Energy Security

[Bill Moore]

Flagg, thanks for the lead on iTulip.com. I did a quick search to see if the site and Eric Janszen were scam artists like so many of these sites are, but by all accounts Eric is very respected, so I will be a regular reader.

You wrote,

Personally, it feels like a 21st century version of circa-1935.

I agree strongly, it doesn't take a lot of imagination or hyperbole to see the war clouds forming on the horizon. All those who predicted more Afghanistans and recommended gutting our conventional warfighting force will unfortunately be backtracking on those comments sooner rather than later. Economics will likely drive the next major conflict.

I still question our strategy and our pursuit of globalism without limits. Gas prices are high today for two primary reasons. One is the turmoil in the Middle East (spectulators driving up prices based on fear that they like to generate), and then the real reason is greater demand (no additional supply) by emerging economies (India, China, etc.). We still want to develop the economies of every country in the world so they'll buy our products (after we outsource our jobs to developing nations), but we don't calculate the risks of doing that to our standard of living. Success in this case could be failure for the U.S.. I am not proposing isolationist policies, but there needs to be some limits on our globalist agenda.

[flagg]

Flagg, thanks for the lead on iTulip.com. I did a quick search to see if the site and Eric Janszen were scam artists like so many of these sites are, but by all accounts Eric is very respected, so I will be a regular reader.

You wrote,

I agree strongly, it doesn't take a lot of imagination or hyperbole to see the war clouds forming on the horizon. All those who predicted more Afghanistans and recommended gutting our conventional warfighting force will unfortunately be backtracking on those comments sooner rather than later. Economics will likely drive the next major conflict.

I still question our strategy and our pursuit of globalism without limits. Gas prices are high today for two primary reasons. One is the turmoil in the Middle East (spectulators driving up prices based on fear that they like to generate), and then the real reason is greater demand (no additional supply) by emerging economies (India, China, etc.). We still want to develop the economies of every country in the world so they'll buy our products (after we outsource our jobs to developing nations), but we don't calculate the risks of doing that to our standard of living. Success in this case could be failure for the U.S.. I am not proposing isolationist policies, but there needs to be some limits on our globalist agenda.

No worries!

If after some time over there you find the content and analysis to be of value, I'd be interested to hear your feedback on what I perceive to be a weakness in the forum's lack of defense/security SMEs to round out effective analysis and opinion if we truly are heading into period of heightened conflict risk.

I've posted a few times over there my desire to see an analysis mashup between Small Wars Journal forum and the iTulip forum...I think it would be a win/win for both.

------
DISCLOSURE: I'm a paying member of the iTulip.com community....but I have no stake in it....just a keen student over there AND here....which means I should probably donate here as well for balance
------

EJ has a book on Amazon that I recommend:

http://www.amazon.com/Eric-Janszen/e/B003MF9U9C

He calls for investment in a TECI economy: Transportation, Energy, Comunications, Infrastructure to reindustrialize the US.

He's a real "glass half full" kinda guy in my opinion......and for a guy with such a strong and consistent track record.....the darker tone lately leaves me a bit troubled.

[Rick M]

The latest Oil Shockwave exercise was conducted last week in Washington. Like the first Oil Shockwave exercise in June, 2005, the 2011 top-level "war game" explored the potential effects of a large-scale oil supply shock. Conclusions from the most recent exercise concur with those of previous Oil Shockwave exercises: response options are few, and "only long-term thinking can provide more short-term options in an energy crisis."

These exercises are valuable in highlighting a major vulnerability which continues to be ignored.
Following the 2005 Shockwave, participant Robert Gates said, “The scenarios portrayed were absolutely not alarmist, they’re realistic…. The threat is real and urgent, requiring immediate and sustained attention at the highest levels of government.” Unfortunately, there is little evidence of attention to this issue apart from the increasing warnings from military researchers and from the International Energy Agency of an impending oil supply crunch and the peaking of global oil production.

Unlike some of the earlier Shockwave exercises which were described in written reports of about 20 pages, the details of last week's exercise are not available. The main focus of these exercises tends to be on damage to the US economy, strains on the transport sector, and the absence of effective response options in the short term. It would be helpful if Oil Shockwave organizers expanded the scope and duration of their exercise to include effects to the agri-food sector as well as a review of the US plan for liquid fuel emergencies.

It is my understanding that the US Standby Gasoline Rationing Plan (June, 1980) has been rescinded but I am not aware of a written federal plan which replaces it. The ESF-12 Energy Annex outlines organizational structure and processes, but I'm not aware of a federal document which identifies (for example) Essential Users, how fuel will be provided to them, etc.
There is also the particular problem of ensuring that farmers have affordable fuel: the majority of Essential Users are publicly funded (police fire, utilities, government agencies, etc) whereas many family farmers are stuck in a long-standing farm income crisis.

My understanding is the the main response tool will be "full price pass-through:" in other words, government has no plan to intervene in the marketplace and will allow price to effectively ration the available supply. Other response options (eg. attempts to ration, allocate or control prices) appear to be overwhelmingly complex and impractical, but such barriers do not obviate the need to ensure that farmers are not paralyzed by unaffordable fuel. During an emergency, we need farmers to do more, not less (since food imports would almost certainly be curtailed during a major oil shock).

Other views are welcome, and I would certainly appreciate any further information on government plans for fuel emergencies (and I invite correction if I have missed or misconstrued something).

Thank you for considering all this, and here is the Shockwave link:
http://www.secureenergy.org/media?type=25

[Dayuhan]

I still question our strategy and our pursuit of globalism without limits. Gas prices are high today for two primary reasons. One is the turmoil in the Middle East (spectulators driving up prices based on fear that they like to generate), and then the real reason is greater demand (no additional supply) by emerging economies (India, China, etc.). We still want to develop the economies of every country in the world so they'll buy our products (after we outsource our jobs to developing nations), but we don't calculate the risks of doing that to our standard of living. Success in this case could be failure for the U.S.. I am not proposing isolationist policies, but there needs to be some limits on our globalist agenda.

Certainly added demand from developing nations is putting pressure on oil supplies and driving prices up... a good thing, IMO, as we will never get serious about alternatives and reducing our use unless we have sustained high prices. Important to note, though, that these economies are not developing and increasing their energy consumption because of the US globalist agenda, or because of anything the US does. They are developing because they want to, and they will continue to develop whether we like it or not. It is not something we control.

I'm personally curious to see where the rising interest in natural gas leads... certainly there's a lot of hype, but there's more than just hype there, and there is potential for a "bridge fuel" to gradually supplant oil while the renewable alternatives develop to the point of practicality: decades, realistically.

Gas isn't perfect, but the major oil consumers (US and China) do have major reserves, and the technology to exploit them is available. There are environmental impacts, of course, but there always are, and the impact of gas across the production - consumption cycle is well below that of oil. Of course for Americans the problem is that the environmental impact of domestic gas production is local and visible, while the environmental impact from production of imported oil is, while greater, far away. As long as we insist on exporting environmental impact we will have to import energy, with all the risks that entails.

[bourbon]

They are developing because they want to, and they will continue to develop whether we like it or not. It is not something we control.

China is import dependent on over 50% and growing for its oil supply, and currently most of it is delivered via SLOC. China’s continued economic growth is contingent upon a secure oil supply.

The United States has eleven carrier strike groups, and military bases adjacent to the greatest untapped petroleum reserves in the world. Maintaining some “control” was exactly what VP Cheney had in mind when it came to invading Iraq in 2003.

[Dayuhan]

China is import dependent on over 50% and growing for its oil supply, and currently most of it is delivered via SLOC. China’s continued economic growth is contingent upon a secure oil supply.

The security of China's oil supply is assured by their dollar reserves. Oil will flow to those who can pay for it, and the Chinese can pay. Again, not something the US controls.

The United States has eleven carrier strike groups, and military bases adjacent to the greatest untapped petroleum reserves in the world. Maintaining some “control” was exactly what VP Cheney had in mind when it came to invading Iraq in 2003.

Again, money is what does the talking. If oil runs short, the price will escalate and those who can't pay will have to go without. China will be able to pay; they have money. The US will be able to pay; we have no money but we can always print some more. Others are in a harder position, and will drop out and suffer.

The desire to "control" Iraqi oil is often assumed, generally misunderstood. Of course the US wanted to get Iraqi oil back on the market, which meant either lifting sanctions or overthrowing Saddam. That worked for the Chinese as well. What is often misunderstood is that as long as that oil goes back on the market, it doesn't matter where it goes. If Iraq got back to 6mbpd someday, the US would benefit as much as China, even if every drop produced by Iraq went to China. It doesn't matter where it goes.. If China buys more from Iraq they need less from other sources, freeing up that oil for others to buy.

[Dayuhan]

There is also the particular problem of ensuring that farmers have affordable fuel

It would seem on the surface that agricultural equipment is an obvious candidate for natural gas conversion, which is particularly applicable to heavy vehicles that operate within a limited range and can thus use a single fueling point or a very limited network of fueling points. I was recently running the numbers on gas conversion for municipal buses and sanitation trucks, and they're pretty compelling, even with a fairly high conversion cost. Because those vehicles run continuously year-round the fuel savings are huge (gas is a lot cheaper and prices are much less volatile; because it's sourced primarily in the US and Canada there's a lot less politically induced volatility) ; payback on conversion wouldn't be as fast for equipment that's not in continuous use, but it could still be viable. Certainly it would be worth throwing the numbers around.

Whether gas is potentially "the solution" on a national scale is of course debatable, but it's certainly emerging as a solution for fuel-intensive heavy vehicle fleets operating over a limited geographic range.

[bourbon]

The security of China's oil supply is assured by their dollar reserves. Oil will flow to those who can pay for it, and the Chinese can pay. Again, not something the US controls.

Emphasis on secure. And a further emphasis on SLOC, something that the US Navy does control (for now). The Chinese can buy as much oil as they like overseas, but it still has to get home safely somehow – and for the time being that means by boat.

Again, money is what does the talking. If oil runs short, the price will escalate and those who can't pay will have to go without. China will be able to pay; they have money. The US will be able to pay; we have no money but we can always print some more. Others are in a harder position, and will drop out and suffer.

You are foolish to think that future Iraqi governments or an Iraqi national oil company will be able freely choose who to sell significant oil supplies or concessions to, without first getting it blessed by a foreign power (American, Iranian, whoever..).

The desire to "control" Iraqi oil is often assumed, generally misunderstood. Of course the US wanted to get Iraqi oil back on the market, which meant either lifting sanctions or overthrowing Saddam.

That’s actually debatable; I wouldn’t say that is clear. Historically, Western powers have suppressed Iraqi production. What the US really didn’t want was the Chinese, Russians and maybe even the French, developing major concessions in untapped Iraqi fields; because then they would have influence and control over the spigots.

That worked for the Chinese as well. What is often misunderstood is that as long as that oil goes back on the market, it doesn't matter where it goes. If Iraq got back to 6mbpd someday, the US would benefit as much as China, even if every drop produced by Iraq went to China. It doesn't matter where it goes.. If China buys more from Iraq they need less from other sources, freeing up that oil for others to buy.

That free-market oil is great for China, except if they ever want to do anything the US might object to. Which frankly is fine with me, but unfortunately the Chinese think otherwise and are scouring the world for equity barrels and attempting to diversify and secure supply routes.

[Dayuhan]

Emphasis on secure. And a further emphasis on SLOC, something that the US Navy does control (for now). The Chinese can buy as much oil as they like overseas, but it still has to get home safely somehow – and for the time being that means by boat.

Except in the very unlikely event of outright war, the US is not likely to interfere with, say, Saudi shipments of oil to China on neutrally flagged vessels. War is unlikely largely because the Chinese are aware of that, are unlikely to take the risk, and don't need to fight to get anything they really need. Much cheaper to buy oil than to fight for it. Similarly, the US has little or no incentive to initiate hostilities with China.

To me the single most likely flashpoint for great-power conflict is Russia-China competition over Central Asia. China-US is way overblown, unless of course the Chinese economy topples and reactionary nutcases emerge to "make China great again". Then all bets are off.

You are foolish to think that future Iraqi governments or an Iraqi national oil company will be able freely choose who to sell significant oil supplies or concessions to, without first getting it blessed by a foreign power (American, Iranian, whoever..).

Not foolish at all, since the Iraqis are already selling the concessions and the oil to whoever they please. Actually at the moment the concessions are going to whoever is willing to take them on Iraqi terms: primarily the Chinese, as nobody else sees the political risk equation as favorable. There is no reason at all, short of conspiracy theorizing, to suggest that the US intends to control where Iraq sends its oil. As stated before, it really doesn't matter, and if the Chinese are willing to take the risk to develop the resources, why not let them? Doesn't matter where the oil goes, as long as it gets onto the market, and US companies aren't terribly interested.

That’s actually debatable; I wouldn’t say that is clear. Historically, Western powers have suppressed Iraqi production. What the US really didn’t want was the Chinese, Russians and maybe even the French, developing major concessions in untapped Iraqi fields; because then they would have influence and control over the spigots.

Any source for that conclusion? In any event the Iraqi government will retain majority interest in any deal and will control the spigots and who gets to buy... meaning whoever will pay. Investors ceased to control sales decades ago. Just because a US company gets a concession doesn't mean the oil goes to the US, same with a Chinese company.

That free-market oil is great for China, except if they ever want to do anything the US might object to. Which frankly is fine with me, but unfortunately the Chinese think otherwise and are scouring the world for equity barrels and attempting to diversify and secure supply routes.

Everybody tries to diversify supply, nothing new there. All the Chinese deals are to buy at prevailing market price, and any of them can be tossed by the source country at any time: there is no real security and the idea of "locking up" sources is a fantasy. Chinese investment in high-risk areas is from an energy perspective a good thing for the US: it adds to the global production pool without us having to take high-risk investments. No reason to feel threatened by it. How it will work out for the Chinese remains to be seen. I think it's quite likely that in the next decade or so we'll see Chinese intervention to support a threatened government in which they're invested from a rebellion aiming to nationalize investments and/or cut new deals. That will be a new twist in the small wars world, and it will be a welcome relief to be able to watch somebody else mired in the inevitable mess.

Really nothing there to get all breathless, hyped up, and conspiratorial over, unless you really really want to.

[Rick M]

Whoa, you guys have been busy on this thread.

We're on the run here with haying (perfect weather this morning: sunny, warm & breezy).
I was only able to scan your exchange but will examine closely this evening.

Regarding security of oil supply, this appeared this morning re. declining Saudi export capacity:
http://www.emirates247.com/business/...07-20-1.408672

Its concerns are entirely consistent with projections by Jeffrey Brown and by Chatham House.
When Saudi exports stall, we will all be in trouble.

[davidbfpo]

Via separate, non-SWC research I've located a European academic / policy research think tank, the European Centre for Energy and Resource Security, co-located in London and Berlin that may have items of interest: http://www.eucers.eu/

[Dayuhan]

Rick,

As I said before, for reasons connected to the real job I've been reading a lot about natural gas as a vehicle fuel, and it seems to me that there might be real applicability to your concerns over the impact of oil scarcity on diesel-dependent farmers.

Good overview on the gas scene from MIT:

http://web.mit.edu/mitei/research/st...atural-gas.pdf

Gas is interesting for a number of reasons:

- It's consistently much cheaper than diesel... nowadays as much as $1.50 per gallon equivalent cheaper.

- The price is much less volatile, as the North American consumption is sourced within North America and is thus less subject to security and risk related fluctuation.

- The distribution grid is already in place, as gas is widely used for heating and cooking.

So, on a rough basis... supposing the government gave a farmer a zero-interest loan to convert his fleet to CNG and install an on-site fueling system (slow-fill overnight fueling systems are available and much cheaper than the fast-fill variant). The farmer then saves roughly $1.50/gallon equivalent, and uses the savings to pay back the loan. The farmer is no longer dependent on oil, and emissions are dramatically reduced... the emissions reduction could be considered the "interest" on the loan.

I have no diea if the numbers on that would stand up to detailed study (the key to assessing viability would be the quantity of fuel the farmer uses), but it certainly seems like it would be worth a close look.

[Rick M]

David,
Thanks very much for the EUCERS link. I was not aware of them or their military-energy focus, and will probably write to Prof. Frost for more details.

Steve,
You are correct on all points re NG, but several problems come to mind.
There is a distribution grid in place, but very few farm-houses are on it (I don't know of any). The cost of running pipelines to farms would be prohibitive, in which case we are looking at delivery by truck (we've had propane delivery to our island for decades).
Each farm would then need its own high-pressure tank (just as we have diesel tanks now).

A greater problem may be the range and power of a NG tractor. We can go all day without refueling, which is not a big issue for me but it would be out west... they would not want to drive miles just to refuel. I would think that an NG tank would take up much more room than a diesel tank (on the tractor).

Tractors don't have a suspension, so I don't know what all that banging about might do to high-pressure gas lines over time.

But these are not insurmountable problems, in which case your recommendation seems perfectly sensible. Assuming SG is as viable as the optimists say, we may very see things evolve in the direction you are suggesting.

However, Art Berman (for whom I have great respect) is far from convinced about the large-scale viability of SG:
http://www.theoildrum.com/node/8212#more

Farmers would want to see the uncertainties re long-term supply and price cleared up before they converted. Farm vehicles last for decades: our Ford 5000 (1968) is into its 5th decade of service and might outlive me.

[Dayuhan]

Assuming SG is as viable as the optimists say, we may very see things evolve in the direction you are suggesting.

However, Art Berman (for whom I have great respect) is far from convinced about the large-scale viability of SG:
http://www.theoildrum.com/node/8212#more

Farmers would want to see the uncertainties re long-term supply and price cleared up before they converted. Farm vehicles last for decades: our Ford 5000 (1968) is into its 5th decade of service and might outlive me.

There will always be uncertainties over supply and price. Given that limited supply and high prices for diesel are a virtual certainty, it's more a matter of looking to the area where the uncertainties are least threatening.

There's certainly a prodigious amount of hype over gas at the moment. As is so often the case, a lot of that is nonsense, but there's also a solid basis on which that overextended edifice of hype has been built.

In a lot of energy-related fields we see delayed elasticities: price does drive production and consumption, but it doesn't drive it instantly. Gas production has spiked, but consumption hasn't, so the gas price is very low. That will drive consumers to gas eventually, increasing demand and stabilizing price at a more sustainable level. That will take time, though. An oil-fired power plant can't just switch over to gas because it's cheaper. A trucker can't fill up on CNG instead of diesel just because it's cheap, and a homeowner with an oil-burning furnace can't just ring up a gas delivery instead of oil. The shift requires substantial capital investment, and it will require time.

Right now there's a fair bit of silliness going on. People are drilling gas that with current technology and at current prices should be left in the ground, because more wellheads makes better investment hype.

Right now the price is unsustainably low, but that's not all bad. It will help to drive the capital investment needed, and some of the flakier companies in the business will fail and be consolidated into those with more effective business models. Bringing the gas price up to a sustainable level would reduce the price advantage of gas over diesel (unless the price of diesel also rises, always possible) but it could still be very substantial, and domestic sourcing is a significant cushion against wild price fluctuation.

I do expect to see the current extraction technologies improve as they mature and are more widely used, reducing extraction cost. I also expect to see a moderate increase in gas demand and price as the lower price and prospect of lower price volatility attract more users.

Berman says:

The “Pickens Plan” seeks to get congressional approval for natural gas subsidies that might eventually lead to conversion of large parts of our vehicle fleet to run on natural gas. This might commit the U.S. to decades of natural gas exports at fixed prices in the face of scarcity and increasing prices in the domestic market.

That makes no sense at all to me. How would converting part of the US vehicle fleet to gas commit the US to decades of gas exports?

Realistically, I don't see "large parts of the US vehicle fleet" converting to gas, with or without the Pickens Plan. For your average vehicle user the benefits just don't justify the incremental cost, even with the proposed subsidy. Where gas really makes sense is in continuous-use, low mileage, high emissions applications like sanitation trucks, transit buses, and local heavy hauling or delivery, especially where vehicles operate on fixed routes and can refuel at a single point. Because of the huge amount of fuel these vehicles use annually, the price advantage racks up much faster and brings a much quicker payback.

I don't think we're looking at a giant wholesale conversion of the US transport sector to gas. Raising gas consumption by 10% and decreasing oil by 5% is a target I've seen quoted by reasonable analysts.

Similarly, companies have gotten permits from the government to transform liquefied natural gas import terminals into export facilities that would commit the U.S. to decades of large, fixed export volumes.

I don't see that converting a terminal commits anyone to anything. The companies involved are taking a gamble. If the gas surplus reaches a point that makes sustained exports possible, they win. If it doesn't they lose. That would suck for their shareholders, but it wouldn't be the end of the world.

In short, I would certainly not jump on the bandwagon that claims gas is "the solution" for American oil dependence. I think it can be A solution for certain sectors of the economy, especially power generation, industrial process heating, and - among vehicle operators - large fuel consumers operating over a limited geographic range and directly exposed to diesel price volatility and tightening emissions controls. Whether or not agriculture is one of those sectors I'm not qualified to say, but I'd guess it's worth looking into. The likely answer would be that it's viable for some and not for others, and that it's part of a solution, not a magic bullet.

[Rick M]

I agree with your observations, Steve, and am likewise unsure as to what Art means.
I just submitted a comment at TOD asking him to please explain.

As far as I can see, the only way that could happen would be the trap that Canada fell into under NAFTA, where we cannot reduce energy exports except in proportion to our own reduced consumption. (In other words, Canada cannot suddenly reduce oil exports to USA in order to divert that supply to eastern Canada, even during an oil supply emergency.)

This is an untested Article in NAFTA, and I'm not sure how individual companies (which own the oil & pipelines) can be forced to uphold an international agreement, but I presume that there are ways.

But the Americans (and Mexicans) are obviously smarter than Canadians and would not be so stupid as to lock themselves into such an export commitment.

We'll see what Art has to say....

[Rick M]

Hi, Steve

Art has responded at 8:26 and I submitted a follow-up question.
Just go here, then go to the very bottom and it's in the last 10 or so comments (as of now, but further comments will bump everything upward):
http://www.theoildrum.com/node/8212#comments_top

Please consider signing onto TOD if you haven't already done so. I think you would find most of the discussions pretty interesting, and you would have quite a bit to contribute as well.

- rick

[Dayuhan]

Please consider signing onto TOD if you haven't already done so. I think you would find most of the discussions pretty interesting, and you would have quite a bit to contribute as well.

If I find one more place to procrastinate online I'll never get anything done. Bad enough with SWJ...

Looking at the comments on the gas issue...

Thanks for your comment because it made me realize that we had a sentence out of place which I have now corrected:

A sensible enough explanation, but it's interesting to me that despite a fair volume of preceding comment, nobody mentioned that fairly glaring error. Selective reading? Hard to know, exactly, but odd any way you look at it.

Clearly, the Pickens Plan does not commit the U.S. to long-term natural gas contracts but it does potentially mandate certain levels of use that would alter the open market-spot price formation dynamics. I question the embedded fossil fuel costs and use to manufacture the conversion equipment, installation facilities, and infrastructure to distribute the natural gas to thousands of service stations around the country. In short, I think the plan is simplistic and does not fully consider the full-cost structure of the investment. It sounds good but, on deeper consideration, has problems.

Certainly the use of subsidies to encourage a transition to gas distorts the market to some extent, but there's also a distortion in the other direction caused by simple inertia. Alternative vehicle fuels are stuck in the mother of all chicken-and-egg ruts: nobody will build fueling infrastructure if there aren't vehicles on the road to use it, but nobody will put the vehicles on the road if there's no fueling infrastructure. Any attempt to bring new vehicle fuels into the mix will require a bit of a shove to overcome that, and I think that's what the Pickens plan (and other alternative energy incentive plans) is trying to do. I don't think it will generate a dramatic transition, because it doesn't address the primary obstacle: the very high cost of CNG conversion in the US and the limited number of approved conversions available. It costs less than $5k to convert a light vehicle to CNG in Germany, where labor cost and environmental standards are roughly equivalent to the US. In the US it costs $10-20k, and approved conversions are available for very limited numbers of vehicles. The reason is an appallingly cumbersome and expensive procedure used by the EPA to approve conversion processes.

I expect that to change over time, and I expect that gas will gradually find a place in the North American transport mix. The process of evolution will determine who makes the transition and who finds it viable.

Of course as use of gas increases the price will go up... that's not a bad thing, as a higher price will be needed to generate continued production, even though production costs will decrease as the technology improves and the scale of production increases.

Of course conversion and infrastructure costs have to be factored in, but there are similar costs to use of any other fuel. There are many billions being spent right now to expand and improve oil production infrastructure, all of which will be passed on to customers. Most of those billions are being spent abroad. At least the capital investment supporting the expansion of the role of domestically produced gas in the North American energy mix is domestic, and can generate domestic jobs and boost the domestic economy. Most of the capital is coming from private sources. Not all the ventures will succeed, but that's always the case, and I don't see that private investment in domestic industry is a bad thing.

I'm not sure it's appropriate to class commitments made by US companies as "US commitments". Companies will take risks, some will win, some will lose. That's implicit in any industrial shift. People will see opportunities and try to take advantage of them, sometimes in legitimate business with a real future, sometimes by conning naive investors into buying hot air. Lots of people lost their shirts in the .com bust, but the internet is still a very viable business with a real economic impact. Yes, some companies and some people will lose, but that doesn't mean the industry as a whole isn't viable.

Of course anyone who claims gas will replace oil is spouting nonsense, but that doesn't mean gas can't play a much expanded role in the energy mix, displace a significant amount of current and future oil consumption, and provide a useful alternative for some industries and sectors.

[Rick M]

Thanks for your detailed analysis, Steve.
No quarrel with any of it.

Meanwhile, the U.S. Chamber of Commerce recently published its energy security index, which is a rather interesting concept. I have seen nothing about it in the media.
A review of their Index was posted this morning at Energy Bulletin:
http://www.energybulletin.net/storie...-commerce-2011

An e-mail has been sent to the Chamber which alerts them to the review and invites them to respond.

This may also be of interest:
http://www.theglobeandmail.com/repor...rticle2130910/

[Rick M]

The Chamber of Commerce responded to the review of their Index of U.S. Energy Security. Their response and my reply to it were posted in a single article at Energy Bulletin this morning:
http://www.energybulletin.net/storie...ity-risk-and-a

The Chamber was respectfully encouraged to look beyond info from the EIA and to incorporate the observations & concerns of military analysts with respect to peak oil and export decline.

[Rick M]

(This has nothing particularly to do with energy, but I didn't know where else to put it.)

An American military logistics expert recently recommended that I read this analysis of how the USA acquired its strength, written by George Friedman at Stratfor.
At 15 pages, it's not exactly short, but (given the scale of the topic) it is both concise and very insightful.
Friedman focuses on five strategic imperatives that America had to achieve (and did).
The logistician was correct; this is certainly one of the most interesting non-energy items that I've read in a long time:
http://www.stratfor.com/analysis/201...vitable-empire