A Christian Liberal is NOT an oxymoron.

Posted by XT on September 16th, 2008 in US News

I am extremely dubious of anyone who calls for “energy independence“. For me, it sends up a big red “I’m a MORON!” flag. So I’ve pretty much totally dismissed T. Boone Pickens‘ energy plan – but I thought I’d take a look at it, if for no other reason than Big Bill Richardson signed off on it.

Right off, I have problems with “The Plan”.

America is addicted to foreign oil.

It’s an addiction that threatens our economy, our environment and our national security. It touches every part of our daily lives and ties our hands as a nation and a people.

I’ve never liked the addiction analogy. It’s overblown. If you buy into the Twelve Stepper definition of addiction, then the use of oil is surely fatal. If you prefer a more behavioral explanation, then it’s a sick social cycle of negative emotional dependence.

Oil is just a commodity. It’s movement and sale across international borders is no more evil than that of socks or underwear or toothpicks. So long as oil is abundant – and it is – and cheap – believe it or not, it still is – we can adjust to periodic spikes and troughs in pricing. It is not the absolute value of gasoline that is the problem, it is the quick spike in prices. Given time, our economy would adjust to $500 a barrel oil. Of course, I hope we don’t have to any time soon, but the market dynamics are all there.

More Pickens stuff:

As imports grow and world prices rise, the amount of money we send to foreign nations every year is soaring. At current oil prices, we will send $700 billion dollars out of the country this year alone — that’s four times the annual cost of the Iraq war.

Projected over the next 10 years the cost will be $10 trillion — it will be the greatest transfer of wealth in the history of mankind.

Oil prices change. Not every barrel is bought at record prices – in fact, only a very small percentage is.

Anyway, not all financial transfers are the same. What Pickens doesn’t talk about is that we’ve already seen a transfer of vast amounts of natural resources into this country. The difference between the transfer Pickens talks about and the transfer he doesn’t is that all of those resources go into a single country – ours – while the wealth is transferred to many different countries.

According to the latest EIA data, this is how much oil was delivered to the United States in June of this year:
Total: 401,007 thousand barrels

Countries of origin with more than 10,000 thousand barrels imports to the US in June (in units of 10,000 barrels):

Algeria: 14,753
Angola: 19,461
Iraq: 20,786
Nigeria: 30,595
Saudi Arabia 44,785
Venezuela 36,436
Canada 70,784
Mexico 37,626
Russia 22,914

The following countries make the “more than 5,000 thousand barrels” marker:

Ecuador 5,506
Kuwait 5,476
Brazil 9,428
Columbia 5,381
Netherlands 7,918
UK 8,573
Virgin Islands 9,430

That’s 16 countries, and there are 48 more on the list as having sent us petroleum (or refined products) in the month of June of 2008.

World oil production peaked in 2005. Despite growing demand and an unprecedented increase in prices, oil production has fallen over the last three years. Oil is getting more expensive to produce, harder to find and there just isn’t enough of it to keep up with demand.

You can look at the numbers yourself (Excel file). There was a very slight decline in 2006 – from 84,582 thousand barrels per day to 84,544 thousand barrels per day. So far, for this year, we are producing 84,439 thousand barrels per day. This is somewhere around a 0.2% single-year reduction in oil production. Is it a view of the future? Well, there is honestly no way to tell from a single year’s worth of data. As far as “the last three years” – oil production has been relatively flat, falling less than 1% total.

Now, look at the phrase “Despite…unprecedented increase in prices…” Now think about your basic economics class. What happens to demand when price increases? That’s right, it falls. And what happens to production of any particular good when demand falls? Yes, production will follow demand.

According to the BP Statistical Review of Energy, in 2007, demand actually increased a bit while production fell very slightly. But the longer trend is for upward prices causing a slower growth in demand.

Oil is certainly getting harder to find and more expensive to produce, but we have yet to reach a point where there isn’t enough of it to keep up with demand. That doesn’t mean we should do nothing until we reach that point, but we need to be honest about things.

Further down, Pickens confuses his comparisons when he talks about natural gas vehicles, then switches immediately to compressed natural gas prices. There’s no discussion at all of liquified natural gas. There’s no discussion of increased safety concerns with compressed natural gas or the energy required to liquify it. So his “plan” just breezes over the hard part of his plan. “Somehow” we convert to natural gas and then “somehow” shift everything back to wind power. That isn’t a plan, it’s a hope.

Then there’s also the hypocrisy factor. The Clinton Administration had issued plans to increase the use of natural gas for electricity generation – a plan that was halted by the Bush Administration as part of their skepticism about global warming. As part of “diversifying” our electrical grid, the Bushies wanted to use less natural gas – a fuel that is used to produce about fifteen percent of our electricity – in favor of more coal – which is used to produce more than fifty percent of our electricity (if that doesn’t make sense, then you read it correctly).

I agree that we should use more natural gas – it’s cheap, efficient, plentiful, and cleaner burning than either coal or oil. But we don’t need to resort to hysterics to do so. Plus, color me incredibly skeptical about Pickens’ sudden conversion to an apolitical energy guru. The man is in it to make money, pure and simple. I’d trust him more if he’d say so.

Technorati Tags: energy independence, T. Boone Pickens, Bill Richardson

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