Politics of Energy

Posted on July 18, 2008
Filed Under Politics |

Even though oil prices are dropping pretty significantly this week I suspect the days of cheap oil are over. While I’m no fan of McCain I think one has to acknowledge he’s really taken the bull by the horns. (See, for instance these posts by Framing Science where even Democratic operatives think McCain is dominating the subject and then the GOP strategy to use energy against Obama.

Now I tend to think McCain has at best an uphill battle against Obama. People are just too upset at how the Republican leadership at the Presidential, Congressional, and Senate levels have failed the past 8 years. (Really, it’s enough to make conservatives like myself shake our heads in wonder) And this is a good issue to target. Not just because it gives Republicans some semblance of hope. (I almost wonder if greater humiliation isn’t needed to reform the party) Rather it is because I think Obama will win and we need the Democratic President and Congress to enact a broad energy policy including not just conservation but also alternative fuels like nuclear along with solar and wind plants as well as more oil drilling.

And while long term new oil fields won’t affect the price of oil that significantly as a symbol it can have a big effect and affect them short term - say over the next year.

I’d love it if Obama seriously said we need to get oil shale in Colorado and Utah going. (Where there is more oil than in all of Saudi Arabia) If limited offshore drilling was allowed. And if real reforms for more power plants were enacted.

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13 Responses to “Politics of Energy”

And while long term new oil fields won’t affect the price of oil that significantly as a symbol it can have a big effect and affect them short term - say over the next year.

I’ve heard this said before. And for all I know it may be true. But HOW, do you suppose, will this have a “big effect” as a “symbol”?

The truth is that the number one short term thing that can be done about the price of oil is … for everyone to use less oil.

If the rumor of war can raise oil prices and that’s a symbol then things like the belief of peace with Iran or the idea that governments are taking exploration more serious can as well. You can’t say symbols can only affect one way. And it’s undeniable that a lot of price increases this year have come from such means.

This is not to deny the very real effects on demand as China and India modernize nor the lowering of production in some countries. (There’s very good reasons to believe Saudi Arabia has passed peak production)

If the short-term solutions actually work, though, this would just push long-term solutions that much further out. If everyone is comfortable and oil is cheap, then we’ll just roll along our merry way until oil runs out and then when we try to come up with a real solution, it will be too late. With China just getting on the oil bandwagon, this day will come very soon. For me, the best way to move forward is always in the long-term. Short-term thinking will always be reactionary and short-sighted, in my opinion.

Clark, please tell me why you support oil shale in Utah. I no longer live there, but I cringe when I think about what kind of damage would be done to my beloved Kaiparowits Plateau (et al.).

I think any solution has to be multi-tiered. However slowing the shock of the transition also has to be done. Right now there just aren’t real alternatives. Especially for the poor or people outside of cities with mass transit.

Bush bares the brunt of the blame for this. Eight years ago he could have put programs in place to seriously prepare us for the inevitable day when this would happen. After 9/11 he must have known that the middle east is just too volatile to allow oil to control the world economy so much.

Brian, shale extraction is definitely different from say tar sands extraction in Canada. I’m not at all convinced it would be an environmental catastrophe in the least. No more than say filling up Nevada and Southern Utah with large scale solar power plants.

6 David Clark on July 18th, 2008 9:42 pm

I’ve heard this said before. And for all I know it may be true. But HOW, do you suppose, will this have a “big effect” as a “symbol”?

Dennis, If you don’t know much about it then you need to research more about commodities markets. Essentially commodities markets discount the future price of oil (since that’s when contracts come due), based on what traders feel the fair market price will be at the time the contracts come due. However the only way to predict the future is to extrapolate from the present. If it looks like supply is ramping up in the present, then futures prices come down.

Also, it really isn’t in the best interests of the middle east for the prices to be so high. The sweet spot for the middle east is for oil to be as expensive as it can be before the U.S. starts exploring alternative energy sources (because at that point it’s economically feasible to do so). If we make moves to ramp production you can be sure that OPEC will flood the market with oil to bring prices down right now so that it becomes more economical to purchase oil than to develop alternative energies. However, if we never make moves to do that then the prices will stay the same. Hence, future promises, if believed, can have dramatic near term consequences.

7 Rich Knapton on July 19th, 2008 10:02 am

It has been estimated that oil off the coast of Florida can be in our tanks within one year of the OK to drill. So, everything is not long term.

As far as blaming Bush, he has advocated opening up new fields for exploration, new refiners, and nuclear power plants for years. He has been stymied by Democrats and environmentalists. This is why his approval ratings, as low as they are, are three times higher than Congress.

Rich

8 kristine N on July 19th, 2008 11:43 am

Clark–From conversations with other geologists my impression is that the energy that could be extracted from oil shales is less than the energy that would be required to extract the energy. It’s just the wrong kind of rock to try to pull oil out of–you have use a heated solvent to pull out the oil, which requires a considerable energy investment. We’d be better off with coal liquefaction technology, as I understand it.

Kristine, my understanding is that it takes a fair bit of energy but that it’s not hard to get breakeven and that it becomes very economical once oil reaches $70 a barrel. If you’re interested I can show you studies on this. There’s actually a test extraction plant running right now.

Regarding Bush, merely advocating alternatives is useless. It’s the question of where the rubber meets the road and in terms of research dollars and incentives he’s been underwhelming. He has to do more than say what he’d like in a State of the Union speech.

“The sweet spot for the middle east is for oil to be as expensive as it can be before the U.S. starts exploring alternative energy sources”

I keep hearing that and yet we still seem to be using oil despite a huge rise in oil prices. Also they are running short of oil and are always under threat of new technology dramatically reducing the value of their oil in the ground - one would think they would want to get as much money as you can while they can.

There have been significant decreases in American use this year and finally more alternative sources are coming on the market. I believe Nevada is building two large scale solar power plants which I believe are each 400 - 500 megawatts. The country is at least seriously considering nuclear power. Wave power isn’t there yet but appears to be promising. Toyota says that upcoming hybrids will be able to be plugged into the electric grid rather than recharged via the gas engine. The country is largely switching over to more efficient light bulbs and so forth.

The problem is that with India and China industrializing conservation will only get you so far.

12 Gerald Smith on July 21st, 2008 8:43 am

The reality is, conservation by US citizens isn’t going to fix the problem. All the oil we stop consuming will just be bought by China and India, in their race to industrialize. All we’ll accomplish is move our consumption over to other nations.
We need to have an energy growth policy like JFK’s moon shot, or Ike’s national highway system. Investment in many technologies will be the only solution.
Still, the only truly workable solution right now is oil. If we were to drill offshore, or use oil shale, require it to be sold only to US customers; and place a 10-25 cent tax on every gallon sold - using those profits for financing new energy technologies, we could have short term and long term solutions on hand.

While much oil production would be 5-10 years down the road, the reality is that alternative energy sources are 20-25 years down the road. How many of us are going to dump our current cars and rush down to buy a $50,000 fuel cell car? Or will most Americans do as they currently do, and buy used, when it becomes affordable?

We need current oil and an emphasis on new development to win this energy and environmental and security problem without crushing our economy anymore than it already is.

The algae production of gasoline is actually exciting. We’ll see how that scales. The problem with that technology though is that it doesn’t deal with the global warming issue. If you’re going to find alternative fuels ideally you’d want to deal with the warming issues at the same time.

I disagree that oil is the only solution. Right now the northeast uses heating oil and a lot of power production in the US is still oil. Switch to electric heaters and then alternative power production (solar, wind, wave, nuclear) and you can have a significant effect. Add in plug in hybrids and you’ll have a fairly significant impact.

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