Category: Historical

The Times notes that the Arab press is now cultivating the idea that “if chemical, biological or nuclear weapons are found in Iraq, it will be because the American military planted them there.”
–Slate’s Today’s Papers

Does anybody actually read this? 🙂

Remember back in the first entry on this topic, I quoted statistics that said 45% of US oil consumption, or about 8.9 Million bbl/d, go to motor gasonline, essentially to power automobiles and trucks. Imagine, for a moment, that in 2010, instead of having drilled some holes in the ground up in Alaska, a huge undertaking occurred to switch us to a new, cheaper, alternative power source that would essentially eliminate the need for motor gasonline. In the blink of an eye, nearly 75% of the oil the US imported would no longer be necessary. Want energy independence? Congress should adopt a hydrogen-friendly policy, not waste time on ANWR votes.

While there are technical difficulties that remain with hydrogen-based energy sources, solutions are under development. With the right stimulus from the government, the timeframe to resolution would only be accelerated. In fact, both Wired Magazine and BusinessWeek recently outlined a plan to speed the adoption of what is being termed the “hydrogen economy”.

Wired’s plan consists of five components, which I will show below:

1. Solve the hydrogen fuel-tank problem.
2. Encourage mass production of fuel cell vehicles.
3. Convert the nation’s fueling infrastructure to hydrogen.
4. Ramp up hydrogen production.
5. Mount a public campaign to sell the hydrogen economy.

BusinessWeek, coming from an econimic perspective, outlines these steps:
1. Diversify Oil Supplies (Suddenly, the “No Blood for Oil” protests don’t seem quite so misguided. I’m sure securing Iraq’s oil reserves doesn’t hurt when considering energy policy, even if I don’t believe that had anything to do with the primary motivation behind the invasion).
2. Use Strategic Reserves
3. Boost Industrial Efficiency
4. Raise Car and Truck MPG
5. Nurture Renewable Energy
6. Phase in Fuel Taxes

If the politicians wanted to truly accomplish energy independence, these would be a solid basis from which to begin. A sufficient rise in the Fuel Tax, with a corresponding cut in the Payroll Tax (so as not to increase the regressive nature of these taxes), would spur gains in fuel efficieny. If the price of oil were to double in the next two years, to levels closer to those found in Europe, drivers would feel the pinch and adapt accordingly. The added benefit would be to have gasoline prices more accurately reflect the cost of securing those supplies, such as the constant supply of aid sent to Middle Eastern countries, the cost of maintaining large forces in oil-rich regions, and the cost associated with terrorism that is spurred on by the regimes the US supports to help secure those supplies.

Combined with that, further research spending, on energy sources such as hydrogen, would do wonders to move from a dependence on any oil. To that end, the proposal by Wired of allocating $100 billion as a sum toward the research, development, and conversion to a hydrogen-based economy seems like a drop in the bucket. Considering $80 billion was spent on the war in Iraq already, and there is likely to be far more funding allocated to support reconstruction, dropping $100 billion on hydrogen power seems like nothing. President Bush is prepared to spend $300 billion to provide tax-free dividends, whereas the long term gain from hydrogen power would be far more clearly defined.

If all this seems so easy on the surface, the real question is why these policies have not been adopted? To that end, I would suppose that it takes a kind of character that appears to be lacking on a federal level. No one wants to “stick their neck out”, so to speak, so instead the debate about ANWR rages on, serving as a continued distraction from any sort of meaningful debates on true energy independence. Which is all part of why I can’t find the desire to donate any money to the Dems right now.

I’m still playing this game. Just one more dungeon and I’ll be caught up to my co-workers. Hopefully, there won’t be too many more left after this.

In my previous entry, I expressed some concern about why the long term global supply and demand picture regarding oil consumption. If we look at worldwide reserves, we have the following data points:

Saudia Arabia: 264.2 billion barrels and up to 1 trillion barrels of ultimately recoverable oil
Caspian Sea Region: 10 Billion Barrels and up to 233 Billion Barrels ultimately recoverable
Iraq: 112 Billion Barrels proven with an unknown quantity unproven (Potentially > 100 Billion)

Reserves, however, neglect to take in to account actual production. When we examien production, we find the following:

Saudia Arabia: 8.1 million barrels per day
Caspian Sea Region: 1.29 Million barrels per day
Iraq: 2.02 Million barrels per day

These are considered the major oil and gas regions in terms of production and exploration over the coming decade. Now, let’s take a moment to explore the supply picture. For that, let us turn to China and India, two of the most populous countries in the world, with more than 2 billion people between them. Both are undergoing rapid development, leading to a rise in the economic status of their populations. One of the growing trends in both countries is a larger middle class, and one of the most common purchases is cars and SUVs. Evidence is, in fact, abundant, judging by the articles containing auto sales and import figures.

What follows is rising consumption of oil from these two countries. In fact, the DoE numbers support this argument.

China:
China currently is the world’s third largest oil consumer, behind the United States and Japan. Consumption of petroleum products totalled 4.78 million barrels per day (bbl/d) in 2000, up from 4.36 million bbl/d in 1999. China is expected to surpass Japan as the second largest world oil consumer within the next decade and reach a consumption level of 10.5 million bbl/d by 2020, making it a major factor in the world oil market.

India:
Future oil consumption in India is expected to grow rapidly, to 3.2 million bbl/d by 2010, from 2.0 million bbl/d in 2002. India is attempting to limit its dependence on oil imports somewhat by expanding domestic exploration and production.

So, from these two countries alone, are we likely to see a demand spike of nearly 7 million bbl/d over the next ten to fifteen years. Even with rising supplies and enhanced production capability, US domestic oil production is likely to decrease. Even with the currently high price, we find that crude oil production in the lower 48 states is expected to fall by about 130,000 bbl/d in 2003, while Alaskan crude production remains flat (DoE.

This does not bode well. Declining domestic production combined with increased global competition for existing oil resources, combined with reserves that place the U.S. at only twelfth among nations while being the number one consumer, appear to take as far from the path of energy independence. And ANWR, at best, would only add less than 1.5 million bbl/d to domestic capacity, hardly keeping up with rising demand, let alone coming close to providing any resolution.

So, what should the US do?

The commute in was wonderful today. Why couldn’t every day be a holiday?

This week I noticed a sign I pass in front of an apartment complex that reads “R.N. Unit Manager”. Now, what exactly is an “R.N. Unit Manager”? Is it “Registered Nurse?” Is it “Right Now”? Someone’s name? “Rob Newbury”? “Rock Needleburrow”?

So, as I noted before, the US used an estimated 8.9 MMBD on motor oil, while in 2002 (the first nine months) imported 11.2 MMBD of oil, leaving domestic supplies to make up the additional 43% of oil consumed.

If the US were to drill in ANWR, where would that put us? Would this, as Republican House members would like us to believe, achieve the holy grail of energy independence? A simple back of the envelope calculation throws this in to question. Let us first turn to the DoE.

In early 2000, the Energy Information Administration (EIA), in response to a Congressional request, issued a report on potential oil reserves and production from the Arctic National Wildlife Refuge (ANWR). The report, which cited a 1998 U.S. Geological Survey study of ANWR oil resources, projected that for the mean resource case (10.3 billion barrels technically recoverable), ANWR peak production rates could range from 1.0 to 1.35 MMBD, with initial ANWR production possibly beginning around 2010, and peak production 20-30 years after that.

Clearly these numbers don’t add up. If we assume the peak production rate of 1.35 MMBD, 11.2 MMBD imported – 1.35 MMBD from ANWR clearly don’t equal zero. If we remember back to the previous entry, our estimated usage of oil is expected to grow about 670,000 Barrels/Day in 2003. ANWR drilling, if it were to hit peak production in the next few months (and from above, a more realistic date is 2010), would only gover our GROWTH in usage for the next two years, assuming 3% growth. Even if the estimates above prove conservative, and we take a more optimistic scenario of 2.5 MMBD, we are only likely in 2010 to have reduced oil importation to today’s levels. And this doesn’t talk about offsetting the declining domestic production of oil elsewhere.

Of course, as stated before, oil is now a global market, with potentially huge reserves coming online over the next decade and beyond in other regions. But, at the same time, looking at oil consumption elsewhere points to a grim picture for worldwide markets.

I just finished cooking a chicken, brocolli and cashew nut dinner. It wasn’t terrible, but I just can’t get the flavor right. The sauce ingredients clash rather than mesh, so the soy sauce overpowers the other ingredients.

Every now and again, when elections, terrorism, or an ANWR (Alaskan National Wildlife Refuge) vote make their way to the top of the news heap, a brief flurry of outcry ensues about the need for American “energy independence” and for strategies to eliminate the “dependence” of America on foreign oil. One of the biggest myths about this is that ANWR will somehow magically serve as a panacea for decades, reducing the need for the US to import any oil. Unfortunately, the numbers behind this dream don’t add up. Over the next few “non-personal” entries, I’m going to further explore some basic research I did in to the US and its relationship with oil consumption.

The following statistics were taken from the US Department of Energy’s web site.Detailed country links will follow at the end.

Before I can illustrate how little drilling in ANWR is likely to accomplish, and how the world might look to solve the oil problem, it is first necessary to provide some details of oil consumption in the US. According to the DOE,

The United States is estimated to be consuming an average of about 19.7 MMBD of oil in 2002. Of this, 8.9 MMBD (or 45% of the total) is motor gasoline, 4.8 MMBD (24%) “other oils,” 3.8 MMBD (19%) distillate fuel oil, 1.7 MMBD (8%) jet fuel, and 0.7 million bbl/d (3%) residual fuel oil. U.S. oil demand is expected to increase by about 3% (670,000 bbl/d) in 2003.

The US consumes nearly 20 million barrels of oil per day, with nearly half of that as motor gasoline for cars and trucks. Filling up the old SUV at $1.53/gallon contributes heavily to the bottom line of oil consuption in the US. But this isn’t a complete picture. Now we need to take a look at where we’re getting that oil.

The United States averaged total gross oil (crude and products) imports of an estimated 11.2 MMBD during the first nine months of 2002,representing around 57% of total U.S. oil demand. Around two-fifths of this oil came from OPEC nations, with Persian Gulf sources accounting for about one-fifth of total U.S. oil imports. Overall, the top suppliers of oil to the United States during the first nine months of 2002 were Canada (1.9 MMBD), Saudi Arabia (1.5 MMBD), Mexico (1.5 MMBD), and Venezuela (1.4 MMBD).

So, not only does the US consume 8.9 MMBD for gasonline, but in the first 9 months of 2002, we imported 11.2 MMBD. And of the imports, 20%, or about 2.25 MMBD, came from the Middle East. Imagine, if we could double our fuel efficiency for vehicles that use motor oil, we could cut our imports drastically.

Remember, today there exists an global market for oil, where contracts are traded about. Therefore, supply and demand changes in one place affect the price paid in all places. As we will see, this can be a double-edged sword.

As some of my friends and family have no doubt heard, I have long been thinking about taking an assignment/position overseas. As the time for me to make a decision comes closer, I’ve been torn on whether I want to, and where I would want to go.

A major source of my nervousness involves the fact that I have never lived so far from my friends and family. Moving 20 miles away is far more different from moving 4,000 to 10,000 miles away. Having to take a plane, spending anywhere from a half a day to more than twenty-four hours to visit family is an experience I’m not used to. Of course, this is no reason not to go. In fact, the experience gained from it might far outweigh the initial concern. Just having a chance to view life from outside the American bubble, and to gain a different perspective on life, should make the experience worthwhile. Never mind actually practicing what is so often preached with regards to the concepts of “diversity” and “globalization”.

When I try to think of where I would want to live, I’m drawn to Asia, even though it’s a far longer trek. The primary motivation behind the January trip to Singapore was to determine how livable I thought it was. Thankfully, I personally didn’t find it as boring as many of the other comments I had heard about it. While there are plenty of activities, the one aspect of life that seems to be missing more than anything else is the lack of a fully developed theatre scene. I do know that the Esplanade opened recently, and that this is an aspect of life that the government is trying to improve. And the city is certainly one of the greenest I’ve been to. And Australia is just a “short” flight away.

On the other hand, while Europe doesn’t seem as exotic, it does have the advantage of being closer (a long weekend trip home isn’t as unreasonable). Also, with the discount airlines (Rynair and easyJet)and the train network, taking trips between various countries and cities would be easier than movement around parts of Asia. As far as short duration (long weekend) trips go.

Of course, all of this depends on what opportunities may be available, which is outside my control.