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April 28, 2005

Bush's Latest Energy "Plan"

Approaching the summer "driving season" when gas prices often spike, President Bush has pumped up a new set of energy proposals. Even the mainstream media regard them as window dressing. (Witness the Washington Post.) But I'll take the proposals as serious and comment.

1. The Bush administration proposes to allow oil refineries on abandoned military bases, claiming that limited refinery capacity is driving up gas prices and that it's hard to get permission to build new refineries. Military bases, as federal property, are exempt from most local regulations.

The overwhelming cause of high motor fuel prices is high world oil prices. World oil prices are high because of lots of demand, especially from the United States and China, and -- especially -- because the oil markets have built a big "risk premium" into prices. "Risk premium" is Wall Street talk for cold sweats. Oil traders are afraid that world oil supply will be disrupted dramatically by violence in the Middle East, such as by crippling the main Saudi oil port. These fears are thoroughly justified. The Bush Administration's military policy in the Middle East is behind this "risk premium."

World oil prices are especially high for the United States because the dollar is down. The dollar is down mostly because of massive federal deficits, created by tax cuts without corresponding spending cuts. The Bush Administration is the cause of this fiscal policy.

Some observers also think the world is already close to "peak oil"--the highest annual rate of production we'll ever reach. At peak oil, most analysts believe, prices go up and become more volatile. This is bad. It may even be very, very bad. According to some few analysts, peak oil also hearkens all manner of other terrible things--pretty much the end of life as we know it. It's the veritable apocalypse. (Excuse my sarcasm. It's just that some of the peak oil folks strike me as scary: they seem positively enthusiastic about dreaming up worst case scenarios. These people, possessed not by reasonable concerns about peak oil but instead gripped with a cult-like obsession about it, remind me a lot of the Y2K cult that held sway in the late 1990s. They also remind me of fringe fundamentalist Christians who believe the end is near, that Armageddon is upon us, and that the Rapture is imminent.)

Refinery capacity is a tiny bit limited in a very few places--the Northwest not one of them--because the nation's fuel appetite is bloated by falling fuel economy (aka, trucks supplanting cars). But mostly, Bush's proposal is irrelevant. Rescuing the dollar by showing serious intent to end deficit spending would have more short-term and long-term benefit to US oil purchasing power. Fully inflating car tires would have far more benefit. And, of course, finding some way out of the quagmire in Iraq would help lower oil prices.

As WaPo notes:

Industry leaders said it is not clear that companies would want to build new refineries because the business historically has not been highly profitable. While demand and profit margins are high now, companies are not convinced those margins will remain high enough to justify new refineries.

2. Bush's plan includes "renewing tax credits for hybrid vehicles and adding them for efficient "clean diesel" vehicles."

That's a good idea. It's just a tiny idea. Hybrids and clean diesel together make up such a tiny share of the vehicle fleet--well under one percent--that they have hardly any effect on total fuel demand. Why not extend the idea to the entire fleet through feebates?

3. Bush also proposes to override state and local government and make the federal government the ultimate arbiters of proposals to build liquid-natural-gas terminals. At least five of these risky facilities are proposed in Cascadia. Such federal intrusion on state and local land-use regulations is wholly unwarranted. If LNG facilities are worth building, the communities that accept them should have a say.

P.S. Oh, and the Bush "plan" also tries to create new incentives for building nuclear power plants. As if nuclear power needs more subsidy than it already has. Even with these subsidies, though, it's unlikely anyone will build any.

Posted by Alan Durning | Permalink

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Comments

How about coming back to the middle here where there is more truth than on either extreme side?

It's amazing how many inaccuracies you represent in one article. Please try to do a little more research before throwing out your "I hate anything Bush does 'cause he sucks" rhetoric. And not just internet research, please. Real research.

Mike

Posted by: Mike Rodriguez | Apr 28, 2005 2:30:13 PM

Peak oil is very bad. Just how bad remains to be seen, and is largely a function of what people and nations will do as things get more desperate. It is possible that we all (as in all people on Planet Earth) could pull together and accept that with less oil we will have less physical amenities, but even a casual study of history makes that notion difficult to support.

The number one reason that peak oil is very bad, regardless of the effects of human nature, is that the vast majority of the "Green Revolution" consisted of figuring out new and better ways to use petroleum to increase crop yields (tractors, fertilizer, pesticides, etc). It therefore follows that less petroleum results in lower agricultural yields for the planet, and it is difficult to see how the planet's population will fail to decrease (and probably not by voluntary means) when that happens.

Posted by: Roy Smith | Apr 28, 2005 2:33:43 PM

hey i think gas prices should go down cause the gas now is just reiculous

Posted by: Amy | Apr 28, 2005 2:49:29 PM

Oil prices are high at the moment because of a speculative bubble, they'll come down in a few months when investors realize that the fundamentals don't support these prices. But people should think of this time as a taste of things to come.

What I find most striking about Bush's plan is the lack of vision. Instead of a piddling $8 billion mish-mosh of tepid ideas, I'd like to see a Project Apollo-like crash program, something that will build community as it helps us prepare for a radically different future.

As for inaccuracies in this article, if someone says there are inaccuracies, they need to point out at least two of them if they want to have any credibility.

Posted by: Dale Greer | Apr 28, 2005 2:50:38 PM

To Mike above - and how much research have you done? If you are claiming this article is inaccurate, you must have done research to validate your findings. Please point out exactly which stated items are inaccurate, and cite the research (real research, not Internet research) that validates your findings.

Or perhaps you are guilty of exactly what you are complaining about?

Posted by: TomK | Apr 28, 2005 2:52:56 PM

OK, we need energy. We need less dependence on oil, foreign or domestic. So what is the problem with nuclear? I studied nuclear power and operated a submarine nuclear power plant for four years and am totally convinced that it is the BEST plan for the interim. We need more electricity that won't polute (as badly) the atmosphere, waters, etc. Yes, processing nuclear fuel requires some emissions, but nothing compared to fossil fuel plants. Yes, we need to do something with the waste, but storing it underground and monitoring it indefinately is very feasible. The French do it. Terrorist threat, earthquake, plane falling on it? We can build them strong, and guard them well. 3-mile Island? We have learned lessons, and I know if the Navy can operate dozens of reactors without incident (I know this for a fact), then so can civilians (which comprise of mostly former Navy personnel). I know getting a nuclear plant off the gorund is expensive, and subsidies are going to happen, on top of cost over-runs and red-tape. But what do we have to lose? Spend a little more monthly on our electricity bill, and perhaps people will be more diligent about power conservation. Reduce the dependence on foreign oil... can you imagine not being owned by the Saudis?

Posted by: Greg | Apr 28, 2005 2:52:57 PM

Electric cars and plug-capable hybrids can eliminate our dependence on foreign oil. The electric comes from unused off-peak power (see the graph on http://DrivingTheFuture.com ) and is paid for by credits generated by rooftop solar systems.

Even a modest solar electric system pays for ALL our driving (up to 4000 miles per month) plus all domestic electric at a cost less than our former electric bill.

And we drive 2 RAV4-EV pure Electric cars and one Golf conversion, each of us drives about 2000 miles per month at up to 80 miles per hour.

So who needs gasoline? Especially overseas gas! We get 2,500 miles of driving for each gallon of gas that we buy. Raise gas prices to $10 per gallon, it need not matter to you, if you have a rooftop electric and an Electric car.

Posted by: doug | Apr 28, 2005 3:07:23 PM

People are going to be jumping on the nuke bandwagon since environmentalist "guru" James Lovelock endorsed it as a way to curtail anthropogenic Global Warming.

http://www.energybulletin.net/320.html

Also, do a google on "environmentalist nuclear power". Ignore the rabid right wing anti-environmentalist ranting of some of the links, and check out the ones from places like TreeHugger.com.

Posted by: Dale Greer | Apr 28, 2005 3:12:46 PM


The comments about nuclear power, even from an old friend seem outdated. Even James Lovelock the father of green now calls for more nuclear power plants to offset increasing global warming trends already taking place. I'm not an environmental activist, far from it. Just a concerned human being.

I admire your Cascadia viewpoints at times, and perhaps your past environmental cleanup issues with nuclear power are clouding your views on smarter ways to use the energy of the atom to help mankind. Lets face it, what we do or don't do within the next ten years may impact our kids and grandchildren's environment and ourfuture on a global scale not just locally. We must pick our battles carefully.

Environmentalism needs to be balanced to consider all aspects effecting today's world, not like the onesided viewpoints of the past. I believe science can learn from its past mistakes and provide better alternatives as long as we keep our minds open to new ways of thinking using past lessons as a guide.

regards,

V. Golubic
(always a Tucson Native)

Posted by: V. Golubic | Apr 28, 2005 3:19:53 PM

Hey,
I'd put and extra $1.00 tax on fuel and move the money toward finding an environmentally better way. If it took rail subsidies, innovation. Listen if we start innovating - let people loose to create a smarter, better means to get around - it would create jobs, influence direction, and possibly find a way out of this oil import mess.
We could develope the technology that could be exportable, create jobs, and build some hope.

Posted by: jharlan | Apr 28, 2005 3:24:16 PM

Sigh...lil' trolls have found the quiet CS.

The issue I have with BushCo's window dressing of a 'plan' fails to note where the infrastructure for a refinery comes from to place on a military base.

We can turn an AFB into a refinery. Never mind the populace downwind nor the ships attempting to going down the arterial out the front gate, carrying away the finished product...

Or maybe all those Navy bases closed in the 90s, converted to promenades and parks...take those back and plop a big tank there.

D

Posted by: Dano | Apr 28, 2005 3:26:31 PM

Everybody should be riding motorcycles.

Posted by: Sean Paul Turner | Apr 28, 2005 3:33:27 PM

I have about a 40 mile roundtrip commute every day - in the Dallas-Fort Worth metroplex. Every day I see literally hundreds of SUV's and large pickup trucks with ONE person in them. It's insane. Do Americans really think that with 5% of the world's population we can go on indefintely using 25% of the oil??
I'm a car salesman at a high end luxury dealership. Last year we sold many of our large SUV's because of a very generous tax break for vehicles with a loaded weight of 6,000 pounds or more. Supposedly, the vehicle had to be used in business - well every guy with any kind of "business" was taking advantage of the tax break (at a pricetag of $48,000 to $70,000 these are NOT carpenters hauling tools.
If the President really wanted to have an "Apollo Mission" plan it would be to move as quickly as possible to build the infrastructure to support hydrogen powered cars - thereby getting us largely out of the oil business. Oh, I forgot,Bush is IN THE OIL BUSINESS. How silly of me!

Posted by: john stonesypher | Apr 28, 2005 3:36:03 PM

Putting oil refineries on abandoned military bases? What a ridiculous idea. That will go about as far as Bush's vision of a NASA trip to Mars. Remember that one anyone?

How many abandoned military bases are located next to a deep water tanker port? Exactly ZERO I suspect. Sure, you could build a refinery in an abandoned military base in North Dakota but if you can't get the crude oil to the location, what's the point?

Those military bases that are located in ports such as the navy bases in Puget Sound are probably way too close to major population centers for refineries.

Posted by: Kent | Apr 28, 2005 3:46:21 PM

Ok, the discussion is effectively over once someone mentions Hitler or Nazi. That's a sure sign that they have no further substance to add to the debate.

Posted by: Hank | Apr 28, 2005 4:16:01 PM

Put some money into serious off-road bicycle arteries. They have them all over Germany, and guess what? All kinds of people ride bikes--people in going-to-work clothes, grannies with the wicker baskets in front sporting a tiny terrier, entire families out on the riverside bike path, you name it. And when there aren't off-road bike paths, the drivers are courteous and don't scare you to death--maybe because their mamas ride bikes, too.

Posted by: zyx | Apr 28, 2005 4:21:48 PM

With the weighty load of important topics ranging from educating our children, Medicaid for the aged, lost manufacturing jobs, huge trade and budget deficit, why have you and congress focused on Steroids and nuclear facilities. Congress has disgraced themselves publicly and shown their inability to understand and deal with the issues of the day. Maybe their time would be better spent meeting with Toyota to learn how they can produce a car that gets 60 Mpg. The American public is tired of politicians putting themselves before the country's needs and you Mr. President are failing to lead. Please, step up to the plate!

Posted by: Gary King | Apr 28, 2005 4:49:44 PM

To Amy: The idea that the fundamentals don't support current oil prices is usually put forth by those people that take the claims of the Saudis (among others) regarding reserves at face value. A major contention of the Peak Oil theorists is that there is a lot of evidence that the books have been cooked by both countries and oil companies regarding stated reserves and that there is actually a lot less out there than official figures say.

To all the people talking about nukes: Independent of the pros or cons of nukes (I happen to support nuclear power, for global warming reasons), nuclear energy will not save us from the ravages of Peak Oil. Oil supplies about 90% of the energy for transportation, and it will neither be easy, quick, or cheap to change that. Also, modern factory farming (the Green Revolution) is basically a system for turning petroleum into food and has far exceeded the carrying capacity of the earth. When oil gets expensive and scarce, food production will go down (in and of itself a disaster) and transportation will become much more difficult. These two facts will wreak havoc in the industrialized economies.

Posted by: Roy Smith | Apr 28, 2005 5:03:13 PM

No apologies to those whose comments were deleted from this string. Cascadia Scorecard weblog doesn't tolerate obscenity and hate speech.

Posted by: Alan Durning | Apr 28, 2005 5:13:35 PM

We grow more corn than anywhere in the world. We can bioengineer it so we can double and triple it's yeild. Why not ethanol? Maybe we could also put a still in the trunk and make moonshine while we are driving.

Posted by: Brad | Apr 28, 2005 5:21:18 PM

I think the huge influx of traffic was due to this site being front and center on google news this afternoon.

Hey one more comment about peak oil if may, as a bona fide Koolaid drinker,

I am filled with glee that carbon based fuels will decline, preventing humans from loading up the climate with enough carbon to kick off runaway global warming.

Looking at the ASPO numbers - which are considered pessimistic, but also thorough, we will have 66% percent of current oil production in 2030, with depletion proceeding apace from there.

Not a disaster, unless people can't share. There is enough oil to produce food, and hopefully as awareness spreads enough time to switch to local, organic methods.

Posted by: Jon S. | Apr 28, 2005 5:44:53 PM

>>Not a disaster, unless people can't share. There is enough oil to produce food, and hopefully as awareness spreads enough time to switch to local, organic methods.<<

Exactly. Show me one example in history where large populations of diverse people successfully shared when their food or energy supplies or lifestyles were seriously threatened. Even if wars are avoided, it also seems unlikely that petroleum will be allocated in any way that ensures that the pain is more or less evenly distributed.

A more fundamental problem is that shortage of petroleum may simply cause the economy to collapse. Modern economic systems are very complex creations, and it is not inconceivable that a severe shortage of a fundamental commodity may destabilize the financial markets to the point where everybody simply loses faith in them. At that point, it is difficult to see how chaos will not ensue.

Posted by: Roy Smith | Apr 28, 2005 6:14:45 PM

>>We grow more corn than anywhere in the world. We can bioengineer it so we can double and triple it's yeild. Why not ethanol?<<

Because of the required fertilizer and pesticide inputs (all petroleum based), ethanol is a net energy loser (i.e., you get more energy simply by putting the petroleum in your gas tank than you do from the resulting ethanol). Bioengineering has tripled yields because it allows plants to take advantage of more fertilizer. Without fertilizer (petroleum) the yield gains are much, muce more modest. Bottom line: ethanol doesn't cut it as a replacement for petroleum.

Posted by: Roy Smith | Apr 28, 2005 6:18:06 PM

Roy, on sharing, sure, it may be that people won't. We'll still have tremendous supplies of oil for the next few decades, so "sharing" is an option that I can leave on the table.

Posted by: Jon S. | Apr 28, 2005 6:37:16 PM

Mike, if you have found so many inaccuracies it would be prudent of you to share those with these readers so that we do not believe these falsities; just saying something wrong is not convincing.

Oh I cant wait till the day my truck driving friend rethinks his purchase to ferry him to McDonalds. I can only hope some of these people receive a financial penalties due to their bad oil decisions (low gas milage cars, driving only 2 miles for trips...).

Posted by: Kevin F | Apr 28, 2005 9:22:58 PM