Politics trumps science. Again.

Regarding tax policies: "It's not based as much on technical merit. It's based on politics."

Cash for Clunkers or Sustainable Capitalism? The choice is ours.

It is fascinating to watch the fiasco that is Washington, D.C. It is an indication of the decline of Western Civilization. To wit:

[1] Not enough cars are being purchased due to the down economy.
[2] The U.S. Government (with its resources*) bails out (buys) GM & Chrysler.
[3] The U.S. Government pours billions into a program** to encourage people to buy cars
[4] The program is so successful (throwing money away always is!), that they triple the total amount, from $1 billion to $3 billion!
[5] They do so by stealing money from loan-guarantee programs for renewable energy projects.

What are real consequences of such (shortsighted, politically-motivated) actions?

[A] Funds for long-term renewable energy projects are reduced for short-term reasons. Consequence: Energy will be more expensive, later.

[B] The true environmental costs increase. Why? Because the cost to make cars has not been taken into the calculation.

[C] The price of cars will increase later. Why? Because continuing to pour $s into consuming will create inflation. Which will increase the price of everything. And since we are not investing in renewable energy projects, energy will also become more expensive.

[D] The spike in sales will mostly deplete vehicle inventories, rather than spur new (& innovative) manufacturing. Consequence: No real boost in employment will occur.

[E] Interest rates will increase, due to the major borrowing that is occurring. Supply and demand will make it happen.

[F] The biggy is this: Where is the learning? Without market forces driving auto manufacturers, they are not incentivized to learn how to respond to - and predict consumer behavior. That is, if people want more fuel-efficient cars, then the Bog 3 ought to marshal their forces to design and develop these vehicles. If not, they will be heading out of business. Then other manufacturers - who do listen to customers (instead of the government) will take their place. Maybe even American manufacturers, like those who make electric vehicles. (ex: Tesla, Brammo, GrrenLite Motors and others.)

This is a market-distorting program that is ill-conceived, ill-planned and ill-managed. Just like the prior Government focus (& subsequent spending) on corn-ethanol. Ahh... Washintonians. Come to think of it, we voted them in! The decline of civilization, indeed.

Bottom line? Let the market take care of itself. Let the auto manufacturers learn, or die. Let competition drive better, lower-cost products. Just look at the unregulated, unstimulated computer market. Look what $1000 used to buy and what it buys now. Why? Sustainable capitalism. Not unsustainable capital-infusion.

What should happen? Government's role is to create an environment for long-term, business-oriented solutions for renewable energy to occur. A deeper discussion on this can be found in The 21st Century Energy Initiative. A specific solution is NXergy, Inc.

* "Resources": read taxed from U.S. citizens and borrowed from (mainly) foreign countries.
** Forget for the moment that the "program" helps foreign companies as much as U.S. companies, or the fact that someone with an 18 mpg car could purchase a 15 mpg truck(!!)

Politics trumps logic

Unfortunately, the Senate (& compromise) versions got rid of the $2 billion to accelerate technologies and instead put in lots more $s (good news) for pet projects (bad news). It seems politicians think they can "pick winners" better than scientist, engineers and entrepreneurs. Can you say "ethanol"? When will it end?

Examples:
House version: "$2,000,000,000 shall be for expenses necessary for energy efficiency and renewable energy research, development, demonstration and deployment activities, to accelerate the development of technologies..." (i.e., open-ended as to what might actually work!)

Compromise version: "That $2,000,000,000 shall be available for grants for the manufacturing of advanced batteries and components..." (i.e., Closed-ended: "Do thus and so.")

Utilities seek $33 Billion for energy efficiencies

A utility association that represents 70 percent of the U.S. power industry called on Congress and the new administration to jump-start the economy by helping Americans save energy.

Although energy efficiency is an excellent investment, the reader should decide for themselves if the free-market-breaking proposition is the best use of $s.

Exponential Times

It struck me that during the Great Depression, it took about 5 years before the Government started considering injecting significant currency into the markets. In January of 2008, we were worried about inflation. It's taken less than 12 months for the US Government to start pumping liquidity into the market. Another interesting fact: It took about ten years after the Great Depression for the US Government to issue bonds that carried a negative interest rate. This time, it took less than 6 months, after the stock market nose-dived.

I believe with the "speed of information travel" being SO fast (and getting faster), that we are in "exponential times".

If we think that societies' "speed" will not create a significant energy demand surge, then we're kidding ourselves. The recession may last a few years, but soon - the economy will roar back. The investments we make (in renewable energy & energy-efficient technologies) now will pay significant dividends, later. However (=opinion alert=), if we do not invest now, the U.S. will become a third-world nation.

California increases RPS from 20% to 33%

On November 17, 2008, Governor Schwarzenegger signed Executive Order S-14-08, revising California's existing Renewable Portfolio Standard (RPS) upward to require all retail sellers of electricity to serve 33% of their load from renewable energy sources by 2020.

Although this is good news from a renewable energy perspective, changing things mid-stream is not ethical, and will cause all kinds of problems. It's similar to having the wind investment tax credit expire every year. Makes no sense. We need to set fixed-requirements, then let the prepar for, and then market deal with it. In a logical, planned manner!

Bankers, consumers... now automakers

Everyone wants a bailout! Whatever happened to our advice to the Japanese when their economy went south in the 1990s? We (U.S. policymakers) told them to let banks fail, in order to cleanse the system of those who should never be allowed to survive. All others would become stronger as a result, and the economy would ultimately recover in a more robust manner. I huess we don't listen to our own words.

Now - because the automakers never did (really) understand [1] what consumers wanted, nor [2] what was going to happen in a peak-oil-world, they want a bail-out, too. And D.C. is considering it!(?). This will only give them the money they need to keep spending the way they have. What happens if one of them fails? The others will become stronger! What happens if we bail them out? They continue their spendthrift ways, without the wake-up call they need.

Opinion alert: I do not think we should reward bad behavior! With all the largess, hyper-inflation will be headed our way, soon enough. Keep an eye open for it.

"Power corrupts; absolute power corrupts absolutely"

And so it begins... "In the first sign of Democratic intraparty strife since the election, Rep. Henry A. Waxman (D-Calif.) has told colleagues that he plans to challenge the House's most senior member, Rep. John D. Dingell (D-Mich.), for the chairmanship of the Energy and Commerce Committee."

"Power corrupts; absolute power corrupts absolutely"

What are the consequences of Cap & Trade?

Now that Obama has been elected, with a majority in both houses, a Cap & Trade scheme to reduce carbon emissions is all but assured. What does mean to the economy, industry & energy prices? The Economist had a great article about it last year. Perhaps being open to other ways to reduce carbon emissions might be in order.

VeraSun Energy files for bankruptcy

The VeraSun Energy Corporation, which accounts for roughly 7 percent of ethanol production capacity in the United States, announced that it had filed for Chapter 11 bankruptcy protection late Friday.

As reported in this blog since 2005, corn ethanol just doesn't "pencil out":

=> Corn ethanol is just bad science and bad business.
=> Corn ethanol is not the answer.
=> Is Ethanol really right for the economy and environment?
=> Oregon's Renewable Energy Action Plan.

We need a 21st Century Energy Initiative that relies on science (not political whim) to develop the new technologies to get us through to the next century!

The Death of Capitalism?

Or... how a brief economic history informs our current economic situation

To be clear, I am a free-market, capitalist and believe very strongly that the market knows better than any government could. However, a few things have transpired that concern me greatly, and should bring pause to others:

[1] In response to the banking failures of 1929, two acts of Congress came to pass: the Glass-Steagall Act and Banking Act of 1935, which prohibited banks from investing and limited interest rates among other things.

In March of 1980, Regulation Q (from that time period) was repealed. The "Savings & Loan Crisis" ensued. (Ronald Reagan was president.)

[2] In 1999, other provisions prohibiting bank holding companies from owning other financial companies were repealed. Robert Kuttner (co-founder The American Prospect) has criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis. (In 1999, Bill Clinton was president.)

[3] The Bretton-Woods system of 1944 provided that the United States would maintain the dollar value of gold at $35 and the other national central banks would maintain the dollar value of their currencies. If all countries were fixed to the dollar and the dollar was fixed to gold, the fixed exchange-rate system was anchored to gold, a design that prevented monetary inflation.

In 1973 the Bretton Woods Agreement was effectively disbanded and gold increased to $140 an ounce. Inflation became rampant and in fact, stagflation (recession and inflation - the worst of both worlds) came into being. (Richard Nixon was president.)

[4] In 1944, the Bretton Woods Agreements took the U.S. Dollar off the gold standard. A major cause of oil (and gold) inflation has to do with the precipitously falling dollar - due in no small part on how our U.S. economy has been led (read Government spending). Or mis-led. By both democrats and republicans alike.

[5] In the strong economy of the 1950s and 1960s, we had utilities who were encouraged to find ever-more profitable ways to reduce energy costs. Passing a portion on to consumers while being allowed to keep some of it (in case we forget, they are called profits.). Now we seem to discourage this behavior. Since the 1973 oil embargo, we have viewed oil companies as the bad guys, and taxed their "excess" profits. The unintended consequence of this is that they did not invest as they could have, ramping up our dependence on foreign oil resulting in much higher gas prices.

[6] In the strong economy of the 1950s and 1960s we had smaller budget deficits, Republicans weren't in cahoots with Democrats (in spending our hard-earned $s), nor were they spending on hundred-million $ bridges to nowhere. Or multi-billion $s no-exit-strategy wars.

[7] In the strong economy of the 1950s and 1960s, utilities were rock-solid. Banks were rock-solid. Inflation was tamed. The United States led the world financially and morally. In ethical behavior. In Doing What Is Right.

[8] Outsourcing: From a business perspective, it "seemed" like a good idea to export our jobs to lower-wage (read lower-quality / lower-ethic) countries. But with contaminated pet food, lead in toys and counterfeit software and other products, we are finally waking up to the fact that not everyone has the same ethics as Americans.

[9] BRIC: Brazil, Russia, India and China are growing at such a rate that their economies are (also) driving up oil prices.

[10] Obesity and being a victim: Americans seem to feel the Government owes them a living. Including free health care. Which will require vast sums of money and cause further erosion in the value of the dollar. The deferred gratification that comes with longer life (later) due to better behavior (now) seems to be a difficult concept to grasp for most Americans.

If you put all these seemingly disparate facts / events together, one can see how this came about: Death by a thousand cuts: Those cuts being the erosion of profit as a true motivator (led by anti-capitalists), and one can see where this may head. Sooner than later. It is interesting that this contrarian view makes sense when unwinding unintended consequences caused by too much government meddling.

(Side note: Portland is a microcosm of this mismanagement: We are spending precious time and resources on naming streets and building bike paths instead of creating an environment where clean, sustainable businesses are encouraged to set up shop - to bring in a net in-flow of people to the community. Instead, we tax businesses and investors and only realize the unintended consequences after many move out.)

We have a choice in front of us. We have the talent, resources, capitalist (read free-choice) system and capability to lead the world: economically, technologically, politically and even morally.

Rearranging deck chairs on the Titanic seems to be the status quo from our political leaders. Voted in by a disenfranchised electorate.

The United States deserves more. Its citizens deserve more. And you deserve more.

We need leadership. We need focus. And we need to marshal our collective will and considerable resources to work together to solve all these problems, in a way that bodes well for our children and grandchildren.

Instead of the political parties trying to undermine one another, instead of the PUC disincentivizing utilities to find innovative ways to move to clean energy, instead of additionally taxing oil companies' profits - why not focus on what would solve many problems?

Why not focus our resources on incentivizing, supporting and even funding renewable energy technologies that would enable the United States to become a net-exporter of renewable energy? Not high-jobs-per-kilowatt-hour. But high-density, clean energy production.

A simple (simplistic?) solution is to move away from oil entirely and rely on electric vehicles, using renewable grid-electricity production. Yes, driving range is an issue. As is battery technology, but most of us drive fewer than the average range of current-technology plug-in cars. By converting even 10% to 20% of vehicle usage to electric vehicles, greenhouse emissions would decrease significantly, as would oil prices. These are business decisions, and it seems our car companies are a bit slow in "getting it".

Bottom line: The root cause of our economic problems is that we are a net importer - of goods and energy. No economy can withstand the hundreds of billions of dollars being sent to non-friendly states. The root cause of us being a net-importer is that in general, we are complacent. Yes lots of great people and organizations are doing lots of great things. But America appears to be in not only a cyclical decline but a long-term decline.

Solution:

As a free country (so far), you have the ability to vote with your signature and your dollar.

Government: Let's help Government become more responsible by only voting for those who "get" this notion and actually do something by focusing on the root cause problem: Becoming a net-exporter of renewable energy and renewable energy technologies. How do we do that? With your vote. In 1980, John Anderson ran on a ticket to solve our energy problems by adding a 50 cent per gallon gasoline tax. Had this been accomplished, those billions of dollars would have been spent to solve our oil dependency. He received 7% of the popular vote. Use your signature on a letter to your congressmen and women - to fund renewable energy technology development. Your children will thank you.

Business: Only buy cars that are electric or hybrid. That is, vote with your dollars. Use your signature to write the CEOs of U.S. car manufacturers to build plug-in electrics. Then buy them.

Repeat of 1970s!

"Those who cannot remember the past are condemned to repeat it." *

Here we go again: Delays in renewable / alternative energy initiatives are beginning.

* George Santayana

Unbelievable!

It is absolutely unbelievable that our elected officials - those who are entrusted with our (read *your*) taxes have failed in their fiduciary responsibility to protect Americans. To "spend" a minimum of $785 billion* will do nothing but ignite hyper-inflation. This puts significant upward pressure on oil prices, which puts a downward spiral on the U.S. dollar.

The result? As inflation revs up, fewer real dollars are available to solve our energy problems. This will mean more oil addiction... and the spiral continues.

How to Solve Our Energy Problems: The 21st Century Energy Initiative points to how the lack of financial leadership (in Government) has led, and will lead us down a ruinous path. (Book excerpt on this topic, here.) Soon, the only way will be to vote the bastards out... and only vote in those who tell the truth, and make the hard (politically incorrect) decisions to get this nation moving in the right direction. Again.

* $700 to "bail out Wall Street" and $85 billion to bail out AIG.

How to Fix Our Economy and the Energy Crisis

With the economic meltdown in our economy, there is plenty of blame to go around. While we’ll soon be focusing on mortgage loan companies using risky methods, consumers biting off more than they can chew, Congress wanting to add more regulations (that hamper investments), and both presidential candidates blaming the other party, we might want to look a bit longer term. Both in the past and the future.

Perhaps we should ask ourselves how we got in this mess. Why aren’t we the economic powerhouse of the 1950s / 1960s anymore? To answer these and many more questions, you may want to read these:

=> How did we get in this mess? What decisions were made, by whom? And how can we learn from the past? Find out. And what about now?

=> And you think it’s bad, now? How developing nations will make the problem much worse, and why we need to make different decisions, now. A book excerpt on this train wreck can be found here. And details of the analysis can be found here.

=> Whoever addresses our energy problem – through real technology innovation and business model innovation – will win this election. You can compare the presidential candidates’ approaches, here. (With the detail, here.) Please check your congressional candidates’ views, too.

=> We need to innovate our way out: Create industries and technologies – to become a net-exporter of renewable energy technologies.

Seven Myths of Energy Independence

"Despite supposedly bold initiatives such as last year's Energy Independence and Security Act, America is no freer from foreign oil: Since 2006, imports have remained steady at about 13 million barrels every day, while the price for each of those barrels has jumped by $30. Our heavily subsidized ethanol refiners now use so much corn that prices for all grains have soared, sparking (food) inflation."

The 7 Myths (According to the article):
Myth #1: Energy Independence Is Good
Myth #2: Ethanol Will Set Us Free
Myth #3: Conservation Is a "Personal Virtue"
Myth #4: We Can Go It Alone
Myth #5: Some Geek in Silicon Valley Will Fix the Problem
Myth #6: Cut Demand and the Rest Will Follow
Myth #7: Once Bush Is Gone, Change Will Come

U.S.: Third World Grid?

A major challenge facing renewable-energy growth is a real-world challenge: Getting power from where it is produced to where it is needed is no small challenge! Points to the need for "DG": distributed generation - where not only are transmission costs avoided, but so are "I2R" losses. Think transformers!

An All-Electric Vehicle Solution

Andy Grove revs up his electric-car approach: In The American, he discusses this need specifically. In Wired, he discusses the problems with Picken's Plan and Gore's focus. Worth reading!

Stagflation Growing

As identified in this blog 2 years ago*, Stagflation is something to be concerned about. Now, The Economist is reporting on it - and for good reason: "This suggests that the economic malaise will stretch well into next year, and maybe into 2010. ... If there was one lesson that policymakers learned in the 1970s, it is that there is no easy cure for stagflation. After the nice years, a hard slog lies ahead."

Point? The decisions we make now need to be fact-based, long-term oriented, instead of driven by election cycle politics - what seems (almost) "fanciful", now.

* And in a research report, in 2005 (page 8), item #2 "Make a Decision".

"$1,000 energy rebates?" This makes no sense!

Let's see... Obama is (rightfully) against McCain's "Gas Tax Holiday" - mainly because it maintains (or worsens) fuel addiction. Now he thinks the Government should step in and give consumers $1000 (of their own money) back for an "energy rebate"... then says he'll pay for it via a windfall profits tax. Election year politics: "Can I buy your vote?" Round 2. (Round 1 being the "stimulus package rebates".)

If "rebates" are such a good idea, why not just lower taxes and call it good?

SNAFU: $1.7 billion Utility spends $258K a year on R&D. Consumer groups says that's "too much!"

It is interesting to note that PGE (Portland General Electric), a $1.7 billion a year company is only spending $258,000 on R&D. How can new technologies (like high-density energy storage - to level the effects of wind power variability - and therefore lower rates to consumers) be developed on that budget? They can't.

PGE is (rightfully) trying to increase it to $2 million a year (still insufficient), but consumers' groups think that's too much. It seems these very groups (who want to lower rates, even though fundamental energy costs are increasing), are against PGE's request for more research dollars. This will have the effect of raising rates higher, later.

We have met the Enemy and He is Us.

"In the end, the Citizens' Utility Board's Jenks... recommended that instead of granting the company an increase in its operating costs, the public utility commission should impose a 1 percent across-the-board cut."

Are speculators to blame for the price of oil?

According to Rich Lowry, blaming speculators is a waste of time, and even illogical. Whatever we do, let's not discuss supply and demand. It might lead us to the "wrong" conclusion (i.e., different from our beliefs).

Biofuels report

Well said: "Corn ethanol provides the kind of cautionary tale that should give us pause and reinforce the need for clear and critical thinking based on science and economics rather than wishful thinking and vested interests." Continuing... "corn ethanol is estimated to contribute to energy independence at a cost that is 15 times more costly than fuel efficiency standards and 28 times more costly than a gas tax".

Corn ethanol is just bad business. It is also entirely subject to the fluctuations in oil. Should oil drop precipitously, corn ethanol will be unable to remain in production.

Giant False Start on Biofuels in Europe

Europeans now determine that biofuels might not be such a great idea. I hope Washington D.C. learns from this - soon.

I am not sure why it requires several studies to determine the negative impact that bio/ethanol has on food prices and Climate Change. [A] It requires land, water and crops to get the feedstock to the "ready" state that oil is already in, and [B] people still need to burn it - to for energy. This is another example of ready, fire, aim. Worse - it is lessons people's belief and resolve to do the next "great solution", and wastes precious time and money going in the wrong direction.

My suggestion? Stop, think, plan and verify which path(s) to go down, before moving forward. It's called "physics meets project management". Let science, problem-solving processes and a more formal approach trump politics and group-think, and you will see real solutions develop.

What effect does the falling dollar have on the price of oil?

With the price of a gallon of gasoline at about $4.50, since 2000 until the beginning of 2008, the falling value of the dollar accounts for nearly $1 of this price. In other words, it would be $3.50 if the dollar had kept the same value of the year 2000. If the dollar had actually strengthened by the same amount as it weakened, the price of gas would be nearly another dollar less, or almost $2.50. So, a question might be: "How do we strengthen the dollar?"

The two-page analysis. Sources for this analysis are: Decline of the dollar since the 1700s; Price of the Euro (Inverse value of the dollar); Price of Oil

A “systems” way of thinking is required to solve our energy dependence problem, and build a sustainable future.

This quote from Peter Senge’s Book “The Fifth Discipline” should cause one pause (relative to how this country is going about “solving our ‘price’ problem”:

“Beware the symptomatic solution. Solutions that address only the symptoms of a problem, not the fundamental causes, tend to short-term benefits at best. In the long term, the problem resurfaces and there is increased pressure for symptomatic response. Meanwhile, the capacity for fundamental solutions can atrophy.”

Paraphrasing: Trying to address the high price of gas (the symptom) instead of dealing with the problem (home-grown alternatives / renewable energy technologies) is delaying the true days of reckoning: And in fact, decreasing our ability to solve this problem. (As has happened in the past 35 years.)

A Congressman speaks his mind on the unintended consequences of a recent bill

Penalizing U.S. oil companies due to Chinese subsidizing oil?

Some countries are subsidizing gas prices for their citizens. The result? Higher demand. Which increases gas prices further. A few of the culprits.

Consider donating what you can!

This site is funded by readers like you. Please donate whatever you can to keep the truth about energy independence coming to you. Thank you.

Time to socialize, er... nationalize, er.. take over the oil companies?

Here we go again! Only this time, look at the faces on Maxine's collaborators' faces when she... well... watch.

Gas Tax "Holiday"?

Unbelievable! First, (some) politicians want to buy your vote by giving you back you own money (via the stimulus package). Then they want to do the exact opposite of what needs to be done to reduce our gas consumption (again, by trying to buy your vote) - by deleting Federal taxes on gasoline over the (pre-election) summer.

The reason this is the exact opposite of what is needed to help us reduce our dependence on oil is: Higher prices reduce consumption. Lower prices (now) encourages higher demand, which uses supply and equals higher prices (later). Again, short-term thinking.

Even though I am for market-driven solutions, the exact right thing to do would be to increase gas taxes (reducing demand) and use that money to develop innovative new technologies to support our utilities and oil companies to move toward carbon-reducing solutions. Unfortunately, that is not politically savvy: John Anderson tried that in 1980 and only received 7% of the popular vote. Lesson learned! Which is why we're now in a downward spiral of lower dollar value and upward spiral of oil prices. Don't blame the oil companies, don't blame the politicians, blame ourselves for being fooled. not once, but every election cycle.

Thomas Friedman's article is worth reading: especially if you're interested in how tax policy & energy strategy do (or don't) work.

Corn ethanol is not the answer.

More reasons why corn ethanol is not the right answer to energy independence: [1] High food prices & more pollution & [2] Dramatic increase in water use.

History repeats itself (1973=> 2008)

Once again, some members of Congress seem to be more interested in appearing to do something (to get reelected) than actually solving the energy problem. They got air-time to grill oil execs. Here we go again. We are headed down the exact same path we did after 1973... which absolutely did not solve the problem!

Due to the OPEC-led oil-shock of 1973, Congress applied a "windfall profits tax" in 1980. This reduced oil companies ability to find better ways to produce oil. Effect? Oil companies can't pump more oil due to demand increases generated by tremendous growth in China & India. Prices went up. This unintended consequence is the exact opposite of what Congress wanted: lower prices. Government at work.

And on the other side, the U.S. government is providing $10 to $20 billion in subsidies to these very same companies. Money that could be used for finding renewable, low-carbon solutions - other than inflation-inducing ethanol (which also requires burning to work). Government at work.

Bottom line: If we just let the market-forces take care of itself, stop subsidizing oil companies and focus on real solutions instead of grand-standing for political purposes, perhaps we could let the market sort itself out. Gasoline at $10 a gallon would be incentive enough for profit-minded entrepreneurs and investors to solve the problem. What's next, price controls? This would be yet another folly - that would further delay Solving Our Energy Problems.

As Albert Einstein said - “We cannot solve our significant problems from the same level of thinking we were at when we created these problems.” This much is clear.

The Oregonian gets Bold

Finally - the Oregonian ran a front page article about "biofuels" - that provided insights into this politically savvy, but factually errant approach. [1] They were being very bold - to go against that normal politically-safe notion that (all) bio-fuels are carbon-reducing. And [2] they were mostly right, but lumped in bio-diesel along with (corn) ethanol. There is "good" bio and "bad" bio: consideration for the energy-to-produce relative to energy-content-of bio-fuels needs to be taken into account.

Of course, for some time now, this blog has been discussing the concerns of blindly jumping on the anything-but-oil bandwagon, at the expense of logic. Yes, both supply and demand & importing oil are causing price increases and political instability. And yes, something needs to be done (solutions, elsewhere int his blog)... but (corn) ethanol can't provide the full solution - without causing a run-up in food prices, and increase in carbon-release! Sugar ethanol is much better, but is causing quicker deforestation. Links to the front page and second part of the article.

Say it isn't so!

A new study says that energy-efficiency efforts may actually help use more energy - as paradoxical as that sounds! This points to a need to also focus on renewable energy / technology development!

"Energy efficiency regulations have little impact on saving energy, helping the environment or reducing dependency on foreign oil, finds a new CIBC World Market report."

The Full Report can be found here. And more on the Khazzom-Brookes Postulate.

Another "unintended consequence"? Proof against this is quite welcome!

Consider donating what you can!

This site is funded by readers like you. Please donate whatever you can to keep the truth about energy independence coming to you. Thank you.

The Best & Worst of Government in Action

The proposed "Renewable Fuels, Consumer Protection, and Energy Efficiency Act of 2007" can be found, here. All 278 pages of it! There are some seriously great aspects of this bill, but the Federal Government is also trying to "legislate capitalism". Meaning, (some parts of it) are simply going to make things worse! (Those unintended consequences again!)

Unintended consequences of Ethanol?

Recent research indicates that high-blend ethanol may actually be worse for the environment, while the Renewable Fuels Association maintains it will be better. The truth would be interesting!

Careful how we approach climate change!

"Climate change is so wildly fashionable now that hardly anybody dares object to measures designed to combat it. But as the costs of such policies rise, that may not last. The more money governments spend on wasteful subsidies, the bigger the backlash is likely to be, and the smaller the chance of sustaining the political will needed to keep the world cool." The whole article.

Ethanol... ready for prime-time?

Further unintended consequences.... (full article, here.)

"Simple economics dictates that if farmers find it more profitable to grow switchgrass rather than corn, soy or cotton, the price of those commodities is bound to rise in response to falling supply.

'You can produce a lot of ethanol from cellulose without competing with food,' said Wallace Tyner, an agricultural economist at Purdue University. 'But if you want to get half your fuel supply from it you will compete with food agriculture.'

There may also be ecological impacts. The government currently pays farmers not to farm about 35 million acres of conservation land, mostly in the Midwest. Those fallow tracts provide valuable habitat for wildlife, especially birds. Though switchgrass is a good home for most birds, if it became profitable to grow it or another energy crop on conservation land some species could decline."

More on food vs. fuel.

Unintended consequences

Focus on corn-based biofuels has doubled corn-feed from $2 a bushel to $4 a bushel. (http://www.energy2025.com/FoodVsFuel.pdf)

Although biofuels are a great alternative to hydrocarbons, they cannot provide 100% solution. Yes, a 15% to 20% solution helps moderate imports, but at what cost? The "stuff" from which energy is to be produced needs to be "free". Just as oil is "free" (just need to pay to extract, refine, ship & distribute it). What else is based on a "free" essence of the basic energy source? Solar, wind, wave, hydro energy. Of course, that would drive us to electric cars (pardon the pun). But why not? The infrastructure exists, already!

The best we can do?

Please read the House bill "Creating Long-Term Energy Alternatives for the Nation Act", and determine for yourself if this will actually help US get there! My take? The title conveys a spot-on message, however it seems the Act is being used to tell voters "We're doing something." - when in fact, it limits U.S. oil companies' ability to compete on the global playing field, and really does nothing to encourage investment in renewable energy sources! Net result? Same as the 1980's WPT: U.S. oil companies will be at a disadvantage relative to foreign oil companies. This provides us another unintended (i.e., bad) long-term consequence, while seemingly doing soemthing in the short term. Not only that, it will have the effect of lost jobs, due to less investment money! The exact opposite of the Democrats' desires.

A better approach might be to ensure that *all* producers are equally affected - by imposing a consumer-inducement to reduce fuel, while investing proceeds in alternatives... and define how the money will be spent. (i.e., a free-market-based, VC-type Energy Independence Fund, perhaps?)

Unintended Consequences at work again!

Unintended Consequences at work again!

Focusing on the effect...
Contrary as it sounds, (even temporary) elimination of the 18 cents a gallon Federal tax on each gallon of gas "to reduce the effect of high gas prices on consumers" will ultimately result in... you guessed it - higher gas prices. Same as a "windfall profit tax" on oil companies.

Why? Cheap gas keeps us hooked on gasoline as our primary fuel (and we use more!), while higher prices encourage everyone to look for alternatives. With higher prices, we use less gas... bringing a downward pressure to prices! (Simple supply & demand.) If we let market forces work... we will have renewable energy, sooner! Not later! These are just two examples of the Law of Unintended Consequences!

... when we should be focusing on the cause:
The cause of high gas prices is that Americans simply want lots of cheap gas... and will do most anything to keep it that way. That is, our dependence on foreign oil is due to having had so much cheap gas for so long! And it also due to the lack of competing energy sources. (The U.S. Government has been subsidizing Big Oil for a very long time!)

We must break this decades-old cycle! We must take back energy leadership. We must create an Energy Independence Fund. It would be operated like a Venture Capital firm, by business people... with the mission of funding innovation & new technology to enable the U.S. to become a net-exporter of renewable energy. It would be funded by the day to day fluctuations in gas-at-the-pump: about 15 cents a gallon. This EIF would also have the secondary effect of (slightly) dampening demand, thereby putting (lowering) pressure on gas prices.

Consider donating what you can!

This site is funded by readers like you. Please donate whatever you can to keep the truth about energy independence coming to you. Thank you.