Soon, the energy debate will come back into the headlines. Also, the bill which contains the oil drilling moratorium on federal lands is due to expire this month.
Those who are opposed to drilling will once again point to alternatives such as wind, solar and biofuels. Pursuing all alternatives should be our policy. Since 2001, the United States government has spent over $18 billion in this research.
With all of this "investment", the most economical and diverse form of energy is still oil. Oil's diversity is not only in the energy that is produced, but the products that are manufactured and supplied to our economy.
According to the U.S. Energy Information Administration, the most common products from petroleum are energy products: gasoline, heating oil, and diesel fuel. Other petroleum products are: ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, records, tires, ammonia, and heart valves.
Additional refined products include, petrochemical feedstock - products derived from petroleum principally for the manufacturing of chemicals, synthetic rubber and plastics.
The most talked about alternative right now is wind. T. Boone Pickens has been advertising this alternative for about 3 months now. On the surface, wind turbines sound great as another form of energy. They look very sleek and are always presented as a green alternative to oil.
Mr. Pickens plan is to have wind farms replace natural gas power plants so that natural gas can be used in place of gasoline for transportation needs. Can this really work in the market place and take care of our energy needs? No.
T. Boone Pickens is a smart man. He recognizes the need for our country to become energy independent and the current anti-oil, anti-nuclear, anti-coal energy environment our congress and environmentalist have been in.
But wind is not adequately sufficient to replace natural gas or any fossil fuel plant. Wind provides 1% of our current electricity as compared to 22% for natural gas. So how much energy can you get from a wind turbine or for that matter, a wind farm?
As noted in the Investor's Business Daily, "...to replace natural gas' 22% with wind would require building 300,000 1.5-megawatt turbines occupying an area the size of South Carolina."
If wind is such great a source of energy, and natural gas powered cars are the way of the future, why isn't more private capital being invested in these new wind farms? Unless the United States government commits to subsidizing wind energy for the next 20 years, there is no money to make.
The primary subsidy for wind is a credit that is given for each kilowatt hour of energy that is produced. As the Atlanta Journal-Constitution reported in a recent article; "In 1999, 2001 and 2003, when Congress temporarily killed the credits, the number of new turbines dropped dramatically."
Since we haven't figured out how to store the electricity that is produced from any power plant, every wind farm must be backed up by a conventional power plant. Wind turbines only produce energy when the wind is blowing. And as we are beginning to find out, these turbine farms are loud and kill lots of birds. Give it about 3 more years and the environmentalist will be trying to shut down this industry the same way it has tried to shut down nuclear power.
So what happens if we do the Pickens plan? Well, to get the natural gas to accommodate the future transportation needs of this country, we need to drill. How ironic! We also need to create the infrastructure and market to fuel vehicles with natural gas; more subsidies.
If an energy technology is not economically competitive, no amount of public subsidies will make it so. We should be advocating our congressional leaders to remove all energy subsidies from the federal budget and tax code. This will allow each and every energy source and technology to compete with one another on a level playing field. It will also save you and me billions of dollars.
Unfortunately, the future energy needs of our country are not ironic. We will need 135 gigawatts of new capacity in the next ten years. Right now, plants producing a total of 57 gigawatts are planned. Environmental groups like the National Resources Defense Council have succeeded in stopping 13 natural gas power plants from coming online in southern California.
According to Rick P. Sergel, chief executive at the North American Electric Reliability Corporation, "There isn't any excess in the system."
The bottom line is that we have the resources to take care of our energy needs. We should have a diversity of supply, a level economic playing field and common sense environmental regulations.
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