Getting Off the Energy Dime

The Energy Information Agency says US net oil imports for 2006 averaged 12.39 million barrels per day. By my calculations, at yesterday’s spot price of roughly $127.50 per barrel, a similar amount this year will cost us a staggering $1.58 billion per day, every day. That’s more that half a trillion bucks per year, amounting to more than 70% of the trade deficit for last year. Let’s stop doing that. Let’s set some national goals that will have us self sufficient in transportation fuels and other petroleum products by, say 2020. While we’re at it let’s plan to generate at least half our electricity from non-carbon based sources. Let’s cut current inflation adjusted energy prices by half or more. We can do it at phenomenal net benefits to our economy and we can take some serious steps to clean up the air in the process. It will require major investments in money and effort but the returns should more than justify them.

We can do all of this with increased emphasis on nuclear, wind, and solar power for electricity, and clean coal and alga culture processes for liquid fuels. The technology is available and engineers say they can build the necessary facilities at competitive costs, though wind and solar rely on subsidies to do it.

Nuclear power currently accounts for about 19.4% of US electricity. I’m guessing we could more than double that in 12 years if we put our minds to it. The Department of Energy has already announced a 6% goal from wind by 2020, and 20% by 2030. It’s a goal that should be accelerated based on current trends. Solar power has been lagging a bit behind but costs and capacity have been improving rapidly in recent years. One problem with all three sources is that the bests sites are remote from major population centers but with improvements in high voltage direct current technology the problems in transporting electricity over hundreds of miles, including under ground and under water, are a lot less daunting than they were a few years ago. These amount to big increases in electrical generating capacity. As new plants come on stream we could shut down older, dirtier coal plants and divert natural gas to home heating applications where it works best.

As for liquid fuels for transportation, we’ve been focused on the wrong technologies with corn and soy based biofuels that don’t have the potential to meet the need. Coal and algae do but 12 million barrels a day is a lot of oil and replacing it will require a gargantuan ramp up in production capacity. Just getting started could have enormous ramifications. Exxon alone expects to spend $21 billion this year on oil exploration and refinery expansion. That’s money that could build a lot of algae farms and coal gasification plants. If the big oil companies begin to see a future reduction in petroleum demand, they just might divert some of those dollars. Maybe some of our elected representatives could think of some incentives to help them to that conclusion. Exxon has been resisting the idea but most of the others are at least making tentative investments in alternative fuels. A change in their return on investment calculations could turn that into a flood.

It will need it. The National Mining Association puts the cost to build a coal-to-liquid refinery at about $600 million to $700 million and a lead time of five to seven years to produce 10,000 barrels per day, less than one tenth of one percent of the capacity required. The numbers get a little better with increased scale but the required investment would be many billions every year to get anywhere near my goal. It’s a lot of money but it’s nothing compared to the cost of imported oil.