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Energy Dependence

Charles Krauthammer opens a column in 2007, “Is there anything more depressing than yet another promise of energy independence in yet another State of the Union address? By my count, 24 of the 34 State of the Union addresses since the oil embargo of 1973 have proposed solutions to our energy problem.

The result? In 1973 we imported 34.8 percent of our oil. Today we import 60.3 percent.”

He was talking about George W. Bush's 2007 State of the Union address. Mr Bush said in his addresss, "Extending hope and opportunity depends on a stable supply of energy that keeps America's economy running and America's environment clean.

For too long, our nation has been dependent on foreign oil. And this dependence leaves us more vulnerable to hostile regimes and to terrorists who could cause huge disruptions of oil shipments and raise the price of oil and do great harm to our economy."

In his 2007 column, Mr Krauthammer goes on to stay deep within the box as he proposes his solution: “There are three serious things we can do now: Tax gas. Drill in the Arctic. Go nuclear.”

Back in 2007, Mr Krauthammer thought increased prices induced by taxes on consumption would change habits and reduce gas prices:  “Tax gas to $4 a gallon. With oil prices having fallen to $55 a barrel, now is the time. The effect of a gas-tax hike will be seen in less than two years, and you don't even have to go back to the 1970s and the subsequent radical reduction in consumption to see how. Just look at last summer. Gas prices spike to $3 -- with the premium going to Vladimir Putin, Hugo Chávez and assorted sheiks rather than the U.S. Treasury -- and, presto, SUV sales plunge, the Prius is cool and car ads once again begin featuring miles-per-gallon ratings.

No regulator, no fuel-efficiency standards, no presidential exhortations, no grand experiments with switch grass. Raise the price, and people change their habits. It's the essence of capitalism.”

He continued with advocating more drilling and opening ANWR to drilling more specifically: “Second, immediate drilling to recover oil that is under U.S. control, namely in the Arctic and on the outer continental shelf. No one pretends that this fixes everything. But a million barrels a day from the Arctic National Wildlife Refuge is 5 percent of our consumption. In tight markets, that makes a crucial difference.”

Now he doesn’t address the time required to drill up there and deliver the oil and gas down here. I’ve read a number of estimates that puts it anywhere from ten to twenty years. There’s also arguments about how much oil is up there, and a slew of other cultural, economic, environmental and social issues are pasted over when arguing for drilling in ANWR.

Yes, it is the essence of capitalism that if you increase supply and decrease demand, prices will drop. Today I read that is doesn’t work – or rather, it does work, if you will. But it’s more complex than Charles Krauthammer envisions.

In an aside, I want to mention that I’m not trying to pick on Mr Krauthammer. His article was easily accessible via the Internet and the Washington Post, and he laid out his points well. I could just as easily put in Sarah ‘Drill, baby, drill’ Palin. Google her name and oil or energy independence and you’ll see her champion some of the same ideas.

For that matter, listen to the Republican presidential nominees debating. They echo Charles from 2007 and Sarah (every year). (http://abcnews.go.com/blogs/politics/2011/10/energy-debate-heats-up-amid-2012-candidates-fact-checking-gop-claims/)

I also looked up Mr Krauthammer’s more recent commentary, to see how his thinking has evolved. In his column on November 18th, lambasting Mr Obama’s Keystone XL pipeline decision, he states, “We can’t wait. Except for certain exceptions, such as the 1,700-mile trans-U.S. Keystone XL pipeline, carrying Alberta oil to Texas refineries, which would have created thousands of American jobs and increased our energy independence.”

Mr Obama and many Democrats are also thinking the same way, how do we save energy? How do we get more energy? If we save energy, acquire more energy, and become more energy efficient, prices will drop, business will improve, and it will help our economy.

David R Baker points out, as others have, that this doesn’t work. Mr Baker doesn’t say that in so many words, instead drawing and stating some conclusions about America’s gas and oil use:  “The United States, long the world's most voracious consumer of fuel, still imports almost half of its crude oil, the raw material for gasoline and diesel. But starting in 2008, the country began exporting more refined petroleum products than it imported. And the gap keeps growing.

In the first nine months of this year, the United States exported 655 million barrels of finished petroleum products, including 121 million barrels of gasoline. At the same time, the country imported 264 million barrels of finished petroleum products, including 32 million barrels of gasoline, according to data from the U.S. Energy Information Administration.”

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/12/02/MN8I1M7LAV.DTL#ixzz1fUiFWmUX

I haven’t vetted Mr Baker’s numbers.  Some might question if they can be trusted, since they’re from the US Energy Information Administration, and that’s the Federal Government, and you can’t trust them because Mr Obama is an avowed socialist out to destroy the United States. I don’t hold that view, I’m just saying that’s the word on the Internet, Fox News, and a few other periodicals, like the Washington Times.

Mr Baker goes on to quote Tom Kloza. Mr Kloza is with the Oil Price Information Service. He says that, with Americans using less gas, you would expect product to back up and prices to drop. The essence of American’s free market capitalist supply and demand system, right? But Mr Kloza says that instead what has happened is that the gas and oil companies have instead found other markets for the gas that the United States doesn’t use and sells it to them.

I have vetted Mr Kloza’s information though several sources, and he’s right about the dynamics. Is anyone surprised? This is also the essence of our economic system. Corporations are established to provide goods and services in return for making money for their shareholders. They’re not vested in reducing energy dependence. Selling less gas and oil is contrary to their desires.

And how would that improve America’s energy independence?

That captures the essence of many energy independence arguments. They begin and end with the idea that more energy and more efficient use of energy is what will save us. But our urban design and planning puts greater demand on energy.

Think about it. We import not just ‘consumer goods’ such as wii consoles, big screen televisions, iPhones, Blackberries, and Banana Republic and Gap clothing, but such actual needs like food and water.

Yet our society and governments at every level rarely address that. City governments are often engaged with bringing in more revenue. Bonds are created for civic projects, like new libraries, fire departments, and football and baseball stadiums. Stadiums are necessary because cities like having professional sports teams, to spruce up their images and bring in more revenue by attracting more businesses.

It’s a screwy paradigm: businesses exist to provide goods and services, and we work for these businesses providing the goods and services so we can buy the essentials that we need, i.e., food, water, shelter, and clothing. Thus governments ask, “How can we get more revenue? We must find more revenue. Raise taxes? A new mall or grocery store? How can this be done?”

Zoning in urban areas reinforce this. Cities and towns outlaw farm animals. Neighborhoods and housing associations outlaw growing fruit and vegetables – we don’t want our property values going down by the smell of cow shit, do we? No, of course not. Property values are very, very important, even sacred to many home owners, because they’ve worked all their lives at a job to provide goods and services to others so they can be paid to make and save enough money to buy their home, and they’re not going to stand by and let some guy next store depress their property’s value by raising herd animals, for God’s sake. What are we, a third world country?

‘Think local’ has been mocked by serious thinkers as a joke. “Oh, it’s much more complicated than that. You can’t just start growing food and raising animals. Why, that takes energy, too, and causes its own set of problems.”

True; we make it more complicated. Start with small steps. When a park is built, create, too, vegetable patches. Remember victory gardens?

These are several of the reasons Ashland and southern Oregon attracted us. They do things like this. We have local water supplies, and local farms and orchards growing fruits and vegetables and selling them, locally in stores as well as at growers’ markets and farmers’ markets and stands.  We’ve installed solar panels, and have reduced our gas consumption by walking and biking. We use about 20 gallons of gas per month now. Ashland incorporates good access for bikers and pedestrians and addresses its layout to further improve them, as people step forward and speak up, citing needs.

Personally, my wife and I are trying to go further yet. We have a garden where we grow vegetables. We pick, can and freeze fruits such as blueberries, blackberries, raspberries, peaches, apples, pears, and vegetables such as tomatoes, squash, and green beans. Onions and garlic is hung in the garage and potatoes are in bins.

All of these are small steps. We have further small steps planned. I have water barrels to collect the runoff so we can store it to water the garden, although the project is still in embryonic stages (that means I’ve bought the barrels but haven’t installed them). We’re adding more fruit trees and I’m toying with growing my own coffee. That should be fun.

There are paradoxes with this entire discussion, and I can be accused of hypocrisy. The computer I type on, a Lenovo ThinkPad built from components assembled in Asia and manufactured in Asia, shipped here on freighters, would not be available without our previous energy plans and initiatives, and here I sit, in a coffee shop serving coffee from South America, imported via those evil vehicles.

These are just like any addiction. Ending the addiction and changing the behavior begins with self-awareness and acknowledging there is a problem. From there, it’s small steps. And I think it begins by changing the paradigm when you think about energy ‘independence’.