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Political analysis and other daily rants on the state of the nation

Friday | October 10, 2003

Energy Plan: No Visionaries, Please - Part 2

By Meteor Blades

Introduce energy and you’re guaranteed to suck the juice out of any conversation. I can hear the mouse clicks firing away already. We’ll jabber on forever about our automobiles, the joy of behemoth plasma screens, the quiet purr of just-installed air conditioning. Try talking about how to keep sparking these ubiquities of modern living, however, and the glaze-over begins before the first sentence ends.

No surprise. Energy talk is technical and necessarily jammed with numbers - disputed numbers. Bear with me.

Two years ago, Republican leaders complained the Clinton Administration had failed Americans by not putting together a comprehensive energy plan. This, they said, would be remedied in short order. Two years of wrangling have followed. As recently as a week ago, Senator Pete Domenici, chairman of the Senate Committee on Energy and Natural Resources, asserted that the Energy Policy Act would be all tidied up for the president to sign this autumn.

Enter the same old glitch. Too many irreconcilable differences divide the House version (HR 6) and the Senate version (S. 14). So Congress probably isn’t going to be
sending any
comprehensive energy legislation to theWhite House until next year.

Yes, that sound you hear is me cheering. This legislation is longer and more horrific than a Stephen King novel. While the Senate version outshines the dreadful House bill, both are brimful of subsidies for nukes and oil, with too few specific goals and incentives for conservation and renewables. Sure, anyone can find something to like in this bill. That’s the idea. Stack the bacon so high everybody gets a taste. Who dares say no? But the existing package would try to back us into the future. This will fail.

Two weeks ago here I wrote about the Energy Policy Act’s devious plans to pry open more protected taxpayer-owned lands for gas exploration. Now let’s talk about oil.

Both bills include massive tax breaks and direct subsidies to oil and gas companies, $9.8 billion worth in the House version. Backers say this will boost domestic production. Some environmentalists call this misguided. Untrue. These “incentives” are guided with laser-beam accuracy into the wallets of big energy companies who have been lobbying to obtain this outcome for years.

In the short run, the giveaway would no doubt raise at-home production. And some supporters say a few years are all we need to shift to a new technology – the hydrogen economy. I’m a firm believer in technology. But the hydrogen economy is a dream. Whether it’s a pipedream or actually can be transformed into reality makes no difference in this discussion. Neither energy bill would get us there fast enough.

Because we’re rapidly running out of oil.

Some readers are thinking, oh no, not this again. How many times have the doom-and-gloom crowd predicted this catastrophe, only to be proved wrong when new oil is found?

Well, label me as you will, but if we don't redirect energy policy and soon, I say without hesitation that the under-25 generation won’t be yet retired when the world gets to the bottom of the oil barrel.

We won’t one day wake up having just “run out of oil.” The cheap stuff goes first. We’ll just reach a point where it takes more energy to extract difficult oil than the oil itself produces. That’s exactly why we had three shale-oil boondoggles in the 20th century: the ratio of energy used to energy gained was less than 1:1. That kind of oil might as well be on Saturn’s moons.

Rapidly dwindling resources of oil aren’t bad news only for SUV lovers. They mean trouble for the chemical industry, for plastics, for the whole array of petroleum-based products.

Don’t believe me? Check out the numbers.

Worldwide petroleum reserves
now stand at 1.032 trillion barrels, according to the U.S. Geological Survey. “Reserves” have a specific meaning: oil that geologists know is in the ground, that nobody disputes: proven oil. Then there’s undiscovered oil. Undiscovered oil plus proven reserves together are called Estimated Ultimately Recoverable oil (EUR in the jargon).

EUR predictions range widely, from about 1.8 trillion barrels to about 3.8 trillion barrels. Super-optimists like to cite the 3.8 trillion level, but the USGS World Petroleum Assessment 2000 team, which actually made this high-end forecast, give it only a 5% chance of actually being true.)

USGS said there is a 95% chance of 2.1 trillion barrels outside the U.S. Add in U.S. reserves and undiscovered oil here, and you get a global EUR total in the 2.4 trillion-barrel range. The team also cites a 50-50 chance of there being 3 trillion EUR barrels worldwide.

But it’s the weekend, so let’s be super-duper optimists for the moment. Let’s say that even the 5 per-centers have underestimated. Let’s assume there are 5 trillion barrels of recoverable oil still in the ground. Ample enough, surely?

Until you do the math. Worldwide consumption in 2003 is just short of 77 million barrels a day – 28 billion barrels a year - with the consumption rate rising 2% annually. In 1993, the world only consumed 24 billion barrels.

This means, that between now and 2053, the world will consume 2.377 trillion barrels of oil – exactly what the USGS gives as the amount of oil we can definitely count on. And that super-optimistic vision of 5 trillion barrels? All of it gone by 2078.

Decades before then, of course, oil will be hugely expensive, and that alone will reduce consumption. People who today worry about the potential economic effects of $40 per barrel oil will be praying for a drop to $140 per barrel long before I’m dead.

I’m being conservative here. Many experts think grave impacts from the effective “end of oil” could be closer than two generations down the road. Two of them, Colin J. Campbell and Jean H. Laherrère, have updated the predictions of M. King Hubbert. For the technically minded, here’s a chart-filled look at their scenario.

Hubbert developed the theory now named for him, Hubbert’s Peak. The short version: Oil is finite. Eventually, each country will get to the halfway point in its oil-production potential. After that, it’s all downhill.

When Hubbert predicted in 1959 that this would happen to the United States in the late 1960s, he was ridiculed. U.S. oil production peaked in 1970. In Russia, it peaked in 1980. By 2000, it had peaked in 37 other countries. Laherrère and others say the global peak may come as soon as 2010.

Wouldn’t drilling in the Arctic National Wildlife Refuge and offshore Florida and California change this picture? No. That oil is figured in the global EUR already. Proven U.S. reserves hover around 21 billion barrels. Drilling and pumping might – again, in a super-duper optimistic scenario – triple America’s domestic reserves. Which would give America enough to fuel global consumption for 10 months. Truly a drop in the proverbial bucket.

On economic reasons alone (to say nothing of military, political, environmental and social reasons), it makes sense for our politicians to stop staring two inches in front of their noses and push - really push - conservation.

Here’s one example of what’s going wrong. Starting in 1992, the government has provided a “clean fuel” tax deduction for people who buy super-efficient cars. This year, for instance, if you want to buy one of the hybrid gas-electrics that gets 50 miles to gallon and has the lowest emissions on the road, the IRS will let you take a $2000 deduction on next year’s taxes. But the deduction is reduced $500 a year until 2007, when it ceases. The House bill does not renew this valuable incentive (although it does provide incentives for fuel-cell and hydrogen-powered vehicles).

A bold Congress would not only renew the deduction for hybrids, it would mandate that large percentages of federal fleet purchases be hybrids. It would devise federal incentives for states and local governments to follow suit.

That’s just one example of dozens of ideas that should be included in a future-oriented energy plan. Many organizations have proposed various ideas about what others should be.

For instance, the American Council for an Energy Efficient Economy makes specific recommendations on the current legislation.

A coalition that includes religious, business, labor and environmental groups - the Apollo Alliance - backs an excellent alternative.

So do the National Policy Initiative and the Natural Resources Defense Council.

Posted October 10, 2003 04:22 PM | Comments (139)


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