Time for an Energy Debate

Rich Galen

7/16/2012 12:34:00 PM - Rich Galen

Before we begin, let me remind you that I have worked for T. Boone Pickens on the Pickens Plan since 2008, so filter everything that follows through that lens.

The Energy Information Administration (EIA) of the Department of Energy produces a monthly report of how much money we import, how much we've paid for it, and what percentage of our total oil use it represents.

In June, 2012, for instance, we produced about 6.2 million barrels of crude oil per day. That is third most in the world behind Saudi Arabia (10.04 million barrels) and Russia (just behind at 9.89 million barrels).

That's pretty good; six million barrels a day, right?

Problem is, the United States still has the largest economy on the planet - about a third larger than China's which is in second place - and it takes a lot of fuel to … fuel that economy and so we imported 338 million barrels of oil, averaging 10.27 million barrels a day - something in the vicinity of 60 percent of our daily oil use.

There is a common misconception about how much oil it takes to make electricity in the U.S. You hear it on cable chat shows all the time when the conversation turns to solar, wind, or some other form of alternative energy source.

The EPA which knows about these things, has estimated that coal accounts for nearly half our electricity, nuclear is in second with about 19 percent, natural gas is a close third at 18.8 percent; and oil is at three percent - about half the electricity produced by hydro in the U.S.

So, what do we need all that oil for?

Your car. Well, your car and the rest of the 250 million cars and light trucks on American roads burning gasoline that take us and our families to work, to soccer practice, and to the Safeway. Also the more than eight million heavy-duty trucks, running on largely imported diesel, that bring the food to the Safeway, the soccer shoes to the sports store, and take the stuff we make from our work and deliver it all over the country.

You know that the Pickens Plan is all about using natural gas as a transportation fuel. You also know there are precious few natural gas refueling stations in your neighborhood so unless you install one of those devices that allows your natural gas vehicle (NGV) to refuel overnight in your garage, the kids are going to be late for vacation bible school.

Using natural gas as a fuel for 18-wheelers is a different issue. Over the road trucks tend to ru the same routes on a regular schedule and their drivers tend to pull into the same truck stops to eat, rest and refuel so the random nature of refueling passenger vehicles doesn't exist for heavy-duty trucks.

The Strait of Hormuz is the bottleneck at the southern end of the Persian Gulf through which, in 2011, some 17 million barrels of oil (about 35 percent of the world's seaborne traded oil) flows every day, according to the EIA.

The Strait divides Oman and Iran. Iran has been threatening to close down the Strait of Hormuz in the face of increased pressure to stop its development of nuclear weapons. In April, the U.S. Navy deployed a second Carrier Strike Group to protect the oil coming through the Strait.

A Carrier Strike Group typically consists of one Aircraft Carrier, two Guided Missile Cruisers, two Anti-Aircraft Warships, and one or two Anti-Submarine Destroyers or Frigates. So, this is a little bigger deal than loading up the SUV to go tubing on a summer Sunday afternoon.

Halfway through 2012 we have spent about $223 billion on imported oil. But, that's just the cost of the oil. When you add the amount we are spending every day for things like two Carrier Strike Groups, that cost increases dramatically.

We are producing more oil than at any time in our history and we're still on track to ship about a half trillion dollars off shore in 2012.

We have enough natural gas to last more than 100 years and changing over our national fleet of heavy trucks from diesel to that domestic resource would not only help clean up the air (natural gas produces about a third less greenhouse gasses as diesel or gasoline) but would reduce our need for OPEC oil by about half.

As of last night West Texas Intermediate (WTI) crude, which is the benchmark, was selling for $86.90 per barrel. That is down from the nearly $110 of a few months ago, and so energy has fallen off the table as an election issue.

It shouldn't. We're spending too much in treasure and blood to protect oil we don't need to import.