Sunday, June 24, 2007

Return to cheap energy: think again

Talk of energy is all the rage these days as we confront the intertwined issues of GW and higher petrol prices. The pundits have their pet solutions, though the politicians, for probably very good reasons, show scant coherence as to implementing any of them. As a thoughtful piece in the Tribune this week pointed out, any solution to "dependence on foreign oil" runs counter to the popular desire for low prices. Simply put, any alternative energy source will be more expensive than the current "exorbitant" high price. Remarkably, or perhaps not so, the surge in petrol price seems to do little to alter behaviour so perhaps it is not that high after all. With my torrid half-mile commute to the college I fortunately do not notice the effect; although my summer Argonne adventure now demands a gruelling ten mile journey and so my transportation costs have soared stratospherically. I am now looking to wind power - perhaps a sail-assisted car; though I'm not sure that sails will be a help or hindrance at the obligatory 80 mph on I-355. I'm thinking perhaps it's not such a good idea and probably explains why there aren't many sail-assisted vehicles on the roads (a different kind of hybrid).

The notion that energy independence will somehow ensure low prices along the lines of what were enjoyed for so long is delusional. Independence assumes alternatives dominate because for sure oil alone cannot do it. I enjoyed my annual free lunch at the Argonne Guest House courtesy of a former Amoco colleague who now commands some upper echelon administrative role there, though he is curiously obtuse as to exactly what it is. That aside, as I set about my salmon, quite passable apart from the somewhat stale Terra chips (okay it was Monday - I suppose they were left over from the previous week), we discussed the energy business. What about the hydrogen economy? Can this deliver at an economical price? What is not recognized in all the hype about the promise of this carbonless technology (at least at the point of its combustion) is the cost of delivery. At a low market penetration, the kind of entry level appropriate for a young technology, the cost of delivering hydrogen would hugely exceed the current delivery costs of petroleum - a fact overlooked by many I suspect, and one which really emphasizes the cost dilemma for politicians: it is impossible to campaign for reduced fuel costs and alternative fuels at the same time.

In Illinois the dilemma is readily apparent in the fight over electric rates; the popular approach is to extend the low price to the consumer; the long-term view would be to let the price of electricity reach its market value - highly unpopular with consumers.

So how even could a hydrogen, or whatever alternative fuel, economy get going? A realistic approach, avoiding subsidies and artificial price fixing, would be to burden the fossil fuels with taxes that reflect their negative environmental impact - a carbon tax. I can't imagine any legislator campaigning on that ticket and I don't expect to hear about any carbon taxes any time soon around here.

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