Rather than the usual blather about a SPR drawdown to relieve oil prices, he talked about the U.S. Government selling some of that oil at today's high prices in order to fund R&D efforts to break our oil addiction. He talked about what a great financial deal this was since it cost $20/bbl to stock the reserve and it would be sold at $130/bbl. But regardless of this great financial deal, I really like this concept. The government needs to put some serious muscle behind aggressive R&D and so far they have not found the funding through other means nor do they (as a whole) have the guts to take back the tax breaks they're giving to Big Oil.
Now I'm not sure if Congressman Moran was the first to come up with this. But it was the first I've heard of it - and even more impressive coming from an elected official. Maybe the idea has some hope.
So what would it mean? Right now the SPR is sitting on approximately 282 million barrels of sweet crude. Lets say the government draws down some 150 million of that (a little over half) and sells it. At $130/bbl that works out to just about $20 billion. That sounds like a good number to pump up the R&D efforts.
My top targets (in no particular order):
a. High yield algae based bio-diesel (Valcent Products). From an earlier post of mine: Kertz said he can produce about 100,000 gallons of algae oil a year per acre, compared to about 30 gallons per acre from corn; 50 gallons from soybeans." That's a 3,333 to 1 improvement over corn in terms of output per acre!.
b. Drastic Improvements in Batteries. Let's face, almost any senior mechanical engineering student could design a functional electric car. I'm sure it wouldn't be for the masses, but the core concepts aren't too difficult. The real cutting edge stuff is in battery capacity, weight, and quick recharge-ability. Get that part of the equation right and electric cars will be popping up all over.
c. Hydrogen based vehicles. Finding an environmentally friendly way to produce the hydrogen as well as the core technology are challenges here. Of course, the same electricity challenges for Hydrogen apply to electric cars if they hit the main stream.
d. Experimental R&D. Like the solar collector/window Lowell had posted about yesterday and much, much more.
All I'm saying is that I'm not sure I see the sense of selling oil at this price, only to have to replace it later at a higher price (given the inelasticity of supply and control over the commodity by a cartel).
There is no easy solution/magic bullet out of this mess. I do believe that private capital will provide a lot of funding for research of alternative energy sources -- the government need not fund this, although it should help coordinate private sector efforts.
But throwing around ideas like this help our leaders avoid the real issue, which is that we need to begin various programs NOW to lower the demand for oil. Sorry, but we need a Jimmy Carter-type moment to tell us we have to slow our cars down, car pool, encourage mass transit, lower our thermostats, insulate our homes better and so on.
For all you libertarians out there, I'm not talking about a Nanny state that dictates all these things. I'm talking about leadership that makes a commitment toward mobilizing public opinion toward accomplishing these things, and passing common sense laws and regulations that rewards positive behavior.
I looked into the capabilities of quick charging batteries here
Basically, in order to pump a day's worth of driving in less than eight hours of overnight charging, you're going to need a serious electrical connection, larger than most people handle on a regular basis. We're talking the kind of connection that you plug your stove or water heater into. For the normal outlet people have on the outside of their houses, it will take all night to get a charge for 40-60 miles, and no upgrade to battery technology will solve that.
For hydrogen, just no. It doesn't offer much more in terms of capability other than storage, and it would require a completely new infrastructure. I discuss the downsides of hydrogen here.
I think all of your solutions are very car-based, and you ignore the improvements in transit efficiency you can get if you were to give out $100M in investment to the cities that were willing to upgrade their most traveled downtown bus line into a streetcar or light rail. There are many cities trying to do just that, but current FTA rules require the cities to consider BRT, which doesn't work as well to spur development, doesn't attract as much ridership, and continues dependence on diesel fuel rather than electricity.
You'd get people commuting by electric power rather than diesel, encourage more compact development, even make motorized transport for some trips unnecessary, because the development you'd spur would bring many uses together. Here's a link to a discussion on how a five cent increase in the gas tax (or about $5 billion of your $20 billion from oil sales) could go to promoting these new electric transit systems.
Thanks for your time.
He combined electrifying rail transport with investment in light rail.
The U.S. Strategic Petroleum Reserve is the largest stockpile of government-owned emergency crude oil in the world. Established in the aftermath of the 1973-74 oil embargo, the SPR provides the President with a powerful response option should a disruption in commercial oil supplies threaten the U.S. economy. It also allows the United States to meet part of its International Energy Agency obligation to maintain emergency oil stocks, and it provides a national defense fuel reserve
Current stock as the diary points out is 282.5 million bbls sweet + 423.7 million bbls sour = 706.2 million bbls.
However, the Energy Policy Act of 2005 include a provision directing the DOE to raise the reserve. Here is an excerpt of the 2006 directive issue thru the EPAct 2005.
The recently enacted Energy Policy Act of 2005 (Pub. L. 109-58) generally directs the Secretary of Energy to acquire petroleum to fill the SPR to the one billion barrel capacity authorized by section 154(a) of EPCA (42 U.S.C. 6234(a)) as expeditiously as practicable, without incurring excessive cost or appreciably affecting the price of petroleum products to consumers. DOE estimates that the acquisition of the approximately 300 million barrel difference between the current and authorized SPR inventory would likely take approximately 15 years.
Considering what the future may hold for the price of crude, I do not think many energy policymakers on either side of the aisle, think this would be a prudent move. Funding for AE R&D will be available, especially with a new Congress in 2009. As for as the SPR revision goes, it was considered during a "fairly" stress-free period in oil & gas prices, probably rising around the $50/bbl range in 2004-5 when EPAct 2005 was crafted.
Here is a recent comment regarding SPR from Senate Energy Chair, Sen. Bingaman (NM-D):
"While everyone agrees that having oil in an emergency reserve is extremely important, no one can make the case that filling the reserve makes sense when oil prices are rising the way they are," Bingaman said. "DOE has made the right call. Suspending the SPR fill will keep the government from competing for oil in the marketplace and driving up fuel costs across America."
About releasing oil from the SPR from the DOE's website
The Strategic Petroleum Reserve exists, first and foremost, as an emergency response tool the President can use should the United States be confronted with an economically- threatening disruption in oil supplies.
There were times when oil was drawn during non-emergency periods, 1997 for one, but those were when crude traded less than $20 bbl.
Here's some SPR positions from a 2006 Democratic SPR legislation from the Chairman of the House Committee on Energy & Commerce and Chairman of the House Subcommitte on Energy and Air Quality, Sen. Dingell (MI-D) and Rick Boucher (VA-D), respectively.
How would the strategic refinery reserve be used during non-emergency times?During non-emergency times the SRR will provide refined product to the Federal fleet, including the Department of Defense. This provision provides the following benefits: (1) ensures that the Federal fleet and military needs can be met; (2) lessens startup time for SRR refineries to ramp up to full production during emergencies since they will not be starting cold and (3) lessens demand for refined product in the consumer market, thereby freeing additional supply and hopefully decreasing price pressures.
When would strategic refinery reserve products be made available?
During emergencies the Secretary is authorized to make SRR products available based on two criteria: (1) the same severe supply disruption criteria used to trigger the drawdown of SPR under Section 161 of the Energy Policy and Conservation Act (EPCA); and (2) upon a Presidential determination of a regional petroleum supply shortage.
While the laws/rules might need to be tweaked just a bit, I think the situation we are currently facing does constitute an emergency that warrants a SPR draw. It's not the sort of grab you by the throat emergency that would trigger screams of drastic action, so no one is really looking at the SPR.
But just look at the horrible consequences many scientists are predicting if we continue down this path. And they're not saying it's going to be generations away. The slow deterioration that we've been ignoring will continue to get worse, effecting more people (and the environment) in more ways and worse ways.
If you believe those scientists, then we are dealing with an emergency situation. So IMO that is sufficient reason to look at ideas such as SPR funded R&D. And I was suggesting only drawing down half of the sweet crude - leaving some to operate our military or other critical infrastructure should our oil supplies vanish overnight. I know it's not ideal, but then again, neither is the global warming situation we face.
If, as perkinsms says, the funding appears from somewhere else, then we don't need to talk about the SPR. But if it continues the way it is, we need to talk about more drastic actions.
Drawing down SPR for a non-military economic or market or emergency is a different matter. Are we there yet? Not sure. The economy is stressed out right now for sure, but some of that pressure is more in the monetary and credit markets. The economy could certainly take a dive for the worse. Today's higher fuel prices are changing consumer habits for the better, but since no one is sure where the price of crude is going in the near term, if the situation approaches a level causing demand destruction, an SPR draw could certainly enter into the equation for that reason.
I think other important problems, outside of global warming, are beginning to spur the market, industry and policymakers, as well as consumers and voters, to believe a clean energy revolution is fully warranted and urgently needed.
The next Congress will undoubtedly favor more policymaking towards meaning those changes, hence R&D funding will be addressed w/o effectively decreasing SPR beyond what EPAct of 2005 intended. Remember, the SPR revision was crafted during a time when the price of crude was not at this critical price level. I think more trust should be given to that decision, while other avenues for funding still exist.
The term Apollo Program is frequently used when discussing how to move forward in our battle against global warming. If you would have asked the average person in 1949 if they thought men would walk on the moon in 20 years, I doubt you would have found many "yes" responses. But with the full backing of the Government and the genius of the scientific and engineering communities we had men on the moon. It's a great story of what we can achieve when we put our minds and resources to it.
So what does that have to do with the comments?
The Apollo Program was backed by the Government. I have no doubt that private industry could have achieved the same result, but it would have taken much longer and they would have needed the right risk/reward balance in order to even consider it. Today, I think private industry is seeing the writing on the wall (with a few innovators out front) but there are still too many unknowns for that risk/reward balance to allow them to fully commit. So that leaves the Government to take the dive for us. And honestly, despite how great the moon walk was, this is for a far greater cause. Can we move forward without the Government? Sure, but how much faster could we move with the Government? With an Apollo like commitment I think we could move a lot faster and we don't have the luxury of time anymore.
No doubt this is a multi-front war. So part of the funding should address lowering consumption/demand for energy and focus on pushing for more energy efficiency (this is both a marketing and R&D effort). I can't disagree with what y'all have written in this regard - this aspect needs to be funded.
But we also must push hard into the alternate energy arena. Someone pointed out above that my original list was mostly focused on vehicles, so I must add alternate/renewable electricity generation R&D to the list. Glaring omission on my part.
To address the concept of funding some of this effort by a SPR drawdown/sell-off: I certainly don't think this is the only way to get it done. As pointed out above, I feel strongly that the Government does need to put major funding into this effort and I really don't care that much where those funds come from. Actually, my top choice would be to roll back the Big Oil tax breaks and then slap a windfall profit on top of that and then send all those funds into Government sponsored R&D. But as long as the Government comes up with serious funding I don't really care too much where it came from.
But the SPR idea does have some merit. First, I do believe we are facing an emergency situation and the SPR was created to deal with emergencies. The details are a bit off, but the general concept is that we'd be using an emergency supply to deal with an emergency situation. That's about as straight forward as it gets.
Second, although there might be some irony in concept, I do like the idea of oil revenues being the solution to break our addiction to oil. While in the short term it would be encouraging the continued use of oil, I seriously doubt that any other publicly acceptable approach would discourage the use of oil. So for a short term status quo, we have oil funding its own demise.
Third, although the SPR would be lowered significantly, as long as it's done right there would be enough left for military/government emergencies. Furthermore, we wouldn't need to replace the drawdown because as the R&D efforts pay off, we'd be replacing our need for oil and therefore our need for the SPR.
But as I said earlier, I'm simply for Government jumping in with an Apollo Program like effort. If they fund it from somewhere else, great, leave the SPR alone. If this is the only place they can find funding, use it. No matter how it goes down we need a very serious Government funded effort to lead the fight against the threat of our time - global warming.
It took 9/11 and the 2003 blackout to get Congress to agree, and from this, the Energy Policy Act of 2005 was born. In a nutshell the dems backoff their protest to expand and improve energy infrastructure and the repubs backed off of ANWR and embraced renewables more.
The 5 basic points to EPAct 2005 are:
1. Diversify energy resources
2. Greater energy efficiency and conservation in homes and businesses.
3. Greater efficiency in the transportation sector.
4. Improve and upgrade the electric & gas grids.
5. Expand the strategic petroleum reserve.
Before implementing any aspect in this strategy, EPAct called for various and periodic studies. One was a GAO report on AE R&D funding which was released in Dec 2006. It stated that the DOE's R&D has steadily decline since 1978 and at its current rate, meeting strategic goals in the 15 to 25 years timeframe as called for by EPAct, were basically impossible.
While FY07 & 08 DOE budgets took big increases, R&D in those years did not see similar increases mainly because the pipeline of initiatives were scant. They were scant because of overall neglect, the direct result of Congressional squabbling over who's energy plan was best from 1994 thru 2003. EPAct was more encompassing to renewables and improving technologies for fossil and those advances had to run their course in the lab. Because of this GAO report, the DOE now has implemented a funding goal to double the R&D budget by 2016, (based on 06 levels) and R&D is already planning on a huge FY09 increase, a makeup in part of 07 & 08 deficits, but more significantly, because of greater increases in previously funding initiatives w/i EPAct 2005 which have since graduated from the lab phase, and are ready for funding at the demonstration phase. MIT's solar window innovation was born from 70's DOE R&D; and MIT's innovation was funded by the DOE's National Science Foundation.
So in method we differ, but that is substantial. The SPR is vital and to draw from it requires reasons which have no other likely alternative. Are we there yet in terms of other issues outside of climate? I'm not sure. Expanding SPR was vital and it took oil to rise form the $40 dollar range when EPAct was crafted in 04, to $140/bbl to the DOE to voluntarily halt new purchases. And since other avenues for AE R&D funding (because of climate) exist, we'll see those funds surface over Obama's :o next two (?) presidential terms ;) .
Understanding that the clean energy revolution requires more input other than just for climate reasons, is something that needs to recognized. If this revolution is acted upon for climate reasons only, it will error in the long-run, and exasperate the other problems which are also dependent on it.
While we all accept GW, some more so than others, we could see the market (policymakers, industry & consumers) wane from it in the coming years. Why? More solar scientists are pointing to a decreasing trend in solar activity which may in turn place our hemisphere in a period of cooling. This doesn't mean that AGW isn't a force in surface temperatures, however, it may mean that the net affect behind energy change, may create a backlash in the market, if energy policy is solely acted upon by climate reasons led by environmentalist. Being an advocate for this energy revolution, I believe we mustn't do that. Energy independence, energy security and economics, as well as climate, are justifications for change taken individually, but more collectively, urgent change if kept combined.
While it has some shortfalls, here's some excerpt from the White House's 2001 Energy Plan which failed in Congress. Seven years later, its an interesting read:
America in the year 2001 faces the most serious energy shortage since the oil embargoes of the 1970s. The effects are already being felt nationwide. Many families face energy bills two to three times higher than they were a year ago. Millions of Americans find themselves dealing with rolling blackouts or brownouts; some employers must lay off workers or curtail production to absorb the rising cost of energy. Drivers across America are paying higher and higher gasoline prices.
Californians have felt these problems most acutely. California actually began the 1990s with a surplus of electricity generating capacity. Yet despite an economic boom, a rapidly growing population, and a corresponding increase in energy needs, California did not add a single new major electric power plant during the 1990s. The result is a demand for electricity that greatly succeeds the amount available.
A fundamental imbalance between supply and demand defines our nation's energy crisis...if energy production increases at the same rate as during the last decade our projected energy needs will far outstrip expected levels of production. This imbalance, if allowed to continue, will inevitably undermine our economy, our standard of living, and our national security.
Renewable and alternative fuels offer hope for America's energy future. But they supply only a small fraction of present energy needs. The day they fulfill the bulk of our needs is still years away. Until that day comes, we must continue meeting the nation's energy requirements by the means available to us. Estimates indicate that over the next 20 years, U.S. oil consumption will increase by 33 percent, natural gas consumption by well over 50 percent, and demand for electricity will rise by 45 percent. If America's energy production grows at the same rate as it did in the 1990s we will face an ever-increasing gap.
We do not accept the false choice between environmental protection and energy production. An integrated approach to policy can yield a cleaner environment, a stronger economy, and a sufficient supply of energy for our future.
One of the factors harming the environment today is the very lack of a comprehensive, long-term national energy policy. States confronting blackouts must take desperate measures, often at the expense of environmental standards, requesting waivers of environmental rules, and delaying the implementation of anti-pollution efforts. Shortfalls in electricity generating capacity and shortsighted (electricity generating) policies have blocked construction of new, cleaner plants, leaving no choice but to rely on older, inefficient plants to meet demand. The increased use of emergency power sources, such as diesel generators, results in greater air pollution.
I kinda hate to do this, but I'm going to respond to your long effort with a very short statement. Taking a cue from one of the quotes you highlighted (The day they fulfill the bulk of our needs is still years away. Until that day comes, we must continue meeting the nation's energy requirements by the means available to us.), I'll simply say this: It's not about waiting until "that day comes", it's about the sheer will to make it happen, and make it start happening now, no matter what the cost.
Oh, and I do agree with you that this isn't just about global warming. It's just that the GW angle is the easy sell to the masses right now.
That's what I'm afraid of. You see, you may have missed the paragraph in my long reply, most of which are quotes, that solar inactivity may bring on a period of cooling. No, I'm not a skeptic, but I'm a realist and cooling and warming are periodic cycles. If we have cooling, like they did in China last winter, then how convinced are the mass going to be when you have skeptic, saying, I told you so?
If you don't start encompassing the full picture in the discussion, the right will further box the left out of energy policymaking.
Anyways, drawing from the SPR, is a bad idea, just as bad as drilling in ANWR and using proceeds for AE R&D, or dipping into the SS Fund for whatever politican can think of.
The R&D for FY09 is a very large increase which made the R&D relieved. Secondly, DOE has issued a proclamation to double R&D budget by 2016, based on 2006. That was something they both sides in Energy committees were very satisfied.
Its coming and carelessly throwing more money at it when the pipeline can only fit so much, isn't very smart. We're are going to need that money for tax incentives for pv solar roofing, among other things when the smart grid is up and running.
What is the R&D funding set at in 09? And what is the doubling in 2016 starting from? These are all relative terms and meaningless in the bigger picture. If funding was $1 million and jumped to $10 million it's a huge increase. Yet $10 million is practically pointless in this battle.
The R&D funding needs to be in the 10's of billions ASAP. If you'd like to throw in other programs such as tax breaks or other programs to encourage adoption of EE appliances, conservation habits, personal renewable energy (like solar panels, etc), that's great too. Increase the budget even more and let's get it done.
I know this sounds pie-in-the-sky, but we had our chance to spend wisely and move cautiously yet every President following Carter failed to address these problems in a responsible manner. Now we need to go into hustle mode and that will lead to inefficiencies in spending - but it's more important to get money into the hands of the people who can help than to keep it out of the hands of the useless leeches. If tax breaks drive up demand for solar panels beyond what can be produced, great. It'll create an ugly market situation, but at least people will be moving and/or thinking in the right direction.
The total (FY09) DOE R&D portfolio would soar 8.9 percent or $858 million to $10.5 billion because of the large Science increase, and smaller increases for DOE's energy and defense R&D portfolios.
Don't forget, when ready, most all of the intermittent renewable resources, outside of their geographic preferred locations, need a fully implemented smart grid in order to reach their envisioned impact. That's going to take us into the mid-2020's. During this time, other hurdles such as transmission have the time to be sorted. Renewables need them too, you know. This is a real problem, because the transmission grid is already severely deficient. The industry can not even manage to get improvements sited after they are proposed, let alone plan for new transmission for renewables. 85% of proposed wind generation still has no plan transmission connections. This is a major problem you will not read at the Grist or RealClimate.
Then while you have another hurdle of meeting RPS goals and larger long-term federal demand strategies, the greater looming obstacle of many older powerplants nearing their end, is fast approaching.
I think the DOE has gotten industry, or vice versa, to get with the program. But there's still no escaping the pipeline being what it is, since new energy policy was so delayed. The time lost is just that. Similarly, we have this new era of high oil, and no matter what we do, an Apollo-type drilling initiative or whatever, we cannot return to $40-$60 2005 level of crude. Our Congress's delay with new energy policy has given us this, not Bush. Congress had the power, not the executive branch. Why is Congress to inept and divided? Because efficacious voters are. Look at how we hate each other on these political blogs. We need to change that.
It's good to see a photo and know he's still in good health.
His base is definitely the inside the beltway part. My reston friends were surprised to hear they weren't in Davis' district.
From a constituent service point of view, its no difference for them from being represented by a Republican.
Is it true he can't read a map to drive himself there.