Warning from Energy Insider…
By: Jutia Group Thursday, July 03, 2008 12:45 PM
I’ve been corresponding with an acquaintance who works at the National Science Foundation. This guy (“People call me Jim”) is one of the smartest people I’ve ever met. And he asked me to note that he is speaking from his own personal views, and not on behalf of the NSF or the U.S. government.
Jim has a background in applied mathematics, electrical engineering and neural networks. He’s been involved in energy research since the 1970s. In terms of long-term knowledge of U.S. energy policy, Jim is a national asset.
Jim is an acknowledged expert in the fields of electricity generation and transmission. This includes deep knowledge of new technology in the arenas of solar and wind power. One of Jim’s biggest concerns is the on-again, off-again pace in the field of U.S. energy research and development.
New Energy System Research
Here’s a short version of what Jim has to say about what is going on with the development of new kinds of energy systems in the U.S.:
“We keep encountering these delays in all the pioneering technology developments. If it’s not funding, it’s something like access to sites. If you get the funding and access, then you see these shortages of skilled people or some critical pieces of equipment.
“And it’s NOT just a matter of a two-year delay in being able to use solar to crank out electricity, or massively displace carbon dioxide — which has become the latest and greatest ‘selling point’ for a lot of projects. With some of these delays, we risk throwing key development companies into bankruptcy. And then these firms might never recover. If we don’t use it, we’re going to lose it. This happens more times than you might think.”
US Energy Politics and Policy
Here’s what Jim thinks about the politics and policy of energy in the U.S.:
“We need to depoliticize most of the energy debate. The energy reality out there is changing, and changing fast. If you have not thought about the ‘energy issue’ in, say, five years, then your thinking process is probably obsolete. If you are frozen in some past that you learned years ago, then you are part of the problem.
“At the same time, we need policy stability and long-term focus within the national energy evolution. Are we going to produce large amounts of energy in the future? If not, how do we plan to run the country? To run the economy? Or are we just going to blow down what we have in the installed base? If we want to just live off the past energy heritage, we should also ask the band to practice playing ‘Nearer, My God, to Thee.”
“Things are changing fast, but we still have to steer the ship. Otherwise, we’re going to just hit the rocks, and it’s going to kill us as a nation. Really, why should the future of the nation’s energy supply be subject to the same red versus blue state politics as, say, abortion, health care or the estate tax?
“For some parts of the energy equation, what is left of the so-called ‘free market’ can carry the load. Energy companies take a lot of bad-mouthing. But really, we’ve taxed and regulated the energy industry so much that it’s almost silly to talk about free markets anymore. Still, people and companies respond to incentives, despite the taxes and regulations. So let that work. Let it happen.
“And for other aspects of the energy equation, we have to move with the concept of ‘command technology.’ This is the combination of serious government policy and government users setting out the requirements. It’s like NASA saying that it wants a system to launch this or that into space and letting industry build it to that spec. It’s how the Navy developed its nuclear submarines over many decades. We know that command technology can work, because it has worked, and worked well, in the past.
“But the idea of ‘command technology’ requires the government to work with industry, as well. And both government and industry have to pick from the possibilities offered by basic science. You cannot do what you cannot do. But you can waste a lot of money trying.
“Will it take 20 or 30 years to develop the U.S. Outer Continental Shelf? Yes, 30 years and more. And we’ll be damn glad to have that oil when it shows up ashore. And will it take 20 or 30 years to develop better solar and wind systems? Or better biofuels? Of course it will. Really, if you want to change out the basic U.S. energy system from carbon to something else, 20 or 30 years is a ‘crash’ program. And we’ll be having this discussion well into the 2030s and beyond, if we’re still around.”
Rising Oil Prices and Trends
And here’s Jim discussing the rising impact of liquid fuel prices on consumption trends:
“Our studies over the years came to some conclusions about fuel prices and fuel demand. A sudden shock, like a 20% price rise, tends to lead to an immediate 4% decline in driving and gasoline use. That’s about what we are seeing today.
“But it’s not like some cosmic trend. Let’s say that gasoline prices stay at the same real level. Right now, most motorists think the price of gas and diesel is ‘high,’ but that’s all relative. Have you driven in Europe or Japan?
“And let’s say that the car fleet changes slowly. That’s because it takes many years to turn over the stock that’s already out on the road. Well then, you can expect gasoline use to trend back up, in line with general economic growth. So high prices don’t necessarily destroy long-term demand.
“And the short-term reaction to a 20% price spike should not be confused with a long-term demand trend. This is the case, even if the price rise is like a growth spurt that will recur again someday.
“Now consider something even worse. Are we only halfway through a growth spurt? Maybe.
“Let’s get really pessimistic. Let’s say that world oil supplies are constrained. It’s the Peak Oil thesis, which is pretty well proving itself out. But nothing is just plain simple. Some areas of the world have oil, or the means to get oil through imports. For those areas, Peak Oil doesn’t really matter. They have oil.
“But some areas of the world don’t have oil, or not nearly enough oil. And they can’t get access when and how they want it. That might include the U.S. in a few years.
“So in the ‘have’ parts of the world, you will see those economies returning to a growth path based on their own energy resources. And it may be that despite an economic decline in some major economies, overall world demand is still rising. This will pull prices upward, even for the ‘have-not’ buyers. And it will take a lot more than what we’ve seen so far in terms of price increases to clear the markets, and to keep demand within the limits of physical supply.
“We cannot afford to lose any more time.”
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