There is a big initiative coming together in Congress based on the Set America Free Coalition's energy security blueprint.

Very fine briefing, guys. Great job.

Of course we have global warming. We have yet to fully recover from the Little Ice Age.

The areas the Norse populated in about 1000AD are under 6 ft of ice.

Global warming on Mars? I don't see this being caused by CO2 emissions on Earth. Perhaps one of our enviros has an explanation.

Later this year a report is due out blaming the last 100 years of warming on increased solar output. Look for it.

A while back Scientific American had an article that indicated the human activity which has increased CO2 in the atmosphere may be preventing the onset of an ice age.

In other words none of the "settled" science is settled at all. In fact none of the computer programs used for these predictions can predict the past. Let alone the future.

I have a book from 1980 predicting global cooling and an ice age. After the winter of '79 with snow drifts 10 feet high in Chicago and truly record cold I can see why.

Alternative energy is the future. However, the path taken to get there is usually better done in a climate of reason rather than fear.

Do we really need to waste money on crash programs? Or would a market based approach be more efficient?

BTW in terms of KWh produced wind is by far the leading alternative energy. There is a reason for this. Its cost is the closest to the cost of coal fired electrical producers. In fact the crossover where wind will be cheaper than coal is expected in the next 5 to 15 years. Solar is probably 10 to 20 years behind.

BTW the Norse reference is to Greenlannd.

It is possible that we may need to increase CO2 output untill we have the technology to put mirrors into space to increase the earth's solar input. Or not.

It ain't what we know that kills us. It is what we know that ain't so.

I also note no mention of the Cypress Semiconductor efforts in the solar cell area.

They have developed a process that produces 20% efficient production cells using silk screen methods to put the conductors on the cells rather than semiconductor methods which are vastly more expensive.

I have to admit its been strange getting rained on in Chicago in January. But im not complaining.

Do we really need to waste money on crash programs? Or would a market based approach be more efficient?

Sometimes, the market isn't as efficient as it should be. The design of small planes hasn't changed much since the late '70's. Legal issues, safety issues and the general stodginess of some industries keeps our market from being as efficient as it should be.

Compare GM to Toyota - instead of predicting trends, our auto industry tends to respond to them. It takes a long time to develop alternative energy sources. By the time our market figures out that change is needed, we'll be way behind everyone else.

Mary,

But the virtue of the market is diversified exploration of the design space. There's very little energy information out there available to governments that isn't also available to sufficiently interested private interests. After all, who do you think does the heavy lifting in the enrgy sector? It's the oil companies that actually do surveys, observe the direct results of pricing and budgetting decisions, etc.

When you depend on governments directing energy policies, you end up with an all-the-eggs-in-one-basket approach. In this case it might be better everything on fuel cells. Or betting everything on solar. Or betting everything on methane. What the big bet is doesn't really matter much; the important thing is that the strategy absolutely requires the government to pick right, and by their natures, governments tend to assume infallibility and force their one true preferred solution.

There are a few agencies that avoid these tendencies-- DARPA springs to mind-- but they do not have management structures that can be replicated in large industrial companies like energy majors.

The virtue of the market, on the other hand, is that it tends not to consolidate everything in one big basket unless so many of the indicators point in one direction. And even there, diversification happens because each one wants to get better than the other, lock in their market, and have excellent and exclusive patents.

The markets are not perfect tools, as GM vs Toyota indicates (even without Japanese market practices) but they depend much less on singular, exclusive bodies making the right choice every time.

I'm also not even certain how one should quantify how efficient a market "should" be.

I'm reminded by Marcus V. of Soviet Scientific Socialism.

They were going to leap ahead based on the input of science to eliminate the "waste" of the market. The waste being trying so many alternatives where it was obvious that there was one true path.

Except that the one true path is only obvious in hindsight.

You don't hear much from the Soviet Scientific Socialists these days. I wonder why?

As to light planes. The demise of that area is due in part to the families of light plane owners not assuming the risks of ownership. So there is an accident. The families involved look for some one to blame/hurt.

The result is that no one will innovate in that field because of the risks of innovation. Something could go wrong if something new is tried.

Evidently this is what light plane owners (or a significant number of them) want.

Is innovation still going on? Sure. The deal is that to get that innovation you have to build your own airplane.

Is it working?

Try a visit to Oshkosh in August and tell me.

I'm reminded by Marcus V. of Soviet Scientific Socialism.

(oh, and I haven't been to Oshkosh, but I'd like to someday. Kitplanes are an interesting alternative but I have to wonder - if the small plane industry hadn't been fossilized by overregulation, would we have a flying car by now? :-)

Mary, #10

Actually, this is a great argument against the current energy "market".

Our government believes that the one true path to economic health is through the free flow of oil around the world. The oil industry is not controlled by the market - it's controlled by government interests and government protection. Oil is not an industry, it's not the market, it's our government's "vital interest".

I am simply not convinced that this is true. Or at least, I am not convinced that this is a good way to analyze the situation.

First, I find no flaw and great virtue in candidly recognizing that one is already in the situation of having placed all one's eggs in one basket as, circa 1975, we clearly had, as long as there are efforts to reduce that situation. And I also know, off the top of my head without bothering to check references, that the Carter, Clinton, and Bush Jr. administrations have all supported energy initiatives from the White House.

I strongly suspect that the Reagan and Bush Sr. Administrations did as well, but I will accept an authoritative correction.

But, along with that candid recognition must come the political will to protect those interests until that reliance can be reduced. Otherwise, the candid recognition becomes the advertisement of a weakness instead of protection of that weakness.

Second, I can state with some confidence that, in fact, we have reduced our reliance on foreign oil supplies. I can say that simply by looking at the harmful effects of the OPEC oil embargoes in the past, vs the lessened impact that the current spate of high oil prices have had. Now, it is dangerous to do a direct dollars per barrel comparison between then and now, due to the effects of inflation, but even bearing that in mind the present productivity of the economy indicates to me that our foreign energy reliance is significantly reduce. If it were not, our economy would be in stagnation if not outright depression.

Contrast this with, for instance, the reaction of the Ukraine and much of Western Europe to the recent actions of Russia with regards to oil pricing: Mostly panic, flailing, and outrage. (And contrast that with France, which has "guessed right" for this context, in that much of it's electricity is nuclear generated.)

Third, the recognition of reality to which I referred above has several components. One of those is technical: Right now, the best source of energy that is both portable and high density enough to be practical for many things is hydrocarbons, in one form or another, and for many reasons, oil is really it. It is only recently that the technology is close to being mature for a transition away from petroleum products to pure (or purer) hydrogen based systems for transport.

But the other half of that reality is political, in the domestic sense. At the same time that you are claiming that the government is too close to the oil industry, and the oil industry is not competetive, I look around and wonder where our commercial/civilian nuclear programs are. Well, the short answer is, they are nowhere, due in large part to domestic political pressure. The politics influences the market, in this case, every bit as much as the market (in your formulation) has influenced the politics.

Annoyingly-- astonishly!-- similar resistance groups are beginning to form against wave and wind powered turbines. "Oh, those are ugly! We don't want them here!" I'm cynically certain that some objection will be made to solar power when (if) solar cells become technically and economically viable enough to provide substantial parts of our national energy consumption. (My guess is that this will become feasible sometime in the 2013 to 2022 timeframe.)

Fourth and finally, I'm really not sure what your proposed solution to this situation is. On the one hand, you're decrying the market as being inefficient and slow to adapt to changing environments. (Although actually, this tends not to be true and borders on simply being mathematically false-- as a computational optimization method, market based algorithms are extremely effective in noisy and changing environments.)

But on the other hand, you also agree with me (I think!) that one-basketism is bad. You definitely agree with me (and I with you) that one-basketism on oil is bad, and we definitely disagree that this is the exclusive fault of government or anti-market forces.

So far in this discussion, the competing solutions have been market forces and government direction, where I claim that market forces promote diversification and adaptability, while governments do not. Is your proposed solution some third path not mentioned? Or is it just a change in focus to get all our eggs in a different basket? Or am I not understanding you at all?

(For the record, my proposed solution-- and a long one it is-- is to continue to protect the dependence we already have, so long as we have it, and to try to shed it as much as possible through largely market based means. Even more specifically, this does mean bring government power to bear, but indirectly, in the form of funding government agencies like DARPA, or the university system, as well as tax credits and reductions for companies that show improved energy efficiency. Moreover, at this phase of the game, it's probably still worthwhile to have competing state level initiatives as well. Let the ideas and approaches compete.)

marcus v -

you can find stats on US oil consumption for the past 40 or so years here - http://www.eia.doe.gov/emeu/aer/petro.html. our dependency on foreign oil supplies is actually higher than ever, but we've diversified our supplies since the 70s - we import much more from Mexico and Canada now, and have reduced OPEC's share of our imports from around 70% in the mid-70s to around 40% today.

John Atkinson #12:

Well. Let's just say that even defining what "oil dependency" means isn't trivial, and is not likely to be found or assessed in the charts focussing on petroleum alone, because those charts won't provide enough higher context.

What I'd be looking for, but did not immediately see, is something along the lines of a "Percentage of total energy use" chart broken out between (say) petroleum, natural gas, coal, nuclear, solar, wind, hydro, and wood. If the petroleum line is going up, I'd call that one very strong indication of increased dependence.

What I did see was a "consumption by source" graph in terms of raw energy used, literally, in quadrillions of BTUs per year, historically, for several sources. There, the major sources (nuclear, coal, natural gas, and oil, in ascending order) are all increasing dramatically in use, but with approximately the same slope on a linear graph. If I had the raw data for that graph, I'd massage it in Excel to confirm my hunch, but I believe that indicates the total national share of energy consumption by oil is in decline relative to other sources.

Furthermore, our energy efficiency overall has increased dramatically since the 1970's, with the energy use per dollar of GDP cut almost in half from 1970 to 2004: from 17.99 BTU/$ to 9.20 BTU/$.

So if it's increasing in raw quad BTUs... but it's decreasing relative to other sources... and we're twice as efficient overall... are we increasing or decreasing our dependence on oil?

I don't know. I'm just asyin', it's not a trivial question.

But my hunch-- backed up by economic performance over the last few years despite high oil prices-- is that our dependence is decreasing.

So far in this discussion, the competing solutions have been market forces and government direction, where I claim that market forces promote diversification and adaptability, while governments do not. Is your proposed solution some third path not mentioned? Or is it just a change in focus to get all our eggs in a different basket? Or am I not understanding you at all?

In the case of the oil industry, the government and the market are intermingled to such a degree that it's hard to see where one ends and where the other begins. The government is willing to go to great lengths to protect their vital interest, and therefore, they're not willing to let market ups and downs affect it.

Capitalism can survive a few ups and downs, it can survive wars, depressions and tulipmania bubbles, but it can't thrive in a risk-averse environment. The government has created a risk-free environment for the American oil industry. Current market/government attempts to reduce our oil dependence have been fairly halfhearted when compared with everyone else. If you travel anywhere outside the US, you'll see that our alternate energy industry appears to be about ten years behind everyone else. We're already way behind the curve.

In 1982, the Saudi government took complete control of Aramco (the Arabian American Oil Co.) after four decades of co-ownership with a consortium of major oil companies. Since then Aramco has never released field-by-field figures for its oil production. In fact, no OPEC member is very forthcoming...

As a result, the world's most reliable source for OPEC production is a little company called Petrologistics, located over a grocery store in Geneva. Conrad Gerber, the principal, claims to have spies in every OPEC port. For all we know, Mr. Gerber is making up his numbers, but everyone -- including the Paris-based International Energy Agency -- takes him seriously, since OPEC produces nothing better...."

Mary #14:

First, I find it remarkable that Mr. Simmons can both claim that there is no reliable factual information coming out of Saudi Arabia on one hand, yet also claim factually that we are absolutely running out of oil.

This is simply contradictory. One of those claims must be false.

Second, aside from that, what you've recapitulated here shows no analysis of the economic and industrial effects of sustained higher oil prices. I foresee at least two: even higher fuel efficiencies in the future, and the development of less economic oil sources. Available oil reserves are always predicated on a particular market price for viability-- when the price remains high enough, long enough, sources such as the Canadian tar sands become viable and are added into the balance sheets.

Third, I would point out that while the national security aspect of oil does indeed deform the situation from a pure market exercise, I am somewhat amused that you can claim that the United States oil market is just an extension of the government, while at the same time holding up the example of Saudi Arabia's nationalization of Saudi Aramco. THAT is a non-market situation. So is the Russian oil company, which just rattled all of Europe's cage. (Except France.) So is Venezuela's oil company. There are many other examples.

And something that they all have in common are scurrilously mendacious accounting practices and staggering inefficiencies, since their purposes are less economic and more statescraft in their nature.

We don't have a perfect market, no. But look around.

Fourth, I agree with you in one important sense-- I'd love to have more diversified energy sources. I'm pretty pro-nuclear, myself. Are you? But I don't think it's the oil companies holding us back on that one. Do you?

First, I find it remarkable that Mr. Simmons can both claim that there is no reliable factual information coming out of Saudi Arabia on one hand, yet also claim factually that we are absolutely running out of oil.

This is simply contradictory. One of those claims must be false.

Simmons isn't able to prove that the Saudis are running out of oil, but he presents some good evidence that it's a very real possibility. Even Exxon is willing to admit that oil supplies are getting tight, and the situation is not going to improve. There are plenty of other people, conservatives, liberals, oil industry people, etc. who are saying the same thing.

The only people who claim that the Saudis have enough oil are the Saudis. Have they ever lied to us before? I'd guess every time they open their mouths.

I am somewhat amused that you can claim that the United States oil market is just an extension of the government, while at the same time holding up the example of Saudi Arabia's nationalization of Saudi Aramco. THAT is a non-market situation.

Our oil industry is enmeshed in politics, but it's not state-owned, like the others. We have been enjoying the benefits of cheap oil for a long time, which is one reason why we're so far behind in alternate energy development.

I agree with you in one important sense-- I'd love to have more diversified energy sources. I'm pretty pro-nuclear, myself. Are you? But I don't think it's the oil companies holding us back on that one. Do you?

I think we should be building more pebble-bed reactors around the country. Environmentalists and general fears of anything nuclear-related are holding us back. Michael Crichton wrote a great article about how fear of nukes (and everything else) causes more health problems than actual nuclear accidents.