Posted by Rojas @ 1:01 am on August 29th 2008

BA-ZING!

Rod Dreher cuts straight to the heart of the matter:

No, you know what makes people cynical about government? When politicians promise things like ending dependence on foreign oil within 10 years, and don’t deliver because they can’t deliver.

If Obama had produced a single line that good (and true) tonight, the speech would have been an A- instead of a B.

13 Comments »

  1. Is it impossible?

    Comment by Mortexai — 8/29/2008 @ 1:28 am

  2. It’s no more outlandish a suggestion than when JFK proposed putting a man on the moon. I think it remains to be seen what sort of forces are in play both for and against. It was the cold war, fear of Russian dominance in space and the ever-present spectre of nuclear weapons (IN SPAAAAACE) that really powered the space race. For all the rah rah over the war on terror this past decade, I’m still not really sure Americans are as motivated as some claim to be. Part of the problem is likely the nebulous nature of our enemy. The Red Scare was much more concrete.

    Comment by tessellated — 8/29/2008 @ 2:57 am

  3. I think it also hinges on the word ‘dependence’. Certainly the country is currently dependent on foreign oil, to the extent that if all foreign oil were cut off the next day, it would collapse. In ten years, could we get to the point of being able to survive having oil imports cut off? I’m thinking it doesn’t sound so outlandish, but maybe I’m missing something, so clue me in if you’ve got something to indicate otherwise.

    Comment by Mortexai — 8/29/2008 @ 3:22 am

  4. I’m really not speaking from an expert opinion. At best, I do as most (hopefully) do and sample from the opinions of experts. What I’ve gathered is that if this country were truly committed to ridding itself of dependence on foreign oil (and I would probably further define that to be oil from hostile or potentially hostile areas such as the Middle East and Russia, for example) then it would be possible. It would require a full-on embrace of nuclear power, which means building a lot more plants. Our nuclear infrastructure is 30+ years old, I believe. There is huge potential in that field alone. It would likely also mean a much more widespread adoption coal too. All the usual alternative energy suspects would have to be hustled out as they could. Geothermal, I think, has been an unsung hero in this regard. Drilling technology has come a long way; one no longer need to live on top of a volcanoe for access to it.

    The big problem, though, is automobiles and (I imagine to a lesser extent) airplanes. As I understand it, it’s not even so much the cars themselves (which of course will need to be retired by attrition) but all of the fuel infrastructure that will need to be replaced. That’s quite a daunting task. My feeling is that the market really COULD turn around the existing infrastructure within a decade IF the forces are, indeed, present to drive such a change. Political will is only a part of that equation though a necessary one.

    Already, high fuel prices are laying the groundwork for it, however, and this is nothing. $4 a gallon sucks donkey dick, but just wait until it hits 6 or 8. I think you will be amazed at how fast people flock to electric cars or public transportation or work-at-home etc.

    Soooo, I guess in summation, I say watch fuel prices. If they keep climbing you can expect to see more and more dinky cars, Hummers bragging about (EIGHTEEN MILES PER GALLON! — what a hilariously ridiculous dealership sign that was) and a lot more serious talk and maybe even action in Washington.

    Comment by tessellated — 8/29/2008 @ 4:00 am

  5. Sure thing.

    Let’s think for a minute what dependence really means. Right now we buy foreign oil because there is a supply and it is cost effective. There isn’t enough oil in the United States that is cheap enough to extract to stave off foreign oil imports. Like anything there is a gradation of extraction costs based on various factors like oil depth, transportation (pipe vs. supertanker vs. semi-truck). So some of the oil that is produced in the US is cheap enough that it competes with foreign production. A lot of possible extraction locations simply aren’t cost effective for domestic production. For instance the Canadian (I know, not domestic, but darn close) tar sands aren’t economically viable until oil is around $100 a barrel.

    Okay fine, we don’t have enough reserves to produce all of our domestic needs at cost effective price points. So we buy oil on the world market. This oil is the same as our domestic oil with respect to the market forces. Some foreign oil is not economically viable to be exported to the United States. Other oil is.

    That’s all pretty basic stuff: we can’t produce enough oil cheaply enough to ward off importation of foreign oil. In that respect we are currently dependent on foreign oil. We could change this balance between domestic and foreign in a few ways.

    We could add a tariff on foreign oil, increasing its price to a point where more domestic oil is economically viable to produce. If the foreign stuff costs more than domestic stuff we’ll naturally gravitate towards the cheaper domestic stuff. So artificial price manipulation of imported oil would decrease the percentage of domestic oil usage. Now the kicker is that it would also increase the price paid by American consumers to an artificially high level because we just raised the price of oil by taxing cheap imports. That sucks.

    Aside from a tariff on foreign oil, we could attempt to create an alternative to oil. By doing this we would divert dollars from oil purchases to an alternative energy source. So how do you do that? Well, in a world of high oil prices the market responds by trying to create cost effective (cheaper) alternatives to oil. The key is creating a product that is cheaper and more efficient than imported oil. This is actually somewhat tough. Oil is a marvelous substance and has served our species extremely well for the last century or so.

    Gasoline has some often overlooked remarkable properties like energy density. A single ounce of gasoline can boil 26 gallons of water. Think how long it takes your stove or microwave to boil a gallon of water and how much energy is used. That means that a 26th of a gallon of gasoline can boil a whole gallon of water. That’s damn impressive. A microwave takes like five minutes to boil a couple of cups and that device burns through 1800 watts of electricity. Just imagine how long a gallon would take to boil in a microwave. A tiny amount of gasoline holds enough energy to boil that entire gallon of water.

    What that means is that alternative sources of energy are trying to improve an a damn good source of energy. So what kinds of alternatives are there? If we relegate ourselves to transportation we can think of things like hydrogen, solar, electric and then hydrocarbon alternatives others like biodiesel and ethanol (actually the same thing as drinkable alcohol for those not in the know).

    Now the goal is to reduce oil consumption by making one or many of these transporation energy sources cheaper than oil. If we dismiss jacking up the price for oil as idiotic, we just want to make these cheap. How do you go about doing that? About the only answer from most people is that we could use the government to subsidize these particular sources of energy, artificially cheapening them for consumers. But isn’t that kind of the opposite of adding import taxes on oil? We’d be using taxpayer money to make a particular product cheaper for taxpayers to buy. Sounds great, no? Well the results of this usually suck. What ends up happening is that the subsidy never goes away and it becomes a vast wasteland of corruption and taxpayer losses. There is another downside. Lots of countries around the world subsidize their gasoline now. India and Venezuela are two at the top of my head. Their subsidy increases consumer demand for the artificially cheap product which increases the subsidy paid AND decrease the world supply. That decrease in the world supply leads to higher prices around the world and higher taxes in the country itself (but at least they have cheap gas).

    So we could pour taxpayer money into subsidizing alternative energy sources (like a discount on electricity you use to power up your electric scooter) and hopefully decrease demand for gasoline.

    There is another money pit to be discussed: research. Why not just pay people to find a more efficient battery or crop to turn into ethanol? Well, someone has to direct where that money goes. It has to be divided and split into effective fields. Amazingly governments are rather bad at deciding this. There is a remarkable way to determine where money should be spent. It’s called the market.

    You see, when something is really expensive people (you?) try to make alternative things cheaper because if you have a cheaper thing to sell people tend to buy your thing. When a particular item like gasoline goes through the roof price wise, suddenly the alternatives are attractive purchases because they’re cheaper. It is a complete failure to have a nice electric car if it costs eight times more than a gasoline alternative and takes fifty years to recoup the surplus cost. But if the electric car is a couple of grand cheaper than a gas car, recharges instantly and is cheaper to operate don’t you think the seller would have a bonanza on their hand?

    This is why we will eventually wean off of oil. It will get more expensive. Even if it doesn’t bright people will come up with brilliant ideas of alternative energy sources eventually pushing oil from it’s perch as cheapest energy source that it has held for so long. We’re a clever people.

    So let’s see:

    – One could wean us off foreign oil by making it more vastly more expensive, artificially diverting production to domestic oil. Consumers would suffer through yet higher oil prices, but hell it’d be domestic oil.

    – One could wean us off foreign oil by subsidizing ethanol or something else to a point where all of our corn goes to fuel and food price skyrocket because we’re turning it all into alcohol. But the subsidized fuel would be cheaper than foreign gasoline! Oh yeah, consumers suffer because we’re paying for the subsidies at least twice, once at the grocery store and once on April 15th.

    – One could wean us off foreign oil by invading foreign countries and making the oil no longer foreign (ooooh, cleverness). Yeah, everybody suffers with this option.

    – One could dump money into government sponsored R&D in an attempt to find a cheaper energy source, but then again how efficient is the government at spending money, and we trust them to efficiently find and efficient energy source to compete with efficient gasoline engines of today?

    OR….


    We could just sit back and fold our hands. As alternatives develop we can be dutiful consumers and buy the cheaper and better options. We can let smart people do what they’re doing now and try to figure out something better than gasoline Don’t you think they’re trying right this second if for no other reason than to make fist-fulls of money? We can save our hard earned dollars to spend on new iPhones.

    So yes, we could be independent from foreign oil in ten years. But to do so could mean $15 dollar a gallon gas. Or a couple of trillion dollars here or there for research or subsidies. Or a few billion hungry people because we’re burning up the food supply in a horribly pigheaded attempt to be green and patriotic.

    Comment by Cameron — 8/29/2008 @ 4:43 am

  6. I’ll have a response to the comments in post form later this weekend.

    Long story short: it is possible to marginally reduce dependence on foreign oil, and we should indeed implement some policies to do so. But the idea of energy independence, PARTICULARLY in a ten-year time frame, is a pipe dream. We ought to be seeking energy SECURITY, which is a very different thing.

    It is not a matter of will, but of basic physics and economics. Saying “yes we can” doesn’t alter mathematical laws, and where ending oil is concerned, the math is not on our side.

    Comment by Rojas — 8/29/2008 @ 9:03 am

  7. Cameron: Umm yeah, thanks for the lesson in free market economics I didn’t need. Not trying to be rude, just want to save you some time so I’ll go ahead and lay out that I think ethanol subsidies are a travesty bordering on criminal, I’m not a fan of bureacracy, I’ve voted libertarian in every election since I turned 18.

    Now, on to what I’m getting at here, which how possible it is to acheive independance from foreign oil. I think you dismiss domestic sources too lightly, I’ll even say that you’re flat out wrong. This is because I think you’re operating on flawed or outdated information. When you state that domestic sources are too expensive, what you really mean to say is that it is too expensive in the face of cheap foreign oil. This was true, but isn’t any longer. True, foreign oil might be cheaper again some day, but not neccesarily so, or at least not to the point where domestic sources become too expensive. However, those sources can be competitive now, at prices today, not the $15 a gallon you suggested, in fact, because some enterprising free marketers are already testing extraction methods, that means they’ve thought it viable for some time now, which indicates they thought it viable even at somewhat lower prices. In fact, there are some who think they may have ways to unlock the oil in oil shale deposits in a manner that might make it competitive at a price point of $40 a barrel. The oil shale deposits in the US are bigger than the oil reserves in Saudi Arabia, so that would mean we could conceivably export oil instead of importing. And yes, this is happening now, it’s not just words and drawings, my girlfriend attended a test run of an extraction technique not long ago.

    This is why I’m asking if someone has information that I’m not privy to, because I see as very viable to develop this in a ten year span.

    Rojas: Energy independence would be pretty much energy security, though I understand you can have security with the independence. It does seem fairly safe to continue to rely on imports from say Canada, and certainly energy security would be a more easily attainable short-term goal and a worthy one. I’m certainly interested in your ideas on the subject, so I hope you get back to this.

    Comment by Mortexai — 8/29/2008 @ 3:35 pm

  8. First off, I realize my post was getting a bit long and rambling, but I was having fun writing it so I kept going.

    As you pointed out it was the trick is the balance between foreign and domestic oil. The relative prices are what determiner the purchased percentage. I can say with certainty that domestic supplies are too expensive in the face of $135 dollar foreign oil. There is a simple reason that’s a fact: we keep buying foreign oil. If there was adequate of domestic oil at a price undercutting expensive foreign oil don’t you think we would be buying nothing but domestic oil?

    If we can agree that foreign oil is currently cheaper than much current potential production of domestic oil reserves, the only means by which change will happen is a disruption of one side or another of the equation. We will either need cheaper domestic production (great idea!) or higher foreign prices.

    The critique I have centers on what do you want to bring about a change in that balance? What actions do you want to be taken? Tax imports? Subsidize domestic production? Twiddle thumbs?

    If indeed domestic production is cheaper than foreign importation of oil, the market will react and respond with domestic overtaking foreign sources. I don’t see this happening though. I don’t think domestic production can get down to the needed price points. If it can, more power to the domestic oil industry. Just don’t use my tax money to screw with the market.

    Oh, and one other point centers around dwindling domestic production. We hit our peak production numbers quite a while ago and have been producing less and less domestically for some time. It’d be awesome if technology can change this with increased efficiency of extraction domestically. A new oil shale boom would be welcome news. As I said before, I don’t see it happening. Costs of extraction seem too high to compete with foreign sources.

    Comment by Cameron — 8/29/2008 @ 3:58 pm

  9. The market is reacting, it’s happening which was my original point, that the statement that it is impossible for us to acheive energy independence in ten years is wrong, unless there is something I’m missing, which hasn’t been provided, though I’m waiting for Rojas to weigh in on that. Again though, I’ll point out that I think you’re wrong on the extraction price on oil shale, and so do a lot of oil people, which is why they’re going for it. Oddly enough, according to the little woman, they’re looking at a ten year time frame for commercial production, which is a number that sounds oddly familiar.
    I’m not trying to debate how the government should get involved, indeed, aside from the government not regulating the extraction into economic infeasibility, it appears it’ll happen anyway, or will as long as oil stays upwards of $60 a barrel or so, and I’m not trying make any statement for Obama, other than he might not be wrong about the possibility of being energy independent in ten years. Whether the credit goes to Obama or the market doesn’t matter a fig to me, because I wasn’t trying to debate that, I was trying debate the possibility.

    Comment by Mortexai — 8/29/2008 @ 4:16 pm

  10. Ending dependence on foreign oil within 10 years is completely infeasible. Sounds good, but there is no way it can happen. If we can achieve it by 2030 I would be pretty amazed.

    Comment by James — 8/29/2008 @ 4:34 pm

  11. Why? I’ve been playing cards with the little woman and tipping back beers so I’m not going to attempt any coherent argument at this moment, but all I’m getting from people is ‘Can’t be done, nope, ain’t gonna happen’ and no hard reasons why. Give me something to bite into because I think it can be done. It might not be pretty, it might not make a lot of folk happy to do it, hell, I don’t even think I’d get behind what I think it would take, but I want one person to step up and tell me why it is flat out impossible. No one can tell me why, they just state that it is. It’s just a fact, apparently, like Jesus walking on water.

    Comment by Mortexai — 8/30/2008 @ 2:40 am

  12. I haven’t said it is impossible. As I previously mentioned we could enact a law tomorrow making imported oil prohibitively expensive. We could end dependence on foreign oil with one snap of our fingers if we wanted to. It would screw everything up in our country but we could do it.

    You said “It might not be pretty, it might not make a lot of folk happy to do it, hell, I dont even think Id get behind what I think it would take.” What do you think it would take? My answer to that question is that the costs of such an endeavor far exceed the benefits. Because of that, it will not happen. It is infeasible. Not impossible, infeasible. Pigheaded. Stupid. Wrong.

    Comment by Cameron — 8/30/2008 @ 3:14 am

  13. It’s called infrastructure, Mort. There are physical limitations that make it impossible to shift that quickly; and that is assuming we already have the alternate fuel source lined up. I think that you will find the 10 year window dismissed by every expert from every corner except of course Obama and his throngs of pipe-dreamers.

    Comment by James — 8/30/2008 @ 12:40 pm

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