Energy/Environment – Page 86 – artdiamondblog.com

We Should Reward Those Who Take Risks to Produce What We Need

On the Democratic and Republican-in-Name-Only side, we have the idea of "windfall profits taxes" on energy companies. These would presumably mandate a desirable level of corporate profits in one sector on which we depend. (And how long do you think it would apply to only one industry?) If profits exceeded that level, they would be taxed.

As far as I can tell, there is no plan to give a rebate to the companies if their profits have fallen below that desired level.

In other words, the plan is to send this message to energy-company investors, including retirees and pension funds: "Yes, we are in a situation of oil and gas shortage. Yes, we want you to risk billions of dollars exploring for and producing and refining oil and processing gas. But if you succeed for any reason, and even if no price-fixing is found, we will punish you for it."

This is what I would call confusion. You usually get more of something by rewarding people for doing it or producing it, not by punishing them for doing it or producing it.

Yes, the human instinct of envy demands that we get some licks in against people who are doing well, even if we are doing only slightly less well ourselves. But economies built on the politics of envy are rarely successful. Ask the Cambodians or the Chinese or the Russians before they went capitalist.

For the full commentary, see:

BEN STEIN. "Everybody’s Business; A Quick Course in the Economics of Confusion." The New York Times (Sun., May 28, 2006):

Current Cost of Gas Needed to Drive a Mile, Is Not High, by Historical Standards

Source of graphic: p. C1 of NYT article cited below.

(p. C1) The price of gasoline is hovering around $3 a gallon, and politicians are falling over each other to pander to voters’ gas fears. In a recent Gallup Poll, 70 percent of people said they favored price controls, a relic of Richard Nixon’s day.

But it’s time to take a deep breath and consider a radical fact: gas still isn’t all that expensive. I’m not just talking about the disparity between prices here and in Europe, where gas taxes are much higher. What really matters to people is the cost of the gas that is needed to drive a mile, a function of both the price of oil and the fuel efficiency of cars.

By this measure, gas for the average American now costs about what it did throughout the 1960’s and early 70’s and much less than in the early 80’s. The 1990’s, in other words, were the big exception.

For the full commentary, see:

David Leonhardt. "The High Costs of Cheap Gas and Vice Versa." The New York Times (Weds., May 10, 2006): C1 & C11.

Charlie Munger Calls Ethanol “Stupid”

Charlie Munger. Source of image: http://daily.stanford.edu/tempo?page=content&id=16135&repository=0001_article#

Charlie Munger is the number two executive, next to Warren Buffett, at Berkshire Hathaway. He is old enough, and successful enough, and gutsy enough, and curmudgeony enough, to call ethanol "stupid" while in the "cornhusker state" for the company’s annual meeting. (Of course, he wasn’t running for public office, and knew he would soon be flying back to his home in California.)

Munger said using ethanol for fuel seems "stupid" to him because it takes more energy to create than it produces as a fuel. Buffett said there are so many ethanol plants, existing or planned, that he doesn’t see how they can all continue operating profitably.

For the full article, see:

STEVE JORDON and JONATHAN WEGNER. "Berkshire Notes: Clayton’s Excutives Double Up." Omaha World-Herald (Sunday, May 7, 2006): 1D.

(Note: the annual meeting was held on Sat., May 6, 2006)

Taxpayer Pays $120 to Displace a Barrel of Oil With Ethanol

John Deutch served as Undersecretary of Energy under President Jimmy Carter. He also served in the Clinton administration, and is now an MIT chemistry professor. In the selection below, he explains why corn-based ethanol in the United States, is not an efficient way to produce energy. In a later section of his commentary, he is more positive about the economics of producing ethanol from switch grass. (The main difference, he says, is that switch grass can be cultivated using much less petroleum than is used for corn.)

Today, we use corn to produce ethanol in an automobile fuel known as "gasohol" — 10% ethanol and 90% gasoline. Generous federal and state subsidies, largely in the form of exemption from gasoline taxes for gasohol, explain the growth of its use; in 2005, over four billion gallons of ethanol were used in gasohol out of a total gasoline pool of 120 billion gallons. Politicians from corn-states and other proponents of renewable energy support this federal subsidy, but most energy experts believe using corn to make ethanol is not effective in the long run because the net amount of oil saved by gasohol use is minimal.

In the U.S., cultivation of corn is highly energy-intensive and a significant amount of oil and natural gas is used in growing, fertilizing and harvesting it. Moreover, there is a substantial energy requirement — much of it supplied by diesel or natural gas — for the fermentation and distillation process that converts corn to ethanol. These petroleum inputs must be subtracted when calculating the net amount of oil that is displaced by the use of ethanol in gasohol. While there is some quarreling among experts, it is clear that it takes two-thirds of a gallon of oil to make a gallon equivalent of ethanol from corn. Thus one gallon of ethanol used in gasohol displaces perhaps one-third of a gallon of oil or less.

A federal tax credit of 10 cents per gallon on gasohol, therefore, costs the taxpayer a hefty $120 per barrel of oil displaced cost. Surely it is worthwhile to look for cheaper ways to eliminate oil.

The economics are not the same in other countries. Brazil is a well-known example, where sugarcane grows in the tropical climate and conventional fermentation and distillation readily yields ethanol. Ethanol is said to provide 40% of automobile fuel in Brazil and compete with gasoline without government subsidy. Depending on the future world price of sugar and the lessening of trade restrictions on both sugar and sugar-derived ethanol, Brazil could become a net exporter of this biofuel.

For the full commentary, see:

JOHN DEUTCH. "Biomass Movement." The Wall Street Journal (Weds., May 10, 2006): A18.

Endangered Fish Thrive on Oil Platforms

Large numbers of rockfish and other fish near the Gilda oil platform off the Ventura coast. Source of image: http://www.lovelab.id.ucsb.edu/Check.html

SANTA BARBARA, Calif., March 11 – A marine biologist has found that 27 oil platforms off California’s Central Coast may be havens for bocaccio, cowcod and other fish.

. . .

Since the 1950’s, when heavy fishing began in the region, some species have been reduced to 6 percent of their previous numbers, Dr. Love said. Overfishing has led to an economic disaster, leading some fisheries to close.

Dr. Love films fish around the platforms from a submarine and then counts them in his laboratory.

Among his findings are that large fish prefer crevices at the platforms’ base, and smaller ones like the middle section above their predators.

At Platform Gail, which stands in 739 feet of water nine miles off the Ventura coast, Dr. Love found what he believes to be the highest density of two species of overfished rockfish in Southern California.

Dr. Love emphasizes that his research does not draw conclusions about whether the platforms should be removed. He says his personal view is that the rigs should stay in place, cut below the waterline so that ships can pass safely over them.

Dr. Love gets about 80 percent of his research money from the government, and the rest from the California Artificial Reef Enhancement Program, a Sacramento nonprofit group financed almost entirely by oil companies. The group has contributed about $100,000 a year to his research since 1999, said its executive director, George Steinbach. Dr. Love said oil industry money could not sway his research.

For the full story, see:

"Citing Oil Rigs as Fish Havens, Companies Resist Removal." The New York Times (Mon., March 13, 2006): A18.

Expecting Nationalization, Companies Held Off Investing in Bolivia

Bolivian President Morales announcing the nationalization of Bolivia’s energy industry. Source of image: http://www.nytimes.com/2006/05/03/world/americas/03bolivia.html

Bolivia’s nationalization of its energy industry, announced Monday by President Evo Morales, was a vivid illustration that the populist policies, championed most prominently by Venezuela, were spreading.

. . .

. . . while Brazil might feel tremors from Bolivia’s decision, it is Bolivia that may be risking its potential as a major natural gas exporter.

Companies had been holding off on investments in Bolivia for some time, unnerved by growing talk of precisely the kind of step that Mr. Morales took this week. Foreign direct investment, much of which goes to energy and mining, fell to $103 million in 2005, from $1 billion in 1999.

What is more, unlike oil, natural gas is not easily exportable, with costly liquefaction facilities, customized tankers or pipelines needed to take the fuel to markets. Chile, a potential market for Bolivian gas, may choose instead a project to import the fuel from as far away as Africa.

Even Brazil, while now reliant on Bolivian gas, has recently discovered large offshore gas reserves of its own. Thus the window of opportunity for Bolivia to become a leading gas exporter may be closing, even as it grows more courageous in its dealings with foreigners.

"If Brazil decides to give the cold shoulder to Bolivia," said Carlos Alberto López, an independent consultant for oil companies in La Paz, "Bolivia will be left with its gas underground."

For the full story, see:

SIMON ROMERO and JUAN FORERO. "Bolivia’s Energy Takeover: Populism Rules in the Andes." The New York Times (Weds., May 3, 2006): A8.

Bolivian soldiers after seizing natural gas facilities. Source of image: http://www.nytimes.com/2006/05/03/world/americas/03bolivia.html

Chernobyl Accident Cannot Occur In U.S. Type Reactors

Twenty years ago (April 25, 1986), the Chernobyl nuclear accident sent a plume of radiation into the air above Ukraine. The word "Chernobyl" remains the most emotionally charged argument used by the opponents of nuclear energy. But if examined carefully, the main lesson from Chernobyl may be that what happened there cannot occur in the better designed light water reactors used in the United States, and most of the rest of the world. William Sweet, the author of the commentary below, has also authored Kicking the Carbon Habit: Global Warming and the Case for Renewable and Nuclear Energy.

(p. A23) . . . , though it went unnoticed at the time and has been inadequately appreciated since, Chernobyl also cast into relief the positive features of the reactors used in the United States and most other advanced industrial countries.

The reactor at Chernobyl belonged to a class that was especially vulnerable to runaway reactions. When operating at low power, if such reactors lost water, their reactivity could suddenly take off and very rapidly reach a threshold beyond which they could only explode. Making matters worse, surprisingly little more pressure than normal in the machine’s water channels would lift its lid, snapping the vital control rods and fuel channels that entered the reactor’s core.

On the night of April 25, 1986, poorly trained and supervised plant operators conducted an ill-conceived experiment, putting the machine into the very state in which reactivity was most likely to spike. Within a fraction of a second, the reactor went from being barely on to power levels many times higher than the maximum intended.

This kind of accident cannot happen in the so-called light water reactors used in the United States and most of Western Europe and Asia. In these reactors, the water functions not only as a coolant but as a "moderator": self-sustaining nuclear chain reactions cannot take place in its absence. This is a very useful passive safety feature. If coolant runs low, there is still a danger of a core meltdown, because the fuel retains heat; but the reactor will have automatically and immediately turned itself off.

For the full commentary, see:

WILLIAM SWEET. "The Nuclear Option." The New York Times (Weds., April 26, 2006): A23.

The reference to Sweet’s related book is:

Sweet, William. Kicking the Carbon Habit: Global Warming and the Case for Renewable and Nuclear Energy. Columbia University Press, 2006.

Source of book image: http://www.amazon.com/gp/product/0231137109/sr=8-1/qid=1146071688/ref=sr_1_1/104-5668094-9083929?%5Fencoding=UTF8

Founder of Greenpeace Endorses New Nuclear Reactors

Patrick Moore, co-founder of Greenpeace. Source of image: http://www.nytimes.com/2006/04/25/us/25nuke.html?_r=1&oref=slogin

(p. A24) WASHINGTON, April 24 — The nuclear industry has hired Christie Whitman, the former administrator of the Environmental Protection Agency, and Patrick Moore, a co-founder of Greenpeace, the environmental organization, to lead a public relations campaign for new reactors.

Nuclear power is "environmentally friendly, affordable, clean, dependable and safe," Mrs. Whitman said at a news conference on Monday. She said that as the E.P.A. leader for two and a half years, ending in June 2003, and as governor of New Jersey for seven years, she had promoted various means to reduce the emission of gases that cause global warming and pollution.

But Mrs. Whitman said that "none of them will have as great a positive impact on our environment as will increasing our ability to generate electricity from nuclear power."

. . .

Mr. Moore said he favored efficiency and renewable energy, but added that solar cells, which produce electricity from sunlight, were "being given too much emphasis and taking too much money." A dollar spent on geothermal energy, he said, was "10 to 12 times more effective in reducing greenhouse emissions."

Mr. Moore is the director of a company that distributes geothermal systems in Canada. He is also a supporter of what he called "sustainable forestry" because, he said, building with wood avoided the use of materials whose manufacture releases greenhouse gases, like steel and concrete.

Mr. Moore, who left Greenpeace in 1986, favors many technologies that some environmentalists oppose, including the genetic engineering of crops, and has referred to his former colleagues as "environmental extremists" and "anti-human."

. . .

Representatives of the United States Chamber of Commerce and the Teamsters also spoke in favor of new reactors.

For the full story, see:

MATTHEW L. WALD. "Ex-Environmental Leaders Tout Nuclear Energy." The New York Times (Tues., April 25, 2006): A24.

Hurricanes Not Caused by Human-Induced Climate Change: More on Why Crichton is Right

The Alfred P. Sloan Professor of Atmospheric Science at MIT analyzes the case for human-induced global warming:

(p. A14) There have been repeated claims that this past year’s hurricane activity was another sign of human-induced climate change. Everything from the heat wave in Paris to heavy snows in Buffalo has been blamed on people burning gasoline to fuel their cars, and coal and natural gas to heat, cool and electrify their homes. Yet how can a barely discernible, one-degree increase in the recorded global mean temperature since the late 19th century possibly gain public acceptance as the source of recent weather catastrophes? And how can it translate into unlikely claims about future catastrophes?
The answer has much to do with misunderstanding the science of climate, plus a willingness to debase climate science into a triangle of alarmism.
. . .
To understand the misconceptions perpetuated about climate science and the climate of intimidation, one needs to grasp some of the complex underlying scientific issues. First, let’s start where there is agreement. The public, press and policy makers have been repeatedly told that three claims have widespread scientific support: Global temperature has risen about a degree since the late 19th century; levels of CO2 in the atmosphere have increased by about 30% over the same period; and CO2 should contribute to future warming. These claims are true. However, what the public fails to grasp is that the claims neither constitute support for alarm nor establish man’s responsibility for the small amount of warming that has occurred. In fact, those who make the most outlandish claims of alarm are actually demonstrating skepticism of the very science they say supports them. It isn’t just that the alarmists are trumpeting model results that we know must be wrong. It is that they are trumpeting catastrophes that couldn’t happen even if the models were right as justifying costly policies to try to prevent global warming.
If the models are correct, global warming reduces the temperature differences between the poles and the equator. When you have less difference in temperature, you have less excitation of extratropical storms, not more. And, in fact, model runs support this conclusion. Alarmists have drawn some support for increased claims of tropical storminess from a casual claim by Sir John Houghton of the U.N.’s Intergovernmental Panel on Climate Change (IPCC) that a warmer world would have more evaporation, with latent heat providing more energy for disturbances. The problem with this is that the ability of evaporation to drive tropical storms relies not only on temperature but humidity as well, and calls for drier, less humid air. Claims for starkly higher temperatures are based upon there being more humidity, not less — hardly a case for more storminess with global warming.
. . .
In Europe, Henk Tennekes was dismissed as research director of the Royal Dutch Meteorological Society after questioning the scientific underpinnings of global warming. Aksel Winn-Nielsen, former director of the U.N.’s World Meteorological Organization, was tarred by Bert Bolin, first head of the IPCC, as a tool of the coal industry for questioning climate alarmism. Respected Italian professors Alfonso Sutera and Antonio Speranza disappeared from the debate in 1991, apparently losing climate-research funding for raising questions.
And then there are the peculiar standards in place in scientific journals for articles submitted by those who raise questions about accepted climate wisdom. At Science and Nature, such papers are commonly refused without review as being without interest. However, even when such papers are published, standards shift. When I, with some colleagues at NASA, attempted to determine how clouds behave under varying temperatures, we discovered what we called an “Iris Effect,” wherein upper-level cirrus clouds contracted with increased temperature, providing a very strong negative climate feedback sufficient to greatly reduce the response to increasing CO2. Normally, criticism of papers appears in the form of letters to the journal to which the original authors can respond immediately. However, in this case (and others) a flurry of hastily prepared papers appeared, claiming errors in our study, with our responses delayed months and longer. The delay permitted our paper to be commonly referred to as “discredited.” Indeed, there is a strange reluctance to actually find out how climate really behaves. In 2003, when the draft of the U.S. National Climate Plan urged a high priority for improving our knowledge of climate sensitivity, the National Research Council instead urged support to look at the impacts of the warming — not whether it would actually happen.
Alarm rather than genuine scientific curiosity, it appears, is essential to maintaining funding. And only the most senior scientists today can stand up against this alarmist gale, and defy the iron triangle of climate scientists, advocates and policymakers.

For the full commentary, see:
RICHARD LINDZEN. “Climate of Fear.” The Wall Street Journal (Weds., April 12, 2006): A14.

Wildcatters Find 80% of Oil in U.S.

Source of image: WSJ article cited below.

(p. A1) David F. Morehouse, senior geologist with the U.S. Department of Energy’s Energy Information Administration, contends there is more new oil to be found in the continental U.S. Finding it, he says, will “depend on people doing the data analysis and, quite frankly, people going in and drilling enough in the right places.”
Mr. Findley, who is 54 years old, did just that. Now production in this part of eastern Montana is growing, and new investors are arriving to explore the potential. At least one midsized firm, Marathon Oil Co., has begun buying leases. Halliburton Co., the big Houston-based oil-services company, has invested with Mr. Findley. The state says the proven oil find in the area will likely be in the range of 150 million barrels, hardly what oil-patch hands call an “elephant,” but nevertheless boosting the nation’s proven oil reserves by about 1%.
. . .
(p. A14) While many people associate big oil finds with big companies, over the years about 80% of the oil found in the U.S. has been brought in by wildcatters such as Mr. Findley, says Larry Nation, spokesman for the American Association of Petroleum Geologists. Wildcatters search for oil, nail down drilling rights, then seek money from banks or bigger companies to extract it.
Mr. Findley grew up in Corpus Christi, Texas, the son of an accountant for a chain of grocery stores. A brother-in-law, a geologist, hired him as a field assistant to hunt for oil in west Texas. “I just fell in love with geology,” he recalls. He graduated from Texas A&M University in 1975 and got a job as a geologist with Tenneco Oil Co. In 1983 he left to found his own Montana-based consulting and exploration company, a one-man operation.
Three years later, world oil prices crashed, and fluctuating prices dogged Mr. Findley as he tried to stay in the business. In the 1990s, the majors left the area in the belief that it was played out. Mr. Findley felt there was more oil to be found and began putting together small exploration deals.
His income had dropped by more than half to $45,000 a year, and he wasn’t sure how much longer that would last. “Many times, my wife and I sat down at the kitchen table and said, ‘What are we going to do next?’ We always came to the same conclusion. [Geology] is what I know. This is what I love. So we just kept going.”

For the full story, see:
JOHN J. FIALKA. “Second Look; Wildcat Producer Sparks Oil Boom On Montana Plains After Majors Pulled Out, Mr. Findley Drilled Anew; Size of Find Still Unclear; A Rival Counts Tanker Trucks.” The Wall Street Journal (Weds., April 5, 2006): A1 & A14.
Source of map: WSJ article cited above.

86% Agree that Government Should Ban Dihydrogen Monoxide

A junior high school student in Idaho, Nathan Zohner, demonstrated in a 1997 science fair project how easy it was to hoodwink a scientifically uninformed public. As described in “The Frankenfood Myth,” 86 percent of the 50 students he surveyed thought dihydrogen monoxide should be banned after they were told that prolonged exposure to its solid form caused severe tissue damage, that exposure to its gaseous form caused severe burns and that it had been found in tumors from terminal cancer patients. Only one student recognized the substance as water, H2O.

For the full commentary, see:
JANE E. BRODY. ” PERSONAL HEALTH; Facing Biotech Foods Without the Fear Factor.” The New York Times (Tues., January 11, 2005): D7.