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Obama's Green Promise

by: Callum Roxburgh August 31, 2008 | about stocks: DIG / DUG / FAN / IEO / KOL / TAN / UNG / USO / XES / XOP    

Callum Roxburgh

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Democrat Presidential Nominee Barack Obama in his acceptance speech in Denver promised that he would rid America of her dependence on foreign oil within 10 years. He has obviously recognized that access to resources over the next few decades is going to be the main source of international conflict. Even many who disagree with him about whether it was wrong to invade Iraq would not argue that the reason America found it had a national interest in that country was its petroleum resources, and America’s dependence on foreign oil was the imperative that drove the decision making. But how realistic is it to think that America could achieve energy independence within 10 years?

America currently consumes 20.7 million barrels a day and meets 6.9 million barrels of that consumption through domestic production. The other two-thirds comes from foreign sources. America imports 2.4 million barrels from Canada and Mexico, with the rest coming from much more unstable sources such as West Africa, South America and the Persian Gulf, regions where you have to deal with endemic corruption, resource nationalization or Islamic fundamentalism as a by-product of your dependence. It is obvious that given a choice, you would not want to depend on the stability of any of these regions for something as important as energy security.

So what are America’s alternatives?

T. Boone Pickens believes that compressed natural gas may be a substitute for gasoline. It is relatively inexpensive to retrofit existing cars to run on natural gas. Natural gas has traditionally been used as a fuel source for heating as well as electricity generation, something that it is well suited to. If large numbers of vehicles were converted to burn natural gas, they would push up prices and the cost of home heating and electricity generation would rise.

The US currently produces 546 billion cubic meters of natural gas and consumes 653 billion cubic meters, with the shortfall made up from imports from Canada and Mexico. Proven reserves in North America are 7.98 trillion cubic meters, enough to meet current energy usage patterns for the next 10.3 years. If you converted half the cars in America to run on natural gas, that reserve would be depleted in 6.7 years. So while this may be a short term solution that can buy some time, it does not solve the problem.

America is abundant in coal reserves, enough to last 234 years at current production. Unfortunately, coal does not lend itself to easy use as a clean transportation fuel. It has to be converted into something else. It can be turned into motive power by converting it to a liquid, which is a fairly expensive process, or used to generate electricity which could be stored either as hydrogen by releasing the hydrogen in water or by storing it in a battery.

Most hydrogen that is currently produced is done by “cracking” it out of natural gas. Cracking it out of water is a much more expensive proposition. The main obstacle to the widespread use of hydrogen as a fuel source, whether in fuel cells or in internal combustion engines, is that with currently available commercial technology it is a very expensive fuel. There are, however, new technologies that are under development which promise to produce greater volumes of hydrogen for a given amount of electrical input. If these technologies realize their promise this may provide one of the long term solutions.

The other technology that shows a lot of promise is new battery technologies. The main drawback to the widespread adoption of electric vehicles has been that batteries are heavy in relation to their storage capacity and that they take a long time to recharge. Though most Americans have a daily commute of less than 60 miles, they have been reluctant to buy vehicles that need to be recharged for 5 hours after only covering 250 miles. The two problems are being solved by using nanotechnologies to make better lithium ion batteries. The latest technologies promise batteries that can give vehicles a range of over 250 miles on a single charge and can be recharged in as little as 5 minutes. They also can be recharged over 50,000 cycles, meaning that they will probably outlast the car itself.

The technologies needed to meet Barack Obama’s goal of energy independence in 10 years are either commercially available or in the development stage. Technologies such as “clean coal” as well as renewable technologies such as wind, solar, geothermal and wave are all viable solutions at the right price. When confronted by the Arab oil embargo in the 70’s, President Ford, proposed that the solution to end America’s dependence was to keep fuel prices high. The high prices would lead to increased conservation and provide an incentive for the market to create solutions. But as oil prices declined in the 80’s, all worries about energy security where pushed down the political agenda. It is awfully difficult to get people to see the problem when they can fill up their tank on the cheap.

If the government put an import tax on oil imports from outside the NAFTA countries and gradually increased it in a predictable fashion, it would have two very profound effects. It would make it more attractive for the major oil companies to explore for new oil and gas deposits in North America rather than spend money drilling in potential political hot spots. And, it would also provide clear guidance to the automotive and electricity-generating industries that investing in new technologies which will help America escape its transport fuels strait-jacket will be rewarded. The key to making this all happen is maintaining the political will to stick to this goal even if oil prices should fall. That is the real question.

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This article has 24 comments:

  •  
    Aug 31 07:41 AM
    The key to the energy problem is private enterprise not the high taxes and fairlure by the government.
    Reply
  •  
    Aug 31 08:02 AM
    Now that both running mates have been chosen and the presidential election heats up American's are left to sort out which candidates will better address the ever burdening issue of the energy crisis in America. The energy crisis is directly linked to our economy. Foreclosures are on the rise as well as unemployment. With all the technology available it is incredible to believe we have not come together as a nation to devise a plan. We have become so dependant on foreign oil that we have neglected to fully utilize such natural sources of energy such wind power & solar power. Along with modern technology such as plug in cars, hybrid cars, v2g technology , regenerative braking, and Kwh/gal, MJ/gal technology we still seem to be floundering as a nation as to devising the best plan utilize all that is available to us and lift ourselves out of this mess we are in.

    themanhattanprojectof2...
    howmuchenergydoesmycar...


    Reply
  •  
    Aug 31 08:13 AM
    The estimates I've seen for Natural Gas reserves are over 100 years supply, not 6.7. That's quite a difference and would make quite a difference.
    Reply
  •  
    Aug 31 10:14 AM
    But Panchanguero, the environment is not a left or right wing issue. If California had not worked so hard and spent so much money over the past 40 years, the air would not be breathable and all the life in the streams and coastal waters would be gone or endangered. In th 60's the outlook was very bleak. Don't you remember the pictures and the headlines? The people accepted what had to be done and they did it. It's still facing problems, of course, but they had a paradise to save. Start thinking of the paradises you have where you live. We can reach all the goals we strive for. Yes, we can.
    Reply
  •  
    Aug 31 10:23 AM
    I guess Callum Roxburgh is not educated enough to do this editorial and needs to research Algae Fuel and companies like Valcent that are already making headway in new technology to overcome our dependance on oil and also help making this a green planet.
    Reply
  •  
    Aug 31 11:22 AM
    It's simple - Drill here and sell here
    Than the price of world oil would drop to affordable prices and everybody would benifit
    TKSK53
    Reply
  •  
    Aug 31 01:59 PM
    I am a conservative environmentalist. We have composted our household garbage for more than 30 years. I rode a bicycle to and from work for the last 19 years before retirement. We installed a solar water heater 6 years ago and it is saving us about $50 a month in electricity. I am studying a solar-electric installation for our house.I understand that Senator John Kerry has an $8,600 dollar hand made bike but I haven't seen him ride it to work.My paranoid suspicion is that the radical enviros wanted an energy crisis which is why they have opposed every rational attempt to remedy the situation. This is going to backfire on them badly. Obama has called Canadian tar sands crude "dirty oil". Well, the Chinese and others will be more than happy to take that "dirty crude" off the Canadians hands. I predict that an Obama presidency, combined with Pelosi and Reid in Congress will be having people wistfully saying: "Gee, I miss George Bush" (and I am no Bush fan!). Sara Palin is being attacked by Democrat spokesmen for a lack of administrative experience (small town mayor, two years as a governor) what a laugh...Sara has MORE administrative experience than the other three men in this race combined!!!
    Reply
  •  
    Aug 31 02:16 PM
    We currently have an energy, global warming as well as an economic problem related to the price of energy. If we are careful about finding the solutions, we may be able to solve all of them in varying measure. However, to do this we need to have the cooperation of the slick and the unthinking loud-mouths for some restraint. To be able to do it at all without an even worse fall-out! (Remember ethanol from grain. The cure is worse than the disease to start with..)

    Based on the authors presentation, some options should be ruled out outright, and debate should stop because it only causes more confusion and air-pollution from the mouth.

    Liquid fuel from coal debate should end. Why? As the author says it is expensive and needs massive investments which we don't have or can't afford. However, the most compelling reason is that it worsens global warming. The efficiency of converting coal to liquid fuels is only about 50% (within a plant; cracking petroleum to liquids in a plant about 88 to 92% and depends on type. of process). If you consider the energy expended in mining coal, transporting/shipping it to a plant, etc, the efficiency would perhaps be less than 40%. Mining and transporting coal is avery energy intensive, and often needs diesel and electricity (not coal!).

    Ditto in many ways for converting natural gas to liquids. Efficiency about 50%, but not as bad as coal because natural gas does not contain as much carbon (Btu to btu) as coal. However, if you can use natural gas directly (in a car engine as the author mentioned) why waste energy (global warming!) by converting it. to liquids? Of course, hopefully the car/vehicle engine operates as efficiently at least as an engine on liquids. It does! Actually somewhat better! So I say forget about conversion of natural gas to liquids in most cases.

    Hydrogen and fuel cells based on natural gas. This is a difficult issue as there has been too much air pollution coming out of mouths! I was connected (managed the implementation) with the US Government's technology development programs for hydrogen from coal about 25 to 30 years ago. As expensive as the liquids from coal processes, but the efficiency of conversion (whether from coal or natural gas) is somewhat higher than that for converting coal to liquids. Efficiency (in plant) for both close to 66 -68% range, and despite so-called conceptual technological advances (only peripheral) over the last 30 years, the efficiency has not improved much. Mission impossible to get any significant improvements in process efficiencies in my view. So here we have global warming (not as serious as in the case of liquids) issues, though we have also got cost problems. So I say forget this option forever, even though the coal and gas lobbies will say our"National Security." imperatives. (They don't think global warming and our economic security is National security at all!)

    Use gas directily! Use coal for coal gasification (which technology development programs I also managed during the period mentioned above). Coal to electricity via gasification- ("clean coal" combined cycle) is more efficient than coal to electricity via current conventional combustion based electricity generation. However, in $ and cents it is about 20% more expensive. When you factor health-care costs which our combustion powerplant generators don't pay from their pockets, coal gasification-combined cycle is actually about 15% cheaper (perhaps more if you include other environmental benefits). The technology availble is so advanced that you can virtually get a near zero effluenct clean technology which also is not given credit during economic analysis by the loudmouth cliques whose only interest is $ and cents for themselves.

    This is my epocrypha for today. I am retired and don't seek the limelight, but don't mind doing and contributing for the public interest if the slick and the loudmouths don't shout me down. Sorry if I have done a good job writing good prose.

    Reply
  •  
    Aug 31 02:38 PM
    Obama wants to be elected. I want to solve the problem.

    Considering much of the flux flow between free enterprise, unfree enterprise, natural and contrived disaster, who's on the take, corporate greed and personal greed, I am convinced that we need to create our own crisis to get off oil and coal and the natural resources we BURN before we find ourselves in another crisis without a paddle - not unlike the '73 embargo and the '78-79 gas crunch (we know who caused eash so we know who the enemy is - an as you know we, the American consumer and American Business, are not exempt).

    So let's do the unthinkable - the action and the results are not new - other nations have done it - it's time we did it. Put a $5 BURN TAX on each gallon of gasoline and diesel, equivalnet mcf of NG, ton of coal, lb or gal of propane etc., - A BURN TAX - where ever; from wherever: import or domestic. That tax (God help us because it goes to DC) is to be used only for installing infrastructure like electric railroads, electrified inter/intrastate hiway ferries, electric grid improvements and expansion (beefing up) to handle 20 Quads/yr, INCLUDING SOLAR AND WIND HOOKUPS.

    In addition, the electrified railroads, electrified hiways and power grid will have an attached lesser TOLL TAX for prime-movers (the railroads, the ferries, the utilities) and a CREDIT REBATE (reduced fee) for baseline users (John Q Public and businesses).

    Doing this:

    1) the Govt provides the means for the common good which is it's role,

    2) making the profiting entrapanuers pay to play (ie., the capitalistic risktakers placing their bets), and

    3) forcing thru taxation (punishment) and relief (rewards) the behavior change desired where,

    4) additional capitalistic risktakers will develop the additional means to make it all happen (the R&D, investment, and providing of solar, wind, electric vehicles, hybrids, etc., etc, whatever the need).

    5) AND THE GOVERNMENT HAS TO DO WHAT IT HAS ALWAYS DONE, PUT A TAX ON IT'S PEOPLE AND NEVER REMOVE IT.

    AS THE BEHAVIOR CHANGES THE PUNISHING TAX NATRUALLY EVAPORATES (NO MORE BURN; NO MORE TAX).

    AND THE NEW ECONOMY IS ESTABLISHED FOR THE NEW DESIRED BEHAVIOR WITH BURDEN AND REWARD IN PLACE, BOTH PAYING FOR USE; AND NOT KNOWING IT, AND SATISFIED.


    Reply
  •  
    Aug 31 02:46 PM
    Pickens has the best idea and we shouldn't be using natural gas to generate electricity we should be using wind, solar, and Syngas that is derived from coal. Pickens has the only near term solution.
    Reply
  •  
    Aug 31 03:04 PM
    Panchanguero - "Alaska can provide us with all the energy we need." What planet are you living on? There is no such Alaska on this planet.

    Yes, we can get a few more years of domestic oil by drilling everywhere we can. Then what? We have an economic opportunity in front of us that comes along only once every century or so. The 19th century saw the great opportunities of the railroads and the industrial revolution. The twentieth century saw the great opportunities of the internal combustion engine and the age of oil, followed by the information revolution. The century we are just starting will be the age of the energy revolution. Are we going to lead it or play second fiddle to someone else, like China?

    We need all the sources of energy we can get for the next 10-20 years - oil, gas, coal, nuclear, biofuels (especially from waste) plus emerging alternative energy sources. Ultimately, technology will make the free and relatively limitless energy sources of the sun, air in motion and water in motion the cheapest forms of energy available. There may even be technologies not yet seriously on the radar, such as tapping the energy of the earth's magnetic field.

    Go ahead and put all your money in drilling and mining coal. There should be some good profits. However, the great wealth creation of the next 10, 20 and 30 years will be in new technologies.
    Reply
  •  
    Aug 31 03:23 PM
    Most of the proposed alternative fuels are going to take time and money to develop. An effective energy policy needs to include programs to reduce consumption and increase efficiency of energy consumption.

    There is a real easy solution to reducing consumption and increasing efficiency for daily commuters. Currently, the roads are congested by daily commuters driving back and forth from home to some centralized office. In this time of high speed internet, VOIP, VPNs and conference calling, there is no reason for workers to commute across town each day.

    Remote Office Centers make it possible for workers to work remotely from an office near where they live. Remote Office Centers lease individual offices, internet, and phone systems to workers from different companies in shared centers located around the suburbs.

    Remote Office Centers are fairly new, but can be found in most cities by doing a web search for "Remote Office Centers" in quotes.

    Alternative fuels are needed, but they are going to take time to develop. For both the short and long term, this country needs to make sure it is using energy as efficiently as possible. Driving back and forth to an office that could just as easily be located down the street is not an efficient use of oil.

    Many people need to be onsite to work, but these workers can still gain the benefit of lower overall gas demand and less cars on the road.

    America has always been good at innovating. Innovation is just a matter of using existing technology in a new way. Rather than wait for new technology, American workers can start working remotely using existing technology and save oil immediately.
    Reply
  •  
    Aug 31 03:29 PM
    Some good points and lots of misinformation from you bloggers.

    But none of you talk about:

    stopoilspeculationnow..../

    WAKE UP AMERICA!!!

    Take the link and do something to stop the speculation in commodity futures.

    Also, I use solar and my microwave to heat hot water. I have an empty 250 gallon fuel oil tank. I am looking into solar heat and electricity.

    My electric bill in the summer is about $28.00 a month...I hardly need AC in NEPA.

    A bitter guy in PA. who LOVES OBAMA AND BIDEN.

    OBAMA / BIDEN 08
    Reply
  •  
    Aug 31 05:29 PM
    gee jjason - you must have very a large microwave oven. where do find one of those?
    Reply
  •  
    Aug 31 08:43 PM
    You propose an import tax on oil to make it more attractive for companies to produce more oil at home. News flash: it's *already* plenty attractive for them. They go literally to the ends of the earth to find oil and yet still can't replace their reserves. They're being tossed out of the most promising areas abroad by the likes of Chavez and Putin. What's stopping them here then? Obama, Pelosi, and Reid have slammed the door in their faces on our most promising resources. An import tax may or may not be a good idea, but by itself it won't be enough to raise production at home. The most likely effect is that it will raise prices on consumers (good, because it will get them out of wasteful SUVs) and create a profit windfall for the companies as their remaining domestic reserves rise in value to the new market price inside the country.
    Reply
  •  
    Aug 31 09:34 PM
    In June, 1979, President Jimmy Carter proposed a “new solar strategy” to “move our Nation toward true energy security and abundant, readily available energy supplies.” In an effort to set an
    example for the country, Carter had solar panels installed on the roof of the White House West Wing. One of Ronald Reagan's 1st acts as president was to remove the solar panels.
    Reply
  •  
    Aug 31 09:42 PM
    I'm all for taxing gas to keep it high. I would want to ensure that these taxes could only go towards subsidizing solar and a few other renewable energy resources. However, that's harder than it seems. As one person commented, some politicians would probably find ways to divert the taxes to other things. Even if they didn't, these politicians would see that they have more money overall to spend. But I still think it's worth a try, or maybe we should just make sure that our representatives promise to use a certain amount of money for alternative energy, and also tax gas to keep it high, but make these two acts independent of each other.

    I liked Obama's idea of using 150 billion dollars to get us off of dependence on foreign oil. It's probably not enough money but it's a start. I just wish we had not spent all of that money and a lot more on a war. We could have used it as Obama is planning to do.

    Anyway, I think it's a good article.
    Reply
  •  
    Aug 31 09:50 PM
    Keep digging the furrow deeper in your brains so you can continue the one track tax chant while ignoring billions squandered and just plain vanished in Iraq and you don't even care.
    Reply
  •  
    Sep 01 03:53 AM
    Most of ole T. Boone's gas for our future transportation fuel,-that frees us from the clutches of OPEC and Russia, comes from un nvebntional resources that require alot of water to produce.
    Will be interesting to see the O'Bama Administration
    pick through the minefield of enviro nuts as to what they are going to do, Enviro nuts don't like oil and gas men messin with the water.

    But have no fear--after a couple of indecisive years in office the Republicans take over Congress again and justlike Clinton a Republican Congress will resurrect O'Bama and suddenly O'Bama is a big advocate of drilling and a big advocate of liberal this and liberal that as well.
    And just like Clinton he gets re-elected with the help of a Republican Congress that saves his butt, just like Clinton.
    The R's will give him direction and something to say he accomplished and something to oppose.
    Gee, sounds like the roaring 90's all over again.
    Reply
  •  
    Sep 01 12:01 PM
    The author above totally omitted the fact that Pickens plan was to replace Natural gas with wind power in electric power generation thus freeing it up for transporation. Not a minor omission.
    Reply
  •  
    Sep 01 09:17 PM
    Our company, Limnia, Inc. (www.limnia.com) has resolved almost all of the issues associated with hydrogen infrastructure. We store hydrogen in patented, solid-state, non-pressurized canisters that are safe, efficient, better than many battery solutions, use common carriers already built out globally and can recharge a car in seconds via hot-swap. Our many hydrogen generation partners have shown methods, this year, to make hydrogen from water or organic waste so that the energy efficiency is completely attractive.

    Cindy Lewis
    Reply
  •  
    Sep 01 10:39 PM
    I have read two books recently that scare the daylights out of me..

    Mark Steyn, America Alone, The End of the World as We Know It (about Islamists outbreeding the Western World 8 kids per family vs 2.1:1)

    Jerome Corsi, The Obama Nation (Obama's experience - not a lack of it - is what we should be concerned about and CHANGE = wealth redistribution ala Saul Alinsky "slowly, quietly, gently, so they will agree to it with little objection)

    Read them before you vote in "08.
    Reply
  •  
    Sep 02 02:49 AM
    Toml2068 wrote:"The author above totally omitted the fact that Pickens plan was to replace Natural gas with wind power in electric power generation thus freeing it up for transporation. Not a minor omission."

    A valid point Tom, but if you could replace all the gas fired electricity generation with alternative sources it still wont last very long. America's current energy usage in million tonnes of oil equivalent are:
    Oil - 943.1
    Natural Gas - 595.7
    Coal - 573.7
    Nuclear - 192.1
    Hydro - 56.8

    If you diverted all the natural gas to use as motor fuel and only replaced the 2/3 of the oil consumption that is imported you would still need 628 tonnes oil equivalent which is larger than current consumption. Given that current Proven Reserves stand at 10.3 years under current use, if diverted it would be 9.8 years. That is still short-term in my books.
    Reply
  •  
    Sep 07 11:40 AM
    Conservation plus the above will have to prevail. Public transportation, centralized population clusters and many other innovative strategies for existance in concert with the planet is manditory.
    Did I mention term limits for government offices? It will never happen unless the voters make it happen. Vote out the incumbents.
    Reply
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