Saturday, June 7, 2008

Eight step solution to energy crisis

Gas prices seem to be going up, up and away. Some experts have predicted that the price of gas may even reach $12 to 15 dollars a gallon and cause havoc with the economy. Likewise, with some believing that oil is a limited resource, we may find oil at some point in the near future being rationed.

That's a far fetched scenario, but then again so was the idea that gas would one day cost $4.00 a gallon. When I drove past the Shell station on the way to work, gas was priced at a whopping $4.09.
Why are prices going up?

The reason oil is so high is partly due to environmental regulations that don't allow the oil industry to build refineries, research, drill for oil mines in new areas like the tundra in alaska or slant drilling under lakes and oceans, or build nuclear power plants. All of these have resulted in the U.S. depending on foreign nations for us to meet our oil and energy needs.

Thus, while the demand in the U.S. is growing, the supply of oil is the same. Likewise, with growing capitalistic economies in India and China booming in recent years, the demand for gas worldwide has grown rapidly. Yet still the supply is limited.

From economics 101 simple supply and demand, we learn that when demand goes up and supply stays the same, the price goes up. OPEC limiting the supply of oil only adds to the problems with supply, and further drives up the price.

So, what do we do about it?

I have read about this from various sources, but there are a series of steps that should be done to solve this problem, all of which will take some time.

The first step would be to preach conservation. We need to encourage people to drive less and walk and ride bikes more. We need to encourage people to purchase cars that use less fuel, as opposed to driving around in large SUVs and large gas guzzling cars.

Now this would only be a temporary solution, as would step two, which would involve drilling for oil in whatever areas of the U.S. we can find it. This would allow us to control our own oil supply and cause prices to go down. This would also make us independent on foreign dictators, which would be good for national security.

"But," I find my friends saying, "why should we destroy our environment by digging for oil when we could let other countries destroy their environments?"

The answer to that is simple: new technologies have allowed for safer drilling that is environmentally safe and only takes up a small amount of land. People who tell you otherwise are stating fallacies.

And I'm not just blowing hot air here. According to polling data, 73% of Americans believe that with "appropriate safeguards to protect the environment we should drill for oil off America's coast to reduce our dependence on foreign oil," according to

Step three would be a more long term solution, and would involve investing in nuclear power. We must get over the fear of nuclear plants and build some here in the U.S.

According to Newt Gingrich in his book Real Change, France gets 78% of its power from nuclear plants, and that results in "two billion tons of carbon a year out of the atmosphere, which is 15% better than the Kyoto treaty goal. And that would be a 37% reduction below current emissions.

"One of the greenest states," he writes, "Vermont, actually gets 72.5% of its electricity from nuclear power." If the entire U.S. were to use nuclear power, that "should build a dramatically better future for environment and for domestic energy production through nuclear power."

He adds that as a bonus, nuclear plants make hydrogen. Thus nuclear facilities may lead the way to "a hydrogen economy." Thus, if some scientist could come up with a hydrogen powered car we'd have the fuel already made, one that is far safer for the environment than what we currently use, and far safer for our national security because we'd be making it ourselves instead of relying on national dictators for our energy needs.

That brings me to step four. In the past cash incentives have worked. In one example, the cigarette industry offered a cash reward for the first person to invent a machine that would make cigarettes quicker and more efficiently, and one was invented in a heart beat and changed the cigarette industry forever.

Gingrich writes that the "American experience proves again and again that market orientated approach encourages entrepreneurs to use new science and new technologies to create more progress than any other system."

When the U.S. was faced with the Polio epidemic, scientists put their minds together and invented the Polio Vaccine. When the U.S. learned about the benefits of nuclear power as a weapon, many scientists put their heads together and invented the nuclear bomb, which was invented just in time to end WWII.

For a list of other things American entrepreneurs invented right at the time when they were most needed, click here.

That in mind, the U.S. government, Newt writes, should focus on renewable fuels, mainly hydrogen "which has no environmental impact at a reasonable price and is universally available as a natural resource." It should offer a $1.5 million reward for the first entrepreneur to invent a hydrogen powered vehicle. Who knows, we might have all the gas guzzlers off the roads in as little as ten years if we act now.

He writes in his book that even if the U.S. adapted the Kyoto accords, they would have a difficult time convincing India and China to buy into the accords because those nations are more into doing whatever benefits their own economy, as opposed to what would benefit the environment.

However, he writes, an energy source such as hydrogen "would have huge appeal to China and India if it were commercially competitive in price. American technologies for hydrogen vehicles might be one of the biggest winners of the next generation."

Step six would be to give substantial tax breaks for any industry that invests in ethanol and hydrogen supply stations and pipelines so fuel can be delivered when the automobiles are available at a reasonable price.

Step seven, which actually should be higher on this list, would involve giving tax breaks to individuals for trading in old gas guzzlers, which would help the poor, the environment, and the auto industry.

Step eight would be to continue to work toward providing incentives to entrepreneurs and the auto industry to inventing and investing in lighter materials to provide cars that have better gas mileage. To come up with more efficient solar cells that are more competitive as an electricity source. We could even encourage further studies of wind power and hybrid cars.

Any of these aforementioned steps is far better than the alternative version that has democratic and republican politicians convinced that adding regulations to fight global warming is the way to go.

We do not have to destroy the economy to have a better, cleaner, safer environment. We can use the same capitalistic market that solved many of the problems we have faced since the inception of this great experiment on in 1776.


DB said...

I admit I haven't paid attention to oil prices and its effect, and as a result have not thought about it at all until today at the grocery store. Your post offers many solutions that liberals and conservatives can find common ground on, and rather easily at that. Either way we go about this solution, I believe the answer will be in providing a variety of options of fuel to keep the competition high and the prices low. This would include a lot of deregulation of oil and nuclear limitations, balanced with incentives to find alternative fuels, as your post points out. It will have to be a compromise from both sides to reach the same goals of low cost fuel. After I realized today how bad the oil situation is messing up the economy, I think your post opened my eyes on a variety of solutions. We can watch the economy go to hell because of foreign oil and blame each other, or we can start working together on a bipartisan solution.

Freadom said...

Wow, I thought I was the only one up at this hour. DB, I agree with you 100%. We need to find common ground. And I think there are more ways to solve our energy woes besides regulating the economy to death. Yet, what is offered here are more OPTIONS to be debated in the arena of ideas.

DB said...

Heaven forbid our elected representative work together on an issue to solve a potential national crisis! I am interested in hearing some of the other plans that I am sure are out there. Either way, national security reasons should be a driving force to start this discussion. Surely both sides agree that we don't want the Middle East to control our economy through oil.

btw, It is only 6:45 here in Japan lol.

Freadom said...

Japan. How's the weather up there?

DB said...

On Okinawa and its Rainy lots of rain, humidity, and other benefits of subtropical climates! When there is no rain, this place is amazingly beautiful (still is with the rain, just harder to enjoy).