US Energy Challenges and the Way Forward
Rizwan Ghani
February 05, 2008
Utilities turn from coal to gas, raising risk of price increase. http://www.nytimes.com/2008/02/05/business/05gas.html?pagewanted=print
explains US energy challenges and there is a dire need to find a way forward. In my view politics (including foreign policy), poor governance and corruption are the major obstacles in resolving America“s energy problems. In their redirection and resolution, lies answer to country“s energy difficulties.
A brief look at the global energy sector shows that in all probability OPEC will not authorize increase in oil output despite Bush“s call. OPEC believes and rightly so that there is sufficient oil in the market and increase in oil output will not bring the prices down. OPEC may yield to US pressure and “fine tune“ output but it will not reduce oil prices drastically.
The Arab media has already pointed out that actual cost of barrel is 55 dollars while global community is being charged hundred dollars due to Bush“s flawed policies. Reportedly, IMF in December 2007 said that dollar has devalued by 30 percent. If we deduct 30 dollars from a barrel“s price, it will come down to 70 dollars. Iran by purchasing (due to sanctions it export oil and then imports refined oil) in other currencies in 2007 and saved 9 billion US dollars. It makes economic sense.
The report of US decision to increase current level of oil purchases from 50,000 barrels of oil daily from Gulf to 70,000 starting Feb. 08 has added 10 percent speculative price to the barrel. Washington“s review of its decision of buying addition 20,000 barrels of oil daily will end speculation and will bring the price down to 60 dollars a barrel. Reportedly, the review of decision will not have any adverse affects because Washington has fifty-two days of strategic oil reserve. There is an opinion that energy sector is pushing for 20,000 barrel of oil for stakes. The critics are linking this purchase to 1930“s where 2-dollar oil purchased from Gulf was sold for exorbitant profit in US. In all probability, it is a repeat of that situation. Reportedly, even today the production of a barrel of sweet oil in Iraq costs 5 dollars, unlike Gulf where it costs 31 dollars.
The Iraq war itself is adding 5 percent to oil price. The change of US policy on Iraq including US troop withdrawal could cut five dollars being added to the barrel cost. It will bring the price of oil barrel down to 55 dollars. This may sound logical to ordinary citizens of the world but it doesn“t make economic sense to stockholders, energy sector and politicians.
I leave verification of given statistics and options with US energy consumer watchdogs, media and public how they fight their case with US leadership and lawmakers both from Congress and Senate to do what it takes to bring price of barrel of oil back to 55 dollars. In this regard they may have see how analyze purchase of oil in basked of other currencies. US can always be facilitated to keep dollar in the basket. The job of US leadership and politicians is to facilitate public and low oil prices are necessary if Washington is interested to revive the stalling US economy.
The unjustified increase in oil prices has attracted speculative investors including retired people that have pushed oil prices upwards. It needs to be reversed. The improvement of US retirement fund and pressure on corporations to uphold their part of the pension benefits should bring the money back to US and reduce speculative investment in oil stocks that in turn should bring down oil prices. If similar remedial measure will not be taken at this stage in all probability the oil might touch 200 dollar a barrel in second half of 2008 despite predictions of it staying between 70-90 dollars in the same period.
The fact of the matter is there is no dearth of oil in the market. Interestingly there is a surplus of crude oil in Gulf and West including US are unable to use cheap oil because of lack of refining facilities. The Western capitals and Washington instead of taking remedial measures are resorting to blame games and coming up with concocted theories of energy dependence on Russia and ME etc. Oil is a product, countries buy products from each other, and this is how commerce and trade works. World buys cars from Japan, spices from India and computers from West. There is no fuss about it. Why all the hue and cry on oil.
I wish if Washington has brought its own corrupt US energy giants under similar spotlight that it has shed on ME and Russia for oil the American public would not have to go through what it is facing for last three years. The fact of the matter is inefficient, corrupt US energy giants led by inept leaders have failed to implement their part of the contract dealing with improving and expanding countries refining capabilities. White House not only failed to watch over these critical violations but now everyone who matters in Washington and Capitol Hill is covering this failure by blaming rest of the world.
Interestingly the Gulf States have been pushed to refine oil for US and the West while these unscrupulous energy cartels enjoyed the profits without implementing their end of the bargain with the US Govt. and its people. It would be interesting to see how White House and lawmakers energy committees defend this perception.
If Gulf States have planned to invest 160 billion in refining sector-staring 2008- to improve their business why can“t US. It can help America utilize excess cheap crude oil and kick start US economy. It will help ease global demand for oil because US is the largest oil consumer in the world. With the predictions of China economic growth rate hovering around 7.5% in 2008 there is hope. But if US economy will stay slow the Chinese exports will have to increase to cover the shortfall in US economy and in turn it will put pressure on oil demand. Third world countries will only get cheap oil if Washington manages purge its energy giants of corruption and put them back on track. In all probability it is the stakes of concerned in America in the two trillion dollar annual oil sector that will determine energy policies not plight of hard pressed public within America and across the globe.
Although there are many challenges in US fossil fuel energy sector but there is hope in alternate energy. Washington needs to focus and facilitate on developments in this sector with a twofold objective. A). Replace average household units in America with alternate energy. China has successfully implemented laws including mandatory use of energy savers in all govt. institutions, which has helped the country save eleven percent of its total energy consumption. UK is already building green houses. These houses come with solar panels, wind turbines and different green gadgetry including lights and fuel cells etc. Most major cities of Germany are in the process of shifting heating and cooking to alternate energy.
America itself has made strong headway in field of alternate energy. The local companies have developed all kinds of gadgetry fit for use in average household and small businesses. The cases in point are National Rural Electric Cooperation Association (www.nreca.org). NRECA has successfully developed alternate energy projects that are providing clean energy to hundreds and thousands of houses in America. The shining examples are Arizona Solar Power Plant, which is expected to start providing power by 2012 to some 75,000 units. http://www.nreca.org/AboutUs/CooperativeDifference/20080130AEPCO.htm . 205 MW White Creek Wind project in Washington is up and running providing energy to some 38,000 units. It was completed in 18 months with a cost of 360 million US dollars http://www.nreca.org/AboutUs/CooperativeDifference/20080124WhiteCreekProject.htm. The non-profit NRECA and its Co-op are expanding their investment in alternate energy. In 2007 the cooperation received 11 percent of their power from energy renewable sources http://www.nreca.org/AboutUs/Co-op101/coopsandrenewables.htm.
NRECA and its allied Co-op are seeking investment in renewable energy. They should be supported in step with the national energy policy including policy of self-reliance in the energy sector. Ironically, there is lot of energy independence talk in Washington and Capital Hill but double standards are clear in Congress“ refusal to extend clean energy renewable bond and little or no hope of funding in 2008. http://www.nreca.org/main/NRECA/PublicPolicy/issuespotlight/20080128CREB.htm . The resolution of the standoff would have served energy independence policy goals, facilitated shifting of thousands of schools and other public setups to alternate green energy and the helped America go green and less dependent on imported energy.
Congress may have valid reasons but for ordinary public such delays are frustrating and have economic consequences. It is hoped that Congress will resolve the issue at the earliest so that NRECA can facilitate its dependent consumers willing to shift to green alternates.
It is this attitude of national leadership that in all probability explains why US is not utilizing state of the art equipment available in the country to shift to alternate energy. Washington in addition to facilitating existing traditional energy generation plans must encourage adoption of alternate energy with US and rest of the world for multiple reasons:-
(A). In terms of green earth the move will be in step with its national energy policy, cut green house emissions, promote business and employment (NRECA alternate energy projects have generated employment of some 75,000 people.
(B). The shift to renewable energy has cut costs from 2.48 cents per kWh to 2.12. http://www.nreca.coop/main/NRECA/PublicPolicy/issuespotlight/20080107CoopVoices.htm. It will benefit business cost.
(C.) US by promoting alternate energy in third world country can positively contribute in poverty alleviation and re-starting economic activity. In turn it will not be obliged to give financial aids that are mostly pocketed by corrupt regimes. American use excess energy from third world countries that will be freed because of their transfer to alternate energy.
(D). It can provide business opportunities to non-profit setup like NRECA who can cooperate with third world countries on no profit no loss basis to help them shift to alternate energy. It will improve the image of US in third world countries and will be a real gesture of support. Needless to say that it will improve national security concerns etc.
(E). In economic terms it can bring trillions of dollars in foreign direct investment to America. For example today global community is looking for reliable investment opportunities and if US and its organizations including NRECA can provide a reliable platform for investment in alternate energy sector the entire third world country is the potential market. The organization of retired Japanese for example has over 1.3 trillion US dollars with it but there is no reliable investment opportunity. Pakistan is facing over 4000 MW shortage. Reportedly, the country has the potential of generating 50,000 MW from alternate energy. NRECA and other US alternate energy setup could start in the third world by facilitating Pakistan to ease its energy crunch. There is long list of African and Asian states struggling to overcome energy crisis and endemic corruption.
F). US itself is struggling to replace aging energy distribution network. Its national grid is serving 7 units per mile as compared to NRECA and its Co-ops that are at places having 35 units per mile. They are responsible for the maintenance of infrastructure. This model should help end line losses and tackle issue of maintenance of energy distribution infrastructure and allied corruption.
G). The expansion and establishment of NRECA like setup across US and world can help end challenge of transferring fossil fuel based energy generation to green alternate energy resources . The energy produces as part of govt. policy and business competiveness have reportedly started offering green alternates to energy consumers. As compared to 1990“s there are now 750 utilities offering green energy options.
http://www.nreca.coop/main/NRECA/PublicPolicy/issuespotlight/20080107CoopVoices.htm . The Al-Gore awareness campaign is going to help. However, it is unfortunate that so much work has been already done but it has not been recognized, promoted and utilized. It is about time these steps are taken.
H.)In terms of coal sector Washington in addition to improving miners safety needs to facilitate funding needed to accelerate country wide research to cut carbon emission and to improve coal based power generation to alleviate concerns of the concerned including NRECA http://www.nreca.org/PublicPolicy/issuespotlight/20080131.htm. In terms of cutting carbon emissions from coal based plants China has made lot of progress. The existing Chinese model are cases in point.
The developments in NRECA and other public and private sector alternate energy generation sector shows that the solution to American energy challenges lies within the country. There is however a greater need of political will, transparency and working in national interest. It is therefore hoped that Washington will review its current foreign policy based on use of power with diplomacy, trade, and commerce friendly policies to resolve its energy and economic challenges. The lawmakers on Capitol Hill must serve public interest instead of supporting energy giants.
The cheap alternate energy will help American economy and business and support its national energy policy. It will also help force third world governments to withdraw their support for corrupt energy cartels that are holding their economies and public hostage and in turn spreading poverty and corruption. The answer to energy challenges within US and rest of the world lies in accepting the truth and working for solution than Europe blaming Russia for using energy as policy tool. US looking to maintain continued military presence in ME to secure its energy interests and meddling in democratic systems of third world countries including Pakistan to keep leadership of its choice. China and Russia are cases in point. They are successfully securing their energy, economic and geo-political interests through diplomacy and dialogue in Africa, Asia and rest of the world.
The global community is engaging with them to protect their energy, economic and political interests despite growing concerns of human rights and disregard for international conventions and rights. It is about time the American planners and policy makers take a wider view of the unfolding global political, economic and energy realities in national interest. This also important because the third world economies and their energy needs are affected by US policies.
Finally, US has made tremendous headway in alternate energy sector. It is time steps are taken on war footings for adoption of state of the art alternate energy technology at grassroots for individual and national benefits. The third world will automatically follow suit. This step in itself has tremendous potential to improve global peace and make energy independent US like rest of the world stronger and safer. It is the way forward to end US energy challenges. The US cooperation in alternate energy sector will improve its relations with people of third world countries.
explains US energy challenges and there is a dire need to find a way forward. In my view politics (including foreign policy), poor governance and corruption are the major obstacles in resolving America“s energy problems. In their redirection and resolution, lies answer to country“s energy difficulties.
A brief look at the global energy sector shows that in all probability OPEC will not authorize increase in oil output despite Bush“s call. OPEC believes and rightly so that there is sufficient oil in the market and increase in oil output will not bring the prices down. OPEC may yield to US pressure and “fine tune“ output but it will not reduce oil prices drastically.
The Arab media has already pointed out that actual cost of barrel is 55 dollars while global community is being charged hundred dollars due to Bush“s flawed policies. Reportedly, IMF in December 2007 said that dollar has devalued by 30 percent. If we deduct 30 dollars from a barrel“s price, it will come down to 70 dollars. Iran by purchasing (due to sanctions it export oil and then imports refined oil) in other currencies in 2007 and saved 9 billion US dollars. It makes economic sense.
The report of US decision to increase current level of oil purchases from 50,000 barrels of oil daily from Gulf to 70,000 starting Feb. 08 has added 10 percent speculative price to the barrel. Washington“s review of its decision of buying addition 20,000 barrels of oil daily will end speculation and will bring the price down to 60 dollars a barrel. Reportedly, the review of decision will not have any adverse affects because Washington has fifty-two days of strategic oil reserve. There is an opinion that energy sector is pushing for 20,000 barrel of oil for stakes. The critics are linking this purchase to 1930“s where 2-dollar oil purchased from Gulf was sold for exorbitant profit in US. In all probability, it is a repeat of that situation. Reportedly, even today the production of a barrel of sweet oil in Iraq costs 5 dollars, unlike Gulf where it costs 31 dollars.
The Iraq war itself is adding 5 percent to oil price. The change of US policy on Iraq including US troop withdrawal could cut five dollars being added to the barrel cost. It will bring the price of oil barrel down to 55 dollars. This may sound logical to ordinary citizens of the world but it doesn“t make economic sense to stockholders, energy sector and politicians.
I leave verification of given statistics and options with US energy consumer watchdogs, media and public how they fight their case with US leadership and lawmakers both from Congress and Senate to do what it takes to bring price of barrel of oil back to 55 dollars. In this regard they may have see how analyze purchase of oil in basked of other currencies. US can always be facilitated to keep dollar in the basket. The job of US leadership and politicians is to facilitate public and low oil prices are necessary if Washington is interested to revive the stalling US economy.
The unjustified increase in oil prices has attracted speculative investors including retired people that have pushed oil prices upwards. It needs to be reversed. The improvement of US retirement fund and pressure on corporations to uphold their part of the pension benefits should bring the money back to US and reduce speculative investment in oil stocks that in turn should bring down oil prices. If similar remedial measure will not be taken at this stage in all probability the oil might touch 200 dollar a barrel in second half of 2008 despite predictions of it staying between 70-90 dollars in the same period.
The fact of the matter is there is no dearth of oil in the market. Interestingly there is a surplus of crude oil in Gulf and West including US are unable to use cheap oil because of lack of refining facilities. The Western capitals and Washington instead of taking remedial measures are resorting to blame games and coming up with concocted theories of energy dependence on Russia and ME etc. Oil is a product, countries buy products from each other, and this is how commerce and trade works. World buys cars from Japan, spices from India and computers from West. There is no fuss about it. Why all the hue and cry on oil.
I wish if Washington has brought its own corrupt US energy giants under similar spotlight that it has shed on ME and Russia for oil the American public would not have to go through what it is facing for last three years. The fact of the matter is inefficient, corrupt US energy giants led by inept leaders have failed to implement their part of the contract dealing with improving and expanding countries refining capabilities. White House not only failed to watch over these critical violations but now everyone who matters in Washington and Capitol Hill is covering this failure by blaming rest of the world.
Interestingly the Gulf States have been pushed to refine oil for US and the West while these unscrupulous energy cartels enjoyed the profits without implementing their end of the bargain with the US Govt. and its people. It would be interesting to see how White House and lawmakers energy committees defend this perception.
If Gulf States have planned to invest 160 billion in refining sector-staring 2008- to improve their business why can“t US. It can help America utilize excess cheap crude oil and kick start US economy. It will help ease global demand for oil because US is the largest oil consumer in the world. With the predictions of China economic growth rate hovering around 7.5% in 2008 there is hope. But if US economy will stay slow the Chinese exports will have to increase to cover the shortfall in US economy and in turn it will put pressure on oil demand. Third world countries will only get cheap oil if Washington manages purge its energy giants of corruption and put them back on track. In all probability it is the stakes of concerned in America in the two trillion dollar annual oil sector that will determine energy policies not plight of hard pressed public within America and across the globe.
Although there are many challenges in US fossil fuel energy sector but there is hope in alternate energy. Washington needs to focus and facilitate on developments in this sector with a twofold objective. A). Replace average household units in America with alternate energy. China has successfully implemented laws including mandatory use of energy savers in all govt. institutions, which has helped the country save eleven percent of its total energy consumption. UK is already building green houses. These houses come with solar panels, wind turbines and different green gadgetry including lights and fuel cells etc. Most major cities of Germany are in the process of shifting heating and cooking to alternate energy.
America itself has made strong headway in field of alternate energy. The local companies have developed all kinds of gadgetry fit for use in average household and small businesses. The cases in point are National Rural Electric Cooperation Association (www.nreca.org). NRECA has successfully developed alternate energy projects that are providing clean energy to hundreds and thousands of houses in America. The shining examples are Arizona Solar Power Plant, which is expected to start providing power by 2012 to some 75,000 units. http://www.nreca.org/AboutUs/CooperativeDifference/20080130AEPCO.htm . 205 MW White Creek Wind project in Washington is up and running providing energy to some 38,000 units. It was completed in 18 months with a cost of 360 million US dollars http://www.nreca.org/AboutUs/CooperativeDifference/20080124WhiteCreekProject.htm. The non-profit NRECA and its Co-op are expanding their investment in alternate energy. In 2007 the cooperation received 11 percent of their power from energy renewable sources http://www.nreca.org/AboutUs/Co-op101/coopsandrenewables.htm.
NRECA and its allied Co-op are seeking investment in renewable energy. They should be supported in step with the national energy policy including policy of self-reliance in the energy sector. Ironically, there is lot of energy independence talk in Washington and Capital Hill but double standards are clear in Congress“ refusal to extend clean energy renewable bond and little or no hope of funding in 2008. http://www.nreca.org/main/NRECA/PublicPolicy/issuespotlight/20080128CREB.htm . The resolution of the standoff would have served energy independence policy goals, facilitated shifting of thousands of schools and other public setups to alternate green energy and the helped America go green and less dependent on imported energy.
Congress may have valid reasons but for ordinary public such delays are frustrating and have economic consequences. It is hoped that Congress will resolve the issue at the earliest so that NRECA can facilitate its dependent consumers willing to shift to green alternates.
It is this attitude of national leadership that in all probability explains why US is not utilizing state of the art equipment available in the country to shift to alternate energy. Washington in addition to facilitating existing traditional energy generation plans must encourage adoption of alternate energy with US and rest of the world for multiple reasons:-
(A). In terms of green earth the move will be in step with its national energy policy, cut green house emissions, promote business and employment (NRECA alternate energy projects have generated employment of some 75,000 people.
(B). The shift to renewable energy has cut costs from 2.48 cents per kWh to 2.12. http://www.nreca.coop/main/NRECA/PublicPolicy/issuespotlight/20080107CoopVoices.htm. It will benefit business cost.
(C.) US by promoting alternate energy in third world country can positively contribute in poverty alleviation and re-starting economic activity. In turn it will not be obliged to give financial aids that are mostly pocketed by corrupt regimes. American use excess energy from third world countries that will be freed because of their transfer to alternate energy.
(D). It can provide business opportunities to non-profit setup like NRECA who can cooperate with third world countries on no profit no loss basis to help them shift to alternate energy. It will improve the image of US in third world countries and will be a real gesture of support. Needless to say that it will improve national security concerns etc.
(E). In economic terms it can bring trillions of dollars in foreign direct investment to America. For example today global community is looking for reliable investment opportunities and if US and its organizations including NRECA can provide a reliable platform for investment in alternate energy sector the entire third world country is the potential market. The organization of retired Japanese for example has over 1.3 trillion US dollars with it but there is no reliable investment opportunity. Pakistan is facing over 4000 MW shortage. Reportedly, the country has the potential of generating 50,000 MW from alternate energy. NRECA and other US alternate energy setup could start in the third world by facilitating Pakistan to ease its energy crunch. There is long list of African and Asian states struggling to overcome energy crisis and endemic corruption.
F). US itself is struggling to replace aging energy distribution network. Its national grid is serving 7 units per mile as compared to NRECA and its Co-ops that are at places having 35 units per mile. They are responsible for the maintenance of infrastructure. This model should help end line losses and tackle issue of maintenance of energy distribution infrastructure and allied corruption.
G). The expansion and establishment of NRECA like setup across US and world can help end challenge of transferring fossil fuel based energy generation to green alternate energy resources . The energy produces as part of govt. policy and business competiveness have reportedly started offering green alternates to energy consumers. As compared to 1990“s there are now 750 utilities offering green energy options.
http://www.nreca.coop/main/NRECA/PublicPolicy/issuespotlight/20080107CoopVoices.htm . The Al-Gore awareness campaign is going to help. However, it is unfortunate that so much work has been already done but it has not been recognized, promoted and utilized. It is about time these steps are taken.
H.)In terms of coal sector Washington in addition to improving miners safety needs to facilitate funding needed to accelerate country wide research to cut carbon emission and to improve coal based power generation to alleviate concerns of the concerned including NRECA http://www.nreca.org/PublicPolicy/issuespotlight/20080131.htm. In terms of cutting carbon emissions from coal based plants China has made lot of progress. The existing Chinese model are cases in point.
The developments in NRECA and other public and private sector alternate energy generation sector shows that the solution to American energy challenges lies within the country. There is however a greater need of political will, transparency and working in national interest. It is therefore hoped that Washington will review its current foreign policy based on use of power with diplomacy, trade, and commerce friendly policies to resolve its energy and economic challenges. The lawmakers on Capitol Hill must serve public interest instead of supporting energy giants.
The cheap alternate energy will help American economy and business and support its national energy policy. It will also help force third world governments to withdraw their support for corrupt energy cartels that are holding their economies and public hostage and in turn spreading poverty and corruption. The answer to energy challenges within US and rest of the world lies in accepting the truth and working for solution than Europe blaming Russia for using energy as policy tool. US looking to maintain continued military presence in ME to secure its energy interests and meddling in democratic systems of third world countries including Pakistan to keep leadership of its choice. China and Russia are cases in point. They are successfully securing their energy, economic and geo-political interests through diplomacy and dialogue in Africa, Asia and rest of the world.
The global community is engaging with them to protect their energy, economic and political interests despite growing concerns of human rights and disregard for international conventions and rights. It is about time the American planners and policy makers take a wider view of the unfolding global political, economic and energy realities in national interest. This also important because the third world economies and their energy needs are affected by US policies.
Finally, US has made tremendous headway in alternate energy sector. It is time steps are taken on war footings for adoption of state of the art alternate energy technology at grassroots for individual and national benefits. The third world will automatically follow suit. This step in itself has tremendous potential to improve global peace and make energy independent US like rest of the world stronger and safer. It is the way forward to end US energy challenges. The US cooperation in alternate energy sector will improve its relations with people of third world countries.
Print
Email
