The Energy Crisis: Is It Solvable?

I recently spoke at a business school on the east coast and the title of my discussion was "The Energy Crisis: Is It Solvable?" I want to share some thoughts from my discussion with these very bright and engaged students.

I give many talks on energy. I speak to Wall Street, in Washington and outside the U.S. For reasons I do not understand, many in our country do not get or refuse to get my simple message -- America must use all of its abundant domestic resources (not just corn) and all of its technologies to produce alternative fuels if we really want to reduce our dependency on foreign oil. However, I cannot tell you how refreshing and encouraging it was that these students viewed my message as a "no brainer."

In my lead off with the students I shared with them how much energy is consumed worldwide and who uses the vast majority. We then discussed where the reserves are located and the timing of major discoveries. It did not take too long for the group to understand that the world and in particular the U.S. has a real supply and demand imbalance. America consumes 25% of the oil in the world and produces 4% of the supply. Moreover, the percentage we produce is continuing to decline. Eighty percent of the world's reserves now reside in government controlled companies and that trend is continuing to grow. We spend $1 billion per day on foreign oil and our U.S. Air Force's fuel expense has risen over $3 billion annually in just 2 years, meanwhile, we continue buying oil from nations who don't particularly have the same values as we have and some of whose leaders are openly hostile to our interests.

Unlike too many others, these students easily and rapidly grasp the notion that America is in a real bind and unless we use all of our domestic resources and our technologies, America's situation will only get worse.

I run a company, Rentech Inc., that will use its technology to convert a wide array of domestic feedstock or inputs (biomass, coal, natural gas, trash) to the cleanest diesel and jet fuel in America. I mentioned that America has a 200 year supply of coal and certainly enough biomass in this country to fuel our planes and keep the economy moving. I suggested to the group that it was and is completely irresponsible to bypass coal as a resource for clean burning jet fuel and diesel. If we use all of our abundant domestic resources to produce alternative fuels we can add to our supply and produce fuels that are dramatically cleaner than traditional fuel.

Although the technology is not yet fully developed, many policy makers believe that non-food, often called cellulosic, ethanol will play a key role in reducing our dependency on foreign oil. However, these same policy makers seems not to understand that the technology exists today to produce cellulosic diesel and jet fuel.

It was a delight to see that these students understood that America should put its shoulders behind all of its alternative fuels and get moving. Remember, by the time our children are in their prime--oil as we know it won't exist and yet some policy makers seem to be blind to this fact.

Technology can get us out of this situation; all we need is some common sense as it seems these students have. I did not debate global warming and the students didn't either. What was clear to the students and to me is that we can and should use the alternative fuel technology that exists today to reduce our dependency on foreign oil AND to reduce global warming. Foreign companies and countries around the globe seem to understand that alternative fuel technology will enable us to do both. However, in the U.S we are still debating not whether but how much cleaner alternative fuels must be than traditional fuels. While some policy makers continue their search for the perfect solution, America is failing to deploy alternative fuel technologies that are not only much cleaner than traditional fuels but also available today. The pendulum has swung too far in a direction that if common sense were applied as these students had figured out -- we could move forward now to create jobs, clean up the environment and reduce our dependency on foreign oil.

I hope policy makers and other opinion leaders in the U.S. will soon get what these students and foreign countries and companies already understand. All we need to do is to have students, scientists and industry work together to bring our exist alternative fuels technologies to the market place. I agree with the students this really is a "no brainer.

Comments

[realitytrumpsbull]

One part of this 'crisis' is deliberate foreign market manipulation, being perpetrated by...hmmm....oh, I don't know, could it be....OPEC??!?!??!?!? No, they're not SATAN, we're supposed to be the 'Great Satan' in their stupid little game, if you're keeping track of that sort of thing, but they are economically
influential enough to cause havoc with our Con Me, which was probably ripe for some havoc-ing if you stop and think about it, anywho, part of this is artificial, 'cause they reported their tankers hanging out offshore for tax purposes. It's all a fun little game, unless you happen to be a veal calf, er, 'consumer', in which case, It Sucks To Be You, while King George's army gets fat on foreign shores, and trains up for the 'fun' they've got planned when they come 'home'. Now, is re-formatting our military to be aligned with a foreign power, is that treason? Well, I don't know, you'll have to work that out for yourself, at any rate the petrobiz and its' hangers-on have accumulated enough raw financial clout to make the rest of the country their 'bitch'. Well, maybe it comes from having SOB's in charge, trying to get back at 'mom' or something, only your psychoanalyst knows for sure, and he's probably on Oxycontin or something, so there's no REAL telling what the motivation is, here, anyway, long and short of it is, we're being sold short. I guess, in summary, I have a lot of suspicion of and questions of this administrationerer and their motivations in perpetuating the 'war', we're being taken to the bank BIG time, maybe that's the New World Odor we kept hearing so much about 10-15 years ago. Smells like SOMEthing, anyway...little plastic hitler hats and unaffordable commodities coming soon to a Hamlet near you...they'll put it in next to MacBeth's.
All the world's a stage, and you're just a stage-hand...earning minimum wage...and no tips.
You were late yesterday.

LOL

[Coyote2]

It is a twin-headed monster that we face. Energy Scarcity (end of cheap energy) and Climate Change will destroy the American Dream, the American economy as we know it. Our economy is built upon excessive consumption based on cheap energy. Our consumption patterns are no longer sustainable, no matter how much more fiscal stimulus and tax reductions we throw at it.

We must turn and face the monsters of the 21'st century if America, as we know it, is to survive. And any solutions proposed -obviously not from the obsolete woolly mammoth party- must address BOTH Energy Scarcity AND Climate Change. Thus your proposal to gasify coal MUST ALSO include a plan to sequester the carbon in ailing oil fields to sustain existing production capacity.

And any fiscal stimulus plan emerging from Congress MUST ignore stimulating the obsolete economy and focus instead on stimulating the New Energy economy. The consumer must be rewarded for consuming New Energy choices. For example, I already drive a small pickup that returns 35MPG, and I burn waste wood -which is carbon neutral- to heat my home. And I receive nothing but grief from my government.

There is no reason to depend on large corporate solutions or projects. Small local solutions may often suffice. I have modified a hearth-heater to 'gasify' wood rather than burn it. The addition of firebrick to insulate and direct flame flow; addition of a blower to create high temperatures; and the addition of a firebrick 'maze' within the fireplace cavity to extract and store energy from the hot flue gases has resulted in my wood burning dropping from several cords per year to less than half a cord.

And this is an amateur endeavor. A professionally engineered retrofit as described would be carbon neutral, would convert waste into energy (as it prefers smaller fuel sizes rather than logs); and would reduce emissions from typical wood burning appliances. A subsidy would make it affordable to ordinary Americans and the solution is individual, small, non-complex, local and non-corporate. It would generate jobs, not eliminate them.

[joebaggadonuts]

Hmm. I was going to complain about the problems with your position, Hunt, but all the commenters so far have said everything I had to say.

I second essentially all of what was said before me on this thread.

[seawolf77]

The problem is EIEOR which stands for energy invested energy output returned. Oil in the early 20th century stood at 100. Currently we are around 20. All of the solutions you state are less than 5. All this points to one inescabable conclusion:energy was cheap and now it's expensive. Which means inflation. Oil peaked in US in 1970. Remember those years, before Reagan came. Well they are here again becasue the world has peaked. Unfortunately now we have to go to another planet.

[Purple Girl]

WHAT YEARIS IT- 1976??? WHY HAVE WE BEEN DERAILED FOR OVER 30 YEARS REGARDING THIS
'CRISIS'
Why have led sleds and gas guzzlers returned in droves?
'WHO KILLED THE ELECTRIC CAR'- FOLLOW THE MONEY HONEY. It will also explain alot about how we ended up in a War in the middle East and who really benefits from our 'Investment' and BLOOD
Of course we are fighting many of the same battles started in the'70's why not this one too.
If you were an agent for 'Changes' why didn't you prove it with your votes????

[Hopalongpoppyseed]

Whenever the subject of alternate (Green), energy is mentioned I am always disappointed that tidal energy has not yet made its way into the discussion. Tidal energy is another form of hydro-electric that is only now being pioneered. Since water is heavier than air it only takes a little bit of water movement to turn a turbine (a water wheel). Think of our salt water coastlines and the tides turning a great variety of turbines, or filling caissons to be emptied when tides ebb, while funnels drive yet more turbines. I urge you all to educate yourselves about tidal energy. The tides do not pollute.
Here are some links:

http://peswiki.com/index.php/Directory:Tidal_Power

http://www.mtpc.org/AgencyOverview/staff.htm

http://www.oceanpowertechnologies.com/ac.htm

http://en.wikipedia.org/wiki/Tidal_Power

http://curtrosengren.typepad.com/alternative_energy/2005/03/wave_power.html

http://www.alternative-energy-news.info/tidal-power/

http://www.alternative-energy-news.info/tidal-power/

http://www.alternative-energy-news.info/tidal-power/

http://www.alternative-energy-news.info/technology/hydro/tidal-power/

[PaulLoeb]

The author's piece does nothing to address the carbon impact of coal. He also doesn't mention that his company is in a joint venture with Peabody Coal.

[Rockyman]

Now that we know burning fossil fuels is madness we need to shift peoples choices to cleaner options by taxing based on the unhealthy byproducts produced. Gradual escalate this tax. Behavior will not change to the degree neccessary if the pocketbook is not impacted. At some point efficiencies and alternatives will be looked at as viable alternatives. At $3.00 a gallon we still drive like theres no tomorrow........there may be none. As was stated earlier, the taxes generated could be allocated to assist in the purchasing of "green" energy. As oil continues to cost more this transition was going to occur, however at a rate not fast enough to mitigate the overwhelming impacts to our atmosphere.

[rationalcon]

Nuclear, wind, solar, hydrogen, geothermal, biomass. These are what is required to solve the problem. It was obvious in the 70's that these were the technologies that needed to be pursued, now it's truly a crisis. It makes me ill to have predicted war for oil thirty years ago and here we are. It didn't need to happen this way, but as pointed out, big energy (not just oil) would never allow the government to do anything to slow their growth.
We, as a society have been idiots. No new nuclear generation plant in 10+years. Wind! Oh no, noisy and kills birds. Solar! Oh no, ugly PV panels will mar my pretty neighborhood. Hydrogen! Hindenberg. Yadda, yadda, yadda. Too selfish to do the right thing.
CAFE should be at 100 MPG by now and the big 3 are whining about 35 MPG. Why is it that the Prius is hailed as as a great achievement when it only gets 48 MPG. In the early 80s the Rabbit Diesel got about 50 MPG - doesn't seem to be much progress for 30 years of research and development (although anybody that ever had to ride in a Rabbit would attest that the Prius is an infinitely nicer car).
Energy independence is important, it is feasible, it is achievable. Today, there is still time to get started as we still have a formidable technical community in this country. 5-10 more years and we will have to pay for Indian and Chinese technology to solve our problems.

[olephart]

"irresponsible to bypass coal as a resource for clean burning jet fuel and diesel."

Coal liquification produces one unit of CO2 per unit of fuel which produces an additional unit of CO2. It is thus twice as dirty from a carbon standpoint as coal or oil themselves. Many other routes to end use energy products exist as you noted. The greatest barriers are inconsistencies both in price and Government policies. What makes economic sense at $100 per barrel oil is unfeasible at $50 oil. The Government's off and on support for various technologies based on Political pressures makes long term planning impossible.

The solution is actually quite simple. It relies both on Government stewardship and market dynamics. A floor must be paced under the price of transportation fuels. This can be accomplished with a tax, say $2.00 per gallon, on fossil fuels. This tax would not apply to alternate fuels to the extent of their production efficiency based on the fossil fuels required to produce them. Corn based ethanol yields 30% more fuel than is consumed so its discount would be 30%. The higher the efficiency the higher the discount. The taxes collected would not be co mingled with other funds and would be exclusively used as tax credits for both individual and business investment into alternate energy. Thus homeowners and businesses could receive tax credits for installation of solar panels and similar devices. A National reverse metering law would be required. By diversifying electricity production to point of use generation, costly new power plants and infrastructure could be avoided. This alone would save over $500,000,000,000. Tax credits for utilities constructing wind and other alternate generating devices should be provided.


QED

[loslobo]

If you can agree that big oil has bought and paid for our energy policy for the past forty years, then why would we allow these same corporations the unregulated ability to buy up, thus control alternative energy industries. Do we really want solar and wind to be viability available only after the oil and coal are used up? This will not only be tragic to our economy, but for the planet.

[mmckinl]

The problem with the solutions posed is that they take more energy to manufacture than they contain.

The solution is to electrify our transportation fleet with hybrids and batttery vehicles. Even using coal for electricity is cleaner and much cheaper than petrol. As new renewable energy comes on line it can be plugged right into the grid.

Oil must be reserved for food production, plastics, drugs and a downsized aviation industry. Trains need to be upgraded to European standards.

The answer to our oil dependency is your nearest electric plug.

[sdsurfer]

I applaud you for pointing out that America must change its perceptions and behaviour with regard to energy. However, you are not being an honest broker about what the choices are. I believe those that you contend are not using common sense and "..continue their search for the perfect solution" are really against using sequestered carbon containing energy sources (oil, coal, natural gas). Your lumping feedstocks together (fossil fuels and sustainables) is not credible. People are not saying that we must have either perfection or nothing. They are simply against any further investments in creating alternate ways of using fossil fuels. Their (and my) argument is that any new technology that liberates more sequestered CO2 into the environment does not deserve to be built. Coal is terrible in this regard as it has relatively low energy content vs. carbon content compared to other fossil fuels, the same for the tar sands. Building a more innovative way to destroy the environment still produces the same result.

[muffler]

We need to use the oil we have now to put the infrastructure in place for the next source of energy.. otherwise it is a house of cards. If you don't have cheap energy to build with the next source will be very expensive when really needed.

What ever happened to our sense of planning and real Teddy Roosevelt conservativism.

It's looks to me that the children of the Greatest Generation just act like trust babies and see dollars ahead of our growth and survival. They are just so short sighted and selfish. I guess they figure it's not their problem cause they will be dead. This seem consistent with why they sell off everything to foreign interests. The young people will have clean up after them. BUNK!

[kevinabt]

Developing other ways of doing or business besides using oil and gas is extremely important. The supply of these things is about to become much scarcer than it is now. Few people want to talk about this because the obvious solutions involve: consuming less, spending more on energy/transportation/food, giving up many luxuries, acknowledging that the current American lifestyle cannot continue, and going back to a more laborious less convenient way of life. No one wants to do that so it is getting put off indefinately.
Unfortunately putting it if is going to result in us all being much less prepared for the crash and being much harder hit by it.