Topic: A scary strategic problem - no oil

[Thucydides]

Interesting, if dense, read.

If I understand one of their conclusions correctly, taxes on petroleum products are actually beginning to artificially favour alternate sources of energy, without necessarily ensuring that these alternative energy sources are viable or economical.  Thoughts?

Increasing taxes works on the demand side of the equation (higher prices reduce usage and drive consumers to seek lower cost alternatives), but since the price mechanism is taxation, the money is siphoned out of the productive economy, and energy producers see no incentive to move towards alternatives (and less money is availalbe for alternative energy investment anyway, since it is in the "General Revenue" pot of the government, not in the hands of individual investors).

It is an interesting conumdrum (and obviously more complex than a one line summary can give), since the United States spends something on the order of $100 billion per year on imported oil. With that amount of money flowing out of the country, you would imagine there would be every incentive to turn things around, but this isn't true, and hasn't since the 1973 oil embargo.

[TCBF]

So, after the Isrealis try to take out the Iranian nuclear capability and the Iraniansthen  close the gulf using their Sunburn anti-ship missles (thanks a bunch for that, Russia!), how much will oil cost per bbl?

Tom

[Thucydides]

So, after the Isrealis try to take out the Iranian nuclear capability and the Iraniansthen  close the gulf using their Sunburn anti-ship missles (thanks a bunch for that, Russia!), how much will oil cost per bbl?

Tom

I'll call Ralph Klien and ask how much he wants 

Update: Some people are believers in the alcohol economy. My own personal take is that they are not adding the energy inputs of fertilizer and other petrochemicals needed for modern high intensity agriculture (we are talking about raising enough biomass to fuel the transportation economy of the United States), but nevertheless:

http://www.taemag.com/issues/articleID.18976/article_detail.asp

[clasper]

I'll call Ralph Klien and ask how much he wants 

Update: Some people are believers in the alcohol economy. My own personal take is that they are not adding the energy inputs of fertilizer and other petrochemicals needed for modern high intensity agriculture (we are talking about raising enough biomass to fuel the transportation economy of the United States), but nevertheless:

http://www.taemag.com/issues/articleID.18976/article_detail.asp

Very interesting article from Robert Zubrin.  There were a few holes in the economics of his Case for Mars (which was 15 years ago), but he's learned quite a bit since then.  He's still politically naive, but you can bet the physics behind what he's saying is bang on- he's analyzed all of the inputs for modern agriculture (and realized that agriculture is incapable of providing all of the alcohol required for the economy).

[Thucydides]

Getting off the oil wagon or at least getting a new and secure supply away from the middle east is becoming more and more pressing:

http://www.nationalreview.com/hanson/hanson200602030807.asp

Three Pillars of Wisdom
Finding our footing where lunacy looms large.

Public relations between the so-called West and the Islamic Middle East have reached a level of abject absurdity. Hamas, whose charter pledges the very destruction of Israel, comes to power only through American-inspired pressures to hold Western-style free elections on the West Bank. No one expected the elders of a New England township, but they were nevertheless somewhat amused that the result was right out of a Quentin Tarantino movie.

Almost immediately, Hamas's newly elected, self-proclaimed officials issued a series of demands: Israel should change its flag; the Europeans and the Americans must continue to give its terrorists hundreds of millions of dollars in aid; there will be no retraction of its promises to destroy Israel.

Apparently, the West and Israel are not only to give to Hamas some breathing space ("a truce"), but also to subsidize it while it gets its second wind to renew the struggle to annihilate the Jewish state.

All this lunacy is understood only in a larger surreal landscape. Tibet is swallowed by China. Much of Greek Cyprus is gobbled up by Turkish forces. Germany is 10-percent smaller today than in 1945. Yet only in the Middle East is there even a term "occupied land," one that derived from the military defeat of an aggressive power.

Over a half-million Jews were forcibly cleansed from Baghdad, Damascus, Cairo, and other Arab cities after the 1967 war; but only on the West Bank are there still refugees who lost their homes. Over a million people were butchered in Rwanda; thousands die each month in Darfur. The world snoozes. Yet less than 60 are killed in a running battle in Jenin, and suddenly the 1.5 million lost in Stalingrad and Leningrad are evoked as the moral objects of comparison, as the globe is lectured about "Jeningrad."

Now the Islamic world is organizing boycotts of Denmark because one of its newspapers chose to run a cartoon supposedly lampooning the prophet Mohammed. We are supposed to forget that it is de rigueur in raucous Scandinavian popular culture to attack Christianity with impunity. Much less are we to remember that Hamas terrorists occupied and desecrated the Church of the Nativity in Bethlehem in a globally televised charade.

Instead, Danish officials are threatened, boycotts organized, ambassadors recalled — and, yes, Bill Clinton steps forward to offer another lip-biting apology while garnering lecture fees in the oil-rich Gulf, in the manner of his mea culpa last year to the Iranian mullacracy. There is now a pattern to Clintonian apologies — they almost always occur overseas and on someone else's subsidy.

Ever since that seminal death sentence handed down to Salman Rushdie by the Iranian theocracy, the Western world has incrementally and insidiously accepted these laws of asymmetry. Perhaps due to what might legitimately be called the lunacy principle ("these people are capable of doing anything at anytime"), the Muslim Middle East can insist on one standard of behavior for itself and quite another for others. It asks nothing of its own people and everything of everyone else's, while expecting no serious repercussions in the age of political correctness, in which affluent and leisured Westerners are frantic to avoid any disruption in their rather sheltered lives.

Then there is "President" Ahmadinejad of Iran, who, a mere 60 years after the Holocaust, trumps Mein Kampf by not only promising, like Hitler, to wipe out the Jews, but, unlike the ascendant Fuhrer, going about the business of quite publicly obtaining the means to do it. And the rest of the Islamic world, nursed on the daily "apes and pigs" slurs, can just scarcely conceal its envy that the Persian Shiite outsider will bell the cat before they do.

The architects of September 11, by general consent, hide somewhere on the Pakistani border. A recent American missile strike that killed a few of them was roundly condemned by the Pakistani government. Although a recipient of billions of dollars in American aid and debt relief, and admittedly harboring those responsible for 9/11, it castigates the U.S. for violating borders in pursuit of our deadly enemies who, while on Pakistani soil, boast of planning yet another mass murder of Americans.

Pakistan demands that America will cease such incursions — or else. The "else" apparently entails the threat either to give even greater latitude to terrorists, or to allow them to return to Afghanistan to destroy the nascent democracy in Kabul. American diplomats understandably would shudder at the thought of threatening nuclear Pakistan should there be another 9/11, this time organized by the very al Qaedists they now harbor.

The list of hypocrisies could be expanded. The locus classicus, of course, is bin Laden's fanciful fatwas. Oil pumped for $5 a barrel and sold for $70 is called stealing resources. Tens of millions of Muslims emigrating to the United States and Europe, while very few Westerners reside in the Middle East, is deemed "occupying our lands." Israel, the biblical home of the Jews, and subsequently claimed for centuries by Persians, Greeks, Macedonians, Romans, Byzantines, Franks, Ottomans, and English is "occupied by crusader infidels" — as if the entire world is to accept that world history began only in the seventh century A.D.

The only mystery is not how bizarre the news will be from the Middle East, but why the autocratic Middle Easterners feel so confident that any would pay their lunacy such attention.

The answer? Oil and nukes — and sometimes the two in combination.

By any economic standard, most states in the Middle East — whether characterized by monarchy, Baathism, dictatorship, or theocracy — have floundered. There are no scientific discoveries emanating from a Cairo or Damascus. It is tragic and perhaps insensitive, but nevertheless honest, to confess that the contemporary Arab world has lately given the world only two new developments: the suicide-bomb belt and the improvised explosive device. Even here there is a twofold irony: The technology for both is imported from the West. And the very tactic arises out of a desperate admission that to fight a conventional battle against a Westernized military without the cover of civilian shields, whether in Israel or Baghdad, is tantamount to suicide.

Meanwhile, millions of Africans face famine and try to inaugurate democracies. Asia is in the midst of economic transformation. Latin America is undergoing fundamental political upheaval. Who cares? — our attention is glued instead on a few acres near Jericho, the mountains of the Hindu Kush, the succession patterns of Gulf Royals, and the latest ranting of an Iranian president who seems barely hinged, and without petroleum and a reactor would be accorded the global derision once reserved for Idi Amin.

So take the dependency on oil away from Europe and the United States, and the billions of petrodollars the world sends yearly to medieval regimes like Iran or Saudi Arabia, and the other five billion of us could, to be frank, fret little whether such self-pitying tribal and patriarchal societies wished to remain, well, tribal. There would be no money for Hezbollah, Wahhabi madrassas, Syrian assassination teams, or bought Western apologists.

The problem is not just a matter of the particular suppliers who happen to sell to the United States — after all, we get lots of our imported oil from Mexico, Canada, and Nigeria. Rather, we should worry about the insatiable American demand that results in tight global supply for everyone, leading to high prices and petrobillions in the hands of otherwise-failed societies who use this largess for nefarious activities from buying nukes to buying off deserved censure from the West, India, and China. If the Middle East gets a pass on its terrorist behavior from the rest of the world, ultimately that exemption can be traced back to the voracious American appetite for imported oil, and its effects on everything from global petroleum prices to the appeasement of Islamic fascism.

Without nuclear acquisition, a Pakistan or Iran would warrant little worry. It is no accident that top al Qaeda figures are either in Pakistan or Iran, assured that their immunity is won by reason that both of their hosts have vast oil reserves or nukes or both.

The lesson from all this is that in order to free the United States from such blackmail and dependency, we must at least try to achieve energy independence and drive down oil prices — and see that no Middle East autocracy gains nuclear weapons. Those principles, along with support for democratic reform, should be the three pillars of American foreign policy.

Encouraging democracy is still vital to offer a third choice other than dictatorship or theocracy — especially when we now recognize the general Middle East rule: The logical successor to a shah is a Khomeini; a Zarqawi wishes to follow a fallen Saddam; a propped-up Arafat ensures Hamas; and a subsidized Mubarak will lead to the Muslim Brotherhood. Puritanical zealotry always feeds off autocratic corruption — as if lopping hands and heads is the proper antidote to military courts and firing squads.

And we also know the political blame game at home: Past realist failures at propping up dictators are postfacto reinvented as sobriety, while the messy and belated democratic correction is derided as foolery. Even the election of Hamas and the honesty it brings are welcome news: Support the process, not always the result, while stopping the subsidy and dialogue if such terrorists come to power. Let them stew in their own juice, not ours.

In the meantime, until we arrive at liberal and consensual governments that prove stable, there will be no real peace. And if an Iran, Saudi Arabia, or Syria obtains nuclear weapons, there will be eventually war on an unimaginable scale, predicated on the principle that the West will tolerate almost any imaginable horror to ensure that one of its cities is not nuked or made uninhabitable.

Yet if billions of petrodollars continue to pour into such traditional societies, as a result they will never do the hard political and economic work of building real societies. Instead their elites will obtain real nuclear weapons to threaten neighbors for even more concessions, as they buy support at home with the national prestige of an "Islamic bomb." Saddam almost grasped that: Had he delayed his invasion of Kuwait five years until he resurrected his damaged nuclear program, Kuwait would now be an Iraqi province, and perhaps Saudi Arabia as well.

In the long-term, democratization in the framework of constitutional government has the best chance of bringing relief. But for the foreseeable future the United States and its allies must also ensure that Iran, and states like it, are not nuclear, and that we wean ourselves off a petroleum dependency — to save both ourselves, the addicts, and even our enemies, the dealers of the Middle East.

— Victor Davis Hanson is a senior fellow at the Hoover Institution. His latest book is A War Like No Other. How the Athenians and Spartans Fought the Peloponnesian War.
   
  http://www.nationalreview.com/hanson/hanson200602030807.asp

       

[Thucydides]

Interesting observation: rising pump prices are not affecting consumer behaviour in the way expected by classical economists, but there are other factors.

http://www.forbes.com/home/columnists/2006/04/20/energy-costs-gasoline_cx_ns_0420schulz.html

Why The Pump Isn't More Painful
Nick Schulz 04.20.06, 11:30 AM ET

When it comes to gas prices, the media too often know the price of everything and the value of nothing.

Flip open a paper or turn on the TV and you'll learn that gas prices are rising again. "Stormy 6 Weeks Ahead," says CBSNews--and warns consumers to expect "pain at the pump." MSNBC says, "Further surge in gas prices expected." "Summer is approaching--and gas prices are already climbing," MSN Money tells us. And this week, crude oil hit $70 per barrel. The culprits include rising demand, pinched supplies, uncertainty over future crude prices and instability in the Middle East and Nigeria.

But what's more interesting about these stories is what they don't tell you. For example, the Associated Press reports that "surveys indicate drivers won't be easing off on their mileage, using even more gas than a year ago." Now why is that? If prices are rising, one would expect consumers would use less.

The answer might be in some of the long-term trends that the short-term media lens is too cramped to see. Energy prices may be rising, but energy itself is much less important to consumers and to the overall economy than it once was.

According to the Bureau of Economic Affairs (see chart here), American consumer spending on energy as a fraction of total personal consumption has declined considerably since 1980. Whereas 25 years ago, one in every ten consumer dollars was spent on energy, today it's one in every 16. In other words, what it takes to heat and cool our homes and drive to and from our jobs and vacation destinations is relatively less costly than it was then.

This goes a long way toward explaining why even when gas prices rise this summer--higher than they were throughout the 1990s--people will still be driving more; it's much more of a value than it was a generation ago.

What's more, so-called energy intensity is declining rapidly. That means we produce more with less energy. According to Economy.com, "The U.S. economy has undergone major structural changes over the last two decades, becoming more energy efficient, thus reducing its overall dependence on energy. … The energy intensity of the U.S. economy has declined by roughly 40% since the first oil crisis (as of 2001)."

These trends are healthy for the economy. They also put the lie to President George W. Bush's recent unwise rhetoric about America's oil "addiction." The nature of addiction typically is that it becomes all-consuming, eating up a greater share of one's life and livelihood. But the long-term trends of American consumer spending reflect something different: Energy is becoming less important to the overall economy over time.

Of course, no one likes to pay more at the pump. And with some analysts predicting oil per barrel going up to $75 or higher in the near future, we might see retail prices go up further still. But unlike a generation or two ago, these increases won't prompt the broader economic pain they once did.

Nick Schulz is editor of TCS Daily.

[Old Guy]

Here's a link to a well-reasoned article in Reason magazine (no pun intended).

http://www.reason.com/0605/fe.rb.peak.shtml

Jim

[tomahawk6]

The US and Canada could be self sufficient in oil within two years by doing the following :
1.US - coal liquification
2.Canada- liquificiation of tar sands

The cost of a liquification plant is $1.25b  per 22,000 barrel/day. These plants are modules so a 50,000 barrel/day plant is $2.5b. Cost is $25 to $30 a barrel to liquify coal/tar sands. Plant should be built on a site with large proven reserves to keep transportation costs at a minimum. Montana for example has 120 billion tons of proven coal reserves. This technology can be used to liquify oil shale as well. I think this is the best short term way to make our countries entirely independent of foreign oil.

[Thucydides]

Market incentives will help bring about many of the alternative ideas that are being touted here, increase production of existing resources and perhaps unleash a few ideas no one has thought of yet:

http://www.nationalreview.com/kudlow/kudlow200604280845.asp

The Greatest Story Never Told
Even the oil saga can’t disrupt this upbeat economic page-turner.

As all the pollsters are telling us, there’s an inverse relationship between rising gasoline prices and President’s Bush’s falling approval ratings — most especially his approval rating on the economy. Of course, these polls describe a certain national angst over energy that harkens back to the dreadful 1970s. But there’s a better reality out there: Namely, the upturn in gas prices simply is not stopping the economy the way it did three decades ago.

Today’s economy may be the greatest story never told. It’s an American boom, spurred by lower tax rates, huge profits, big productivity, plentiful jobs, and an ongoing free-market capitalist resiliency. It’s also a global boom, marked by a spread of free-market capitalism like we’ve never seen before.

The political resolution to the disconnect between fear (high energy prices) and reality (a great economy) remains to be seen. But as the data keep rolling in, the economy continues to surpass not only the pessimism of its critics, but even the optimism of its supporters.

Recent data on production, retail sales, and employment are stronger than expected. The latest durable-goods report shows huge gains in orders for big-ticket items like airplanes, transportation, metals, machinery, and computers — even cars and parts. These orders suggest that the economic boom will continue as far as the eye can see. And there’s more: The backlog of unfilled orders, the best leading-indicator of business activity, gained 12 percent at an annual rate in the first quarter. With this kind of real-world corporate activity in the pipeline, highly profitable businesses will be doing a lot of hiring in the months ahead in order to expand plant and equipment capacity. Just what the doctor ordered.

As for the energy angst, President Bush recently outlined a sensible pro-market mid-course policy correction. He is suspending the ethanol tax mandate that forced gasoline distributors to switch to the corn-based fuel from the MTBE oxygenate. This ethanol regulation was one of the great energy-policy bungles of all time. Neither refiners nor transporters were anywhere near ready to implement this misguided mandate, which drove up pump prices by 50 cents in just a few weeks. Energy secretary Sam Bodman was warned by industry leaders — like much-maligned former ExxonMobil CEO Lee Raymond — that the ethanol-switch would be a disaster. But Bodman didn’t listen, although, according to the polls, it seems like America did.

But with Bush’s recent action, futures prices for unleaded gasoline are already retreating, and it wouldn’t surprise if the whole ethanol-price-hike effect was reversed. Crude oil is also declining in the aftermath of the Bush announcements, which included the decision to stop the crude-oil fill rate for the Strategic Petroleum Reserve. At the margin, government deregulation is giving markets more latitude — always a good thing.

The big point here is that free markets work. Rising prices from the global boom will lead to more conservation, less consumption, and more production, but only so long as government stays out of the way. Instead of blaming ExxonMobil for high gas prices, irate motorists and voters should blame Congress for mandating, regulating, and taxing against energy.

Indeed, bashing big oil won’t create a drop of new energy. Nor will confiscating Lee Raymond’s bank account. Actually, over the past fifteen years, ExxonMobil’s total investment has exceeded the company’s earnings, according to Washington analyst James K. Glassman. Meanwhile, all the evidence from time immemorial shows that gas prices are set by market forces, not manipulation at the production level. So-called price gouging is nothing but a political red herring. Windfall profits taxes and special tax subsidies will only diminish energy investment, not increase it.

Energy is best left in the hands of the free market. With this in mind, Congress should allow environmentally friendly drilling in ANWAR and the Outer Continental Shelf, more LNG terminals, and the creation of nuclear power facilities. Deregulation works: Just look at the boom in Canadian oil sands.

President Bush can also build on his new energy policy with more pro-growth measures that will extend the economic boom: Get rid of the ethanol tax for good. Repeal the tariff on imported ethanol from Brazil and elsewhere. Repeal the multiple taxation of dividends and cap-gains, and abolish the death tax while you’re at it. Exercise the budget veto pen to stop bridges and railroads to nowhere. Go back to the Reagan economic model of a strong dollar to hold down inflation and lower-tax-rate incentives to promote economic growth. That model will work as well today as it did twenty-five years ago when it launched the long prosperity boom we continue to enjoy.

Most of all, let free markets work. This is the new worldwide message of freedom, prosperity, and optimism.

— Larry Kudlow, NRO’s Economics Editor, is host of CNBC’s Kudlow & Company and author of the daily web blog, Kudlow’s Money Politic$.
http://www.nationalreview.com/kudlow/kudlow200604280845.asp

       

[probum non poenitet]

Here's a bit of optimism for you:

In the 1960s, there was a raging debate in the computer science field whether or not a computer would ever be able 'smart' enough to play chess.
Many of the top computer scientists said it was far too complex for a machine, and always would be.
40 years later computers can beat the best human players in the world.

I think our technology is advancing so fast, that when it really becomes important and profitable, alternate energy will come to the fore. It will probably be something we haven't even considered yet. (If you had talked about electricity or photography or radio to someone 50 years before they were invented/discovered, they would have thought you were crackers).

Of course, in the future we will probably also have to deal with berserk terminator robots ...

[Otto Fest]

I too am optomistic.  As prices rise the users at the margins who gain the least utility value from it will stop or lower their consumption.  Case in point, my car was just totalled, but we still have a van for three kids.  I now walk or ride the bike to work and save about $250 per month.

I'm constantly asked when I'm getting a new car.  I answer "why?"

Most oil companies are publicly traded entities striving to make a profit for their shareholders, so are obligated to sell to the highest bidder.  China can buy all the Canadian oil companies it wants, but if it attempts to sell cheaper oil to itself will go bankrupt.  It won't be north americans that go without because we are filthy rich (as a whole).  It will be the developing and third world that will suffer.

[GAP]

The next set of wars/conflicts has already and will continue to be about resources. Oil is a major factor, even if it is Politically Incorrect to mention it. All other arguemen ts aside, the Iraq war has an oil supply component, as does Afghanistan (via Tajikistan pipeline).

I don't want to get into a big flap about all the good reasons...that's not the point here. Governments and companies are more than aware of the coming crisis, and are developing their inroads and areas of protection/development for the past 20 years, and will continue to do so. They just don't advertise it.

This whole scenario has an up side. As long as there was a "glut" of oil, alternative methods or fuels would not be considered seriously. Just look at the development of the hydrogen fuel cell and wind power within the last 5 years will tell you that something is changing.

[tomahawk6]

Good post Grunt. The China and India together are using as much oil as the US did 10 year's ago, which is causing pressure on oil prices, then throw in the jitters over Iran's nuclear program and you have +$75 oil.
It may be that the Iranian's are sounding crazy to keep oil prices and their profits high.

[clasper]

Most oil companies are publicly traded entities striving to make a profit for their shareholders, so are obligated to sell to the highest bidder.  China can buy all the Canadian oil companies it wants, but if it attempts to sell cheaper oil to itself will go bankrupt.

Unfortunately this isn't true.  The major oil companies (BP, Shell, ChevronTexaco, ExxonMobil, etc.) are all publicly traded, but they control fewer reserves than major resource holders controlled by national governments in Saudi Arabia, Iran, Venezuela, Russia, and elsewhere.  Many of these governments behave less rationally than free markets do, and will throw whatever wrenches they can into the works of alternative energies (whether it's actually in their interest or not).

[Thucydides]

True enough. Venezuela and Saudi Arabia (among others) sell heavily subsidized oil to their home markets, while "letting" us buy it at the market price. This isn't limited to oil or the third world, Ontario's policy of selling electricity to consumers for less than the market price is setting us up for the greatest financial disaster in Canadian history; all our tax money is going to American generating companies [who are using coal fired plants too, no less] to buy our peak power.

One of the interesting common theams of the alternative energy movement is to "create" more resources that are under our control (either "home grown" resources like biodiesel or ways and means to unlock the tar sands or shale oil that exist here in North America).

[tomahawk6]

Engines capable of operating from multiple fuels is one component to energy independence. The quasiturbine engine is the future. It can burn diesel,gas,methanol and even hydrogen. The engine does not require oil, which is a huge plus. Burns fuel with far fewer emitions than current engines. Fewer moving parts. I really am excited about this engine.

http://www.quasiturbine.com/

http://auto.howstuffworks.com/quasiturbine4.htm

[54/102 CEF]

A PDF File for you from this author http://www.oilendgame.com/

See notes on the 60 slide show here
http://www.jhuapl.edu/POW/rethinking/SeminarArchive/022306/022306_LovinsNotes.pdf

Full presentation in PDF http://www.jhuapl.edu/POW/rethinking/SeminarArchive/022306/022306_LovinsPresentation.pdf

Extracts

۞ Symbols link to start of relevant video NOTE - this links to videos of the presentation here ---- look for Feb 23 Speaker: Amory Lovins

See video archive http://www.jhuapl.edu/POW/rethinking/video.cfm
Rethinking the Future Nature of Competitions and Conflict
23 February 2006
Amory Lovins
Director, Rocky Mountain Institute
Winning the Oil Endgame
۞ 1
Mr. Lovins began by describing his work and that of his Rocky Mountain Institute
• Vision: abundance by design (http://www.natcap.org)
• Mission: foster the efficient and restorative use of resources to make the world
secure, just, prosperous, and life-sustaining
• Past security work
o Defense Science Board panel on platform efficiency (1999–2001)
o Studies for SECNAV and COMNAVSEA on ship power and
transformation issues
o Led “greening”-of-Pentagon
o Strategy lectures for NDU, AWC, NWC, NPS, OJCS
o Definitive unclass study of domestic energy vulnerability (1981)
o Extensive unclass nonproliferation syntheses 1970s–80s
o Redefined security in Security Without War (1993)
o Does not consider himself an expert on military affairs
Energy efficiency improvements from RMI work
• From RMI work involving $20B in redesign of over 80 companies
• Retro fits can bring free byproducts
• Redesigns can save capital so that new plants can be located in Texas, not China
• Tremendous savings can be had no matter what the company
o Retrofits usually have 2-3 year paybacks for investments
o New, specially designed facilities can save on capital investments
Major Thesis: The US can get completely off its oil dependency and revise its economy
• All to be lead by business profit motives and decisions
• Can/should be accelerated by DoD’s interest
Context: competition drives strategy and things do change
• Military strategic vectors used to be stealth, speed and precision
o Then network central warfare issues added
۞ 2
o Now need to consider Power as the 5th strategic vector
 Electrified warriors keep running out of batteries
 Systems also need huge amounts of fuel
o Threats can now be asymmetrical, demassified, elusive, remote, irregular,
techno-savvy
 Now need many small units covering large areas
• Power issues are about 50 years behind the other vectors
o So ripe for attacking the problem
• Currently need oil to move military’s heavy equipment
o Ultra light materials could change all that
• A reasonably conservative target would improve fuel use by 3-4 times
Current requirements and acquisition process hugely undervalues fuel efficiency
• Logistics are assumed to be free
• In war games, never deal with fuel issues
• In reality whole divisions tasked with hauling fuel around
o They are very vulnerable
o Cut backs in need for fuel would change tooth to tail ratio big-time
o Could save 10s of B$ per year
Biggest win would be more strategic – won’t need as much oil so won’t need to treat oilproducing
countries differently or fight for oil rights
• See Winning the Oil Endgame
• Partially paid for by Andy Marshal in Net Assessments
• Has been endorsed by a number of military officers and DoD policy-makers
• Push civilian world change so eliminate US oil needs by 2040s
Winning the Oil Endgame is not based on any political strategy but on business logic
• 1/3 of the way through a 3-year program
• Doing business acupuncture to help maintain the flow of business
o Involves tweaking small issues
۞ 3
Things can change quickly:
• In 1850 the biggest US industry was whaling to provide oil for lamps
• Within 6 years 5/6th of the market moved away to fossil fuels
• Whalers did not watch what their competition was doing at the time
 No one bothered to add up all the fuel alternatives coming on line
 Happening again
We know that major conservation and other efforts can work
• Did after the 1970s oil shocks
• Broke OPEC control for 10 years
• We can save oil faster than the Saudis can stop selling it
• Investment can be one time
• There could be 1 million new jobs available
o Mostly in rural areas that have been losing populations
Key to making changes – vehicles
• Need to make them light and slippery to cut wind resistance
• Includes cars, trucks, planes, etc
• Remarkable new materials will be very important
o Carbon fiber cars and other vehicles
• Use of more exotic (often more expensive) materials is compensated by simpler
manufacturing processes

Where does a car’s fuel energy go?
Only 6% goes into acceleration
Therefore less than 1% actually propels the drivers
Would save a great deal if vehicles were made much lighter

New materials can be highly impact absorbing
• Can be aluminum, light steels or carbon composites
• No longer have to be big and heavy to be safe
o Carbon composite structures can absorb 6-12 times as much energy per kg
as steel does
• Could be simpler and potentially cheaper to manufacture
۞ 4
Need to migrate innovative techniques and materials from military/aerospace industries
to high volume vehicles
• Example: In 1994–96 DARPA/ Integrated Technology for Affordability Skunk
Works® team designed an advanced tactical fighter airframe
o 95% of carbon-fiber composites
o 1/3 lighter than its 72%-metal predecessor
o but 2/3 cheaper because designed to be made from carbon
o Too radical for military customer
• Same players designed a halved-weight SUV

GM et al are obviously re-inventing themselves

[clasper]

Further to my last about national oil companies behaving less than rationally:

http://www.rigzone.com/news/article.asp?a_id=31765

Edit: just noticed that tomahawk6 posted the same article here:
http://forums.army.ca/forums/index.php/topic,42915.msg0.html

[Thucydides]

One thing that isn't thought of often is the time it takes to work new changes in and replace the established capital base (i.e. the "sunk costs" of what is already out there). Here is a link to a somewhat pessemistic article suggesting the changeover could take 50 years. I think a more reasonable extimate would be around 20, splitting the differecen between Amory Lovens and MIT

http://www.technologyreview.com/read_article.aspx?id=16777&ch=biztech

Hydrogen Reality Check

Fuel cells won't significantly dent fuel consumption for 50 years -- we need to look elsewhere.

By Kevin Bullis

High oil prices and concerns about the long-term availability of oil have U.S. government officials singing the praises of hydrogen fuel cells as a solution to our nation's transportation energy problem. But fuel cells, while a promising technology, could take more than 50 years to have a significant impact on gasoline consumption, according to estimates by MIT researchers. On the other hand, improved internal combustion engines and lighter vehicles could offset energy consumption much sooner, especially if consumers have incentives to buy them and manufacturers to make them.

"The potential for hydrogen fuel cells having an impact that you'd notice is a long way away," says John Heywood, professor of mechanical engineering at MIT. The estimates assume that competitive fuel cell vehicles will be available within 15 years, an achievement that will require improvements, for example, in hydrogen storage and production and fuel-cell costs. But even if and when fuel-cell vehicles come with the price and performance that consumers want, it will still take decades more before such new vehicles work their way into widespread use.

One factor slowing the impact of any new vehicle technology -- whether advanced internal combustion engine, hybrid, or fuel cell -- is the average lifespan of a car, which is about 15 years, according to Heywood. Even as people buy cars with new technologies, old ones stay on the roads, continuing to burn fuel and emit carbon dioxide.

follow the link to read the rest

[Bert]

Heres a poster with convenient oil statistics and bright colors.

http://www.oilposter.org/posterlarge-x.html

[Thucydides]

Interesting post. Perhaps it should join the thread here as well? http://forums.army.ca/forums/index.php/topic,37017.0.html

[Enzo]

So, not a solution to the issue of energy, but a technology to increase the efficiency of the existing fossils eh?

John B. Holmes Jr., Syntroleum's president and chief executive officer, said his firm would sell the Air Force its synthetic fuel for testing "at our cost, and we may be losing a little bit."

The main question on my mind is, what's Syntroleum's stock going for these days?

[tomahawk6]

Soy biodiesel plants are in the process of being built as we speak. I think that coal liquification should be actively pursued, followed by oil from shale. In Canada the tar sands are already being aggressively developed. I can see a time in the next 5-10 years the US being self sufficient and no longer importing oil. This would help the trade deficit the US has.

[Otto Fest]

Both Nazi Germany and South Africa in the 70s had huge coal gassification plants.  If ever there's a conspiracy, this 'secret' technology would take the cake.  We need to stop wasting Hydrocarbons to fuel our vehicles and power plants as they are far more important for plastics and pharmaceuticals.  Perhaps $100/bbl is not such a bad thing.

[Thucydides]

I don't think there is a single "magic wand" solution, so persuing all different options gives us the flexibility to meet all possible contingencies. Coal liquefaction as persued in the 1930's and 1970's was hugely energy intensive, so an improved process needs to be found (maybe even more efficient than the Syntroleum process). More efficient ways of using existing fuel also need to be persued in tandem; I once read that if every vehicle in North America had the tires inflated to the proper pressure, there would be a 10% reduction in transportation fuel usage! (Go get a tune-up and tire check people!)

Here are some links for "Plan B", promising to increase fuel economy by 50%:

http://www.me.berkeley.edu/cal/HCCI/

http://www.llnl.gov/str/Westbrook.html