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Sun. Aug 03, 2008

Tactical Energy Solutions

This morning on ABC’s “This Week,” Nancy Pelosi tried to diminish the idea of offshore drilling by stating it wouldn’t affect prices for a decade, whereas a release of some of the 700+ million barrels of oil in our Strategic Petroleum Reserve would have an impact on price within 10 days.

When it comes to the impact on pricing, she is correct (though, in my neck of the woods the price of a gallon of gas has already dropped 25-30 cents from its peak). But otherwise that idea is entirely wrong.

It’s not called the “Tactical Petroleum Reserve,” and releasing oil from there simply to lower consumer prices in the short term would be just that … a tactic. Not a solution.

Dropping gas taxes to shave ten cents a gallon off the price is a tactic, too. Even though they never did it, fed and state coffers are now low on funds from gas taxes due to the fact consumers have cut back on consumption. It’s not a solution, it’s an aggravation.

The solutions are many, varied, and need to be applied at once. Offshore drilling is not the solution, but it is part of the solution (we must maximize production of what oil is left while we convert to other power sources). As is solar, and wind, and nuclear power.

I’m a pretty convinced believer in the concept of Peak Oil, and that we are over the top of the bell curve. The oil we have left in the ground, wherever it might be, is now a rare and precious resource, one to be used wisely as part of a larger plan to abandon it as our energy future, not dumped on the market as fast as possible just to meet current demands.

But back to the SPR. It’s called the “Strategic Petroleum Reserve” because it is part of a long term strategy to offer us a slim margin of protection in a worst case scenario. It was originally created due to fears that one day the Soviets might seize oil fields in the Middle East, perhaps as part of an attack to take over Europe, and our military (and its supplying industries) would require a strategic reserve in order to continue the fight.

It wasn’t for you.

Obviously that threat has long since passed. But each week we hear some scare story about how either the US or Israel will/must attack Iran. And Iran always counters by threatening to close the Straits of Hormuz. Say hello to barrel oil prices in excess of $200, and that’s when the strategic Oil Reserve would be direly needed.

There’s allegedly about 60 days of our normal national consumption stored in this reserve. Care to dump 15-20% of it on the market now, in order to save some money in the short term on August vacations?

Or would you prefer to be in a position to be able to provide heating oil this winter in the Northern parts of this country, should the worst happen this fall?

This is the type of pandering we see in an election year. Politicians will try to convince you it is perfectly OK to sell your mother for some short term gain, and when they get elected, they will usher in an Era of Mother Abundance.

Your mother knows better. You should, too.

Later: Wrong, Wrong, Wrong: “In a reversal of his energy policy, U.S. presidential candidate Barack Obama called Monday for swapping some of the oil in the country’s Strategic Petroleum Reserve, a move his campaign said was aimed at lowering the price of gasoline [...] Obama’s call to release oil from the reserve is a change in his energy policy as stated in June, when the candidate opposed using the oil stockpile for anything but a dire emergency.”