The problem is not dependence on imported oil - its ALL oil

I see, via Real Clear Energy, that Jim Powell of the Cato Institute has an article over at Forbes, saying "Why 'Dependence' On Foreign Oil Is A Bogus Worry".

He's right that dependence on imported oil is not a problem. But, he doesn't complete his thought. It is dependence on ALL OIL that is the problem. Politicians like to blame foreign oil, but the truth is that its our dependence on oil at all that is harming both the American economy and America's national security.

So long as American businesses and consumers are completely dependent upon oil for 94% of their transportation, fluctuations in price will disproportionately affect those who need oil. This is not a commodity with easy and available substitutes.  

We're seeing it now with prices back up over $100 per barrel. This acts exactly as a tax increase: we don't have any other option. That harms our economy. Note that it is not whether the oil is imported or produced here at home: consumers are still bearing the burden.

There is a better way - we should reduce overall dependence on oil by increasing fleet fuel economy and by promoting alternatives that can break the monopoly that oil holds.

Huntsman: "we need to break oil's monopoly as a transportation fuel"

-Cross-posted from ASP's Flashpoint Blog -

Yesterday, Jon Huntsman gave a major speech on energy policy in New Hampshire. The former Governor of Utah and Ambassador China - and currently low-polling Republican Presidential candidate - laid out a vision for America's energy future. Much of it is standard Republican objectives (reducing regulations, producing more at home, etc), but I wanted to flag an important component that he brings up: "breaking oil's monopoly as a transportation fuel".

Unlike many other candidates in the Republican primaries, he is not of the "Drill, Baby, Drill" crowd, saying "we cannot simply drill our way to energy security". That is a key point to this. Even if we produced 100% of the oil we consumed, the U.S. economy would still be stuck with the global market for oil, and all the price fluctuations that go along with that.

So - to reduce that dependence, Huntsman proposes to open up we need to open up the transportation fuels market to competition. I will quote from his speech at length:

America's prosperity has always flowed from competition, and I believe it's time to let creative destruction loose in our energy sector.  Energy security, as Winston Churchill said, "lies in variety and variety alone."

Yet the current system of transportation fuels is essentially closed to competition because of gasoline's de facto monopoly for light-duty vehicles and diesel's near-monopoly for heavy-duty vehicles.

The concentration of distribution ownership is similar to the broadcast network domination in the early 1970s, which triggered market-opening FCC rules and an antitrust consent decree.

Accordingly, the Federal Trade Commission and Senate Judiciary Committee must commence an expedited review of the fuel distribution network.

Breaking oil’s monopoly will also require the repeal of regulations that prevent a truly open and fair market.

This proposal is broadly in line with a problem I identified in the ASP white paper "America's Energy Choices". Because oil is 92% of our total transportation energy, American consumers are at the mercy of broad fluctuations in the oil market. With competition, they could choose which fuel or mode of transportation offers the best combination of value, cost, and time.

This is an energy plan that is thoughtful, and Gov. Huntsman deserves credit for it. You can see the speech in full after the jump:

R&D as a percentage of GDP

I'm just doing some research on what % basic scientific research is of US GDP. The BEA has numbers going back to 1959 and extending through 2007. It makes for an interesting graph:

That is all...

China Suspends Rare Earth Production

This is Cross-Posted from ASP's Flashpoint Blog
I see, via the AP, that China's biggest producer of Rare Earth minerals is suspending production for one month. The DailyTech has a great article explaining what Rare Earths are, and why they're important. Short summary: they're needed for a lot of high-tech and renewable energy devices.

Recall, about a year ago China suspended exports of Rare Earths to Japan, in a clear linkage to an international incident in a disputed sea boundary. That was a wake-up call to many - both the businesses that use them and the producers who supply them.  It is interesting that the reason for the suspension this time is not geopolitical, but instead is economic: a slumping global economy means there's less demand and lower prices.

ASP published an important report "Rare Earth Metals and U.S. National Security" in February, 2011. Take a read, or look at the fact-sheet when you can.

It is important to remember that Rare Earths actually are not that rare. The fact that China has 97% of their production is a historical accident. The U.S. and Canada have reserves in the Rocky Mountains of Rare Earth minerals, but there are no operating mines.

Molycorp is beginning to change that with plans to re-open its mine in Mountain Pass, California. Businesses, too, that rely on Rare Earths are finding ways to build the batteries they need without the minerals.

There is no reason for Rare Earth Minerals to be a strategic resource. In the end, they should be little different from copper or iron: necessary for production, but easily sourced from the lowest-cost producer.

Space Based Solar - The Videos

I've got a new blog post up on ASP's blog looking at Space Based Solar Power. This is a very cool technology, and I would encourage you to click over to check it out. But - one thing I cam across when doing research for this post was how many cool videos there were explaining it. Below is a series of some of the best.

The first features some great elevator music:

After the jump, several more.

Nuclear Lessons Learned from Fukushima

The Springfield Nuclear Power Plant

This morning, I attended an event, "Lessons from Japan, Global Implications of Nuclear Disaster" hosted by the National Journal. I'm not going to do a full summary of the event - most of everything that was spoken wasn't new - it was a restating of positions. This is a problem in Washington: an external event - even one as big as the Tohoku disaster - does not change positions. Instead, it just causes people to restate their previous stances, and say "now more than ever" (with hat tip to Ezra Klein for that idea). At this event we saw such statements from Rep. Markey, as well as panelist from the Nuclear Energy Institute and the Center for American Progress.

The most pertinent presenter was Greg Jaczko, the Chairman of the Nuclear Regulator Commission. The lesson he claimed the U.S. should learn is that accidents do happen - all of the preparation in the world cannot prevent every accident. In a nuclear disaster, its never just one thing that goes wrong, instead it is an unanticipated series of events that cascade into a severe disaster. That is what happened at Three Mile Island, Chernobyl, and Fukushima. To take account of that, there needs to be a constant re-evaluation of risk - including looking at the unknown and unpredictable as well as mainstream predictions. I am heartened to see the nuclear regulator taking this. As was discussed at the conference on energy and environmental risks I attended last week at Maxwell AFB, this is the difference between prediction and foresight. Planners need to look beyond a single, linear prediction, and instead realize that planning is about preparing for that which is not obvious.

Finally, a brief criticism of the event - if they were really looking for lessons from Japan, it seems that at least one of the presenters should have been from Japan. As it was, the overwhelming response to the event, from almost every participant, was that we don't yet know the final lessons. So - it seems that a pertinent speaker would have been someone from Japan who worked closely on the response. They could have then discussed how this experience should shape American nuclear policy. Instead, we had a series of American policymakers and commentators who seemed to be saying the same things they've always said.

U.S. Military’s Efforts to Reduce Exposure to Energy Security Risks

- This post is cross-posted from ASP's Flashpoint Blog -

Last week, there was an important article posted up on the Army’s website, “Scientists bring energy solutions to the desert.” The article discusses how the Army has set up a small (one megawatt) smart-grid at the Army’s Camp Sabalu-Harrison in Afghanistan. The smart grid uses 4 large diesel generators to provide power for 66 structures. These 4 system is an example of a ‘smart grid’ because it is able to balance supply and demand throughout the day. This grid has replaced 20 separate generators that were required to be running all day regardless of demand. Whereas the old system required a fuel truck to refill each generator throughout the day, the new system has one centralized refueling point.

This article is an example of how the different branches of the military are innovating ways to reduce their exposure to energy security risks. I spent a few days down at Maxwell Air Force Base last week for a conference on the military’s proposal’s to address energy security. At this conference (held under Chatham House rules – so I can’t quote anything for attribution), it was clear that every branch of the military was moving to reduce their exposure to energy insecurity.

Mostly, this means that the military is trying to reduce their use of oil. There are two big reasons to do this. Strategically, military leadership understands that scarce resources, like oil, are a potential spark of conflict, and the military’s dependence on oil from unstable regions is a major strategic vulnerability. At the tactical level, the long logistical tail left by convoys carrying fuel or water are the most vulnerable to attack, with some sources saying that one casualty is taken for every 24 convoys.

Reducing fuel use means means different things to each service. The Navy and the Air Force don’t have to operate forward deployed bases, so they are less concerned about the vulnerability of their supply lines. Instead, they are concerned that future shortages of oil could impact their effectiveness. The Air Force is testing biofuels in an effort to secure ‘drop-in’ replacements for jet fuel. Similarly, the Navy has the Green Hornet program for naval aviation to run on a 50/50 blend of biofuel and traditional jet fuel and just last year it launched the USS Makin Island, the first navy ship to run on a hybrid gas turbine with electric auxiliaries propulsion plant.

Like the Army, the Marines are concerned about reducing the logistics tail of forward-deployed units. However, they have also been getting a lot of press recently for their push to use solar on the battlefield to reduce the heavy load of batteries that each Marine is forced to carry into battle.

All of this has led some policy people to talk about “Green Soldiers” or some such term, but the military’s push to reduce fuel use is not about being environmentally friendly, it is about helping the war fighters to more effectively fight and win wars. However, it is an important bonus that the technology they are developing could immediately be useful to American civilians. If a biofuel mix turns out to be a drop-in replacement for jet fuel, I am sure that civilian airlines will jump on. Similarly, the Army’s microgrid could provide significant experience for implementing a larger ‘smart grid’ here at home. Here’s hoping that innovations from the battlefield can help civilians as well as the military.