How About A Sane Energy Policy Mr. Obamney?

It’s Presidential Election year.  Ergo, time to discuss our 40 year whacked out excuse for an energy policy.  Royally botched up by every President since, umm?


Make US energy supply cheap for the US consumer and industry, fast growing and profitable for the American energy sector, clean, widely available and reliable, and secure, diversified, environmentally friendly and safe for all of us.


Cheap, Clean, Reliable, Secure, Energy


An Energy Policy that leaves us more efficient than our competitors

An Energy Policy that leaves us with more and more diversified, supply than our competitors

An Energy Policy that leaves us more reliable than our competitors

An Energy Policy that makes us healthier and cleaner than our competitors

An Energy Policy that makes us able to develop adopt new technologies faster than our competitors

An Energy Policy that makes it easy for industry to sell technology, energy, and raw materials to our competitors

An Energy Policy that keeps $ home.

A Sane Energy policy


Think more drilling, less regulation on supply, lower tariffs, more investment in R&D, tighter CAFE and energy efficiency standards, simpler and larger subsidies for new technologies, less regulation on infrastructure project development.


A couple of key action items:

  • Support the development of new marginal options for fuel supply, and support options that improve balance of payments, whether EVs ethanol, solar et al
  • Make crude oil, refined products, Gas, LNG and coal easy to import and export
  • Drive energy efficiency like a wedge deep in our economy
  • Support expansion and modernization of gas, electric, and transport infrastructure
  • Support long term R&D in both oil & gas, electric power, and renewables
  • Reduce time to develop and bring online new projects of any type (yes that means pipelines, solar and wind plants, offshore drilling, fracking and transmission lines).
  • Support policies and technology that enable  linking of energy markets
  • Challenge the OPEC cartel like we do EVERY OTHER cartel and break the back of our supply contraints
  • Support the export of our energy industry engineering, services and manufacturing  sectors overseas
  • Incorporate energy access into the core of our trade policy
  • Support deregulation of power markets
  • Support long term improvement in environmental and safety standards
  • Broadly support significant per unit market subsidies for alternatives like PV, wind, biofuels, fracking as they approach competitiveness

Or we could do it the other way:

  • Leave ourselves locked into single sources of supply in a screwy regulated market that involves sending massive checks to countries who’s governments don’t like us because that’s the way we did it in the 50s?
  • Keep massive direct subsidies to darling sectors so the darling sectors can fight each other to keep their subsidies instead of cutting costs?
  • Keep a mashup of state and federal regulatory, carbon and environmental standards making it virtually impossible to change infrastructure when new technology comes around?
  • Promote deregulation in Texas, and screw the consumer in every other market?
  • Every time there’s a crisis, we can shoot the industry messenger in the head, stop work, and subsidize something.
  • Continue the Cold War policy of appeasing OPEC so they can keep us under their thumb for another 30 years
  • And drop a few billion here and there on pet pork projects

Come on guys, stop the politics, let’s get something rational going.  Oh wait, it’s an election year.  Damn.

And in the meantime how about making energy taxes (a MASSIVE chunk of your gasoline and power prices) variable, so they go DOWN when prices go up.  Then at least the government’s pocket book has an incentive to control cost, even if they’re incompetent at putting together a policy that does so.

The World According to BP

On January 18, BP (NYSE: BP) released Energy Outlook 2030, its official corporate view of the future of energy.  Every year, BP releases its Statistical Review of World Energy that serves as an excellent compendium of historical and current data on a host of energy-related issues, but rarely does BP present its projections of trends and the associated implications on the energy markets.

At the release event in London, BP’s CEO Bob Dudley made a brief speech covering the highlights of the Outlook.  It’s an easy and good read, which I will summarize here.

Dudley began by reciting what he termed “five realities”.  In reality, these so-called “realities” are nevertheless anticipations of events to come.  However, they do seem like pretty safe bets as playing out as described:

  1. Global energy demand will increase by 40% by 2030.  As Dudley notes, “that’s like adding one more China and one more U.S. to the world’s energy demand by 2030.  Nearly all that growth – 96% in fact – is expected to come from the emerging economies with more than half coming from China and India alone.”
  2. Fossil fuels will supply roughly 80% of global energy demand in 2030.  Dudley continues, “renewables will grow rapidly, but from a very low base.”  In other words, while renewables will be a great growth industry for the next few decades, the enormous head-start in market share that fossil fuels enjoys from more than 100 years of development, along with continued demand growth, means that energy markets and the energy industry will be dominated by fossil fuels for the lifetime of anyone who reads this blog post.
  3. Oil will continue to be essential for transportation, with 87% of mobility based on petroleum.  While increased fuel efficiency, hybrid vehicles, and expansion of biofuels will reduce needs for petroleum, the explosive growth of the developing economies and their voracious desire for vehicles means that oil demand will continue to grow.  Dudley notes that oil demand growth will be less than 1% annually, which “doesn’t sound like much, but it adds up to an additional 16 million barrels per day by 2030.”
  4. To supply this increasing demand, new frontiers will continue to be tapped.  This will be oil from deep water – what should be a sticky subject for BP, given the Deepwater Horizon debacle from less than two years ago – heavy oil such as the oil sands in Alberta (which Dudley noted needed to be “produced carefully and responsibly”), and unconventional gas plays such as shale gas and tight gas.
  5. Global CO2 emissions will rise by almost 30% by 2030.  Dudley emphasized that “this is a projection, not a proposal.  BP supports action to limit emissions including a carbon price and transitional incentives that encourage renewable energy to become competitive at scale.”  The last two words – “at scale” – are critical, not just for cleantech advocates and for the planet, but also supermajors like BP, who by their sheer size can only be bothered with energy phenomena that represent more than niches.

It’s a daunting picture.  As Dudley states, “this is not an outlook for the world as we wish to see it,” but nevertheless “it should be important input for policy-makers.”  And, it should be added, for participants and advocates in the cleantech space.

From this sober perspective, Dudley outlines “five opportunities” surfaced in the Outlook:

  1. Energy efficiency gains will be critical to the world of the future, as they simultaneously reduce consumer costs, improve energy security and cut emissions.  Frankly, this is “motherhood and apple pie” that just about all observers of the energy sector point out – nothing new here.
  2. Technology advancement will be crucial.  Dudley notes that BP thinks “the efficiency of the internal combustion engine is likely to double over the next 20 years” – an extraordinary possibility for a technology that’s over a century old and ought to be quite mature.  Innovation is not only imperative for efficiency gains but also for supply expansion to meet worldwide demand growth even netting out improvements in efficiency.  New energy supply technologies are not just in the realm of renewables but also in the realm of hydrocarbon production as well, increasing the economic access to fossil fuels on the frontiers described above.
  3. Competitive forces are an essential stimulant of capturing efficiencies and pursuing innovation.  Although Dudley doesn’t exactly say so, I think this is code for “expect increasing energy prices”, thus driving efficiency and new technology.  (Also unsaid:  “Don’t blame us or accuse us of gouging when energy prices are high.”)  I think these comments are also a soft unobtrusive plea for more access by private sector companies, and correspondingly fewer obstacles thrown up by governments, to developing new energy resources.
  4. Natural gas will be a very big thing.  Dudley calls natural gas a “sustainable option being deployed at scale”.  The latter claim of scale is inarguable, though the former claim of sustainability is semantically dubious.  Even so, it is true when Dudley says “gas typically generates fewer than half the emissions of coal” – notably, the one and only time that the word “coal” is uttered by Dudley in his entire talk.  (Admittedly, BP doesn’t have any coal business, but coal remains a sizable piece of the global energy economy, and to mention the role of coal just once is telling.)
  5. Biofuels show great potential.  According to Dudley, BP has “an optimistic view on the future of biofuels,” but “the world needs to focus on biofuels that do not compete with the food chain and are produced in a sustainable way.”  Thereafter follows some touting of second-generation biofuels (e.g., cellulosic ethanol), which still remain tantalizing but commercially-unavailable.  To me, this fifth “opportunity” is the most speculative of the bunch.

Dudley closes his comments by discussing BP’s obviously very substantial place in the world of energy. 

He acknowledges the Deepwater Horizon tragedy, and BP’s activities in expanding production of the controversial oil sands in Alberta.  No doubt, he had to, in order to avoid allegations of “greenwashing” BP’s record.

However, he tries to counterbalance this by extolling $7 billion of investments in renewables since 2005, “focused on creating large-scale commercial businesses that are not dependent on subsidies,” and BP’s emphasis on improving energy efficiency – in part because BP requires “all new projects to calculate the impact of future carbon pricing on their operations”, planning for “a future where carbon does have a price.”

Perhaps this is the most optimistic item in Dudley’s synopsis of BP’s future view of the energy sector over the next 20 years.  Hopefully, not unrealistic.