Fossil Fuels Deserve a Better Credit Rating than US Govt

 

The aforementioned is from an e-mail a young man named Cooper sent me the day before his paper was due. His father had heard me on the radio and suggested that Cooper contact me. I spent 45 minutes talking with him. Everything I said was a fresh new idea to Cooper. Obviously he was not being taught the complete picture. If Cooper had questions, others probably do, too. Here are the three things I told him that, like Cooper, you may not know, may have forgotten, or just haven’t thought about in a while.

 

With rising gas prices bringing energy into the debate, and President Obama setting his energy priorities out in his budget, it is important to be aware of some energy realities. Otherwise you may think fossil fuels are “evil,” when, in fact, they provide us with the freedom to come and go, to be and do.

 

With gas prices in the news, reporters are interviewing people in gas stations and getting their thoughts on the situation. One had a man proclaiming that oil is a precious resource. He stated that we needed the price to go up so people used less of it. I agree that oil is precious—as in valuable and important, but not as in scarce or rare.

 

Decades ago, it was thought that we were about to run out of oil. True, production in America did decline. But new privately developed technologies have both found more oil and natural gas and allowed us to use it more efficiently.

 

In America, a high-pressure extraction method known as “fracking” has brought forth vast new resources of both oil and natural gas. Areas not previously thought to be “oil country” are now buzzing with activity and economic growth. Best known is North Dakota’s Bakken Field, which is now producing more than 500,000 barrels of oil a day—more than the current infrastructure can transport. Other new resource-rich regions include Ohio, Pennsylvania, and New York (though New York is not maximizing its bounty), with fields known as the Utica Shale and the Marcellus Shale—which are rich in natural gas. These new areas have so much natural gas that the price has dropped to the lowest rate in a decade, and some companies are cutting back on drilling because the cost of extracting the resource versus the price they can sell it for makes it uneconomic at this time. Knowing that this gas is in the ground just waiting for us to need it is like a “Strategic Petroleum Reserve.” Similar fields have been found in other parts of the world, as well.

 

Technology has opened up vast new “deepwater” fields. The Julia Field was discovered in the Gulf of Mexico in 2007 and is believed to have one billion barrels of oil. Recent new discoveries have been found off the coast of Mozambique, Argentina, Israel, and in the North Sea. 

 

Additionally, the resources that we have are now are used more efficiently—which makes them go farther than ever before. This is what is known as “resource expansion.” When I was a child, my father’s car got eight miles per gallon of gas (mpg). Today, most cars get more like 32 mpg—and if gas mileage is important, gasoline or diesel-fueled vehicles can be found, which get more than 50 mpg. Similar improvements have been made in the use of electricity as well.

 

One of the wonderful things about oil is that it can be easily transported—shipped, trucked, trained, or piped to the end user. While not as easily done, natural gas can be compressed or liquefied and use similar methods of transportation. Likewise, if needed, coal can be converted into a liquid fuel—though coal is more frequently used for electricity, rather than as a transportation fuel. Because most of America’s infrastructure was built before there was opposition to anyone attempting to build anything near anyone, oil, natural gas, and coal are readily available. Nearly every major intersection and freeway exit has a gas station. Coal-fueled power plants are often built near where coal is available. In other locations, natural gas is the fuel of choice for electric power—because it is available.

 

Besides location and transportation, the other important thing about the availability of fossil fuels is that they are “available” when we want them—and this is, perhaps, their most valuable asset. This is true for both liquid/transportation fuels and electricity. 

 

With transportation fuels, fossil fuels allow us instant fill-ups at the myriad gas stations we drive by every day. We stop, we fill up, and we go. With electric vehicles—the only kind that could be theoretically be powered by renewables—a fill-up takes 4-20 hours and is needed much more frequently than with fossil fuels. 

 

With electricity powered by fossil fuels, rain or shine, wind or calm, we can expect the lights to turn on—unlike the highly touted renewables that need specific conditions to work. Because wind and solar (the most common “renewables”) are not 24/7, they require “back up”—usually in the form of natural gas or coal. Natural gas is the better back up, as like a natural gas kitchen stove, it can be turned on and off quickly. Boiling a pot of water on your stove may take five minutes, while boiling that same pot of water over a charcoal fire would take an hour—with the bulk of the time being getting the coals hot enough to actually boil the water. While boiling a pot of water is an over-simplified example, it helped Cooper understand why natural gas was the preferred back up to intermittent wind or solar power. Which bring us to Affordable.

 

With the prices of gasoline rising as rapidly as they are—and electricity rates increasing, some might dispute the “affordable” argument. However, comparatively, fossil fuels are still affordable—and could be more so with favorable government policies (though, international unrest does play into the price of oil). Coal is the dominant source of electricity in America—providing nearly 50%. While natural gas’ abundance has dropped the price, making the price of natural gas-fueled electricity to be close to coal, the fact that we have existing coal-fueled power plants makes electricity from coal cheaper overall as converting power plants or building new ones significantly increases the costs. In some locations, such as Rhode Island, who use natural gas for their electricity, the lower prices for natural gas have actually caused the public utility commission to lower the rates.

 

With renewables, the cost of electricity is higher and the need for double power plants—wind or solar and natural gas or coal—means double costs.

 

Back in 2008, when gasoline prices spiked, President Bush announced a reversal on his father’s ban on offshore drilling. Nearly overnight the price of crude oil dropped and gasoline followed suit. It wasn’t that there was any more oil being produced, but on an international market, investors knew that more oil would be coming online—not less. The price dropped.

 

With the current policies—such as killing Keystone, blocking offshore drilling, and minimizing drilling on federal lands—the forecasts show less availability, not more. The price goes up. President Obama can give a speech saying he’s going to open up more of America’s resources, but the markets do not believe him, as every policy he sets in place says the opposite. Prices have continued to climb.

 

These policies are why the 2012 election is so important. Will we elect someone who believes that fossil fuels are “evil” or someone who understands that they deserve a triple “A” rating: abundant, available, affordable?

 

Cooper closed his paper with these words: “We must protect the future of our energy from politicians who have interests only in their own agendas and a misinformed public that believes fossil fuels are destroying the world, when they are actually fueling it.  We will be dependent upon fossil fuels for a while, and that is fine. We have hundreds and hundreds of years to figure it out.  Our fossil fuels should be utilized as long as possible.  There is no other sensible option.”