The more we learn about the Pickens Plan, the more we are impressed. The video clip above is of Pickens giving a quick 5 minute overview of our oil problem and his proposed solution. The crux of that solution is to replace the 22% of the energy that is currently being generated through the burning of natural gas with energy produced from the high wind corridor that sits in the middle of America. That natural gas resource would then be transfered to power automobiles, thereby dramatically reducing our consumption of oil.
According to Pickens, the key to this plan’s success will be having the right leadership, and having the ability to get the entire country on board and to “march in the same direction.” It seems to us that Pickens has provided us the answer, whether we implement it is now up to us and the leaders we choose.
The largest operator of a civilian vehicle fleet in the country, the US Postal Service is really feeling the effects of increased gasoline prices. According to the Deputy Postmaster General, the USPS spent $1.7 billion on gasoline and diesel last year, and predicts that number to increase by $600 million this year. As a result, the USPS, which uses 200,000 trucks has been forced to look for alternative means of reducing fuel consumption–some of which have been successful, some of which, not so much.
One strategy, which has not proven very effective, was the purchase of 30,000 alternative fuel vehicles, including flex-fuel (E85), CNG and biodiesel trucks. In particular, the flex-fuel trucks saw a decrease in fuel efficiency by 29% and ended up consuming 1.5 million more gallons of gasoline than before.
Some more effective solutions have included realigning routes so drivers don’t have to make left turns (which require more idling), adding GPS systems to plot more efficient delivery routes and, the most effective solution: having employees deliver more of their route by foot.
Last week GM announced that they were investing in a second company that develops technology for ethanol production.Apparently this is an attempt by GM to hedge its bets on how to most efficiently produce non-grain based ethanol.This type of biofuel, known as cellulose, requires a complicated final process to convert the material’s sugar into alcohol, which can be burned by engines.The company that GM invested in uses a process different than that which GM has previously pursued.This alternative process requires no use of chemicals, and instead relies on heat and mechanical action to convert the material to alcohol.
It is unclear to us whether this process releases fewer greenhouse gasses during the manufacturing process, an issue which has been of great concern lately.While it is encouraging to see GM invest in a technology that is forward thinking, it is unclear whether this process will ultimately help the environment, or if it is instead, an attempt to fulfill the mandates of the federal government on biofuel usage.[Note, this link is to an organization that “speaks for the petrochemical and refining industries on issues important to their business.”]
We recently had a post about former Greenpeace cofounder, Patrick Moore’s support of a “nuclear renaissance” in America. One of Moore’s arguments was that nuclear power plants in America have removed and reprocessed weapons grade materials from the former Soviet Union, thereby keeping those materials from potentially entering the black market.
In our analysis, we pondered what would happen to all of the radioactive waste that would result from increased nuclear energy production. Environmental Capital had a post yesterday looking at this issue. Currently, the Bush Administration favors a process that would recycle used fuel rods. However, this plan is controversial because the reprocessing method can create weapons grade plutonium. Additionally, although the most potent nuclear waste is recycled, there is an increased amount of lower grade nuclear waste not reused that must still be stored.
Again, we come back to the point we made last week about the inevitability of human error, given enough time… If reprocessing fuel dramatically increases the amount of weapons grade plutonium in the world, this naturally will increase the odds that human error or poor judgment may lead to increased weapons proliferation. If reprocessing nuclear waste actually increases the amount of weapons grade material in the world, this would cut against one of Moore’s key arguments in favor of nuclear energy. (Although it is not clear to us that Moore has advocated reprocessing civilian nuclear waste.)
Historically, when gas prices have increased, so has oil production.This is not currently the case.The New York Times has an article looking at this unique situation, where oil prices have recently skyrocketed, but an increase in supply has not followed, thereby leading to even higher oil prices.
The article quotes Fatih Birol, the chief economist at the International Energy Agency, who states, “According to normal economic theory, and the history of oil, rising prices have two major effects. They reduce demand and they induce oil supplies. Not this time.”
Other than OPEC, there is no explicit agreement between oil producers to artificially restrict supply.According to the article, some of the presumed causes for the failure to increase supply stem from issues such as higher drilling costs, nationalistic policies that restrict foreign investments, high petroleum taxes, costly licensing agreements, scarce manpower, and political wrangling and violence.
The article states that according to Jeff Rubin, an analyst at CIBC World Markets, by 2012, gas prices in the United States could potentially reach $7 per gallon.
Having reported on Senator McCain’s proposal to suspend the federal gas tax during the summer months, we wanted to report on Senator Clinton’s support of this policy and Senator Obama’s opposition.We noted that one benefit of high gas prices is the continuing incentive for entrepreneurs, big businesses, and governments to develop alternative technologies and mass transit solutions.Governmental policies intended to lower gas prices, could decrease some of the incentive to innovate and evolve.(Although we tend to assume this is a moot concern since gas companies will likely make up for any price drop with a commensurate increase in prices.)
This week on the campaign trail, Obama asserted that “I think John McCain’s proposal for a three-month tax holiday is a bad idea.”He continued, by stating “We’re talking about 5 percent of your total cost of gas that you suspend for three months, which might save you a few hundred bucks that then will spike right up.Now keep in mind that it will save you that if Exxon Mobil doesn’t decide, ‘We’ll just tack on another 5 percent on the current cost.’”
