[ This session is unusual in that the words “peak oil” are spoken several times, and M. King Hubbert, James Howard Kunstler, and Matt Simmons are lauded. Gal Luft points out that “10 years ago, Osama bin Laden predicted that oil would be $144 a barrel. Everybody laughed at him. Oil was only $12 a barrel at the time. He was right.”
Pickens ideas about running transportation on natural gas so far haven’t worked out so far. It was hoped that 20% of trucks would be running on natural gas by now, but only 3% are, for many reasons that I explain in my book “When Trucks Stop Running: Energy and the Future of Transportation.
At least Pickens realizes that it is heavy-duty transportation, especially trucks, that are the most important. Yet cars dominate discussions and the lion-share of funding for “energy solutions. And guess what, people drive more miles when cars get more efficient, undoing the oil saved. Even if people drove less, so what? Trucks, trains, and ships BURN DIESEL. Cars burn gasoline. Diesel engines can’t run on gasoline (or ethanol, diesohol and many other fuels). Diesel engine are just as important for our high level of civilization as the diesel they burn because they’re twice as efficient than a gasoline engine and far more powerful, lasting up to 40 years and a million miles.
Alice Friedemann www.energyskeptic.com ]
Senate 110-1023. July 22, 2008. Energy security. An American imperative. U.S. Senate hearing.
Excerpts from this 175 page hearing follow:
T. BOONE PICKENS, Founder & CEO, BP Capital Management
We had produced 1 trillion barrels of oil at the turn of the century. It is interesting because if you look at King Hubbert’s extension, peak oil, and what would happen, the guy was great, in my estimation. I am a disciple. I don’t think there are 2 trillion barrels of oil. You may say take the oil shale on the western slope and this and that and everything. You can add up a bunch of stuff. When you add it up, it is going to be very expensive oil. But in looking at conventional oil—I live and you live and everybody in this room lives in the hydrocarbon era, and that era started with the automobile in 1900.
Half of the oil that I see out there had been produced by the year 2000.
Now, we have another trillion barrels, and you say, well, that is another hundred years. No. You started slow, ramped up, and now the next trillion is going to go out of the system within the next 50 years. So you are going to be forced to abandon the hydrocarbon era.
Can you imagine researchers 500 years out that come back and look at us? They are going to say, ‘‘That was a strange crowd. They lived on oil as a fuel.’’
We are going to have to make it to the next fuel. But what is going to happen, if I am right on what I am trying to do, I am going to awaken the American people, and they are going to see what they are up against. When they walk out of a room, they will turn off the lights. They do not do that now.
The Pickens Plan starts with harnessing wind and building solar capabilities. We are blessed with some of the best wind and solar resources in the world. The plan substitutes electricity generated by natural gas-fired plants with wind-generated electricity. Natural gas-fired is 22 percent; the wind is going to replace that 22 percent. The natural gas freed up is directed to transportation needs of the country. The natural gas is cheaper, cleaner than gasoline, and its supply is plentiful. And, most of all, it is American.
But natural gas is nothing more than a bridge to the next fuel because when you get to 2050, we are pretty well maxed out on hydrocarbons as a transportation fuel. I almost think it is divine intervention to have natural gas show up at such a critical time for this country, and to be able to use it as a bridge to the next fuel in the next 20 or 30 years.
And 70% of the oil is used for transportation. When a barrel of oil comes to the United States today, it will be moved to a refinery, refined, then go into marketing, then go into our cars, and in 4 months it is gone. It is gone. We burn it up. It is out of here. And so we have to get a hold of this situation.
Senator COLLINS. How much of the solution also should encompass energy conservation?
Mr. PICKENS. Oh, it has got to be on page 1, of course. We have got to conserve. There is no question about that. We have been very wasteful. But in our defense, we had cheap oil. And as long as we had cheap oil—I don’t know whether you have seen Jim Kunstler. I went over to Southern Methodist University (SMU) and heard him the other night. He is worth hearing. He is a generalist, but he tells us where we made the mistakes. We did not develop our rail system. You look at the world today, we go places and we want to ride on a 200-mile-an-hour train. We have to go to a foreign country to do that. We don’t have that. Why don’t we have it? Because we had cheap oil. It didn’t make sense for us to. It was expensive. We were going to subsidize it. And we built too far away from our work. He says you are going to move to your work now because of the cost of energy. And it was really interesting because this was 2 years ago and the guy nailed it. I listened to what he had to say. I watched what has happened, and he was right on.
If you go with my plan and get 400,000 megawatts of wind in the central part of the country, you have helped the economy. Now, what is the cost of your energy? I am guessing in 10 years you are going to be a long way down the track to an electric vehicle. But, remember, an electric vehicle does not do heavy duty. So you are going to have to continue to use natural gas with heavy duty vehicles.
Ethanol is a light-duty fuel. Ethanol cannot work for heavy duty. But natural gas can. So I am approaching it with the view that natural gas would be for heavy duty, first and all. Mandate to the fleets that they have got to go to natural gas. 38 percent of the fuel used in America is used to move goods. And that is done by trucks.
Geoffrey Anderson, President & CEO Smart Growth America
The real opportunity out there right now is to allow people to drive less and to be able to do more. We can do that by building more walkable and complete communities. A lot of the growth in oil use has been as a result of spread out landscapes that have no options besides driving. There is a real move now to create more walkable communities where homes are closer to jobs, shops are closer to work, and all of these things can be reached either on foot, by bike, with transit, or by shorter car trips.
Real estate and our research indicate that about a third of the market is interested in having more walkable communities, more compact communities. The fact is that for the last 50 years, we have essentially built drive-only communities, so the two-thirds of the market that really is interested in that product is well provided for.
Work trips only account for 25 to 35% of trips a household takes. Denser communities mean kids can walk to school (50% used to, just 11% now), and daily errands require shorter trips. The current way we are building communities is locking in oil dependence in the transportation sector.
Senator Lieberman. The near total dependence of our economy, the energy sector of it—and particularly the transportation sector—on oil is weakening our Nation’s position in the world while enriching and strengthening a lot of countries in the rest of the world, many of them volatile and some of them just plain hostile to the United States of America. For well over a generation, America’s leaders have seen this growing dependence on foreign oil but essentially sat back and watched passively as trillions of dollars of our American, hard-earned wealth has been used to buy that oil and thereby go to countries abroad. And during that more than a generation, America’s leaders have done little or nothing about that problem. Apparently, it took $4-a-gallon gasoline to wake up the American people and their leaders here in Washington, to make all of us angry and anxious enough to get serious about breaking our national dependency on foreign oil.
Senator Collins. Beyond the impact on countless families struggling with high costs, our growing dependence on foreign oil is a threat to our national and economic security. One of our witnesses, Mr. Pickens, has vividly illustrated our ever-increasing dependence on foreign sources of oil in the Middle East and Venezuela. We are impoverishing ourselves while enriching regimes that are in many cases hostile to America. Ending our dependence on foreign oil and securing our own energy future is an American imperative. Our Nation must embrace a comprehensive strategy to reduce, and ultimately eliminate, our reliance on Middle East oil. We must expand and diversify American energy resources, and while doing so, improve our environment.
Our Nation missed an enormous opportunity on another October day 35 years ago. On October 17, 1973, the Organization of Arab Petroleum Exporting Countries, the predecessor of the Organization of Petroleum Exporting Countries (OPEC), hit the United States with an oil embargo. The immediate results were soaring gasoline prices, fuel shortages, lines at filling stations, and an economic recession. Unfortunately, after the immediate crisis passed, the long-term result was a steady increase in oil imports and a dependence that worsens each day. The 1973 embargo was a wake-up call that we failed to heed. The current crisis is a fire alarm that we must not ignore.
It also requires action by government. From establishing a timeline for energy security to undertaking critical investments to stimulate research in alternatives to expanding the production and conservation tax credits, government has a critical role to play.
Mr. Pickens. In 1945, we were exporting oil to our allies. By 1970, we were importing 24% of our oil. By the 1980s, it was 37%. And in 1991, during the Gulf War, it was 42%. Today, we are approaching 70%. Much of our dependency is on oil from countries that are not friendly, and some would even like to see us fail as a democracy and as the leader of the free world. I am convinced we are paying for both sides of the Iraq war. We are giving them tools to accomplish their mission without ever having to do anything but sell us oil. This is more than a disturbing trend line. It is a recipe for national disaster. It has gone on for 40 years now. This is a crisis that cannot be left to the next generation to solve, and it is a shame if we do not do something about it. And we can, without bringing our economy and way of life to a halt.
I will tell you what [the American people] do understand. They know it is something very bad about energy. They do not think they are being told the truth about energy. And it is confusing to them. I think when we come out of this, by the time we get—I want to elevate this into the presidential debate, and it is not there yet. OK. Elevate it there. By the time we get the elections over, whoever wins, the American people are going to demand they know the truth about energy, they know what they are up against, and they will respond. We will see the energy use go down dramatically when they see what it is going to cost. They can see that it does not have anything to do with Exxon or Chevron or anybody else running up the price. It does not have anything to do with some speculator on Wall Street. That is not what we are faced with. We are faced with 85 million barrels a day of production in the world, and we are using 25 percent of it, with 4 percent of the population, and we only have 3 percent of the reserves. In the United States, we have nothing to do with the price of oil. We only have 3 percent of the reserves.
SENATOR VOINOVICH. Wind produces about 1.5 percent of our energy in this country. I think renewables are about—let’s see, about 9 percent, most of it is hydroelectric. How can you ramp that up over a quick period of time? And, second of all, as you know, down in Texas you have had some times when the wind just kind of stopped and you have had some reliability problems. And if you are going to use wind, you know that if you are going to have reliability, you are going to have to back up that wind with some ordinary baseload energy generation.
SENATOR DOMENICI. You are so right that we must get the people to understand; that the United States is sending so much of our resources to foreign countries just to acquire crude oil; that it should be doubtful in the minds of intelligent people as to whether America can continue this kind of exportation of our assets, of our resources to foreign countries for 5 or 10 years. I actually do not believe we can. I believe we will become poorer and poorer and poorer as we send $500 to $700 billion a year overseas for crude oil. We are in a real mess. You are not against us opening more of the offshore assets of the United States where there are 85 percent that are locked up in a moratorium of one type or another and you cannot drill even if you wanted to. Are you on the side of those who say lift those and start drilling in an appropriate——
Mr. PICKENS. I am saying do everything you can do to get off of foreign oil, is what I am saying.
Senator DOMENICI. And that is one.
Mr. PICKENS. That is one. It is not going to do it. It is not big enough. You do not have enough reserves in the offshore to do it. I think you are going to get a rude awakening as to value of the east and west coast when it is opened up and when it is put up for sale. When those tracts are put up for sale, I think you are going to be surprised at the [low] price you get for the tracts [ because most of the remaining oil is in the Gulf ].
There is no question that if I am right on the peak oil at 85 million barrels, in 10 years we are going to have less than 85 million barrels available to the world. Now, the question is: What is the demand? I have to think in 10 years the demand for oil— because the price now is going up. In 10 years, you are going to have $300 a barrel oil. Maybe higher, I don’t know. But this is really— it is a tough question to look out 10 years on this one. But I can tell you this: In 10 years, if we continue to drift like we are drifting, you are going to be importing 80 percent of your oil. And I promise you, it will be over $300 a barrel.
Senator VOINOVICH. I went to some war games at the National Defense University, and they talked about the vulnerability that we have. And some folks out at Stanford said that in the next 10 years there is a 80-percent chance that the cut-off of oil will bring our economy to its knees. So we have a certain urgency that we have right now to get on with this.
GAL LUFT, PH.D. EXECUTIVE DIRECTOR, INSTITUTE FOR THE ANALYSIS OF GLOBAL SECURITY, AND CO-FOUNDER, SET AMERICA FREE COALITION
When we talk about national security, we need to realize that 63% of the world’s natural gas reserves are in the hands of Russia, Iran, Qatar, Saudi Arabia, and United Arab Emirates. These countries are now in the process of developing and discussing the establishment of a natural gas cartel. So shifting our transportation sector from oil to natural gas is like jumping from the frying pan into the fire. This is a spectacularly bad idea for us to shift our transportation sector from one resource that we do not have to another that we do not have. And we only have 3 percent of the world reserves of natural gas. The situation is very similar to our situation with regards to oil.
Just to remind the Committee that 10 years ago, Osama bin Laden predicted that oil would be $144 a barrel. Everybody laughed at him. Oil was only $12 a barrel at the time. He was right, and as a result, we are exporting hundreds of billions of dollars. This is the first year that we actually are going to pay foreign countries more than we pay our own military to protect us.
In order to understand what should be the road to energy security, we must first understand why we are where we are. There are many reasons why we have the oil crisis now. Of course, strong demand in developing Asia, speculation, geological decline, geopolitical risk, all of them have contributed their share. But, in my view, by far the main culprit is OPEC’s reluctance to ramp up production. This cartel owns 78 percent of the world’s proven reserves, and it produces about 40 percent of its oil production.
Our energy security problem stems from the fact that our transportation sector is dominated by petroleum. And while being in a hole, we continue to dig.
We put on the road annually 16 million new cars, almost all of them gasoline only, each with an average street life of 16.8 years. A Senator elected in 2008 will witness the introduction of 102 million gasoline-only cars during his or her 6- year term.
This means that neither efforts to expand petroleum supply nor those to crimp petroleum demand through increased Corporate Average Economy Fuel (CAFE) standards will be enough to reduce America’s strategic vulnerability. Such non-transformational policies at best buy us a few more years of complacency, while ensuring a much worse dependence down the road when America’s conventional oil reserves are even more depleted.
[ Luft then goes on with solutions for CARS: ethanol, methanol, open fuel standards, electric – whether Pickens plan makes sense or not, at least Pickens understand it is heavy –duty transportation that needs to be kept running. Clearly Luft hasn’t read Matt Simmons “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy”, which makes the case that the Saudi’s and other Middle Eastern oil producing nations greatly exaggerated their reserves. And why should the Saudi’s produce oil as fast as we want them to, when they’d prefer for their oil to last many more generations. Also, producing oil at too fast a rate can damage the oil field and reduce the ultimate amount of oil extracted – indeed, it’s thought that before the U.S. and British oil companies in the Middle East that got kicked out did this before they left ].
HABIB J. DAGHER, PH.D., DIRECTOR, ADVANCED STRUCTURES AND COMPOSITES LABORATORY, UNIVERSITY OF MAINE
I would like to start this testimony by acknowledging… the inspiring role of Matt Simmons, who is well known for alerting our country to peak oil and peak oil issues.
You have heard about T. Boone Pickens’ wonderful plan, but we sit in the corner of the country, and we are not very close to the wind belt that runs up and down from Kansas to Texas. So what do we do? T. Boone Pickens’ plan utilizes the wind corridor from the Dakotas down to Texas to generate anywhere from 200 to 400 gigawatts, depending on how much you want to generate. But that leaves us out, if you wish, on the east coast and on the west coast unless we build very expensive transmission systems. The majority of the U.S. population, actually close to 28 States, utilize more than 70 percent of the Earth’s electricity around the coasts of the United States. So the major demand for electricity is around the perimeter of the country. There are line losses that take place, and, of course, there are transmission costs, and building transmission lines in heavily populated areas is very expensive as well from a permitting viewpoint and so forth. And if you look at the population centers on the east coast, for example, the Midatlantic States and up in the New England area, it would be very costly to build transmission lines in those areas.
Wind speed is actually high when we need it. We need to heat ourselves in the State of Maine and in the Northeast, and the heating costs are our biggest issues. But in the wintertime, the wind blows twice as fast as it does in the summertime, and the power generated from the wind is the cube of the wind speed. So in the wintertime, per month, we can generate 8 times as much power as we do in the summertime. You can think of wind off the coast of Maine as a seasonal crop right now that can help us heat the State of Maine. [ What will Maine do in the summer? ]