Tuesday, July 29, 2008

Post No. 29: The Problems Associated with Having Your Cake and Eating It Too

© 2008, The Institute for Applied Common Sense

America is an interesting country. We should often be perplexed about the various positions in which we find ourselves. This concept called “freedom,” which we must keep in mind is a relatively new concept, has its complications. Consider the following.

Why should a populace which willingly and voluntarily eats poor quality fast, fatty, salty, and cholesterol laden food, smokes, drinks alcohol, refrains from exercise, and engages in other questionable behavior, have an expectation that it is entitled to affordable health care coverage when poor health flows from such behavior? How can the citizens, of a country that permits them to pursue virtually any educational or vocational pursuit of their choice, complain when they are unable to find a job of their liking or one that permits them to adequately support their family? How can citizens of a country purchase inexpensive products made by American companies in third world countries, and then turn around and complain about the exporting of American jobs and technology?

Who is really at fault in connection with our housing mortgage crisis, the lenders for making bad loans to customers with an inability to pay, or the homeowners, for entering into transactions which were beyond their financial means? Just this past Sunday, a psychiatrist connected with UCLA’s Student Health Services, discussed on C-Span2 Book TV, the frustrations experienced by career professional women who thought that science had advanced to the point of suspending the biological clock, only to later discover that there are complications associated with having children late in life. (http://www.booktv.org/program.aspx?ProgramId=8574&SectionName=&PlayMedia=No.)

Last week, in Post No. 28 of this blog, we touched on predictions by some that a water crisis is in the making, and suggested that America start planning ahead of time, contrary to the manner in which it approached energy. However, we did not pose the fundamental question: How did a country, with all of our great academic and corporate institutions, manage to find itself dependent on others for energy? We submit that what we have in this country is a responsibility crisis. We always want our cake and to eat it too. Both parties, and both sides of the aisle, are responsible, and yet you will never hear them acknowledge it. Taking responsibility for one’s condition is a common sense first step toward addressing one’s problems.

Two sound bites uttered this past weekend made us stop and think about our current condition. One was made by Barack Obama, during his interview on NBC’s Meet the Press on Sunday morning. He spoke of the inability of our politicians to make hard decisions. (Are they so focused on getting re-elected that they lack the ability to do so?) The other was uttered by T. Boone Pickens, to the effect that, “People will follow if we have leadership [emphasis added].” Pickens testified before a Senate committee on homeland security issues related to energy dependence. (http://inside.c-spanarchives.org:8080/cspan/cspan.csp?command=dprogram&record=566076979.)

In our opinion, probably the most difficult situation in which this nation has ever found itself, and which defies common sense, is our dependence on foreign oil. Pickens, a geologist by training, has committed 58 million dollars to telling America his plan for making America energy independent. You may have seen or heard his commercials on the media outlets over the past two weeks. He believes that the American public does not fully understand this confusing area. He further believes that we want to know what is going on, in some comprehensible manner, and he wants to elevate the discussion before the presidential election.

Pickens was previously the founder and owner of Mesa Petroleum. He is now the head of B.P. Capital Management. In his opinion (and the purpose of this blog is not to support his position), the increase in the price of a barrel of oil is not due to corporate price gouging or the involvement of speculators, but rather the factor that recent production levels have remained relatively constant, while the demand has increased dramatically. (We suspect that most of you economic experts have some empirical evidence to challenge his position.) Be that as it may, he argues that the oil leaders in the Middle East are absolutely dumbfounded by U. S. energy policy. They can not understand why the U.S. has done virtually nothing to improve its situation, and yet blames the oil producing nations for the current price increases. Did we have any clues, any clues at all, in our recent history, that we should try to become energy independent?

Pickens’ company operates the largest wind farm in America. It provides the power equivalent to two and one-half nuclear plants, and it has created 15,000 jobs. The farm is located in a wind corridor in the mid-west section of the United States. Interestingly, according to Pickens, Germany is the largest user of wind generated power, and it has poor wind conditions. Overall, he claims that the United States has excellent conditions, not to mention the coastal areas which can be utilized. (Many of you may be aware that there has been an ongoing battle near Cape Cod / Martha’s Vineyard in connection with a proposed off-shore wind farm. Some have suggested that wealthy residents in the area have placed their interests above those of the public. Actually, the issue is far more complicated than that. However, it should have been resolved by now. Time’s a wasting. [http://www.en.wikipedia.org/wiki/Cape_Wind].)

Pickens made a number of interesting points before the Committee. He indicated that 38% of our oil is imported from the Middle East and Africa, from countries which are unstable. He noted that we can replace that 38% with natural gas already here in the United States. Natural gas costs 40% of crude oil. Will our supply last indefinitely? No, according to Pickens, but it will give us time to develop some alternatives. In fact, according to Pickens, if we had started using natural gas 20 years ago, our resources would be substantially depleted by now; however, we would not be dependent on others for that segment of our energy needs.

Pickens made some other interesting points. He noted that there is no one silver bullet that will solve all of our energy issues, but rather we need to use all available technologies and resources to become independent. Pickens believes that wind and solar power are the cheapest sources at this time, but that we need to consider off-shore drilling, and drilling near the Artic Circle. He also mentioned the need for government mandates to encourage industry participation in this independence effort. Pickens himself drives a Honda GX natural gas vehicle (http://automobiles.honda.com/shop/?modelname=civic+gx&ef_id=1097:3:s_f566d7a6f1f03f560e37a47917ba4e55_444155100_honda%20natural%20gas%20vehicle:gu-rNtB6B3YAAG6U7sUAAAAR:20080729045957). No American automobile manufacturer makes such a vehicle, at least not in the United States. General Motors makes them, but according to Pickens, only in South America.

Keep in mind that Pickens’ testimony was before a committee dealing with homeland security. He considers our dependence on foreign oil to be dangerous. Every time one of the senators posed a partisan question, or made a suggestion that he supported one side of the aisle or the other, he responded that his concern is about what is in the best interests of America, and American jobs. When asked specifically about whether he was in agreement with Al Gore regarding alternative sources of energy, he simply said that Al Gore’s issue is global warming. Pickens regards that as a secondary issue which can be addressed later. He considers our energy dependence on unstable countries to be the primary issue, which needs to be addressed now. According to Pickens, “There is only one enemy, foreign oil, and that’s my fight.”

All of this is quite complicated stuff to this simpleton, and I suspect that most of you feel that you already know what we need to do. However, are we going to continue to argue about all of the competing considerations, and drag out all of the litigation and bureaucratic haggling, while our energy situation further deteriorates? Even if you disagree with all of Pickens’ suggestions, and think that they are self-serving, hopefully you agree with his statement that, “People will follow if we have leadership [emphasis added].” Some one or some body needs to exercise responsible leadership. America can not afford to keep traveling down this path. We can’t have our cake and eat it too, indefinitely.

© 2008, The Institute for Applied Common Sense


  1. I agree with much of what you have said. Unfortunately, neither the right or the left have produced a leader that can lead both sides. No one from the middle has made it to front stage. What I haven't been able to understand is how both side fail to find a common ground on energy policy. The left can come from the point of global warming/environmental concerns. The right can come from the point of fear and business. In the middle, compromises can be made to lower the demand for oil which accomplishes both goals. Neither side seems willing to have a win/win situation because that means the other side had a win too.

  2. Happy to hear you're reading and enjoying my blog, although I admit the content is mostly skewed for entertainment purposes only. What can I say? My family doesn't want to hear me rant about energy policy :)

    I read your posts re energy and have found them interesting. I'm actually not a big fan of Picken's plan...not because I don't think we need more wind power (we clearly do), but switching our cars from oil to natural gas does not strike me as a short, mid, or long term solution. He glosses over the fact that natural gas cars can't go the same mileage, or the time & cost it takes to switch US manufacturers and infrastructure over to natural gas. How many gas stations have you seen that can handle natural gas? It's not the same thing...

    Not to mention the price of natural gas follows the price of oil. Its also increased ~5X in the past 5 years (as have all the fossil fuels).

    Clearly he's playing the part of the concerned environmentalist, which may or may not be true (I personally doubt it). But one point which can't be argued is that he's not doing all this for charity - he stands to make billions on his wind farms, especially if he can push off the responsibility of having to pay for the transmission lines. And then there's always the problems of rolling brown & blackouts from having too much wind power on the electrical grid. Do a search for "Texas wind grid electricity" on NYTimes, WSJ, etc and you'll see what I mean. ERCOT is already having serious problems getting their current grid to work...imagine if they scaled it up 10X. And besides, I'm always skeptical of having noble thoughts about the person who stands to make the money.

    I think I'll stop here. That's already way too long for a simple comment :)

    Thanks again, and I'll keep an eye on your posts.

  3. This is somewhat in response to a comment, which we very much appreciate, from Cash Fitzpatrick, who is currently living in Iceland working on a thermal energy project. He mentioned that he was skeptical of T. Boone Pickens' plan for energy independence. He noted that Pickens stands to gain lots of money if his plan is adopted.

    Cash's comment reminded me of an experience which occurred during one of my graduate school classes. We were discussing possible solutions to a societal problem. Solution A was dismissed because of Problem X. Solution B was dismissed because of Problem Y. Solution C was dismissed because of Problem Z. Finally, out of frustration, I suggested that someone had to do something.

    That graduate school discussion is similar to the debate which we have everyday at governmental levels regarding solving problems.
    We must all realize that no solution is perfect, and that it will have both positive and negative attributes. At least in this instance, I'd rather have an American make billions than have a foreign, potentially unstable government make them.


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