In this Guest Voice post, columnist Bill Steigerwald interviews Carnegie Mellon University economics professor and veteran economics consultant Allan Meltzer on the economy.
Our Sorry Economy — Interview with Allan Meltzer
by Bill Steigerwald
Carnegie Mellon University economics professor Allan Meltzer has served as a consultant on economic policy for Congress, the U.S. Treasury and the World Bank and has written “A History of the Federal Reserve,” part-one of his definitive history of the Fed that ranges from its founding in 1913 to 1951. On Thursday, July17, I called Meltzer, 80, at his home not far from the CMU campus to find out his thoughts on the sorry state of the economy — and what Washington is or is not doing right to make things better:
Q: Oil prices have taken a nice dip and stock prices are jumping. Is the worst over for the economy?
A: Who knows? The decline in oil prices is probably a sign that the oil market recognizes that the world economy is slowing. Despite all the talk about speculators, the facts about the oil market are very simple: The demand has been about 1 million barrels a day more than the supply. Demand has been increasing and the supply has been falling. So you don’t need to blame speculators to get a story about why the prices have been rising.
Looking ahead, the market sees — whatever the moment-to-moment problems are — that there’s going to be less demand for oil unless something changes. Now, what might change? Well, one thing is world demand, and world demand is, I think, seriously slowly.
Q: And stocks moving up is not the start of a big trend?
A: A lower oil price does help. Despite all the talk about the housing market — and the housing market is in many locations a serious problem — it is not the major problem, as far as I can see. The major problem for the economy is that people are really pushed against their budgets to pay for gasoline and food, which have risen. Oil prices get into every product we buy; every product moves by truck or airplane, and those industries are seeing serious cost increases. So prices are going to rise for transportation, and that affects everything we buy.
Wait until we see what is going to happen to the home heating-oil prices of people who use oil to heat next winter. It’s summertime now and, of course, they are running air-conditioners. But there’s going to be a real problem in the winter in New England and the Midwest with oil prices for home heating.
Al Gore’s work to protect and preserve not only this country’s but the world’s natural environment has found a great many useful expressions. He is, in fact, the best-known spokesman in this realm.
Yet, for reasons that seem incomprehensible to me, he still seems to be missing the key point that could advance this end far more effectively—the fact that environmentally sound behavior is almost always now also economically sound behavior. That making “the hard choices between the environment and the economy” is a basically a 19th century view that should no longer has a place in the thinking of 21st century planners.
This strange failing was again heard in Gore’s recent comments about freeing the U.S. from dependence on petroleum by 2020. He said this “would cost trillions of dollars,” the kind of statement that makes it sound as if this money would take away from something else, lower living standards, be a kind of pot-latching to Mother Gaia.
No, Al. That kind of statement is just plain misleading. The trillions of dollars going toward this hoped for objective isn’t destroyed. It is invested in new infrastructure. It will not “cost the economy” anything, any more than money that went toward converting from a horse-drawn economy to a car-based economy “cost” our economy anything when it occurred in the early part of the last century.
Words are important in winning arguments. “Costs” is a bad word in the energy context. “Investment,” “new jobs in new industries with great export potential,” “savings on fossil fuel achieved through the use of renewable resources,” those are the good words and phrases that should always be employed.
We have been using the wrong words about the environment-economic interface far, far too long. Use the right wording and desirable policy shifts will occur much, much sooner.
[P.S. I was an environmental adviser to the 1992 Clinton-Gore campaign, and was saying this back then. And frankly, I feel it’s really about time that folks in Washington finally got this stuff right!]
July 14th, 2008 by SWARAAJ CHAUHAN, International Columnist
Everything, it is said, is fair in love and war. Let’s admit it, we all are in love with “oil”. In the present long-drawn “war” we have allowed anything and everything to happen. In fact our “love” has turned into a naked “lust” for oil. And when “lust” takes hold of leaders and the public, they lose their sense of proportion and become virtually myopic (or blind) to the consequences of their actions.
So what can a Mc Cain or an Obama do under the circumstances? (Have a look here…) These thoughts occured to me when I recently went through a must-read book “Half Gone” by Jeremy Leggett. A powerful book that provides fascinating insight into the geology and politics of oil…and hope(?).
He writes: “Despite the defectors from the Empire of Oil, the growing dissent within it, little (has) changed. The Great Addiction remained…Barons of the Empire of Oil rode the planet in executive jets, more powerful than any president except perhaps the president of the Number One Nation State. But then he was one of them anyway.
“The most basic foundations of our assumptions of future economic wellbeing are rotten. Our society is in a state of collective denial that has no precendent in history, in terms of its scale and implications.
“Most US presidents since the Second World War have ordered military action of some sort in the Middle East. American leaders may dress their military entanglements east of Suez in the rhetroic of democracy building, but the long-running strategic theme is obvious. It was stated most clearly, paradoxically, by the most liberal of them.
“In 1980 Jimmy Carter declared access to the Persian Gulf a vital national interest to be proteced by ‘any means necessary, including military force.’ This the US has been doing ever since, clocking up a bill measured in the hundreds of billions of dollars, and counting. With such a strategy comes an increasingly disquieting descent into moral ambiguity, at least in the minds of something approaching half the country.
“The deeper the dependency on oil and oil money becomes, the worse the effects of the unforseen energy crisis will be when it hits, so the more America’s security is undermined, even as its government advances enhanced security as the rationale for the latest actions of the Pentagon’s global oil potection service.
“Confronted with skyrocketing oil prices, the rising cost of food, the financial crisis, chaos in the money markets and finally, global warming, the powerful have no convincing response to provide the world.
On all of these issues - and without forgetting the Iranian nuclear threat, the G-8 Summit in Japan has illustrated the impotence of the major industrialized nations which, until recently, were able to impose their views to the rest of the planet.”
“The absence of vision is largely the result of the now-concluding American administration, which only recently recognized the existence of the problem.”
July 9th, 2008 by SWARAAJ CHAUHAN, International Columnist
Tim Johnston's Australian company, Firepower, seemed to have found the answer to the global energy crisis. It claimed that their “magic” pill would slash fuel costs by nearly 42 per cent, thus providing a saving of up to (Australian) $20 a tank and cut harmful emissions. The company now seems to be in big trouble with Johnston reportedly on the run.
Investors bought more than Australian $80m worth of shares in Johnston’s company. The Australian businessman enjoyed an opulent lifestyle, and bought himself expensive toys, including the country’s leading basketball team, the Sydney Kings, reports The Independent. “The Australian media, meanwhile, have uncovered documents revealing that the fuel-saving properties of Firepower’s little pill are – perhaps not surprisingly – unproven.
“Yet the company engaged the interest of the likes of John Howard, the former Australian prime minister. Mr Howard witnessed the signing of a deal in Pakistan, where Australia’s High Commissioner, Zorica McCarthy, later bought 200,000 Firepower shares.
“So is Mr Johnston in London, Bali, Singapore or the British Virgin Islands, where various reports have placed him? Among those wanting to know are the Australian Tax Office and the Australian Securities and Investment Commission, which are investigating his affairs. The (Sydney) Kings’ liquidator is seeking a warrant for his arrest.” More here…
Johnston tried to sell his “magic pills” in New Zealand 16 years ago. More here…
In a previous column, several readers took me to task over my assertion that Senator McCain seemed to have put forward a more sensible, comprehensive set of proposals for both U.S. energy policy and the economy. (These days the two are linked to the point of being inseparable.) Today I would like to take a more comprehensive look at the stated positions, voting records and campaign trail statements of the two primary candidates on some of the key energy initiatives. Both are making admirable calls for advancements in alternative and renewable energy sources, which will be key to our long term strategy as we move away from a fossil fuel based system, but the specifics differ, as do their proposed short and medium term solutions.
First let’s examine their position on biofuels, specifically ethanol. Obama has been a vocal and enthusiastic supporter of corn and grain based ethanol programs. However, more and more research has indicated that this approach presents a number of problems. The large amounts of produce going into this project may be contributing to food shortage concerns, and the process itself is far from sound in terms of environmental issues. (We use up to 2,000 gallons of fresh water to produce a single gallon of ethanol and the waste products are considerable.) Ethanol is also a less efficient fuel than oil, containing only 75% of the energy by volume to an equivalent amount of oil based fuel. McCain is proposing a roll-back of the subsidies for this program, shifting the funding into alternative green sources to produce this type of fuel.
On the issue of nuclear power, while there is still significant, residual opposition to it in this country, the fact is that nuclear fission technology is safer than it was in the past and new technological advancements have greatly reduced the amount of waste byproducts. Storage is still a significant, valid question, but we already have plans in place which seem viable. Meanwhile, other countries in Europe are generating a majority of their electricity using this technology (which we developed) while the United States has not begun construction on a new nuclear plant in more than thirty years. Barack Obama’s position on this has been fuzzy at times, but he has come out against nuclear power on several occasions. McCain is not only calling for the construction of at least 45 new plants by 2030, (100 plants eventually) but working on plans to reduce the political and regulatory gridlock preventing such development.
On wind, solar and geothermal, contrary to charges made by Obama’s campaign, McCain has not argued against these forms of energy, and has called for their continued research, development and deployment. But McCain also realizes that we do not yet have the technology and infrastructure in these areas to meet expected needs. Both candidates want to continue development of these technologies, but Obama’s plan to mandate 25% of the country’s electricity coming from these sources by 2030 is simply not realistic in the opinion of most experts. (See the previous link on that.)
To fill that gap until such technology can fully meet our needs, we will need other domestic energy sources. While you are free to oppose the idea, we may still have no choice but to rely on domestic oil and clean coal sources in the medium term. McCain is calling for lifting the bans on domestic drilling and Obama opposes such a move. I am very puzzled by people saying that “we won’t produce any oil for seven years” with new domestic drilling, and using that for a reason not to do it. If it takes seven years and you never start, you will never get any more oil.
How have the candidates voted on energy in the past? One of the key items on the agenda was the 2005 energy bill, developed primarily by Vice President Cheney. At the time it was noted that the bill contained billions of dollars in giveaways for oil companies while doing little or nothing to support the exploration of alternative energy sources or efforts to decrease our dependence on fossil fuels. The bill was backed by President Bush, but oddly enough, John McCain voted against the bill and Obama voted for it. (And yet, Obama is running ads accusing John McCain of voting with President Bush to give big tax breaks to oil companies, which is certainly an odd charge in light of this voting record.) Obama also supported the recent farm bill which was packed with subsidies for large agri-business interests (as opposed to small farmers) and propping up the ethanol push again, while McCain opposed it. This voting pattern, in my opinion, not only speaks to McCain’s commitment to fiscal discipline, but makes him arguably the “greener” and more environmentally friendly of the two candidates in terms of energy policy.
Taking all of these factors into consideration, I still find McCain to have the more comprehensive and viable energy proposals, which will be a key consideration for many voters this fall. And this plan also seems to be the most environmentally friendly. Obama is to be given full credit for calling on Americans to drastically reduce energy demand, but he does not seem to do much to increase supply. Of the two plans, I still have to give the tip of the hat to McCain’s Lexington Project.
Billionaire oilman T. Boone Pickens is putting his clout behind renewable energy sources like wind power.
The legendary entrepreneur and philanthropist on Tuesday unveiled a new energy plan he says will decrease the United States’ dependency on foreign oil by more than one-third and help shift American energy production toward renewable natural resources.
“The Pickens Plan” calls for investing in domestic renewable resources such as wind, and switching from oil to natural gas as a transportation fuel.
He’s apparently putting $2 billion down on the table, so he’s serious about playing the hand… and as a result of both the project and its scale, there are very real possibilities. I’m not an expert on any of this, so I can’t speak for his numbers, but I’m intrigued. Excited, even.
Pickens’ site is here. I also looked up some detail from a November announcement about the public hearing in Gray County:
Pickens, a Roberts County rancher and Dallas businessman, created Mesa Energy to build a 4,000-megawatt wind farm in northern Gray County and southern Roberts County. In addition to the wind farm, Mesa plans a 750-megawatt coal-fired plant to supply energy when the wind isn’t blowing and a 600-megawatt natural gas-fired plant to handle peak loads.
In addition to the generation facilities, Mesa plans a 320-mile transmission line to the Dallas area to tap the fast-growing urban markets of North Texas.
For those of you who, like me, have heard about the impact on bird populations, here’s a link to some information. And here’s yet another link to “common misperceptions” (pdf) about wind power.
So why do I think all this is so interesting and important?
For one thing, the scale of Pickens’ project means real, measurable impact that can be duplicated all the way up the “wind corridor”. It’s also a big enough step that other forms of renewable energy might finally be brought into the picture, under similar circumstances. (Think geothermal…) Add to these a modest expansion in nuclear power, and you’ve got yourself a realistic, viable, and sustainable energy plan for the future — and not the far distant, just-in-time-for-the-grandkids future, either.
Our future. A little over a decade.
His energy plan could be implemented within 10 years if both Congress and the White House treat the current energy situation as a “national emergency and take immediate action,” [Pickens] predicted.
Well duh! It is an emergency! Let’s act like it, people!
All our government really needs to do is provide some incentives and then stay out of the way.
I’ve been hesitant to build up a lot of hope, but I’m starting to think that the future of America’s energy policies may wind up being the turnkey issue that drives a lot of us off the fence who have been either undecided or hovering around third party candidates out of frustration with our major party choices. CBS News is reporting on a new proposal from Sen. John McCain which is being dubbed “The Lexington Project” which may provide a ray of hope for those dismayed by Congressional inaction on an increasingly urgent topic.
Senator John McCain unveiled the name of his energy project in Las Vegas today as he wrapped up the western swing of his two week energy tour. Deemed the Lexington Project, McCain’s plan states the U.S. will be independent of foreign energy sources by the year 2025.
“For the town where Americans asserted their independence once before,” McCain explained of the plan’s namesake in Virginia. “Let it begin today with this commitment: In a world of hostile and unstable suppliers of oil, this nation will achieve strategic independence by 2025.”
Anyone who is looking for a “silver bullet” to address our energy problems with one, single solution is doing nothing more than whistling their way past the graveyard. It’s going to require a patchwork of solutions in different areas where each makes sense. There are some serious possibilities laid out in this initiative which Congress would do well to consider. From the McCain team:
The Lexington Project Initiative Includes:
· Expanding Domestic Oil And Natural Gas Exploration And Production.
· Taking Action Now To Break Our Dependency On Foreign Oil By Reforming Our Transportation Sector.
· Investing In Clean, Alternative Sources Of Energy.
· Protecting Our Environment By Addressing Climate Change.
· Promoting Energy Efficiency.
· Addressing Speculative Pricing Of Oil.
It’s highly disappointing when Congress talks endlessly about issues which they feel will deliver political advantage and then wind up doing nothing. One great example is immigration. (Just to pick one of many, of course.) Stop talking about building a 100 foot high electric fence across the Mexican border with a moat and sharks and dinosaurs. You’ve bored us to death. If you were serious about it you would be moving to stiffen penalties for employers who hire illegal aliens and putting the funding and resources in place to pursue those prosecutions. If you lack the political will to do that, please stop wasting our time.
Congress has done much of the same on the energy issue. We have two Senators running for president right now. Don’t tell me what you’re going to do after we elect you. You’re in a position to do something right now. If either of them can get Congress together to wrestle something like the Lexington Project to the ground, then you will have impressed me.
Get to work, gentlemen. This is coming down to crunch time and we need a lot more than talk. This Lexington Project proposal is a good start. Let’s see if Congress can’t actually get past the partisan bickering and do something about it.
Republican presumptive Presidential nominee Sen. John McCain has made it clear: although he has called for renewed offshore drilling as a way to help get America out of the energy crunch and has shifted his position on that — he is not dropping his opposition to drilling in ANWR:
Senator John McCain reiterated his opposition to drilling for oil in the Arctic National Wildlife Refuge on Thursday, a day after his statement that he would be willing to “go back and look at it again” sparked speculation among both opponents and proponents of drilling that he might change his mind.
“My position has not changed,’’ Mr. McCain said here on his campaign bus.
“People have said to me, ‘I’m going to bring you new information about ANWR, how environmentally we can make it safe,’” he said. “I’ll be glad to accept new information but my position has not changed.’’
Mr. McCain did change his position this week by proposing lifting the moratorium on off-shore drilling – in which he was quickly seconded by President Bush – but he said his position on drilling the the wildlife refuge was unchanged.
It’s actually a very smart position for McCain, going into the general election. It means he is not appearing to be Bush Lite on the drilling — taking a middle-stance between those who want unfettered drilling and always mention ANWR in the same breath and those such as Democratic presumptive Presidential candidate Sen. Barack Obama who oppose drilling.
The issue is more complex than it may appear at first glance: despite a widespread perception that most Americans remain opposed to drilling in once-taboo areas, a recent Gallup poll found “57 percent of Americans would support drilling in the nation’s coastal and wilderness areas that are currently closed to exploration if it helped reduce gasoline prices and if the drilling was conducted under strict environmental controls,” US News reports.
But the wildlife refuge?
Those who oppose it have pointed to experts who say it would do little for a short or even long term fix, and mostly be a big, fat ladle of gravy handed over to the oil companies. Here’s one of the websites arguing against it. Some mainstream news media also reached the same conclusion — as you can see here and here.
“One reason why I’m now far more in favor of off shore drilling is the price of oil,’’ he said. But he said that he did not believe that the price was so high that he would reconsider his position on drilling in the wildlife refuge.
Bush and his talk show and web supporters have made ANWR a kind of rallying cry, but have been thwarted repeatedly. And to environmentalists, perhaps more than the thorny issue of offshore drilling, it has become a kind of line in the ice.
Add to that a slew of images of the preserve that are online — images showing pristine scenery and endangered Polar Bears — and it’s hard to believe any Republican who claims to be a descendant of conservationist President TR Roosevelt could ever advocate drilling there.
McCain often likes to paint himself as a modern day Teddy Roosevelt. And while he’ll take lots of heat for changing his position on offshore drilling, and will have environmental groups working against him, sticking with his position on ANWR will set him apart from both packs — and maintain some of the independent image he had that eroded as he has tried to please the GOP’s conservative base and show loyalty to George Bush.
McCain again when asked about changing his position:
“No, but again, if somebody says, ‘will you look at this information,’ that the guy stood up at the town hall meeting, `I know how you can make it environmentally and totally safe,’ I’ll be glad to look at that information,’’ he said. “I think it’s incumbent on me to review it. But I certainly haven’t changed my position.”
And unless he changes his position, his current position now puts him between the viewpoints of establishment Republicans (yes on offshore drilling and drill in ANWR) and most Democrats (no on offshore drilling and don’t drill in ANWR).
So McCain’s precarious political tightrope walk continues — shaky, but it continues..
I tend to wrinkle my nose when I hear our friends on the Right referring to Democrats as communists or socialists. It’s needless, caustic hyperbole in an already incindiary political climate. That’s why I found myself doing a double-take upon looking at this article from Outside the Beltway this morning. (Be sure to click through to watch this jaw dropping video of Congressman Maurice Hinchey talking about the oil industry.)
HINCHEY: So if there’s any seriousness on the part of what our Republican colleagues are saying in the House and elsewhere about improving the number of refineries, then maybe they’d be willing to have these refineries be owned publicly - owned by the people of the United States - so that the people of the United States can determine how much of the product is refined and put on the market. To me, that sounds like a very good idea.
That just happens to be MY congressman talking. (Excuse me for a moment while I bang my head on my desk…. OUCH. OUCH. OUCH… Ok. That’s a little better.) Clearly I need to pen a quick letter to my representative in The People’s House, but since I was going to write a column for TMV this morning, I may as well do it here.
Congressman Hinchey,
Speaking as one of your constituents, I watched with interest your recent comments about “nationalizing” the oil industry in our country. This fascinating proposal brought several questions to mind, chief among which was the following: Is your Democratic Party so fearful of winning two elections in a row and having to take the reigns of power that you’ve simply decided to throw yourselves on your swords? Or have you perhaps spent too long in cozy chats with Hugo Chavez that some of his thinking is creeping into the cloak rooms of Congress? You are aware, are you not, that the chief hallmark of socialism is “a political theory advocating state ownership of industry” as found in most dictionaries? I don’t like paying four dollars a gallon for gas either, but having you folks take over a major industry is… alright, I don’t really even have a word for what that is.
Assuming you could find support for this proposal, I’m more than curious as to how you would pay for it. If you think running the war in Iraq is expensive, I’m wondering where you’re going to come up with the cash to buy out the oil industry. It would be a staggering figure involving words like “trillions” among others. Or would you propose that our government simply seize their assets? Please… stop. Just stop. Go meet with your friends and figure out how we can let industry build some new, safer fission based nuclear power plants without the builders being regulated into the ground. Subsidize some major investments in micro-hydro. Let the states decide if they want to drill for more oil until we can fully move to renewable energy resources. If you really want to address the energy problems we face, seriously… go do something useful.
Regards,
Jazz Shaw
UPDATE: Over at Right Wing Nuthouse, our friend Rick Moran looks askance at government control of industry for “the benefit of the people” and concludes the following:
How often have we heard that battle cry in history? And oh how miserably those who have uttered it have failed to deliver promised benefits. From Lenin to Castro to Mugabe, the nationalization of industry to benefit “the people” has been a spectacular economic disaster. In the end, production in nationalized industry always declines. In the end, the industry has always fallen into ruins.
Suggesting that tough times call for tough measures, presumptive GOP Presidential nominee John McCain is calling for ending the federal offshore drilling ban — putting him at odds with environmentalist groups he was wooing and his own 2000 presidential campaign position on the issue.
The call is likely to mean environmentalists who have been counting the days since the Bush administration — considered by many environmental groups to be the worst administrations in American history on environmental matters — could work against him. And it also will likely be added to the list of issues on which Democrats say McCain has changed his positions. The Washington Post reports:
The move is aimed at easing voter anger over rising energy prices by freeing states to open vast stretches of the country’s coastline to oil exploration. In a new Washington Post-ABC News poll, nearly 80 percent said soaring prices at the pump are causing them financial hardship, the highest in surveys this decade.
“We must embark on a national mission to eliminate our dependence on foreign oil,” McCain told reporters yesterday. In a speech today, he plans to add that “we have untapped oil reserves of at least 21 billion barrels in the United States. But a broad federal moratorium stands in the way of energy exploration and production. . . . It is time for the federal government to lift these restrictions.”
McCain’s announcement is a reversal of the position he took in his 2000 presidential campaign and a break with environmental activists, even as he attempts to win the support of independents and moderate Democrats. Since becoming the presumptive GOP nominee in March, McCain has presented himself as a friend of the environment by touting his plans to combat global warming and his opposition to drilling in the Arctic National Wildlife Refuge and in the Everglades.
Representatives of several environmental groups criticized him for backing an idea they said would endanger the nation’s most environmentally sensitive waters.
This is the quote that could be a harbinger of what McCain can expect in campaign 2008:
Sierra Club political director Cathy Duvall said McCain “is using the environment as a way to portray himself as being different from George Bush. But the reality is that he isn’t.” The group began running radio commercials yesterday that criticize McCain’s environmental record in the battleground state of Ohio.
Democratic presumptive nominee Sen. Barack Obama responded as you would expect with a comment linking McCain’s call to Bush administration policies.
Nobody is yet calling John McCain a “flip-flopper”. But the Republican nominee’s increasingly finely balanced efforts to shore up his support among the shrinking Republican base while reaching out to independents is starting to fire up the critics.
On Tuesday morning, he launched an advertisement reminding voters of his repeated clashes with President George W. Bush over climate change, which Mr McCain believes is real and requires urgent action.
In the afternoon, he delivered a speech to the oil industry in Houston, calling for a lifting of the moratorium on offshore drilling in order to reduce petrol prices.
Mr McCain’s shift on offshore drilling – which contrasts with his strong support for upholding the moratorium in his 2000 bid for the Republican nomination – could further chip away at his reputation for being a “straight talker”.
Speaking as an amateur home brewer, I’m a big fan of yeast. They are marvelous little critters who have the incredible ability to eat sugar and excrete alcohol. What’s not to love? Other sorts of yeast make it possible for us to have bread to eat and medical products to improve and extend our lives. Well, now there may be one more, earth shaking reason to cheer for miniscule engines of biology. Some clever scientists appear to have genetically modified a relative of the noble yeast and created a bug which can eat organic waste products and excrete… OIL.
[T]he genetic alteration of bugs – very, very small ones – so that when they feed on agricultural waste such as woodchips or wheat straw, they do something extraordinary. They excrete crude oil.
Unbelievably, this is not science fiction. Mr Pal holds up a small beaker of bug excretion that could, theoretically, be poured into the tank of the giant Lexus SUV next to us. Not that Mr Pal is willing to risk it just yet. He gives it a month before the first vehicle is filled up on what he calls “renewable petroleum”. After that, he grins, “it’s a brave new world”.
Before you get too excited, the oil crisis has not suddenly been ended in one fell swoop. The technology has a ways to go, and currently the tank they have of these bugs can produce a whopping one barrel of oil per week. But with some further development and expansion, Mr. Pal thinks we can move into full scale production.
The closest that LS9 has come to mass production is a 1,000-litre fermenting machine, which looks like a large stainless-steel jar, next to a wardrobe-sized computer connected by a tangle of cables and tubes. It has not yet been plugged in. The machine produces the equivalent of one barrel a week and takes up 40 sq ft of floor space.
However, to substitute America’s weekly oil consumption of 143 million barrels, you would need a facility that covered about 205 square miles, an area roughly the size of Chicago.
“Our plan is to have a demonstration-scale plant operational by 2010 and, in parallel, we’ll be working on the design and construction of a commercial-scale facility to open in 2011,” says Mr Pal, adding that if LS9 used Brazilian sugar cane as its feedstock, its fuel would probably cost about $50 a barrel.
If they are right, commercial production of “renewable petroleum” could fill approximately one third of the nation’s transportation petroleum needs in the next decade. This approach also offers one very attractive feature: other renewable energy sources such as hydrogen would require a complete re-tooling of the infrastructure to put them in service. The ability to create petroleum on the fly would allow most machinery to continue operating as it always has. Also, the fuel is being billed as “carbon negative” which means that the amount of hydrocarbon emissions it puts into the atmosphere is less than the amount that the fuel’s raw materials extracted from the system during their growth.
Hang on to your hats. We may be living to see interesting times. (And perhaps that’s not always a bad thing.)
Recently their have been a lot of calls from Republican politicians to open up ANWR for drilling in order to lower gas prices. Having done my homework on this issue I believe that those that are doing so are either ignorant of the facts or have an ulterior motive that has almost nothing to do with lowering gas prices.
Leave it to the deaf, dumb and blind president of the United States to help drive already out-of-control oil prices into the stratosphere by further upsetting the always delicate balance in the Middle East through another round of saber rattling.
It is not unreasonable to conclude at this point that George Bush is so inept that he literally cannot do anything right beyond handing the grieving parents of an Iraq war casualty a medal and folded American flag without dropping them.
The Iraq war has been unique in American history in that the president has worked hard to make it sacrifice free and has largely succeeded. But now we all are feeling the effects of a war without end at the pump and supermarket checkout line even if most of us have not made the connection.
Don’t expect John McCain to do the math for us because he’s too busy beating the bomb Iran war drum with the president. Besides which, $5 gas and spiking food prices are justified because we’re making the Middle East safe for democracy, right?
Analysts described the global oil market as “hysterical” and “shooting itself in the foot” after oil futures jumped a staggering $11 a barrel on Friday to set yet another new record at over $138 a barrel.
This development, combined with still more bleak economic news as the unemployment rate surged to 5.5. percent in May, the biggest increase in more than two decades, further fanned recession fears. Some 330,000 Americans have lost their jobs because of Bush economic policies since the year began, while government unemployment figures do not include the millions of Americas who have run out of benefits and are no longer looking for work.
But while the U.S. may not be technically in recession according to some economic parameters, that is of cold comfort to consumers.
Consider this while you pump $50 worth of gas to fill your thrifty Honda hybrid or $120 to top off your macho-man Chevy pickup truck: Rising inflation continues to eat into your paycheck like the rust around the wheel wells of the car you can’t afford to trade in because you’re so deeply in hock to mortgage and credit card companies. As it is, wages grew at less than a 1 percent rate on an inflation-adjusted basis in the first quarter of the year.
June 5th, 2008 by SWARAAJ CHAUHAN, International Columnist
The blame game has already been going on, and is likely to become ugly and fierce as to who is causing maximum pollution and contributing towards visible changes in environment.
On the one side we have “developed” countries refusing to have a critical look at their reckless consumerism. While on the other are the “developing” countries wanting to mindlessly ape the Western lifestyle and thus putting an unbearable burden on the scarce resources on our planet earth.
All this has been been convincingly discussed in detail in the latest must-read article in The Economist. However, it does more finger-pointing towards China and India rather than suggesting ways how and what the “developed” nations should do towards sustainable living.
“Now that the American presidential race is down to two candidates who are both committed to cutting emissions, China and India, the world’s most populous nations, are seen by many as the world’s biggest climate-change problems. Russia’s economy is more profligate with energy, but China is widely believed to be the world’s biggest emitter of carbon dioxide, and India is rapidly moving up.
“Their exploding emissions are America’s main excuse for failing to take action itself; and their intransigence exasperates those trying to negotiate a global agreement on climate-change mitigation to replace the Kyoto protocol. Meanwhile, both countries are awakening to the problems that climate change will cause them.”
It goes without saying that without equitable distribution of resources the world would be witnessing increasing migrations, poverty and terrorism in the coming years. One option has been shown by the Bush administration — survival of the fittest. The other revolves round urgent evolving of a consensus on such critical issues through serious deliberations by world leaders. The latter option may provide effective long and short term strategy so essential for world peace and harmony.
Meanwhile a study centre, described as the world’s first legal research centre into climate change, will be opened in Canberra at the Australian National University today by environment minister Peter Garrett. The centre would focus on issues such as the international legal regime for tackling climate change, after the Kyoto agreement runs out, climate litigation, and issues involving renewable energy, transport and forestry. More here…
Gas prices paid by Western Europeans are much higher than those paid by Americans. But at least Europeans get something good back for their pain at the pump—first rate public transportation infrastructures. What’s our own return from gas prices that have risen almost a buck a gallon in recent months?
In Praise Of Gas Taxes
I know free markets generate
A host of things desirable
But when it comes to energy
They’re kind of unreliable.
The markets’ mix of greed and fear
With oil has spawned great dismay
I mean no disrespect, of course
But might there be a better way?
If gas costs rise because of taxes
And not to suit big traders’ dreams
The extra price consumers pay
Could fund big public transport schemes.
A buck a gallon paid to Sam
It’s true would add to drivers’ woes
But what comes back is better than
Enriching oil CEOs.
Gas prices are going up and up and UP. So Guest Voice writer humorist Tom Purcell has an item for sale..
SUV for Sale
By Tom Purcell
“Ah, the summer season has arrived and the wife and I hope to hit the road. That means one thing. I must dump my SUV.”
“Dump your SUV?”
“With gas prices soaring, who can afford to drive such a gas guzzler anymore? What’s worse: My giant hunk of steel is worth several thousand less than I owe on it.”
“Those are the breaks. But isn’t that the risk you took when you bought it?”
“Risk?”
“Surely you know that a third of the world’s crude oil comes from the Middle East, one of the most volatile regions in the world. That volatility has led to erratic gasoline prices before.”
“It has?”
“Sure, back in 1973, the Arab members of the Organization of Petroleum Exporting Countries (OPEC) stopped shipping oil to countries that supported Israel during the Yom Kippur War. An oil shortage resulted and Americans were hit hard.”
“I don’t remember that far back.”
“There were more problems in 1979. A revolution in Iran resulted in reduced oil output. Prices shot through the roof. Some American states rationed gasoline.”
“Gas rationing in America?”
“Sure. Then Congress got into the act. Congress established Corporate Average Fuel Economy (CAFE) regulations with the goal of increasing fuel efficiency and reducing America’s dependence on foreign oil. As is often the case with government, unintended consequences would result.”
Heightened international competition for the planet’s scarce resources has begun, and it’s emerging nations that stand to lose the most, warns O Globo of Brazil’s chief international columnist, William Waack.
“The first is contained in a report from the respected International Energy Agency , which assumes that geological and geopolitical reasons will inevitably lead to an oil supply crisis. … The other interpretation follows the same scenerio (price inflation, competition for scarce resources) but arrives at a far different conclusion. The rising cost of a barrel of oil will lead to a slowdown in the global economy, which will prevent the emergence of a crisis in supply.”
“The emerging nations will have to compete, perhaps for the first time, for the same resources available to the already rich and developed.”
By William Waack
Translated By Brandi Miller
May 23, 2008
Brazil - O Globo - Original Article (Portuguese)
The immediate consequence of the explosion in oil prices is clear and irreversible in the short term. It’s the global inflation that has manifested itself in higher prices for food, airfares, freight costs, consumables and finished products in many sectors.
But for the medium term, there are two conflicting interpretations. The first is contained in a report from the respected International Energy Agency , which assumes that geological and geopolitical reasons will inevitably lead to an oil supply crisis. This interpretation was the immediate cause of nervousness on oil markets this Thursday (May 22).
The other interpretation for the medium-term follows the same scenerio (price inflation, competition for scarce resources) but arrives at a far different conclusion. The rising cost of a barrel of oil will lead to a slowdown in the global economy, which will prevent the emergence of a crisis in supply.
It’s difficult to resolve this “battle” of interpretations at the moment. Other similar episodes of rising oil prices show that higher prices spur new technologies and the better use of fuel. In the decade of the seventies, the “shocks” in price and supply (caused by geopolitical, not geological reasons) were absorbed by a fantastic technological revolution - the information age.
READ ON AT WORLDMEETS.US, along with continuing translated foreign press coverage of the United States and the global energy and food crisis.
Speaking as an amateur home brewer, I’m a big fan of yeast. They are marvelous little critters who have the incredible ability to eat sugar and excrete alcohol. What’s not to love? Other sorts of yeast make it possible for us to have bread to eat and medical products to improve and extend our lives. Well, now there may be one more, earth shaking reason to cheer for miniscule engines of biology. Some 
