Tilting at Windmills

Much of the idea of alt-energy is based on the use of alternative electrical production replacing current electrical production AND an increased use of electrical-powered transportation replacing current petroleum- powered transportation. And some have suggested that no matter what we should KEEP oil prices artifically high through government fiat to encourage the development of alt-energy.

So, a few uncomfortable realities. First, other than than through psychological/political factors almost nothing we do today will have an immediate impact on energy prices. The basis for current high oil prices is largely political and psychological, and unrest in the Middle East is not likely to abate anytime soon, nor is Hugo Chavez likely to decide he loves us, and as long as current pricing brings in both political and market rewards to producers (which, I note, are mostly nations and not companies) higher than boosting production and lowering prices does, the bubble has ongoing support.

Only medium to long range changes in fundamentals are going to have much impact on the short-term situation. That's not contradictory--much of the psychological support for the bubble is the knowledge that we are not doing ANYTHING constructive to alleviate the foreign dependency problem. And regardless of what the alt-energy fans will tell you, just supporting research and passing laws won't do a damn thing to address that. It takes actual steps towards increased and enhanced domestic energy production to change it. Such as opening up some of our massive domestic energy reserves to production.

Take notice--this applies just as much to alt-energy as it does to fossil hydrocarbons. The argument that new fossil fuel development will take years ALSO applies just as much or more so to alt-energy. The main differences are that the fossil fuels are actually already there, and beginning development of them is a sure thing as compared to a speculative gamble, and that shifting our transportation energy requirements to electricity would take even longer and cost even more than boosting our oil production.

Let's begin with the idea of alt-electrical production. We actually do have cost-efficient technology to implement some additional solar and wind production. BUT...the amount of current generation capacity we can replace with these technologies is limited. And in any case it only marginally addresses petroleum prices--more than half of our power production comes from coal. We have no shortage of coal, and newer technology will improve our production efficiency, giving us more electrical power anyway, as would adding more nuclear plants. So what's the problem there?

First, the infrastructure to distribute that electricity is limited. Our national grid is already at capacity, and adding capacity will take years. Even if we had unlimited electrical generation right now, we would be unable to distribute it. We must (regardless) improve our national grid infrastructure, adding more capacity. As the grid stands now, if we converted all of our cars to electrical power tomorrow, there would simply not be enough grid power available to charge them.

Second, small-scale production of electricity such as home solar photovoltaic (PV) systems is simply not yet cost-effective, certainly not for the limited spaces available in urban areas. A typical home has the space available to produce about one-third of its required electricity, but that at a capital cost that would take half a century or more to pay back assuming a zero-interest opportunity cost of capital. Until and unless small-scale solar hits about a 10 to 15 year investment breakeven at current interest rates, it's economically unsound. We need a reduction in costs of about 2/3 to 3/4 at today's prices and interest rates for it to make real sense. "Net metering" whereby excess production above household needs can be sold back to the utility grid reduces that requirement somewhat, but we're still not in cost-effective range, and we don't know when the technology will get there. And don't forget #1--our grid capacity is already maxed. WE NEED MORE GRID CAPACITY. And that will take more than the 5 to 10 year lead time of boosting fossil fuel production to accomplish. The "won't hep us now" argment is completely hollow--NOTHING other than asset-bubble-bursting perceptions will help us immediately, and we need to start doing what will help us in five years, ten years, and onward.

Wind generation is limited for obvious reasons--there are only so many places available that are suitable for wind production. Use those places, great. I'm a big fan! (Pun.)

But our big problem with the oil run-up is portable fuel for transportation. It is no exaggeration at all to say that the cost of portable fuel has a major and direct impact on our economy and our future ecnomic prospects. Products have to be moved to market, and we can't all telecommute. Nor can we all live in big cities...or want to. The geography of our nation is completely unsuited for mass transportation as a solution. We grew to where we are on transportation, and to maintain our nation we must have reasonably inexpensive transportation, or decline as a nation.

Grain ethanol is limited. We simply can't produce enough of it to have a major imapct on fuel cost, and trying diverts resouces away from food production. Given the inherent limitations, subsidizing it is downright insane. Cellulosic ethanol is not nearly so limited--we can use ANY plant material, and will. But it still won't be enough. Bio-deisel has much the same limitations as grain ethanol. The Holy Grail of bio-crude for domestic fuel lies in synthetic crudes such as algal oil and bacterial oil, IF they can be developed into economic cost-effectiveness.

The automobile and freight truck or their updated equivalents are simply not going away, and the fuel to power same must come from somewhere. Buying that fuel from foreigners at current prices is downright insane when we have such enormous reserves available to us that can be produced at half or less of current world market prices. Even at half the current price, buying it from foreigners and exporting all those dollars is crazy if we could grow it ourselves (at carbon negativity or nuetrality to boot, for you warmists).

Despite decades of warnings, we have collectively sat on our thumbs or chased idiocies such as grain ethanol susbidies. It's time to begin to address the real problem--our dependence on others to feed our energy hunger. We can't just go on a diet--as a nation we would starve to death. Our health as a nation requires affordable energy. We can't get there overnight, we must plan for the future, and we must do so realistically.

That means expanding grid capacity/infrastructure. That means building more electrical power plants of whatever kind--coal, gas, nuclear, wind, solar--to feed that enhanced and improved grid. That means opening the domestic fossil fuel production spigots that Congress has kept closed for so long--and perhaps even restricting or heavily taxing any exports of same, to provide some degree of separation between doemstic and world markets. That means focusing research efforts on the existing technologies that have the greatest potential for the lowest long-term costs, such as bio syncrudes that can utilize existing production infrastructure. And yes, that means implementing "renewable" electrical sources, particularly small-scale localized production such as home solar, as and when they become economically viable.

If we don't begin and begin in a big way, we will never get there, and we will radically decline as a nation. If we don't begin and begin in a big way, the perceptions that feed the current asset-bubble of oil prices will continue. Activists and partisans can finger-point and pimp their preferred "solutions" all they want, but this is the reality--we must expand and fortify our domestic production of our energy sources, or be forever dependent on the kindness of strangers, many of whom wish us to dry up and blow away, picking off bits of our national flesh along the way.

To help ourselves in the short term, we must act for the long term.