Unsustainable Oil Prices

One of the goofier ideas going around these days is that the solution to high gasoline prices is to use the tax code to keep them high. The theory is that by locking us all into high prices, we will encourage the great unwashed to avoid gas guzzlers because they would lock them into, well high gas prices. I suppose there is a certain logic to that for the organic chardonnay and brie crowd but for most of us schmucks there is a better way. Let the market sort it out. There are roles for government in R&D and in emissions and mileage standards but if there is anything to be learned from our disgraceful farm policies it is that price controls are a bad idea whether they be floors or ceilings.

There is a basic long term mechanism for bringing oil prices back into line, competition from alternatives. Anything above about $55 per barrel makes technologies like coal-to-liquid and alga culture economically feasible. Those two sources between them can provide a virtually limitless and environmentally friendly supply of fuel. The fear is that oil may drop back again and bankrupt investors who get too far out in front. But lower oil prices discourage exploration and marginal recovery processes. Petroleum producers can’t satisfy demand unless the money is there, maybe not even if it is there. There is a case for $55 per barrel or thereabouts as the long term equilibrium price.

For obvious reasons the US Air Force wants a reliable domestic source of aviation fuel and has been experimenting with coal-to-liquid production for several years. The result works as well as conventional jet fuel and they would like to see it produced on a commercial scale. To that end they’ve asked congress for long term contracting authority to jump start construction of the necessary refining facilities. They ought to get it. Guaranteeing supplies is not the same as market distorting price controls.

Another suggestion is that the Department of Energy build a refinery and then sell it. DOE did something like that with the Great Plains Synfuels Plant in the 1980’s. Since 2000 the carbon monoxide from that plant has been sequestered and piped 200 miles to a Canadian oil field where it is pumped under ground to enhance oil recovery. Most of it will remain under ground permanently. That should answer any question about whether it can be done and the plant’s owners have paid DOE several hundred million dollars in a revenue sharing arrangement. Unfortunately the twenty year old plant is still the only commercial coal gasification operation in the US. We’ve learned a lot about the technology and it’s time we built another one. I’d like to see one built in Texas. There is a huge lignite field off I45 just north of Centerville that might make an ideal site.

I’d especially like to see multiple plants using competing processes. There are at least three designs ready for use on a large scale. One will most likely prove superior and I’d not want to have DOE or the Air Force deciding the winner in advance. DOE was about to make that mistake with the recently cancelled billion dollar plus FutureGen project. FutureGen would have used up most of the available development dollars on an experiment involving the production of hydrogen, not a prospect for replacing liquid fuel on a large scale any time soon. Now DOE is proposing a series of production facilities to be on line by 2015, without the hydrogen. Predictably the Illinois and Missouri congressional delegations are fighting to keep FutureGen alive. Their states would get most of the money. The rest of us should support the change. A few firm coal-to liquid projects in the pipeline might be just the ticket to burst the speculation bubble that has helped get oil and gas prices so high.

Washington We Have a Problem

The only reason we ever became addicted to oil was it was cheap and plentiful. It is no longer cheap and the Wall Street Journal is reporting that over the next few decades supplies may not keep up with demand at any price. While we’ve tinkered with bio fuels and disastrous unintended consequences for the food supply the world has been using up the real stuff faster than it can be produced. We are just now realizing that all the corn and soybeans the planet can grow won’t make up the shortage, and we’ll still have to eat. In thinking about this it’s important to understand we are talking about transportation, not electricity though the hybrid vehicles can help. Most of the petroleum we use goes to the production of gasoline, diesel, and jet fuel with home heating oil coming in a distant fourth. We can address needs for electricity with nuclear power, wind and photovoltaic farms, and improved capture of waste natural gas but none of that is going to get us across town, not any time soon. As much of what used to be called the third world emerges into the modern era they are going to demand the modes of transportation that go with it. We are going to have to find fuel for them, we are going to have to find it fast, and we are going to have to find a substitute for petroleum. We really have only one alternative, coal. We have a lot of it, it’s readily accessible, and the basic technology for converting it to liquid fuels has been around at least since the 1920s. Self appointed environmentalists object because they say it’s dirty. It is but coal advocates say they can clean it up, and at a reasonable cost. The Department of Energy agrees. DOE has looked at designs they think can take the filthiest, lowest grade coal, cleanse it of pollutants, convert it to liquid fuels, and capture and store the resulting carbon dioxide. The processes work well in tests and on a commercial scale DOE estimates a cost equivalent to oil at about $55 per barrel. With current prices somewhere north of $130 and expected to go higher it’s time to stop dithering and find out if they are right. Required facilities can be brought on line in a few years, not decades. Nothing else on the horizon has that potential. Environmentalists had better get on board with this if they want a place at the table. We will do it regardless. We have no choice. We should insist on doing everything we reasonably can to protect the air but the operative word is reasonable. We can also take measures to minimize and recover from damage due to strip mining but we need that coal. In the short term we have no other way to get required transportation fuels. One other point: The United States has more than a quarter of the world’s recoverable coal reserves, far more than any other country. That coal contains more energy than all the oil in Saudi Arabia. It has the potential to turn us into a net energy exporter, reverse our trade deficits, and do more for our economy than anything since the invention of the internal combustion engine. We’ve been working on it since the Carter administration. We should have been doing more, a lot more. We need to be addressing global warming and all the other energy related issues too but this is a problem we can solve. It’s way past time we got on with it. I’m writing this while on a driving trip where I paid $4.00 for a gallon of gasoline for the first time. I don’t expect to go back to the days when I could fill up my tank without serious damage to a $20 bill but I’d like to ask my elected representatives how that happened and I don’t want to hear about greedy oil company executives. I want to know what we can do about it and why we haven’t done it already.

Throwing Stones

Fr. Art Mallinson, at one time an assistant at my parish in Plano, has been forced to resign as pastor at St. Michael’s in McKinney after being outed by a “conservative activist group,” dedicated to exposing gay Catholic priests. Roman Catholic Faithful is one of those muck raking organizations of the sort the mainstream media wouldn’t normally go near but anything involving sexual misbehavior among clergymen or conservative politicians is fair game these days. (Openly gay Episcopal Bishops appear to be an exception to this rule.) Fr. Mallinson hasn’t been accused of any crime so far as I know, or of abusing his clerical office, just of some lewd correspondence from several years ago. He may yet be hounded out of the priesthood, though that isn’t technically possible. In my church holy orders, like baptism, confers an indelible sacramental mark. Once one is a priest one is always a priest. No one seems to have alleged Fr. Mallinson has violated his vow of celibacy, though that is also a misnomer. Roman Catholic priests vow not to marry. Fornication is a sin, an infraction of the requirement for abstinence, but it does not abrogate a state of celibacy. I’ve been Catholic and married to a Catholic long enough to have known quite a number of priests. I count several of them among my friends. A few are among the people I admire most in this world. Some I have known left to marry and no longer celebrate priestly rites. Some I thought to be irascible old curmudgeons. Like other men, priests have been known to abuse alcohol or have heterosexual affairs. Some presumably are homosexual. I wouldn’t be surprised if more than a few have visited pornographic web sites at one time or another, gay or straight. Not withstanding any of that I find most priests to be sincere and dedicated to their vocation. All of them, like me, are sinners. None of them belong on pedestals. None of them deserve to have their private indiscretions dragged across the headlines either. From what I understand Fr. Mallinson would be welcomed back in his most recent parish, among those who know him well. His most vocal critics are people who don’t know him at all. Personally I think the hue and cry often says more about the accusers than the accused. Take a look at the RCF web site. These people have issues, actually only one issue. They don’t talk about anything else. It’s one diatribe after another and for the most part not about the abuse of children, though God knows we’ve had enough of that. This is about gay priests, any gay priests, the bishops who tolerate them, the abomination of gay households in our society, anything gay. They appear to be quite well acquainted with gay porn sites, presumably for investigative purposes only. They like to use gay bashing words like pervert and they aren’t above pointing their readers to graphic and offensive photographs. They solicit dirt from anybody who has any to offer. It’s time we all took a deep breath. Our church is still trying to deal with the scandal of predatory priests that has rocked its foundations. It was the single issue that got the most attention during Pope Benedict XVI’s recent visit. It’s not something we are likely to have behind us any time soon. But homosexual priests are a fact. They have been a part of our church at lease since the adoption of mandatory celibacy. They aren’t all pedophiles or predators, and they aren’t necessarily a menace even if they are sometimes guilty of sins many of us find particularly distasteful. We don’t need to be rummaging through every priest’s closet looking for homosexuals and we don’t need homophobic scandal sheets like the RCF news letter.

Pond Scum – the New Texas Tea

The energy business is getting more interesting. Chevron, Honeywell, and Boeing have all announced projects to grow algae for use as substitutes for petroleum based energy products. Now PetroSun has started a commercial farm operation on the Texas Gulf Coast near Harlingen to grow it for conversion into diesel and jet fuel. Scientists have been saying for years that algae has the potential to replace the world’s consumption of petroleum, all of it, but until recently nobody has found a cost effective way to solve the technical problems. PetroSun thinks it has one. If they are right it will be the biggest economic news since the invention of the internal combustion engine. The stuff has a lot of advantages. It is an inexhaustible renewable resource. It’s eminently biodegradable. It doesn’t need arable land. Certain strains thrive in brackish or salty water. Under ideal conditions it is many times more productive than any other crop. Enough of it could be grown on a few square miles of desert to supply all of America’s energy needs. It could turn America into a net energy exporter. It can be fed with animal or vegetable waste, including municipal waste. It’s a potential use for the excess carbon dioxide being spewed out by power and cement pants. Biodiesel fuel can be burned efficiently in existing engines and delivered through existing infrastructure. It contains no sulfur. What’s left over after extracting vegetable oil for use as fuel can make a nutritious food supplement for animals or humans. A group of engineers at Auburn University has calculated that Alabama’s cattle and chicken farms alone produce more than enough waste to satisfy the state’s need for liquid fuel. They’ve developed a design they think is feasible for doing just that, and at a profit. The seminal work on algae based fuels came out of the Department of Energy’s Aquatic Species Program a relatively small research project launched in 1978 in the wake of the Arab Oil Embargo. ASP demonstrated conclusively that oils from algae can produce natural gas and just about anything petroleum can but they never could make the numbers work. In 1996, with gasoline at $1 a gallon, DOE shut it down. The technical problems were serious. ASP focused on open pond systems thinking that an enclosed system would be too expensive. A lot of people thought that was a mistake, though both the PetroSun farm and the Auburn system are based on open pond designs. The open pond left them vulnerable to the vagaries of weather and contamination. This works best with a pure strain of algae suited for the specific purpose. One strain is right for diesel, another for jet fuel, a third for methane. Maximum yields require ideal conditions of light, temperature, and nutrient and catalyst levels. The algae must be circulated at just the right rate to avoid under or over exposure to sunlight. You need a lot more carbon dioxide than can be squeezed from the air. You have to get it from somewhere and it has to be mixed with water. At harvest time the algae must be extracted from the water, and the oil from the algae. ASP overcame all of those issues but their costs were just too high. Fortunately research continued in the private sector and today, with oil at over $100 per barrel, the economics look a lot better. So does the technology. There are pilot projects going on at several places around the country using enclosed bioreactors that may be more costly than the ponds but are also more efficient and easier to control. When smokestack and vehicular carbon dioxide sequestering technology becomes commercially viable we may see an explosion of algae farms recycling it back into reusable energy. In the meantime it looks like we may well be on the way to not needing it.

Trouble in the Food Chain

I stopped at Tom Thumb the other day to pick up stuff for our dinner salad. The only cucumbers they had were organic. I wasn’t about to pay $5 for one of those beasties so I went to Kroger and got a conventionally grown one for $1, still steep I thought. Now I’m not going to blame the global food crisis on organic tofu but the incident did illustrate the perils of diverting crop land to marginally productive uses. Maybe more corn for ethanol isn’t the best way to do our bit for the planet. Heaven help us if we start using organically grown ethanol. I read today that the high price of fertilizer is driving farmers in Iowa to replace commercial fertilizer with hog manure. It takes about 100 pounds of it to provide the basic nutrient of a pound of regular fertilizer. It takes tons of it to produce expected yields on an acre of corn. That’s a lot of pig poop.

Ethanol isn’t the only culprit in this or even the major one. The biggest factor seems to be an improvement in global nutrition. People are eating more and better. That’s good news isn’t it? It’s not like the typical Vietnamese child is sitting around watching television and eating fast food but his parents are a foot taller that their parents were. That’s because they had a better diet growing up. The same thing happened in Japan after WWII. The explosion in crop yields that came with the Green Revolution let us feed an expanding population, and feed it better that ever before in human history. Now it’s catching up to us with an interlocking network of bad government agricultural policy, high prices for the oil and natural gas needed to produce fertilizers and transport the crops, growing resistance to innovations in agronomy such as genetic crop modification, and of course greater prosperity allowing people to demand better food.

This could be the sleeper issue in this year’s presidential campaign. None of the candidates seem prepared for it. They are coming up with half baked ideas on how to deal with a spike in gasoline prices, and none at all for how to react to what seems likely to be a permanent rise in demand for limited supplies of food. If we begin to see spot shortages this could get serious in a hurry. If we begin to see wide spread hoarding, and we’ve already seen some, the whole thing could spiral quickly out of control. This is food we’re talking about. It was a bread riot that sparked the Russian Revolution for Pete’s sake.

There appear to be a number of long term solutions to this, but precious few of them get us through the rest of this year. Better irrigation techniques would work new miracles. The Israelis have shown us that. Much of the worlds’ arable land is still poorly managed. That’s a political problem that could be solved if we put our minds to it but it will take years to turn it around. We have hardly begun to develop the oceans’ potential for aquaculture. This old planet still has a lot to give.

It’s time we put some serious thought into this, and this spring’s early warning signs should prompt us to take some short term precautions. We might consider slowing down the diversion of food crops to non-food uses. We might want to temporarily take some land out of conservation programs and plant it this year. Conservationists, environmentalists, hunters, and everybody else with a vested interest in the current arrangements will all scream to high heaven. But we have had a few shots across our bow on this issue. It would be a lot easier to avoid a crisis than to deal with one in progress. I doubt we’ll see riots in the US but we’re seeing them around the world. Prices are up. Demand is up. Supplies are down. People have to be fed and that food has to come from somewhere. This year’s harvest is going to need a boost.