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Sunday, August 10, 2008

Tire Pressure Gauges, Gang of 10, and More

Why did it take 9/11 for us to get the big picture on homeland security? Why has it taken over 20 years since the last immigration bill to focus on border security and revamping the broken Latin American guest worker program? Why is it that we have been net importers of energy supplies for decades, with increasing reliance on external suppliers? Why has it taken decades to consider new refineries or nuclear power plants? Why does it take a Hurricane Katrina or Minnesota bridge collapse to highlight an aging, increasingly unreliable infrastructure?

The concern I have with plans, such as Obama's, which seems to be heavily dependent on subsidies on alternative fuel or power, is that they underestimate the relevant costs, scalability, and infrastructure. Currently wind, solar, geothermal, tide and other alternative energy sources account for less than 10% of our energy needs, despite decades of hype. There are huge intrinsic technical difficulties to be resolved, which cannot be resolved by throwing hard-earned taxpayer subsidy money at the problem, pushing arbitrary, unrealistic deadlines. When Obama promises creating well-paying jobs in alternative jobs, how will that happen given a current educational system where rigorous education systems in China and India create ten times the number of engineers and scientists than America does, and where American women, whom now comprise a majority of college students, are all but absent among the ranks of math, science, and engineering majors?

When Barack Obama starts talking about trying to achieve short-term price relief by releasing oil from our strategic reserve for mere political reasons, tell me, Mr. Obama: who's going to refill the strategic reserve when oil is selling for $300/barrel? When is it going to dawn on you that if it takes 6 years or so to get new oil production online, we are in the meanwhile still going to have to bid against faster-growing, net importer nations in the interim for each barrel of oil?

If it takes years to build a nuclear power plant, or to build a coal-to-liquid refinery, how long do we think we can afford for Democrats to stonewall the requirements for a buildout to accommodate our projected energy growth needs? Is it really necessary to remind you what happened to California when it failed to expand its supply capacity during the 1990's to fit its growing energy requirements?

I can't believe we are talking about insufficient gains through commonly-agreed better gasoline efficiency (by keeping one's tires inflated, tuneups for older cars, replacing air filters, etc.), Obama's promise to grant $1000 energy rebates from unconstitutional or counterproductive windfall profits taxes, while at the same time panning a much smaller costing gas-tax holiday (even though the tax is a regressive one, and one which well-to-do liberals can game by buying expensive, more energy-efficient hybrids)? Mr. Obama would do well to keep in mind that Exxon and other energy giants have shrinking, not expanding reserves, and one way you can increase reserves is by opening up oil production in offshore areas, oil shale properties in north-central-western states, and ANWR.

This is not to say John McCain and the new Senate bipartisan group (which I term the "Gang of 10") pushing a lightweight oil drilling package (if we agree to keep new drilling far enough off the coast, and only for a select few states which can still veto production, and, oh, by the way, we would rather buy oil from the Middle East than potentially disturb the mating habits of the caribou at ANWR?) Is the Emperor wearing any clothes? The oil off our coasts does not belong just to coastline states; these resources are owned by all Americans. It's time for John McCain to tell America what Barack Obama is refusing to admit: today's oil drilling technology is more environmentally-safe, the risks to spillage minimal, and its footprint is small and unobtrusive.

We have no choice but to expand drilling--and now. I'm really concerned about a shrinking gap between global supply and demand, not to mention potential supply issues with many large oil fields already in declining production--and we are not even talking about potential disruptions from the volatile Middle East or our heavy concentration and vulnerability of refineries and rigs off the Texas and Louisiana Gulf coast, vulnerable to geographic risks, e.g., hurricanes.

It reminds me of a newspaper cartoon I read a few years back. A young boy is looking intensely at the ground under a street lamp. A man passing by asks the boy what he's looking for. The boy says, "A quarter." The man frowns and asks, "Are you sure you lost it here?" "No," the boy replies, "Over there...", pointing at a darker area away from the lamp. "Then why are you looking here?" "Because the light is better..." In other words, drill where the oil is, not based an arbitrary conditions like distance from shore or whether the environment is "pristine".

By saying all this, I don't discount the need for energy conservation; business as usual in Detroit of focusing on higher-margin, fuel-inefficient SUV's and trucks is no longer viable. We also need to realize our biggest gains in energy conservation may involve focusing on lower-income Americans relying an older, less-efficient autos and appliances and/or can't afford solar paneling. A tax rebate-voucher approach, perhaps matched by Detroit, typically championed by Republicans and other conservatives, may be in order here. What I am saying is that energy conservation is not enough.

I am not dismissing the possibility of disruptive technologies, and I believe a key objective will be rapid development of scalable energy storage technologies, not just for automobiles but to accommodate climate-constrained energy technologies (e.g., solar and wind). But what's clear is that we need to be smarter about deployment of alternate fuel technologies: it is clear, for instance, E-85 based on current corn ethanol production is simply not viable for widespread distribution, given the unacceptable effects on food inflation, a particularly nasty regressive cost. We need to focus on a more favorable energy yield; for example, earless corn or much-hyped cellulosic ethanol (e.g., switchgrass). But we need to do better planning for ethanol in terms of compatible pipelines to refineries and a critical mass of distribution outlets carrying E-85.