Recently in North America Category

The last decade has seen a sustained campaign by the hydraulic fracturing ('fracking") industry against its critics, as the fracking industry in the U.S. alone was worth an estimated $76 billion in 2010 and is projected to grow to $231 billion in 2036 if only those pesky environmentalists can be sidelined. According to Washington's energy Information Administration, production of shale gas in the United States in 2010 totalled 4.87 trillion cubic feet (tcf) compared with 0.39 tcf only a decade earlier.

The combination of horizontal drilling and hydraulic fracturing has already transformed North America's natural gas market in less than half a decade. In 2000 shale gas was 1 percent of America's gas supplies; today it is 25 percent. While U.S. energy companies began fracking for gas in the late 1990s, there was a dramatic increase in 2005 after the administration of President George W. Bush exempted fracking from regulations under the U.S. Clean Water Act. According to Washington's energy Information Agency, shale gas production has grown 48 percent annually.

But there still some snakes to be chased from the industry's campaign to convince the electorate that natgas produced by fracking is safe, as on 8 December the Environmental Protection Agency said for the first time it found chemicals used in fracking in a drinking-water aquifer in west-central Wyoming.

Soothing the electorate, the industry group Energy in Depth reported, "The history of fracturing technology's safe use in America extends all the way back to the Truman administration, with more than 1.2 million wells completed via the process since 1947."

And the feds are backing fracking as well, as a new estimate from the U.S. Department of Energy, estimates that the national gas resource can be sustained for 110 years at current consumption rates.

Numbers?

In 2009 an industry-financed study reported that 622,000 people are directly involved in the discovery, extraction and distribution of U.S. natural gas.

As for "insider" influence, in 2005 former Vice President Dick Cheney, in partnership with the energy industry and drilling companies such as his former employer, Halliburton Corp., successfully pressured Congress to exempt fracking from the Safe Drinking Water Act, the Clean Air Act and other environmental laws.

Even worse, a report released the following month by the U.S. National Center for Atmospheric Research noted that switching from coal to natural gas as an energy source could result in increased global warming, mainly due to the methane leakage problem, which is common but unregulated.

In a further potential federal sandbagging of the natgas industry, the federal Environmental Protection Agency, which studied fracking and deemed it safe in 2004, is taking another, broader look at the practice and may end up taking a more active role, with a broader study expected to be finished next year.

Maalox moments all - but now fracking is being charged with contributing to global warming by releasing substantial amounts of methane, a greenhouse gas 20-100 times more potent than carbon dioxide. According to Igor Semiletov of the International Arctic Research Centre at the University of Alaska Fairbanks, "Each methane molecule is about 70 times more potent in terms of trapping heat than a molecule of carbon dioxide."

Any American watching cable TV over the past few months can hardly fail to have noticed the seemingly ubiquitous advertisements extolling the virtues of extracting oil from Canadian oil sands, which the commentators assure their audience has a carbon footprint largely comparable with traditional fossil fuels, and which, if developed will provide not only millions of new jobs but billions of dollars for governments as well as energy security by weaning the Western Hemisphere off its addiction to terrorism-tainted Middle East oil.

But don't break out your checkbook just yet.

Apparently those pesky Eurocrats in Brussels haven't gotten the message, as on 4 October the European Commission proposed that oil sands crude be ranked as a dirtier source of fuel compared with oil from conventional wells.

The move has unsettled Ottawa, as all of the world's oil sands reserves are in northern Alberta and Saskatchewan. While Canada does not currently ship any of its oil sands production to Europe, the Canadian energy industry is alarmed that Europe's green anti-oil-sands policy could influence other global areas, such as Asia, where Canada hopes to develop a market for its oil sands crude exports.

Canadian Association of Petroleum Producers vice-president of oil sands and markets Greg Stringham said, "The concern for us is one of principle and precedent. The importance of it in the EU for us is that it could set a precedent on which others then build their policies," adding that the EU is playing favorites, as it imports oil from Nigeria and Russia, whose energy products have similar greenhouse gas emissions as oil sands.

The European Commission's decision came after lengthy internal debate, but the body ended up recommending that oil sands-derived fuel be given a greenhouse gas rating of 107 grams per megajoule, roughly 20 per cent higher than the 87.5 grams assigned to fuel from conventional crude oil. A bill containing a fuel-quality directive (FQD) targeting oil sands imports is due to be presented to the European Parliament for a vote later this year.

It's a largely symbolic gesture, as according to Canada's National Energy Board, 98.5 percent of Canada's first quarter 2011 oil sands exports went to the United States.

But it's the principle of the thing, and Ottawa is now threatening to retaliate in the area of Canadian-EU bilateral trade, a not insignificant concern, as last year the EU imported about $26.8 billion of Canadian goods, while Canada took roughly $35.6 billion of EU imports.

Suspected Mexican drug traffickers from the Zetas drug cartel on 20 September drove two trucks to a main avenue in the Mexican Gulf coast city of Boca del Rio in Veracruz state and dumped 35 corpses during rush hour while gunmen stood guard, menacing frightened motorists with automatic weapons.

So, why is this being written about here?

Well, if for no other reason, Mexico's drug cartels have declared a de facto war with the government for control of the country's northern provinces for exports routes into the United States.

Meanwhile, Washington, fixated on the decade-old war on terror, the Middle East and stopping Palestine's incipient bid for statehood at the UN, doesn't even mention a yawn, despite the fact that in the last five years drug violence has claimed more than 35,000 Mexican lives, according to government figures. And that's the low end of the curve, as a number of human rights groups estimate that the true death toll is 40,000.

Forty thousand.

More than 12 times the number of Americans killed in the 9/11 2001 terrorist attacks, in a neighboring country.

Who cares? After all, we all know that Central America is prone to violence, and well... that's just the way it is. Why should Washington care?

Quite aside from the human issues involved, Washington should care because, according to the U.S. Energy Administration, of United States total crude oil imports now averaging 9.033 million barrels per day, Mexico with its 1.319 million barrels per day of exports is exceeded only by Canada as the U.S. top importer of crude, and exceeds Saudi Arabian imports by over 200,000 bpd.

But in dealing with Mexico Washington is in a classic state of addict denial - and, after all, it is addicted to not one, but three Mexican narcotics - oil imports, drugs and cheap labor.

As for oil, it is worth remembering that all of Mexico's energy imports fall under the purview of Petroleos Mexicanos state oil monopoly, more familiarly known as Pemex. Accordingly, threats against the government's authority, as the Boca del Rio massacres most assuredly are, ultimately threaten the central administration's ability to rule, which in turn calls into question larger governmental policies.

And the assault on oil exports is led by the cartels' determination to both preserve and expand its footprint in the lucrative gringo market north of the border.

As noted by Richard Heinberg on June 22nd, 2011, the media has lacked the ability to connect the economic situations in the Middle East and their uprisings to what is happening in Europe. I would avoid the word "Revolution" in the case of the Middle Eastern uprisings, seeing as no dramatic systemic changes have taken place, only the ousting of dictators. Same as I would avoid the words of social upheaval in the case of European protests, which have been quite calm and only demanding to maintain the social safety nets produced through years of labor struggle. Rather, the odd occurrence is the ostensibly quiet population of the United States who are in many cases having the same economic problems and austerity based government solutions. This a place where the media does want to ask the public the question, "Why aren't you protesting?"

Effectively in the United States the labor movement has been dismantled over 30 years through multiple policies, the main one being "Right-to-Work" laws, which have left only 6.9% of private sector workers in unions, and 36.2% of public sector workers in unions. This has correlated as well to a 30 year stagnation in wages, which has barely kept pace with inflation, leaving many with the option of accumulating debt buttressed by a free flowing credit policy. That points to a problem when consumer spending accounts anywhere from 40%-70% of the economy (whether or not you wish to count government spending which is done through the aggregation of taxes from said consumers). Even if the low end number of 40% is the truth of the matter, it is large stake in the economy and plays a disproportionate role in the health of the economy as a whole.

The importance of wage and debt is linked to the economy having a large consumer component, which is basically like the gas to the engine, it keeps things in motion. According to the Federal Reserve, Household Debt is far greater than disposable income, basically at a ratio where consumers are maxed out. Connect this with the Weltanschauung (world outlook) of consumers at the moment, according to the Rasmussen Consumer Index, 61% of the US population see the economy as getting worse. Basically, you have a massive Molotov cocktail being thrown at the economy. The wage trend is not reversing, as noted by Paul Craig Roberts and Shadow Government Statistics, new jobs are typically in non-value added labor (service economy), with an industrial sector shedding jobs as they are outsourced to countries with cheaper labor and laxer regulations (or harsher authoritarian regimes).

When unemployment is calculated correctly it stands nearer to 16-17%, and high-value labor is not returning to employ most of these people, but only the non-value added labor. Without wages and jobs, how is 40% (roughly 5.9 trillion dollars) of 14.7 trillion dollars going to be maintained. Possibly through Citigroup's idea of a Plutonomy, where the economy services only 20% of the population. However, wouldn't that lead to political instability in a country that in a form stabilizes the world economy through dollar supremacy and also US treasury bonds (one of the safest investments).

With all this being the trend, and each recession taking longer to reach normal employment levels, where is the social reaction in the United States in comparison to Europe and the Middle East, which were experiencing (and still are) similar situations. A large part of the blame can be laid at the feet of the media who have downplayed protests calling for stimulus and national reinvestment from the grassroots and economists such as Paul Krugman, Josepsh Stiglitz, Robert Reich, and Mike Whitney. Stimulus having the point of proper regulations (neither over or under-regulated, but well regulated), and bringing back value-added jobs which maintain the advancement in Science & Technology. At the same time the media has overrated the Tea Party movement which has been calling for the implementation of the same policies which have been followed since Regan.

These were bad solutions to growth stagnation at the end of the 70's and still are in the present. Cutting taxes and eviscerating regulation produced large mountains of government debt and has not increased the number of middle class workers (rather decreased that number). Those people, Tea Partiers and so-called Conservatives, do not understand the first thing about economics and are just rabid ideologues spouting words that make semiotics professors mouths' water. But, not all the blame can be placed on the media, it also is a lack of political will on the part of the politicians, and large propaganda campaigns by corporate America. What has happened is a corporatization of American politics, especially after Citizens United case, but even before, as rampant individualism and greed have taken root into the American culture in a corrosive manner.

A quick glance at the historical record shows that when the elites begin to siphon off more and more of the surplus, social movements were typically the norm. This creates instability and opens doors to collapse of power and markets, the internal structure of a nation. The new rulers are the multi-nationals, and they are not nationalist. As they exist without borders, they are not worried about political or economic instability in a single country.

The new rulers do not have any real party affiliation, and neither party adheres to the political philosophy they claim, they are all corporatists now. And this is the fundamental reason why America is so silent. The people are behind history, they are standing in the trashed piled high by the Angel of History, which always progresses forward, not understanding their old paradigm does not operate properly anymore. They do not believe a government is meant to regulate an economy, that is for the markets. Yet they want a government, just not to impinge on their right to be greedy at all costs.

What then is left to this government that has no purpose within the economic sector?

Militarism and policing, which has never been good for a government to occupy all it's time with. The other function has been for the government to siphon money through taxes (by having one of the highest corporate tax rates which can be avoided with a legion of lawyers), into corporations. This is shown by the revelations about GE. GE had American profits of $5.1 billion, paid 0% in taxes, and received a tax benefit of $3.2 billion, but I am almost certain it is using roads, electric and water systems, and other American taxpayer produced resources free of charge. So, yes Americans are going the Tea Party route, because they do not trust government, not recognizing that the line between Governments and Corporations have been obliterated over the last 30 years.

What does all this mean for political and economic stability in the U.S.?

It looks like a long brimstone filled road, unless somebody can grow a pair to start making a proper political discourse in that beacon of light on a hill, that republic from 1776. There are many people who are shareholders and need to recognize that collapse economically in the US, means a collapse in their portfolio. And stakeholders as well need to recognize that it is their tax dollars being turned into profits (money begetting money) rather than value-added goods and infrastructure development. These are the last people with any clout, because obviously the rap line is the only mantra left in the US, "Money Talks, Bullshit Walks."

Otherwise as the system deteriorates even further, massive protests will happen, but with a narcissistic victim hood component where people are finding someone else to blame, ultimately not accepting responsibility for misunderstanding or being blatantly ignorant about the link between politics and economics. With money moving freely around the world, markets will react as markets like to react, dropping dollar supremacy, moving investments to other countries with a better "order", and leaving a highly militarized and narcissistically angry society holding nothing but guns and their broken dreams.

Source: http://oilprice.com

By. Andrew Smolski of OilPrice.com

Petroleos Mexicanos (PEMEX) is the state-owned oil company (and natural gas) of México, which since the 90's has been discussed for privatization like many other state-owned companies in México. The policy of privatization is sometimes called liberalizing the company, however many aspects of privatization need to be taken into consideration when discussing such a lucrative portion of the federal budget for México. PEMEX has 41 divisions, and is a source of Mexican sovereignty, and any talk of privatization will not happen without a strong fight, not only from the left, but also Mexican nationalists who see it as a source of pride. This article will attempt to give a brief summary of these considerations and bring forth an argument on what will happen in the future of PEMEX and its worth for investors.

According to the Mexican constitution (Article 27) all subsurface minerals are the property of the Mexican government, and not the people who own the land where these minerals are found. This has led to 1/3rd of the federal budget being derived from the fossil fuels found and produced in México, and accounting for 10% of all export earnings for the country. However, over the past 5 years the amount of barrels per day being produced has been declining, mostly due to the difficulty that surrounds new oil exploration, the need for more advanced technology and risk taking investment. With the need for investment and most of the profit utilized as expenditures in the federal budget, PEMEX lacks the resources necessary to continue to produce optimally and also to reach its goal of 600,000 barrels of crude per day by 2021.

None of this means that there is no longer oil in México, with one set of fields, Chicontepec, having an estimated 9 billion barrels of oil if proper investment and technology existed. Instead, since the 90's the problem has been the obstacles to liberalize the company, with some parts almost being liberalized (such as PEMEX Petroquímica) when the plans were met with a popular backlash, typically from the union movement. $2 billion of assets in PEMEX were sold off, but this is quite meager in comparison to its size of $80.6 billion in revenue. PEMEX has around 140,000 employees, which means it has a large and relatively powerful union, but that has come under attack as of late. It should also be taken into consideration that there are approximately 70,000 retired workers with a pension fund worth about 1,700,000,000 pesos ($145,299,145 dollars). With this sort of money, no one is going down without a fight, and on top of that in 2012 an election is coming with a resurgent Partido Revolucionario Institucional (PRI), who will be seeking the support of the PEMEX union in order to win the presidency.

This does not mean that PRI will not attempt to privatize or liberalize PEMEX, as it has tried before. The before mentioned example of PEMEX Petroquímica happened during the PRI years. But, the resurgence of PRI has led to worries by the US, who sees PRI as wanting to reattempt a recentralization program. Therefore in order to build support, PRI be in a position to maintain PEMEX as a state-owned company. Especially, when the Mexican Constitution (Article 27) give all rights to subsurface minerals to the governments, as well as (Article 28) prohibits any private driller from reaping profits from oil begotten from Mexican land. So, if privatization was to go forward, it would mean that Constitutional referendums would have to be passed with a larger majority then it seems like any political party would like to admit (except the PRD who vehemently oppose any form of privatization or liberalization). Therefore, the closest that liberalization or privatization of PEMEX has come is the utilization of sub-contracting, which is a form of going around the laws to utilize outside companies and investors, such as Halliburton.

The dilapidated condition of PEMEX production factories makes them sell their crude oil to US companies who then refine it and sell it back to México. It has not built new factories since the 70's, and for being a crown jewel and representation of Mexican sovereignty, the government has looked as if it has wanted to sell it off for quite sometime. Even in 2006 when PEMEX had looked to have turned a corner, it went directly back into its decline, due to lack of reinvestment on the part of the company. PRD party member AMLO (Andres Manuel Lopez Obrador) has called this a "starving the beast" tactic, and whether people are against it or for it, it has been working in order to make PEMEX have to rely upon outside aid and resources in order to continue production.

México does have a history of nationalizing industries after the 1911 revolution, but this does not seem to be its history starting from the 90's (or even 80's) with a slow creep towards privatization of large state-owned monopolies. With a starved and deprived PEMEX, a union being busted, and a political climate focused more on the drug war, this might be the perfect time for PRI or PAN to pass what they have tried to for 20 years. However, the Mexican people are quite intelligent, and do not have amnesia, they remember the pesos crisis in '94 because of foreign capital flight, and hopes and dreams built on foreigners have never brought their strongest support.

Source: http://oilprice.com/

By. Andrew Smolski of OilPrice.com

Investors looking for the next big thing after a hydrocarbon economy have a panoply of options, from solar to wind, as well as biofuels.

In terms of quickly ramping up production biofuels clearly win the race, but navigating the PR fluff and reality is not a simple thing.

The three main contenders for investor dollars are algae, jatropha and camelina. All have strengths and weaknesses, leaving investors to choose amongst them. Stripped of PR flummery, the only issue is where and when production can begin on a viable commercial scale. Investors who unravel the complexities of biofuel production and have cast-iron stomachs stand to profit, but biofuel production in the U.S, while having major players like Goldman Sachs and the Carlyle Group, are moving their chess pieces around a board already gamed by the major players.

While everyone agrees that biofuels are the future, investment is lagging.

But the interest is there. Fuel and oil comprise 25 percent of civilian airlines' operating costs. When the price of jet fuel rises one cent, it increases the global cost of aviation $195 million.

Camelina as an additive is a "drop in" fuel - engines need no modification, and a series of Pentagon tests over the last two years have proven its feasibility as something to add to a 50 percent JP-8 blend. The Pentagon

So why, no U.S. production?

The answers are both complex and simple.

First, new biofuels are up against the well established ethanol lobby.

Secondly, given renewables' battle against the ethanol Goliath, there are yet exist no subsidies, crop insurance or any other incentives to bring farmers onboard to provide camelina feedstock, and farmers are hardly the most progressive green community.

Accordingly, U.S. companies such as Sustainable Oils face an uphill battle to sign up farmers, one by one.

But the technology exists, the product has been approved, most notably to fuel USAF C-17 Globemasters, as further Pentagon weapons testing continues.

Unfortunately for biofuel producers, the Pentagon only purchases fuel, and does not invest.

So, at the end of the day, the Pentagon role is passive - as for the civilian market, they are awaiting commercial volumes to be produced.

U.S. production to ramp up camelina derivatives is constrained by a lack of subsidies, crop insurance and record-high commodity prices for such alterrnatives as ethanol's major feedstock, corn.

But camelina's future as a civilian aircraft biofuel has been validated by the March announcement that a European consortium announced a project to produce Jet A-1 for civilian aircraft. European aircraft manufacturer Airbus and Romanian state-owned airline Tarom and a consortium of partners announced plans to establish a bio-fuel production center in Romania to manufacture fuel for the airline industry.

An American company is also prosing to produce biofuel in Uzbekistan.

So, the question is - how ironclad are investors' stomachs? The question is no longer if biofuel will be produced - only where and when. Given that it is ultimately an agricultural product, sharp investors may see their profits expand before the end of a growing season.

Source: http://oilprice.com

By Dr John C.K. Daly for OilPrice.com

There is a piece of doggerel which goes:

They said it couldn't be done.
So I went right to it -
- that thing they said
Couldn't be done.
And I couldn't do it.

And that is the way it has been with presidents since the 1973 oil crisis. All of them -- from Richard Nixon to Barack Obama, who has just joined the club -- have wrung their hands and exhorted Americans to use less oil in general and less foreign oil in particular.

Nixon had his commerce secretary, Peter G. Peterson (he of enormous wealth these days), promise far reaching and revolutionary "initiatives" to tame our thirst for oil. But Nixon was out of office before these palliatives were revealed.

Gerald Ford, caught up in vicious inflation, partly linked to the cost of oil, launched the Energy Research and Development Administration (ERDA), combining the Atomic Energy Commission, the Office of Coal Research and other energy entities in the federal government. ERDA initiated many programs, while politicians invoked the Manhattan Project and the Apollo 11 moon landing. But the search for the Fountain of Eternal Energy failed.

Jimmy Carter wanted not only to solve the energy challenge, but to be seen to be solving it. Ergo, he expanded ERDA into the Department of Energy (DOE) and created a separate Synthetic Fuels Corporation. The latter failed after a short and unhappy life. No oil reached the pumps.

When the price of oil collapsed in the 1980s, so did hopes for many of the alternative energy sources, including ocean thermal gradients and flywheel energy storage.

To its credit, though at great cost, DOE, through its chain of national laboratories, kept searching. The result has been evolutionary improvements in many fields, and some really revolutionary ones in how we find oil and drill for it; these include seismic mapping, new drill bits and horizontal drilling.

These evolutionary developments brought more oil to market and have contributed to the recent improvement in domestic production that Obama likes to point out. It has enabled us to cut our imports slightly, so they now stand at 11 million barrels per day out of consumption of 20million barrels per day.

A former UBS banker now working in Credit Suisse charged with helping American account holders hide as much as $500 million in offshore assets to avoid taxes has been granted bail by a federal court judge. Christos Bagios who worked for UBS Bank of Switzerland was held in custody since January 26 but has now been granted bail of $500,000 corporate surety bond and $150,000 cash bond by US Magistrate judge Robin Rosenbaum. Judge Rosenbaum also ruled in Fort Lauderdale that the prosecution has probable cause to charge Bagios of conspiring to defraud the US government by impeding the IRS.

In 2009, UBS Bank was granted a moratorium from criminal prosecution by paying a fne of $780 million to the US government for helping American taxpayers dodge taxes using their offshore bank accounts. The bank also had to divulge details of thousands of its hitherto secret bank accounts belonging to wealthy Americans suspected of tax evasion.

Judge Rosenbaum made public a criminal complaint that Bagios helped between 100 and 150 American taxpayers evade taxes through their bank accounts. However, Bagios himself maintained that he was not aware he
was abetting tax evasion, according to Arthur Greenspan, his lawyer.
 
Judge Rosenbaum ordered that Bagios undergo electronic monitoring and remain in South Florida. Bagios, 45 is a Greek citizen residing in Switzerland. He joined Credit Suisse Private Advisors in 2009 after a career spanning 15 years at UBS Bank.

Bagios conspired with another UBS banker, Renzo Gadola who pleaded guilty to conspiracy in December. According to Gadola, he and Bagios were 'part of a team of UBS bankers who serviced hundreds of undeclared accounts at UBS owned and controlled by US taxpayers'. 17 of those clients stepped forward and disclosed their accounts to the IRS in order to escape prosecution.

Bagios' lawyers pressed for his release on the grounds that the government did not grant him a hearing to indict him within 30 days of his arrest. But Judge Rosenbaum declined to release him after a prosecutor said the two sides were in negotiations together.
 
According to the criminal complaint the judge made public, Bagios had helped a California businessman named Bernard Goldstein hide his assets in an account in Panama. Goldstein was also charged and has not entered a plea yet. The complaint also alleges that Bagios met other American taxpayers to discussed their undeclared accounts.

Image by Be the Change, Inc. via Flickr

As most readers of this short paper probably know, Dr Steven Chu is the energy secretary of the United States, a physicist, and a Nobel Laureate. Discovery Magazine, in its latest issue (2011), selected what it called the "100 top stories of 2010", one of which was authored by an editor of Discovery, and whose main purpose was to verify Dr Chu's green credentials.

Some important observations of the Econ 101 variety were missing from Dr Chu's answers to editor Corey Powell's questions, which unfortunately prevents me from recommending his 'piece' to serious readers.

Mr Powell began this Q&A with a reference to the Gulf Coast oil spill, asking how an accident of this magnitude could happen. I won't bother to discuss Dr Chu's answer, because both question and answer were irrelevant. Statistically, accidents of that type are unavoidable, and have always taken place. If we go back to the Second World War, we can look e.g. the unnecessary invasion of Peleliu Island and the attack on Manila, the failure to clear the approaches to the port of Antwerp as soon as possible, and perhaps the worst blunder of all, which was adopting the Sherman as the main American battle tank. Compared to those 'accidents', the Gulf Coast tragedy was small beer.

For long term energy investments, Dr Chu pictures the U.S. moving toward the electrification of personal vehicles. So do I, only I don't have a clue as to the details, nor how rapidly a large-scale electrification could be completed if deemed necessary. I therefore wonder if the secretary and his foot soldiers could provide us with the kind of information that we can use in our teaching and publications, and to do so as soon as possible - assuming that they, unlike my good self, have examined this issue sufficiently to tell us something beyond public relations hype.

His thoughts on nuclear energy bother me somewhat, because he states that large reactors will cost 7 to 8 billion (US) dollars. I regard that estimate as completely and totally wrong, and suggest that he should have a talk with Anne Lauvergeon about her plans for her firm Areva, as well as what she knows about the new Chinese reactors. Evidence from the nuclear past and present leads me to insist that "large" reactors, whose construction is organized by competent managers, will soon cost a maximum of 5 billion dollars. This is because the time span from ground break to grid power will be less than 5 years, and when the nuclear renaissance moves into full swing, perhaps much less.

"Future-gen" (in the form of zero-emission coal power plants) evidently plays a prominent role in Dr Chu's vision of an optimal energy structure. It plays none whatsoever in mine however, and I never use the expression "future-gen" nor listen to anyone discussing it. Carbon Capture and Sequestration (CCS) is an element in this activity, and the Swedish firm Vattenfall once made certain optimistic promises to the German government and newspaper readers concerning their efforts in that direction. Jeffrey Michel, an MIT graduate and energy consultant living in Germany, calls CCS a thermodynamic travesty, and remembering my own long and delightful study of thermodynamics and engineering economics causes me to say that Michel's judgement is much too mild.

A carbon-free United States in 2050 seems to be one of Secretary Chu's more abstract notions. Interestingly, a recent large energy meeting in Berlin was on the same wave length, where the emphasis was on solar and wind's place on the German energy scene in the same year. As far as I am concerned, the German intentions are strictly off-the-wall, and in 2050 the German nuclear intensity will match or overmatch that in France. The nuclear equipment will be breeders, and I sincerely hope that the security problems associated with those reactors are solved the way that they should be solved, because if not somebody could be in a world of hurt.

Finally, Dr Chu mentions that "there is no law of physics which states that the whole society can't benefit", and unlike the contention of e.g. Gordon Gekko (in the film Wall Street), he says that "there is no zero sum game here". It was really very decent of the Secretary to inform us of his interest in the subject of game theory, because in a world of 9.5 billion souls - which is his prophecy for 2050 - a complicated version (or extension) of the zero sum paradigm is going to be the order of the day, and there is very little - or more realistically nothing - that he or all the Nobel Prize winners since Adam and Eve can do about that.

Source: http://oilprice.com/Energy/Energy-General/In-the-Head-of-Energy-Secretary-Chu.html

By. Professor Ferdinand E. Banks for OilPrice.com. For more information on oil prices and other commodity related topics please visit www.oilprice.com

REFERENCES

Banks, Ferdinand E. (2011). Energy and Economic theory. Singapore, London and New York: World Scientific.

Powell, Corey S. (2011) 'Secretary of Energy Steven Chu on how we'll get to the green energy future'. Discover (January/February)

Cover of Bill Gates

There is an idea that has been around for a long time, at least since the fall of 1973: All that stands between the United States and an abundant energy future is a lack of spending on research and development. It is as though the Knights Templar could find the Holy Grail, if only the Pope would commit just a few more resources to the hunt.

Tens of billions of dollars have been spent on energy research, many of them fruitlessly; and some advances have been made, not the least in the kind of drilling technology that enables us to drill miles below the sea floor in the Gulf of Mexico. (Oops!)

Much else has been researched and not come to market. Wind and solar have taken giant strides, but still require tax breaks and subsidies. Nuclear energy has been researched, even as its deployment has languished. Worldwide hundreds of billions of dollars have been spent on nuclear fusion with nothing to show for it. Other programs have gone by the board, from coal liquefaction to magnetohydrodynamics and ocean-thermal gradients.

The thing about energy research has been that there are many promising lines, but seldom a big success. The big successes, too, have been happenstantial. One such is the aeroderivative turbine; essentially, a fighter-jet engine operating at very high temperatures in steady state on the ground, and burning natural gas instead of kerosene.

On June 10, a new set of highly qualified persuaders came to Washington to exhort the government to increase energy research and development funding from $5 billion to $16 billion a year, and to set up new organizations to channel and manage basic research on energy.

Some of the nation's industrial savants, including Bill Gates late of Microsoft, Jeff Immelt of General Electric and Ursula Burns of Xerox, appeared at a press conference here as members of the American Energy Innovation Council. The chairman of the group, Chad Holliday of Bank of America, told the press: "Up until now energy investments have gotten short shrift."

That is debatable. The problem with energy research has not been that it has been short-changed, but that it has often been directed at the wrong thing; it has often been diluted or spread out for political purposes. Farmers want ethanol research, coal states want carbon management, and the populous eastern states want carbon-free energy--so long as it is not nuclear.