trucks (usually alone), and then complain about the price of gas?

    All while voting for tax cuts but no spending cuts, so that the dollar drops relative to the price of oil? Hello??

    Put the kid on a bike or make them take the bus, get ‘em home before dinner, and then make them do their friggin math homework (by themselves and not with an online tutor, so they can improve both their reading comprehension and their self-sufficiency).

    If that means missing out on some dumb event, play with the neighborhood kids in the local park.

    Bunch of spoiled panzies.

    No kids of anyone here though. You guys are alright.

  57. Tony Tiger says:

    Not only ethanol isn’t viable.

    Nuclear isn’t viable any way you cut it. Fuel production and nuclear waste disposal are discounted off-budget in nuclear energy cost calculations. Even the most efficient government nuclear program in the world, France’s, cost upwards of $1.50/KW when they stopped building them in 2000.

    Allowing for inflation, and the current price of ~7c/KW for power in the US, it doesn’t take a mathematical genius to see the payback period for nuclear exceeds the useable lifespan of the reactor by a decade, again, without considering production costs, fuel costs, operating costs, distribution costs, decommissioning and waste disposal.

    Nuclear power is, and will remain, the most expensive form of power generation on earth.
    Naturally, the American Halliban want US all butt nuked.

  58. Eric says:

    At least you can use depleted uranium as a weapon. Maybe the disposal plan is to spread it thin across the surface of any country we want to prevent from developing by saddling them with epidemics of cancer. Iraq is a good example.

    http://cseserv.engr.scu.edu/StudentWebPages/IPesic/ResearchPaper.htm

    http://www.mindfully.org/Nucs/2003/DU-Cancer-Iraq14dec03.htm

    Sarcasm aside, disposing of nuclear-industrial waste in this way is not a new idea. Flouride is also a by-product of weapons-grade uranium production. Here in northern Europe, flouride was added to drinking water starting in the 50s and then banned in the 70s. There is no longer any flouride in the drinking water here in this culturually and technologically advanced part of the world. Why do you think that is? Why do you think flouride is so cheaply available for municipal water supplies in America?

    http://www.amazon.com/Fluoride-Deception-Christopher-Bryson/dp/1583225269

  59. wally says:

    Wow.
    Incredible streams of disinformation, prejudice and unreality.

  60. People hate nuclear – unfortunately.

    Solar is at 40% efficiency for high cost – not worth it unless it uses biology (see algae below).

    Ethanol = Inflation

    Why? Because farmers have shifted production enmass away from soy and cotton into more risky corn crops. Using corn to produce energy is a waste.

    For those who talk about cellulosic ethanol, I hope you understand what that actually means before using it as the next great buzzword like ethanol became.

    I highly recommend you take a look at the following article:

    http://bigpicture.typepad.com/comments/2007/06/crude_strong_re.html#comments

    Specifically look at the chart of:

    Capital Costs of Fuel Facilities
    Source: EIA Annual Energy Outlook 2006

    Coal to liquid is one answer because it uses a gassification process similar to bio-mass gassification. Coal to liquid could be a catalyst for reaching biomass gassification because of this similarity.
    (and for those misinformed, Coal to liquid has been successfully in use for years, what hasn’t been is C02 capture from it)

    We can’t instantly all change to electric or hydrogen vehicles. It is unrealistic, this is why CTL and biomass gassification are the answers to meeting today’s needs.

    Algaculture is the solution to solving C02 emissions from CTL/Biomass. It also serves as a solution for creating hydrogen and biodiesel.

    http://en.wikipedia.org/wiki/Algaculture#Biodiesel_production

    Algae can be used to consume Carbon Dioxide emissions from existing coal power plants (http://www.greenfuelonline.com/) to produce either Oxygen or Hydrogen (if you limit it’s supply of sulfer)

    Algae can also be used as a biomass feedstock.

    Coal to liquid and Algae are the way we should be going to address needs to support today’s infrastructure, be carbon neutral/negative and grow towards a cleaner hydrogen/electric future.

    Remember, there will always be the Barry’s out there who want to cruse around in straight 6′s on sundays.

  61. Posted wrong link above. Where I referenced this article in regards to celluosic ethanol, I mean to reference this:

    http://www.insidegreentech.com/node/277

  62. mhm says:

    This ethanol bashing is just too stupid to keep myself quiet.

    *Ethanol is the result of a process.*

    - processing corn to get ethanol is inefficient and expensive.
    - processing sugarcane to get ethanol is very efficient and cheap. Also, the waste is carbon rich, as good as good coal. It is burned to produce electricity, feed the processing plant and the excess is sold to the power grid.

    The brazilian ethanol program is over 30 years old and was meant to reduce dependency from imported oil.

    And last: All this green, tree-hugging new label to ethanol is bullshit. It was never the reason to create the program.

  63. VoiceFromTheWilderness says:

    Excellent points Barry and Thanks for doing what you do. Your point about energy and though sparked an old wound:

    If this country were serious about terrorism, that is to say, actually interested in having terrorism go away, we would have taken the 500 Billion dollars we have spent on this war to breed more, and put it into a Manhattan Project for energy. Invest in finding out, and then doing whatever it would take to get this country independent once more. If we had done so we would have changed the geopolitical equation for decades if not centuries, and very possibly ushered humanity into a new age. Why? because energy is history.

    The basic problem is that solar doesn’t generate enough energy, nuclear is horrible environmentally, and any technology based on combusting carbon is going to be too environmentally destructive to even burn all the resources we’ve got. Personally I think what we need is a crash course in making Fusion work, but I’m less worried about the form and more worried about the result: energy, financial, and political independence.

    Too bad we’ve now spent the money we had, and are now so in debt that we can’t afford the right answer. Too bad that the business community, the energy companies in particular, are more focused on their profits than the public good (guess it’s time to find out that private benefit is not the same as public benefit), too bad the politicians need an enemy and a war to maintain their grip on power.

    oh well, say hello to the century of war.

  64. Bob A says:

    I love Nuclear and I want to keep the waste in your back yard.

  65. Matt says:

    There is a significant amount of disinformation on this thread about nuclear so I will try and clear a little bit up. My disclaimer: I have a Bachelor’s and Master’s in Nuclear Engineering and work for a nuclear utility that is aggressively pursuing new plants.

    First, to the person who said that fuel production costs and waste disposal costs are done off-budget, that is entirely incorrect. Fuel production is taken into account explicitly; you have to calculate fuel costs in order to justify a plant purchase. Disposal costs are not directly factored into account because there is a surcharge on all electricity generated by nuclear power plants of $.01/kwh paid by the user. This has been paid into a fund since 1983 to pay for things like Yucca Mountain ($28.9 billion has been collected, $9.1 billion has been spent).

    As to the nuclear waste issue in general, people should note that the vast majority of nuclear waste is made up of used nuclear fuel. It is solid ceramic particles inside metal rods, not a glowing green ooze. If we ran our nuclear program in this country more intelligently (like the French or the Japanese), we would recycle this fuel instead of trying to bury it. When a fuel rod is “burned” inside a reactor, only about 3% of the uranium is burned. This leaves 97% of the initial fuel load still in the rod. If we recycle or reprocess these fuel rods, we can significantly reduce the costs of fuel as well as the amount of waste that needs to be stored.

    Another thing that people don’t realize is that any fossil fuel plant is going to be putting out nearly as much radioactive waste as a nuclear power plant because of the carbon-14 in the coal or natural gas. All of the radioactive waste from a nuclear power plant is easily stored and sequestered because it is all solid. And the waste that lasts the longest is the least dangerous (a fun byproduct of the relationship between the decay constant and half-life).

    Nuclear in general is very economical compared with solar, natural gas and wind. It is not economical compared to coal. The O&M and fuel costs for a NPP are $0.0175 per kwh, for a coal plant are $0.0221/kwh, and for a natural gas plant are $0.075/kwh ($0.035/kwh just 10 years ago; nuclear costs haven’t hardly changed even with the run-up in uranium). When you add in capital costs, nuclear is cheaper than natural gas but more expensive than coal.

    The biggest issue facing nuclear plants in this country is not so much pure economics but the unknown risks from litigation and permitting. If the Sierra Club or Greenpeace can delay constrution by a year or two, it can cost hundreds of millions of dollars. That can wreck the economics of a project more than anything else.

    Nuclear is safe. I could toss out reams of statistics showing this but I’ve spent enough time on this post.

    I’m not a 100% nuclear guy. I fully support the idea of renewables like solar and wind; I also recognize that you still need a reliable baseload of electricity and you have three choices: nuclear, coal and natural gas. I pick nuclear.

  66. Tom B says:

    “If we ran our nuclear program in this country more intelligently (like the French or the Japanese), we would recycle this fuel instead of trying to bury it.”

    Correct.

    “Another thing that people don’t realize is that any fossil fuel plant is going to be putting out nearly as much radioactive waste as a nuclear power plant because of the carbon-14 in the coal or natural gas.”

    Coal also puts out lots of mercury (non-radioactive but toxic). This is important if you breathe or eat fish.

    I like wind a lot. And natural gas from garbage and cattle.

  67. Greg0658 says:

    Matt and others
    I’m not in favor of transporting nuclear waste across this vast country to one depository in Yuca Mountain for 2 reasons,
    1. accidents happen on the road
    2. the material will someday be useful to its manager, hopefully a friendly manager

    IMO waste products should not travel far from the origination, this plan keeps an eye on waste.

  68. sakelley says:

    I have thoroughly enjoyed reading all the comments in this blog. My take is that, in this country, any alternative energy sources will only become mainstream if there is a serious emergency. Otherwise, due to complete disagreement by most everybody on which sources should be given priority and a lack of leadership by the government in this area, don’t expect a coherent plan anytime soon. As long as the almighty dollar governs how this game is played among different constituents, the U.S. policy will be a mess. Just look at ethanol, for example. Bush plants a big kiss on the farmer’s butts and decides that we must use corn as a basis for ethanol. Now look at what that has done for the price of foods that depend on corn as a direct component or as feed.

    Another example is the NIMBY people who don’t want any nuclear plants, wind farms, power plants or anything else anywhere near them. Guess they just want us to go back to loincloths, teepee’s and campfires.

    There are many other examples that could be cited where selfish interesta are at work. Unless and until we can come to some kind of consensus in this country on our future energy policy, expect more of the same with little progress. A pretty sorry state of affairs for the most developed country in the world, don’t you think?

  69. brion says:

    “…Another example is the NIMBY people who don’t want any nuclear plants, wind farms, power plants or anything else anywhere near them….”

    America thanks you for this great sacrifice sakelley. OK now, exactly where is your backyard?

  70. Matt says:

    Brion,

    You can bury the waste in my backyard. It’s safer than the chemical plant I live within 4 miles of.

  71. Ames Tiedeman says:

    Crude at 80..will see 150 when e bomb Iran!