John Hofmeister (former president of Shell Oil Co.) wound up the Microsoft Global Energy Forum this year with an inspired rant against different US administrations’ performance in energy policy. Hofmeister is not one to pull his punches. Those senators who defended bio fuels as an alternative to increased oil production will be ‘kneeling come 2012, the gas price is the single most important pocket book issue to the US voter.’ While US consumption has dipped, Asian demand is surging and diesel shortages are reported in China.
The 111th Congress’ plan was to ‘move beyond oil to wind, solar and biofuels.’ Unfortunately, 98% of the US’ energy does not come from renewables and never will! Back in 1973, president Nixon proclaimed ‘energy independence by 1990.’ A similar claim has been made by all subsequent presidents. Back then, the US produced 70% of its oil, today, it imports 70%.
Plugging the growing shortfall now means competing with Asia. We will soon be back to the $147 peak and beyond. The average age of electricity plants (fossil fuel and nuclear) is 30 years. The Yukka Mountain nuclear waste repository was canceled after $20 billion was spent. Without waste management, nuclear is dead.
Today, politics determines energy outcomes to the benefit of those who manipulate the system as a function of the electoral cycle. High energy prices are a serious problem. In 2008 they contributed directly to the meltdown as folks filled up their cars and stopped paying the mortgage. Meanwhile the oil industry is subject to ‘strangulation by regulation’ and no new permits for coal production have been granted since 2009. Coal produces 49% of US electricity.
We need more energy from all available sources. Energy efficiency is a good thing too as is environmental protection. We need new infrastructure, witness the recent explosion of a 50 year old pipeline in California. Instead we just defer and defer. Government is broken, unfixable—even the court system blocks progress. We need a different governance model or we will price 50% of Americans out of market.
Hofmeister thinks we should learn from history. In the 19th another financial meltdown led to the establishment of the Federal Reserve System. Like it or not, the Fed has saved the day many times and sees beyond the electoral cycle. We need to establish an independent Board of Energy Governors with a 14 year term who will make decisions in the interest of the nation.
We also need to develop superconducting transmission, the smart grid and to plan for the management of all ‘gaseous waste,’ including CO2, thereby taking care of global warming. If ‘nimbys’ get in the way, the good of the nation takes precedence.
Hofmeister has set up the Citizens for Affordable Energy to lobby for this and to ensure that ‘supply is greater than demand.’ This is to be achieved by removing or adapting regulation to make business work. ‘We need a new oil production target of say 10 million bopd, up from today’s 7.’ This will create three million new jobs and will take about a decade. More from www.oilit.com/links/1102_23.
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