Hurricane Katrina’s aftermath has left thousands of
Gulf Coast Americans helpless. The full extent of the tragedy’s
economic consequences will remain unknown for some time but one thing
is clear; approximately 10 percent of America’s total oil refining
capacity was crippled in addition to damaging pipelines that send the
fuel to the northeast and mid-west parts of the country. In Katrina’s
immediate aftermath the price of oil broke the $70 per barrel mark and
the price is expected to remain above $60 per barrel for an extended
period of time.
In the wake of Hurrican Katrina, an oil tanker
is docked at a Marathon refinery along the Mississippi River outside
New Orleans. Gulf refineries were hit hard by the storm. (David J.
Philip/AP)
President George W. Bush, in full recognition of America’s grave
concern over rising energy prices, signed the Energy Policy Act of
2005 into law on August 8. Furthermore, the concept of energy security
was discussed in a serious way for the first time since the early
1980s. Energy policy and private industry are slowly engaging each
other together to explore alternative energy sources to achieve
America’s future energy security while lessening the impact on the
environment.
In March, a bipartisan list of 30 former government officials sent
a letter to President George W. Bush under the banner of the “Energy
Future Coalition”, urging him to place greater emphasis on America’s
dangerous dependence on foreign oil and to create an economic
environment suitable for increased investment in the various renewable
energy sectors. The signatories, including such former officials as
National Security Adviser Robert C. McFarlane, Director of Central
Intelligence R. James Woolsey and Assistant Secretary of State for
Global Affairs Timothy Wirth, requested the President ask Congress to
fund new initiatives to curtail U.S. oil consumption by increasing
efficiency and developing petroleum fuel alternatives at a level
proportionate with other national defense priorities. Incentives,
including tax credits to spur production and purchase of advanced
efficiency vehicles, the construction of facilities for alternative
fuel production from domestic resources and the adoption of
alternative liquid fuels at existing fueling stations, were advocated.
As crude oil prices broke the $60 per barrel barrier for the first
time in history, fears increased that turmoil and conflict in the
major producing areas of the Middle East, and attacks on the pipelines
in Iraq and Saudi Arabia would play havoc with the U.S. economy.
Seventy percent of oil imported into the U.S. is consumed by the
transportation sector and disruptions in oil production have a ripple
effect reaching the American consumer through immediate hikes in gas
prices at the pumps. In December 2004, Osama bin Laden, via an
audiotape broadcast by Arab satellite channels, called on his
supporters to take their holy war to the oil industry and disrupt
Persian Gulf oil supplies to the U.S.
President Bush holds The Energy Policy Act of
2005 after signing in New Mexico Aug. 8. From left: Alliance Vice
Chair Rep. Ralph Hall (R-TX), Rep. Joe Barton (R-TX), Sen. Pete
Domenici (R-NM), and Alliance Vice Chair Sen. Jeff Bingaman (D-NM).
President G.W. Bush recently emphasized the government’s role in
leading the fight to create an energy-efficient America. On June 15,
2005, as the keynote speaker at the 16th Annual Energy Efficiency
Forum in Washington, D.C., the President said that the American people
understand gas prices are not going fall overnight, but “they’re not
going to tolerate inaction in Washington as they watch the underlying
problems grow worse...To address the root causes of high gas prices,
we need to take four important steps toward one vital goal - and that
is making American less dependent on foreign sources of oil.”
Spurred by steadily increasing demand, American energy policy and
newly developed technologies are being brought together with a new
urgency. The Energy Policy Act, the first national energy plan in more
than a decade, intends to promote residential energy efficiency and
set new minimum energy efficiency standards for consumer and
commercial products while working to reduce federal government energy
usage. Tax credits are to be granted for wind, solar, and biomass
energy and the Act repeals outdated laws that discourage investment in
new infrastructure. It also calls for consumer tax credits for
energy-efficient hybrid, clean-diesel, and fuel-cell vehicles.
The Act codified into law the essence of the 2002 National Security
Strategy (NSS). The NSS called for the United States to strengthen its
energy security “and the shared prosperity of the global economy by
working with our allies, trading partners, and energy producers to
expand the sources and types of global energy supplied especially in
the Western Hemisphere, Africa, Central Asia, and the Caspian region.”
The document noted that economic growth must be accompanied by efforts
to stabilize greenhouse gas emissions and cut U.S. emissions by 18
percent per unit of output by the year 2012. To do so, the White House
advised increased spending to $4.5 billion on research and new
technologies to address the issue of climate change.
Terrorists Drive Up The Cost of Imported Energy
The United States has spent more than $1.16 trillion to purchase
foreign oil over the past 30 years. The Institute for the Analysis of
Global Security (IAGS), a non-profit, Washington-based organization
focusing on energy and global security, estimates the cost of securing
U.S. access to Middle East oil at $50 billion annually, which include
the continual U.S. military presence in the Middle East. As developing
states such as China and India increase their demand for oil, not only
will the market price for oil rise, but the American presence in the
Middle East will need to be maintained - if not increased - to ensure
that sufficient quantities of oil reach U.S. soil.
A burning oil pipeline at Hit, Iraq, 93 miles
northwest of Baghdad, following insurgent sabotage June 22, 2003.(AP
Photo/Ali Haider)
It is taken as axiomatic that terrorists understand attacks on
pipelines in Iraq and Saudi Arabia can have extreme negative effects
on the United States economy. Gal Luft, IAGS executive director, said
rising oil prices in the U.S. reflects the “fear premium” that can be
attributed to any uncertainty that may prevent oil from reaching the
consumer. This includes terrorist attacks on oil pipelines, increasing
energy demand from countries such as China and India, and natural
disasters such as Hurricanes Katrina and Rita. “There is no exact
dollar amount that can be added to the price of oil due to the
uncertainties that exist,” Luft said. “It depends on the investor and
those watching over the markets and their view of what may or may not
affect the markets.” In the past year, attacks on oil pipelines in
Iraq have decreased in comparison to previous years, to which Luft
attributes the fact that attacking previously damaged pipelines does
not achieve terrorist goals. As the number of targets decreased the
number of attacks also decreased. Unfortunately, he said, more than
100 million barrels of oil per year are prevented from reaching the
global market due to terrorist attacks, and if those barrels could be
added into the system, “we would see a decrease in oil prices of
approximately ten dollars a barrel.”
In the past 40 years, a spike in oil prices has always led to an
economic recession in the U.S. Despite the fact that much of the
petrodollars leaving the U.S. end up in Middle East accounts and are
eventually spent on American goods by consumers in the oil producing
countries, there is fear that continued deterioration in relations
between the Muslim world and America could result in a boycott of the
U.S. dollar by shifting transactions to the euro. It has been reported
that both OPEC and Russia are considering switching to the euro as the
payment currency for oil sales. “Both of those moves would fulfill
jihadists wishes,” said Luft.
What is the Future of Middle East Oil?
On April 26, 2005, world oil prices fell when Saudi Crown Prince
Abdullah bin Abdul Aziz hinted that his country could increase oil
production. Experts suspect, however, that Saudi reserves are
exaggerated and, in fact, declining. Energy analyst Matthew Simmons,
chairman and CEO of Simmons & Company International, a specialized
energy investment-banking firm, believes the Saudi fields are on the
verge of a production collapse. In an interview with the online
Environment & Energy Television (eedaily.com), produced by Environment
& Energy Publishing, LLC, Simmons declared that the Saudi oil fields
will soon lose the “high reservoir pressure that keeps a fabulous
amount of oil flowing from a small number of wells.” Officials at
Saudi Aramco, the state-owned production company, claim that new
technologies will allow them to increase production and create access
to new oil fields.
The true condition of the OPEC oil fields is unknown to outsiders.
Peter Maass’ August 21, 2005 New York Times article “The
Breaking Point” pointed out that OPEC quotas, which were imposed in
1983, were based on each member’s overall reserves. The more reserves
a member claimed, the higher their quota would be therefore more
revenue for the country. “It is widely believed that most, if not all,
OPEC members exaggerated the sizes of their reserves in order to have
the largest possible quota - and thus the largest possible revenue
stream,” Maass wrote.
Technology has enabled oil producers to push the illusion that oil
supplies will last forever, while the reality is such that decline
curves, some occurring at surprisingly rapid rates, are inevitable.
David Goodstein, professor at the California Institute of Technology
and author of the 2004 bestseller Out of Gas: The End of the Age of
Oil reported the number of oil discoveries peaked in the 1960s
whereas in the 1980s OPEC changed its quota for how many barrels of
oil each country could pump. Goodstein says that during that time
world reserves “should have decreased by 200 billion
barrels...instead, they’ve increased by about 400 billion barrels.” It
is uncertain when world oil production will peak, but when it does, it
“will not be artificial and it will not be temporary.”
What About ANWR?
The House energy bill, passed in April, tackled the oil supply
issue with language allowing for exploratory drilling in the Arctic
National Wildlife Refuge (ANWR). In 1980, President Jimmy Carter
signed the Alaska National Interest Lands Conservation Act (ANILCA),
which designated much of the Refuge for a wilderness area. However,
the coastal plains of ANWR were set aside for future consideration of
its oil resources. The wording in the House energy bill called for
drilling in no more than 2,000 acres of the ANWR refuge, representing
0.01 percent of the 19.6 million acre refuge. In 1987, the Department
of the Interior, in a report on the gas and oil potential of the
coastal plains, estimated the presence of 600 million barrels (on the
low end) to 9.2 billion barrels (on the high end) of recoverable oil
reserves in the coastal plains. These are estimates, however, and
proponents of ANWR oil exploration say only drilling exploration wells
will accurately show what is available. While not included in the
Energy Policy Act, there will be attempts to approve drilling in ANWR
through other legislation this fall.
Nuclear Power
Private industry is not blind to the changes affecting the sources
of the nation’s energy supply. Energy companies are recognizing that
to remain firmly invested in traditional energy sources such as coal
and oil is risky. In order to mitigate the risks and remain at the top
of the energy business large companies are investing heavily in clean
and renewable fuels in anticipation of stringent regulations on
emissions and efficiency. Nuclear “A secure energy future for America
must include more nuclear power,” President Bush told the Small
Business Administration April 27, 2005. Concern over nuclear
proliferation concerns and the creation of additional lucrative
terrorist targets, however, are significant obstacles to new nuclear
plant construction.
Nuclear
power plant. Cooling towers release only steam. Two cylindrical
reactor containment structures are seen in foreground.
As of May 12, 2005, there are 440 nuclear power plants operating in
31 countries with an additional 24 under construction. The laws
regulating the production of nuclear energy and tracking methods to
secure uranium used must be tightened and updated before further
nuclear power plants are built, according to Henry Sokolski, executive
director of the Nonproliferation Policy Education Center and a former
deputy for Nonproliferation Policy in the Office of the U.S. Secretary
of Defense. Sokolski predicts that, “in 20 years [the United States]
will have as much nuclear energy as [it] has today.” There is
currently a window of opportunity to tighten the security surrounding
nuclear energy.
Clean-coal technology is an oxymoron for many environmentalists who
believe not enough emphasis is being placed on other newer forms of
clean energy and that “clean-coal” is not clean enough. The United
States generates about 52 percent of its electricity from coal -
providing $350 billion in annual revenues for coal-powered utility
companies. The Bush Administration’s FY2006 budget request to Congress
contained a clean-coal-power initiative and funding for the
“FutureGen” program - utilizing integrated gasification combined-cycle
technology (IGCC) - a demonstration project to create hydrogen and
electricity from coal. The FutureGen project is expected to take 10
years to complete and cost $1 billion.
Clean-Coal Technology
The IGCC gasifier uses carbon-based raw materials reacting with
steam and oxygen at high temperatures and pressures to create a
synthetic fuel. Nearly zero air pollution is emitted. To date,
however, no utility company has built a commercial IGCC plant due to
technological uncertainties, according to a report by the Center for
Energy and Environmental Studies at Carnegie Mellon University.
Uncertainties include equipment sizing parameters, requirements for
initial catalysts, and the unit costs of wastes and fuels, which are
difficult to assess for new advanced technologies as performance of a
new technology is often based on limited experimental data from
small-scale testing. George Rudins, the Department of Energy deputy
assistant secretary for coal, believes that economic incentives,
including tax-breaks, are key in the development of IGCC plants.
Engineers believe that a new catalyst may present an important step
toward using the nation’s coal supply to power alternative fuel
vehicles and utilities. The most widely-used catalyst is derived from
iron and chromium, a toxic metal. Chromium is released as a by-product
and when the material has reached its lifetime, expensive disposal
methods must be used.
Ohio State University engineers have developed a new chemical
catalyst, which increases hydrogen production without using toxic
metals that are common to other catalysts. Umit Ozkan, a professor of
chemical and biomolecular engineering at the University, explained
that the new catalyst uses combinations of iron, aluminum and other
metals to yield hydrogen from carbon monoxide and water. The tests
found that this catalyst performs 25 percent better than commercially
available alternatives. Ozkan believes that hydrogen can become the
ultimate fuel for the transportation sector and hopes to efficiently
create hydrogen from coal. Ultimately, the technology could place the
U.S. on the road toward the rumored “hydrogen economy” and alleviate
need for expensive gasoline.
Concentrating solar power plant.
The challenge is finding a market for the clean-coal technology
plants. It wasn’t until the 1990 Clean Air Act Amendment’s call for a
50 percent reduction in sulfur dioxide emissions that utility
companies made reductions at all. Dallas Burtraw, a senior fellow at
Resources for the Future, a non-profit concerned with energy policy,
said that there is a lot of hope placed in clean-coal technologies
because the near future is likely to consist of a carbon-controlled
economy. “Clean-coal technology gains would seem to be an incentive to
achieve carbon reductions in the near term, but the Administration’s
unwillingness to use carbon-reduction-enforcing measures in the short
term is allowing industry to miss a lot of [opportunities].” Burtraw
believes that uncertainties about the types and extent of future
regulations make present action very risky and highly unlikely.
Paul S. Fischbeck, director of the Center for the Study &
Improvement of Regulations (CSIR), a joint research center in the
Department of Engineering and Public Policy at Carnegie Mellon
University and the Institute for Risk Analysis and Risk Communication
at the University of Washington, says that the vast majority of
utility executives for whom CSIR conducts seminars expect carbon
regulations within the next 20 years. The problem, he says, is that
“they don’t have any idea what shape or form it will take or when it
might be enacted. The cost of uncertainty makes people afraid to act.
It is too risky.” It appears clear that, until the future is somewhat
certain, utilities will continue to use current technologies,
according to Chemical and Engineering News, February 23, 2004.
Solar
Solar energy is one of the cleanest methods of energy production
currently available. According to the “Clean Energy Trends 2005”
report, published in March of 2005 by Clean Edge, a clean technology
market authority, the market for solar photovoltaic (PV) energy will
grow from $7.2 billion in 2004 (from $4.7 billion in 2003) to $39.2
billion by 2014. Photovoltaic solar energy receives the most attention
out of all available solar technologies. The solar cells used for this
technology are made of semi conducting materials, such as those in
computer chips. When the sunlight is absorbed into the materials the
solar energy knocks electrons loose from their atoms. As the electrons
flow through the material, they produce energy.
Though photovoltaic solar energy is the most popular, concentrating
solar power (CSP) is receiving more attention from the renewable
energy community. Concentrating solar power technologies use
reflective materials such as mirrors to concentrate the sun’s energy.
This concentrated heat energy is then converted into electricity.
CSP’s high-temperature capabilities make it attractive for other
energy sources as well. The government’s Sandia National Labs (SNL),
the University of Nevada, and General Atomics, a San Diego-based
provider of advanced technologies, are looking to use the energy from
CSP to produce hydrogen from water.
Wind Energy
The wind resource of the United States is tremendous. Using today’s
technology, there is sufficient wind flowing across America to provide
enough energy for the entire country. According to the American Wind
Energy Association’s report on the current status of wind power in the
U.S., North Dakota alone could supply over 40 percent of the nation’s
electricity needs. At present, however, only one percent of the
nation’s electricity is supplied by wind energy and only “under an
aggressive growth policy perhaps six percent of the nation’s
electricity could be supplied by wind power by 2020.”
Modern wind turbine undergoing onsite assembly. Crane vehicle gives
scale of enormous size.
Cristina Archer and Mark Jacobson of Stanford University suggest
that using the results of testes sources of strong winds to
strategically capture wind energy could generate enough power to
satisfy the world’s energy demands. The researchers collected and
analyzed 7.500 wind surface stations and approximately 500 more
balloon-launch stations in order to establish global winds speeds at
300 feet above the earth’s surface (the hub height of modern wind
turbines). Nearly 13 percent of the stations analyzed reported an
average wind speed strong enough to use for power generation. Fifteen
miles per hour is the wind speed considered acceptable for
economically feasible power generation. North America was found to
have the greatest wind power potential, with Northern Europe, the
southern tip of South America and the island of Tasmania having
significant wind speeds at the turbine blade height.
The researchers found that the locations where these wind speeds
(called Class 3 winds) were found could produce 72 terawatts of
energy. One terawatt equals 1 billion watts. They believe that
capturing only a small fraction of the energy could produce 1.6-1.8
terawatts of energy, which is the equivalent of global electricity
usage in 2000. Energy in this capacity would require over 500 nuclear
reactors or thousands of coal-burning plants. Twenty percent of the
potential wind energy, once converted to electricity, could meet the
global electricity demand. But significant barriers exist to
harnessing energy at that level. The prospect of thousands of giant
turbines dotting American horizons has prompted opposition.
Denmark’s Kappel wind farm along the Baltic Sea, one of many that
dot the small European country.
The Energy Policy Act extended the Production Tax Credit of 1.8
cents per kWh offered to the wind energy industry by three years. The
Senate also, for the first time, voted for a federal Renewable
Portfolio Standard (RPS), which will require 10 percent of the
electricity generated by investor-owned utilities be created from
renewable energy sources such as wind and solar by the year 2020. The
extension of the tax credit will create over 5,000 new megawatts of
clean, renewable energy through the year 2007 and will also generate
over 100,000 new jobs across the United States.
Additional wind power may result from growing consumer demand
despite objections on aesthetic grounds. On April 26, the Long Island
Power Authority and FPL Energy applied to build a 140-megawatt
offshore wind energy park southeast of Jones Beach State Park and
southwest of Robert Moses State Park. The facility is to consist of 40
state-of-the-art wind turbines. Initially, the power from the park was
to be channeled to LIPA’s total energy bank to be distributed equally
among customers.
Map showing the offshore location of the planned Long Island wind
energy park.
There was such enthusiasm from the customers for zero-emissions
energy, however, that consumers will be able to choose to continue
receiving energy from the LIPA or they can buy the wind-power directly
from the offshore energy park. LIPA Chairman Richard Kessel said that,
“it seems that people who are really enthused about the prospect of
Long Island having a facility that will produce a significant amount
of wind-generated power want to be a part of the effort to break
OPEC’s hold on our energy supply by buying alternative energy
supplies.”
It is estimated that power from the wind park will save 13.5
million of barrels of oil per year, and will prevent 235,000 tons of
carbon dioxide, 489 tons of sulfur, and 221 tons of nitrogen oxide
from being emitted into the air.
Transportation: Plug-ins, Hybrids, and Biofuels
Half the automotive fuel in the United States could be replaced
with ethanol from renewable agricultural crops and forest wastes,
University of Florida researcher Lonnie Ingram declared in May 2005.
Ingram, a professor of microbiology with U of F’s Institute of Food
and Agricultural Sciences, has developed a genetically engineered E.
coli bacteria that converts biomass (all pant and plant-derived
materials including manure and other farm wastes into fuel. “We can
reduce our dependence on imported oil and lower the price of
automotive fuel by reformulating our gasoline with ethanol derived
from inexpensive farm wastes,” he said. “Ethanol will stretch the
nation’s fuel supply and make gasoline burn more cleanly.
Gasoline-ethanol blends also boost the octane rating of automotive
fuel.”
Ford Think plug-in electric car.
By year’s end, more than 4.5 billion gallons of fuel will be
manufactured from cornstarch nearly three times the amount produced in
2001. Prof. Ingram expects his new technology could more than double
this figure. In 2006, a 30-million-gallon biomass-to-ethanol plant
will be built in Jennings, Louisiana by BC International. The plant
will use the technology developed by Ingram and bagasse from local
sugar mills as a feedstock. After harvest, the cane is transported to
a sugar mill where it is squeezed and cooked to extract the sugar
sucrose. The leftover material is called bagasse. It is cellulosic
biomass waste material. Although some bagasse is burned to produce
heat for the sugar mill process, a large fraction of this material is
considered excess and is provided to BCI for the cost of
transportation.
Governors from 33 states, gathered under the banner of the
Governors’ Ethanol Coalition, issued a report on the future of ethanol
in the United States in April 2005. “Ethanol from Biomass- America’s
21st Century Transportation Fuel: Recommendations” stated that
“national security is linked to energy through the dependence of this
country and many others on imported oil - much of it located in
politically troubled parts of the globe,” and that “the safest and
cheapest way to mitigate these risks is to set and achieve a goal of
providing at least five percent of the nation’s transportation fuel
from ethanol by 2010, and to produce at least eight billion gallons of
ethanol a year by 2012.” The report states that the use of cornstarch
and high-level sources for ethanol production may increase the cost of
corn and therefore low-level sources of ethanol production must be
found. Ingram’s new technology appears to provide the answer to their
request. The Coalition recommends the implementation of a national
security renewable fuels act and the introduction of performance-based
incentives. Additionally, the coalition recommends that Congress
support policies in favor of more flexible fuel vehicle standards, and
aim to make all vehicles become fuel-flexible, in hopes of achieving
an 85 percent ethanol fuel.
Prominent biomass uses today include ethanol
and biodiesel fuel additives and process heat and power generation
with paper mill and forestry residues.
In addition to using alternative fuels to reduce the need for
foreign oil, many in the auto industry are focusing on battery and
wheel mechanisms to create more fuel-efficient cars. Luft, the IAGS
executive director, wrote on July 30, 2004 for Energy Pulse, an
online forum for leaders in the power industry, that the utilities
industry could provide the solution. Luft is a proponent of plug-in
hybrid cars. Taking a step further than the hybrid vehicles currently
on the market, the plug-in hybrid is equipped with a battery that can
last for 20 to 50 miles of driving and can be charged using a standard
electric outlet. Additionally, plug-ins have a regular gasoline engine
and a fuel tank, which the vehicle can automatically and seamlessly
switch to when the battery power runs out. This offers the consumer
the same driving range as traditional vehicles. “Since 50 percent of
the cars on the road in the U.S. drive 20 miles a day or less,” Luft
said, “most of the driving in a plug-in is fueled by electricity.
Overall, plug-ins can reduce gasoline use by 85 percent.”
Charging the cars at night or during the middle of the day, “when
electric utilities have a great deal of excess capacity, plug-ins will
enable utilities to sell electricity at off-peak hours thus increasing
the use of existing capacity and generating more revenues,” said Luft.
“America leads the world in technology - and we need to use that
technology to lead the world in fuel efficiency,” President George W.
Bush declared on June 15, 2005 in his speech to the 16th Annual Energy
Efficiency Forum.
By JINSA Editorial Assistant Chloe Feinberg.
Copyright
JINSA, © 1999-2005.
All Rights Reserved.
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