Posted on 02/28/2006 9:15:59 AM PST by SirLinksalot
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| Oil's Slippery Slope
DAYS AFTER HURRICANE KATRINA struck the Gulf Coast and sent energy prices skyrocketing, I called the top in oil1. A month later, just after Hurricane Rita hit, I called the top in natural gas2. I stand by both calls. Last month, crude oil tried to rally back to the post-Katrina highs, but failed without even penetrating the $70/barrel level. For an essential commodity that we're supposedly running out of, this is pretty poor performance. Natural gas did trade higher last December than when I made my top call, but by only about 6% — but since then it's lost more than half its value. That's a downright crash. Yet, even though oil and natural gas have come off their posthurricane highs, it seems there's as much public anxiety as ever about energy. And energy stocks continue to capture the imagination of momentum investors. I say sell 'em. The public anxiety about energy is misplaced. But it's strong enough to have motivated President Bush to take the extraordinary step of declaring in his recent State of the Union address that America is "addicted to oil, which is often imported from unstable parts of the world." Bush went on to propose that we cut our consumption of Middle East oil by 75%. Sounds impossible, doesn't it? You probably think that America couldn't possibly do without Middle East oil — and the idea that we even try conjures up all kinds of awful images of a stagnant economy and do-without lifestyles. But think again. Today, about 80% of our oil comes from North America — from Canada, Mexico, or right here in the U.S. of A. Less than 15% of our oil comes from the Middle East. So when Bush is talking about cutting 75% from that one source, he's really only talking about cutting less than 10% from total oil consumption. And that doesn't mean cutting energy consumption. It could just mean substituting nonoil sources for a small fraction of our energy needs — moving from oil to coal, gas, nuclear, or any number of new technologies that may become feasible in the future. Even if it did mean sheer conservation — rather than swapping one form of energy for another — that doesn't have to be as bad as you think. Little by little, without our quite realizing it, oil is becoming easier and easier to do without every day. Consider the technology future of electric automobiles. No, not the Buck Rogers monstrosities that you have to plug into a wall outlet for 24 hours before they can grudgingly take you just five miles before they need to be charged again. I'm talking about fast and powerful cars and SUVs whose electric motors are powered by onboard generators that use — yes! — gasoline made from — yes! — oil. Such a next-generation hybrid would obviously not eliminate the need for gasoline or the oil from which gasoline is distilled. But it would use far less oil than today's pure-gasoline cars. Why? Because today an enormous fraction of the weight of the typical car is its mechanical drivetrain, the sole function of which is to convert the up-and-down motion of gasoline-fired pistons into rotary motion and transmit that motion to the car's wheels. In the future, the drivetrain will just be a set of wires that transmit current from the gasoline-fired engine to the electric motors that independently power each of the car's four wheels. A car that doesn't have to drag tons of drivetrain around will get a lot better gas mileage.
Already the world's most powerful rail locomotives and earth-moving equipment work exactly like this, so this is no fantasy. Cars with electric drivetrains will be on the road within a decade. That will put a huge dent in oil imports, because transportation makes up by far the majority of oil consumption in this country. One criticism of this view that I often hear is that it's not enough to think about cutting oil consumption from today's levels. We have to keep the objective of rapid economic growth in mind and be prepared to use less oil in the future even when the U.S. economy is much larger than it is today. True enough. But it turns out that most of our economic growth has relatively little to do with oil. As the economy has surged in the last quarter century, by far the fastest growing form of energy consumption has been electricity. And at this point, very little of America's electric generating capacity has anything to do with oil. The nonoil alternatives for generating electricity are cheap, abundant and clean. We have many thousands of years' worth of coal reserves right here in America, and the technology already exists for burning it to generate electricity without serious air-pollution consequences. Yes, last month there were two tragic events that raised the issue of coal-mining safety. But these appear to be blips in a long-term safety record that is nothing less than astonishingly good, considering what's involved. And we have the capacity to use plentiful uranium to generate electricity at nuclear power plants. The rest of the world has embraced this power source, but the U.S. remains squeamish about it. Anytime we wish to find our courage, it is a resource we can easily use. Most people think of the U.S. nuclear power industry as moribund, ever since the mishap at Three Mile Island in 1979. But the reality is that America's use of nuclear power has done nothing but grow. Today, 20% of America's electricity comes from nuclear, about twice the amount in the 1970s — even though no new plants have been built in decades. How? Because we've gotten better and better at using the plants we already have. We now have so much confidence in their safety that they require much less down time than they used to. Using the plants we already have more fully has turned nuclear into America's stealth energy giant. And the perfect safety record that made it possible means we should be building more plants today to meet the growth needs of the future. For investors, here's what it means. We're not running out of oil. Instead, oil is going out of style. In my opinion, investing in the big integrated oil companies amounts to swimming against the tide of history. I wouldn't do it. Natural gas has an important future — in home heating, electricity generation, and even in transportation. Prices have crashed, but the stocks of natural-gas companies haven't really come down all that much. I think gas prices have further to fall, and the stock prices even more so. The sweet spot for energy investing is coal and nuclear. Don't be afraid of being politically correct. These energy sources won't trash the environment. And if it makes you feel any better, you'll be able to afford to plant a few trees with all the money you'll make on these stocks. Where are they headed tomorrow, next week, or next month? That's a gamble. But in my view it's a certainty that oil is the past, and nuclear and coal are the future. If you are a long-term investor, that's where you should be placing your bets.
Donald Luskin is chief investment officer of Trend Macrolytics, an economics consulting firm serving institutional investors. 3. |
That number is from old data. New studies have considerably refined it, to this point:
Lead paragraph: "A new report by UC Berkley analyzes six studies of the energy efficiency of ethanol, adjusted all of the studies to consistent system boundaries for comparison and based on the current state of ethanol production recalculated the values for corn ethanol and used a "realistic scenario" conditions to calculate the energy to produce cellulosic ethanol from switchgrass. The study found that the net energy ratio (energy out/energy in) is 1.2 for ethanol produced from corn and 8.3 for cellulosic ethanol produced from switchgrass. The net energy value (energy out-energy in) was calculated to be 4.5 MJ/liter for corn ethanol and 22.8 MJ/liter for cellulosic ethanol. In terms of environmental impact corn ethanol decreases greenhouse gases only 14% when compared to gasoline, while cellulosic ethanol has a much greater reduction of 88% . They also pointed out, as have others, that it takes less energy to produce ethanol than it does to produce gasoline."
Can you tell me why the following wouldn’t work?
A gas turbine that powers a generator that powers an electric motor that powers a car.
Gas turbines will run on just about anything that will burn and are efficient when run at a constant speed.
I agree. However, I think that the excess capacity should be ethanol, not new petroleum. I also think that the system modifications necessary to bring considerably more ethanol online are easier and faster than bringing totally new oil fields online. See my other post on ethanol just above this one.
I don't think you've really thought through the impact of that much additional farm land in production. We'll be trading energy independence for food dependence.
All this electric stuff will require a lot of copper.
That may be another good commodity buy for the long term.
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July 5, 2005
Cornell ecologist's study finds that producing ethanol and biodiesel from corn and other crops is not worth the energy
ITHACA, N.Y. -- Turning plants such as corn, soybeans and sunflowers into fuel uses much more energy than the resulting ethanol or biodiesel generates, according to a new Cornell University and University of California-Berkeley study. "There is just no energy benefit to using plant biomass for liquid fuel," says David Pimentel, professor of ecology and agriculture at Cornell. "These strategies are not sustainable." Pimentel and Tad W. Patzek, professor of civil and environmental engineering at Berkeley, conducted a detailed analysis of the energy input-yield ratios of producing ethanol from corn, switch grass and wood biomass as well as for producing biodiesel from soybean and sunflower plants. Their report is published in Natural Resources Research (Vol. 14:1, 65-76). In terms of energy output compared with energy input for ethanol production, the study found that:
In terms of energy output compared with the energy input for biodiesel production, the study found that:
In assessing inputs, the researchers considered such factors as the energy used in producing the crop (including production of pesticides and fertilizer, running farm machinery and irrigating, grinding and transporting the crop) and in fermenting/distilling the ethanol from the water mix. Although additional costs are incurred, such as federal and state subsidies that are passed on to consumers and the costs associated with environmental pollution or degradation, these figures were not included in the analysis. "The United State desperately needs a liquid fuel replacement for oil in the near future," says Pimentel, "but producing ethanol or biodiesel from plant biomass is going down the wrong road, because you use more energy to produce these fuels than you get out from the combustion of these products." Although Pimentel advocates the use of burning biomass to produce thermal energy (to heat homes, for example), he deplores the use of biomass for liquid fuel. "The government spends more than $3 billion a year to subsidize ethanol production when it does not provide a net energy balance or gain, is not a renewable energy source or an economical fuel. Further, its production and use contribute to air, water and soil pollution and global warming," Pimentel says. He points out that the vast majority of the subsidies do not go to farmers but to large ethanol-producing corporations. "Ethanol production in the United States does not benefit the nation's energy security, its agriculture, economy or the environment," says Pimentel. "Ethanol production requires large fossil energy input, and therefore, it is contributing to oil and natural gas imports and U.S. deficits." He says the country should instead focus its efforts on producing electrical energy from photovoltaic cells, wind power and burning biomass and producing fuel from hydrogen conversion.
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July 5, 2005
Cornell ecologist's study finds that producing ethanol and biodiesel from corn and other crops is not worth the energy
ITHACA, N.Y. -- Turning plants such as corn, soybeans and sunflowers into fuel uses much more energy than the resulting ethanol or biodiesel generates, according to a new Cornell University and University of California-Berkeley study. "There is just no energy benefit to using plant biomass for liquid fuel," says David Pimentel, professor of ecology and agriculture at Cornell. "These strategies are not sustainable." Pimentel and Tad W. Patzek, professor of civil and environmental engineering at Berkeley, conducted a detailed analysis of the energy input-yield ratios of producing ethanol from corn, switch grass and wood biomass as well as for producing biodiesel from soybean and sunflower plants. Their report is published in Natural Resources Research (Vol. 14:1, 65-76). In terms of energy output compared with energy input for ethanol production, the study found that:
In terms of energy output compared with the energy input for biodiesel production, the study found that:
In assessing inputs, the researchers considered such factors as the energy used in producing the crop (including production of pesticides and fertilizer, running farm machinery and irrigating, grinding and transporting the crop) and in fermenting/distilling the ethanol from the water mix. Although additional costs are incurred, such as federal and state subsidies that are passed on to consumers and the costs associated with environmental pollution or degradation, these figures were not included in the analysis. "The United State desperately needs a liquid fuel replacement for oil in the near future," says Pimentel, "but producing ethanol or biodiesel from plant biomass is going down the wrong road, because you use more energy to produce these fuels than you get out from the combustion of these products." Although Pimentel advocates the use of burning biomass to produce thermal energy (to heat homes, for example), he deplores the use of biomass for liquid fuel. "The government spends more than $3 billion a year to subsidize ethanol production when it does not provide a net energy balance or gain, is not a renewable energy source or an economical fuel. Further, its production and use contribute to air, water and soil pollution and global warming," Pimentel says. He points out that the vast majority of the subsidies do not go to farmers but to large ethanol-producing corporations. "Ethanol production in the United States does not benefit the nation's energy security, its agriculture, economy or the environment," says Pimentel. "Ethanol production requires large fossil energy input, and therefore, it is contributing to oil and natural gas imports and U.S. deficits." He says the country should instead focus its efforts on producing electrical energy from photovoltaic cells, wind power and burning biomass and producing fuel from hydrogen conversion.
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Start.
I'm going to be conspicuously polite, despite your tone. Please evaluate the contents and conclusions of the study as if authorship and origin were anonymous. It is not a valid argument technique to dismiss the valid presentation of data merely because of a perceived association of the authors with a political or philosophical viewpoint which may or may not have any relevance. It is a valid argumentative technique to demonstrate flaws in data sources, logical reasoning, and analytical methodology.
It is also not a valid argumentative technique to present numbers lacking referential support as the "best" analysis merely because they agree with a preconceived personal viewpoint. I.e., show your work and cite your sources.
This is clearly a topic that requires informed analysis. Let's try to do that.
You have a major immaturity problem that you should deal with. Privately.
The fact is that not only Alaska, but off shore South Jersey, Fla., N. Car., of course, Ca., there are gallons and gallons et al for many years but the enviros will not give in and now we are supposedly all turning Green. We need nukes, coal, and oil. No cars will be given up easily by most of the public and it will not be for years when we finally, if ever, go off the oil-gas fix. We will still need that oil and we have it domestically but will not be able to get it due to Gop wussiness and Left Dem obstructionism.
"if top fuel dragsters are any indication, alcohol seems to propel vehicles at a satisfactory rate."
Having spent a good number of years racing with alcohol and Nitro, it's a crappy fuel as far as efficency and price.
When the only considreation is to go fast efficency and price don't even count.
In 1954 in a flathead 32 roadster the fuel cost for a 1/4 mile run was almost $8 when the price of gasoline was 14 cents a gallon. Running the same car on gas and losing about 10% of the speed you ran the same 1/4 mile for about 20 cents.
But... let's try to get down to the contents of the study. This is from the Berkeley press release:
"The goal of the UC Berkeley analysis was to understand how six studies of fuel ethanol could come to such different conclusions about the overall energy balance in its production and use. Farrell, Kammen and their UC Berkeley colleagues dissected each study and recreated its analysis in a spreadsheet where they could be compared side-by-side. The team said it found numerous "errors, inconsistencies and omissions" among the studies, such as not considering the value of co-products of ethanol production - dried distillers grains, corn gluten feed and corn oil - that boost the net energy gain from ethanol production. Other studies overestimated the energy used by farm machinery."
"On the other side, some studies ignored the use of crushed limestone on corn fields, which can be a significant energy input because of the need to pulverize the rock. Farrell noted that some numbers needed for the analysis, such as the amount of limestone applied, are just not known reliably. On the other hand, some of the studies used outdated data when more recent numbers were available, making ethanol look worse."
"The assumptions made by some of the authors were not based on the best data, or were just a little bit too convenient, and had a strong impact on the results," Kammen said.
Your turn.
The marketplace is a funny thing. The price of gasoline has skyrocketed while the octane rating of gasoline has dropped. Meanwhile, the price of alcohol has dropped from the $8.00 per gallon recalled by you to, what, $2.30 today.
The price of the alcohol from Shell Chemical by the barrel in 54 was 65 cents/gal. Nitro cost considerably more but it took almost 5 gllons to run the 1/4 mile with 90% which producedthe total cost. It only took us a little over 1 gallon of gas to make the same run with the same car.
That's a good point, and the agricultural impact needs to be evaluated. But gee, aren't a lot of farmers looking for a cash crop? Especially one that grows like... weeds?
Alcohol is still a crsppy fuel for engines as is gas alcohol mix!
They csn take all the aternative energy BS and shove it, just use the hundreds of years of oil that are within the US, namely California.
BTW, i'm a 5th generation So. Californian.
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