America is facing serious issues concerning its energy and political policies. We, as a people, have to act now to avoid further degradation of our country's future due to special interest groups and political maneuvering that is leaving our nation crippled. It is time the truth is explored and for the masses of Americans to make intelligent decisions as to which strategic path to follow concerning its energy policies, economy, and political infrastructure.
This book will be informative and should create a call to action for those who are interested in correcting our Nations energy and financial course.
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Resurrection of a NationSolving the Energy, Financial, & Political Crisis in America
By Kris Axhoj John P. Walker
AuthorHouseCopyright © 2010 Kris Axhoj & John P. Walker
All right reserved.
Chapter OneAmerica's Current Energy Synopsis
It is evident that the fortunes of the world's human population, for better or for worse, are inextricably interrelated with the use that is made of energy resources. -M. King Hubbert, Resources and Man, 1969
The purpose of this chapter is to understand our country's energy consumption. We will explore the nation's current landscape of energy usage and then analyze the financials behind moving to clean energy in the next chapter. Let's see how dependent we are on fossil fuels and who is supplying our energy needs. We will briefly look at the Department of Energy and how it has helped us over the last thirty-three years of its existence. Finally, we will look at our imports and national security.
In bullet point format, we will explore:
* America's Energy Consumption * What Powers Electricity * Fuel Energy Costs * Where are the Profits * Who is Supplying America's Oil
America's Energy Consumption
There is no doubt America is currently based on a fossil fuel energy system. America's industry has its antennas up to move toward cleaner energy, but the conversion is expensive without government subsidies. The US Government is helping with tax incentives (lost revenue for the country) to help move this popular clean energy movement along. Even with all these intentions, it will take a long time to convert the country from fossil fuels. Take a look at the table below showing the current energy consumption breakdown by supply category:
US Current Energy Consumption Breakdown: 37.1% - Petroleum(ethanol fuel is included in "Renewable Energy.") 23.8% - Natural Gas 22.5% - Coal 8.5% - Nuclear Electric Power 7.3% - Renewable Energy Comprised of: 1% - Solar PV 5% - Geothermal 6% - Waste 7% - Wind 19% - Biofuels 28% - Wood (i.e. bamboo) 34% - Hydroelectric Power From the Department of Energy Annual Energy Review 2008
The dependence on fossil fuels in the US is - Eighty Three Percent! Logistically, that is a lot of energy to displace with "clean" energy. If we leave Natural Gas in the mix as an option for clean energy (accepted by some) but subtract out Petroleum and Coal, Sixty Percent of our energy will need to be replaced by renewable energy. This is not a stagnant number because the US Energy demand continues to increase. The energy consumption increased five percent in the last ten years. The strides to convert to clean "Renewable" energy equal only eight percent of the US total energy consumption after many years of technology advances. Like it or not, America has a long way to go to get rid of its fossil fuel dependency. So what are we going to do in the interim for our energy needs while we are waiting for renewable energy to become more affordable?
It is funny to hear people say we need to convert to electric energy so we will get rid of our fossil fuel dependency. Interestingly, most of the electricity generated in our country is not from renewable energy as the majority of people think. The great dams are not generating the majority of the electricity used for our consumption ... coal is. The following table illustrates the fuels behind America's electrical power plants:
"Clean" Electricity is Powered by the following Fuels: 1% - Petroleum 23% - Natural Gas 45% - Coal 20% - Nuclear Electric Power 7% - Hydroelectric Power 4% - Other Renewable Energy DOE (Electric Power Monthly with data for October 2009)
Electricity is not so clean considering sixty nine percent is fueled by fossil fuels. Coal has the environmentalists up in arms, but with newer "scrubbing" processes, staged combustion processes and now the processes of gasification, technologies exist that minimize pollutants before they can escape into the environment. All coal facilities built after 1978 had to have scrubbers installed to filter out sulfur pollutants.
Just a note on natural gas: It is the cleanest of all the fossil fuels and burns efficiently. Natural gas is composed primarily of methane. The byproducts of burning natural gas are carbon dioxide and water vapor the same compounds we exhale when we breathe. Not too bad for the environment.
Believing our current electric grid will allow us to become energy independent and take the US off fossil fuels using "Renewable Energy" is not the total answer at this time. There are major benefits of using electric power. Almost all the fuel used to power electricity is harvested right here in the US, it is extremely inexpensive, and there is lots of it. We have plenty of domestic coal and gas to power electricity ... essentially keeping dollars in America's economy.
Fuel Energy Costs
We have looked at the types and amount of energy the US is currently using. Let's look at the cost of generating energy from each fuel source to see which one is most efficient. Availability and costs of energy are extremely important to the American economy. As energy prices increase, the economy slows - elementary supply and demand.
The two main costs associated with energy, with traditional fuels or renewable sources, are infrastructure and harvesting/distribution. Infrastructure, which will be explored in the next chapter, can be extremely expensive depending on the technology and fuel type. After the infrastructure is built, the variable costs of harvesting the energy and its distribution are associated with every unit of energy produced.
The infrastructure, harvesting, and distribution systems for fossil fuels have been established and accepted for the longest period of time. The newer Renewable Energies (outside of wood and hydroelectric) are becoming more affordable as demand continues to grow, but are only practical when incentives, usually government incentives, make up the cost difference.
The latest published data by the Department of Energy show the costs per sector of energy:
Energy Costs (Cost in 1970 Nominal Dollars per Million Btu by Energy Sector): $17.89 - Petroleum $9.62 - Natural Gas $1.78 - Coal $0.44 - Nuclear Electric Power $3.18 - BioFuels Energy Information Administration, "State Energy Data 2006: Prices and Expenditures"
Isn't it amazing! The most expensive cost is from the largest commodity used in America's energy consumption: petroleum. It just makes sense to target this commodity to relieve pressure on the US economy and national security. Why have we not worked on this issue before? The obvious answer is to increase America's affordable energy supply to eliminate the need to import oil.
Where the Profits Are
Most people have an opinion that the oil companies are raking in tremendous profits. We hear the total amount of money earned by these companies and the numbers sound staggering. Actually, the oil companies made only a modest 5.4% profit in 2009 when most manufacturing companies made around 8%. Understand most of these companies are publicly traded on the stock market, so investors (international and domestic) are also participating in earned profits. Investors seeking short-term and long-term financial gains have made oil a driving force in America's society and financial strategy. The numbers speak for themselves as to who has the power in energy production:
Major US Companies' Profitability in Billion Nominal Dollars: $62.7 - Petroleum $8.8 - Natural Gas $.8 - Coal, Renewable Energy, Nuclear Electric Power DOE (Major U.S. Energy Companies' Net Income, 1974-2007)
Oil has been a major force in our society and, as you can see from the US' dependence, it is not going to stop overnight. The profitability of the oil companies seem huge, but the companies have to be very large in order to be competitive considering the infrastructure it takes to run that type of operation. Oil has capital to invest in new areas for drilling and resources to make their profits without government incentives. Businesses create profits and profits are needed for America to prosper. Profits are just a telling sign of who is giving the consumers what they want at a price they will pay.
Who is Supplying America's Oil?
America has one of the highest per capita usages of energy in the world. The productivity of America is staggering as we out-produce by 3.5 times the Gross Domestic Product (GDP) of second place Japan and a very close third place China (2008 numbers as represented by World Development Indicators database, World Bank, 7 October 2009). America has led the world's economy basically since the industrial revolution in the early 1900's. However, in the 1970's it was obvious that the United States was hamstrung by oil producing countries, and that our first "Energy Crisis" during the Carter administration was a wake-up call that America needed to protect its economy and security. In 1977, the Department of Energy was formed with the following mission (outside of their nuclear responsibilities):
"To advance the national, economic, and energy security of the United States; to promote scientific and technological innovation in support of that mission;" From the Department of Energy (DOE) Web site
Let's see how America is doing with the help of the DOE.
Total Imports of Petroleum (Top 15 Countries) (Thousand Barrels per Day) COUNTRY YTD 2009 CANADA 2,464 MEXICO 1,234 NIGERIA 804 SAUDI ARABIA 1,012 VENEZUELA 1,078 ALGERIA 488 RUSSIA 554 IRAQ 450 VIRGIN ISLANDS 276 ANGOLA 460 COLOMBIA 278 UNITED KINGDOM 245 BRAZIL 307 KUWAIT 187 AZERBAIJAN 75
US Energy Information Administration December 2009 Import Highlights: February 25, 2010
As of October 2009, the United States produced only thirty-nine percent of its oil and imported sixty-one percent. Our economy is not safe when it is controlled by foreign oil.
Why would America pay for expensive fuels that are mostly imported? It is very clear America's economic machine was brought up on oil and is now very dependent on it. Unfortunately, this monster continues to feed on America's economy, creating the largest wealth drain of any country in history. Additionally, if OPEC wants to choke our economy again, all they have to do is hold back on exports to our country.
Just to make this perfectly clear, America imports to the tune of over eight hundred million dollars per day. That is over three hundred Billion dollars per year - money leaving America in the greatest transfer of wealth in history. To make matters worse, many of the countries from which we purchase oil are undermining the United States with the very money we are spending on their oil. How crazy is that?
More than one hundred Billion dollars per year is going to countries that do not like the United States and would support terrorist activities against America's citizens. This wealth transfer is boosting countries that would destroy the hand that feeds them. This is not too smart considering our country spends billions of dollars fighting terrorist groups around the world that are partially funded through oil profits. So, we fund the people who do not like our country, and then we fund our troops to protect us from the terrorists we just funded. There is a "fund-a-mental" problem with this. We are playing with our national security.
Our understanding is that there is around three to four days' worth of food stored at the grocery store. If a hostile force shuts down the Persian Gulf and our oil supply is shut off from that region, America could get very hungry within a week. If there is no fuel to transport food around the country and over the seas, it would cause havoc in our country just on the logistics level - not to mention fueling our military for national security.
Is the Department of Energy having any success making America stronger, or are their 16,000 employees and over 100,000 contractors just giving us pretty graphs and following the media trends on environmental issues? The government might have given a half-hearted plan for 2030 or 2050, but 33 years after the DOE was set up, we are no better off. There are no teeth behind their plans, just expensive planning and data collection that pacify people into believing the department is a benefit to our society. It is an unsuccessful government agency that is a tumor on the American taxpayer. We will be talking more about the Department of Energy later.
The US is very dependent on oil. It will take a long time to displace thirty eight percent of our energy consumption. The Department of Energy was established 33 years ago to help America become independent from foreign oil. In 2009, America was still importing sixty one percent of its oil. The facts suggest that our nation needs to act now in a responsible way to do what is financially plausible in our new economy. We need practical actions now to sustain America's economy and stop our dependencies on foreign oil. America must become energy independent.
Chapter TwoCost of Renewable Energy
Beware of little expenses; a small leak will sink a great ship. Benjamin Franklin
The government is pushing for renewable energy as basically the only solution to our energy independence. America is in a critical period in which our economy is suffering and the national debt is rising at an unprecedented rate. The government is spending enormous amounts of money on funding renewable research and development, but perhaps it should let free enterprise produce the best results? How many government efforts are productive, efficient and/or profitable?
There is a need for healthy renewable energy as the total world consumption of marketed energy is projected to increase by forty-four percent from 2006 to 2030 (DOE (Report #:DOE/EIA-0484(2009)). Why not let the free market, which has made America great, take its course. As the need grows, innovations and alternative supplies will increase to solve the problems of scarcity.
Environmentalists and the government are calling for renewable energy now. The cost to implement renewable energy infrastructure is tremendous. As we saw in the last chapter, renewable energies are currently only eight percent of the total picture of America's consumption. This energy sector would have to grow another sixty percent to eliminate petroleum and coal energy production. The amount of capital to convert sixty percent of our energy needs is way too staggering, so we are just going to analyze what it would take to remove our foreign oil dependency. To stop the transfer of wealth to foreign oil suppliers, America would have to replace twenty-two percent of its total energy consumption. Just for kicks, we will also do some number crunching to get rid of the twelve percent of imports to the United States being supplied by countries considered hostile toward us.
To understand the renewable energy options, we will look at the technology and costs for implementing "Clean" energies. In this chapter, we will look at:
* Wind * Solar * Biomass * Hydroelectric * Nuclear * National Smart Power Grid * Conservation
This chapter will feel like a textbook because of the number crunching. It is designed for you to understand how expensive these renewable technologies are today. The numbers illustrate what it would take to replace imported petroleum with renewable energy. In each category we will talk about the infrastructure costs, variable costs, payback and barrier-to-entry into the market.
Excerpted from Resurrection of a Nation by Kris Axhoj John P. Walker Copyright © 2010 by Kris Axhoj & John P. Walker. Excerpted by permission.
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Table of Contents
Contents1. America's Current Energy Synopsis....................1
2. Cost of Renewable Energy....................11
3. Environmentalist or Imperialists?....................25
4. The US National Debt....................39
5. Government Overhaul....................49
6. The Crisis....................65
7. The Solution....................77
8. Where we go from here....................85