California Going Faster Down the Economic Tube

E-Mail to Congress:

EIN News says, "California Alternative Energy Legislation Gets Broad Backing. The Gulf of Mexico oil spill is spurring California legislators and conflicting interest groups to settle past differences and adopt the nation's toughest renewable energy law to reduce the state's dependence on oil and serve as a model for other states. (latimes.com)".

This will further assure the decline of California as a productive, non-bankrupt state.

Other than coal, oil is the cheapest source of available energy. Solar and wind energy will not satisfy their energy requirements. They will import oil from other states or abroad, and will not have the money from other income sources to pay for it.

I suspect that other states will be smarter than to follow the California lead.

Beware of Energy Reform Involving Cap & Trade

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EIN News says, "White House to Hold Bipartisan Talks With Senators on Energy Reform. In a strategy similar to the endgame on health care reform, President Barack Obama will convene top senators from both parties at the White House on Wednesday to try to reach a deal on an energy reform bill. (cnn.com)."

Presumably this Energy Reform Bill is a disguised form involving Global Warming and Cap & Trade, in which case you could lose your shirt in these negotiations.

We Will Vote Against Anybody Advocating Cap & Trade

E-Mail the Congress:

I just heard Sen. Lieberman on Fox News. He was pushing solar and wind energy. To do this, he wants to handicap our major sources of energy, which are fossil fuels, by applying taxes. This is another case of handicapping a winner in order to level the playing field.

Many years ago there were hundreds of windmills in Holland, using energy to perform energy demanding tasks, such as grinding grain. Eastern Long Island also had many windmills and most of the West had windmills to pump water for cattle. These uses of wind energy have mostly been replaced by electrically driven motors. In effect, fossil fuels to produce electricity has generally taken over to become the major sources of energy. This is happening, because electricity is cheap and most convenient, when compared to the labor-intensive requirements of using wind energy and its general unreliability, when the wind is not blowing.

Why would we knowingly revert to using the decadent technology of wind energy, when fossil fuels do the job better and cheaper? Carbon dioxide emission significantly contributing to global warming is a myth. We have controlled emissions of sulfur dioxide which had contributed to acid rain, and I will grant that a little more tweaking on process improvement may be helpful. But, to desert an effective technology on the basis of hearsay or political desire to improve revenues for an increase in government, size is ridiculous.

If we want to embark on reinstituting decadent technologies, why not reinstitute bleeding for health improvement, reinstitute lighthouses to replace GPS, bring back the horse and carriage, use candles instead of electric lights, etc.

Government Must Maintain Good Relations with Oil Drillers

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EIN News says, "Gulf Oil Spill Puts Industry-friendly Republicans in Tight Spot. Who says there's no such thing as loyalty in politics? Rep. Joe L. Barton (R-Tex.), who has received more than $100,000 in campaign contributions from the oil industry during this election cycle, revealed Thursday that he may be the only person in America who believes that BP deserves an apology for the way it has been treated during the Gulf of Mexico oil spill. (washingtonpost.com)".

Why should Republicans be in a tight spot because they are friendly to oil drillers? Oil drillers keep our economy rolling by supplying a product, which we desperately need to keep our economy rolling through use of our automotive fleet.

It is the responsibility of Democrat/Republican Representatives and Senators to maintain good relations with oil drillers and assist them in doing their job for the American public.

Simultaneously, oil drillers are in business to make a profit through the unusual risks involved in oil drilling. They need as much help as they can get from government. When they see a Representative or Senator, who is favorable to their cause, it is only logical that they would financially support that representative for reelection.

The converse of this system would be to have an antagonistic attitude on the part of Representatives, Senators, and the Administration to oil drillers, such that the drillers will take their business elsewhere, and then we would be more dependent on foreign oil.

Unjust Criticism of BP for Cost Savings

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EIN News says, "Documents Show BP Crew Focused on Costs. BP PLC engineers made a series of cost-conscious decisions that ran counter to the advice of key contractors in the days leading up to the April 20 Deepwater Horizon rig explosion, according to documents released by a congressional panel. (wsj.com)"

What's wrong with focusing on costs? I do it all the time. If I didn't, I'd be up to my neck in debt, like the federal government. Any private company must focus on costs if it's going to stay in business. The statement that the cost decisions "ran counter to the advice of key contractors" is too nebulous for my book. Sub-contractors traditionally try to sell something unnecessary in order to make an additional profit. It's the job of the main contractor or owner to weed out the excesses and get the job done. In the above statement, nothing was mentioned about sacrificing safety and the proper culmination of the project, because of cost savings. One can always assume the worst, but unless I see data to support a negative contention, I'll give the benefit of doubt to the operator.

Oil drilling and many other operations are risky businesses. Operators do not knowingly sacrifice completion of a project for saving a few bucks. BP engineers and financial managers used their best judgment in operating the way they did. Unfortunately, they did not properly police the operation to be sure that things were working. Government routinely has the same problem. We complain about it but do not castigate government for it. Why castigate BP. They at least supply us with oil. Government supplies us with questionable benefits, which are better handled by ourselves.

Mistake to Deny BP Oil Leases and Contracts

E-Mail to Congress:

EIN News says, "BP May Lose U.S. Oil Leases, Contracts After Spill, Analysts Say."

Are we going to kill the goose that lays the golden eggs, because we have to clean up some poop now and then?

Bill Gates and the Maine Gov. Inadvisedly Pushing Nonfossil Energy Sources

E-Mail to Congress:

EIN News says, "US must invest in clean energy research: Bill Gates 13 Jun 2010 - 10:28. Maine governor touts offshore wind energy 13 Jun 2010 - 10:10."


Bill Gates has proved his expertise in developing a huge software company with products operating efficiently on the Internet. Chances are very high that he knows little about energy, with respect to production of energy sources, refining, product delivery, and application to various uses. In addition, it is unlikely that he really understands any of the economics involved.

The Maine Governor is likely the traditional politician, who is an expert at political organizing, running for office, and supervising people. Chances are very high that his knowledge of the energy industry and its economics is about on a par with that of Bill Gates.

Both Gates and the Governor have likely fallen for the myth that carbon dioxide emissions from burning fossil fuel has a significant effect on global warming. I will put their combined scientific/economic knowledge on the subject in the same category as that of Al Gore. Gates is probably not after the money. The other three probably see a great opportunity to fleece the American public.

Two New Energy Supplies

E-Mail to Congress:

There is excellent double news on the energy front!

You are already aware of the first one, but we have to get that into perspective. It involves the "oil spill" in the Gulf of Mexico. Up to now, we have been concentrating on the negative environmental impact. However, let's take a look at the more positive availability of oil, as we get the supply under control for our use.

We have a gusher 5000 feet below the surface of the Gulf. At that depth, the water pressure is 260 pounds per square inch. Since oil is pouring out of that pipe, the oil pressure is above 260 pounds per square inch. In comparison, air pressure at land surface is 14.7 pounds per square inch, and a gusher on land only needs to exceed that pressure. The pressure of the Gulf supply is in the neighborhood of 18 times that of an equivalent oil gusher on land. The pressure of an oil supply is not always related to its volume and the Gulf gusher could cease at any time. However, experience with land gushers has shown that there is usually significant volume. This indication is already confirmed in the Gulf gusher by the amount of oil lost in a relatively short time.

The second item, which has generally gone unnoticed, involves natural gas. It has been known for some time that there is a significant quantity of natural gas trapped in shale at many locations in the continental US. However, this natural gas source has previously been considered unattainable. Within the past few years, a number of companies have been developing a hydraulic fracturing technique. This technique basically involves pumping a liquid at high pressure into the shale deposit. This fractures the shale to release the natural gas. Sand is also injected to keep the fractured segments apart and maintain the gas flow.

With this new technique making shale natural gas available, it is estimated that we now have a 100-year supply of natural gas at current usage rates.

We also have very extensive coal deposits which are used as the workhorse in generating most of our electricity. However, an electricity generating plant based on coal requires a very substantial investment, with a longtime return on that investment. In spite of that, it is our cheapest source of electricity. Wind, solar, and natural gas turbines are unable to compete on a cost basis. The previous cost disadvantage of natural gas turbines has been the high-cost and supply variability of natural gas. With hydraulic fracturing, those deficiencies can be eliminated. In addition, the production of electricity by natural gas turbines has a significantly lower capital investment than a coal burning plant. Up to now, natural gas turbines have been used for quick add-on electrical supply. General Electric is a major producer of these gas turbines. The technology is already available and the company is likely able to significantly increase production capacity, now that the economics is changing.

Environmentalist groups have started to raise a ruckus about hydraulic fracturing, with the contention that the hydraulic fracturing fluids could contaminate local water supplies. This is obviously true, but reasonable preventive measures can be taken to avoid this difficulty. The first remedy is to avoid hydraulic fracturing in those areas where local water supplies are obtained from wells. The second remedy is to convert local water supplies to collection of surface water in reservoirs and avoid use of wells. For example, New York City draws its water supply from lakes in the Catskills. You also have noticed that this past spring has seen a preponderance of flooding in various sections of the US. We have had in the USA a continuing program of flood control, starting with the TVA many years ago. For some unknown reason, that program has been dropped and there has been no recent significant increase in flood control that I know of. Reinstituting such action to create lakes would have the dual purpose of flood control and local water supplies independent of wells. Consider also the availability of new construction jobs.

I encourage you in several ways to be involved in these programs. Do not pay attention to the specific requests of environmentalist groups, but concede that they have a legitimate general concern. Do not impose on hydraulic fracturing companies, through the EPA or any other agency, a multitude of restrictions which would make developing this natural gas supply impractical. Reinstitute a government program to further increase flood control through construction of dams, which will develop lakes for use in local water supply.

Reduce Controls & Penalties on Domestic Oil Drllers

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EIN News says, "Offshore Accidents Bring Few Penalties From the Feds. In the five years before the Deepwater Horizon exploded, federal investigators documented nearly 200 safety and environmental violations in accidents on platforms and rigs in the Gulf of Mexico, describing a stunning array of hazards that resulted in few penalties. (chron.com)"

Nothing wrong with this. The flip side is that if you sock the drillers with a multitude of controls and penalties, they will take their business elsewhere.

Would you rather let the courts handle civil suits against oil drillers or would you rather purchase foreign oil? If the latter, where will you get the money to buy the foreign oil. Print it and increase inflation, because of an unfavorable balance of payments?

Nuclear Blast to Seal off Gulf Oil Spill

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EIN News says, "Nuclear Option on Gulf Oil Spill? No Way, U.S. Says. The chatter began weeks ago as armchair engineers brainstormed for ways to stop the torrent of oil spilling into the Gulf of Mexico: What about nuking the well? (nytimes.com)".

I agree. Too risky. We have already stumbled into an unanticipated event, with the gusher we already have. A nuclear blast might solidify the geologic formation, but it might not. It could also do other unanticipated damage, such as create a tsunami.

We also don't want to solidify the geologic formation. We want to capture the oil it contains. Not make it unavailable in this generation.

The Russians are known to be big risk takers. Many times beyond common sense. Remember the case of nuclear missiles in Cuba and the first Russian astronaut.

Root Causes of Gulf Oil Disaster

E-Mail to Congress:

Chemical and Engineering News says Congress wants to get to the root cause of the Gulf oil spill disaster. (C&EN, May 17, 2010, page 9).

I can save Congress some time. Here are the several root causes, including comments and suggestions:

1. We need oil to continually operate our automotive and truck fleet. Without oil, our economy will grind to a halt.

2. We can produce our own oil or purchase it from foreign countries. Our economic balance of payments requires that we produce our own.

3. To produce oil, we must drill for it.

4. Only drilling companies are capable of drilling and producing new oil. We have need to encourage those companies, rather than discourage them by applying unnecessary and picayune controls.

5. One of the controls, which is not picayune, was to force drilling into one-mile deep water. Environmental organizations forced this requirement and the Federal government (Congress and the Administration) bought it. Notice here the first responsibility leading to apparent negative results.

6. Drilling companies have been accommodating to the deep-water requirement, with use of new technology. Use of new technology inherently involves risks. Those risks are generally unknown or unanticipated aspects combined with subsequent faults of equipment and personnel.

7. The unanticipated aspect of the Gulf oil spill was the tremendous pressure and volume of the discovered oil. The bad news is that this has caused ecological damage. The good news is that there is a tremendous amount of new oil which needs to be capped and used.

8. The non-operation of the blowout valve, and the explosion on the rig, with subsequent sinking, were faults of equipment and personnel. These faults resulted from lack of judgment and shoddy work. This was likely non-intentional, since it was the un-questionable objective of BP to bring to the surface usable oil. Every discovery operation has inherent risks, many of which will lead to disaster. Recall the Apollo 9 disaster. In all such cases, Monday morning quarterbacks can ask, "What if.....?", which leads to subsequent improvement.

9. Congress should not be attempting to place blame. It should be considering how it can best help to produce oil with a minimum of damage. Notice that there will always be damage. It can be minimized, but it should always be recognized in the context that we need oil. A pundit has said we should be looking for other sources of energy. Why? We have just found a tremendous supply of oil in the Gulf. We need only to cap it as expeditiously as possible. It is likely that Congress cannot help in that endeavor, in which case it is best to stay out of the way.