Tuesday, January 29, 2008

Americans Could Suffer Due To Loss Of Energy Backbone

America appears to have lost its will to provide abundant energy supplies to its citizens at reasonable prices. AAEA supports the production of sufficient supplies of energy that should be used efficiently and sold at reasonable prices. There are signs that supplies will tighten and prices will be too high because of misguided politics and misplaced priorities. There is virtually unlimited energy in the world so one would think it could be provided at reasonable prices. Unfortunately, each energy sector is being hampered, or could be hampered, from providing Americans with freedom generating energy. About 85% of our electricity comes from coal, nuclear power and natural gas. Oil has its own domestic contraints. Each sector has its challenges.

Oil: AAEA is promoting plug-in fuel cell hybrid electric vehicles as the front line replacement for gasoline. But with 300 million vehicles using most of our 20 million barrels of oil a day (half imported) and no refineries being built because of clean air laws, the price can only go up. And although we fear that ethanol could increase smog and special pipelines will have to be built to get it from field to filling stations, 36 billion gallons per year of the liquor have been mandated by Congress.

Coal: Global warming concern could lead to policies, including cap-&-trade or carbon taxes, that will increase the cost of producing electricity. Coal policies should accent technological solutions that will not inordinately increase the price of electricity to customers. We favor massive subsidies for coal to gasoline conversion (Fischer-Tropsch) using nuclear power on the front end to split hydrogen and oxygen in water for oxygen use in the coal plant fire box and hydrogen for the conversion and fuel cell production (See Full Description). Yet the Sierra Club [map] has a major push going to prevent the building of new coal plants.

Nuclear energy: The technology already solves global warming problems and over time could keep electricity prices stable (but definitely not the old 'too cheap to meter.') Yet appropriate subsidies to assure the building of the next 6 plants could be threatened by changing political winds and promotion of chic new trends, such as 'Green Jobs.' No mainstream environmental groups support nuclear power (opponents and proponents discount AAEA), but maybe litigation will be kept to a minimum and Wall Street will play ball, although power companies and investment houses will be closely scrutinizing expensive capital projects.

Liquefied Natural Gas (LNG): This is currently the path of least resistance for building new power plants, but there isn't enough of it domestically and tight supplies raise prices. There are 5 LNG terminals in the U.S. today. The Federal Energy Regulatory Commission (FERC) and the Coast Guard have approved 14 plants with 5 others approved in Canada and Mexico, 20 proposed and 20 more potential sites, but LNG simply is not taking off. Two projects in California were rejected and projects in Maryland and in the Long Island Sound are languishing. State NIMBYism is killing these projects.

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