Ed's Blog

"Some people know everything, but that's all they know."

BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

The U.S. fossil-fuel dilemma is that the United States has vast, albeit finite, fossil-fuel resources, but we don’t exploit them sufficiently because of environmental and political reasons.

Many environmentalists and political activists believe their use causes man-made global warming, and by exploiting finite domestic energy resources we only discourage the development of infinite alternative energy sources—solar, wind, geothermal, etc. Thus we have allowed ourselves to become dependent on expensive foreign oil from volatile regions of the world.

As gas prices again soar, there is a way out of this dilemma, if only we have the common sense to see it.   (Read the full column at EWRoss.com)

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34 Responses

  1. LinkedIn Group: U.S. Veteran

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    You are on target!

    Posted by John O. Meekins

  2. Ron N. says:

    And to add to the high prices, the poor in under-developed countries are forced to burn more wood and things they normally would not. Further adding to deforestation and COPD causing emissions.

  3. LinkedIn Group: Campaign for Liberty

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    There is what I call a “global warming wall” that we hit when considering policy alternatives on this subject. See http://obitur-dictum.blogspot.com/2012/02/global-warming-wall.html

    Posted by Jon Roland

  4. Bob says:

    We must develop a plan with balance. Voters hopefully are realizing that the global warming scare does not outweigh our current economical survival. The global warming theory has been highly oversold and its validity is now being challenged due to a lack of scientific and plausible evidence. This will become even more apparent in this election year as the prices at the pump reaches upward of five dollars a gallon. No one in their right mind wants to harm the environment, but the common sense approach is to continue to develop programs that will clean up the environment (particularly air & water). We should do this in a slower and more moderate fashion. The government has put unreasonable panic into the process by things like unreasonable cafe standards and refusing to continue development of our country’s own resources. The sad fact is, we have forced a lot of our production (jobs) to other countries, some that pollute the environment at will.

  5. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    This is a 100% phony political philosophy issue. If you recall, since the Arab Oil Embargo the rational against fossil fuels has been a moving target. Even though the shortage was caused by OPEC, leftist and environmentalists invented a crisis i.e. we are running out of oil. As each ginned up crisis is debunked, they change their reasoning for being against using fossil fuels. Maybe it is for monitary gain e.g. Al Gore; maybe it is to destroy our economy, or maybe it is because “If we can’t keep the unwashed masses from buying Hummer H3s like us cool elitist, we can at least make it too expensive for them to operate them.” This latest scam is particulary ingenious and quite frankly diabolical as the elitist will be able to afford carbon credits and continue to live as they please while the rest of us are required to curtain our standard of living.

    Posted by Kenneth McElroy

  6. Tom Rumsey says:

    As always, very well stated Ed. Hope to God someone in congress is reading this and paying attention.
    Tom in Benicia

  7. Tony says:

    Nicely described, but it comes to an illogical conclusion. The notion that any measure taken by private industry will in time cause fuel prices to drop simply is not supported by open market performance. A more likely scenario is that once the oil industry sees revenues, thus profits drop, instruments will be put in place to continue to hold if not elevate overall prices. Remember the objective is to make money, not perform a national or public service. The sad part is that as we are discussing this the American public is not outraged over the current situation and are, therefore, taking the part of the slowly boiling frog, and accepting their fate. With overall consumption slightly down globally and oil prices not rocketing out of control, there is no rational reason for the spike in gas prices, except to condition consumers for higher summer gas prices, which was predicted for last year, but didn’t necessarily occur. This is simply the self-licking ice cream cone put forth by the industry and no amount of rational thinking without direct government intervention will stem this tide.

  8. LinkedIn Group: Department of Defense

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    I appreciate your trying to strike a balance between the “drill baby drill” crowd and the tree huggers, but I’m having trouble with your proposed solution. First, you say the NPF would not receive any taxpayer funds, but would receive a percentage of proceeds from oil and gas sales and royalties. Those revenues are being put to some use by the government, so wherever that money is going to now would lose a revenue stream. Either taxpayers will have to make that up, or else whatever activity is currently being funded will have to be curtailed. So the NPF would not be costless, somebody will have to pay. Second, you criticize the government picking winners and losers, yet that’s what you propose in setting up a program of grants and prizes. To assure efficient management of this program, you suggest a semi-independent corporation (avoiding the mistakes of Fannie Mae and Freddie Mac). How exactly do we avoid the mistakes of Fannie Mae and Freddie Mac? You suggest a further layer of oversight, a special joint committee of Congress. You seriously expect any Congressional committee to be efficient and devoid of cronyism? Really? Third, you assume that the NPF legislation, opening new oilfields, approving the Keystone Pipeline, and setting a goal for energy independence will cause prices to drop like a rock. Underlying this is the assumption that China’s demand for oil and gas will not put any upward pressure on prices. Well, the current spike in prices results from speculation over the mess in the Middle East. That spike may be reversed, but the energy demand of China, India, and the rest of the world will continue the upward pressure on prices. Unless you propose to restrict oil exports, prices of additional product brought online will be bid up as the long-term demand continues. Finally, you ignore the real problems DoD has in running on fossil fuel. Rising fuel prices are eating up Defense budgets, and having to move product to and within theater is a major tactical and operational, not just strategic, problem. Rather than having a new entity award grants and prizes, how about giving DoD the money to award R&D contracts to solve the military energy problem? The results of that would have a spillover effect to the civilian sector, like a lot of other technological advances that are the result of direct DoD and NASA investment.

    Posted by Tom Ray

    • Ron N. says:

      Tom-
      Striking a balance is almost always a smart approach. I am trying to understand some of the questions you bring up. Ed’s proposal is not a full outline of a solution. There are issues with any proposed solution (committee cronyism, avoiding mistakes of FM & FM, speculation of foreign pressure on price). Those issues are dealt with through analysis, modeling and lessons learned (i.e. FM & FM). A dynamic economy will require adjustments prn.

      Regarding DoD use- they have always dealt with fossil fuel use- so what has changed? If anything, the changes are positive. First, the Navy uses nuclear power and is experimenting with algae based fuel. Second, unlike past theaters of operation (VN and Korea), we are currently located in oil fields and receiving a huge supply of oil (i.e. Kuwait); with the exception of Afghanistan, the fuel is much closer than you think. Finally, the branch that uses the most fuel is the AF and they are not exactly keeping an air wing of bombers in Kabul.

  9. LinkedIn Group: The Political Coffeehouse

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Hi again Ed, I just read your comments on “fuel delimma” and I believe the key pharse was “As gas prices again soar, there is a way out of this dilemma, if only we have the common sense to see it.” Especially “we” & “common sense”. Whe was the last time th “we’s” used commonsense? I’ve been an engineer for 50 years and actually enjoy research on these subjects. First of all, sometime back in the 70’s I started a study on solar energy, etc. only to give it up after about three years. I finally realized it would never make it as a viable source. Wind energy is worse. The costs and maintenance are way too high. Most will argue with me that “it’s FREE”. Aren’t you supposed to be skeptical when some one says “free”?

    You were mostly right in your introduction to environmental concerns. You implied that we must be prudent about greenhouse gases, etc. Here is my take on this environmental concern. The earth experiences an ice age every 100,000 years for at least the last 150 million years. The last ice age was 30,000 years ago and the earth is still warming up from that period and the oceans are still rising but at a average rate of less than 2 degrees per 100 years. But that is cyclic depending on sun spots, etc.

    As for the relation of CO2 to green house gases, everyone assumes that CO2 is the only greenhouse gas. But the truth is man made CO2 is less the .03% of all the gases that make up so-called greenhouse gases. This is roughly one tablespoon per gallon. No one ever asked what is the total make up of 100% greenhouse gas. 95% is watervapor of which we can do nothing about. If we stopped burning ALL hydro carbons tomorrow it would have absolutly NO affect on global climate change. Ever. The 3,62% of CO2 in the atmosphere comes from forest fires, volcanoes, rotting vegatation, animals breathing and so on.

    Further more EPA is spitting in the wind on all these
    regulations. Fifty million people (16% population) lives in 50 of the the largest cities (5% area). 84% of our population live in rural and relatively small town USA (95% area) that has no polution what-so-ever. But EPA and environmentals demand clean up laws and regulations that burden all of us for what? Drive across this nation and try to find polution? There isn’t any! This country is so sparsely populated that ALL so the people in the USA can fit in an area the size of Rhode Island with each person using a space of 10ft X 10ft. Believe it or not. This environmental crap is the biggest hoax since the Federal Reserve Act.

    Please inform your readers and listeners of some of these facts or check it out for your self.

    Hybrid cars ain’t going to make it either. It might prove to be a nice way to save going to &from work but never hack it going cross country. Have you ever thought about driving 3,000 miles in a compact car. It doesn’t compare to European contries.
    Beside the Chev Volt will get 25 miles on a full charge of 16kwh at a cost of 12 cents per kwh. That comes to 7 cents per mile. My big ford gets 28 miles (hwy) per gal and can go 400 miles between fill ups. It cost $20,000 compared to the Volt at $40, 000. No brainer!!

    Have a nice day!

    Posted by Lee Birkhead

    • Ron N. says:

      Lee-
      I agree 50% with your statements. Love your global warming hypothesis on the ice-age cooling and warming cycle; that is probably one of the best theories I’ve heard. However, even though you are my senior and love to research some of these subjects, much of your environmental view is a little skewed and doesn’t take in account scientific and medical facts. For instance, your correlations between population, location, and pollution.
      Like you stated, CO2 is not the only greenhouse emission. If we stopped burning ALL hydrocarbons, I believe, WILL have a positive effect on the environment and $. This is assuming we discovered something to take its place that is low to zero cost and 100% renewable. Let’s just make up a name and call it “cosmic smoke & mirrors” or CS&M. Using CS&M means we will shift infrastructure requirements and regulations- saves $. Waste will be dramatically reduced which will diminish other emission/pollution consequences such as acid rain, deforestation, and of course respiratory ailments and cancer- BIG $ savings. CS&M replaces oil- the largest financial contribution to our greatest enemies- who knows how much $ this will save and assist our environment. I don’t know when the last time you were in the Middle East, they have so much black gold, they love to burn everything that is made with it- an environmental train-wreck.
      My point is we need to adopt new ways, new technologies, and make changes… slowly. We do this for the economy, health, environmental prosperity, and humanity. For obvious reasons, I wouldn’t encourage our next generation to get into logging, making wagon wheels or blacksmithing. However, a century and a half ago, that would have been a hard sell.

  10. LinkedIn Group: Department of Defense

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    I agree with all of what has been said so far, we need to do all of the above. If we don’t become energy independent soon, gas prices will be so high that no company will have the resources to put money and time into developing alternate energy. I do agree that if we start opening up the refineries that have been shut down and start producing the oil fields that are just sitting dormant, even the mention of doing this will drop the price of oil. The OPEC nations will see the writing on the wall and will drop prices just to make the Americans happy about oil prices again. When we have better control of the oil prices again and are not so dependant on Dictators who want to control the world, we will be able to start looking at alternate energy sources. I, for on, would not spend $30,000 on a solar system for my house that may or may not last ten years. I also do not want to spend double the amount for an automobile that won’t come close to what I am used to having. Why would anyone pay double for half the car, lots of R&D still to be done on cars, solar and wind alternatives. Nuclear is a very viable proven product that can bring us to energy independance faster than any of these other alternatives but again, the American people have a huge fear of Nuclear because of what we have been told for years and that will be difficult to overcome.

    Posted by Dan Turley

  11. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    H3?? My Daughter drives an H3. Real men drive H2’s. (It’s true that smaller, real men drive H1’s but, frankly, I don’t fit in those tiny seats…)

    Btw, there was a paper a while back that argued that crude oil may not, in fact, be fossil based. That the carbon elements in oil may be a form of contamination. The theory posited that oil may be a natural by-product of the earth’s internal core. (see Cornell University physicist Thomas Gold’s book “The Deep Hot Biosphere: The Myth of Fossil Fuels.”)

    The reason I bring this up is that it is so hard for the layman to find truth in science when science has been so corrupted by political thought and bias. Corruption partly due to the need for the political class to sow fear in the electorate and the scientific community to get funding from the political class. Moral hazard abounds.

    Posted by Michael Gaddis

  12. LinkedIn Group: The Political Coffeehouse

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Thank you Ed, for another powerful and articulate infusion of common sense and spot-on analysis. Yours sentiments and conclusions encompass what I’ve been saying for nearly a decade.

    Current “solar” technology is indeed expensive, inefficient and (where electric cars are concerned) short-lived, not to mention the environmental and economical impact of disposal, once those huge lead-acid batteries expire.

    I’d like to point out another, very significant aspect. The actual production and exploration of domestic fossil fuels will create thousands of good-paying jobs immediately. The manufacturing of equipment, building of refineries and maintenance infrastructure will create tens of thousands more.

    This is exactly the kind of shift we need to see in America. It would be the impetus for long term, aggressive economic recovery. You are also correct that OPEC would move immediately, to adjust oil prices and we’d see instant and significant drops in pump prices.

    It will be necessary to sweep government corruption and interference out of the equation. I believe this to be the REAL challenge!

    Thanks again.

    Posted by George Daggett

  13. LinkedIn Group: Department of Defense

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Could not resist comenting on this. I need to say a geologist that spent time looking for oil in west Texas in 1980, it seems policy on economics and petroleum havn’t changed we are still dependent on hydrocarbons and will be in the forseeable future. That being said we (U.S) have many options such as geothermal etc..the issue has been and still is politics and policy and greed drive the wagon. We could have had electric cars 20 years ago, but the auto companies and bi oil killed it. There was adocumentary on this back a few years ago. Since I am on this, we need to lokk at developing sources like the Marcellus Plays (Shales) in PA and NY there is enough natural gas to suplley the US for 100 years.

    See Considine, T., et al. (2011) The Economic Opportunities of Shale Energy Development. Energy Policy & the Environment Report No. 9. Manhattan Institute For Policy Research. Retrieved from http://www.manhattan-institute.org/html/eper_09.htm#11

    My point is we still have an opportunity to develop the alternative energy sources while we still use hydrocarbons, but need our politicans and policy makers to change thier thinking…

    Posted by James Tarr

  14. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Nicely described, but it comes to an illogical conclusion. The notion that any measure taken by private industry will in time cause fuel prices to drop simply is not supported by open market performance. A more likely scenario is that once the oil industry sees revenues, thus profits drop, instruments will be put in place to continue to hold if not elevate overall prices. Remember the objective is to make money, not perform a national or public service. The sad part is that as we are discussing this the American public is not outraged over the current situation and are, therefore, taking the part of the slowly boiling frog, and accepting their fate. With overall consumption slightly down globally and oil prices not rocketing out of control, there is no rational reason for the spike in gas prices, except to condition consumers for higher summer gas prices, which was predicted for last year, but didn’t necessarily occur. This is simply the self-licking ice cream cone put forth by the industry and no amount of rational thinking without direct government intervention will stem this tide

    Posted by Tony Kopacz

  15. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    It is difficult to use an open market model to describe the performance of the oil industry since the industry is dominated by a small group of players that collude on supply which drives the price. In the short-run, flutuations appear to be driven more by uncertainty than supply and demand. One thing IS for certain. Unless we allow our domestic oil producers to be players in the production game, OPEC will continue to call the shots. As for the outrage, the public has been so misdirected regarding this, they don’t know whether to “crap or go blind.” And with regard to government intervention, name an industry that has more government intervention. Taxes, regulations, permits, etc. The problem is the governemt has a nearly perfect record of intervening at the wrong time and with the wrong methods. Just because our government is “ubiquitously” big doesn’t make it omnipotent.

    Posted by Kenneth McElroy

    • Ron N. says:

      You are off base on this Ken. As long as we rely on petro as heavily as we (US) do, OPEC will always call the shots. Domestic production makes very little impact. The Bush administration gave huge tax incentive for domestic production to explore deep sea production. Oil companies took up the offer an made nice profits. However, when gas prices went up, the public was quick to make an inaccurate correlation and point the finger at oil companies and the administration.

  16. LinkedIn Group: Department of Defense

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    I question the US ability to maintain heavy influence on the world oil market with the surpassing development growth of countries 5 times our size (i.e. China). I would love to share optimism that all we have to do is open up our local oil spigots to drive the price of oil down. Unfortunately, that window of opportunity is temporary.

    James is right about greed driving the energy decisions. The one silver lining in all of this is just that – greed dictates the ending. When gasoline prices hit $10 per gallon the market will chase less costly energy alternatives. To a large part, the transportation energy technology alternatives – like electricity (generated by solar, wind, hydro, geothermal and nuclear) and hydrogen gas – are already here. We need to build the supporting infrastructure (fueling stations) and production facilities (alternate energy and alt vehicles or vehicle retrofit kits) to make this work. To do this will take high gas prices and thereby will follow favorable alternate technology legislation and incentives.

    I would caution statements of estimates of resource size like “There’s enough coal in the US to meet the countries energy needs for the next 200 years” or “There’s enough natural gas in PA and NY to supply the US for the next 100 years”. Estimates back in 1970’s were the Saudi oil reserve, the largest in the world at the time, wouldn’t hit the half way mark until 2075. I believe they are already there. [This is a key point because not long after the halfway mark is passed, oil recovery costs grow. It is recovered then by pumping water into one well to get oil pressure in an adjacent wells. After that doesn’t work, superheated steam is pumped into one well for oil recovery the anothers – again, more costly recovery.]

    I make this point to underscore the importance of us moving proactively with planning now instead of later. Again, market pressures will ultimately dictate. From my assessment, let’s not tap into our dwindling oil reserves which will be more valuable later. Instead, let gasoline prices hit the tipping point where market driven political decisions push us to pursue alternatives aggressively. At the very least, higher gasoline prices will tend to kill all but the richest from driving SUVs, pickup trucks, and luxury cars that get 6-25 mpg. Higher gas prices will encourage car pooling and telecommuting thus decreasing urban smog. From an environmental, oil conservation, and alternate energy promotion standpoint, higher gasoline prices are a win-win. Let the market dictate direction.

    One closing note – the key ingredient in nearly every gee-whiz lightweight product (including cars, computers, HDTV’s and i-Phones for example) is plastic. The success of production today is inexpensive input materials. Plastic comes from oil. If there is no more cheap oil, there will be no cheap plastic and thereby, far less affordable goods. We should save the oil for products instead of burning it in cars. I say let oil prices climb. That way the consumer’s wallet and bread basket that will speak loudest and force (hopefully) positive changes.

    Posted by Mark Diglio

    • Ron N. says:

      Mark, saving oil for plastics production will barely make a difference. Less than 5% of of oil production is used for plastic feedstock; then another approx 4% is used as energy to turn the feedstock into plastic. However, according to the EPA, manufacturing new plastic from recycled plastic requires 2/3 of the energy used in virgin plastic manufacture- one ton of recycled plastic saves 685 gallons of oil.

  17. LinkedIn Group: Department of Defense

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Mark

    I like your ideas and agree with many of them. As they say in economics it comes down to “Willingess to Pay”

    Posted by James Tarr

  18. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    @Kenneth, that is a good point. While we cannot be sure that collusion is holding oil prices steady as argued, the importance of keeping our treasure here, paying taxes here, instead of shipping dollars to OPEC is geopolitically vital regardless of the spot price outcome. If we make it a matter of policy that drilling for oil here will be at least as cost effective (and slightly less given the shipping cost) as overseas (by carving out sufficient regulatory overhead) then they will drill here since the refineries are here. That would have a dramatic effect on the world economy and help bleed the OPEC nations. The only government “intervention” required is to get out of the way so that when supply/demand reaches a Nash equilibrium that the oil and money flow to western oil companies drilling here.

    Posted by Michael Gaddis

  19. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Kenneth, I agree that it is difficult to accurately describe the oil market using any model, simply because of the collusive nature of the system, but that is my point. And given that nature, we are tilting at windmills to imagine that there is any form of altruism in the oil business that will put things in check for the benefit of country or consumer. The only demonstrated driver is profit, and I don’t argue that it should be otherwise, but there is a threshold beyond which we get into the public good piece of economics, similar to water, electricity, some forms of transportation, etc. Once that threshold is crossed some form of oversight/regulation is needed to ensure that there is balance between public utility, profit and use. OPEC will always be in the equation, and it is not reasonable, although politically popular to scream foreign oil independence. I’m not sure that as country we are actually ready to entertain our own monopoly on energy, without knowing the real costs, pros and cons…this country has been down that road more than once and found the concept corrosive and ultimately destructive. Additionally, globalization dictates that we play in every major market, lest we cede control and face yet undetermined consequences. You are right about the consumer and the misinformed nature of their plight, but I have, nor should anyone have empathy for their condition. Today’s public is like a bunch of Lemmings perfectly willing to be led over a cliff…and then awaken just long enough to blame someone else.

    Posted by Tony Kopacz

  20. LinkedIn Group: The Political Coffeehouse

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Watch this if you want to know why gas prices are on the rise http://www.youtube.com/watch?v=g3-UoI_LNoM

    Posted by Mick Anderson

  21. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    This is an interesting thread of thought, but is it realistic to suggest that the “public” should be the agent that provides the solution? As has been said, there are many factors in the global economy that drive the price of oil. However, is it possible that the apparent collusion to increase the cost of oil might not be the culprit? And, if there is collusion, or even a single agent intentionally manipulating the market, is there a political solution to the problem in the U.S.? I agree that altruism would not be a solution. Regulation of the market is not only politically unlikely, but is fraught with potentially catastrophic outcomes. Clearly, as Michael Gaddis pointed out, independence from foreign sources of energy is an important long-term goal. Are we doing enough now to further our oil independence in the future? Are there viable steps that can be taken to limit the near term impact on our economy? The U. S. is a participant in a Global market. As individuals, we can see that the current situation has a deleterious impact on our individual and national interests. Shouldn’t we be developing and advocating proactive solutions that are both politically and economically viable? For example, in addition to the the other factors mentioned above, there is unbridled speculation in this market that adds significantly to the ultimate price of gasoline. Curbing oil speculation is at least a factor that might be addressable by the Congress with the general support of the public.

    Posted by Michael Kearney

  22. LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    If you are referring to collusion by US oil companies, there have been several Congressional Committes investigating that and since is such a hot-button political topic, I have no doubt they would have ferretted it out if it existed. As to international collusion, there is no doubt as that is the sole reason for a cartel. That said, cartels have problems of their own due to the incentive to cheat by individual members which usually affects a cartels ability to maintain control forever especially if a new player is allowed to emerge that takes the advantage away from the cartel. If US production was unburdened, then uncertainty would be greatly diminished. Uncertainty is the engine that drives speculation.

    Posted by Kenneth McElroy

  23. LinkedIn Group: Manufacturing Digest

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Ed – Great article. Sensible and reasonable ideas for investing in the US – I believe this could actually work to improve development of alternative energies. Unfortunately therein lies the problem – Too Sensible and Too Reasonable – the government will never buy into it! It appears History will once again repeat itself – as before – the goverment will focus on the short-term, and the initial failures of current alternative energy development and return to their easy way out (fossil fuels). It is our failures that produce alternative ideas which eventually produce our successes.

    Thanks for the sanity and vision.

    Posted by Cindy Ellis

  24. LinkedIn Group: The Political Coffeehouse

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    With the state of our current economy and our dependence on oil from risky parts of the world, we must and I emphasize MUST work towards oil independence as fast as we can. Oil companies have been working for years on alternative energy solutions and will be the alternative energy companies of the future. I find it strange that this administration has not even consulted the oil companies to get their input on alternative fuel sources since they are the real experts. The oil companies could have saved the tax payer billions of dollars just by sitting down with this administration.

    We must get our house in order and our economy back on track before we can begin to replace oil as our primary energy source. I believe we should have an energy policy that not only stipulates oil independence but also once there when we will move to alternative energy sources.

    Posted by Dan Craddock

  25. Ron N. says:

    Reading this tread only reinforces that there are too many loose facts, uncertainties, and opinions on political influences and market strategies. Additionally, I find that the environmental concerns create the largest rift in opinion.

    Nevertheless, many express that if US production is increased, we can significantly lower gas prices and wrestle more control from OPEC. If you look at the stats, this is far from reality. The US is already one of the largest oil producing countries (in volume) but uses twice the amount we produce. The US has less than 5% of total world population but consumes about 22% of the world’s oil.

    We, the US, do not have enough known reserves to tap into to meet our own demand! Furthermore, much of the oil we know of is expensive to get to and/or refine. It only becomes feasible to go after if the demand and or profitability goes up- something we do not like. The Bush administration attempted (with some success) to encourage deep sea production through tax incentives. Nonetheless, as soon as prices went up and the American public found out that US oil companies showed past huge profits, they were outraged. Who was at fault? Nobody! We got oil companies to take the gamble and go after the expensive oil and we wanted to crucify them for making money off the gamble. Doesn’t sound like much of a free market to me.

    Some real questions to ponder: Do we really want to give more control to the govt? To private industry? Regulation? More or less environmental regulation? Tax incentives? More emphasis on renewables? The list goes on and the answers appear to be mostly opinions.

    So I ask again, who is at fault? We are! The fickle public that expects cheap unlimited oil and the govt to ensure we get it but we are not willing to make sacrifices if it inconveniences the way we are used to living.

    News flash… there is no constant in our global market and cultural differences. Not a bad thing. In a dynamic market, advances in technology, new discoveries and their cause and effect on health and environment, and who is in political power, we will constantly be adjusting the way we do business and thus requiring personal adjustments at home. Or, as most people do, we can sit around and bitch about change and sacrifices instead of encouraging our next gens to ‘gradually’ incorporate and embrace the dynamics as a reality and opportunity. Positive change requires lifestyle and thinking adjustments. (BTW, if eating habits of kids in the US is any measure of positive parental influence in lifestyle adjustments, we may be doomed).

    Ponder this- go back 100 years and tell one of the most important and familiar employment industries- agricultural (roughly 1/3 of the US population in 1910) American farmer/rancher, that their employment numbers will steadily and dramatically decrease yet they will feed more than five times the mouths they are currently feeding. And this will happen before their grandchildren’s kids die.

    Unless we are willing to incorporate and accept gradual lifestyle changes to better the whole, rely on and expect less from the government, and hold large corporations accountable to standard ethics of business practices while accepting that in a free market there will be winner and losers, we will see a decline of the western civilization.

    Right now, with or without factoring in the oil equation, considering the current selection from the political pool it looks like we are in for some rough seas ahead.

    • EWRoss says:

      Ron, thanks much for your important contribution to this discussion. You make excellent points. My intent was to raise the idea of countering the argument that lower gas prices brought about by increased supply only discourages althernative energy development. This subject is complex. I doubt anyone has the perfect algorithm for how everything that effects gas prices works. Thanks much.

  26. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Great discussion. I’m not sure that we really mean “independence” from foreign oil. In as much as that as a goal might be used to promote accelerated research in alternative forms of energy, I don’t see completely pulling out of the world oil market as a consumer a viable solution regardless of product origin. The stakes are too high to relinquish our seat in the world oil market. Because of oil’s influence on world markets in all forms of petroleum products it is vital to remain a major player. I would much prefer to establish a limit on oil imports and seriously use that as a catalyst to resource energy research for alternate fuels. And no, the public can not be the sole agent that provides the solution, but to re-play our popular saw about how markets drive prices, and then observe the outcomes of market performance, it is disconcerting to see that the public has relinquished its voice and has allowed itself to acquiesce to pre-conditioning by those professionals who know exactly what they are doing when it comes to mass psychology. As far as collusion, speculation and uncertainty are concerned. I have little or no confidence, based on performance of numerous Congressional Committees and Panels…beginning 20 years ago with the financial, credit, housing, banking, SEC, etc sectors that there exists the ability to do serious investigating. My observation is that the best we get is a norming of issues, followed by nibbling at regulations to give the appearance of action with the knowledge that the issues will need to be re-visited and nibbled at some more, in the meantime the bad behavior continues. I marvel at the cause and effect relationship between speculation and uncertainty, mainly because it is often difficult to discover where the precipitant originated. Let’s see, I think that we should worry about Iran today, that should scare the markets, or maybe North Korea can be a problem, I’m sure we can weave that into some sort of uncertain catalyst for market influence. The list of examples is endless and inexplicable when it comes to oil market drivers…we have been living with these and much worse for the last fifty years. What is it that surprises us and causes the dear in the headlights stare, followed by the jackrabbit scamper? Are we really that frail a country and society that we can’t cope with the world around us?

    Posted by Tony Kopacz

  27. Reposted from LinkedIn says:

    LinkedIn Group: Naval Postgraduate School Alumni

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    As I read these well thought out discusions I see a similarity with the discussions oft had with tax regulations. Like our tax code, the energy supply system is so complex that it defies comprehension–literally. The interaction between national and world markets, national and world resource management regulations and environmental regulations is so complex that virtually any solution runs into the pragmatic barrier. That is, if you move this lever, that may fix A but it breaks B, C and D. Eventually you are paralyzed. I see this paralysis in our discussion.

    It is possible to over think tax policy as well as energy policy. The solution is to simplify the problem and apply simple regulatory controls which may result in revolutionary change. I have an opinion in that regard, just as I have for taxes (fair tax based on consumption, zero deductions, eliminate the IRS).

    With energy I would tag oil as nationally produced (US Oil) or internationally produced (other) and declare US Oil a national resource. There would be two sources of US Oil production, Public and Private depending on where it was pumped. Based on those distinctions I would construct a national energy policy. I would stop investing in near-term alternative energy technologies because they are painfully inefficient and instead direct the national investment in fundamental research to find the next great thing. I would unleash our oil exploration after firing the EPA–literally–and set overall policy based on our ability to produce near term near unlimited energy resources. (We have more proven reserves than the rest of the world combined.)

    After all, without cheap energy our lifestyle cannot be sustained, (just as cheap energy is the primary reason for our current world supremacy) in that regard a new aggressive energy policy is an existential requirement. Near term that is coal, natural gas and petroleum. Long term we need a new source but I have faith in us, we are a clever people.

    Posted by Michael Gaddis

  28. Reposted from LinkedIn says:

    LinkedIn Group: Manufacturing Digest

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Ed, cracking the code. The United States has had the philosophy of not exploiting its fossil fuels because of the issue you refer to these supplies are finite. So the United States has consistently sought their energy elsewhere. One of the fascinating things that I have observed during fuel shortages is the fact that the Germans during World War II developed inexpensive systems for turning their coal into fuel that standard automobiles and trucks can use. I have been told that once oil goes beyond $75 for a 55 gallon it is cheaper than oil. There has been considerable amount of energy spent demonizing coal. I believe this effort has been done to further distance ourselves from our very simple and available solution. The United States is going to be forced, because of its huge indebtedness to China, to start selling its resources in order to get out of debt. I believe that in the future, the very near future, we will become a net exporter of energy.

    Posted by Jeff Witt

  29. Reposted from LinkedIn says:

    LinkedIn Group: Manufacturing Digest

    Discussion: BREAKING THE CODE OF THE FOSSIL-FUEL DILEMMA

    Ed, the fact that all of the human activities on the planet represent only 1% of the planet’s occupancy the idea that global warming is caused by humans is incredibly egocentric. This is an inter glacial planet and when one contemplates that millions of years that the dinosaurs existed and their incredible size due to very plentiful food supplies and the accompanying flatulent. One would probably think that they certainly contributed to global warming. The environmentalists have even pursued the notion that somehow curbing the flatulent from cattle would somehow benefit the planet. The earth has over 2000 active volcanoes. Never in the history of man’s activities has the pollution that we spew stopped us from flying airplanes. I was totally blown away when the last Kyoto meeting held in Copenhagen was troubled by the volcano in Iceland interrupting air travel. Politicizing global warming is just an effort to extract revenues from the more successful nations to be distributed to the less successful nations. It is the typical redistribution of wealth based upon a very shallow philosophy.

    Posted by Jeff Witt

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