Six Energy Myths

There's a very interesting article at the always interesting site, Pragmatic Capital, run by Cullen Roche. It talks about some energy myths that are part of the conventional wisdom. Follow this link for more detail. Here are the highlights.

• US crude oil comes from the Middle East/Persian Gulf.

It doesn't; at least not most of it. As I commented on before, Canada is our largest foreign supplier of oil with Mexico at number two.

• The US domestic energy production continues to dwindle.

It was but it's not dwindling now. Production is ramping up and quickly with the oil shale finds in the Bakken (North Dakota) and Marsellus (Ohio, Pennsylvania, New York) fields. I've seen predictions that we'll be the largest producer of oil in the world before 2020.

• If the US produced more of its energy requirements, the price at the pump would be lower.

This is wrong on its face. As a commodity traded in a world-wide market, the price of oil is based on world markets. The recent tussle over the Keystone pipeline is a good example of this irony. Proponents of Keystone often claim that we'll get cheaper oil if we ship it from a direct neighbor like Canada. Perhaps, but shortening the supply line won't make a difference you'll feel at the pump. What will make the difference is encouraging Canada to pump and sell all they can get their hands on. 

• US energy needs are constantly growing.

Also not true: at least not as a percentage of GDP. The linked article has more detail.

• The US is not an energy exporter because it has no excess energy to export.

True at the macro level, but misleading. Starting this year we are a net exporter of refined products like gasoline and jet fuel. We make it more cost efficiently than others so they buy it from us.

• World’s oil production has already peaked and as the reserves dwindle, more wars will be fought over the scarce energy resources.

Absolutely not true but I'll leave it to the article's author to explain it.

 Enjoy the read. And, by the way, Happy New Year 2012!

Orwell and Havel

I am a huge fan of George Orwell. My favorite book of his is Homage to Catalonia which is his memoir of his participation in the Spanish Civil War. It seems that the recently departed Vaclav Havel (leader of and the best thing to come out of the post-Communist Czechoslovakia) is also a big fan of George. Orwell wrote of the potentiality of totalitarianism. Havel lived in it. Today, I picked up this quote from Havel, which could have come straight from Orwell.

The post-totalitarian system touches people at every step, but it does so with its ideological gloves on. This is why life in the system is so thoroughly permeated with hypocrisy and lies: government by bureaucracy is called popular government; the working class is enslaved in the name of the working class; the complete degradation of the individual is presented as his ultimate liberation; depriving people of information is called making it available; the use of power to manipulate is called the public control of power, and the arbitrary abuse of power is called observing the legal code; the repression of culture is called its development; the expansion of imperial influence is presented as support for the oppressed; the lack of free expression becomes the highest form of freedom; farcical elections become the highest form of democracy; banning independent thought becomes the most scientific of world views; military occupation becomes fraternal assistance. Because the regime is captive to its own lies, it must falsify everything. It falsifies the past. It falsifies the present, and it falsifies the future. It falsifies statistics. It pretends not to possess an omnipotent and unprincipled police apparatus. It pretends to respect human rights. It pretends to persecute no one. It pretends to fear nothing. It pretends to pretend nothing.

 Ladies and gents: This is as good an example of clear thinking as you'll ever see.

A Maze of Keystones

The Keystone pipeline project is under considerable and strenuous debate in the United States today. You can find much more interesting commentary on it than you'll get from me. But here is a very interesting graphic.

In a recent CNBC appearance, the famous (or infamous) oil man T. Boone Pickens made the comment that there are five pipelines running through his own ranch in Texas. Pipelines are a long-running fact of life. One more won't hurt. 

Another Ugly Truth

The United States has vast (and I mean vast) energy reserves in coal, gas, and (yes) oil. We are now a net exporter of refined oil products. By 2017, we may be an exporter of oil (if we let development happen). Now, it's becoming undeniable that we have enormous amounts of energy waiting to be used for the prosperity of my children and grandchildren. Check out the details at this link.