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June 17, 2008 Blog Cheap Energy For centuries, man's primary need of energy was for heat. He also needed fuel to provide light, but because few could read, this was not especially crucial. Most people burned wood or perhaps coal to keep warm and lamps were fueled by oil from plants and whales. With the arrival of the industrial revolution, the demand for energy began to spiral upwards. Grain and saw mills were built and powered by water. Glass factories and foundries used wood or coal in their furnaces. Factories were often powered by steam turbines, which were also wood or coal fired. In order to settle America's frontier, transportation became crucial. Railroads and mighty steam engines were built. Canals with elaborate lock systems soon crisscrossed the country for ship transport. By the mid 19th century, oil for lamps and lubrication had gotten expensive due to the gradual decimation of whales. Just in time, oil was discovered in western Pennsylvania and the first oil wells created a euphoria that was unequalled even during the height of the California gold rush ten years earlier. Within three years, a barrel of oil was selling for ten cents; the barrel was worth much more than its contents. Talk about cheap energy! (for more on energy read my article: Truth or Tolerance?) By 1900, America had become the world's major oil producing nation, but other nations soon began to search for oil in their own soil. For the most part, American oil companies provided the expertise and equipment for this quest. In 1938, American oil prospectors struck oil in Saudi Arabia. Arab nations were among the poorest in the world, with little more than sand to call their own, but oil soon changed that! The first automobiles appeared around the turn of the century, but it was another 20 years before they were taken seriously as a viable alternative to the horse and buggy. It was a similar story with air travel. Who is to blame for high gas prices? The answer to this question is very simple: The greedy and the needy are the cause of high gas prices. We are needy and the others are greedy, but none of us is very generous when it comes to energy. If you consider yourself to be generous, why are you upset about high gas prices? Today, we want and need energy for just about everything we do. Like air and water, energy has been plentiful and therefore cheap in the past. Because it has cost less than it was worth in past decades, we seldom thought about conserving energy. Now, China, India and other nations also require huge amounts of energy to fuel their booming economies. Our own growing appetite for oil is getting some stiff competition and oil-producing nations are simply reacting to the law of supply and demand. Supply and Demand - or Free Trade We can play the blame game for a little while, but sooner or later we need to get realistic. We are all subject to the rules of supply and demand, especially in a democratic society. Venezuela and the Arab oil lands have plenty of oil and it's all under government control. They don't need to be concerned about conservation. You have probably seen pictures of the extensive construction projects in Dubai that range from gigantic artificial islands with luxury hotels to indoor ski resorts in the desert. The rest of the world has been accusing America of not being concerned about the ecology of our planet. I contend that there is no nation on the face of this globe that has done more sooner to protect the environment than the USA! We were first to make strict requirements for car and factory emissions. We have set a precedent for others in cleaning up our rivers and streams. No nation on earth has so many laws in place to restrict new construction and hinder development of properties where nature might be compromised. We have brought back countless species of animals that were near extinction, some of them to the extent that they have again become a nuisance or even a threat to human beings. While Europe depletes its own energy reserves and Japan had few of its own to begin with, the Arab oil lands continue to pump oil unabatedly. No one knows how long this can go on, but there has to be a limit. Only America is sitting on its reserves. We presently get 17% of our oil from the Prudhoe Bay area but Congress forbids drilling in most regions where we have billions of barrels of proven soil reserves. The Arctic National Wildlife Refuge alone could provide an estimated one million barrels of oil per day! Americans are divided over the wisdom of this decision. Some argue that we should not use our reserves as long as we can import oil. It is perhaps the only thing of value that we will leave to the next generation. Others believe that we should tap these reserves now to rescue our floundering economy. One strong argument for using our reserves has to do with international laws that govern offshore drilling. China, Cuba, Canada and others are drilling or preparing to drill 50-150 miles off our coasts where US companies are not permitted to drill. As long as we have no power to prevent others from sucking up the oil along our coasts and selling it to the USA for exorbitant prices, a Congressional ban on drilling for US firms doesn't make any sense at all. One problem we face is the lack of modern refineries. We have not built one new refinery since 1976, yet the EPA requires at least 15 unique 'boutique' fuel blends that can be sold in different areas around the nation. This means that U.S. Refinery capacity is stretched so tight that even the slightest problem at a refinery causes enormous supply problems and price spikes. Building refineries may be necessary, but it doesn't increase supply. Democrats have been blaming President Bush and the Republicans for high gasoline prices, but the price of gas has risen much more sharply since the Democrats took control of Congress. High gas prices are a boon not only to the oil companies, but even more for the government. For every Dollar the oil companies earn, the government receives four Dollars and doesn't even have to collect the money! Other Energy Sources Alternative energy is not a viable solution to our problem. Solar, wind and water power can only provide a small portion of our present energy needs. Some argue for more atomic energy plants. We now have 104 nuclear plants which produce about one fifth of our total energy. European nations produce 40% or more of their power with an ever increasing number of nuclear plants, but we haven't built a nuclear facility in a decade. Nuclear energy is cheaper ($1.72/kilowatt-hour) than coal ($2.37) or natural gas ($6.35), but this is only economics. We must also consider the dangers and ecological factors. The proper disposal of spent fuel is a matter which has not been resolved. What about taxing the windfall profits of energy producers? A basic understanding of economics and politics would be helpful here. Higher taxes mean more governmental regulations and therefore more government, and taxpayers pay for government. Energy companies will simply raise fuel prices, which means the government gets even more of our money. We pay more and more while energy providers and the government get fat. False Conservation Environmentalists preach that we must conserve energy and urge the government to pass regulations designed to minimize the use of energy. These measures cost millions or even billions, yet they bring no relief and only frustration to Americans. Only the rich can afford hybrid cars and solar cells. The recently passed law requiring energy-saving (CFL) light bulbs is ridiculous (read my April 9th blog)! There is virtually no public transportation and the little we have is a catastrophe. At airports, we wait in long lines, go through countless security checks, pay extra for everything from earphones to drinks and then arrive late without our baggage. Rail travel is little better and in most parts of America non-existent. Should the government legislate building more railroads, taxpayers will pay for it. And I promise you that we will pay more to ride trains than to drive cars. Americans who are worried about runaway energy and food prices should keep in mind that the upcoming election is not just about choosing a new President. We'll also pick a new Congress. I want to hear what the candidates plan to do when they get elected besides spend our money. There is much that can and should be done to protect nature, like curb the chemical industries - which produce poisons that destroy birds, butterflies and bees - instead of subsidizing them. But these companies have strong lobbies and feed political coffers. Politicians seldom bite the hands that feeds them. The reason for high energy prices is a combination of need and greed. It isn't a simple matter to place the blame for high gas prices on any one person, industry, nation or political party. Nor does blaming solve our energy problems. We need to curb our needs and fight greed.
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