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Archive for April, 2010

Some Facts about offshore drilling
Thursday, April 22, 2010@ 4:45 PM
Author: admin

In this modern global economy, rife with uncertainty, there are a lot of variables that affect the rising cost of gas and fossil fuels. This is in no small part due to the conflicts in the oil-rich countries. Many have internal strife within the nation as well as conflicts with other nations, so there is a constant battle directing what the oil price should be. There are ways in which the market can lower the price of oil, one being to fund offshore drilling. But the only drawback with this is that you need to be able to find oil in the area that you can easily access and build offshore oil rigs. This is the greatest immediate alternative to having to import any oil from foreign countries.

Offshore drilling is when companies or governments use a drill to slice through the oceanic crust to get to the oil underneath. It is usually done near the continental crust. This usually requires creating an underwater well and then bringing the oil up to the surface. But the only drawback is that the drill might end up hitting a pocket of gas – and you have to be careful that the gas is not explosive.

There are a lot of reasons as to why some countries would go in for offshore oil drilling. In Alaska for example, there is a lot of domestic oil available. If the Unites States were to actually use this oil, it would lower the oil prices domestically. Not only that, it would also provide opportunity for an oil job for out of work industrial laborers.

Offshore drilling however is often in the center of energy controversy due to the fact that it causes a lot of harm to many kinds of marine life. For one thing it tends to disrupt where animals live, hunt and reproduce and forces them to move and live elsewhere.  Sadly, this is not a happy situation and many animals perish as a result.  Another major threat is the danger of oil spills. All in all, it is clear that oil exploration must be done with an eye on environment protection, which is the only way we can consider it to be sustainable energy.

One of the other concerns is that offshore drilling actually changes the landscape.  The process demands the creation of new infrastructure in order for the interests doing the drilling to accommodate all the equipment. There are roads that need to be built as well and this tends to affect the nearby beaches, forests and other habitats There will continue to be arguments among  scientists, environmentalists, and politicians about the consequences of drilling.

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More Infrastructure
Wednesday, April 21, 2010@ 2:54 PM
Author: admin

Energy is produced where it is most efficient to produce it. Most times that means it is a long way from the consumer. While oil, gas and coal can be transported, most people prefer not to live right next door to the production facilities that make, store or distribute the energy that comes from such facilities. The structures that move energy from where it is produced to where it is consumed is called infrastructure. Infrastructure exists in many forms. It includes platforms to drill and produce oil and gas, coal mines, pipelines, rail lines and rail yards, storage tanks, transmission towers and lines, substations, transformers, poles and lines, ethanol distilleries, wind farms, liquefied natural gas re-gasification terminals, hydro-electric dams, nuclear plants, and the so-called “green spaces” that often surround critical infrastructure.

We know how important infrastructure is when it quits working. Whether from a storm, a hurricane, a tornado, an ice storm, a black-out or brown-out, we often don’t think about infrastructure except when it breaks or also when it is proposed to be built near where we live. In recent decades the issues of so-called “nimbyism” (not-in-my-backyard-ism) have made the building and even the maintenance of infrastructure very challenging.

In addition there is something called “legal infrastructure.” Legal infrastructure is the permitting, licensing and pricing systems by which physical infrastructure is built or not, maintained, or updated, or sometimes removed. The terms used in the energy industry are “commissioning”, “re-commissioning”, or “de-commissioning.”

Both physical and legal infrastructure are absolutely essential to a national energy plan and, similar to other critical elements such as supply, technology and environmental Protection, must be founded upon a short, medium and long term outlook and plan.

Much of our traditional hydrocarbon infrastructure is aging. Oil, gas and coal have been around a long time. Its infrastructure needs constant maintenance and sometimes needs to be expanded or replaced. Likewise our 100 plus nuclear plants and numerous hydro-electric dams have been around a long time and may need updating and re-commissioning, or de-commissioning. The future promises many new and exciting alternative sources of energy as well. Each one of the new alternatives requires new and often different infrastructure than what exists today. All new infrastructure needs to be built to bring energy from where it is produced to where it is consumed. As the nation’s economy grows and we continue to adhere to our lifestyles, which consume considerable energy, we must have a plan for infrastructure that conveys supply to meet the demand.

That physical infrastructure only happens if the legal infrastructure lets it. We depend today upon legal rules and regulations which date back sometimes more than 100 years. Most of it at least more than 50 years. We must ask ourselves as citizens two questions: can we allow current infrastructure to be updated and new infrastructure to be built? Can we do so in affordable ways, which means also updating and even revising existing rules and regulations to make it possible.

Everyone knows an example or two of proposed energy infrastructure projects that have been delayed for years or even decades and sometimes projects that have been deferred so long that they have been cancelled. Most often the loss of infrastructure or the failure to license and build infrastructure has led to ever higher energy costs in the area that restricts it. There are many instances of job losses and job opportunities foregone because of the inability to obtain affordable energy due to infrastructure delays.

Citizens for Affordable Energy is prepared to put forth a comprehensive and coherent infrastructure plan that addresses both existing and new infrastructure, both physical and legal, that meets short, medium and long term requirements for carrying energy to where it is needed in consultation with American citizens for political leadership to consider. Citizens have a right to sound, factual information upon which to make rational choices. Citizens for Affordable Energy looks forward to providing such information without ideological fervor or partisan political viewpoints. We hope to play a role to inform future choices in the months and years ahead

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More Environmental Protection
Wednesday, April 21, 2010@ 2:50 PM
Author: admin

Energy and the environment present ongoing and sustained challenges to producers, transporters and consumers. It has always been the case and will likely remain so. Some forms of energy are produced from the destruction of molecules. Thus there are environmental impact issues to be dealt with. Other forms of energy require infrastructure that impacts the landscape. Still other forms dam rivers or create nuclear waste. As the future unfolds every so-called “clean” or “green” form of energy also has environmental consequences of one form or another.

Citizens for Affordable Energy believes that there are solutions for environmental Protection by establishing a comprehensive, coherent approach that takes into account short, medium and long term issues and concerns as part of a national energy plan. Over many years the U.S. has undertaken a serious effort to manage our physical waste. While not yet perfect, the issues identified during the 20th century are more and more being tackled by community after community. Likewise our society has come a long way towards managing our liquid waste. The times when manufacturers, farmers, households and communities poured liquid wastes directly into streams, rivers or other waterways without treatment are well behind us. While perhaps not perfect yet, our society is much better at managing liquid waste. Now arguably it is time to turn our attention to gaseous wastes, many of which come from energy production and consumption.

Environmental Protection is about protecting and preserving a sustainable future. As citizens we naturally want to protect our atmosphere, earth and water for the future of life on our planet and the quality of life of future generations. All three are finite and we do not want to be the generation that makes our future worse for our descendants than what we received. The debate about Environmental Protection as put forth by Citizens for Affordable Energy is not a debate about climate change or global warming. Citizens for Affordable Energy does not have the capability or resources to be expert at climatology. We leave that to others.

In the same manner that we have largely and affordably mastered physical and liquid waste because we knew it was wrong for the earth, we can manage gaseous waste. No one chooses to put his or her head over the top of a smokestack or at the end of a car’s tailpipe. Emissions of all kinds, from CO2 to volatile organic compounds (VOC’s) to non-organic compounds (NOC’s) are unpleasant if not harmful or even fatal under certain circumstances. Currently such emissions enter a finite atmosphere with limited constraints. We can do better and find affordable ways to do so.

In an average day in the U.S. 10,000 gallons of oil are burned every second. 20 train car loads of coal a minute, or 1200 per hour, are burned mostly to make electricity. 60 billion cubic feet of natural gas are consumed each day. This is enough gas that if the cubic feet were stacked one on top of the other, the stack could go to the moon and back 25 times each day. The point is we produce a lot of CO2 and other emissions. We believe that technology and regulation can go a long way to controlling, reducing and even capturing and storing emissions under the earth in geologically sound ways such that we would never have to worry again about what we bury. But it takes will, cooperation, and wide-spread understanding to build a national plan for gaseous emissions reduction.

We have an opportunity to provide global leadership on this matter, if we choose to take it up. Many will say that other countries should agree to solutions before we unilaterally take action ourselves. It’s a fair debate. But the real point is the U.S. may be the best positioned for global leadership, given that we enjoy the highest per capita production of such emissions, have the world’s largest economy, the most enjoyable life-styles, and the best track record for rule of law in an open democracy.

Citizens for Affordable Energy is prepared to put forth a comprehensive and coherent short, medium and long term plan in consultation with American citizens for political leadership to consider for Environmental Protection in the months and years ahead. Along the way citizens have the right to sound, factual, non-ideological and non-partisan information upon which to make rational choices. We hope to play a role in informing future choices for the nation.

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More Technology for Efficiency
Wednesday, April 21, 2010@ 2:30 PM
Author: admin

The most affordable energy is the energy we never use. When efficiency in the use of energy means that we use less, we save the costs of what we don’t use. We also defer the availability of that energy to the future. The most effective conservation that we could ever consider is that of adopting efficient technology in all of our devices, homes, vehicles and behavior patterns of energy use. There is essentially no limit to the potential for energy conservation and energy savings through technology and innovation. This can be a never-ending journey that can stimulate the minds and creativity of technologists, scientists, physicists, entrepreneurs, and consumers across the nation and around the world.

Citizens for Affordable Energy promotes increasing the efforts to not only research but also to apply the benefits of research in the applications of energy use throughout society. The range of impact is enormous. How we use our land, plan our cities, organize our communities, schools, transport systems, home and building construction, populate our homes and other buildings with appliances, electronics, lighting, and how we use them for our own purposes are all subjects within the realm of technology for efficiency.

We’re coming off an era of both waste and inefficiency. As we discovered uses for electricity and improvement in life styles from the 19th century and as we discovered the joys and pleasures of mobility through cars, trucks, planes and trains, we also had an abundance of energy to explore everything we wanted to discover. In more recent years the rest of the world has been emulating the U.S. in this process of discovery. As a result there has been a faster growth in demand for energy than in supply of energy. The consequence has been rising prices and growing worries about availability.

Let’s consider some of the more wasteful practices of older energy technology. We can start with the internal combustion engine that propels our cars. It’s been around for a hundred plus years. It is about 20% efficient by design. It means for every $100 of gas we purchase, $20 dollars gives us mobility; $80 is wasted as heat. Now we have seen improvements over the years and automakers keep working on improved miles per gallon. And we will have the ICE with us for decades to come. But technology could change the source of mobility power. Batteries or hydrogen fuel cells hold promise, for example. Another example is the homely incandescent light bulb. It’s been around a long time. It’s served us well. It uses 3% of the energy consumed to give us light. 97% of the energy is wasted as heat. Congress decided in 2007 to phase out certain incandescent light bulbs to be replaced by light emitting diodes (LED’s) or the new low energy fluorescent lamps which can be substituted for incandescent. Double pane vs single pane windows are a basic example in the construction of homes and other buildings that provide significant energy savings. New designs of appliances are more energy efficient. The practical day to day list goes on. The potential is extraordinary, if we choose well.

But what we have lacked is an effort to look at technology and innovation over the short, medium and long term future and to incorporate the possibilities of far-reaching technology efforts as part of a national plan for energy. Citizens for Affordable Energy is prepared to put forth a comprehensive and coherent plan in consultation with American citizens for political leadership to consider. Working closely with universities, research centers, entrepreneurs and manufacturers of products, architects and construction companies, urban and city planners, and the public at large, we believe citizens can benefit from sound, factual information upon which to make rational choices. When it comes to improving the efficient use of energy through technology and innovation, we hope to play a role in informing future choices.

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More Energy From All Sources
Wednesday, April 21, 2010@ 2:27 PM
Author: admin

U.S. economic growth and our life styles are predicated on available and affordable energy. In recent years we have experienced a relentless rise in all energy prices and we have begun to fear that sufficient energy availability may be in the past. Many people now talk about “peak oil” and “dirty coal” as if these two prolific energy sources of the 20th Century are behind us. They promote wind and solar energy as new sources to replace them.

Unfortunately there is far, far too much mis-information, dis-information and lack of information about energy across the nation. Because we are the beneficiaries of decades of available and affordable energy, we have as a nation operated with a limited understanding of what it takes to supply energy. Our demand for energy has always been met. There have been few situations where we challenge ourselves or seek out new information on what energy means to us and what its environmental impact is, or is not.

Energy companies have not adequately engaged and educated the public about what they do. School systems have chosen to teach students very little about energy. Elected officials only talk about energy when there is a perceived problem. The general public has not been well served by the industry, education and our leaders when it comes to making informed choices about energy.

Since Katrina and Rita, two of seven major hurricanes in the Gulf of Mexico during 2005, we have sensed our energy vulnerability. Gustav and Ike in 2008 test our energy security once again. With 2008 also an election year there is talk across the country about the problems and solutions. However many discussions are politically slanted to advantage one candidate or party versus another. Accusation and vilification are abundant; new sources of energy and solutions to lower prices are not.

The truth is there is no shortage of energy resources of any kind in our country. There is more oil available than we have ever consumed; more coal than any other country on earth; the opportunity for clean coal power production has never been better; more natural gas; more opportunity for liquefied natural gas; more oil in U.S. shale than in all of Saudi Arabia; more bio-fuels practically by the month; more solar; more wind; and more potential for hydrogen than ever before. Meanwhile we continue to benefit from robust hydro-power and nuclear energy production and out there in the future are more opportunities for geo-thermal power. The bottom line is the U.S. has ample energy resources for whatever we choose to do in the future.

Our problem is the lack of a comprehensive, holistic and coherent energy strategy for the short, medium and long term future. The nation has lacked a plan for generations. There has been energy legislation in each of 2005, 2006, 2007 and more is proposed for 2008. Yet each of these bills has come about as a result of a divisive, politically abrasiveness process that has diminished the potential outcomes and even contradicted actions taken in a prior bill just a year or two before. The politics of partisan paralysis has dominated energy legislation; the American people are suffering the consequences.

Citizens for Affordable Energy is prepared to put forth a comprehensive and coherent short, medium and long term plan in consultation with American citizens for political leadership to consider. In the coming months and years information will be disseminated about the supplies of energy to meet future demand. Supply information will be provided without partisan bias and ideological rhetoric. The pluses and minuses of various types of energy supplies from coal, oil and gas to nuclear, bio-fuels, solar and wind, etc. will be presented in their stark realities and without political preference. Citizens have the right to sound, factual information upon which to make rational choices. We plan to make such information available without overwhelmingly complex technical language, which makes the subject incomprehensible. We hope to play a role in informing future choices.

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Sunday, April 18, 2010@ 5:22 PM
Author: Press


Contact: Karen Hofmeister

Telephone: 713-523-7333

E-Mail: karen.hofmeister@jkhgroup.org


It Can If a Donation is Texted to Citizens for Affordable Energy

Citizens for Affordable Energy educates citizens and government officials about pragmatic, non-partisan affordable energy solutions, environmental protections, energy alternatives, efficiency, infrastructure, public policy, competitiveness, social cohesion, and quality of life. CEO and founder of Citizens for Affordable Energy is John Hofmeister, the former President of Shell Oil. He founded the group to help educate citizens who will ultimately demand public policy by which America produces much more energy for affordability and sustainability.

By texting the word ENERGY to 20222 individuals can make a donation to Citizens for Affordable Energy and help further the cause of leading America to a more prosperous tomorrow. Donations to the group can help to accomplish the goals of bringing the cost of energy down, more energy independence, creating energy in an environmentally-friendly manner, developing new technology for energy production, developing alternative forms of energy, and improving energy policy.

For more information please visit www.citizensforaffordableenergy.com. John Hofmeister has carefully explained his vision and energy solutions in the book Why We Hate the Oil Companies: Straight Talk from an Energy Insider, to be released on May 25th by Palgrave McMillan.

# # #

For more information please contact Karen Hofmeister at 713-523-7333 or karen.hofmeister@jkhgroup.org.

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Chasing votes with ‘clean and green’
Sunday, April 18, 2010@ 4:40 PM
Author: Press

Chasing votes with ‘clean and green’

Despite the talk, ideology doesn’t translate to actual alternative energy


March 6, 2010, 4:00PM

I’m a backer of wind, solar and biofuels as new, high-technology future contributors to the energy supply of the nation. Facing the daunting demand forecasts of the medium- and long-term future, the nation will need all the energy it can produce from every available source. Today’s seeming abundance of energy is a recession-driven aberration from the continuing rise in postindustrial, electron-dominated energy requirements in this century. Companies, institutions, governments and homes are run by information systems and countless electrical devices. When transportation also demands electrons, watch your meter spin!

Yet public officials from the president and vice president to Cabinet and congressional leaders insult our intelligence by delivering scripted messages that the future of the new energy system in this country is clean renewable energy that will be delivered by countless so-called green jobs. The fake chimes of energy independence echo up and down Pennsylvania Avenue. Do headlines make truth, regardless of content? What is it about organizations like Repower America and the Center for American Progress, which provide ideology, not substance, to the administration and congressional leadership on the so-called new energy system? Why are their conclusions unchallenged? Is it ease of messaging, for who can be against clean and green? Is it to run away from hard choices about hydrocarbons and nuclear energy? No one’s against cleaner energy. But is it material? Is it affordable? Can it deliver commercial, ample new energy to the ever-aging existing energy system? Let’s be honest. It’s incremental and expensive.

The American people, if sometimes late, are eventually pragmatic about energy hype without substance. Wind and solar don’t reduce the electric bill; biofuels don’t reduce gas prices. Misinformation and disinformation lead to communications bankruptcy. I told Sen. Barack Obama he needed a hydrocarbon plank in his presidential energy platform to deliver affordable gasoline. He responded that, as president, he would do biofuels. I said I’m doing biofuels (at the time as Shell Oil’s president) but not materially by 2012, or even 2016. He said we’ll do biofuels. I asked, with what subsidy? End of conversation.

Clean and green, the energy system we aspire to, is subsidized like no other energy source in history. By whom? Us, and our progeny. All energy has historically received some type of public support to even out the volatility of high and low price cycles. The Energy Information Agency of the U.S. government’s Department of Energy reports that, for 2008, natural gas was subsidized 25 cents per megawatt hour of electricity produced, coal received 44 cents per megawatt hour, nuclear $1.59. Oil was not reported in these numbers since oil is hardly a factor in electricity production. However, oil benefits from a variety of tax subsidies for dry well expenses and royalty holidays dating from the $10-a-barrel oil days of the late 1990s, which the administration promises to rescind. At the same time in the same year, wind energy received public subsidy of $23.37 per megawatt hour; solar energy received $24.34. These numbers do not include the additional subsidies we taxpayers have been compelled to pay for wind, solar and biofuels through the stimulus plan, the 2010 budget and the 2011 framework budget. These subsidies help support 2 percent of today’s energy system. Their proponents promise to double and double again the amounts of subsidized supply from clean and green with no commitment to ending subsidies. That’s not a new energy system.

Frittering at the edges

Here’s the problem I have with what the administration and Congress are doing. They are frittering at the edges of the energy system, not even building a manufacturing base to sustain its growth, because it’s politically popular. Polls say bashing the energy industry gets votes. You don’t govern by promoting coal, oil, gas and nuclear when you just got elected berating them. Symbols trump substance. Meanwhile, our leaders ignore 93 percent of base energy — hydrocarbons and nuclear, which are aging rapidly and in need of major new investment — at their constituents’ peril. The nation needs its leaders to promote short-, medium- and long-term energy supplies from all sources and do what it takes to deliver. Beginning with the Nixon administration, we’ve had eight presidents and 18 Congresses who have promised energy independence and never delivered.

Recent announcements on tripling loan guarantees for future nuclear construction are little more than sleeves off the vest. Loan guarantees are useless for unaffordable new nuclear investments, which have also just lost their future source of nuclear waste disposal. The administration torched $20 billion of our money, announcing its determination to forever close Yucca Mountain, Nevada’s national nuclear waste repository. After decades of build-out, just as the site sought license approval, an eight-week-old administration pulled the budget plug.

It’s politics

Does anyone suspect the reason? Sen. Harry Reid of Nevada, the Senate majority leader, faces a tough re-election race in 2010; he is benefited by the energy secretary’s announcement, undoubtedly from orders on high, to shut down the nation’s only safe and reliable storage site. Now we’re appointing a blue ribbon panel to study what we studied decades ago and report out in two more years. Why not a blue ribbon panel to commoditize nuclear and reprocess waste to lower costs, so we can actually build more plants?

As for hydrocarbons, the administration is proposing a series of demonstration projects to evaluate carbon capture and sequestration by 2016. Never mind that new coal leasing is all but dead, stopped in its tracks by the EPA. They’re kicking the can down the alley, while making headlines as if they’re doing something.

Regarding other hydrocarbons, EPA regulation of fracking is being proposed, which will add time and cost to developing tight gas reserves. Offshore leasing for drilling is as stalled as it was when congressional and presidential moratoria precluded it for 30 years.

But “clean and green” it is: the simplistic formula to make it look like we’re serious about producing more energy. It will produce votes, not material energy. It’s not enough and never will be. We’re headed for an energy abyss.

Hofmeister, the former president of Shell Oil, is founder and CEO of Citizens for Affordable Energy. He also is the author of the book Why We Hate the Oil Companies: Straight Talk From an Energy Insider (Palgrave Macmillan, $27).

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The new age of the energy abyss
Sunday, April 18, 2010@ 3:57 PM
Author: Press

The new age of the energy abyss


March 13, 2010

Given the condition of our country’s energy system and the public policies that currently govern it, the nation will begin a new era by the end of this decade. By the year 2020, the age of the energy abyss will begin. Once it begins, it is sure to last at least a decade or longer.

Hard decisions avoided and ignored over the past 40 years, together with another several terms of political leaders and policymakers kicking the can down the alley, will combine to ensure shortages of liquid fuel for transportation and electrons for everything electrical and electronic. (Texas may be exempted, other than having very high prices, thanks to local drilling, refineries and the Electric Reliability Council of Texas, or ERCOT, which operates the electric grid and manages the deregulated market for much of the state).

Gas lines, outages of fuel and sky-high prices at the pump will besiege and enrage drivers and truckers who have no transportation alternatives. Ongoing brownouts and rolling blackouts are now inconveniences endured during ice storms and hurricanes or after thunderstorms. In the age of the energy abyss, they will be employed by electric system operators more frequently, and especially in the hot summer and cold winter months, as an alternative to otherwise shutting down the system to save it from self-destruction. Grass-roots Americans will ask themselves, How did this happen? What’s with this Third World, Venezuela-like problem? Who did this to us?

Who’s to blame?

Whom do we blame? Will it be the fault of electric utilities, oil, gas, coal, wind, solar, biofuels, hydropower, hydrogen, geothermal, nuclear or wave energy producers, each of which works for its investors? Will it be the fault of investors who put money only in energy projects that paid them a return? Will it be consumers who for more than a century have benefited from affordable and available energy and built their lives around it on the presumption that their energy purchases, votes and tax dollars ensured continuity of energy supply? Or will it be the combination of eight presidents since Richard Nixon, who in November 1973 promised “energy independence” within seven years, together with 18 Congresses, which likewise promoted energy independence but failed to deliver on their energy public policy promises?

From the 1910s through the 1970s the great American energy system build-out occurred. Never in human history had so much financial and human capital gone into creating a ubiquitous and homogenous energy system that fostered the creation of the world’s largest economy, won two world wars for freedom and raised a standard of living that became the envy of the world. Energy was affordable and available. The shiver down the spine created by the Arab oil embargo in 1973 was the first shot across the nation’s bow that suggested perhaps the energy nirvana we enjoyed also carried risks. Today’s energy system is essentially a 40-plus-year-old legacy of what we built back then. Add 10 more years and we are headed toward a 50-plus-year-old legacy energy system that cannot carry on. It’s worn out.

Dismal record

With no national energy policy, here’s the track record. In the past five years the nation’s electric utilities have shelved plans for more than 100 new coal plants because the barriers were too great to build them. They have ignored gasification of coal because they can’t get a high enough price to pay for the technology. More than 100 nuclear plants were built in the 1960s and ’70s. The last one built was finally commissioned in the early 1990s, having endured more than a decade of delay. Not a single new plant has been built since, and I can all but guarantee that another one will not be built or commissioned in this decade. Time marches on. Many nuclear plant licenses begin expiring in this decade. The nation has endured 30 years of congressional and presidential moratoria prohibiting offshore drilling across 85 percent of the nation’s outer continental shelf. While the law expired in 2008 and President George W. Bush took seven and a half years to lift the presidential moratoria, nothing has happened since then. Support for future drilling shows up in occasional words, not actions. For oil and gas companies to expand their operations into the nation’s reservoirs of untouched oil and gas resources they need approved leases, actions not words. Instead we “fritter at the edges” of our energy system by promoting subsidized wind, solar and biofuels, pretending to remake the nation’s energy system. Addressing 2 percent of our energy supply by promising to double it and double it again with subsidized funding does not make a new energy system.

Meanwhile, 93 percent of our existing energy base, and the infrastructure that supports it, is aging faster than it is being maintained. The balance comes from old and silted dams. No new dams are planned. The world’s largest economy is energized by a precarious, aged, diminishing supply infrastructure. The most promising new supply, natural gas from tight formations, relies on fracking technology. Its prospect is shrinking and slowed by the threat of authorizing oversight from the federal EPA instead of states.

Meanwhile, in China …

China, meanwhile, commissions a new coal plant every week and licenses coal gasification technology for multiple purposes, including electricity production. It just bought $60 billion of Australian coal because it can’t produce enough itself. It is building dozens of nuclear plants with a goal of a hundred new plants in coming decades. China is the world’s largest builder of wind and solar systems, not only the installations but also the manufacturing plants to produce such systems.

The American energy abyss will take hold of the country thanks to political leaders who make promises but not policy, who point fingers, but not at themselves. They have chosen the do-nothing path to avoid tough choices. They prefer partisanship and policy paralysis in spite of the nation’s needs. They are guided by the arrogance of incumbency, avoiding the risk of offending special interests. They make words of rectitude, not decisions to deliver the goods. Politics and energy are oil and water. They don’t mix. The nation’s energy abyss will be proof positive, if such is needed.

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The U.S. Needs an Industrial Policy
Sunday, April 18, 2010@ 3:38 PM
Author: Press

The U.S. Needs an Industrial Policy

The rest of the world actively promotes its core industries. It’s time we did too.


Much is being said about the terrible financial returns and lack of economic growth in the “lost” decade that began the 21st century. Why should anyone be surprised?

As a nation we’ve been driving toward this no-growth plateau for several decades. As manufacturing has shrunk, we’ve honored the gods of “rationalization,” “restructuring,” and the almightiest of all, “globalization.” Core industry after industry has orchestrated its own decline, facilitated by short-term managerial reward systems.

The next decade could see negative growth thanks to our foolhardy fondness for “free market” philosophies that tell us it’s OK to export all our jobs. The U.S. is down to four world leading industries: entertainment, out of Los Angeles (heavily indebted to Democrats); information technology, out of the Bay Area (likewise); energy, out of Houston (heavily indebted to Republicans); and financial services, out of New York (indebted to both parties). That’s it, folks. We’re otherwise second- or third-rung suppliers across the range of manufactured products—except for biotech, a small industry—and we can still (mostly) feed ourselves. Even aerospace has suffered.

Let’s acknowledge the parasitic legal industry’s role in eroding America’s manufacturing strength. Some argue that the U.S. leads in innovation and entrepreneurship. If so, where are the jobs and value creation?
It wasn’t always this way. For the first three decades after World War II, the U.S. led the world in manufacturing. From mining to materials to mechanical, electrical and electronic products, from textiles to footwear, autos to airplanes, furniture to food, U.S. manufacturing filled our households with self-made products and elevated the standard of living for most to unpretentious comfort.

Services grew out of the successful manufacturing base because we had it. Prosperity seemed endless until we started “rationalizing,” shipping jobs overseas to build supply chains that enlarged growth prospects everywhere but the country of origin.

And while the U.S. worshipped the free market, especially unrestrained freedoms to cut labor, the rest of the world didn’t. Other countries saw the wisdom of protecting jobs and people. They erected barriers and social programs that hardly exist in the U.S., while adding government-sponsored manufacturing incentives.

Services are just as vulnerable to the free labor market, only it’s called “outsourcing.” America needs manufacturing jobs for skilled, semi-skilled and low-skilled citizens. We need their wages circulating in the economy for sustained growth.

As we look ahead, the current Democratic majority is locking the government’s incisors into the neck of two of our four industries: energy and financial services. The antihydrocarbon and antinuclear crowds are making it virtually impossible for the producers of 93% of the nation’s core energy to expand or grow (coal, oil, gas and nuclear) while helping venture capital friends in Silicon Valley expand 2%-3% of our energy base (wind, solar and biofuels) with virtually free taxpayer money.

How long Houston can hang onto world energy leadership is being actively discussed in, yes, Houston. The financial services industry, in the aftermath of its inexcusable greed and manipulation of trust, is about to get regulated in ways that will drive it to impotence, sending the core strength of yet another historic U.S. industry elsewhere. Where? Probably not Europe, or Japan. More likely it’s China.

So then there will be two. Two world-leading industries in the U.S., entertainment and information technology. For how long? Entertainment is ever more virtual and universal. China, Korea, India and Japan are after Silicon Valley’s infotech dominance day after relentless day. And those countries create the government policies that help and protect those efforts.

The administration is worried about jobs in the runup to the fall elections. Every incumbent should be. Where to stimulate job creation should be as obvious as the cosmetic smile on an elected official’s face: manufacturing. Go where we’ve been.

Since government is involved anyway, let’s shift it from disablement to enablement. Create manufacturing incentives like other governments do. Lower repressive corporate tax structures, accelerate depreciation, defer income and inventory taxes, tax abate existing and new jobs, pay for worker training, incentivize new, and the conversion of former, manufacturing sites.

We’ve never systematically used government incentives to help U.S. industry compete across the board. It’s time we did, like everyone else. Use the unspent hundreds of stimulus billions to create millions of competitively priced manufacturing jobs in America. We’ve never had more people available, ready and willing to work. Let’s practice the “globalization” we taught everyone else.

Mr. Hofmeister, former president of Shell Oil Company, is founder and CEO of Citizens for Affordable Energy, and author of “Why We Hate the Oil Companies: Straight Talk from an Energy Insider,” due out in May by Palgrave Macmillan.

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“Political Time” is Sapping our Energy
Friday, April 16, 2010@ 10:44 PM
Author: Press

Political Time” is Sapping our Energy


March 27, 2010

As an intended joke I asked a Congressman’s chief of staff in December 2008 whether she was working on the 2010 election yet. To my surprise she responded with the comeback, “How did you know?” Remember, we had just finished (seemingly) the longest election in our history and it had hardly had a chance to wind down.

Yet this Congressman was already girding for the next election, working on the messaging, going over the finances, and steering his staff’s thinking toward the future. Two year terms can be an eternal political damnation or “Happy Days,” depending on how an elected official prepares for the future.  Four year presidential first terms are sustained campaigns; second terms are two years of legacy building and two years of wind down. Six year term senators can’t coast for any length of time. Tens of millions of dollars have to be raised; each week is a new milestone where messages, friends and their contributions matter.

I call “political time” the two year cycle between elections when every handshake, speech, vote and smile matters. The two year candidates never stop campaigning, the four and six year candidates guide their own messages and decisions based on their reading of the ongoing two year dynamics so they’re ready in the run-up to their election cycle. “Political time”  success is defined by winning elections. It requires successful campaigning and a good gut for decisions in the moment. It never stops and isn’t over ‘til it’s over, but then you’re out.

Energy executives meanwhile are delivering energy today from projects that began ten, twenty, thirty, forty and even fifty or more years ago. They keep them going as long as they can make a return to their shareholders and ensure the safety of the facilities. Their days and weeks are filled with project reviews and analyses of alternatives to decide which projects best fit future energy portfolios years and decades into the future. Investments and costs are continuously reviewed against oil and gas or coal price premises to determine what rates of return might be possible against short, medium and long term supply/demand forecasts. Supply chain decisions for new leases, power plants, platforms, turbines, castings and ships must be debated or made for the next decades of project flow.

I call “energy time” the decades of project analysis and execution that deliver future energy. “Energy time” success is defined by deliberation, analysis, capability in your organization, long relationships, knowledge and even mastery of technology. Gut decisions lead to short tenure; sound decisions lead to long term success.

Politicians and energy executives live in completely different worlds. There is nothing compatible about what they do or how they do it. They speak untranslatable languages to each other, think and work in totally opposite time dimensions, the here and now versus the future, and are accountable for incompatible objectives, winning votes versus risking popular resistance. Politicians are accountable for winning elections; executives are accountable for providing energy. One promises, the other delivers. “Political time” and “energy time” are as incompatible as oil and water.

Yet, unbelievably, politicians govern energy executives and decide what they can and can’t do. “Political time” energy policies are sapping the nation’s energy. We’re going backwards not forwards. Politicians, since Nixon first declared energy independence in 1973, have run for office on its promise. When Nixon was president we imported 30 percent of our crude oil from exporting nations; forty years later, 8 presidents and 18 congresses later, politicians have delivered political time results. We now import 65 percent of our crude oil. “Political time” policies make things worse.

It’s not enough that politicians have clamped down on energy companies for decades to keep us from producing our own domestic energy, they are now working on how best to strangle the remaining strength of our legacy energy system. “Big Oil,”  “Big Coal,” and “Nuclear Power” are the bad boys of the energy patch. Their so-called “excessive profits,” “filthy ways,” and “terrorist risks,” are being demonized, taxed, and controlled by politicians in “political time.” They are denying new leases and permits, stripping away decades of tax policies that stabilize energy production through economic cycles, and defunding the only national nuclear waste site, after spending $20 billion on it, to help the 2010 re-election prospects of the senate majority leader.

Today’s majority party politicians run for office to govern our energy future with all the knowledge and understanding of gifted amateurs, beholding to clean and green ideologues out to promote their special interests, while catering to the line-up of venture capitalists seeking taxpayer funds for the next “big thing”  in energy.  In case you haven’t noticed we’re experiencing a crusade to diminish the companies that deliver 93 percent of daily base load energy, while we ignore the 5 percent that comes from hydropower, and chattily, happily, smilingly promote and subsidize 2 percent of our energy supply from wind, solar and biofuels, which at best incrementally, and expensively, add to our energy mix.

“Political time” energy sapping is taking us perhaps unintentionally but continuously to an unprecedented energy abyss. Their track record proves we can’t count on politicians. Grassroots citizens are the nation’s only hope for the future. What they know and how they respond to this knowledge is crucial to the nation’s security, economic well-being and lifestyle promise. I founded Citizens for Affordable Energy and wrote Why We Hate the Oil Companies: Straight Talk from an Energy Insider (Palgrave Macmillan 2010) to provide the facts, the non-political reality, and a pathway to future short, medium and long term sustainable energy solutions. We have more energy in this country than we will ever need. We should not restrict its production to keep prices high to reward politicians’ “political time” energy friends. We need more energy from all sources. “Political time” restrictions prohibiting “energy time” security are wrong. Citizens need to set the politicians straight. They work for us, not the other way around.

John Hofmeister

Founder and CEO: Citizens for Affordable Energy

Former President: Shell Oil Company

Author: Why We Hate the Oil Companies: Straight Talk from an Energy Insider (Palgrave Macmillan 2010)

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