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Energy Voices: Insights on the future of fuel and power

Monitor staff and guest contributors offer a mix of news, analysis, and commentary on energy and resource issues emerging across the globe.

In a July file photo, the fleet replenishment oiler USNS Henry J. Kaiser, left, delivers a 50-50 blend of advanced biofuels and traditional petroleum-based fuel to the guided-missile cruiser USS Princeton during a 'green fleet' demonstration. Navy Secretary Ray Mabus says he thinks federal lawmakers will come around on the branch’s ambitions to ease its use of foreign oil once they understand it’s not an environmental move, it’s a defense strategy. (MC3 Ryan Mayes/U.S. Navy/AP/File)

US military attacked for its clean-tech push (but sticks to its guns, anyway)

By Richard T. StuebiGuest blogger / 09.07.12

For several years, the U.S. military has been one of the most active proponents and early-adopters of renewable energy and alternative fuels, with their Operational Energy Strategy.  Why?  Several reasons:

1.  Fuel delivered to the remote front-lines such as in Afghanistan for use in power generation and transportation has an “all-in” cost of $400/gallon.  Any energy source that can be supplied locally, such as solar, to reduce fuel has significant potential for economic savings.

2.  Being of critical logistical importance, convoys to deliver fuel are often the target of insurgent attacks, resulting in casualties to American servicemen and -women.  Anything that can reduce the quantity and frequency of these convoys should obviously be a very good thing.

3.  In buying so much oil, America sends hundreds of billions of dollars each year to regimes that not only don’t like the U.S., but actively attack U.S. interests.  As many astute observers such as James Woolsey, former head of the CIA has said on a number of occasions, “we are funding both sides of the war on terror.”  Military reliance upon oil is a key contributing factor.

Now comes James Bartis of the RAND Corporation, who argues in a recent study that “military planners are afflicted with petroleum anxiety.”  He says that the military shouldn’t be so worried about oil price increases and supply insecurity:  “they think prices are heading in only one direction:  up.  But history teaches us otherwise.”

Senator John McCain (R-AZ) is piling on to this argument.  McCain is alleging that the U.S. DOD long-term strategy to reduce reliance on fossil fuels is “an incredible waste of taxpayers’ money.”  In the mother of all current smears, McCain is wary of ”another Solyndra” that might stem from this effort.

I pronounce Bartis and McCain guilty of imprudent short-term thinking — which is surprising and highly disappointing, since I have generally considered RAND and McCain himself as having a good grasp of the big picture. 

Fortunately, the military is keeping its head down and pushing forward with its plans:  earlier this month, the Army released a $7 billion RFP for renewable and alternative energy projects to be installed over the next 10 years.

The military’s energy strategy is not solely or even mainly about minimizing $/gallon or c/kwh, and it’s certainly not about environmental benefits.  This is about building and operating a military that is best suited to win against a dispersed enemy that derives its income from oil sales and targets oil supply lines to impede American military effectiveness and kill Americans. 

Period. 

Reducing oil consumption as much and as quickly as reasonably practicable is key to unhooking our military from this thorny problem.  True, part of reducing oil consumption is through increased efficiency, but part of reducing oil consumption can also be via substitution of alternatives:  biofuels, solar, and wind.

Whether the military’s push for renewable energy will be as successful as desired is unclear.  However, the only way to know is to try.  If they don’t try, the U.S. military — and our country more generally — will just paint itself further into the corner in which it finds itself strategically today.

In this June photo, Edalyn Garcia plates fried broccoli during a fundraiser in which the six-person culinary Olympic team from Coos Bay, Ore., served community members a two-course meal similar to what they will prepare during the Olympic competition this fall. Using energy to cook food has given the human race a much more varied diet and more time to develop it. (Jessie Higgins/The World/AP/File)

Humans seem to need outside energy

By Gail TverbergGuest blogger / 09.07.12

Strange as it may seem, humans seem to have evolved in a way that we have a need for external energy, such as energy from burning wood or fossil fuels. While the evidence is not 100% certain, it appears that we learned to use fire long enough ago that it is now  necessary for our food to be cooked. Otherwise, in many climates, we would need to spend half the day chewing our food, and we would not be able to do much besides gather food and eat it. (People on raw food diets get around this issue by using a blender, which also uses external energy.)

There are other evolutionary deficiencies as well: How do we deal with our lack of fur? How do we deal with our evolutionary dental problems? How do we deal with “survival of the fittest”? If we want our children to live, we continually need more food for our growing families. Cooked food gives more choice of food supply. We don’t think of humans as having instincts, but like dogs, we have a tendency toward hierarchical behavior, and this affects our need for (or at least “want for”) external energy.

An additional issue, now, of course, is that the world’s population is over 7 billion people. Even if we had not evolved to require using external energy, cooking our food makes many more types of food available, and is from this point of view much more practical than raw food. Cooking food does not in itself take a huge amount of external energy, but once we had learned the skill of using external energy, it opened new doors for other applications.

In this post, I will explain how these and other evolutionary issues relate to mankind’s need for external energy, such as wood, or gasoline, or electricity. 

Humans’ Need for an Outside Energy Source

According to Todar’s Online Textbook of Bacteriology, energy is important for all living organisms. Plants and animals literally can’t live without a source of energy. Except for humans, plants and animals get all the energy they require from natural sources: from the food that they eat, or from sunshine through photosynthesis. Some organisms derive the energy they need through oxidation of inorganic compounds. Because of these natural mechanisms, these species have everything they need for survival, without requiring clothing or shelter, or other types of goods.

We can see how different humans are from other animals by comparing ourselves to large primates such as chimpanzees. Large primates spend much of their day gathering and eating raw food. They are not as intelligent as humans, and they mostly live in trees, so as to be able to avoid predators. This limits their choice of food supply. Their total number is far smaller than humans, because they need to stay in habitats to which they are adapted. The number of large primates varies by species (100,000 to 200,000 chimpanzees, about 130,000 gorillas, and fewer than 250,000 Gelada baboons according to the National Primate Research Center), but is always far fewer than the 7 billion humans in the world.

The shift away from behavior similar to that of other primates seems to have started after humans learned to control fire and learned to cook food. Chris Organ and others have shown that for a primate the size of humans, cooking food decreases the amount of time that must be spent chewing food from 48% of daily activity to 4.7% of daily activity. With so much more free time, the way an animal spends its time can change dramatically. Those changing to cooked food could do more hunting, and because of this change, include more meat in the diets. This would improve diets in another way.

It is well-known that cooking makes grains much easier to digest. Grains are a major agricultural crop, so cooking helped enable the transition to agriculture, around 10,000 BCE.  With the transition to agriculture came the possibility of much higher world population.

Harvard biological anthropologist Richard Wrangham in “Catching Fire: How Cooking Made Us Human” sees evidence of evolution of adaptation to a cooked food diet as early as 1.9 million years ago. When Homo Erectus appeared at that time, teeth and guts were smaller than in predecessor species, and brains got larger. He speculates that the energy that had previously gone into digestion might have gone into brain development.1

With  the evolution to smaller teeth, smaller gut, and bigger brains, humans have a real need to cook at least part of the food they eat. So outside energy for cooking food is one realneed for the 7 billion people on our planet today. ( Continue… )

James Rogers, chairman and CEO of Duke Energy Corp., attends a session at the World Economic Forum in Davos, Switzerland, in this 2009 file photo. Mr. Rogers supports Obama's energy policies. (Christian Hartmann/Reuters/File)

US energy sector better off than four years ago? Duke CEO says yes.

By CER News Desk / 09.07.12

President Barack Obama has been given an important vote of confidence from within the energy sector, with Duke Energy CEO Jim Rogers telling news network CNN that the country is better off now when it comes to energy than it was before Obama’s election.

The statement comes just as the Democratic National Convention gets set to open in Charlotte, North Carolina, with Rogers acting as co-chairman of the event’s host committee. While the words come from within his own camp, Obama appears to be gaining ground on rival Mitt Romney with voters across the country where energy policy is concerned.

 “Well, from an energy-sector [standpoint], we’re better off today than we were four years ago. Think about it. President Obama pursued an all-of-the-above strategy. Are we better off in terms of efficiency? We see per-home usage of electricity declining. That’s a good thing,” Rogers said to a CNN interviewer.

“The second thing is we [have had] two license[s] for nuclear plants issued. We have abundant supply of natural gas at low prices. And so as you look at the various ways to generate electricity in this country, we’re better off today than we were four years ago.”

Despite Romney focusing much of his campaign in recent weeks on what he calls Obama’s energy failures, a USA Today/Gallop poll conducted from August 20-22 shows that 53 percent of respondents see Obama as the better candidate to lead American energy policy into the future; by comparison, only 40 percent see that quality in Romney.

With energy issues playing a more and more prominent role leading up the election, both candidates are likely to continue to focus on that sector leading into November.

In this January file photo, fishing boats are seen in front of oil tankers on the Persian Gulf waters, south of the Strait of Hormuz, off the shores of Ras Al Khaimah in the United Arab Emirates. In percentage terms, the closure of the Strait of Hormuz would represent a shock to world production that would be three times as large as the 1973-74 OPEC embargo. (Kamran Jebreili/AP/File)

The real reason behind oil price rises

By James StaffordGuest blogger / 09.07.12

Nowadays the energy picture is confusing at best as the more information we are shown the more blurred our vision seems to become. Mixed messages, poor reporting and a media hungry to sensationalize anything it thinks can grab a headline have led to many wondering what the true energy situation is. We hear numerous reports on how the shale revolution will transform the energy sector, why alternatives are just around the corner, why advances in oilfield extraction techniques and new finds will help to lower oil prices. Yet no sooner have we read these rosy reports than we are bombarded with negative news on the Middle East, on why alternatives will never compete, on peak oil and declining oil production.

So where do we really stand? Is our energy future one of falling prices and plentiful supply or should we prepare for declining supply and sky high prices?

To give readers a real understanding of where we are Oilprice.com was fortunate enough to speak with the world’s leading energy economist, Professor James Hamilton. James is a professor in the Economics Department at the University of California, San Diego. He has been a visiting scholar at the Federal Reserve Board in Washington, DC as well as many of the Federal Reserve Banks; and has also been a consultant for the National Academy of Sciences, Commodity Futures Trading Commission and the European Central Bank and has testified before the United States Congress. You can find more of his work on his website Econbrowser.

In the interview, James discusses:
•    Why we shouldn’t get too excited with the shale revolution
•    The “Real” cause of high oil prices
•    The incredible opportunity presented by natural gas
•    Why long term oil prices will creep upwards
•    The geopolitical hotspots that could cause an oil price spike
•    Why sanctions could cause Iran to lash out
•    Why speculators and oil companies are not to blame for high oil prices.
•    Changes we can expect to see under a Romney Administration
•    Why Short term oil price forecasts are worthless
•    Peak oil & Daniel Yergin

Interview conducted by James Stafford of Oilprice.com
 

James Stafford: Oil prices have shot up in the last month. What range do you see oil prices trading in over the next 12 months?

James HamiltonOil prices have always been very volatile.  If you look at 12-month logarithmic changes in WTI going back to 1947, you come up with a standard deviation of 0.27.  In other words, 25% moves up or down within a year are fairly common, and 50% moves or greater have also been seen on a number of occasions.

If you look at options prices at the moment, they imply the same level of uncertainty looking forward.  For example, somebody today is willing to pay $2.90/barrel for a NYMEX option to buy oil in September 2013 at $120/barrel, consistent with a standard deviation of annual log changes of 0.26.  The market is saying that prices that high or higher are not that remote a possibility. ( Continue… )

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