Power Hungry (46 page)

The worst offenders when it comes to gas flaring are the oil producers in Russia and the countries around the Caspian Sea. That region flares some 2.1 trillion cubic feet of gas per year. Running a close second are the petrostates of the Middle East and North Africa, which flare about 1.6 trillion cubic feet per year.
⁴⁵
Iraq alone is flaring about 1 billion cubic feet of natural gas per day, enough fuel to generate most—or perhaps all—of Iraq's electricity.
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Or consider this: The 1 billion cubic feet of gas wasted every day in Iraq could supply nearly all of the natural gas needs of Taiwan.
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Of course, capturing all of the gas now being flared would cost tens of billions of dollars. And that's the key issue: Many producers flare the gas because saving the gas costs more than burning it. But some new technologies are emerging that could allow companies to turn that gas into a salable product. For instance, R3 Sciences, a Louisiana-based startup company, is developing a small system that can convert gas into methanol near the wellhead.
⁴⁸
Although methanol is a relatively lowvalue product, R3's technology includes a process that can upgrade the methanol into dimethyl ether, which, like propane, can be used as motor fuel. Dimethyl ether can also be turned into gasoline.
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Given those technologies, and the relative abundance of natural gas around the world, there is enormous potential for converting natural gas into motor fuel that can be used with the existing infrastructure.

The point here is obvious: Natural gas is too valuable for it to simply be wasted. The United States began eliminating the flaring of natural gas back in the 1940s. It's time for the rest of the world to follow suit.

Energy policy is like the weather: Everybody complains about it, but nobody does anything about it. The reason: Nobody is really in charge.

Sure, Congress writes laws—it has passed two major energy bills since 2005—but the process of implementing energy policy is diffused across huge bureaucracies without any consideration of how to best coordinate substantive changes. And in that regard, very little has changed in the past forty years. In 1971, Monty Hoyt of the
Christian Science Monitor
estimated that federal energy policy was determined by forty-eight federal agencies and fourteen congressional committees.
⁵⁰
By 2009, the crazy quilt of regulatory oversight was different but just as convoluted. That year, the U.S. Chamber of Commerce's Institute for 21st Century Energy estimated that there were twenty-four federal agencies and twenty-five congressional committees with a hand in shaping U.S. energy policy.
⁵¹
(See Appendix C for the chamber's list.)

This phalanx of regulators and overseers assures that demagogues on energy policy will continue to kvetch about what should, could, and might happen. And the ranks of energy posers will continue to swell, because the possibility of effecting significant change over a short period of time is nil, while the potential for outrage is infinite.

Reorienting energy diets takes time even in countries ruled by authoritarian regimes, and it will take even longer in the United States because U.S. energy policy decisions are so diffused among so many different entities. Creating a more cohesive, forward-looking energy policy will require each of those entities to give up some of their control. That might happen. But it will take a long time.

Toward Cheap, Abundant Energy

I
N THEIR 2005 book on the energy business,
The Bottomless Well
, authors Peter Huber and Mark Mills made the case for increased energy supplies, writing that, “over the long term, societies that expand and improve their energy supplies overwhelm those that don't. The paramount objective of US energy policy should be to promote abundant supplies of cheap energy and to facilitate their distribution and consumption.”
¹

That's it exactly. More energy—and more power—equals more wealth. Period. End of story. Leave. Go home. Elvis has left the building.

The United States must—repeat,
must
—pursue cheap and abundant energy as a primary goal. But it must do more than that. It must also promote cheap and abundant energy abroad. By promoting cheap and abundant energy abroad, the United States can help stimulate its own economy.

Unfortunately, rather than focusing on cheap, abundant energy, policymakers in Congress and in the federal bureaucracy are launching mandates and subsidies for programs that will likely do just the opposite. And the results of those overly intrusive policies could be disastrous.

In August 2009, the U.S. Commerce Department announced that about 12.7 percent of the U.S. population—some 38.8 million Americans—were living in poverty. The agency estimated that between 2008 and 2009, more than 1.5 million Americans fell below the income level that qualifies them as “poor.” (The federal government's official definition of
poverty is an annual income of $21,203 for a family of four, or $13,540 for a family of two.)

In early November 2009, the official U.S. unemployment rate hit 10.2 percent. But the actual number is substantially higher. Officials at the Federal Reserve Bank in Atlanta have estimated that the actual unemployment rate—when accounting for people who have dropped out of the job market or are underemployed—is likely closer to 16 percent.
²
That implies that the number of Americans living in poverty is closer to 50 million, or about 15 percent of the U.S. population.
³
Put another way, nearly 1 in 6 Americans are now living in poverty. The numbers are even worse if you are a child, and worse still if you are an African American child. Whereas 1 in 5 children in the United States are now living in poverty, among African American youths it's 1 in 3.
⁴

In mid-November, the Mortgage Bankers Association provided yet more grim news, announcing that about 1 in 10 U.S. homeowners who had mortgages were at least one payment behind schedule, the highest level since the association began keeping records in 1972. But as the
New York Times
reported, that number does not include the homes that are already in foreclosure. “The combined percentage of those in foreclosure as well as delinquent homeowners is 14.41%, or about 1 in 7 mortgage holders.”
⁵

Given the high level of unemployment, the huge number of people living in poverty, and the ragged state of the economy, few Americans are willing to put carbon dioxide emissions and global warming at the top of their list of concerns. On July 1, 2009, Rasmussen Reports released a survey finding that 56 percent of Americans “say they are not willing to pay more in taxes and utility costs to generate cleaner energy and fight global warming.” The same survey, which was conducted after the U.S. House of Representatives narrowly approved a bill that would create a cap-and-trade mechanism for carbon dioxide emissions, found that just 21 percent of Americans were willing to pay $100 more per year for cleaner energy and global warming efforts. Just 14 percent said they would pay more than $100 per year.
⁶

Those results, and previous polls showing strong opposition to any form of gasoline or motor fuel tax, prove that most Americans are more interested in their economic well-being than they are in abstract issues such as climate change. Americans are practical. They understand their
need for energy even if they don't understand the broad outlines of the energy business or its many complexities. Americans want gasoline, electricity, natural gas, and all the other forms of energy. When those energy sources are not available, or when Americans think they're too expensive, they get mad. And when Americans get mad, alas, they don't necessarily inspire politicians to create thoughtful policies. Instead, the political rhetoric gets degraded yet further, with predictable results.

The news throughout the decade of the 2000s was dominated by stories about cheats, liars, and bamboozlers. The decade began with Enron and ended with Tiger Woods. But Enron was just the beginning. George W. Bush and his cronies used trumped-up intelligence to justify the Second Iraq War, a ruinously expensive campaign that will haunt the United States for decades to come. We had the fraud perpetrated by Dennis Kozlowski of Tyco International, who felt entitled to a $6,000 shower curtain.
⁷
There were the two Bernies: Bernie Ebbers of WorldCom, who's now serving a twenty-five-year sentence for fraud and conspiracy, and, of course, Bernie Madoff, the gold-digging mastermind of a multibillion-dollar Ponzi scheme who's now serving 150 years in prison. The sports pages were full of news about cheaters, from Major League Baseball players such as Mark Mc-Gwire and Barry Bonds to the ongoing doping scandals at the Tour de France. And we saw the carnage created by the pirates on Wall Street who engineered a multitrillion-dollar mess of toxic derivatives—from collateralized debt obligations to credit default swaps—that would have made even a privateer such as Enron's Jeffrey Skilling blush in embarrassment.
⁸

We cannot, must not, be Enroned when it comes to energy and energy policy. We must understand—as business author Jim Collins makes clear—that facts are better than dreams. Americans must reject the notion that energy should be scarce and expensive. And make no mistake, that's exactly what many of these “green” energy projects will achieve: scarce, expensive energy.

Cheap energy must be the priority. Cheap energy will help us adapt to changes in the climate—regardless of why those changes are occurring. Cheap energy will allow the production of more potable water. As the world's demand for fresh water continues to grow, the need for desalination and other water-treatment technologies becomes more acute. In the coming decades, the energy-water nexus will be ever more important as
the need for safe drinking water, water distribution, and wastewater treatment grows. Cheap energy also means better mobility. As the global economy continues to shift, cheap energy will allow more people to travel farther to find jobs. And, as always, cheap energy will allow for greater increases in productivity. But the United States must not only aim to have cheap energy at home, it must pursue that goal globally. As Michael Shellenberger and Ted Nordhaus of the Breakthrough Institute have declared, “we need to make clean energy cheap worldwide.”
⁹

The pursuit of cheap energy means pursuing N2N. Natural gas and nuclear power offer the best no-regrets energy policy because they reduce the volumes of neurotoxins released into the environment, cut solid waste production, slash greenhouse gases, eliminate air pollution, and obviate the need for carbon capture and sequestration. The United States can, and should, lead the development of the technologies that will speed the global embrace of N2N. The historical and societal megatrends favoring N2N are indisputable. The United States need only adjust its energy policies so that they align with those trends.

In 1865, William Stanley Jevons called energy “the universal aid—the factor in everything we do.” He went on to say that with sufficient energy resources, “almost any feat is possible or easy; without it, we are thrown back into the laborious poverty of early times.”
¹⁰

We must accept the essentiality of energy, and in particular, the essentiality of electricity. If we are going to avoid the “laborious poverty of early times,” we must move beyond the puerile energy rhetoric that is poisoning our politics. We must depoliticize energy and move beyond the petty recriminations and small-minded approach to the world's most important commodity. If we can achieve that, the United States can get busy providing more energy to more people, which will mean more prosperity.

There is no silver bullet. We cannot rely solely on solar and wind power to fuel our economy. Nor can we solely focus on hydrocarbons and nuclear power. We will need all of those sources, because it is the nature of civilization to use energy.
¹¹
More energy means more power. And we are, all of us, power hungry.

Epilogue to the Paperback Edition

F
OR ABOUT A MONTH after the release of the hardback edition of
Power Hungry
, I was rather despondent. The book was released on April 27, 2010, exactly one week after the blowout of BP's Macondo well in the Gulf of Mexico.

The accident, which left eleven workers dead, led to an orgy of news coverage about the dangers of offshore drilling, the potential for other blowouts, BP's terrible safety history, and inevitably, the need for the United States and the rest of the world to quit using oil. The blowout was a made-for-TV disaster, complete with live video from the bottom of the ocean showing the oil gushing out of the well bore. Images of oil-soaked birds and miles-wide patches of soupy crude floating atop the ocean were a staple of the twenty-four-hour news cycle as the well spewed some 50,000 barrels of oil per day into the Gulf.

And yet here I was, an energy journalist from Texas, promoting a book that declares that hydrocarbons are here to stay and that, yes, “oil is green.”

My despondency gradually lifted, thanks to a number of positive reviews of
Power Hungry
, as well as my realization that the spill was
destined to be a short-term story. And that's exactly what it was. The Macondo well was effectively controlled in early August. By September, BP had killed the well for good with a relief well that pumped cement into the bore hole and permanently sealed it. More importantly, the Macondo well accident, which ended up costing BP tens of billions of dollars, turned out to be the ecological disaster that wasn't. Despite the myriad predictions of a catastrophe that would endure for years (about ten days after the accident, the state director of the Mississippi chapter of the Sierra Club called the accident “America's Chernobyl”), the Gulf of Mexico turned out to be far more resilient than anyone expected.
¹