what if the price of oil declines significantly?

How can we make and keep the need for alternative power sources an urgent element if the price of oil declines to, say $80/bbl? If I am even reasonably close, that corresponds to about $2.00/gal at the pump. People have already proven that "two-dollar" gas does not generate the "hurt" needed to demand that Congress act. Popular support would vanish over-night.

I think that a decline in oil prices is in the future -- OPEC isn't stupid and pushing the US to alternate power sources is not in their best interest. Further, China's hoarding fuel will probably be over relatively soon and, if they dump their overages on the market, that will further depress the price. So, I believe my premise is valid and the time to plan for that contingency is now. How say you?

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Permalink Reply by Robert D. Jones on July 18, 2008 at 4:04pm: Raj (wouldn't be Raj Paul, by any chance?)

The math is pretty simple. If both the gasoline and CNG fueled vehicles are equally efficient (assume both get 20mpg) and the cars are driven 20,000 miles per year (yes, I like simple arithmetic) the cars would each use 1,000 gallons of fuel. Assume that gasoline is $4/gal and CNG is $2/gal. There is a $2,000 savings per year (assuming all other costs are equal). If the conversion costs $10,000 -- as per a conservative reading of the earlier post -- then it would take five years to amortize the cost. That assumes both gasoline and CNG are available at the same reasonably close location. If you throw in a mandatory distance to the closest CNG fueling station or the cost to set up your own station running off the CNG piped into your house ($4,000) if I recall the number correctly, then the CNG becomes non-viable. This does not appear to be an EPA driven problem.

I happen to drive a vehicle that runs on either gasoline or ethanol. The ethanol is not as efficient as gasoline (delta is about 3mpg). With the difference in gasoline and ethanol price, it is pretty much a wash in terms of money. Since the closest ethanol station is about twenty-miles away (but very close to a destination that a travel to every week or so). The net result? If I happen to need fuel and I am close to the ethanol station, I'll stop for green's sake, as it were.

That does bring up a second point about alternate fuels. To use a food source as the source for ethanol production ranks pretty high on the stupid scale, in my opinion. We need to make ethanol out of waste material or that simply shifts the focus from one relatively scarce resource to another.; ▶ Reply to This

Permalink Reply by Rexrino on July 30, 2008 at 11:13am: I vote for algae.; ▶ Reply to This

Permalink Reply by Rob O'Neill on July 23, 2008 at 10:19am: CNG conversion is here today, you can do it tomorrow. This is not sci-fi this is a "Today" solution to our situation.
Look at the sites below.

The "Phill" is pump that hooks to your NG line in your house just like your stove. You fill your own car in your garage overnight for about $1.50 a gallon.

The concept is multi-fuel Gasoline/CNG conversions, best of both worlds.
The ROI is about two years for the entire pkg @$4 per gallon.
Look for the CNG sticker next time you are behind a city bus.

www.CNGoutfitters.com
http://www.myphill.com/
http://www.fuelmaker.com/
http://www.ehow.com/how_2175756_convert-vehicle-natural-gas.html Delete Comme; ▶ Reply to This

Permalink Reply by Robert D. Jones on July 23, 2008 at 10:23am: Thanks for the info, Rob. I'll check it out. I have seen the CNG stickers on busses and some company fleets. However, the fueling stations are pretty much restricted. I mentioned in an earlier post that there was a CNG fueling station at an Exxon station less than two miles from my house here in Houston. It stayed in place for about a year and then was removed for lack of interest. This took place a few years back.; ▶ Reply to This

Permalink Reply by Rexrino on July 30, 2008 at 11:14am: I was just reading about this device. It cost about 2 grand. Sounds like a good deal. This would be a great asset for most Georgians.

It would be real nice if you could pull up to someones house, fill up, pay them a bit more then they pay for their use to offset their home costs.
:); ▶ Reply to This

Permalink Reply by Leon D'Souza on July 18, 2008 at 8:16pm: Robert,

Who am I to disagree with the wisdom of experience? I'm sure you're quite right. Although I still believe price controls can be managed.

If "pain" is a necessary motivator, I think a "tax," or some sort of induced discomfort could be quite successful. Sure, we might anticipate a degree of political opposition to getting such a measure passed, but education (your proposal) could help mitigate that resistance. After all, we are in dire need of a source of funding to help advance research into alternative energy sources. This way, Congress wouldn't need production tax credits for wind and solar energy, which unfortunately have been bogged down in partisan debate. It would have a taxpayer-funded program to support renewable energy initiatives.

To your point about a diversion of effort, don't you think that's quite impossible at this juncture? To be sure, our dependence on net petroleum imports – according to the Energy Information Administration's 2007 statistics – is at a staggering 58.2 percent. Could the argument about our disproportionate dependence on foreign oil be made more poignantly? Surely more people are aware that our political and economic context has shifted rather significantly since the 1970s. Perhaps I'm being terribly naïve, but I'd like to think times have changed.

I agree entirely with your other suggestions. On providing incentives for Big Oil, however, your guess is as good as mine.; ▶ Reply to This

Permalink Reply by Robert D. Jones on July 19, 2008 at 7:41am: The problem I see with "tax" is that I have minimal confidence that the Government will invest the money wisely. I think that commercial enterprise is still the most efficient implementation device available in the world. Look at the success of the non-government flight to space by the Rutan organization. They tend to cut through a lot of BS and get to the point quickly.

Production tax credits are OK (as would be an increase in the depletion allowance for US production). There have been a number of significant improvements in solar power generation recently -- both in reducing the size of the collectors and making them more sensitive to ultra-violet which increases their effectiveness on cloudy days. Wind power has a lot of potential because the output can be directly inserted into the grid. However, the investment in a wind-farm large enough to accomplish the PickensPlan thrust will be huge. I assume that one of these days someone is going to create an organization whose purpose is to create such a farm and many of us will put some money into it.

Personally, I would like to be part of that effort (don't have a lot of money, but I have been around the technical world for more years than I care to remember, in the Government, large corporation, and small, private corporation arenas).

This goes back to my comment that in order to achieve significant popular support, we will have to show some kind of viable power production, meaning that the cost to produce is competitive with the cost to produce power from some of the carbon based fuels. Whether that is going to be solar, wind, or CNG generation of electrical power (in the short run) is still up in the air.

Off the top of my head, it would seem that converting oil fired or coal fired electrical generation plants to run on CNG would be the quickest way to reduce our use of oil. Don't know how much of our off-shore oil goes to heating homes, but that would be another significant way to reduce oil consumption in the short haul.

Nothing definite, just something to think about in terms of getting some kind of success story in the public view.; ▶ Reply to This

Permalink Reply by Leon D'Souza on July 19, 2008 at 10:54am: Robert,

I can appreciate your lack of confidence in the government, although I cannot share your optimism for a policy that would leave the decision to pursue renewable energy to the free market. Clearly, the oil industry has been woefully complacent thus far. What would inspire them to suddenly seek alternatives now? It is vitally important that the government at least set in place a framework that requires this sort of investment, regardless of the prevailing price of crude.

What we must acknowledge is that the world will eventually find its access to carbon-based fuels crucially diminished. This will inevitably create larger problems in the realms of economic and political sovereignty. At that level, governments will necessarily become involved. So why not act proactively in the present?

I agree with your comment about providing a demonstration of viable power production. To this end, I think the State of Texas is making headway. In North Carolina, Appalachian State University is testing an economic impact modeling software in conjunction with the Department of Energy's National Renewable Energy Laboratory. The program helps regions determine the impacts of wind energy on their respective local economies.

You can read about the various projects here.; ▶ Reply to This

Permalink Reply by Robert D. Jones on July 19, 2008 at 11:12am: Leon,

We do not disagree markedly. I think the Government has to be involved lest they hamstring everything by over-regulating the various processes -- if nothing else. I also think that it would be ideal if the Government would create an Agency (like the old NACA versus the current NASA) that would do research in alternate fuel sources and provide the results of that research freely to commercial entities. The various comanies would then build on that research to create competitive products. That model was the one that made us clearly the leader in the Aerospace World. It is a shame that we departed from it, in my opinion -- but I am off the subject.

The problem is that rarely does the Government release the full cost of anything. For example, the advertised cost is something like $3,000 per pound to low-earth orbit (using the Shuttle). Unfortunately, that cost simply doesn't include a huge amount of money that is spent to sustain the NASA infrastructure, only the direct cost attributable to a specific mission. Using that kind of criteria, the real value of the various alternate sources may well be masked. That is particularly true if the various entities receive compensation based on the lowest cost per unit energy produced.

Truth in accounting is an essential element in determining the best candidate for long-term relief. Short-term relief is another subject. In that case, like the Moon Landing, speed is more important than cost.

I'll look at your cites a bit later. Work calls....; ▶ Reply to This

Permalink Reply by Leon D'Souza on July 19, 2008 at 1:14pm: Robert,

An organization modeled after NACA/NASA is precisely what I had in mind! Your concerns about truth in accounting and transparency, however, are certainly valid. Could we perhaps commission some sort of independent oversight body to ensure efficiency?; ▶ Reply to This

Permalink Reply by Robert D. Jones on July 19, 2008 at 2:37pm: Afternoon Leon,

Remember that NACA was a strictly research organization (there is a relatively small part of NASA that still does that kind of work, but most of their budget goes to maintain the infrastructure needed to perform their operational tasks -- meaning to fly the shuttle and actually prosecute missions). I remember the volumes and volumes of research data available to all (I worked in a technical library while in college -- after I discovered that there were other jobs besides heavy construction that could pay for an education).

The only oversight body that I recall was in the headquarters group -- plus the normal congressional committees, of course. The crunch was that the budget for NACA was relatively small and their product was not displayed for all to see and critique.

I'm a bit leery of "independent oversight" organizations. In order to really implement oversight, one has to be as familiar with the tasks as those doing the work. If you aren't that deep in the subject matter, it is simply too easy to snow you with fancy "viewgraph engineering".

I am a pretty firm believer in the market place forcing efficiency once most of the research is accomplished. I am not against oversight, I just hate to see the kind of talent taken out of the primary task arena.; ▶ Reply to This

Permalink Reply by Leon D'Souza on July 19, 2008 at 7:26pm: So perhaps the solution, then, is to fashion an organization closely resembling the National Advisory Committee for Aeronautics in form and function, but with federal funding indexed at least to inflation, and mandatory disclosure requirements ensuring an acceptable level of transparency.