Wednesday, July 9, 2008

Energy: The Good, The Bad, and The Ugly

The Good: T. Boone Pickens - oil man, financier, and the guy who brought down my Dad's former employer, has a simple but interesting plan for reducing our dependence on foreign oil. He essentially suggests taking the natural gas that we currently use for power generation, and replacing it with wind power (22% of electricity production from wind, specifically). As he points out, wind is more plentiful in the U.S. than it is anywhere on Earth. You can think of us as the "Saudi Arabia of wind". The natural gas savings from this move could then be diverted to fueling cars powered by natural gas rather than gasoline. Pickens estimates that this could reduce oil imports by 38%, which would come to $300 billion a year. Even better - both natural gas and wind are cleaner than gasoline, and both are produced domestically. This isn't exactly rocket science here - lots of people have suggested that we move on wind energy - but Pickens has the personal wealth to push this plan (he's airing self-funded commercials promoting it), and he's already made some investments in wind energy in Texas. He may also have the clout to push the next administration in this direction as well. When it comes to major changes like this, the trick isn't just to have the good idea. Usually these "good ideas" are deceptively simple and more or less abundantly available. The trick is to provide the motivation to make it happen. Pickens could help with this. Very encouraging.

The Bad: OK, so it's not really bad - ridiculous is probably a better word. As most have probably already heard, the G8 is meeting in Hokkaido, Japan, and they have agreed to reduce greenhouse gases by 50% by 2050... well... sort of. My understanding (culled from NPR), is that the agreement is not enforceable and conditional on other countries agreeing to the cuts as well. To add to the craziness, I'll remind my readers that 2050 is still 42 years out. The G8 says nothing about a "bridge policy", like the Pikens proposal, that might get us there. OK, so this isn't really "bad", but it is a little discouraging that this is what the G8 came up with. I would have preferred a less declaratory, more modest, but more immediately actionable policy.

Oh - and Mexico, India, Brazil, China, and South Africa threw in their two cents too... they challenged the G8 to reduce emissions by 80%. Thanks guys... you're a real help here.

The Ugly: Crude oil prices have fallen for the last two days! So why is this in my "ugly" column? Market analysts suggest that oil prices have fallen in response to recent reports that experts are worried the recession will be deeper and longer than expected. Softening demand due to a prolonged recession means that prices go down. So there you go! Prices are lower because the economy is tanking!

Here's an idea - lets kill two birds with one stone. Lets actually rebuild our public transportation infrastructure in places like... oh... I don't know - Virginia maybe? That would put people to work (addressing the recession), and help cut our demand for oil (addressing oil prices).

1 comment:

Evan said...

I saw the news about Pickens- that was very encouraging, and as you said they've been discussing this for some time. I think the philanthropic spirit of the financial elite has been a hugely positive factor in recent years; think of someone like Bono or Bill Gates. Just as the messes are created by billionaires, the solutions seem to be as well. I think it's just a matter of the scale of a globalized situation. I'm excited to here more about Pickens' plan as it develops. I'm not familiar enough with the thoughts of McCain and Obama about energy issues, but I imagine that either one would be rather supportive of something like this. The jobs created by wind energy in the corridor would also be good, for an area that is probably suffering more than the East or West coast.

The G8 is kind of disappointing all around... and not, I think, because of screw ups that are totally within their control. They come to the table with food prices and oil prices doubled since past meetings, and with all of the political damage that this has done. I agree with you that they should have set in place a more reasonable goal- like Picken, they are the ones with the money and should feel bound to jump-starting what needs to be done.

On the ugly, all I've got to say is that our car is at a 1/4 tank of gas, so perhaps I should run out while prices have dipped! In seriousness, I agree with you. I wish we had some promising economic game plans for the next few years. Plenty of criticism is going around, but I haven't heard anything striking being proposed (not that I'd necessarily recognize it if it were proposed, but I have you to confirm my suspicions when they do occur!)