Discussion in 'Economics' started by jficquette, Jun 12, 2008.
June 12, 2008
Sitting on an Ocean of Energy, Doing Nothing
By Daniel Henninger
Charles de Gaulle once wrote off the nation of Brazil in six words: "Brazil is not a serious country." How much time is left before someone says the same of the United States?
One thing Brazil and the U.S. have in common is the price of oil: It is priced in dollars, and everyone in the world now knows what the price is. Another commonality is that each country has vast oil reserves in waters off their coastlines.
Here we may draw a line in the waves between the serious and the unserious.
Brazil discovered only yesterday (November) that billions of barrels of oil sit in difficult water beneath a swath of the Santos Basin, 180 miles offshore from Rio de Janeiro and Sao Paulo. The U.S. has known for decades that at least 8.5 billion proven barrels of oil sit off its Pacific, Atlantic and Gulf coasts, with the Interior Department estimating 86 billion barrels of undiscovered oil resources.
When Brazil made this find last November, did its legislature announce that, for fear of oil spills hitting Rio's beaches or altering the climate, it would forgo exploiting these fields?
Of course it didn't. Guilherme Estrella, director of exploration and production for the Brazilian oil company Petrobras, said, "It's an extraordinary position for Brazil to be in." Indeed it is.
At this point in time, is there another country on the face of the earth that would possess the oil and gas reserves held by the United States and refuse to exploit them? Only technical incompetence, as in Mexico, would hold anyone back.
But not us. We won't drill.
California won't drill for the estimated 1.3 billion barrels of recoverable oil off its coast because of bad memories of the Santa Barbara oil spill - in 1969.
We won't drill for the estimated 5.6 billion to 16 billion barrels of oil in the moonscape known as the Arctic National Wildlife Refuge (ANWR) because of - the caribou.
In 1990, George H.W. Bush, calling himself "the environmental president," signed an order putting virtually all the U.S. outer continental shelf's oil and gas reserves in the deep freeze. Bill Clinton extended that lockup until 2013. A Clinton veto also threw away the key to ANWR's oil 13 years ago.
Our waters may hold 60 trillion untapped cubic feet of natural gas. As in Brazil, these are surely conservative estimates.
While Brazilians proudly embrace Petrobras, yelling "We're Going to Be No. 1," the U.S.'s Democratic nominee for president, Barack Obama, promises to impose an "excess profits tax" on American oil producers.
We live in a world in which Russia's Vladimir Putin and Venezuela's Hugo ChÃ¡vez use their vast oil and gas reserves as instruments of state power. Here, Nancy Pelosi and Harry Reid use their control of Congress to spend a week debating a "climate-change" bill. This they did fresh off their subsidized (and bipartisan) ethanol fiasco.
One may assume that Mr. Putin and the Chinese have noticed the policy obsessions of our political class. While other nations use their oil reserves to attain world status, we give ours up. Why shouldn't they conclude that, long term, these people can be taken? Nikita Khrushchev said, "We will bury you." Forget that. We'll do it ourselves.
Putin intimidates Ukraine, Georgia, the Baltic states and Poland with oil and gas cutoffs, while ChÃ¡vez uses petrodollars to bankroll Colombian terrorists. Cuba plans to exploit its Caribbean oil fields within a long tee shot of the Florida Keys with help from India, Spain, Venezuela, Canada, Norway, Malaysia, even Vietnam. But America won't drill. Democratic Sen. Bill Nelson of Florida said just last month he's afraid of an oil spill. Katrina wrecked the oil rigs in the Gulf with no significant damage from leaking oil.
Some portion of the current $4-per-gallon gasoline may be attributable to the Federal Reserve's inflationary monetary policy or even speculators. But we can wave goodbye to the $1.25/gallon gasoline that in 1990 allowed a President Bush to airily lock away the nation's oil and gas jewels. This isn't your father's world of energy. New world powers are coming online fast, and they need energy. We need to get back in the game.
The goal shouldn't be "energy independence," a ridiculous notion in an economically integrated world. It's about admitting the need to strike a balance between the energy and security realities of the here-and-now and the potentialities of the future. Some of our best and brightest want to pursue alternative energy technologies, and they should be encouraged to do so, inside market disciplines. But let's at least stop pretending the rest of the world is going to play along with our environmentalist moralisms.
The Democrats' climate-change bill collapsed last week under the weight of brutal cost realities. It was a wake-up call. This is the year Americans joined the real world of energy costs. Now someone needs to explain to them why we - and we alone - are sitting on an ocean of energy but won't drill for it.
You'd think the "national security" nominee, John McCain, would get this. He's clueless - a don't-drill zombie. We may mark this down as the year the U.S. tired of being a serious country.
Daniel Henninger is deputy editor of The Wall Street Journal's editorial page.
Perhaps, but there is a lot more to this than continuing to be tied to the oil teat.
There are huge amounts of alternative energy for the taking: wave energy, offshore windfarms, nuclear (especially breeder reactors), carbon sequestration, and a bunch of other things. If we had been seriously investing in these things the last 30 years, instead of tinkering. If we would support large industrial efforts to monetize this stuff, and stop ignoring the damaging aspects of current energy sources, we could be a lot farther along, very quickly.
Electric vehicles get far more use out fuel of than gas engines - which are only like 20-30% efficient. Plugins would halve our fuel needs. But we continue to drag our feet.
Just a couple miles below the surface, is an unlimited amount of heat energy that could take care of almost everything.
Instead, we decide to turn grain into ethanol, and drive the price of food through the roof for everyone.
Try as we might, there is still worrisome effects about CO2 and methane. I know there are some who think this is a conspiracy theory, but this is the head in the sand view.
Maybe expensive oil/gasoline will finally be the spark that makes us so dependent. It is kicking the heck out of huge SUVs and pickups. If we stopped importing incandescent bulbs, we would be on our way to a 5% reduction in energy. If we stopped trying to build up to 420hp cars, and used some composite materials, we could slash more. If we insulated and used less wasteful packaging, and a hundred other things. We could probably EASILY reduce our energy needs by 25% total.
We are already far less energy intensive than during the 73 oil embargo. But we pale compared to Japan in efficient use of oil. France gets 70%
I believe we should do a Manhattan type project to develop new fuel sources at any cost. Greater electric generation and hydrogen. Use all the previously mentioned sources to generate as much electricity as possible so electric cars won't be an issue. Hydrogen is actually the dream fuel as it has zero pollution when run in a fuel cell. I rode in a hydrogen bus in San Jose, CA, Ran just fine. Quiet. The output was water and heat (which can be diverted to heat the bus when cold out). Hydrogen has to be made of course, which takes electricity, but luckily hydrogen is the most plentiful element in the universe, so we probably wouldn't run out anytime soon.
In the mean time, we need to drill like mad.
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