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Tomorrow's Election

Posted November 3, 2008
By: Brad Meikle

Since I was 18 I have been a registered republican, always a capitalist at heart and pretty intolerant of socialist mantras. I too had a restaurant experience where tips were shared in a socialist way allowing under-performers to continue to contribute less than their fair share. I don't think that's what this election is about. The republican party has lost its way from its original tenets. 

This country is on a very dangerous course that will not correct itself under the current republican regime regime. Demand for oil is currently growing faster than supply and will continue to do so. Supply is close to peak, if it were to grow significantly it would worsen the issues down the road. The faster you pump an oil field the less its aggregate output is. Reserves today are overstated. Saudi Arabia states it has 286billion barrels but in reality its closer to 180billion. Iraq - 99b but really 40b. Kuwait - 50b but really 35b. Iran 134b but really 44b. Demand is greater than supply and the situation is not sustainable.

Iran has asserted its power in Lebanon and is now doing so in Iraq. Exxon Mobil tried to cut a deal with Iraq for oil supply from Basra and was given the green light but told by the Iraqi govt that they had to get final approval from Iran. I'm not making this up. Meanwhile Iran has sidewinder missiles pointed at every major oil field in the gulf, 55% of reserves, so if we make any aggressive moves towards Iran, oil prices are $300 one day later. The US needs to control its own destiny and the only way is through new sources and efficient consumption. Why don't we just get more efficient? Because it would completely screw up Exxon's future quarters and the stock would get pummeled, cant have that!

Here we are (the US) spending 10bill a day in Iraq, flying back 100+ caskets a month, and on the home-front we cant even put together an energy bill that will subsidize new sources and incentivize efficiencies. Why? Well finger pointing between GM, the UAW, and strong level of pressure by the oil lobbies and "think tanks" like the CATO institute which are nothing more than propaganda machines.

Whats your choice? Higher taxes or a mandatory draft for your children.

The technology for electric hybrid vehicles is very straight forward, its not rocket science. 70-80% of oil is used in transportation. The US consumes 20mil barrels per day of 80million ww, 25% of supply with just 5% of the global population. If the US, China and Europe moved average fuel consumption from 17mpg today to 50mpg in 10 years the problem would largely be solved. China sees this and is going to. The US has the innovative potential, manufacturing base and technology to do it but we cant get out of our own way. The republican regime has sold out and they go back to their old mantras of criticizing big govt etc but that's not what its about right now.

A capitalistic democracy is the least flawed economic/political system, not the best, there is no perfect system. The basic tenet of a open market system is that each individual maximizes his own gain which as a result drives the greatest gain for the country overall. The system breaks down when a certain segment of the system goes so far to maximize its own gain that its actions actually are damaging to the greater whole. Right now the efforts of the oil industry are putting the future of the country at risk.

After the Yalta Conference in 1945, where Stalin, FDR and Churchill redrew the lines in Europe, FDR in his last days travelled to Saudi Arabia to meet with the new king Abdul Aziz Al Saud. This was a king who rose to power the old fashioned way, by rule of the sword. At this meeting FDR formalized an agreement with Saudi Arabia where the US would provide protection (Saudi is the largest customer of the US defense industry) in exchange for preferred access to Saudi oil. For many decades this served the US well as it had a lower cost & steady supply for one of the main components of the economy. In the late 70s pricing spiked for various reasons and it was the first sign that we should start exploring alternative energy sources. All efforts Carter put in place were killed under Reagan's tenure. Sure they weren't cost competitive at first, but one has to start somewhere. The energy industry has done its best to prevent alternative energy development from happening in any significant way. The answer has always been, lets find more oil. Today though this doesn't work. Drilling in the ANWR or offshore will not fix the problem. Last year tensions sparked in the Straight of Hormuz and now the US has more than 40 ships on patrol in the Gulf. Why don't Exxon, Chevron and the rest of the oil companies take the OPEX for these ships on their books? Street #s might have to come down a tad.

Hopefully history will show that this was a turning point for the US in terms of setting a direction that is sustainable. The renewable energy industry isn't really about global warming, but geopolitical conflicts and demand for limited resources being significantly greater than supply.

Brad Meikle

(In full disclosure, I am a partner in a renewable energy research business but the reason I started the firm was the issues stated above are all too true.)

Categories:
General Interest

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http://www.renewableanalytics.com/blog/2008/11/03/tomorrowselection.cfm

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