How About an Energy Policy, Please?
By John D. Turner
9 Aug 2006

Turn on your TV set, tune in the news, and what do you hear? Rockets blowing up in Israel. Israeli jets bombing in Lebanon. Iran seeking to acquire nuclear weapons. Kim Jung Il throwing a tantrum in North Korea. Democrats throwing tantrums here in the US.

Oh yes, and a minor item of news, BP has shut down the Alaska pipeline for repairs “indefinitely”. Did you know that the Alaska pipeline provides 400,000 barrels of oil to the United States per day, accounting for 8 percent of our domestic output?

True, much of that oil does not go to U.S. markets. A lot is shipped overseas, primarily to Japan. However this means 400,000 barrels per day that has to come from somewhere; the difference will have to be made up on the world oil markets, already stretched thin. The result? Oil prices are rising again. So even if none of the 400,000 barrels went to refineries providing fuel to the United States, we are still affected by this, since we still get over 50% of our oil from world oil markets; the price rise affects us anyway.

BP, who is replacing 16 of 22 miles of pipeline due to corrosion, says the line could be closed for weeks or even months. Independent oil experts estimate that it will probably be six months to a year before production is restored to normal.

It should be noted here that this is more than the estimated 367,000 barrels of production per day that were lost due to oil well and refinery shutdowns in the aftermath of Hurricanes Katrina and Rita. It is less than the estimated daily peak production (876,000 barrels per day by 2025) of the ANWR oil fields, which have been deemed “insignificant” by those opposed to drilling there.

We screamed when gas first hit $3 a gallon. Now, we are used to it, and sigh in relief when it drops a quarter and becomes “cheap”. Has it curtailed our driving? Not much. I cringed a bit when I had to fill the Suburban on our recent summer vacation, but after putting in the $120 it took to fill the tank (in two fillings, as the pumps would only dispense $75 at once), I whipped out the ole plastic and continued on my way. Most Americans are doing the same; gas consumption in the U.S. has not dropped at all this summer.

But $3 may be the calm before the storm. We may in the future look back at $3 a gallon and think longingly of “the good old days” when gas was “cheap”. Experts list five events that could cripple our oil supply. These are (not in any particular order):

Successful terrorist attack on Saudi Arabia’s primary oil facility. This is a definite possibility. It would not take the complete destruction of the facility, though that would definitely have severe consequences. A successful attack, even with relatively minor damage would cause the world price of oil to spike significantly. Buyers are nervous enough as it is. Numbers in the vicinity of $100/barrel have been bandied about. Since this is expected by oil analysts, you can be sure that it will go at least that high.

Successful Iranian mining of the Strait of Hormuz. Does anyone remember the last time this happened, and the effect it had on oil/gasoline prices? Can it happen again? You bet. In fact, it is possible that it has already happened. It is possible to build mines that are pre-positioned but “turned off”. They sit there benignly and wait for a signal to activate. Such mines can be placed before hostilities begin, when such activity may be more difficult to accomplish.

Significant Attack by insurgents against oil facilities in southern Iraq. – just read the headlines. Bombs are going off somewhere every day. Can this happen? I think so.

Prolonged severe storms in the Black Sea. The estimates are that such an event would interrupt Russian oil exports by 100,000 to 500,000 barrels/day. Gosh! Shutting down the Alaska pipeline just cut our oil exports by 400,000 barrels/day. This sounds like an event of similar magnitude.

Major oil strike by workers in Venezuela. What if we just generalize this to “loss of oil exports from Venezuela to the United States”? True, if the oil was taken off the market entirely, that would have a definite negative effect on world oil prices. But unlike our Alaska oil, which mainly does not go to us, Venezuela is a major source of oil we use here in the United States. Cutting off this source of supply would have an immediate impact on refineries here; the oil would have to be replaced from other sources, and that would take time, additional expense, and certainly cause shortages in the interim. Hugo Chavez, the current president of Venezuela is not our friend. He is quite cozy with China, who would be more than happy to buy any oil he is currently selling to us. Selling to China instead of the United States would not hurt Venezuela any at all; it would however have a serious effect on us, at least in the short term.

You will note that repairs to pipelines are not on this list. Nor are other such things as hurricanes in the Gulf. But when supplies are tight, and people are jittery, even small events can cause price spikes.

So what would be our response to any of these or other events that could disrupt our economy by spiking the price of oil to outrageous levels? Who is responsible for formulating responses based on possible energy scenarios? Anyone? Or do we just meet such events with the typical crisis management techniques of the clueless and simply “muddle through”? Doesn’t this seem like something, oh I don’t know, that the Energy Department should be addressing?

Question: What is the purpose of the Energy Department anyway? Way back when President Reagan was running for his first term, one of his campaign promises was to do away with this department, as it apparently had no function. He won the election, yet here we are, 26 years later, President Reagan is dead, the Energy Department is still here, and the question remains.

You would think that, by its name, it would have something to do with promulgating U.S. energy policies. And yet, I defy you to tell me what exactly the U.S. energy policy is, other than using energy. We talk quite a bit about our dependence on foreign oil. We deplore the rising cost of gasoline, home heating oil, electricity, and anything else that depends on that gooey black stuff from under the ground. And yet, we continue to do nothing but talk when it comes to actually doing anything about it.

Every year, we talk about our dependence on foreign oil. Yet every year it continues to grow. When solutions, such as drilling more oil wells are proposed, such solutions are immediately attacked as “insufficient” by special interest groups, who have a completely different agenda, because they won’t eliminate the problem in one fell swoop. Yes, individually, each individual oil field that could be opened is just a drop in the bucket. But the contents of the bucket are composed of individual drops, are they not? Every little bit helps.

By the logic used to defeat drilling in ANWAR (that it won’t, in and of itself, eliminate our dependence on foreign oil), we will never drill another oil field, as no single oil discovery will eliminate our dependence. In fact, no single alternative energy source will do so either. It will take a combination of efforts to secure our energy independence.

Conservation is great, and we need it. But we can’t conserve our way to energy independence, unless we are willing to give up electricity all together.

We could build more dams, but environmentalists oppose that. In fact, there are movements afoot in this country to reduce the number of hydroelectric dams currently in place. It seems that fish, particularly salmon, have problems with dams.

Wind power has been touted by many as a clean, environmentally friendly alternative to oil and coal fired plants. But alas, it seems that birds have a similar problem with windmills, as fish have with hydroelectric plants. The environmentalists aren’t too happy with windmill farms either.

Ethanol has been touted as the solution for cars. It sounds good on paper, but have you ever calculated exactly how much acreage would have to be planted in corn in order to produce enough to wean us off foreign oil to run our vehicles? Suffice it to say it is a huge chunk. Which of course, would entail more irrigation (and fresh water supplies are already becoming a problem in some parts of the country), more fertilizer (and fertilizer runoff is already a problem in our lakes, ponds, rivers, and streams), and probably less land devoted to raising food crops. When you factor in the energy that would be required to produce the ethanol, it is not clear that this is a viable solution either. It could be part of the solution (as is drilling more oil wells), but certainly not the complete solution.

There have been proposals to make gasoline from oil shale, tar sand, and coal. There have been proposals to make diesel fuel from bio solids and used cooking oil. But it seems that no one wants to have the required industrial plants in their back yards. California, for example, recognizes the need for more electricity generation plants, but feels that they should be built in someone else’s state; just send us the electricity, and keep the nasty pollution and visual eyesores where you live thank you very much.

There have been proposals to convert to fuel cell or electric vehicles. But so far, the technology to do so is not mature enough to be economically viable. And there is the infrastructure cost of converting a nation-wide gasoline distribution system to one based on electricity or hydrogen or whatever other alternative fuel is currently in vogue. This is usually glossed over in the exuberant verbiage of how much better this or that alternative will be compared to gasoline. If it is mentioned, it is usually in the context of “the companies who provide this service will have to pick up the cost of ‘investing’ in the infrastructure”. What this really means, of course, is that we will pick up the cost; expenses of doing business are always passed along to the consumer, in the cost of the good or service, in the form of increased fees and taxes, or both. And obviously, this cannot be accomplished overnight.

Everyone seems to be waiting for the Federal Government to do something, but all the government does is stick it’s political finger in the wind, point fingers, and issue 15 second sound bites. It’s too bad that all the hot air they produce can’t be used for something useful, such as heating the capitol in the winter!

The only thing not being discussed is nuclear power. Well, the president did mention it, but of course, the opposition party immediately opposed, the environmentalists went ballistic, and the Republicans, sensing the political winds blowing in a negative direction during an election year pretended that he had never spoken at all.

The problem is, we do need the Federal government to do something. We need a plan to be put forth on how we get out of this mess. It needs to be a viable plan – one that depends on things we can do now, not things we might be able to do if we spend enough money trying, and it needs to be done soon., because no matter what the plan is, it will take years to come to fruition. We need to start now!

And if that useless department, called the Department of Energy isn’t the where this plan is to be generated and managed (or at the very least, coordinated), then I say we can start by eliminating it, thereby providing some utility by saving the electricity it costs to run the place.

After we have a plan, we need to execute it. This is another place where we need the firepower of the Federal Government to come into play. We need to overcome all the environmental restrictions, the land-use restrictions, and the not-in-my-backyard attitudes that will surface and cause the implementation to be delayed or, in the worst case, canceled. We need the government to remove all the obstacles, many of which it established in the first place, that are impeding the implementation of a cogent, national energy program.

I am not, in general, a big fan of government. There are some things however, that the Federal government should be doing, particularly when national security is impacted. And this is a national security issue, economically, militarily, and diplomatically. If there is anything that has the capability of putting this country into a 1930’s style depression, it is out of control energy costs. The cost of energy is fundamental to everything we do in this country. Instead of the rising tide that raises all boats, it is the tsunami that can swamp all boats. Additionally, foreign control of our energy is a weapon in the hands of those who would seek to manipulate us or do us harm. This is something that cannot be tolerated. It is a huge vulnerability. It is also a driving force in our interventions in countries abroad, and in the ability of foreign governments to intervene in our affairs. In military terms, the price of oil is a national center of gravity.

While we are at it, perhaps we can save some money and resources by eliminating some of the energy programs we established in the past to deal with energy issues that have already been solved. Rural electrification and the Tennessee Valley Authority spring immediately to mind, but I am sure there are others. These resources can then be diverted into new initiatives to further the goal of achieving energy independence. Or if not complete independence, at least enough so that we can weather high world oil prices without crippling ourselves.

So what can we do about it? This is an election year. Lobby your congresscritters! Write letters to those currently in office, and to those seeking to unseat them. Let them know that this is an issue that is important to you. If it is important to enough people, it will be important to them; that is the way representative democracy (and individual self-interest) works. If they hear nothing, it will not even be a blip on their radar screen – until something catastrophic happens and they go into crisis management mode. At that point, it’s too late; the damage has already been done.

This is a long lead-time issue. Even if we had a plan today and began immediately, it will probably take 10-15 years to achieve. We need to get started as soon as possible. Delay only ensures that more effort will be required, the cost will be greater, and the danger to our national economy (and to us individually) will continue to increase.