BLOG.ENERGYECONOMYONLINE.COM

As Economic Growth Fails, How Do We Live? Part III

2011-12-31T00:33:52Z

In With The New
Part III of As Economic Growth Fails, How Do We Live?

Image Credit: Dilmen (cropped) Wikimedia Commons

by Craig A. Severance
December 30, 2011

We need a map for uncharted territory as we enter this New Year, as the realization is dawning we are dealing with an economic crisis of an entirely different character than ever before. Our industrial civilization is reaching limits to growth, and we don't know how to live with that.

Part I of this series of three articles addressed the four major challenges we now face, there dubbed "The Four Horsemen of the Economic Apocalypse": 1) Too Much Debt; 2) Resource Limits; 3) Destruction and Decay of Infrastructure; and 4) Greed.  Bottom line: this crisis is much deeper and more permanent than we've been led us to believe. "Recovery" to former patterns of growth simply won't happen. We must now adapt to new realities, as individuals and as a society.

Part II of this series, "Out With The Old", discussed the end of seven "Dead End" unsustainable practices that will falter and decline.  We won't pay our unpayable debts or keep impossible promises. We can't keep importing more than we export and borrowing the difference. Our Empire will shrink back. Our use of fossil fuels will decline as we experience Peak Oil and Peak Coal . We must cure Sick Care. We will repeal laws that mandate opulence and forbid prosperity. Finally, we will "drop the shopping" for worthless junk and refocus on the best of what it means to be human.

In With The New: Seven New Ways of Living That Will Work. In this third and final article in this series, we will discuss seven new ways of living which we can adopt as economic growth fails. They are not revolutionary (revolutions never achieve their utopian visions because of something called "human nature"). Rather, they may allow us to "muddle through" the best we can right now with what we already know how to do.

We will do these things because they will work -- and we certainly need to stop doing things that don't work, and find new ways that will work:

Click here to read entire article.

As Economic Growth Fails How Do We Live? Part II

2011-12-23T04:43:06Z

As Economic Growth Fails, How Do We Live?
Part II: Out With The Old

Image: Wikimedia Commons (PD)

by Craig Severance
December 22, 2011

There is a growing consensus the world economy is in a lot more trouble than politicians and media talking heads are letting on. The four major headwinds to growth were covered in Part I of these three articles, and there dubbed "The Four Horsemen of the Economic Apocalype":

1. Too Much Debt
2.  Resource Limits
3.  Destruction and Decay of Infrastructure
4. Greed

That article was a brief summary of the extreme challenges we now face. These next two articles are an attempt to move beyond this understanding of what has gone wrong, to develop a sense of what we can do now, as individuals and as a society.

We cannot "set things right" in the sense of restoring things to the way they once were, but we must begin now to adapt to the new realities if we are to reduce suffering and continue an advanced culture. Today's article, "Out With the Old", will discuss the end to seven unsustainable practices. In the next and final article in this series, "In With the New" will discuss new ways of living we can adopt as economic growth fails.

Out With The Old -- Seven Outcomes as Economic Growth Fails:

Before we allow our society to sink into a chaos of devastation and deprivation, there are many wasteful, or otherwise doomed, practices that will end. The "Out With the Old" list is not a proposed agenda for politicians to adopt. They are too committed to the existing order to voluntarily make these changes.  Rather, the end of these practices will come (and much of this is already happening) as pragmatic realities sink in. They are unsustainable Dead Ends, so they will not be sustained:

Click here to read entire article.

As Economic Growth Fails, How Do We Live? Part I

2011-12-16T03:29:45Z

Part I: The Four Horsemen of the Economic Apocalypse

by Craig A. Severance
December 15, 2011

As recently as a year ago it was considered heresy to suggest economic growth would not soon resume. Now, however, as The Big Engine That Couldn't has faltered for several years, it is becoming increasingly clear the economy is running off the tracks. Both investors and the public are beginning to realize the long-revered goal of endless economic growth is failing.

Anger and fear are widespread, as the livelihoods and hopes of ordinary Americans are being destroyed. Anger runs among the "99%" over economic injustices that favor the "1%".  Fear, however, may run among 100% over this question: How do we live when economic growth fails?

How Do We Live? These three articles will briefly lay out our current predicament, and discuss ways we can cope.  Today's post will cover four major reasons -- dubbed here "The Four Horsemen of the Economic Apocalypse" -- why nothing seems to work anymore.  In the second post, next week, "Out With the Old", will cover the inevitable end to seven unsustainable practices. The final post in this series, "In With the New", will discuss seven ways of living which we can embrace in a world with failing economic growth.

If we act purposefully now as individuals and as a society, we may help to avoid the most chaotic and destructive effects of collapse. First, we need to understand what has gone wrong -- which we will discuss in today's post.  The adaptations laid out in the next two posts represent ways we may find a "softer landing" -- but we cannot expect a return to what we came to believe was "normal".

Three Years to Get Back to 2007 Levels.   After the close of 2nd Quarter 2011, the U.S. Bureau of Economic Analysis published its official estimates of U.S. Real Gross Domestic Product (GDP). By the end of 2nd Quarter 2011 the U.S. economy was officially producing about the same as its end of 2007 peak -- in other words, essentially no overall economic growth for 3 1/2 years.

Image Source: Shadow Government Statistics

Less Per Person. Though the economy was no larger, U.S. population had increased, so as of the end of 2nd Qtr 2011 there was 3.5% less GDP to go around per person in the U.S. than at the end of 2007. (By comparison, there was a 35% increase per person in China over this same period.)

Heading Into Decline Again? Having just officially climbed back to 2007 GDP levels, it seems like a really bad dream the economy could once again start heading backwards. Yet that is exactly the prediction experts are now making. On November 7th, the Economic Cycle Research Institute, a group with a stellar record of predicting recessions, re-affirmed its recent call the U.S. economy is once again slipping into recession. So that no one would mistake what that means, in its September 30 press release, the group said bluntly, "Here's what ECRI's recession call really says: if you think this is a bad economy, you haven't seen anything yet." Also, on November 25th, Deutsche Bank revised it projections and is now warning of a "deeper" Eurozone recession.

Even Worse Than We're Being Told? As bad as the official numbers noted above may seem, the actual story is likely even worse.  John Williams of Shadow Government Statistics notes that government methods of counting inflation in prices have chosen to statistically ignore many price increases, and thus count a misleading share of observed sales as economic growth. Calculating the same way the government previously used to measure the inflation rate, SGS shows a much higher inflation rate that is more in keeping with everyone's experience of skyrocketing fuel and food costs, health premiums, etc. With distortions removed, SGS estimates the U.S. economy has actually been stagnant or shrinking for most of the last decade:

Source: ShadowStats.com

Why Nothing Seems to Work Anymore: The Four Horsemen of the Economic Apocalyse.   The news that a bad economy is now expected to get even worse is particularly crushing with so many still out of work, and after so much money has been spent.  Leaders debate austerity or stimulus, but common sense says something more must be happening.

The "Four Horsemen of the Economic Apocalypse" have been revealed by many astute observers. Researchers and analysts such as Chris Martenson ( "The Crash Course" video course, and book) and Richard Heinberg ("The End of Growth") have written extensively about the first three Horsemen. The original Tea Party movement (which began as anger over government bailouts of Wall Street), and the Occupy Wall Street movement have focused attention on the fourth Horseman. To know what lies ahead, we need to know what is wrong:

Click here to read entire article.

Everyone's Oil Depletion Allowance

2011-07-02T01:28:14Z

"Everyone's Oil Depletion Allowance" Makes Fuel Efficient Cars a Tax Free Profit Center

by Craig A. Severance
July 1, 2011

As a CPA, I was amazed the first time I encountered information on the Oil Depletion Allowance -- a special tax break for certain businesses with an interest in oil and gas operations. My amazement came because it is customary for Congress to grant tax write-offs when a taxpayer actually spends money on something real.   However, the Oil Depletion Allowance is often a straight 15% deduction off Gross Revenues -- without the need to spend a single dime.

The rest of us would love to have such a "standard" tax write-off with no need to actually spend money, but they are very rare.

"Everyone's Oil Depletion Allowance".   While not as generous as the tax breaks for the oil and gas industry, there is a "standard" tax write-off available to most businesses that, like the Oil Depletion Allowance, is not based upon the amount of money you actually spend.   This "standard" write-off is the Standard Mileage Rate -- which on July 1, 2011 the IRS increased from 51 cents, to a new rate of 55 1/2 cents for every mile driven for business.

The Standard Mileage Rate is based upon IRS calculations of what -- on average -- it costs to own and run a vehicle. Burning fuel, i.e. depleting the oil based resource in your tank, is a big part of that cost, which is why my nickname for the Standard Mileage Rate is "Everyone's Oil Depletion Allowance".

Opportunity for Small Business Owners With Fuel Efficient Vehicles. The other reason this nickname fits is that a business can use the full amount of this tax write-off without actually spending that much money. The Standard Mileage Rate is based on miles driven -- not how much it actually costs to drive those miles.

Because it is an average rate, small businesses with fuel efficient vehicles can use this as a perfectly legitimate way to claim a business deduction that is more than they actually had to spend. They just need to make sure they are eligible to use the Standard Mileage Rate per IRS rules, and keep good mileage records.

When Do You Really Need the Big Truck? Many businesses -- including many who do not now think they could use a lighter vehicle -- can benefit from this strategy. How often is a heavy truck really needed? Are you really going to haul a backhoe around on a bidding sales call or a quick trip to the hardware store?  If you really must have a heavy truck, limit its use to only the trips where it is really needed.

Opportunities for Employees. IRS currently limits the use of the Standard Mileage Rate essentially to small businesses, those with up to 4 vehicles in use, and does not permit its use for large fleets of vehicles such as those owned by big corporations. However, it is standard practice in many large and small corporations to reimburse employees (tax free) at the Standard Mileage Rate for using their own vehicles for the business.

The employee, therefore, can receive tax free income. If they are getting reimbursed 55 1/2 cents per mile for driving an efficient car on company business, they can get paid more than it costs them to drive that vehicle. This is a great way to be rewarded for driving a "Green" car.

I typically advise small corporation owners, who are employees, to use this "employee reimbursement" method for themselves as well rather than have their corporation own the vehicle. This is because Congress treats light-weight vehicles as "Luxury Automobiles" (go figure), with strict limits on write-offs that do not apply to heavy gas guzzler vehicles.  The Standard Mileage Rate employee reimbursement for use of a personally-owned vehicle is often thus the only way for a small corporation owner to be patriotic and save on imported oil.

Substantial Tax Free Profits.   Let's take a quick look at how well this can work, assuming a pretty typical business use of 18,000 business miles per year for an active business person. Reimbursed at the new 55 1/2 cents per mile Standard Mileage Rate, that's $9,990 per year of tax write-off if you are the business owner, or $9,990/year in reimbursement to you if you are the employee.

To drive a Toyota Prius 18,000 miles per year would only use about 360 gallons of gasoline. I know since I own one, and if you get less than 50 mpg you've got a "lead foot". At $4 per gallon that gasoline would only cost you $1,440 -- so you are still $8,550/year ahead of the game.

You still have to pay for the car. Let's say you expect the car to last 120,000 miles before it would be sold for an old Prius value of, say, $5,000. (Yeah, used fuel-efficient cars are worth more these days.) If you paid $25,000 for the car new, that's equivalent to burning through about 17 cents of the cost of the car for every mile you drive, or only about $3,000/year for the business miles portion driven each year. So you're still $5,550/year ahead of the game.

If you need to spend anywhere near $5,550/year to register, maintain, insure and repair a brand new car, there's something very wrong -- so it's clear that getting paid tax free 55 1/2 cents per mile to drive a Prius is a great deal. If you did this for five years and only cleared $2,000/year you would have tax free income of $10,000 over that period, for a nice down-payment on your next car.

Click here to read entire article.

A Practical, Affordable (and Safe) Clean Electric Energy Plan

2011-03-14T06:26:00Z

A Practical, Affordable (and Safe) Clean Electric Energy Plan

by Craig Severance
March 14, 2011

The President of the United States has chosen to make the goal of 80% clean electricity generation by 2035 the first priority in his move to make America more competitive. In his recent State of the Union Address, Barack Obama compared this project to the 1960's moon shot program, noting we are at another "Sputnik moment" where we must innovate or be left behind.

(Unexpected editorial note: In the midst of the current events surrounding the Japanese nuclear reactors, it will be helpful to know how we can devise a practical and affordable clean energy plan without new nuclear power. This article presents just such a plan -- not because of safety concerns, but because new nuclear power fails the "practical and affordable" test. -- CS)

Investment, or Runaway Spending? While many applauded the President's call for innovation and investment, "eyes were rolling" among many fiscal conservatives. The President's call for investment in the future was immediately labeled as simply a call for increased government spending. This is a critical concern when we are already running a $1.6 Trillion U.S. budget deficit.

In my article from one year ago  I noted the problems of both deficit spending and high unemployment were "paralyzing the nation's political life, as Americans are worried about both high unemployment and record deficits."   I wrote the solution to this conundrum is investment -- "to invest money now, into projects that when completed will help us individually and as a nation to save more".

The difference between investment and runaway spending is that investment pays for itself. One way it can pay for itself is to help us spend less. Another way it can pay for itself is to bring in more revenues -- more sales to other countries, and more job creation.

The Way to a Fail. A profligate "Clean Energy Plan" that invests in very expensive technologies will fail. Americans won't save -- we will be forced to pay more. Also, other countries won't be attracted to buy costly boondoggles -- we must have something to sell that makes sense.

Past forays of the government into supporting specific energy technologies -- such as corn ethanol -- give pause that government can prop up exactly the wrong "solutions".   Those with the best lobbyists and the most campaign contributions get the government gravy.

A Clean Energy Plan for the electric power industry is an even bigger prize and will have lobbyists all over it. If Democrats are not to be seen supporting high rollers, and Republicans are not to be RINO's (Republicans In Name Only) wasting taxpayer dollars, then a practical and affordable Clean Energy Plan must be devised.

Click here to read entire article.

Article originally published at www.EnergyEconomyOnline.com

Living Better in 'The Finite World'

2010-12-31T17:03:00Z

Living Better in 'The Finite World'
A Finite Sustenance is Challenge of Our Time

Earth Seen From Apollo 17: Wikimedia Commons

by Craig Severance
December 31, 2010

A lot of things we use every day are about to get much less affordable.

That's the bottom line impact for the average family looking ahead at this next decade. This next ten years will be the time when serious world resource shortages begin to take hold, especially the expected Peak of world oil production.

Will we be able to grow jobs if we have no money left after filling our gas tanks?  Who will be hurt the most? Will our entire civilization experience a catastrophic Collapse when world oil and other critical supplies begin to decline?

Most importantly -- is there still hope we can actually live better?

The World is Not Just Us. Though Americans are still hurting, prices of essential supplies and fuels (deemed Commodities by traders) are now rising because of greater world demand.

World population is increasing, and people almost everywhere now live on a lot less than we do here. Exploding economies such as China and India have been growing at rates over 8% per year.

They need to use more, just to meet their basic needs.  No problem with that, except for this fact: there isn't "more".

The Finite World. We don't have the whole Universe to supply our needs. We live on this little round ball called the Earth, and it is finite. You can make your way around it in just a few hours in a space shuttle.

This little globe has been a really great kitchen cupboard to explore, but it seems we've just about opened all the drawers to all the pantries. Yet, more company keeps arriving and sitting down at the dinner table.

Graphs and charts (see links) can tell the story of depleting key minerals and especially the limits to production of our Master Resource, crude oil.

Common sense tells the story just as well. We don't live in an abstract world of infinite x and y axes. We live in a real, physical, world where there is only so much -- of anything.

Something Has to Give (and it is).  With more people clamoring to use the same resources, the Law of Supply & Demand is kicking in. Prices for basic resources -- oil, metals, grains, cotton -- are all rising, much faster than many people expected just a few months ago. Just this week, predictions were circulating of $5 per gallon gasoline soon in the U.S.

Data Source: Dec. 31, 2010 Current Interactive Charts

An Economist's Finite World.  Nobel winning economist Paul Krugman posted a tantalizing New York Times column this week entitled The Finite World. I say "tantalizing" because Krugman came very close to challenging the economic profession's central dogma -- the assumption of endless and infinite economic growth -- but in the end he backed away.
.
As more and more people in formerly poor nations are entering the global middle class, they’re beginning to drive cars and eat meat, placing growing pressure on world oil and food supplies.

And those supplies aren’t keeping pace. Conventional oil production has been flat for four years; in that sense, at least, peak oil has arrived. True, alternative sources, like oil from Canada’s tar sands, have continued to grow. But these alternative sources come at relatively high cost, both monetary and environmental ....

So what are the implications of the recent rise in commodity prices? It is, as I said, a sign that we’re living in a finite world, one in which resource constraints are becoming increasingly binding. This won’t bring an end to economic growth, let alone Mad Max style collapse. It will require that we gradually change the way we live, adapting our economy and our lifestyles to the reality of more expensive resources. (emphasis added)

Krugman then deflected from examining the full implications of The Finite World, and redirected to his main purpose.

It turns out the main point of Krugman's article was to argue that current increases in commodity prices "have no bearing, one way or another, on U.S. monetary policy."   Krugman has been a promoter of economic stimulus, and was merely using this piece to defend against attacks that rising world commodity prices are a sign the world is devaluing the U.S. dollar.

The Great Precipice.   Like a car careening in the dark, inches away from an unseen chasm, Krugman came right to the edge seemingly unknowing of the breach he almost vaulted.

If he had continued pondering the implications of The Finite World, he would have seen that economic growth may drop off a cliff when the economy's basic fuels and supplies become too scarce. How can you make and deliver more and more products, unless you have a ready supply of more raw materials and fuels?

Click here to read entire article.

Not Arks or Fortresses but Cities of Light

2010-12-24T11:47:00Z

Not Arks or Fortresses, But Cities of Light

Image: Wikimedia Commons

by Craig Severance
December 24, 2010

Over the last several months a clear shift in focus can be seen in the energy and climate community. After political leaders refused to adopt broad measures to prevent the coming energy, economic and climate cataclysms, many of those who fought valiantly for public actions are now visibly turning toward preparations for catastrophe.

Whereas the talk of the day just six months ago centered hopefully around when the U.S. Senate would adopt an energy and climate bill, now more often than not we are reading predictions of the Collapse of our industrial society.

The forces now converging are so immense as to be overwhelming. There is an emerging sense it is already too late to avoid major disruptions to our way of life from Peak Oil production.  Climate change seems to have reached a tipping point where the world climate is increasingly unstable. Added to these natural forces, the economic picture brings more bad news almost daily as debts mount with no hope of repayment.

With these type of forces in play, it is no wonder many feel it is more urgent now to learn how to grow one's own food, than to follow the latest statements from Congressional climate zombies.

Angst Over "Turning Inward".   Though there is a palpable sense of impending change, there is still confusion about how or even if families should be warned to prepare.

Are we just being selfish if we try to save ourselves and our loved ones? Do efforts to build personal and local resilience even have a chance, if the society at large does not join in?  Shouldn't we still be spending all our time pressuring Congress to pass national mandates?

Survival in Isolation Fruitless. Gail Tverberg, a long-time editor of The Oil Drum, notes in a recent interview at Transition Voice, “If I plant a garden and all my neighbors are starving, I’ll have to share it with them and it’s not going to go very far.”

Preparation for major changes must always start with one's own family. However, the model of the Ark -- where Noah and his family survived and left the rest of the population to drown -- is flawed. In Noah's Ark No Kind of Escape Plan Transition Voice Editor Erik Curren deflates the "Ark" fantasy:

But imagine if, in the hours as the water started to rise before the heavy laden Ark took float, that Noah’s neighbors finally realized he was not crazy, but was in fact the only guy who was prepared to survive disaster. Frightened mobs could have stormed the Ark to try to get aboard, wielding rope ladders with grappling hooks. Rich people could’ve sent archers to force Noah to let down the gangplank. Warlords of a neighboring tribe could’ve rushed in a catapult.

And even if none of them were able to board the ship, at least they could have put enough holes in the hull to ensure that the Ark would sink. For the doomed, sabotaging someone else’s escape plan can be a final desperate comfort.

Curren's debunking of the notion we can set up little "Arks" may leave some feeling they can solve the security problem with a Survivalist style Fortress -- essentially a well-armed Ark. However, I doubt many will have enough "Guns, Gold and Guts" to survive the inevitable trip away from the Fortress to obtain supplies.

Light in Darkness Only Model That Can Work. Knowing the Ark and Fortress ideas won't work is invaluable, as this revelation strips away the illusion of a "safe and secure" future isolated from what happens to the rest of your community.

What is left will not be safe, but instead requires courage and generosity.

We are left with the only model that can work: be a Light in the Darkness.

Click Here to read entire article.

______________________________________________________________

Can Energy Loans Bring Wonderful Life to Economy?

2010-11-25T07:28:00Z

Can Energy Loans Bring Wonderful Life to Economy?

Image: Wikmidea Commons

November 25, 2010
by Craig Severance

In Frank Capra's classic 1946 film It's A Wonderful Life, Jimmy Stewart as Building and Loan manager George Bailey discovers what the world would have been like if he had never existed.

Without George Bailey's heroic efforts to save the small lender that helped the middle class, Bailey's home town of Bedford Falls would have fallen into decay.  Bailey's guardian angel Clarence shows him the town, renamed "Pottersville", under the control of evil slumlord and big banker Henry Potter. The crushing effects of poverty have destroyed the lives of many closest to Bailey.

Poverty Now Spreading in America. Much as in the Pottersville scene from the movie, hopelessness and poverty are now spreading across America.   The most inclusive U.6 jobless rate is at 17%, the alternate measure calculated by Shadow Government Statistics shows there are 22.5% jobless, ominously close to the estimated Great Depression peak of 25% unemployment.  One in eight Americans are now on food stamps, the highest percentage since records began in 1969.   While Congress debates extending tax cuts for the wealthiest Americans, unemployment benefits will expire for millions who still have no hope of finding work.

Chart: John Williams Shadow Government Statistics

Most families and businesses are simply "Maxed Out" and at the limits of their budgets. To create jobs, Americans must spend money, but that money has to come from somewhere.

Projects That Pay For Themselves.   While American families and businesses may have little ability to spend more right now, the opportunity to spend less makes sense.

Energy saving and renewable energy projects can more than pay for themselves by cutting the energy expenditures of households and businesses.   Though they take up-front dollars to implement, a steady monthly stream of utility bill savings pays off the cost of the project.

An energy loan on good terms can convert the cost of the energy saving and renewable energy projects into a monthly payment that is less than the savings. The family budget improves from Day 1 of project completion.

Creating American Jobs.   While these projects pay for themselves with the same money people are already spending on utility bills, energy saving projects are not a "wash" for American job creation, for four reasons:

1. More money is spent now, on the project, than current year utility bills.
2. Energy saving and renewable industries are more labor intensive.
3. Many fuels are imported from other countries.
4. Most energy-saving products such as caulk & insulation are USA made.

The customer saves money, and the project creates jobs. If there was ever a definition of a "no-brainer" you've-got-to-do-this idea, this is the one.

We Need George Bailey.   All of the above makes sense, but if your credit rating is shot, or your home equity is gone, your chance of getting an energy loan is nil. Even if you qualify, you may not do it as you don't know how long you will live in the house.   If you are a renter, forget it completely.

To create American jobs doing these projects that pay for themselves, there are two proposals now afloat -- Federally Guaranteed Loans, and On-Bill Financing from utilities.

Click here to read entire article.

Climate Hope in a Prison of Despair

2010-08-04T06:08:00Z

Climate Hope in a Prison of Despair

Image: Holman, Despair of the Defenders of Jerusalem, Wikimedia

There is a Way Forward From Here

August 4, 2010
By Craig Severance

The U.S. Senate has rejected taking action on a significant climate or energy bill this year. Heads are hanging in despair, moans of anguish are rising, and arguments are breaking out about who is to blame.

Earth Not Waiting. While Washington has failed to act, the Earth is showing accelerating strains from our continued dumping of warming pollutants to the atmosphere.

The latest alarming news: the phytoplankton that produce 50% of all the Earth's oxygen and form the base of the ocean's entire food chain are now dying off.    World temperature records continue to be set monthly in this hottest of all years and hottest of decades on record.  Panicked scientists are frantically warning "the urgent need to act cannot be overstated".

When We See the Iceberg it Will Be Too Late. We are as passengers on the Titanic desperately trying to convince the Captain to change course. The iceberg isn't yet in sight, so few believe us.  When it finally looms into view and everyone rushes on deck with deer-in-the-headlight eyes, it will already be too late.

Is There Any Hope? Action must be taken now. If Congress will not act, is there any hope in this Prison of Despair?

Hope is here --- a light can still shine . . .

Image: Hope in a Prison of Despair, De Morgan (WikiMedia)

Here's how:

Click here to read full article.

What Will it Take to End Our Oil Addiction?

2010-05-29T20:12:00Z

What Will it Take to End Our Oil Addiction?

Deepwater Horizon Oil Spill                               Peak Oil Coming Sooner Than Expected

May 29, 2010
by Craig Severance

It's time we moved on to something else, or this is going to kill us.

Not only are world oil supplies running out, but what oil is still left is proving very dirty to obtain. We need to kick our oil addiction now if we expect to preserve any hopes of economic prosperity, or unspoiled habitats.

"This is What the End of the Oil Age Looks Like."  We have the Deepwater Horizon oil spill now precisely because the easy to obtain oil is already tapped. You don't drill in mile deep waters if you have somewhere else you could go.

The worst is yet to come. If we don't kick oil now, we will see more disasters as oil companies move to the Arctic offshore, clear more forests for tar sands, and rape the American West to develop oil shale. Worldwide droughts, floods and dead seas will also ensue from global warming caused from burning oil.

Richard Heinberg of Post Carbon Institute said it best: "This is what the end of the oil age looks like. The cheap, easy petroleum is gone; from now on, we will pay steadily more and more for what we put in our gas tanks—more not just in dollars, but in lives and health, in a failed foreign policy that spawns foreign wars and military occupations, and in the lost integrity of the biological systems that sustain life on this planet. The only solution is to do proactively, and sooner, what we will end up doing anyway as a result of resource depletion and economic, environmental, and military ruin: end our dependence on the stuff."

We Can Do That. I said in my recent Peak Oil article "The End of the World as We Know It" that we need to adapt to Peak Oil, but we can do that. This article explains how.

Click here to read full article.

It's The End of the World as We Know It

2010-05-14T22:33:00Z

Oil Production Peak Much Sooner Than Expected

May 14, 2010
by Craig Severance

A storm is quickly approaching, and the world is not ready for it.

The permanent end of the era of cheap oil is coming as soon as next year, according to a raft of official reports that have made their way into energy media over the last few months. Governments are now beginning to acknowledge the looming crisis. Yet, perhaps because they waited too long to prevent it, leaders are not yet alerting the public.

The entire world economy is built on cheap oil, A permanent oil production shortage will thus lead to The End of The World (As We Know It). What will come on the other side of this -- will it be good or bad?

Public Unaware. Except for a few stories in financial pages such as London's Financial Times, this earth-shaking news has yet to reach the Mainstream Media. While "Peak Oil" researchers have long warned of approaching oil shortages, the difference now is these dire warnings are being validated by the highest government and oil company officials. Yet, no political leader has had the courage to make a major announcement to prepare the public for what lies ahead.

Click here to read full article.

Colorado Shows How It's Done

2010-04-24T16:31:00Z

30% Renewables by 2020, Efficiency, and Phaseout of Coal Plants

Graphics: CO Climate Action Plan

April 24, 2010
by Craig Severance

As the U.S. Senate now prepares to consider a new climate bill, Congress can consider how readiily climate action can take hold, through the example of Colorado. This politically diverse state has aggressively embraced climate action as a way to grow its economy.

Bipartisan Support. Colorado's action plan is noteworthy because key elements of the plan have received strong bi-partisan support, in a "purple" Swing State that is neither dependably Democratic nor Republican. As an example, the latest measure adopted -- a bill to encourage conversion of older coal-fired power plants to cleaner natural gas -- was co-sponsored by the Republican Senate Minority Leader Sen. Josh Penry and several other Republicans, along with most Democrats and Democratic Governor Bill Ritter.

This strong support for climate action is remarkable, considering Colorado is one of the nation's most heavily coal-dependent states.

Coal Was King. As recently as 2005, Colorado relied upon coal to supply over two thirds of its electricity, making Colorado far more dependent on pollution-spewing coal than the nation as a whole, which averages around half of total electricity from coal. Coal has been cheap yet produces massive carbon dioxide emissions which cause global warming. The idea of a major coal-dependent state such as Colorado becoming a climate change leader was thus a daunting challenge.

Colorado is nevertheless now leading the way to achieve one of the highest reductions in carbon emissions anywhere in the world.  Colorado is on track to achieve a total 30% reduction by 2020 in CO₂ emissions from its electric power industry. This is far ahead of 17% reduction by 2020 greenhouse gas reduction goals set in Congressional climate legislation -- showing that even a "coal state" can far exceed those goals.

As the nation's 8th largest coal-producing state, Colorado could have chosen to resist climate change action like many other states with strong coal lobbies. However, led by Colorado's own citizens through a 2004 renewable power initiative, strong leadership by Governor Bill Ritter and bipartisan action by the Colorado legislature, Colorado is instead showing "how it's done" to the rest of the country and the world.

Click here to read full article.

World Has Much at Stake in Nuclear Power Decision

2010-03-07T12:06:08Z

Photo: View from site of Potsdam nuclear conference

March 7, 2010
by Craig severance

At a quiet lakeside retreat house in Potsdam, Germany, 35 people met this past week to discuss the future of nuclear power. Among us were representatives from governments, academia, think tanks, the nuclear power and utility industries, and independent writers and researchers.  We came to talk, and not necessarily to agree. Nevertheless, the discussions were brisk and a wealth of valuable information was shared. The Brookings Institution and the Global Public Policy Institute with support from the European Commission sponsored the conference, entitled "Towards a Nuclear Power Renaissance? Challenges for Global Energy Governance".    (The insights I share below are my own perspective. The conference followed rules where each of us is free to publish our own talk and perspectives but cannot report on what others said, so as to promote the free exchange of ideas.)

Potsdam Historically Significant. Potsdam seemed particularly appropriate for such an important conference. Though it is a relatively small community 24 km southwest of Berlin, it has served an important role in history. It was the home of the Prussian kings until 1918, a place where decisions could be made in an idyllic setting.   These same qualities attracted the Allies after WWII to meet in Potsdam to determine the future of Germany and postwar Europe. Today, it has become an important scientific and research center.

Nuclear Power Decisions Will Determine Much.  Though nuclear power may seem a limited issue -- related only to energy, and only one of several energy sources at that -- the decision whether to pursue nuclear power may prove to be the most important decision now before world leaders.    Consider the following:

Capital Needs. Expanding nuclear power requires enormous amounts of capital, For instance, some members of the U.S. Congress have said the U.S. should build 100 more new nuclear power plants. Yet, building 100 new nuclear power plants would require a capital investment of at least one trillion dollars, and this would still meet only only a fraction of U.S. energy requirements. In the throes of a world financial crisis, will economies have the resources to devote such enormous resources to just one industry? Where will the funds come from? Will other energy priorities such as energy efficiency, the Smart Grid, and expansion of renewables be eclipsed by nuclear power's needs? Even more broadly, is it ethical or wise to devote so much of an economy's total resources to just electricity production? For instance, do we really want the elderly who now struggle to pay $100/month electric bills to now have to find a way to pay $200/month? Or, would it be better to limit the share of resources devoted to electricity by helping electric customers cut their usage? Also, on the societal level, capital is limited. In many developed countries key needs such as roads and bridges, public water and sewer systems, basic scientific research and development, and schools are all falling into decay because of a lack of capital investment. In developing countries, these key infrastructures are not yet even in place.
Climate Change. Amory Lovins of the Rocky Mountain Institute has said for many years that the pursuit of nuclear power will make climate change worse -- because adopting it as a climate protection strategy simply won't work. It will be too expensive and too slow to get the job done. This would not be such a disaster (many things don't work) if nuclear power didn't take all the money away from doing the things that actually do work. Also, as Dr. Benjamin Sovacool of the Lee Kuan Yew School of Public Policy published here in 2008, nuclear power "is in no way carbon free or emissions free" even though it is better than coal, oil, or natural gas. Because of carbon emissions needed for uranium mining and milling, uranium enrichment etc., Dr. Sovacool concluded after reviewng 103 studies on the topic, that nuclear power produces significantly more emissions than renewable energy technologies. Putting most of your money into a technology that is more costly, slower, and less effective is a strategy for failure -- and climate change is an issue where the world cannot afford to fail.
Employment. Finding a solution to crippling unemployment is now an urgent matter for many countries. We cannot "stimulate" forever -- it is crucial that limited capital resources are invested most effectively. Investments in efficiency and renewables will create more jobs than investing in new nuclear power plants. The jobs created in new nuclear power are so highly technical there may not even be a trained nuclear work force available to fill those jobs. As reported by the World Nuclear Industry Status Report 2009, the nuclear industry is already facing critical shortages of the nuclear engineers needed to keep today's existing fleets of nuclear power plants operating safely, let alone having the added staff needed to expand. It is not nuclear engineers who are out of work -- there aren't even enough ot them -- but the construction workers we all know in our own families and communities. Jobs are needed in every community, not just a few concentrated locations where a massive new power plant may be built. Efficiency and distributed power sources spread more new jobs, to those who need them, in more places.
Economic Dependence . America, most of Europe except Russia, and in fact most countries of the world other than oil exporting nations are all suffering from a major drain on their economies due to the need to pay for imported energy. Nuclear power won't help most countries become energy independent, because only a handful of nations in the world possess significant uranium resources. Nuclear power is actually just another form of imported energy. Is it wise for a country to invest tens or hundreds of billions of dollars in new power plants that depend on fuel imports from often unstable countries, and countries within the former Soviet sphere of influence? Efficiency and renewables (and for some nations natural gas) utilize a country's own resources. Keeping dollars from leaving a country can create just as much economic activity as bringing new dollars in.
Military Security. America and the EU nations have invested major military resources to protect access to imported oil. Nuclear power does little or nothing to reduce oil dependence to lessen the need for the military resources devoted to oil. Far worse, however, is that nuclear power creates stark new military security threats of its own that may require investment of major military resources to keep terrorists and weapons-intent countries from building nuclear weapons. Nuclear power grew out of the nuclear weapons program, and the nuclear fuel cycle still produces the elements -- uranium and plutonium -- which can be used to make nuclear weapons or radioactive "dirty bombs". The nuclear industry argues that any nation or terrorist does not need a nuclear power plant to make a bomb, they just need uranium enrichment. This is true. However, the only "legitimate" reason to enrich uranium is to use it in a nuclear power plant. The continued promotion and sale worldwide of "civilian" nuclear reactors thus gives nations the excuse to operate uranium enrichment programs, as we have seen in Iran. In addition to this looming threat of new nuclear states, an even more frightening prospect is that weapons grade material will fall into the hands of terrorists. Terrorists are not deterred by Mutually Assured Destruction as are nuclear states. Some nations are separating out the plutonium from spent nuclear fuel and mixing it into new fuel, and also stockpiling huge quantities of plutonium. The unused fuel containing plutonium is shipped to nuclear plants, making it vulnerable to attack in transport. The large plutonium stockpiles may also be attacked with the purpose of either seizing the material for bomb making or contamination of populations with radiation. Western nuclear plants cannot explode with an atomic Hiroshima-style blast. However, the continued sale and use of nuclear power plants may allow those intent on creating such horrendous destruction to gain access to exactly the materials they need..

Nuclear Power Makes No Business Sense. The above problems are very serious in nature. To address them however may require some simple common sense. What is the purpose of nuclear power: simply to boil water to make kWh's. It is not the only way to make kWh''s. Thus, if nuclear power makes no business sense, and there are alternatives to nuclear power, the problems noted above can be avoided except for existing plants. We won't need to make things worse by builiding new nuclear power plants.

Click here to read entire article.

Job Losses Push Need for Energy Bill

2010-02-10T08:12:00Z

February 10, 2010
by Craig Severance

America's urgent need for new job creation may be the driver that pushes the Senate to pass a jobs & energy bill this year. After the loss of 8.4 million jobs in the current Great Recession, Congress is searching desperately for any means to create new jobs.

Unemployment vs. Deficit "Conundrum". As former Treasury Secretary Henry Paulson said Saturday on National Public Radio, "we as a nation save too little and we borrow too much, both individually and the government."   In Paulson's new book On the Brink, he argues that Americans' relative lack of savings helped to propel the financial crisis.

Paulson: "Conundrum"

However, Paulson acknowledged to NPR host Scott Simon, the "conundrum" is that to spur the economy, we now need to spend more and create more jobs. Paulson did not offer a solution to this impasse.

Indeed, this contradiction is now paralyzing the nation's political life, as Americans are worried about both high unemployment and record deficits. The Obama Administration and Congress are now walking a tightrope between these anxieties.

Investment as Solution. The solution to this jobs vs. savings conundrum is to invest money now, into projects that when completed will help us individually and as a nation to save more.

For instance, an investment now into energy efficient buildings would create desperately needed construction jobs, but pay for itself with increased energy savings.

Investments in an advanced electric grid using renewable energy will create the engine to power the economy, without skyrocketing fuel costs.

Investments to wean our cars and trucks off imported oil can stop the transfer of wealth of trillions of dollars from the U.S. economy that is now building the economies of oil exporting nations, many of them hostile. These dollars can instead remain in the U.S. to build our own economy.

Measures which spur investments that help us to save thus meet both the urgent need for more jobs and make structural changes to help America thrive through thrift.

Click here to read the full article.

Tax Policies to Help Climate Action, Create Jobs

2009-11-11T10:00:00Z

November 11, 2009
by Craig Severance, CPA

The Senate Finance Committee, Chaired by Senator Max Baucus (D-MT), held a Hearing Tuesday over the "future of jobs" in the context of the proposed energy and climate bill. The strange list of witnesses -- including polluter industries who hold few prospects for job creation in a new energy economy -- seemed to only distract the Committee from its primary responsibility, which is to use the powers under its jurisdiction to contribute real solutions.

Will Finance Committee Senators use the power of their Committee over Federal tax policy to actually do something about climate change, and America's 10.2% and climbing jobless rate?

Or, will the Committee be pushed to give more breaks to the very polluters who are causing the climate catastrophe?

Tax a Powerful Tool. The ability to tax -- or to give tax breaks -- is one of the most powerful tools of the Federal government. It is discouraging the tax committees of Congress-- Baucus' Senate Finance Committee and Rep. Charles Rangel's House Ways & Means Committee -- have done little to examine how the Federal Tax Code is actually encouraging energy waste. While other Committees have led the way on energy and climate legislation, the tax committees have been sitting on the sidelines for most of this year.

How could tax laws now help create jobs and curb climate catastrophe? ''

Building Industry in Crisis. We can start with the industry most seriously affected with job losses right now -- and which is also responsible for almost half of U.S. energy use: the building industry.

Source: Architecture 2030

Idea: Long Term Extension of Homebuyer Tax Credit -- Targeted for Energy Efficient Homes. The construction industry has led this recession, and is still suffering from over 20% unemployment. When the Stimulus Bill passed in February, a separate bill for the housing sector was promised -- yet never materialized.

Click here to read entire article.

San Antonio: New Economy Leader or Nuclear Guinea Pig?

2009-09-20T05:47:00Z

Photo: Mural at Construction site in beautiful downtown San Antonio, TX

September 19, 2009
by Craig Severance

SAN ANTONIO, TX -- San Antonio's new Mayor Julian Castro, in office just three months, has inherited a dilemma. The nation's 7th largest city is suffering from almost 8% unemployment. With limited resources, the Mayor and City Council are searching for ways to create local jobs. At the same time, the City, through its municipal utility City Public Service (CPS), is burning through hundreds of millions of dollars on just paperwork, to prepare to spend billions on a new nuclear power plant project some 200 miles away at Bay City, TX.

Should the Mayor and the City Council question the wisdom of rushing ahead with the nuclear project, or approve CPS continuing to spend hundreds of thousands of dollars a day to prepare applications for CPS to buy a 40% share of two new reactors proposed for the South Texas Project? CPS says the two new reactors, to be co-owned with NRG Inc., would help the utility meet power demands projected for 2020 and beyond -- over 10 years away.

$400 Million Bond Issue. The issue comes to a head next month, when the City Council must approve or disapprove CPS issuing $400 million in bonds to continue its spending on the project. The monies will not be used to actually begin construction --- that would be years away -- but to prepare the enormously complex engineering, design, and environmental applications required for a new nuclear power project.

Local citizen groups, however, say a far better use of such monies would be to help CPS fund aggressive energy conservation, Smart Grid, and solar energy programs to help citizens cut utility bills.  Such programs would immediately create local jobs -- and cut electric growth so the nuclear projects would not be needed.

"First in U.S." CPS and NRG, Inc. are rushing the proposal, as they say the South Texas Project expansion will be the first new nuclear plants to be built in the U.S. in over 30 years. They hope to be first in line to receive Federal Nuclear Loan Guarantees under an $18.5 Billion program authorized by Congress.

Many San Antonions question the wisdom of rushing to be the guinea pig for the nuclear industry, which has a history of massive cost overruns.   They challenge whether it is even a good idea to be first.  Why not let someone else find out whether the nuclear industry has learned how to build plants on-budget?

Nuclear Debate Held Wednesday, September 16th. With so much at stake, San Antonio civic leaders have taken extraordinary measures to open up the process to public scrutiny. The San Antonio News Express , led by Editor Robert Rivard, has for months run articles on the nuclear proposal. Open meetings have been sponsored by the utility in many neighborhoods.

As a peak event in this public discussion, The San Antonio Clean Technology Forum, led by civic leader Michael Burke, organized a sold-out luncheon debate this past Wednesday, attended by 400 of San Antonio's leading citizens. Tables were sold to major companies and organizations, and all news media were invited.

The Clean Technology Forum invited myself and Dr. Arjun Makhijani, President of the Institute for Energy and Environmental Research, to debate the wisdom of the new nuclear project.    Supporting the project were Steve Bartley, CPS Interim General Manager, and Patrick Moore, who is a paid spokesperson for the nuclear power industry. Mayor Julian Castro keynoted the event, which was gracefully moderated by Bob Rivard, Express-News Editor.

View the Actual Debate. The video of the full debate can be viewed here:

Click HERE to go to TexasVox site with Videos of Debate.

I encourage readers to view the full debate to hear the exchange for themselves, as it was quite lively. Each speaker had only 12 minutes, followed by audience Q&A and a 2 minute close, so it's not too long.

Click here to read entire article.

Enabling Wind, Sun to Be Our Main Power Supplies

2009-08-30T05:58:00Z

Quest for Storage -- "Holy Grail" of New Energy Economy -- Nears Goal


August 29, 2009
By Craig Severance

As the world meets this December to set plans to halt global warming, it is expected America and other industrial nations will commit to a daunting task: reduce CO2 emissions 80% by 2050. In just 40 years, a complete revolution in how we use and supply our power must happen, or the world will face catastrophic effects of runaway climate changes.

As a new power plant typically lasts 40-50 years, many scientists are now arguing we must simply stop building new power systems that use significant amounts of fossil fuels. They argue we must move to a high reliance on the wind and the sun for our electricity.

Abundant Power. The U.S. has enormous wind resources, capable of generating over 20% of U.S. electricity from wind by 2030, according to the U.S. Department of Energy.

The sunlight falling on our deserts, parking lots, and rooftops has even more power -- enough to supply 69% of U.S. electricity by 2050 according to published studies.

Other renewable power sources -- such as geothermal energy, municipal waste-to-energy, and biomass -- will also play a role, but they pale in size compared to the gargantuan resources of wind and sunlight.

How We Use Energy vs. How Nature Provides. Though nature provides all the energy we may need, there is a problem. We demand power literally "at the flick of a switch", not just when the wind is blowing or the sun is shining.

This basic fact about how we use power versus how nature supplies clean energy has caused many to discount the idea that wind or solar power can ever supply more than a small fraction of our electricity. Critics of renewable electricity call it "intermittent" and "unreliable". They say we can't "catch the wind", nor can we command the sun to always shine.

These critics see two possible choices for the future. We can develop more stable supplies of renewable energy by coupling wind and solar projects with storage.  Failing that, they argue we should give up on renewables as a primary source of electricity, and instead build more nuclear power.

The flaw in the nuclear path, beyond its tremendous cost, long lead times, and imported fuel, is that nuclear is not actually "dispatchable" power. Nuclear plants are designed to run all the time at fairly steady output -- meaning nuclear power cannot provide the "peaking power" now provided by gas turbines. Thus, a nuclear path would still rely heavily on fossil fuel power plants to "ramp up" on a daily basis to provide the power needed during these daily swings.

A truly dispatchable system providing over 80% reductions in carbon emissions, therefore, must rely on some form of energy storage. The energy storage can allow us to fully utilize wind and sunlight as our main power sources -- supplying both "base load" power and dispatchable daily peaking power with energy from these inexhaustible supplies.

Click here to read entire article.