A Strategic Long-Term Comprehensive Energy Policy

A Natural Gas/Electric Hybrid Vehicle

Updated on 9/12/2009 The energy policy below is updated from time-to-time and includes my thoughts, feedback from my blog readers and from SeekingAlpha.com readers. Significant revisions were made after reading Robert Hefner III's book The GET: Grand Energy Transition. Hefner's book is required reading for anyone interested in energy and 21st century energy policy. You can get more information on ordering The GET here:

http://www.the-get.com/

STEP 1: Acknowledge the Problem

· Acknowledge the problem. No difficult problem can be solved until it is first acknowledged. US government and media need to honestly inform and educate the American people and policy makers at every level about the threat worldwide oil supply/demand realities pose to the US. The US uses 25% of worldwide oil supply, yet owns only 3% of the world's proven reserves. The US imports 70% of its oil, enriching unfriendlies such as Russia, Saudi Arabia, Venezuela and Iran. We are going bankrupt in the process not to mention funding both sides of the "war on terror". Our currency is weak. Our addiction to oil and coal have led to three intolerable consequences: economic contraction, environmental destruction, and geostrategic tensions. These are the basics of the energy challenge facing America. The energy crisis needs to be attacked with realistic information and wise policy decisions. A strategic, long-term, comprehensive energy policy must be adopted, publicized, and executed. The basic components of such an energy policy are listed below.

· The basic top-level energy strategy can be summarized as: we need to use less dirty and expensive solid and liquids based energy (coal, imported oil) and more cleaner and cheaper US domestic gas energy (natural gas, wind, solar, and hydrogen).

· Create a National Energy Council to develop and speed the implementation of the top-level energy strategy stated above. The director of the NEC should report directly to the President as a member of the Cabinet.

· US energy policy must recognize the fact that natural gas is the only domestic fuel supply capable of being scaled-up within the next decade to meaningfully reduce American's foreign oil imports and CO2 emissions. America should become the world leader in CNG vehicles.

STEP 2: Conservation and Energy Efficiency

· Increase fuel-efficiency standards substantially and immediately.

· Increase gas guzzler green taxes and encourage non-gasoline powered vehicles via increased tax rebates.

· Impose a top speed limit of 60 mph nationwide.

· Adopt four-day workweeks wherever and whenever it makes sense.

· Conservation and efficiency guidelines should be issued by federal, state, and local governments.

STEP 3: Transportation Initiatives

· Have at least half of all American cars and trucks running on CNG by the year 2015.
This will be done by retrofitting existing vehicles to run on natural gas, and by increased production of CNG vehicles. Tax credits should cover conversion costs.

· Encourage and adopt natural gas/electric hybrid vehicles as the single best solution to reducing foreign oil imports and emissions. See the Toyota concept car above.


The "Phill" Home Garage Nat Gas Refueling Appliance

· We should focus on natural gas home refueling appliances like the "Phill" to enable home garage refueling of NGVs in the 130 million vehicles already residing in homes on the existing natural gas pipeline grid. Tax credits should cover the installation costs of a CNG home refueling appliance.

· Tax credits should be given to all gas stations on or near the existing natural gas grid so that these stations are required to provide natural gas refueling. Tax credits should also be available to businesses such that their employees can refuel with natural gas while at work.

· Substantial government assistance for US automakers to tool-up CNG and CNG/electric hybrid vehicle production. This government assistance will extend to the production of home refueling appliances in order to bring their costs down.

· Tax credits to build out natural gas refueling stations along the nation's interstate highway system.

· All government vehicle fleets should switch to NGV’s. Encourage local municipal use of natural gas (refuse pickup, buses, mass transit, etc). Develop the natural gas conversion kit market to convert existing gasoline powered vehicles to cleaner cheaper natural gas.

· Develop electric and natural gas powered mass transit for people and goods.

· Place a green tax on all imported oil and all coal usage. The revenue generated will go *only* toward building the natural gas, wind, solar, and electrical infrastructures needed to move toward a gas based energy society. The taxes should be ramped up over a 5 year period to allow for economic planning and adjustment.

STEP 4: Prioritize and Invest Sustainable and Green Energy Sources

· Abolish federal subsidies for the oil and coal industries.

· Abolish biofuel and ethanol mandates. They cause major distortions in the food chain, inflation, and impeed development of other more economic alternative energy sources.

· Eliminate the construction of any new coal power plants. Replace existing coal plants with more distributed natural gas electrical generation.

· Construct a trans-Canadian natural gas pipeline from Alaska to the lower-48.

· Begin a government sponsored “battery technology” program (similar to the successful Sematech organization for semi-conductor technology) in order to insure that the US is not only the leader (we are way behind now…) in battery research and design, but also in battery *manufacturing*.

· Invest in wind, solar, nuclear, geothermal, and tidal energy generation to power non-gasoline powered transportation solutions described in STEP 3 above.

· In order to use the power generated from the above non-oil sources to power automobile solutions, the natural gas & electric grid infrastructures must be updated and its capacity increased dramatically.

· The government must deem electric transmission lines a matter of national security and thereby invoke eminent domain in order to construct them as needed to deliver solar and wind energy from source to consumption.

· Wind and solar power generation of hydrogen via electrolysis as a storage mechanism for calm and cloudy days. Hydrogen power generation needs encouragement.

· Streamline the permitting and construction of LNG terminals on both US coasts.

· Streamline the permitting and construction of latest generation nuclear power plants.

· Open the continental shelf and Alaska to natural gas drilling. The royalties on these resources will help fund other components of this energy plan.

· Abolish import taxes on Brazilian ethanol.

· Increase funding for hydrogen fusion research and development.

STEP 5: Social Iniatives

· Encourage local sustainability in energy generation, food production, and transportation.

· Encourage population control through education.

· Encourage green power education, business, and industry.

· The US voting public should demand energy accountability by its political leadership.

Irishman Padraig Harrington Wins the PGA!

Irishman Padraig Harrington won back-to-back majors by taking the 2008 PGA Championship by closing out the tournament with a pair of weekend 66's. Harrington's putter was simply too much for Sergio Garcia, who once again failed to make the best of a major opportunity. Garcia gave his Ryder Cup teammate the cold shoulder when shaking hands on the 18th green.

Harrington has now won 3 of the last 6 majors. He is the first European to win the PGA Championship since Tommy Armour did so in 1930 and is the first European to win the British Open and the PGA in the same year.

Harrington is the first European to ever win two consecutive major tournaments.

The tri-colour was waving proudly in Ireland and no doubt the Guinness flowed freely. Cheers to Paddy!

The Opinion the Wall Street Journal Refuses to Print: A Strategic Long-Term Comprehensive Energy Policy

Despite $120/barrel oil, an S&P500 that has returned 2.8% over the last 10 years, an annual inflation rate somewhere in the neighborhood of 8%, a financial system that is being nationalized by the so-call "conservative" Republican administration, an economy that could be described as anemic (at best) and a US currency that has dropped by 50% since Bush got elected, the US political leadership and media remain in "oil-denial". The Wall Street Journal, while publishing an article on the "Opinions" page critical of Boone Pickens' wind and natural gas energy strategy, refuses to print the following "opinion", which I have sent to the editors 3 times now. Why?

The US Must Adopt a Strategic, Long-Term Comprehensive Energy Policy

The debate is not about peak oil theory, or global warming, or the role of speculators in the price of oil. The debate should not be about windfall profits taxes on big oil or suing the oil producing nations. For a country that consumes 20% of worldwide oil production and imports 60% of it, has seen oil double in the past year and quadruple over the past 5 years, the question is a very simple one: what rational policies can the US adopt to prepare and protect US national security and its economy from an environment where worldwide oil supply cannot keep up with worldwide oil demand? It's a simple question. A common sense question.
The energy crisis of the 1970's was marked by soaring energy prices, runaway inflation, rising unemployment, and economic uncertainty. Yet the energy challenge facing the US and the world today will make the 1970's look like a walk in the park. Then, the energy crisis was a political crisis based on US Israeli policy and an Arab oil embargo. It ended when the embargo was lifted and Saudi turned on the "spigot". Today, there is no "spigot" and worldwide oil supply will not be able to keep up with demand. There will be no "end" to this energy crisis. Despite the skeptics, it truly IS different this time.
The only solution is a comprehensive long-term energy policy. This is extremely urgent, and we need to get it right the first time. The energy challenge confronting the US and the world is so daunting every economically viable source of non-oil based energy will be needed. Here are the basic features of such an energy policy:

· Acknowledge the problem. No difficult problem can be solved until it is first acknowledged. US government and media need to honestly inform and educate the American people and policy makers at every level about the threat worldwide oil supply/demand realties pose to the US. This is the root of the energy challenge. The energy crisis needs to be attacked with information and wise decisions.

· The nature of the energy challenge is so immense the US government will have to play an important and central role.

· Increase gas guzzler tax penalties and encourage gas sippers via increased tax rebates.

· Increase CAFE standards. "Open fuel standards" autos should be incentivized.

· Conservation guidelines should be issued by federal, state, and local governments.

· Impose a top speed limit of 60 mph nationwide

· Adopt four-day workweeks wherever and whenever it makes sense.

· Government encouragement and tax incentives for development of non-gasoline powered transportation.

· Huge investments are needed in wind, solar, geothermal, and nuclear energy to power non-gasoline powered automobile solutions.

· Wind and solar power generation of hydrogen via electrolysis as a storage mechanism for calm and cloudy days. Hydrogen power generation needs encouragement.

· In order to use the power generated from the above non-oil sources to power automobile solutions, the electric grid infrastructure must be updated and its capacity increased dramatically.

· Construction of a trans-Canadian natural gas pipeline from Alaska to the lower-48.

· Permit and construct LNG terminals on both coasts. Now.

· Open the continental shelf and Alaska to oil and gas drilling. Now.

· Research and development of clean coal-to-liquids and coal gasification.

· Increase the federal gasoline sales tax gradually over time.

· Develop electric mass transit for people and goods.

· Biofuels should be encouraged by not at the expense of runaway food inflation.

· Abolish Ethanol mandates. They cause major distortions in the food chain.

· Abolish import taxes on Brazilian ethanol.

· Food production and transportation methods in a non-oil based world should be investigated and results published.

· Encourage local sustainability in energy, food production, and transportation.

· Encourage population control through education.

· The US voting public should demand energy accountability by its political leadership. We need policy by engineers and scientists, not Rush Limbaugh and Larry Kudlow.


In conclusion, the economic and social implications of remaining on our present oil-based economy will be very unpleasant. We need to take action now. The US is capable of successfully confronting the energy challenges but can only do so by rationally acknowledging the problems and solutions. We can usher in a new age of economic prosperity based on non-oil based energy solutions but we must begin the transition now. We are running out of time and should begin a massive build out of a non-oil based energy sources, transportation solutions, and infrastructure today. The only way to achieve solutions to the economic challenges posed by the energy crisis is adoption of a well crafted, long-term, comprehensive energy policy as shown above. Failure to do so will mean continued US currency devaluation, equity investment destruction, reduction in the US standard of living, and eventually social unrest and huge economic and social dislocations.