Energy Independence?

As a follow-up on Bush's plea for Naimi to raise oil production, it looks like we're already seeing what we learned on the first day of class. Bush wants the US to be oil/energy independent, and here he is already asking the Saudis to help manage the market trends concering the high oil prices. This topic was discussed at the Democratic debate last night, and Clinton had some reasonable criticism of Bush's actions. She basically asked what we were all thinking as to why Bush doesn't have an energy policy that is creating jobs for Americans to lean us toward independence rather than relying on and "begging the Saudis to drop the price of oil."

http://www.msnbc.msn.com/id/22644928/

Nuclear Power, Should We Be Using It?

I was watching the Nevada Democratic Debate last night and the topic of energy was raised. Nuclear energy was of big concern because Yucaa Mountain (where they plan to store nuclear waste) is located in southern Nevada. You can bet the people of Nevada have a strong feeling about nuclear energy and if we should be using it. From the candidates responses, they all seemed to be opposed to the building of Yucca Mountain and to the building of anymore nuclear power plants in the US. I know there is a huge problem with getting rid of the waste, but can we afford, with all our looming energy/climate problems, to not look at nuclear power as an option until renewable sources become profitable? I don't know, that's why I'm taking the class. As an interesting note, Great Britain announced its new energy policy on the 10th of January. It included support for the building of new nuclear plants. The link is below if you want to check out the article.

http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=821240&story_id=10498995

Calls for Raising Federal Gas Tax

A U.S. Transportation panel is calling for raising federal gas taxes to pay for improvements for roads/bridges and to build new ones. Most of the money that state highway agencies (TxDOT in Texas) use to fund roadway projects come from this tax that is collected anytime you fill up your car/truck with gas or diesel. Currently, the tax is 18.3 cents per gallon and the transportation panel is recommending that the tax be increased by 40 cents over 5 years (8 cents per year).

Infrastructure became a “sexy” issue after the tragedy this summer in Minneapolis. Everyone is talking about how we need to improve our bridges and how we need to inspect all of them. You would expect that during the ensuing months every bridge in the US has been inspected and those bridges deemed structurally unsafe closed for repairs. Well you’d be wrong! In fact, TxDOT is facing a credit crunch now and will suspend issuing new contracts starting this February (they have already scaled back other projects).

So do you think people are supporting the gas tax hike? Of course not! A lot of people don’t like the plan – they say it’s the wrong way to solve the congestion problem. Keep in mind the gas tax has not been raised since 1993. Well gas is quite expensive already (nearly $3/gallon) - so do we really need another 40 cents on top of that? To answer that question it would be wise to compare the cost of gas in other countries and see where we stand: approximately $6/gal in Europe, $4.5/gal in Japan, $5/gal in Brazil, and $3.5/gal in Australia. Obviously there are countries where the price is a lot less than that (Venezuela - $0.2/gal).

The idea here is that paying a little more for gas won’t kill us (at least in my opinion) and it is obvious that we need the money to improve our infrastructure. The bottom line is that our infrastructure is old and needs to be repaired the question is how we pay for it. Some people say raise the gas tax and others say let private enterprise handle it (basically tolls). Either way we’ll pay more out of our pockets but tolls cannot be expected to fix the entire US infrastructure (unless we toll everything) so it seems to me that increasing the gas tax might be the answer!

Below is a link to an article in the Austin American Statesman on the topic:

http://www.statesman.com/news/content/news/stories/nation/01/16/0116gastax.html?cxtype=rss&cxsvc=7&cxcat=52

Oil Production Policy

Isn't it interesting that as a nation, we espouse a market driven regulatory envrionment, be it for energy, health care or the environment, but we (Bush) ask that other nations increase oil production output ro avert a crisis in the U.S. economy? The latter notion is the jist of the latest exchange between President Bush and the Saudis from Bush's visit to Riyadh (this week). As reported in the Austin American Statemen this morning, Saudi Oil Minister Ali al-Naimi said the president raised valid concerns about the impact on the U.S. economy, but Naimi seemed to suggest there were limits to what the Saudis would do. "We will raise production when the market justifies it," he said.

Nuclear Power is Not Clean

The Miami Herald recently covered the fact that FP&L's request for its nuclear power facilities to qualify for renewable energy credits, or RECs, was denied by the state of Florida:

http://energypriorities.com/entries/2007/08/nuclear_power_not_clean.php

I say kudos to the state regulators for seeing through all this hogwash about nuclear power being clean just because it does not emit conventional air pollutants.

Thanks to the highly radioactive waste produced by nuclear fusion, nuclear is one of the dirtiest ways to produce electricity known to mankind. And what's worse, it's one of the costliest.

Ask the average American why they don't power their house with solar panels, and they'll tell you it's too expensive. Ask an expert, and they'll explain that the up-front cost of buying and installing solar panels, amortized over the life of the panels (30 to 50 years), devided by the total amount of electricity the panels will produce, will give you in the range of $.25 to $.35 per killowatt of electricity produced, compared to $.07 to $.12 per killowatt for natural gas and much cheaper for coal. According to many experts, nuclear power is even cheaper than that.

I'm an MBA student, and one thing we learn at McCombs is how to build financial models that incorporate expenses and revenues over time. We usually build these models out 5, maybe 10 years. Anything past 30 years is just too unpredictable. After all, how can you estimate costs that far into the future?

The problem with nuclear is that, in order to incorporate the full costs of producing nuclear power, you have to try to calculate the cost of managing the nuclear waste going out 3000, 4000, or 5000 years into the future. No one can do that, so no one does do that. Looking at this time horizon, it seems obvious that nuclear is outrageously expensive, and that's because it's incredibly dirty.

And if such a dirty source of energy can qualify for renewable energy credits (an eventuality which would fit nicely into Dr. Webber's characterization of current U.S. energy policy), then we find ourselves in a hot, steaming pile of trouble.

Sleep tight.

Cyrus Tashakkori

China Bans Free Plastic Bags

Hi everyone! I have not blogged in a few years, but I hope you all find this article interesting.

In June this year, China will implement a ban on thin (less than 0.025 mm) plastic bags. This measure will reduce the amount of waste and resources used. They are allowing consumers to use “sturdy” plastic bags and cloth bags, and the citizens in China are happy to do so. Similarly, San Francisco has also banned petroleum-based plastic bags in grocery stores. About 5 other countries are making efforts to reduce the amount of plastic bags used.

Currently, the US throws out almost 100 billion plastic bags every year. Most of these bags probably go to landfills so a policy like this one would have huge effects for the US. China is making a great effort and the US should implement this kind of policy too. The policy sounds abrupt and forceful, but this is the kind of action the US government needs to take to make improvements and the US looks like it is already falling further behind.
Do you think this policy will work in the US too?

G.M. Buys Stake in Ethanol Made From Waste

General Motors is investing in Coskata, an ethanol start-up company. Coskata plans to use feedstock other than corn to produce their ethanol. It’s good to see GM investing in a company that uses feedstocks that don’t compete with food, which is a definite downfall to current corn ethanol practices. The announcement of this investment comes shortly after legislation pushing fuel efficiency standards and alternative fuels has been passed. GM’s investment in Coskata and push of E85 fuel shows that the automotive industry is now feeling pressure to incorporate alternative fuels and efficient technologies in their products.

Bush seeks Saudi help to tame oil prices

Hi folks - This is my first blog, so hopefully the links will be provided.

President Bush asked Saudi Arabia today to use their influence in OPEC to increase oil production, as higher oil prices may lead to a slow down in the US economy. He went on to say that a slowdown in the US economy due to high oil prices would in turn result in less oil and gas sold, and as such lower profits for the OPEC nations.

Interestingly enough, in another related story, the Bush administration notified Congress today that it plans to go ahead with the sale of laser guided bomb technology to Saudi Arabia.

This may be a case of "you scratch my back and I will scratch yours".

Any thoughts?

EU Promises Sustainable Plant Fuel

Hi everyone in the Energy, Technology and Policy Class. I thought I'd get a jump on this week's blogging with an article about a new plan from the European Commission.

Twenty seven member states of the EU have signed a deal dedicated to reducing carbon emissions by increasing the use of renewable fuels. The goal is to have 20% of energy consumption coming from renewable fuels by 2020. The details will be revealed on the 23rd of January.

The article mentions that the commission will also reveal revisions to the carbon emissions trading scheme on that day.

I think it should be interesting to see what the EU will lay out for increasing the use of renewable resources. Also, I think the US should be watching what improvements are made to the (fairly well criticized) carbon emissions trading scheme to see if it is something that would work here someday.

What do you think will be recommended Jan 23rd for renewable resources or for the carbon emissions trading scheme?

Article: "EU promises sustainable plant fuel" http://news.bbc.co.uk/2/hi/europe/7187606.stm

Practical use of Bio Mass

For the past two winters I have been burning cord wood in a Greenwood Technologies high efficiency boiler which runs 24/7 generating up to 300k btu's per hour to heat a 6600 sq ft shop and a tunnel and eventually our home. By burning some of the 6000 acres of fire killed pine forest, we are cleaning up the area for regrowth, saving the cost of propane and thus not putting additional fossil fuel CO2 into the atmosphere. It is my understanding that the amount of CO2 going into the admosphere is about the same if you burn the wood or it decomposes. By burning it in a ceramic high efficiency boiler there is no visible smoke after a few minutes of initial burn.

I am not a scientist, but would be glad to work with any student wishing to study the process.

Thank you.

WebberEnergyBlog: I don't understand oil futures

WebberEnergyBlog: I don't understand oil futures

Hello Michael and Blog group! This is my first entry on any blog and I promise to always be respectful of all views and hope that I get the same in return. I am over 60 and not the brightest bulb in the pack, but I am very enterested in energy and how we can maneuver through the coming mine field of change.

Of course the Iranian actions were strange, and the motives probably complex. Over the years I have always found it advantageous to say: "Follow the money!" With almost instant world communications so many of the financial and commodity markets can be influenced by media hype that you have to wonder what actions are possibly orchastrated to cause just those fluctuations. On the other hand I am NOT looking for a conspiracy theory! I like the "Keep It Simple Stupid" analysis as my first choice - unfortunately we live in a very complex world where the true answers to questions are very difficult to find. This can lead one to cynicism which is not a position from which one can influence change.

I welcome your efforts to bring talented young people to be a part of building new solutions!

Vanity Fair Asked in February 2007 Whether Nigerian Rebels Could Cause a Recession in the U.S.

Last February 2007, Sebastian Junger wrote a piece for Vanity Fair about Nigerian militants in the Movement for the Emancipation of the Niger Delta (MEND) whose activities have targeted the oil industry.  His article leads with the following question:

Could a bunch of Nigerian militants in speedboats bring about a U.S. recession? Blowing up facilities and taking hostages, they are wreaking havoc on the oil production of America's fifth-largest supplier.

Since that article was published, oil industry attacks in Nigeria have continued, the price of oil has nearly doubled from $55/barrel a year ago to $95/barrel today, and the U.S. military has organized AFRICOM (the African Command), which is located off the Nigerian coast of Africa. Saturday the Wall Street Journal reported that "Odds of Recession Seen Rising" (see here).

Coincidence?

Look For Many More Posts in Winter/Spring 2008

I will be requiring students in my class titled "Energy Technology & Policy" to blog once weekly during the Spring 2008 semester. There are 70+ students enrolled in the class, and participants will be a mix of undergraduate and graduate students from the business school, geosciences, public affairs, mechanical engineering, chemical engineering, and civil engineering. That means starting next week, you should see dozens of new posts weekly, so come back soon!

Webber Energy Group Begins Field-to-Wheel Analysis of 4 Biofuels

The Webber Energy Group will begin participating in a new project funded by the Environmental Protection Agency to take a field-to-wheel life-cycle view of four biofuels: ethanol from citrus and sugar cane, and biodiesel from cottonseed and algae.  We'll keep you posted with our findings!

I don't understand oil futures

Very smart people tell me that the oil futures market is an important economic tool that will bring rationality into the way oil markets work. Maybe. I just don't understand how they operate.

For example, when Bhutto was assassinated in Pakistan (a terrible tragedy), the futures price of oil jumped several dollars per barrel, presumably because of skittishness and concerns that her assassination was a sign that oil disruptions might someday become a reality because of a resurgent and confident Al Qaeda. However, in just the last two days, the press has been plastered with reports that Iranian fastboats approached three U.S. Navy ships in the Straits of Hormuz (see here), dropping boxes in the path of the Navy ships, and almost drawing fire from the Navy. This incident was an even starker reminder to people that the risk of oil disruptions is very real. Yet, oil prices DROPPED a few dollars per barrel in response.

Can anyone explain this conundrum to me?