Friday, May 2, 2008

The power of conservation

Over the past few days I have been talking a lot about the presidential candidates' plans to cut fuel costs. Very clearly, I have supported Obama's "cut consumption" plans over Clinton's and McCain's "increase consumption but lower taxes a couple cents" plans. I felt that some of the research I did for comments deserved a little bit more attention.

As of 2006, Americans were using over 20 million barrels of oil per day. This is three times more than any other country in the world - China, the most populous nation and second biggest oil consumer, uses just over 7 million. Looked at a little differently, the average American uses about 25 barrels of oil per year, the average Chinese person uses about 2; Japan, the next most consuming nation and also a highly developed society, uses about 15 barrels per person.

What does this mean when it comes to oil? It means that America is one of the best countries to focus on conserving oil. If Americans used just 10% less oil a year, that would make an incredible dent in consumption. It wouldn't completely fix the problem, but as a computer programmer, you learn to optimize starting with the largest bottleneck.

What would 2.5 barrels of oil entail? One barrel of oil holds 42 gallons of crude. Out of that, depending on the refining efficiency, about 19 to 20 gallons of gasoline can be made, along with a number of other by-products. For just gas, 2.5 barrels is, on average, a bit more than 1,200 miles of driving in a year. If fuel economy is raised to 35 mpg as called for in the recent bill, that alone would be a fuel savings of about 30% over an average year, about 143 gallons - more than 7 barrels of oil and more than $500 (not including what is saved in lower demand). Even more can be saved by using, when available, public mass transit. Or by purchasing locally grown food (shipping food from China and Central America uses quite a bit of fuel).

Or even just by recycling and buying recycled plastics. New plastic products, worldwide, consume about 1 billion barrels of oil a year (just in the plastics themselves, this doesn't include energy to produce). Recycling could cut this significantly (producers, PLEASE mark your products for this...).


FranIAm said...

Bravo John!

What a great post. It would take so little to get so much further ahead.

And then if we made real efforts - well just imagine.

Thank you for this.

Distributorcap said...


conservation is the answer, or the start -- but americans will not conserve --- we are a consumption society and a wasteful one and more so -- a spoiled

i know if we all did a little -- but so many people dont -- dont care or dont want to

i know i am the pessimist -- but even at these lofty prices i still think people will not give up their cars or their Poland Spring water bottles

John J. said...

DCap, I completely understand, although I prefer to call it a healthy sense of realism instead of pessimism :/

The thing is, with this, so little has to be done by everyone that it would be possible for fewer people to have the same effect. Like I described, if every American dropped oil consumption 10% it would do an enormous amount. But for every person who upped the fuel efficiency of their cars from the current average of 24.7 mpg to 35, that would be like three people cutting consumption 10%. You can evangelize to 1/3 of the people.

That is also why it will take government initiatives like Obama is calling for to force increased efficiencies instead of tax breaks designed to encourage consumption.

I don't expect everyone to jump on the bandwagon. But by showing how little really needs to be done to have a large impact, I hope more people will do some little part.

your pal said...

john j,

Prosperity is increasing in China and India. For every person in the US who decides to use less oil, more than one person in China and India who get their first cars. India is building new power plants. Imagine the amount of energy India will consume producing enough electricity for everyone in the country to have lights and air conditioning. How about China.

Our conservation efforts will get lost in the sauce as India and China put electricity in every home and cars in the hands of a BILLION first-time drivers.

John J. said...

So, Slapps, your argument is that because China will still be causing problems in this area we shouldn't do anything? By that same logic, we shouldn't bother passing crime prevention laws because people will still commit the crimes.

As I said to Distributorcap, each American has to do so little to have such a large impact that it is ridiculous to not try.

your pal said...

john j, drawing logical equivalence between energy use and crime is about as abusive to logic as one can get.

No matter how many stars you wish upon, GLOBAL energy use will climb. Every year. Forever.

But I have great faith in science and engineering. Humans will adapt to a changing world. However, humans are resistant to artificial or foolishly contrived changes.

HIgh oil prices will drive people to seek alternatives. But oil is a commodity, which means its price will vary with demand. If, as you believe, solar energy gains ground, it will gain only because it offers advantages not offered by oil.

AS solar use increases, the increase will eventually appear in declining oil prices. If you don't know, energy usually sells on the basis of its energy units -- BTUs, therms, pick your unit.

Thus, the price of solar cells will closely match oil able to produce an equal amount of energy. Of course the calculation with solar panels becomes trickier since the solar panel converts sunlight over a period of time. Thus, the buyer would need an estimate of the total watt-hours of energy a solar panel will provide before it's time to replace the panel.

Anyway, as I say and you seem to ignore, rising global prosperity and rising global population will over-ride any conservation efforts in the US.

Even if the newly prosperous people of Earth adopt the latest energy technology, they will continue to increase global energy consumption of every form. To believe otherwise is delusional.

No oil exporting nations will destroy their own economies by aiming to reduce global oil use. If necessary, the middle-east oil dictatorships would offer oil at fire-sale prices to keep their economies functioning. Those countries have nothing without oil revenue.

Of course if the US were to succeed in Iraq and begin the process of building widespread prosperity and economic diversity into the middle east, your goals would have a chance of being realized in your lifetime.

But as long as the major oil-producing countries are helpless without oil revenue, you will see increases in the global use of oil.

your pal said...

john j, here's something about solar energy for you to ponder...

"Arizona aims to tap its 325 sunny days a year, but loss of an energy tax credit threatens its big plans.

Phoenix - The sun shines 325 days a year in Arizona, on average, and some here see that as the state's biggest energy asset.

But fledgling efforts to turn Arizona into the solar capital of the world depend on making the initial investment in new energy plants affordable - something that could become much more difficult, perhaps even impossible, if a federal tax credit for solar projects expires at the end of the year as scheduled.

"We have a tremendous solar energy resource, up to seven or eight solar productive hours a day," says Ardeth Barnhart, associate director of the Arizona Research Institute for Solar Energy (AzRISE) at the University of Arizona in Tucson. "Other states like New Jersey have very progressive policies, but we've got more sun. We could theoretically power the US with a very large stretch of land - about 100 square miles - in Arizona."

But plans for a project that could put Arizona on the map as a solar powerhouse - a huge $1 billion solar energy plant to be built near Gila Bend, Ariz., by 2011 - are likely to be scrapped if the tax credit is allowed to lapse.

That's because solar power is still more expensive to produce than is electricity derived from fossil fuel, though some experts expect the gap to close in the next seven to 10 years.

The subsidy in question is the federal Investment Tax Credit. The US government boosted the ITC from 10 percent to 30 percent for solar systems in 2006, meaning that 30 percent of the cost of building and installing a system is returned to the investor in the form of a tax credit.

But that rate is set to expire at the end of 2008. That scenario worries many political, business, and academic leaders here, who see their dreams of a solar-energy hub evaporating.

"The extension of the tax credit is critical," says US Rep. Gabrielle Giffords (D) of Arizona in a phone interview. "I've introduced legislation to extend it to 2016."

The Arizona Public Service Co., the utility that is the driving force behind plans for the Gila Bend solar plant, already owns smaller solar plants. This yet-to-be-built one, called Solana (Spanish for "sunny place"), would cover three square miles with trough mirrors and receiver pipes and would include two 140-megawatt steam generators. It would provide enough energy to power 70,000 Arizona homes, according to Barbara Lockwood, an APS official.

Arizona law now requires utilities to invest in renewable energy. Currently, 90 percent of the state's electricity is produced by natural gas and coal.

"They have to generate 15 percent of electricity from renewable-energy sources by 2025," says Govindasamy TamizhMani, director of the photovoltaic testing lab at Arizona State University. "So all the utility companies are trying to meet that mandate."

"What's so exciting about solar energy is that it creates an elegant solution to three of the largest challenges that ... face our country today," says Giffords. The first, she says, is US dependence on foreign energy. The second is global warming, and the third is advances in technology.

Those advances in technology, she argues, could help America lead the world in this field.

Many in the solar energy field say the rising price of oil, and the possibility of a future tax on carbon emissions, is likely to make the solar option more competitive - and soon.

"People are looking at some kind of cost parity, some comparable costs in the next seven to 10 years," says Ms. Barnhart of AzRISE.

ASU's Dr. TamizhMani agrees. "At the moment, the industry depends on incentive money, but by 2015 the cost of conventional electricity and solar are expected to be equal."

John J. said...

Exactly. I am not calling for an unfunded mandate with solar power. I, and Obama and Clinton (not sure about McCain), believe that tax subsidy does need to be extended and possibly strengthened.

your pal said...

john j,

The solar-energy tax subsidy will become nothing more than a tax-saving gambit for affluent investors. That's how these things work.

When subsidies and tax credits are created, smart operators create companies that exist to obtain the subsidies and tax credits and sell them to people who use them to reduce their taxes.

Solar energy tax credits are manna from heaven for people with big tax bills. But they will do little to advance solar energy itself. That will happen when the true price of solar competes with the price of other energy sources. We're a long way from that point.

Obviously, solar people want oil prices to rise as high as possible. Hence, they are not concerned about the welfare of the nation.

your pal said...

Energy Subsidies -- from today's Wall Street Journal

Wind ($23.37) v. Gas (25 Cents)

Congress seems ready to spend billions on a new "Manhattan Project" for green energy, or at least the political class really, really likes talking about one. But maybe we should look at what our energy subsidy dollars are buying now.

Some clarity comes from the U.S. Energy Information Administration (EIA), an independent federal agency that tried to quantify government spending on energy production in 2007. The agency reports that the total taxpayer bill was $16.6 billion in direct subsidies, tax breaks, loan guarantees and the like. That's double in real dollars from eight years earlier, as you'd expect given all the money Congress is throwing at "renewables." Even more subsidies are set to pass this year.

An even better way to tell the story is by how much taxpayer money is dispensed per unit of energy, so the costs are standardized. For electricity generation, the EIA concludes that solar energy is subsidized to the tune of $24.34 per megawatt hour, wind $23.37 and "clean coal" $29.81. By contrast, normal coal receives 44 cents, natural gas a mere quarter, hydroelectric about 67 cents and nuclear power $1.59.

The wind and solar lobbies are currently moaning that they don't get their fair share of the subsidy pie. They also argue that subsidies per unit of energy are always higher at an early stage of development, before innovation makes large-scale production possible.

But wind and solar have been on the subsidy take for years, and they still account for less than 1% of total net electricity generation. Would it make any difference if the federal subsidy for wind were $50 per megawatt hour, or even $100? Almost certainly not without a technological breakthrough.

By contrast, nuclear power provides 20% of U.S. base electricity production, yet it is subsidized about 15 times less than wind. We prefer an energy policy that lets markets determine which energy source dominates. But if you believe in subsidies, then nuclear power gets a lot more power for the buck than other "alternatives."

The same study also looked at federal subsidies for non-electrical energy production, such as for fuel. It found that ethanol and biofuels receive $5.72 per British thermal unit of energy produced. That compares to $2.82 for solar and $1.35 for refined coal, but only three cents per BTU for natural gas and other petroleum liquids.

All of this shows that there is a reason fossil fuels continue to dominate American energy production: They are extremely cost-effective. That's a reality to keep in mind the next time you hear a politician talk about creating millions of "green jobs." Those jobs won't come cheap, and you'll be paying for them.

John J. said...

Ok, so the two arguments in that article are:

1) Well established technologies are being subsidized less.

2) Very new technologies haven't yet proven themselves.

The first one gets a "duh." What are the inflation adjusted numbers from when they were first being set up? What about the low cost land purchases we have set up for fossil fuel exploration? These numbers are being ignored in this article.

The second one is also pretty obvious. Where are the majority of these subsidies going? Research (as far as I know). They are working on the technological breakthroughs that article says are necessary.

The numbers in and of themselves are false as well. The article is using total number of government dollars compared to total number of megawatt hours. With all (relatively) new technologies, more money goes into R&D and setting up production facilities than into generating results (in this case power). Comparatively speaking, very little money is going into coal and oil research (not including "clean" coal, which this article seems to single out).

your pal said...

john j, you asked:

"What are the inflation adjusted numbers from when they were first being set up?"

Inflation was low, but who cares? As the article stated, the figures were reported in "real terms." In others, adjusted for inflation.

You asked:

"What about the low cost land purchases we have set up for fossil fuel exploration?"

This is silly. First, energy companies must bid for leases to explore on federal land. They must also make deals with private landowners if they want to explore and/or drill on private land.

Meanwhile, there is no charge for the sun and the wind.

Look, I'm all in favor of generating power from the sun and the wind. But, as someone who was involved with both technologies as an engineering undergraduate, I can tell you that converting wind power into electrical power is a mechanical process.

There is no BREAKTHROUGH to come.

NOTHING can change this. Simple Newtonian physics here. F = MA. However, when put into action, the wind energy equation involves taking the fourth root of the wind power to calculate the final power output available from the energy conversion device. In other words, the conversion ratio shows how little can be gotten from the wind.

Unless you believe Newton was wrong, there's nothing to debate on the question of wind except the number, size, and location of wind turbines. The environmentalists are your worst enemies here.

Moreover, unlike oil or natural gas, there are no new supplies of wind to tap. Global wind power is fixed. Thus, even if humans captured every possible watt of wind power, the wind contribution would mean less and less each year as the population of Earth grew and total energy demand increased.

On the other hand, we can build new nuclear plants to meet growing power demands. Solar power probably has more potential than wind, but once again, we know exactly how much solar energy reaches Earth. It will never increase.

As for your claim that the numbers in the article are false, well, sorry, they're as real as real can be.

You might not like them because you think there is leverage against your favored technologies. If there were no commercial applications of wind and solar power, I'd have some sympathy for your view.

But wind farms have been around since the 1980s and companies like First Solar are in business selling their solar power devices. Thus, neither technology is newly born. I admit the infancy of solar power may last quite a few years and mature products may be decades away, but that begs the question of why things are taking so long?

Maybe the promise cannot be fulfilled? That could be. The scientist who can convert sunlight into electricity for less than the cost of oil will become the richest man on Earth. In other words, there are huge financial rewards for the smart guy or guys who crack the solar code.

Then there's the issue of the benefits already derived from the wind and sun subsidies. You're claiming they are "new" technologies, which means they are less efficient and deserve time to improve. But scientists have been at it for years.

How much improvement have we seen in the last decade? There are real numbers available to quantify the gains. I think they are unimpressive. But the talk is big.

John J. said...

These numbers you gave me are over the past eight years. Last I checked, we started building coal fired power plants in the 1800s. The financing for initial explorations there and power plant construction are completely ignored. Ditto on hydro power - the TVA, which built many of our dams was set up in 1933. None of these numbers are included in this article which means it is completely biased against technologies in their infancies.

As far as "untapped" wind sources, I can look out my window and see several miles of untapped wind resources. Any one wind farm only has access to the wind that passes through it. Your argument is the height of idiocity.

Also, there are breakthroughs still available. The first is simply manufacturing improvements. Much of the current expense is getting the materials for these power supplies - be they solar panels or wind turbines. There is also plenty of room for breakthroughs in efficiency. Solar power is, generally, in the low 10% range, wind is better than that, but I expect there is room for improvement.

You are right, solar power is capped at what the sun is currently sending us, roughly 174 PETAwatts (174,000,000,000,000,000 Watts) constantly. Not all of this reaches the ground and not all of it is usable, but if we are able to access even .00001% of it, that is still 17.4 Terawatts constantly - more than all of the energy we consumed world-wide in the entirety of 2004.

Oil meanwhile, is an increasingly shrinking source of power that, for all it's use, only produced 5.6 TW all 2004. Not to mention that we have an estimated 60-100 years worth of usable oil available. By your logic on this one point, oil companies shouldn't receive a single penny in subsidies.

As for the time it has taken for green technologies to create an impact, it took oil, with very little refining necessary, 40 years to have a significant impact on the use of whale oil. It has taken solar a mere 20 years to become an acceptable contender, another couple years to be a serious price contender is insignificant - especially given its long term capabilities.

no_slappz said...

john j,

When it comes to wind power, everyone who misunderstands it reaches the same conclusion you did: it's outside my window -- untapped.

You can put a wind turbine in your own yard -- maybe. But if you do, you will discover the shortcomings of wind power. Such as, how little power you can obtain from the wind, when it blows.

As I mentioned, the amount of power is calculated at the fourth root of the blade velocity.

And, as I said, there are no breakthroughs pending. Wind generators turn mechanical energy into electricity, which means the system is extremely limited.

Where do you think the electricity goes when it is produced by wind power? It must either go into the power grid, or it must be stored. If it goes into the grid the power must match the the power made by the utility company. That is, same voltage, hertz, etc.

Therefore, extra technology is needed to compensate for the varying wind speeds. Of course it's do-able. But even though the energy source is free, everything else is expensive.

A number of people have gotten wind generators to power their homes. For a couple of years their activities were in the news, but after a while coverage disappeared. Why? Becasue it was a lot easier and less expensive to buy power from the local utility. They gave up. Their hobby became a big pain in the neck.

Many cities and towns have already banned cell phone towers. Given the existing bias against tree-like structures all over the country, I think you'll find even more opposition to tree-like structures with huge turning blades attached. Of course the government can ram wind power down the throats of citizens if the will exists, but given the successful efforts of NIMBY people so far, I doubt it will work. But that problem has nothing to do with the limitations of the technology per se.

You mentioned dams. That's another area where I gathered a little experience as an engineer. I was the energy analyst for a company at one time. The company was over a hundred years old and its factory was built on the banks of a river, which supplied the factory with hydro-power that drove an old belt system in the days before electricity.

I learned the rules and regulations for damming rivers, as well as the engineering of hydro turbines. In short, water produces a much smoother output of power than wind. Given a choice, go with water.

But, long story short, the Army Corps of Engineers must approve a dam. Generally they don't because all the damable rivers have been dammed. Hence, just about all the power we can extract from rivers is being extracted.

Your sun energy claim was also silly. Obviously vast quantities of solar energy hit the surface of the entire planet. But there is no chance solar collectors will appear over vast expanses of water, whether lake or ocean. Not happening.

Meanwhile, large land-based collection sites will have costs attached -- where they are permitted. I suppose we will one day have sun farms. Large expanses of land covered with solar collection devices. Better hope the solar panels don't disturb the habitat of the Gila Monsters found in the sunniest regions of the US.

Today Polar Bears were deemed an endangered specie, which is another way of saying it will get tougher and more expensive to drill for oil in Alaska as a result.

You should revisit the history of oil. Read a few chapters out of The Prize, by Daniel Yergin of Cambridge Energy Research Associates. He's the authority on oil.

Long story short, John D Rockefeller was close to bankruptcy when Henry Ford began mass manufacturing of cars and saved Standard Oil.

Rockefeller's rescue was a demonstration of Say's Law -- which says supply will create its own demand. Ford saw that oil was cheap and he built a contraption to use it. Neither Ford nor Rockefeller were subsidized by the government.

However, even at today's high oil prices, there is still no alternative that is less expensive. I wish there were. But there isn't. However, you seem to want to increase the price of oil artificially, while simultaneously decreasing the price of alternatives through other gimmickry.

As everyone seems to know, the oil will eventually run out. Hence, we have no choice about finding alternatives. But you can be sure that opponents of nuclear power will stand firmly against it even as lights start to go out around the country.

You've got to let go of your totalitarian streak aimed at forcing people to give up oil. We already know Nature is giving us no choice about this. Change will come -- eventually, when it's necessary.

no_slappz said...

johj j, here's some facts and figures for you to ponder:

In 2007 First Solar generated revenue of $504 million. Its net income was $158 million. That's a 31% AFTER-TAX profit margin.

Exxon, meanwhile, generated revenue of about $404 billion and net income of $40 billion. That's an after-tax profit margin of about 10%.

Moreover, out of that $404 billion, Exxon paid various forms of taxes totaling $106 billion.

In other words, through MASSIVE tax-payer subsidies First Solar in extraordinarily profitable.

Do you have expectations or beliefs that First Solar and other solar energy companies will willingly stand by and allow their profit margins to decline?

Or do you think the solar companies will do everything possible to maintain these eye-popping returns?

John J. said...

"Do you have expectations or beliefs that First Solar and other solar energy companies will willingly stand by and allow their profit margins to decline?" That's a straw man. The cost to produce will go down, so cost to purchase will go down. This is basic market economics.

no_slappz said...

john j, you wrote:

"That's a straw man. The cost to produce will go down, so cost to purchase will go down. This is basic market economics."

You need to revisit your economics. This isn't an issue of "costs" going down. As I showed, First Solar has an extraordinary profit margin EVEN though it would lose a bundle without huge subsidies.

Let's assume costs go down. Then the subsidy would decline. But as long as competing energy sources -- oil -- are still a significant part of our energy supplies, the price of each form of energy will stay about even.

Thus, rising oil prices will lead to rising solar energy prices. This isn't computer land. This is energy, and the price of energy does not drop in the way you think.