Goodbye ANWR, Hello Nukes

The American Enterprise Online ^ | 3/6/05 | William Tucker

[Valin]

I hope environmentalists have learned a lesson from the Alaska National Wildlife Refuge vote.

ANWR held up President George Bush's energy bill for three years. Conservatives claimed--correctly--that drilling wouldn't have the slightest impact on the 19-million-acre wilderness. As supporters have been pointing out for almost a decade, the entire drilling operation would occupy only 2,000 acres, about the size of Dulles Airport.

But Democrats hung on anyway, calling ANWR the "crown jewels of America" and conjuring images of grimy oil derricks fouling pristine nature.

Then, suddenly, drilling in the ANWR passed the Senate last month. Sure there was the usual parliamentary maneuvering but very little public protest from environmentalists.

What happened? The answer is printed right on your gas pump. Gas is now far north of $2 a gallon, and oil is $57 a barrel. Last Thursday Goldman Sachs spooked Wall Street by predicting oil prices of more than $105 a barrel within the next few years. The market dropped 100 points in one day on the news.

In a word, economic reality suddenly intruded. No environmentalist is going to chain themselves to the gates of ANWR when it costs $40 to fill your tank. Pillorying "Big Oil" is one thing. Confronting an angry public is another.

Environmentalists better get used to this. Some of their long-standing predictions on fossil fuel shortages are coming true. Unfortunately, they have become their own worst enemies in meeting them.

As I outlined in the January/February issue of The American Enterprise, we may be seeing the leveling off of world oil production. Global oil discoveries peaked in 1960. Global reserves peaked in 1988 and production outside the Middle East peaked in 1997. The only thing that is keeping us going is the vast reserves of oil beneath the Persian Gulf.

That doesn't mean we're "running out of oil." But with China now the world's second largest importer (behind us), demand is starting to pull away from supply. The same thing happened in 1970 when our domestic product reached "Hubbert's Peak"--named after the Shell oil geologist who predicted it in 1956. Domestic consumption began to outstrip domestic production. We solved the problem by turning to imports. You know what happened next. When world production hits its own "Hubbert's Peak"--and we may be on top of it right now--we won't have anywhere to turn, unless we start importing from another planet. What we're running out of is cheap oil.

Such shifts have occurred throughout history. We turned to kerosene lanterns after 1860 because whale oil was getting scarce. When oil supplies thin out, we may get a boost from natural gas. But natural gas supplies are also limited, which means we must eventually turn to running our cars on electricity or hydrogen generated from electricity.

In either case, that means generating electricity from coal or nuclear power. The rest of the world is opting for nuclear. We're still playing around with coal. In just a few years, we're going to face a very important turn in the road.

Environmentalists got on the wrong track in the 1970s. Up to that point, they had supported nuclear power. The Sierra Club was one of the biggest boosters. Then, a few radicals started to have second thoughts. Paul Ehrlich objected to nuclear precisely because it promised large, clean sources of energy. He feared that would lead to more consumption and population growth.

But the anti-nuclear movement didn't hit its stride until the emergence of Amory Lovins in a 1975 article in Foreign Affairs. Lovins preached that not only was nuclear power the essence of evil; the world could do without it as well. In his book Soft Energy Paths--which influenced Jimmy Carter-- Lovins argued against centralized electricity. The grid was inefficient, he said, and could be phased out through a two-pronged strategy: 1) heroic efforts at energy conservation and 2) a gradual switch to the "soft path"--solar collectors, backyard windmills, industrial "co-generation" facilities (steam and small amounts of electricity), "biofuels" (corn-into-ethanol), plus miniature hydroelectric dams. The thesis had quite a bit in common with Mao Tse-Tung's vision that China could replace its steel mills with backyard forges.

Lovins turned out to be right about the possibilities of energy conservation, which has obscured the woeful romanticism of the soft path. California took it seriously under Governor Jerry Brown. From 1980 to 2000, the Golden State did not commission a single central generating station. Instead it built co-generation--the last major contribution being a 158-megawatt plant from Campbell Soups. To that, it added windmills, geothermal plants, and mandated energy conservation. By 2000 California had the lowest per capita electrical consumption in the country, the nation's largest fleet of methane-from-garbage facilities (one megawatt apiece)--and, of course, the nation's first "electricity shortage." When confronted with the consequences of California's "soft path," Lovins argued that it hadn't worked because other Western states hadn't followed it along with California.

California's failure hasn't affected Lovins' reputation a bit. In fact his influence grows every day. Last August, Fortune magazine ran a cover story entitled, "How to Kick the Oil Habit." Incredibly, the 5,000-world article did not once mention nuclear power. Instead, it dutifully laid out his thesis of biofuels, conservation, windmills, and solar energy--all of it giving due credit to Lovins.

Then in September, Lovins' Rocky Mountain Institute published Winning the Oil Endgame, a 332-page, $40 encyclopedia making the same arguments in encyclopedic detail. What's so exciting about that? Well, the whole project was sponsored by the Pentagon! It won an endorsement from Robert McFarlane, President Reagan's one-time security advisor, and George Schultz wrote the introduction. When the editors of Fortune, a former secretary of state, and the entire Defense Department have been bamboozled into believing we don't need nuclear power, we're in serious trouble.

All of this will be quickly overtaken by events. On Saturday, the New York Times ran a remarkable story of how Prius owners are starting to hack their gas-electric hybrids so they can plug them into the grid. Toyota had quietly removed this accessory on the American version, because it didn't want buyers to think they had to recharge every night. But with gas selling at $2.20 a gallon, buyers want to recharge their cars.

So what's the problem? Well, environmentalists are already tearing their hair: "We don't want to substitute addiction to one polluting fuel for addiction to a more polluting fuel," complains Dan Becker, head of the Sierra Club's global warming and energy program. "Coal is more polluting than gasoline, and nearly 60 percent of U.S. electricity is generated by burning coal."

And there you have it. When push comes to shove, windmills and solar collectors will all be swept off the board, and all we'll have left is the opposing black and white queens--coal versus nuclear. As I pointed out in my TAE article, the only realistic scenario for "kicking the oil habit" is to power America's auto fleet with a combination of electricity and hydrogen-from-electricity. The only environmentally benign way to produce this electricity--twice what we consume now--will be nuclear power.

The question is this: Will we experience the whole transition as another "energy crisis?" Or will we start now making a smooth transition to a nuclear-hydrogen economy?

Contributing writer William Tucker is the author of "Right Idea," a weekly column for TAEmag.com.

[biblewonk]

Ofcourse I do but that wasn't the discussion. Only the possibility.

[delacoert]

Only the possibility.

Like I said - dream world.

[biblewonk]

Economically viable for about another 2 cents per kwhr retail.

[jrawk]

And which of these can be produced for the going rate of $50 a barrel?

I believe the article pointed out a distinction in saying Cheap Oil. Middle East Oil is cheap because it pumps itself. Expenses low enough you can profit at the $30 level where even running a pumpjack in texas puts you in a losing proposition.

Sure we can rely on all those sources, but we won't be buying our oil at prices less than what they are today.

-- lates
-- jrawk

[delacoert]

Nice number.

Because of the cost involved in dealing with the technical difficulties of building, servicing and transmitting the power from windmill farms, the cost per kW-hr is potentially 2 to 3.5 times the cost from fossil-fuel/nuclear plants.

[No.6]

Why is everyone, whether here or among the massmedia, so convinced it has to be one thing and not the other.

Why no nukes but yes windmills, or yes nukes and no windmills?

Why not yes to nukes and yes to windmills and yes to biodiesel and everything else that works?

A single-pronged approach to energy is why we're at the point where we have to have this discussion in the first place. Attack from all angles and we'll be OK.

I even like the idea of local generation, not as a replacement for big energy plants, but as a supplement. I don't see anything wrong with redundant supplies of energy, and several things right (such as not being entirely vulnerable in the event some terrorist strikes a big energy plant).

[delacoert]

I agree with you.

[Eric in the Ozarks]

Another reason new refineries are not being built is the threat that existing refineries bring to the marketplace as they grow larger, even if they're in another state.
When Pennsoil wanted to build a new plant in Arizona, Chevron made it clear that they believed this state was their property, via pipeline from California. In so many words, they promised to sell their Arizona bbls at just below Pennsoils' breakeven cost and this put a huge question mark in the economics of the project.

[JustAnAmerican]

Well now I am confused. After doing quite a bit of research, after hearing a few things on the local radio station this morning, I found the following.

Oil from Alaska flows through the Alaskan pipeline to Valdez port. It then leaves from Valdez to ports in California(for refinement). From here I understand that the bulk(That which is not used locally) is shipped overseas.

The reason for this is that (mostly due to environ wackos or maybe terrain), California has absolutely zero pipelines that connect to the Main Pipeline network in this country.

So as far as the Oil companies are concerned it is cost prohibitive to ship any product out of California to other states using over the road haulers or shipping through the Panama Canal to link up with the main network of US pipelines. What about my knowledge is lackinig here?

[Eric in the Ozarks]

With the exception of California pipelines into Arizona, you are correct.

[JustAnAmerican]

"With the exception of California pipelines into Arizona, you are correct."

Thanks, sure wish the energy department would update their info once in a while.

Energy Info

[thackney]

all of the oil in the Alaska Pipeline is sold to users outside the United States

Not true, nearly ALL the Alaskan Oil is sold to the US. Very little, but a little of Alaskan oil is exported out of the US. ~5.5%

CRS Report for Congress, Alaska Oil Exports

Protests against Alaska oil exports

www.ANWR.org Flyer on Exports

[thackney]

The reason for this is that (mostly due to environ wackos or maybe terrain), California has absolutely zero pipelines that connect to the Main Pipeline network in this country.

The primary method of movement of petroleum products to local distribution terminal in the state is through pipelines, the majority of which are owned by the Santa Fe Pacific Pipeline Company.

Northern and Southern California are not connected by any petroleum product pipeline. Product movement between the two regions is accomplished through the use of marine vessels and tanker trucks.

San Diego County receives about 92 percent of its gasoline from a pipeline that runs from the Los Angeles refining center to distribution terminals located in Mission Valley and San Diego Harbor. The rest of the gasoline (about 8 percent) is delivered to the area by tanker trucks.

There are no refineries located in San Diego County.

The shipping cost by pipeline from the Los Angeles refineries to the San Diego terminals is about 1 cent more per gallon than the cost to ship to the Los Angeles area terminals from the same refineries.

Shipping gasoline to the San Diego region by tanker truck costs from 2 to 4 cents per gallon. (Noted prices out of date)

[shield]

Yep...President Bush said we'd come to these gas prices without his energy policy being passed....and here we are folks.

[Dog Gone]

Some of the by-products of the refining process (primarily petroluem coke) from Alaskan crude are exported overseas. But we're using the gasoline from the refining process right here in the USA.